SUBLEASE AGREEMENT

                                   dated as of

                                 March 18, 1996

                                     Between

                       TACA INTERNATIONAL AIRLINES, S.A.,

                                  as Sublessor,

                                       and

                         WESTERN PACIFIC AIRLINES, INC.

                                  as Sublessee


                    One Used Boeing Model B737-3S3 Aircraft,
               current United States Registration Mark N375TA and
                      Manufacturer's Serial No. 23787 with
             two CFM International, Inc., Model CFM 56-3B2 Engines,
           Manufacturer's Serial Nos. 721150 and 721743, Respectively


ALL THE RIGHT,  TITLE AND INTEREST IN AND TO THIS SUBLEASE AGREEMENT ON THE PART
OF TACA  INTERNATIONAL  AIRLINES,  S.A. HAS BEEN ASSIGNED TO AND IS SUBJECT TO A
SECURITY  INTEREST  IN FAVOR  OF ING  AVIATION  LEASE  B.V.  ONLY  THE  ORIGINAL
COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY ING AVIATION LEASE B.V. ON
THE SIGNATURE PAGE THEREOF.



                      THIS IS NOT THE ORIGINAL COUNTERPART



<PAGE>



CODED FOR TABLE OF CONTENTS

EXHIBIT A                  AIRCRAFT DESCRIPTION
EXHIBIT B                  FORM OF ACCEPTANCE CERTIFICATE
EXHIBIT C                  FORM OF RETURN ACCEPTANCE RECEIPT


                                       -4-

<PAGE>


                                TABLE OF CONTENTS


                                                                           Page


Section 1.             Definitions........................................... 1

Section 2.             Sublease; Sublease Term; Delivery of
                       Aircraft.............................................. 7
                       (a)  Sublease; Sublease Term.......................... 7
                       (b)  Delays........................................... 7
                       (c)  Condition of Aircraft at Delivery................ 7

Section 3.             Security Deposit and Other Payments................... 8
                       (a)  Security Deposit................................. 8
                       (b)  Basic Rent....................................... 8
                       (c)  Commission....................................... 9
                       (d)  Supplemental Rent................................ 9
                       (e)  Manner of Payment................................ 9
                       (f)  Late Payments.................................... 9
                       (g)  No Setoff, Counterclaim, etc..................... 9

Section 4.             Conditions Precedent and Other
                       Requirements......................................... 11
                       (i) ................................................. 11
                       (a)  Execution and Delivery of
                              Documents..................................... 11
                       (b)  Representations, Warranties, No
                              Default....................................... 11
                       (c)  Resolutions, etc................................ 11
                       (d)  Security Deposit and Basic Rent................. 12
                       (e)  Side Letter..................................... 12
                       (f)  Insurance Certificate........................... 12
                       (g)  Filings; Financing Statements................... 12
                       (h)  Opinions of Counsel............................. 12
                       (i)  No Event of Loss................................ 12
                       (j)  Acceptance by Process Agent..................... 12
                       (k)  Net Worth....................................... 12
                       (l)  Other Documents................................. 13
                       (ii) ................................................ 13
                       (a)  Delivery of Assignments of
                              Warranties.................................... 13
                       (b)  Resolutions, etc................................ 13
                       (c)  Consents to Sublease............................ 13
                       (d)  Extension of Lease.............................. 13
                       (e)  Certificate of No Default....................... 13
                       (f)  Delivery of Sublease Supplement................. 13

                                       -i-

<PAGE>

                       (g)  Certificate of Airworthiness.................... 13
                       (h)  Acceptance by Process Agent..................... 14
                       (i)  Broker.......................................... 14

Section 5.             Disclaimer; Manufacturer and Vendor
                       Warranties........................................... 14
                       (a)  Disclaimer by Sublessor......................... 14
                       (b)  Sublessor's Representations,
                              Warranties and Covenants...................... 15
                       (c)      Manufacturer and Vendor
                                Warranties.................................. 16

Section 6.             Maintenance; Alterations, Modifications
                       and Additions........................................ 16
                       (a)      Maintenance................................. 16
                       (b)      Maintenance Reserves........................ 19
                       (c)  Replacement of Parts............................ 22
                       (d)      Pooling of Parts............................ 23
                       (e)  Alterations, Modifications and
                                Additions................................... 24

Section 7.             Title and Registration; Liens;
                       Possession........................................... 25
                       (a)      Title and Registration...................... 25
                       (b)      Liens....................................... 26
                       (c)      Operation, Quiet Enjoyment.................. 27
                       (d)      Possession.................................. 27
                       (e)      Identification Plates....................... 29
                       (f)      Reporting Requirements...................... 29
                       (g)      Inspections................................. 29

Section 8.             Loss, Destruction, Requisition, etc.................. 30
                       (a)      Event of Loss with Respect to the
                                Aircraft.................................... 30
                       (b)      Event of Loss with Respect to an
                                Engine...................................... 30
                       (c)      Application of Payments from
                                Governmental Authorities.................... 32
                       (d)      Requisition of Use of the
                                Aircraft.................................... 32
                       (e)      Quiet Enjoyment............................. 33

Section 9.             Insurance............................................ 33
                       (a)      Liability................................... 34
                       (b)      Other Insurance............................. 34
                       (c)      Terms of Insurance.......................... 35
                       (d)      Application of Insurance.................... 37
                       (e)      Reports..................................... 38
                       (f)      Failure to Insure........................... 39
                       (g)      Additional Insurance........................ 39
                       (h)      Notice of Claims............................ 39
                       (i)      Stipulated Loss Value....................... 39


                                      -ii-


<PAGE>




Section 10.  Return of Aircraft............................................. 40
                       (a)      Redelivery upon Termination................. 40
                       (b)      Condition of Aircraft-- General............. 40
                       (c)      Condition of Airframe....................... 42
                       (d)      Condition of Controlled
                                Components.................................. 43
                       (e)      Condition of Engines........................ 43
                       (f)      Ground Inspection by Sublessor.............. 44
                       (g)      Operational Ground Check.................... 44
                       (h)      Demonstration Flight........................ 44
                       (i)      Ferry Flight................................ 45
                       (j)      Deferred Discrepancy Correction............. 45
                       (k)      Flight Cost................................. 45
                       (l)      Aircraft Documentation...................... 46
                       (m)      Service Bulletin Kits....................... 46
                       (n)      Non-U.S. Manufactured Items................. 46
                       (o)      Sublessee's Continuing
                                Obligations................................. 46

Section 11.  Representations, Warranties and
                       Covenants of Sublessee............................... 47

Section 12.            Indemnification...................................... 51
                       (a)      General Indemnity and Expenses.............. 51
                       (b)      General Tax Indemnity....................... 53
                       (c)      Calculation of Tax Indemnity
                                Payments.................................... 56
                       (d)      Contest; Reports............................ 57
                       (e)      Payment..................................... 60
                       (f)      Survival.................................... 60

Section 13.            Assignment; Sublease Subject and
                       Subordinate.......................................... 60
                       (a)      No Impermissible Sublease by
                                Sublessee................................... 60
                       (b)      Assignment by Sublessor..................... 60
                       (c)      Sublease Subject and Subordinate............ 61
                       (d)      Assignments by Sublessor or
                                Lessor...................................... 61

Section 14.            Events of Default; Remedies.......................... 62
                       (a)      Events of Default........................... 62
                       (b)      Remedies.................................... 64

Section 15.            Notices.............................................. 67

Section 16.            Governing Law and Jurisdiction....................... 68
                       (a)      Governing Law............................... 68
                       (b)      Jurisdiction; Service of Process............ 68
                       (c)      Waiver of Immunity.......................... 69



                                      -iii-


<PAGE>


Section 17.            Miscellaneous........................................ 69
                       (a)      Entire Agreement............................ 69
                       (b)      English Language............................ 69
                       (c)      Sublessor's Right to Perform for
                                    Sublessee............................... 69
                       (d)      Application of Payments During
                                    Existence of Default.................... 69
                       (e)      Expenses.................................... 70
                       (f)      Further Assurances.......................... 70
                       (g)      Judgment Currency........................... 70
                       (h)      Invalidity of any Provision................. 70
                       (i)      Changes in Law.............................. 71
                       (j)      Headings.................................... 71
                       (k)      Consent..................................... 71
                       (l)      Third-Party Beneficiaries................... 71
                       (m)      Counterparts................................ 71


EXHIBIT A                  AIRCRAFT DESCRIPTION
EXHIBIT B                  FORM OF ACCEPTANCE CERTIFICATE
EXHIBIT C                  FORM OF RETURN ACCEPTANCE RECEIPT

                                      -iv-



<PAGE>

         This  SUBLEASE  AGREEMENT,  dated as of March 19,  1996,  between  TACA
INTERNATIONAL  AIRLINES,  S.A., a corporation  organized and existing  under the
laws of El Salvador  with its principal  place of business in San  Salvador,  El
Salvador,  and its successors  and assigns  ("Sublessor"),  and WESTERN  PACIFIC
AIRLINES,  INC., a corporation organized and existing under the laws of Delaware
with  its   principal   place  of  business  in   Colorado   Springs,   Colorado
("Sublessee").

         Sublessor and Lessor (such term and other capitalized terms are used as
hereinafter defined) are parties to the Lease.

         Sublessee desires to sublease the Aircraft from Sublessor and Sublessor
is willing to sublease the Aircraft to Sublessee  upon and subject to the terms,
conditions and covenants herein set forth.

         In  consideration  of and  subject to the mutual  covenants,  terms and
conditions contained in this Sublease, Sublessor and Sublessee agree as follows:

         Section 1.          Definitions.

         (a) Unless the context  otherwise  requires the  following  terms shall
have the  following  meanings  for all  purposes of this  Sublease  and shall be
equally  applicable  both to the singular and plural forms of the terms defined.
Any  agreement  defined  below shall include each  amendment,  modification  and
supplement thereto and waiver thereof in effect from time to time.

         "Additional Insurance" shall have the meaning ascribed to it in Section
9(f) hereof.

         "Additional  Insureds" shall have the meaning ascribed to it in Section
9(c) hereof.

         "Aircraft"  shall mean (i) the Airframe,  together with two (2) Engines
initially installed on such Airframe at the Commencement Date or any Replacement
Engine  substituted  for any such  Engine,  whether  or not any of said  initial
Engines or  Replacement  Engines may from time to time no longer be installed on
such Airframe or may be installed upon another  airframe and the Parts; and (ii)
the Aircraft Documentation.  As the context requires, "Aircraft" shall also mean
the  Airframe,  any Engine  (including  a  Replacement  Engine),  any Part,  the
Aircraft Documentation, or any part thereof individually.

         "Aircraft  Documentation"  shall  mean  all  (i)  log  books,  aircraft
records,  manuals and other data or documents provided to Sublessee on or before
the Commencement  Date, as evidenced by any Schedule  attached to the Acceptance
Certificate as a receipt



<PAGE>



thereof; and, (ii) any other documents,  drawings, or data which are required to
be  maintained  during the Sublease  Term  pursuant  hereto or by the FAA or the
Maintenance Program.

         "Airframe"  shall  mean that  certain  Boeing  model  737-3S3  airframe
bearing manufacturer's serial number 23787.

         "Airframe  Reserve  Amount"  shall have the  meaning  ascribed to it in
Section 6(b).

         "Agent" shall mean ING Aviation Lease,  B.V., as agent for the Lenders,
its successors and assigns.

         "Approved  Repair  Facility"  shall have the meaning  ascribed to it in
Section 6(a)(ii).

         "Basic  Rent"  shall have the meaning  ascribed  to it in Section  3(b)
hereof.

         "Credit Agreement" shall mean the Credit Agreement dated as of November
4, 1993 between First  Security  Bank of Utah,  National  Association,  as owner
trustee, as borrower,  Amerilease Capital Corporation,  as owner participant and
guarantor and the Agent, as may be amended or supplemented from time to time.

         "Commencement  Date"  shall  mean the date upon which the  Aircraft  is
tendered  to  Sublessee  in  conformity  with  this  Sublease  and the  Sublease
Supplement is executed and delivered.

         "Cycle"  shall  mean any flight of the  Aircraft  or, in the case of an
engine not attached to an aircraft, any airframe to which an Engine is attached,
consisting of one take-off and one landing  regardless  of time elapsed  between
take-off and landing and distance flown.

         "Debt" shall mean,  with respect to any Person,  (a) all obligations of
such Person for  borrowed  money or with respect to deposits and advances of any
kind, whether evidenced by bonds,  debentures,  notes or other instruments,  (b)
all obligations of such Person upon which interest charges at customarily  paid,
(c) all  obligations  of such  Person  under  conditional  sale or  other  title
retention  agreements  relating to property  purchased by such  Person,  (d) all
obligations  of such Person issued or assumed as the deferred  purchase price of
property  or  services,  (e) any  lease  obligation  that,  in  accordance  with
generally  accepted  accounting  principles has been or should be capitalized on
the books of such Person,  and (f) all guarantees of such Person of the debts or
obligations for borrowed money of any other Person,  whether direct or indirect,
absolute, contingent or otherwise.

         "Default"  shall mean any event  that,  with the passage of time or the
giving of notice or both, would become an Event of Default.



                                       -2-

<PAGE>



         "Dollars" and "US$" shall mean lawful  currency of the United States of
America.

         "Engine"  shall mean (i) each of the two CFM  International  Inc. Model
CFM 56-3B2 jet aircraft engines bearing manufacturer's serial numbers 721150 and
721734,  respectively,  whether  or not  from  time  to time  installed  on such
Airframe or installed on any other  airframe,  and (ii) any  Replacement  Engine
that may from time to time be substituted as contemplated by Section 8(b) for an
Engine  subleased  hereunder;  together  in each  case  with  any and all  Parts
incorporated  or installed in or attached  thereto or any and all Parts  removed
therefrom  so  long as  title  thereto  shall  remain  vested  in  Sublessor  in
accordance  with the terms of Section  6(c) after  removal from any such Engine.
Except as otherwise set forth herein, at such time as a Replacement Engine shall
be so  substituted  and the Engine for which the  substitution  is made shall be
released from the Lien of the Mortgage,  such replaced  Engine shall cease to be
an Engine hereunder.  The term "Engines" means, as of any date of determination,
all Engines then subleased hereunder. Each Engine has and any Replacement Engine
hereunder will have not less than 750 rated takeoff horsepower.

         "Engine  Loss  Value"  shall  mean,  in respect of each  engine,  three
million two hundred thousand United States Dollars (US$3,200,000).

          "Engine  Reserve  Amount"  shall have the  meaning  ascribed  to it in
Section 6(b) hereof.

         "Event of  Default"  shall have the  meaning  ascribed to it in Section
14(a) hereof.

         "Event of Loss"  with  respect to the  Aircraft,  the  Airframe  or any
Engine  (hereinbelow  referred to as "property") shall mean any of the following
events  with  respect to such  property:  (i) loss of such  property  or the use
thereof  due to  theft,  disappearance,  destruction,  damage  beyond  repair or
rendition  of such  property  permanently  unfit for  normal  use for any reason
whatsoever;  (ii) any damage to such  property  that  results in the  receipt of
insurance  proceeds  with respect to such property on the basis of a total loss;
(iii) the condemnation,  confiscation or seizure of, or requisition of title to,
such Property by any authority, or a requisition for use of such property by any
authority other than a Government  Entity of the United States of America;  (iv)
as a result of any rule, regulation,  order or other action by the FAA, or other
governmental body having jurisdiction  thereof or any other occurrence,  the use
of such  property in the normal  course of air  transportation  of persons shall
have been prohibited for a period of three consecutive  months unless Sublessee,
prior to the expiration of such  three-month  period,  shall have undertaken and
shall be diligently  carrying  forward all steps that are necessary or desirable
to permit the normal use of such property by Sublessee or, in any event, if such
use


                                       -3-

<PAGE>



shall  have been  prohibited  for a period of six  consecutive  months;  (v) the
inability  for any reason of Sublessor  to obtain  possession  of such  Aircraft
within 30 days after this  Sublease  shall have been  declared  to be in default
pursuant  to Section 14,  free and clear of all liens  (other  than  Sublessor's
Liens);  and (vi) in the case of an  Engine,  as  described  in clause  (iii) of
Section 7(d).  An Event of Loss with respect to the Aircraft  shall be deemed to
have occurred if an Event of Loss occurs with respect to the Airframe.

         "FAA" shall mean the United States Federal Aviation  Administration and
any successor agency thereto.

         "Federal  Aviation Act" shall mean the United States  Federal  Aviation
Act of 1958 as amended, and the regulations promulgated thereunder.

         "First Security" shall mean Lessor, in its individual capacity.

         "Flight  Hour" shall mean each hour or part thereof  elapsing  from the
moment the wheels of the Airframe (or other  airframe on which an Engine is then
installed) leave the ground on takeoff until the wheels of the Airframe (or such
other airframe) touch the ground on landing following such flight.  For purposes
of all calculations  under this Sublease  measured in Flight Hours,  such hours,
including fractions thereof, shall be measured to two decimal places.

         "Government  Entity" means (i) any national,  state or local government
of the United  States of America or any other  country where the Aircraft may be
flown  and  operated  by  Sublessee,  (ii) any  board,  commission,  department,
division, instrumentality,  court, agency or political subdivision of any entity
described  in  (i)  above,  however  constituted,  and  (iii)  any  association,
organization,  or institution of which any entity described in (i) or (ii) above
it a  Member  or to  whose  jurisdiction  any  thereof  is  subject  or in whose
activities any thereof is a participant.

         "Indemnitee"  shall have the meaning  ascribed  to it in Section  12(a)
hereof.

         "Lease" shall mean that certain  Aircraft Lease  Agreement  dated as of
November 4, 1993,  between  Lessor and Sublessor,  as originally  executed or as
modified, amended or supplemented pursuant to the applicable provisions hereof.

         "Lenders" shall mean ING Aviation Lease, B.V. and each Person who shall
become a Lender in accordance with the provisions of the Credit Agreement.

         "Lessor" shall mean First Security Bank of Utah, National  Association,
not in its  individual  capacity but solely as owner  trustee under that certain
Trust Agreement dated as of


                                       -4-

<PAGE>



November  4,  1993,  between  First  Security  and the owner  participant  named
therein.

         "Lien" shall mean any  mortgage,  pledge,  lien,  charge,  encumbrance,
lease, exercise of rights, security interest or claim of any nature whatsoever.

         "Maintenance  Program" shall have the meaning ascribed to it in Section
6(a) hereof.

         "Maintenance Reserves" shall have the meaning ascribed to it in Section
6(b) hereof.

         "Manufacturer"  shall mean The Boeing Company, a corporation  organized
and existing under the laws of Delaware.

         "Mortgage" shall mean the Mortgage and Security Agreement,  dated as of
November 4, 1993, between Lessor and Agent relating to the Aircraft, as the same
may be amended, supplemented or modified from time to time.

         "Parts"   shall  mean  any  and  all   appliances,   parts,   avionics,
attachments,  accessions, instruments,  appurtenances,  accessories, furnishings
and other equipment of whatever nature (other than complete Engines or engines).

         "Payment  Date" shall mean the fifteenth  (15) day of each  consecutive
calendar  month  commencing  with the calendar month  immediately  following the
Commencement  Date and each  consecutive  calendar month  thereafter  during the
Sublease Term; provided however that Sublessee,  on or prior to the Commencement
Date, shall pay Basic Rent in respect of the Aircraft corresponding to the first
month of the Sublease Term.

         "Permitted  Lien" shall have the meaning ascribed to it in Section 7(b)
hereof.

         "Person"  shall mean an  individual,  corporation,  partnership,  joint
venture, trust,  unincorporated organization or any other juridical entity, or a
Government Entity.

         "Post-Default  Rate" shall mean a rate per annum equal to three percent
(3%) above the rate publicly announced from time to time by Citibank,  N.A., New
York,  New York (or any  successor  institution)  as its "prime rate" (or, if no
such rate exists, any comparable reference rate established by such institution)
on the basis of the actual number of days elapsed over a 360-day year.

         "Process Agent" shall have the meaning  ascribed to it in Section 16(b)
hereof.

         "Rent" shall mean Basic Rent and Supplemental Rent.



                                       -5-

<PAGE>



         "Replacement  Engine" shall mean a CFM  International,  Inc. CFM 56-3B2
jet  aircraft  engine  (or  engine  of the same  manufacturer  of the same or an
improved model) approved by Sublessor,  that has a value,  utility and thrust at
least equal to those of the Engines,  together  with all Parts  relating to such
engine.

         "Security Assignments" shall mean an instrument or instruments, in form
and substance  satisfactory  to Lessor and Lender,  pursuant to which  Sublessor
assigns to Lessor (and Lessor further assigns to Agent) all of Sublessor's right
and interest in and to this Sublease.

         "Security  Deposit"  shall have the  meaning  ascribed to it in Section
3(a) hereof.

         "Stipulated Loss Value" shall mean in respect of the Aircraft as of any
particular date, such amount as is set forth on Schedule 1 hereto.

         "Sublease,"   "this  Sublease   Agreement,"   "this   Sublease,"  "this
Agreement,"  "herein,"  "hereunder,"  "hereby,"  or other  words shall mean this
Sublease as originally executed or as modified, amended or supplemented pursuant
to the applicable provisions hereof.

         "Sublease  Supplement"  shall mean the Sublease  Supplement dated as of
even date herewith, in form and substance satisfactory to Sublessor.

         "Sublease  Term" shall have the meaning  ascribed to it in Section 2(a)
hereof.
        
         "Sublessor  Lien" shall mean any Lien arising as a result of (i) claims
against Sublessor or Lessor not related to the transactions contemplated by this
Sublease,   (ii)  Taxes  imposed  against  Sublessor  or  Lessor  that  are  not
indemnified  against by Sublessee  pursuant to Section  12(b),  (iii) the Lease,
(iv) the Mortgage or (v) claims  against  Sublessor or Lessor arising out of the
transfer by either of them of all or any part of its  interest  in the  Aircraft
other than by reason of the occurrence of an Event of Loss or following an Event
of Default.

         "Supplemental Rent" shall mean all amounts, sums, monies, indebtedness,
liabilities  and  obligations  (other than Basic Rent) that  Sublessee  assumes,
agrees or otherwise  becomes  liable to pay to Sublessor or others  hereunder or
under any other document or agreement entered into by Sublessee and Sublessor in
connection  herewith or with the  transactions  contemplated  hereby and thereby
including, without limitation, payments of Maintenance Reserves, Stipulated Loss
Value and any  interest  payable  with  respect to payments  pursuant to Section
3(e).



                                       -6-

<PAGE>



         "Tax"  or  "Taxes"  shall  mean any and all  fees  (including,  without
limitation,   license  and  registration   fees),   taxes  (including,   without
limitation,  gross receipts,  income, sales, rental, use, turnover, value added,
property  (tangible or  intangible),  excise and stamp taxes,  levies,  imposts,
duties, charges, assessments or withholdings of any nature whatsoever,  together
with any and all  penalties,  fines,  additions to tax and  interest  thereon or
computed by reference thereto).

         "Taxing  Authority"  shall have the  meaning  ascribed to it in Section
12(b) hereof.


         Section 2.          Sublease; Sublease Term; Delivery of Aircraft.

         (a) Sublease;  Sublease Term.  Sublessor hereby subleases to Sublessee,
for a period (the  "Sublease  Term")  commencing  on the  Commencement  Date and
ending,  unless earlier terminated  pursuant to the provisions of this Sublease,
on such  date as shall  fall  120  consecutive  calendar  months  following  the
Commencement Date (the "Expiration Date").

         (b) Delays.  Sublessor will not be liable for any delay in commencement
of the Sublease  which is beyond  Sublessor's  reasonable  control,  but if such
delay causes the  Commencement  Date of the Sublease  Term of the Aircraft to be
delayed  beyond March 31, 1996,  either party may  terminate  this  Sublease and
neither  party shall have any further  liability to the other  hereunder,  other
than  Sublessor's  obligation  to return the Security  Deposit (and other monies
heretofore paid by Sublessee to Sublessor) to Sublessee.

         (c) Condition of Aircraft at Delivery.  On the  Commencement  Date, the
Aircraft (i) shall be in an airworthy condition and have all systems functioning
in accordance with manufacturer's recommendations, (ii) shall have a current and
valid  Certificate  of  Airworthiness  issued by the FAA, (iii) shall be painted
white,  (iv) shall be fresh from its last scheduled "C" check,  other than hours
flown in respect of test and ferry  flights,  (v) shall be in a 136Y (136 seats,
single  class  cabin)  configuration,  and  (vi)  shall  be in  accord  with the
description thereof set forth in Exhibit A hereto.  Sublessee  acknowledges that
it has inspected and technically accepted the Aircraft prior to the date hereof,
and  Sublessee  agrees to accept the Aircraft  under the terms of this  Sublease
when duly  tendered by  Sublessor  in  accordance  herewith.  Upon such  tender,
Sublessee shall execute a Sublease Supplement, which will be conclusive proof as
between  Sublessor and Sublessee that Sublessee has examined the Aircraft,  that
the Aircraft and the Aircraft  Documentation  are  satisfactory to Sublessee and
that  Sublessee  has accepted the Aircraft for all purposes  hereof  without any
reservations whatsoever (except as noted therein).



                                       -7-

<PAGE>




         Section 3.          Security Deposit and Other Payments.

         (a) Security  Deposit.  Sublessee has heretofore  paid to Sublessor the
amount of  US$356,062.50 in partial  fulfillment  of its  obligation to pay the
Security Deposit. On or prior to the Commencement Date,  Sublessee shall deliver
to Sublessor the balance of the security  deposit (the "Security  Deposit") such
that as of the Commencement  Date Sublessor shall have received the total sum of
Seven   Hundred  Five  Thousand  Dollars (US$705,000)   (the  "Security  Deposit
Amount").  The Security  Deposit shall be held by Sublessor  during the Sublease
Term as security  for the full and punctual  performance  by Sublessee of all of
its obligations hereunder. During the Sublease Term, the Security Deposit may be
commingled  by  Sublessor  with other  funds.  Interest,  if any,  earned on the
Security Deposit shall be for Sublessor's sole account. Sublessor may, but shall
not be obligated  to, apply the  Security  Deposit,  in whole or in part for the
payment of any Basic Rent owing hereunder or any other amount owing from time to
time by Sublessee hereunder, or utilize the Security Deposit in whole or in part
to perform any of  Sublessee's  obligations  hereunder or  otherwise  remedy any
Event of Default, without prejudice to any other remedy of Sublessor.  Sublessee
shall not attempt to subject the  Security  Deposit to any Lien or to assign any
interest  therein to any Person  and,  to the  extent of its  interest  therein.
Sublessee  hereby grants to Sublessor a Lien in the Security Deposit and assigns
and transfers to Sublessor any and all of Sublessee's  right, title and interest
therein,  as security as provided above,  and Sublessor shall be entitled to the
remedy of offset against and  application of the Security  Deposit,  without any
prior  notice to or demand  against  Sublessee  (except to the extent  otherwise
required by applicable  law), all of which are hereby waived.  If Sublessor uses
or applies all or a portion of the Security Deposit,  such application shall not
be deemed a cure of any Event of Default,  until and unless Sublessee shall have
replenished the amount applied hereunder within the time period provided herein.
Sublessee shall replenish any portion or all of the Security  Deposit applied by
Sublessor to satisfy,  in whole or in part,  any Event of Default by  depositing
with Sublessor in immediately  available  funds an amount  sufficient to restore
the Security  Deposit to the Security  Deposit  Amount within three (3) Business
Days  after  Sublessor's  demand  therefor.   Within  fifteen  (15)  days  after
redelivery of the Aircraft to Sublessor by Sublessee,  and provided the Aircraft
is delivered in full conformity with the return  conditions set forth in Section
10 hereof,  and that  Sublessee has paid in full, all amounts owing by Sublessee
hereunder and performed all of its obligations hereunder,  Sublessor will return
to Sublessee the Security Deposit, without interest, less any amounts applied by
Sublessor and not replenished by Sublessee.

         (b) Basic Rent.  Sublessee agrees to pay Sublessor,  or, for so long as
the  Mortgage  remains  in effect,  Agent,  rent with  respect to the  aircraft,
monthly, in advance on each Payment


                                       -8-

<PAGE>



Date, in the amount of Two Hundred Thirty-five Thousand Dollars (US$235,000) per
month ("Basic  Rent").  All payments of Basic Rent shall be made in  immediately
available  funds,  in Dollars  by 2:00 p.m.  New York time on the date when due;
provided,  however,  that in the event that any  payment  should be due on a day
that is not a  Business  Day,  then  such  payment  shall  be  made on the  next
succeeding Business Day without any penalty for late payment.

         (c)  Commission.  Sublessee  shall pay to  Sublessor  the amount of Two
Thousand  Three  Hundred  Fifty  Dollars   (US$2,350)  per  month   ("Commission
Payment"),  monthly,  in  advance  on or before  each  Payment  Date  during the
Sublease  Term  and  any  renewals  thereof,   if  applicable,   as  payment  or
reimbursement for and in respect of the commission  payable to Cauff,  Lippman &
Crane  Aviation,  Inc. as sole  brokers in respect of this  Sublease.  Sublessor
shall pay such commission to Cauff, Lippman & Crane Aviation, Inc.

         (d)  Supplemental  Rent.  Sublessee  also  agrees  promptly  to  pay to
Sublessor any and all Supplemental Rent, as the same shall become due and owing,
and in the event of any failure on the part of Sublessee to pay any Supplemental
Rent,  Sublessor shall have all rights,  powers and remedies provided for herein
or by law or equity or otherwise in the case of nonpayment of Basic Rent.

         (e) Manner of Payment. All Basic Rent and Supplemental Rent (other than
the Security Deposit and Maintenance  Reserves) required to be made to Sublessor
hereunder shall be paid (i) so long as the Mortgage remains in effect,  directly
to Agent at: The Northern Trust International Banking Corp., New York, New York,
account of ING Bank,  Acct. No.  100628-20230 for further credit to ING Aviation
Lease  B.V.,  Amsterdam,   The  Netherlands,   Acct.  No.  5007.2102;  and  (ii)
thereafter,  to such bank accounts as Sublessor  shall specify by written notice
to Sublessee.  All payments of  Supplemental  Rent shall be made in  immediately
available  funds in  Dollars by 2:00 p.m.  New York time,  on the daft when due;
provided,  however,  that in the event that any  Payment  should be due on a day
that is not a Business Day then such  payment  shall be made on the Business Day
next succeeding such day without any penalty for late payment.

         (f) Late Payments. As to any (i) amount due under this Sublease that is
not paid when due as herein  provided,  or (ii) advance made by Sublessor of any
amount  required to be paid by sublessee  as herein  provided and not so paid by
Sublessee,  Sublessee shall pay to Sublessor at the time of payment thereof,  as
Supplemental  Rent,  interest thereon at the Post-Default  Rate, from either the
due date  thereof  (as to amounts  referred to in clause (i)) or the date of the
advance by Sublessor (as to amounts referred to in clause (ii)), as the case may
be, to the date such late payment is paid in full.

         (g) No  Setoff,  Counterclaim,  etc.  Notwithstanding  anything  to the
contrary herein and except as otherwise set forth in this


                                       -9-

<PAGE>



Section 3(f), Sublessee's obligations and liabilities to pay all amounts payable
hereunder shall be absolute and  unconditional  and shall not be affected by any
circumstance,  including,  without  limitation,  (i) any  setoff,  counterclaim,
recoupment,  defense or other right that Sublessee may have against Sublessor or
any other Person for any reason whatsoever,  (ii) any defect in the title caused
directly by an act or omission of Sublessee,  airworthiness,  condition, design,
operation or fitness for use of or any damage to or loss or destruction  of, the
Aircraft,  the  Airframe,  any  Engine  or  any  Part  of  any  thereof  or  any
interruption  or cessation in the use or  possession of any thereof by Sublessee
for any reason whatsoever, (iii) any insolvency,  bankruptcy,  reorganization or
similar proceedings by or against Sublessee, (iv) the disaffirmance or rejection
of this  Sublease by Sublessor or any trustee in bankruptcy  (or similar  party)
provided  that  there  shall  have  been no  change  materially  adverse  to the
Sublessee in any of the terms or conditions of this Sublease in connection  with
applicable  bankruptcy  proceedings,  (v) claims  against  the  Manufacturer  or
manufacturers  of the  Aircraft,  the  Airframe,  any Engine,  Part or component
thereof,  (vi)  enforceability  or lack of enforceability of any of the terms or
conditions of this Sublease, (vii) breach by Sublessor of any warranty,  express
or implied,  with regard to the Aircraft,  the Airframe,  any Engine any Part of
any thereof, including,  without limitation,  merchantability or fitness for any
purpose or use relating to or otherwise  made or alleged to be made by Sublessor
to Sublessee or any of it agents,  representatives  or employees  with regard to
the Aircraft,  the Airframe,  any Engine or any Part of any thereof,  (viii) any
right,  claim,  demand,  bill, action or suit whatsoever by or against or on the
part of Sublessee against  Sublessor,  including,  without  limitation,  whether
arising out of legal  action or otherwise  (x) at law or in equity,  (y) whether
affirmative,  negative or defensive in nature for or on account of the legality,
enforceability,  validity  or  other  infirmity  as to (A) any of the  terms  or
conditions  of this  Sublease,  (B) any  express or implied  warranty  as to the
Aircraft, the Airframe, any Engine or any Part of any thereof or (C) arising out
of or as a result of any contract, agreement,  assignment or transaction between
Sublessor and Sublessee  whether direct or indirect,  written or oral,  (ix) any
interruption  or  cessation  in the  use or  possession  of the  Aircraft  by or
availability  of the Aircraft to  Sublessee  for any reason  whatsoever  whether
arising out of relating  to an act or  omission of  Sublessee;  or (x) any other
circumstances,  happening or event whatsoever,  whether or not similar to any of
the foregoing  which but for this provision might have the effect of terminating
this  sublease,  it being the intention of the Sublessor and Sublessee  that all
Rent and other amounts  payable by Sublessee  hereunder  shall be payable in all
events unless the obligation to pay the same shall be terminated pursuant to the
express  provisions of this Sublease.  Sublessee  hereby waives,  to the fullest
extent permitted by applicable law any and all rights it may now have or that at
any time  hereafter  may be  conferred  upon it, by  statute  or  otherwise,  to
terminate, cancel, quit or surrender this Sublease except in accordance with


                                      -10-

<PAGE>



the express terms  hereof.  Notwithstanding  anything  contained in this Section
3(f) in the event that as a result of a breach by Sublessor  or anyone  claiming
by through or under Sublessor of its covenant of quiet enjoyment  (including any
defect in title not caused by an act or omission of  Sublessee  which  defect in
title  shall have  caused the  Aircraft  to be  deregistered  under the  Federal
Aviation Act),  Sublessee shall be deprived of possession or use of the Aircraft
under and in accordance  with this Sublease,  Sublessee shall not be required to
pay  Basic  Rent  and  Maintenance   Reserves  in  respect  of  such  period  of
non-possession of or inability to use the Aircraft. Each payment of Rent made by
Sublessee  shall be final as to Sublessor and Sublessee,  and Sublessee will not
seek to recover all or any part of any such  payment of Rent from  Sublessor  or
its successors or assigns for any reason whatsoever.

