`As filed with the Securities and Exchange Commission on October 1 , 2004
                                                     Registration No. 333-5650
==============================================================================
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                              _________________

                                  FORM 20-F

                              _________________

 (Mark One)
   |_|  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
        SECURITIES EXCHANGE ACT OF 1934
                                       OR
   |X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
                     For the Fiscal Year Ended June 30, 2004
   |_|  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
                       Commission file number 333-5650
             AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED
            (Exact name of Registrant as specified in its charter)
                           JERSEY, CHANNEL ISLANDS
               (Jurisdiction of incorporation or organization)
                             22 Grenville Street
                              St. Helier, Jersey
                           JE4 8PX Channel Islands
                   (Address of principal executive offices)
                              _________________

  Securities registered or to be registered pursuant to Section 12(b) of the
                                  Act: None

  Securities registered or to be registered pursuant to Section 12(g) of the
                                  Act: None

   Securities for which there is a reporting obligation pursuant to Section
                              15(d) of the Act.
                               (Title of Class)

 ALPS 96-1 Pass Through Trust $245,673,000 Class A Pass Through Certificates,
                                   Series A

 ALPS 96-1 Pass Through Trust $56,868,750 Class B Pass Through Certificates,
                                   Series A

 ALPS 96-1 Pass Through Trust $50,044,500 Class C Pass Through Certificates,
                                   Series A

 ALPS 96-1 Pass Through Trust $40,945,500 Class D Pass Through Certificates,
                                   Series A

Indicate the number of outstanding shares of each of the issuer's classes of
capital or Ordinary Shares as of the close of the period covered by the
annual report.
            Shares, $1 par value........................................  10
   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
                              Yes    X   No  ___
   Indicate by check mark which financial statement item the registrant has
elected to follow.
                          Item 17  ___ Item 18   X

==============================================================================`

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`TABLE OF CONTENTS
                                                                          Page
Introduction
            Definitions and Technical Terms.......................           1
            Forward-Looking Statements............................           1
            Certain Information...................................           1

Part I      Item 1.  Identity of Directors, Senior
               Management and Advisors............................           1
                     A. Directors and Senior Management...........Not applicable
                     B. Advisors..................................Not applicable
                     C. Auditors..................................Not applicable

            Item 2.  Offer Statistics and Expected Timetable......           2
                     A. Offer Statistics..........................Not applicable
                     B. Method and Expected Timetable.............Not applicable

            Item 3.  Key Information..............................           2
                     A. Selected Financial Data...................           2
                     B. Capitalization and Indebtedness...........Not applicable
                     C. Reasons for the Offer and Use of Proceeds.Not applicable
                     D. Risk Factors..............................           3

            Item 4.  Information on the Company...................          27
                     A. History and Development of the Company....          27
                     B. Business Overview.........................          29
                     C. Organizational Structure..................          39
                     D. Property, Plants and Equipment............          39

            Item 5.  Operating and Financial Review and Prospects.          40
                     A. Operating Results.........................          40
                     B. Liquidity and Capital Resources...........          48
                     C. Research and Development, Patents
                          and Licenses............................ Not applicable
                     D. Trend Information.........................          52
                     E. Off-Balance Sheet Arrangements............          54
                     F. Tabular Disclosure of Contractual
                          Obligations.............................          54

            Item 6.  Directors, Senior Management and Employees...          55
                     A. Directors and Senior Management...........          55
                     B. Compensation..............................          60
                     C. Board Practices...........................          60
                     D. Employees.................................          61
                     E. Share Ownership...........................          61

            Item 7.  Major Shareholders and Related Party
               Transactions.......................................          61
                     A. Major Shareholders........................          61
                     B. Related Party Transactions................          62
                     C. Interests of Experts and Counsel..........Not applicable

            Item 8.  Financial Information........................          62
                     A. Consolidated Statements and Other
                          Financial Information...................          62
                     B. Significant Changes.......................          62

            Item 9.  The Listing..................................          62
                     A. Offer and Listing Details.................          62
                     B. Plan of Distribution......................Not applicable
                     C. Markets...................................          62
                     D. Selling Shareholders......................Not applicable
                     E. Dilution..................................Not applicable
                     F. Expenses of the Issue.....................Not applicable

            Item 10.    Additional Information....................          63
                     A. Share Capital.............................Not applicable
                     B. Memorandum and Articles of Association....          63
                     C. Material Contracts........................          67
                     D. Exchange Controls.........................          67
                     E. Taxation..................................          67
                     F. Dividends and Paying Agents...............Not applicable
                     G. Statement by Experts......................Not applicable
                     H. Documents on Display......................          69
                     I. Subsidiary Information....................Not applicable

            Item 11.    Quantitative and Qualitative Disclosures about
                          Market Risk...........................            69

            Item 12.    Description of Securities other than Equity
                          Securities............................. Not applicable

Part II     Item 13.    Defaults, Dividend  Arrearages and
                          Delinquencies...........................          70

            Item 14.    Material Modifications to the rights of
                          Security Holders and use of Proceeds....          72

            Item 15.    Controls and Procedures...................          72

            Item 16.    Reserved..................................          72

            Item 16A    Audit Committee Financial Expert..........          72

            Item 16B    Code of Ethics............................          73

            Item 16C    Principal Accountant Fees and Services....          73

            Item 16D    Exemption From the Listing Standards
                           for Audit Committee.................... Not applicable

            Item 16E    Purchases of Equity Securities by
                           the Issuer and
                     Affiliated Purchasers........................          74

Part III    Item 17. .............................................Not applicable

            Item 18.    Consolidated Financial Statements.........          74

            Item 19.    Exhibits..................................          74

            Certain Definitions and Technical Terms...............          75`

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`1
                                 INTRODUCTION

      Definitions and Technical Terms

      This  annual  report  on Form  20-F uses  defined  terms  and  technical
terms.  Definitions  for  these  terms  can be found on pages 75 to 82 of this
annual report.

      Forward-Looking Statements

      This annual  report  contains  forward-looking  statements  that involve
risks and  uncertainties.  In most  cases,  you can  identify  forward-looking
statements  by  terminology  such  as  "may,"  "should,"  "expects,"  "plans,"
"anticipates,"  "believes," "estimates," "predicts," "potential" or "continue"
or the  negative of such terms or similar  terminology.  Such  forward-looking
statements  are not  guarantees  of future  performance  and involve risks and
uncertainties,  and actual  results  may differ  materially  from those in the
forward-looking   statements.  In  evaluating  these  statements,  you  should
specifically  consider various factors,  including,  without  limitation,  the
information  contained in this annual report under  "Item 3 - Key  Information
-  Risk  Factors,"  "Item  4 -  Information  on the  Company"  and  "Item  5 -
Operating and Financial Review and Prospects."

      Certain Information

      Aircraft Lease Portfolio  Securitisation  92-1 Limited was  incorporated
in Jersey  on May 13,  1992  (registered  number  52674) as a private  limited
company  under  the  laws of  Jersey  and  became  a  public  limited  company
pursuant  to a special  resolution  passed on June 15,  1992.  As used in this
annual  report on Form 20-F,  "we,"  "us,"  "our" and the  "Company"  refer to
Aircraft Lease  Portfolio  Securitisation  92-1 Limited and its  subsidiaries,
except where it is clear that such terms mean only  Aircraft  Lease  Portfolio
Securitisation  92-1  Limited,  and "you" and "your"  refer to the  holders of
Notes.

      In this annual report,  references to "United  States" are to the United
States of America and  references to "U.S.  dollars,"  "dollars," "$" or "U.S.
$" are to United States dollars.

                                    PART I

ITEM 1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

A.    Directors and Senior Management

      Not applicable.

B.    Advisors

      Not applicable.

C.    Auditors

      Not applicable.

ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

A.    Offer Statistics

      Not applicable.

B.    Method and Expected Timetable

      Not applicable.

ITEM 3.     KEY INFORMATION

A.    Selected Financial Data

      The following  table  summarizes  selected  consolidated  financial data
and  operating  information  of the Company  drawn from our audited  financial
statements.  The  financial  statements  for each of the  fiscal  years  ended
June 30, 2000 through 2004 have been  prepared in  accordance  with U.S.  GAAP
and  audited  by  KPMG,  independent  chartered   accountants.   The  selected
consolidated  financial  data  should be read in  conjunction  with "Item 18 -
Consolidated  Financial  Statements"  and  the  notes  thereto  and  "Item 5 -
Operating and Financial Review and Prospects - Operating Results."

             Selected Consolidated Financial Data and Operations Information

                                                  FISCAL YEAR ENDED (1)
                                     June 30   June 30   June 30   June 30  June 30
                                       2004      2003      2002      2001     2000
-------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS DATA:
Lease Revenue - Aircraft Leasing     $15,175   $19,758   $32,605   $37,948  $43,087
Gain/(Loss) on sale of Aircraft            -    (1,152)        -         -      284
                                     -------- --------- --------- --------- --------
Net Revenue                           15,175    18,606    32,605    37,948   43,371
Net Expenses                         (51,325)  (49,266)  (63,370)  (90,984) (52,680)
Loss before taxes                    (35,939)  (30,660)  (30,765)  (53,036)  (9,309)
Taxes                                     (7)     (225)      (24)      (20)     (20)
Dividend                                   -         -         -         -        -
                                     ---------  --------  --------  -------- -------
Net Loss                             $(35,946) $(30,885) $(30,789) $(53,056)$(9,329)
                                     ---------  --------  --------  -------- -------
-------------------------------------------------------------------------------------
BALANCE SHEET DATA:
Total assets                          $166,136 $192,284  $254,987  $291,244  $340,876
Total liabilities                     $366,253 $356,455  $388,273  $393,741  $390,317
Shareholders' deficit              $(200,117) $(164,171)$(133,286)$(102,497) $(49,441)
OTHER DATA
Aircraft owned at period end            9             9        11        11        11

________________
(1)     All dollar amounts are listed in thousands.

B.    Capitalization and Indebtedness

      Not applicable.

C.    Reasons for the Offer and Use of Proceeds

      Not applicable.

D.    Risk Factors

      The following  summarizes  certain risks which may materially affect our
ability to pay interest,  principal and premium,  if any, on the Notes in full
at or before their final maturity date.

      The  risks  and  uncertainties  described  below  are not the only  ones
facing our company.  Additional  risks and  liabilities  that we are not aware
of at present,  or that we believe today are  immaterial,  may also impair our
business  operations.  Our  business,   financial  condition  and  results  of
operations  could be materially  adversely  affected by any of these risks. If
any of the  following  risks  actually  occur,  we may not be able to make the
required payments on the Notes.

Recent Developments

      Negative  trends caused by the depression in the aviation  industry have
adversely  affected  our lessees  and our  ability to sell and lease  aircraft
and thereby have adversely affected our revenue.

      The  pre-existing  slowdown  in the  global  economy  and  its  negative
effect on the  commercial  aviation  industry was  exacerbated by the economic
and  political  fallout  from the  terrorist  attacks in the United  States on
September  11,  2001,  the  military  action  of the U.S.  and its  allies  in
Afghanistan,  the war in Iraq,  ongoing  terrorist attacks in various parts of
the world and the outbreak of SARS.

      In recent  years,  a number of initially  small low cost  airlines  have
emerged  with   radically   reduced   fares  and  the  attempt  by  the  older
traditional  "legacy"  carriers to compete by matching  the fares of these low
cost airlines has  contributed to many of these larger  airlines  experiencing
significant  financial  losses due to their  inability  to  adequately  reduce
their  greater  costs of  operation.  A number of these larger  airlines  have
recently  emerged  from,  filed for or are  indicating  that they are close to
filing for  bankruptcy.  Air Canada,  our largest  lessee,  as measured by our
annual lease  revenue and the ninth  largest  airline in the world as measured
by  fleet  size,   filed  for  bankruptcy  in  April  2003  and  emerged  from
bankruptcy  on September  30, 2004.  United  Airlines  and U.S.  Airways,  the
second and sixth largest airlines in the world,  respectively,  as measured by
fleet size, are currently  subject to Chapter 11 bankruptcy  protection  (U.S.
Airways  for  the  second  time  in two  years).  Delta  Airlines,  the  third
largest  airline in the world as measured by fleet size,  is  indicating  that
absent  significant  financial  concessions  from  its  employees  it  will be
forced  to  declare  bankruptcy.  Although  many  of  these  bankruptcies  and
threatened  bankruptcies of the largest  airlines in the world are essentially
restructurings  to reduce  the  airline's  cost  base they do often  result in
fleet   reductions   and  in  some  cases  have  the   potential  to  lead  to
liquidations.  When these  large  airlines  reduce  the size of their  fleets,
supply of used  aircraft in the market  increases and  negatively  affects the
lease rates and sale  proceeds  we can obtain for our  aircraft.  Further,  if
any of these  airlines  or any other large  airlines  were to  liquidate,  the
addition  of their  aircraft  portfolios  into the  marketplace  would  likely
cause  significant  volatility  to  lease  rates  and  sale  prices  for  used
aircraft.  In  addition  to  increasing  the  supply of  aircraft  for sale or
lease,  further  bankruptcies and consolidation  would also further reduce the
number of potential  lessees and operators of  particular  models of aircraft,
which would result in further  decreased  aircraft  values for any such models
and lease  rates in  general.  Certain  of our  lessees  have  suffered  large
losses or face  severe  financial  difficulties.  Indeed,  Skynet,  one of our
lessees  from  January 2003 to May 2004,  has ceased  operations  and returned
the  aircraft  we had  leased  to  them  ten  months  prior  to the  scheduled
expiration of their lease.

      Significant  increases  in  the  cost  of  fuel  in  2004  have  further
strained  the  financial  viability  of many  airlines.  At the  beginning  of
2004,  the  IATA  forecasted  a $3  billion  profit  for  the  global  airline
industry  for calendar  year 2004.  This  projection  was based on among other
things,  a positive  trend that began in the last twelve months of an increase
in the number of airline  passengers.  RPK has  increased  in every  region in
the first seven  months of 2004 as  compared to the same period in 2003.  This
increase  was  particularly  significant  in  Asia  as the  airlines  in  Asia
continued to rebound from SARS related  issues.  The IATA  projection was also
predicated  on a number  of  assumptions  including  the  assumption  that the
average  price of oil in 2004  would be $30 per  barrel.  Assuming  all  other
assumptions  remained  unchanged,  but that the average oil price were instead
$33 per  barrel  the  IATA  industry  forecast  changed  to  project  that the
industry  would break even,  and if the average  price were  assumed to be $36
per barrel,  the forecast  varied further to project a $3 billion loss for the
industry.  As at  January  31,  2004,  June  30,  2004,  August  31,  2004 and
September  30, 2004 the price of oil was  approximately  $32, $36, $41 and $50
per barrel, respectively.

      The depressed  aircraft  market that has existed for the last four years
has  meant  it has not been  possible  for the  Company  to sell  aircraft  at
prices  consistent  with  the  Business  Objectives  set  out in the  Deed  of
Charge.  Lease rates also suffered from the increase  after  September 2001 in
availability  of  aircraft,  although  in the past  twelve  months the overall
number of used  aircraft  available  for lease and sale has begun to  decrease
and lease rates have now begun to increase.  However,  the resulting  positive
impact has been less  significant  for older  aircraft such as ours.  Further,
the  potential  for  volatility  as a  result  of  airline  restructurings  or
liquidation,  or the  occurrence  of other adverse  world events  remains.  We
have  experienced  a  significant  decline in lease rates upon  re-leasing  or
extending  leases as compared to lease  rates prior to  September  2001 and we
have  received  requests  from certain  lessees to  restructure  their leases.
Although the  situation  is now  improving,  our  business has been  adversely
affected by these negative  developments  in the industry  during this period,
particularly in respect of new aircraft  leases and the increased  negotiating
power by lessees  to,  among  other  things,  require  that  certain  aircraft
maintenance,   modification   and  overhaul   expenses  and  the  expenses  of
complying  with  ADs be  paid  by the  Company.  As a  result  of the  loss of
investor  appetite and the difficulty in obtaining  financing for the purchase
of the types of older  aircraft  in our  portfolio,  there  are few  potential
buyers of these  aircraft on operating  lease,  and the resulting  illiquidity
in the market has caused  sale prices of these  aircraft  to further  decline.
There have been few sale  transactions  of older aircraft such as the aircraft
in our  portfolio  that we are  aware of in the  past  twelve  months  and the
difficulty  in selling  these types of older  aircraft  in the current  market
has had an  adverse  effect on sales  prices  generally.  The sales  prices we
received  for the  aircraft  we sold in fiscal  year 2003,  in our  efforts to
comply with the Trust Note Sales Goals,  reflected  the industry  wide decline
in sales prices for older aircraft.

      In  fiscal  year  2000,  we  determined  that  projected  lease and sale
proceeds  combined  with  lease  and sale  proceeds  received  indicated  that
proceeds  expected  through to the final maturity dates of the Notes would not
be  sufficient  to repay the  Class E Notes in full and may not be  sufficient
to repay  the  Class D Notes in full.  Recognizing  this  projected  shortfall
and the  potential  for further  deterioration  in lease rates and sale values
for older aircraft,  we considered the limited  alternatives  available to us,
given  the  restrictions  imposed  by the  Deed  of  Charge  on the  Company's
operations,  to  maximize  the  proceeds  available  to  pay  noteholders  the
amounts  owing  to  them  at the  time  such  amounts  become  due.  With  the
assistance  of the  Servicer,  we  solicited  bids for a sale of our  aircraft
portfolio.

      By September  11, 2001, we were in advanced  negotiations  for a sale of
the  Company to a  prospective  purchaser  that would  have,  if  consummated,
resulted in payment of all  amounts  owing to the Class A, Class B and Class C
noteholders  and  all  amounts  owing  to  the  Class  D  noteholders   except
make-whole  premium.  As a result of the  terrorist  attacks of September  11,
2001 and the  resulting  disruption  to the economy  generally and the airline
industry   specifically,   the  prospective   purchaser  initially  put  these
negotiations  on hold and  ultimately  informed  us that  they  were no longer
interested  in  purchasing  the  portfolio.  Assuming  we  were  able  to find
another  prospective  purchaser,  the terms we  negotiated  prior to September
11, 2001 would not be achievable  at this time given the current  condition of
the airline  industry.  Further,  because  the sale  values of older  aircraft
have declined so  significantly  and with respect to certain  aircraft  models
there is  currently  no sales  market,  the  Company was unable to comply with
the Trust Note Sales Goal for June 2003 or for June 2004.

      This  difficult  business  environment  has already had serious  adverse
implications  for  our  revenue,  and  consequently  for  our  ability  to pay
noteholders  certain  amounts due.  During  fiscal year 2004,  certain  target
principal  payments  scheduled  to be paid to  holders of Class A, Class C and
Class D Notes,  certain  interest  payments due to holders of Class A, Class B
and Class C Notes and all  interest  payments  due to  holders  of Class D and
Class E Notes  were in  arrears.  As at the end of  fiscal  year  2004,  these
arrears  consisted of $70.810  million of Class A Note Target  Amount,  $0.942
million  of Class A Note  step-up  interest,  $0.407  million  of Class B Note
step-up  interest,  $4.304  million  of  Class C Note  Target  Amount,  $0.390
million  of Class C Note  step-up  interest,  $5.177  million  of Class D Note
Target  Amount,  $0.665  million  of  Class D Note  step-up  interest,  $1.042
million  of Class D Note  default  interest,  $7.130  million  of Class D Note
regular  interest  and  $52.705  million  of  Class  E  Note  interest.  As of
September 15, 2004,  unpaid amounts of target principal  payments and interest
consisted of $77.472  million of Class A Note Target  Amount,  $1.042  million
of Class A Note  step-up  interest,  $0.458  million  of Class B Note  step-up
interest,  $4.304  million of Class C Note Target  Amount,  $0.441  million of
Class C Note step-up  interest,  $5.177 million of Class D Note Target Amount,
$1.127  million of Class D Note default  interest,  $0.750  million of Class D
Note step-up  interest,  $8.215  million of Class D Note regular  interest and
$54.779 million of Class E Note interest.

      As a result of the  continued  decline in lease  rental rates and market
values,  our revenue has  decreased  significantly.  In  addition,  several of
our leases are  "power-by-the-hour"  leases,  where our receipts are dependent
on the  lessees'  use of the  aircraft.  These  factors  have  had an  adverse
impact on our cashflow.

      The rental  amounts and sales  proceeds  received to date  combined with
projected  rental  amounts and sale proceeds  through the final  maturity date
of the Notes  indicate  that  there  will not be  sufficient  funds to pay any
further  interest  on or repay the  principal  of the  Class E Notes,  pay any
further  interest  on or repay  any  further  principal  of the Class D Notes,
repay any  further  principal  of the Class C Notes,  repay some or all of the
outstanding  principal  of the  Class  B  Notes  or pay  any  further  step-up
interest on the Class A, B, C or D Notes.

      A  significant  proportion  of our  limited  cash  resources  are  being
applied  and  are   expected  to  continue  to  be  applied  to  pay  required
maintenance,   modification   and  overhaul   expenses  and  the  expenses  of
complying  with ADs that have come due in the last twelve  months and that are
expected  to continue  to come due in the  future.  As a result,  we have paid
only  limited  Class A Note  principal  in  fiscal  year 2004 and we expect to
only be able to pay a  limited  amount,  if  any,  of  Class A Note  principal
prior to the sale of any of our aircraft.

      ADs  (and  together   with   maintenance,   modification   and  overhaul
expenses,  "Maintenance  Expenses")  applicable  to  our  aircraft  have  been
increasing due to various  factors  including the ageing of our aircraft,  the
increased   negotiating  power  of  lessees  to  require  us,  as  lessor,  to
contribute towards Maintenance  Expenses,  and the increase in ADs issued that
relate  to our  aircraft.  At the same  time,  our  lease  revenues  have been
decreasing  as we have sold  aircraft to comply with the  requirements  of the
Deed of Charge  and as  lessees  have  negotiated  for more  favourable  terms
given  the  weak  industry  environment  and  the age of our  aircraft.  These
Maintenance  Expenses  (as  well  as  our  other  operational   expenses)  are
required to be paid prior to any  principal  payments to our  Noteholders.  As
a result of the  increased  percentage  of our lease revenue being used to pay
Maintenance  Expenses,  as well as the  continuation  of a number of  negative
industry  factors as discussed in this Annual  Report,  in fiscal year 2004 we
have paid only $7.9  million of principal  to Class A  Noteholders  (with only
$1.4  million  of this  principal  being paid in the last six months of fiscal
year  2004)  and  have  been  unable  to  pay  any   principal  to  any  other
Noteholders.  Although in many cases it is not  possible  to predict  with any
degree of  certainty  the amount of future  Maintenance  Expenses or when they
will come due, our  projections  based on information  currently  available to
the  Servicer  suggest  that,  in the  absence of sales of our  aircraft,  our
future  Maintenance  Expenses  combined with the other  pre-existing  negative
industry  factors are likely to cause us to have only  limited  cash flow,  if
any,  available  to pay any  further  principal  to  Class A  Noteholders  and
insufficient  cash  flow  available  to pay any  further  principal  to  other
Noteholders.  Further,  the combined  effect of the Class A Note Target Amount
increasing  as a result of the  amortization  schedule and of our inability to
pay Class A principal  due to  insufficient  funds has caused the Class A Note
Target Amount arrears to increase  significantly  each month.  As of September
15, 2004,  the Class A Note Target Amount  arrears are $77.472  million (being
the  entire  outstanding   principal  balance  of  the  Class  A  Notes).  The
inability  of the  Company to pay  principal  of the Notes on any day prior to
the final  maturity date because  funds are not  available in accordance  with
the  priority  of payments  set out in the Deed of Charge does not  constitute
an Event of Default.

      We were  unable  to  repay  any of the  Notes by  their  expected  final
payment  date  and  current  projections   indicate  that  we  will  not  have
sufficient  funds to pay any  further  step-up  interest  on any of the Notes,
pay any further  interest on or repay the principal of the Class E Notes,  pay
any further  interest on or repay any further  principal of the Class D Notes,
repay any  further  principal  of the Class C Notes or to repay some or all of
the outstanding principal of the Class B Notes.

      The  pre-existing  slowdown  in the  global  economy  and  its  negative
effect on the  commercial  aviation  industry was  exacerbated by the economic
and  political  fallout  from the  terrorist  attacks in the United  States on
September  11,  2001,  the  military  action  of the U.S.  and its  allies  in
Afghanistan,  the war in Iraq,  ongoing  terrorist attacks in various parts of
the  world  and  the  outbreak  of  SARS.   These  events  combined  with  the
pre-existing  downturn in the airline  industry  prior to  September  11, 2001
have negatively  affected  projected  rental amounts and sale proceeds through
to the final  maturity  date of the Notes.  Our current  projections  indicate
that we will not have  sufficient  funds to pay any further  step-up  interest
on any of the Notes,  pay any further  interest on or repay the  principal  of
the  Class  E  Notes,  pay  any  further  interest  on or  repay  any  further
principal  of the Class D Notes,  repay any further  principal  of the Class C
Notes or to repay  some or all of the  outstanding  principal  of the  Class B
Notes.

      The  Company  did not have  sufficient  funds to repay the Class A Notes
on their  expected  final  payment  date of May 15, 2002 or to repay the Class
B, Class C or Class D Notes on their  expected  final payment date of July 15,
2002.  Failure  to repay in full the  principal  of those  Notes by such dates
is not an Event of  Default;  however,  the Deed of  Charge  requires,  to the
extent the  Company  does not repay in full the  principal  of those  Notes by
such  dates,  that  the  Company  pay to the  Class  A,  Class  B and  Class C
Noteholders  additional  step-up  interest of 0.50% per annum and to the Class
D Noteholders  additional  step-up  interest of 1.00% per annum for each month
until the  earlier of the date such  Notes are repaid in full and their  final
maturity  date of June 15, 2006.  These  additional  interest  costs will only
be paid to the extent there are available  collections in accordance  with the
priority of payments  set forth in the Deed of Charge.  The Company  paid some
step-up  interest in fiscal year 2002,  but our current  projections  indicate
that we will not have sufficient funds to pay any further step-up interest.

      We were  unable to comply  with the Trust Note Sales Goals for June 2003
and for June  2004 and as a result  we may be  required  by the Deed of Charge
to sell aircraft at the Class A Note Target Price.

      The Deed of Charge sets out the  following  Trust Note Sales Goals which
required us to approve sales of our aircraft on an ongoing basis:


        Aircraft to be Sold
   (measured by Initial Appraised         Date by which Sales Goals
     Value as of June 3, 1996)              were to be Satisfied
             $65,000,000                        June 27, 2001
            $130,000,000                        June 27, 2002
            $200,000,000                        June 27, 2003
            $454,950,000                        June 27, 2004

      We were in  compliance  with and had exceeded the Trust Note Sales Goals
as of June 27,  2001 and  were  required  to sell a  further  $54,330,000  (as
measured by Initial  Appraised  Value)  worth of aircraft to be in  compliance
with the Trust Note Sales Goals as of June 27, 2002.

      As discussed  above,  since  September 11, 2001,  the market for sale of
older  used   aircraft  such  as  our  aircraft  has  been   extremely   poor.
Nevertheless,  in  order  to  meet  the  June  2002  Trust  Note  Sales  Goal,
following  an  extensive  marketing  effort by the  Servicer,  the Company had
entered  into  non-binding  agreements  to  sell a  B737-300  and an  A320-200
aircraft to two separate  purchasers  by June 27, 2002.  However,  as a result
of  difficulties  and delays  outside  the  Company's  control the sale of the
B737-300  aircraft  was not  completed  until  October 1, 2002 and the sale of
the A320-200  aircraft  (which was  ultimately  sold to a different  purchaser
following  the  withdrawal of the original  prospective  purchaser on November
5,  2002)  was not  completed  until  December  20,  2002.  As a  result,  the
Company was not in  compliance  with the Trust Note Sales Goals from  November
5, 2002  until the  A320-200  aircraft  was sold to such  other  purchaser  on
December 20, 2002.

      In the  period  from  June  1996 to date,  we have  sold  five  aircraft
totaling  $133,190,000  (measured by Initial  Appraised  Value).  We needed to
sell an additional  $66,810,000  (measured by Initial  Appraised  Value) worth
of  aircraft  to comply with the June 2003 Trust Note Sales Goal and needed to
sell all of our  aircraft  to  comply  with the June  2004  Trust  Note  Sales
Goal. At our  direction,  the Servicer has  periodically  been  marketing each
of our aircraft  for sale in order to meet the ongoing  Trust Note Sales Goals
in  a  manner  consistent  with  the  requirements  of  the  Deed  of  Charge.
However,  the  current  market  for sale of older  used  aircraft  such as our
aircraft is  extremely  poor and it is not likely the market for our  aircraft
will improve prior to the  final maturity date of the Notes.

      In fiscal year 2003, the marketing  efforts of the Servicer  resulted in
two offers to purchase the B757-200  aircraft,  but both offers were at prices
significantly   below  the  Class  C  Note   Target   Price.   After   careful
consideration  of these offers,  the Company's  obligations  under the Deed of
Charge  (notably,  the  Business  Objectives  contained  therein) and the then
current  and  possible  future  market   conditions  for  aircraft  sales  and
leasing,  we concluded  that it would not be consistent  with the terms of the
Deed of Charge for the Company to accept either such offer.

      We did not comply  with the Trust Note Sales  Goals for June 27, 2003 or
for  June  27,  2004  as we were  unable,  given  the  then  current  aircraft
industry market  conditions,  to sell  sufficient  aircraft at the sale prices
required by our then current Business Objectives.

      Failure to comply  with the Trust Note Sales  Goals may,  under  certain
circumstances,  constitute  an Event of  Default  under  the Deed of Charge if
such failure  continues for 30 days or more after written  notice  thereof has
been given to the Company or the  Security  Trustee by holders of at least 25%
of the  aggregate  Outstanding  Principal  Balance  of the  Notes of any class
which has been materially adversely affected by such failure.

      The Deed of Charge  further  provides  that if an Event of Default  were
to occur  and be  continuing  an  Enforcement  Notice  may only be  served  by
662/3%  or  more  of  the  aggregate  Outstanding  Principal  Balance  of  the
directing  class,  which  will be  Class A so  long as any  Class A Notes  are
outstanding.

      The Deed of Charge  provides  that the  failure to comply  with the June
2004 Trust Note Sales  Goal  gives the  Noteholders  the right to replace  the
Servicer at the  direction  of  Noteholders  representing  at least 66 2/3% of
the Outstanding  Principal  Balance of the Class A, Class B, Class C and Class
D Notes.  The Deed of Charge also provides  that,  subject to the  pre-emption
rights of the Class D and Class E  Noteholders,  to the  extent the Trust Note
Sales Goals are not complied  with prior to December 27, 2004,  the Company is
required  to  accept  any  Sale  Offer  for  the  sale of an  aircraft  if the
proposed  sale  price is at  least  equal to the  Class C Note  Target  Price.
During the time that the  Company  has not been in  compliance  with the Trust
Note Sales  Goals,  the Company has been  unable,  with the  exception  of the
sale of the A320-200  aircraft in December  2002,  to sell  aircraft at prices
at or  above  the  Class C Note  Target  Price.  However,  to the  extent  the
Company  has not  complied  with  the  Trust  Note  Sales  Goals,  on or after
December 27, 2004,  the Company will be required,  subject to the  pre-emption
rights of the Class D and Class E  Noteholders,  to accept  any Sale Offer for
the sale of an  aircraft if the  proposed  sale price is at least equal to the
Class A Note Target Price (the  "Required Sale  Provision").  The Class A Note
Target  Price,  were  all of the  aircraft  to be sold at the  same  time,  is
defined in the Deed of Charge to be the Outstanding  Principal  Balance of the
Class A Notes  (currently  $77.472  million)  plus  accrued and unpaid Class A
Note  regular  interest  at the  time of sale  and  certain  then  outstanding
expenses of the Company.

      Our  Business  Objectives  changed  on June  27,  2004 in a way that may
adversely affect Class B and Class C Noteholders.

      With respect to the  re-leasing,  marketing  and sale of  aircraft,  the
Deed of Charge  provides that our Business  Objectives  (as described in "Item
4  -  Information   on  the  Company  -  B.   Business   Overview  -  Business
Objectives")  change after certain dates.  Accordingly,  (i) prior to June 27,
2001  our  Business  Objectives  were to (x)  re-lease  aircraft  to  maximize
rental  payments so as to be able to make  required  payments of interest  and
principal on the  scheduled  payment dates with respect to each class of Notes
and (y)  market and sell  aircraft  so as to repay the  Outstanding  Principal
Balance  of all  Notes,  (ii) from June 27,  2001  through  June 26,  2004 our
Business   Objectives  were  to  (x)  re-lease  aircraft  to  maximize  rental
payments  so  as to  be  able  to  make  required  payments  of  interest  and
principal  on the  scheduled  payment  dates with  respect to the Senior Trust
Notes  and (y)  market  and  sell  aircraft  so as to  repay  the  Outstanding
Principal  Balance of the Senior  Trust  Notes,  and (iii) from June 27,  2004
through June 15, 2006 our  Business  Objectives  are to (x) re-lease  aircraft
to  maximize  rental  payments so as to be able to make  required  payments of
interest and  principal  on the  scheduled  payment  dates with respect to the
senior  most  class of Notes  (namely  the Class A Notes)  and (y)  market and
sell aircraft so as to repay the Outstanding  Principal  Balance of the senior
most class of Notes.

      Consistent  with these  requirements  of the Deed of  Charge,  from June
27, 2001 and  continuing  through June 26, 2004 we had analyzed each potential
sale or  lease of  aircraft  with a view  toward  maximizing  cashflow  to the
holders of the  Senior  Trust  Notes.  However,  since  June 27,  2004 we have
been required to analyze such options with a view toward  maximizing  cashflow
to only the  holders of Class A Notes.  Although  we are always  cognizant  of
acting in the  interest  of all the  Company's  noteholders,  compliance  with
this  requirement may in certain  circumstances  dictate that aircraft be sold
or leased  in a manner  that may not be in the best  interest  of  holders  of
Notes  junior to Class A. See "We were  unable to comply  with the Trust  Note
Sales  Goals  for  June  2003 and for  June  2004  and as a  result  we may be
required  by the Deed of Charge to sell  aircraft  at the Class A Note  Target
Price."

      As a result of incorrect  LIBOR  calculations  by the  Reference  Agent,
holders  of  Class A,  Class B and  Class C Notes  were  overpaid  on  certain
payment  dates and  holders  of Class D and Class E Notes  were  underpaid  by
equivalent amounts on such dates.

