As filed with the Securities and Exchange Commission on December 24, 2003


                                                       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, 2003

|_|  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
                                     ---           ---

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


<PAGE>


<TABLE>
<CAPTION>

                                             TABLE OF CONTENTS
                                                                                                      Page
                                                                                                      ----
<S>                                                                                                   <C>
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............................................                26
                     A.    History and Development of the Company.......................                26
                     B.    Business Overview............................................                28
                     C.    Organizational Structure.....................................                37
                     D.    Property, Plants and Equipment...............................                37

         Item 5.  Operating and Financial Review and Prospects..........................                38
                     A.    Operating Results............................................                38
                     B.    Liquidity and Capital Resources..............................                46
                     C.    Research and Development, Patents and Licenses...............    Not applicable
                     D.    Trend Information............................................                50
                     E.    Off-Balance Sheet Arrangements...............................                51
                     F.    Tabular Disclosure of Contractual Obligations................                51

         Item 6.  Directors, Senior Management and Employees............................                52
                     A.    Directors and Senior Management..............................                52
                     B.    Compensation.................................................                57
                     C.    Board Practices..............................................                58
                     D.    Employees....................................................                58
                     E.    Share Ownership..............................................                58

         Item 7.  Major Shareholders and Related Party Transactions.....................                58
                     A.    Major Shareholders...........................................                58
                     B.    Related Party Transactions...................................                59
                     C.    Interests of Experts and Counsel.............................    Not applicable

         Item 8.  Financial Information.................................................                59
                     A.    Consolidated Statements and Other Financial Information......59
                     B.    Significant Changes..........................................                59

</TABLE>

                                                    I
<PAGE>


<TABLE>
<CAPTION>
                                                                                                      Page
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<S>      <C>                                                                               <C>
         Item 9.  The Listing...........................................................                59
                     A.    Offer and Listing Details....................................                59
                     B.    Plan of Distribution.........................................    Not applicable
                     C.    Markets......................................................                60
                     D.    Selling Shareholders.........................................    Not applicable
                     E.    Dilution.....................................................    Not applicable
                     F.    Expenses of the Issue........................................    Not applicable

         Item 10.  Additional Information...............................................                60
                     A.    Share Capital................................................    Not applicable
                     B.    Memorandum and Articles of Association.......................                60
                     C.    Material Contracts...........................................                64
                     D.    Exchange Controls............................................                64
                     E.    Taxation.....................................................                64
                     F.    Dividends and Paying Agents..................................    Not applicable
                     G.    Statement by Experts.........................................    Not applicable
                     H.    Documents on Display.........................................                66
                     I.    Subsidiary Information.......................................    Not applicable

         Item 11.  Quantitative and Qualitative Disclosures about Market Risk...........                66

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

Part II  Item 13.  Defaults, Dividend  Arrearages and Delinquencies.....................                67

         Item 14.  Material Modifications to the rights of Security Holders
                     and use of Proceeds................................................                69

         Item 15.  Controls and Procedures..............................................                69

         Item 16.          .............................................................    Not applicable

         Item 16A.   Audit Committee Financial Expert...................................    Not applicable

         Item 16B.   Code of Ethics.....................................................    Not applicable

         Item 16C.   Principal Accountant Fees and Services.............................                70

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

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

         Item 18.  Financial Statements.................................................                71

         Item 19.  Exhibits.............................................................                71

         Certain Definitions and Technical Terms........................................                72

</TABLE>


                                                    II

<PAGE>







                                               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 72 to 78 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.


                                       1
<PAGE>


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,
1999 through 2003 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 the Consolidated  Financial  Statements
and notes thereto and "Item 5 - Operating  and Financial  Review and Prospects -
Operating Results."

         Selected Consolidated Financial Data and Operations Information

<TABLE>
<CAPTION>

                                                                 FISCAL YEAR ENDED (1)
                                          -------------------------------------------------------------------
                                           June 30,       June 30,      June 20,        June 30,      June 30
                                               2003           2002          2001           2000          1999
                                          ---------       --------     ---------    -----------    -----------
<S>                                       <C>             <C>          <C>          <C>            <C>
OPERATIONS STATEMENT DATA:
Lease Revenue - Aircraft Leasing            $19,758        $32,605       $37,948        $43,087       $47,373
Gain/(Loss) on sale of Aircraft              (1,152)             -             -            284        (1,905)
                                           ---------      --------    ----------    -----------   -----------
Net Revenue                                  18,606         32,605        37,948         43,371        45,468
Net Expenses                                (49,266)       (63,370)      (90,984)       (52,680)      (52,993)
                                            --------       --------   -----------   -----------   -----------
Loss before taxes                           (30,660)       (30,765)      (53,036)        (9,309)       (7,525)
Taxes                                          (225)           (24)          (20)           (20)          (20)
Dividend                                          -              -             -              -             -
                                           ---------      --------    ----------     ----------    ----------
Net Loss                                   $(30,885)      $(30,789)     $(53,056)       $(9,329)      $(7,545)
                                           ---------      --------    ----------     ----------    ----------

BALANCE SHEET DATA:
Total assets                               $192,284       $254,987      $291,244       $340,876      $380,849
Total liabilities                          $356,455       $388,273      $393,741       $390,317      $420,961
Shareholders' deficit                     $(164,171)     $(133,286)    $(102,497)      ($49,441)     $(40,112)
OTHER DATA
Aircraft owned at period end                      9             11            11             11            13

</TABLE>

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

B.   Capitalization and Indebtedness

     Not applicable.


                                       2
<PAGE>

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

         Continued  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.

         In the fiscal year ended June 30, 2003 and in the subsequent  period to
date, we have  continued to suffer from a very  difficult  business  environment
given global  economic  conditions as  exacerbated  by the terrorist  attacks of
September  11,  2001,  the  military  action  of the  U.S.  and  its  allies  in
Afghanistan, the terrorist attacks in Bali and Saudi Arabia, the war in Iraq and
the outbreak of Severe Acute Respiratory  Syndrome ("SARS").  Although the World
Health  Organization   recently  removed  the  last  remaining  negative  travel
recommendations  related to SARS, some scientists have suggested the possibility
that new cases of SARS may emerge during the coming winter season. Each of these
events highlighted the deteriorating  business fundamentals in the industry that
have been further weakened by passengers' fears and economic  recession.  Losses
of $10.54  billion were  estimated for the global  airline  industry in calendar
year 2002, the second largest annual loss in aviation history.

         The impact of these events has been seen in many airlines cutting their
flight  schedules  with many  taking the  opportunity  to retire  aircraft  from
service.  Industry  experts  indicate  that  the  percentage  of  western  built
commercial  jet aircraft  (excluding  current  production)  "on-the-ground"  and
available  for lease or sale has  increased  from  approximately  3% in the late
1990's to approximately 6% in 2003. In addition, many carriers chose to postpone
delivery of new aircraft  purchases on which they had made firm  commitments and
canceled orders for many on which they had options. Some carriers have filed for
bankruptcy  (including  Air Canada,  one of our  largest  lessees as measured by
annual lease  revenue) or  consolidated,  while  others,  including  many of our
lessees, have suffered large losses or face severe financial difficulties. There
has been a significant  increase of aircraft on the market available for sale or
lease (especially older technology and less fuel-efficient aircraft or models no
longer in  production),  increasing  pressure on the  rentals  and sales  prices
offered. The depressed aircraft market has made it difficult to sell aircraft at
reasonable  prices.  Lease rates have also been  suffering  from the increase in
availability of aircraft and this reduction in aircraft values.  As a result, we
have  experienced  a  significant  decline  in lease  rates upon  re-leasing  or
extensions of leases,  requests from certain lessees to restructure their leases
and an increasing number of "power-by-the-hour"  leases in which lease rates are
based on the number of hours the lessee uses the aircraft. Our business has been
adversely affected by these negative developments in the industry,  particularly
in  respect  of  new   aircraft   leases   which  have   mostly  been  based  on
"power-by-the-hour"  terms and the  increased  negotiating  power by lessees to,
among other things, require that certain aircraft maintenance and overhaul costs
be paid by the  Company.  As a result of the



                                       3
<PAGE>

loss of investor  appetite and the  difficulty  in obtaining  financing  for the
purchase of aircraft,  there are few buyers of aircraft on  operating  lease and
the  resulting  illiquidity  in the market has caused sale prices of aircraft to
further  decline.  There have been few aircraft  sale  transactions  that we are
aware of in the past twelve months and the difficulty in selling 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 most 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,  and we believe
the  Company  will not be able to comply with the Trust Note Sales Goal 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. At various  times  during  fiscal year 2003,
certain target  principal  payments  scheduled to be paid to holders of Class A,
Class B, Class C and Class D Notes,  certain interest payments due to holders of
Class A, Class B, Class C and Class D Notes and all interest payments  scheduled
to be paid to holders of Class E Notes were in arrears.  As at the end of fiscal
year 2003,  these  arrears  consisted  of $2.042  million of Class A Note Target
Amount, $0.565 million of Class A Note step-up interest, $0.220 million of Class
B Note step-up  interest,  $4.304 million of Class C Note Target Amount,  $0.206
million of Class C Note step-up interest,  $5.177 million of Class D Note Target
Amount, $0.326 million of Class D Note step-up interest, $0.504 million of Class
D Note default  interest,  $2.805  million of Class D Note  interest and $45.105
million of Class E Note  interest.  As of December 15, 2003,  unpaid  amounts of
target principal  payments and interest  consisted of $30.589 million of Class A
Note Target  Amount,  $0.741  million of Class A Note step-up  interest,  $0.305
million of Class B Note step-up interest,  $4.304 million of Class C Note Target
Amount, $0.290 million of Class C Note step-up interest, $5.177 million of Class
D Note Target Amount,  $0.661 million of Class D Note default  interest,  $0.482
million  of  Class D Note  step-up  interest,  $4.612  million  of  Class D Note
interest and $48.560 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


                                       4
<PAGE>


cashflow,  particularly  as we are  required to continue to sell our aircraft in
order to meet the Trust  Note  Sales  Goals set out in the Deed of Charge and as
discussed below.

         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 proceeds 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 of the principal of the Class
B Notes or pay any further step-up interest on the Class A, B, C or D Notes.

         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 2003,  Standard & Poor's  announced on November 15, 2002
that it was  lowering its ratings on each class of the Notes rated by Standard &
Poor's and removing them from credit watch. On March 25, 2003, Standard & Poor's
announced  that it was  placing  each  class of the Notes on credit  watch  with
negative implications.  On June 5, 2003, Standard & Poor's again downgraded each
class of the Notes  and also  removed  them  from  credit  watch  with  negative
implications but at the same time placed each class on negative outlook.

         In fiscal year 2003, Moody's announced on November 15, 2002 that it was
lowering its ratings on each class of the Notes rated by Moody's.  Subsequent to
the fiscal year end,  Moody's  announced  on October 1, 2003 that it was further
reducing the ratings on the Class A and Class B Notes.

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

                               Moody's                Standard & Poor's
                               ---------              ---------------------
Class A                        A3                     BBB-/Outlook negative
Class B                        Ba3                    B/Outlook negative
Class C                        Caa1                   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.

         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 any  further  principal  of the Class D and Class E Notes,
repay any further  principal  of the Class C Notes or to repay the  principal of
the Class B Notes in full.


                                       5
<PAGE>

         The September 11, 2001  terrorist  attacks on the United States as well
as the military action of the U.S. and its allies in Afghanistan,  the terrorist
attacks in Bali and Saudi Arabia,  the war in Iraq and the outbreak of SARS have
each had a significant adverse effect on the aircraft industry in general and on
the Company.  These events  combined  with the slowdown in the airline  industry
prior to September 11, 2001 have negatively  impacted  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
interest  on or repay any  further  principal  of the Class D and Class E Notes,
repay any further  principal  of the Class C Notes or to repay the  principal of
the Class B Notes in full.

         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 Goal for June 2003
and we believe we will not be able to comply  with the Trust Note Sales Goal for
June 2004.

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


                Aircraft to be Sold
 (measured by Initial Appraised Value as of June 3,    Date by which Sales Goals
                       1996)                              are 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
used aircraft has been extremely poor and it is not clear if and when the market
will improve in a meaningful way. Nevertheless,  in order to meet the Trust Note
Sales Goals,  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.


                                       6
<PAGE>

         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 would need to
sell all of our aircraft to comply with the June 2004 Trust Note Sales Goal.  At
our direction,  the Servicer has been marketing each of our aircraft for sale in
order to meet the ongoing Trust Note Sales Goals.  However,  the current  market
for sale of used aircraft is extremely  poor and it is not clear if and when the
market will improve.

         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 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 as
we were unable,  given the current aircraft industry market conditions,  to sell
sufficient  aircraft  at  the  sale  prices  required  by our  current  Business
Objectives.  Given the  continuing  depressed  market for aircraft sales and the
requirement  to  achieve  sale  prices  consistent  with  our  current  Business
Objectives,  we believe  the  Company  will not be able to comply with the Trust
Note Sales Goal for June 27, 2004.

         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 Trust
Note Sales Goals gives the  Noteholders the right to replace the Servicer at the
direction of Noteholders  representing at least 75% of the aggregate 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.

         Our Business  Objectives  will change on June 27, 2004 in a way that is
potentially adverse to 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


                                       7
<PAGE>


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  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  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  will be 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 have  analyzed and will  continue
through June 26, 2004 to analyze each potential sale or lease of aircraft with a
view  toward  maximizing  cashflow  to the  holders of the Senior  Trust  Notes.
However,  beginning on June 27, 2004 we will be 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.

         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  recently  informed us 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  over  payments 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 is  proposing  that it will contact the holders of Class A,
Class B and Class C Notes to request that the incorrect overpayments be returned
so that the Trustee can properly allocate such funds to the appropriate  holders
of Class D and Class E Notes. We can offer no assurance that the Trustee will be
successful in identifying  precisely which holders of Class A, Class B and Class
C Notes received the overpayments, whether, even if identified, the Trustee will
be  successful  in having these funds  returned or how long it will take for the
Trustee to actually complete this process.


                                       8
<PAGE>

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 any further
principal of the Class D and Class E Notes,  repay any further  principal of the
Class C Notes or to repay the principal of the Class B Notes in full.

         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) our ability to sell the aircraft at the times and for the amounts
contemplated  in the Prospectus 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 to re-lease the aircraft on the scheduled  re-lease date with
respect to such aircraft at the rates  contemplated in the Prospectus;  (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
impacted  by the current  depression  in the airline  industry,  accentuated  by
reductions  in travel  following  increased  world wide  terrorist  action,  the
ongoing threat of such action,  the threat of continued  military  action in the
Middle  East and  elsewhere  and the  outbreak  of SARS and the threat of future
similar  outbreaks.  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 any further principal of the Class D and Class E Notes,  repay any further
principal of the Class C Notes or to repay the principal of the Class B Notes in
full. 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."

         The Deed of Charge  requirement  that the  Company  sell  aircraft of a
certain value by specific dates reduces 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 are able to sell aircraft in anticipation of the legal
final maturity of the Notes in June 2006, 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.  Many 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  certain  maintenance,  overhaul  and AD  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. As the size of our fleet
decreases and lease revenue decreases proportionately, these maintenance, AD and
other expenses increase as a percentage of our monthly revenue and, because they
are  required to be paid in advance of  principal  and


                                       9
<PAGE>

interest on the Notes in accordance with the Deed of Charge, these expenses have
a significant impact on the funds available to pay principal and interest on the
Notes and may at times prevent us from making such payments on the Notes. 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  is  further  exacerbated  by  the  current  weak
environment  in the aircraft  industry  because there is currently  little to no
economically  viable market for the sale of most of our aircraft which forces us
to sell 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, we determined the expected final payment dates for
the Notes  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 September 11, 2001  terrorist  attacks on the United States as well
as the military action of the U.S. and its allies in Afghanistan,  the terrorist
attacks in Bali and Saudi Arabia,  the war in Iraq and the outbreak of SARS have
had a significant  adverse effect on the aircraft industry in general and on the
Company.  These events combined with the slowdown in the airline  industry prior
to September 11, 2001 have negatively impacted projected rental amounts and sale
proceeds  through to the final maturity date of the Notes.  Current  projections
indicate that there will not be sufficient  proceeds to pay any further  step-up
interest on the Notes,  pay any further  interest on or principal of the Class D
and Class E Notes,  repay any further principal of the Class C Notes or to repay
the principal of the Class B Notes in full.

         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 ADs and  reimbursement  of maintenance and


                                       10
<PAGE>

overhaul costs 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  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 and ADs 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  principal
in full to all noteholders.

         The  pre-existing  downturn  in the  world  economic  climate  and  its
negative  impact 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  terrorist  attacks in Bali and Saudi
Arabia,  the war in  Iraq,  the  outbreak  of SARS  and the  threat  of  further
terrorist  attacks.  The drop in  passenger  demand has resulted in reduction in
flight  schedules and a consequent  oversupply of aircraft  (including  aircraft
available for lease). We are experiencing  declines in lease rates and a fall in
the realizable  value for aircraft in open market sales.  In addition,  airlines
are seeking to agree reduced rentals in exchange for extended lease terms.  Many
airlines have had financial difficulties as a result of the current environment,
resulting in the bankruptcy of two major European airlines (Sabena and Swissair)
and  Chapter  11, or  similar,  bankruptcy  protection  for a number of airlines
including US Airways, United Airlines, Air Canada (one of our largest lessees as
measured by annual lease  revenue) and Avianca.  As a result,  aircraft owned or
leased to these  airlines  may be put on the  market  for sale or lease  thereby
increasing the supply of available  aircraft at a time of decreasing demand. Any
further  bankruptcies or  consolidation  may further increase supply of aircraft
for sale or lease and  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.

         Our ability to repay the principal of the Notes depends  largely on our
ability to sell the aircraft for an amount that will be  sufficient to repay the
outstanding  principal  on such  Notes.  In the event we are  unable to sell the
aircraft, or if the proceeds of the sales of aircraft are less than such amount,
we will  not  have  sufficient  funds  to pay all the  principal  of the  Notes.
Aircraft appraisers have recently been reducing, and in some cases significantly
reducing,  their  appraised base values for aircraft.  Further,  the substantial
difficulties faced by airlines in the current market have reduced demand for and
increased  supply of aircraft  which has resulted in  accelerated  reductions in
aircraft  values.  The  reductions  in  aircraft  values  to date  have  already
negatively  impacted  our ability to repay  principal on the Class B, C, D and E
Notes,  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.  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 priorities  described in the  Prospectus,  will
not constitute an Event of Default with respect to such class of Notes.


                                       11
<PAGE>

         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
and in the future we may not have  sufficient  funds to pay all  interest due to
the other noteholders in the amounts and on the dates contemplated.