         Nothing in this Section 3(f) or  elsewhere  in this  Sublease  shall be
construed to limit  Sublessee's  right to seek a recovery of any payment of Rent
or any  other  amount  which  is not  due and  payable  hereunder,  or to  limit
Sublessee's  rights and remedies to pursue, in a court of law or otherwise,  any
claim it may have  against  Sublessor  on account of any failure of Sublessor to
perform its obligations hereunder or in connection herewith.

        Section 4.           Conditions Precedent and Other Requirements.

         (i) The  obligation  of Sublessor to sublease the Aircraft to Sublessee
on the terms and conditions herein set forth is subject to the satisfaction,  on
or before the Commencement Date, of each of the following conditions:

         (a)  Execution  and Delivery of  Documents.  Sublessee  shall have duly
executed and  delivered  to  Sublessor  (i) this  Sublease,  (ii) an  Acceptance
Certificate in the form of Exhibit B hereto  covering the Aircraft and effective
as of the Commencement Date, (iii) the Sublease  Supplement,  and (iv) a consent
or consents to the Security  Assignments in form and substance  satisfactory  to
Lessor and Agent.

         (b)   Representations,   Warranties,   No  Default.   (i)  All  of  the
representations  and warranties of Sublessee contained in this Sublease shall be
true and correct on and as of the Commencement  Date as though made on such date
or,  if they  relate  solely  to an  earlier  date,  as of such date and (ii) no
Default  or Event of Default  shall have  occurred  and be  continuing  or would
result from  Sublessee's  execution,  delivery and performance of this Sublease,
and Sublessor shall have received an Officer's Certificate in form and substance
satisfactory to it, to the effect of each of the foregoing.

         (c)  Resolutions,  etc.  Sublessor  shall  have  received,  in form and
substance  satisfactory  to its (i) certificate of the Secretary or an Assistant
Secretary of Sublessee with respect to the resolutions of the Board of Directors
of Sublessee


                                      -11-

<PAGE>



authorizing  the  execution,  delivery  and  performance  by  Sublessee  of this
Sublease and all other  documents  and  certificates  contemplated  hereby to be
executed on behalf of Sublessee, and the authority and signatures of the persons
authorized  to execute and deliver such  documents on behalf of  Sublessee;  and
(ii) such other  documents  and evidence  with respect to Sublessee as Sublessor
may  reasonably   request  in  order  to  establish  the   consummation  of  the
transactions  contemplated  by this Sublease,  the taking of all  proceedings in
connection  therewith  and  compliance  with the  conditions  set  forth in this
Section 4.

         (d) Security Deposit and Basic Rent. On or before the Commencement Date
(i) Sublessor shall have received  immediately  available funds in the amount of
the balance of the Security  Deposit  Amount and (ii) Agent shall have  received
the first Basic Rent payment.

         (e) Side Letter.  On or before the Commencement  Date,  Sublessor shall
have  received  all amounts due to it under that certain side letter dated as of
even date herewith.

         (f) Insurance  Certificate.  Sublessor shall have received, on or prior
to the Commencement Date, in form and substance satisfactory to it and to Agent,
an insurer's or broker's  certificate as to the due compliance by Sublessee with
the insurance provisions of Section 9.

         (g)  Filings;  Financing  Statements.  Sublessor  shall  have  received
evidence  satisfactory  to it that this  Sublease and the  Security  Assignments
shall each have been duly filed for  recordation  with the FAA  pursuant  to the
Federal  Aviation Act. If requested by Sublessor,  Sublessee shall have executed
(as  debtor)  and  delivered  to  Sublessor  one or more  precautionary  Uniform
Commercial  Code  financing  statements  for filing in such places in the United
States as, in the Sublessor's opinion, are necessary or desirable.

         (h)  Opinions of  Counsel.  Sublessor  shall have  received a favorable
opinion or opinions  addressed to Sublessor and Lessor from  Winthrop,  Stimson,
Putnam &  Roberts  and  Sparks,  Dix,  counsel  for  Sublessee,  dated as of the
Commencement Date.

         (i) No Event of Loss. No Event of Loss shall have occurred with respect
to the Aircraft or any Engine.

         (j)  Acceptance  by Process  Agent.  CT  Corporation  System shall have
accepted its  appointment as Process Agent on behalf of Sublessee by one or more
instruments in writing delivered to Sublessor.

         (k) Net Worth. On and as of the Commencement  Date Sublessee shall have
a net worth of not less than  U.S.$50,000,000,  as determined in accordance with
generally accepted accounting principles.


                                      -12-

<PAGE>




         (l) Other Documents. Sublessor shall have received such other documents
and matters  incident to foregoing as Sublessor,  Lessor or Agent may reasonably
request and such other  agreements as Sublessor,  Lessor or Agent may reasonably
request,  as each deems  necessary or desirable to consummate  the  transactions
contemplated hereby.

         (ii)  The  obligation  of  Sublessee  to  sublease  the  Aircraft  from
Sublessor  pursuant  hereto is  subject  to the  satisfaction,  on or before the
commencement date, of each of the following conditions:

         (a)  Delivery  of  Assignments  of  Warranties.  Sublessee  shall  have
received  from  Sublessor  Assignments  of  Warranties  in  form  and  substance
reasonably  acceptable to Sublessee,  duly accepted by the  Manufacturers of the
Airframe and the Engine.

         (b)  Resolutions,  etc.  Sublessee  shall  have  received,  in form and
substance  reasonably  satisfactory to it: (i) a certificate of the Secretary or
an Assistant  Secretary of Sublessor,  in the form attached as part of Exhibit D
hereto,  with respect to the  resolutions of the Board of Directors of Sublessor
authorizing  the  execution,  delivery  and  performance  by  Sublessor  of this
Sublease and all other  documents  and  certificates  contemplated  hereby to be
executed on behalf of Sublessor, and the authority and signatures of the persons
authorized  to execute and deliver such  documents on behalf of  Sublessor;  and
(ii) such other  documents  and evidence  with respect to Sublessor as Sublessee
may  reasonably   request  in  order  to  establish  the   consummation  of  the
transactions  contemplated  by this Sublease,  the taking of all  proceedings in
connection  therewith  and  compliance  with the  conditions  set  forth in this
Section 4.

         (c) Consents to  Sublease.  Sublessee  shall have  received the written
consents of Lessor and Agent to this Sublease.

         (d)  Extension of Lease.  Sublessee  shall have received a copy of that
certain  Amendment  to Lease  dated on or prior to the date  hereof  pursuant to
which the terms of the Lease shall have been  extended  such that it shall be at
least coterminous herewith.

         (e)  Certificate  of  No  Default.  Sublessee  shall  have  received  a
certificate  of a duly  authorized  officer of  Sublessor  to the effect that no
Default or Event of Default, as defined therein,  has occurred and is continuing
under the Lease or the Mortgage.

         (f) Delivery of Sublease Supplement.  Sublessor shall have delivered to
Sublessee the Sublease Supplement.

         (g) Certificate of Airworthiness.  The Certificate of Airworthiness for
the Aircraft shall not have been withdrawn.


                                      -13-

<PAGE>



         (h) Acceptance by Process Agent.  Greenberg,  Traurig et al. shall have
accepted its appointment as Process Agent on behalf of Sublessor.

         (i) Broker.  Sublessee shall have received a letter from Cauff, Lippman
& Crane Aviation,  Inc., addressed to and in form and substance  satisfactory to
it, to the effect that Cauff,  Lippman & Crane Aviation will not seek to recover
any amounts in respect of the Aircraft, Engines or Parts from Sublessee.

         Section 5.          Disclaimer; Manufacturer and Vendor Warranties.

         (a)  Disclaimer by Sublessor.  PRIOR TO THE EXECUTION OF THIS SUBLEASE,
SUBLESSEE HAS SELECTED THE TYPE OF AIRCRAFT, AIRFRAME, ENGINES AND PARTS. EXCEPT
AS  OTHERWISE  EXPRESSLY  PROVIDED  IN SECTION  5(B) BELOW,  NEITHER  SUBLESSOR,
LESSOR,  AGENT,  ANY LENDER NOR ANY SUCCESSOR IN INTEREST TO EITHER HAS MADE NOR
SHALL BE DEEMED TO HAVE  MADE AND  ACCORDINGLY  MAKES NO  WARRANTY,  EXPRESS  OR
IMPLIED,  AS TO ANY MATTER WHATSOEVER,  INCLUDING THE CONDITION OF THE AIRCRAFT,
AIRFRAME,  ENGINES AND PARTS,  THEIR  MERCHANTABILITY  OR THEIR  FITNESS FOR ANY
PARTICULAR PURPOSE,  AND SUBLESSOR (FOR ITSELF,  LESSOR,  AGENT AND ANY LENDERS)
EXPRESSLY  DISCLAIMS THE SAME AND AS RESPECTS  SUBLESSOR.  SUBLESSEE  LEASES THE
AIRCRAFT,  AIRFRAME,  ENGINES  AND  PARTS  "AS IS" AND  "WHERE  IS".  EXCEPT  AS
OTHERWISE  EXPRESSLY PROVIDED IN SECTION 5(B) BELOW,  SUBLESSOR HEREBY EXPRESSLY
DISCLAIMS  ANY  WARRANTY  EITHER  EXPRESS  OR  IMPLIED  (WHETHER   STATUTORY  OR
OTHERWISE)  RELATING  TO  THE  CAPACITY,  AGE,  QUALITY,   DESCRIPTION,   STATE,
CONDITION, DESIGN, CONSTRUCTION,  USE, OPERATION, OR PERFORMANCE OF THE AIRCRAFT
OR THE SUITABILITY OF THE AIRCRAFT OR ITS FITNESS FOR ANY PARTICULAR  PURPOSE OR
AS TO ITS AIRWORTHINESS.  SUBLESSOR,  LESSOR, AGENT AND ANY LENDER SHALL HAVE NO
LIABILITY TO SUBLESSEE FOR ANY CLAIM, LOSS OR DAMAGE WHATSOEVER  INCLUDING,  BUT
NOT LIMITED TO,  INCIDENTAL OR  CONSEQUENTIAL  DAMAGES,  CAUSED OR ALLEGED TO BE
CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR AIRFRAME, ANY OF THE ENGINES OR
PARTS,  OR BY ANY  INADEQUACY  THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY
INCIDENT  WHATSOEVER  IN  CONNECTION  THEREWITH  ARISING  IN  STRICT  LIABILITY,
NEGLIGENCE,  GROSS  NEGLIGENCE  OR  OTHERWISE,  OR IN ANY  ACTION  RELATED TO OR
ARISING  OUT OF THIS  SUBLEASE  OR ANY  OTHER  DOCUMENT  AND  WHETHER  INVOLVING
PERSONAL INJURY,  PROPERTY DAMAGE OR OTHERWISE,  EXCEPT AS EXPRESSLY PROVIDED IN
SECTION 5(b) BELOW, SUBLESSEE HEREBY WAIVES AS BETWEEN ITSELF, SUBLESSOR AND ANY
PERSON CLAIMING BY, THROUGH OR UNDER  SUBLESSOR,  LESSOR,  AGENT AND ANY LENDER,
ALL ITS RIGHTS,  EXPRESS OR IMPLIED  (WHETHER  STATUTORY OR OTHERWISE),  AGAINST
SUBLESSOR  OR ANY OTHER  SUCH  PERSON  IN AND TO THE  AIRCRAFT  RELATING  TO THE
CAPACITY, AGE, QUALITY,  DESCRIPTION,  STATE, CONDITION,  DESIGN,  CONSTRUCTION,
USE,  OPERATION  OR  PERFORMANCE  OF THE  AIRCRAFT  AND THE  LEASING  THEREOF BY
SUBLESSOR TO SUBLESSEE, OR TO THE MERCHANTABILITY OR SUITABILITY OF THE AIRCRAFT
OR ITS  FITNESS  FOR  ANY  PARTICULAR  PURPOSE  OR AS TO ITS  AIRWORTHINESS.  In
particular and without  prejudice to the  generality of the  foregoing,  neither
Sublessor nor any such other Person shall be


                                      -14-

<PAGE>



under any liability  whatsoever  and howsoever  arising,  whether in contract or
tort or both, in respect of any loss, liability,  damage or delay of or to or in
connection  with any of the  Aircraft  or any  Person  or  property  whatsoever,
whether on board the Aircraft or elsewhere,  irrespective  of whether such loss,
damage or delay shall arise (x) from the unairworthiness of the Aircraft, or (y)
from any action or omission of  Sublessor  or any other such Person  (other than
any action or omission that constitutes  willful  misconduct or gross negligence
of Sublessor).

         (b)    Sublessor's    Representations,    Warranties   and   Covenants.
Notwithstanding and as the sole exception to Section 5(a),  Sublessor represents
and warrants that (1) it is a Sociedad anonima, duly formed and validly existing
under the laws of El Salvador and has legal right to own its  properties  and to
carry on its  business as  presently  conducted  and to perform its  obligations
under this  Sublease,  (ii)  unless a Default or an Event of Default  shall have
occurred and be continuing  neither  Sublessor or Lessor nor anyone claiming by,
under or through  Sublessor or Lessor shall take any actions  inconsistent  with
Sublessee's  right of quiet  enjoyment,  (iii)  the  Aircraft  and the  Aircraft
Records have been maintained in accordance with TACA's FAA approved  maintenance
program during the period that such Aircraft has been leased to Sublessor,  (iv)
Sublessor shall indemnify and hold Sublessee harmless from any claims or damages
arising out of that certain prior Letter of Intent by and between  Sublessor and
Transbrasil S.A. Linhas Aereas  concerning the Aircraft;  (v) holds all material
licenses,  certificates and permits necessary for the conduct of its business as
now conducted; (vi) the execution, delivery and performance of this Sublease has
been duly authorized by all necessary  corporate  action of Sublessor,  and does
not and will not (a) result in the  violation of the  provisions  of the charter
documents or bylaws of  Sublessor  as in effect on the date hereof,  (b) require
stockholder  approval  or  approval  or consent of any trustee or holders of any
indebtedness  of Sublessor,  except such approvals  which have been obtained and
are in full force and effect,  (c) contravene any law, rule or regulation or any
order of any Government  Entity  binding on Sublessor,  and (d) conflict with or
result in a breach of any terms or provisions of or constitute a default  under,
or result in or require the creation or imposition of any Lien upon any material
property  or  assets  of  Sublessor  under,  any  indenture,  mortgage  or other
agreement or instrument as in effect on the date hereof to which  Sublessor is a
party or by which it or any of its  property is bound,  or any  applicable  law,
rule or regulation,  judgment, order or decree of any Government Entity or court
having jurisdiction over Sublessor or any of its properties; (vii) this Sublease
constitutes the legal,  valid and binding  obligation of Sublessor,  enforceable
against  Sublessor  in  accordance  with its terms  except as may be  limited by
applicable bankruptcy, insolvency,  reorganization,  moratorium or other similar
laws  affecting  creditors'  rights  generally  and, to the extent that  certain
remedies  require  or may  require  enforcement  by a court of  equity,  by such
principles of equity


                                      -15-

<PAGE>



(regardless of whether such  enforceability is considered in a proceeding at law
or in equity) as a court having  jurisdiction may impose;  (viii) at least fifty
percent (50%) of the issued and outstanding shares,  representing 50% or more in
value of Sublessor, are owned by residents of El Salvador; and (viii) no Default
or Event of Default as defined therein has occurred and is continuing  under the
Lease or the Mortgage.

         (c)  Manufacturer  and Vendor  Warranties.  Sublessor hereby assigns to
Sublessee  for the duration of the Sublease Term (so long as no Event of Default
shall have occurred and be continuing) all assignable warranties,  if any, given
by the  Manufacturer  and other vendors with respect to the Aircraft and Engines
and shall  obtain  Manufacturer's  consent to such  Assignment.  Sublessee  will
diligently  and  promptly  pursue  any  valid  claims  it may  have  under  such
warranties and will provide notice of the same to Sublessor.  To the extent that
any warranty given by the Manufacturer or others with respect to the Aircraft or
Engines is not assignable or otherwise  made  available to Sublessee,  Sublessor
agrees, at its option,  either (i) to authorize Sublessee to take such action to
enforce such warranty in the name of Sublessor as Sublessee  sees fit or (ii) to
exert  reasonable  efforts at  Sublessee's  request and expense  (and subject to
Sublessee  making  adequate  provision to the  satisfaction  of  Sublessor  with
respect to such  expense)  to enforce  any such  warranties  for the  benefit of
Sublessee.  Effective on the return of the Aircraft or the  termination  of this
Sublease,   whichever  is  earlier,   Sublessee  hereby  assigns  any  remaining
warranties,  and any claims  thereunder,  to  Sublessor  or its  designee.  Upon
exercise by Sublessor or any Party  claiming by,  through or under  Sublessor of
any  remedies  in  respect  of an  Event of  Default,  and at the  latest,  upon
expiration  of the  Sublease  Term,  the benefit of all  warranties  referred to
herein  shall  immediately  revert  and be  deemed to have  been  reassigned  by
Sublessee to Sublessor.

         Section 6.          Maintenance; Alterations, Modifications and
                             Additions.

         (a)      Maintenance.

                  (i) So long as  Sublessor  has not  committed  a breach of its
         covenant of quiet  enjoyment  which shall have the effect of  depriving
         Sublessee of the use or possession of the Aircraft, during the Sublease
         Term and until the Aircraft is returned to Sublessor,  Sublessee shall,
         at its  sole  cost  and  expense,  service,  inspect,  test,  maintain,
         overhaul and repair the  Aircraft,  the Engines and all of the Parts in
         accordance with Sublessee's FAA approved airworthiness  maintenance and
         inspection  program,  a copy of which has been or will be  delivered to
         Sublessor  on or  prior  to the  Commencement  Date  (the  "Maintenance
         Program") and in Conformity  with the rules and regulations of the FAA,
         (A) so as to keep the Aircraft in as good condition (operating and


                                      -16-

<PAGE>



         otherwise),  appearance  and  repair  as when  delivered  to  Sublessee
         hereunder,  ordinary wear and tear excepted and otherwise to enable the
         airworthiness  certification  of the Aircraft to be  maintained in good
         standing  at all  times  under  applicable  law,  and to be and  remain
         registered in the United States  pursuant to the Federal  Aviation Act,
         and (B) in the same manner and with the same care as used by  Sublessee
         with  respect to similar  aircraft  and  engines  owned or  operated by
         Sublessee (it being the intention of the parties  hereto that Sublessee
         shall  not  discriminate   against  the  Aircraft  in  respect  of  any
         maintenance  matters).  Sublessee  shall be  authorized  to  amend  its
         Maintenance  Program;  provided,  however,  that  notwithstanding  such
         amendment,  the  Maintenance  Program  shall,  it all times  during the
         Sublease Term, be in full  conformity with the  requirements  set forth
         above  and,  further  provided,  that  Sublessee  shall  have  obtained
         Sublessor's  prior written consent to any material  amendment or change
         in or to the Maintenance Program. All service, inspection, maintenance,
         modification,  repair and  overhaul  shall be performed or caused to be
         performed  by  Sublessee  in  accordance   with  all   applicable   FAA
         requirements   and  under  the  Maintenance   Program,   and  shall  be
         accomplished  in accordance  with all applicable  service,  inspection,
         maintenance,  modification,  repair and overhaul  manuals and bulletins
         published by the  Manufacturer or the  manufacturers  of the Engines or
         engines,  equipment,  accessories  or Parts  installed on the Aircraft.
         Without  limiting the generality of the foregoing or the obligations of
         Sublessee hereunder, Sublessee agrees that such maintenance and repairs
         will include but will not be limited to each of the following:

                                    (A)     to  perform   in accordance with the
                  Maintenance Program all routine and non-routine
                  maintenance work;

                                    (B) to comply on a  terminating  basis  with
                  all outstanding mandatory orders, airworthiness directives and
                  instructions  issued by the FAA  affecting  the Aircraft  that
                  have an effective date for compliance prior to, or sooner than
                  one hundred  eighty  (180) days after,  the return date of the
                  Aircraft;

                                    (C)  to  incorporate  in  the  Aircraft  all
                  service bulletins of the Manufacturer, the Engine manufacturer
                  and other vendors  which  Sublessee  schedules to  incorporate
                  during the Sublease  Term on aircraft or engines in its Boeing
                  737 fleet;

                                    (D)  to   incorporate   in  to   maintenance
                  schedule  for the  Aircraft  a  corrosion  control  program as
                  recommended by Manufacturer  and the FAA and to carry out such
                  work  as  may  be  required  to  comply  therewith,  including
                  periodic inspections of fuel tanks, periodic


                                      -17-

<PAGE>



                  inspection  and clean-up  under  galleys and  lavatories,  the
                  cleaning and treating of all mild and moderate  corrosion  and
                  the  correcting  of all severe  and  exfoliated  corrosion  in
                  accordance with the recommendations of the Manufacturer; and

                                    (E) to maintain, in the English language (1)
                  the Aircraft  Documentation and (2) any other records, logs or
                  other  documents,  information  or  materials  relating to the
                  service,  inspection,   testing,  maintenance,   modification,
                  overhaul and repair of the  Aircraft,  any Engine and any Part
                  which are  required by the FAA or by  applicable  law,  all of
                  which shall at all times be kept current and up-to-date, shall
                  conform  with  the  laws  of  any  Government   Entity  having
                  jurisdiction  and with  normal  practices  of  commercial  air
                  carriers,  shall  disclose  the location of any Engine or Part
                  not installed on the Airframe and shall be made  available for
                  review by Sublessor on reasonable notice.

                  (ii) Sublessee shall have designated persons in its employment
         authorized  by the FAA to perform  service,  inspection,  modifications
         repair and  alterations of the Aircraft,  and to return the Aircraft to
         Sublessee's   revenue   service   after  such   performance   has  been
         accomplished  by  Sublessee  or shall  have the same  performed  on its
         behalf by an FAA  approved  repair and overhaul  station in  conformity
         with  FAR  145  ("Approved  Repair  Facility").  For  purposes  hereof,
         Sublessor  acknowledges  that  Sublessee's  maintenance  and repairs in
         connection  with "C" checks and "D" checks (or the equivalent  thereof)
         are being  Performed  by Tramco,  Inc. of Seattle,  Washington.  In the
         event Sublessee has a third party  accomplish,  on a continuous  basis,
         some  or all of the  maintenance  requirements  under  the  Maintenance
         Program  (excluding "A," preflight and transit checks) such maintenance
         by said  third  party  must be  accomplished  in  accordance  with  the
         provisions  of this  Section  6(a).  Sublessor  shall be  entitled  and
         Sublessee shall ensure that Sublessor is permitted to reasonably  visit
         the facilities of any such third party maintenance performer to inspect
         the maintenance  work performed on and the  maintenance  records of the
         Aircraft including any Engine or Part.

                  (iii) Sublessor may request that Sublessee  accomplish changes
         desired by Sublessor to the Aircraft  during  Sublessee's  layup of the
         Aircraft  for  maintenance  under  the  Maintenance  Program  in  those
         circumstances  where such changes are not  required  under this Section
         6(c).  No such  request  shall  be  unreasonably  denied  by  Sublessee
         provided  that no such  changes  shall  require  Sublessee  to keep the
         Aircraft  out of service for any longer  period  than the period  which
         Sublessee's  maintenance of the Aircraft was scheduled to require. With
         respect to such requested  changes,  Sublessor,  at its expense,  shall
         provide retrofit


                                      -18-

<PAGE>



         kits of parts and  installation  instructions  to Sublessee.  Sublessor
         shall,  within  thirty  (30)  days (or such  earlier  period  as may be
         required by any  Authorized  Repair  Facility  performing the requested
         change(s)) of receipt of an invoice  detailing the same,  pay all costs
         thereof which costs shall have been agreed upon prior to performance of
         the requested changes.

                  (iv) Sublessee  shall give Sublessor not less than thirty (30)
         days'  prior  written  notice of the  anticipated  date,  location  and
         Approved  Repair  Facility in respect of any "C" check or "D" check (or
         its equivalent) to be performed on the Aircraft.

                  (v) Repairs will be accomplished as follows: (A) any repair to
         the  Aircraft  shall  be  accomplished   pursuant  to  the  appropriate
         manufacturer's   repair  manual  instructions  under  an  FFA  approved
         program;  and (B)  any  material  repair  to the  Aircraft  that is not
         covered by appropriate  manufacturer's repair manual instructions shall
         be subject to  Sublessor's  prior  written  approval  and shall be made
         under an FAA approved program.

                  (vi) Notwithstanding anything to the contrary contained herein
         and  provided  that the same shall not violate the terms of or conflict
         with any lease,  sublease,  credit or security  agreement to which such
         engine, an aircraft engine that is not an Engine, but that is installed
         on the Airframe,  shall be  maintained in accordance  with this Section
         6(a).

         (b)      Maintenance Reserves.

                  (i) Sublessee shall pay Sublessor,  as  Supplemental  Rent for
         the use of the Aircraft  during the Sublease Term,  within fifteen (15)
         days  following the last day of each calendar month during the Sublease
         Term and on the  redelivery  date,  the  following  sums  ("Maintenance
         Reserves"):  (A) with respect to each  Engine,  the amount (the "Engine
         Reserve  Amount")  determined by multiplying the number of Flight Hours
         of  operation of such Engine  during the  immediately  preceding  month
         (irrespective  of whether  such Engine is  installed on the Airframe or
         any other  airframe)  times One Hundred and Twenty Dollars  (US$120.00)
         (of which Seventy  Dollars  (US$70.00)  shall be for  restoration  shop
         visits (the "Shop Visit Portion") and Fifty Dollars  (US$50.00)shall be
         towards the cost of life-limited  parts (the "LLP  Portion")),  and (B)
         with  respect  to the  Airframe,  the  amount  (the  "Airframe  Reserve
         Amount")  determined  by  multiplying  the  number of  Flight  Hours of
         operation  of the  Airframe  during  such month times  Seventy  Dollars
         (US$70.00).  It is the intent of the parties  hereto that the  Aircraft
         and  Engines  be  operated  during  the  Sublease  Term  at an  average
         Hour/Cycle ratio (the "Ratio")


                                      -19-

<PAGE>



          greater than one and seven-tenths  Hours to one Cycle (1.7:1).  In the
          event that during any calendar  quarter  during the Sublease Term, the
          average of the Ratios corresponding to each month during such calendar
          quarter shall be less (as  determined in increments of one tenth of an
          hour, any measurement being rounded up to the next tenth of an hour if
          equal to or greater  than fifty one  hundredths  of an hour or rounded
          down  to the  lower  one  tenth  of an hour if  less  than  fifty  one
          hundredths of an hour) than 1.7 Hours to each Cycle  (1.7:1),  the LLP
          Portion of the Engine Reserve Amount in respect of the next succeeding
          calendar  quarter  shall be  increased  in inverse  proportion  to the
          decrease  in  Ratio  as   evidenced  by  the  average  of  the  Ratios
          corresponding to each month during such calendar quarter. In the event
          that   during  any   calendar   quarter  the  average  of  the  Ratios
          corresponding  to each month  during such  calendar  quarter  shall be
          greater (as  determined  in  increments  of one tenth of an hour,  any
          measurement  being rounded up to the next tenth of an hour if equal to
          or greater than fifty one hundredths of an hour or rounded down to the
          lower  one tenth of an hour if less than  fifty one  hundredths  of an
          hour)  than the one and seven  tenths  (1.7:1),  the amount of the LLP
          Portion of the Engine  Reserve  Amount  shall be  decreased in inverse
          proportion  to the  increase  in the  Ratio.  Any  excess  Maintenance
          Reserves  remaining at the  expiration of the Sublease Term or earlier
          termination of this Sublease shall be retained by Sublessor.

               (ii) Sublessee shall be entitled to  reimbursement  from the Shop
          Visit  Portion of the  Engine  Reserve  Amount  held for an Engine for
          Sublessee's  actual costs (without  mark-up)  incurred with respect to
          heavy maintenance of such Engine requiring a shop visit, excluding any
          costs  associated with  replacement of life limited parts and the cost
          of any  repairs  or  maintenance  required  due to  accidents,  abuse,
          misuse,  mishandling,  faulty  maintenance,   foreign  object  damage,
          elective part  replacement  or any insured event.  Such  reimbursement
          shall be made  within ten (10)  Business  Days after  presentation  to
          Sublessor of  appropriate  written  evidence of such  expenses  (which
          shall  include a copy of an invoice from an  FAA-approved  maintenance
          facility  indicating  that  the  maintenance  has been  completed  and
          identifying those engine  maintenance tasks accomplished and the labor
          and material  breakdown  thereof,  and a receipt from the  maintenance
          facility for payment of the invoice,  or at least such amount  thereof
          as shall exceed the portion of the Maintenance  Reserves  available to
          Sublessee  hereunder);  provided,  that (A) the amount  reimbursed  to
          Sublessee shall not exceed the amount of the Maintenance Reserves paid
          by  Sublessee  (and not  previously  disbursed)  allocable to the Shop
          Visit Portion of the Engine Reserve Amount for the Engine  requiring a
          shop  visit,  and (B) in no  event  shall  Sublessee  be  entitled  to
          reimbursement  for any expenses  related to removal or installation of
          any Engine for


                                      -20-

<PAGE>



         maintenance or any other shipping or  transportation  expenses.  To the
         extent  that any  amount  reimbursable  hereunder  has not been paid by
         Sublessee,  such  amount  shall  be paid  directly  to the  maintenance
         facility  which  performed  the  services  for which  reimbursement  is
         sought.

                  (iii)  Sublessee shall be entitled to  reimbursement  from the
         LLP Portion of the Engine Reserve  Amount (i) for the full  replacement
         cost  of  life  limited  parts  having  a  remaining  life of up to and
         including   one  thousand  two  hundred  fifty  (1250)   Cycles.   Upon
         reimbursement  of such replacement  costs,  Sublessee shall deliver the
         removed  life limited  parts to Sublessor at the overhaul  facility and
         cause title  thereto to vest in  Sublessor  free and clear of all Liens
         other than Sublessor Liens, and (ii) of such portion of the replacement
         cost of life  limited  parts  having a remaining  life in excess of one
         thousand two hundred fifty (1250) Cycles as corresponds to the utilized
         (non-remaining)  portion  of the  life of such  life  limited  parts as
         compared to the total life  thereof  when new, as  expressed in Cycles.
         With  respect to such life  limited  parts  having a remaining  life in
         excess of one thousand two hundred fifty (1250)  Cycles,  title to such
         life  limited  parts  shall  be  deemed  to  vest  in  Sublessee   upon
         installation  of  replacement  parts on an Engine.  Such  reimbursement
         shall be made  within  ten (10)  Business  Days after  presentation  to
         Sublessor of  appropriate  written  evidence of such costs (which shall
         include a copy of an invoice from an FAA-approved supplier of such life
         limited  parts,  identifying  those  purchased  and  receipt of payment
         therefor or at least  payment for such  portion as shall exceed the LLP
         Portion of the Engine Reserve Amount  available to Sublessee  hereunder
         and of the Approved Repair  Facility  indicating that such life limited
         parts have been installed on an Engine;  provided,  that (A) the amount
         reimbursed to Sublessee  shall not exceed the amount of the Maintenance
         Reserves paid by Sublessee (and not previously  disbursed) allocable to
         the LLP Portion of the Engine Reserve Amount for the Engine requiring a
         shop  visit,  and  (B) in no  event  shall  Sublessee  be  entitled  to
         reimbursement  for  any  expenses  related  to  removal,   shipping  or
         transportation  expenses.  To the extent  that any amount  reimbursable
         hereunder  has not been paid by  Sublessee,  such amount  shall be paid
         directly  to the  supplier  of  the  life  limited  part(s)  for  which
         reimbursement is sought.

                  (iv)  Sublessee  shall be entitled to  reimbursement  from the
         Airframe  Reserve  Amount  for the costs  incurred  pursuant  to a full
         structural  and systems "D" check (or its  equivalent)  to occur during
         the Sublease  Term.  Such  reimbursement  shall be made within ten (10)
         Business Days after  presentation  to Sublessor of appropriate  written
         evidence of such  expenses  (which  shall  include a copy of an invoice
         from an FAA-approved maintenance facility indicating that the "D" check
         (or its equivalent) has been completed


                                      -21-

<PAGE>



         and identifying those maintenance tasks  accomplished and the labor and
         material breakdown thereof, and a receipt from the maintenance facility
         for payment of the  invoice,  or at least such amount  thereof as shall
         exceed the portion of the Maintenance  Reserves  available to Sublessee
         from the Airframe  Reserve Amount  hereunder);  provided,  that (A) the
         amount  reimbursed  to  Sublessee  shall not  exceed  the amount of the
         Maintenance  Reserves paid by Sublessee (and not previously  disbursed)
         allocable to the  Airframe  Reserve  Amount,  and (B) in no event shall
         Sublessee  be entitled to  reimbursement  for any  expenses  related to
         removal,  shipping or transportation  expenses.  To the extent that any
         amount  reimbursable  hereunder  has not been paid by  Sublessee,  such
         amount  shall  be  paid  directly  to the  maintenance  facility  which
         performed the "D" check for which reimbursement is sought.