      The  Reference  Agency  Agreement  requires  that  the  Reference  Agent
determine  LIBOR as the per annum rate for deposits in United  States  dollars
for a period of one  month  that  appears  on  Telerate  Page 3750 as of 11:00
a.m.  (London  time),  rounded to the nearest  1/16 of one  percentage  point.
The  Reference   Agency   Agreement   further  provides  that  based  on  this
determination,  the  Reference  Agent shall  determine  the interest  rate for
each class of the Company's floating rate notes.

      The  Reference  Agent  informed us in 2003 that since the  Closing  Date
there  have been a number of  instances  where  LIBOR was not  rounded  to the
nearest  1/16 of one  percentage  point.  As a result on a number  of  Payment
Dates  since the Closing  Date,  holders of Class A, Class B and Class C Notes
received  more  interest  than they were  entitled  to, and holders of Class D
and  Class E Notes  received  proportionately  less  interest  than  they were
entitled to. The Trustee has calculated  that the  cumulative  effect of these
incorrect   interest   payments   resulted  in   aggregate   overpayments   of
approximately  $172,000,  $70,000 and $61,000 to the holders of Class A, Class
B  and  Class  C  Notes,  respectively,  and  underpayments  of  approximately
$215,000 and $88,000 to holders of Class D and Class E Notes, respectively.

      The  Trustee  has  sent  notices  to DTC  for DTC to  forward  on to the
current  holders of Class A, Class B and Class C Notes to attempt to  identify
the  holders  of  these  Notes  at  the  relevant  times  when  the  incorrect
overpayments  were made and to  request  that the  incorrect  overpayments  be
returned so that the Trustee can properly  allocate  such funds to the holders
of Class D and  Class E Notes at the  relevant  times.  The  Trustee  has also
sent  notices to DTC for DTC to forward on to the  current  holders of Class D
Notes  to  attempt  to  identify  the  holders  of the  Class D  Notes  at the
relevant  times when the incorrect  underpayments  were made,  and the Trustee
has sent a notice  to the  holder of the Class E Notes.  The  Reference  Agent
has advised the  Company  that it will  compensate  the  relevant  Class D and
Class E Noteholders  to the extent of the incorrect  underpayments  and to the
extent these holders'  identities  are  established.  The Reference  Agent has
further   advised  the  Company  that  in  response  to  these   notices  some
Noteholders  who were underpaid have  identified  themselves and the Reference
Agent has compensated them to the extent of their respective underpayments.

      Re-evaluation  of our  Notes by the  rating  agencies  has  resulted  in
downgrades  to our  Class A,  Class B,  Class C and  Class D Notes  and  could
result in some or all of these Notes being  further  downgraded by one or both
of the rating agencies.

      In fiscal year 2004,  Standard & Poor's  announced on April 6, 2004 that
it was  placing  each  class  of the  Notes  on  credit  watch  with  negative
implications  and on May 13,  2004  Standard  & Poor's  announced  that it was
lowering its ratings on the Class A and Class B Notes and  removing  them from
credit watch.

      In fiscal year 2004,  Moody's  announced  on October 1, 2003 that it was
lowering  its  ratings  on the  Class A and  Class B Notes.  On May 11,  2004,
Moody's  announced  it was  placing  each class of the Notes  rated by Moody's
under review for possible  downgrade and on June 25, 2004,  Moody's  announced
it was downgrading each such class of Notes.

      The current ratings on each class of the Notes are as follows:

                            Moody's                    Standard & Poor's

Class A                     Baa3                       BB

Class B                     Caa1                       B-

Class C                     Ca                         CCC/Outlook negative

Class D                     Not rated                  CCC-/Outlook negative

      Copies of the  announcements  of these  downgrades  by Standard & Poor's
and Moody's may be viewed at their respective web sites.

      A rating is not a  recommendation  to buy,  sell or hold  Notes  because
ratings do not  comment as to market  price or  suitability  for a  particular
investor.  A rating may be subject to revision,  suspension  or  withdrawal at
any time by the assigning  rating agency.  Given the  continuing  difficulties
in the aircraft  industry and their impact on the factors which  determine our
revenues,  there can be no assurance  that the rating  agencies  will not take
any further action in respect of our Notes.

Risks Relating to Payments on the Notes

      Our  assets are  limited.  Our  current  projections  indicate  that our
proceeds  from  leasing  and  selling  aircraft  will not be enough to pay any
further step-up  interest on the Notes,  pay any further  interest on or repay
the principal of the Class E Notes,  pay any further  interest on or repay any
further  principal  of the Class D Notes,  repay any further  principal of the
Class C Notes  or to repay  some or all of the  outstanding  principal  of the
Class B Notes.

      We do  not  have,  nor  are  we  permitted  or  expected  to  have,  any
significant  assets  other than our  specific  portfolio  of aircraft  and our
rights as lessor  under the leases for these  aircraft,  including  our rights
to the  payments  thereunder.  Our  ability to pay  interest  on and repay the
principal  of the Notes is  primarily  dependent  upon the  receipt  of rental
payments  under the  leases  and of sales and other  disposition  proceeds  in
respect of the  aircraft,  which  depends upon a number of factors,  including
(i) the timing of the  receipt of  payments  under the leases and the  ability
of our  lessees  to make  such  payments;  (ii) the sale  price we are able to
obtain  for the sale of our  aircraft  and the  timing of our  receipt  of the
proceeds  of any such  aircraft  sales;  (iii) our  ability  to  re-lease  any
aircraft  upon  termination  of  the  existing  lease  with  respect  thereto,
whether  upon the  scheduled  expiration  date  thereof  or as a  result  of a
lessee  default  thereunder or  otherwise,  and the lease rates we are able to
obtain;  (iv) the exercise by a lessee of an extension,  early  termination or
purchase  option under the related  lease;  and (v) the occurrence of an event
of loss under a lease with  respect to any  aircraft and timing of our receipt
of casualty  insurance or other  proceeds,  if any, in respect  thereof.  Many
of  these  factors  have  been  adversely  affected  by  the  global  economic
downturn  existing  prior to  September  2001 and the events  since  September
2001 which are discussed  throughout  these Risk Factors.  The rental  amounts
and sale  proceeds  received to date combined with  projected  rental  amounts
and sale proceeds  through the final  maturity date of the Notes indicate that
there will not be sufficient  proceeds to pay any further step-up  interest on
the Notes,  pay any further  interest on or repay the principal of the Class E
Notes,  pay any  further  interest on or repay any  further  principal  of the
Class D Notes,  repay any further  principal  of the Class C Notes or to repay
some or all of the  outstanding  principal  of the Class B Notes.  See "Item 4
- Information on the Company - History and  Development of the Company," "Item
5 - Operating  and  Financial  Review and  Prospects  - Liquidity  and Capital
Resources  - The  Company's  Cash  Needs"  and "Item 13 -  Defaults,  Dividend
Arrearages and Delinquencies."

      To the  extent  we sell  some of our  aircraft  to  satisfy  the Deed of
Charge  requirement  that the  Company  sell all of its  aircraft,  this  will
reduce our ability to generate  dependable  funds to pay  noteholders  amounts
due,  particularly  as many of our  expenses  which  are  required  to be paid
prior to payments to  noteholders  are fixed and do not  necessarily  decrease
proportionately with the decrease of our revenue generating assets.

      To the  extent  we sell some of the  aircraft  in order to  satisfy  the
Deed of Charge  requirement  to sell all of our  aircraft,  we will reduce the
diversification  of our portfolio and increase the Company's  dependence  upon
each  remaining  aircraft's  lease  revenues  as a  percentage  of total lease
revenue.  A number of our current  leases are  "power-by-the-hour"  leases and
our  revenue  from  these  leases is  primarily  based on the  number of hours
these  aircraft  are in use and this  revenue is  therefore a less  dependable
source of rental  income than our revenue  from fixed  leases.  Further,  many
of our  expenses  are fixed and are not  reduced  as  aircraft  are sold.  Our
lessees  and  future  potential  lessees  also have had,  during  this time of
oversupply of and reduced  demand for  aircraft,  and continue to have greater
bargaining  power with  regard to having us, as  lessor,  agree to  contribute
towards  Maintenance  Expenses  which in  earlier  years  had  typically  been
fully  covered by  lessees.  Further,  even if lessees  are  obligated  to pay
such costs  pursuant  to their  leases,  their weak  financial  condition  may
leave  them  unable to do so in which  case we may have to cover such costs in
order  to keep the  aircraft  in use.  To the  extent  the  size of our  fleet
decreases,   lease   revenue  will   decrease   proportionately.   Maintenance
Expenses have  increased as a percentage of our monthly  revenue and,  because
they are  required  to be paid in advance of  principal  and  interest  on the
Notes in accordance  with the Deed of Charge,  these expenses have had and are
expected  to  continue  to have a  significant  adverse  effect  on the  funds
available  to pay  principal  and  interest on the Notes.  At present  and, we
believe,  until such time as we sell  aircraft,  these  expenses  are and will
continue  to prevent us from  making any  further  principal  payments  to the
Class A  Noteholders.  To the extent any  remaining  aircraft is  off-lease or
re-leased  at  reduced  rates it will also have a more  significant  impact on
our funds  available to pay  noteholders  amounts due. This situation could be
further  exacerbated  if we sell  aircraft  as a result of the  Required  Sale
Provision but are unable to sell the entire  portfolio,  particularly  if such
sales were of the  aircraft  that  attract  better  lease rates and which have
longer lease terms outstanding.

      Our original  assumptions  about  revenue and  operating  costs have not
matched  actual  experience  and as a result we have  been  unable to make all
Note  payments  at  the  times  and  in  the  amounts  that  our   assumptions
indicated.  We  expect  that  actual  experience  will  continue  to  be  more
negative than our original assumptions.

      On the Closing  Date,  the expected  final  payment  dates for the Notes
were  determined  based on  assumptions  about our future revenue and interest
and operating costs and possible future  economic  conditions.  The purpose of
these  assumptions  was to  illustrate  the payment  provisions  of the Notes.
Many of these  assumptions  related to future  political,  economic and market
conditions  that were  outside our  control and  difficult  or  impossible  to
predict.  Market  interest rates are an example of such an  assumption.  Other
assumptions  made at that time  related to future  events  that  depend on the
actions  and future  financial  condition  of  lessees or others  with whom we
deal.  Insurance  recoveries  and  maintenance  payments  are examples of such
assumptions.   Further,   our   assumptions  at  that  time  clearly  did  not
anticipate  events  similar to the terrorist  attacks of September 11, 2001 or
the  outbreak  of  SARS.  For  the  reasons   discussed   above,   our  actual
experience has not been consistent with the assumptions we made.

      The  Company  did not have  sufficient  funds to repay the Class A Notes
on their  expected  final  payment  date of May 15, 2002 or to repay the Class
B, Class C or Class D Notes on their  expected  final payment date of July 15,
2002.  Failure  to repay in full the  principal  of those  Notes by such dates
is not an Event of  Default;  however,  the Deed of  Charge  requires,  to the
extent the  Company  does not repay in full  principal  of these Notes by such
dates,  that the Company  pay to the Class A, Class B and Class C  Noteholders
additional   step-up   interest  of  0.50%  per  annum  and  to  the  Class  D
Noteholders  additional  step-up  interest  of 1.00% per annum for each  month
until the  earlier of the date such  Notes are repaid in full and their  final
maturity date of June 15, 2006.  These  additional  interest  costs would only
be paid to the extent there are available  collections in accordance  with the
priority of  payments  set forth in the Deed of Charge.  We paid some  step-up
interest in fiscal year 2002,  but our current  projections  indicate  that we
will not have sufficient funds to pay any further step-up interest.

      The  pre-existing  slowdown  in the  global  economy  and  its  negative
effect on the  commercial  aviation  industry was  exacerbated by the economic
and  political  fallout  from the  terrorist  attacks in the United  States on
September  11,  2001,  the  military  action  of the U.S.  and its  allies  in
Afghanistan,  the war in Iraq,  ongoing  terrorist attacks in various parts of
the  world  and  the  outbreak  of  SARS.   These  events  combined  with  the
pre-existing  downturn in the airline  industry  prior to  September  11, 2001
have negatively  affected  projected  rental amounts and sale proceeds through
to the final  maturity date of the Notes.  Current  projections  indicate that
there will not be  sufficient  funds to pay any  further  step-up  interest on
the Notes,  pay any further  interest on or repay the principal of the Class E
Notes,  pay any further  interest on or principal of the Class D Notes,  repay
any  further  principal  of the  Class C Notes or to repay  some or all of the
outstanding principal of the Class B Notes.

      Your right to receive  payments  ranks  junior to our  operational  fees
and expenses,  certain other  payments we may make and any more senior classes
of Notes.

      Our operational  fees  (including  fees of the Servicer,  Administrative
Agent,  Cash  Manager,  Financial  Consultant  and Trustee and legal and audit
fees)  and  expenses  (including  expenses  payable  under  the  terms  of our
leases,  such as payments in respect of Maintenance  Expenses  discussed above
and other  corporate  expenses  such as premiums  for  directors  and officers
liability  insurance)  and  certain  other  payments  that we must  make  rank
senior to the Notes and are payable out of our funds  before any  payments are
made on the Notes.  Depending  on the amount of these  more  senior  payments,
and the amount of our lease  revenue  (which has  decreased  for many  reasons
including  the  required  reduction  of our  portfolio  and the  reduction  in
market  lease rates for our  aircraft - all as  discussed  herein) our ability
to make the required payments on the Notes is likely to be further reduced.

      In addition,  your right to receive payments of interest,  principal and
any premium  will rank  junior to  payments  on more senior  classes of Notes.
Upon the  occurrence  of an Event of Default,  the holders of a class of Notes
may not  exercise  remedies  under the Deed of Charge until all amounts we owe
on more senior  classes of Notes and our other more senior  obligations  (such
as  payments  in  respect  of  Maintenance  Expenses  and  other  fixed  costs
discussed  herein)  have been paid.  In that case,  holders of the most senior
class of Notes will  control the  exercise  of these  remedies.  For  example,
see "Item 13 - Defaults, Dividend Arrearages and Delinquencies."

      We  rely  on  lease   payments  and  aircraft  sales  proceeds  to  make
principal  payments on the Notes.  To date,  these lease payments and aircraft
sales   proceeds  have  not  met   expectations   and  based  on  our  current
projections,  future lease  payments and aircraft  sales  proceeds will not be
sufficient  to repay the  principal  of the Class E Notes,  repay any  further
principal  on the  Class D or  Class C Notes,  or to repay  some or all of the
outstanding principal of the Class B Notes.

      The  pre-existing  downturn  in  the  world  economic  climate  and  its
negative  effect on the commercial  aviation  industry was  exacerbated by the
terrorist  attacks of September  11, 2001,  as well as the military  action of
the  U.S.  and its  allies  in  Afghanistan,  the war in Iraq,  the  terrorist
attacks  in  various  parts of the world and the  outbreak  of SARS.  Although
passenger  demand has begun to increase in 2004, the drop in passenger  demand
from  September  2001  until  2004  had  resulted  in a  reduction  in  flight
schedules  and  a  consequent   oversupply  of  aircraft  (including  aircraft
available  for  lease) as  compared  to  pre-September  2001  levels.  We have
experienced  declines  in lease rates and a fall in the  realizable  value for
aircraft  in open  market  sales as  compared  to lease  rates and sale values
prior  to  September   11,  2001.   Although  the  industry  is  beginning  to
experience  improvement in these areas,  the positive impact to older aircraft
such as ours is more  limited and is not  expected to return the lease or sale
value of our  aircraft  to  their  pre-September  2001  levels.  In  addition,
during this  period,  many  airlines  including  some of our lessees  received
reduced  rentals in  exchange  for  extended  lease  terms.  Air  Canada,  our
largest  lessee,  as  measured  by our  annual  lease  revenue  and the  ninth
largest  airline in the world as measured by fleet size,  filed for bankruptcy
in April 2003 and emerged  from  bankruptcy  on  September  30,  2004.  United
Airlines  and U.S.  Airways,  the second  and sixth  largest  airlines  in the
world,  respectively,  as  measured by fleet size,  are  currently  subject to
Chapter 11  bankruptcy  protection  (U.S.  Airways  for the second time in two
years).  Delta  Airlines,  the third largest airline in the world, as measured
by fleet size, is indicating  that absent  significant  financial  concessions
from its  employees  it will be forced to declare  bankruptcy.  Although  many
of these  bankruptcies and threatened  bankruptcies of the largest airlines in
the world are  essentially  restructurings  to reduce the airline's  cost base
they  do  often  result  in  fleet  reductions  and in  some  cases  have  the
potential  to lead to  liquidations.  When  these  large  airlines  reduce the
size of their  fleets,  supply of used  aircraft in the market  increases  and
negatively  affects  the lease  rates and sale  proceeds we can obtain for our
aircraft.  Further,  if any of these  airlines  or any  other  large  airlines
were to  liquidate,  the  addition  of  their  aircraft  portfolios  into  the
marketplace  would  likely  cause  significant  volatility  to lease rates and
sale  prices  for used  aircraft.  In  addition  to  increasing  the supply of
aircraft  for sale or lease,  further  bankruptcies  and  consolidation  would
also  further  reduce  the  number  of  potential  lessees  and  operators  of
particular  models  of  aircraft,  which  would  result in  further  decreased
aircraft values for any such models and lease rates in general.

      The rental  amounts and sales  proceeds  received to date  combined with
projected  rental  amounts and sale proceeds  through the final  maturity date
of the Notes  indicate  that there will not be  sufficient  funds to repay the
principal  of the Class E Notes,  repay any further  principal  of the Class D
Notes,  repay any further  principal of the Class C Notes or repay some or all
of the  outstanding  principal  of the  Class  B  Notes.  The  failure  of the
Company  to pay  principal  of the Class A,  Class B, Class C or Class D Notes
on any day prior to the final  maturity  date because funds of the Company are
not  available  in  accordance  with the priority of payments set forth in the
Deed of Charge,  will not  constitute an Event of Default with respect to such
class of Notes.

      We rely on lease  payments to make  interest  payments on the Notes.  To
date,  these  lease  payments  have  not met  expectations  and  based  on our
current  projections  we do not  expect  to have  sufficient  funds to pay any
further step-up  interest on the Notes or any further  interest on the Class D
and Class E Notes.

      Our  ability to make  payments  of interest on the Notes when and in the
amounts due depends  primarily  upon our receipt of payments  under the leases
and the  re-lease  of each  of the  aircraft  and the  timing  and  amount  of
proceeds  from  such  leases.  The  financial  condition  of  certain  of  our
lessees and many of the airlines which utilize  operating  leases is generally
weak, and as a result  certain of our lessees are often in arrears,  sometimes
significantly.   Further,   as  a  result  of  the   decline   in  air  travel
experienced  since  the end of 2001 and the  competitive  pressures  caused by
the  emergence of smaller low cost and low fare  airlines,  many  airlines are
flying fewer aircraft than they were prior to September  2001. In addition,  a
number of  airlines  have  declared  bankruptcy  (including  Air  Canada,  our
largest  lessee as measured by our annual lease  revenue,  which  emerged from
bankruptcy  on  September  30,  2004) and a number  of  airlines  have  ceased
operations  since  September  11,  2001 and it is expected  that the  industry
will experience  further  consolidation as well as additional  bankruptcies in
the  near  future.  All of  this  may  significantly  impact  our  ability  to
re-lease  our  aircraft on a timely  basis and at  favorable  rates.  Further,
the reduced  revenue and  increased  expenses  (including  recent  significant
increases in the cost of fuel) that many airlines are  encountering  since the
September 2001 terrorist  attacks are likely to continue to negatively  impact
the  already  weak  financial  condition  of  these  airlines,  including  our
lessees.  This may  result  in an  increase  in  delayed,  missed  or  reduced
rental  payments as has been the case for our largest  lessee (as  measured by
our annual  lease  revenue),  Air Canada  (see  "Item 4 -  Information  on the
Company - Aircraft  Leasing").  In the event  that one or more of the  lessees
does not make the  required  payments  under the  leases or one or more of the
aircraft  are not  re-leased  on or promptly  after the  applicable  scheduled
lease  expiration  date,  payments  of  interest on the Notes will not be made
unless  we are able to  satisfy  our  obligation  to make such  payments  from
payments on other leases that are current or that are entered  into  following
a repossession  of the relevant  aircraft or out of collateral  provided under
the  defaulted  lease  or  out of  available  collections  distributed  on any
payment date in accordance  with the priority of payments  established for the
Notes.  No  assurance  can be given,  however,  that amounts will be available
from such other  sources to satisfy  our  obligations  to pay  interest on the
Notes or that such other sources will exist.  This  situation will also become
more  difficult  assuming we are able to sell aircraft and thereby become more
dependent on the lease revenue from each  aircraft  remaining in our portfolio
as a  percentage  of total lease  revenue.  Our  reliance on  declining  lease
revenues  is  further  exacerbated  by the  increased  requirements  for us to
contribute  towards  Maintenance  Expenses  (which are  required to be paid in
advance of principal and interest on the Notes) that we are  experiencing  and
expect  to  continue  to  experience  as  discussed  elsewhere  in these  Risk
Factors.  Based on  current  projections,  we expect our lease  payments  will
not be  sufficient  to pay any further  interest due on the Class D or Class E
Notes.  An  Event  of  Default  occurs  if we do not pay  interest  (excluding
additional  interest,  default  interest  or  step-up  interest)  on any  Note
within  five days of its due date.  This Event of Default  occurred on several
occasions  prior to fiscal  year 2003  when we had  insufficient  funds to pay
such  interest in full to Class D  Noteholders  and has now been ongoing since
December  16,  2002.  We expect  this  Event of  Default  to  continue  as the
Company does not expect to have  sufficient  funds to pay any further  Class D
Note   interest.   See  "Item  13  -   Defaults,   Dividend   Arrearages   and
Delinquencies"  for a discussion of the limited  remedies  available  upon the
occurrence of an Event of Default under these  circumstances.  Further,  based
on our current  projections we do not expect to have  sufficient  funds to pay
any step-up interest due to any noteholders.

      Our leases are all  interest-rate-fixed  leases  (some  leases are based
on  "power-by-the-hour"  fixed hourly rates and others on fixed monthly rates)
and our  interest  obligations  on the  Notes  are  fixed  and  floating  rate
obligations.  If  LIBOR  materially  increases  it may  adversely  affect  our
ability to make interest payments when due.

      Our lease  collections  are invested based upon  recommendations  of the
Cash  Manager.  Based on these  recommendations,  we  currently do not believe
it is necessary  to invest our lease  collections  in swaps,  options or other
hedging  alternatives  to protect  against  materially  adverse  movements  in
interest rates.  We may,  however,  invest in such  instruments at any time if
we and our  advisors  determine it is  appropriate.  There can be no assurance
that the strategy  adopted to invest or to not invest in such  instruments  at
any time will be  effective  in  protecting  your  payments  of interest in an
environment of material increases to LIBOR.

      The  Notes  have a  limited  trading  market.  As a  result  you  may be
unable to sell your Notes or the price of the Notes may suffer.

      The Notes have a limited  trading  market,  which may  adversely  affect
your  ability  to sell the  Notes or the  price at which  you sell  them.  The
Notes  are  listed  only  on the  Luxembourg  Stock  Exchange.  No one  has an
obligation  to make a market in the Notes.  We do not intend to seek  approval
for quotation through any automated  quotation  system.  Future trading prices
for  the  Notes  will  depend  on many  factors,  including  general  economic
conditions and our financial condition, performance and prospects.

Risks Relating to Sales of Aircraft

      Overview.  Our  ability to make  payments  of  principal  on the Class A
and Class B Notes on their final  maturity date will be dependent  principally
upon our  ability to keep all of the  aircraft  on lease at  current  rates or
better  through  the  final  maturity  date and upon our  ability  to sell the
aircraft  at the Class A Note  Target  Price or better.  Lease  rates and sale
prices  for our  aircraft  have  been  and will  continue  to be  affected  by
factors  such as the demand for  commercial  jet  aircraft in general,  demand
for our aircraft in  particular,  the cost of  comparable  new  aircraft,  the
future  value of our  aircraft  and the  timing  of the sale of our  aircraft.
Each of these factors has been  adversely  affected by the  terrorist  attacks
of  September  11,  2001 as well as the  military  action of the U.S.  and its
allies in  Afghanistan,  the war in Iraq,  the  terrorist  attacks  in various
parts  of the  world  and  the  outbreak  of  SARS  all of  which  followed  a
pre-existing global economic downturn.

      The  commercial  aircraft  market is cyclical.  In  addition,  decreased
demand and excess supply of aircraft has decreased our revenue.

      The market for  commercial  jet  aircraft  is  cyclical  and can produce
sharp  increases  and decreases in aircraft  values and lease rates.  Prior to
September 11, 2001,  the aircraft  leasing  market was already  experiencing a
reduction  in  demand,   particularly  for  older  widebody   aircraft  (which
accounted  for two of our nine  aircraft as at June 30,  2004).  Decreases  in
aircraft  values and lease  rates have  caused and are likely to  continue  to
cause a decrease in our revenue.

      Aircraft  values  and lease  rates  depend on various  factors  (many of
which  have  been  adversely   impacted  by  the  depression  in  the  airline
industry) that are outside our control, including:

o     general economic conditions affecting lessee operations;

o     used aircraft supply and demand;

o     interest rates, currency exchange rates and credit availability;

o     fuel and other operating costs;

o     manufacturer production levels and prices for new aircraft;

o     passenger demand;

o     competitive pressures on various airlines;

o     retirement and obsolescence of aircraft models;

o     re-introduction into service of aircraft previously in storage;

o     governmental regulations; and

o     lack of capacity in the air traffic control system.

      In  addition  to values for  aircraft  generally,  the value of specific
aircraft  may increase or decrease  sharply  depending on factors that are not
within our control, including:

o     manufacturers  merging or leaving  the  aircraft  industry,  such as the
         merger  between  Boeing and McDonnell  Douglas and the  bankruptcy of
         Fokker  N.V.,   which  led  to  the   termination  of  production  of
         McDonnell  Douglas and Fokker  aircraft  and a resulting  decrease in
         the values and lease rates of our MD aircraft;

o     the maintenance and operating history of the aircraft;

o     the number of operators  using a particular  type of aircraft (which may
         be reduced by  bankruptcy or industry  consolidation)  and the supply
         of that type of aircraft;

o     legal or  regulatory  requirements  that prevent us from  re-leasing  or
         selling an aircraft in the condition that it is in; and

o     the  discovery  of  manufacturing  defects  in an  aircraft  model.  See
         "Item  4  -  Information  on  the  Company  -  Business   Overview  -
         Compliance with Governmental and Technical Regulation."

      An  increasing  number of airlines are retiring  older  aircraft.  This,
combined with other  adverse  industry  conditions  as discussed  elsewhere in
these Risk  Factors,  has had a negative  impact on the  proceeds  received to
date from the sale of our aircraft and the revenue we have  received  from our
leases.  Although  trends are now  improving  in some  areas of the  industry,
the  benefits of these  trends with  respect to our  aircraft  may be limited.
Therefore,  there  can be no  assurance  that we will  be  able to  repay  the
holders of the Class A Notes the full  amount of  principal  owed to them when
due.  Further,   based  on  our  current   projections,   we  expect  to  have
insufficient  funds  to  repay  some  or all of the  outstanding  Class B Note
principal and any further Class C, Class D and Class E Note principal.

      The pool of  potential  purchasers  for our  aircraft  is likely to be a
limited group.  Various  factors  outside our control may further reduce their
interest in purchasing our aircraft  which may reduce our funds  available for
payments on the Notes.

      Although  operators  of  aircraft  may  purchase  one  or  more  of  the
aircraft in our  portfolio,  we expect that most of the aircraft  will be sold
with leases in place,  which makes it unlikely  that aircraft  operators  will
be  purchasers  of our  aircraft.  Our aircraft are  marketed  principally  as
financial   assets  for  purchase  by  corporate,   institutional   and  other
investors who seek returns based on a combination  of the  underlying  rentals
and the residual  value of an aircraft  and, in certain  cases,  tax benefits.
There can be no  assurance  that,  at the time the  aircraft  are marketed for
sale,  historical  purchasers  of  assets  such  as  the  aircraft,  or  other
institutional  and corporate  investors,  will desire to purchase  assets such
as the  aircraft,  or  that  particular  developments  in  financial  markets,
regulatory  requirements  or tax  regimes  will not make the  purchase  of the
aircraft an  unattractive  investment.  Further,  the effect of the Trust Note
Sales  Goals  contained  in the  Deed  of  Charge  and  ultimately  the  final
maturity  of all  Notes  in June  2006  is to  require  us to sell  all of our
remaining  aircraft  in a  relatively  short  time  frame.  Given the  adverse
impact of the  terrorist  attacks of September  11, 2001 and other  subsequent
adverse  events on the  airline  industry  and,  in  particular,  on  aircraft
values,  this  obligates us to sell  aircraft at a time when  aircraft  values
are  significantly  lower  than  they  might  otherwise  be,  which  adversely
affects our ability to repay principal of the Notes.

      We  are  competing  with  other   aircraft   sellers  who  have  various
advantages in their ability to sell  aircraft.  This may adversely  affect our
ability to sell our  aircraft  and the amount of proceeds we receive upon such
sale.

      We have  encountered  and expect to  continue to  encounter  competition
from  sellers of other  aircraft at the time we offer the  aircraft  for sale.
There  are  numerous  other  entities  which own and sell  aircraft  that will
compete  with us in the sale of our  aircraft.  These  entities  include,  but
are not limited to, distributors,  aircraft manufacturers,  airlines, aircraft
leasing  companies,   financial  institutions,   public  and  private  limited
partnerships  and  funds  with  investment  objectives  similar  to  ours  and
special  purpose  vehicles  similar to ours (such as Airplanes Group and AerCo
Limited)  formed  for  the  purpose  of  acquiring,  leasing,  re-leasing  and
selling   aircraft.   In  addition,   because  the  Servicer   performs  lease
management  services  with  respect to our aircraft as well as with respect to
aircraft  owned by third  parties,  our  aircraft  may be offered  for sale in
competition  with other  aircraft for which the Servicer  performs  management
services.  Some of these  other  entities  with  aircraft  available  for sale
have, or have access to, financial resources  substantially  greater than ours
and  may be  able  to  offer  financing,  management,  remarketing  and  other
services, inducements or concessions that we are not able to provide.

      We believe the  appraised  base value of our  aircraft is  significantly
higher than the actual value we would  receive  upon a sale of such  aircraft.
To  the  extent  the  sale  price  of an  aircraft  is  below  the  aircraft's
appraised  base  value,  our  ability  to make  payments  on the Notes will be
adversely affected.

      Aircraft  appraised  base values do not  necessarily  reflect the market
value for an aircraft at a specific  time.  The scheduled  principal  payments
on the  Notes  were  determined  based  on the  assumptions  set  forth in the
Prospectus  with respect to the appraised  base value of the  aircraft.  If we
sell an  aircraft  to  generate  cash  to  make  payments  on the  Notes,  the
proceeds of the sale are likely to be  significantly  less than its  appraised
base value. We expect  therefore that we will have  insufficient  cash to make
any  further  principal  payments  on the Class C,  Class D and Class E Notes,
and may  have  insufficient  cash  to  repay  some  or all of the  outstanding
principal of the Class B Notes.

      We  have   obtained   three   desktop   appraisals   (without   physical
inspection)  of the  appraised  base  value of each  aircraft  as of June 2004
from  Avitas,  AISI  and  BK.  Based  on such  desktop  appraisals,  the  nine
aircraft had an aggregate  appraised base value of $137,680,000,  $185,000,000
and $207,170,000,  respectively,  or an average aggregate appraised base value
of approximately $176,620,000.

      The  appraised  base values were  determined  assuming an  arm's-length,
cash  transaction   between  willing  and   knowledgeable   parties,   with  a
reasonable  period of time  available  for  marketing,  assuming,  among other
things,  sales  of  the  aircraft  in  an  open,  unrestricted  stable  market
environment with a reasonable  balance of supply and demand,  and assuming the
maintenance  status of each  aircraft  with regard to such things as airframe,
engines  and  landing  gear  to be  at  its  half-life  condition  (i.e.,  its
condition  at midpoint  between  service  intervals),  adjusted to account for
certain  aspects  of the  actual  maintenance  status  of  each  aircraft,  as
provided to the Independent Appraisers.

      As  discussed  in  the   Statement   of   Accounting   Policies  in  the
Consolidated   Financial  Statements  contained  in  Item  18,  the  Directors
undertake a review to determine  whether an  impairment  charge is required in
respect of both  aircraft  held for use and any  aircraft  held for sale.  The
Directors,  in applying Statement of Financial  Accounting  Standards No. 144,
Accounting for the  Impairment or Disposal of Long-lived  Assets ("SFAS 144"),
have determined  that the carrying value for eight of the Company's  aircraft,
all of which are  classified  as held for use, is greater  than the  estimated
undiscounted  future  net  cashflows  in  respect  of such  aircraft  and have
recorded  an  impairment  charge for these  aircraft  equal to the  difference
between their carrying value and fair value.

      In  applying  SFAS  144 the  Directors  have  determined  that  the most
appropriate  estimate  of the fair  value  of the  Company's  aircraft  is the
average  Appraised Current Market Value,  which was in aggregate  $138,300,000
as at June  30,  2004  for the  nine  aircraft.  The  Independent  Appraisers'
assessment  of  Appraised   Current   Market  Value  reflects  the  underlying
economic  value of  aircraft  and  engines in normal  market  conditions.  The
Independent   Appraisers  assume  that  the  aircraft  are  valued  for  their
highest,  best use,  that the parties to the  hypothetical  sale are  willing,
able,  prudent and  knowledgeable,  and under no unusual pressure for a prompt
sale,  and  that  the   transaction   would  be  negotiated  in  an  open  and
unrestricted market on an arm's length basis.

      Appraised  Current Market Values have been estimated by the  Independent
Appraisers  based on value  curves  from the  last  downturn  in the  aircraft
market.  An  appraisal  is an  estimate of value and should not be relied upon
as a measure of current sales value.  In the current  environment,  there is a
lack of hard data  available on which to base  aircraft  valuations  for older
aircraft of the type in our portfolio  and therefore the appraisal  process is
more difficult.

      The Directors  believe that current market  conditions  (in  particular,
the absence of  liquidity  and of willing  buyers and sellers for the types of
aircraft  owned by the  Company) do not reflect the normal  market  conditions
which  the  Independent  Appraisers  have  had to  assume.  Consequently,  the
sales  value that could be  achieved  for the  aircraft in the event that they
were  disposed  of in  the  current  market  may  be  less  than  the  average
Appraised  Current  Market  Value  and  carrying  value as at June  30,  2004.
Also,  if the  Company is required to sell the  aircraft  due to the  Required
Sale  Provision  the proceeds  from such sale may be even less than that which
could be achieved in the current market.