         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 our
lessees are often in arrears,  sometimes significantly.  Further, as a result of
the  decline in air travel  experienced  at the end of 2001 and during  2002 and
2003, many airlines are flying fewer aircraft and downsizing or reducing planned
growth  of their  fleets.  In  addition,  a number  of  airlines  have  declared
bankruptcy  (including  Air Canada,  one of our  largest  lessees as measured by
annual lease revenue) and 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  that many  airlines are
encountering  since the  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 one of our largest  lessees  (as  measured by
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 other
amounts that may be on deposit in the lessee funded  account 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 sufficient aircraft
to satisfy  future Trust Note Sales Goals 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,  overhaul and AD costs (which are required to be paid in advance of
principal and interest on the Notes) that we are  experiencing  and expecting 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 remaining  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 may not have sufficient funds to pay all interest due
to the other noteholders in the amounts and on the dates  contemplated and 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 payments on the Notes are fixed and


                                       12
<PAGE>

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 Notes will
be dependent  principally upon our ability to lease and sell the aircraft and to
receive  proceeds  from such  leases and sales at the times and for the  amounts
initially contemplated by the Prospectus, which has 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  impacted by the terrorist attacks of September
11,  2001 as  well  as the  military  action  of the  U.S.  and  its  allies  in
Afghanistan, the terrorist attacks in Bali and Saudi Arabia, the war in Iraq 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, 2003).  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;


                                       13
<PAGE>


         o   manufacturer production levels and prices for new aircraft;

         o   passenger demand;

         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."

         Although the two major  manufacturers  are now reducing their output in
response to the decline in the aircraft market, an increasing number of airlines
are also reducing their capacity and retiring older  aircraft.  Therefore  there
has been an increasing number of aircraft available for sale and lease. This has
had and is  expected  to  continue  to have a  negative  impact on the  proceeds
received  from the sale of aircraft  or the  revenue to be  received  from their
lease.  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 Class B Note  principal  and any  remaining  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 adversely  affect our ability to
pay principal 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.  Our aircraft are marketed  globally,  and,
from time to time, sales of our aircraft with leases in place to purchasers in a


                                       14
<PAGE>

single  country may represent a substantial  portion of sales of our aircraft in
an attempt to maximize  returns in the most  favorable  marketplace.  In certain
countries,  local  financial  intermediaries  may be important to our efforts to
sell the aircraft.  Adverse developments in particular  financial markets,  home
country regulatory  requirements or changes in tax regimes,  however, may impair
our ability to market the aircraft  successfully in a particular country or to a
particular group of investors in such country or may require the creation of new
tax-advantaged  structures.  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.  In addition, there can be
no  assurance  that  it will be  possible  to  create  any  such  tax-advantaged
structures at or by the time the aircraft are being marketed for sale.  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 pay principal on 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.  The
decline in the airline industry following the terrorist attacks of September 11,
2001 as well as the military  action of the U.S. and its allies in  Afghanistan,
the terrorist attacks in Bali and Saudi Arabia, the war in Iraq and the outbreak
of SARS and the  subsequent  decline in  passenger  demand  caused  the  fragile
position many airlines were in to worsen considerably. A number of airlines have
either declared bankruptcy  (including Air Canada, one of our largest lessees as
measured by annual lease  revenue) or face  bankruptcy in light of the depressed
market.  The  bankruptcies  that have occurred and the threat of bankruptcy  for
others has increased the number of aircraft on the market.  The aircraft  market
is experiencing an increase in supply at a time of decreasing demand.  According
to Back Aviation Solutions, there were 902 western built commercial jet aircraft
available  for sale and lease in mid  September  2003.  This is a decrease of 13
available  aircraft since  November 2002, an increase of 120 available  aircraft
since June 2001 and an increase of 226 available aircraft since January 2001. It
is  expected  that it will take  several  years for the  international  aviation
industry to work out this backlog,  during which time competition  among lessors
will remain  strong and lease rental  rates and aircraft  values are expected to
remain depressed.


                                       15
<PAGE>

         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. We determined the scheduled  principal
payments on the Notes 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 to
have  insufficient  cash to make  payments in full on some of the Notes.  Market
lease rates may also depend on current  market  values for  aircraft.  If market
values  are less than  appraised  base  values,  we may be  unable  to  re-lease
aircraft at rental rates sufficient to repay the Notes.

         We have obtained three desktop appraisals (without physical inspection)
of the appraised  base value of each aircraft as of June 2003 from Avitas,  AISI
and BK. Based on such  desktop  appraisals,  the nine  aircraft had an aggregate
appraised   base  value  of   $157,610,000,   $222,520,000   and   $237,350,000,
respectively,  or an average  aggregate  appraised  base value of  approximately
$205,820,000.

         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 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 each 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 used average  Appraised Current
Market Value,  which was in aggregate  $163,316,667  as at June 30, 2003 for the
nine aircraft and represents  the  Independent  Appraisers'  opinion of the most
likely  trading price that may be generated for an aircraft under current 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  Appraised  Current  Market  Value is an  estimate of value and should not be
relied upon as a measure of current  sales value;  the proceeds  realized upon a
sale of an aircraft may be less than the average Appraised Current Market Value,
particularly   in  current   market   conditions   as  discussed  in  "-  Recent
Developments"  above and in note 3 of the Financial  Statements.  In the current
environment,  there is a lack of hard data  available on which to base  aircraft
valuations and therefore the appraisal process is more difficult.


                                       16
<PAGE>

         The Directors  believe that, as a result of the factors discussed above
and in note 3 of the  Financial  Statements,  the sales value of the aircraft in
the current market may be less than the average  Appraised  Current Market Value
and the  carrying  value as at June 30,  2003.  Also,  if it were  necessary  to
dispose of an aircraft  quickly,  the  proceeds  from the sale of such  aircraft
would probably be even less than the value in the current market. In that event,
further write-downs would most likely be required.

         The  application  of the  accounting  policies in the fiscal year ended
June 30,  2003 has led to an  impairment  charge of  $14.378  million.  Previous
charges  were made at June 30, 2002 and June 30,  2001 for  $20.321  million and
$30.259 million,  respectively.  At June 30, 2002 the impairment  charge carried
forward  represents  write-downs to average  Appraised  Current Market Values at
June 30, 2002 and June 30, 2001.

         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 ability to make
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 costs are expenses that rank senior
to payments on the Notes,  our ability to make  payments on the Notes is further
reduced by these maintenance  costs. 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.

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 without  incurring  significant  downtime prior to  commencement of a new
lease.  If we cannot  re-lease the aircraft,  we may not have enough  revenue to
make  payments on the Notes.  Even if we can  re-lease the  aircraft,  we may be


                                       17
<PAGE>

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   have
significantly  reduced  demand for and increased  supply of aircraft  generally,
including aircraft available for operating lease. Our cashflows are suffering as
a result of an oversupply of aircraft for lease, increased aircraft downtime and
an overall decline in lease rates.  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   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  2003  were  leased  at rates
significantly below historic rates achieved on these aircraft.  Further,  two of
the  aircraft  which  were  re-leased  during  fiscal  year 2003 were  leased on
"power-by-the-hour"  leases  which allow for the lessee to pay for only the time
that the aircraft is being used.

         We currently have no aircraft  off-lease and we have no aircraft leases
scheduled to expire before March 2005,  however  there can be no assurance  that
other 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 ability
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,
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.  Many of our lessees are based or operate in regions such as
Asia that from time to time experience severe economic crises.  You should


                                       18
<PAGE>

refer to "Item 4 -  Information  on the  Company - Business  Overview - Regional
Concentrations" for a detailed 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 terrorist attacks in Bali
and Saudi  Arabia,  the war in Iraq and the outbreak of SARS,  have  resulted in
airlines worldwide experiencing financial difficulties.  Some of our lessees are
in a weak financial  position.  Investors should also expect this to be the case
with future lessees. 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  decline  in the  aircraft  industry,  the  financial
position of many airlines, including our lessees, is likely to be weakened 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 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 payment 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;


                                       19
<PAGE>

         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 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,  as of December 23, 2003 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  which would  adversely  affect our ability 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


                                       20
<PAGE>

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 2005.  Allegiant Air also has one  extension  option on
the lease.  If this  extension is exercised,  the  estimated  date of expiration
would be in June 2006.  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 airworthiness  directives (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.


                                       21
<PAGE>

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.

         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 harm our  ability 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 ability
to make payments on the Notes.

         Increased regulation of the aircraft industry may impair our ability to
re-lease or sell aircraft.

         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  and
further new security  directives are 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.


                                       22
<PAGE>

         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.


                                       23
<PAGE>

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 European Union 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 and we do not redeem them,  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 could harm
our ability to make payments on the Notes.


                                       24
<PAGE>

         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 the revenue 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 2005.  Allegiant Air also has one  extension  option on
the lease.  If this  extension is exercised,  the  estimated  date of expiration
would be in June 2006. 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  recently  informed  the Company 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 has indicated that withholding  taxes of $9,991 are due and owing to the
United States government for investments relating to 2003, and has indicated its
intention  to  pay  such  amount  from  collections   otherwise   available  for
distribution to Noteholders.  The Cash Manager has further  indicated that it is
reviewing its withholding tax obligations in respect of the years prior to 2003,
and has 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 amounts owed 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
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


                                       25
<PAGE>

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


                                       26
<PAGE>

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 Trust Note
Sales Goals.  As  discussed  herein,  due to current  market  conditions  in the
aircraft industry it was not possible to meet the Trust Note Sales Goal for June
27, 2003 and remain in compliance with other requirements of the Deed of Charge.
Further, to comply with the Trust Note Sales Goal for June 27, 2004, the Company
would be required to sell all of its remaining aircraft.  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 and we are
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 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
of the Class B Note  principal  and any  remaining  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
remaining  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  on 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.

         At various  times during  fiscal year 2003,  certain  target  principal
payments  scheduled to be paid to holders of Class A, Class B, Class C and Class
D Notes,  certain interest  payments due to holders of Class A, Class B, Class C
and Class D Notes, and all interest payments  scheduled to be paid to holders of
Class E Notes were in arrears.  As at the end of fiscal year 2003, these arrears
consisted of $2.042  million of Class A Note Target  Amount,  $0.565  million of
Class A Note step-up interest,  $0.220 million of Class B Note step-up interest,
$4.304  million of Class C Note Target  Amount,  $0.206  million of Class C Note
step-up interest,  $5.177 million of Class D Note Target Amount,  $0.326 million
of  Class D Note  step-up  interest,  $0.504  million  of  Class D Note  default
interest,  $2.805 million of Class D Note interest, and $45.105 million of Class
E Note interest.


                                       27
<PAGE>

B.       Business Overview

         Business Objectives

         Our business  objectives  pursuant to the Deed of Charge (the "Business
Objectives")  are (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 Trust 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 each
class of the  Senior  Trust  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,  (ii) from June 27, 2001
through June 26, 2004 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 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 will be 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.

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

         Aircraft Leasing

         As of June 30,  2003,  our  fleet of  aircraft  was  comprised  of nine
aircraft, all of which were on lease to eight lessees in eight countries.  As of
June 30, 2003, the remaining terms of the leases ranged from  approximately four
months to three years and eleven months. The following table shows the scheduled
terminations by aircraft type and lessee for the leases relating to our aircraft
as of June 30, 2003:

Aircraft Type             Lessee                   Month and Year of Expiration
-------------             ---------------------    ----------------------------
B737 - 400                Asiana(1)                December 2003
B737 - 400                Travel Service(2)        October 2005
B737 - 400                Skynet                   March 2005
B737 - 500                China Southern(3)        March 2004
B757 - 200                First Choice Airways(4)  April 2005
B767 - 300ER              Air Canada(5)            March 2004
B767 - 300ER              Air Canada               May 2007
MD83                      Meridiana(6)             March 2004
MD83                      Allegiant Air(7)         October 2003
----------------------
(1)  The Asiana lease  terminated  on December  13,  2003.  Batavia has signed a
     lease agreement,  dated December 18, 2003, for this B737-400 aircraft for a
     lease term beginning December 18, 2003 and ending on March 31, 2007.


                                       28
<PAGE>

----------------------
(2)  Travel  Service  signed a lease  amendment and extension  agreement,  dated
     December 16, 2003, to extend this lease until March 31, 2007.
(3)  China  Southern  signed a lease  amendment and extension  agreement,  dated
     December 17, 2003, to extend this lease until March 31, 2006.
(4)  Formerly known as Air 2000 Limited.
(5)  A Memorandum  of  Understanding,  dated  October 10, 2003,  executed by Air
     Canada extends the lease of this aircraft until March 31, 2007.
(6)  Meridiana signed a lease amendment and extension  agreement,  dated October
     5, 2003, to extend this lease until March 31, 2006.
(7)  Allegiant  Air signed a lease  amendment  and  extension  agreement,  dated
     October 9,  2003,  to extend  this lease  until the next "C Check" for this
     aircraft which is expected to occur in March 2005, with an option to extend
     until the following "C Check," which is expected to occur in June 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 -
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 November 30, 2003, the aggregate arrears
for all lessees was $150,000.  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 extended this moratorium  until they completed their agreements with each
lessor.  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.


                                       29
<PAGE>

         Aircraft Fleet

         As of June 30, 2003,  our fleet was  comprised  of nine  aircraft . Our
aircraft  consist of widebody and  narrowbody  Stage 3 Aircraft.  As of June 30,
2003, 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, 2003,  our aircraft,  divided by  manufacturer,  were as
follows:


                                  COMPANY FLEET

                                                           Net Book Value
Manufacturer            Aircraft Type     Number    (in thousands of dollars)(1)
-------------           -------------     ------     -----------------------
Boeing                  B737 - 400           3             $  40,723
                        B737 - 500           1                12,557
                        B757 - 200           1                22,250
                        B767 - 300ER         2                69,859

McDonnell Douglas       MD83                 2                17,926
                                             -              --------
Total                                        9              $163,316
                                             =              ========
--------------

(1) Net book value in respect of each of the nine  aircraft is stated as of
    June 30, 2003.

         Aircraft Value

         We have obtained three desktop appraisals (without physical inspection)
of the appraised  base value of each aircraft as of June 2003 from Avitas,  AISI
and  BK.  Based  on such  desktop  appraisals,  the  aircraft  had an  aggregate
appraised   base  value  of   $157,610,000,   $222,520,000   and   $237,350,000,
respectively,  or an average  aggregate  appraised  base value of  approximately
$205,820,000.

         We obtained desktop  appraisals  (without physical  inspections) of the
appraised  base values of the nine  aircraft as of June 2002 from Avitas,  AISI,
and BK. Based on such desktop appraisals,  the aircraft had an average aggregate
appraised base value of approximately $235,540,000, 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  $235,540,000  as of June 2002 to $205,820,000 as of June
2003 representing a reduction of 12.62% 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.


                                       30
<PAGE>

         As discussed in the Statement of  Accounting  Policies in the 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 each 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 used average  Appraised Current
Market Value,  which was in aggregate  $163,316,667  as at June 30, 2003 for the
nine aircraft,  and represents the Independent  Appraisers'  opinion of the most
likely  trading price that may be generated for an aircraft under current 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  Appraised  Current  Market  Value is an  estimate of value and should not be
relied upon as a measure of current  sales value;  the proceeds  realized upon a
sale of an  aircraft  may be less  than  the  Appraised  Current  Market  Value,
particularly  in  current  market  conditions  as  discussed  in  "Item  3 - Key
Information - Risk Factors - Recent Developments" and in note 3 of the Financial
Statements.  In the current environment,  there is a lack of hard data available
on which to base aircraft valuations and therefore the appraisal process is more
difficult.

         The Directors  believe that, as a result of the factors discussed above
and in note 3 of the  Financial  Statements,  the sales value of the aircraft in
the current market may be less than the average  Appraised  Current Market Value
and the  carrying  value as at June 30,  2003.  Also,  if it were  necessary  to
dispose of an aircraft  quickly,  the  proceeds  from the sale of such  aircraft
would probably be even less than the value in the current market. In that event,
further write-downs would most likely be required.

         The  application  of the  accounting  policies in the fiscal year ended
June 30,  2003 has led to an  impairment  charge of  $14.378  million.  Previous
charges  were  made at June  30,  2002 and June  30,  2001 for  $20,321,000  and
$30,259,000,  respectively.  At June 30,  2002  the  impairment  charge  carried
forward  represents  write-downs to average  Appraised  Current Market Values at
June 30, 2002 and June 30, 2001.

         Following the  terrorist  attacks of September 11, 2001 and other world
events 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.  In  addition,  since  September  11,  2001 a number of
airlines  have declared  bankruptcy  (including  Air Canada,  one of our largest
lessees as measured by annual  lease  revenue) and ceased  operations  and it is
expected  that the industry will  experience  further  consolidation  as well as
additional  bankruptcies in the near future.  As a result,  aircraft owned by or
leased to these  airlines  have been put on the market for sale or lease thereby
increasing  the  supply  of  available  aircraft.  Due to the  loss of  investor
appetite and the difficulty in obtaining financing for the purchase of aircraft,
there are  fewer  buyers  of  aircraft  on  operating  lease  and the  resulting
illiquidity in the market has caused sale prices of aircraft to further decline.
Further,  in the current  environment  there is a lack of hard data available on
which to base aircraft  valuations  and therefore the appraisal  process is more
difficult.  As discussed  above, an appraisal is an estimate of value and should
not be relied upon as a measure of current  sales  value.  We believe  that as a
result of all of these  factors the sales  value of the  aircraft in the current
market (as compared with the "open,  unrestricted stable market environment with
a reasonable  balance of supply and demand" assumed in the  determination of the
appraised  base values) is  significantly  less than the average  appraised base
value and may be less than the average  Appraised


                                       31
<PAGE>

Current  Market Value and the carrying  value as at June 30, 2003.  Also,  if it
were necessary to dispose of an aircraft quickly,  the proceeds from the sale of
such aircraft would probably be even less than the value in the current  market.
The effect of the Trust Note Sales Goals  contained  in the Deed of Charge is to
require that we sell all of our  aircraft by June 27,  2004.  Although we do not
believe it will be possible, given the current market conditions in the aircraft
industry,  to comply with this  requirement  and achieve sale prices  consistent
with our current Business Objectives, there can be no assurance that we will not
be forced to sell one or more aircraft in a distressed sale situation.  The Deed
of Charge 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. See "Item 3 - Key Information - Risk Factors - Risks Relating
to Sales of Aircraft."

         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 12.89
years as of June 30, 2003.

         Lessees

         The lessees of our aircraft as of June 30,  2003,  such  lessees'  home
country and the  respective  aircraft  type and date of  manufacture  are as set
forth below:

<TABLE>
<CAPTION>

Lessee                   Country                     Aircraft Type      Date of Manufacture
---------------------    ------------------          --------------     -------------------
<S>                      <C>                         <C>                <C>
Air Canada               Canada                      B767 - 300ER        arch 1991
                                                     B767 - 300ER        ugust 1991
Allegiant Air            U.S.A.                      MD83                ugust 1989
Asiana(1)                South Korea                 B737 - 400          ovember 1988
China Southern           People's Republic of China  B737 - 500          uly 1991
First Choice Airways(2)  United Kingdom              B757 - 200          arch 1991
Meridiana                Italy                       MD83                uly 1989
Skynet                   Ireland                     B737 - 400          ctober 1989
Travel Service           Czech Republic              B737 - 400          arch 1989

</TABLE>

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

(1)  Beginning on December 18, 2003,  this B737-400  aircraft will be leased
     to Batavia whose home country is Indonesia.