                  (v) In  respect of any  maintenance  work to be  performed  or
         replacement  of life  limited  parts for which  reimbursement  from the
         applicable  portion  of the  Maintenance  Reserves  will be  requested,
         Sublessee,  prior to the performance of such maintenance or replacement
         of life limited parts, shall deliver to Sublessor a detailed work scope
         to be  performed  with an  estimate  of all  costs  to be  incurred  in
         connection  with such  maintenance  and/or  replacement of life limited
         parts,  including,  without  limitation,  the estimated  cost of labor,
         materials  and parts for which  reimbursement  is available  under this
         Section 6(b).

                  (vi)  Provided  that no breach  by  Sublessor  of  Sublessor's
         covenant  of  quiet  enjoyment   depriving  Sublessee  of  its  use  or
         possession  of the Aircraft has  occurred  and is  continuing,  nothing
         therein shall modify, limit or otherwise affect Sublessee's  obligation
         to maintain  and repair the  Aircraft in  accordance  with the terms of
         this sublease and, except as specifically  provided herein, any and all
         maintenance  and repairs on or to the aircraft  shall be at sublessee's
         sole cost and expense.

         (c)  Replacement  of  Parts.  Sublessee,  at its own cost  and  expense
(except as otherwise expressly provided herein), will promptly replace all Parts
that may from time to time be  incorporated  or  installed in or attached to the
Aircraft  or any Engine and that may from time to time  become  worn out,  lost,
stolen,  destroyed,  seized,  confiscated,  damaged beyond repair or permanently
rendered unfit for use for any reason  whatsoever,  except as otherwise provided
in Section 6(e). In addition, Sublessee may, at its own cost and expense, remove
in the ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen,  destroyed,  seized,  confiscated,
damaged  beyond  repair or  permanently  rendered  unfit for use;  provided that
Sublessee,  except as otherwise  provided in Section 6(e), will, at its own cost
and expense, replace such Parts as promptly as possible.


                                      -22-

<PAGE>



All replacement Parts shall (i) be free and clear of all Liens (except Permitted
Liens, as hereinafter defined, and except for pooling arrangements to the extent
permitted by Section 6(d)),  (ii) be in airworthy and good  operating  condition
and of at least equivalent  model and  modification  status and have a value and
utility at least equal to, the Parts replaced (assuming such replaced Parts were
in the condition  and repair  required to be maintained by the terms hereof) and
(iii) if applicable,  have a current  "serviceable  tag" of the  manufacturer or
maintenance  facility  providing such items to Sublessee,  indicating  that such
Parts are new, serviceable or overhauled. All Parts at any time removed from the
Aircraft or any Engine shall remain  subject to this  Sublease,  no matter where
located, until such time as such Parts shall be replaced by Parts that have been
incorporated or installed in or attached to the Aircraft or such Engine and that
meet the requirements  for replaced Parts specified above.  Immediately upon any
replacement  Part  becoming  incorporated  or  installed  in or  attached to the
Aircraft or any Engine as above provided,  without further act, (i) title to the
replaced Part shall  thereupon vest in Sublessee,  free and clear of Sublessor's
Liens and all rights of Sublessor,  Agent and the Lenders and shall no longer be
deemed a Part hereunder provided,  however, that in the case of any Part that is
replaced by a replacement Part subject to a pooling  arrangement,  title to such
replaced Part shall not vest in Sublessee  until Sublessee has complied with the
provisions of Section 6(d),  (ii) title to such  replacement  Part shall vest in
Sublessor  and such  replacement  Part shall  thereupon  become  subject to this
Sublease  (subject  only to a pooling  arrangement  to the extent  permitted  by
Section  6(d)) and  (iii)  such  replacement  Part  shall be deemed  part of the
Aircraft or such Engine for all purposes  hereof to the same extent as the Parts
originally  incorporated  or  installed  in or attached to the  Aircraft or such
Engine.

         Notwithstanding  the provisions of this Section 6(c),  provided that no
Event of Default  has  occurred  and is  continuing,  Sublessee  may install any
engine or part on the Aircraft by way of temporary  replacement if: (i) there is
not  available  to Sublessee at the time and in the place that an engine or part
is required to be installed on the  Aircraft,  a  Replacement  Engine or, as the
case may be, Part complying with the requirements of Section 6(c); (ii) it would
result in an unreasonable disruption of the operation of the Aircraft and/or the
business of  Sublessee to ground the  Aircraft  until an Engine or Part,  as the
case may be,  complying with Section 6(c) becomes  available for installation on
the Aircraft; and (iii) as soon as practicable after installation of the same on
the  Aircraft  but,  in any  event,  no later  than  the date of the next  major
maintenance  check  (except  as such time may be  extended  pursuant  to Section
8(b)),  Sublessee removes any such engine or part and replaces it with an Engine
or Part, as the case may be, complying with Section 6(c).

         (d) Pooling of Parts.  Any Part (other than  Engines)  removed from the
Aircraft as provided in Section 6(c) may be


                                      -23-

<PAGE>



subjected by Sublessee to a normal pooling arrangement  customary in the airline
industry  entered  into in the  ordinary  course of  Sublessee's  business  with
financially and operationally  responsible air carriers;  provided no Default of
Event of Default shall have occurred and be continuing and further provided that
the Part  replacing such removed Part shall be  incorporated  or installed in or
attached to the  Aircraft in  accordance  with Section 6(c) after the removal of
such removed  Part.  In addition,  any  replacement  Part when  incorporated  or
installed in or attached to the Aircraft in accordance  with Section 6(c) may be
owned by a financially and operationally responsible air carrier subject to such
a normal pooling arrangement;  provided that Sublessee,  at its expense,  either
(i)  causes  such  replacement  Part  to  become  subject  to this  Sublease  in
accordance  with  Section  6(c) by  Sublessee  acquiring  title  thereto for the
benefit of Sublessor free and clear of all Liens other than  Permitted  Liens or
(ii)  replaces  such  replacement  Part by  incorporating  or  installing  in or
attaching to the Aircraft a further replacement Part owned by Sublessee free and
clear of all Liens  other  than  Permitted  Liens and by  causing  such  further
replacement Part to become subject hereto in accordance with Section 6(c).

         (e)  Alterations,   Modifications   and  Additions.   EXCEPT  FOR  SUCH
ALTERNATIONS  AND  MODIFICATIONS  TO THE  AIRCRAFT  AND  THE  ENGINES  AS MAY BE
REQUIRED  FROM  TIME  TO  TIME  TO  MEET  THE  STANDARDS  OF THE  FAA  OR  OTHER
GOVERNMENTAL   ENTITY  HAVING   JURISDICTION  AND  AS  REQUIRED  TO  CONFORM  TO
MANUFACTURERS' MANDATORY SERVICE BULLETINS, SUBLESSEE SHALL MAKE NO ALTERATIONS,
MODIFICATIONS  OR  ADDITIONS  TO THE  AIRCRAFT  OR ANY ENGINE  WITHOUT THE PRIOR
WRITTEN  CONSENT OF  SUBLESSOR.  Sublessee,  at its own expense,  will make such
alterations and modifications to the Aircraft and the Engines as may be required
from time to time to meet the standards of the FAA or other Governmental  Entity
having  jurisdiction  and as  required  to conform to  Manufacturers'  mandatory
service  bulletins,  and shall  notify  Sublessor of the nature and schedule for
making such changes and,  upon  submission  of the Monthly  Report for the month
during which competition of the same shall have occurred, of completion thereof.
Unless  expressly  required  by the  FAA  or  Manufacturer's  mandatory  service
bulletins,  no alteration,  modification or addition shall diminish the value or
utility of the Aircraft or such Engine, or impair the condition or airworthiness
thereof,   below  the  value,  utility,   condition  and  airworthiness  thereof
immediately  prior to such  alteration,  modification or addition  (assuming the
Aircraft or such  Engine was then of the value or utility  and in the  condition
and airworthiness  required to be maintained by the terms of this Sublease),  it
being  understood  that any  such  alteration,  modification  or  addition  that
adversely  affects  interchangeability  of Parts shall be deemed to diminish the
value of the Aircraft.  Promptly upon request therefor,  Sublessee shall provide
to  Sublessor  copies of all  drawings  and data with  respect  to any  proposed
alteration,  modification  or addition  not mandated by the FAA.  Sublessor  may
impose as a condition to its consent


                                      -24-

<PAGE>



to all or any part of such proposed  alteration,  modification or addition that,
prior to the return of the Aircraft to Sublessor in accordance  with Section 10,
such alteration,  modification or addition be removed and the Aircraft returned,
all at Sublessee's expense, to the condition it was in prior to such alteration,
modification  or  addition,  and  otherwise as required by Section 10. All parts
incorporated or installed in or attached or added to the Aircraft or such Engine
as the  result of such  alteration,  modification  or  addition  shall,  without
further act,  become  subject to this  Sublease.  Notwithstanding  the foregoing
sentence of this Section  6(e),  so long as no Default or Event of Default shall
have occurred and be  continuing,  Sublessee may remove any Part;  provided that
(i) such Part is in addition to, and not in replacement of or substitution  for,
any Part originally  incorporated or installed in or attached to the Aircraft or
any engine at the time of delivery thereof  hereunder or any Part in replacement
of, or  substitution  for any such Part,  (ii) such Part is not  required  to be
incorporated or installed in or attached or added to the Aircraft or such Engine
pursuant  to the terms of this  Section  6(e) and (iii) such Part can be removed
from the Aircraft or such Engine  without  diminishing  or impairing  the value,
utility,  condition or  airworthiness  required to be maintained by the terms of
this  Sublease  that the Aircraft or such Engine would have had at such time had
such  removal not  occurred.  Upon the removal by Sublessee of any Part as above
provided,  title thereto shall,  without further act, vest in Sublessee and such
Part shall no longer be deemed part of the Aircraft or such Engine from which it
was  removed.  Any Part  removed by  Sublessee in any manner other than as above
provided  prior to the  return  of the  Aircraft  or such  Engine  to  Sublessor
hereunder shall remain the property of Sublessor.

         Notwithstanding  anything  herein to the contrary,  Sublessee  shall be
permitted  to install and remove,  at its sole cost and  expense,  new  galleys,
seats, video and entertainment  systems and telephones,  provided that Sublessee
shall store any galleys and video, entertainment and telephone systems currently
installed on the Aircraft and removed  therefrom by Sublessee,  in a safe manner
and at its sole cost and  expense  and,  provided,  except as  otherwise  agreed
between  Sublessee and  Sublessor,  that any such  equipment  installed upon the
Aircraft by  Sublessee  is removed by Sublessee at its sole cost and expense and
Sublessee shall return the Aircraft with the Sublessor's  equipment  reinstalled
thereon or, if lost or damaged,  with the equivalent  thereof,  satisfactory  to
Sublessor, and further provided that Sublessee shall repair at its sole cost and
expense and to Sublessor's reasonable  satisfaction,  any damage to the Aircraft
caused by or in connection with such installation and removal.

         Section 7.          Title and Registration; Liens; Possession.

         (a) Title and Registration.  Sublessee  acknowledges and agrees that as
between  Sublessee and Sublessor,  title shall at all times be and remain vested
solely and exclusively in Lessor,


                                      -25-

<PAGE>



and Sublessee shall have no right,  title or interest in the Aircraft except the
right to use the  Aircraft  as  provided  herein.  The  Aircraft  has been  duly
registered,  and  shall at all  times  during  the  Sublease  Term  remain  duly
registered, in the name of Lessor under the laws of the United States, except as
otherwise required by the Federal Aviation Act. Sublessee,  at its sole cost and
expense,  shall  from  time to time do or  cause to be done any and all acts and
things then required by law  (including the Geneva  Convention on  International
Recognition  of Rights in Aircraft,  if  applicable)  or by practice,  custom or
understanding  or as Sublessor may reasonably  request to protect,  preserve and
perfect Sublessor's,  Lessor's, Agent's and any Lender's rights and interests in
the  Aircraft,  the Lease and this Sublease in the United States or in any other
jurisdiction  into or over which  Sublessee may operate the Aircraft or to which
Sublessee is subject.  Without  limiting the generality of the foregoing,  if at
any time any filing or recording  is necessary or advisable to perfect,  protect
and/or  preserve the rights and  interests of  Sublessor,  Lessor,  Agent or any
Lender  in the  Aircraft  (including  Engines  and  Parts),  the  Lease  or this
Sublease, Sublessee shall, at its own cost and expense, cause this Sublease, the
Lease,  financing  statements  with respect  hereto or thereto,  and any and all
additional  documents  or  instruments  which shall be executed  pursuant to the
terms  hereof or thereof,  so far as permitted  by  applicable  law, to be kept,
filed and recorded and to be reexecuted,  refiled and rerecorded at all times in
the  appropriate  offices  pursuant or in relation  to the  applicable  laws and
regulations of the United  States,  and shall furnish to Sublessor an opinion of
counsel and/or other evidence  satisfactory to Sublessor of such  registrations,
recordation and filings required hereunder.

         (b) Liens.  Sublessee  will not directly or indirectly  create,  incur,
assume or suffer to exist any Lien on or with  respect  to the  Airframe  or any
Engine, title thereto or any Part or interest therein or in this Sublease except
(i) the respective  rights of Sublessor and Sublessee as herein  provided,  (ii)
the rights of others under  agreements or arrangements  to the extent  expressly
permitted by the terms of Sections 6(d), (iii) Sublessor  Liens,  (iv) Liens for
Taxes either not yet due or being  contested  in good faith (and,  in respect of
such contest,  for the payment of which adequate reserves have been provided) by
appropriate  proceedings  diligently  pursued so long as such proceedings do not
involve any material  danger of the sale,  forfeiture or loss of the Airframe or
any  Engine  or Part or  interest  therein  and (v)  materialmen's,  mechanics',
workmen's,  repairmen's,  employees' or other like Liens arising in the ordinary
course of business for amounts the payment of which is either not yet delinquent
or is being  contested in good faith (and, in respect of such  contest,  for the
payment of which adequate  reserves or other adequate  provisions for payment by
way of security or otherwise,  have been  provided) by  appropriate  proceedings
diligently  pursued so long as such proceedings do not involve any danger of the
sale, forfeiture or loss of the


                                      -26-

<PAGE>



Airframe or any Engine or Part or interest  therein (each of the Liens  referred
to in  clauses  (i) to (v)  being  herein  referred  to as  "Permitted  Liens").
Sublessee will notify,  as soon as reasonably  practicable,  Sublessor and shall
promptly,  at its sole cost and expense, take such action as may be necessary to
discharge any such lien not excepted  above if the same shall arise at any time.
Sublessee  hereby  further  agrees that no  mechanics'  or similar  Lien for any
labor, services or materials supplied directly by Sublessee,  shall attach to or
otherwise  affect  the  Aircraft,  any Engine or any Part and  Sublessee  hereby
irrevocably waives disclaims and releases any such Lien.

         (c) Operation,  Quiet Enjoyment.  Sublessee shall not operate or locate
the Aircraft, or suffer the Aircraft to be operated or located, (i) in violation
of any applicable law or the Aircraft's certificate of airworthiness, (ii) other
than on regularly  scheduled or charter  commercial  passenger or cargo  flights
between any points in the Americas  except  (inclusive  of any landings) in Cuba
except  if  otherwise  required  to ferry the  Aircraft  to an  Approved  Repair
Facility,  (iii) in any area excluded from coverage by any insurance required by
the  terms  of  Section  9, or  (iv) in any  recognized  or  threatened  area of
hostility  without  Sublessor's  written  consent  and unless  fully  covered to
Sublessor's  satisfaction  by war risk,  confiscation  and hijacking  insurance.
Sublessee  shall not use the  Aircraft  for  testing or for  training  of flight
crewmembers other than Sublessee's own crewmembers. Except as otherwise provided
herein,  Sublessee shall pay all costs incurred in the operation of the Aircraft
during the Sublease Term, for profit or otherwise, including the costs of flight
crews, cabin personnel, fuel, oil, lubricants,  maintenance, insurance, storage,
landing and navigation fees, airport charges,  passenger service and any and all
other expenses of any kind or nature, directly or indirectly, in connection with
or related to the use,  movement  and  operation  of the  Aircraft.  Provided no
Default or Event of Default shall occur and be continuing,  Sublessor  shall not
take or cause or permit to be taken any  action  inconsistent  with  Sublessee's
right of quiet enjoyment of, or otherwise in any way interfere with or interrupt
the continuing  use,  operation and possession of the Aircraft,  the Airframe or
any Engine by Sublessee.

         (d)  Possession.  EXCEPT AS OTHERWISE  PROVIDED IN THIS  SECTION  7(d),
SUBLESSEE SHALL HAVE NO RIGHT  WHATSOEVER TO SUBLEASE THE AIRCRAFT OR ANY ENGINE
TO ANY PERSON  WITHOUT HAVING  OBTAINED THE PRIOR WRITTEN  CONSENT OF SUBLESSOR,
LESSOR AND AGENT.  Sublessor agrees that it will not  unreasonably  withhold its
consent to a proposed  sublease by  Sublessee.  In addition and  notwithstanding
anything in this  Sublease  to the  contrary,  Sublessee  will not in any manner
without  Sublessor's  prior  written  consent  deliver,  transfer or  relinquish
possession of the Aircraft, the Airframe or any Engine or install any Engine, or
permit any Engine to be  installed,  on any  airframe  other than the  Airframe;
provided, that, so long as no Default or Event of


                                      -27-

<PAGE>



Default shall have occurred and be  continuing,  and so long as the action to be
taken shall not deprive  Lessor of its interest in the Aircraft or Lender of the
perfected first priority Lien of the Mortgage, Sublessee may, from time to time,
take any of the following actions:

                  (i) deliver  possession  of the  Airframe or any Engine to the
         manufacturer  thereof  or to any  organization  for  testing,  service,
         repair,  maintenance  or overhaul work on the Airframe or any Engine or
         any Part of any  thereof  or for  alterations  or  modifications  in or
         additions  to such  Airframe  or any Engine to the extent  required  or
         permitted by the terms of Section 6(c); or

                  (ii) to the extent permitted by this Section 7(d), subject any
         appliances,  parts or other  equipment owned by Lessor and removed from
         the  Airframe or any Engine to any pooling  arrangement  referred to in
         Section 6(d) of the Sublease; or

                  (iii)  install the Engines on any airframe  owned or leased by
         Sublessee;  provided  that,  no lien shall attach to any such Engine by
         virtue of or in  connection  with  such  installation,  and the  owner,
         lessor,  or any party having a security  interest in any such  airframe
         grants reciprocal rights to Sublessor,  Lessor and Lender;  and further
         provided that,  Sublessee shall maintain any and all insurance required
         to be  maintained  upon or in respect of the Engines  hereunder  at all
         times during the Sublease Term and until  redelivery of the same in the
         conditions required in Section 10 hereof; or

                  (iv) transfer  possession of the Airframe or any Engine to any
         Government  Entity of the United States pursuant to a sublease,  a copy
         of which shall be promptly  furnished to Sublessor,  provided that such
         sublease  shall (A) not extend  beyond the end of the Sublease Term and
         (B) Lessee shall have delivered to Sublessor  signed copies of a notice
         of  assignment  of such  sublease in favor of Sublessor and each of the
         Lenders  under the  Assignment  of Claims Act of 1940,  as amended  (31
         U.S.C.  Section  3727,  41 U.S.C.  Section  15) or any  superseding  or
         successor  provisions  thereto,  and in compliance  with the applicable
         provisions of 32 C.F.R.  Section 7-103.8 and 41 C.F.R.  Section 1-30.7,
         or superseding or successor laws and regulations,  and Sublessor may at
         any time when a Default or Event of Default  shall  have  occurred  and
         then be continuing, file such sublease and an original and three copies
         of such notice of assignment with the proper contracting and disbursing
         officers and  otherwise  comply with all  applicable  provisions  of 32
         C.F.R.  Section  7-103.8 or any  superseding  or  successor  provisions
         thereto.

         Any "wet lease" or other  similar  arrangement  under  which  Sublessee
maintains operational control of, and continues to


                                      -28-

<PAGE>



maintain and insure the Aircraft,  for a term not  exceeding  twelve (12) months
(including  all  extensions  and  renewals),  shall not  constitute  a sublease,
transfer or  relinquishment  of  possession  for purposes of this Section  7(d).
Sublessee shall notify Sublessor concurrently with entering into any "wet lease"
with a term, including renewals of more than six (6) months.

         No sublease,  transfer or  relinquishment of possession of the Airframe
or any Engine  permitted  under this Section 7(d) shall in any way  discharge or
diminish any of Sublessee's obligations hereunder, or constitute a waiver of any
of  Sublessor's  rights and remedies  hereunder.  Notwithstanding  any sublease,
transfer or  relinquishment  of  possession  permitted  under this Section 7(d),
Sublessee shall remain  primarily liable hereunder for the performance of all of
the  terms of this  Sublease  to the same  extent  as if any  such  transfer  or
relinquishment of possession had not occurred.

         (e) Identification  Plates.  Sublessee shall at all times maintain in a
prominent  position  in the  cockpit  of the  Airframe  and on each  Engine  the
identification  plates installed  thereon or attached  thereto.  Sublessee shall
promptly replace any such  identification  plate that becomes  illegible,  lost,
damaged or destroyed for any reason.

         (f) Reporting Requirements.  Commencing with a report furnished fifteen
(15)  days  after  the  end of the  calendar  month  of the  Commencement  Date,
Sublessee will furnish to Sublessor a Monthly Report in the form attached hereto
as Exhibit G, which  report will include (i) the  hours/cycles  operated for the
Airframe and each of the Engines (and their location by airframe). On at least a
quarterly  basis  Sublessee's  report will also contain a list of those  service
bulletins, ADs and engineering modifications  incorporated on the Aircraft. Each
Monthly Report will be furnished  within fifteen (15) days after the end of each
calendar month,  except that the Monthly Report pertaining to the last month (or
any portion  thereof) of the  Sublease  Term will be  furnished to Lessor on the
last day of the Sublease Term.

         (g)  Inspections.  During the Sublease  Term  Sublessee  shall  furnish
Sublessor such information concerning the location, condition, use and operation
of the  Aircraft as  Sublessor  may  reasonably  request.  Sublessee  shall give
Sublessor  reasonable  prior  notice  of  the  anticipated  date  of  any  major
maintenance checks, in order to enable Sublessor to inspect the Aircraft (should
it choose to do so) at the time and place such  major  checks  occur.  Sublessor
shall be entitled to have its technical representatives present during any major
maintenance checks. On reasonable notice, Sublessor and/or its authorized agents
or  representatives  shall have the right to inspect the  Aircraft  and Aircraft
documentation  (whether in connection with scheduled major maintenance checks or
otherwise) and/or make copies of the Aircraft documentation; provided, that such
inspections do not


                                      -29-

<PAGE>



unreasonably  disrupt  Sublessee's  commercial  operations  or  operation of the
Aircraft. Sublessor shall have no duty to make any such inspection and shall not
incur any  liability  or  obligation  by reason of making or not making any such
inspection or by reason of any reports it receives or any reviews it may make of
the Aircraft records.

         Section 8.          Loss,  Destruction,  Requisition,  etc.  During the
Sublease Term except as otherwise expressly   provided herein,  Sublessee  shall
bear the entire risk of loss of or damage to the
Aircraft.  Accordingly:

         (a) Event of Loss with Respect to the Aircraft.  Upon the occurrence of
an Event of Loss with respect to the Aircraft,  Sublessee  shall forthwith (and,
in any  event,  within  seven (7) days  after such  occurrence)  give  Sublessor
written  notice of such Event of Loss.  On or before the earlier to occur of (x)
the actual  receipt by  Sublessee of any  insurance  proceeds in respect of such
Event of Loss and (y) the one  hundred  twentieth  (120th) day after the date of
such Event of Loss, but in no case later than the last day of the Sublease Term,
Sublessee shall pay to Agent in immediately  available funds the Stipulated Loss
Value,  whereupon (1) the obligation of Sublessee to pay Basic Rent with respect
to the  Aircraft  for any  period  commencing  after the date of payment of such
Stipulated  Loss Value shall  terminate;  provided  the  Sublessee  shall remain
liable for all  payments of Basic Rent due on or before the date of such payment
of Stipulated  Loss Value,  (2) the Sublease  Term shall end and (3)  Sublessor,
after  compliance  by  Sublessee  with all of its other  obligations  hereunder,
including without  limitation  payment of Supplemental Rent then due, will cause
Lessor to transfer to  Sublessee,  without  recourse or  warranty,  title to the
Aircraft free and clear of Sublessor  Liens and shall cause Agent to execute and
deliver to Sublessee an appropriate  instrument  releasing the Aircraft from the
Lien of the Mortgage.

         (b) Event of Loss with Respect to an Engine.  Upon the occurrence of an
Event of Loss with respect to an Engine  only,  Sublessee  shall give  Sublessor
prompt written  notice thereof and shall,  as soon as practical but in any event
within one hundred twenty (120) days after the occurrence of such Event of Loss,
convey or cause to be conveyed  to Lessor,  as  replacement  for the Engine with
respect to which such Event of Loss occurred, title to a Replacement Engine free
and clear of all Liens, other than Permitted Liens, and having a value, utility,
mod  status  at least  equal  to,  and of the same or  improved  model,  service
bulletin  status,  and  maintenance  status  (i.e.,  total  time,   hours/cycles
remaining until next inspection,  overhaul or scheduled removal) and in at least
as good  operating  condition as, the Engine with respect to which such Event of
Loss occurred, assuming such Engine was of the value, utility and remaining life
and in the condition and repair required by the terms hereof  immediately  prior
to the  occurrence  of such  Event of Loss.  Prior to or at the time of any such
conveyance, Sublessee, at its own expense,


                                      -30-

<PAGE>



will  promptly  (i) furnish  Lessor with a bill of sale,  in form and  substance
satisfactory to Lessor,  with respect to such Replacement  Engine;  (ii) cause a
supplement hereto, in form and substance  reasonably  satisfactory to Sublessor,
subjecting  such  Replacement  Engine to this  Sublease,  to be duly executed by
Sublessee,  and recorded  pursuant to the Federal  Aviation  Act;  (iii) furnish
Sublessor,  Lessor and Agent  with such  evidence  of title to such  Replacement
Engine and of compliance with the insurance provisions of Section 9 with respect
to such  Replacement  Engine  as  either of them may  reasonably  request;  (iv)
furnish  Sublessor,  Lessor and Agent with an opinion of Sublessee's  counsel to
the effect  that title to such  Replacement  Engine  has been duly  conveyed  to
Lessor free and clear of all Liens,  encumbrances  and rights of others  (except
Permitted  Liens) and is duly leased  hereunder;  (v) furnish  Sublessor  with a
certificate  signed by a duly  authorized  financial  officer  or  executive  of
Sublessee  certifying that Sublessee's  representations and warranties set forth
in Section 11 are true and accurate on and as of said date as though made on and
as of said date and that upon  consummation of such  replacement,  no Default or
Event of  Default  will  exist  hereunder;  (vi)  furnish  Sublessor  with  such
documents  and  evidence  with  respect to  Sublessee as Sublessor or Lessor may
reasonably  request in order to establish the  consummation of the  transactions
contemplated  by this Section 8(b),  the taking of all corporate  proceedings in
connection  therewith  and  compliance  with the  conditions  set  forth in this
Section  8(b), in each case in form and  substance  satisfactory  to such party;
(vii) furnish  Sublessor  with a  certificate  of a duly  authorized  officer of
Sublessee to the effect that no Event of Default has occurred and is continuing;
and (viii) furnish Sublessor with Uniform  Commercial Code financing  statements
covering such  Replacement  Engine.  Upon full  compliance by Sublessee with the
terms of this  subparagraph  (b),  such Engine shall no longer be subject to the
terms of this Sublease and Sublessor  will cause Lessor to transfer to Sublessee
title to the Engine with  respect to which the Event of Loss  occurred,  without
recourse  or  warranty  (except  that the Engine is free and clear of  Sublessor
Liens) and shall cause Agent and Lessor to execute and deliver to  Sublessee  an
instrument releasing the Engine from the Lien of the Mortgage and the Lease. For
all purposes hereof,  each such  Replacement  Engine shall be deemed part of the
property  leased  hereunder,  shall be deemed an "Engine" as defined  herein and
shall be deemed part of the  Aircraft  as was the Engine  replaced  thereby.  No
Event of Loss  covered by this  Section  8(b) shall  result in any  reduction in
Basic Rent.  Notwithstanding the foregoing,  if, as of the one hundred twentieth
(120th) day following the occurrence of the Event of Loss,  Sublessee  shall not
have furnished a Replacement  Engine as required hereunder and conforming to the
requirements  set forth above, at Sublessor's  option (i) Sublessor shall extend
the time period within which  Sublessee may perform its obligations to furnish a
Replacement  Engine  hereunder,  or,  (ii)  Sublessee  shall  forthwith  pay  to
Sublessor,  an amount  equal to the Engine  Loss Value and upon  receipt of such
payment Sublessor


                                      -31-

<PAGE>



shall,  as soon as  practicable  but in any event  prior to the end of  Sublease
Term,  convey or cause to be conveyed to Lessor,  and to be leased to  Sublessor
and subleased to Sublessee  hereunder,  a Replacement  Engine complying with the
conditions of this Section 8(b).  Notwithstanding the provisions of Section 6(c)
hereof any engine  installed by Sublessee on the Aircraft  following an Event of
Loss to an Engine may remain thereon until  replaced by a Replacement  Engine as
hereinafter provided.

         (c) Application of Payments from Governmental Authorities. Any payments
(other than  insurance  proceeds  the  application  of which is provided  for in
Section 9) received at any time by Sublessor or by Sublessee from any Government
Entity or other  Person  with  respect  to an Event of Loss  resulting  from the
condemnation,  confiscation,  theft or seizure of, or requisition of title to or
use of,  the  Aircraft  or any  Engine,  other than a  requisition  for use by a
Government  Entity of the United States not  constituting an Event of Loss, will
be applied as follows:

                  (i) if such payments are received with respect to the Airframe
         or the  Airframe  and one or more  Engines or engines  installed on the
         Airframe,  such payment  shall be paid to or retained by Sublessor  and
         applied in reduction of  Sublessee's  obligation to pay the  Stipulated
         Loss Value,  if not already paid by  Sublessee,  or, if already paid by
         Sublessee,  shall be paid to or  retained by  Sublessee  and applied to
         reimburse  Sublessee for its payment of such Stipulated Loss Value, and
         the balance,  if any, of such  payment  remaining  thereafter  shall be
         distributed to Sublessee; and

                  (ii) if such  payments are received with respect to an Engine,
         such payments shall be held by the Sublessor  until (A)  replacement of
         the  Engine by  Sublessee  by a  Replacement  Engine at which time said
         payments  shall  be paid to  Sublessee;  (B) if  Sublessor  shall  have
         elected to provide a  Replacement  Engine as provided  in Section  9(b)
         said payments shall be applied in reduction of  Sublessee's  obligation
         to pay the Engine Loss Value,  if not already paid by Sublessee;  or if
         already paid by  Sublessee,  shall be paid to Sublessee  and applied to
         reimburse Sublessee for its payment of such Engine Loss Value; and, (C)
         the balance, if any, of such payment remaining thereafter to Sublessee.

         (d) Requisition of Use of the Aircraft. In the event of the requisition
for use of the Aircraft by a Government  Entity of the United  States and one or
more related Engines or engines during the Sublease Term under circumstances not
constituting an Event of Loss, Sublessee shall promptly notify Sublessor of such
requisition.  All of Sublessee's obligations under this Sublease with respect to
such Aircraft including,  but not limited to Sublessee's obligation to pay Rent,
shall continue to the same extent as if such  requisition  had not occurred.  In
the event of a breach of Sublessee's obligations pursuant to this Section


                                      -32-

<PAGE>



8(d),  all payments  received by Sublessor  or  Sublessee  from such  Government
Entity for the use of such  Aircraft  and Engines or engines  shall be paid over
to, or retained by,  Sublessor to the extent of  Sublessee's  obligations  under
this Sublease.

         (e) Quiet Enjoyment.  Notwithstanding the provisions of this Section 8,
if (i) Sublessee has been deprived of both use and possession of the Aircraft or
any Engine or Part thereof  solely as a result of the breach by Sublessor of its
covenant  of quiet  enjoyment  set forth  herein and (ii)  Sublessee  shall have
provided Sublessor written notice to the effect that Sublessee has been deprived
of such use and possession  and that  Sublessee  intends to cancel its insurance
with respect to the  Aircraft or any such Engine or Part on a date  specified in
such  notice  (which  date shall not be earlier  than thirty (30) days after the
date of Sublessor's  receipt of such notice),  then,  from and after the date so
specified,  but only  during the period  that  Sublessee  shall  continue  to be
deprived of both use and  possession of the Aircraft or such Engine or Part (the
"Suspension Period"), (A) Sublessor shall bear the entire risk of loss or damage
thereof  (other than loss or damage  caused by an act or  omission of  Sublessee
during the  Suspension  Period),  and (B)  Sublessee  shall be  relieved  of its
obligation to maintain insurance, as set forth in Section 9 hereof, with respect
thereto.  In the  event  of an  Event of Loss of the  Aircraft  during  any such
period, the Sublease shall terminate and, upon such termination (i) the Aircraft
shall be deemed to have been redelivered to Sublessor in the condition  required
as of the date on which such  deprivation of use or possession  first  occurred,
(ii) Sublessee  shall be relieved of all further  obligations  hereunder  except
such as are  expressly  stated to survive the  termination  of this Sublease and
(iii) Sublessor,  shall, return the Security Deposit to Sublessor as provided in
Section  3. In the  event of an Event of Loss  with  respect  to an  Engine  not
involving an Event of Loss with respect to the Airframe  during any such period,
Sublessor shall at its sole cost and expense,  as soon as practicable but in any
event  within  120  days  after  the  date of such  Event  of  Loss,  provide  a
Replacement  Engine  complying  with all terms of this  Sublease and meeting all
conditions  otherwise imposed hereunder on Sublessee in the event of an Event of
Loss with respect to an Engine.  Immediately  upon Sublessee  being restored use
and  possession  of the Aircraft or any Engine or Part with respect to which the
risk of loss shall have passed from  Sublessee to Sublessor in  accordance  with
this  Section  8(e),  the entire  risk of loss  thereof  shall again be borne by
Sublessee in accordance with the terms of this Sublease.