      The  application  of the  accounting  policies  in the fiscal year ended
June 30, 2004 has led to an  impairment  charge of $13.053  million.  Previous
charges  were  made at June  30,  2003,  June 30,  2002 and June 30,  2001 for
$14.378 million, $20.321 million and $30.259 million, respectively.

      New  and/or  more  technologically  advanced  aircraft  may  impair  our
ability to  re-lease  or sell our  aircraft.  If we are unable to  re-lease or
sell our aircraft on favorable  terms,  this will  adversely  affect our funds
available for payments on the Notes.

      The   availability  of  newer  and/or  more   technologically   advanced
aircraft or the  introduction  of  increasingly  stringent  noise or emissions
regulations  may make it more  difficult for us to re-lease or sell  aircraft.
We  expect  that our  ability  to manage  these  technological  risks  through
modifications to the aircraft and sale of aircraft will be limited.

      Our  maintenance  expenses  are  increasing  as our lease  revenues  are
declining.  This will reduce the rental and sale  proceeds  available  to make
payments on the Notes.

      The standards of  maintenance  observed by our lessees and the condition
of the aircraft at the time of sale or re-lease  may affect the future  values
of  and  rental  rates  for  the  aircraft.   Under  each  lease,  it  is  the
responsibility  of the relevant  lessee to maintain the aircraft and to comply
with all governmental  requirements  applicable to the lessee or the aircraft,
including,  without  limitation,  operational,  maintenance  and  registration
requirements  and, in most cases,  manufacturer  recommendations,  although in
certain  cases  the  Company,  as  lessor,  has  agreed  to share  the cost of
certain  required  modifications  to the aircraft and certain  overhaul costs.
If a  lessee  does  not  perform  such  obligations  or  if  the  aircraft  is
off-lease,  we will be responsible  for  maintenance  obligations  and for the
cost,  in whole or in part, of complying  with  governmental  requirements  or
manufacturer   recommendations.   Failure  to   perform   such   required   or
recommended  maintenance  with  respect to an aircraft  (a) could  result in a
grounding of such  aircraft,  (b) is likely to  adversely  affect the value of
that  aircraft  upon the sale  thereof  and (c) in the event of a re-lease  of
such  aircraft,  is  likely  to  require  us to incur  costs,  which  could be
substantial,   in  restoring  such  aircraft  to  an  acceptable   maintenance
condition  prior  to  re-leasing.   Because  our   Maintenance   Expenses  are
expenses  that rank  senior to  payments  on the  Notes,  our  ability to make
payments on the Notes is further  reduced by these  Maintenance  Expenses.  In
some cases,  we may have an  obligation to reimburse the lessee or pay some or
all of the  cost  of  aircraft  maintenance.  Our  cash  resources  may not be
sufficient  both to fund  maintenance  requirements  and make  payments on the
Notes,   especially  as  the  aircraft  continue  to  age  (see  also  "Recent
Developments-A  significant  proportion  of our  limited  cash  resources  are
being  applied and are  expected  to  continue  to be applied to pay  required
maintenance,   modification   and  overhaul   expenses  and  the  expenses  of
complying  with  airworthiness  directives  that  have  come  due in the  last
twelve  months and that are  expected  to  continue to come due in the future.
As a result,  we have paid only limited Class A Note  principal in fiscal year
2004 and we expect to only be able to pay a limited  amount,  if any, of Class
A Note principal prior to the sale of any of our aircraft.")

Risks Relating to Leasing of Aircraft

      Our funds  available  to make  payments  on the Notes will be reduced if
we are unable to re-lease aircraft quickly or on favorable terms.

      We may not be able to  re-lease  the  aircraft  upon  expiration  of the
leases or if the lease is for any  reason  terminated  prior to its  scheduled
expiration date without incurring  significant  downtime prior to commencement
of a new lease.  If we cannot  re-lease  the  aircraft,  this will  reduce our
funds  available  to make  payments on the Notes.  Even if we can re-lease the
aircraft,  we may be unable to receive  favorable rental rates,  especially if
there is reduced  demand for aircraft on operating  lease.  The decline in the
aircraft  industry  at the  end of  2001  and the  subsequent  depression  and
airline  bankruptcies  significantly  reduced demand for and increased  supply
of aircraft  generally,  including  aircraft  available for  operating  lease.
Although  there have been some  positive  trends in 2004 any  positive  impact
with respect to our  aircraft is expected to be limited.  Our  cashflows  have
suffered  and are  expected  to  continue  to  suffer  from an  oversupply  of
aircraft for lease,  aircraft  downtime and an overall  decline in lease rates
of older  aircraft as compared to lease  rates prior to  September  2001.  Our
ability to re-lease  aircraft and obtain  acceptable  lease payments and terms
may also suffer because of:

o     economic conditions affecting the airline industry;

o     the supply of competing aircraft and demand for particular types;

o     lessor competition;

o     competitive pressure on airlines to reduce costs;

o     restrictions   on  our  re-leasing   flexibility   under  our  operative
         documents;

o     increased  bargaining  power for  lessees  as they join  airline  global
         alliances; and

o     a  reduction  in  the  number  of  potential   lessees  due  to  airline
         bankruptcies, liquidation or consolidation.

      Aircraft  re-leased  during  fiscal  year  2004  were  leased  at  rates
significantly  below historic rates achieved on these  aircraft.  We currently
have no  aircraft  off-lease  and we  have no  aircraft  leases  scheduled  to
expire  before April 2005,  however  there can be no assurance  that  aircraft
will  not come  off-lease  before  expiration  of their  lease  terms.  In the
current  circumstances,  re-leasing  our  aircraft  in  a  timely  fashion  at
reasonable  rates  represents a  significant  challenge  to the  Company.  Any
lack of success in meeting this  challenge  may have a  significant  effect on
our  funds  available  to  make  payments  on  the  Notes.  Based  on  current
projections,  we  expect  our  cashflows  will  not be  sufficient  to pay any
further  interest  due on the Class D and Class E Notes.  An Event of  Default
occurs  if we do not pay  interest  (excluding  additional  interest,  default
interest  or step-up  interest)  on any Note within five days of its due date.
This  Event  of  Default  has  occurred  and  is  continuing  as we  have  had
insufficient  funds to pay such interest in full to Class D  Noteholders,  and
we now expect  this Event of Default to  continue  for the  remaining  term of
the Notes.  See "Item 13 - Defaults,  Dividend  Arrearages and  Delinquencies"
for a discussion of the limited  remedies  available upon the occurrence of an
Event of Default under these circumstances.

      Lessees in weak  financial  condition  could fail to make lease payments
and may require  the  restructuring  of their  leases to avoid  default.  This
would reduce the revenue available to make payments on the Notes.

      There is a  significant  risk that lessees in weak  financial  condition
may  default on their  obligations  under the  leases.  If lessees do not make
rent  and  maintenance  payments  or are  significantly  in  arrears,  it will
impair  our  ability  to make  payments  on the  Notes.  The  ability  of each
lessee to perform its  obligations  under its lease will depend  primarily  on
its financial  condition.  A lessee's  financial  condition may be affected by
various  factors  beyond its  control,  including  competition,  fare  levels,
passenger  demand,  operating costs (including the cost of fuel), the cost and
availability of finance,  and environmental and other governmental  regulation
of the air  transportation  business.  The economic  conditions of the regions
where our lessees  operate will also affect their  ability to meet their lease
obligations.  Some of our  lessees  are based or operate  in  regions  such as
Asia that from time to time  experience  severe  economic  crises.  You should
refer to "Item 4 - Information  on the Company - Business  Overview - Regional
Concentrations"  for a  discussion  of  the  regional  concentrations  of  our
lessees and the  economic  trends of the regions  that may impact the lessees'
financial conditions.

      In addition,  the events of  September  11, 2001 as well as the military
action  of the U.S.  and its  allies  in  Afghanistan,  the war in  Iraq,  the
terrorist  attacks  in  various  parts of the world and the  outbreak  of SARS
have  resulted  in airlines  worldwide  experiencing  financial  difficulties.
Many large airlines are experiencing  additional  financial difficulty as they
are  reducing  fares in order to be  competitive,  but are  unable  to  reduce
costs to the  extent  necessary  to  achieve  profitability.  The  significant
increase  in fiscal  year 2004 in the  price of fuel is  further  exacerbating
these  difficulties.  Some of our  lessees are in a weak  financial  position,
including  one of our fiscal year 2004 lessees that ceased  operations  in the
middle  of  2004,   and  another  that  has  just  emerged  from   bankruptcy.
Investors  should  continue  to expect  that any number of our future  lessees
will be  financially  weak.  As a result,  a large  proportion  of lessees may
consistently  be   significantly  in  arrears  in  their  rental  payments  or
maintenance  payments.  Also,  as a  result  of  the  many  aircraft  industry
factors discussed herein, the financial  position of many airlines,  including
our  lessees,  is likely to remain weak which in turn may cause an increase in
delayed,  missed or reduced  payments.  Further,  in order to keep aircraft on
lease and generating rental proceeds in this difficult  economic  environment,
many  aircraft  lessors,   including  the  Company,   have  agreed  to  rental
holidays,  rental  restructurings,  the early  return of aircraft  and similar
measures  for some  lessees.  We expect  this may  continue  to occur with our
lessees.  We can also give no  assurance  that  defaults,  amounts  in arrears
and the  frequency  of lease  restructurings  will not  increase as the market
for our aircraft on operating lease experiences a continued decline.

      Our ability to re-lease  aircraft and generate  cash to make payments on
the  Notes  will be  impaired  if we cannot  terminate  leases  and  repossess
aircraft when a lessee defaults.

      We have the  contractual  right to terminate a lease and  repossess  the
aircraft  if  there  is an event of  default  under a lease.  However,  due to
circumstances  outside our control,  we may be prevented  from  terminating  a
particular  lease.  Further,  we may incur substantial costs if we terminate a
lease and  repossess  the aircraft.  If we cannot  repossess the aircraft,  it
will not be  available  for  re-lease or sale.  In that event,  or if we incur
substantial  costs in terminating a lease and  repossessing  an aircraft,  our
revenue available to make payments on the Notes will be reduced.

      Our  ability to  terminate a lease and  repossess  the  aircraft  may be
limited by a number of factors, including the following:

o     a lessee  contesting  our right to terminate the lease and repossess the
         aircraft;

o     our inability to export, deregister and redeploy the aircraft;

o     legal  restrictions  on  our  ability  to  terminate  or  repossess  the
         aircraft; and

o     the  appointment  of a trustee in bankruptcy  or similar  officer in the
         case of a bankrupt or insolvent lessee.

      Even if we are able to terminate  the lease and  repossess the aircraft,
we may incur substantial costs, including:

o     the  direct  costs  associated  with  the  termination  of the  lease or
         repossession of an aircraft, including technical and legal costs;

o     the cost of returning the aircraft to the appropriate jurisdiction;

o     the  payment of debts and taxes  secured by liens on the  aircraft  that
         were not paid by the lessee;

o     the  costs  of  retrieving  or  recreating  aircraft  records  that  are
         required for re-registering the aircraft;

o     the costs of putting  the  aircraft  back in a  condition  suitable  for
         leasing or sale; and

o     costs of obtaining a certificate of airworthiness for the aircraft.

      Our revenue  available to make  payments on the Notes will be reduced if
aircraft  insurance  is not  adequate  to cover any losses or  liabilities  we
incur.

      Our lessees have obligations  under the leases to maintain  property and
liability  insurance  covering  their  operation of the aircraft.  We can give
no  assurance  that this  insurance  will be  adequate  to cover any losses or
liabilities  that we may  incur  in our  business.  For  example,  the loss or
liability  from an aviation  accident or other  catastrophic  event may exceed
the  coverage  limits  in the  policy.  Other  losses  may not be  covered  by
insurance.  There is also a risk  that our  lessees  will  not  perform  their
insurance  obligations  under the lease,  which may mean that  insurance  will
not be  available  to us. In either  case,  we may be unable to make  payments
on the Notes if insurance  proceeds do not cover losses or  liabilities we may
incur.

      As a  consequence  of the  terrorist  attacks  of  September  11,  2001,
airlines  worldwide  continue to experience  difficulties  in maintaining  war
insurance  cover  and some  other  types  of  insurance  cover in the  amounts
required under their leases with us and other  lessors.  Until  recently,  our
lessees  have  relied on  government  guarantees  or  indemnities  to  provide
coverage for third party  liability  (other than to  passengers)  arising from
war and terrorism  risks,  above a greatly  reduced  ceiling of cover provided
by the  aviation  insurance  market as a reaction  to the events of  September
11, 2001.  Although most  governments  have now terminated  their guarantee or
indemnity  support,  currently  two of our eight  lessees  continue to rely on
such  government  support  for  this  coverage.   However,  there  can  be  no
assurance  that if and when such  government  support is removed  our  lessees
will  be  able  to  replace  that  support  by  insurance  coverage.  If  such
insurance  coverage were not purchased or otherwise  available from government
support,  it may be necessary for the relevant  aircraft to be grounded.  Such
consequences  would have a material adverse impact on the financial  condition
of our  lessees  and their  ability  to  perform  under  their  leases.  These
effects  could cause a reduction in our revenue  available to make payments on
the Notes.

      If we cannot  obtain the required  licenses,  consents and  approvals to
re-lease or sell  aircraft,  our  revenue  available  to make  payments on the
Notes may be reduced.

      If  we  or,  where   applicable,   the  lessee  cannot  obtain  required
government licenses,  consents and approvals,  we may be unable to re-lease or
sell  aircraft.   Several  leases  require  specific  licenses,   consents  or
approvals.  These include  licenses,  consents or approvals from  governmental
or  regulatory  authorities  to  certain  lease  payments  and to the  import,
re-export  or   deregistration   of  the  aircraft.   There  is  a  risk  that
subsequent legal and  administrative  changes will increase such  requirements
or that a license,  consent or approval,  once given,  will be  withdrawn.  We
may  be  unable  to  receive   licenses,   consents  or  approvals  needed  in
connection  with future  re-leasing or sale of an aircraft.  In any such case,
our revenue available to make payments on the Notes may be reduced.

      If  withholding  taxes are imposed on lease  rentals,  these taxes would
reduce our revenue available to make payments on the Notes.

      We have  attempted to structure  our leases in such a way that either no
withholding  taxes will be  applicable  to payments  by the lessees  under the
leases  or,  if  withholding  taxes  are  applicable,  the  lessees  would  be
required  to pay  corresponding  additional  amounts.  If such  taxes  must be
paid and we cannot  recover  these  additional  amounts from the lessee,  that
amount will be unavailable for Note payments.

      United  States  federal  income  withholding  taxes at a rate of 30% are
applicable to lease  payments  relating to an aircraft  that was  re-delivered
in  October  2002 and was  immediately  placed on lease to  Allegiant  Air,  a
United  States  airline,  and that lease makes no  provision  for  recovery of
such  taxes  from  the  lessee.  The  lease  to  Allegiant  Air  has  a  lease
expiration  date as of the date of  completion  of the next "C Check" for this
aircraft,  which date is estimated to be in March 2006  (Allegiant  Air having
exercised  an  extension  option  on July  28,  2004).  There  can  also be no
assurance  that  any  subsequent  lease  will  avoid  United  States  or other
withholding taxes.

      If lessees do not comply with their  obligations  under their  operating
leases it may  increase  our costs and reduce our  revenue  available  to make
payments on the Notes.

      The leases are all fixed term  operating  leases,  under which we retain
substantially  all of the risks and rewards  associated  with ownership of the
aircraft,  including  the  aircraft's  residual  value.  The  leases are "net"
leases  pursuant to which the lessees are  obligated to make  periodic  rental
payments  and  generally   assume   responsibility   for,   inter  alia,   (i)
maintaining  the  aircraft,  (ii) ensuring  proper  operation of the aircraft,
(iii)  providing  indemnification  against and insurance for losses  resulting
from  operation  of the  aircraft,  (iv)  paying  all costs of  operating  the
aircraft  and keeping the  aircraft  free of liens (as defined in the relevant
lease) (other than permitted  liens under the relevant  lease)  resulting from
such operation and (v) complying with all applicable  governmental  licensing,
registration  and other  requirements,  including  ADs  (although  in  certain
cases,  the terms of the relevant  lease  require the lessor to share the cost
thereof).  Failure of a lessee to comply with such  obligations  could  result
in increased  costs to us and reduce our revenue  available  to make  payments
on the Notes.

Other Risks Related to the Sale and Leasing of the Aircraft

      Restrictions  in our  operative and  governing  corporate  documents may
impair our ability to compete effectively in the aircraft leasing market.

      Our operative and governing  corporate  documents impose restrictions on
how  we  operate  our  business.  These  restrictions  limit  our  ability  to
compete  effectively in the aircraft  leasing market.  For example,  we cannot
grant  privileged  rental  rates to airlines in return for equity  investments
in such  airlines.  There  are also  restrictions  on  persons  to whom we may
lease  aircraft  and limits on leasing  to  lessees in  specific  geographical
regions.  Most  competing  aircraft  lessors  do  not  operate  under  similar
restrictions.

      If lessees do not discharge  liens that attach to the  aircraft,  we may
be unable to repossess, re-lease or sell the aircraft.

      Liens  may  attach to the  aircraft  in the  course of their  operation.
These  liens  may  impair  our  ability  to  repossess,  re-lease  or sell the
aircraft.  Liens that secure the  payment of airport  taxes,  customs  duties,
air navigation  charges,  landing charges,  crew wages,  repairer's charges or
salvage  charges  attach to the  aircraft in the normal  course of  operation.
The  amounts  that the liens  secure  may be  substantial  and may  exceed the
value  of  the  aircraft   against  which  the  lien  is  asserted.   In  some
jurisdictions,  a holder of aircraft liens may have the right to detain,  sell
or cause  the  forfeiture  of the  aircraft.  The  lessees  may fail to comply
with their  obligations  under the leases to discharge  liens  arising  during
the  terms of the  leases.  Prior to  terminating  our  lease  with  Istanbul,
Istanbul  incurred  a debt to  Eurocontrol.  Istanbul  failed to  comply  with
their  obligation  under the lease to pay this debt and cause the related lien
to be  discharged.  As  owner of the  aircraft,  the  Company  was  forced  to
settle this debt of  approximately  $1.8 million with  Eurocontrol  (which was
accrued  for  in  the  fiscal  years  ended  June  30,  2001  and  2002).  The
settlement of this debt, in fiscal year 2003,  reduced our funds  available to
make  payments on the Notes,  and any other similar debt we may be required to
settle in the future in order to have liens  discharged  would also reduce our
revenue  available  to make  payments on the Notes.  On May 17,  2004,  Skynet
returned its leased  aircraft ten months prior to the scheduled  expiration of
its  lease.  At the  time of such  return,  Skynet  had  incurred  substantial
payment  arrears  (for both the  Company's  aircraft  and for  Skynet's  other
aircraft)  to  Eurocontrol  and two other  creditors.  Skynet  has  informally
agreed with the Servicer  that Skynet will  discharge  such arrears by monthly
installments  over several  months (see "Item 4.  Information on the Company -
B. Business  Overview - Aircraft Leasing" for further  details).  However,  if
Skynet  does not pay all such  installments  there is a risk that  Eurocontrol
or one of the other  creditors  might assert a lien or right of detention over
the aircraft  (unless the Company  chooses to pay the  outstanding  amounts in
order to obviate this risk).

      Lessees may fail to maintain  valid  registration  of the aircraft.  The
impact of the loss of aircraft  registration  or the inability of the aircraft
to generate  rental income for us could  adversely  affect our funds available
to make payments on the Notes.

      All of the  aircraft  that are or will be  operated  must be  registered
with an appropriate  aviation  authority.  If an aircraft is operated  without
a valid registration or other required  licenses,  certificates and approvals,
the lessee  operator  or, in some cases,  the owner or lessor,  may be subject
to  penalties  which may result in a lien being placed on the  aircraft.  Loss
of registration could have other adverse effects,  including  grounding of the
aircraft  and loss of  insurance,  which  may have an  adverse  effect  on our
funds available to make payments on the Notes.

      Increased  regulation  of the  aircraft  industry may impair our ability
to re-lease  or sell  aircraft  and the cost of  compliance  may reduce  funds
available for payments on the Notes.

      The aircraft  industry is heavily  regulated  and  aviation  authorities
may adopt  additional  regulations  in  jurisdictions  where our  aircraft are
registered  or operated.  For example,  as a result of the  terrorist  attacks
in the United States on September 11, 2001,  installation  of enhanced  Ground
Proximity  Warning  Systems in all  aircraft by 2005 has been  mandated by the
U.S.   Federal  Aviation   Administration   ("FAA")  and  the  European  Joint
Airworthiness  Authorities  ("JAA").  The FAA and the JAA already  require the
installation  of reinforced  cockpit  doors.  In addition,  the  International
Civil Aviation  Organization  ("ICAO") requires  contracting states to mandate
the  incorporation  of  cockpit  doorway  surveillance  systems.  Further  new
security  directives  are also  under  consideration  by a number of  aviation
authorities.  To the extent the cost of  complying  with such  regulations  is
required to be borne by the Company  rather than the  lessees,  we could incur
significant  cash  expenditures  in order to  comply  with  such  regulations.
Further,  additional  regulations  relating to security and aircraft noise and
emissions,  may cause us to incur significant costs,  depress the value of the
aircraft and impair our ability to re-lease or sell aircraft.

Reliance on Third Parties and Conflicts of Interest

      We rely on third  parties to manage our  business.  Our  operations  may
suffer  and we may be unable  to make  payments  on the  Notes if our  service
providers  do not  perform  their  obligations  to us or if we have to replace
them.

      We have no employees or  executive  management  resources of our own. We
therefore rely on several  service  providers for the leasing,  re-leasing and
sale  of  the   aircraft   and  all   other   executive   and   administrative
responsibilities.   If  these   service   providers   do  not  perform   their
contractual  obligations  to us, our  operations  may  suffer and our  revenue
available  to repay the Notes may be reduced.  We can give no  assurance  that
we will continue our  arrangements  with these  service  providers or that the
service  providers  will continue their  relationship  with us until the final
maturity  date of the Notes.  If a service  provider  resigns or we  terminate
its  appointment,  we may be  unable  to  find  suitable  replacement  service
providers   that  we  can  engage  on  suitable   terms.   Additionally,   our
appointment  of  replacement   service  providers  may  cause  a  lowering  or
withdrawal  of the  ratings  on the  Notes.  You  should  refer  to  "Item 6 -
Directors,   Senior   Management   and   Employees  -  Directors   and  Senior
Management"  for detailed  information  on the  responsibilities  delegated to
service providers.

      Babcock & Brown,  as  servicer  will have  conflicts  of  interest  from
their other aircraft  management  activities.  We may be unable to re-lease or
sell aircraft if they cannot resolve these conflicts.

      Babcock & Brown own and manage  other  aircraft  and may face  conflicts
of interest in managing and marketing our aircraft for re-lease or sale.

      Our Directors may have conflicts of interest.

      From time to time our  Directors  may have  conflicts  of interest  that
arise as a result  of their  other  relationships  in the  aviation  industry.
See "Item 6 -  Directors,  Senior  Management  and  Employees - Directors  and
Senior Management."

Bankruptcy Risks

      If the Company were to be  consolidated  with  another  entity upon such
entity's  bankruptcy  our assets may be unavailable to repay the Notes and our
other obligations.

      We have taken  steps,  described  below,  to ensure  that our assets and
liabilities  will  not  be  consolidated  with  those  of  any  other  entity,
including  WFC, in the event that such  entity  voluntarily  or  involuntarily
becomes the subject of an application for relief under  applicable  bankruptcy
or  insolvency  laws.  At the time the  Notes  were  issued,  we  received  an
opinion  of U.S.  counsel  concluding  that  neither  our  activities  nor the
activities  of WFC  would  result  in a court  holding  that  our  assets  and
liabilities  should be  consolidated  with those of WFC in a proceeding  under
the applicable  insolvency  laws in the United States.  However,  there can be
no  assurance  that the  circumstances  upon  which  such  counsel  based  its
opinion  will not change,  that a court of  competent  jurisdiction  would not
find  differently,  that such opinion will prove to be correct or that the law
of another jurisdiction would not apply.

      In  addition,  WFC  warranted  to us,  among  other  things,  that  upon
delivery  of the  WFC  Aircraft  to us we  would  be  the  owner  of  the  WFC
Aircraft,  that the sale of the WFC  Aircraft by it to us was a "true sale" of
the WFC  Aircraft  to us and that the  conveyance  was  effective  to transfer
title to us.  WFC and the  Company  have  treated  the  conveyance  of the WFC
Aircraft as a sale of the WFC Aircraft  and  transfer of the related  lease to
us, and we have taken all actions that are  required to perfect our  ownership
interest in the WFC Aircraft and the related  lease.  However,  if WFC were to
become a debtor in a  bankruptcy  case  under the U.S.  Bankruptcy  Code and a
creditor  or  trustee-in-bankruptcy  of WFC or WFC  itself  were to  take  the
position  that the sale of WFC Aircraft to us should be  recharacterized  as a
pledge of the WFC  Aircraft  and the related  lease to secure a  borrowing  of
WFC,  then  delays in  payments  of lease  rentals  to us on the WFC  Aircraft
could  occur.  A court  ruling in favor of any such  creditor,  trustee or WFC
could result in reductions in the amount of such  payments  and/or  forfeiture
or  subordination  of our rights in the WFC  Aircraft  and the related  lease.
Such delays or  reductions  and/or  forfeiture  also could result in delays or
reductions  in our ability to make  payments on the Notes.  If the transfer of
the WFC Aircraft and the related  lease to us is  recharacterized  as a pledge
or a lien on the property of WFC,  our  position  with respect to WFC would be
that of a  secured  creditor  of WFC  with a claim in an  amount  equal to the
purchase  price of the WFC  Aircraft  secured by such  pledge or lien.  On the
other hand, if the  conveyance  of the WFC Aircraft is treated as a sale,  the
WFC Aircraft  and rental  payments  under the related  lease would not be part
of WFC's  bankruptcy  estate and would not be  available  to WFC's  creditors.
On the  Closing  Date,  we  received  an  opinion  of  United  States  counsel
concluding  that,  under  applicable  state law,  the sale of the WFC Aircraft
and the related  lease would  constitute a true sale from WFC to us and should
not be  characterized  as a pledge of these assets to secure a loan from us to
WFC.  However,  there can be no assurance  that the  circumstances  upon which
such  counsel  has  based  its  opinion  will  not  change,  that a  court  of
competent  jurisdiction  would not find  differently,  that such opinion would
prove to be correct or that the law of another jurisdiction would not apply.

Certain Income Tax Risks

      If payments of  principal  or  interest on the Notes  become  subject to
withholding tax, we will not make additional payments to you.

      We  will  not  make  any  additional  payments  to  noteholders  for any
withholding  or deduction  that is required  under  applicable law on payments
on  the  Notes.  If we  are  required  to  make a  withholding  or  deduction,
whether because of the  implementation  of the EU Savings Tax Directive or for
any other reason,  we will use reasonable  efforts to avoid the application of
withholding  taxes.  If we cannot  avoid the  withholding  taxes,  we have the
right to redeem the  Notes.  If  withholding  taxes are  imposed  on  interest
payments on the Notes,  we will  reduce the amount of  interest  that you will
receive by the amount of the withholding taxes.

      Ownership of the Notes entails  certain risks  regarding the application
of the tax laws of Ireland,  the United States,  Jersey and the  jurisdictions
in which the Company,  its subsidiaries and the lessees are organized,  reside
or  operate.  You  should  refer  to  "Item  10  -  Additional  Information  -
Taxation"  for a  more  detailed  discussion  of  some  of  the  possible  tax
consequences of owning the Notes.

      Our operations  may become  subject to income taxes,  which would reduce
the revenue available to make payments on the Notes.

      Our  operations  may be subject to the income tax laws of  Ireland,  the
United Kingdom,  the United States,  Jersey,  France and other  jurisdictions.
There is also a risk that the  Servicer's  future  management  of the aircraft
might  expose the  Company and its  subsidiaries  to tax  liabilities  outside
Ireland  and the United  Kingdom.  If our income is subject to  taxation,  the
revenue available to make payments on the Notes would be reduced.

      If our Irish  subsidiary  were to lose its Irish tax  benefits our funds
available to make payments on the Notes will be reduced.

      Our Irish  tax-resident  subsidiary is entitled to certain corporate tax
benefits for  International  Financial  Services Center  certified  companies,
including  a  preferential   corporation   tax  rate  of  10%  in  respect  of
prescribed  leasing  operations  through  December 31, 2005. The loss of these
tax benefits would reduce our funds available to make payments on the Notes.

      Upon  the  scheduled   termination   of  the  Irish   preferential   10%
corporation  tax rate on December 31,  2005, the Company's Irish  tax-resident
subsidiary  will become  subject to Irish  corporation  tax on its net trading
income,  which would include leasing  income,  at a 12.5% rate as provided for
in the Irish Finance Act of 1999.  This  legislation  provides for non-trading
income (for  example,  deposit  interest) to be taxed at 25%.  There can be no
assurance that these tax rates will not be changed in the future.

      The  activities  of our  service  providers  or loss of treaty  benefits
could  expose us to United  States  federal net income  taxation,  which would
reduce our funds available to make payments on the Notes.

      The  Company  and its  subsidiaries  do not expect to have any  material
United  States  federal net income tax  liability.  However,  this  conclusion
may depend, in part, on:

o     the nature of such companies' income and operations, and

o     in the case of the Company's  Irish-resident  subsidiary,  qualification
         for the benefits of the income tax treaty  between the United  States
         and Ireland.

      There can be no  assurance  that the  activities  of the  Servicer,  the
Administrative  Agent and other service  providers will not expose the Company
and its  subsidiaries  to United States  federal net income tax on part or all
of their  income,  which would reduce our funds  available to make payments on
the Notes.

      United  States  withholding  taxes  currently  apply to one  lease,  may
continue to do so, and may apply to other leases in the future.

      United  States  federal  income  withholding  taxes at a rate of 30% are
applicable to lease  payments  relating to an aircraft  that was  re-delivered
in  October  2002 and was  immediately  placed on lease to  Allegiant  Air,  a
United  States  airline,  and that lease makes no  provision  for  recovery of
such  taxes  from  the  lessee.  The  lease  to  Allegiant  Air  has  a  lease
expiration  date as of the date of  completion  of the next "C Check" for this
aircraft,  which date is estimated to be in March 2006  (Allegiant  Air having
exercised an extension  option on July 28,  2004).  There can be no assurance,
however,  that any  subsequent  lease will  avoid  United  States  withholding
taxes.  Likewise,  there  can be no  assurance  that  other  leases  will  not
become subject to United States federal income tax withholding.

      The Company has incurred tax  liabilities  in 2003 and may have incurred
additional  tax  liabilities  in prior  years,  in  respect  of unpaid  United
States  withholding  taxes relating to the  investment of certain  collections
by the Cash Manager.

      The Cash  Manager  informed  the  Company  in 2003 that in past  periods
certain  Company  collections  had been invested in United States money market
funds,  and that the Cash  Manager  apparently  should  have  withheld  United
States  withholding  taxes from such  collections  but  failed to do so.  Upon
being  informed of these  investments,  the Company  immediately  directed the
Cash Manager to cease  investing in such funds as the Deed of Charge  provides
that  collections may not be invested in investments  that are subject to U.S.
withholding  tax.  The  Cash  Manager  indicated  that  withholding  taxes  of
$9,991  were due and owing to the United  States  government  for  investments
relating to 2003,  and the Cash  Manager  paid such  amount  from  collections
otherwise  available  for  distribution  to  Noteholders.   The  Cash  Manager
further  indicated that it was reviewing its  withholding  tax  obligations in
respect of the years prior to 2003,  and  provided  preliminary  estimates  of
$104,165,  $74,319  and  $24,871  that may be owed for  2000,  2001 and  2002,
respectively.   Although   the   estimates   for  2000,   2001  and  2002  are
preliminary  they suggest that if  withholding  taxes are owed for these three
years,  the amounts  owed for each of these  three years will be greater  than
the tax paid  for  2003.  Further,  the Cash  Manager  has not yet  determined
whether  withholding taxes may be owed for years prior to 2000,  whether there
may be additional  liabilities  for penalties and interest owing for any years
or provided  even  preliminary  calculations  of potential  withholding  taxes
owed for years  prior to 2000 or  penalties  and  interest  for any year.  The
Company has requested that the Cash Manager  provide,  on an expedited  basis,
its  analysis of whether  such  amounts are owing and its  calculations  as to
what  such  amounts  are.  The  Company  further  understands  that,  whatever
course of action the Cash Manager  ultimately  determines to take, the Company
may be  liable  for any  withholding  tax  amounts  not  remitted  by the Cash
Manager  to  the  United  States   government.   Although  the  investment  of
collections  in  investments  subject  to  withholding  appears  to have  been
inconsistent  with the terms of the Deed of Charge,  the  Company  has not yet
determined  the  remedies,  if  any,  that  may be  available  in  respect  of
withholding  liabilities  it may  ultimately  bear.  Accordingly,  the  United
States  withholding tax liabilities  associated with the investment of Company
collections  in United  States  money market funds may be borne in full by the
Company  and   ultimately   the   Noteholders   without  the  benefit  of  any
contribution from the Cash Manager.

ITEM 4.     INFORMATION ON THE COMPANY

A.    History and Development of the Company

      The Company was  incorporated in Jersey  (registered  number 52674) as a
private,  limited liability  company under the Companies  (Jersey) Law 1991 on
May  13,  1992,  for an  unlimited  duration,  and  became  a  public  company
pursuant  to a special  resolution  passed on June 15,  1992.  The  registered
office of the Company is at 22  Grenville  Street,  St.  Helier,  Jersey,  JE4
8PX,  Channel  Islands and its  telephone  number is  011-44-1534-609000.  The
Company has an authorized  share  capital of 15,000  ordinary  shares,  $1 par
value per share,  10 of which  have been  issued.  All of the issued  ordinary
shares are held by the  Nominees  for the  benefit of the  trustee of the ALPS
Trust, a charitable trust established in Jersey.

      The Company has three direct wholly owned  subsidiaries,  one in each of
Ireland,  England and France.  The  subsidiaries  directly or indirectly lease
aircraft from the Company and sublease them to operators  where  commercial or
other reasons make it desirable to do so.