(2)  Formerly known as Air 2000 Limited.

         In fiscal year 2003,  four lessees  accounted  for more than 10% of our
leasing  revenue (Air Canada 29.43%,  Asiana  15.75%,  Travel Service 13.30% and
China  Southern  12.63%).  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.


                                       32
<PAGE>

         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, 2002 to and including June 30, 2003:

                                        Amount                   Percentage
                             ------------------------          -------------
                             (in thousands of dollars)
Europe                                   $6,973                      35.30
Americas                                 $6,341                      32.10
Asia/Pacific                             $6,444                      32.60
                                         ------                      -----
                                        $19,758                     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 and Saudi Arabia,  the war in Iraq, the outbreak of SARS and the
subsequent decline in the aircraft industry.

         Regional Concentrations.

         Asia Concentration - At June 30, 2003, 14% of our aircraft by appraised
base value at June 30, 2003 were leased by operators in Asia.

         The  Asian  civil  aviation  industry  had  rebounded  from the  severe
economic  difficulties  in the  region  that  began  in 1998  and  1999  and was
performing  satisfactorily  with reasonable growth in passenger numbers prior to
the  terrorist  attack in Bali in October  2002 and the  outbreak of SARS at the
beginning  of  2003.  The  outbreak  of SARS in the  Asia-Pacific  region  had a
significant  short-term impact on air travel to and within the region.  Carriers
in  the  worst  SARS-affected   regions,   such  as  Hong  Kong,  were  affected
particularly  badly  with  dramatic  cuts in  services  of  between  30% to 50%.
Although  the  crisis  appears  to now be under  control  with the World  Health
Organization  removing the last remaining  negative travel  recommendations  for
Beijing on June 24, 2003, and most carriers  having now restored the majority of
their flight schedules,  some scientists have suggested the possibility that new
cases of SARS may emerge during the coming winter season.

         European  Concentration  - At June 30,  2003,  36% of our  aircraft  by
appraised  base  value  at June 30,  2003  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


                                       33
<PAGE>

EU may also adversely affect European  lessees'  operations and their ability to
meet their obligations under the leases.

         The first half of 2003 was poor for most  European  carriers as traffic
numbers  declined due to the slow growth in the economy,  the outbreak of war in
Iraq and SARS.

         The European  economy  continues to perform  sluggishly with low single
digit growth  predicted for 2003. The  appreciation of the euro against the U.S.
dollar over the past number of months  should help those  carriers  operating in
the euro area to meet their U.S. dollar denominated  obligations  including fuel
and lease obligations.

         North America  Concentration - At June 30, 2003, 50% of our aircraft by
appraised  base  value at June 30,  2003 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,  one of our largest  lessees (as measured by annual lease
revenue),  and United  Airlines,  the second  largest  airline in the world) and
several major United States airlines have ceased operations.  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 remains likely.

         Off lease  aircraft - As at June 30, 2003,  none of our  aircraft  were
off-lease.

         Payment History

         As of June 30, 2003, arrears equalled  $1,285,583,  $1,055,700 of which
were due from Air Canada as a result of their  court  authorized  moratorium  on
lease rentals.  See "--North  America  Concentration"  above. As of November 30,
2003 the aggregate arrears for all lessees equalled $150,000.

         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 Industrie  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.  Although we do
not believe it will be possible, given current market conditions in the aircraft
industry and the requirements to achieve sale prices consistent with our current
Business  Objectives,  we are also  required to sell all of our aircraft by June
27,  2004 to comply with the Trust Note Sales  Goals.  Many  entities  sell used
aircraft  so  the  competition  for  the  sale  of  used  aircraft  is  intense,
particularly  under  current  market  conditions.  As discussed in "Item 3 - Key
Information - Risk  Factors,"  the  terrorist  attacks of September 11, 2001 and
subsequent  political,  economic and other factors have significantly  increased
the supply of aircraft available for sale and significantly decreased demand for
the purchase of such aircraft.


                                       34
<PAGE>

         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  airworthiness  directives  ("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 and lessee  funded  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.  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 2003 through 2005.

         As a result  of the  terrorist  attacks  of  September  11,  2001,  new
security directives may be adopted by aviation authorities. Depending on whether
the cost of complying with such  directives  would have to be borne by us or our
lessees,  such directives could result in significant cash expenditures by us in
the future.


                                       35
<PAGE>

         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, 2003. 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 March 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  installation  of an  overwing
heater  blanket  system or a primary  upper wing ice  detection  system on MD-80
aircraft  prior to May 7,  2004.  The cost per  aircraft  of such  modifications
ranges  between  $70,000 for the  primary  upper wing ice  detection  system and
$151,000  for the  overwing  heater  blanket  system.  The choice of system will
depend on the operational requirements of the lessee. This modification has been
implemented on one of our MD-80 series  aircraft and is expected to be completed
on the other MD-80  series  aircraft in December  2003.  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, 2003. 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.

         In July  2001,  the FAA  issued an AD  mandating  the  modification  of
affected lapjoints on Boeing 737 aircraft when the aircraft has completed 50,000
cycles.  The estimated cost to implement  such  modifications  is  approximately
$270,000  per  aircraft.  We have four  Boeing 737  aircraft  in our  portfolio,
representing  32% of the  portfolio  by  appraised  base value at June 30, 2003.
Based on the current  cycles  completed to date by our Boeing 737 aircraft,  our
Boeing 737 aircraft are not likely to require these modifications prior to 2005.
However,  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.

         The FAA has 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,  2003.  It is  expected  that  we will  incur  the  full  cost of this
modification, which will impact adversely on our results of operations.

         The FAA  recently  published 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, 2003.  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.


                                       36
<PAGE>

         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,  as of December 23, 2003, 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 ability to make  payments on the
Notes.

         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."


                                       37
<PAGE>

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,
2003.

         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 and ALPS 92-1 UK Limited,
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 a A300 B4-200  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  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  have   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 terrorist attacks in Bali
and  Saudi  Arabia,  the war in Iraq,  the  outbreak  of SARS and the  continued
slowdown in the global economy.

         Recent Developments

         The  continued  slowdown  in the  global  economy,  together  with  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 terrorist  attacks in Bali and Saudi Arabia,  the war in Iraq,
and the outbreak of SARS have all  adversely  affected the  commercial  aviation
industry.

         This continued downturn in the commercial aviation industry has had and
continues to have a material  adverse  impact on the financial  condition of our
lessees and their ability to perform  under the leases.  It has also resulted in
reduced demand for our aircraft,  which impacts our ability to re-lease


                                       38
<PAGE>

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 which has
adversely affected our ability 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                A3                          BBB-/Outlook negative
Class B                Ba3                         B/Outlook negative
Class C                Caa1                        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 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. One of our B737-400
aircraft  now leased to Skynet  was off lease  from July 2002 to  January  2003.
Following its filing for bankruptcy protection on April 1, 2003, Air Canada, one
of our largest  lessees (as measured by annual  lease  revenue),  ceased  making
rental  payments in respect of our two B767-300ER  aircraft.  Air Canada resumed
making payments in October 2003. In addition, a number of aircraft are leased on
"power-by-the-hour" leases which generally result in reduced and less dependable
rental income.

         Our ability to make  payments  of  interest  will depend in part on the
successful  re-leasing  of our two aircraft with leases which expire in 2003 and
2004.  See "Item 3 - Key  Information - Risk Factors - Risks Relating to Leasing
of  Aircraft."  Such new leases 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


                                       39
<PAGE>

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.  The decline in the airline industry and the number of bankruptcies have
increased  the number of aircraft on the market while demand has been  dropping.
Further,  uncertainty  with respect to short to medium term future  prospects of
the  aircraft   industry  has  resulted  in  many  aircraft  lessees   requiring
restructuring   of  leases  and  many  new  leases   being   agreed  only  on  a
"power-by-the-hour"  basis. Many new leases and restructurings have also shifted
certain  aircraft  maintenance  and overhaul  costs to the  Company,  as lessor.
Generally,  all lease restructurings  result in reduced rates, deferred payments
or  early  returns  of  aircraft.  "Power-by-the-hour"  arrangements  result  in
generally lower and less dependable lease revenue. Currently three of our leases
are on "power-by-the-hour"  arrangements. 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  revenue  and  are  likely  to  have a
significant  adverse  effect on our  ability to make  payments on the Notes on a
timely basis and in full.  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 eight year period since fiscal year 1995, decreasing from $22.7 million
for fiscal  year 1995 to $6.9  million  for  fiscal  year  2003.  Lease  revenue
attributable  to lessees based in Asia has also  decreased from $13.6 million to
$6.4 million over the same period.  Lease revenue  attributable to lessees based
in North  America has  decreased  from $11.4  million to $6.3  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  payments 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
require us to approve sales of our aircraft on an ongoing basis:


                Aircraft to be Sold
 (measured by Initial Appraised Value as of June 3,    Date by which Sales Goals
                       1996)                              are 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


                                       40
<PAGE>

         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
used aircraft has been extremely poor and it is not clear if and when the market
will improve in a meaningful way. Nevertheless,  in order to meet the Trust Note
Sales Goals,  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 would need to
sell all of our aircraft to comply with the June 2004 Trust Note Sales Goal.  At
our direction,  the Servicer has been marketing each of our aircraft for sale in
order to meet the ongoing Trust Note Sales Goals.  However,  the current  market
for sale of used aircraft is extremely  poor and it is not clear if and when the
market will improve.

         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 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 as
we were unable,  given the current aircraft industry market conditions,  to sell
sufficient  aircraft  at  the  sale  prices  required  by our  current  Business
Objectives.  Given the  continuing  depressed  market for aircraft sales and the
requirement  to  achieve  sale  prices  consistent  with  our  current  Business
Objectives,  we believe  the  Company  will not be able to comply with the Trust
Note Sales Goal for June 27, 2004.

         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, 2003.

         This  review has  determined  that the  carrying  value for each 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,
fair value is the average  Appraised  Current  Market Value as calculated by the
Independent  Appraisers.  The average  Appraised Current Market Value was in the
aggregate  $163,316,667 as at June 30, 2003 for the nine aircraft and represents
the Independent Appraisers' opinion of the most likely trading price that may be
generated  for an aircraft


                                       41
<PAGE>

under current 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.
The  Appraised  Current  Market  Value is an estimate of value and should not be
relied upon as a measure of current  sales value;  the proceeds  realized upon a
sale of an  aircraft  may be less  than  the  Appraised  Current  Market  Value,
particularly  in  current  market  conditions  as  discussed  in  "Item  3 - Key
Information - Risk Factors - Recent Developments" and in note 3 of the Financial
Statements.  In the current environment,  there is a lack of hard data available
on which to base aircraft valuations and therefore the appraisal process is more
difficult.

         The Directors  believe that as a result of the factors  discussed above
and in note 3 of the Financial Statements the sales value of the aircraft in the
current  market  (as  compared  with  the  "open,  unrestricted,  stable  market
environment  with a  reasonable  balance  of supply and  demand"  assumed in the
determination of appraised base values) is  significantly  less than the average
appraised base value and may be less than the average  Appraised  Current Market
Value and the carrying value as at June 30, 2003.  Also, if it were necessary to
dispose of an aircraft  quickly,  the  proceeds  from the sale of such  aircraft
would probably be even less than the value in the current market. In that event,
further write-downs would most likely be required.

         The  application  of the  accounting  policies in the fiscal year ended
June 30,  2003 has led to an  impairment  charge of  $14.378  million.  Previous
charges were made at June 30, 2002 and at June 30, 2001 for $20.321  million and
$30.259 million,  respectively.  At June 30, 2002 the impairment  charge carried
forward  represents  write-downs to average  Appraised  Current Market Values at
June 30, 2002 and June 30, 2001.

         Recently Issued Accounting Standards

         In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation  -  Transition  and  Disclosure,  an  amendment  of SFAS 123." This
Statement amends SFAS 123, "Accounting for Stock-Based Compensation," to provide
alternative  methods  of  transition  for a  voluntary  change to the fair value
method of accounting for stock-based employee  compensation.  In addition,  this
Statement  amends the disclosure  requirements of SFAS 123 to require  prominent
disclosures  in both annual and  interim  financial  statements.  Certain of the
disclosure modifications are required for fiscal years ending after December 15,
2002.  The Company has no employee stock  compensation  plans and does not issue
equity  instruments  in  exchange  for  goods  and  services.  Accordingly,  the
application  of SFAS 148 does not have any  effect  on the  Company's  financial
statements.

         In November 2002, the FASB issued  Interpretation No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of Indebtedness to Others" ("FIN 45"), and  interpretation of SFAS 5,
57 and 107 and a rescission  of SFAS 34. This  Interpretation  elaborates on the
disclosure  to be  made by a  guarantor  in its  interim  and  annual  financial
statements about its obligations  under guarantees  issued.  The  Interpretation
also  clarifies  that a guarantor  is required to  recognize,  at inception of a
guarantee,  a liability  for the fair value of the  obligation  undertaken.  The
disclosure  requirements  are effective for financial  statements of interim and
annual  periods  ending after  December  31,  2002.  The Company has adopted the
disclosure   requirements   and  will  apply  the  recognition  and  measurement
provisions for all guarantees  entered into or modified after December 31, 2002.
In the period from  January 1, 2003 to date the Company has not entered into any
guarantees.


                                       42
<PAGE>

         On April 30, 2003, the FASB issued SFAS 149,  "Amendment of SFAS 133 on
Derivative Instruments and Hedging Activities," to address (1) decisions reached
by the Derivatives Implementation Group, (2) developments in other FASB projects
that address financial instruments, and (3) implementation issues related to the
definition  of a derivative.  SFAS 149 has multiple  effective  date  provisions
depending  on the nature of the  amendment  to SFAS 133.  The  Company  does not
utilise  derivative  instruments  nor  does it  engage  in  hedging  activities.
Accordingly,  the  application of SFAS 149 is not expected to have any effect on
future financial statements.

         On May 15,  2003 the FASB  issued  SFAS 150,  "Accounting  for  Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
150  establishes  standards for how an insurer  classifies and measures  certain
financial  instruments with characteristics of both liabilities and equity. SFAS
150 is effective for all financial  instruments  entered into or modified  after
May 31, 2003. For  unmodified  financial  instruments  existing at May 31, 2003,
SFAS 150 is effective at the  beginning of the first  interim  period  beginning
after June 15, 2003, except for mandatorily  redeemable financial instruments of
non-public  entities.  As  the  Company  does  not  currently  have  any  equity
instruments outstanding,  the new standard is not expected to have any effect on
future financial statements.

         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 market value.  The
Directors have concluded that the estimated undiscounted future net cashflows to
be generated by the Company's  aircraft will be less than their carrying  value.
Consequently 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,  fair
value is the average of the Appraised  Current Market  Values,  as calculated by
the Independent Appraisers. The Appraised Current Market Value is an estimate of
value and  therefore  should be relied upon as a measure of current sales value;
the  proceeds  realized


                                       43
<PAGE>

upon a sale of an aircraft may be less than the average Appraised Current Market
Value,  particularly in the current market  conditions as discussed in "Item 3 -
Key  Information  - Risk  Factors  - Recent  Developments"  and in note 3 of the
Financial Statements.  In the current environment,  there is a lack of hard data
available on which to base  aircraft  valuations  and  therefore  the  appraisal
process  is more  difficult.  The  Directors  believe  that as a result of these
factors the sales value of the  aircraft in the current  market may be less than
the average Appraised Current Market Value and the carrying value as at June 30,
2003. Also, if it were necessary to dispose of an aircraft quickly, the proceeds
from the sale of such aircraft would probably be even less than the value in the
current  market.  In that  event,  further  write-downs  would  most  likely  be
required.

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 are prepared on the going concern
basis.  Although  the Company  balance  sheet  shows that there are  liabilities
considerably in excess of assets, the terms of the Notes are such that, prior to
the final maturity of the Notes,  the  Noteholders  are only entitled to receive
interest and principal repayments in the event that cash is available. Therefore
the Directors believe that the Company is a going concern.

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


                                       44
<PAGE>

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.

Results of Operations - Fiscal Year Ended June 30, 2002 compared with the Fiscal
Year Ended June 30, 2001

         Aircraft Leasing

         Lease revenue, which constitutes  substantially all of our revenue, was
$32.6  million for the fiscal year ended June 30,  2002,  a decrease of 14% from
the  corresponding  figure of $37.9  million  for the fiscal year ended June 30,
2001.  This  decrease  was  due  primarily  to  downtime  of  the  B737-400  for
approximately three months, reduced revenue from the Company's B757-200 aircraft
which was on a "power-by-the-hour"  lease but was not utilized by the lessee for
eight months, 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 increased
from $3.0  million for the fiscal  year ended June 30, 2001 to $3.6  million for
the fiscal year ended June 30, 2002, an increase of 20%. Lease  management  fees
decreased  by 16.5% from $1.4  million in the fiscal year ended June 30, 2001 to
$1.2  million in the fiscal  year ended


                                       45
<PAGE>

June 30, 2002 as a result of lower lease revenue income.  Aircraft costs of $0.8
million  were  incurred  in the fiscal  year ended June 30,  2002 (none in prior
period) 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  $190,000  in the fiscal year ended June 30, 2001 to $275,000 in the fiscal
year ended June 30,  2002 due to a general  increase in D&O  insurance  premiums
across all industries.

         Depreciation

         Depreciation  of $16.4  million  was  charged for the fiscal year ended
June 30, 2002 and $17.6 million for the fiscal year ended June 30, 2001.

         Impairment  in Aircraft Values

         In accordance with Statement of Financial Accounting Standards No. 121,
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 seven aircraft classified as held for use
as at June  30,  2002 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. In respect to the
two aircraft  classified  as held for sale at June 30,  2002,  these assets have
been included as part of the  portfolio at the lower of the carrying  amount and
their estimated net realizable value less costs to sell. Gains or losses arising
on the  revaluation of such assets have been taken to the charge for impairment.
A charge for impairment of the book value of aircraft of $20.32 million was made
for the fiscal year ended June 30, 2002. 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 AD costs of $7.2
million in respect of four aircraft.

         Bad Debts

         There  have been no bad debts  during  the  fiscal  year ended June 30,
2002.

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 2003. At June 30,
2003, cash resources equaled $26.5 million compared to $30.2 million at June 30,
2002.  This reduction was due primarily to a reduction in the Liquidity  Reserve
Amount following the sale of two aircraft.