         Section 9.  Insurance.  Except as  otherwise  set forth in Section 8(e)
hereof in  respect of any  Suspension  Period,  Sublessee,  at its sole cost and
expense,  shall maintain or cause to be maintained  throughout the Sublease Term
and until the  return of the  Aircraft  to  Sublessor  in such  condition  as is
required under Section 10 hereof with insurers of recognized  responsibility and
good repute and under policies reasonably


                                      -33-

<PAGE>



satisfactory  to Sublessor all such  insurance as is required to be procured and
maintained pursuant to this Section 9. Such insurance shall include:

         (a)  Liability.   Public  liability  (including,   without  limitation,
aircraft third-party,  baggage, cargo, contractual and passenger legal liability
including war risks),  property damage  liability  insurance with respect to the
Aircraft and general  airline third party legal  liability  (including  products
liability insurance) with insurers of recognized  responsibility and good repute
specializing in aviation insurance in the leading international markets, in form
satisfactory  to  Sublessor  and Lender  and in  amounts  at least  equal to the
greater  of  (a)  Three  Hundred  Fifty  Million  Dollars  (US$350,000,000)  per
occurrence  subject to no deductible except  deductibles as to baggage and cargo
that are  standard in the airline  industry in respect of carriers  operating in
the countries in which  Sublessee  operates and (b) the amount of such insurance
carried by Sublessee applicable to other aircraft of similar type in Sublessee's
fleet.

         (b) Other  Insurance.  

                  (i)  all-risk  (including,   without  limitation,  ground  and
         flight)  aircraft  hull  insurance  with  respect to the Aircraft in an
         amount  which  shall not at any time while the  Aircraft  is subject to
         this Sublease be less than Stipulated Loss Value;

                  (ii) hull war-risk  insurance  with respect to the Aircraft in
         an amount which shall not be less than the Stipulated Loss Value of the
         Aircraft; provided, further, however, that such insurance shall include
         but not be limited  to,  coverage  against (1) war,  invasion,  acts of
         foreign  enemies,  hostilities  (whether war be declared or not), civil
         war,  rebellion,  revolution,  insurrection,  martial law,  military or
         usurped power or attempts at usurpation of power,  (2) strikes,  riots,
         civil  commotions  or  labor  disturbances,  (3) any act of one or more
         persons,  whether or not agents of a sovereign  power, for political or
         terrorist  purposes and whether the loss or damage resulting  therefrom
         is accidental or intentional, (4) any malicious act or act of sabotage,
         (5)  confiscation,   nationalization,  seizure,  restraint,  detention,
         appropriation,  requisition of title or use (other than requisition for
         use by a Government  Entity of the United States) by or under the order
         of any government  (whether civil,  military or de facto) or any public
         or  local  authority  and (6)  hijacking  or any  unlawful  seizure  or
         wrongful  exercise  of  control  of the  Aircraft  or  crew  in  flight
         (including  any attempt at such seizure or control)  made by any person
         or  persons  on board  the  Aircraft  acting  without  the  consent  of
         Sublessee;

                  (iii) All-risk (including,  without limitation,  fire, transit
         and extended  coverage)  insurance,  and war-risk insurance of the type
         specified in Section 9(b)(ii) to the extent available,  with respect to
         each Engine when not installed on the


                                      -34-

<PAGE>



Airframe in an amount not less than the Engine Loss Value of such Engine;

                  (iv) such other  insurance as Sublessee  carries in respect of
         other similar aircraft in its fleet.

         Notwithstanding anything in the foregoing to the contrary, no insurance
shall have a deductible in excess of $750,000.

         (c)      Terms of Insurance.

                  (i) Without limiting any of Sublessee's obligations hereunder,
         any policies  carried in accordance  with Section 9(a) of this Sublease
         covering  the  Aircraft or the Engines  and any  policies  taken out in
         substitution or replacement for any such policies shall:

                                    (A)  insure  the  interests  of, and name as
                  additional   insureds,   each  Indemnitee   (the   "Additional
                  Insureds")  and provide that the  Additional  Insureds bear no
                  liability for the payment of premiums;

                                    (B) provide that if the insurers cancel such
                  insurance for any reason  whatever,  or the same is allowed to
                  lapse  for   nonpayment  of  premium,   or  if  there  is  any
                  alteration, termination, or cancellation (whether by Sublessee
                  or any other Person and for whatever reason) of the insurance,
                  such   cancellation,   lapse,   alteration,   termination   or
                  cancellation  shall  not be  effective  as to  the  Additional
                  Insureds  for  thirty  (30)  days  (with  respect  to war risk
                  insurance  seven  (7) days or the  maximum  shorter  or longer
                  period available in the market for any portion of the required
                  war risk coverage) after receipt by such  Additional  Insureds
                  of notice from such insurers thereof;

                                    (C) provide  that in respect of the interest
                  of  Sublessor  and  each  other  Additional  Insured  in  such
                  policies,  such  insurance  shall  not be  invalidated  by any
                  action or inaction of  Sublessee or any other Person and shall
                  insure  Sublessor's  and the Additional  Insureds'  interests,
                  regardless  of any breach or  violation  by  Sublessee  or any
                  other  Person of any  warranties  declarations  or  conditions
                  contained in such policies;

                                    (D) Shall  contain a waiver by the  insurers
                  of (i) all rights of  subrogation  against  any and all of the
                  Additional   Insureds   and  (ii)  any   rights  of   set-off,
                  counterclaim or any other deductions  whether by attachment or
                  otherwise, which they may have against any Additional Insured;



                                      -35-

<PAGE>



                                    (E) shall by primary  and  without  right of
                  contribution  from any other  insurance  carried by any of the
                  Additional  Insureds,  and shall expressly provide that all of
                  the  provisions  provide  that all of the  provisions  thereof
                  (except limits of liability)  shall operate in the same manner
                  as if there were a separate  policy  covering each  Additional
                  Insured; and

                                    (F) shall,  with respect to hull risk,  hull
                  war  risk and  allied  perils  insurance,  include  a  50%-50%
                  provision.

                  (ii) Any policies  carried in accordance  with Section 9(b) of
         this  Sublease  covering  the  Aircraft or the Engines and any policies
         taken out in substitution or replacement for any such policies shall:

                                    (A)  insure  the  interests  of, and name as
                  additional   insureds,   each  Indemnitee   (the   "Additional
                  Insureds")  and provide that the  Additional  Insureds bear no
                  liability for the payment of premiums;

                                    (B) during any time period  during which the
                  Mortgage shall remain in effect, be made payable in the United
                  States to the extent of the Stipulated  Loss Value to Agent as
                  sole "loss  payee"  and  thereafter  to Lessor,  as sole "loss
                  payee"  (except that  proceeds with respect to partial loss or
                  damage of less than $750,000 to Sublessee  subject to the last
                  sentence of Section 9(d));

                                    (C) provide that if the insurers cancel such
                  insurance for any reason  whatever,  or the same is allowed to
                  lapse  for   nonpayment  of  premium,   or  if  there  is  any
                  alteration,  termination or cancellation (whether by Sublessee
                  or any other Person and for whatever reason) of the insurance,
                  such   cancellation,   lapse,   alteration,   termination   or
                  cancellation  shall  not be  effective  as to  the  Additional
                  Insureds  for  thirty  (30)  days  (with  respect  to war risk
                  insurance  seven  (7) days or the  maximum  shorter  or longer
                  period available in the market for any portion of the required
                  war risk coverage) after receipt by such  Additional  Insureds
                  of notice from such insurers thereof;

                                    (D) provide  that in respect of the interest
                  of  Sublessor  and  each  other  Additional  Insured  in  such
                  policies,  such  insurance  shall  not be  invalidated  by any
                  action or inaction of  Sublessee or any other Person and shall
                  insure  Sublessor's  and the Additional  Insureds'  interests,
                  regardless  of any breach or  violation  by  Sublessee  or any
                  other  Person  of any  warranties  declaration  or  conditions
                  contained in such policies;


                                      -36-

<PAGE>




                                    (E)     shall   contain   a  waiver  by  the
                  insurers of all rights of  subrogation  against any and all of
                  the Additional Insureds; and

                                    (F)     shall be primary and  without  right
                  of contribution form any of the Additional Insureds; and

                  (iii) All amounts payable under policies carried in accordance
         with this  Section  9 shall be paid in  immediately  available,  freely
         transferable  Dollars in the United  States.  In the case of a lease or
         contract with the United  States or any  Government  Entity  thereof in
         respect of the Aircraft,  a valid  agreement duly assigned to Sublessor
         to  indemnify  Sublessee  against  the same  risks  that  Sublessee  is
         required  under Section 9(b) to insure  against by the United States or
         such  Government  Entity in an amount at least equal to the  Stipulated
         Loss Value shall be considered  adequate  insurance with respect to the
         Aircraft  to the  extent of the risks and in the  amounts  that are the
         subject of any such agreement to indemnify.

                  (iv) All insurance maintained pursuant to this Section 9 shall
         be (A)  maintained  with  recognized  aircraft and  aviation  insurance
         companies in the United States or  international  markets that normally
         participate in aviation  insurance or (B) supported by 99%  reinsurance
         issued by recognized  aircraft and aviation insurance  companies in the
         international   markets  that  normally  participate  in  international
         aviation  insurance.  Any such reinsurance  shall be with insurers,  in
         form and in amounts reasonably satisfactory to Sublessor and Lender and
         shall be subject to "cut through" endorsements or other endorsements or
         agreements  satisfactory  in form and  substance to Sublessor and Agent
         which shall provide that all payments under such reinsurance in respect
         of  losses  shall  be  paid  (x) in the  case of  insurance  maintained
         pursuant to Section 9(a) hereof, to the applicable  Additional  Insured
         or (y) in the case of  insurance  maintained  pursuant to Section  9(b)
         hereof, to Agent for so long as the Mortgage shall remain in effect and
         thereafter  to Lessor as sole  "loss  payee"  (except  as  provided  in
         Section 9(c)(ii)(B)) and not to any such primary insurance company.

         (d)  Application  of  Insurance.  All  insurance or indemnity  payments
received as the result of the occurrence of an Event of Loss with respect to the
Airframe or an Engine will be applied as follows:

                  (i)  if  such  payments  are  received  with  respect  to  the
         Airframe, the Engines or engines installed thereon, such payments shall
         be applied in the following order of priority:  (A) to Agent, of if the
         Mortgage has been  discharged,  to Lessor in the amount  required to be
         paid by Sublessee pursuant to Section 8(a), which amount shall be


                                      -37-

<PAGE>



         applied in reduction of  Sublessee's  obligation  to pay such amount if
         not already  paid by  Sublessee  or, to the extent such amount has been
         paid by Sublessee to Agent or Lessor,  as the case may be, to Sublessee
         to reimburse Sublessee for its payment thereof and (B) to Sublessee the
         balance, if any, of such payment; and

                  (ii) if such  payments are received with respect to an Engine,
         such payments shall be held by the insurer until (A) replacement of the
         Engine by Sublessee by a Replacement Engine at which time said payments
         shall be paid to  Sublessee;  (B) if  Sublessor  shall have  elected to
         provide a Replacement  Engine as provided in Section 9(b) said payments
         shall be paid to Sublessor  to be applied in  reduction of  Sublessee's
         obligation  to pay  the  Engine  Loss  Value,  if not  already  paid by
         Sublessee, or if already paid by Sublessee,  shall be paid to Sublessee
         and applied to reimburse  Sublessee for its payment of such Engine Loss
         Value; and (C) the balance of such payment, if any, to Sublessee.

                  The  insurance  payments  with respect to any property  damage
         loss not constituting any Event of Loss with respect to the Airframe or
         an Engine will be paid to Sublessor and applied by Sublessor in payment
         (or to reimburse  Sublessee)  for repairs to or replacement of property
         in accordance with the terms of Section 8 against evidence satisfactory
         to Sublessor that such repairs and  replacement  have been made, or, if
         such repairs or replacement  have already been paid for by Sublessee,to
         reimburse   Sublessee   therefor,   and  any  balance  remaining  after
         compliance with such Section with respect to such loss shall be paid to
         Sublessee.  Any amount  referred  to in the  preceding  sentence  or in
         paragraph (i) or (ii) of this Section 9(d) that is payable to Sublessee
         shall not be paid to  Sublessee if at the time of such payment an Event
         of Default or Default shall have occurred and be continuing,  but shall
         be  held by  Sublessor  as  security  for  and  may be  applied  to the
         obligations of Sublessee under this Sublease and, at such time as there
         shall not be  continuing  any such  Default or Event of  Default,  such
         amount  not   previously   so  applied  shall  be  paid  to  Sublessee.
         Notwithstanding  the provisions of this paragraph,  payments in respect
         of partial  losses of less than Seven Hundred  Fifty  Thousand  Dollars
         (US$750,000)  shall be paid  directly to  Sublessee  toward the cost of
         repair or replacement of such property in conformity herewith.

         (e) Reports. On or before the Commencement Date, Sublessee will furnish
or cause to be furnished to Sublessor a report  signed by a firm of  independent
aircraft insurance brokers,  appointed by Sublessee and acceptable to Sublessor,
stating the opinion of such firm that the insurance  then carried and maintained
on the Aircraft  complies with the terms hereof.  Sublessee will cause such firm
to advise Sublessor and each other Additional Insured in writing promptly of any
default in the


                                      -38-

<PAGE>



payment of any premium, of any other act or omission on the part of Sublessee of
which such firm has knowledge that might invalidate or render unenforceable,  in
whole or in part,  any  insurance  on the  Aircraft  and of each  claim  made by
Sublessee  in respect of the  Aircraft.  Sublessee  will also cause such firm to
advise  Sublessor and each other  Additional  Insured in writing at least thirty
(30) days prior to the expiration or  termination  of any insurance  carried and
maintained on the Aircraft pursuant to this Section 9.

         (f)  Failure  to  Insure.  In the event  that  Sublessee  shall fail to
maintain or cause to be maintained insurance as herein provided,  Sublessor may,
at its option,  but without liability to Sublessee for failure to do so, provide
such  insurance  and, in such  event,  Sublessee  shall,  upon  written  demand,
reimburse Sublessor for the cost thereof as Supplemental Rent. At any time while
such failure is continuing,  Sublessor may require the Aircraft to remain at any
airport or (as the case may be) proceed to and remain at any airport  within the
United  States as  designated  by  Sublessor,  until such failure is remedied to
Sublessor's satisfaction.

         (g)  Additional  Insurance.  Nothing  contained in this Sublease  shall
prevent  Sublessor,  Sublessee,  Lessor,  Agent  or any  Lender  each at its own
expense and for its  exclusive  benefit,  from carrying  insurance  covering the
Aircraft in addition to the  insurance  required  under this Section 9 (any such
additional  insurance,  "Additional  Insurance");  provided,  however, that such
Additional  Insurance  shall be excess  and  non-contributory  to the  insurance
required to be procured and  maintained  by Sublessee  hereunder.  The insurance
payments for any property  damage loss covered by Additional  Insurance shall be
paid directly to the party  carrying such  Additional  Insurance.  Sublessee may
carry hull all risks or hull war and allied  perils on the Aircraft in excess of
the Stipulated  Loss Value only to the extent such excess  insurance which would
be  payable  to  Sublessee  following  an Event of Loss does not  prejudice  the
insurances  required herein or the recovery by Sublessor,  Lessor,  Agent or any
Lender  thereunder.  Sublessee agrees that it will not create or permit to exist
any Liens (other than Sublessor Liens) over the insurances  required  hereunder,
or its interest therein, except as constituted by this Sublease.

         (h) Notice of Claims.  Sublessee shall give Sublessor and Lender notice
in  writing  of any  claim or  request  for  payment  of an  amount in excess of
$750,000 under any physical  damage  insurance  policy required to be maintained
hereunder promptly (but in any event within five (5) days) of the filing of such
claim or request for payment.

                  (i)  Stipulated  Loss Value.  At any time  following the first
         anniversary of the Commencement Date,  Sublessee may propose a revision
         to the  Stipulated  Loss Value Schedule set forth as Schedule I hereof,
         and, upon receipt of any such proposal,


                                      -39-

<PAGE>



                  Sublessor  and  Sublessee  shall  negotiate  in  good  faith a
                  revised Schedule I of this Sublease.

         Section 10. Return of Aircraft. The provisions of this Section 10 shall
apply to any  return of the  Aircraft  to  Sublessor  upon  termination  of this
Sublease (including,  without limitation, such return resulting from an Event of
Default);  provided,  that if this Sublease is terminated pursuant to Section 14
and the Aircraft is repossessed by Sublessor,  any action that is required to be
taken by  Sublessee  pursuant  to this  Section  10 prior to the  return  of the
Aircraft shall be taken immediately after the return of such Aircraft.

         (a)  Redelivery  upon  Termination.  On the date of termination of this
Sublease,  Sublessee shall at its sole cost and expense,  return the Aircraft to
Sublessor, at Sublessor's facilities in San Salvador, El Salvador (provided that
if this Sublease shall be terminated as a result of a default by Sublessor under
the  Lease or a default  by Lessor  under the  Mortgage  the  Aircraft  shall be
returned  to a point in the  United  States  reasonably  requested  by Lessor or
Agent).  If there shall be any Tax imposed by a Government  Entity of the United
States, imposed upon Sublessee solely by virtue of redelivery of the Aircraft to
El  Salvador,  Sublessee  and  Sublessor  shall,  in  good  faith,  negotiate  a
reasonable alternate redelivery location;  provided,  however, that no alternate
location shall be deemed reasonable if Sublessor shall incur any Taxes by virtue
of accepting redelivery and/or removing the Aircraft from such location.  At the
time of return of the  Aircraft to  Sublessor,  Sublessor  and  Sublessee  shall
execute a Return  Acceptance  Receipt  in  substantially  the form of  Exhibit C
hereto.

         (b)  Condition of Aircraft -- General.  The Aircraft at the time of its
return to Sublessor  shall have been  maintained and repaired in accordance with
the  Maintenance  Program as if such Aircraft were to be kept in further service
by Sublessee,  shall be free and clear of all Liens (other than Sublessor Liens)
and shall meet the following requirements:

                  (i) The Aircraft shall be in good operating condition with all
         of the  Aircraft  equipment,  components  and  systems  functioning  in
         accordance with Manufacturer's limitations,  irrespective of deviations
         or variations authorized by the Minimum Equipment List or Configuration
         Deviation  List  prepared  and  authorized  by  the   Manufacturer   or
         authorized by the FAA.

                  (ii)  The  interior  of  the  Aircraft  shall  be in  as  good
         condition as upon delivery (normal wear and tear excepted).

                  (iii) The brakes  and tires  shall  have a  remaining  life at
         least  equal to the  remaining  life of the brakes and tires  installed
         upon the Aircraft as of March 6, 1996.



                                      -40-

<PAGE>



                  (iv) The Aircraft shall be clean by  international  commercial
         airline standards.

                  (v) The  Aircraft  shall have,  and be in  compliance  with, a
         current valid standard  certificate of airworthiness  issued by the FAA
         and  shall  meet  the  requirements  of  FAR  Part  121 as  applied  to
         Sublessee's then current operations  without any corrections,  repairs,
         modifications,  alterations or overhauls having to be performed to meet
         such standards and rules.

                  (vi) The  Aircraft  shall have had  accomplished  thereon,  at
         Sublessee's sole cost and expense,  on a terminating  action basis, and
         be in compliance  with all  outstanding  airworthiness  directives  and
         mandatory  service  bulletins  issued by the FAA affecting the Aircraft
         that have an effective date for compliance prior to, or sooner than one
         hundred eighty (180) days after the return date of the Aircraft. In the
         event  Sublessee  has obtained a waiver or deviation  from the FAA from
         having  to  comply  with  any  such FAA  airworthiness  directives  and
         mandatory  service  bulletins  Sublessee  shall,  irrespective  of such
         waiver  or   deviation,   comply  with  all  such   mandatory   orders,
         airworthiness,  directives,  service bulletins and instructions covered
         by such  waiver  or  deviation  prior  to  return  of the  Aircraft  to
         Sublessor.

                  (vii)  All  outstanding   pilot   discrepancies  and  deferred
         maintenance  items  shall  have been  cleared on a  terminating  action
         basis.

                  (viii) The Aircraft  shall have had  accomplished  thereon the
         cleaning and treating of all mild and moderate corrosion and correcting
         of all severe or exfoliated corrosion in accordance with the provisions
         of  the  Manufacturer's   Maintenance   Planning  Document,   Corrosion
         Prevention  Manual or 737 Structural  Repair Manual  criteria,  in each
         case,  without  discrimination  as between the Aircraft and Sublessee's
         other Boeing 737-300 aircraft.

                  (ix) Except as otherwise permitted in Section 6(e) hereto, the
         Aircraft  shall be in the same  configuration  and  condition  with all
         equipment installed therein as that in which the Aircraft was delivered
         to Sublessee by Sublessor under this Sublease,  excepting only ordinary
         wear and tear,  replacements  and substitute parts and equipment as may
         have been properly made by Sublessee pursuant to this Sublease.

                  (x) The  Aircraft  will be free  of  fuel,  oil and  hydraulic
         leaks.  Any  temporary  fuel leak  repairs  will have been  replaced by
         permanent repairs.

                  (xi) The Aircraft fluid reservoirs  (including oil, hydraulic,
         water and waste tanks) will be serviced to full


                                      -41-

<PAGE>



         in  accordance  with  Manufacturer's  instructions,  and each fuel tank
         shall  contain at least the quantity of fuel as was  contained  therein
         when the Aircraft was delivered to Sublessee on the Commencement  Date;
         or, in the case of any  deficiency,  Sublessee  shall pay Sublessor for
         such deficiency at Sublessor's then current cost of fuel.

                  (xii) No special or unique  Manufacturer,  Engine manufacturer
         or FAA  inspection  or check  requirements  which are  specific  to the
         Aircraft or Engines and have which arisen  during the Sublease Term (as
         opposed to all  aircraft  or engines  of their  types)  will exist with
         respect to the Airframe,  Engines and Aircraft equipment components and
         systems.

                  (xiii) All repairs,  modifications and alterations made to the
         Aircraft or the addition or removal of equipment, systems or components
         will have been made in  accordance  with FAA approved data and properly
         documented in accordance with the rules and regulations of the FAA.

                  (xiv) No Part or component of the Airframe shall be older than
         the Airframe.

         (c)  Condition of  Airframe.  The Airframe at the time of its return to
Sublessor shall have a currently  effective U.S.  certificate of  airworthiness,
shall meet the  requirements  of FAR 121 as applied to Sublessee's  then current
operations,  shall  meet the  requirements  and shall have such hours and cycles
remaining under the Maintenance Program as set forth below:

                  (i) The Airframe  shall have  accomplished  the next  complete
         structural  and systems "C" check  sufficient to clear the Aircraft for
         3,000 hours, 3,000 cycles or, at least twelve (12) months of operations
         determined with reference to the Maintenance Program.

                  (ii) The  installed  main  landing  gear and nose landing gear
         shall each have at least 8,000 hours or 4,000 cycles  remaining  before
         overhaul.

                  (iii) Perform an internal and external corrosion inspection as
         required  pursuant to the pre-return  "C" check as per the  Maintenance
         Program and CPCP and correct any  discrepancies  in accordance with the
         recommendations of Manufacturer and the Structural Repair Manual.

                  (iv)  Remove  Sublessee's  exterior  markings,  including  all
         exterior paint and decals, by scuff/sanding the paint from the Airframe
         and repaint the Airframe white.

                  (v)  Permanently  repair  in  accordance  with  Manufacturer's
         Structural   Repair   Manual   damage  to  the  Aircraft  that  exceeds
         Manufacturer's limits and replace any


                                      -42-

<PAGE>



         non-flush  structural  patch  repairs  installed  on  the  Airframe  by
         Sublessee, unless otherwise recommended by Manufacturer, if required by
         Manufacturer's   maintenance  and  repair  guidelines  with  flush-type
         repairs.

         (d)  Condition of  Controlled  Components.  Each  life-limited  part or
component and aircraft hour and/or cycle  controlled  components of the Aircraft
and of each Engine at the time of redelivery of the Aircraft to Sublessor  shall
have  remaining  at least 3,000 hours and/or 3,000  cycles,  whichever  is  more
limiting, between scheduled removals for overhaul, testing, or disassembly.  All
components  controlled  on a calendar  basis  shall have  remaining  at least 12
months  before  scheduled  removal for testing or overhaul.  Such  hour/cycle or
calendar controlled  components are defined as those components controlled under
the Maintenance Program.  However, if the component or part has a check interval
limit that is less than the above stated  hours,  cycles or calendar  time limit
requirement, the check interval limit shall prevail.

         (e)      Condition of Engines. 

                  (i) Each Engine at the time of return to Sublessor  whether or
         not  installed  on  the  Airframe  shall  have  been  maintained  on an
         "on-condition" program.

                  (ii) Each Engine  shall have no more cycles or hours since the
         last shop visit for full performance  restoration,  as described in the
         Aviall  Caledonian  Workscope  definitions,  than such  Engine had when
         delivered.

                  (iii)  Perform a full and  complete  video  borescope  on each
         Engine and its  modules in  accordance  with the Engine  manufacturer's
         maintenance manual,  with Sublessor or its representatives  entitled to
         be present. Sublessee will provide evidence to Sublessor's satisfaction
         that such  inspection  does not reveal any condition  which would cause
         the  Engine  or any  module  to be  unserviceable,  beyond  serviceable
         limits, or serviceable with limitations under the Engine manufacturer's
         maintenance  manual.   Sublessee  will  correct  any  discrepancies  in
         accordance with the guidelines set out by the Engine manufacturer which
         may be discovered during such inspection.

                  (iv) Each Engine shall have an exhaust gas temperature  margin
         remaining of 15 degrees or higher and shall, at a minimum, meet all the
         requirements of the maximum power assurance run criteria for CFM 56-3B2
         engines.

                  (v) The Aircraft shall be capable of  certificated,  full rate
         performance  without   limitations   throughout  the  entire  operating
         envelope as defined in the  Manufacturer's  flight manual applicable to
         the Aircraft which  performance  compliance will be demonstrated at the
         time of the demonstration flight referred to in Section 10(h) and/or by
         on-wing static inspection and testing of the powerplants


                                      -43-

<PAGE>



         (engines,  nacelles and accessories) in accordance with the maintenance
         manual applicable to such Engine, at Sublessor's option.

                  (vi)  The  auxiliary  power  unit or  units  installed  in the
         Aircraft at the time of return to Sublessor shall have no more than 500
         Hours since the last overhaul as per the Garret  Workscope  definition,
         shall  be in  good  operating  condition  and  shall  have a  borescope
         inspection and "on-  condition"  check performed in accordance with the
         Maintenance  Program.   Satisfactory  evidence  shall  be  provided  to
         Sublessor  reflecting the correction of any discrepancies  found during
         such inspection or such check, as the case may be.

         (f)  Ground  Inspection  by  Sublessor.  The  Aircraft  (including  the
Aircraft  documentation and other related documents to be returned  therewith as
provided in Section  10(l))  shall be made  available  to  Sublessor  for ground
inspection by Sublessor at  Sublessee's  facilities or those of its FAA approved
maintenance  provider during the pre-redelivery "C" check. Such inspection shall
commence  not less than  seven  working  days prior to the date of return of the
Aircraft to  Sublessor.  Sublessee  shall  remove the  Aircraft  from  scheduled
service and open the areas of the Aircraft as required to perform the  necessary
checks as  contemplated by this Sublease and shall allow Sublessor to accomplish
its inspection in order to determine  that the Aircraft  (including the Aircraft
documentation)  and other  related  documents  are in the condition set forth in
Section 10. During such pre-delivery "C" check, Sublessor's personnel shall have
the right to  reasonably  request that  adjacent  additional  panels or areas be
opened in order to allow further  inspection by Sublessor  personnel.  Sublessee
shall  promptly  correct any  discrepancies  from the condition  required by the
provisions  of Section  10 that are  observed  during  such  inspection  and are
communicated by Sublessor to Sublessee.

         (g)  Operational  Ground  Check.   Promptly  after  completion  of  any
corrections required under Section 10(f),  Sublessee shall conduct an operations
ground check  (including  an engine  power  assurance  run and a flight  control
operational and rigging check) in accordance with the Manufacturer's maintenance
manual  criteria  for the purpose of  demonstrating  that each of the  following
systems meet applicable  manufacturer's criteria: (i) full fuel tank leak check;
(ii) altimeter calibration; (iii) ATC transponder system operational check; (iv)
audible ignition check (both systems);  (v) pilot and static systems check; (vi)
hydraulic system internal leak check; and (vii) brake wear check. Promptly after
the operational ground check, Sublessee shall repair any discrepancies resulting
therefrom.

         (h) Demonstration Flight.  Promptly after completion of any corrections
required  under  Sections  10(f)  and  10(g),  the  Aircraft  shall  be flown by
Sublessee, using qualified flight test


                                      -44-

<PAGE>



personnel  and  the  applicable   Manufacturer's   test  flight  document,   for
approximately  one and  one-half  hours  for the  purpose  of  demonstrating  to
Sublessor the satisfactory  operation of the Aircraft and its equipment.  During
such test flight,  command,  care,  custody and control of the Aircraft shall at
all times remain with Sublessee. Representatives of Sublessor may participate in
such flight as observers. A qualified pilot designated by Sublessor shall occupy
the cockpit  observer's  seat as an observer during such  demonstration  flight.
Upon completion of such demonstration  flight, the  representatives of Sublessee
and Sublessor  participating in such  demonstration  shall agree in writing upon
any discrepancies in the Aircraft required to be corrected by Sublessee in order
to comply with the  provisions of this Section 10 and Sublessee  shall  promptly
correct any such discrepancies. Subsequent to corrections of such discrepancies,
Sublessor  shall  inspect and  technically  accept the Aircraft  for  redelivery
subject to the  requirements  of this Section  10(h) and Sections  10(i) and (j)
below.  If any of the  discrepancies  referred to in Sections 10(f) and 10(g) or
this Section 10(h) continue to persist,  Sublessor may, at its option,  agree to
accept  redelivery  of the Aircraft and apply the procedure set forth in Section
10(j) for such discrepancies.

         (i) Ferry Flight. Upon completion of the demonstration flight and after
Sublessee has corrected  discrepancies as required to comply with the provisions
of this Section 10, or Sublessor  has agreed to apply the procedure set forth in
Section  10(j),  the Aircraft  shall be ferried by  Sublessee to the  redelivery
point set forth in Section  10(a)  hereof.  Upon arrival of the Aircraft at such
redelivery point,  Sublessee shall correct any discrepancies arising during such
ferry flight.  Sublessor's  representatives may participate in such ferry flight
as non-revenue passengers and observers.

         (j) Deferred Discrepancy Correction. Any discrepancies found during the
ground  inspection,  operational  ground check,  demonstration  flight and ferry
flight provided for in Sections  10(f),  10(g),  10(h) and 10(i),  respectively,
that  were not  corrected  by  Sublessee  prior to  return  of the  Aircraft  to
Sublessor  may be corrected  by  Sublessor  or its designee  after return of the
aircraft and Sublessee  shall reimburse  Sublessor for the expenses  incurred by
Sublessor  or its  designee  for  accomplishing  such  discrepancy  corrections.
Sublessee shall pay Sublessor for such expenses incurred within thirty (30) days
of the date of Sublessor's invoice therefor.

         (k) Flight Cost. All flights pursuant to Sections 10(h) and 10(i) shall
be made at Sublessee's  expense and Sublessee  shall pay or reimburse  Sublessor
for any costs associated with such flights including,  but not limited to, costs
for  fuel,  oil,  airport  fees,   insurance,   takeoff/landing   fees,   airway
communication fees and ground handling fees.



                                      -45-

<PAGE>



         (l) Aircraft Documentation.  Sublessee shall return to Sublessor at the
time  the  Aircraft  is  returned  to  Sublessor,  all of the  Aircraft  records
documents,  manuals and data provided to Sublessee by Sublessor  prior to, on or
after the  Commencement  Date,  updated and maintained by Sublessee  through the
date of return of the  Aircraft.  In  addition,  Sublessee  shall  also  provide
Sublessor at the time the  Aircraft is returned to  Sublessor  with all records,
documents,  manuals,  authorizations,  drawings  and  data,  in each case in the
English  language,  that were  developed  or caused to be developed by Sublessee
and/or  required by the  appropriate  governmental  agency  having  jurisdiction
updated and maintained by Sublessee for the Aircraft  through the date of return
of  such  Aircraft.  Any  such  Aircraft  documentation  not  already  owned  by
Sublessor,  when delivered to Sublessor  pursuant to this Section  10(l),  shall
thereupon  become the property of  Sublessor.  In the event  Sublessor  requires
copies of any of such Aircraft documentation prior to the return of the Aircraft
to  Sublessor  to  enable   Sublessor  to  plan  or  accomplish   modifications,
recertification,  sale,  lease or other  disposition  of or  utilization  of the
Aircraft upon such return,  Sublessee shall,  promptly upon receipt of each such
Sublessor  request,  provide to Sublessor a reasonable  number of copies of such
Aircraft  documentation  requested  by Sublessor  at  Sublessor's  sole cost and
expense.

         (m)  Service  Bulletin  Kits.  All  vendor  and  Manufacturer  supplied
mandatory  service bulletin kits delivered to Sublessee for the Aircraft but not
installed therein shall be return with the Aircraft,  as part of the Aircraft at
the time of the  return of the  Aircraft,  and shall be loaded by  Sublessee  on
board  the  Aircraft  as  cargo.  Title to such  kits  shall  pass to  Sublessor
concurrently with the delivery of the Aircraft to Sublessor.