      The Company was formed for the  purpose of  acquiring a portfolio  of 14
commercial  jet aircraft all of which were  subject to operating  leases.  The
Company  agreed to purchase such  aircraft from GPA and received  delivery and
legal  title from GPA of the  aircraft  over the four month  period  from June
23,  1992 to  October  30,  1992.  One  aircraft  was sold on March 15,  1996,
reducing  the fleet size to 13. The WFC  Aircraft  was  purchased  on November
27, 1996 from WFC,  and on July 24, 1997 the  B747-283B  aircraft  was sold to
WFC.  Four  further  aircraft  were  sold on  July 2,  1999,  June  27,  2000,
October 1, 2002 and December 20, 2002, respectively.

      In June 1996,  the Company  elected to refinance  the Prior Debt through
the  issuance  of  the  Notes  rather  than  remarketing  and  selling  all 13
aircraft  during  the  one-year  period  prior  to  the  originally  scheduled
maturity  of the Prior  Debt in June  1997.  The  decision  to  refinance  the
Prior  Debt was  primarily  due to the  uncertainty  as to the  ability of the
Company  to make  payment  in full on the Old  Class B Notes  and Old  Class M
Notes  under  the  then  current  schedule  for  sale  of  the  aircraft.   In
connection  with the  refinancing of the Prior Debt, the Old Class A Notes and
the Old Class M Notes were  redeemed and the Old Class B Notes were  exchanged
for the Class E Notes.  The Company  believed  that the revised  schedule  for
sale of the  Company's  then  current  aircraft  portfolio  would  allow it to
realize  better  returns on such  aircraft,  because the  Company  expected at
that time to sell such  aircraft  over a period  of five to seven  years  from
the Closing  Date  (compared  to fifteen  months  under the terms of the Prior
Debt).

      The  Class A,  Class B,  Class C and  Class D Notes  were  issued on the
Closing  Date with an aggregate  face amount of  approximately  $394  million.
The proceeds  together with cash balances  previously held in reserve accounts
were  utilized to repay the  outstanding  interest on the Old Notes,  the $367
million of  outstanding  principal  on the Old Class A Notes and the Old Class
M Notes,  the  refinancing  expenses of $13  million,  the premium paid to the
holders of certain  of the Old Notes of $4 million  and to create an  aircraft
purchase  reserve  account for the purchase of the WFC Aircraft.  In addition,
in connection  with such  refinancing (i) the Old Class B Notes were exchanged
for the Class E Notes, and (ii) the Old SM Loan of $78 million was repaid.

      The Company is  obligated  to pay interest on the Notes and a portion of
the  principal  of the  Class  A  Notes  from  the  revenue  generated  by the
Company's  leasing  operations.  The Company was  required to sell one or more
further  aircraft  having an  aggregate  Initial  Appraised  Value of at least
$66,810,000  by June 27,  2003 in order to  comply  with the June  2003  Trust
Note Sales  Goal.  Further,  to comply with the Trust Note Sales Goal for June
27, 2004,  the Company was required to sell all of its  remaining  aircraft by
that date.  As  discussed  herein,  due to market  conditions  in the aircraft
industry it was not  possible to meet the Trust Note Sales Goals for  June 27,
2003 or for June 27,  2004 and remain in  compliance  with other  requirements
of the Deed of Charge.  Proceeds  from the sale of  aircraft  are  required to
be used to pay  principal  of the Notes in the  priority set forth in the Deed
of Charge.  The  Servicer  has an ongoing  instruction  from us to market each
and  every  aircraft  for  sale  in a  manner  consistent  with  our  Business
Objectives  and  the  other  requirements  of the  Deed  of  Charge.  However,
selling  any of the  aircraft in the current  industry  environment  at prices
consistent with compliance with our current  Business  Objectives is extremely
difficult  and  there  can be no  assurance  that we will be able to repay the
holders  of the  Class  A Notes  the  full  amount  owed  to  them  when  due.
Further,  based on current  projections,  we expect to have insufficient funds
to  repay  some  or all of the  outstanding  Class  B Note  principal  and any
further  Class C,  Class D and Class E Note  principal,  and we expect to have
insufficient  funds to pay any further  step-up  interest  due on the Class A,
Class B, Class C or Class D Notes or any further  interest  due on the Class D
and  Class E Notes.  An  Event of  Default  occurs  if we do not pay  interest
(excluding  additional interest,  default interest or step-up interest) on any
Note  within  five days of its due date.  This  Event of Default  occurred  on
several  occasions  prior to fiscal year 2003 when we had  insufficient  funds
to pay such interest in full to Class D  Noteholders  and has now been ongoing
since  December  16,  2002.  The  Company  does not expect to have  sufficient
funds  to  pay  any  further  Class  D  Note  interest.  See  "Item  3  -  Key
Information - Risk  Factors,"  and "Item 5 - Operating  and  Financial  Review
and  Prospects  -  Liquidity  and  Capital  Resources"  and  see  "Item  13  -
Defaults,  Dividend  Arrearages  and  Delinquencies"  for a discussion  of the
limited  remedies  available  upon the occurrence of an Event of Default under
these circumstances.

      The  Company  did not have  sufficient  funds to repay the Class A Notes
on their  expected  final  payment  date of May 15, 2002 or to repay the Class
B, Class C or Class D Notes on their  expected  final payment date of July 15,
2002.  The Deed of Charge  requires,  to the extent the Company does not repay
in full  principal  of those Notes by such dates,  that the Company pay to the
Class A,  Class B and  Class C  Noteholders  additional  step-up  interest  of
0.50% per annum and to the Class D  Noteholders  additional  step-up  interest
of 1.00% per annum for each  month  until the  earlier  of the date such Notes
are  repaid in full and their  final  maturity  date of June 15,  2006.  These
additional  interest  costs  would  only  be  paid  to the  extent  there  are
available  collections  in accordance  with the priority of payments set forth
in the Deed of  Charge.  The  Company  paid some  step-up  interest  in fiscal
year  2002,  but our  current  projections  indicate  that we  will  not  have
sufficient funds to pay any further step-up interest.

      During fiscal year 2004,  certain target  principal  payments  scheduled
to be paid  to  holders  of  Class  A,  Class C and  Class  D  Notes,  certain
interest  payments  due to holders of Class A, Class B and Class C Notes,  and
all  interest  payments  due to  holders  of Class D and Class E Notes were in
arrears.  As at the end of  fiscal  year  2004,  these  arrears  consisted  of
$70.810  million  of Class A Note  Target  Amount,  $0.942  million of Class A
Note  step-up  interest,  $0.407  million  of Class B Note  step-up  interest,
$4.304 million of Class C Note Target  Amount,  $0.390 million of Class C Note
step-up  interest,  $5.177  million  of  Class D Note  Target  Amount,  $0.665
million  of Class D Note  step-up  interest,  $1.042  million  of Class D Note
default  interest,  $7.130  million  of  Class D Note  regular  interest,  and
$52.705 million of Class E Note interest.

B.    Business Overview

      Business Objectives

      Our business  objectives  pursuant to the Deed of Charge (the  "Business
Objectives")  changed on June 27, 2004 and are now (a) to re-lease  certain of
the aircraft  promptly after the scheduled  expiration  date of the applicable
original  lease and to  manage  the  aircraft  with a view  towards  receiving
rental  payments  under the existing  leases,  and, in the case of any renewed
or replacement  lease relating to any aircraft,  to maximize the amount of any
rental payments  thereunder so as to be able to make the required  payments of
interest and  principal  on the  scheduled  payment  dates with respect to the
senior  most  class of Notes  (namely  the Class A Notes),  (b) to market  and
sell the  aircraft  at such  times  and for such  amounts  to  realize,  on an
aggregate  basis,  an  amount  sufficient  to repay  in full  the  Outstanding
Principal  Balance  of the  senior  most  class of Notes  (namely  the Class A
Notes)  and (c) to the  extent  consistent  with the  objective  described  in
clause (b) above,  upon the sale of the aircraft,  to realize the value of the
aircraft on an  aggregate  basis so as to provide  the  maximum  return to the
Company on its  investment  therein,  in all cases  taking  into  account  the
present  and  anticipated  market  conditions   affecting  the  sale  of  used
aircraft  and the  commercial  aviation  industry  generally.  With respect to
the  re-leasing,  marketing and sale of aircraft  described in clauses (a) and
(b) above,  the Deed of Charge  provides that our Business  Objectives  change
after  certain  dates.  Accordingly,  (i) prior to June 27, 2001 our  Business
Objectives  were to (x) re-lease  aircraft to maximize  rental  payments so as
to be able  to  make  required  payments  of  interest  and  principal  on the
scheduled  payment  dates  with  respect to each class of Notes and (y) market
and sell  aircraft  so as to repay the  Outstanding  Principal  Balance of all
Notes  and (ii)  from  June  27,  2001  through  June  26,  2004 our  Business
Objectives  were to (x) re-lease  aircraft to maximize  rental  payments so as
to be able  to  make  required  payments  of  interest  and  principal  on the
scheduled  payment  dates  with  respect  to the  Senior  Trust  Notes and (y)
market and sell aircraft so as to repay the Outstanding  Principal  Balance of
the Senior Trust Notes.

      The  management  and  administration  of the leases and the  aircraft is
conducted principally by Babcock & Brown, as servicer.

      Aircraft Leasing

      As of June  30,  2004,  our  fleet of  aircraft  was  comprised  of nine
aircraft,  eight of which were on lease to seven  lessees  in seven  countries
and one of which was off-lease.  As of June 30, 2004,  the remaining  terms of
the  leases  ranged  from  approximately  seven  months to five  years and one
month.  The  following  table  shows the  scheduled  terminations  by aircraft
type and lessee for the leases  relating  to our  aircraft as of June 30, 2004
(except as noted with respect to the aircraft currently leased to Transaero):

Aircraft Type    Lessee                    Month and Year of Expiration
B737 - 400       Batavia                   March 2007
B737 - 400       Travel Service            March 2007
B737 - 400       AOG(1)                    -
B737 - 500       China Southern            March 2006
B757 - 200       First Choice Airways(2)   April 2005
B767 - 300ER     Air Canada                March 2007
B767 - 300ER     Air Canada                May 2007
MD83             Meridiana                 March 2006
MD83             Allegiant Air(3)          January 2005
______________________
(1)   This  aircraft was formerly  leased to Skynet with a lease  expiration  of
   March  2005.  At the  request  of  Skynet,  the  Company  agreed to the early
   return of this  aircraft  which  occurred on May 17,  2004.  On July 28, 2004
   the aircraft was  re-leased to Transaero  for a five year term ending on July
   27, 2009.
(2)   First  Choice  Airways has an option to extend the lease to April 30, 2006
   if it provides notice by December 1, 2004 that it will exercise such option.
(3)   Allegiant  Air, by a notice dated July 28, 2004,  exercised  its option to
   extend  this lease  until the next C check for this  aircraft  (estimated  to
   occur in March 2006).

      All of the leases  relating to our aircraft are  operating  leases under
which  we (i) will  not  recover  fully  the  cost of each  aircraft  and (ii)
retain  the  benefit  and  assume  the  risk  of  the  residual  value  of the
aircraft.  The  aircraft  are  included  as  assets on our  balance  sheet and
depreciation  is  charged to income  over the  estimated  useful  lives of the
aircraft.  See "Item 18 -  Consolidated  Financial  Statements  -Statement  of
Accounting  Policies  -  Aircraft."  Minimum  lease  rentals in respect of the
aircraft  are  reported  as  revenue  over the term of the lease on a straight
line basis.  Contingent rents are recorded as the contingency is resolved.

      All leases are on a "net" basis,  under which the lessee is  responsible
for all operating expenses,  generally  including,  without limitation,  fuel,
crews,  airport  and  navigation  charges,   taxes,  licenses,   registration,
insurance  and  certain  maintenance  costs.  However,  in  some  of the  more
recently  executed  leases,  the Company has agreed to cover certain  aircraft
maintenance  and  overhaul  costs.  Under the  provisions  of the leases,  the
lessee may also be  obligated  to pay an  agreed-upon  charge based on the use
of  the  aircraft  as  a  provision  for  certain  future  maintenance  costs.
Normally,  such  amounts  could be  reclaimed  by the lessee once the relevant
maintenance  has been  completed by the lessee.  The leases  contain  specific
provisions  regarding  maintenance  standards  during  the terms  thereof  and
regarding  the  condition of the aircraft  upon  redelivery  to us. The lessee
is responsible for compliance  with all applicable  laws and regulations  with
respect to the  aircraft.  We require our lessees to maintain  the aircraft in
accordance with an approved  maintenance  program  designed to ensure that the
aircraft meets applicable  regulatory  requirements in the jurisdictions where
the lessee operates.

      Babcock & Brown,  on our  behalf,  is required to inspect or arrange for
the  inspection  of the  condition  of each  aircraft  at least  once every 18
months.  Generally,  we require a security  deposit  and/or a letter of credit
from the lessee as security for the  performance  of the lessee's  obligations
under the  lease  although  this has not been the case for all of the  leases.
In addition,  the leases  contain  extensive  provisions  regarding our rights
and   remedies  in  the  event  of  a  default   thereunder   by  the  lessee.
Notwithstanding  the  foregoing,  no  assurance  can be given that all lessees
will  comply with the terms of their  related  leases or that all of the lease
provisions  discussed  herein will be enforceable  against each lessee.  As of
August 31, 2004, the aggregate arrears for all lessees was $145,000.

      On April 1,  2003,  Air Canada  filed for  bankruptcy  protection  under
Canada's  Companies  Creditors   Arrangement  Act.  Under  the  terms  of  the
court's  order,  Air Canada's  lessors,  who wanted to continue  leasing their
aircraft to Air Canada,  agreed to a 60 day moratorium on lease  rentals.  Air
Canada  subsequently  extended  this  moratorium.  Following  execution  of  a
Memorandum of Understanding  by Air Canada,  which became effective on October
20,  2003,  all rental  arrears for the two  aircraft  leased by Air Canada in
the  amount  of  $1,548,350   were  offset  against  the  Company's   required
contribution  of  $1,447,300   towards  the  S4C  check  on  one  of  the  two
aircraft.  Air Canada  paid the  remaining  arrears of $101,050 on October 23,
2003.  On November  17, 2003 the Company  submitted a claim for  approximately
$4.0 million in respect of the loss of the  contracted  lease  rentals on both
of the  Company's  aircraft from the date that Air Canada  entered  bankruptcy
protection  to the original  lease expiry  dates.  Legal fees  incurred by the
Company  as a result of the Air Canada  restructuring  were also  included  in
the  claim.  We  are  advised  that  this  claim  has  been  approved  by  the
bankruptcy  monitor.  The latest  indications  are that creditors will receive
between  five and seven  U.S.  cents for each U.S.  dollar of claims  and that
this will be  settled by an  issuance  of shares  (in ACE  Aviation  Holdings,
Inc.,  the new Air Canada  holding  company) to creditors.  Air Canada emerged
from  bankruptcy on September 30, 2004 and it is currently  expected that such
shares will be issued over a period of months beginning in October 2004.

      On  May  10,  2004  Skynet  advised  the  Servicer  that  it  wished  to
terminate  the  leasing  of  MSN  24519  due  to  its  inability  to  generate
sufficient  revenues  to support its  operations  and lease  payments.  On May
17, 2004 the Company  agreed to the early  return of the aircraft and a notice
of  termination  was  served  on  Skynet.  Following  the  termination  of the
lease,  the Skynet  cash  security  deposit  of  $296,000  was  applied to the
outstanding  May and June 2004 rentals.  As a result of this  application,  on
June 1, 2004 the  Skynet  arrears  were  $365,902  comprising  of  maintenance
payment  arrears  of  $363,215  and  default  interest  due  of  $2,687.   The
Servicer  subsequently  informally  agreed with  Skynet that the lessor  would
release  Skynet  from its  obligations  under  the  lease in  respect  of such
maintenance   payment  arrears  and  default  interest  provided  that  Skynet
cleared  all of  its  payment  obligations  to  three  entities:  (i)  Shannon
Aerospace  (in  respect of a "C Check"  performed  on the  aircraft)  (ii) Aer
Rianta (in respect of arrears of landing  charges,  catering charges and fuel)
and (iii)  Eurocontrol (in respect of arrears of air navigation  charges).  As
of  September 8, 2004 Skynet had  continued  to make all of their  installment
payment  obligations to these three entities and the balance  outstanding  was
in the aggregate approximately $0.703 million.

      Aircraft Fleet

      As of June 30,  2004,  our fleet was  comprised  of nine  aircraft.  Our
aircraft  consist of widebody  and  narrowbody  Stage 3  Aircraft.  As of June
30, 2004,  two of the aircraft  were  classified as widebody  aircraft,  being
two Boeing  767-300ERs.  The  remaining  seven  aircraft  were  classified  as
narrowbody aircraft.

      As of June 30, 2004,  our  aircraft,  divided by  manufacturer,  were as
follows:


                                COMPANY FLEET

                                                          Net Book Value
                                                         (in thousands of
Manufacturer         Aircraft Type         Number           dollars)(1)
Boeing               B737 - 400               3             $35,045
                     B737 - 500               1              10,590
                     B757 - 200               1              18,910
                     B767 - 300ER             2              60,530

McDonnell Douglas    MD83                     2              14,390
                                              -              ------
Total                                         9            $139,465
                                              =             =======

______________

(1)  Net book value in respect  of each of the nine  aircraft  is stated as of
     June 30, 2004.

      Aircraft Value

      We  have   obtained   three   desktop   appraisals   (without   physical
inspection)  of the  appraised  base  value of each  aircraft  as of June 2004
from Avitas, AISI and BK. Based on such desktop  appraisals,  the aircraft had
an  aggregate   appraised  base  value  of   $137,680,000,   $185,000,000  and
$207,170,000,  respectively,  or an average aggregate  appraised base value of
approximately $176,620,000.

      We obtained desktop  appraisals  (without  physical  inspections) of the
appraised  base value of the nine aircraft as of June 2003 from Avitas,  AISI,
and  BK.  Based  on such  desktop  appraisals,  the  aircraft  had an  average
aggregate  appraised base value of approximately  $205,820,000,  calculated as
the average of the  appraised  base values as  determined  by the  Independent
Appraisers.

      For the purpose of the  valuations,  appraised  base value is defined by
the  International  Society of Transport  Aircraft Trading as the value of the
aircraft  assuming  an  arm's-length,  cash  transaction  between  willing and
knowledgeable  parties,  with  a  reasonable  period  of  time  available  for
marketing,  assuming,  among other  things,  sales of the aircraft in an open,
unrestricted,  stable market  environment with a reasonable  balance of supply
and demand,  and assuming the maintenance  status of each aircraft with regard
to such things as airframe,  engines and landing  gear to be at its  half-life
condition  (i.e.,  its  condition  at  midpoint  between  service  intervals),
adjusted to account for certain  aspects of the actual  maintenance  status of
each  aircraft,  as provided to the  Independent  Appraisers.  Appraised  base
values,  as  so  determined,   are  only  estimates  of  resale  values  in  a
hypothetical market environment.

      We believe  that the  reduction in the average  appraised  base value of
the nine  aircraft from  $205,820,000  as of June 2003 to  $176,620,000  as of
June 2004  representing  a reduction of 14.19% of the average  appraised  base
value from the prior  year,  is due  primarily  to the ageing of the  aircraft
and,  with respect to certain  aircraft,  those market  conditions  which have
had a negative effect on aircraft values.

      As  discussed  in  the   Statement   of   Accounting   Policies  in  the
Consolidated   Financial  Statements  contained  in  Item  18,  the  Directors
undertake a review to determine  whether an  impairment  charge is required in
respect of both  aircraft  held for use and any  aircraft  held for sale.  The
Directors,  in applying SFAS 144, have  determined that the carrying value for
eight of the  Company's  aircraft,  all of which  are  classified  as held for
use,  is greater  than the  estimated  undiscounted  future net  cashflows  in
respect of such  aircraft  and have  recorded an  impairment  charge for these
aircraft equal to the difference between their carrying value and fair value.

      In  applying  SFAS  144 the  Directors  have  determined  that  the most
appropriate  estimate  of the fair  value  of the  Company's  aircraft  is the
average  Appraised Current Market Value,  which was in aggregate  $138,300,000
as at June  30,  2004  for the  nine  aircraft.  The  Independent  Appraisers'
assessment  of  Appraised   Current   Market  Value  reflects  the  underlying
economic  value of  aircraft  and  engines in normal  market  conditions.  The
Independent   Appraisers  assume  that  the  aircraft  are  valued  for  their
highest,  best use,  that the parties to the  hypothetical  sale are  willing,
able,  prudent and  knowledgeable,  and under no unusual pressure for a prompt
sale,  and  that  the   transaction   would  be  negotiated  in  an  open  and
unrestricted market on an arm's length basis.

      Appraised  Current Market Values have been estimated by the  Independent
Appraisers  based on value  curves  from the  last  downturn  in the  aircraft
market.  An  appraisal  is an  estimate of value and should not be relied upon
as a measure of current sales value.  In the current  environment,  there is a
lack of hard data  available on which to base  aircraft  valuations  for older
aircraft of the type in our portfolio  and therefore the appraisal  process is
more difficult.

      The Directors  believe that current market  conditions  (in  particular,
the absence of  liquidity  and of willing  buyers and sellers for the types of
aircraft  owned by the  Company) do not reflect the normal  market  conditions
which  the  Independent  Appraisers  have  had to  assume.  Consequently,  the
sales  value that could be  achieved  for the  aircraft in the event that they
were  disposed  of in  the  current  market  may  be  less  than  the  average
Appraised  Current  Market  Value  and  carrying  value as at June  30,  2004.
Also,  if the  Company is required to sell the  aircraft  due to the  Required
Sale  Provision  the proceeds  from such sale may be even less than that which
could be achieved in the current market.

      The  application  of the  accounting  policies  in the fiscal year ended
June 30, 2004 has led to an  impairment  charge of $13.053  million.  Previous
charges  were  made at June  30,  2003,  June 30,  2002 and June 30,  2001 for
$14,378,000, $20,321,000 and $30,259,000, respectively.

      Following  the  terrorist  attacks of  September  11, 2001 and the other
world events and  industry  factors  discussed  herein that  contributed  to a
significant  downturn in the airline industry,  many airlines have been flying
fewer  aircraft  and  downsizing  or reducing  planned  growth of their fleets
during  this  period.  In  addition,  since  September  11,  2001 a number  of
airlines have declared  bankruptcy  (including Air Canada,  our largest lessee
as measured by our annual lease  revenue,  which  emerged from  bankruptcy  on
September  30,  2004) some of which have  ceased  operations.  Although  there
have been some positive  trends in 2004 for the aircraft  industry it is still
expected  that the industry  will  experience  some further  consolidation  as
well  as  additional  bankruptcies  in the  near  future.  As a  result,  some
aircraft  owned by or leased  to these  airlines  have been put on the  market
for sale or lease.  Due to the loss of investor  appetite  and the  difficulty
in  obtaining  financing  for the  purchase of the types of older  aircraft in
our  portfolio,  there  are  fewer  potential  buyers  of  these  aircraft  on
operating lease,  and the resulting  illiquidity in the market has caused sale
prices of these aircraft to further  decline.  As discussed  above,  Appraised
Current  Market  Values  have been  estimated  by the  Independent  Appraisers
based on value  curves  from the last  downturn  in the  aircraft  market.  An
appraisal  is an  estimate of value and should not be relied upon as a measure
of current sales value.  In the current  environment,  there is a lack of hard
data  available on which to base  aircraft  valuations  for older  aircraft of
the  type  in our  portfolio  and  therefore  the  appraisal  process  is more
difficult.   The  Directors   believe  that  current  market   conditions  (in
particular,  the absence of  liquidity  and of willing  buyers and sellers for
the types of aircraft  owned by the Company) do not reflect the normal  market
conditions   which   the   Independent   Appraisers   have   had  to   assume.
Consequently,  the sales value that could be achieved  for the aircraft in the
event that they were  disposed of in the  current  market may be less than the
average  Appraised  Current  Market  Value and  carrying  value as at June 30,
2004.  Also,  if the  Company  is  required  to sell the  aircraft  due to the
Required  Sale  Provision  the  proceeds  from such sale may be even less than
that which  could be  achieved  in the  current  market.  Although  it was not
possible,  given the then current market conditions in the aircraft  industry,
to comply with the Trust Note Sales Goals and achieve  sale prices  consistent
with our then current Business  Objectives,  there can be no assurance that we
will not be forced to sell one or more  aircraft  as a result of the  Required
Sale  Provision.  See  "Item  3 - Key  Information  - Risk  Factors  - We were
unable to comply  with the Trust Note  Sales  Goals for June 2003 and for June
2004 and as a result we may be required  to sell  aircraft at the Class A Note
Target Price."

      The  foregoing  indications  of  appraised  base value  provided  by the
Independent  Appraisers  do not reflect  the value of the leases,  maintenance
reserves,  security deposits or other related  collateral,  if any. All dollar
amounts listed under this subsection are rounded to the nearest $0.1 million.

      Fleet Age Analysis

      The  weighted  average  age of our  aircraft by net book value was 13.87
years as of June 30, 2004.

      Lessees

      The lessees of our  aircraft  as of June 30, 2004  (except as noted with
respect to the aircraft  currently  leased to  Transaero),  such lessees' home
country and the respective  aircraft type and date of  manufacture  are as set
forth below:

Lessee              Country                 Aircraft Type    Date of Manufacture
Air Canada          Canada                  B767 - 300ER     March 1991
                                            B767 - 300ER     August 1991
Allegiant Air       U.S.A.                  MD83             August 1989
Batavia             Indonesia               B737 - 400       November 1988
China Southern      People's Republic of    B737 - 500       July 1991
                    China
First Choice        United Kingdom          B757 - 200       March 1991
Airways
Meridiana           Italy                   MD83             July 1989
Transaero(1)        Russia                  B737 - 400       October 1989
Travel Service      Czech Republic          B737 - 400       March 1989
_______________
(1)   This aircraft was formerly  leased to Skynet,  an Irish company,  with a
      lease  expiration of March 2005.  At the request of Skynet,  the Company
      agreed to the early return of this  aircraft  which  occurred on May 17,
      2004.  On July 28, 2004 the aircraft was re-leased to Transaero.

      In fiscal year 2004,  four  lessees  accounted  for more than 10% of our
leasing  revenue (Air Canada  27.87%,  Travel Service  14.94%,  China Southern
14.17%  and  Skynet  11.70%).  There are no leases  with  respect to which the
present  value  of the  lease  payments  due  from  the  lessee  (utilizing  a
discount  rate equal to the  average  coupon on the Notes)  exceeds 10% of the
original aggregate principal balance of the Notes.

      Distribution of Revenue by Geographic Area

      The  following  table  sets forth the dollar  amount and  percentage  of
total lease revenue  attributable  to the indicated  geographic  areas for the
period from July 1, 2003 to and including June 30, 2004:

                                        Amount            Percentage
                                 --------------------- ----------------------
                                  (in thousands of
                                       dollars)
Europe                                   $6,118               40.32
Americas                                 $4,822               31.77
Asia/Pacific                             $4,235               27.91
                                        $15,175              100.00%
                                        =======              ======

      Many foreign  countries  have currency and exchange laws  regulating the
international  transfer of  currencies.  We attempt to minimize  our  currency
and exchange risks by negotiating  our aircraft  leasing  transactions in U.S.
dollars and all  letters of credit and any other  forms of credit  enhancement
obtained  to  support  various  leases  are  denominated  for  payment in U.S.
dollars.
------------------------------------------------------------------------------

      Our  revenue  and  income  may be  affected  by  political  instability,
changes  in  national  policy in the  countries  where our  aircraft  operate,
competitive  pressures  and  other  financial   difficulties   experienced  by
certain air carriers,  fuel shortages,  labor stoppages,  recessions and other
political or economic events  adversely  affecting  world or regional  trading
markets or impacting a particular  customer.  Many of these  factors have been
adversely   impacted  by  the  terrorist  attacks  in  the  United  States  on
September  11,  2001,  the  military  action  of the U.S.  and its  allies  in
Afghanistan,   the  terrorist  attacks  in  Bali,  Saudi  Arabia,   Spain  and
elsewhere,  the war in Iraq, the outbreak of SARS and the  subsequent  decline
in the aircraft industry.

      Regional Concentrations.

      Asia  Concentration  - At  June  30,  2004,  15.4%  of our  aircraft  by
appraised base value at June 30, 2004 were leased by operators in Asia.

      The  Asia  region  has  recovered  from  the  outbreak  of SARS in 2003.
According to IATA statistics recently released,  revenue passenger  kilometres
RPK in Asia  increased  by 29.4% for the first seven  months in 2004  compared
to the same period in 2003.

      European  Concentration  - At June 30,  2004,  27.6% of our  aircraft by
appraised  base  value at  June 30,  2004 were  leased by  operators  based in
"developed" Europe.

      The  commercial  aviation  industry  in  Europe  is  very  sensitive  to
general economic conditions.  Since air travel is largely  discretionary,  the
industry tends to suffer severe  financial  difficulties  during slow economic
periods.  As a result,  the  financial  prospects  for  European  lessees will
depend  on the  level of  economic  activity  in  Europe  and in the  specific
countries  where they  operate.  A recession  or other  worsening  of economic
conditions in one or more of those  countries,  particularly  if combined with
high fuel  prices  and/or a weak  Euro,  may  adversely  affect  the  European
lessees'  ability to meet their financial and other  obligations.  Competitive
pressures from continuing  deregulation of the airline  industry by the EU may
also adversely affect European  lessees'  operations and their ability to meet
their obligations under the leases.

      RPK in Europe  increased  by 12.6% for the  first  seven  months of 2004
compared to the same period in 2003.

      North America  Concentration  - At June 30, 2004,  48.5% of our aircraft
by  appraised  base  value at June 30,  2004 were  leased by two  airlines  in
North  America.  As in  Europe,  the  commercial  aviation  industry  in North
America  is  highly  sensitive  to  general  economic  conditions.  Since  air
travel is largely  discretionary,  the industry has suffered severe  financial
difficulties  during economic  downturns.  Over the last several years, nearly
half of the major North  American  passenger  airlines  have filed for Chapter
11  bankruptcy  protection  (including  Air  Canada,  our  largest  lessee  as
measured  by our annual  lease  revenue,  which  emerged  from  bankruptcy  on
September  30,  2004),  United  Airlines,  the second  largest  airline in the
world,  and U.S.  Airways,  the sixth  largest  airline  in the world by fleet
size) and several major United  States  airlines  have ceased  operations.  In
addition,  Delta Airlines (the third largest  airline in the world as measured
by fleet size) has indicated  that absent  significant  financial  concessions
from its  employees,  it will also be forced to file for Chapter 11 bankruptcy
protection.  Although  RPK in North  America  have  increased by 18.7% for the
first seven  months of 2004  compared to the same period in 2003,  the decline
in the airline  industry  following  the  terrorist  attacks of September  11,
2001  continues  to  be  a  significant   factor  in  the  United  States  and
additional bankruptcies of other United States airlines remain likely.

      Off  lease  aircraft  - As at  June  30,  2004,  one  of  our  aircraft,
representing  8.5% of our aircraft by  appraised  base value at June 30, 2004,
was   off-lease   having   come  off  lease  on  May  17,  2004  in  an  early
termination.  It was  re-leased to another  lessee based in Russia on July 28,
2004.

      Payment History

      As  of  June  30,  2004,  there  were  no  outstanding   rental  arrears
(following  the  application  of the  Skynet  cash  security  deposit  towards
outstanding May and June 2004 rentals (see "Aircraft Leasing")).

      As of June 30,  2004 there  were  arrears  of  $365,902  owed by Skynet,
comprising of maintenance  payments  arrears of $363,215 and default  interest
of $2,687.  The  Servicer  subsequently  informally  agreed to release  Skynet
from  liability  under the lease in  respect  of these  arrears  (and  certain
other  obligations)  if Skynet cleared all its payment  obligations to certain
third parties with respect to the leased aircraft (see "Aircraft Leasing").

      Competition

      Our  principal  business is the  provision of aircraft  through  leasing
transactions   to   aircraft   operators.   We   focus  on  the   leasing   of
widebody/narrowbody  Stage 3  Aircraft.  A  number  of other  parties  provide
aircraft  on  operating  leases  similar to those  provided  by us,  including
International  Lease  Finance  Corporation,   debis  AirFinance  B.V.,  Airbus
Financial  Services,  Boeing Capital  Corporation,  Pembroke  Capital Limited,
Ansett Worldwide  Aviation Services,  GE Capital Aviation  Services,  Limited,
GATX Corporation,  AerCo Limited,  Airplanes Limited, Airplanes U.S. Trust and
others.  In  addition,   there  are  a  number  of  specialist  operators  who
concentrate  on  particular  regions  or types of  customers  and on  specific
aircraft  types.  Furthermore,  we face  competition  from airlines,  aircraft
manufacturers,  aircraft brokers,  banks and other financial  institutions who
may  provide  aircraft  for  lease.  Many of  these  parties  have  access  to
financial resources  substantially  greater than those at our disposal,  which
adversely   affects  our  competitive   position.   Many  entities  sell  used
aircraft  so the  competition  for  the  sale  of used  aircraft  is  intense,
particularly under current market conditions.

      Compliance with Governmental and Technical Regulation

       Our customers  are generally  subject to a high degree of regulation in
the  various  jurisdictions  in  which  they  operate.  Such  regulation  also
indirectly  affects our  business  operations.  The nature of such  regulation
ranges  from  compliance  with  technical,   environmental  and  airworthiness
standards  to  economic   regulation  of  the  market  for  air  travel.  Some
organizations  and  jurisdictions  have  already  begun to discuss the further
tightening  of  noise  and  emissions  certification  requirements  for  newly
manufactured  aircraft.  Changes  in  regulation  which  are  adverse  to  our
interests or our customers  could have a  significant  effect upon our results
from operations or the value of our aircraft.

      In addition to general requirements  regarding  maintenance of aircraft,
aviation  authorities  issue ADs  requiring  the operators of aircraft to take
particular  maintenance  actions or make particular  modifications to a number
of aircraft of  designated  types.  ADs normally  specify a period in which to
carry out the required  action or  modification  and generally  enough time is
allowed to permit the  implementation  of the AD in connection  with scheduled
maintenance  of the  aircraft or engines.  The lessees  usually  bear the cost
of  compliance  with  ADs  issued  by  applicable  aviation   authorities  and
relevant  manufacturers'  recommendations.  We may be required to contribute a
portion  of such  costs  over a  specified  threshold.  However,  if a  lessee
fails to perform ADs  required on an aircraft or if an aircraft is  off-lease,
we would bear the cost of  compliance  necessary  for the aircraft to maintain
its  certificate  of  airworthiness.  In  such  circumstances,  funds  in  the
collection  account will be  available  to mitigate  the costs of  compliance,
although such use would reduce the  availability  of such amounts to cover the
cost of  scheduled  maintenance.  There can be no  assurance  that such  funds
will be  available  at the time  needed  or that any funds  available  will be
sufficient for such purposes.