                                       46
<PAGE>

         Cash from Operating Activities

         Net cash provided by operating  activities  amounted to $1.0 million in
fiscal year 2003,  $16.1 million in fiscal year 2002 and $19.2 million in fiscal
year 2001.  This  reflects  cash  received in respect of lease  rentals of $17.7
million in fiscal year 2003, $31.1 million in fiscal year 2002 and $38.1 million
in fiscal year 2001. Cash paid in respect of interest was $6.2 million in fiscal
year 2003 as  compared  to $12.33  million  in fiscal  year  2002.  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,
2003.  During  the  fiscal  year ended  June 30,  2002,  there were  maintenance
payments of $5.4 million primarily in respect of the MD83 and B737-300 aircraft.
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.

         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,  2003,  approximately  $199.3  million  of
principal and $142.3 million of interest has been paid to the Noteholders.

         The Company's Cash Needs

         At various  times during  fiscal year 2003,  certain  target  principal
payments  scheduled to be paid to holders of Class A, Class B, Class C and Class
D Notes,  certain interest  payments due to holders of Class A, Class B, Class C
and Class D Notes and all interest  payments  scheduled to be paid to holders of
Class E Notes were in arrears.  As at the end of fiscal year 2003, these arrears
consisted of $2.042  million of Class A Note Target  Amount,  $0.565  million of
Class A Note step-up interest,  $0.220 million of Class B Note step-up interest,
$4.304  million of Class C Note Target  Amount,  $0.206  million of Class C Note
step-up interest,  $5.177 million of Class D Note Target Amount,  $0.326 million
of  Class D Note  step-up  interest,  $0.504  million  of  Class D Note  default
interest, $2.805 million of Class D Note interest and $45.105 million of Class E
Note interest. Our current projections for the remainder of fiscal year 2004 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


                                       47
<PAGE>

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,  is
marketing  each of the  aircraft  for sale;  however,  the sales market for 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 of the Class B
Note  principal and any remaining  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
require us to approve sales of our aircraft on an ongoing basis:


                Aircraft to be Sold
 (measured by Initial Appraised Value as of June 3,    Date by which Sales Goals
                       1996)                              are 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
used aircraft has been extremely poor and it is not clear if and when the market
will improve in a meaningful way. Nevertheless,  in order to meet the Trust Note
Sales Goals,  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


                                       48
<PAGE>

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 would need to
sell all of our aircraft to comply with the June 2004 Trust Note Sales Goal.  At
our direction,  the Servicer has been marketing each of our aircraft for sale in
order to meet the ongoing Trust Note Sales Goals.  However,  the current  market
for sale of used aircraft is extremely  poor and it is not clear if and when the
market will improve.

         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 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 as
we were unable,  given the current aircraft industry market conditions,  to sell
sufficient  aircraft  at  the  sale  prices  required  by our  current  Business
Objectives.  Given the  continuing  depressed  market for aircraft sales and the
requirement  to  achieve  sale  prices  consistent  with  our  current  Business
Objectives,  we believe  the  Company  will not be able to comply with the Trust
Note Sales Goal for June 27, 2004.

         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 Trust
Note Sales Goals gives the  Noteholders the right to replace the Servicer at the
direction of Noteholders  representing at least 75% of the aggregate 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.


                                       49
<PAGE>

         Except as noted below, the Company's  collection account is required to
be  maintained  at a  balance  equal  to  $22,691,000  (the  "Liquidity  Reserve
Amount").  In March 2003, the level of the Liquidity  Reserve Amount was reduced
from $23,907,000 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,  subject  to  Board  approval,  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  airworthiness  directives  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, Class C and Class D 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.

C.       Research and Development, Patents and Licenses

         Not applicable.

D.       Trend Information

         We have  continued  to suffer  from a difficult  business  environment.
During  the past three  years,  there has been a general  downturn  in the world
economic  climate,  with a  consequential  negative  impact  on  the  commercial
aviation  industry.  Global  economic  conditions,  exacerbated by the terrorist
attacks of September 11, 2001, the military action of the U.S. and its allies in
Afghanistan, the terrorist attacks in Bali and Saudi Arabia, the war in Iraq and
the outbreak of SARS have adversely  impacted the commercial  aviation industry.
As  previously  reported  the  resulting  reduction  in  passenger  numbers  and
consequential  reduction in flight  schedules by airlines has caused a continued
decline in demand for aircraft.  Some carriers,  including  United Airlines (the
second  largest  airline in the  world),  U.S.  Airways  and one of our  largest
lessees  (as  measured by annual  lease  revenue),  Air  Canada,  have filed for
bankruptcy,  while others,  including  many of our lessees,  have suffered large
losses  or face  severe  financial  difficulties.  Oversupply  of  aircraft  has
resulted in increased aircraft downtime, aircraft being parked, a fall in market
value of aircraft (especially older technology and less fuel-efficient  aircraft
or models no  longer  in  production)  and  lower  lease  rates  throughout  the
industry.  We have ourselves  experienced  increased time between redelivery and
re-leasing of aircraft,  a decline in lease rates upon  re-leasing or extensions
of  leases,  and a decline  in sales  prices  for our  aircraft.  We have had to
restructure a number of leases, resulting in rental reductions.  There can be no
assurance that we may not have to agree further restructurings in the future. In
addition,  we  currently  expect  new ADs to be issued to  improve  security  on
aircraft,  the costs of compliance  with which,  to the extent that they are not
the  responsibility  of lessees under their leases or if the aircraft are not on
lease, will be our responsibility.

         There has been a decline of 12.62% in the average  appraised base value
of our fleet of nine aircraft from June 30, 2002 to June 30, 2003. 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


                                       50
<PAGE>

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  possible  that  certain  of  our  aircraft,
particularly the MD-80s and  737-400/500s,  may be 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


<TABLE>
<CAPTION>

                                                            Payments due by period as at June 30, 2003
                                     -----------------------------------------------------------------------------------------
                                                                             $million
                                     ------------------------------------------------------------------------------------------
                                          Total           less than 1        1-3 years         3-5 years          more than
                                                             year                                                  5 years
                                     ----------------    --------------    ---------------    -------------    ----------------
<S>                                  <C>                 <C>                <C>               <C>              <C>
Contractual Obligations

(i)  Long-Term Debt Obligations -       $282.183             -               $282.183              -                  -
     Notes
(ii) Purchase Obligations -              $1.4154            $0.4718           $0.9436              -                  -
     Servicer and Cash Manager Fees
                                     ----------------    --------------    ---------------    -------------    ----------------
Total                                  $283.5984            $0.4718         $283.1266              -                  -
                                     ================    ==============    ===============    =============    ================


</TABLE>


(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 the
         principal  of the  Class B Notes  in  full 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


                                       51
<PAGE>

         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 payments will be payable in excess of
         the available collections.
(ii)     The annual  commitment to the Servicer is $454,800 plus 2% of all lease
         rentals  collected.  The  annual  commitment  to the  Cash  Manager  is
         $17,000.

ITEM 6.  directors, senior management and employees

A.       Directors and Senior Management

         Board of Directors

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

<TABLE>
<CAPTION>

Name                                    Age      Business Address                   Principal Activities
----------------------------            ---      ------------------------------     ---------------------------------
<S>                                     <C>      <C>                                <C>
Mr. Frederick W. Bradley, Jr.           76       764 Norgate, Westfield             Retired - Senior Vice President,
                                                 New Jersey, United States 07090    Citibank, 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 Financial
                                                 Elkhart, Indiana, United States    Corporation
                                                 46517

</TABLE>

         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.


                                       52
<PAGE>

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. Robinson's term expired in the second calendar quarter of 2002, when he
was  re-appointed  to the Board and Mr.  Bradley's  term  expired  in the second
calendar quarter of 2003, when he was re-appointed to the Board. Mr.  Robinson's
term expires again in the second  calendar  quarter of 2004. 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
elected 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;


                                       53
<PAGE>

             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;


                                       54
<PAGE>


             -   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

         Due to the  liquidation  of the United  Kingdom  partnership  of Arthur
Andersen,  the  previous   administrative  agent,  Andersen  Corporate  Services
(Jersey)  Limited,  and the previous  company  secretary,  Andersen  Secretaries
(Jersey) Limited, which were both wholly owned by the United Kingdom partnership
of Arthur  Andersen,  were  replaced by Mourant & Co.  Limited and Mourant & Co.
Secretaries Limited,  respectively, on October 1, 2003. Our Administrative Agent
(in  conjunction  with  the  Company  Secretary)  provides   administrative  and
accounting services to the Board of Directors including:


                                       55
<PAGE>

             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


                                       56
<PAGE>

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.


                                       57
<PAGE>

         Additionally, Mr. Robinson is paid fees of approximately Euro 6,400 per
annum,  fees of up to (pound)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  employment.  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

Title of Class   Identity of Person or Group    Amount Owned    Percent of Class
--------------   ---------------------------    ------------    ---------------
Ordinary Shares  Mourant & Co. Trustees              10               100%
                 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.


                                       58
<PAGE>

         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 de 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 events are  explained in Note 15 of
"Item 18 - 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.


                                       59
<PAGE>

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 are incorporated by reference at Exhibit 1 hereto.

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,


                                       60
<PAGE>


                  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.


                                       61
<PAGE>

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.



                                       62
<PAGE>

         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.



                                       63
<PAGE>

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



                                       64
<PAGE>

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 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
January 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
proposed  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.


                                       65
<PAGE>

         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% of its taxable profits.

         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
payments 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


                                       66
<PAGE>

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 2003 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 only remedy
available to holders of Class D Notes for an Event of Default  caused by failure
to pay  regular  Class D Note  interest is that  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 2003, arrears consisted of $2.042 million of Class A Note
Target Amount,  $0.565 million of Class A Note step-up interest,  $0.220 million
of Class B Note step-up interest,  $4.304 million of Class C Note Target Amount,
$0.206 million of Class C Note step-up interest,  $5.177 million of Class D Note
Target Amount,  $0.326 million of Class D Note step-up interest,  $0.504 million
of  Class D Note  default  interest,  $2.805  million  of  regular  Class D Note
interest and $45.105 million of Class E Note interest.  As of December 15, 2003,
the unpaid amounts  consisted of $30.589  million of Class A Note Target Amount,
$0.741 million of Class A Note step-up interest,  $0.305 million of Class B Note
step-up interest,  $4.304 million of Class C Note Target Amount,  $0.290 million
of Class C Note step-up interest,  $5.177 million of Class D Note Target Amount,
$4.612 million of regular Class D Note interest,  $0.661 million of Class D Note
default  interest,  $0.482 million of Class D Note step-up  interest and $48.560
million of Class E Note interest.  Our inability,  during fiscal year 2003 or to
date,  to pay these  amounts,  other than the $4.612  million of regular Class D
Note 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.


                                       67
<PAGE>

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


                Aircraft to be Sold
 (measured by Initial Appraised Value as of June 3,   Date by which Sales Goals
                       1996)                             are 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
used aircraft has been  extremely  poor and it is not clear when the market will
improve in a meaningful way. Nevertheless, in order to meet the Trust Note Sales
Goals,  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 would need to
sell all of our aircraft to comply with the June 2004 Trust Note Sales Goal.  At
our direction,  the Servicer has been marketing each of our aircraft for sale in
order to meet the ongoing Trust Note Sales Goals.  However,  the current  market
for sale of used aircraft is extremely  poor and it is not clear if and when the
market will improve.

         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 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 as
we were unable,  given the current aircraft industry market conditions,  to sell
sufficient  aircraft  at  the  sale  prices  required  by our  current  Business
Objectives.  Given the  continuing  depressed  market for aircraft sales and the
requirement  to  achieve  sale  prices  consistent  with  our  current  Business
Objectives,  we believe  the  Company  will not be able to comply with the Trust
Note Sales Goal for June 27, 2004.

         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


                                       68
<PAGE>

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 Trust
Note Sales Goals gives the  Noteholders the right to replace the Servicer at the
direction of Noteholders  representing at least 75% of the aggregate 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.  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


                                       69
<PAGE>

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.

         Not applicable

Item 16A.  AUDIT COMMITTEE FINANCIAL EXPERT

         Not applicable.

Item 16B.  CODE OF ETHICS

         Not applicable.

Item 16C.  PRINCIPAL ACCOUNTANT'S FEES AND SERVICES

<TABLE>
<CAPTION>

                                                   Year Ended June 30, 2003                           Year Ended June 30, 2002
                                                    % Approved by Board /                             % Approved by Board /
                                  U.S.$                Audit Committee                U.S.$              Audit Committee
                              ---------------     ---------------------------      ------------     --------------------------
<S>                          <C>                  <C>                              <C>              <C>
Audit Fees                         85,063                    100%                      62,227                 100%
Audit-Related Fees                 39,626                    100%                      40,271                 100%
Tax Fees                            5,763                    100%                       5,603                 100%
All Other Fees                     18,208                    100%                      23,441                 100%
                              ---------------     ---------------------------      ------------     --------------------------
Total                             148,660                    100%                     131,542                 100%
                              ===============     ===========================      ============     ==========================
</TABLE>


         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, 2003
and 2002 relate to review of our annual report on Form 20-F.

         Tax fees in the table  above for the years ended June 30, 2003 and 2002
relate to tax filing in Ireland


                                       70
<PAGE>

         All Other Fees in the table  above for the year ended June 30, 2003 and
2002  relate to tax  advice,  accounting  advice and  statutory  filings for our
subsidiaries.

Item 16D.  EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE

         Not applicable.

                                    PART III
ITEM 17.

         Not applicable

ITEM 18. FINANCIAL STATEMENTS

         See pages F-1 through F-21.

ITEM 19. EXHIBITS

         1.       Memorandum  and  Articles of  Association  of  Aircraft  Lease
                  Portfolio Securitisation 92-1 Limited.

         8.       List of subsidiaries.

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

         13.      Section 1350 Certification.



                                       71
<PAGE>




                     CERTAIN DEFINITIONS AND TECHNICAL TERMS
<TABLE>
<CAPTION>

<S>                                                          <C>
"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"...................................................     Shall have the meaning set forth on page 35.

"AISI"..................................................     Aircraft Information Services, Inc.

"Allegiant Air".........................................     Allegiant Air, Inc.

"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.

"Asiana"................................................     Asiana Airlines, Inc.

"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 28.

</TABLE>

                                       72
<PAGE>

<TABLE>
<CAPTION>
<S>                                                         <C>
"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 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 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 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 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.
</TABLE>


                                       73
<PAGE>


<TABLE>
<CAPTION>

<S>                                                          <C>
"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.

"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 65.

"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.

"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  (formerly  known as 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.

</TABLE>

                                       74
<PAGE>


<TABLE>
<CAPTION>

<S>                                                          <C>
"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.

"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 50.

"Malev".................................................     Malev RT.

"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

</TABLE>


                                       75
<PAGE>


<TABLE>
<CAPTION>

<S>                                                         <C>
                                                             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).

"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).

"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).
</TABLE>

                                       76
<PAGE>


<TABLE>
<CAPTION>

<S>                                                          <C>
"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 16.

"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.

"Travel Service"........................................     Travel Servis 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
</TABLE>


                                       77
<PAGE>


<TABLE>
<CAPTION>

<S>                                                         <C>

                                                             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.
</TABLE>


                                       78
<PAGE>






                                   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: December 23, 2003



                                       79
<PAGE>



                               Index to Exhibits

Exhibit No.      Description
-----------      -----------
1.               Memorandum  and  Articles of  Association  of Aircraft
                 Lease Portfolio Securitisation 92-1 Limited.

8.               List of subsidiaries.

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

13.              Section 1350 Certification




                                       80
<PAGE>



                                                                       Exhibit 1


                           COMPANIES (JERSEY) LAW 1991

                            MEMORANDUM OF ASSOCIATION

                                       of

                  AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1

    LIMITED (reprinted with amendments up to and including 12 December 2003)


1.   The name of the Company is Aircraft  Lease  Portfolio  Securitisation  92-1
     Limited.

2.   The share capital of the Company is U.S.$15,000  divided into 15,000 shares
     of U.S.$1 each.

3.   The liability of the members is limited.

4.   The Company is established for the following purposes:-

     (a)  To carry on business as brokers or agents for the sale,  leasing  out,
          purchase,  exchange,  charter,  hire, demise,  acquisition,  disposal,
          construction,   equipping,   maintenance,   repair,   improvement,  or
          alteration of aircraft, ships, vessels, spacecraft, craft and vehicles
          of all kinds.

     (b)  To establish,  maintain and operate air  transport,  shipping and road
          transport services and all ancillary services.

     (c)  To  act  as  chartering  agents,   merchants,   freight   contractors,
          warehousemen,   wharfingers,  lightermen,  stevedores  and  forwarding
          agents, and as underwriters and insurers of aircraft,  ships, vessels,
          craft and vehicles of all kinds and of goods and other property and as
          consultants  on  air  and  maritime  affairs,   and  as  providers  of
          management and training services of all kinds.

     (d)  To own,  manage,  work,  trade  with and  lease out  aircraft,  ships,
          vessels,  craft and  vehicles  of all  kinds  with all  necessary  and
          convenient equipment,  or any shares or interests in aircraft,  ships,
          vessels, craft and vehicles of all kinds, including shares, stocks, or
          securities  of companies  possessed of or  interested in any aircraft,
          ships, vessels, craft and vehicles of all kinds.

     (e)  To purchase,  take in, exchange,  charter,  hire,  demise,  lease out,
          acquire, dispose of, construct,  equip, maintain,  repair, improve, or
          alter, aircraft, ships, vessels, spacecraft and vehicles of all kinds.

     (f)  To carry on all or any of the  businesses  of carriers by air, land or
          water,  agents  for,  or  managers  of,  aircraft  and  air  transport
          services,  shipowners,   ship-brokers,   shipping  and  other  agents,
          forwarding   agents,   freight   contractors,    warehousemen,   cargo
          contractors  and  agents,  importers,  exporters,  dealers in oils and
          petrol,  general commission agents, brokers and factors. To buy, sell,
          manufacture,  repair, alter, exchange, let on hire, import, export and
          deal in all kinds of articles and things which may be required for the
          purpose of any of the  businesses  referred to in this  Memorandum  or
          commonly  supplied  or dealt in by persons in any such  businesses  or
          which may seem capable of being  profitably  dealt with in  connection
          with any of the said businesses.

     (g)  To borrow or raise money and to raise or secure the  repayment of such
          sum or sums of money in such manner and upon such terms and conditions
          in all respects as the Directors of the Company shall think fit and in
          particular,  without prejudice to the generality of the foregoing,  by
          the issue of unsecured notes or bonds or by the issue of notes, bonds,



                                       1
<PAGE>


          debentures,  mortgages,  charges or other  security  charged  upon the
          undertaking  or the whole or any part of the  property  of the Company
          and upon such  terms and  conditions  and in such  manner and for such
          consideration as they may direct.