         (n) Non-U.S.  Manufactured Items.  Sublessee shall provide to Sublessor
at the time of the return of the Aircraft a complete  list,  describing  by Part
number and name, all non-United States  manufactured  equipment,  components and
parts, if any, installed on such Aircraft by Sublessee during the Sublease Term.
Such list shall include quantity,  the acquisition price and the  manufacturer's
name and country in respect of each such item.

         (o)  Sublessee's  Continuing  Obligations.  In the event that Sublessee
does not return the  Aircraft to Sublessor  upon  termination  of this  Sublease
(including,  without  limitation,  any  termination  resulting  from an Event of
Default by Sublessee) and in the condition  required herein for any reason,  the
obligations of Sublessee under this Sublease shall continue;  provided, however,
that such failure to return the Aircraft to  Sublessor in such  condition  shall
not be the result of a breach by Sublessor  of its  covenant of quiet  enjoyment
which has resulted in Sublessee  having been  deprived of use and  possession of
the Aircraft  immediately prior to such termination,  in which case the Aircraft
shall be returned in its then condition provided that, immediately prior to such
breach by Sublessor of its covenant of


                                      -46-

<PAGE>



quiet  enjoyment  such Aircraft shall have been in such condition as to meet the
requirements  of  Section 8 hereof but for such  breach.  Such  continuation  of
Sublessee's  obligations  shall not be considered a renewal of the terms of this
Sublease or of  Sublessee's  rights to use the  Aircraft,  an  extension  of the
Sublease  Term or a waiver of any  Default  or Event of  Default or any right of
Sublessor hereunder. Until such time as the Aircraft is redelivered to Sublessor
as  required  herein,  Sublessee  agrees,  during  the  first  thirty  (30) days
following the termination  hereof,  to pay Basic Rent with interest at the Post-
Default Rate and  thereafter  to pay twice the amount of Basic Rent for each day
from such thirtieth (30th) day after the termination  hereof until redelivery of
the Aircraft in the condition required hereunder (the monthly Basic Rent payable
being prorated based on the actual number of days in the applicable month).

         Section 11.         Representations,   Warranties   and   Covenants  of
Sublessee.  Sublessee represents and warrants to, and covenants  with  Sublessor
as follows:

         (a) Sublessee (i) has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, (ii) has
full corporate  power and authority and legal right to own its properties and to
carry on its  business as  presently  conducted  and to perform its  obligations
under this  Sublease,  (iii) is the holder of an air  carrier  certificate  duly
issued  pursuant to the Federal  Aviation  Act and such  certificate  is in full
force and effect, and (iv) holds all material licenses, certificates and permits
from all  Government  Entities  of the  United  States  and other  jurisdictions
necessary for the conduct of its business as now conducted and for the operation
of the Aircraft.

         (b) The execution,  delivery and  performance of this Sublease has been
duly authorized by all necessary corporate action of Sublessee, and does not and
will not (i) result in the violation of the provisions of the charter  documents
or bylaws of Sublessee as in effect on the date hereof, (ii) require stockholder
approval or approval or consent of any trustee or holders of any indebtedness of
Sublessee,  except such approvals which have been obtained and are in full force
and effect,  (iii)  contravene  any law,  rule or regulation or any order of any
Government  Entity  binding on  Sublessee,  or (iv) conflict with or result in a
breach of any terms or provisions of or constitute a default under, or result in
or require the creation or imposition of any Lien upon any material  property or
assets of Sublessee under, any material  indenture,  mortgage or other agreement
or instrument  as in effect on the date hereof to which  Sublessee is a party or
by which it or any of its  property is bound,  or any  applicable  law,  rule or
regulation,  judgment,  order or decree of any Government Entity or court having
jurisdiction over Sublessee or any of its properties.



                                      -47-

<PAGE>



         (c) No  authorization,  approval,  consent,  license  or order  of,  or
registration with, or the giving of notice to, or the taking of any other action
in respect of, any  Government  Entity is required for the valid  authorization,
execution,  delivery  and  performance  by  Sublessee  of this  Sublease  or the
consummation  of  any  of  the  transactions  contemplated  hereby,  except  (i)
approvals, authorization, consents, licenses, certificates and orders of the FAA
and any other  regulatory  authority  having  jurisdiction  with  respect to the
ownership,  use and operation of the Aircraft and the transactions  contemplated
hereby,  all of which  have been (or on the  Delivery  Date will have been) duly
obtained  and are (or will on the  Delivery  Date be) in full force and  effect,
(ii) the filing of this Sublease or other necessary documentation with the civil
aviation  authority of each country  (other than the United States) in which the
Aircraft may be operated or located  which  filings  have been made,  or will be
made as to each such country prior to such Aircraft being operated or located in
such country and (iii) any normal periodic and other reporting  requirements and
renewals  and  extensions  of any of the  foregoing,  in each case to the extent
required to be given or obtained only after the Delivery Date.

         (d) Except for (i) the filing and  recording  pursuant  to the  Federal
Aviation  Act of this  Sublease,  (ii) the  filing  of duly  executed  financing
statements  naming  Sublessee  as debtor and  Sublessor  as  secured  party (and
continuation  statements  with respect to such  financing  statements)  with the
Secretary of State of the State of Colorado and, if applicable,  the appropriate
filing authority in El Paso County, Colorado and (ii) the retention by Lessor of
the  original  counterpart  of the  Sublease  to the  extent,  if any,  that the
Sublease  constitutes  chattel  paper (as such term is  defined  in the  Uniform
Commercial Code as in effect in any applicable jurisdiction), no further action,
including  any filing or  recording  of any document  (including  any  financing
statement in respect  thereof under Article 9 of the Uniform  Commercial Code of
any  applicable  jurisdiction),  is necessary in order to establish  and perfect
Lessor's title to the Aircraft or Lender's security interest in this Sublease as
against  Sublessee and any third parties in any applicable  jurisdictions in the
United States.

         (e) This Sublease  constitutes the legal,  valid and binding obligation
of Sublessee,  enforceable against Sublessee in accordance with its terms except
as  may  be  limited  by  applicable  bankruptcy,  insolvency,   reorganization,
moratorium or other similar laws affecting  creditors'  rights generally and, to
the extent that certain remedies  require or may require  enforcement by a court
of  equity,   by  such   principles  of  equity   (regardless  of  whether  such
enforceability  is  considered  in a proceeding  at law or in equity) as a court
having jurisdiction may impose.

         (f)  There  are no suits or  proceedings  pending  or,  to  Sublessee's
knowledge,  threatened in any court of before any  Government  Entity against or
affecting Sublessee that would, if


                                      -48-

<PAGE>



adversely  determined,  (i) prevent or adversely affect  Sublessee's  ability to
perform its obligations under this Sublease or (ii) materially  adversely affect
the  financial  condition  or  operations  of  Sublessee  and  its  consolidated
subsidiaries, taken as a whole.

         (g) The chief  executive  office  (as such term is used in Article 9 of
the Uniform  Commercial  Code) of Sublessee and the office where  Sublessee will
keep its corporate records concerning the Aircraft is located in El Paso County,
Colorado.  Sublessee will notify Sublessor thirty (30) days in advance of moving
either such office to another location.

         (h) Neither  Sublessee  nor  Sublessor  has  retained  or employed  any
broker,  finder or financial advisor other than Cauff, Lippman & Crane Aviation,
Inc. to act on its behalf in  connection  with its lease of the Aircraft and has
not authorized any broker,  finder or financial  advisor retained or employed by
any other person so to act.

         (i) Neither  Sublessee  nor any of its property  has any immunity  from
jurisdiction of any court located in the United States or from any legal process
in the Untied States  (whether  through service or notice,  attachment  prior to
judgment, attachment in aid of execution, execution or otherwise).

         (j) There is no Tax,  levy,  impost,  deduction,  charge or withholding
imposed  by the State of  Colorado  or any Taxing  Authority  thereof or therein
either (i) on or by virtue of the execution or delivery of this Sublease or (ii)
on any payment made or to be made by Sublessee under this Sublease.

         (k) The obligations of Sublessee under this Sublease rank at least pari
passu in right of payment with all other  unsecured  obligations  of  Sublessee,
with the exception of such obligations as are mandatorily preferred by law.

         (l) Sublessee  will promptly  give notice to Sublessor  upon  obtaining
actual knowledge of any Default or Event of Default; and

         (m) Sublessee acknowledges that in the event Sublessee files a petition
or otherwise seeks relief under the Bankruptcy  Code or an involuntary  petition
is filed against  Sublessee,  it is the intention of Sublessor  that  Sublessor,
Lessor,  Agent and any Lenders  shall be  entitled  to the  benefits of Title 11
U.S.C. ss. 1110 and any similar or analogous provisions of any successor statute
("Section 1110") with respect to the Aircraft,  the Lease and this Sublease, and
Sublessee  agrees that it shall not oppose any motion,  petition or  application
filed by Sublessor, Lessor, Agent or any Lender with any bankruptcy court having
jurisdiction over Sublessee whereby Sublessor, Lessor, Agent or any Lender seeks
recovery of possession of the Aircraft under Section 1110 unless Sublessee shall
have complied with the requirements of


                                      -49-

<PAGE>



Section 1110 to be  fulfilled in order to entitle  Sublessee to continue use and
possession of the Aircraft hereunder.

         (n) Without  having  obtained the prior  written  consent of Sublessor,
Sublessee  will  not  consolidate  with or merge  into,  sell or  lease,  in one
transaction or a series of transactions,  all or substantially all of its assets
to  another  corporation  or other  entity  unless  such  other  corporation  or
subsidiary  thereof  is engaged in the  airline  business,  the net worth of the
corporation  resulting from such merger or consolidation or corporation or other
entity to which  such sale or lease is made  would be at least  equal to the net
worth of Sublessee at the date hereof,  such corporation or other entity assumes
all of Sublessee's  obligations under this Sublease in a manner and by documents
and  agreements   satisfactory  to  Sublessor  in  its  sole  discretion,   such
corporation   or  other   entity   immediately   subsequent   to  such   merger,
consolidation,  lease  or sale is not in  default  hereunder  and if  Sublessor,
Lessor and Agent receive an opinion of counsel  satisfactory  to them as to such
assumption and documentation.

         (o)  Sublessee  agrees to furnish to Sublessor as soon as  practicable,
but in no event  later  than (i) sixty  (60)  days  after the end of each of the
first  three  quarterly  fiscal  periods in each  fiscal  year of  Sublessee,  a
consolidated  balance sheet of Sublessee and its subsidiaries  prepared by it as
of the close of such period,  together with the related consolidated  statements
of income and of surplus and  statements  of changes in  financial  position for
such period  (this  requirement  may be  satisfied by delivery to Sublessor of a
copy of Sublessee's Form 10-Q), (ii) one hundred and twenty (120) days after the
close  of each  fiscal  year of  Sublessee,  a  consolidated  balance  sheet  of
Sublessee  and its  subsidiaries  as of the close of such fiscal year,  together
with the related consolidated statements of income and of surplus and statements
of  changes  in  financial  position  for such  fiscal  year,  as  certified  by
independent  public  accountants,  including their  accompanying  opinion letter
related  thereto,  (iii) with each such  financial  statement,  a certificate of
Sublessee  signed by a duly authorized  financial  officer of Sublessee,  to the
effect that the signer has reviewed the relevant  terms of this Sublease and has
made, or caused to be made under his  supervision,  a review of the transactions
and condition of Sublessee during the accounting period covered by the financial
statements  and that such review had not  disclosed  the  existence  during such
accounting period, nor does the signer have knowledge of the existence as at the
date of such  certificate,  of any condition or event that constitutes a Default
or Event of  Default,  or, if any such  condition  or event  existed  or exists,
specifying the nature and period of existence  thereof and what action Sublessee
has taken or is taking or  proposes to take with  respect  thereto and (iv) from
time to time,  such  other  information  as  Sublessor,  Lessor  or  Lender  may
reasonably request; provided that such other information is either in the


                                      -50-

<PAGE>



public domain or is provided to Lessor or Sublessor of aircraft to  Sublessee or
to creditors of Sublessee.

         (p) Sublessee  shall,  within  fifteen (15) days of the end of each and
every calendar  month during the Sublease  Term,  deliver to Sublessor a monthly
report,  in such form and containing such  information as set forth in Exhibit F
hereof.

         (q) Sublessee shall, at the end of each calendar  quarter,  have a long
term debt to equity ratio of not more than 4:1 as determined in accordance  with
generally accepted  accounting  principles  consistently  applied.  For purposes
hereof, debt shall exclude all off balance sheet financing and operating leases.

         (r) Sublessee  shall, at the end of each calendar  quarter have a ratio
of current  assets to current  liabilities of not less than 1:1 as determined in
accordance with generally accepted accounting principals consistently applied.

         Section 12.         Indemnification.

         (a) General Indemnity and Expenses.  Sublessee hereby assumes liability
for and hereby agrees to, indemnify,  protect, save and keep harmless Sublessor,
Lessor, Agent, each Lender and their respective  Affiliates,  agents,  officers,
directors,  employees,  successors and permitted  assigns (each of the foregoing
and  their  respective  Affiliates,  agents,  officers,  directors,   employees,
successors and assigns being hereinafter  referred to as an "Indemnitee" and any
reference  herein to an  Indemnitee  shall  include its  respective  Affiliates,
agents, officers, directors,  employees,  successors and permitted assigns) from
and against,  and on written demand to pay, or to reimburse each  Indemnitee for
the  payment  of,  as the case  may be,  any and all  liabilities,  obligations,
losses,  damages,  penalties,  claims  (including,  without  limitation,  claims
arising  out of  negligence  or  involving  strict  liability  in tort),  suits,
actions,  costs, expenses and disbursements,  including without limitation legal
fees and expenses,  of  whatsoever  kind and nature  imposed on,  incurred by or
asserted against any Indemnitee relating to or arising out of (A) this Sublease,
any  payments  made  pursuant  hereto or the  exercise  of  rights  or  remedies
hereunder,  (B) the  preparation,  negotiation,  execution  and  delivery of any
amendments,  modifications  or waivers required by this Sublease or requested by
Sublessee  (or  resulting  from any requests of  Sublessee)  hereunder,  (C) the
Aircraft,  each Engine and any Part  thereof,  whether or not arising out of the
airworthiness, delivery, nondelivery, sublease, presence, storage, modification,
substitution,  replacement,  alteration,  maintenance,  inspection,  failure  to
inspect,  repair, release,  possession,  repossession after an Event of Default,
registration (unless, in respect to Sublessor,  any act or omission of Sublessor
shall cause the  deregistration of the Aircraft under the Federal Aviation Act),
use,  operation,   condition,   condition  upon  return,  return,   exportation,
importation, transfer or other application or


                                      -51-

<PAGE>



disposition thereof (including,  in each case and without limitation,  latent or
other defects, whether or not discoverable),  any claim for patent, trademark or
copyright  infringement arising as a result of or in connection with Sublessee's
patents, trademarks,  copyrights,  servicemarks or logos or those of Sublessee's
advertisers,  sponsors,  and others  whose  designs  and/or  logos appear on the
Aircraft,  at any  time,  any  claim  based on  strict  or  absolute  liability,
statutory  liability or tort and any liability for any injury to or death of any
person or loss of or damage to any property including,  without limitation,  any
such  arising  out of any test  flight,  demonstration  flight  or ferry  flight
performed  by  Sublessee  or any  entity  to which  Sublessee  may have  further
subleased  the  Aircraft  pursuant  to  Section 7 hereof  and (D) any breach of,
noncompliance  with or  misrepresentation  made or deemed  made in,  under or in
connection  with this  Sublease or any  agreement to which  Sublessee is a party
concerning  the  Aircraft or any  warranty,  certificate  or  agreement  made or
delivered in, under or in connection  therewith made or deemed to have been made
by Sublessee or anyone claiming by, through or under Sublessee;  provided,  that
Sublessee  shall not be required to indemnify any  Indemnitee  hereunder (w) for
any  liability  attributable  to  acts  or  events  which  occur  prior  to  the
Commencement  Date or after  the  Sublease  Term or the  property  return of the
Aircraft to Sublessor in the condition required hereunder  whichever shall occur
later,  (x) for  liability  resulting  solely  and  directly  from acts of gross
negligence  or  misconduct of such  Indemnitee  (other than gross  negligence or
willful  misconduct  attributed  to such  Indemnitee  solely  by  reason  of its
interest in the  Aircraft,  any Engine or any Part),  it being agreed that gross
negligence or willful misconduct of an Indemnitee shall not affect the rights to
be indemnified  hereunder of any other Indemnitee  (other than the rights of any
Indemnitee that is an Affiliate, agent, officer, director, employee or successor
of  any  such  Indemnitee  that  is so  grossly  negligent  or  guilty  of  such
misconduct),  (y) for any Taxes  that  Sublessee  has not  agreed  to  indemnify
against  pursuant to the  provisions  of Section  12(b) or (z) for any liability
imposed or any  Indemnitee  arising as a result of a  disposition  of all or any
part of such Indemnitee's interest in the Aircraft,  other than by reason of the
occurrence  of a Default or an Event of Default  and  further  provided  that no
indemnification  hereunder  shall be paid by Sublessee to Indemnitees in respect
of any claim arising during any period during which Sublessee is deprived of use
and  possession  of the  Aircraft  as a result of a breach by  Sublessor  of its
covenant of quiet enjoyment provided that such claim is not caused by any act or
omission of Sublessee.

         If any  Indemnitee  shall  have  knowledge  of any  claim or  liability
required to be  indemnified  against under this Section 12(a),  such  Indemnitee
shall give prompt written  notice thereof to Sublessee,  but the failure of such
Indemnitee so to notify Sublessee shall not relieve Sublessee from any liability
that it would otherwise have to such Indemnitee hereunder except to the


                                      -52-

<PAGE>



extent that  Sublessee's  rights  respecting any defense thereto are irrevocably
and materially impaired directly and solely as a result of such failure.

         Sublessee  shall be  obligated  to such  Indemnitee  under this Section
12(a)  irrespective  of whether any Indemnitee  shall also be  indemnified  with
respect to the same matter under any other  agreement,  and each  Indemnitee may
proceed  directly  against  Sublessee  under this Section  12(a)  without  first
resorting to any such other rights of indemnification.

         Any payment or indemnity  pursuant to this Section  12(a) shall include
the  amount,  if  any,  necessary  to hold  each  Indemnitee  harmless  on a net
after-tax  basis  from all  Taxes  required  to be paid by such  recipient  with
respect to such payment or indemnity  under laws,  rules or  regulations  of any
Government  Entity or Taxing  Authority.  If any  Indemnitee  is  entitled  to a
permanent  tax benefit  (whether by way of deduction,  credit or otherwise)  not
taken into account pursuant to the preceding  sentence as a result of the matter
indemnified against under this Section 12(a), such Indemnitee shall promptly pay
to  Sublessee,  after such  permanent  tax  benefit is  realized  but not before
Sublessee shall have made all payments  theretofore due to such Indemnitee under
this  Sublease  and any other  agreement in respect of the  Aircraft,  an amount
that,  after  subtraction of any further tax savings to which such Indemnitee is
entitled  as a result of the  payment  thereof,  is equal to the  amount of such
permanent tax benefit;  provided,  however,  that such  Indemnitee  shall not be
obligated to make any payment to Sublessee  pursuant to this sentence so long as
a Default or Event of Default  shall have occurred and be continuing or any Rent
or Supplemental Rent then due and owing shall not have been paid.

         Upon the indefeasible  payment in full of any indemnities due and owing
under this Section  12(a),  Sublessee  shall be  subrogated  to any right of the
Indemnitee in respect of the matter against which indemnity has been given.

         (b)      General Tax Indemnity.

                  (i)  Sublessee  agrees that each payment of Rent or any amount
         payable  hereunder  shall  be free of all  withholdings  of any  nature
         whatsoever,  and  in  the  event  that  any  withholding  is  required,
         Sublessee  shall pay an  additional  amount of Rent such that after the
         deduction  of all amounts  required to be  withheld,  the net amount of
         Rent that is actually  received by Sublessor,  will equal the amount of
         Rent or any such amount payable  hereunder or such other amount, as the
         case may be, that would be due absent such withholding,

                  (ii)  Sublessee  hereby  agrees to indemnify and hold harmless
         from and  against,  and on  written  demand  to pay or  reimburse  each
         Indemnitee  for the  payment  of, as the case may be, any and all Taxes
         imposed upon or asserted against any Indemnitee


                                      -53-

<PAGE>



         or the  Aircraft,  the  Airframe,  any Engine,  or any Part  thereof or
         interest therein, or this Sublease,  or the rentals received under this
         Sublease,  by any federal,  state or local  government  or other taxing
         authority in the United States, in any territory or possession  thereof
         or by any foreign  government  or any political  subdivision  or taxing
         authority  thereof or therein (the  foregoing  being referred to herein
         individually  as a  "Taxing  Authority"  and  collectively  as  "Taxing
         Authorities")  upon or with respect to (a) the  acceptance,  rejection,
         delivery,   transport,    insuring,    registration,    deregistration,
         reregistration,  assembly,  possession,  repossession,  operation, use,
         presence,   condition,   maintenance,   repair,  return,   abandonment,
         preparation,    installation,    storage,   redelivery,    manufacture,
         subleasing,  modification,   rebuilding,  or  importation  of,  or  the
         imposition of any Lien (other than a Sublessor  Lien) (or the insurance
         of any  liability  to refund or pay over any  amount as a result of any
         Lien (other than a Sublessor Lien)) on the Aircraft,  the Airframe, any
         Engine or any Part thereof or interest  therein,  (b) payments of Basic
         Rent or Supplemental Rent, (c) the Aircraft,  the Airframe, any Engine,
         or any Part thereof or any  interest  therein or the  applicability  of
         this Sublease to the Aircraft,  the Airframe,  any Engine,  or any Part
         thereof or any interest  therein,  (d) any or all of the  documents and
         agreements relating to the Aircraft, contemplated hereby and amendments
         or supplements hereto and thereto, or the execution,  delivery,  filing
         or recording thereof, or (e) otherwise with respect to or in connection
         with the  transactions  effected  under this Sublease and the documents
         and agreements  contemplated  hereby including the exercise of remedies
         hereunder.

                  (iii) The  provisions  of Section  12(b)(i) and (ii) shall not
         apply to, and  Sublessee  shall have no  lability to  Sublessor  or any
         other person  thereunder  with respect to Taxes to the extent  excluded
         under any of the following provisions or any combination thereof:

                                    (A) Taxes  imposed  by any  country,  taxing
                   authority or governmental  subdivision  thereof or therein or
                   any  international  authority  except to the extent that such
                   Taxes  would not have been due  (whether or not from the same
                   person  on  whom  they  are  actually  imposed)  but  for the
                   transactions  contemplated by this  Agreement,  provided that
                   the presence or activities of any person other than Sublessor
                   in any jurisdiction shall not be imputed for purposes of this
                   subparagraph (A);

                                    (B) Taxes (I) imposed as a result of a sale,
                   assignment,  transfer or other disposition (whether voluntary
                   or  involuntary) (a "Transfer') (x) by Sublessor or any other
                   person  (other than  Sublessee or any affiliate or transferee
                   of or  successor  to  Sublessee)  of any legal or  beneficial
                   interest  in  the  Aircraft  or  in  or  arising  under  this
                   Agreement  or (y) of  any  direct  or  indirect  interest  in
                   Sublessor or any such other person having any such legal or


                                      -54-

<PAGE>



                   beneficial  interest (any event described in (x) or (y) being
                   a  "Sublessor  Transfer")  or (II) to the  extent  such taxes
                   exceed the amount of taxes that would have been  imposed  and
                   indemnified  against  by  Sublessee  had  there  not  been  a
                   "Sublessor  Transfer,"  provided that the exclusion set forth
                   in this subparagraph (B) shall not apply to a Transfer (other
                   than  a  sale  of  the  Aircraft  or  any  interest  therein)
                   resulting  from the exercise of any remedies  provided for in
                   this  Agreement in connection  with an Event of Default or an
                   Event of Loss;

                                    (C) Taxes  incurred in respect of any period
                   after the occurrence of any of the following events:  (I) the
                   sale  or  return  of the  Aircraft  or any  part  thereof  or
                   interest  therein to the extent  the Taxes  relate  solely to
                   such part or interest) in  accordance  with the terms of this
                   Agreement;  (II) the  termination  of this  Agreement and the
                   return of the Aircraft or (III) the sale or other transfer of
                   the  Aircraft  and the  return of the  Aircraft  (or any part
                   thereof or interest  therein to the extent the Taxes  release
                   solely to such part or interest)  following a Total Loss with
                   respect to the  Aircraft,  provided  that the  exclusion  set
                   forth in this  subparagraph  (C)  shall not apply to Taxes to
                   the extent such Taxes  relate to periods  prior to, or events
                   occurring or matters arising prior to or simultaneously with,
                   such event;

                                    (D) Taxes to the extent  imposed as a result
                   of  (I)  the  willful   misconduct  or  gross  negligence  of
                   Sublessor,  (II)  the  breach  by  Sublessor  of  any  of its
                   representations,  warranties  or covenants  contained in this
                   Agreement or (III) Sublessor's Liens;

                                    (E)  Taxes  either  not  yet  due  or  being
                   contested in accordance with the provisions of Section 12(d);

                                    (F) Taxes on, based on,  measured by or with
                   respect to the net or gross income, or net or gross receipts,
                   including any capital gains Taxes, minimum Taxes, Taxes on or
                   measured  by any  items  of tax  preference  and  withholding
                   Taxes,  including  Taxes  imposed  under  Subtitle  A of  the
                   Internal  Revenue  Code of 1986,  as amended  (the "Code") or
                   Section 3406 of the Code or any successor provisions required
                   to be  withheld  from  any  payment  under  this  Agreement),
                   capital,  net worth,  franchise,  or conduct of  business  of
                   Sublessor or any other person (other than Taxes in the nature
                   of  sales,  use,  rental,  property,  or  value-added  Taxes)
                   imposed by any federal,  state or local  government or taxing
                   authority in the United States;

                                    (G) Taxes on, based on,  measured by or with
                   respect to the net or gross  income or net or gross  receipts
                   (including any capital gains Taxes,  minimum Taxes,  Taxes on
                   or measured by any items of tax preference and withholding


                                      -55-

<PAGE>



                   Taxes), capital, net worth, franchise, or conduct of business
                   of  Sublessor  or any other  person  (other than Taxes in the
                   nature of sales, use, rental, property, or value-added Taxes)
                   imposed  by  any  foreign  government  subdivision  or  other
                   foreign taxing authority or by any territory or possession of
                   the  United  States,  or  by  any  international   authority,
                   provided that the  exclusion  set forth in this  subparagraph
                   (G) shall not  exclude  such Taxes if and to the extent  that
                   such  Taxes  (i)  would  not have  been  imposed  but for the
                   operation,  presence or registration in such  jurisdiction of
                   the Aircraft or any part thereof, or (ii) would have not been
                   imposed  solely  as a  result  of (x)  the  presence  in such
                   jurisdiction of a permanent  establishment  or fixed place of
                   business of Sublessee, or any user or person in possession of
                   the  Aircraft  or  any  part  thereof,   (y)  the  residence,
                   nationality  or place of management  and control of Sublessee
                   or any user or person in  possession  of the  Aircraft or any
                   part  thereof,  (z) the  payment  from such  jurisdiction  by
                   Sublessee or any user or person in possession of the Aircraft
                   or any part  thereof of any  amount  due under the Lease,  or
                   (iii) any combination of clauses (i) and (ii);

                                    (H) Taxes that  would not have been  imposed
                   but for any failure of Lessor or Sublessor to (x) file proper
                   and  timely  reports or returns or to pay any Taxes when due,
                   or  (y)   comply   with   any   certification,   information,
                   documentation,   reporting  or  other  similar   requirements
                   concerning the nationality, residence, identity or connection
                   with the jurisdiction imposing such Taxes, if such compliance
                   is required to obtain or establish  relief or exemption  from
                   or  reduction  in such  Taxes  and  Lessor or  Sublessor  was
                   eligible to comply with such requirement  provided,  however,
                   that this  exclusion  shall not  apply to any  obligation  to
                   file, pay or certify,  other than an obligation imposed under
                   the laws of El Salvador, of which Sublessor was unaware.

                                   (I) Taxes imposed  under  Section  887 of the
                  Code.

                  Notwithstanding  any  provision  in  this  Section  12 to  the
contrary, Sublessee shall in no event be obligated to pay any amount pursuant to
this  Section  12 in excess of the Taxes  Sublessee  would be  required  by this
Section 12 to pay if (i)  Sublessor  were the Sublessor of the Aircraft and (ii)
no person other than the owner participant as of the date hereof pursuant to the
Trust  Agreement  dated as of  November  4, 1993  between  Lessor and such owner
participant,  Sublessor,  Sublessee or any  sublessee or other user or person in
possession  of the Aircraft or any part thereof had any interest in the Aircraft
or part thereof.

         (c)      Calculation of Tax Indemnity Payments.

                  (i) Any payment that Sublessee shall be required to make to or
         for the account of any Indemnitee with respect to any


                                      -56-

<PAGE>



         Tax that is  subject  to  indemnification  under  Section  12(b)  shall
         include the amount necessary to hold such Indemnitee  harmless on a net
         after-tax  basis from he net amount of all Taxes required to be paid by
         such  Indemnitee as the result of such payment  pursuant to the laws of
         any Taxing Authority.

                  (ii) If Sublessor  shall  realize a Tax benefit as a result of
         or with respect to any Taxes paid or  indemnified  against by Sublessee
         under  this  Section  12  (whether  by  way  of  deduction,  credit  or
         otherwise),   Sublessor   shall  pay  to  Sublessee,   promptly   after
         realization  of  such  Tax  benefit,  an  amount  that,  prior  to  the
         application  of  any   withholding   tax  to  that  payment  but  after
         subtraction of any further Tax savings Sublessor realizes as a benefit,
         provided that if any such Tax benefit is subsequently disallowed,  lost
         or reduced,  Sublessee  shall,  upon  written  notice  from  Sublessor,
         promptly  repay the amounts paid to the Sublessee  with respect to such
         Tax benefit,  provided  further that  Sublessor  shall not be obligated
         under this Section  12(c)(ii) to pay Sublessee any amounts with respect
         to  Tax  benefits  realized  s a  result  of  any  Taxes  not  paid  or
         indemnified  against  by  Sublessee.  Notwithstanding  anything  to the
         contrary  in this  Section  12,  if,  at the  time any  payments  would
         otherwise be due to Sublessee  pursuant to this Section  12(c)(ii),  an
         Event of Default shall have occurred and be continuing, Sublessor shall
         hold the amount of such payment as security for the  obligations of the
         Sublessee  to  Sublessor  under the  Sublease and at such time as there
         shall  not be  continuing  any such  Event of  Default,  shall pay such
         amount to Sublessee.  Sublessor  shall use  reasonable  efforts in good
         faith in filing its Tax returns and in dealing with taxing  authorities
         to seek and to claim any such Tax  benefit or savings  and to  minimize
         the Taxes payable or indemnifiable by Sublessee hereunder.

                  (iii) At Sublessee's  request, the computation by Sublessor of
         any amount  payable to  Sublessee  pursuant to this Section 12 shall be
         verified  by an  independent  accounting  firm of  national  reputation
         selected by Sublessor.  The fees of such  accountants  shall be paid by
         Sublessee unless such accountants  determine that the amount payable to
         Sublessee is at least 25% more,  or the amount  payable by Sublessee is
         at least 25% less, than the amount computed by Sublessor, in which case
         such fees shall be payable by Sublessor.

         (d)      Contest; Reports.