      Other  governmental  regulations  may apply to our  aircraft,  including
requirements  relating to noise and emissions  levels.  Such  regulations  may
be  imposed  not  only  by  the   jurisdictions  in  which  the  aircraft  are
registered,  but also in jurisdictions  where the aircraft operate.  Chapter 3
of the Chicago  Convention  establishes two  progressively  restrictive  noise
level standards that correspond to the  requirements  for Stage 3 Aircraft.  A
number of  jurisdictions  have  adopted,  or are in the  process of  adopting,
noise  regulations  which will  require  all  aircraft to comply with the most
restrictive of these standards.  In addition,  local  municipalities  may have
more stringent noise regulations than those applicable to Stage 3 Aircraft.

      Volume 2 of Annex 16 of the Chicago  Convention also contains  standards
and  recommendations  regarding  limitations  on  vented  fuel and  smoke  and
gaseous  emissions  for  aircraft.  While a number of  countries  have adopted
regulations  implementing these  recommendations,  such regulations  generally
have been  prospective  in  nature,  requiring  only that  newly  manufactured
engines  meet  particular  standards  after a particular  date.  To the extent
that these  regulations  require  modifications  to the  engines  owned by us,
they would be treated similarly to ADs under the leases.

      Aviation  authorities in Europe and North America have recently  adopted
regulations  requiring the installation of enhanced ground  proximity  warning
systems  and  certain  other  systems  by 2005 such as Mode S  Elementary  and
Enhanced  Surveillance  Systems  which will shortly  become a  requirement  in
Europe in order to  accommodate  increased  growth in air  traffic.  Depending
on whether the costs of complying  with these  regulations  are borne by us or
the lessees,  installation  of these systems could result in significant  cash
capital  expenditures  of  approximately  $500,000 per  aircraft  (operated in
Europe or North America) by us in 2004 through 2005.

      As a  result  of the  terrorist  attacks  of  September  11,  2001,  new
security  directives  have been  adopted by aviation  authorities  such as the
installation of reinforced  cockpit doors at a cost of  approximately  $50,000
per aircraft.  In addition,  the ICAO requires  contracting  states to mandate
the  incorporation  of cockpit  doorway  surveillance  systems.  Depending  on
whether  the cost of  complying  with such  directives  are borne by us or our
lessees,  such directives could result in significant cash  expenditures by us
in the future.

      The FAA  has  previously  announced  an AD that  requires  operators  of
MD-11,  MD-80 and DC-10  aircraft to replace  certain  insulation  blankets in
order to  reduce  the risk of  fire.  The  estimated  cost to  implement  this
modification  is $665,000  per  aircraft.  We have two MD-80  series  aircraft
representing  12% of our  portfolio by appraised  base value at June 30, 2004.
This  modification  has been  implemented for one of our MD-80 series aircraft
and the  modification  of our other  MD-80  series  aircraft is expected to be
completed  in  January  2005.  The  significant   costs  incurred  and  to  be
incurred  in causing  these two MD-80  series  aircraft  to comply  with these
standards, are adversely impacting our results of operations.

      The FAA has  issued an AD  mandating  the  replacement  of main  landing
gear  shock  strut  pistons  on  MD-80  and  MD-90   aircraft   prior  to  the
accumulation  of 30,000  cycles on the existing  main landing gear shock strut
pistons.  The  cost  for  such  replacement  is  approximately   $265,000  per
aircraft.  Depending  on warranty  credit  provided by the  manufacturer,  the
majority  of this  cost  may be  claimed  from the  manufacturer.  We have two
MD-80 series  aircraft  representing  12% of our  portfolio by appraised  base
value at June 30, 2004.  Based on the current cycles  completed to date by our
MD-80 aircraft,  one of our aircraft may require this modification  within the
next  twelve to  eighteen  months.  In the event that  warranty  credit is not
available from the manufacturer for any aircraft,  we could incur  significant
costs in ensuring our MD-80 aircraft comply with these  standards,  which will
impact adversely on our results of operations.

      The FAA has  issued  a  number  of ADs  mandating  the  modification  of
affected  lapjoints  on Boeing 737 aircraft  when the  aircraft has  completed
45,000  cycles.   The  estimated  cost  to  implement  such  modifications  is
approximately  $1,000,000  per  aircraft.  We have four Boeing 737 aircraft in
our  portfolio,  representing  32% of the portfolio by appraised base value at
June 30,  2004.  Based on the current  cycles  completed to date by our Boeing
737  aircraft,  one of our  Boeing  737  aircraft  is  likely  to  require  an
inspection  in  connection  with these ADs in 2004 and may then require  these
modifications  to be  implemented  .  We  could  incur  significant  costs  in
ensuring  that our Boeing 737  aircraft  comply  with these  standards,  which
could impact adversely on our results of operations.

      In 2003,  the FAA  issued an AD  mandating  a  re-design  of the  rudder
systems of Boeing 737 aircraft  prior to November  2008.  The average cost per
aircraft  of such  modifications  is  approximately  $182,000.  We  have  four
Boeing 737 aircraft in the  portfolio,  representing  32% of the  portfolio by
appraised  base  value at June 30,  2004.  It is  expected  that we will incur
the  full  cost of this  modification,  which  will  impact  adversely  on our
results of operations.

      In  2003,  the FAA  issued  an AD that  requires  operators  of  Pratt &
Whitney PW4000 powered Airbus Industrie A300,  Airbus  Industrie A310,  Boeing
747,  Boeing 767 and McDonnell  Douglas  MD-11  aircraft to replace the engine
compressor  case on each engine  installed on these aircraft  before  December
31,  2007.  The  estimated  cost  to  comply  with  this  AD is  approximately
$430,000  per  aircraft.  We have two  PW4000  powered  Boeing  B767  aircraft
representing  42% of our  portfolio by appraised  base value at June 30, 2004.
The  series  of  engine  modifications  required  by  this  AD for  these  two
aircraft  are  scheduled to be  completed  between July 2005 and May 2007.  We
will incur  significant  costs in ensuring that our two B767  aircraft  comply
with  these new  standards.  This will  impact  adversely  on our  results  of
operations.

      Employees

      We have no employees or  executive  management  of our own. We therefore
rely on the Servicer,  the  Administrative  Agent,  the Financial  Consultant,
the Cash  Manager,  the  Insurance  Advisor and the Company  Secretary for the
leasing,  releasing  and sale of our  aircraft  and all  other  executive  and
administrative functions.

      Insurance

      Pursuant  to each  lease,  we require  our lessees to carry the types of
insurance which are customary in the air  transportation  industry,  including
comprehensive  liability  insurance  and aircraft hull  insurance.  We further
require  that we be  named as an  additional  insured  on hull  and  liability
policies  carried  by the  lessees.  All  policies  are to contain a breach of
warranty  endorsement or  severability  of interest clause so that we continue
to be  protected  even  if the  operator/lessee  violates  one or  more of the
warranties  or conditions of the  insurance  policy.  The coverage  usually is
worldwide,   subject  to  limitations  consistent  with  comparable  operators
operating  similar  aircraft on similar routes.  The  comprehensive  liability
insurance  policies are  generally  arranged on a combined  single limit basis
for  comprehensive  liabilities  with an amount not less than $500 million for
each  widebody  aircraft  and an  amount of not less  than  $350  million  per
narrowbody aircraft.

      As a  consequence  of the  terrorist  attacks  of  September  11,  2001,
airlines  worldwide  continue to experience  difficulties  in maintaining  war
insurance  cover in the amounts  required under their leases with us and other
lessors.  Until  recently,  our lessees have relied on  government  guarantees
or indemnities to provide  coverage for third party  liability  (other than to
passengers)  arising from war and  terrorism  risks,  above a greatly  reduced
ceiling of cover  provided by the aviation  insurance  market as a reaction to
the  events  of  September  11,  2001.  Although  most  governments  have  now
terminated  their guarantee or indemnity  support,  presently two of our eight
lessees  continue  to rely on  such  government  support  for  this  coverage.
There  can be no  assurance  that  if and  when  such  government  support  is
removed  our  lessees  will be able  to  replace  that  support  by  insurance
coverage.  If such  insurance  were not purchased or otherwise  available from
government  support,  it may be  necessary  for the  relevant  aircraft  to be
grounded.  Such  consequences  would  have a  material  adverse  impact on the
financial  condition of our lessees and their  ability to perform  under their
leases.  These  effects  could  cause a reduction  in our revenue  which would
adversely affect our funds available to make payments on the Notes.

      Following   insurance  market  developments  in  the  aftermath  of  the
terrorist  attacks of September 11, 2001, the insurance  market, on January 1,
2002,  ceased  offering cover for  Confiscation  by the State of  Registration
(as  required  under the  majority of  leases).  Such cover  became  available
again from about mid 2003 albeit at increased cost,  with  additional  imposed
conditions and only for certain  jurisdictions.  As of September  2004, all of
our lessees had cover for  Confiscation by the State of Registration  with the
exception  of our  lessees  in China and the United  States,  as this cover is
not available in those jurisdictions.

      Babcock & Brown,  as Servicer,  monitors the  compliance  by the lessees
with the  foregoing  requirements  relating to insurance to be  maintained  in
respect of the  aircraft  and, to the extent of any  insufficiencies  or other
problems  with  respect to the required  insurance  coverage,  negotiates  and
arranges for appropriate additional insurance coverage.

C.    Organizational Structure

      The  Company  has three  wholly-owned  subsidiaries.  They are ALPS 92-1
UK Limited  incorporated in England,  Carotene Limited incorporated in Ireland
and ALPS 92-1 France  SARL which was  incorporated  in France on December  15,
2003.

D.    Property, Plants and Equipment

      We have no  ownership or leasehold  interest in any real  property.  Our
registered  and  principal  office is  located  at 22  Grenville  Street,  St.
Helier,  Jersey JE4 8PX,  Channel  Islands.  For a description of our interest
in other  property,  see  "Item 4 -  Information  on the  Company  -  Business
Overview."

ITEM 5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.    Operating Results

      The  following  discussion is based on our  financial  statements  which
were  prepared  under U.S.  GAAP. We present our  statements in U.S.  dollars.
Except where  otherwise  indicated,  all dollar  amounts listed in this Item 5
are rounded to the nearest $0.1 million.

      We believe that our revenue and expenses  were not  materially  affected
by inflation  during the period from  incorporation  to and including June 30,
2004.

      Overview

      We  commenced  operations  in 1992 to acquire and own a portfolio  of 14
commercial  passenger  jet  aircraft,  re-lease the aircraft as necessary  and
sell the  aircraft in order to provide  funds to pay the  principal  amount of
the  Company's  debt  securities  at  maturity.   Substantially   all  of  our
business  consists of aircraft  operating lease  activities and aircraft sales
as  required  to satisfy our Trust Note Sales  Goals.  We conduct  some of our
leasing  operations  through our wholly owned  subsidiaries  Carotene Limited,
ALPS 92-1 UK Limited and ALPS 92-1 France  SARL,  which were  established  for
the sole purpose of assisting us in accomplishing  our Business  Objectives by
leasing  aircraft from us either  directly or indirectly and  re-leasing  them
to  operators  where tax  considerations  or other  business  factors  make it
desirable  to do so.  We  sold  one  of our  aircraft  to GPA in  March  1996,
bought the WFC  Aircraft in November  1996,  and sold a B747-283B  aircraft to
WFC in  July  1997.  On  July  2,  1999,  we sold a  Fokker  100  aircraft  to
Besleasing,  on  June  27,  2000,  we  sold  an  A300B4-200  aircraft  to Cebi
Aviation  S.A.,  on  October  1,  2002  we  sold a  B737-300  aircraft  to JFM
Aviation  One LLC,  and on December  20, 2002 we sold an A320-200  aircraft to
Transamerica Aviation, LLC.

      Our net  income  consists  principally  of lease  revenue  and  interest
income,  reduced by interest  expense,  general and  administrative  expenses,
depreciation  and,  in some  years,  a provision  for  impairment  in aircraft
values.

      Our results of  operations  have been and will continue to be determined
by significant  factors such as (i) conditions in the civil aviation  industry
for  both  leased  and  owned  aircraft,   (ii)  the  mix,  relative  age  and
popularity  of the various  aircraft  types in our  portfolio  of aircraft and
(iii)  our  financial   resources  and  liquidity  position  relative  to  our
competitors,   most   of  whom   possess   substantially   greater   financial
resources.  We have operated in a difficult  financial market  environment for
many of the  years  since  our  formation  in 1992.  Although  there  had been
signs  of  recovery  in  the  civil  aviation  industry,  conditions  remained
difficult  through  September  11, 2001 and  deteriorated  significantly  as a
result of the  terrorist  attacks on that  date,  the  military  action of the
U.S. and its allies in  Afghanistan,  the war in Iraq,  the terrorist  attacks
in various  parts of the world,  the outbreak of SARS,  and more  recently the
significant increase in the price of oil.

      Recent Developments

      The  pre-existing  slowdown  in the  global  economy  and  its  negative
effect on the  commercial  aviation  industry was  exacerbated by the economic
and  political  fallout  from the  terrorist  attacks in the United  States on
September  11,  2001,  the  military  action  of the U.S.  and its  allies  in
Afghanistan,  the war in Iraq,  ongoing  terrorist attacks in various parts of
the world and the outbreak of SARS.  More recently,  in 2004, the  significant
increase in the price of oil has further  adversely  affected  the  commercial
aviation industry.

      Despite  some  positive  trends  in  2004  in  the  commercial  aviation
industry,  many of the factors  discussed herein as having adversely  affected
the  industry  since  September  2001,   continue  to  adversely   affect  the
financial  condition  of our  lessees and their  ability to perform  under the
leases.  This has also  resulted  in reduced  demand for our  aircraft,  which
impacts our ability to re-lease  aircraft on a timely  basis and at  favorable
rates,  and a  reduction  in the value of our  aircraft.  These  effects  have
caused a reduction in our cashflow available to make payments on the Notes.

      The  vulnerability  of the Notes has been  reflected in actions taken by
the  rating   agencies  which   re-evaluated   several   structured   aircraft
financings  in the wake of the  terrorist  attacks  in the  United  States  on
September 11, 2001 and several times since then.

      The current ratings on each class of the Notes are as follows:

                            Moody's                    Standard & Poor's
Class A                     Baa3                       BB
Class B                     Caa1                       B-
Class C                     Ca                         CCC/Outlook negative
Class D                     Not rated                  CCC-/Outlook negative

      A rating is not a  recommendation  to buy,  sell or hold  Notes  because
ratings do not  comment as to market  price or  suitability  for a  particular
investor.  A rating may be subject to revision,  suspension  or  withdrawal at
any time by the assigning  rating agency.  Given the  continuing  difficulties
in the aircraft  industry and their impact on the factors which  determine our
revenues,  there can be no assurance  that the rating  agencies  will not take
any further action in respect of our Notes.

      Lease Revenue

      Revenue  decreased  in fiscal  year  2000 due to the sale of the  Fokker
100  aircraft  and  the  A300B4-200  aircraft  in July  1999  and  June  2000,
respectively.  Revenue  decreased  in fiscal  year 2001 due to the  re-leasing
of various  aircraft at reduced  rates and the downtime of one of our B737-400
aircraft  which  was  subsequently  leased  to  a  lessee  in  India.  Revenue
decreased  in  fiscal  year  2002 due to  downtime  of the same  B737-400  for
approximately  three months,  reduced revenue from the B757-200 which was on a
"power-by-the-hour"  lease  but was  not  utilized  by the  lessee  for  eight
months,  and new  "power-by-the-hour"  leases and lease extensions  negotiated
with  a  number  of  lessees  which  generally  result  in  reduced  and  less
dependable  rental income.  Revenue  decreased further in fiscal year 2003 due
to the sale of our  B737-300  aircraft  on October 1, 2002 and the sale of our
A320-200  aircraft  on  December  20,  2002  as  well  as  the  re-leasing  or
extension  of leases of various  aircraft at reduced  rates,  the failure of a
lessee to make certain  rental  payments and downtime on one of our  aircraft.
Revenue  decreased  further in fiscal year 2004 for three  principal  reasons.
First,  Air  Canada,  the  lessee of our two  B767-300ER  aircraft,  filed for
bankruptcy  protection on April 1, 2003 and  immediately  ceased making rental
payments.   In  October   2003,   following   execution  of  a  memorandum  of
understanding  with the Company  involving a restructuring of lease terms, Air
Canada   resumed   payment  of   rentals.   However   these  have  been  at  a
significantly  lower level than the rentals  received in the prior fiscal year
due to the terms of the  restructured  leases (which are "power-  by-the-hour"
leases)  and the fact that the  utilisation  of the  aircraft up to April 2004
was  relatively  low.  Secondly,  the  lease of one of our  B737-400  aircraft
expired during fiscal year 2004 and this aircraft was  subsequently  re-leased
at a  significantly  lower monthly lease rate.  Thirdly,  the lease of another
of our B737-400  aircraft was terminated  during fiscal year 2004 and no lease
rentals  were  received by the Company for the  aircraft for the months of May
and  June  2004.  Further,   three  of  our  leases  are   "power-by-the-hour"
leases.  "Power-by-the-hour"  leases  generally  result  in  reduced  and less
dependable lease income.

      Our  ability to make  payments  of  interest  will depend in part on the
successful  re-leasing  of our one aircraft with a lease which expires in 2005
(assuming  the existing  lessee of such  aircraft does not exercise its option
to extend the lease).  See "Item 3 - Key  Information  - Risk  Factors - Risks
Relating  to  Leasing  of  Aircraft."  A new lease of such  aircraft  may bear
fixed  or  floating  rate  payments.   The  rental  rate  achieved  upon  such
re-leasing  will be  affected  by a  number  of  factors  including  the  age,
condition and  jurisdiction  of  registration  of the aircraft,  the perceived
credit  risk of the  lessee,  demand for the  particular  aircraft  type,  the
availability  and price of competing  new and used  aircraft,  the market into
which the  aircraft  is leased,  the terms of the lease and  general  economic
factors such as interest  rates,  inflation  and the general  availability  of
credit.  Uncertainty  with  respect to short to medium term  future  prospects
of the  aircraft  industry  has  resulted  in a  number  of  aircraft  lessees
requiring   restructuring   of   leases.   A   number   of  new   leases   and
restructurings  have also shifted  certain  aircraft  maintenance and overhaul
costs to the Company,  as lessor.  Generally,  our lease  restructurings  have
resulted in reduced  rates,  deferred  payments or early  returns of aircraft.
These  conditions,  particularly  should they  continue,  are likely to affect
our  lessees'  ability to make rent and other  lease  payments,  are likely to
impair our ability to re-lease  aircraft  on a timely  basis and at  favorable
rates and are likely to reduce the value of the aircraft  for  possible  sale.
These  factors  have caused and are  expected to continue to cause a reduction
in our  funds  available  to make  payments  on the  Notes.  See "Item 3 - Key
Information - Risk Factors - Risks Relating to Payments on the Notes."

      Lease  revenue  attributable  to lessees  based in Europe has  decreased
over the nine year  period  since  fiscal  year  1995,  decreasing  from $22.7
million  for fiscal  year 1995 to $6.1  million  for fiscal  year 2004.  Lease
revenue  attributable  to lessees based in Asia has also  decreased from $13.6
million to $4.2 million over the same period.  Lease revenue  attributable  to
lessees  based in North  America  has  decreased  from  $11.4  million to $4.8
million  and lease  revenue  attributable  to lessees  based in  South/Central
America has  decreased  from $6.6  million to zero over the same  period.  The
decrease in lease revenue  attributable  to lessees based in Europe,  Asia and
North  America is primarily  the result of the  portfolio  being  reduced from
fourteen  to  nine  aircraft  during  the  period  and  also a  result  of all
aircraft  being  re-leased  at lower  rates.  The  decrease  in lease  revenue
attributable  to lessees based in  South/Central  America is the result of our
leasing  the  aircraft  to lessees in other  regions  upon  expiration  of the
leases to airlines in South/Central  America.  The most significant  decreases
in lease rates have been in respect of the aircraft  with  "power-by-the-hour"
leases and in the reduced  lease  rates for the two  B767-300ER  aircraft.  In
connection  with the re-lease or sub-lease of an aircraft,  we are required to
satisfy certain criteria  regarding  geographic  concentrations and the credit
ratings of the  countries of domicile of new lessees or  sublessees  unless we
receive  confirmation  from each  applicable  rating  agency that not doing so
will  not  result  in the  withdrawal  or  lowering  of such  rating  agency's
then-current  rating of  certificates  representing  interests in any class of
the  Notes.  All our  current  leases  provide  for rental  payments  based on
fixed  rates  (some  lessees  are based on  "power-by-the-hour"  fixed  hourly
rates and others on fixed monthly rates)  whereas the interest  obligations on
the Notes are  based on fixed and  floating  rates.  A  material  increase  in
LIBOR may  adversely  impact our cashflow in respect of expenses.  See "Item 3
- Key Information - Risk Factors - Risks Relating to Payments on the Notes."

      Sales Revenue

      The Deed of Charge sets out the  following  Trust Note Sales Goals which
required us to approve sales of our aircraft on an ongoing basis:


        Aircraft to be Sold
   (measured by Initial Appraised         Date by which Sales Goals
     Value as of June 3, 1996)              were to be Satisfied
             $65,000,000                        June 27, 2001
            $130,000,000                        June 27, 2002
            $200,000,000                        June 27, 2003
            $454,950,000                        June 27, 2004

      We were in  compliance  with and had exceeded the Trust Note Sales Goals
as of June 27,  2001 and  were  required  to sell a  further  $54,330,000  (as
measured by Initial  Appraised  Value)  worth of aircraft to be in  compliance
with the Trust Note Sales Goals as of June 27, 2002.

      As discussed  above,  since  September 11, 2001,  the market for sale of
older  used   aircraft  such  as  our  aircraft  has  been   extremely   poor.
Nevertheless,  in  order  to  meet  the  June  2002  Trust  Note  Sales  Goal,
following  an  extensive  marketing  effort by the  Servicer,  the Company had
entered  into  non-binding  agreements  to  sell a  B737-300  and an  A320-200
aircraft to two separate  purchasers  by June 27, 2002.  However,  as a result
of  difficulties  and delays  outside  the  Company's  control the sale of the
B737-300  aircraft  was not  completed  until  October 1, 2002 and the sale of
the A320-200  aircraft  (which was  ultimately  sold to a different  purchaser
following  the  withdrawal of the original  prospective  purchaser on November
5,  2002)  was not  completed  until  December  20,  2002.  As a  result,  the
Company was not in  compliance  with the Trust Note Sales Goals from  November
5, 2002  until the  A320-200  aircraft  was sold to such  other  purchaser  on
December 20, 2002.

      In the  period  from  June  1996 to date,  we have  sold  five  aircraft
totaling  $133,190,000  (measured by Initial  Appraised  Value).  We needed to
sell an additional  $66,810,000  (measured by Initial  Appraised  Value) worth
of  aircraft  to comply with the June 2003 Trust Note Sales Goal and needed to
sell all of our  aircraft  to  comply  with the June  2004  Trust  Note  Sales
Goal. At our  direction,  the Servicer has  periodically  been  marketing each
of our aircraft  for sale in order to meet the ongoing  Trust Note Sales Goals
in  a  manner  consistent  with  the  requirements  of  the  Deed  of  Charge.
However,  the  current  market  for sale of older  used  aircraft  such as our
aircraft is  extremely  poor and it is not likely the market for our  aircraft
will improve prior to the final maturity date of the Notes.

      In fiscal year 2003, the marketing  efforts of the Servicer  resulted in
two offers to purchase the B757-200  aircraft,  but both offers were at prices
significantly   below  the  Class  C  Note   Target   Price.   After   careful
consideration  of these offers,  the Company's  obligations  under the Deed of
Charge  (notably  the  Business  Objectives  contained  therein)  and the then
current  and  possible  future  market   conditions  for  aircraft  sales  and
leasing,  we concluded  that it would not be consistent  with the terms of the
Deed of Charge for the Company to accept either such offer.

      We did not comply  with the Trust  Note Sales Goal for June 27,  2003 or
for  June  27,  2004  as we were  unable,  given  the  then  current  aircraft
industry market  conditions,  to sell  sufficient  aircraft at the sale prices
required by our then current  Business  Objectives.  To the extent the Company
has not  complied  with the Trust Note Sales Goals,  on or after  December 27,
2004, the Company will be required,  subject to the pre-emption  rights of the
Class D and Class E  Noteholders,  to accept any Sale Offer for the sale of an
aircraft  if the  proposed  sale  price is at least  equal to the Class A Note
Target Price.  The Class A Note Target  Price,  were all of the aircraft to be
sold  at  the  same  time,  is  defined  in  the  Deed  of  Charge  to be  the
Outstanding  Principal  Balance  of  the  Class  A  Notes  (currently  $77.472
million)  plus accrued and unpaid  Class A Note  regular  interest at the time
of sale and certain then outstanding expenses of the Company.

      Impairment

      In  accordance  with  SFAS  144,  the  Directors  undertook  a review to
determine  whether an  impairment  charge is  required  in respect of the nine
aircraft, all of which were classified as held for use as at June 30, 2004.

      This  review has  determined  that the  carrying  value for eight of the
aircraft is greater than the  estimated  undiscounted  future net cashflows in
respect  of such  aircraft  and the  Directors  have  recorded  an  impairment
charge for these  aircraft  equal to the  difference  between  their  carrying
value and fair  value.  For the  purpose of  measuring  impairment  losses for
long-lived  assets,  the Directors have determined  that the most  appropriate
estimate  of  the  fair  value  of  the  Company's  aircraft  is  the  average
Appraised  Current Market Value as calculated by the  Independent  Appraisers.
The average Appraised  Current Market Value was in the aggregate  $138,300,000
as at June  30,  2004  for the  nine  aircraft.  The  Independent  Appraisers'
assessment  of  Appraised   Current   Market  Value  reflects  the  underlying
economic  value of  aircraft  and  engines in normal  market  conditions.  The
Independent   Appraisers  assume  that  the  aircraft  are  valued  for  their
highest,  best use,  that the parties to the  hypothetical  sale are  willing,
able,  prudent and  knowledgeable,  and under no unusual pressure for a prompt
sale,  and  that  the   transaction   would  be  negotiated  in  an  open  and
unrestricted market on an arm's length basis.

      Appraised  Current Market Values have been estimated by the  Independent
Appraisers  based on value  curves  from the  last  downturn  in the  aircraft
market.  An  appraisal  is an  estimate of value and should not be relied upon
as a measure of current sales value.  In the current  environment,  there is a
lack of hard data  available on which to base  aircraft  valuations  for older
aircraft of the type in our portfolio  and therefore the appraisal  process is
more difficult.

      The Directors  believe that current market  conditions  (in  particular,
the absence of  liquidity  and of willing  buyers and sellers for the types of
aircraft  owned by the  Company) do not reflect the normal  market  conditions
which  the  Independent  Appraisers  have  had to  assume.  Consequently,  the
sales  value that could be  achieved  for the  aircraft in the event that they
were  disposed  of in  the  current  market  may  be  less  than  the  average
Appraised  Current  Market  Value  and  carrying  value as at June  30,  2004.
Also,  if the  Company is required to sell the  aircraft  due to the  Required
Sale  Provision  the proceeds  from such sale may be even less than that which
could be achieved in the current market.

      The  application  of the  accounting  policies  in the fiscal year ended
June 30, 2004 has led to an  impairment  charge of $13.053  million.  Previous
charges  were made at June 30,  2003,  June 30,  2002 and at June 30, 2001 for
$14.378 million, $20.321 million and $30.259 million, respectively.

      Critical Accounting Policies

      We have  determined  the  critical  policies by  considering  those that
involve  the most  subjective  decisions  or  assessments.  The most  critical
accounting  policies are those  related to adequacy of  maintenance  reserves,
impairment of aircraft  values and  depreciation  methods since these policies
involve  elements which require us to make  assumptions as to matters that are
highly  uncertain at the time the  estimates  were made.  We also consider the
going concern assumption to be a critical element in our financial reporting.

Maintenance Reserves

      In many of the lease  contracts  the lessee  makes a payment into a fund
held by the  Company,  from which the costs of future  maintenance  checks are
reimbursed.  The  receipts  from lessees are held in the  maintenance  reserve
fund,  except  where the  Directors  believe that a surplus  exists,  in which
case such a  surplus,  to the  extent  retainable  by the  Company is taken to
income as a reduction  of  expenses.  Conversely,  the Company  also  provides
for  additional  maintenance  costs  which are not  expected to be paid out of
the  maintenance  reserves,  and such  costs  are  charged  to  expenses.  The
determination  of the  adequacy  of the  maintenance  reserves  is based on an
analysis  of the lease  portfolio  and  reflects  and takes into  account  the
judgment of the Directors.

Impairment

      The  Directors  have  reviewed the  Company's  fleet for  impairment  in
accordance  with  SFAS  144.  Under  SFAS  144,  the  Company's  policy  is to
evaluate for  impairment  when an asset's  carrying  value is greater than its
estimated  undiscounted  future net  cashflows.  The amount of the  impairment
charge is the  difference  between  the  asset's  carrying  value and its fair
value.  The Directors have concluded  that the estimated  undiscounted  future
net  cashflows  to be  generated by eight of the  Company's  aircraft  will be
less  than  their  carrying  value.   Consequently   eight  of  the  Company's
aircraft have been written down to their fair value.

      In determining  fair value, the Directors use external  valuations.  For
the purposes of  measuring  impairment  losses for aircraft  held for use, the
Directors  have  determined  that the most  appropriate  estimate  of the fair
value of the  Company's  aircraft  is the  average  Appraised  Current  Market
Value,  as  calculated  by the  Independent  Appraisers.  An  appraisal  is an
estimate  of value and  therefore  should  not be relied  upon as a measure of
current  sales  value.  In the  current  environment,  there is a lack of hard
data  available on which to base  aircraft  valuations  for older  aircraft of
the  type  in our  portfolio  and  therefore  the  appraisal  process  is more
difficult.   The  Directors   believe  that  current  market   conditions  (in
particular,  the absence of  liquidity  and of willing  buyers and sellers for
the types of aircraft  owned by the Company) do not reflect the normal  market
conditions   which   the   Independent   Appraisers   have   had  to   assume.
Consequently,  the sales value that could be achieved  for the aircraft in the
event that they were  disposed of in the  current  market may be less than the
average  Appraised  Current  Market  Value and  carrying  value as at June 30,
2004.  Also,  if the  Company  is  required  to sell the  aircraft  due to the
Required  Sale  Provision  the  proceeds  from such sale may be even less than
that which could be achieved in the current market.

Depreciation

      Aircraft are recorded at cost and are  depreciated at a rate  calculated
to write off the cost of the  assets to their  estimated  residual  value on a
straight  line  basis  over  their  estimated   useful  economic  lives.   The
determinations  of  useful  life  and  residual  value  are  critical  to  the
calculation  of  depreciation.  The current  estimates  of residual  value and
useful  economic  lives  are  10% of  cost,  and 25  years  from  the  date of
manufacture.

Going Concern

      The Consolidated  Financial  Statements have been prepared assuming that
the Company will continue in operational  existence,  for a reasonable  period
of  time,  up to one  year  beyond  the  date  of the  Consolidated  Financial
Statements.   Note  4  to  the  Consolidated  Financial  Statements  sets  out
certain  matters that have had a significant  adverse effect on the ability of
the  Company's  lessees to make rent and other  payments and  consequently  on
the Company's  ability to make  interest and  principal  payments on the Notes
on a  timely  basis  and  in  full.  Note  1  to  the  Consolidated  Financial
Statements  describes  the effect of these  matters on the  Company's  payment
obligations,  those  provisions  of the Deed of  Charge  concerning  Events of
Default and the  Required  Sale  Provision  of the Deed of Charge  which could
require  the  Company to  dispose of some or all of its fleet and  accordingly
discontinue or substantially  curtail  operations.  These matters give rise to
substantial doubt about the Company's ability to continue as a going concern.

      For  the  reasons  given  in  note  1  to  the  Consolidated   Financial
Statements  the  Directors  consider  that it is  appropriate  to prepare  the
Consolidated  Financial  Statements on a going concern basis at this time. The
Consolidated  Financial  Statements do not include any adjustments  that would
arise  in the  event  that the  Company  was  unable  to  continue  as a going
concern.

Results of  Operations  - Fiscal  Year Ended June 30, 2004  compared  with the
Fiscal Year Ended June 30, 2003

      Aircraft Leasing

      Lease revenue,  which constitutes  substantially all of our revenue, was
$15.2  million  for the fiscal year ended June 30,  2004,  a decrease of 23.2%
from the  corresponding  figure of $19.8  million  for the  fiscal  year ended
June 30, 2003.  This  decrease was due  primarily to reduced  revenue from the
Company's two B767-300ER  aircraft which were on  "power-by-the-hour"  leases,
downtime  of one of our  B737-400  aircraft  following  its early  return from
Skynet,  re-leasing  of one of our B737-400  aircraft at a lower rate,  and by
reduced rental rates negotiated by a number of lessees.

      General and Administrative Expenses

      General  and  administrative   expenses  consist  principally  of  lease
management  fees, cash  management  fees,  directors' and officers'  insurance
and legal and  professional  fees.  General and  administrative  expenses have
decreased  from $5.9  million  for the fiscal year ended June 30, 2003 to $3.2
million for the fiscal year ended June 30,  2004,  a decrease of 45.4%.  Lease
management  fees  decreased  by 38.5% from $1.3  million  in the  fiscal  year
ended June 30,  2003 to $0.8  million in the fiscal  year ended June 30,  2004
as a result of lower lease  revenue  income.  Aircraft  costs of $0.1  million
were  incurred  in the  fiscal  year  ended June 30,  2004  (compared  to $1.9
million in the prior  fiscal year) in  connection  with the  redelivery  of an
aircraft,  the lease in respect of which expired  during the fiscal year.  Our
D&O insurance  premium  increased  from $480,000 in the fiscal year ended June
30,  2003 to  $936,000 in the fiscal year ended June 30, 2004 due to a general
increase in D&O insurance  premiums  across all  industries and an increase in
the  level of  insurance  cover  compared  to that  obtained  in the  previous
fiscal year.

      Depreciation

      Depreciation  of $10.8  million  was  charged  for the fiscal year ended
June 30, 2004 and $12.0 million for the fiscal year ended June 30, 2003.