     (h)  As an object of the Company  and as a pursuit in itself or  otherwise,
          and  whether  for the purpose of making a profit or avoiding a loss or
          for any other purpose  whatsoever,  to engage in currency exchange and
          interest  rate   transactions   and  any  other   financial  or  other
          transactions  of whatever  nature,  including  (without  limiting  the
          foregoing)  any  transaction  for the purposes of, or capable of being
          for the purposes of, avoiding, reducing,  minimising,  hedging against
          or otherwise managing the risk of any loss, cost, expense or liability
          arising, or which may arise, directly or indirectly,  from a change or
          changes in any interest rate or currency exchange rate or in the price
          or value of any property, asset, commodity, index or liability or from
          any other risk or factor affecting the Company's  business,  including
          but not limited to dealings,  whether  involving  purchases,  sales or
          otherwise,  in  foreign  currency,  spot  and  forward  exchange  rate
          contracts, forward rate agreements, caps, floors and collars, futures,
          options, swaps, and any other currency interest rate and other hedging
          arrangements  and  such  other  instruments  as  are  similar  to,  or
          derivatives of, any of the foregoing.

     (i)  To establish,  regulate and discontinue agencies, and to undertake and
          transact all kinds of agency business which an ordinary individual may
          legally undertake.

     (j)  To  establish,  promote  and  aid in  promoting,  constitute,  form or
          organise,  companies,  syndicates or partnerships of all kinds for the
          purpose of carrying on any business or acquiring and  undertaking  any
          property or  liability of the  Company,  or of  advancing  directly or
          indirectly  the objects  thereof,  or for any other  purpose which the
          Company  may think  expedient,  and to  acquire,  hold and  dispose of
          shares  and  other  interests  in  any  such  company,   syndicate  or
          partnership.

     (k)  To enter into  guarantees,  contracts of indemnity and  suretyships of
          all kinds,  whether or not the Company shall derive a benefit from the
          same,  on such terms and in such manner as the  Directors see fit, and
          in  particular  but  without   prejudice  to  the  generality  of  the
          foregoing,  to  guarantee,  underwrite  or  secure,  with  or  without
          consideration,  and  whether by personal  obligation  or by creating a
          security  interest  over or by mortgaging or charging or providing any
          other security over the whole or any part of the undertaking, property
          or assets  (whether  present or future)  and  uncalled  capital of the
          Company or by the creation and issue of any securities of the Company,
          the  performance of any  obligations or commitments or satisfaction of
          any  liabilities  of any  person or  company  including,  but  without
          prejudice to the generality of the foregoing, any company which is for
          the time  being a  subsidiary  or holding  company  of the  Company or
          another subsidiary of a holding company of the Company or is otherwise
          associated with the Company.

     (l)  To carry on all of the said businesses or any one or more of them as a
          distinct or  separate  business  or as the  principal  business of the
          Company, to carry on any other business or undertake any other purpose
          which may seem to the Company capable of being conveniently carried on
          in  conjunction  with the above or any one of the above or  calculated
          directly  or  indirectly  to  enhance  the  value  of or  render  more
          profitable any of the Company's property or rights.

     (m)  To take out,  acquire,  surrender and assign policies of insurance and
          assurance  with any insurance  company or companies  which the Company
          may  think  fit  payable  at  fixed  or  uncertain  dates  or upon the
          happening  of any  contingency  whatsoever  and to  pay  the  premiums
          thereon.


                                       2
<PAGE>

     (n)  To carry on any business  which the Company is  authorised to carry on
          by means or through the agency of any  subsidiaries  and to enter into
          any  agreement  with any such  subsidiary  for taking the  profits and
          bearing the losses of any business so carried on or for  financing any
          such subsidiary or  guaranteeing  its liabilities or to make any other
          arrangement  which may seem desirable,  with reference to any business
          so carried on,  including power at any time and either  temporarily or
          permanently to close any such business.

     (o)  To do all or any of the  above  things  in any part of the  world  and
          either as principals,  agents, trustees,  contractors or otherwise and
          either  alone or in  conjunction  with others and either by or through
          agents, sub-contractors, trustees or otherwise.

5.   The Company is a public company.



                                       3
<PAGE>


We the subscribers to this  memorandum of association,  wish to be formed into a
company pursuant to this  memorandum,  and we agree to take the number of shares
shown opposite our respective names.


Corporate names and                 Signatures                  Number of shares
registered office of                for and on behalf           taken by each
subscribers                         of subscribers              subscriber
--------------------                -------------------         ----------------
Juris Limited
18 Grenville Street                 /s/                               5
St. Helier                          -------------------
Jersey                              Director
Channel Islands.


Lively Limited
18 Grenville Street                 /s/                               5
St. Helier                          -------------------
Jersey                              Director
Channel Islands.


Witness to the above signatures:   /s/ Marjorie Mauger,
                                  -----------------------
                                  Marjorie Mauger,
                                  18, Grenville Street
                                  St. Helier
                                  Jersey
                                  Channel Islands.


<PAGE>




                           COMPANIES (JERSEY) LAW 1991

                             ARTICLES OF ASSOCIATION

                                       of

                  AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1
    LIMITED (reprinted with amendments up to and including 12 December 2003)

Interpretation

1.   In these Articles,  if not  inconsistent  with the subject or context,  the
     words in the first  column of the  following  table shall bear the meanings
     set opposite to them respectively in the second column.

<TABLE>
<CAPTION>
Words                                     Meanings
------------------------------------      -----------------------------------------------------------------------------
<S>                                       <C>
Affiliate                                 As to any  person,  any other  person  that,  directly  or  indirectly,
                                          controls,  is  controlled  by or is under the common  control with such
                                          person or is a director  of officer of such  person.  For the  purposes
                                          of  this   definition,   the  term   "control"   (including  the  terms
                                          "controlling",  "controlled  by" and "under the common  control with" )
                                          of a person means possession,  direct or indirect, of the power to vote
                                          5% or more of the  voting  stock of such  person  or to direct or cause
                                          the direction of the  management  and policies of such person,  whether
                                          through the ownership of voting stock, by contract or otherwise.

another tax favourable jurisdiction       In the context of an action to be taken, any place previously  approved
                                          by the  Board  of  the  Directors  of  the  Company  on  the  basis  of
                                          appropriate  advice,  in which the action to be taken would be unlikely
                                          to be treated for taxation  purposes as carrying on a trade or business
                                          or  creating a permanent  establishment  in that  jurisdiction,  and by
                                          either such reason or  otherwise  render the Company  liable to payment
                                          of an amount of tax in such  jurisdiction  which in the  opinion of the
                                          Directors is more than a minimal amount.

these Articles                            These  Articles of Association in their present form or as from time to
                                          time altered.

auditors                                  Auditors (if any) of the Company appointed pursuant to these Articles.

bankrupt                                  Shall have the  meaning  defined in the  Interpretation  (Jersey)  Law,
                                          1954.

Class E Notes                             The  U.S.  dollar  denominated  Class E Notes  to be  constituted  by a
                                          resolution of the Board of the Directors of the Company.

Class E Note Director                     Any  Director who is appointed  by the holder or holders of a  majority
                                          in  aggregate   principal amount   of  the   Class  E  Notes  in
                                          accordance with Article 99A(i).

clear days                                In  relation  to the  period of a notice,   shall   mean   that
                                          period excluding  the day when the  notice is served or deemed to be
                                          served  and the day for  which it is given or on which it is to take effect.

</TABLE>



                                       1
<PAGE>

<TABLE>
<CAPTION>
Words                                     Meanings
------------------------------------      -----------------------------------------------------------------------------
<S>                                       <C>

Directors                                 The directors of the Company for the time being.

holding company                           Shall have the meaning defined in the Law.

the Law                                   The Companies (Jersey) Law 1991.

Independent Director                      A Director  who is not at the time of his appointment or at any time
                                          during his  service as  Director,  and has  not  been  for  the   twenty-four
                                          months  prior  to his  appointment  as Director,  an  employee,   consultant,
                                          officer or  director  of any holder of the Class E Notes or any  Affiliate of
                                          any such person.

Member                                    A person  whose name is entered in the Register  as the  holder  of shares in
                                          the Company.

month                                     Calendar month.

notice                                    A written notice unless otherwise specifically stated.

Office                                    The registered office of the Company.

paid up                                   Shall include credited as paid up.

present in  person                        In   relation  to  general meetings   of  the   Company   and  to
                                          meetings  of the  holders of any class of shares,  shall  include  present by
                                          attorney  or by proxy  or, in the case of   a   corporate   shareholder,   by
                                          representative.

Register                                  The register of Members to be kept pursuant to Article 26 hereof.

Secretary                                 Any person  appointed by the Directors to  perform   any  of  the  duties  of
                                          secretary of the Company  (including a temporary or assistant secretary), and
                                          in the  event  of two or more  persons being  appointed as joint  secretaries
                                          any  one or  more  of the  persons  so appointed.

Special Resolution                        A resolution of the Company passed  as  a  special  resolution  in
                                          accordance with the Law.

Trustee                                   The  trustee for the time being of the Alps  96-1  Pass  Through  Trust to be
                                          formed  under the laws of the State of New York pursuant to a trust agreement
                                          and to whom it is proposed the Company will issue debt instruments.

</TABLE>

2.   In these  Articles,  unless  there be  something  in the subject or context
     inconsistent with such construction:-

     (a)  the word "may" shall be construed as  permissive  and the word "shall"
          shall be construed as imperative;

     (b)  the word  "signed"  shall be  construed  as  including a signature  or
          representation of a signature affixed by mechanical or other means;

     (c)  the  words "in  writing"  shall be  construed  as  including  written,
          printed,  telexed,


                                       2
<PAGE>

          electronically  transmitted  or any  other  mode  of  representing  or
          reproducing words in a visible form;

     (d)  words importing "persons" shall be construed as including companies or
          associations or bodies of persons whether corporate or unincorporate;

     (e)  words  importing  the singular  number shall be construed as including
          the plural number and vice versa;  ( f) words  importing the masculine
          gender only shall be construed as including the feminine gender; and

     (g)  references  to enactments  are to such  enactments as are from time to
          time  modified,  re-enacted  or  consolidated  and shall  include  any
          enactment made in substitution for an enactment that is repealed.

3.   The  headings  herein  are for  convenience  only and shall not  affect the
     construction of these Articles.

Preliminary

4.   The preliminary  expenses incurred in forming the Company may be discharged
     out of the funds of the Company.

5.   The  business  of  the  Company  shall  be  commenced  as  soon  after  the
     incorporation of the Company as the Directors think fit.

Share Capital and Shares

6.   The share  capital of the  Company is as  specified  in the  Memorandum  of
     Association  and the  shares of the  Company  shall  have the rights and be
     subject to the conditions contained in these Articles.

7.   Without prejudice to any special rights for the time being conferred on the
     holders of any class of shares (which special rights shall not be varied or
     abrogated except with such consent or sanction as is required by Article 19
     hereof and  subject to the Law) any share in the Company may be issued with
     such  preferred,  deferred or other special rights,  or such  restrictions,
     whether in regard to dividends,  return of capital, voting or otherwise, as
     the Company may from time to time, by Special Resolution, determine.

8.   Subject to Articles 14 to 17 hereof, the unissued shares for the time being
     in the capital of the Company  shall be at the  disposal of the  Directors,
     and they may (subject to the provisions of Article 7 hereof)  allot,  grant
     options  over,  or otherwise  dispose of them to such persons at such times
     and on such  terms as they  think  proper,  but so that no shares  shall be
     issued at a discount.

9.   The Company may issue fractions of shares in accordance with and subject to
     the provisions of the Law, provided that:-

     (a)  a fraction of a share shall be taken into account in  determining  the
          entitlement of a Member as regards dividends or on a winding up; and

     (b)  a fraction  of a share shall not entitle a Member to a vote in respect
          thereof.


                                       3
<PAGE>


10.  The Company  may:-

     (a)  issue; or

     (b)  convert any existing  non-redeemable  shares  (whether  issued or not)
          into,

         shares  which are to be  redeemed,  or are liable to be redeemed at the
         option of the Company or the holder thereof,  on such terms and in such
         manner as may be  determined by Special  Resolution  it being  provided
         that the Company  shall not receive or pay any  redemption of shares in
         any part of the world except in or from the Island of Jersey.

11.  The Company may pay  commissions  as permitted  by the Law.  Subject to the
     provisions of the Law, any such  commission may be satisfied  either by the
     payment  of cash or by the  allotment  of fully or  partly  paid  shares or
     partly in one way and partly in the other.

12.  Save as  permitted  by the  Law,  the  Company  shall  not  give  financial
     assistance  directly or  indirectly  for the  purpose of, or in  connection
     with, the acquisition made or to be made by any person of any shares in the
     Company or its holding company (if any).

13.  Except as required by law, no person shall be  recognised by the Company as
     holding any share upon any trust,  and the Company shall not be bound by or
     recognise  any  equitable,  contingent,  future or partial  interest in any
     share, or (except only as by these Articles otherwise provided or as by law
     required)  any interest in any  fraction of a share,  or any other right in
     respect of any share,  except an absolute right to the entirety  thereof in
     the registered holder.

Alteration of Share Capital

14.  The Company  may, by altering  its  Memorandum  of  Association  by Special
     Resolution, alter its share capital in any manner permitted by the Law.

15.  Any new shares created on an increase or other  alteration of share capital
     shall be issued  upon such terms and  conditions  as the Company in general
     meeting shall direct.

16.  Unless otherwise  directed by the Company in general meeting all new shares
     shall be offered to the Members in proportion  to the existing  shares held
     by them.  Such  offers  shall be made by notice  specifying  the  number of
     shares to which the Member is entitled and  prescribing  the period  within
     which the offer will  remain  open,  and upon the expiry of such period the
     offer,  if not accepted,  shall be deemed to have been  declined.  All such
     shares,  if  offered  to the  Members  and not  taken up by them,  shall be
     disposed of by the  Directors  in such manner as the  Directors  think most
     beneficial to the Company.

17.  Any capital  raised by the creation of new shares shall,  unless  otherwise
     provided by the  conditions  of issue of the new shares,  be  considered as
     part of the  original  capital,  and the new shares shall be subject to the
     provisions  of these  Articles  with  reference  to the  payment  of calls,
     transfer and transmission of shares,  lien or otherwise,  applicable to the
     existing shares in the Company.

Reduction of Share Capital

18.  Subject  to  the  provisions  of the  Law,  the  Company  may,  by  Special
     Resolution, reduce its share capital in any way.



                                       4
<PAGE>


Variation of Rights

19.  Whenever  the capital of the Company is divided into  different  classes of
     shares, the special rights attached to any class, unless otherwise provided
     by the  terms  of issue of the  shares  of that  class,  may be  varied  or
     abrogated,  either  whilst the  Company is a going  concern or during or in
     contemplation  of a winding  up, with the consent in writing of the holders
     of the majority of the issued shares of that class, or with the sanction of
     a resolution  passed at a separate meeting of the holders of shares of that
     class, but not otherwise. To every such separate meeting all the provisions
     of these  Articles  and of the Law  relating  to  general  meetings  of the
     Company or to the proceedings thereat shall apply, mutatis mutandis, except
     that the necessary  quorum shall be two persons  holding or representing at
     least one-third in nominal amount of the issued shares of that class but so
     that if at any adjourned  meeting of such holders a quorum as above defined
     is not present, those holders who are present in person shall be a quorum.

20.  The special rights conferred upon the holders of any class of shares issued
     with  preferred or other special rights shall be deemed to be varied by the
     reduction  of the  capital  paid up on such  shares and by the  creation of
     further shares ranking in priority thereto, but shall not (unless otherwise
     expressly  provided by these Articles or by the conditions of issue of such
     shares) be deemed to be varied by the  creation or issue of further  shares
     ranking after or pari passu therewith.

Share Certificates

21.  Every Member shall be entitled:-

     (a)  without  payment,  to one certificate for all his shares of each class
          and, when part only of the shares  comprised in a certificate  is sold
          or  transferred,  to a new certificate for the remainder of the shares
          so comprised; or

     (b)  upon payment of such sum for each  certificate as the Directors  shall
          from time to time determine,  to several  certificates each for one or
          more of his shares of any class.

22.  Every  certificate  shall be issued  within two months  after  allotment or
     lodgment of  transfer  (or within such other  period as the  conditions  of
     issue shall provide),  shall be under seal, and shall specify the shares to
     which it relates  and the amount  paid up thereon and if so required by the
     Law, the distinguishing numbers of such shares.

23.  In respect of a share held jointly by several  persons,  the Company  shall
     not be  bound  to  issue  more  than one  certificate,  and  delivery  of a
     certificate for a share to one of several joint holders shall be sufficient
     delivery to all such holders.

24.  If a share certificate is defaced, lost or destroyed,  it may be renewed on
     payment of such fee and on such terms (if any) as to evidence and indemnity
     and the  payment of  out-of-pocket  expenses  of the  Company  in  relation
     thereto as the Directors think fit.

Joint Holders of Shares

25.  Where two or more persons are  registered  as the holders of any share they
     shall be  deemed  to hold the same as joint  tenants  with the  benefit  of
     survivorship, subject to the following provisions:-

     (a)  the Company  shall not be bound to register  more than four persons as
          the joint holders of any share;

     (b)  the joint  holders of any share shall be liable,  severally as well as
          jointly,  in  respect  of all  payments  to be made in respect of such
          share;


                                       5
<PAGE>

     (c)  any  one of  such  joint  holders  may  give a good  receipt  for  any
          dividend, bonus or return of capital payable to such joint holders;

     (d)  only the senior of the joint  holders of a share  shall be entitled to
          delivery  of the  certificate  relating  to such  share or to  receive
          notices from the Company or to attend general  meetings of the Company
          and any notice given to the senior joint holder shall be deemed notice
          to all the joint holders; and

     (e)  for the purpose of the provisions of this Article,  seniority shall be
          determined by the order in which the names of the joint holders appear
          in the Register.

Register of Members

26.  The Directors shall keep or cause to be kept at the Office or at such other
     place in the  Island of Jersey  where it is made up, as the  Directors  may
     from time to time determine,  a Register in the manner required by the Law.
     In each year the Directors  shall prepare or cause to be prepared and filed
     an annual return containing the particulars required by the Law.

Lien

27.  The Company shall have a first and paramount lien on every share (not being
     a fully  paid  share) for all  monies,  whether  presently  payable or not,
     called or  payable  at a fixed  time in  respect  of such  shares;  and the
     Company  shall also have a first and  paramount  lien on all shares  (other
     than fully paid shares)  registered  in the name of a single Member for all
     the debts and  liabilities  of such  Member or his  estate to the  Company,
     whether  the same shall have been  incurred  before or after  notice to the
     Company of any  interest  of any person  other than such Member and whether
     the period for the  payment or  discharge  of the same shall have  actually
     commenced  or not,  and  notwithstanding  that the same are joint  debts or
     liabilities  of such  Member or his estate and any other  person  whether a
     Member or not. The  Company's  lien (if any) on a share shall extend to all
     dividends  or other  monies  payable  thereon  or in respect  thereof.  The
     Directors  may resolve that any share shall,  for such period as they think
     fit, be exempt from the provisions of this Article.