                  (i) If a claim is made in writing against  Sublessor  (whether
         on audit or otherwise)  for any Taxes that Sublessee is required to pay
         or indemnify against pursuant to Section 12(b),  Sublessor shall notify
         Sublessee  in writing  within 30  Business  Days of the receipt of such
         claim,  provided  that a failure  to so  notify  will not  diminish  or
         relieve Sublessee or any obligations under Section 12(b), except to the
         extent Sublessee is entitled


                                      -57-

<PAGE>



         to contest or to cause  Sublessor to contest such Taxes and Sublessee's
         or  Sublessor's   successful   defense  of  such  claim  is  materially
         prejudiced  or precluded  thereby.  If the amount of the claim  exceeds
         $25,000 and if requested by Sublessee in  accordance  with this Section
         12(d) and in writing within 30 Business Days after receipt by Sublessee
         of the notice described in the preceding  sentence,  Sublessor shall in
         good  faith and with due  diligence  contest  (including  pursuing  all
         administrative  and judicial  appeals) in the name of Sublessor  or, if
         permitted by law and  requested by Sublessee in the name of  Sublessee,
         the  validity,  applicability  or amount of such  Taxes in  appropriate
         administrative  or judicial  proceedings to be determined by Sublessor,
         provided  that (1) prior to taking such  action,  Sublessee  shall have
         agreed to pay  Sublessor  all  out-of-pocket  costs and  expenses  that
         Sublessor  may  incur  in  connection   with   contesting  such  claim,
         including,  without  limitation,  all reasonable legal and accountant's
         fees  and  disbursements  and  costs  of  administrative  and  judicial
         proceedings,  and the amount of any interest or  penalties  that may be
         attributable  to and payable as a result of contesting  such claim (or,
         at Sublessor's request, Sublessee shall advance to Sublessor funds with
         which to pay the  foregoing  amounts,  and  Sublessor's  obligation  to
         contest any Tax shall be suspended during any period Sublessee does not
         advance  sufficient  funds to pay such amounts as they accrue or become
         payable), (2) if such contest is to be initiated by the payment of, and
         the claiming of a refund for such Taxes (and any interest and penalties
         that  also must be  paid),  Sublessee  shall  have  advanced  Sublessor
         sufficient funds (on an interest-free  basis) to make such payment, (3)
         no Event of Default has occurred and is  continuing,  (4) the action to
         be taken will not result in a material risk of sale, forfeiture or loss
         of Sublessor's title to the Aircraft (unless Sublessee  provides a bond
         or other security  satisfactory  to Sublessor),  and (5) at Sublessor's
         request, Sublessee shall provide to Sublessor a written opinion in form
         and substance  satisfactory  to Sublessor of independent  legal counsel
         satisfactory  to Sublessor  that there is a  reasonable  basis for such
         contest.  Notwithstanding that the conditions set forth in clauses (1),
         (2), (3), (4) and (5) above may have been satisfied,  Sublessor,  after
         consulting  in good  faith  with  Sublessee,  may elect to  pursue  any
         contest or proceeding  pursuant to the  preceding  sentence or elect to
         discontinue (by settlement or otherwise) any such contest or proceeding
         commenced pursuant to the preceding  sentence,  but such election shall
         constitute   a  waiver  by   Sublessor  of  any  right  to  payment  or
         indemnification   pursuant  to  Section   12(b)  with  respect  to  the
         adjustment that was the subject of such proposed  contest or proceeding
         (and any other  adjustment  the contest of which is  precluded  by such
         failure to contest) and, if Sublessee has theretofore  paid or provided
         Sublessor with funds to pay any amount with respect to such adjustment,
         Sublessor  shall promptly repay such amount to Sublessee.  If Sublessor
         shall obtain a refund in whatever  form of all or any part of any Taxes
         that  Sublessee  shall have paid or reimbursed to Sublessor  hereunder,
         Sublessor shall, provided that no Event of Default shall have


                                      -58-

<PAGE>



         occurred and be continuing, pay to Sublessee an amount that is equal to
         the sum of the  amount of such  refund  or  credit,  plus any  interest
         received on such  refund  fairly  attributable  to any Taxes paid by or
         with funds  provided  by  Sublessee  prior to  receipt of such  refund,
         reduced by an Taxes  incurred by  Sublessor by reason of the receipt or
         accrual of such refund and interest  and net of any expenses  described
         in clause (1) of the second  sentence of this  Section  12(d) that have
         not  been  previously  reimbursed,  and  increased  by any Tax  benefit
         realized  by  Sublessor  as a result of any payment by  Sublessor  made
         pursuant to this  sentence,  provided  further that, if, at the time of
         such payment an Event of Default shall have occurred and be continuing,
         Sublessor  shall hold the amount of such  payment as  security  for the
         obligations of Sublessee to Sublessor under the Lease, and at such time
         as there shall not be continuing  any such Event of Default,  shall pay
         such  amount to the  Sublessee.  Sublessor  hereby  agrees that it will
         inform  Sublessee  of the time and place  of,  and  Sublessor  will not
         object to Sublessee's  presence at any proceeding conducted pursuant to
         this Section  12(d)  provided  that  Sublessee's  presence also must be
         allowed by applicable law and provided  further that the conditions set
         forth in clauses (1), (2), (3), (4) and (5) above shall have been,  and
         shall continue to be, satisfied.

                  (ii) Sublessee shall provide  Sublessor with such  information
         in the possession of Sublessee or otherwise  reasonably available to it
         as Sublessor may reasonable  require to enable Sublessor to fulfill its
         tax filing  obligations under this Section 12 and any audit information
         request  arising in  connection  with the Taxes subject to this Section
         12.  Sublessor  shall provide  Sublessee  with such  information in the
         possession  of  Sublessor or  otherwise  reasonable  available to it as
         Sublessee may reasonably request to fulfill its tax filing requirements
         under this  Section  12 and any audit  information  request  arising in
         connection  with the Taxes subject to this Section 12. If any report or
         return  is  required  to be made  with  respect  to any  obligation  of
         Sublessee  under this  Section 12,  Sublessee  will make such report or
         return,  provided that  Sublessee  shall have no obligation to file any
         such  return or  report if (A)  Sublessor,  after  Sublessee's  written
         request  therefor,  shall have  failed to furnish  Sublessee  with such
         information  as is  peculiarly  within the  control  of, or  reasonably
         available to Sublessor  and is necessary  for the filing of such report
         or return, or (B) such return or report would or should have been filed
         by Sublessor even if it had not entered into the Sublease.

                  (iii)  Sublessor  shall furnish from time to time to Sublessee
         or to such other  person as  Sublessee  may  designate,  such  returns,
         statements or other  documentation  ("Tax Forms")  (including,  without
         limitation, if then required, information as to the ultimate beneficial
         owners of Sublessor and the stock  interests in Sublessee held actually
         and  constructively by Sublessor,  if not otherwise known to Sublessee)
         in such form and with such substance as are necessary or appropriate to
         enable Sublessor or Sublessee, to claim an available reduction of or


                                      -59-

<PAGE>



         exemption  from  Taxes  which  Sublessee  may  be  required  to  pay or
         indemnify  against  hereunder,   provided  that  Sublessee  shall  have
         provided Sublessor with any information within the Sublessee's  control
         or reasonably  available to Sublessee that is necessary to prepare such
         return,  statement or other documentation.  Any such Tax Forms shall be
         provided  promptly after receipt of a written request therefor from the
         Sublessee.

         (e) Payment.  Unless otherwise requested by the appropriate Indemnitee,
Sublessee  shall pay when due any Tax for which it is liable pursuant to Section
12(b) directly to the  appropriate  Taxing  Authority,  or, upon written demand,
shall reimburse the appropriate  Indemnitee for the payment of any such Tax made
by such  Indemnitee.  Within 30 days after the date of each payment by Sublessee
of any Tax referred to in the proceeding  sentence,  Sublessee shall furnish the
appropriate  Indemnitee  evidence  of  payment  of such Tax  acceptable  to such
Indemnitee.  Sublessee shall also cause to be furnished,  promptly upon request,
such data as any Indemnitee may reasonably require from Sublessee to enable such
Indemnitee to comply with the requirements of any Taxing Authority in respect of
any tax referred to in Section 12(b).

         (f)  Survival.  The  obligations  contained  in this  Section  12 shall
survive the  termination of this Sublease,  to the extent they have accrued,  or
relate to events that have occurred,  on or before the date of such termination;
provided that obligations  arising as a result of the occurrence of a Default or
an Event of Default shall in any event, without limiting the foregoing,  survive
until  payment  in  full  and  performance  of all  obligations  owing  to  each
Indemnitee under the foregoing  agreements and all other agreements  referred to
herein or  contemplated  hereby.  The obligations of Sublessee in respect of all
such indemnities,  obligations,  adjustments and payments are expressly made for
the benefit of, and shall be enforceable by, each Indemnitee entitled thereto at
the option of such Indemnitee  without  declaring this Sublease to be in default
or taking any other action hereunder.

         Section 13.         Assignment; Sublease Subject and Subordinate.

         (a)  No  Impermissible  Sublease  by  Sublessee.  EXCEPT  AS  OTHERWISE
EXPRESSLY  PROVIDED HEREIN,  SUBLESSEE SHALL NOT ASSIGN OR OTHERWISE TRANSFER IN
ANY  MANNER ANY OF ITS RIGHTS OR  INTERESTS  WITH  RESPECT  THIS  SUBLEASE,  THE
AIRCRAFT, ANY ENGINE OR ANY PART THEREOF.

         (b)  Assignment  by  Sublessor.  Pursuant to the Security  Assignments,
Sublessor's  right, title and interest in and to this Sublease has been assigned
to Lessor as security for Sublessor's  obligations  under the Lease, and further
assigned by Lessor to Agent as security  for Lessor's  obligations  to Agent and
the  Lenders  under the Credit  Agreement  and the  Mortgage.  Sublessee  hereby
accepts and consents to the Security  Assignments  and the  assignment of all of
Sublessor's right, title and interest in and


                                      -60-

<PAGE>



to this  Sublease to Agent  pursuant to the terms  thereof,  including,  without
limitation,  the right to make all waivers and agreements,  to give all notices,
consents and releases, to exercise Sublessor's rights and remedies upon an Event
of Default  hereunder  and take all  action  upon the  happening  of an Event of
Default hereunder or to do any and all other things whatsoever that Sublessor is
or may become  entitled to do under this  Sublease,  all or any of which  right,
remedies, obligations, benefits and interests may be reassigned or retransferred
by Agent at any time and from time to time.

         (c) Sublease Subject and Subordinate. Sublessee acknowledges and agrees
that  this  Sublease,   and  Sublessee's  rights  hereunder,   are  subject  and
subordinate in all respects to all the terms and conditions of the Lease and the
Mortgage and the rights and remedies of Lessor and Agent thereunder,  including,
without limitation, (i) Lessor's rights to repossession of the Aircraft pursuant
to the Lease and to avoid this  Sublease  upon a default by Sublessor  under the
Lease and (ii) Agent's rights to  repossession  of the Aircraft  pursuant to the
Mortgage   upon  a  default   by  Lessor   thereunder,   as  the  case  may  be.
Notwithstanding anything to the contrary herein, upon the occurrence of an event
of default  entitling  Lessor or Agent,  as the case may be, to demand return of
the Aircraft by Sublessor under the Lease or an event of default by Lessor under
the Mortgage,  Sublessee shall, if requested to do so by Lessor or Agent, as the
case may be, return the Aircraft to Agent or Lessor, as the case may be.

         (d) Assignments by Sublessor or Lessor.  Subject to Sublessee's  rights
hereunder and at  Sublessor's  cost and expense,  Sublessor or Lessor may at any
time and without  Sublessee's  consent  sell,  assign or transfer its rights and
interest hereunder or with respect to the Aircraft to a third party and/or grant
a Lien over the Aircraft and the benefit of this Sublease to Lender or any other
Person as security for Sublessor's or Lessor's  obligations to such Person (each
such  transferee,  assignee  or other  Person,  an  "Assignee").  On  request by
Sublessor, Sublessee will execute all such documents (such as a lease assignment
agreement) as Sublessor or Lessor may reasonably require to confirm  Sublessee's
obligations under this Sublease.  No sale, assignment or transfer of Sublessor's
or  Lessor's  interest  or creation  of any Lien by  Sublessor  or Lessor  shall
adversely affect  Sublessee's rights hereunder or increase  Sublessee's  duties,
expenses or the  liabilities  of Sublessee in respect of any Tax or under any of
its indemnification  obligations or otherwise.  Sublessee will provide all other
reasonable  assistance and cooperation to Sublessor,  Lessor and any Assignee in
connection with any such sale or assignment or the perfection and maintenance of
any Lien granted in connection  therewith,  including,  at Sublessor's sole cost
and expense, making all necessary filings and registrations including filings or
registrations  of mortgages,  financing  statements  and  reregistration  of the
Aircraft. Upon any such assignment or


                                      -61-

<PAGE>



transfer, Sublessor shall cause any Assignee to deliver to Sublessee evidence of
its corporate authority to enter into any such sale,  assignment or transfer and
such Assignee shall grant to Sublessee the same  covenant(s) of quiet  enjoyment
as are set forth herein.  Wherever the terms  "Sublessor",  "Lessor" or "Lender"
are used in this  Sublease  in  relation  to any of the  provisions  relating to
disclaimer, title and registration, indemnity and insurance, such terms shall be
construed to include each Assignee, as applicable.

         Section 14.         Events of Default; Remedies.

         (a) Events of Default.  The  occurrence of any of the following  events
shall  constitute  an  "Event  of  Default"  (whether  any such  event  shall be
voluntary  or  involuntary  or come about or be effected by  operation of law or
pursuant to or in compliance with any judgment,  decree or order of any court or
any order, rule or regulation of any  administrative  or governmental  body) and
each such Event of Default  shall be deemed to exist and  continue so long as it
shall not have been remedied:

                  (i)  Sublessee  shall fail to make any  payment of Basic Rent,
         Maintenance  Reserves,  Stipulated  Loss  Value  or  Supplemental  Rent
         hereunder  within  five (5)  Business  Days  after the same  shall have
         become due and payable;

                  (ii) Sublessee  shall fail to carry and maintain  insurance on
         or with respect to the Aircraft in  accordance  with the  provisions of
         Section  9 hereof or  Sublessee  shall  fail to  provide  an  insurer's
         certificate  evidencing the renewal or replacement of such policy, upon
         the  renewal  or  replacement  thereof,  in  accordance  with the terms
         hereof;

                  (iii)  any  document  required  to be  filed  or  recorded  by
         Sublessee  pursuant thereto is not duly filed and recorded by Sublessee
         as required to perfect and continue the  perfection of the interests of
         Sublessor,  Lessor,  and  Agent  in the  Aircraft  or the  filings  and
         recordings  provided for herein are not made by the time  required;  or
         Sublessee  shall fail to perform or observe any other  covenant,  term,
         condition  or  agreement to be performed or observed by it hereunder or
         under any instrument,  document or agreement  furnished by Sublessee to
         Sublessor,  or Lender in connection with the  transactions  referred to
         herein  or  contemplated   hereby,  and  such  failure  shall  continue
         unremedied  for a period  of  thirty  (30) days  after  written  notice
         thereof to  Sublessee  or thirty  (30) days after  Sublessee,  assuming
         exercise of  reasonable  diligence,  should have known of such failure;
         provided,   however,  such  failure  to  observe  any  covenant,  term,
         condition  or  agreement  does  not  pose  a  material  danger  to  the
         respective  rights and  interests of  Sublessor,  Lessor,  Agent or any
         Lender in the  Aircraft and the same is of such a nature that it can be
         cured;  and further  provided that  Sublessee  shall have commenced and
         shall diligently pursue


                                      -62-

<PAGE>



         such cure, Sublessee shall have an  additional  thirty (30) day  period
         within which to cure the same;

                  (iv) any  representation  or warranty made by Sublessee herein
         or in any document, or certificate furnished by Sublessee in connection
         herewith shall at any time prove to have been false or incorrect or any
         material respect at the time made;

                  (v) Sublessee shall (A) voluntarily commence any proceeding or
         file any  petition  seeking  relief  under any  applicable  bankruptcy,
         insolvency,  liquidation or similar law now or hereafter in effect, (B)
         consent to the  institution  of, or fail to  contravene in a timely and
         appropriate  manner,  any such  proceeding  or the  filing  of any such
         petition,  (C) apply for or consent to the  appointment  of a receiver,
         trustee, custodian,  sequestrator or similar official for itself or for
         a  substantial  part of its  property  or  assets,  (D) file an  answer
         admitting the material  allegations  of a petition filed against it any
         such  proceeding,  (E) make a general  assignment  for the  benefit  of
         creditors,  (F) become  unable,  admit in writing its inability or fail
         generally  to pay its debts as they become due or (G) take  corporation
         action for the purpose of effecting any of the foregoing;

                  (vi) an  involuntary  proceeding  shall  be  commenced  or for
         involuntary   petition   shall  be  filed  in  a  court  of   competent
         jurisdiction  seeking  (A)  relief in  respect  of  Sublessee,  or of a
         substantial  part of the  property  or  assets of  Sublessee  under any
         applicable bankruptcy, insolvency, receivership or similar law, (B) the
         appointment of a receiver, trustee, custodian,  sequestrator or similar
         official  for  Sublessee or for a  substantial  part of the property of
         Sublessee or (C) the winding-up or  liquidation of Sublessee;  and such
         proceeding or petition shall continue undismissed, unstayed or unbonded
         for sixty (60) days or an order or decree  approving or ordering any of
         the  foregoing  shall  continue  unstayed and in effect for thirty (30)
         days;

                  (vii) Sublessee or any subsidiary  thereof,  the debt of which
         has  been  guaranteed  by  Sublessee  thereof  shall  fail to  pay,  in
         accordance with its terms and when due and payable, the principal of or
         interest on any Debt the principal  amount of which exceeds  $2,000,000
         and the maturity of any such Debt, in accordance with the provisions of
         any such Debt or any contract evidencing, providing for the creation of
         or concerning such Debt shall have been  accelerated or any event shall
         have occurred and be continuing that would permit any holder or holders
         of such Debt,  any trustee or agent  acting on behalf of such holder or
         holders or any other Persons so to accelerate such maturity;



                                      -63-

<PAGE>



                  (viii)  final  judgment  for the payment of money in excess of
         $750,000 not fully covered by insurance  (or the  equivalent in another
         currency) shall be rendered against Sublessee and the same shall remain
         undischarged for a period of thirty (30) days during which execution of
         such  judgment  shall not be  effectively  stayed or bonded in a manner
         satisfactory to Sublessor;

                  (ix)   Sublessee   shall   fail  to  remain  a   "certificated
         air-carrier" within the meaning of the Federal Aviation Act;

                  (x) Sublessee shall  voluntarily  suspend all or substantially
         all  of  its  commercial   airline   operations,   or  the  franchises,
         concessions,  permits, rights or privileges acquired for the conduct of
         the business and operations of Sublessee shall be revoked,  canceled or
         otherwise terminated or the free and continued use and exercise thereof
         curtailed or prevented;

                  (xi) except as otherwise  permitted  pursuant to Section 11(n)
         hereof, Sublessee shall merged with or into or consolidate with or into
         or convey,  transfer,  lease or  otherwise  dispose of  (whether in one
         transaction or in a series of transactions) all or substantially all of
         its assets  (whether now owned or hereafter  acquired) to any Person or
         fifty-one percent (51%) or more of the capital stock of Sublessee shall
         be acquired in a single transaction or series of transactions, directly
         or indirectly by any Person and/or its  Affiliates not a shareholder of
         Sublessee on the Commencement Date;

                  (xii)  possession of the Aircraft,  the Airframe or any Engine
         shall be transferred to another  Person,  other than in accordance with
         the express provisions of Section 7(d); and/or

                  (xiii) the Aircraft shall cease to be (or cease to be eligible
         to be)  registered  in the  United  States  as a  result  of any act or
         omission of Sublessee.

         (b)  Remedies.  Upon the  occurrence of any Event of Default and at any
time  thereafter so long as the same shall be continuing,  Sublessor may, at its
option,  declare this Sublease to be in default by notice to  Sublessee;  and at
any  time  thereafter,  so  long  as  Sublessee  shall  not  have  remedied  all
outstanding  Events of Default before Sublessor shall have commenced to exercise
its rights or remedies  hereunder,  Sublessor  may  exercise  one or more of the
following  rights and remedies  with respect to all or any part of the Aircraft,
Airframe or any Engine as Sublessor in its sole  discretion  shall elect, to the
extent  permitted by, and subject to compliance with any mandatory  requirements
of, applicable law then in effect:



                                      -64-

<PAGE>



                  (i) cause Sublessee,  upon the written demand of Sublessor and
         at Sublessee's expense, to return promptly,  and Sublessee shall return
         promptly (and in no event later than two days after such  demand),  all
         or such part of the  Aircraft,  the Airframe or any Engine as Sublessor
         may  demand,  to  Sublessor  or its order in the manner  and  condition
         required by, and otherwise in accordance  with all the  provisions  of,
         Section 10 as if such Aircraft,  Airframe or Engine were being returned
         at the end of the  Sublessee  Term, or  Sublessor,  at its option,  may
         enter upon the premises where all or any part of the Aircraft, Airframe
         or any Engine is located and take  immediate  possession  of and remove
         the same;

                  (ii) hold, use,  operate,  keep idle or lease to others all or
         any part of the Aircraft,  with or without taking possession thereof as
         Sublessor in its sole  discretion may determine,  free and clear of any
         rights of Sublessee  and without any duty to account to Sublessee  with
         respect to such  action or inaction or for any  proceeds  with  respect
         thereto,  except that Sublessee's obligation to pay Basic Rent pursuant
         to the Lease for any periods in respect of the Aircraft or part thereof
         accruing after Sublessee shall have been deprived of possession of such
         Aircraft or part  thereof  pursuant to this Section 14 shall be reduced
         by the net  proceeds,  if any,  received by Sublessor  from leasing the
         Aircraft or part  thereof to any Person  other than  Sublessee  for the
         same periods or any portions thereof;
                  (iii)  Sublessor  may  exercise any other right or remedy that
         may be available to it under  applicable law or proceeds by appropriate
         court action to enforce the terms hereof or to recover  damages for the
         breach or to rescind this Sublease;

                  (iv) Sublessor may terminate this Sublease; and/or

                  (v) whether or not Sublessor  shall have  exercised,  or shall
         thereafter  at any time  exercise,  any of its rights under clause (i),
         (ii),  (iii) or (iv) above,  Sublessor,  by written notice to Sublessee
         specifying a payment date not earlier than five (5) Business Days after
         the date of such notice,  may  terminate  this Sublease and demand that
         Sublessee pay to Sublessor and Sublessee shall pay to Sublessor, on the
         payment date specified in such notice,  as liquidated  damages for loss
         of a bargain  and not as a penalty,  the sum of:  (A) any unpaid  Basic
         Rent due under this  Agreement  for  periods  ending on or prior to the
         payment date specified in such notice and any unpaid Supplemental Rents
         due on or prior to such payment date,  plus (B), an amount equal to the
         aggregate   unpaid  Basic  Rent  which  would  otherwise  have  accrued
         hereunder  over the remainder of the Sublease Term but for the Event of
         Default,  discounted  to  present  value as of the date  specified  for
         payment in such


                                      -65-

<PAGE>



         notice, less (C), if applicable, for any period until the expiration of
         the  Sublease  Term that  Sublessor  has not been able to sublease  the
         Aircraft but has been able, in the normal  course of its  operations to
         use the Aircraft,  the Basic Rent payable by Sublessee to Sublessor for
         the lease of the Aircraft  during any such period of use  discounted to
         present value as of the date specified for payment in such notice.  The
         amounts   specified  in  such  notice   shall  bear   interest  at  the
         Post-Default  Rate from the payment date specified in such notice until
         payment is made. In calculating  Sublessor's  damages hereunder upon an
         Event of Default, all Basic Rent which would have become due during the
         remainder of the Sublease  Term if an Event of Default had not occurred
         will be calculated  on a present  value basis using a discounting  rate
         equal to the rate of interest on United States  Treasury Bills having a
         maturity  which will most closely  approximate  the period equal to the
         remainder of the Sublease Term, as quoted in the Wall Street Journal on
         the date of Sublessor's notice.

         In addition,  Sublessee shall be liable,  except as otherwise  provided
above,  for any and all  Unpaid  Basic  Rent  and  Supplemental  Rent  then  due
hereunder  before  or  during  or after  the  exercise  of any of the  foregoing
remedies  and for all  legal  fees and  other  costs and  expenses  incurred  by
Sublessor by reason of the occurrence of any Event of Default or the exercise of
Sublessor's  remedies  with respect  thereto,  including  all costs and expenses
incurred  in  connection  with  return  of all or any  part of the  Aircraft  in
accordance  with Section 10 or this Section 14 or in storing or maintaining  the
Aircraft  or  any  part  thereof  or  placing  the  same  in the  condition  and
airworthiness required by Section 10.

         Except as otherwise  expressly  provided  above,  no remedy referred to
herein is intended to be exclusive, but each shall be cumulative and in addition
to any other remedy  referred to herein or  otherwise  available to Sublessor at
law or in equity,  and the exercise or beginning of exercise by Sublessor or any
one or more of such  remedies  shall  not  preclude  the  simultaneous  or later
exercise  by  Sublessor  of any or  all  such  other  remedies;  provided,  that
Sublessor  may recover  only once from each  element of damages  sustained  and,
provided  further,  that the  preceding  proviso  shall not be deemed to require
proof of damages actually  sustained in the case of liquidated  damages provided
for herein. No express or implied waiver by Sublessor of any Default or Event of
Default  shall in any way be, or be  construed  to be, a waiver of any future or
subsequent  Default  or  Event  of  Default.  To the  extent  permitted  by law,
Sublessee  hereby  waives any rights now or  hereafter  conferred  by statute or
otherwise 

                                    (A)  that  may  confer  any  right  to prior
                   notice or judicial  hearing in  connection  with  Sublessor's
                   taking  possession  or disposing  of the Aircraft  including,
                   without limitation,  any and all prior notice and hearing for
                   any  prejudgment  remedy or remedies  and any such right that
                   Sublessee might otherwise have under applicable law,


                                      -66-

<PAGE>



                                    (B) except as provided  in this  Section 14,
                   that impose any  requirements as to the time,  place or terms
                   of lease other disposition or other requirements with respect
                   to  the  enforcement  of  Sublessor's   rights  and  remedies
                   hereunder,  (C)  all  rights  of  redemption,   appraisement,
                   valuation,  stay, extension or moratorium now or hereafter in
                   effect  under  applicable  law that may  have the  effect  of
                   delaying  the  enforcement  of this  Sublease or the absolute
                   lease or other disposition of the Aircraft,  or (D) except as
                   otherwise provided herein, that may otherwise limit or modify
                   any of Sublessor's rights or remedies hereunder.  The failure
                   or delay of  Sublessor  in  exercising  any  right or  remedy
                   granted  it  hereunder  upon  any  occurrence  of  any of the
                   contingencies  set forth herein shall not constitute a waiver
                   of  any  such  right  or  remedy  upon  the  continuation  or
                   reoccurrence   of   any   such   contingencies   or   similar
                   contingencies and any single or partial exercise hereunder of
                   any particular right or remedy of Sublessor shall not exhaust
                   the same or  constitute a waiver of any other right  provided
                   herein.

         Notwithstanding  anything contained in this Section 14 to the contrary,
Sublessor shall use reasonable efforts to mitigate damages.

         Section 15. Notices.  All notices required or permitted hereunder shall
be in  writing  and  shall  be  delivered  in  person  or  sent  by  telecopier,
international  courier  service or letter  (mailed  certified and return receipt
requested), addressed to the parties as follows:

if the Sublessor:                           Alto Edificio Caribe, 2d Piso
                                            San Salvador, El Salvador
                                            Attention:  President
                                            Telecopier: (503) 98-0827

with a copy to:                             Greenberg, Traurig, Hoffman,
                                              Lipoff, Rosen & Quentel, P.A.
                                            1221 Brickell Avenue
                                            Miami, Florida 33131
                                            Attention: Kenneth C. Hoffman, Esq.
                                            Telecopier: 305-579-0717

if to Sublessee:                            Western Pacific Airlines, Inc.
                                            2864 S. Circle Drive, Suite 1100
                                            Colorado Springs, Colorado 80906
                                            Attention: Edward R. Beavais,
                                              President & CEO
                                            Telecopier: (719) 527-7480

with a copy to:                             Winthrop, Stimson, Putnam & Roberts
                                            One Battery Park Plaza
                                            New York, New York  10004
                                            Attention: Ruth Weinstein, Esq.
                                            Telecopier:  (212) 858-1500



                                      -67-

<PAGE>



or at such  other  address as  Sublessee  or  Sublessor  shall from time to time
designate  in  writing  to the  other.  In the case of a notice  will be  deemed
received upon actual  receipt.  In the case of a mailed  letter,  notice will be
deemed received on the tenth (10th) Business Day after deposit in the mail, with
proper postage for registered or certified first-class mail prepaid. All notices
required or permitted  under the Lease shall be given in the manner set forth in
Section 18 of the Lease.

         Section 16.         Governing Law and Jurisdiction.

         (a) Governing  Law. This Sublease shall in all respects be governed by,
and  construed in accordance  with,  the internal laws of the State of New York,
inclusive of all matters of construction, validity and performance.

         (b)  Jurisdiction;  Service of Process.  Sublessee and Sublessor hereby
irrevocably  submit to the  jurisdiction  of any New York State or federal court
sitting in New York City in any action or proceeding  arising out of or relating
to this  Sublease,  and hereby  irrevocably  agree that all claims in respect of
such action or  proceeding  may be heard and  determined  in such New York State
court or, to the extent  permitted by law, in such federal court.  Sublessee and
Sublessor hereby  irrevocably  waive, to the fullest extent they may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. Sublessee hereby irrevocably appoints CT Corporation System, with an
office  on the date  hereof at 1633  Broadway,  New York,  New York  10019,  and
Sublessor hereby irrevocably appoints Greenberg, Traurig, Hoffman, Lipoff, Rosen
& Quentel, 153 East 53rd Street, New York, New York 10022 (the "Process Agent"),
as their  respective  agents to receive on their  behalf and in respect of their
proper service of copies of the summons and complaint and any other process that
may be served in any such  action or  proceeding.  Such  service  may be made by
mailing or delivering a copy of such process to Sublessee or  Sublessor,  as the
case may be, in care of their respective  Process Agents at such Process Agent's
above  address,  and Sublessee and Sublessor  hereby  irrevocable  authorize and
direct their  respective  Process Agents to accept such service on their behalf.
As an alternative  method of service,  Sublessee and Sublessor also  irrevocably
consent to the service of any and process in any such  action or  proceeding  by
the mailing of copies of such  process to the address  specified  in Section 16.
Sublessee  and  Sublessor  agree  that a final  judgment  in any such  action or
proceeding  shall be conclusive  and may be enforced in other  jurisdictions  by
suit on the  judgment or in any other  manner  provided by law.  Nothing in this
Section 16(b) shall affect the right of any Person (including Lessor and Lender)
to serve legal process in any other manner  permitted by law or affect the right
of any  other  party to bring any  action or  proceeding  against  Sublessee  or
Sublessor,  or their respective properties in the courts of other jurisdictions.
SUBLESSEE AND SUBLESSOR HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING


                                      -68-

<PAGE>



TO WHICH THEY ARE PARTIES INVOLVING,  DIRECTLY OR INDIRECTLY, ANY MATTER ARISING
OUT OF OR RELATING TO THIS SUBLEASE.

         (c) Waiver of Immunity.  To the extent that  Sublessor or Sublessee has
or hereafter may acquire any sovereign immunity,  Sublessor and Sublessee hereby
irrevocably waive such immunity in respect of their respective obligations under
this Sublease and all other  documents and  agreements  relating to the Aircraft
and the transactions referred to or contemplated herein.

         Section 17.         Miscellaneous.

         (a) Entire  Agreement.  This Sublease  constitutes the entire agreement
between the parties  concerning the subject  matter  hereof,  and supersedes all
previous proposals, agreements,  understandings,  negotiations and other written
and oral  communications  in relation  hereto.  NO SUBLEASE TERM OR PROVISION OF
THIS SUBLEASE MAY BE CHANGED, WAIVED, DISCHARGED OR TERMINATED,  EXCEPT (i) WITH
THE PRIOR  WRITTEN  CONSENT  OF LESSOR  AND AGENT AND (ii) BY AN  INSTRUMENT  IN
WRITING SIGNED BY A DULY  AUTHORIZED  REPRESENTATIVE  OF THE PARTY AGAINST WHICH
THE  ENFORCEMENT  OF THE CHANGE,  WAIVER,  DISCHARGE OR  TERMINATION  IS SOUGHT.
Nothing herein shall be construed as conveying to Sublessee any right,  title or
interest in the Aircraft, the Airframe or any Engine or Part except as Sublessee
under this Sublease.

         (b) English Language. All notices,  communications,  reports,  opinions
and other documents given under this Sublease shall be in the English language.

         (c) Sublessor's  Right to Perform for Sublessee.  If Sublessee fails to
make  any  payment  of  Rent  or  Supplemental  Rent  required  to be made by it
hereunder  or fails to perform or comply  with any of its  agreements  contained
herein,  Sublessor  may itself make such  payment or perform or comply with such
agreement,  and the amount of any expenses of Sublessor  incurred in  connection
with such payment or the performance of or compliance  with such  agreement,  as
the case may be, shall be deemed  Supplemental  Rent  payable by Sublessee  upon
demand;  provided,  however, that no such payment,  performance or compliance by
Sublessor  shall (i) be deemed to have  satisfied the obligation of Sublessee to
make such payment or to perform or comply with such  agreement,  as the case may
be,  unless  and until  Sublessee  shall  have paid all such  Supplemental  Rent
payable  pursuant to this  section by reason of such failure or (ii) be deemed a
waiver of Sublessor's rights and remedies against Sublessee hereunder.

         (d)  Application of Payments  During  Existence of Default.  Any amount
referred to herein that is payable to Sublessee  shall not be paid to Sublessee,
or if it has been previously  paid directly to Sublessee,  shall not be retained
by Sublessee, if at the time of such payment a Default or Event of Default shall
have occurred and be continuing, but shall be paid to and held by


                                      -69-

<PAGE>



Sublessor  as security  for and may be applied to the  obligations  of Sublessee
under this  Sublease and, at such time as Sublessor  shall  receive  evidence in
form and  substance  satisfactory  to it that there is not  continuing  any such
Default or Event of  Default,  all such  amounts in excess of amounts so paid on
obligations of Sublessee shall be paid to Sublessee.

         (e) Expenses. Whether or not the transactions contemplated hereby shall
be consummated,  Sublessee agrees to reimburse  Sublessor,  Lessor and Agent for
their respective  out-of-pocket  costs and expenses,  including  attorneys' fees
(except for the fees of Greenberg,  Traurig,  Hoffman,  Lipoff, Rosen & Quentel,
P.A.), incurred in connection with the preparation,  negotiation and delivery of
this  Sublease,  any other  documents  or  instruments  required  in  connection
herewith and the transactions  contemplated hereby.  Sublessee further agrees to
reimburse Sublessor,  Lessor, Agent and any Lender for their out-of-pocket costs
and  expenses,  including  attorneys'  fees,  incurred  in  connection  with any
amendments,  modifications  or waivers required by this Sublease or requested by
Sublessee (or resulting from any requests of Sublessee) hereunder.

         (f) Further  Assurances.  Sublessee  will promptly and duly execute and
deliver to Sublessor such further documents and assurances and take such further
action as Sublessor  may from time to time  reasonably  request in order to more
effectively  carry out the intent and purpose of this  Sublease and to establish
and protect the rights and  remedies  created or intended to be created in favor
of  Sublessor  hereunder,   including,   without  limitation,  if  requested  by
Sublessor,  Lessor or Agent,  at the expense of  Sublessee,  the  execution  and
delivery of supplements or amendments hereto, in recordable form,  subjecting to
this Sublease any Replacement Engine and the recording or filing of counterparts
hereof,  and all such other  documents and  instruments,  in accordance with the
laws of such jurisdictions as Sublessor may from time to time deem advisable.

         (g) Judgment  Currency.  The obligations of Sublessee in respect of any
sum due from it to Sublessor hereunder shall,  notwithstanding any judgment in a
currency other than Dollars, be discharged only to the extent that Sublessor may
in accordance with normal banking procedures purchase,  or cause to be purchased
for its account  Dollars with such other  currency;  if the Dollars so purchased
are less than the sum originally due in Dollars,  Sublessee  agrees to indemnify
Sublessor  against  such loss,  and if the Dollars so  purchased  exceed the sum
originally due to Sublessor in Dollars,  Sublessor  agrees to remit to Sublessee
such excess.