      Impairment  in Aircraft Values

      In accordance  with SFAS 144, the Directors of the Company  reviewed the
carrying value of the aircraft  against the sum of the estimated  undiscounted
future net cashflows of the aircraft and determined  that  shortfalls  existed
for eight of the  aircraft,  all of which are  classified  as held for use, as
their  carrying  value  was more  than the sum of the  estimated  undiscounted
future net cash  flows of these  aircraft.  The  Directors  therefore  made an
impairment  charge for each of these aircraft equal to the difference  between
their  carrying  value and their fair value.  A charge for  impairment  of the
book value of aircraft  of $13.053  million was made for the fiscal year ended
June 30, 2004.  See "Overview - Impairment" above.

      The decline in the fair value of the  aircraft is due  primarily  to the
ageing of the  aircraft,  and with respect to certain  aircraft,  those market
conditions  which  have  had a  negative  effect  on  aircraft  values.  These
conditions have continued to result in a reduction in lease rates.

      Maintenance Reserves

      The Company has provided for future  expected  lessor  contributions  to
AD,  modification  and overhaul  costs of $10.263  million in respect of seven
aircraft.

      Bad Debts

      A  provision  of $0.366  million  has been made as at June 30, 2004 with
respect  to  amounts  outstanding  from  Skynet,  the  former  lessee  of  one
B737-400  aircraft whose lease was terminated  during the fiscal year.  During
the fiscal year ended June 30, 2004,  $0.172  million was recovered in respect
of amounts  outstanding  from Air Canada against which provision had been made
in the fiscal  year ended June 30,  2003.  The net bad debt  position  for the
fiscal year ended June 30, 2004 is therefore a provision of $0.194 million.

Results of  Operations  - Fiscal  Year Ended June 30, 2003  compared  with the
Fiscal Year Ended June 30, 2002

      Aircraft Leasing

      Lease revenue,  which constitutes  substantially all of our revenue, was
$19.8  million  for the fiscal  year ended June 30,  2003,  a decrease  of 39%
from the  corresponding  figure of $32.6  million  for the  fiscal  year ended
June 30,  2002.  This  decrease  was due  primarily  to the sale of two of our
aircraft  during  fiscal year 2003,  downtime of one of our  aircraft  between
leases,  the  failure by a lessee to make  certain  rental  payments,  reduced
activity  on   "power-by-the-hour"   leases  and  by  reduced   rental   rates
negotiated by a number of lessees.

      General and Administrative Expenses

      General and  administrative  expenses  consist  principally  of aircraft
costs borne by the Company,  lease  management  fees,  cash  management  fees,
directors'  and  officers'   insurance,   and  legal  and  professional  fees.
General and  administrative  expenses have increased from $3.6 million for the
fiscal  year ended June 30,  2002 to $5.9  million  for the fiscal  year ended
June 30,  2003,  an increase of 64%.  Lease  management  fees  increased by 8%
from $1.2  million in the fiscal year ended June 30,  2002 to $1.3  million in
the fiscal year ended June 30, 2003 as a result of  aircraft  sales.  Aircraft
costs of $1.9  million  were  incurred  in the fiscal year ended June 30, 2003
(compared  to  $0.8  million  in  the  prior  fiscal  year)  as  a  result  of
redelivery  conditions  on an aircraft,  the lease in respect of which expired
during the fiscal year.  Our D&O  insurance  premium  increased  from $275,000
in the fiscal  year ended June 30,  2002 to  $480,000 in the fiscal year ended
June 30, 2003 due to a general  increase in D&O insurance  premiums across all
industries.   Legal  and  professional   expenses  have  increased  from  $0.8
million  for the  fiscal  year  ended  June 30,  2002 to $1.4  million  in the
fiscal year ended June 30,  2003,  an increase of 75%.  This  increase was due
primarily to higher aircraft sales activity.

      Depreciation

      Depreciation  of $12.0  million  was  charged  for the fiscal year ended
June 30, 2003 and $16.4 million for fiscal year ended June 30, 2002.

      Impairment  in Aircraft Values

      In accordance  with SFAS 144, the Directors of the Company  reviewed the
carrying value of the aircraft  against the sum of the estimated  undiscounted
future net cashflows of the aircraft and determined  that  shortfalls  existed
for each of the  aircraft,  all of which are  classified  as held for use,  as
their  carrying  value  was more  than the sum of the  estimated  undiscounted
future net  cashflows  of these  aircraft.  The  Directors  therefore  made an
impairment  charge for each of these aircraft equal to the difference  between
their  carrying  value and their fair value.  A charge for  impairment  of the
book value of aircraft  of $14.378  million was made for the fiscal year ended
June 30, 2003.  See "Overview - Impairment" above.

      The decline in the fair value of the  aircraft is due  primarily  to the
ageing of the  aircraft,  and with respect to certain  aircraft,  those market
conditions  which  have  had a  negative  effect  on  aircraft  values.  These
conditions have continued to result in a reduction in lease rates.

      Maintenance Reserves

      The Company has provided for future  expected  lessor  contributions  to
AD,  modification  and  overhaul  costs of $3.565  million  in respect of five
aircraft.

      Bad Debts

      A  provision  of $0.8  million  has been  made as at June 30,  2003 with
respect to amounts  outstanding  from Air Canada  which  filed for  bankruptcy
protection during the fiscal year.

B.    Liquidity and Capital Resources

      Cash position

      We acquired the  original 14 aircraft  with a portion of the proceeds we
received  from  the  issuance  of  the  Prior  Debt.  On  June  27,  1996,  we
refinanced  the Prior  Debt with the  issuance  of the  Notes,  the  aggregate
principal  amount of which was  $435,110,000  as of June 30,  1997.  Operating
expenses  and  payments of interest on and certain  payments of  principal  of
the Notes have been  satisfied  from rental  income  received by us in respect
of the leases as well as sale proceeds.

      Our cash  resources  were reduced  during  fiscal year 2004. At June 30,
2004, cash resources  equaled $24.9 million  compared to $26.5 million at June
30,  2003.  This  reduction  was due  primarily  to a reduction in the overall
level  of the  Liquidity  Reserve  Amount  required  to be  maintained  by the
Company  as well as the fact  that as at June 30,  2004 the  actual  amount of
cash  held by the  Company  representing  the  Liquidity  Reserve  Amount  was
$715,000 below such required level.

      Cash from Operating Activities

      Net cash  provided by operating  activities  amounted to $6.3 million in
fiscal  year  2004,  $1.0  million  in fiscal  year 2003 and $16.1  million in
fiscal year 2002.  This  reflects  cash  received in respect of lease  rentals
of $16.1  million in fiscal year 2004,  $17.7  million in fiscal year 2003 and
$31.1  million in fiscal year 2002.  Cash paid in respect of interest was $3.1
million  in fiscal  year  2004 as  compared  to $6.2  million  in fiscal  year
2003.  Cash paid in respect of  interest  is paid under the Deed of Charge and
is limited to the net cash  provided by  operating  activities.  The  decrease
in  net  cash  provided  by  operating  activities  is  primarily  due  to the
reduction in lease rental  income and interest  and  principal  payments  made
during the  fiscal  year ended  June 30,  2004.  During the fiscal  year ended
June 30, 2003,  there were maintenance  payments of $1.8 million  primarily in
respect  of two  B737-400,  one  B757-200  and one MD83  aircraft.  During the
fiscal  year ended  June 30,  2004 there  were  maintenance  payments  of $4.5
million  primarily  in  respect of one  B757-200,  two  B737-400  and two MD83
aircraft.

      Cash from Investing and Financing Activities

      In fiscal  year  1993,  we issued the Prior  Debt and  received  cash of
$521.0  million.  In addition,  we received an escrow payment of $15.5 million
from GPA and the Old SM Loan of $78.1  million.  These  proceeds  were used to
finance the  acquisition  of the original 14 aircraft  for $521.0  million and
the remaining  cash  balances  were  invested in bank deposits and  commercial
paper.

      In March 1996,  we sold one aircraft to GPA for $25.0  million.  On June
27,  1996,  we  refinanced  the Prior  Debt with the  issuance  of the  Notes.
Proceeds of $380.6  million  were  received  from the issuance of the Class A,
Class B, Class C and Class D Notes,  net of expenses.  The  proceeds  together
with cash  balances  previously  held in reserve  accounts were used to redeem
the Old Class A Notes and Old Class M Notes,  which  were  discharged  in full
pursuant  to  written  instruments  entered  into  by the  parties,  with  the
balance of the  proceeds  of such Notes being held in bank  deposits.  The Old
Class B Notes  which were owned by WFC were  exchanged  by WFC for the Class E
Notes, and the Old SM Loan was repaid.

      From  1996  through  June 30,  2004,  approximately  $207.2  million  of
principal and $145.4 million of interest has been paid to the Noteholders.

      The Company's Cash Needs

      During fiscal year 2004,  certain target  principal  payments  scheduled
to be paid  to  holders  of  Class  A,  Class C and  Class  D  Notes,  certain
interest  payments  due to  holders  of Class A, Class B and Class C Notes and
all  interest  payments  due to  holders  of Class D and Class E Notes were in
arrears.  As at the end of  fiscal  year  2004,  these  arrears  consisted  of
$70.810  million  of Class A Note  Target  Amount,  $0.942  million of Class A
Note  step-up  interest,  $0.407  million  of Class B Note  step-up  interest,
$4.304 million of Class C Note Target  Amount,  $0.390 million of Class C Note
step-up  interest,  $5.177  million  of  Class D Note  Target  Amount,  $0.665
million  of Class D Note  step-up  interest,  $1.042  million  of Class D Note
default  interest,  $7.130  million  of  Class  D Note  interest  and  $52.705
million of Class E Note interest.  Our current  projections  for the remainder
of fiscal year 2005 and  thereafter  indicate  that we will not be able to pay
any further  interest on the Class D and Class E Notes or any further  step-up
interest on the Class A, Class B, Class C and Class D Notes.

      The  Company  did not have  sufficient  funds to repay the Class A Notes
on their  expected  final  payment  date of May 15, 2002 or to repay the Class
B, Class C or Class D Notes on their  expected  final payment date of July 15,
2002.  Failure  to repay in full the  principal  of those  Notes by such dates
is not an Event of  Default;  however,  the Deed of  Charge  requires,  to the
extent the  Company  does not repay in full  principal  of those Notes by such
dates,  that the Company  pay to the Class A, Class B and Class C  Noteholders
additional   step-up   interest  of  0.50%  per  annum  and  to  the  Class  D
Noteholders  additional  step-up  interest  of 1.00% per annum for each  month
until the  earlier of the date such  Notes are repaid in full and their  final
maturity  date of June 15, 2006.  These  additional  interest  costs will only
be paid to the extent there are available  collections in accordance  with the
priority of payments  set forth in the Deed of Charge.  The Company  paid some
step-up  interest in fiscal year 2002,  but our current  projections  indicate
that we will not have sufficient funds to pay any further step-up interest.

      The  timing  and  amount of  principal  payments  on the  Notes  will be
primarily  a function of the Target  Balances  (as such term is defined in the
Prospectus)  for the respective  classes of Notes.  Such Target  Balances were
determined  based  on  certain  assumptions,  including  among  other  things,
assumptions  regarding  the  timing  of  receipt  and  amount of  proceeds  of
aircraft  sales and lease  payments.  Our actual  experience  in  selling  and
leasing aircraft has resulted in proceeds  received by us being  significantly
less  than that  provided  in these  assumptions.  For the  reasons  discussed
under "Item 3 - Key  Information  - Risk  Factors" and "Item 5 - Operating and
Financial  Review and  Prospectus  -  Operating  Results"  we expect  that the
difference  between these  assumptions and actual  experience will increase as
the industry  experiences  a period of prolonged  decline.  The  Servicer,  at
the  Company's  direction,   has  periodically  been  marketing  each  of  the
aircraft  for  sale;  however,  the  sales  market  for our used  aircraft  is
extremely  weak  at this  time.  The  Company  is  continuing  to  review  all
alternatives  in order to maximize  the amount  available  to pay  outstanding
principal  and interest to the  noteholders  while  attempting  to comply with
the  Business  Objectives  and the other  requirements  of the Deed of Charge.
However,  there can be no assurance  that we will be able to repay the holders
of the Class A Notes the full  amount  owed to them when due.  Further,  based
on our  current  projections,  we expect to have  insufficient  funds to repay
some or all of the  outstanding  Class B Note  principal and any further Class
C, Class D and Class E Note principal.  Our operative  documents  restrict our
ability  to  consider  many   traditional   forms  of  financing  and  thereby
circumscribe  the  options  available  to us.  We cannot  offer any  assurance
that  viable  alternative  arrangements  will be  available  to us or that any
alternative  arrangement  selected  will  be  successful.  See  "Item  3 - Key
Information - Risk  Factors,"  "Item 4 - Information  on the Company - History
and Development of the Company" and "Item 13 - Defaults,  Dividend  Arrearages
and Delinquencies."

      The Deed of Charge sets out the  following  Trust Note Sales Goals which
required us to approve sales of our aircraft on an ongoing basis:


        Aircraft to be Sold
   (measured by Initial Appraised         Date by which Sales Goals
     Value as of June 3, 1996)              were to be Satisfied
             $65,000,000                        June 27, 2001
            $130,000,000                        June 27, 2002
            $200,000,000                        June 27, 2003
            $454,950,000                        June 27, 2004

      We were in  compliance  with and had exceeded the Trust Note Sales Goals
as of June 27,  2001 and  were  required  to sell a  further  $54,330,000  (as
measured by Initial  Appraised  Value)  worth of aircraft to be in  compliance
with the Trust Note Sales Goals as of June 27, 2002.

      As discussed  above,  since  September 11, 2001,  the market for sale of
older  used   aircraft  such  as  our  aircraft  has  been   extremely   poor.
Nevertheless,  in  order  to  meet  the  June  2002  Trust  Note  Sales  Goal,
following  an  extensive  marketing  effort by the  Servicer,  the Company had
entered  into  non-binding  agreements  to  sell a  B737-300  and an  A320-200
aircraft to two separate  purchasers  by June 27, 2002.  However,  as a result
of  difficulties  and delays  outside  the  Company's  control the sale of the
B737-300  aircraft  was not  completed  until  October 1, 2002 and the sale of
the A320-200  aircraft  (which was  ultimately  sold to a different  purchaser
following  the  withdrawal of the original  prospective  purchaser on November
5,  2002)  was not  completed  until  December  20,  2002.  As a  result,  the
Company was not in  compliance  with the Trust Note Sales Goals from  November
5, 2002  until the  A320-200  aircraft  was sold to such  other  purchaser  on
December 20, 2002.

      In the  period  from  June  1996 to date,  we have  sold  five  aircraft
totaling  $133,190,000  (measured by Initial  Appraised  Value).  We needed to
sell an additional  $66,810,000  (measured by Initial  Appraised  Value) worth
of  aircraft  to comply with the June 2003 Trust Note Sales Goal and needed to
sell all of our  aircraft  to  comply  with the June  2004  Trust  Note  Sales
Goal. At our  direction,  the Servicer has  periodically  been  marketing each
of our aircraft  for sale in order to meet the ongoing  Trust Note Sales Goals
in  a  manner  consistent  with  the  requirements  of  the  Deed  of  Charge.
However,  the  current  market  for sale of older  used  aircraft  such as our
aircraft is  extremely  poor and it is not likely the market for our  aircraft
will improve prior to the final maturity date of the Notes.

      In fiscal year 2003, the marketing  efforts of the Servicer  resulted in
two offers to purchase the B757-200  aircraft,  but both offers were at prices
significantly   below  the  Class  C  Note   Target   Price.   After   careful
consideration  of these offers,  the Company's  obligations  under the Deed of
Charge  (notably  the  Business  Objectives  contained  therein)  and the then
current  and  possible  future  market   conditions  for  aircraft  sales  and
leasing,  we concluded  that it would not be consistent  with the terms of the
Deed of Charge for the Company to accept either such offer.

      We did not comply  with the Trust Note Sales  Goals for June 27, 2003 or
for  June  27,  2004  as we were  unable,  given  the  then  current  aircraft
industry market  conditions,  to sell  sufficient  aircraft at the sale prices
required by our then current Business Objectives.

      Failure to comply  with the Trust Note Sales  Goals may,  under  certain
circumstances,  constitute  an Event of  Default  under  the Deed of Charge if
such failure  continues for 30 days or more after written  notice  thereof has
been given to the Company or the  Security  Trustee by holders of at least 25%
of the  aggregate  Outstanding  Principal  Balance  of the  Notes of any class
which has been materially adversely affected by such failure.

      The Deed of Charge  further  provides  that if an Event of Default  were
to occur  and be  continuing  an  Enforcement  Notice  may only be  served  by
662/3%  or  more  of  the  aggregate  Outstanding  Principal  Balance  of  the
directing  class,  which  will be  Class A so  long as any  Class A Notes  are
outstanding.

      The Deed of Charge  provides  that the  failure to comply  with the June
2004 Trust Note Sales  Goal  gives the  Noteholders  the right to replace  the
Servicer at the  direction  of  Noteholders  representing  at least 66 2/3% of
the Outstanding  Principal  Balance of the Class A, Class B, Class C and Class
D Notes.  The Deed of Charge also provides  that,  subject to the  pre-emption
rights of the Class D and Class E  Noteholders,  to the  extent the Trust Note
Sales Goals are not complied  with prior to December 27, 2004,  the Company is
required  to  accept  any  Sale  Offer  for  the  sale of an  aircraft  if the
proposed  sale  price is at  least  equal to the  Class C Note  Target  Price.
During the time that the  Company  has not been in  compliance  with the Trust
Note Sales  Goals,  the Company has been  unable,  with the  exception  of the
sale of the A320-200  aircraft in December  2002,  to sell  aircraft at prices
at or  above  the  Class C Note  Target  Price.  However,  to the  extent  the
Company  has not  complied  with  the  Trust  Note  Sales  Goals,  on or after
December  27,  2004,   the  Company  may  be  required  to  sell  aircraft  in
accordance with the Required Sale Provision.

      Except as noted below, the Company's  collection  account is required to
be  maintained  at a balance  equal to  $22,191,000  (the  "Liquidity  Reserve
Amount").  In  May  2004,  the  level  of the  Liquidity  Reserve  Amount  was
reduced from  $22,691,000  with the approval of the rating  agencies.  Part of
the Liquidity  Reserve Amount  consists of  maintenance  reserves and security
deposits  received  in cash  from  certain  lessees  under  the terms of their
leases.  The  Liquidity  Reserve  Amount  may be used  to pay for  maintenance
performed  on  aircraft,  certain  contingencies  in respect of the  aircraft,
repayment  of  cash  security   deposits  and  other   Company   expenses  and
liabilities,  including,  among  other  things,  interest  due on the Class A,
Class B and Class C Notes and costs  incurred in removing  any lien imposed by
Eurocontrol,  in  performing  ADs  on  the  aircraft  or in  re-possessing  or
re-leasing  any aircraft,  to the extent that  available  collections  are not
sufficient  therefor,  in accordance  with the priority of payments set out in
the Deed of Charge.  The Company must  augment the  Liquidity  Reserve  Amount
on a monthly  basis out of available  collections  to the extent it is used to
pay such interest,  costs,  expenses or  liabilities.  In accordance  with the
Deed  of  Charge,  the  Company  may  in  certain   circumstances  reduce  the
Liquidity  Reserve  Amount.  The  balance of funds in the  collection  account
may fall below the  Liquidity  Reserve  Amount at any time and the Company may
continue to make  payments  required on the Class A, Class B and Class C Notes
provided  that the balance of funds in the  collection  account  does not fall
below the "Maintenance  Reserve Amount"  (currently $10 million).  The Company
believes its  maintenance  funding  arrangements  to be  sufficient,  based on
anticipated  future  maintenance   expenses,   to  provide  the  Company  with
sufficient  liquidity  to meet  its  ongoing  maintenance  liabilities.  As at
June 30,  2004,  the actual  amount of cash held by the  Company  representing
the  Liquidity  Reserve  Amount  was  $715,000  below  the  required  level of
$22,191,000,  and as at September  30, 2004 the actual  amount of cash held in
this account was $857,000 below such required level.

C.    Research and Development, Patents and Licenses

      Not applicable.

D.    Trend Information

      The  pre-existing  slowdown  in the  global  economy  and  its  negative
effect on the  commercial  aviation  industry was  exacerbated by the economic
and  political  fallout  from the  terrorist  attacks in the United  States on
September  11,  2001,  the  military  action  of the U.S.  and its  allies  in
Afghanistan,  the war in Iraq,  ongoing  terrorist attacks in various parts of
the world and the outbreak of SARS.

      In recent  years,  a number of initially  small low cost  airlines  have
emerged  with  radically   reduced  fares,   and  the  attempt  by  the  older
traditional  "legacy"  carriers to compete by matching  the fares of these low
cost airlines has  contributed to many of these larger  airlines  experiencing
significant  financial  losses due to their  inability  to  adequately  reduce
their  greater  costs of  operation.  A number of these larger  airlines  have
recently  emerged  from,  filed for or are  indicating  that they are close to
filing for  bankruptcy.  Air Canada,  our largest  lessee,  as measured by our
annual lease  revenue and the ninth  largest  airline in the world as measured
by  fleet  size,   filed  for  bankruptcy  in  April  2003  and  emerged  from
bankruptcy  on September  30, 2004.  United  Airlines  and U.S.  Airways,  the
second and sixth largest airlines in the world,  respectively,  as measured by
fleet size, are currently  subject to Chapter 11 bankruptcy  protection  (U.S.
Airways  for  the  second  time  in two  years).  Delta  Airlines,  the  third
largest  airline in the world as measured by fleet size,  is  indicating  that
absent  significant  financial  concessions  from  its  employees  it  will be
forced  to  declare  bankruptcy.  Although  many  of  these  bankruptcies  and
threatened  bankruptcies of the largest  airlines in the world are essentially
restructurings  to reduce  the  airline's  cost  base they do often  result in
fleet   reductions   and  in  some  cases  have  the   potential  to  lead  to
liquidations.  When these  large  airlines  reduce  the size of their  fleets,
supply of used  aircraft in the market  increases and  negatively  affects the
lease rates and sale  proceeds  we can obtain for our  aircraft.  Further,  if
any of these  airlines  or any other large  airlines  were to  liquidate,  the
addition  of their  aircraft  portfolios  into the  marketplace  would  likely
cause  significant  volatility  to  lease  rates  and  sale  prices  for  used
aircraft.  In  addition,  other  airlines,  including  certain of our lessees,
have  suffered  large losses or face severe  financial  difficulties.  Indeed,
Skynet,  one of  our  lessees  from  January  2003  to May  2004,  has  ceased
operations  and  returned  the aircraft we had leased to them ten months prior
to the scheduled expiration of their lease.

      Significant  increases  in  the  cost  of  fuel  in  2004  have  further
strained  the  financial  viability  of many  airlines.  At the  beginning  of
2004,  the  IATA  forecasted  a $3  billion  profit  for  the  global  airline
industry  for calendar  year 2004.  This  projection  was based on among other
things,  a positive  trend that began in the last twelve months of an increase
in the number of airline  passengers.  RPK has  increased  in every  region in
the first seven  months of 2004 as  compared to the same period in 2003.  This
increase  was  particularly  significant  in  Asia  as the  airlines  in  Asia
continued to rebound from SARS related  issues.  The IATA  projection was also
predicated  on a number  of  assumptions  including  the  assumption  that the
average  price of oil in 2004  would be $30 per  barrel.  Assuming  all  other
assumptions  remained  unchanged,  but that the average oil price were instead
$33 per  barrel  the  IATA  industry  forecast  changed  to  project  that the
industry  would break even,  and if the average  price were  assumed to be $36
per barrel,  the forecast  varied further to project a $3 billion loss for the
industry.  As at  January  31,  2004,  June  30,  2004,  August  31,  2004 and
September  30, 2004 the price of oil was  approximately  $32, $36, $41 and $50
per barrel, respectively.

      The depressed  aircraft  market that has existed for the last four years
has  meant  it has not been  possible  for the  Company  to sell  aircraft  at
prices  consistent  with  the  Business  Objectives  set  out in the  Deed  of
Charge.  Lease rates also suffered from the increase  after  September 2001 in
availability  of  aircraft,  although  in the past  twelve  months the overall
number of used  aircraft  available  for lease and sale has begun to  decrease
and lease rates have now begun to increase.  However,  the resulting  positive
impact has been less  significant  for older  aircraft such as ours.  Further,
the  potential  for  volatility  as a  result  of  airline  restructurings  or
liquidation,  or the  occurrence  of other adverse  world events  remains.  We
have  experienced  a  significant  decline in lease rates upon  re-leasing  or
extending  leases as compared to lease  rates prior to  September  2001 and we
have  received  requests  from certain  lessees to  restructure  their leases.
Although the  situation  is now  improving,  our  business has been  adversely
affected by these negative  developments  in the industry  during this period,
particularly in respect of new aircraft  leases and the increased  negotiating
power by lessees  to,  among  other  things,  require  that  certain  aircraft
maintenance,   modification   and  overhaul   expenses  and  the  expenses  of
complying  with  ADs be  paid  by the  Company.  As a  result  of the  loss of
investor  appetite and the difficulty in obtaining  financing for the purchase
of the types of older  aircraft  in our  portfolio,  there  are few  potential
buyers of these  aircraft on operating  lease,  and the resulting  illiquidity
in the market has caused  sale prices of these  aircraft  to further  decline.
There have been few sale  transactions  of older aircraft such as the aircraft
in our  portfolio  that we are  aware of in the  past  twelve  months  and the
difficulty  in selling  these types of older  aircraft  in the current  market
has had an  adverse  effect on sales  prices  generally.  The sales  prices we
received  for the  aircraft  we sold in fiscal  year 2003,  in our  efforts to
comply with the Trust Note Sales Goals,  reflected  the industry  wide decline
in sales prices for older aircraft.

      There has been a decline of 14.19% in the average  appraised  base value
of our  fleet of nine  aircraft  from  June 30,  2003 to June  30,  2004.  The
appraised  base  values  are based  upon the value of the  aircraft  at normal
utilization  rates in an open,  unrestricted and stable market,  and take into
account  long-term  trends,   including  current  expectations  of  particular
models  becoming  obsolete  more  rapidly  than  previous  predictions.  As  a
theoretical  value,  the  appraised  base  value is not  indicative  of market
value and it is not  likely  that we would  obtain  the  appraised  base value
upon  sale  of any  aircraft,  since  we  might  sell  at a low  point  in the
business  cycle,   and  since  appraised  base  values  are   forward-looking.
Further,  it is likely that certain of our aircraft,  particularly  the MD-80s
and  737-400/500s,  are permanently  impaired,  which would negatively  impact
the future appraised base values of these models.

      Current  interest  rates  are  low  by  historic   standards  which  has
generally been  beneficial for our lessees.  Any future  increases in interest
rates may  adversely  affect  the  ability of our  lessees  to  perform  their
obligations under the leases.

      See "Item 3 - Key  Information  - Risk  Factors" and "Item 5 - Operating
and Financial  Review and  Prospects - Operating  Results" for a discussion of
additional trends affecting our operations.

E.    Off-Balance Sheet Arrangements

      None.

F.    Tabular Disclosure of Contractual Obligations


                                  Payments due by period as at June 30, 2004
                         --------------------------------------------------------------
                                                   $million
                         --------------------------------------------------------------
                            Total    less than       1-3 years    3-5 years   more than
                                       1 year                                  5 years
                         --------------------------------------------------------------
Contractual Obligations
(i)   Long-Term Debt     $274.319         -        $274.319         -           -
   Obligations - Notes

(ii)  Purchase             $0.9436     $0.4718       $0.4718        -           -
   Obligations -
   Servicer and Cash
   Manager Fees

                         ------------  ----------  -----------  ----------  -----------
Total                    $275.2626     $0.4718     $274.7908        -           -
                         ============  ==========  ===========  ==========  ===========



(i)   The Company is  obligated  to pay interest on the Notes and a portion of
      the  principal  of the Class A Notes from the revenue  generated  by the
      Company's  leasing  operations.  Proceeds  from the sale of aircraft are
      required to be used to pay  principal  of the Notes in the  priority set
      forth in the Deed of Charge.

      The matters  described  in "Item 3 - Key  Information  - Risk  Factors -
      Risks  Relating to Payments  on Notes"  have had a  significant  adverse
      effect on the  Company's  revenue and on the  Company's  ability to make
      payments  on  the  Notes  on  a  timely  basis  and  in  full.   Current
      projections  indicate  that  there will not be  sufficient  funds to pay
      any  further  interest on or repay any  principal  of the Class E Notes,
      pay any  further  interest  on or repay  any  further  principal  of the
      Class D Notes,  repay any further principal of the Class C Notes,  repay
      some or all of the  outstanding  principal  of the  Class B Notes or pay
      any further step-up interest on the Class A, B, C or D Notes.

      Upon the  final  maturity  date of the Notes  (June  15,  2006) the cash
      available  will be applied to pay  principal  and  interest on the Notes
      in the order of  priorities  set forth in the Deed of Charge.  The Class
      E Notes will not receive any  principal or interest  payments  until the
      outstanding  principal  amount of each of the Class A,  Class B, Class C
      and the Class D Notes is reduced to zero and all  interest  due on these
      Notes is paid in full.

      The  failure of the  Company to pay  principal  of the Class A, Class B,
      Class C or Class D Notes on any day prior to their final  maturity  date
      due to  insufficient  cash  collections  will not constitute an Event of
      Default  with  respect  to such  class of Notes.  The  limited  recourse
      nature of the Notes  means that no amounts  will be payable in excess of
      the available collections.

(ii)  The annual  commitment  to the Servicer is $454,800 plus 1% of the basic
      rent amount  received  and 1% of the basic rent  amount due.  The annual
      commitment to the Cash Manager is $17,000.

ITEM 6.     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEEDS

A.    Directors and Senior Management

      Board of Directors

      Our  Directors  and  their  ages,   business   addresses  and  principal
activities are as follows:

Name                       Age   Business Address        Principal Activities
------------------------   ---   ---------------------   ---------------------
Mr. Frederick W. Bradley,  77    764 Norgate, Westfield  Retired - Senior Vice
Jr.                              New Jersey, United      President, Citibank,
                                 States 07090            N.A., Citicorp


Mr. G. Adrian Robinson     54    Timbers, Dean Street    Aerospace Consultant
                                 East Farleigh,
                                 Maidstone
                                 Kent ME15 OHS, England

Mr. Brian L. Chamness      44    1403 W. Lusher Ave.     Consultant, Whirlpool
                                 Elkhart, Indiana,       Financial Corporation
                                 United States 46517

      The  present  principal   occupation  and  other   affiliations  of  our
Directors are as follows:

      Frederick  W.  Bradley,  Jr. - Mr.  Bradley  has served as a Director of
the  Company  and as  Chairman  of the Board  since June 15,  1992.  From 1969
until 1992,  Mr.  Bradley was a Senior Vice  President  of Citibank  N.A.,  in
charge of the bank's  global  airline and  aerospace  business  having  joined
Citibank  in 1958.  Mr.  Bradley  served as the  Chairman of the Board of ALPS
94-1  Limited  from  June 2,  1994 to October  18, 2001 and as Chairman of the
Board of AerCo  Limited  from June 23, 1998 to October 18, 2001.  Mr.  Bradley
is also a Director of First  Citicorp  Life  Insurance  Co., and the Institute
of Air  Transport  Paris,  France and is  president of the  International  Air
Transport  Association's  (IATA)  International  Airline  Training Fund of the
United  States.  Mr.  Bradley  retired as a Director of America West Airlines,
Inc. in 1999 after serving seven years on its Board.

      G.  Adrian  Robinson - Mr.  Robinson  has  served as a  Director  of the
Company  since June 27, 1996.  Mr.  Robinson has been an aerospace  consultant
since 1992.  From 1990 to 1992, Mr.  Robinson was a Deputy General  Manager of
The Nippon  Credit  Bank.  Until  1989,  he was a Managing  Director,  Special
Finance  Group,  of Chemical Bank,  which he joined in 1986. Mr.  Robinson has
served as a Director of ALPS 94-1  Limited  since June 2, 1994,  as a Director
of AerCo  Limited  since June 23,  1998 and as the  Chairman  of the Boards of
ALPS 94-1  Limited and AerCo  Limited  since  October 18, 2001.  Mr.  Robinson
also provides  consulting  services from time to time to First Choice Airways,
one of the lessees.

      Brian L.  Chamness - Mr.  Chamness  served as a Director  of the Company
from January 28, 1998 to June 30, 2000 and was  re-appointed  as a Director on
June 12,  2002.  Mr.  Chamness  was a Vice  President of WFC from January 1998
to June  2000 and was a member  of the Board of  Directors  of WFC from  April
1999 to June 2000.  Mr. Chamness currently serves as a consultant to WFC.

      Mr.  Bradley  and  Mr.  Robinson  both  serve  for  two  year  terms  as
Directors,  but there is no limit to the number of terms  they may serve.  Mr.
Chamness  serves for a term of unlimited  duration  until  removed or replaced
by WFC. Mr.  Bradley's  term expired in the second  calendar  quarter of 2003,
when he was  re-appointed  to the Board.  Mr.  Robinson's  term expired in the
second calendar  quarter of 2004, when he was  re-appointed to the Board.  Mr.
Bradley's  term  expires  again in the second  calendar  quarter of 2005.  Mr.
Robinson  is the  Chairman  of the Board and a Director  of AerCo  Limited,  a
competitor of the Company in the aircraft leasing industry.

      Our  Directors  are  non-executive  and we do not and  will not have any
employees or executive  officers.  Accordingly,  the Board of Directors relies
upon the Servicer,  the  Administrative  Agent, the Cash Manager and the other
service  providers  for all  asset  servicing,  executive  and  administrative
functions under the service provider  agreements.  Certain  individuals  other
than the  Directors  listed above serve as  Directors of various  subsidiaries
of the Company.

      In  accordance  with our  Memorandum  and Articles of  Association,  the
holder of the  Class E Notes,  currently  WFC,  is  entitled  to  appoint  one
member of the Board of  Directors.  Since  June 12,  2002,  Mr.  Chamness  has
been the Director appointed to the Board by WFC.