28.  The Company may sell, in such manner as the Directors think fit, any shares
     on which the  Company  has a lien,  but no sale shall be made  unless  some
     monies in  respect  of which the lien  exists are  presently  payable,  and
     fourteen days have expired after a notice, stating and demanding payment of
     the monies  presently  payable and giving  notice of  intention  to sell in
     default,  shall  have been  served on the  holder for the time being of the
     shares or the person  entitled by reason of his death or  bankruptcy to the
     shares.

29.  The net  proceeds  of such sale,  after  payment of the costs of such sale,
     shall be  applied  in or towards  payment  or  satisfaction  of the debt or
     liability  in  respect  whereof  the  lien  exists,  so far as the  same is
     presently payable,  and any residue shall (subject to a like lien for debts
     or  liabilities  not presently  payable as existed upon the shares prior to
     the sale) be paid to the person  entitled  to the shares at the time of the
     sale.  For giving  effect to any such sale the  Directors  may  authorise a
     person to execute  an  instrument  of  transfer  of the shares  sold to the
     purchaser  thereof.  The purchaser shall be registered as the holder of the
     shares so transferred  and he shall not be bound to see to the  application
     of the purchase  money nor shall his title to the shares be affected by any
     irregularity or invalidity in the proceedings in reference to the sale.

Calls on Shares

30.  The Directors  may,  subject to the provisions of these Articles and to any
     conditions of  allotment,  from time to time make calls upon the Members in
     respect of any monies  unpaid on their  shares  (whether  on account of the
     amount  of the  shares  or by way of  premium)  provided  that  (except  as
     otherwise  fixed by the  conditions of application or allotment) no call on
     any share shall be payable


                                       6
<PAGE>

     within  fourteen  days  of the  date  appointed  for  payment  of the  last
     preceding  call,  and each  Member  shall  (subject to being given at least
     fourteen  clear  days'  notice  specifying  the time or times  and place of
     payment) pay to the Company at the time or times and place so specified the
     amount called on his shares.

31.  A call may be made  payable  by  instalments.  A call may be  postponed  or
     wholly or in part revoked as the Directors may  determine.  A call shall be
     deemed to have been made at the time when the  resolution  of the Directors
     authorising the call was passed.

32.  If a sum  called  in  respect  of a share is not paid  before or on the day
     appointed for payment  thereof,  the person from whom the sum is due may be
     required  to pay  interest  on the sum from the day  appointed  for payment
     thereof to the time of actual payment at a rate determined by the Directors
     not exceeding the rate of ten per cent per annum.

33.  Any sum  which by or  pursuant  to the  terms  of issue of a share  becomes
     payable  upon  allotment  or at any fixed  date,  whether on account of the
     amount of the share or by way of premium,  shall,  for all the  purposes of
     these Articles, be deemed to be a call duly made and payable on the date on
     which, by or pursuant to the terms of issue, the same becomes payable,  and
     in case of non-payment, all the relevant provisions of these Articles as to
     payment of interest, forfeiture or otherwise shall apply as if such sum had
     become payable by virtue of a call duly made and notified.

34.  The Directors may make arrangements on the issue of shares for a difference
     between  the  holders in the amount of calls to be paid and in the times of
     payment.

35.  The Directors  may, if they think fit,  receive from any Member  willing to
     advance the same, all or any part of the money uncalled and unpaid upon the
     shares held by him beyond the sums actually  called up thereon as a payment
     in advance of calls. Any such payment in advance of calls shall extinguish,
     so far as the same shall extend,  the liability  upon the shares in respect
     of which it is  advanced.  The Company may pay  interest  upon the money so
     received,  or upon so much  thereof as from time to time exceeds the amount
     of the  calls  then made upon the  shares in  respect  of which it has been
     received,  at such rate as the Directors  shall think fit provided that any
     amount  paid up in advance  of calls  shall not  entitle  the holder of the
     shares upon which such amount is paid to participate in respect  thereof in
     any  dividend  until the same would but for such advance  become  presently
     payable.

Forfeiture of Shares

36.  If a Member fails to pay any call or  instalment of a call on or before the
     day  appointed  for  payment  thereof,   the  Directors  may  at  any  time
     thereafter, during such time as any part of such call or instalment remains
     unpaid,  serve a notice on him requiring  payment of so much of the call or
     instalment as is unpaid,  together with any interest which may have accrued
     and any expenses  which may have been  incurred by the Company by reason of
     such non-payment.

37.  The notice shall name a further day (not earlier  than  fourteen  days from
     the date of service  thereof)  on or before  which and the place  where the
     payment  required by the notice is to be made,  and shall state that in the
     event of non-payment at or before the time and at the place appointed,  the
     shares on which the call was made will be liable to be forfeited.

38.  If the  requirements of any such notice as aforesaid are not complied with,
     any share in respect  of which  such  notice has been given may at any time
     thereafter, before payment of all calls and interest due in respect thereof
     have been made,  be  forfeited  by a  resolution  of the  Directors to that
     effect,  and such  forfeiture  shall include all dividends which shall have
     been  declared on the  forfeited  shares and not  actually  paid before the
     forfeiture.


                                       7
<PAGE>

39.  When any share has been forfeited in accordance with these Articles, notice
     of the  forfeiture  shall  forthwith be given to the holder of the share or
     the person entitled to the share by  transmission,  as the case may be, and
     an entry of such notice having been given,  and of the forfeiture  with the
     date thereof, shall forthwith be made in the Register opposite to the entry
     of the share;  but no forfeiture  shall be invalidated in any manner by any
     omission or neglect to give such notice or to make such entry as aforesaid.

40.  A forfeited share may be sold, re-allotted or otherwise disposed of, either
     to the person  who was before  forfeiture  the holder  thereof or  entitled
     thereto,  or to any other person, upon such terms and in such manner as the
     Directors  think  fit,  and at any  time  before  a sale,  re-allotment  or
     disposition  the forfeiture may be cancelled on such terms as the Directors
     think fit.  The  Directors  may,  if  necessary,  authorise  some person to
     transfer a forfeited share to any other person as aforesaid.

41.  A Member  whose  shares have been  forfeited  shall cease to be a Member in
     respect of the forfeited shares but shall,  notwithstanding the forfeiture,
     remain  liable  to pay to the  Company  all  monies  which  at the  date of
     forfeiture  were presently  payable by him to the Company in respect of the
     shares,  with  interest  thereon at a rate  determined by the Directors not
     exceeding ten per cent per annum from the date of forfeiture  until payment
     and the Directors may enforce  payment  without any allowance for the value
     of the shares at the time of forfeiture.

42.  An  affidavit  by a Director  or the  Secretary  that a share has been duly
     forfeited on the date stated  therein shall be  conclusive  evidence of the
     facts so stated as against all persons claiming to be entitled to the share
     and such affidavit and the receipt of the Company for the consideration (if
     any) given for the share on the sale,  re-allotment  or  disposal  thereof,
     together  with the  certificate  for the share  delivered to a purchaser or
     allottee thereof, shall (subject to the execution of a transfer if the same
     be so required)  constitute  good title to the share and the person to whom
     the share is sold,  re-allotted  or disposed of shall be  registered as the
     holder of the share and shall not be bound to see to the application of the
     consideration (if any), nor shall his title to the share be affected by any
     irregularity or invalidity in the proceedings in respect of the forfeiture,
     sale, re-allotment or disposal of the share.

43.  The provisions of these  Articles as to forfeiture  shall apply in the case
     of  non-payment  of any sum which by the terms of issue of a share  becomes
     payable at a fixed  time,  whether on account of the amount of the share or
     by way of premium, as if the same had been payable by virtue of a call duly
     made and notified.

Transfer and Transmission of Shares

44.  All  transfers of shares shall be effected by notice (a "Transfer  Notice")
     in the usual common form or in any other form approved by the Directors.

45.  All Transfer Notices shall be signed by or on behalf of the transferor and,
     in the case of a partly paid share, by the transferee. The transferor shall
     be  deemed  to  remain  the  holder  of the  share  until  the  name of the
     transferee is entered on the Register in respect thereof.

46.  The Directors may in their absolute  discretion,  and without assigning any
     reason  therefor,  refuse to register  any  transfer of shares,  including,
     without  limitation,  a transfer  of shares to a person of whom they do not
     approve and a transfer of shares on which the Company has a lien.

47.  The Directors may decline to recognise any Transfer Notice, unless:-

     (a)  the Transfer  Notice is deposited at the Office or such other place as
          the  Directors  may appoint  accompanied  by the  certificate  for the
          shares to which it relates and such other  evidence  as the  Directors
          may reasonably require to show the right of the transferor to make the
          transfer; and


                                       8
<PAGE>

     (b)  the Transfer Notice is in respect of only one class of shares.

48.  If the  Directors  refuse to  register  any  transfer of shares they shall,
     within two months  after the date on which the  Transfer  Notice was lodged
     with the Company,  send to the proposed transferor and transferee notice of
     the refusal.

49.  All Transfer  Notices  relating to transfers of shares which are registered
     shall be retained by the  Company,  but any  Transfer  Notices  relating to
     transfers of shares which the Directors  decline to register  shall (except
     in any case of fraud) be returned to the person depositing the same.

50.  The  registration  of  transfers of shares or of any class of shares may be
     suspended whenever the Directors determine.

51.  Unless otherwise decided by the Directors in their sole discretion,  no fee
     shall be charged in respect of the registration of any probate,  letters of
     administration,  certificate  of  marriage  or death,  power of attorney or
     other document relating to or affecting the title to any shares.

52.  In respect of any allotment of any share the Directors  shall have the same
     right to  decline to  approve  the  registration  of any  renouncee  of any
     allottee  as if the  application  to  allot  and  the  renunciation  were a
     transfer of a share under these Articles.

53.  In the case of the death of a Member, the survivors or survivor,  where the
     deceased was a joint  holder,  and the executors or  administrators  of the
     deceased,  where he was a sole or only surviving holder,  shall be the only
     persons  recognised  by the Company as having any title to his  interest in
     the  shares,  but  nothing in this  Article  shall  release the estate of a
     deceased  joint holder from any  liability in respect of any share  jointly
     held by him.

54.  Any guardian of an infant Member and any curator or guardian or other legal
     representative  of a Member under legal  disability and any person becoming
     entitled to a share in consequence of the death or insolvency or bankruptcy
     of a Member may, upon such  evidence as to his title being  produced as may
     from time to time be required by the Directors  and subject as  hereinafter
     provided,  elect either to be registered himself as the holder of the share
     or to have some person nominated by him registered as the holder thereof.

55.  If the person so becoming entitled shall elect to be registered himself, he
     shall  deliver  or send to the  Company  a  Transfer  Notice  signed by him
     stating  that he so  elects.  If he  shall  elect  to have  another  person
     registered,  he shall testify his election by signing a Transfer  Notice in
     favour of that person. All the limitations,  restrictions and provisions of
     these Articles  relating to the right to transfer and the  registration  of
     transfers  of shares shall be  applicable  to any such  Transfer  Notice as
     aforesaid  as would have  existed  had such  transfer  occurred  before the
     death, insolvency or bankruptcy of the Member concerned.

56.  A person becoming  entitled to a share by reason of the death or insolvency
     or bankruptcy of a Member shall be entitled to the same dividends and other
     advantages to which he would be entitled if he were the  registered  holder
     of the share, except that he shall not, before being registered as a Member
     in respect of the share, be entitled in respect of it to exercise any right
     conferred  by  membership  in relation to meetings of the Company  provided
     always that the  Directors  may at any time give notice  requiring any such
     person to elect  either to be  registered  himself or to transfer the share
     and if the notice is not  complied  with within one month such person shall
     be  deemed  to  have  so  elected  to be  registered  himself  and  all the
     restrictions on the transfer and  transmission of shares contained in these
     Articles shall apply to such election.


                                       9
<PAGE>

Gemeral Meetings

57.  Unless all of the Members  agree in writing to dispense with the holding of
     annual general meetings and any such agreement  remains valid in accordance
     with the Law, the  provisions  of Article 58 hereof shall apply with regard
     to annual general meetings of the Company.

58.  An annual general meeting shall be held once in every calendar year, either
     in the Island of Jersey or in another tax favourable jurisdiction,  at such
     time and place as may be  determined by the  Directors;  but so long as the
     Company holds its first annual general  meeting within  eighteen  months of
     its  incorporation it need not hold it in the year of its  incorporation or
     in  the  following  year.  All  other  general  meetings  shall  be  called
     extraordinary general meetings.

59.  The Directors  may whenever they think fit, and upon a requisition  made in
     writing by Members in accordance with the Law the Directors shall,  convene
     an extraordinary general meeting of the Company.

60.  At any  extraordinary  general  meeting  called  pursuant to a requisition,
     unless such meeting is called by the Directors, no business other than that
     stated  in  the  requisition  as  the  objects  of  the  meeting  shall  be
     transacted.

Class Meetings

61.  Save as is provided in this Article and  otherwise in these  Articles,  all
     the  provisions  of  these  Articles  and of the Law  relating  to  general
     meetings of the Company and to the proceedings thereat shall apply, mutatis
     mutandis,  to every  class  meeting.  At any class  meeting  the holders of
     shares of the relevant class shall,  on a poll, have one vote in respect of
     each share of that class held by each of them.

Notice of General Meetings

62.  At least  twenty-one  clear  days'  notice  shall be given of every  annual
     general  meeting and of every general  meeting  called for the passing of a
     Special Resolution, and at least fourteen clear days' notice shall be given
     of all other general  meetings.  Every notice shall specify the place,  the
     day and the time of the  meeting and in the case of special  business,  the
     general  nature of such  business  and,  in the case of an  annual  general
     meeting,  shall specify the meeting as such.  Notice of every meeting shall
     be given in the manner hereinafter  mentioned to all the Members and to the
     Directors  and to the  auditors.

63.  A  meeting  of  the  Company  shall,
     notwithstanding  that it is called by shorter notice than that specified in
     Article 62 hereof,  be deemed to have been duly called if it is so agreed:-

     (a)  in the case of an annual general meeting,  by all the Members entitled
          to attend and vote thereat; and

     (b)  in the case of any other  meeting,  by a majority in number of Members
          having a right to attend  and vote at the  meeting,  being a  majority
          together  holding not less than  ninety-five per cent in nominal value
          of the shares giving that right.

64.  In every  notice  calling a meeting of the Company  there shall appear with
     reasonable prominence a statement that a Member entitled to attend and vote
     is entitled to appoint  one or more  proxies to attend and vote  instead of
     him and that a proxy need not also be a Member.

65.  It shall be the duty of the Company,  subject to the provisions of the Law,
     on the calling of a meeting on the requisition in writing of such number of
     Members as is specified by the Law:-


                                       10
<PAGE>

     (a)  to give to the Members  entitled to receive notice of general meetings
          and to the Directors  notice of any  resolution  which may properly be
          moved and which it is intended to move at that meeting; and

     (b)  to circulate to Members entitled to have notice of any general meeting
          sent to them,  any statement of not more than one thousand  words with
          respect to the matter  referred to in any proposed  resolution  or the
          business to be dealt with at that meeting.


66.  The accidental  omission to give notice of a meeting to, or the non-receipt
     of notice of a meeting by, any person  entitled to receive notice shall not
     invalidate the proceedings at that meeting.

Proceedings at General Meetings

67.  No  general  meeting  shall be held  except  in the  Island of Jersey or in
     another tax favourable jurisdiction.

67A. The business of an annual general  meeting shall be to receive and consider
     the accounts of the Company and the reports of the  Directors and auditors,
     to  elect  Directors  (if  necessary),  to  elect  auditors  and fix  their
     remuneration,  to  sanction  a  dividend  if  thought  fit so to do, and to
     transact any other business of which notice has been given.

68.  No  business  shall  be  transacted  at  any  general  meeting  except  the
     adjournment  of the  meeting  unless a quorum of  Members is present at the
     time when the meeting  proceeds to business.  Such quorum shall  consist of
     not less than two Members present in person,  but so that not less than two
     individuals  will constitute the quorum,  provided that, if at any time all
     of the  issued  shares in the  Company  are held by or by a  nominee  for a
     holding company, such quorum shall consist of the Member present in person.

69.  If within half an hour from the time  appointed for the meeting a quorum is
     not present,  or if during the meeting a quorum  ceases to be present,  the
     meeting,  if  convened  by or upon the  requisition  of  Members,  shall be
     dissolved.  If otherwise  convened the meeting shall stand adjourned to the
     same day in the next week at the same time and place or such day,  time and
     place as the Directors shall determine.

70.  The chairman (if any) of the  Directors  shall preside as chairman at every
     general meeting of the Company. If there is no such chairman,  or if at any
     meeting he is not present the Members present in person shall choose one of
     the Directors  present to be chairman,  or if no Director  shall be present
     and willing to take the chair the Members  present in person  shall  choose
     one of their number to be chairman.

71.  The  chairman  may with the  consent  of any  meeting  at which a quorum is
     present (and shall if so directed by the meeting)  adjourn the meeting from
     time to time and from place to place,  but no business  shall be transacted
     at any adjourned  meeting  other than the business  left  unfinished at the
     meeting from which the adjournment took place.  When a meeting is adjourned
     for thirty days or more,  notice of the adjourned meeting shall be given as
     in the case of the original  meeting.  Save as  aforesaid,  it shall not be
     necessary to give any notice of any adjourned meeting or of the business to
     be transacted at an adjourned meeting.

72.  Except  where  otherwise  provided  in the Law or in  these  Articles,  all
     resolutions  shall be adopted if  approved by a majority of the votes cast.
     In the event of an equality of votes at any general meeting, whether upon a
     show of hands or on a poll,  the chairman shall not be entitled to a second
     or casting vote.

73.  At any  general  meeting  every  question  shall be  decided  in the  first
     instance by a show of hands and,  unless a poll is demanded by the chairman


                                       11
<PAGE>

     or by any Member,  a declaration by the chairman that a resolution has on a
     show of hands been carried or not  carried,  or carried or not carried by a
     particular  majority or lost, and an entry to that effect in the minutes of
     the meeting shall be  conclusive  evidence of the fact without proof of the
     number or  proportion  of the votes  recorded in favour of or against  such
     resolution.

74.  If a poll is demanded in the manner  mentioned  above, it shall be taken at
     such  time  (within  twenty-one  days) and in such  manner as the  chairman
     directs and the  results of such poll shall be deemed to be the  resolution
     of the Company in general meeting. A poll may be demanded upon the election
     of the chairman and upon a question of  adjournment  and such poll shall be
     taken  forthwith  without  adjournment.  Any business  other than that upon
     which a poll has been demanded may proceed pending the taking of the poll.

75.  Minutes of all  resolutions  and  proceedings of general  meetings shall be
     duly and regularly entered in books kept for that purpose at the Office and
     shall be available for inspection by a Member during business hours without
     charge. A Member may require a copy of any such minutes in such manner, and
     upon payment of such sum, as provided in the Law.