         (h) Invalidity of any Provision. Any provision of this Sublease that is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating the remaining provisions hereof, and any such prohibition or


                                      -70-

<PAGE>



unenforceablity in any jurisdiction shall not invalidate or render unenforceable
such provision in any other  jurisdiction.  To the fullest  extent  permitted by
applicable  law,  Sublessee  hereby waives any provision of law that renders any
provision hereof prohibited or unenforceable in any respect.

         (i) Changes in Law. If there shall be any change (or such change  shall
be  enacted  or made by notice or  otherwise  and shall be  scheduled  to become
thereafter  effective)  in the laws or treaties of the United  States that has a
material adverse effect on the validity, legality,  perfection or enforceability
of Sublessor's,  Lessor's or Lender's rights or interest in the Aircraft or this
Sublease  or the  validity,  legality,  perfection,  or  enforceability  of this
Sublease,  or  the  perfection  of the  Security  Assignments  or the  Mortgage,
Sublessor may terminate  this  Agreement,  whereupon  Sublessee  shall  promptly
return the  Aircraft to  Sublessor  or its  designee in the  condition  required
hereunder.

         (j)  Headings.  All section and  paragraph  headings  and  captions are
purely for convenience of reference only and shall not modify,  define,  expand,
limit  or  otherwise  affect  any of the  terms  or  provisions  hereof  and all
references  herein to numbered  sections,  unless  otherwise  indicated,  are to
sections of this Sublease.

         (k) Consent. Whenever in this Sublease, the consent (whether or not, in
writing) of either Sublessor or Sublessee is required, such consent shall not be
unreasonably withheld or delayed.

         (l) Third-Party Beneficiaries.  Sublessee recognizes that this Sublease
confers certain rights and interests on the  Indemnitees.  Notwithstanding  that
the Indemnitees  are not parties to this Sublease,  the Indemnitees are intended
third party  beneficiaries  of such rights and interests  and  Sublessor  hereby
acknowledges  that  the  Indemnitees  may  enforce  such  rights  and  interests
directly, as if they were parties to this Sublease.

         (m)  Counterparts.  This  Sublease  may be  executed  in any  number of
identical  counterparts,  all of which together will be deemed to be one and the
same  instrument.  Delivery  of an  executed  counterpart  of this  Sublease  by
facsimile  will be  deemed  effective  as  delivery  of an  originally  executed
counterpart.  Any party  delivering an executed  counterpart of this Sublease by
facsimile  will also deliver an originally  executed  counterpart;  provided the
failure of any party to  deliver  an  originally  executed  counterpart  of this
Sublease will not affect the validity or effectiveness of this Sublease.

                          [CONTINUED ON SIGNATURE PAGE]




                                      -71-

<PAGE>



                  IN WITNESS  WHEREOF,  Sublessor and Sublessee have each caused
this Sublease to be duly executed as of the day and year first above written.

                                       TACA INTERNATIONAL AIRLINES, S.A.,
                                       as Sublessor


                                       By: _____________________________
                                       Name:
                                       Title:

                                       WESTERN PACIFIC AIRLINES, INC.,
                                       as Sublessee


                                       By: _____________________________
                                       Name:
                                       Title:



                                      -72-

<PAGE>



                                                                      SCHEDULE 1
                                                              SUBLEASE AGREEMENT



                              STIPULATED LOSS VALUE


         The  Stipulated  Loss Value as of any date shall be equal to the amount
of U.S. dollars set forth in the table below and set forth opposite such date.


                              Stipulated Loss Value



                                                                   Stipulated
                                                                   Loss Value
Lease Period Dates                                             (In U.S. Dollars)
                                                               -----------------
March 18, 1996 - March 17, 1997                                   $27,000,000

March 18, 1997 - March 17, 1998                                    26,500,000

March 18, 1998 - March 17, 1999                                    26,000,000

March 18, 1999 - March 17, 2000                                    25,500,000

March 18, 2000 - End of Lease Term                                 25,000,000



                                      -73-

<PAGE>



                                    EXHIBIT A

                              AIRCRAFT DESCRIPTION


One Boeing Model B737-3S3 Aircraft,  United States  Registration Mark N375TA and
Manufacturer's  Serial No.  23787  with two CFM  International,  Inc.  Model CFM
56-3B2 Engines,  Manufacturer's Serial Nos. 721734 and 721150, respectively in a
136-seat, single class configuration.


AIRFRAME*:

                  Aircraft Total Time (Hours)                  _______
                  Aircraft Total Landings (Cycles)             _______
                  Time since last "C" Check                    _______
                  Time since last "D" Check                    _______

ENGINES*:




                                                                   Time to Next
                             Total                                Replacement of
      Serial                Engine        Total      Time Since    Lowest Life
      Number                Cycles        Time        Overhaul    Limited Part
      ------                ------        -----      ----------   --------------
      721734

      721150



 ---------------
 *as of March __, 1996






                                       -1-

<PAGE>



                                    EXHIBIT B

                             ACCEPTANCE CERTIFICATE


         WESTERN PACIFIC  AIRLINES,  INC., a corporation  organized and existing
under the laws of  ________________  with its  principal  place of  business  in
Colorado Springs,  Colorado  ("Sublessee")  does hereby represent,  acknowledge,
warrant and agree as follows:

         (a) Sublease and TACA INTERNATIONAL  AIRLINES,  S.A. ("Sublessor") have
entered  into  a  Sublease  of  Lease  Agreement  dated  as of  March  __,  1996
(hereinafter  referred to as the "Sublease").  Capitalized words used herein and
not otherwise defined will have the meanings set forth in the Sublease.

         (b) Sublessee has this __ day of March,  1996 (Time: ___ ________),  at
El Salvador International Airport, received from Sublessor possession of:

                  (i)  One  (1)  Boeing   737-3S3   Aircraft   bearing
         Manufacturer's   serial   number   23787   and  two  (2)  CFM
         International,  Inc. Model CFM 56-3B2 Engines, Manufacturer's
         Serial Nos. 721734 and 721150 (the "Aircraft"); and

                  (ii)  The  manuals,  logbooks,  flight  records  and
         historical  information  regarding the Aircraft,  Engines and
         Parts   listed  in   Attachment   1  hereto  (the   "Aircraft
         Documentation").

         (c) Except as noted on Attachment 2 hereto,  Sublessee  hereby confirms
and agrees that the above  described  Aircraft and Aircraft  Documentation  have
been duly  accepted by  Sublessee  pursuant to the terms and  provisions  of the
Sublease.

         (d) As of the date hereof,  the Aircraft and Engines had the  following
hours/cycles:

AIRFRAME:                  Aircraft Total Time (Hours)                  ________
                           Aircraft Total Landings (Cycles)             ________
                           Time since last "C" Check                    ________
                           Time since last "D" Check                    ________


                                                                   Time to Next
                        Total                                     Replacement of
    Serial             Engine          Total       Time Since      Lowest Life
    Number             Cycles          Time         Overhaul       Limited Part
    ------             ------          -----       ----------     --------------
    721734

    721150



         (e) Quantity of fuel on board the Aircraft at delivery:_________.



<PAGE>




         IN WITNESS WHEREOF, Sublessee has caused this Acceptance Certificate to
be executed  by its duly  authorized  representative  as of the day and year set
forth above.

                                       WESTERN PACIFIC AIRLINES, INC.



                                       By:____________________________
                                          Name:
                                          Title:



ATTACHMENTS:               1.       List of Aircraft Documentation
                           2.       List of Discrepancies




                                       -2-

<PAGE>



                                  ATTACHMENT 1
                            TO ACCEPTANCE CERTIFICATE

                             AIRCRAFT DOCUMENTATION

                                     MANUALS

                  Name
                  ----
FAA Approved Airplane Flight Manual  
Manufacturer's Operations Manual - Volume No. ______ 
Quick Reference Handbook  
Maintenance Manuals 
Wiring Diagram Manuals
Structural Repair Manual  
Illustrated Parts Catalog 
Vendor Illustrated Parts Catalog  
Overhaul Manuals 
Vendor Overhaul Manuals 
Drawings (Major Assembly and Installation)  
Weight and Balance Control and Loading Manual 
Weight and Balance Manuals Supplement 
Actual Weight and Balance Compliance 
Rigging Document




<PAGE>



                    AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS
                    -----------------------------------------

Aircraft log book (current file copies) 
Aircraft Readiness Log (revised to time of return) 
Maintenance Time Control Report (components, maintenance visit, special items
next, due Airframe hours and cycles) 
Aircraft previous maintenance visit record including the last inspection 
performed.
Airworthiness  Directive  Compliance Summary 
Serviceable Tags for all rotable  components  installed  (Airframe & Engines)
Ads  requiring continuous  surveillance 
Service bulletin terminated accomplished status
Service bulletin requiring continuous surveillance summary and maintenance
control action  
Airframe and component history records  
FAA Form 337 for Airframe, repair/overhaul certification of last major visit 
FAA Form 337 for each Engine, repair/overhaul certification of last shop visit 
Engine Readiness Log for each Engine (components installed) 
Summary of Service Bulletins accomplished for each Engine 
Summary of AD's accomplished  for each Engine 
SD and AD status requiring continuous surveillance with maintenance, control 
action for each engine 
Engine time summary sheet including life limited items (for each Engine)  
Engine log books for each Engine (current and file copies)


                                       -2-

<PAGE>



Receipt of the foregoing documents except as noted, is hereby acknowledged.



                                       -3-

<PAGE>



                                  ATTACHMENT 2
                            TO ACCEPTANCE CERTIFICATE

                                  DISCREPANCIES





<PAGE>



                                    EXHIBIT C

                        FORM OF RETURN ACCEPTANCE RECEIPT


         WESTERN PACIFIC AIRLINES,  INC.  ("Sublessee")  and TACA  INTERNATIONAL
AIRLINES,  S.A.  ("Sublessor")  have entered into a Sublease of Lease  Agreement
dated as of March __, 1996 (hereinafter referred to as "Sublease").  Capitalized
words used herein and not otherwise  defined will have the meanings set forth in
the Sublease.

         (a) Sublessor has this __ day of ______,  _____ (Time:  ___ _________),
at [return location], received from Sublease possession of:

                  (i)  One  (1)  Boeing   737-3S3   Aircraft   bearing
         Manufacturer's   serial   number   23787   and  two  (2)  CFM
         International,  Inc. Model CFM 56-3B2  Engines,  Manufacturer
         Serial Nos. 72134 and 721150 (the "Aircraft"); and

                  (ii)  The  manuals,  logbooks,  flight  records  and
         historical  information  regarding the Aircraft,  Engines and
         Parts   listed  in   Attachment   1  hereto  (the   "Aircraft
         Documentation").

         (b)  Except  as noted on  Attachment  2  hereto,  the  above  specified
Aircraft and Aircraft Documentation are hereby accepted by Sublessor pursuant to
the terms and provisions of the Sublease.

         (c) As of the date hereof,  the Aircraft and Engines had the  following
hours/cycles:

AIRFRAME:                  Aircraft Total Time (Hours)                  ________
                           Aircraft Total Landings (Cycles)             ________
                           Time since last "C" Check                    ________
                           Time since last "D" Check                    ________


                                                                  Time to Next
                        Total                                     Replacement of
    Serial             Engine          Total       Time Since      Lowest Life
    Number             Cycles          Time         Overhaul       Limited Part
    ------             ------          -----       ----------     --------------
    721734

    721150


         (d)      Quantity of fuel on board the Aircraft at redelivery:
-----------------.



<PAGE>



         IN WITNESS  WHEREOF,  Sublessee and  Sublessor  have caused this Return
Acceptance Receipt to be executed by their duly authorized representatives as of
the day and year set forth above.

                                       WESTERN PACIFIC AIRLINES, INC.


                                       By:____________________________
                                          Name:
                                          Title:

                                       TACA INTERNATIONAL AIRLINES, S.A.


                                       By:____________________________
                                          Name:
                                          Title:



ATTACHMENTS:               1.       List of Aircraft Documentation
                           2.       List of Discrepancies






                                       -2-

<PAGE>



                                  ATTACHMENT 1
                          TO RETURN ACCEPTANCE RECEIPT

                             AIRCRAFT DOCUMENTATION


(NOTE:            At time of Aircraft return list all of the records,
                  manuals, documents and data (by title/description,
                  identification number and quantity) which were provided
                  to Sublessee by Sublessor with delivery of the Aircraft
                  under the Sublease.  Also list all additional
                  records/data developed for and returned with the
                  Aircraft by Sublessee.)

                                     MANUALS


         Name
         ----
FAA Approved  Airplane Flight Manual  
Manufacturer's  Operations Manual - Volume No. _______ 
Quick Reference Handbook  
Maintenance Manuals
Wiring Diagram Manuals
Structural  Repair Manual  
Illustrated  Parts Catalog 
Vendor  Illustrated  Parts Catalog  
Overhaul  Manuals 
Vendor Overhaul  Manuals 
Drawings (Major Assembly and Installation)  
Weight and Balance  Contra and Loading  Manual 
Weight and Balance Manual Supplement 
Actual Weight and Balance Compliance 
Rigging Document




<PAGE>



                    AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS


Aircraft log book (current file copies) 
Aircraft Readiness Log (revised to time of return)  
Maintenance Time Control Report (components, maintenance visit, special items
next due, Airframe hours and cycles) 
Aircraft previous maintenance visit record including the last inspection
performed.  
Airworthiness Directive Compliance Summary  
Serviceable Tags for all rotable components installed (Airframe & Engines) 
Ads requiring continuous surveillance  
Service bulletin terminated accomplishment status  
Service bulletin requiring continuous surveillance summary and maintenance
control action  
Airframe and component history records 
FAA Form 337 for Airframe, repair/overhaul certificate of last shop visit 
Engine Readiness Log for each Engine (component installed) 
Summary of Service Bulletin's accomplished for each Engine 
Summary of AD accomplished for each Engine 
SB and AD status requiring continuous surveillance with maintenance, control
action of each Engine 
Engine time summary sheet including life limited items (for each Engine)  
Engine log books for each Engine (current and file copies)


Receipt  of  the  foregoing  documents, except as noted, in hereby acknowledged.


                                       -2-

<PAGE>



                                  ATTACHMENT 2
                          TO RETURN ACCEPTANCE RECEIPT

                                  DISCREPANCIES




<PAGE>



                                    EXHIBIT D


                        FORM OF CERTIFICATES OF Sublessee



                              OFFICER'S CERTIFICATE


         Reference is hereby made to the Sublease of Lease Agreement dated as of
March ___, 1996,  between TACA  International  Airlines,  S.A., as Sublessor and
WESTERN PACIFIC AIRLINES,  INC. (the "Sublease").  Capitalized terms used herein
shall, except as otherwise defined herein, have the respective meanings assigned
thereto or  incorporated  by  reference to any other  document in the  Sublease.
Pursuant to Section 4(a) of the Sublease,  in connection with the Sublease,  the
undersigned hereby certifies as follows:

         1.  The  undersigned  is  the  duly  appointed,  qualified  and  acting
President of WESTERN PACIFIC  AIRLINES,  INC. (the  "Sublessee"),  a corporation
duly  organized and existing  under the laws of  [Delaware],  with its principal
place of business in Colorado Springs, Colorado;

         2. All of the  representations  and warranties made by Sublessee in the
Sublease are true and accurate as of the date hereof,  except to the extent that
such  representations  and warranties relate solely to an earlier date (in which
case, the  undersigned  reaffirms that such  representations  and warranties are
true and accurate as of such earlier date); and

         3. No Default or Event of Default has  occurred and is  continuing,  or
will  result  from  Sublessee's  execution,  delivery  and  performance  of  the
Sublease.

         IN  WITNESS   WHEREOF,   the  undersigned  has  signed  this  Officer's
Certificate this ___ day __________________, 1996.



                                       -----------------------------
                                       Name:
                                       Title:



                                       -2-

<PAGE>



                             SECRETARY'S CERTIFICATE


         Reference is hereby made to the Sublease of Lease Agreement dated as of
March ___, 1996,  between TACA  International  Airlines,  S.A., as Sublessor and
WESTERN PACIFIC  AIRLINES,  INC., as Sublessee,  (the  "Sublease").  Capitalized
terms used herein, have the respective meanings assigned thereto or incorporated
by reference to any other  documents in the  Sublease.  In  connection  with the
Sublease and pursuant to Section 4(b) of the Sublease,  the  undersigned  hereby
certifies as follows:

         1.  The  undersigned  is  the  duly  appointed,  qualified  and  acting
[Secretary][Assistant  Secretary] of Sublessee,  a  corporation  duly  organized
under the laws of  Delaware,  with its  principal  place of business in Colorado
Springs, Colorado.

         2.  Attached as Annex A is a true and complete  copy of the Articles of
Incorporation and the By-laws of Sublessee, as in effect on the date hereof.

         3. There is no pending or contemplated  proceeding for the amendment of
the Articles of Incorporation or By-laws of Sublessee.

         4.  Attached as Annex B is a true and complete copy of  resolutions  of
the Board of Directors of  Sublessee,  as duly adopted by the Board of Directors
in accordance with the Articles of Incorporation and By-laws of Sublessee,  duly
authorizing  the  execution,  delivery  and  performance  by  Sublessee  of this
Sublease  and all other  agreements,  documents  and  certificates  contemplated
hereby or thereby to be executed on behalf of  Sublessee,  and such  resolutions
have not been amended, rescinded,  modified or revoked and are in full force and
effect on the date hereof.

         5. Set forth  below  are/is  the  genuine  signature  of the  Executive
President of Sublessee, who is the person duly authorized to execute and deliver
the Sublease and such other documents and  instruments  required to be delivered
under the Sublease, and who continues to hold his office as of the date hereof:

      Name                Title                                    Signature







<PAGE>



         IN  WITNESS  WHEREOF,  the  undersigned  has  signed  this  Secretary's
Certificate this ___ day of _________________, 1996.



                                       -----------------------------
                                       Name:
                                       Title:


         The undersigned, being one of the officers referred to in the foregoing
Secretary's  Certificate,  does hereby  certify as of the date of the  foregoing
Certificate that  _________________  is the  [Secretary/Assistant  Secretary] of
WESTERN PACIFIC AIRLINES, INC. and the signature above is his genuine signature.



                                       -----------------------------
                                       Name:
                                       Title:




                                       -2-

<PAGE>



                                   EXHIBIT E


                     FORM OF OPINION OF SUBLESSEE'S COUNSEL


To Each Person Listed
on Schedule A Hereto


Gentlemen:

         We have  acted  as  counsel  for  WESTERN  PACIFIC  AIRLINES,  INC.,  a
corporation  organized  and existing  under the laws of  _______________________
("WPA") in  connection  with the  preparation,  execution  and  delivery  of the
Sublease  of Lease  Agreement  dated as of March  ___,  1996  (the  "Sublease"),
between TACA International Airlines,  S.A., as Sublessor, and WPA, as Sublessee,
relating  to the lease of the  Aircraft.  Capitalized  terms used herein and not
otherwise defined shall have the meanings defined in the Sublease.

         In that  connection we have examined the  following:  (i) the Sublease;
(ii) the  Lease;  (iii)  the  Security  Subleases;  (iv) the  Mortgage;  (v) the
Articles of  Incorporation  and bylaws of WPA and all  amendments  thereto  (the
"Charter"); and (vi) such other documents, agreements and instruments as we have
deemed necessary as a basis for the opinions hereinafter expressed. We have also
examined  originals  or  copies,   certified  or  otherwise  identified  to  our
satisfaction,  of such other records and such other instruments and certificates
of public officials and of officers and representatives of WPA as we have deemed
necessary or appropriate as a basis for the opinions hereinafter expressed.

         In  arriving  at the  opinions  expressed  below,  we have  assumed the
genuineness of all signatures and the due authorization,  execution and delivery
by the parties  thereto (other than WPA) of each of the documents  listed above.
In  addition,  we  have  made  such  investigations  of  law as we  have  deemed
appropriate for the purpose of giving the opinions expressed below.

         On the basis of the foregoing,  the further assumptions set forth below
and our  consideration  of such other matters of fact and questions of law as we
have deemed  relevant in the  circumstances,  and subject to the limitations set
forth below, we are of the opinion that:

         (1) WPA is a corporation  duly organized,  validly existing and in good
standing  under  the  laws  of  ____________  and has the  corporate  power  and
authority to carry on its business as presently  conducted and to enter into and
perform its  obligations  under the Sublease,  the Lease and all other documents
contemplated  thereby to which it is or will  become a party  (collectively  the
"Documents"), and holds all material licenses,



<PAGE>



certificates  and permits  from all  Government  Entities of  __________________
necessary for the conduct of its business as now conducted.

         (2) The execution, delivery and performance by WPA of the Documents (a)
have been duly authorized by all necessary  corporate action on the part of WPA,
(b) do not  require  any  stockholder  approval,  or  approval or consent of any
trustee  or  holders  of any  indebtedness  or  obligations  of WPA,  (c) do not
contravene any law, rule or regulation of any Government  Entity binding on WPA,
(d) do not  contravene  any order  binding  on WPA,  (e) do not  contravene  any
provision of the Charter of WPA, and (f) do not contravene the provisions of, or
constitute  a default  under,  or result  in the  creation  of any lien upon any
property  or  assets of WPA under any  indenture,  mortgage,  contract  or other
agreement to which WPA is a party or by which it or its  properties may be bound
or affected or any applicable law, rule or regulation, judgment, order or decree
of any  Government  Entity or court having  jurisdiction  over WPA or any of its
properties or assets. Each of the Documents has been duly executed and delivered
by WPA.

         (3) No authorization or approval  (including exchange control approval)
or other action by, and no notice to or filing with, any Governmental  Entity is
required  for  the  due  execution,  delivery  and  performance  by  WPA  of the
Documents, but the failure so to record or file the Sublease will not affect the
enforceability of WPA's  obligations  under the Documents.  The Documents are in
proper form for filing and recording.

         (4) The Documents are the legal,  valid and binding  obligations of WPA
enforceable against WPA in accordance with their respective terms.

         (5) The obligations of WPA under the Documents rank at least pari passu
in all respects with all other unsecured  obligations of WPA and are not subject
to any law, rule or regulation of ___________ or any Governmental Entity thereof
with regard to any preference for payment of obligations or any  rescheduling of
the payment of any debt or other obligations.

         (6) The Lease,  as assigned to WPA pursuant to the Sublease,  creates a
valid leasehold interest in the Aircraft.

         (7)  There is no  pending  or, to the best of our  knowledge  after due
inquiry,   threatened  action  or  proceeding   affecting  WPA  or  any  of  its
subsidiaries  before  any court,  governmental  agency or  arbitrator,  or which
affects or  purports to restrain  the making or  performance  of, or affects the
legality,  validity  or  enforceability  of the  Documents  or the  transactions
contemplated thereby.

         (8)  Neither  WPA  nor  any of  its  property  has  any  immunity  from
jurisdiction of any court or from any legal process (whether


                                       -2-

<PAGE>



through service or notice,  attachment  prior to judgment,  attachment in aid of
execution, execution or otherwise).

         (9) There is and will be no Tax,  levy,  impost,  deduction,  charge or
withholding imposed by any Taxing Authority of any relevant jurisdiction therein
or  thereof  either  (i) on or by virtue of the  execution  or  delivery  of the
Documents or any other  document to be  furnished  thereunder  or in  connection
therewith or (ii) on any payment  made, or to be made, by WPA pursuant to any of
the Documents.

         (10) It is not  necessary  to take any action in  Colorado or under the
laws of Ecuador to perfect  the  interest  of the Lessor in the  Aircraft or the
security  interests  in favor of the Lender  which the  Mortgage or the Security
Subleases  purport to create in the Aircraft,  the Lease or any other portion of
the Security (as defined in the Mortgage).  No person,  by performing any act in
Colorado including,  without limitation, the execution or recording of a bill of
sale or any security  interest,  can acquire any interest  prior in right to the
Lessor or the  interests in favor of the Lender  which the Mortgage  purports to
create in the Aircraft or any other portion of the Security.

         (11) It is not  necessary  under the laws of  Colorado  (i) in order to
enable the  Sublessor  to enforce its rights under the  Sublease,  the Lessor to
enforce its rights under the Lease or the Lender to enforce its rights under the
Mortgage, or (ii) by reason of the execution, delivery and performance of any of
the Documents that the Sublessor, the Lessor, the Lender or any Lender should be
licensed, qualified or otherwise entitled to carry on business in Colorado.

         (12)  Neither  Sublessor,  Lessor  nor  Lender  will be  deemed to be a
resident  domiciled  or  carrying  on  business  or subject to taxation or other
unfavorable consequences in Colorado by reason only of the execution,  delivery,
performance and/or enforcement of the Sublease or the Security Subleases.

         (13)  Neither  WPA nor any of its  subsidiaries  is, to the best of our
knowledge  after due  inquiry,  in breach of or default  under any  agreement to
which it is a party or which is binding on it or any of its assets.

         (14) The  choice  of New York law set forth  (a) in the  Sublease,  the
Lease,  the Security  Subleases  and the  Mortgage,  in each case to govern such
respective  document and to control the construction  thereof,  is in each case,
under the laws of Colorado, a valid, effective and enforceable choice of law.

         (15) A  judgment  obtained  against  WPA in a court in the State of New
York  pursuant to service of process in  accordance  with the Sublease  would be
enforceable  in Colorado  against WPA's assets  located  therein,  and execution
against WPA's assets in Ecuador to satisfy such a judgment  could be obtained in
Ecuador.


                                       -3-

<PAGE>




         (16) WPA has legally, validly, effectively and irrevocably submitted to
the  jurisdiction  of any United  States or state  courts in New York City,  New
York,  and has  legally,  validly,  effectively  and  irrevocably  appointed  CT
Corporation  System as its  authorized  agent for the purposes  described in the
Sublease.


                                       Very truly yours,





                                       -4-

<PAGE>



                                    EXHIBIT F

                             FORM OF MONTHLY REPORT

                 MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT

To:      TACA INTERNATIONAL AIRLINES, S.A. (the "Sublessor")
         Alto Edificio Caribe, 2d. Piso
         San Salvador, El Salvador
         Attention: President
         Telecopier: (503) 98-0827


From:             WESTERN PACIFIC AIRLINES, INC. (the "Sublessee")



         Re:      AIRCRAFT TYPE:  Boeing 737-3S3
                  REGISTRATION:
                  SERIAL NUMBER: 23787
                  MONTH OF ________ 19__

================================================================================
AIRCRAFT TOTAL TIME SINCE NEW                          HRS:
--------------------------------------------------------------------------------
AIRCRAFT TOTAL CYCLES SINCE NEW                        CYCLES:
--------------------------------------------------------------------------------
AIRFRAME FLIGHT HOURS DURING MONTH                     HRS:
--------------------------------------------------------------------------------
AIRFRAME BLOCK HOURS DURING MONTH                      HRS:
--------------------------------------------------------------------------------
AIRFRAME CYCLES/LANDING DURING MONTH                   CYCLES:
--------------------------------------------------------------------------------
TIME REMAINING TO D OR HEAVY MAINTENANCE
CHECK
================================================================================

Date of next scheduled "C" check:  __________





<PAGE>



================================================================================
ENGINE SERIAL NUMBER ______                   ENGINE SERIAL NUMBER ________
ORIGINAL POSITION _________                   ORIGINAL POSITION ___________
--------------------------------------------------------------------------------
ACTUAL LOCATION:                              ACTUAL LOCATION:
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                                 HOURS:                             HOURS:
--------------------------------------------------------------------------------
TOTAL TIME SINCE NEW                         TOTAL TIME SINCE NEW
--------------------------------------------------------------------------------
TOTAL CYCLES SINCE NEW                       TOTAL CYCLES SINCE
                                             NEW
--------------------------------------------------------------------------------
FLIGHT HOURS FLOWN                           FLIGHT HOURS FLOWN
DURING MONTH                                 DURING MONTH
--------------------------------------------------------------------------------
CYCLES DURING MONTH                          CYCLES DURING MONTH
--------------------------------------------------------------------------------
TIME REMAINING TO HSI                        TIME REMAINING TO HSI
--------------------------------------------------------------------------------
TIME REMAINING TO EHM                        TIME REMAINING TO EHM
================================================================================
NOTE:             IF LESSOR OWNED ENGINE IS REMOVED OR INSTALLED ON
                  ANOTHER AIRCRAFT IT MUST BE REPORTED MONTHLY ON THIS
                  FORM.

SERVICE  BULLETINS,   AIRWORTHINESS  DIRECTIVES,  ENGINEERING  MODIFICATIONS  OR
CHANGES  SCHEDULED OR COMPLETED  (INDICATE DATE SCHEDULED FOR COMPLETION OR DATE
OF COMPLETION, AS APPLICABLE):

================================================================================
================================================================================
================================================================================
================================================================================



WARRANTY CLAIMS MADE OR SETTLED SINCE LAST REPORT  (INDICATE NATURE OF CLAIM AND
SETTLEMENT, AS APPLICABLE):

================================================================================
================================================================================
================================================================================
================================================================================




                                       -2-

<PAGE>



                               SUBLEASE SUPPLEMENT

                  SUBLEASE  SUPPLEMENT,  dated  March 29,  1996,  between:  TACA
INTERNATIONAL AIRLINES, S.A. ("Sublessor") and WESTERN PACIFIC AIRLINES, INC., a
corporation  formed under the laws of Delaware (together with its Sublessors and
permitted assigns, the "Sublessee").

                  Sublessor  and  Sublessee  have  heretofore  entered into that
certain  Sublease  Agreement  dated as of March 18, 1996  relating to one Boeing
737-3S3  aircraft  (the  "Sublease").  Capitalized  terms  used  herein  without
definition  shall have the  meanings  set forth in the  Sublease.  The  Sublease
provides for the execution and delivery of a Sublease Supplement for the purpose
of leasing the Aircraft under the Sublease as and when delivered by Sublessor to
Sublessee in  accordance  with the terms  thereof.  The Sublease  relates to the
Aircraft and Engines described below.

                  NOW,  THEREFORE,  in  consideration  of the premises and other
good and  sufficient  consideration,  Sublessor  and  Sublessee  hereby agree as
follows:

                  1. Sublessor hereby delivers and leases to Sublessee under the
Sublease,  and  Sublessee  hereby  accepts and leases from  Sublessor  under the
Sublease,  the following  Boeing 737-3S3  aircraft (the "Aircraft") and Engines,
all as more particularly  described in the Sublease,  together with the Aircraft
Documentation:

                  (i) Aircraft:  FAA  Registration  No.  N375TA;  manufacturer's
         serial no. 23787;

                  (ii) two (2) CFM  International,  Inc. Model CFM56-3B2 engines
         bearing,  respectively  manufacturer's  serial  nos.  721150 and 721734
         (each  of  which  has  750 or  more  rated  takeoff  horsepower  or the
         equivalent of such horsepower).

                  2.  The  Commencement  Date  is  the  date  of  this  Sublease
Supplement set forth in the opening paragraph hereof.

                  3.  Sublessee  hereby  confirms to  Sublessor  that as between
Sublessee  and  Sublessor,  Sublessee has accepted the Aircraft for all purposes
hereof  and  of  the   Sublease  as  being   airworthy,   in   accordance   with
specifications,  in good working order and repair and without defect or inherent
vice in  condition,  design,  operation  or  fitness  for  use,  whether  or not
discoverable by Sublessee as of the date hereof; provided that nothing contained
herein or in the  Sublease  shall in any way  diminish or  otherwise  affect any
right  Sublessee or Sublessor may have with respect to the Aircraft  against the
Manufacturer  or any  subcontractor  or supplier of the  Manufacturer  under the
Purchase Agreement or otherwise.




<PAGE>



                  4.  Sublessee  hereby  confirms  that on the  date  hereof  no
Default or Event of Default has occurred and is  continuing or would result from
Sublessee's execution, delivery and performance of the Sublease.

                  5. All the terms and  provisions  of the  Sublease  are hereby
incorporated  by reference in this Sublease  Supplement to the same extent as if
fully set forth herein.

                  IN WITNESS  WHEREOF,  Sublessor and Sublessee have caused this
Sublease Supplement to be duly executed on the day and year first above written.


                                       TACA INTERNATIONAL AIRLINES, S.A.,
                                       as Sublessor



                                       By _______________________________
                                          Name:
                                          Title:


                                       WESTERN PACIFIC AIRLINES, INC.,
                                       as Sublessee




                                       By________________________________
                                         Name:
                                         Title:


                                       -2-

<PAGE>






          -------------------------------------------------------------




                                   ASSIGNMENT

                                       OF

                               SUBLEASE AGREEMENT

                           Dated as of March ___, 1996

                                     Between


                       TACA INTERNATIONAL AIRLINES, S.A.,
                                    Assignor

                                       and

               FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
                         not in its individual capacity,
                           but solely as Trustee under
                              the Trust Agreement,
                                    Assignee



             Sublease Agreement, dated as of March 18, 1996, between
              TACA International Airlines, S.A., as Sublessor and
                  Western Pacific Airlines, Inc., as Sublessee
                   Covering One Boeing Model 737-3S3 Aircraft,
               and Two CFM International, Inc. CFM 56-3B2 Engines



          -------------------------------------------------------------


<PAGE>




                  The  right  and  interest  of the  Assignee  in  and  to  this
Assignment,  dated as of the date hereof,  has been  assigned as security to ING
Aviation Lease B.V., as Agent for itself and each of the Lenders (the "Lenders")
under the Credit  Agreement dated as of November 4, 1993, to the extent provided
in the  Assignment of Security  Document dated as of March __, 1996. No security
interest in and to this  Assignment and the Assignment of Security  Document may
be created through the transfer or possession of any counterpart  other than the
original counterpart which shall be identified as the counterpart containing the
receipt therefor executed by the Lender.