      Audit Committee

      The Audit  Committee of the  Company,  established  in  September  2002,
consists  of  the  two  Independent   Directors.   The  duties  of  the  Audit
Committee include the following:

o     to  consider  the  appointment  of  the  external  auditors,  the  audit
               engagement   terms  and  audit  fee,   and  any   questions  of
               resignation or dismissal of the external auditors;

o     to  discuss  and  agree  with the  external  auditors  before  the audit
               commences the nature and scope of the audit;

o     to  pre-approve  all  permissible  non-audit  services  performed by the
               external  auditors.   (Audit  services  include  the  statutory
               audit of group and subsidiary  companies,  the review of annual
               reports and other  related  work).  Pre-approval  is  delegated
               to any member to cater for matters  arising  between  meetings,
               however,   the  full  committee   shall  approve  at  the  next
               scheduled meeting;

o     to  review  from  time to time the cost  effectiveness  of the audit and
               the independence and objectivity of the external auditors;

o     to  review  the  submission  to the  Board in  relation  to any  audited
               accounts, focusing particularly on:

   o     critical   accounting   policies  and   practices  and  any  changes  in
                  accounting policies and practice;

   o     all  alternative  treatments of financial  information  presented  under
                  U.S.  GAAP that have  been or are to be  discussed  with the
                  Board and the treatment preferred by the auditors;

   o     major judgmental areas;

   o     significant adjustments resulting from the audit;

   o     any unadjusted audit differences;

   o     the going concern assumption;

   o     compliance  with  accounting  standards  (and in  particular  accounting
                  standards  adopted  in the  financial  year  for  the  first
                  time);

   o     compliance with legal requirements;

o     to discuss  problems and  reservations  arising from the audit,  and any
               matters the external auditors may wish to discuss;

o     to review the  external  auditors'  management  letter and  management's
               response;

o     to review,  on behalf of the Board,  the  Company's  system of  internal
               and disclosure  controls and procedures  (including  financial,
               operational   compliance   and   risk   management)   and  make
               recommendations to the board;

o     to review adequacy of financial and non-financial  information  provided
               to the Board by the third party service providers;

o     to  consider  the  major   findings  of  internal   investigations   and
               management's response;

o     to review the Company's  operating,  financial and  accounting  policies
               and practices;

o     to consider other matters as defined by the Board; and

o     to report on all of the above matters to the Board.

Corporate Management

      Servicer

      The  Servicer,  Babcock  & Brown,  provides  a wide  range  of  services
including:

o     lease marketing and negotiation of lease agreements;

o     aircraft sales;

o     aircraft lease management including:

-     calculation, invoicing and collection of cash due under leases;

-     monitoring  each  lessee's   performance  of  its  aircraft  maintenance
                 obligations;

-     arranging for aircraft inspections;

-     accepting delivery and redelivery of aircraft;

-     monitoring  lessee  insurance  compliance and arranging for  alternative
                 insurance where  appropriate  and to the extent  commercially
                 available;

-     monitoring of cash and lease security provisions;

-     monitoring lessee compliance under the leases;

-     enforcement of our rights under the leases;

o     preparation of budgets;

o     preparation of Board agendas and reports;

o     arranging  valuations,  and  monitoring  and  advising us on  regulatory
               developments;

o     periodic  reporting of operational,  financial and other  information on
               our aircraft and leases; and

o     providing  us with data and  information  relating to our  aircraft  and
               the commercial aviation industry.

      The  Servicer is paid an annual asset based  servicing  fee of $454,800.
The  asset  based  servicing  fee is  payable  monthly  in  arrears  in  equal
installments.

      The  Servicer is paid lease  incentive  fees which are the  aggregate of
(i) 1% of the basic rent  amount  received;  (ii) 1% of the basic rent  amount
due;  and (iii) an amount  equal to 10% of the  amount by which the basic rent
is  exceeded  for each  aircraft  which is  placed on a new  lease.  The lease
incentive fees are payable monthly in arrears.

      The Servicer is also paid a sales  incentive  fee in respect of the sale
of aircraft calculated as follows:

(i)   1.25% of the net sale  proceeds  up to 87% of the  depreciated  value of
            such aircraft; plus
(ii)  15% of the  amount  by which  the net sale  proceeds  exceed  87% of the
            depreciated value of such aircraft.

      In  certain  circumstances,   we  or  the  Servicer  may  terminate  the
Servicing Agreement.

      Administrative Agent and Company Secretary

      Our Administrative  Agent and Company  Secretary,  Mourant & Co. Limited
and Mourant & Co. Secretaries Limited,  respectively,  provide  administrative
and accounting services to the Board of Directors including:

o     maintaining the corporate  books and records,  including our minute book
               and share register and the register of Notes;

o     making available to us telephone,  telecopy and post office  facilities,
               and  maintaining our registered  office in Jersey,  at which it
               will  accept  service of  process  in Jersey and other  notices
               sent to us;

o     providing other general administrative services;

o     providing   administrative   services  to  us  in  connection  with  the
               closings of the sale and re-lease of our aircraft;

o     providing various types of accounting assistance;

o     coordinating  with the  Financial  Consultant  with  respect  to various
               financial matters;

o     assisting us in connection with any hedging strategy;

o     assisting  with  the  preparation,   filing  and  distributions  of  all
               reports  which need to be prepared,  filed  and/or  distributed
               by us  (including  reports  required  to  be  filed  under  the
               securities  laws of the  United  States but  excluding  reports
               relating to the aircraft and the Luxembourg Stock Exchange);

o     coordinating  any amendments to the  transaction  documents  (other than
               the  leases),  subject  to the  terms  of such  agreements  and
               approval by the Board of Directors; and

o     authorizing   payment  of  certain  bills  and   expenses,   subject  to
               approvals by the Board of Directors.

      The  Administrative  Agent may  resign on 30 days'  written  notice,  as
long as we have  engaged  another  person or entity to  perform  the  services
that were  being  provided  by the  Administrative  Agent.  We may  remove the
Administrative  Agent at any  time on  account  of a  material  breach  of its
obligations.

      The  Administrative  Agent  also may be asked by the Board of  Directors
to provide  other  administrative  services,  including  such other actions as
may  be  appropriate  to  facilitate  the  transactions  contemplated  by  the
Prospectus  and our  operative  documents and to assist the Board of Directors
in carrying out its duties.

      The  fee for the  Administrative  Agent's  services  to the  Company  is
based on the number of hours  worked by each  employee  of the  Administrative
Agent on affairs of the Company  multiplied  by the hourly  rates of each such
employee.  Mourant  & Co.  Limited  provides  administrative  and  secretarial
services  to  other  corporate   entities   including   other   securitization
vehicles,  and is  affiliated  with Mourant du Feu & Jeune,  the law firm that
acts as Jersey legal counsel for the Company.

      Cash Manager

      The Cash Manager,  Deutsche Bank Trust Company  Americas  (f/k/a Bankers
Trust Company),  provides cash  management and related  services to us. In the
ordinary  course of our  business,  the Cash  Manager will inform the Servicer
of the  aggregate  deposits  in the  collection  account on a daily  basis and
with respect to each payment period,  provide such other  information as shall
be  required  in  connection  with  our  accounts  and make  disbursements  in
accordance  with the  Deed of  Charge.  The  Cash  Manager  is  authorized  to
invest the funds held by us in the  collection  account and the lessee  funded
account in prescribed investments and on permitted terms at our direction.

      In  addition,  the  Cash  Manager  receives  the  data  provided  by the
Servicer and the Financial  Consultant  with respect to the  aircraft,  leases
and other  matters  and  calculates  certain  monthly  payments  and makes all
other  calculations  as  required  under the Cash  Management  Agreement.  The
Cash  Manager  will also  provide  the  Trustee  with such  information  as is
required by the Trustee to provide its report to the noteholders.

      The Cash Manager may resign on 30 days'  written  notice,  as long as we
have  engaged  another  person or entity to  perform  the  services  that were
being  provided  by the Cash  Manager.  We may remove the Cash  Manager at any
time on account of a material breach of its obligations.

      The Cash  Manager  receives a fee of $17,000  per year for its  services
to the Company.

      Financial Consultant

      The Financial  Consultant,  Deutsche Bank Trust Company  Americas (f/k/a
Bankers Trust Company),  develops  financial models,  revenue  projections and
forecasts  and  provides   computational  services  to  assist  the  Board  of
Directors in making lease,  sale and hedging  decisions,  and in analyzing the
budget.  The Financial  Consultant may resign on 30 days' written  notice,  as
long as we have  engaged  another  person or entity to  perform  the  services
that were  being  provided  by the  Financial  Consultant.  We may  remove the
Financial  Consultant  at any time on  account  of a  material  breach  of its
obligations.

      The  Financial  Consultant  receives a fee of  $32,000  per year for its
services to the Company.

      Auditors

      Since  September  11,  2003,  the  Company's  auditors  have  been  KPMG
Ireland.  Prior to that date the  Company's  auditors  had been  KPMG  Channel
Islands.  KPMG  Channel  Islands  had  informed  us that it did not  intend to
register  with  the  U.S.  Public  Company  Accounting  Oversight  Board  (the
"PCAOB")  in  accordance  with  a  new  requirement  of  the  PCAOB  that  any
independent  auditor of a company subject to the U.S.  Securities and Exchange
Commission's   periodic  reporting   requirements  register  with  the  PCAOB.
Therefore,  KPMG Channel  Islands would no longer be in a position to continue
as  independent  auditor  to the  Company.  It  also  informed  us  that  KPMG
Ireland,  which had intended to so register with the PCAOB,  had expressed its
willingness to accept appointment as independent auditor to the Company.

      There  were  no  disagreements  between  KPMG  Channel  Islands  and the
Company  or any  other  reportable  events  that  caused  us to  replace  KPMG
Channel  Islands  with KPMG  Ireland.  This  replacement  was approved by both
the Audit Committee and the Board of Directors of the Company.

B.    Compensation

      All Directors are  compensated  for travel and other  expenses  incurred
by them in performing  their duties as Directors.  The Company  currently pays
each  Independent  Director  a fee of  $58,600  per  annum,  which  fee may be
increased  only in accordance  with Articles of Association of the Company and
the Deed of  Charge,  for his  services.  Each  Independent  Director  is also
entitled to an additional fee of $1,000 for each day, or portion  thereof,  on
which he is required to travel  (excluding  the  quarterly  Board  meetings in
Jersey)  on account of Company  business.  Non-Independent  Directors  receive
no remuneration for their services.

      Additionally,  Mr.  Robinson  is paid fees of  approximately  Euro 6,400
per  annum,  fees of up to £3,000  per annum and fees of Euro  4,000 per annum
as  compensation  for  acting as a  Director  of the  Company's  wholly  owned
Irish, English and French subsidiaries, respectively.

      The Company has no other officers.

C.    Board Practices

      None of the Directors  have service  contracts and none of the Directors
are  entitled to benefits on  termination  of their  office.  The Company does
not  have  a   remuneration   committee.   In  September   2002,  the  Company
established  an  Audit  Committee   which   currently   consists  of  the  two
Independent  Directors.  Prior to this  time,  audit  committee  matters  were
considered  at the regular  meetings of the full Board.  See "- Directors  and
Senior   Management  -  Board  of  Directors"   and  "-Audit   Committee"  for
additional  information  concerning  our  Directors  and the Audit  Committee,
respectively.

D.    Employees

      Our  Directors  are  non-executive  and we do not and  will not have any
employees or executive  officers.  Accordingly,  the Board of Directors relies
upon the Servicer,  the Administrative  Agent, the Cash Manager, the Financial
Consultant  and  the  other  service   providers  for  all  asset   servicing,
executive and administrative functions under the service provider agreements.

E.    Share Ownership

      None of our  Directors  own any shares of the  Company  nor do they have
options to purchase shares of the Company.

ITEM 7.     MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.    Major Shareholders

      Our Ordinary  Shares are not listed on any  national  exchange or traded
in any  established  market.  The beneficial  ownership of the Ordinary Shares
as of the date of this report on Form 20-F is presented below.

                     BENEFICIAL OWNERSHIP OF THE COMPANY

                     Identity of Person
   Title of Class         or Group           Amount Owned      Percent of Class

  Ordinary Shares       Mourant & Co.            10                 100%
                      Trustees Limited,
                      as trustee of the
                         ALPS Trust,
                        22 Grenville
                           Street,
                         St. Helier,
                       Jersey, Channel
                           Islands


      All ten Ordinary  Shares  issued are held by the  Nominees  (five shares
each) for the  benefit  of  Mourant & Co.  Trustees  Limited as trustee of the
ALPS Trust, a Jersey charitable trust.

      Under the deed of  covenant  entered  into on June 27, 1996 by Mourant &
Co.  Trustees  Limited as trustee  of the ALPS  Trust (the  "charitable  trust
trustee"),  WFC and the Company,  the charitable  trust trustee agreed that it
will not,  and will  procure  that the  Nominees  will not,  without the prior
written  approval  of the  holder of the Class E Notes,  transfer  any part of
the shares in the  Company  held by them or any  interest  therein  unless the
transferee  shall enter into a covenant  identical  to that  contained  in the
deed of  covenant  in favour of the holder of the Class E Notes  (including  a
covenant not to amend  certain  provisions  of our Articles  without the prior
written approval of the holder of the Class E Notes).

      See "Item 10 - Additional  Information - Articles of Association"  for a
description of the voting rights available to holders of our Ordinary Shares.

B.    Related Party Transactions

      WFC owns the Class E Notes and is entitled  to appoint  one  Director to
the Board for as long as it owns such  Notes.  Currently,  Brian  Chamness,  a
consultant  to WFC,  is the  Director  serving on the Board at the  request of
WFC.

      Mourant & Co.  Limited  is the  Administrative  Agent and  Mourant & Co.
Secretaries  Limited is the Company  Secretary.  Their  affiliate,  Mourant du
Feu & Jeune,  is Jersey,  Channel Islands legal counsel to the Company and its
directors.

C.    Interests of Experts and Counsel

      Not applicable.

ITEM 8.     financial information

A.    Consolidated Statements and Other Financial Information.

      Consolidated financial statements are listed in Item 18.

      We are not a party to any material legal proceedings.

B.    Significant Changes

      There have been  significant  changes which have occurred since the date
of the annual  financial  statements.  These  changes are explained in Note 15
of "Item 18 - Consolidated Financial Statements."

ITEM 9.     The listing

A.    Offer and Listing Details

      The Class A, Class B,  Class C and Class D Notes are listed for  trading
on the  Luxembourg  Stock  Exchange.  Additionally,  in the  United  States at
least one investment  bank makes a secondary  market in such classes of Notes,
but  without  any  obligation  to do  so.  There  can be no  assurance  that a
secondary  market will  continue or develop  further for any class of Notes or
that the market will provide  liquidity of  investment  or that it will remain
for the term of the Notes.

B.    Plan of Distribution

      Not applicable.

C.    Markets

      The Class A, Class B, Class C and Class D Notes are listed on the
Luxembourg Stock Exchange.

D.    Selling Shareholders

      Not applicable

E.    Dilution

      Not applicable.

F.    Expenses of the Issue

      Not applicable.

ITEM 10.    Additional information

A.    Share Capital

      Not applicable

B.    Memorandum and Articles of Association

      The  following   summary   contains  a   description   of  the  material
provisions of our Memorandum  and Articles of  Association  (which we refer to
as our  Memorandum and our Articles  respectively)  and does not purport to be
complete and is qualified in its entirety by reference to our  Memorandum  and
Articles, copies of which were previously filed.

Registration and Objects

      The  Company  is  a  public  limited  liability   company   incorporated
pursuant  to the  Companies  (Jersey)  Law  1991  (which  we  refer  to as the
Companies  Law).  We are  registered  under  number  52674 in the  register of
companies maintained by the Jersey Registrar of Companies.

      Our objects and purposes are set out in paragraph 4 of our Memorandum.

            The purposes of the Company are, inter alia, the following:

o     to own, manage and lease out aircraft,

o     to purchase and dispose of aircraft,

o     to borrow or raise  money and to raise or secure the  repayment  of such
               sums  of  money  in  such   manner  and  upon  such  terms  and
               conditions as the Directors of the Company shall think fit,

o     to engage in currency  exchange and interest rate  transactions  and any
               other financial or other transactions of whatever nature, and

o     to  establish  companies  for the purpose of carrying on any business or
               acquiring  and  undertaking  any  property or  liability of the
               Company.

Directors

      We are  managed by a Board of  Directors  which will  consist of no more
than three  persons  and no less than two  persons at any time.  See "Item 6 -
Directors, Senior Management and Employees."

Transactions in which our Directors are Interested

      Our Articles  provide  that if a Director has  disclosed to the Board of
Directors the nature and extent of any of his material  interests,  a Director
notwithstanding his office:

o     may be a party  to, or  otherwise  interested  in,  any  transaction  or
               arrangement  with  the  Company  or in  which  the  Company  is
               otherwise interested;

o     may be a Director or other  officer  of, or  employed  by, or a party to
               any  transaction or arrangement  with, or otherwise  interested
               in,  any body  corporate  promoted  by the  Company or in which
               the  Company  is  otherwise  interested  or  which  engages  in
               transactions  similar to those  engaged in by the  Company  and
               might  present a conflict  of  interest  for such  Director  in
               discharging his duties;

o     shall not, by reason of his office,  be  accountable  to the Company for
               any  benefit   which  he  derives   from  any  such  office  or
               employment  or from  any such  transaction  or  arrangement  or
               from  any  interest  in any  such  body  corporate  and no such
               transaction  or  arrangement  shall be liable to be  avoided on
               the ground of any such interest or benefit.

Directors' Compensation

      All Directors are  compensated  for travel and other  expenses  incurred
by them in the  performance  of their  duties.  Our Articles  provide for each
Independent  Director  to be paid an  aggregate  fee of $50,000  per annum for
his services (or such higher  amount,  not  exceeding  $100,000 per annum,  as
shall be fixed by the  holders  of our  shares).  On  October  24,  2003,  our
shareholders  approved  an  increase  in these fees based on the change in the
U.S.  Consumer  Price  Index  from June 1996 to June  2003.  As a result  each
Independent  Director  now  receives  a fee  of  $58,600  per  annum  for  his
services.  Each  Independent  Director is also entitled to an  additional  fee
of  $1,000  for each day,  or  portion  thereof,  on which he is  required  to
travel  (excluding the quarterly  Board meetings held in Jersey) on account of
Company  business.  Our Articles  provide  that the Director  appointed by the
holder of the  Company's  Class E Notes is not  entitled to  remuneration  for
his  services.  The  provisions of our Articles may only be changed by special
resolution  passed by the  holders of our shares (as to which see  'Changes to
Shareholders' Rights' below).

Directors' Borrowing Powers

      Our  Articles  provide  for our  Directors  to  exercise  all  borrowing
powers of the  Company.  The  exercise  of such  powers is limited as a result
of the contractual  restrictions on our power to borrow  contained in the Deed
of Charge.

Directors' Age Limits

      There is no  provision  in our  Articles  or in the  Companies  Law as a
result of which our  Directors  would be  required  to retire from office upon
reaching a certain age.

Directors' Share Ownership Requirements

      There  is  no  provision  in  our  Articles  or  in  the  Companies  Law
requiring  our  Directors to hold shares in the Company in order to be able to
hold the position of Director.

Rights, Preferences and Restrictions Relating to Shares

      We have an  authorized  share  capital  consisting  of  15,000  ordinary
shares of $1  nominal  value per  share of which 10 have been  issued  and are
fully paid (See "Item 7 - Major  Shareholders  and Related Party  Transactions
- Major  Shareholders").  The rights,  preferences and restrictions  attaching
to the shares are as follows:

            Dividend Rights

      We may  distribute  dividends  to our  shareholders  from  distributable
profits  in  each  fiscal  year.  These   distributions  are  subject  to  the
requirements  of the  Companies  Law. For the purpose of  calculating  amounts
available for  distribution,  profits and losses must be accumulated in so far
as not  previously  utilized or written off in a reduction or  re-organization
of  capital.  Any  dividends  must  be  distributed  to  our  shareholders  in
proportion  to their  shareholdings.  Under our  Articles,  the holders of the
10 issued  shares in the Company are entitled to a fixed  cumulative  dividend
of $1,500 per annum (to the extent the  Company has  distributable  profits in
any year) and to any additional  dividends paid out of surplus  profits of the
Company.  Under our  Articles,  dividends  not  claimed  within ten years from
the date of declaration  shall, if our Directors so resolve,  be forfeited and
shall from that time belong to the Company.

      Voting Rights

      Each  holder  of our  shares  is  entitled  to one vote per share at any
general meeting of our shareholders.

      Rights to share in the Profits

      See "Dividend Rights" above.

      Rights in the Event of Liquidation

      In the  event  that  we  are  liquidated,  our  assets  remaining  after
payment  of  our  debts,   liquidation  expenses  and  all  of  our  remaining
obligations  will be used to pay to the  holders  of the 10  issued  shares in
the  Company  any  arrears  of the  preferential  dividend  to which  they are
entitled and the balance,  if any,  will be  distributed  to repay in full the
nominal   value  of  our  shares.   Any  surplus  will  then  be   distributed
proportionately among our shareholders in proportion to their shareholdings.

      Redemption of Shares

      Our shares are not redeemable shares.

      Sinking Fund

      Our shares are not subject to any sinking fund.

      Liability to further Capital Calls

      Shareholders are not liable to further capital calls.

      Principal Shareholder Restrictions

      There are no  provisions  in our Articles or in the  Companies Law which
would  discriminate  against any existing or prospective  holder of our shares
as a result of such shareholder owning a substantial number of shares.

Changes to Shareholders' Rights

      The  provisions of our Articles,  which set out the rights  attaching to
our  shares,  may  only  be  amended  by  a  special  resolution  (which  is a
resolution  passed  either by a majority  of not less than two thirds of votes
cast in person or by proxy at a meeting  of  shareholders  or passed by way of
written resolution signed by or on behalf of each shareholder).

Shareholders' Meetings

      The Company is required to hold an annual  general  meeting and may also
hold  extraordinary  general meetings.  All meetings of our shareholders other
than the annual general meeting are called extraordinary general meetings.

      Annual  general  meetings  are convened by the  Directors  each year and
must be held not  more  than 18  months  after  the  previous  annual  general
meeting.  The Economic  Development  Committee of the States  (government)  of
Jersey has the power to call an annual  general  meeting  of a Jersey  company
if that  company  fails to do so and the Royal  Court of  Jersey  also has the
power  in  certain  circumstances  set  out in  the  Companies  Law to  call a
meeting  of a Jersey  company.  The  holders  of at least one tenth in nominal
value of our shares may requisition a meeting of shareholders.

      At least  twenty one days' notice of the annual  general  meeting and of
any  meeting at which a special  resolution  is to be  proposed  is  required.
Fourteen  days'  notice of any other  meeting is required.  An annual  general
meeting  may  however  be  held  at  short  notice   provided   that  all  the
shareholders  entitled  to attend  and vote at the  meeting  agree.  Any other
meeting  may be held at short  notice if a majority of  shareholders  together
holding at least  ninety  five per cent of the shares  given a right to attend
and vote at such meeting agree.

      All  shareholders  or their  proxies  may  attend and vote at the annual
general  meeting  and  extraordinary  general  meetings.  Resolutions  may  be
proposed  either  as  special  resolutions  or  as  ordinary  resolutions.   A
special  resolution  requires the  affirmative  vote of a majority of not less
than  two  thirds  of votes  cast  and an  ordinary  resolution  requires  the
affirmative vote of a simple majority of votes cast.

      The  Companies  Law contains  provisions  governing  the  convening  and
holding of meetings of shareholders which are reflected in our Articles.

Limitation on Security Ownership

      There are no  restrictions  under Jersey law or our Articles  that limit
the right of non-resident  or foreign  shareholders to hold or exercise voting
rights in respect of our shares.

Change in Control

      There are no  provisions  in our Articles  that would have the effect of
delaying,  deferring  or  preventing  a change in our  control  and that would
operate   only  with   respect   to  a  merger,   acquisition   or   corporate
restructuring  involving  the  Company  or  any  of  our  subsidiaries.   See,
however,  "Item 7 - Major  Shareholders and Related Party Transactions - Major
Shareholders"  for a description of certain  contractual  restrictions  on the
transfer of shares by the existing shareholders.

Disclosure of Share Holdings

      There  are  no  provisions  in our  Articles  or in  the  Companies  Law
whereby  persons  acquiring,  holding or disposing of a certain  percentage of
our shares are required to make disclosure of their ownership percentage.

Jersey Law and our Memorandum and Articles

      The content of our  Memorandum  and Articles is largely  derived from an
established  body of corporate  law and  therefore  they mirror the  Companies
Law in  their  provisions.  There  are no  provisions  in our  Memorandum  and
Articles  concerning  changes  of  capital  where  these  provisions  would be
considered more restrictive than that required by the Companies Law.

C.    Material Contracts

      None.

D.    Exchange Controls

      There are currently no Jersey foreign exchange  control  restrictions on
the   payment  of  interest  or   principal   on  the  Notes.   There  are  no
restrictions  under Jersey law or under our  Articles  that limit the right of
non-resident or foreign owners to hold or vote the Notes.

E.    Taxation

Certain Jersey Tax Considerations

      The  following  summary is based upon advice  provided by Mourant du Feu
& Jeune  ("Jersey Tax  Counsel") as to the tax  treatment  under Jersey law of
the  Company  and  the tax  treatment  under  Jersey  law in  relation  to the
purchase,  ownership and  disposition  of the Notes.  The  discussion is based
on an interpretation of laws,  regulations,  rulings and decisions,  including
certain  letters  from  the  Comptroller  of  Income  Tax in  Jersey  and  the
Director of the Jersey Financial  Services  Department (the functions of which
were taken over by the Jersey Financial  Services  Commission with effect from
July 1,  1998),  all of which are  currently  in  effect  and are  subject  to
change.  Any  such  change  may be  applied  retroactively  and may  adversely
affect the Jersey tax consequences described herein.

      Income Taxes

      The Company will qualify as an "exempt  company"  under  Article 123A of
the Income Tax (Jersey) Law 1961,  as amended (the "1961 Law"),  as long as it
makes  the  returns  of  information  and pays the  fees as  required  by that
Article and,  subject to concessions  obtained from the  Comptroller of Income
Tax in Jersey,  as long as no Jersey  resident has a beneficial  interest (for
purposes of the 1961 Law) in the Company.  As an exempt  company,  the Company
will be treated  for  purposes  of the 1961 Law as not  resident in Jersey and
will pay no Jersey  income  tax other than on income  arising in Jersey  (but,
by long  standing  concession,  excluding  bank  deposit  interest  arising in
Jersey)  and  on  profits  of  its  trade  (if  any)  carried  on  through  an
established  place of business  in Jersey.  Based upon the  foregoing  and the
concessions  obtained  from the  Comptroller  of Income Tax in Jersey,  in the
opinion  of Jersey  Tax  Counsel,  the  Company  will not be subject to Jersey
income tax.

      Withholding Taxes

      Based upon the  Company's  qualification  as an exempt  company,  in the
opinion of Jersey Tax  Counsel,  no Jersey  withholding  tax will be  deducted
from interest and other amounts paid on the Notes on account of Jersey taxes.

      In the event that any Jersey  withholding  tax is  imposed,  noteholders
should note that there is no income tax treaty  between the United  States and
Jersey that would apply to reduce or eliminate such withholding.

      Noteholders  should note  further that the Company will not be obligated
under the terms of the Notes to make any  additional  payments  in  respect of
any such  withholding  tax.  Accordingly,  in the event that  withholding were
to be  required  on  account of Jersey  taxes,  distributions  to  noteholders
would be less than those  which  would be made on the Notes in the  absence of
any such withholding tax.

      Other Taxes

      There is no  taxation  of  capital  gains  (other  than with  respect to
certain  tax  avoidance  transactions)  in Jersey.  As a result,  the  capital
gains of the  Company on its  investments  will not be subject to  taxation in
Jersey.  There is no value added tax or other relevant taxation in Jersey.

      European Union Directive on the Taxation of Savings Income

      On June 3, 2003,  the EU  Council  of  Economic  and  Finance  Ministers
adopted  a  directive  on the  taxation  of  savings  income  in the  form  of
interest  payments  (the "EU Savings  Tax  Directive").  It is proposed  that,
subject to a number of important  conditions  being met,  each EU Member State
will,  from July 1, 2005,  be  required to provide to the tax  authorities  of
another EU Member  State  details of payments of  interest  (or other  similar
income) paid by a person within its  jurisdiction  to or for the benefit of an
individual resident in that other EU Member State; however,  Austria,  Belgium
and   Luxembourg   will  instead  apply  a   withholding   tax  system  for  a
transitional period in relation to such payments.

      Jersey is not  subject to the EU Savings  Tax  Directive.  However,  the
Policy & Resources  Committee of the States of Jersey has  announced  that, in
keeping  with  Jersey's  policy  of  constructive   international  engagement,
Jersey  proposes to introduce a withholding  tax system in respect of payments
of interest,  or other similar income, made to an individual  beneficial owner
resident  in an EU Member  State by a paying  agent  situate  in  Jersey  (the
terms  "beneficial  owner" and  "paying  agent" are  defined in the EU Savings
Tax  Directive).  The  withholding  tax system would apply for a  transitional
period prior to the  implementation of a system of automatic  communication to
EU  Member  States  of  information  regarding  such  payments.   During  this
transitional  period,  such an individual  beneficial  owner resident in an EU
Member  State will be entitled to request a paying  agent not to withhold  tax
from such  payments  but  instead  to apply a system by which the  details  of
such payments are  communicated  to the tax authorities of the EU Member State
in which the beneficial owner is resident.

      Under the current  proposals in respect of the  implementation of such a
withholding  tax system in Jersey the Company  would not be  obligated to levy
withholding tax in respect of interest payments made by it to a paying agent.

      The States of Jersey has not yet  adopted  measures to  implement  these
proposals but is expected to adopt such  measures on the same  timetable as EU
Member States and other relevant third countries.

Certain Tax Considerations Regarding Subsidiaries

      The Irish  subsidiary  is subject to Irish  corporation  tax at the rate
of 10% on its trading income and 25% on its non-trading income.

      The U.K.  subsidiary is subject to U.K.  corporation tax at an effective
rate of up to 19%  depending  on the level of  profits  that  this  subsidiary
generates.

      The French  subsidiary is subject to French  corporation tax at the rate
of 33 1/3% of its taxable profits.

F.    Dividends and Paying Agents

      Not applicable.

G.    Statement  by Experts

      Not applicable.

H.    Documents on Display

      The  documents  concerning  us  which  are  referred  to  herein  may be
inspected at the  Securities  and Exchange  Commission,  or at our  registered
office at 22 Grenville  Street,  St. Helier,  Jersey JE4 8PX, Channel Islands.
You may read and copy any  documents  filed or  furnished  by us at the  SEC's
public  reference  rooms in Washington  D.C., New York and Chicago,  Illinois.
Please  call  the  SEC  at  1-800-SEC-0330  for  further  information  on  the
reference  rooms.  Our SEC filings since  November 1, 2002 are also  available
to the public on the SEC Internet site (http://www.sec.gov).

I.    Subsidiary Information

      Not applicable.

ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Interest Rate Risk and Management

      The leasing  revenues of the Company  are  generated  from lease  rental
payments   which   are  all   fixed   rate   (some   leases   are   based   on
"power-by-the-hour"  fixed  hourly rates and others on fixed  monthly  rates).
In  general,  an exposure  to  interest  rate risk  arises when the  Company's
fixed and floating  interest  rate  obligations  on its Notes do not correlate
to the fixed rate lease rental  receipts for different  rental  periods.  This
interest rate  exposure can be managed  through the use of interest rate swaps
and other  derivative  instruments.  Our lease  collections are invested based
upon  recommendations  of the Cash Manager.  We have determined that it is not
necessary to invest our lease  collections in swaps,  options or other hedging
alternatives.  Although  we may  invest  in  such  instruments  if we and  our
advisors  determine  that  such  investments  are  appropriate,   we  and  our
advisors do not  currently  anticipate  any need for such  investments  in the
foreseeable  future.  There can be no assurance  that the strategy  adopted to
invest or to not invest in such  instruments  at any time will be effective in
protecting  your payments of interest in an environment of material  increases
to LIBOR.

ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

      Not applicable.

                                   PART II

ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

      During fiscal year 2004 and to date,  regular  interest  payments due to
holders of Class D Notes were in arrears.  The Deed of Charge  provides  that,
so long as the  Class  A,  Class B or  Class  C  Notes  are  outstanding,  the
holders of Class D Notes are not permitted to serve an  Enforcement  Notice on
the  Company in respect of an Event of Default  caused by failure to pay Class
D Note  regular  interest;  however,  default  interest  of 1% of such  unpaid
interest  shall  accrue and be owed to holders of Class D Notes in  accordance
with the priority of payments  set forth in the Deed of Charge.  As at the end
of fiscal  year 2004,  arrears  consisted  of $70.810  million of Class A Note
Target  Amount,  $0.942  million  of  Class A Note  step-up  interest,  $0.407
million  of Class B Note  step-up  interest,  $4.304  million  of Class C Note
Target  Amount,  $0.390  million  of  Class C Note  step-up  interest,  $5.177
million  of  Class  D Note  Target  Amount,  $0.665  million  of  Class D Note
step-up  interest,  $1.042  million of Class D Note default  interest,  $7.130
million  of Class D Note  regular  interest  and  $52.705  million  of Class E
Note  interest.  As of September  15, 2004,  the unpaid  amounts  consisted of
$77.472  million  of Class A Note  Target  Amount,  $1.042  million of Class A
Note  step-up  interest,  $0.458  million  of Class B Note  step-up  interest,
$4.304 million of Class C Note Target  Amount,  $0.441 million of Class C Note
step-up  interest,  $5.177  million  of  Class D Note  Target  Amount,  $1.127
million  of Class D Note  default  interest,  $0.750  million  of Class D Note
step-up  interest,  $8.215  million  of  Class  D Note  regular  interest  and
$54.779  million of Class E Note interest.  Our inability,  during fiscal year
2004 or to date,  to pay these  amounts,  other  than the  $8.215  million  of
Class D Note  regular  interest  (discussed  above),  does not  constitute  an
Event of Default.

      The  Company  did not have  sufficient  funds to repay the Class A Notes
on their  expected  final  payment  date of May 15, 2002 or to repay the Class
B, Class C or Class D Notes on their  expected  final payment date of July 15,
2002.  Failure  to repay in full the  principal  of those  Notes by such dates
is not an Event of  Default;  however,  the Deed of  Charge  requires,  to the
extent the  Company  does not repay in full  principal  of those Notes by such
dates,  that the Company  pay to the Class A, Class B and Class C  Noteholders
additional   step-up   interest  of  0.50%  per  annum  and  to  the  Class  D
Noteholders  additional  step-up  interest  of 1.00% per annum for each  month
until the  earlier of the date such  Notes are repaid in full and their  final
maturity  date of June 15, 2006.  These  additional  interest  costs will only
be paid to the extent there are available  collections in accordance  with the
priority of payments  set forth in the Deed of Charge.  The Company  paid some
step-up  interest in fiscal year 2002,  but our current  projections  indicate
that we will not have sufficient  funds to pay any further  step-up  interest.
Our current  projections  also indicate that we will not have sufficient funds
to pay any further Class D Note interest.