76.  If a Member is by any means in communication with one or more other Members
     so that each Member  participating  in the  communication  can hear what is
     said  by  any  other  of  them,  each  Member  so   participating   in  the
     communication is deemed to be present in person at a meeting with the other
     Members  so  participating,   notwithstanding   that  all  the  Members  so
     participating  are not present  together  in the same  place.  A meeting at
     which any or all of the Members participate as aforesaid shall be deemed to
     be a general  meeting of the  Company for the  purposes  of these  Articles
     notwithstanding  any  other  provisions  of these  Articles  and all of the
     provisions of these Articles and of the Law relating to general meetings of
     the Company and to the proceedings  thereat shall apply,  mutatis mutandis,
     to every such meeting.

77.  A resolution  in writing  (including a Special  Resolution  but excluding a
     resolution removing an auditor) signed by all Members who would be entitled
     to receive  notice of and to attend and vote at a general  meeting at which
     such a resolution would be proposed,  or by their duly appointed attorneys,
     shall be as valid  and  effectual  as if it had been  passed  at a  general
     meeting of the Company duly  convened  and held.  Any such  resolution  may
     consist of several documents in the like form each signed by one or more of
     the Members or their  attorneys  and  signature  in the case of a corporate
     body which is a Member shall be  sufficient  if made by a director or other
     duly authorised officer thereof or its duly appointed attorney.

78.  (1) On a show of hands every Member present in person shall have one vote.

     (2)  Subject to any  special  voting  powers or  restrictions  for the time
          being  attached to any  shares,  as may be  specified  in the terms of
          issue  thereof or these  Articles,  on a poll every Member  present in
          person shall have one vote for each share held by him.

79.  Where there are joint registered  holders of any share,  such persons shall
     not have the right of voting  individually  in  respect  of such  share but
     shall elect one of their  number to  represent  them and to vote whether in
     person or by proxy in their name.  In default of such  election  the person
     whose name appears  first in order in the Register in respect of such share
     shall be the only person entitled to vote in respect thereof.

80.  A Member for whom a special  or general  attorney  is  appointed  or who is
     suffering from some other legal  incapacity or  interdiction  in respect of
     whom an order has been made by any court  having  jurisdiction  (whether in
     the Island of Jersey or elsewhere) in matters  concerning  legal incapacity
     or interdiction  may vote,  whether on a show of hands or on a poll, by his
     attorney,  curator,  or other person authorised in that behalf appointed by
     that  court,  and any such  attorney,  curator or other  person may vote by
     proxy.  Evidence to the  satisfaction  of the Directors of the


                                       12
<PAGE>

     authority of such attorney,  curator or other person may be required by the
     Directors  prior to any vote being  exercised by such attorney,  curator or
     other person.

81.  The Directors and the auditors  shall be entitled to receive  notice of and
     to attend and speak at any meeting of  Members.  Save as  aforesaid  and as
     provided in Article 80 hereof, no person shall be entitled to be present or
     take part in any  proceedings or vote either  personally or by proxy at any
     general  meeting  unless he has been  registered  as owner of the shares in
     respect of which he claims to vote.

82.  (1) No objection shall be raised to the  qualification  of any voter except
     at the meeting or adjourned  meeting at which the vote objected to is given
     or tendered,  and every vote not  disallowed at such meeting shall be valid
     for all purposes.  Any such objection made in due time shall be referred to
     the chairman of the meeting whose decision shall be final and conclusive.

     (2)  Where a person is  authorised  under  Article 90 hereof to represent a
          body  corporate at a general  meeting of the Company the  Directors or
          the  chairman  of the  meeting  may require him to produce a certified
          copy of the resolution from which he derives his authority.

83.  On a poll a Member  entitled  to more  than  one vote  need not use all his
     votes or cast all the votes he uses in the same way.

84.  The instrument appointing a proxy shall be in writing under the hand of the
     appointor or of his attorney duly authorised in writing or if the appointor
     is a  corporation  either  under  seal or under the hand of an  officer  or
     attorney duly authorised. A proxy need not be a Member.

85.  The  instrument  appointing  a proxy  and the  power of  attorney  or other
     authority (if any) under which it is signed, or a notarially certified copy
     of that power or  authority,  shall be deposited at the Office  within such
     time (not  exceeding  forty-eight  hours)  before the time for  holding the
     meeting  or  adjourned  meeting  or for the  taking  of a poll at which the
     person named in the  instrument  proposes to vote as the Directors may from
     time to time determine.

86.  The instrument appointing a proxy may be in any common form or in any other
     form approved by the Directors including the following form:-

"Aircraft Lease Portfolio Securitisation 92-1 Limited

I/We  _________________________ of ______________________ being a Member/Members
of   the   above   named   Company   hereby   appoint    _________________    of
_______________________ or failing him ____________________ of _________________
as _____  my/our  proxy to vote for me/us on my/our  behalf  at the  (annual  or
extraordinary  as the case may be) general  meeting of the Company to be held on
the _____ day of ______________ and at any adjournment thereof.

Signed this __________________ day of ______________"

87.  Unless the  contrary is stated  thereon the  instrument  appointing a proxy
     shall be as valid as well for any  adjournment  of the  meeting  as for the
     meeting to which it relates.

88.  A vote given in  accordance  with the terms of an instrument of proxy shall
     be valid notwithstanding the previous death or insanity of the principal or
     revocation  of the  proxy or of the  authority  under  which  the proxy was
     executed provided that no intimation in writing of such death,  insanity or
     revocation shall have been received by the Company at the Office before the
     commencement of the meeting or adjourned  meeting or the taking of the poll
     at which the proxy is used.


                                       13
<PAGE>

89.  The  Directors  may at the expense of the Company send by post or otherwise
     to the Members  instruments  of proxy (with or without  provision for their
     return prepaid) for use at any general  meeting or at any separate  meeting
     of the  holders  of any class of shares of the  Company  either in blank or
     nominating in the alternative any one or more of the Directors or any other
     persons.  If for the purpose of any meeting invitations to appoint as proxy
     a person or one or more of a number of persons specified in the invitations
     are issued at the Company's expense they shall be issued to all (and not to
     some only) of the  Members  entitled to be sent a notice of the meeting and
     to vote thereat by proxy.

Corporate Members

90.  Any body corporate  which is a Member may by resolution of its directors or
     other  governing  body authorise such person as it thinks fit to act as its
     representative  at any meeting of Members (or of any class of Members)  and
     the person so  authorised  shall be  entitled  to exercise on behalf of the
     body  corporate  which he represents the same powers as that body corporate
     could exercise if it were an individual.

Directors

91.  The number of Directors  shall not be more than three and shall not be less
     than two. At all times the  Directors  shall  include a majority of persons
     resident outside the Republic of Ireland and a majority of persons resident
     outside  the United  Kingdom and at no time shall all of the  Directors  be
     resident in the United States of America.  Save as provided in Article 99A,
     no person  shall be  appointed  as a Director  of the  Company  unless that
     person  has been  approved  by the  existing  Directors  (if any) as having
     sufficient knowledge and experience in the aircraft leasing industry,  such
     approval  not to be  unreasonably  withheld.  At  all  times  the  Director
     appointed  pursuant  to Article  99A shall  constitute  a  minority  of the
     Directors.  The  Company  shall  keep or cause  to be kept at the  Office a
     register of its Directors in the manner required by the Law.

92.  A  Director  need not be a Member but shall  nevertheless  be  entitled  to
     receive notice of and to attend and speak at any general  meeting or at any
     separate meeting of the holders of any class of shares in the Company.

93.  The  Directors  shall  be  paid  out of the  funds  of  the  Company  their
     travelling and other expenses properly and necessarily  expended by them in
     attending  meetings of the Directors or Members or otherwise on the affairs
     of the Company. The Independent Directors shall also each be paid by way of
     remuneration for their services a sum equal to US$50,000 per annum (or such
     higher amount, not exceeding  US$100,000 per annum as shall be fixed by the
     Company in general  meeting)  which  shall be deemed to accrue  from day to
     day. If any Director shall be appointed  agent or to perform extra services
     or to make any special  exertions or to go or reside  abroad for any of the
     purposes  of the  Company,  the  Directors  may  remunerate  such  Director
     therefor either by a fixed sum or by commission or participation in profits
     or otherwise or partly one way and partly in another as they think fit, and
     such  remuneration  may be either in addition to or in substitution for his
     remuneration,   if  any,  hereinbefore  provided.  The  Director  appointed
     pursuant to Article  99A(i) shall not be entitled to  remuneration  for his
     services as a Director.

Alternate Directors

94.  Any  Director may at his sole  discretion  and at any time and from time to
     time appoint any person (other than a person disqualified by law from being
     a director of a company) as an alternate Director to attend and vote in his
     place at any meetings of Directors at which he is not personally present it
     being  provided  that a Director  may only appoint a person as an alternate
     Director who is also resident in the same  jurisdiction as that Director or
     in another tax favourable  jurisdiction.  Each Director shall be at liberty
     to appoint under this Article more than one alternate Director


                                       14
<PAGE>

     provided that only one such  alternate  Director may at any one time act on
     behalf  of  the  Director  by  whom  he  has  been  appointed.  Every  such
     appointment shall be effective and the following  provisions shall apply in
     connection therewith:-

     (a)  every  alternate  Director  while he  holds  office  as such  shall be
          entitled  to notice of  meetings  of  Directors  and to attend  and to
          exercise all the rights and  privileges  of his  appointor at all such
          meetings at which his appointor is not personally present;

     (b)  every  alternate  Director  shall ipso facto vacate office if and when
          his appointment expires or the Director who appointed him ceases to be
          a Director  of the  Company or removes  the  alternate  Director  from
          office by notice under his hand served upon the Company;

     (c)  every alternate  Director shall be entitled to be paid all travelling,
          hotel and  other  expenses  reasonably  incurred  by him in  attending
          meetings.  The remuneration (if any) of an alternate Director shall be
          payable out of the remuneration payable to the Director appointing him
          as may be agreed between them;

     (d)  a Director  may act as  alternate  Director  for another  Director and
          shall be  entitled  to vote for such other  Director as well as on his
          own account,  but no Director  shall at any meeting be entitled to act
          as alternate Director for more than one other Director; and

     (e)  a  Director  who is also  appointed  an  alternate  Director  shall be
          considered  as two  Directors  for the  purpose  of making a quorum of
          Directors when such quorum shall exceed two.

95.  The instrument appointing an alternate Director may be in any form approved
     by the Directors including the following form:-

"Aircraft Lease Portfolio Securitisation 92-1 Limited

I, __________________ a Director of the above named Company, in pursuance of the
power in that behalf contained in the Articles of Association of the Company, do
hereby nominate and appoint _______________ of  ______________________ to act as
alternate Director in my place at the meeting of the Directors to be held on the
__________ day of  _____________________  and at any adjournment thereof which I
am unable to attend and to  exercise  all my duties as a Director of the Company
at such meeting.

Signed this ___________________ day of ______________"

96.  Save as otherwise  provided in Article 94(b)  hereof,  any  appointment  or
     removal of an alternate  Director shall be by notice signed by the Director
     making or revoking the appointment and shall take effect when lodged at the
     Office or  otherwise  notified to the Company in such manner as is approved
     by the Directors.

Executive Directors

97.  The  Directors may from time to time appoint one or more of their number to
     be the holder of any executive office on such terms and for such periods as
     they may determine. The appointment of any Director to any executive office
     shall be subject to termination if he ceases to be a Director,  but without
     prejudice  to any claim for damages  for breach of any  contract of service
     between him and the Company.

98.  The  Directors  may  entrust to and  confer  upon a  Director  holding  any
     executive office any of the powers exercisable by the Directors,  upon such
     terms and  conditions  and with such  restrictions  as they think fit,  and
     either  collaterally  with or to the  exclusion of their own powers and may
     from  time to  time  revoke,  withdraw,  alter  or vary  all or any of such
     powers.


                                       15
<PAGE>

Appointment of Directors

99.  The  Directors  of the  Company  holding  office on the date of adoption of
     these  Articles,  two of whom shall be  Independent  Directors,  shall hold
     office, subject as hereinafter provided,  until they resign, are removed or
     are  disqualified  in  accordance  with  Article 103 hereof.  At the second
     quarterly meeting of the Directors in each calendar year commencing 1997 to
     be held pursuant to Article 109 hereof one of the two Independent Directors
     then in office shall retire from office and be eligible for re-election. At
     the second quarterly meeting of the Directors to be held in each subsequent
     calendar  year the  Independent  Director who shall not have retired in the
     previous  calendar year (or his successor)  shall retire from office and be
     eligible for  re-election.  The remaining  Directors  shall (subject to the
     provisions  of  Article  91  hereof)  elect a person to fill  each  vacancy
     created  pursuant to the  foregoing  provisions  of this Article and in the
     case of an  equality  of votes the  chairman  elected  in  accordance  with
     Article 114 hereof  shall have a second or casting  vote.  For so long as a
     Director  has been  appointed  pursuant to Article  99(A)(i) and is holding
     office  there  shall not be less  than two  Independent  Directors  holding
     office.

99A. (i)  For so long as any  amount  is  outstanding  or  payable  in
          respect of the Class E Notes,  the holder or holders of a majority  in
          aggregate principal amount of the Class E Notes shall be entitled to:-

          (a)  nominate and appoint one Director at any time;

          (b)  remove any Director  appointed  pursuant to sub-paragraph  (i)(a)
               above; and

          (c)  nominate  and  appoint  a new  Director  to take the place of any
               Director nominated and appointed pursuant to sub-paragraph (i)(a)
               above who vacates his office for any reason.

     (ii) The Independent Directors shall not have the right to remove Directors
          appointed pursuant to this Article.

100. Subject to the  provisions  of Articles 91 and 99 hereof,  the  Independent
     Directors shall have power at any time and from time to time to appoint any
     person to be an Independent Director in order to ensure that the provisions
     of these Articles as to the number of Independent  Directors required to be
     in office are fulfilled.  If at any time there are no Independent Directors
     holding  office the Company in general  meeting (and not, for the avoidance
     of doubt,  the Class E Note  Director)  shall be entitled  to nominate  and
     appoint  such  number of  Independent  Directors  as are  required to be in
     office  pursuant  to  these  Articles.  For  the  purpose  of  making  such
     appointment   the  Class  E  Note  Director   shall  be  entitled  to  make
     recommendation  to the Members  and the Members  may, if they think fit, at
     the  expense  of  the  Company   hire  an   independent   adviser  to  make
     recommendations.  The Members, in making the appointment, shall be entitled
     but not  bound to act in  accordance  with any  such  recommendations.  Any
     Independent  Director so appointed  shall hold office until he resigns,  is
     removed or is disqualified in accordance with Article 103 hereof.

101. At any  general  meeting  at which an  Independent  Director  retires or is
     removed  from  office the  remaining  Independent  Director  shall elect an
     Independent  Director  to fill the  vacancy,  unless the Company in general
     meeting  (subject  always to Article 91) determines to reduce the number of
     Independent  Directors  in  office.  If there is no  remaining  Independent
     Director  the  Company  shall  elect an  Independent  Director  to fill the
     vacancy,  unless the Company in general meeting (and not, for the avoidance
     of doubt,  the  Class E Note  Director)  (subject  always  to  Article  91)
     determines to reduce the number of Independent Directors in office. For the
     purpose  of making  such  appointment  the Class E Note  Director  shall be
     entitled to make  recommendations  to the  Members and the Members  may, if
     they think fit, at the expense of the Company hire an independent adviser


                                       16
<PAGE>

     to make recommendations.  The Members, in making the appointment,  shall be
     entitled but not bound to act in accordance with any such recommendations.

102. Seven clear days' notice shall be given to the Company of the  intention of
     any Member to propose any person for election to the office of  Independent
     Director  provided always that, if the Members present at a general meeting
     unanimously consent, the chairman of such meeting may waive the said notice
     and submit to the meeting the name of any person duly qualified and willing
     to act.

Resignation, Disqualification and Removal of Directors

103. The office of a Director shall be vacated if:-

     (a)  he resigns his office by notice to the Company; or

     (b)  he ceases to be a Director by virtue of any provision of the Law or he
          becomes prohibited or disqualified by law from being a Director; or

     (c)  he becomes  bankrupt or makes any arrangement or composition  with his
          creditors generally; or

     (d)  he is removed from office by resolution of the Members; or

     (e)  in the case of a Director  appointed  pursuant to Article 99A(i) he is
          removed from office pursuant to Article 99A(i); or

     (f)  in the case of an Independent Director, he ceases to be an Independent
          Director  within the meaning of that term contained in these Articles;
          or

     (g)  in the case of an Independent  Director, he becomes due for retirement
          by rotation pursuant to Article 91.

Powers of Directors

104. The  business  of the  Company  shall be managed by the  Directors  who may
     exercise  all such  powers  of the  Company  as are not by the Law or these
     Articles  required to be exercised by the Company in general  meeting,  and
     the power and  authority  to  represent  the  Company  in all  transactions
     relating  to real and  personal  property  and all other  legal or judicial
     transactions, acts and matters and before all courts of law shall be vested
     in the Directors. The Directors' powers shall be subject to any regulations
     of these  Articles,  to the provisions of the Law and to such  regulations,
     being not inconsistent with the aforesaid regulations or provisions, as may
     be prescribed by the Company in general meeting, but no regulations made by
     the  Company  in  general  meeting  shall  invalidate  any prior act of the
     Directors  which  would  have been valid if such  regulations  had not been
     made.

105. The Directors,  or any Director duly authorised by the Board, may (i) enter
     into any  contract  or sign any  document  on behalf of the  Company,  (ii)
     appoint  any  person  to be the  attorney-in-fact,  agent  or  employee  (a
     "Representative")  of the Company for such purposes and on such  conditions
     as they determine  (including  authority for the Representative to delegate
     his powers),  and (iii)  undertake any other  official act on behalf of the
     Company, subject to the following restrictions:

(1)  the Directors, or any committee of the Directors, duly authorised Director,
     or Representative, may only enter into any contract or sign any document on
     behalf of the  Company in the Island of Jersey or  another  tax  favourable
     jurisdiction;

(2)  the  Directors,  and any  committee of the  Directors,  shall  undertake or
     perform  official  acts on


                                       17
<PAGE>

     behalf of the Company only while present in the Island of Jersey or another
     tax  favourable   jurisdiction,   provided  that  receiving  and  reviewing
     documents  and   information,   and  conferring  with  other  Directors  by
     telephone,  shall not  constitute  an official act for this purpose  unless
     such  conferring  constitutes the making of a decision of the Board or of a
     committee of the Board;

(3)  no  person  resident  in the  United  Kingdom  shall be  appointed  to be a
     Representative unless the Directors shall have received advice of competent
     counsel and on that basis shall be satisfied  that the  appointment of such
     Representative and the activities to be undertaken by the Representative on
     behalf of the  Company  in  accordance  with the  terms of his  appointment
     (which activities, including the scope of the Representative's authority to
     act on behalf of and bind the Company,  shall be specified by the Directors
     and  considered by counsel in giving its advice) are not expected to, taken
     in conjunction  with the other  activities of the Company and its Directors
     and  Representatives,  result in the Company being treated as carrying on a
     trade or business or having a permanent establishment in the United Kingdom
     and by either such reason or otherwise render the Company liable to payment
     of an amount of tax which in the  opinion of the  Directors  is more than a
     minimal amount.