                  THIS  ASSIGNMENT OF SUBLEASE  AGREEMENT dated as of March ___,
1996  between TACA  International  Airlines,  S.A.  (the  "Assignor")  and First
Security Bank of Utah, National Association, not in its individual capacity, but
solely as Trustee under the Trust Agreement dated as of November 4, 1993 between
itself and Amerilease Capital Corporation Ltd. (the "Assignee").

                              W I T N E S S E T H:


                  WHEREAS,  the  Assignor  and  Assignee  have entered into that
certain Lease  Agreement  dated as of November 4, 1993 (the "Lease  Agreement"),
which Lease,  together with Lease  Supplement  No. 1 dated November 10, 1993 and
the Mortgage,  were  recorded by the FAA on November 12, 1993 as Conveyance  No.
S091609; and

                  WHEREAS,  the  Assignor  and Western  Pacific  Airlines,  Inc.
("Western Pacific") have entered into a Sublease Agreement dated as of March 18,
1996 (the "Sublease"), pursuant to which the Assignor has agreed to sublease the
Aircraft  to  Western  Pacific,  for the  period  and  subject  to the terms and
conditions  and for such value and  consideration  received as  specified in the
Sublease; and

                  WHEREAS, the Assignor remains liable under the Lease Agreement
to perform all of its  obligations  thereunder  and be governed by the terms and
conditions of such Lease Agreement; and

                  WHEREAS,  capitalized  terms used in this  Assignment that are
not  otherwise  defined in this  Assignment  are used as they are defined in the
Sublease:

                  NOW THEREFORE, the parties hereby agree as follows:

                  1.  Assignment  of Sublease.  For value received and to secure
the due and punctual  payment and performance of all the Assignor's  obligations
under the Lease Agreement, the Assignor hereby assigns, transfers and conveys to
the Assignee,  its successors and assigns, all its right, title and interest in,
to


<PAGE>



and under (but not any of its obligations under) the Sublease, including but not
limited to:

                           (a)      the Sublease, and all the Assignor's rights
                  and interests thereunder;

                           (b) any and all  rents,  insurance  and  condemnation
                  proceeds,  and all other  payments  and other moneys due or to
                  become due, and any and all claims, rights, powers,  remedies,
                  title  and  interest  of the  Assignor  in and to or  under or
                  arising out of the Sublease  (including without limitation all
                  claims for  damages or other sums  arising  upon sale or other
                  disposition of or loss of use of or requisition of title to or
                  use of the  Aircraft  and any part thereof at any time subject
                  to the Sublease or upon any event of default specified therein
                  (hereinafter referred to as a "Assignment Event of Default");

                           (c) all  rights,  powers,  privileges,  remedies  and
                  other  benefits of the  Assignor  under the  Sublease  and all
                  rights to make determinations,  exercise options or elections,
                  give or withhold consents, waivers and approvals, give notices
                  and  exercise  remedies  (including  the right to  declare  or
                  exercise  remedies  with  respect  to an  Assignment  Event of
                  Default  and to  repossess  any  property),  to take any other
                  action  under or in  respect  of the  Sublease  or accept  any
                  surrender or  redelivery of the Aircraft and any part thereof,
                  as well as all the rights,  powers and remedies on the part of
                  the Assignor, whether arising under the Sublease or by statute
                  or at  law or in  equity  or  otherwise,  as a  result  of any
                  Assignment  Event of Default or event that, with the giving of
                  notice  or the  lapse  of  time,  or  both,  would  become  an
                  Assignment  Event of  Default  (hereinafter  referred  to as a
                  "Assignment Default"); and

                           (d)      all proceeds of the foregoing.

                  This   Assignment  is  a  present   assignment  and  shall  be
effective,  and the security  interest created hereby shall attach,  immediately
upon execution of this Assignment;  provided,  however,  that the Assignee shall
not be  entitled  to  exercise,  and the  Assignor  alone  shall be  entitled to
exercise, any of the rights, powers, privileges,  remedies and other benefits of
the Assignor  described  above,  unless and until an Event of Default  under the
Lease Agreement or Credit Agreement shall have occurred and be continuing.

                  2.  Performance of Assignor's Obligations.   It  is  expressly
agreed that anything herein  contained to the contrary  notwithstanding  (i) the
Assignor  shall remain  liable  under the Lease  Agreement to perform all of its
obligations thereunder to

                                      -2-

<PAGE>



the same  extent as if the  Sublease  had not been  executed,  (ii)  neither the
Assignee nor any other party other than the Assignor  shall have any  obligation
or liability under the Sublease by reason of or arising out of this  Assignment,
nor shall the  Assignee or any such other party be required or  obligated in any
manner to perform or fulfill any obligation of the Assignor under or pursuant to
the Sublease, or to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or to present or file any claim or to
take any other  action to collect or enforce the payment of any amounts to which
it or they may be entitled  under the Sublease at any time or times and (iii) at
any time when an Event of Default under the Lease  Agreement has occurred and is
continuing  at the  Assignee's  option,  the Assignee may, but shall be under no
obligation  to,  perform,  or  cause  to be  performed,  all or any  part of the
obligations and agreements of the Assignor under the Sublease, without releasing
the Assignor therefrom.

                  3.  Event  of  Default.  Upon  the  occurrence  of an Event of
Default under the Lease Agreement or under the Credit  Agreement and at any time
thereafter  so long as the same shall be  continuing,  the Assignee  may, at its
option, exercise one or more of the remedies set forth below and/or available to
it under this  Assignment and the Sublease or which may be available to it under
the New York Uniform  Commercial  Code whether or not applicable in the relevant
jurisdiction,  as the  Assignee  in its sole  discretion  may  determine,  which
remedies are cumulative and in addition to every other right or remedy  provided
by law.

                  3.1 Collection of Sublease Payments.  The Assignee may collect
and retain all rents,  proceeds,  payments and other moneys due or to become due
under the  Sublease or any other  property  assigned  thereunder  and apply such
amount to the payments due under the Lease  Agreement,  all as the Assignee,  in
its discretion, shall determine;

                  3.2 Maintenance  of  Sublease.  The Assignee may assume all or
any part of the Assignor's right,  title and interest in the Sublease and/or any
other  property  assigned  thereunder  and  maintain the Sublease and such other
property  assigned  thereunder  in full  force  and  effect,  with the  Assignee
substituted  for the Assignor  thereunder,  and in any such event all the right,
title  and  interest  of the  Assignor  therein  shall be  extinguished  and the
Assignee  shall be  entitled  to  collect  and  retain  all rents  and  payments
thereunder; and/or

                  3.3 Sale.  The  Assignee  may sell at public or private  sale,
without appraisal,  for such price as it may deem fair, the Sublease and all the
Assignor's right,  title and interest therein,  in which case the Assignee shall
give the Assignor at least 15 days' notice of the date fixed for any public sale
or of the date on or after  which  will  occur  the  execution  of any  contract
providing  for any private  sale  thereof,  and each  purchaser at any such sale
shall hold such property absolutely

                                      -3-

<PAGE>



free from any claim or right on the part of the  Assignor,  the Assignor  hereby
waiving and releasing (to the extent permitted by law) all rights of redemption,
stay,  appraisal,  reclamation  and turnover that the Assignor now has or may at
any time in the future  have under any rule of law or statute  now  existing  or
hereafter enacted.

                  4. Expenses and Fees.  The Assignor shall pay to the Assignee 
and its  successors  and assigns on demand all  reasonable  attorney's  fees and
other  reasonable  expenses  incurred by the Assignee in protecting its interest
granted hereunder or in exercising its rights and remedies provided hereunder.

                  5. Waiver,  Invalidity  of Remedies.  The Assignor  waives any
right to require the Assignee to pursue any other remedy it may have against the
Assignor.  The invalidity or  unenforceability of any remedy in any jurisdiction
shall  not  invalidate  such  remedy or  render  it  unenforceable  in any other
jurisdiction. The invalidity or unenforceability of any of the remedies provided
herein in any jurisdiction  shall not in any way affect the right to enforcement
in such jurisdiction or elsewhere of any of the other remedies provided herein.

                  6. Power of Attorney.  The Assignor does hereby constitute the
Assignee  and its  successors  and  assigns,  the  Assignor's  true  and  lawful
attorney-in-fact, with full power (in the name of the Assignor or otherwise) and
at the expense of the Assignor but for the use and benefit of the  Assignee,  at
any time after an Event of Default  under the Lease  Agreement  has occurred and
for so long as it is continuing, to enforce each and every term and provision of
the  Sublease  and any other  property  assigned  thereunder,  to ask,  require,
demand,  receive,  collect,  compound and give acquittance and discharge for any
and all moneys and claims for moneys due and to become due under or arising  out
of the  Sublease,  to  endorse  any  checks  or other  instruments  or orders in
connection therewith, to settle, compromise, compound or adjust any such claims,
to exercise and enforce any and all claims,  rights, powers or remedies of every
kind and  description of the Assignor  under or arising out of the Sublease,  to
file,  commence,  prosecute,  compromise and settle in the name of the Assignor,
the Assignee, or otherwise any suits, actions or proceedings at law or in equity
in any court,  to collect  any such  moneys or to enforce  any rights in respect
thereto  on all other  claims,  rights,  powers and  remedies  of every kind and
description  of the  Assignor  under or arising out of the Sublease or any other
property assigned  thereunder and generally to sell, assign,  transfer,  pledge,
make any  agreement  with respect to or otherwise  deal with any of such claims,
rights,  powers and remedies as fully and completely as though the Assignee were
the  absolute  owner  thereof  for all  purposes,  and at such times and in such
manner as may seem to the Assignee to be necessary or advisable or convenient or
proper in its absolute discretion.


                                      -4-

<PAGE>



                  7.  Execution of  Documents.  The Assignor  agrees that at any
time or from  time to time,  upon  the  written  request  of the  Assignee,  the
Assignor  shall  promptly  and duly execute and deliver any and all such further
instruments,  documents  and  financing  statements  and do such  other acts and
things as the  Assignee  may deem  necessary or desirable in order to obtain the
full benefits of this Assignment and the rights and powers granted herein.

                  8.  Further  Assignment.  The  Assignee  may at any time sell,
assign,  transfer or  otherwise  dispose of its interest in the Sublease or this
Assignment and in the property and security created thereby and hereby, but only
in accordance with the express  provisions of the Lease Agreement.  The Assignor
shall not assign,  delegate,  pledge or otherwise  encumber any of its rights or
obligations hereunder.

                  9.  Assignor's Representations and Warranties.   The  Assignor
represents  and warrants  that, as to itself,  the Sublease is in full force and
effect,  that the  Assignor  is not in  default  thereunder  and that it has not
assigned,  transferred or pledged, and hereby covenants that it will not assign,
transfer or pledge, the whole or any part of the rents, moneys,  claims, rights,
powers,  remedies,  titles or interests hereby assigned to anyone other than the
Assignee, its successors and assigns.

                  10.  Governing Law. This  Assignment is being delivered in the
State of New York,  United  States of America.  This  Assignment,  including all
matters of  construction,  validity  and  performance,  shall in all respects be
governed by, and construed in accordance with, the laws of the State of New York
applicable  to  contracts  made in such  State by  residents  thereof  and to be
performed entirely within such State.

                  11.  Counterparts.  This Assignment may be executed in several
counterparts,  each  of  which  shall  be  deemed  an  original,  and  all  such
counterparts shall constitute one and the same instrument.

                  12.  Miscellaneous.   This  Assignment  may  not  be  amended,
supplemented,  modified  or waived  without  the prior  written  consent  of the
Assignee and the Assignor.  This Assignment  shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and permitted
assigns. Except as otherwise provided in this Assignment,  all notices hereunder
shall be in  writing  and  shall be given  in the  manner  and at the  addresses
provided for notices under the Lease Agreement and the Sublease.


                                      -5-

<PAGE>



                  IN WITNESS  WHEREOF,  the Assignor and the Assignee  have duly
executed this Assignment as of the date first set forth above.


                                            TACA INTERNATIONAL AIRLINES, S.A.



                                            By:______________________________
                                               Title:



                                            FIRST   SECURITY   BANK   OF   UTAH,
                                            NATIONAL  ASSOCIATION,  not  in  its
                                            individual  capacity,  but solely as
                                            Trustee under the Trust Agreement




                                            By:______________________________
                                               Title:


                                      -6-

<PAGE>



                  IN WITNESS  WHEREOF,  the Assignor and the Assignee  have duly
executed this Assignment as of the date first set forth above.


                                            TACA INTERNATIONAL AIRLINES, S.A.



                                            By:______________________________
                                               Title:



                                            FIRST   SECURITY   BANK   OF   UTAH,
                                            NATIONAL  ASSOCIATION,  not  in  its
                                            individual  capacity,  but solely as
                                            Trustee under the Trust Agreement




                                            By:______________________________
                                               Title:



<PAGE>









                    -----------------------------------------


                                   ASSIGNMENT

                                       OF

                                SECURITY DOCUMENT


                           Dated as of March 29, 1996

                                     Between


               FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
                         not in its individual capacity,
                           but solely as Trustee under
                              the Trust Agreement,
                                    Assignor

                                       and


                             ING AVIATION LEASE B.V.
                                    Assignee



                  Assignment of Sublease Agreement, dated as of
                   March 18, 1996, between TACA International
          Airlines, S.A., as Assignor, and First Security Bank of Utah,
                   National Association, not in its individual
           capacity, but solely as Trustee under the Trust agreement,
            as Assignee, Covering One Boeing Model 737-3S3 Aircraft,
                and Two CFM International Inc. CFM 56-3B2 Engines


                    -----------------------------------------



<PAGE>


                  THIS  ASSIGNMENT  OF SECURITY  DOCUMENT  dated as of March 29,
1996 between  First  Security  Bank of Utah,  National  Association,  not in its
individual capacity, but solely as Trustee under the Trust Agreement dated as of
November 4, 1993 between itself and Amerilease  Capital  Corporation,  Ltd. (the
"Assignor"),  and ING Aviation  Lease B.V. (the  "Assignee") as agent for itself
and each of the Lenders  under the Credit  Agreement  (the  "Credit  Agreement")
dated as of November 4, 1993.

                              W I T N E S S E T H :

                  WHEREAS,   the  Assignor  and  Assignee  are  parties  to  the
above-referenced  Credit  Agreement,  pursuant to which the Lenders made certain
loans to the Assignor;

                  WHEREAS,  the Assignor and TACA International  Airlines,  S.A.
(the "Lessee") are parties to the Lease  Agreement  dated as of November 4, 1993
(the "Lease),  which Lease,  together with Lease Supplement No. 1 dated November
10, 1993 and the  Mortgage,  were  recorded  by the FAA on November  12, 1993 as
Conveyance No.
S091609;

                  WHEREAS,  the  Lessee  and  Western  Pacific  Airlines,   Inc.
("Western Pacific") have entered into a Sublease Agreement dated as of March 18,
1996 (the  "Sublease"),  pursuant to which the Lessee has agreed to Sublease the
Aircraft  to  Western  Pacific  for the such  period,  subject to such terms and
conditions,  and for  value  and  consideration  received  as  specified  in the
Sublease; and

                  WHEREAS,  the  Assignor  and the Lessee have  entered  into an
Assignment  of  Sublease  Agreement  dated as of March  29,  1996  (the  "Lessee
Assignment"),  pursuant to which the Lessee has agreed to assign,  transfer  and
convey to the Assignor,  its  successors and assigns,  all its right,  title and
interest in, to and under the Sublease; and

                  WHEREAS,  it is a condition to the  Assignee's  consent to the
transaction contemplated by the Sublease that Assignor assign to Assignee all of
its right and  interest  under the Sublease as further  security for  Assignor's
obligation to Assignee under the Credit Agreement; and

                  WHEREAS,  capitalized  terms used in this  Assignment that are
not  otherwise  defined in this  Assignment  are used as they are defined in the
Credit Agreement;

                  NOW, THEREFORE, the parties hereby agree as follows:

                  1.       Assignment.  For value received and to secure the due
and punctual payment and performance of all the Assignor's obligations under the
Credit Agreement and the Mortgage, the



<PAGE>



Assignor  hereby assigns,  transfers and conveys to the Assignee,  it successors
and assigns,  all its right, title and interest in, to and under (but not any of
its obligations under) the Lessee Assignment, including but not limited to:

                           (a) the  Lessee  Assignment,  and all the  Assignor's
         rights and interests thereunder;

                           (b) any and all  rents,  insurance  and  condemnation
         proceeds, and all other payments and other moneys due or to become due,
         and any and all claims, rights, powers, remedies, title and interest of
         the Assignor in and to or under or arising out of the Lessee Assignment
         (including  without  limitation  all claims  for  damages or other sums
         arising  upon  sale  or  other  disposition  of or  loss  of  use of or
         requisition  of title to or use of the Aircraft and any part thereof at
         any time subject to the Lessee  Assignment or upon any event of default
         specified in the Sublease  (hereinafter  referred to as an  "Assignment
         Event of Default"));

                           (c) all  rights,  powers,  privileges,  remedies  and
         other  benefits of the  Assignor  under the Lessee  Assignment  and all
         right to make  determinations,  exercise options or elections,  give or
         withhold  consents,  waivers and  approvals,  give notices and exercise
         remedies  (including  the right to declare or  exercise  remedies  with
         respect  to an  Assignment  Event  of  Default  and  to  repossess  any
         property),  to take any other  action under or in respect of the Lessee
         Assignment  or accept any  surrender or  redelivery of the Aircraft and
         any part thereof, as well as all the rights, powers and remedies on the
         part of the Assignor, whether arising under the Lessee Assignment or by
         statute  or at  law or in  equity  or  otherwise,  as a  result  of any
         Assignment Event of Default or event that, with the giving of notice or
         the lapse of time, or both, would become an Assignment Event or Default
         (hereinafter referred to as an "Assignment Default"); and

                           (d) all proceeds of the foregoing.

                  This   assignment  is  a  present   assignment  and  shall  be
effective,  and the security  interest created hereby shall attach,  immediately
upon execution of this Assignment; provided however, that the Assignee shall not
be entitled to exercise,  and the Assignor  alone shall be entitled to exercise,
any of the  rights,  powers,  privileges,  remedies  and other  benefits  of the
Assignor described above,  unless and until an Event of Default under the Credit
Agreement or the Mortgage shall have occurred and be continuing.

                  2.       Performance   of   Assignor's   Obligations.   It  is
expressly agreed that anything herein contained to the contrary notwithstanding,
(i) the Assignor shall remain liable under the Credit Agreement and the Mortgage
to perform all of its


                                       -2-

<PAGE>



obligations  thereunder to the same extent as if the Lessee  Assignment  had not
been  executed,  (ii)  neither the  Assignee  nor any other party other than the
Assignor  shall have any  obligation  or liability  under the Sublease or Lessee
Agreement by reason of or arising out of this Assignment, nor shall the Assignee
or any such other  party be required  or  obligated  in any manner to perform or
fulfill any  obligation  of the  Assignor  under or pursuant to the  Sublease or
Lessee  Agreement,  or to make any  payment,  or to make any  inquiry  as to the
nature or sufficiency  of any payment  received by it, or to present or file any
claim or to take any other  action to  collect  or  enforce  the  payment of any
amounts to which it or they may be entitled  hereunder  at any time or times and
(iii) at any time when an Event of Default  under the Credit  Agreement  and the
Mortgage has occurred and is continuing,  at the Assignee's option, the Assignee
may, but shall be under no obligation to, perform, or cause to be performed, all
or any part of the obligations and agreements of the Assignor under the Sublease
or the Lessee Assignment, without releasing the Assignor therefrom.

                  3.       Event of Default.  Upon the occurrence of an Event of
Default  under the Credit  Agreement  and at any time  thereafter so long as the
same shall be continuing,  the Assignee may, at its option, exercise one or more
of the remedies set forth below  and/or  available to it under this  Assignment,
the Lessee  Assignment,  Lease  Agreement  or under the Credit  Agreement or the
Mortgage or which may be available  to it under the New York Uniform  Commercial
Code whether or not applicable in the relevant jurisdiction,  as the Assignee in
its sole discretion may determine, which remedies are cumulative and in addition
to every other right or remedy provided by law.

                           3.1 Collection of Payments  under Lessee  Assignment.
         The Assignee may collect and retain all rents,  proceeds,  payments and
         other  moneys due or to become due under the Lessee  Assignment  or any
         other  property  assigned  thereunder  and  apply  such  amount  to the
         payments due under the Credit  Agreement,  all as the Assignee,  in its
         discretion, shall determine;

                           3.2 Maintenance  of Lessee  Assignment.  The Assignee
         may assume all or any part of the Assignor's right,  title and interest
         in the Lessee Assignment and/or any other property assigned  thereunder
         and maintain the Lessee  Assignment  and such other  property  assigned
         thereunder in full force and effect, with the Assignee  substituted for
         the Assignor thereunder, and in any such event all the right, title and
         interest of the Assignor therein shall be extinguished and the Assignee
         shall be  entitled  to  collect  and  retain  all  rents  and  payments
         thereunder; and/or

                           3.3 Sale.  The Assignee may sell at public or private
         sale, without appraisal, for such price as it may deem fair, the Lessee
         Assignment and all the Assignor's


                                       -3-

<PAGE>



         right,  title and interest  therein,  in which case the Assignee  shall
         give the  Assignor  at least 15 days'  notice of the date fixed for any
         public sale or the date on or after which will occur the  execution  of
         any contract providing for any private sale thereof, and each purchaser
         at any such sale  shall  hold such  property  absolutely  free from any
         claim or right on the part of the Assignor, the Assignor hereby waiving
         and  releasing  (to  the  extent   permitted  by  law)  all  rights  of
         redemption, stay, appraisal, reclamation and turnover that the Assignor
         now has or may at any time in the future  have under any rule of law or
         statute now existing or hereafter enacted.

                  4.       Expenses  and  Fees.  The  Assignor  shall pay to the
Assignee and its successors and assigns on demand all reasonable attorney's fees
and other  reasonable  expenses  incurred  by the  Assignee  in  protecting  its
interest  granted  hereunder or in exercising  its rights and remedies  provided
hereunder.

                  5.       Waiver,  Invalidity of Remedies.  The Assignor waives
any right to require the Assignee to pursue any other remedy it may have against
the  Assignor.   The  invalidity  or  unenforceability  of  any  remedy  in  any
jurisdiction  shall not invalidate such remedy or render it unenforceable in any
other  jurisdiction.  The invalidity or  unenforceability of any of the remedies
provided  herein in any  jurisdiction  shall not in any way  affect the right to
enforcement  in such  jurisdiction  or  elsewhere  of any of the other  remedies
provided herein.

                  6.       Power  of   Attorney.   The   Assignor   does  hereby
constitute the Assignee and its successors and assigns,  the Assignor's true and
lawful  attorney-in-fact,  with  full  power  (in the  name of the  Assignor  or
otherwise) and at the expense of the Assignor but for the use and benefit of the
Assignee,  at any time after an Event of Default under the Credit  Assignment or
the Mortgage has occurred and for so long as it is  continuing,  to enforce each
and every term and  provision of the Lessee  Assignment  and any other  property
assigned thereunder,  to ask, require,  demand, receive,  collect,  compound and
give  acquittance and discharge for any and all moneys and claims for moneys due
and to become due under or arising  out of the Lessee  Assignment,  or any other
property  assigned  thereunder,  to endorse any checks or other  instruments  or
orders in connection therewith,  to settle,  compromise,  compound or adjust any
such  claims,  to exercise  and enforce  any and all  claims,  rights,  power or
remedies of every kind and  description  of the Assignor under or arising out of
the Lessee  Assignment,  or any other  property  assigned  thereunder,  to file,
commence,  prosecute,  compromise  and settle in the name of the  Assignor,  the
Assignee,  or otherwise any suits, actions or proceedings at law or in equity in
any  court,  to  collect  any such  moneys or to  enforce  any rights in respect
thereto  on all other  claims,  rights,  powers and  remedies  of every kind and
description of the Assignor under or arising out of the Lessee Assignment or any
other property assigned


                                       -4-

<PAGE>



thereunder and generally to sell, assign,  transfer,  pledge, make any agreement
with respect to or otherwise  deal with any of such claims,  rights,  powers and
remedies as fully and  completely as though the Assignee were the absolute owner
thereof  for all  purposes,  and at such times and in such manner as may seem to
the  Assignee  to be  necessary  or  advisable  or  convenient  or proper in its
absolute discretion.

                  7.       Execution of Documents.  The Assignor  agrees that at
any time or from time to time,  upon the written  request of the  Assignee,  the
Assignor  shall  promptly  and duly execute and deliver any and all such further
instruments,  documents  and  financing  statements  and do such  other acts and
things as the  Assignee  may deem  necessary or desirable in order to obtain the
full benefits of this Assignment and the rights and powers granted herein.

                  8.       Assignment;  Payments.  The  Assignee may at any time
sell,  assign,  transfer  or  otherwise  dispose of its  interest  in the Lessee
Assignment or this  Assignment and in the property and security  created thereby
and hereby,  but only in accordance with the express provisions of the Mortgage.
The Assignor shall not assign, delegate, pledge or otherwise encumber any of its
rights or obligations hereunder.

                  9.       Assignor's   Representations   and  Warranties.   The
Assignor represents and warrants that, as to itself, the Lessee Assignment is in
full force and effect,  that the Assignor is not in default  thereunder and that
it has not assigned,  transferred or pledged,  and hereby covenants that it will
not  assign,  transfer  or pledge,  the whole or any part of the rents,  moneys,
claims, rights, powers, remedies,  titles or interests hereby assigned to anyone
other than the Assignee, its successors and assigns.

                  10.      Governing Law. This  Assignment is being delivered in
the State of New York, United States of America. This Assignment,  including all
matters of  construction,  validity  and  performance,  shall in all respects be
governed by, and construed in accordance with, the laws of the State of New York
applicable  to  contracts  made in such  State by  residents  thereof  and to be
performed entirely within such State.

                  11.      Counterparts.  This  Assignment  may be  executed  in
several  counterparts,  each of which shall be deemed an original,  and all such
counterparts shall constitute one and the same instrument.

                  12.      Miscellaneous.  This  Assignment  may not be amended,
supplemented,  modified  or waived  without  the prior  written  consent  of the
Assignee and the Assignor.  This Assignment  shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and permitted
assigns. Except as otherwise provided in this Assignment, all


                                       -5-

<PAGE>


notices  hereunder  shall be in writing  and shall be given in the manner and at
the addresses provided for notices under the Credit Agreement.


                                       -6-

<PAGE>



                  IN WITNESS  WHEREOF,  the Assignor and the Assignee  have duly
executed this Assignment as of the date first set forth above.

                                    FIRST   SECURITY  BANK  OF  UTAH,   NATIONAL
                                    ASSOCIATION, not in its individual capacity,
                                    but  solely  as  Trustee   under  the  Trust
                                    Agreement




                                    By:_________________________________
                                       Title:


                                    ING AVIATION LEASE B.V.



                                    By:__________________________________
                                       Title:



<PAGE>





                   AMENDMENT NO. 1 TO AIRCRAFT LEASE AGREEMENT


                  This AMENDMENT NO. 1 TO AIRCRAFT LEASE  AGREEMENT  dated as of
March 29, 1996 (the  "Amendment"),  is entered into  between TACA  INTERNATIONAL
AIRLINES, S.A. ("LESSEE") and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its  individual  capacity  (except as otherwise  specified) but solely as
trustee, under the Trust Agreement ("LESSOR").

                  WHEREAS,  LESSOR  and  LESSEE  are  parties  to  that  certain
Aircraft Lease Agreement dated as of November 4, 1993 (the "Lease") (capitalized
terms used herein and not  otherwise  defined  shall have the meanings  ascribed
thereto in the Lease), which, together with Lease Supplement No. 1 thereto dated
as of November 10, 1993 and the  Mortgage,  were recorded by the FAA on November
12, 1993 as Conveyance No. S091609;

                  WHEREAS,  pursuant  to the Lease,  LESSOR has leased to LESSEE
one (1) Boeing B737-3S3 aircraft bearing  manufacturer's serial number 23787 and
United States registration N375TA, equipped with two (2) CFM International, Inc.
Model CFM 56-3B2 engines bearing  manufacturer's  serial nos. 720890 and 721734,
respectively (the "Aircraft");

                  WHEREAS,  LESSEE, as sublessor,  and Western Pacific Airlines,
Inc.,  as sublessee  ("Sublessee"),  have  entered  into that  certain  Sublease
Agreement dated as of the date hereof (the "Sublease"), pursuant to which LESSEE
has agreed to lease the Aircraft to Sublessee for the term and on the conditions
set forth therein;

                  WHEREAS,  LESSEE  has  requested  that  LESSOR  consent to the
Sublease,  and LESSOR has agreed to consent to Sublease provided that LESSOR and
LESSEE amend the lease as hereinafter set forth.

                  In  consideration  of the  premises,  LESSOR and LESSEE hereby
agree as follows:

                  1.       Amendments  to Section 1 of the  Lease.  Section 1 of
the Lease is hereby amended by the addition of the following definitions:

                  "Insured  Value"  shall mean (i) if the Sublease is in effect,
         the  Stipulated  Loss  Value,  and  (ii) at all  times  while  that the
         Sublease is not in effect, 117% of the Stipulated Loss Value.

                  "Stipulated  Loss Value" shall mean as of any particular  date
         (i) if the Sublease is in effect, the amount set forth in Schedule 1 to
         the Sublease, and (ii) at all times that the Sublease is not in effect,
         the amount set forth in Schedule 1 to the Lease with  reference to such
         date.



<PAGE>




                           "Sublease" shall mean that certain Sublease Agreement
         dated  as  of  March  18,  1996,  between  Lessee,  as  sublessor,  and
         Sublessee, as sublessee, as originally executed or as modified, amended
         or supplemented pursuant to the applicable provisions thereof.

                           "Sublessee"  shall  mean  Western  Pacific  Airlines,
         Inc., a Delaware corporation.

                  2.       Amendment to Section 3(a) of the Lease.  Section 3(a)
of the Lease is hereby  amended by deleting  such  section in its  entirety  and
substituting in its place the following:

                  "(a)  Term.  The Term shall be the  period  commencing  on the
         Delivery Date (November 10, 1993) and ending, unless earlier terminated
         pursuant to the provisions of this Lease,  on the later to occur of (i)
         the tenth (10th)  anniversary  of such Delivery Date, and (ii) the date
         on which the Sublease Term (as defined in the  Sublease)  expires or is
         terminated in accordance with the provisions of the Sublease."

                  3.       Amendment to Section 3(b) of the Lease.  Section 3(b)
of the Lease is hereby  amended by adding the  following  sentence to the end of
such section:

                  "At any time during the Term while the  Sublease is in effect,
                  the Basic Rent  payable by Lessee  shall be  increased  to the
                  amount of  "Basic  Rent"  actually  paid by the  Sublessee  to
                  Lessee  pursuant  to the Lease (if such  amount is higher than
                  the Basic Rent otherwise payable hereunder)."

                  4.       Amendment to Section 3(c) of the Lease.  Section 3(c)
of the Lease is hereby  amended by adding the  following  sentence to the end of
such section:

                  "Lessee also agrees to pay to Lessor,  as  Supplemental  Rent,
                  any and all amounts paid to Lessee by Sublessee as Maintenance
                  Reserves  (as  defined  in  the  Sublease)   pursuant  to  the
                  Sublease;  provided,  that Lessor  shall  return to Lessee any
                  amount of the Maintenance  Reserves that Lessee is required to
                  reimburse to Sublessee, at the times required by and otherwise
                  in accordance with the provisions of the Sublease"

                  5.       Amendment  to Section  10(b) of the Lease.  The first
sentence  of  Section  10(b) of the Lease is hereby  amended  by  deleting  such
sentence in its entirety and substituting in its place the following:

                  "Upon the  occurrence  of an Event of Loss with  respect to an
                  Engine only,  Lessee shall give Lessor prompt  written  notice
                  thereof and shall,  within one hundred twenty (120) days after
                  the occurrence of such Event of


                                       -2-

<PAGE>


                  Loss, convey or cause to be conveyed to Lessor, as replacement
                  for the  Engine  with  respect  to  which  such  Event of Loss
                  occurred,  title to a Replacement Engine free and clear of all
                  Liens other than Permitted  Liens and having a value,  utility
                  and remaining  life  (determined  by reference to the hours or
                  cycles remaining on all  life-limited  Parts installed in such
                  Replacement  Engine)  at least  equal to, and being in as good
                  operating  condition as, the Engine with respect to which such
                  Event of Loss occurred,  assuming such Engine was of the value
                  or utility  and in the  condition  and repair  required by the
                  terms hereof immediately prior to the occurrence of such Event
                  of Loss."

                  6.       No Further  Amendments.  Except as expressly modified
by this  Amendment  all of the terms and  conditions  of the lease shall  remain
unchanged and in full force and effect.

                  7.       Effectiveness;  Counterparts.  This  Amendment  shall
become  binding and  effective  upon  execution of the  Amendment by the parties
hereto.  This Amendment may be executed in  counterparts,  each of which will be
deemed to be an original and all of which  together will be deemed to be one and
the same  instrument.  Delivery of an executed  counterpart of this Amendment by
facsimile  will be  deemed  effective  as  delivery  of an  originally  executed
counterpart.  Any party delivering an executed  counterpart of this Amendment by
facsimile will also deliver an originally executed  counterpart;  provided,  the
failure of any party to  deliver  an  originally  executed  counterpart  of this
Amendment will not affect the validity or effectiveness of this Amendment.



                          (Continued on Signature Page)



                                       -3-

<PAGE>


                  IN WITNESS  WHEREOF,  LESSOR and LESSEE  have each caused this
Amendment  No. 1 to Aircraft  Lease  Agreement to be duly executed as of the day
and year first above written.


                                       TACA INTERNATIONAL AIRLINES, S.A.




                                       By:________________________________
                                          Title:  Vice President Finance


                                       FIRST   SECURITY   BANK   OF   UTAH,
                                       NATIONAL  ASSOCIATION,  not  in  its
                                       individual   capacity   (except   as
                                       otherwise  specified)  but solely as
                                       trustee under the Trust Agreement



                                       By:___________________________________
                                       Title:  Assistant Vice President



                                       -4-

<PAGE>