      The Deed of Charge sets out the  following  Trust Note Sales Goals which
required us to approve sales of our aircraft on an ongoing basis:


        Aircraft to be Sold
   (measured by Initial Appraised         Date by which Sales Goals
     Value as of June 3, 1996)              were to be Satisfied
             $65,000,000                        June 27, 2001
            $130,000,000                        June 27, 2002
            $200,000,000                        June 27, 2003
            $454,950,000                        June 27, 2004

      We were in  compliance  with and had exceeded the Trust Note Sales Goals
as of June 27,  2001 and  were  required  to sell a  further  $54,330,000  (as
measured by Initial  Appraised  Value)  worth of aircraft to be in  compliance
with the Trust Note Sales Goals as of June 27, 2002.

      As discussed  above since  September  11,  2001,  the market for sale of
older  used   aircraft  such  as  our  aircraft  has  been   extremely   poor.
Nevertheless,  in  order  to  meet  the  June  2002  Trust  Note  Sales  Goal,
following  an  extensive  marketing  effort by the  Servicer,  the Company had
entered  into  non-binding  agreements  to  sell a  B737-300  and an  A320-200
aircraft to two separate  purchasers  by June 27, 2002.  However,  as a result
of  difficulties  and delays  outside  the  Company's  control the sale of the
B737-300  aircraft  was not  completed  until  October 1, 2002 and the sale of
the A320-200  aircraft  (which was  ultimately  sold to a different  purchaser
following  the  withdrawal of the original  prospective  purchaser on November
5,  2002)  was not  completed  until  December  20,  2002.  As a  result,  the
Company was not in  compliance  with the Trust Note Sales Goals from  November
5, 2002  until the  A320-200  aircraft  was sold to such  other  purchaser  on
December 20, 2002.

      In the  period  from  June  1996 to date,  we have  sold  five  aircraft
totaling  $133,190,000  (measured by Initial  Appraised  Value).  We needed to
sell an additional  $66,810,000  (measured by Initial  Appraised  Value) worth
of  aircraft  to comply with the June 2003 Trust Note Sales Goal and needed to
sell all of our  aircraft  to  comply  with the June  2004  Trust  Note  Sales
Goal. At our  direction,  the Servicer has  periodically  been  marketing each
of our aircraft  for sale in order to meet the ongoing  Trust Note Sales Goals
in  a  manner  consistent  with  the  requirements  of  the  Deed  of  Charge.
However,  the  current  market  for sale of older  used  aircraft  such as our
aircraft is  extremely  poor and it is not likely the market for our  aircraft
will improve prior to the final maturity date of the Notes.

      In fiscal year 2003, the marketing  efforts of the Servicer  resulted in
two offers to purchase the B757-200  aircraft,  but both offers were at prices
significantly   below  the  Class  C  Note   Target   Price.   After   careful
consideration  of these offers,  the Company's  obligations  under the Deed of
Charge  (notably  the  Business  Objectives  contained  therein)  and the then
current  and  possible  future  market   conditions  for  aircraft  sales  and
leasing,  we concluded  that it would not be consistent  with the terms of the
Deed of Charge for the Company to accept either such offer.

      We did not comply  with the Trust Note Sales  Goals for June 27, 2003 or
for  June  27,  2004  as we were  unable,  given  the  then  current  aircraft
industry market  conditions,  to sell  sufficient  aircraft at the sale prices
required by our then current Business Objectives.

      Failure to comply  with the Trust Note Sales  Goals may,  under  certain
circumstances,  constitute  an Event of  Default  under  the Deed of Charge if
such failure  continues for 30 days or more after written  notice  thereof has
been given to the Company or the  Security  Trustee by holders of at least 25%
of the  aggregate  Outstanding  Principal  Balance  of the  Notes of any class
which has been materially adversely affected by such failure.

      The Deed of Charge  further  provides  that if an Event of Default  were
to occur  and be  continuing  an  Enforcement  Notice  may only be  served  by
662/3%  or  more  of  the  aggregate  Outstanding  Principal  Balance  of  the
directing  class,  which  will be  Class A so  long as any  Class A Notes  are
outstanding.

      The Deed of Charge  provides  that the  failure to comply  with the June
2004 Trust Note Sales  Goal  gives the  Noteholders  the right to replace  the
Servicer at the  direction  of  Noteholders  representing  at least 66 2/3% of
the Outstanding  Principal  Balance of the Class A, Class B, Class C and Class
D Notes.  The Deed of Charge also provides  that,  subject to the  pre-emption
rights of the Class D and Class E  Noteholders,  to the  extent the Trust Note
Sales Goals are not complied  with prior to December 27, 2004,  the Company is
required  to  accept  any  Sale  Offer  for  the  sale of an  aircraft  if the
proposed  sale  price is at  least  equal to the  Class C Note  Target  Price.
During the time that the  Company  has not been in  compliance  with the Trust
Note Sales  Goals,  the Company has been  unable,  with the  exception  of the
sale of the A320-200  aircraft in December  2002,  to sell  aircraft at prices
at or  above  the  Class C Note  Target  Price.  However,  to the  extent  the
Company  has not  complied  with  the  Trust  Note  Sales  Goals,  on or after
December  27,  2004,   the  Company  may  be  required  to  sell  aircraft  in
accordance  with the Required  Sale  Provision.  See "Item 3 - Risk  Factors,"
"Item  4 -  Information  on the  Company  -  History  and  Development  of the
Company"  and  "Item 5 -  Operating  and  Financial  Review  and  Prospects  -
Liquidity and Capital Resources."

ITEM 14.    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE
         OF PROCEEDS

      None.

ITEM 15.    CONTROLS AND PROCEDURES

      (a)   Evaluation of Disclosure Controls and Procedures

            The Chairman of the Board of  Directors  of the Company  acting on
the   recommendation  of  the  Board  of  Directors  of  the  Company,   after
evaluating  the  effectiveness  of  the  Company's  "disclosure  controls  and
procedures"  (as defined in  Exchange  Act Rule  15d-15(e))  as of a date (the
"Evaluation  Date") as of the end of the period covered by this annual report,
has concluded  that as of the Evaluation  Date,  our  disclosure  controls and
procedures  were  effective  based on their  evaluation of these  controls and
procedures required by paragraph (b) of Exchange Act Rule 15d-15.

            The Company's  disclosure  controls and procedures are designed to
provide   reasonable   assurance  of  achieving  their  objectives,   and  the
Company's   Board  of  Directors   have  concluded  that  these  controls  and
procedures are effective at the "reasonable  assurance"  level.  However,  the
Company  believes  that a control  system,  no  matter  how well  designed  or
operated,  cannot  provide  absolute  assurance  that  the  objectives  of the
control  system  are met,  and that no  evaluation  of  controls  can  provide
absolute  assurance that various types of corporate  operational  risks within
a company,  particularly  one such as this that  relies  exclusively  on third
parties  for all  services,  will be  detected  in a  timely  manner.  See for
example  "Item 3 - Key  Information  - Risk Factors - As a result of incorrect
LIBOR  calculations by the Reference  Agent,  holders of Class A, Class B, and
Class C Notes were  overpaid on certain  payment  dates and holders of Class D
and Class E Notes were  underpaid by equivalent  amounts on such dates" and "-
The  Company  has  incurred  tax  liabilities  in 2003 and may  have  incurred
additional  tax  liabilities  in prior  years,  in  respect  of unpaid  United
States  withholding  taxes relating to the  investment of certain  collections
by the Cash Manager."

      (b)   Changes in Internal Controls

            There were no  changes in the  internal  controls  of the  Company
over  financial  reporting   identified  in  connection  with  the  evaluation
required by Exchange Act Rule 15d-15(d)  that occurred  during our last fiscal
year that have  materially  affected,  or are reasonably  likely to materially
affect, our internal control over financial reporting.

ITEM 16.

      Reserved.

Item 16A.   AUDIT COMMITTEE FINANCIAL EXPERT

            We  have  no  audit  committee  financial  expert  as  defined  in
Section 407 of the  Sarbanes-Oxley  Act of 2002. Our audit  committee  members
are financially  literate  professionals  whose  qualifications and experience
are  set  forth  above  under  "Item  6 -  Directors,  Senior  Management  and
Employees" and who  collectively  have the skills and  experience  required to
discharge  fully  the  duties  of the audit  committee.  Out  audit  committee
members  are  non-executive  directors  of  the  Company.  While  we  have  no
executive  management  of our  own,  we  have  access  to  independent  expert
advice,  including  that of the  administrative  agent,  for all our financial
reporting  services.  Since the Company is a  liquidating  trust whose purpose
is  to  service  the  Notes  through  the  leasing,  re-leasing  and  sale  of
aircraft,  we believe that the primary  interest and focus of our  Noteholders
is the amount of funds available to pay principal and interest on the Notes.

Item 16B.   CODE OF ETHICS

      The Company has adopted a code of ethics.  The code is  applicable  only
to the  Directors of the Company as the Company is a special  purpose  vehicle
that does not employ any principal  executive  officer or principal  financial
officer  or other  employees.  All  members of the Board of  Directors  of the
Company  are  non-executive.  A copy of the code of ethics for the  Company is
available upon request from the Administrative Agent.

Item 16C.   PRINCIPAL ACCOUNTANT'S FEES AND SERVICES

                        Year Ended June 30, 2004          Year Ended June 30, 2003
                                    % Approved by                     % Approved by
                                    Board / Audit                     Board / Audit
                      U.S.$           Committee          U.S.$          Committee
Audit Fees           108,312             100%            85,063           100%
Audit-Related Fees    60,849             100%            39,626           100%
Tax Fees               9,127             100%             5,763           100%
All Other Fees        18,255             100%            18,208           100%
                    -----------   -------------------   ---------   ------------------
                    -----------   -------------------   ---------   ------------------
Total                196,544             100%           148,660           100%
                    ===========   ===================   =========   ==================


      The Audit  Committee of the Company,  established  in September 2002 and
which  consists  of the two  Independent  Directors  has  adopted  a policy of
pre-approving  all audit and  non-audit  services  provided  by the  Company's
Principal  Accountant.  Prior to the  establishment of the Audit Committee all
audit and non-audit fees were approved by the Board.

      Audit  related  fees in the table  above for the  years  ended  June 30,
2004 and 2003 relate to review of our annual report on Form 20-F.

      Tax fees in the table  above for the years  ended June 30, 2004 and 2003
relate to tax filing in Ireland.

      All Other Fees in the table  above for the year ended June 30,  2004 and
2003 relate to tax advice,  accounting  advice and  statutory  filings for our
subsidiaries.

Item 16D.   Exemption From the Listing Standards for Audit Committee

      Not applicable.

ITEM 16E.   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
            PURCHASERS

      None.

                                   PART III
ITEM 17.

      Not applicable

ITEM 18.    CONSOLIDATED FINANCIAL STATEMENTS

      See pages F-1 through F-21.

ITEM 19.    EXHIBITS

      8.    List of subsidiaries.

      31.   Rule 15d-14(a) Certification.

      32.   Section 1350 Certification.`

---

`CERTAIN DEFINITIONS AND TECHNICAL TERMS

"A300B4 - 200 aircraft" ...............     The Airbus  A300B4 - 200 aircraft  with
                                            serial  number  127  which  we  sold to
                                            Cebi Aviation S.A. on June 27, 2000.
"Administrative Agency Agreement"......     The   Administrative   and  Secretarial
                                            Services  Agreement,  dated  October 1,
                                            2003, between the Administrative  Agent
                                            and the  Company  pursuant to which the
                                            Administrative   Agent   maintains  the
                                            corporate   books   and   records   and
                                            provides    certain     administrative,
                                            secretarial  and other  services to the
                                            Company.
"Administrative Agent".................     Mourant & Co. Limited.
"ADs"..................................     Airworthiness directives.
"AISI".................................     Aircraft Information Services, Inc.
"Allegiant Air"........................     Allegiant Air, LLC.
"ALPS 94-1 Limited"....................     Aircraft        Lease         Portfolio
                                            Securitization 94-1 Limited.
"ALPS  Trust"..........................     The charitable  trust for whose benefit
                                            the  Nominees  hold 10 Ordinary  Shares
                                            of the Company.
"Avitas"...............................     Avitas, Inc.
"B747-283B Aircraft"...................     The  B747-283B   aircraft  with  serial
                                            number  22381  which  we sold to WFC on
                                            July 24, 1997.
"Babcock & Brown"......................     Babcock & Brown Limited.
"Batavia"..............................     PT Metro Batavia.
"Besleasing"...........................     Besleasing  Mobiliaria  - Sociedade  de
                                            Locacao Financeira S.A.
"BK"...................................     BK Associates, Inc.
"Business Day".........................     A day on  which  commercial  banks  and
                                            foreign    exchange    markets   settle
                                            payments  in U.S.  dollars  in  London,
                                            England and New York, New York.
"Business Objectives"..................     Shall  have the  meaning  set  forth on
                                            page 29.
"Cash Management Agreement"............     The Cash  Management  Agreement,  dated
                                            as of the  Closing  Date,  between  the
                                            Company and the Cash Manager,  pursuant
                                            to  which  the  Cash  Manager  provides
                                            certain cash management,  computational
                                            and  other  related   services  to  the
                                            Company.
"Cash Manager".........................     Deutsche  Bank Trust  Company  Americas
                                            (f/k/a Bankers Trust Company).
"China Southern".......................     China Southern Airlines.
"Class A Notes"........................     The  Company's  Class A Notes issued on
                                            the Closing Date.
"Class A Note Target Amount"..........      Shall  have the  meaning  set  forth in
                                            the Deed of Charge.
"Class A Note Target Price"............     Shall  have the  meaning  set  forth in
                                            the Deed of Charge.
"Class B Notes"........................     The  Company's  Class B Notes issued on
                                            the Closing Date.
"Class B Note Target Amount"..........      Shall  have the  meaning  set  forth in
                                            the Deed of Charge.
"Class B Note Target Price"............     Shall  have the  meaning  set  forth in
                                            the Deed of Charge.
"Class C Notes"........................     The  Company's  Class C Notes issued on
                                            the Closing Date.
"Class C Note Target Amount"...........     Shall  have the  meaning  set  forth in
                                            the Deed of Charge.
"Class C Note Target Price"............     Shall  have the  meaning  set  forth in
                                            the Deed of Charge.
"Class D Notes"........................     The  Company's  Class D Notes issued on
                                            the Closing Date.
"Class D Note Target Amount"..........      Shall  have the  meaning  set  forth in
                                            the Deed of Charge.
"Class D Note Target Price"............     Shall  have the  meaning  set  forth in
                                            the Deed of Charge.
"Class E Notes"........................     Collectively,  the  Class  E-1 Note and
                                            the Class E-2 Note.
"Class E-1 Note".......................     The Company's  Class E-1 Note issued on
                                            the Closing Date in a principal  amount
                                            of $82,918,150.
"Class E-2 Note".......................     The Company's  Class E-2 Note issued on
                                            the Closing Date in a principal  amount
                                            of $100.
"Closing Date".........................     The Closing Date of the  refinancing of
                                            the Company, June 27, 1996.
"Company"..............................     Aircraft        Lease         Portfolio
                                            Securitisation  92-1 Limited,  a public
                                            limited liability company  incorporated
                                            in Jersey,  together  with,  unless the
                                            context   otherwise    requires,    any
                                            subsidiaries thereof.
"Company Secretary"....................     Mourant & Co. Secretaries Limited
"debis AirFinance".....................     debis AirFinance  Ireland plc (formerly
                                            known as AerFi Group plc and,  prior to
                                            that,  GPA Group  plc),  together  with
                                            its consolidated subsidiaries.

"Deed of Charge".......................     The  Deed  of  Charge,  Assignment  and
                                            Priorities,  dated  as of  the  Closing
                                            Date,  among  inter  alia the  Company,
                                            Deutsche    Trustee   Company   Limited
                                            (f/k/a    Bankers    Trustee    Company
                                            Limited) as security trustee,  Deutsche
                                            Bank  Trust  Company  Americas  (f/k/a/
                                            Bankers   Trust   Company),   the  Cash
                                            Manager,  the  Servicer,  the holder of
                                            the  Class E-1 Note and  certain  other
                                            persons to secure,  among other things,
                                            the Notes.
"DTC"..................................     The Depository Trust Company
"Enforcement Notice"...................     A notice  given by  holders of Notes of
                                            a class  representing  at least  662/3%
                                            in  aggregate   Outstanding   Principal
                                            Balance  of Notes of that  class to the
                                            Company,  with a copy  to the  Security
                                            Trustee,     declaring    all    unpaid
                                            principal  of and interest on the Notes
                                            of such  class  to be  immediately  due
                                            and payable.
"EU"...................................     The European Union.
"Eurocontrol"..........................     European  Organisation  for the  Safety
                                            of  Air  Navigation,   the  centralized
                                            European  agency  established  in  1960
                                            pursuant     to    an     international
                                            convention  relating to cooperation for
                                            the safety of air navigation.
"EU Savings Tax Directive".............     Shall  have the  meaning  set  forth on
                                            page 68.
"Event of Default".....................     An event of  default  with  respect  to
                                            the Notes under the Deed of Charge.

"Exchange Act Rule"....................     A rule from the  Rules and  Regulations
                                            promulgated  under the U.S.  Securities
                                            Exchange Act of 1934, as amended.
"FAA"..................................     The     U.S.      Federal      Aviation
                                            Administration.
"FASB".................................     The  Financial   Accounting   Standards
                                            Board.
"Financial Consultant".................     Deutsche  Bank Trust  Company  Americas
                                            (f/k/a Bankers Trust Company).
"First Choice Airways".................     First  Choice  Airways  Limited  (f/k/a
                                            Air 2000 Limited).
"Fokker 100 aircraft"..................     The Fokker  100  aircraft  with  serial
                                            number   11287   which   we   sold   to
                                            Besleasing on July 2, 1999.

"GPA"..................................     GPA  Group  plc  (renamed  AerFi  Group
                                            plc,  effective  November  23, 1998 and
                                            renamed debis  AirFinance  Ireland plc,
                                            effective December 20, 2000),  together
                                            with its consolidated subsidiaries.
"IATA".................................     International       Air       Transport
                                            Association.
"ICAO".................................     International       Civil      Aviation
                                            Organization.
"Independent Appraisers"...............     AISI, Avitas and BK.
"Independent Directors"................     Directors   of  the   Company  who  are
                                            independent  of  holders of the Class E
                                            Notes.
"Initial Appraised Value"..............     The  average  appraised  base  value of
                                            each of the 14  aircraft  owned  by the
                                            Company  on the  Closing  Date (or,  in
                                            the case of the WFC Aircraft,  acquired
                                            by the Company  subsequent  thereto) as
                                            of June 3,  1996  obtained  from  AISI,
                                            Avitas  and  BK,  and as set  forth  on
                                            Exhibit V of the Deed of Charge.
"Insurance Advisor"....................     Aon Group Limited.
"Istanbul".............................     Istanbul Hava Yollari A.S.
"JAA"..................................     The   European   Joint    Airworthiness
                                            Authorities.
"Jersey Tax Counsel"...................     Mourant du Feu & Jeune.
"LIBOR"................................     London   Interbank   Offered  Rate  for
                                            deposits in U.S.  dollars as determined
                                            in  accordance  with  the  terms of the
                                            relevant Note.
"Liquidity Reserve Amount".............     Shall  have the  meaning  set  forth on
                                            page 51.
"Maintenance Expenses".................     Shall  having the  meaning set forth on
                                            page 5.
"Meridiana"............................     Meridiana S.p.A.
"Nominees".............................     Collectively,  Juris Limited and Lively
                                            Limited,  the  nominees for the trustee
                                            of the ALPS Trust.
"Notes"................................     The  Company's  Class A Notes,  Class B
                                            Notes,  Class  C  Notes,  Class D Notes
                                            and  Class  E  Notes.  The  Notes  have
                                            been  issued  pursuant  to the  Deed of
                                            Charge.  Holders  of each  class of the
                                            Pass  Through  Certificates,  Series  A
                                            referenced  on the  cover  page of this
                                            Form  20-F  derive   their   rights  to
                                            payments  from the  payments due on the
                                            related    class    of    the    Notes.
                                            Therefore,     all     references    to
                                            noteholders,   Notes   and  any   class
                                            thereof   throughout   this  Form  20-F
                                            should be read to apply  equally to the
                                            certificateholders,   certificates  and
                                            any class thereof, respectively.
"Note Target Price"....................     Shall  have the  meaning  set  forth in
                                            the Deed of Charge.
"Old Class A Notes"....................     The   $208,400,000   Secured  Class  A1
                                            Floating  Rate  Notes  due  1997,   the
                                            $104,200,000  Secured Class A2 Floating
                                            Rate    Notes    due   1997   and   the
                                            $70,400,000  Secured  Class A3 Floating
                                            Rate  Notes  due  1997  issued  by  the
                                            Company.
"Old Class B Notes"....................     The $104,000,000  Secured Class B Fixed
                                            Rate  Notes  due  1997  issued  by  the
                                            Company.
"Old Class M Notes"....................     The   $34,000,000   Secured   Class   M
                                            Floating  Rate Notes due 1997 issued by
                                            the Company.
"Old Notes"............................     The Old  Class A,  Old  Class B and Old
                                            Class M Notes.
"Old SM Loan"..........................     The   $78,150,000   loan  made  to  the
                                            Company pursuant to the  Supermezzanine
                                            Loan  Agreement,  dated  June  16,1992,
                                            among the Company,  Citibank,  N.A. and
                                            Credit Lyonnais,  originally payable in
                                            1997.
"Ordinary Shares"......................     The   Company's    15,000    authorized
                                            ordinary  shares,   par  value  $1  per
                                            share of which 10 have been issued.
"Outstanding Principal Balance"........     With  respect  to any of the  Notes  at
                                            any  time,  the  outstanding  principal
                                            balance  as of the  Closing  Date  less
                                            all amounts  distributed  to the holder
                                            thereof  and   allocable  to  principal
                                            thereon on previous Payment Dates.
"Payment Date".........................     The  15th  day of each  month  (or,  if
                                            such  day is not a  Business  Day,  the
                                            next succeeding Business Day).
"PCAOB"................................     The  U.S.  Public  Company   Accounting
                                            Oversight Board.
"Prior Debt"...........................     The Old Notes and the Old SM Loan.
"Prospectus"...........................     The prospectus  related to the Class A,
                                            Class  B,  Class C and  Class D  Notes,
                                            dated January 27, 1997.
"Reference Agency Agreement"...........     The Reference Agency  Agreement,  dated
                                            as  of  the  Closing  Date,  among  the
                                            Company,   the  Cash  Manager  and  the
                                            Reference Agent.
"Reference Agent"......................     Deutsche  Bank Trust  Company  Americas
                                            (f/k/a Bankers Trust Company).
"Required Sale Provision"..............     Shall  have the  meaning  set  forth on
                                            page 8.
"RPK"..................................     Revenue Passenger Kilometers.
"Sale Offer"...........................     Shall  have the  meaning  set  forth in
                                            the Deed of Charge.
"SARS".................................     Severe Acute Respiratory Syndrome.
"Security Trustee".....................     Deutsche    Trustee   Company   Limited
                                            (f/k/a    Bankers    Trustee    Company
                                            Limited).
"Senior Trust Notes"...................     The Class A, Class B and Class C Notes.
"Servicer".............................     Babcock  &  Brown  or  any  replacement
                                            servicer  appointed in accordance  with
                                            the terms of the Servicing Agreement.
"Servicing Agreement"..................     The  Servicing  Agreement,  dated as of
                                            the Closing  Date,  between the Company
                                            and  Babcock & Brown  pursuant to which
                                            Babcock & Brown  provides,  among other
                                            things,   certain  management  services
                                            with  respect to the leases and certain
                                            sales  and  marketing  and   re-leasing
                                            services  with  respect to the aircraft
                                            to the Company.
"SFAS 144".............................     Shall  have the  meaning  set  forth on
                                            page 17.
"Skynet"...............................     Skynet Airlines Ltd.
"Stage 3 Aircraft".....................     An  aircraft  type  that  holds  or  is
                                            capable of holding a noise  certificate
                                            issued  under  Chapter  3 of  Volume 1,
                                            Part  II of  Annex  16 of  the  Chicago
                                            Convention  or has been shown to comply
                                            with  Stage 3 Noise  Levels  set out in
                                            Section  36.5 of  Appendix C of Part 36
                                            of the United States  Federal  Aviation
                                            Regulations.
"Transaero"............................     Transaero Airlines.
"Travel Service".......................     Travel Service a.s.
"Trustee"..............................     Deutsche  Bank Trust  Company  Americas
                                            (f/k/a Bankers Trust Company).
"Trust Note Sales Goals"...............     The  Company   must  approve  for  sale
                                            (subject  to the rights of the  holders
                                            of certain  Notes to  approve  sales of
                                            aircraft   as  set   forth  in   Clause
                                            10.10(b)(ii)  of the  Deed  of  Charge)
                                            sufficient  aircraft  to meet the Trust
                                            Note  Sales   Goals.   The  Trust  Note
                                            Sales  Goals   require  that   aircraft
                                            having an  Initial  Appraised  Value of
                                            at  least  (i)  $65,000,000  be sold by
                                            the fifth  anniversary  of the  Closing
                                            Date, (ii)  $130,000,000 be sold by the
                                            sixth  anniversary of the Closing Date,
                                            (iii)   $200,000,000  be  sold  by  the
                                            seventh   anniversary  of  the  Closing
                                            Date and (iv)  $454,950,000  be sold by
                                            the eighth  anniversary  of the Closing
                                            Date.  The  Deed  of  Charge   provides
                                            that if the  Company  fails to meet any
                                            of  the  Trust  Note  Sales  Goals  set
                                            forth  in  clause  (i),  (ii) or  (iii)
                                            above,  then,  at the  direction of the
                                            holders  of the Class A, Class B, Class
                                            C and  Class  D Notes  representing  in
                                            the  aggregate  75% of the  Outstanding
                                            Principal  Balance of such  Notes,  the
                                            Company   shall  replace  the  Servicer
                                            under the Servicing  Agreement  and, if
                                            the  Company  fails to meet  the  Trust
                                            Note  Sales  Goal set  forth in  clause
                                            (iv) above,  then,  at the direction of
                                            the  holders  of the Class A,  Class B,
                                            Class C and Class D Notes  representing
                                            in  the   aggregate   66  2/3%  of  the
                                            Outstanding  Principal  Balance of such
                                            Notes,  the Company  shall  replace the
                                            Servicer     under    the     Servicing
                                            Agreement.  The Deed of Charge provides
                                            that  on or  after  the  fifth,  sixth,
                                            seventh  and  eighth  anniversaries  of
                                            the  Closing  Date,  if and so  long as
                                            the aggregate  Initial  Appraised Value
                                            of  the  aircraft  then  owned  by  the
                                            Company      exceeds      $389,950,000,
                                            $324,950,000,   $254,950,000   and  $0,
                                            respectively,  the Company  must accept
                                            any Sale  Offer in  respect of the sale
                                            of an  aircraft  if the  proposed  sale
                                            price is at least  equal to the Class C
                                            Note  Target  Price (as  defined in the
                                            Deed of  Charge).  On or after the date
                                            that is  eight  years  and  six  months
                                            following   the   Closing   Date,   the
                                            Company  must  accept any Sale Offer in
                                            respect of the sale of an  aircraft  if
                                            the  proposed  sale  price  is at least
                                            equal to the Note Target  Price for the
                                            then most senior  outstanding  class of
                                            Notes.
"U.S. GAAP"............................     Generally      accepted      accounting
                                            principles  applicable  in  the  United
                                            States.
"WFC"..................................     Whirlpool Financial Corporation.
"WFC Aircraft".........................     The  Boeing  767-300ER   aircraft  with
                                            manufacturer's   serial   number  24952
                                            sold by WFC to the  Company on November
                                            27, 1996.`

---

`SIGNATURES

      Pursuant to the  requirements  of Section 12 of the Securities  Exchange
Act of 1934,  the registrant  certifies that it meets all of the  requirements
for filing on Form 20-F and has duly caused  this  annual  report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                    AIRCRAFT LEASE PORTFOLIO
                                    SECURITISATION 92-1 LIMITED



                                    By:  /s/ Frederick W. Bradley, Jr. 
                                         Name:  Frederick W. Bradley, Jr.
                                         Title:   Chairman of the Board
Dated: October 1, 2004`

---

`Index to Exhibits
Exhibit No.      Description

8.               List of subsidiaries.

31.              Rule 15d-14(a) Certification.

32.              Section 1350 Certification`

---

`EXHIBIT 8

                             LIST OF SUBSIDIARIES

      1.....Carotene Limited - incorporated in Ireland.

      2.....ALPS 92-1 UK Limited - incorporated in England and Wales.

      3.....ALPS 92-1 France SARL - incorporated in France.`

---

`EXHIBIT 31



      I,  Frederick  W.  Bradley,  Jr., the Chairman of the Board of Directors
of Aircraft  Lease  Portfolio  Securitisation  92-1 Limited  (the  "Company"),
certify that:

      (1)   I have reviewed this annual report on Form 20-F of the Company;

      (2)   Based on my  knowledge,  this  annual  report does not contain any
            untrue  statement  of a material  fact or omit to state a material
            fact  necessary  to make  the  statements  made,  in  light of the
            circumstances   under  which  such   statements   were  made,  not
            misleading  with  respect  to the period  covered  by this  annual
            report;

      (3)   Based  on  my  knowledge,  the  financial  statements,  and  other
            financial  information  included  in this  annual  report,  fairly
            present  in  all  material   respects  the  financial   condition,
            results of  operations  and  cashflows  of the  Company as of, and
            for, the periods presented in this annual report;

      (4)   I am  responsible  for  establishing  and  maintaining  disclosure
            controls  and   procedures   (as  defined  in  Exchange  Act  Rule
            15d-15(e)) for the Company and I have:

            (a)   designed  such  disclosure   controls  and  procedures,   or
                  caused  such  disclosure   controls  and  procedures  to  be
                  designed  under my  supervision,  to  ensure  that  material
                  information   relating  to  the   Company,   including   its
                  consolidated  subsidiaries,  is made  known to the  Board of
                  Directors of the Company by others  within  those  entities,
                  particularly  during the period in which this annual  report
                  is being prepared;

            (b)   Reserved.

            (c)   evaluated  the  effectiveness  of the  Company's  disclosure
                  controls  and  procedures  and  presented  in this report my
                  conclusions   about  the  effectiveness  of  the  disclosure
                  controls  and  procedures,  as of  the  end  of  the  period
                  covered by this report based on such evaluation; and

            (d)   disclosed  in  this  report  any  change  in  the  Company's
                  internal  control over  financial  reporting  that  occurred
                  during the period  covered by this  annual  report  that has
                  materially  affected,  or is reasonable likely to materially
                  affect,   the  Company's  internal  control  over  financial
                  reporting; and

      (5)   I have disclosed,  based on my most recent  evaluation of internal
            control over financial  reporting,  to the auditors of the Company
            and the audit committee of the Board of Directors of the Company:

            (a)   all  significant  deficiencies  and material  weaknesses  in
                  the design or operation of internal  control over  financial
                  reporting  which are reasonably  likely to adversely  affect
                  the  Company's  ability to record,  process,  summarize  and
                  report financial information; and

            (b)   any  fraud,   whether  or  not   material,   that   involves
                  management or other  employees  who have a significant  role
                  in  the   Company's   internal   controls   over   financial
                  reporting.



                                          Date:  October 1, 2004

                                          By:   /s/ Frederick W. Bradley, Jr.
                                                Frederick W. Bradley, Jr.
                                                Chairman of the Board (1)

--------
1 The Company is a special  purpose  vehicle  that does not employ and has not
employed  an  individual  as a chief  executive  officer  or  chief  financial
officer  and  does  not  have  and  has not had  any  employees  or  executive
officers  since its  inception.  For all  executive  management  functions the
Company   retains  and  relies  upon  its  third  party   aircraft   Servicer,
Administrative  Agent and Cash Manager.  These third party  service  providers
are required to perform  these  executive  management  functions in accordance
with  the  requirements  of the  Servicing  Agreement,  Administrative  Agency
Agreement and Cash  Management  Agreement,  respectively.  With respect to the
information  contained in the annual  report,  all  information  regarding the
aircraft,  the leases and the lessees is provided by the Servicer  pursuant to
the Servicing  Agreement.  The Cash Manager  calculates  monthly  payments and
makes  all  other  calculations  required  by the Cash  Management  Agreement.
Pursuant to the  Administrative  Agency Agreement,  the  Administrative  Agent
uses the  information  provided by the Servicer and the Cash Manager and other
information  the  Administrative  Agent  acquires  in the  performance  of its
services  to the  Company,  to maintain  financial  records of the Company and
prepare financial reports including the annual financial statements.

All  members  of  the  Board  of  Directors  of  the  Company,  including  the
Chairman, are non-executives.`

---

`EXHIBIT 32



      I, Frederick W. Bradley, Jr., the Chairman of the Board of Directors
of Aircraft Lease Portfolio Securitisation 92-1 Limited (the "Company"),
certify that:

      1.    this annual report on Form 20-F fully complies with the
requirements of Section 15(d) of the Securities Exchange Act of 1934, as
amended; and

      2.    the information contained in this annual report fairly presents,
in all material respects, the financial condition and results of operations
of the Company.



                                          Date:  October 1, 2004

                                          By:   /s/ Frederick W. Bradley, Jr.
                                                Frederick W. Bradley, Jr.
                                                Chairman of the Board(1)



--------
1 The Company is a special  purpose  vehicle  that does not employ and has not
employed  an  individual  as a chief  executive  officer  or  chief  financial
officer  and  does  not  have  and  has not had  any  employees  or  executive
officers  since its  inception.  For all  executive  management  functions the
Company   retains  and  relies  upon  its  third  party   aircraft   Servicer,
Administrative  Agent and Cash Manager.  These third party  service  providers
are required to perform  these  executive  management  functions in accordance
with  the  requirements  of the  Servicing  Agreement,  Administrative  Agency
Agreement and Cash  Management  Agreement,  respectively.  With respect to the
information  contained in the annual  report,  all  information  regarding the
aircraft,  the leases and the lessees is provided by the Servicer  pursuant to
the Servicing  Agreement.  The Cash Manager  calculates  monthly  payments and
makes  all  other  calculations  required  by the Cash  Management  Agreement.
Pursuant to the  Administrative  Agency Agreement,  the  Administrative  Agent
uses the  information  provided by the Servicer and the Cash Manager and other
information  the  Administrative  Agent  acquires  in the  performance  of its
services  to the  Company,  to maintain  financial  records of the Company and
prepare financial reports including the annual financial statements.

All members of the Board of Directors of the Company, including the
Chairman, are non-executives.`