(4)  no person  resident in the United  States of America (the "United  States")
     shall be appointed to be a Representative (other than Bankers Trust Company
     or affiliates of Babcock & Brown Limited ("Babcock") acting pursuant to and
     in accordance  with the Servicing  Agreement  dated on or about the date of
     adoption of these Articles  between Babcock and the Company (the "Servicing
     Agreement"))  unless the Directors  shall have received advice of competent
     counsel and on that basis shall be satisfied  that the  appointment of such
     Representative and the activities to be undertaken by the Representative on
     behalf of the  Company  in  accordance  with the  terms of his  appointment
     (which activities, including the scope of the Representative's authority to
     act on behalf of and bind the Company,  shall be specified by the Directors
     and  considered by counsel in giving its advice) are not expected to, taken
     in conjunction  with the other  activities of the Company and its Directors
     and  Representatives,  result in the Company being treated as carrying on a
     trade or business or having a permanent  establishment in the United States
     and by either such reason or otherwise render the Company liable to payment
     of an amount of tax which in the  opinion of the  Directors  is more than a
     minimal amount.

(5)  no  person  resident  in the  Republic  of  Ireland  ("Ireland")  shall  be
     appointed  to be a  Representative  (other than  Babcock or its  affiliates
     acting pursuant to and in accordance with the Servicing  Agreement)  unless
     the Directors shall have received  advice of competent  counsel and on that
     basis shall be satisfied that the  appointment of such  Representative  and
     the  activities  to be undertaken  by the  Representative  on behalf of the
     Company in accordance with the terms of his appointment  (which activities,
     including the scope of the  Representative's  authority to act on behalf of
     and bind the Company, shall be specified by the Directors and considered by
     counsel in giving its advice) are not  expected  to,  taken in  conjunction
     with  the  other   activities   of  the  Company  and  its   Directors  and
     Representatives, result in the Company being treated as carrying on a trade
     or business or having a  permanent  establishment  in Ireland and by either
     such reason or otherwise  render the Company liable to payment of an amount
     of tax which in the opinion of the Directors is more than a minimal amount.

(6)  the Company shall not maintain any bank account in Ireland.

Transactions with Directors

106. A Director,  including an alternate Director,  may hold any other office or
     place of profit  under the  Company  (other  than the office of auditor) in
     conjunction  with his  office  of  Director  and may act in a  professional
     capacity to the Company on such terms as to tenure of office,  remuneration
     and otherwise as the Directors may determine.


                                       18
<PAGE>

107. Subject to the provisions of the Law, and provided that he has disclosed to
     the  Directors  the nature and extent of any of his material  interests,  a
     Director notwithstanding his office:-

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

     (b)  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; and

     (c)  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.

108. For the purposes of Article 107:-

(a)  a general  notice given to the Directors  that a Director is to be regarded
     as having an interest of the nature and extent  specified  in the notice in
     any  transaction  or  arrangement  in which a specified  person or class of
     persons is interested  shall be deemed to be a disclosure that the Director
     has an  interest  in any such  transaction  of the  nature  and  extent  so
     specified; and

(b)  an  interest  of  which a  Director  has no  knowledge  and of  which it is
     unreasonable  to expect  him to have  knowledge  shall not be treated as an
     interest of that Director.

Proceedings of Directors

109. The  Directors  shall meet  together on a regular basis for the despatch of
     business  and may adjourn and  otherwise  regulate  their  meetings as they
     think  fit.  No  meeting  of the  Directors,  including  a meeting  held by
     telephone or other means of  communication  in accordance  with Article 116
     hereof and no resolution in writing  passed in accordance  with Article 117
     hereof shall be held or signed  respectively  unless each of the  Directors
     participating  therein is  present  in the Island of Jersey or another  tax
     favourable  jurisdiction.  Without  prejudice  to  the  generality  of  the
     foregoing  the Directors  shall hold in each calendar  quarter at least one
     meeting in Jersey at which a quorum of Directors is physically  present and
     shall hold such other meetings as the Directors deem  appropriate  and such
     meetings shall be held in accordance with these Articles. Questions arising
     at any meeting shall be  determined  by a majority of votes.  In case of an
     equality of votes the chairman elected in accordance with Article 114 shall
     have a second or casting vote. A Director who is also an alternate Director
     shall be entitled,  in the absence of the Director whom he is representing,
     to a separate  vote on behalf of such Director in addition to his own vote.
     Any  Director  who is unable to attend  any  meeting of the  Directors  may
     submit a written  summary  of his  views on the  matter  or  matters  to be
     considered at such meeting and those persons  present at such meeting shall
     give such views due consideration. A Director may, and the Secretary on the
     requisition  of a  Director  shall,  at any time,  summon a meeting  of the
     Directors by giving to each Director and  alternate  Director not less than
     twenty-four  hours' notice of the meeting  provided that any meeting may be
     convened  at shorter  notice  and in such  manner as each  Director  or his
     alternate  Director shall approve  provided  further that unless  otherwise
     resolved by the  Directors  notices of  Directors'  meetings need not be in
     writing.

110. A meeting of the  Directors at which a quorum is present shall be competent
     to exercise all powers and  discretions  for the time being  exercisable by
     the Directors. The quorum necessary for the



                                       19
<PAGE>

     transaction of the business of the Directors may be fixed by the Directors,
     and unless so fixed at any other number shall be two provided that not less
     than 50%  (fifty  percent)  of the  persons  making  up a  quorum  shall be
     Independent Directors.  For the purposes of this Article and subject to the
     provisions  of Article  94(e)  hereof and the  preceding  sentence  of this
     Article 110 an alternate Director shall be counted in a quorum, but so that
     not less than two individuals will constitute the quorum.

111. A  Director,  notwithstanding  his  interest,  may be counted in the quorum
     present at any meeting at which he is appointed to hold any office or place
     of profit under the Company,  or at which the terms of his  appointment are
     arranged, but he may not vote on his own appointment or the terms thereof.

112. A  Director,  notwithstanding  his  interest,  may be counted in the quorum
     present at any meeting at which any contract or  arrangement in which he is
     interested is considered and, subject to the provisions of Articles 107 and
     108 hereof, he may vote in respect of any such contract or arrangement.

113. The   continuing   Directors  or  a  sole   continuing   Director  may  act
     notwithstanding  any  vacancies  in their  number,  but,  if the  number of
     Directors  is less than the  number  fixed as the  quorum,  the  continuing
     Directors or Director may act only for the purpose of filling  vacancies or
     of calling a general  meeting of the Company.  If there are no Directors or
     no Director is able or willing to act, then any Member or the Secretary may
     summon a general meeting for the purpose of appointing Directors.

114. The Directors may from time to time elect from their number, and remove, an
     Independent  Director to act as a chairman  and/or deputy  chairman  and/or
     vice-chairman  and  determine the period for which they are to hold office.
     Provided  always  that  only an  Independent  Director  may be  elected  as
     chairman,  the  chairman if present  shall  preside at all  meetings of the
     Directors.  If no such chairman be elected,  or at any meeting at which the
     chairman is not present,  the  Directors  present shall choose one of their
     number who is an Independent Director to be the chairman of the Meeting. In
     the case of the meeting of Directors held in each calendar year at which an
     Independent  Director  shall  retire by  rotation  pursuant  to  Article 91
     hereof, the Independent Director not retiring shall act as chairman of such
     meeting.

115. The Directors may delegate any of their powers to committees  consisting of
     such  Directors  or Director or such other  persons as they think fit.  Any
     committee  so formed  shall in the  exercise  of the  powers  so  delegated
     conform to any regulations that may be imposed on it by the Directors.  The
     meetings and  proceedings of any such  committee  consisting of two or more
     persons shall be governed by the  provisions of these  Articles  regulating
     the  meetings  and  proceedings  of the  Directors,  so far as the same are
     applicable and are not superseded by any regulations  made by the Directors
     under this Article  provided that no such committee shall have any power to
     act in any part of the world except whilst  present in the Island of Jersey
     or another tax favourable jurisdiction.

116. If a  Director  is by any  means in  communication  with one or more  other
     Directors so that each Director participating in the communication can hear
     what is said by any other of them,  each Director so  participating  in the
     communication is deemed to be present at a meeting with the other Directors
     so participating,  notwithstanding  that all the Directors so participating
     are not present together in the same place.

117. A  resolution  in  writing  of which  notice  has been  given to all of the
     Directors  or to all of the  members of a committee  appointed  pursuant to
     Article  115  hereof (as the case may be),  if signed by a majority  of the
     Directors or of the members of such  committee (as the case may be),  shall
     be  valid  and  effectual  as if it had been  passed  at a  meeting  of the
     Directors or of the relevant


                                       20
<PAGE>

     committee  duly convened and held and may consist of two or more  documents
     in like form each signed by one or more of the  Directors or members of the
     relevant committee.

118. All acts done bona  fide by any  meeting  of  Directors  or of a  committee
     appointed  by the  Directors or by any person  acting as a Director  shall,
     notwithstanding that it is afterwards discovered that there was some defect
     in the  appointment  of any such  Director or committee or person acting as
     aforesaid,  or that they or any of them were  disqualified  or had  vacated
     office or were not  entitled  to vote,  be as valid as if every such person
     had  been  duly  appointed  and was  qualified  and had  continued  to be a
     Director or a member of a committee appointed by the Directors and had been
     entitled to vote.

Minute Book

119. The Directors  shall cause all  resolutions in writing passed in accordance
     with Articles 77 and 117 hereof and minutes of  proceedings  at all general
     meetings  of the  Company or of the  holders of any class of the  Company's
     shares and of the Directors and of committees appointed by the Directors to
     be entered in books kept for the  purpose at the  Office.  Any minutes of a
     meeting,  if  purporting  to be signed by the chairman of the meeting or by
     the  chairman  of the next  succeeding  meeting,  shall be  evidence of the
     proceedings.

Secretary

120. The  Secretary  shall be appointed by the  Directors  and any  secretary so
     appointed may be removed by the Directors. The Secretary shall at all times
     be resident in the Island of Jersey.  Anything required or authorised to be
     done by or to the  Secretary  may,  if the office is vacant or there is for
     any other  reason no  secretary  capable  of  acting,  be done by or to any
     assistant  or  deputy  secretary  or if there  is no  assistant  or  deputy
     secretary capable of acting, by or to any officer of the Company authorised
     generally or specially in that behalf by the  Directors  provided  that any
     provisions of these Articles requiring or authorising a thing to be done by
     or to a Director and the Secretary shall not be satisfied by its being done
     by or to the same person  acting  both as Director  and as, or in place of,
     the  Secretary.  The Company shall keep or cause to be kept at the Office a
     register of particulars with regard to its Secretary in the manner required
     by the Law.

Seals

121. The  Company  shall have a common seal and may in  accordance  with the Law
     have an official  seal for use  outside of the Island and an official  seal
     for  sealing  securities  issued by the  Company or for  sealing  documents
     creating or evidencing securities so issued.

122. The  Directors  shall provide for the safe custody of all seals and no seal
     shall be used except by the  authority of a resolution  of the Directors or
     of a committee of the Directors authorised in that behalf by the Directors.

123. The Directors may from time to time make such regulations as they think fit
     determining the persons and the number of such persons who shall sign every
     instrument  to which a seal is affixed and until  otherwise  so  determined
     every  such  instrument  shall  be  signed  by one  Director  and  shall be
     countersigned by the Secretary or by a second Director. The Company may, in
     writing, authorise an agent appointed for the purpose to affix any official
     seal to a document to which the Company is a party.

Authentication of Documents

124. Any Director or the Secretary or any person  appointed by the Directors for
     the purpose shall have power to  authenticate  any documents  affecting the
     constitution  of the Company  (including the Memorandum of Association  and
     these Articles) and any resolutions passed by the Company or


                                       21
<PAGE>

     the Directors and any books,  records,  documents and accounts  relating to
     the  business of the  Company,  and to certify  copies  thereof or extracts
     therefrom as true copies or extracts;  and where books, records,  documents
     or accounts are  elsewhere  than at the Office,  the local manager or other
     officer or the company  having the custody  thereof shall be deemed to be a
     person appointed by the Directors as aforesaid.

Dividends

125. Subject to the provisions of the Law, the Company may by resolution declare
     dividends in accordance with the respective  rights of the Members,  but no
     dividend shall exceed the amount recommended by the Directors.

126. The  holders of the  shares in the  capital  of the  Company  issued to the
     Subscribers to the  Memorandum of Association  shall be entitled to receive
     out of the  profits of the  Company  resolved  to be  distributed,  a fixed
     cumulative  preferential  dividend  at  the  rate  of  US$1,500  per  annum
     (regardless  of the  number  of such  shares  in issue  from  time to time)
     payable  amongst  such  holders  rateably  according  to the number of such
     shares  held by each of  them.  For the  avoidance  of doubt  whenever  the
     profits  of the  Company  in  respect  of any  period  shall  be more  than
     sufficient to pay the aforesaid fixed cumulative  preferential  dividend in
     respect of such  period,  the holders of the shares  entitled to such fixed
     preferential  dividend shall be entitled to participate in the surplus pari
     passu  with the  holders of all other  shares  entitled  to the  payment of
     dividends  (subject  always to any  particular  rights or limitations as to
     dividend for the time being attached to any other class of shares as may be
     specified  in these  Articles or upon which such shares shall be issued and
     to any  contractual  limitations  which may be entered  into by the Company
     limiting payment of such surplus).

127. Subject to any particular rights or limitations as to dividend for the time
     being attached to any shares, as may be specified in these Articles or upon
     which  such  shares  may  be  issued,  all  dividends  shall  be  declared,
     apportioned  and paid  pro-rata  according  to the  amounts  paid up on the
     shares  (otherwise than in advance of calls) during any portion or portions
     of the period in respect of which the dividend is paid.

128. Subject to the provisions of the Law, the Directors may, if they think fit,
     from time to time pay to the Members  such  interim  dividends as appear to
     the  Directors  to be  justified.  If at any time the share  capital of the
     Company is divided  into  different  classes,  the  Directors  may pay such
     interim  dividends in respect of those shares in the capital of the Company
     which confer on the holders thereof  deferred or non-preferred  rights,  as
     well as in respect of those  shares  which  confer on the  holders  thereof
     preferential  rights with regard to dividend.  The  Directors  may also pay
     half-yearly,  or at other  suitable  intervals  to be settled by them,  any
     dividend  which may be payable  at a fixed rate if they are of the  opinion
     that the profits of the Company justify the payment. Provided the Directors
     act bona fide they shall not incur any personal liability to the holders of
     shares  conferring  a  preference  for any  damage  that they may suffer by
     reason of the payment of an interim  dividend on any shares having deferred
     or non-preferred rights.

129. The Directors may carry forward to the accounts of the  succeeding  year or
     years any balance of profit which they do not think fit either to divide or
     to place to reserve.

130. The Directors  may deduct from any dividend or other monies  payable to any
     Member on or in  respect  of a share  all sums of money (if any)  presently
     payable by him to the Company on account of calls or  otherwise in relation
     to the shares of the Company.

131. All  unclaimed  dividends  may be invested or otherwise  made use of by the
     Directors for the benefit of the Company until  claimed.  No dividend shall
     bear interest as against the Company.


                                       22
<PAGE>

132. Any dividend  which has remained  unclaimed  for a period of ten years from
     the date of  declaration  thereof  shall,  if the Directors so resolve,  be
     forfeited  and cease to remain  owing by the Company and shall  thenceforth
     belong to the Company absolutely.

133. Any  dividend  or other  monies  payable on or in respect of a share may be
     paid by cheque or warrant sent through the post to the  registered  address
     of the Member or person entitled thereto,  and in the case of joint holders
     to any one of such joint holders,  or to such person and to such address as
     the holder or joint  holders  may in writing  direct.  Every such cheque or
     warrant shall be made payable to the order of the person to whom it is sent
     or to such  other  person as the  holder or joint  holders  may in  writing
     direct,  and payment of the cheque or warrant shall be a good  discharge to
     the Company.  Every such cheque or warrant shall be sent at the risk of the
     person entitled to the money represented thereby.

134. A general meeting declaring a dividend may, upon the  recommendation of the
     Directors,  direct  payment  of  such  dividend  wholly  or in  part by the
     distribution  of specific  assets,  and in  particular of paid up shares or
     debentures of any other  company,  and the  Directors  shall give effect to
     such  resolution;  and  where  any  difficulty  arises  in  regard  to  the
     distribution  they may  settle  the same as they  think  expedient,  and in
     particular may issue  certificates  representing  part of a shareholding or
     fractions  of  shares,  and may  fix the  value  for  distribution  of such
     specific  assets or any part thereof,  and may determine  that cash payment
     shall be made to any  Members  upon the  footing of the value so fixed,  in
     order to adjust the rights of Members,  and may vest any specific assets in
     trustees  upon trust for the persons  entitled to the  dividend as may seem
     expedient to the Directors,  and generally may make such  arrangements  for
     the allotment,  acceptance and sale of such specific assets or certificates
     representing  part of a  shareholding  or fractions of shares,  or any part
     thereof, and otherwise as they think fit.

135. Any resolution  declaring a dividend on the shares of any class,  whether a
     resolution  of the  Company  in  general  meeting  or a  resolution  of the
     Directors,  or any  resolution  of the Directors for the payment of a fixed
     dividend on a date prescribed for the payment thereof, may specify that the
     same shall be payable to the persons registered as the holders of shares of
     the  class  concerned  at the  close  of  business  on a  particular  date,
     notwithstanding that it may be a date prior to that on which the resolution
     is passed (or, as the case may be, that  prescribed  for payment of a fixed
     dividend),  and  thereupon  the  dividend  shall  be  payable  to  them  in
     accordance  with their  respective  holdings  so  registered,  but  without
     prejudice to the rights inter se in respect of such dividend of transferors
     and transferees of any shares of the relevant class.

Reserve Fund

136. Before the  declaration  of a dividend the Directors may set aside any part
     of the net profits of the Company to create a reserve  fund,  and may apply
     the same  either by  employing  it in the  business  of the  Company  or by
     investing  it in such a manner (not being the purchase of or by way of loan
     upon the shares of the Company) as they think fit. Such reserve fund may be
     applied  for the  purpose  of  maintaining  the  property  of the  Company,
     replacing wasting assets, meeting contingencies, forming an insurance fund,
     or equalising dividends or special dividends,  or for any other purpose for
     which the net profits of the Company  may  lawfully be used,  and until the
     same shall be applied it shall remain undivided profits.

Share Premium Account

137. There shall be transferred to a share premium  account,  as required by the
     Law,  the amount or value of any  premium  paid up on shares  issued by the
     Company and the sums for the time being standing to the credit of the share
     premium account shall be applied only in accordance with the Law.


                                       23
<PAGE>

Capitalisation

138. The Company may, upon the recommendation of the Directors,  resolve that it
     is  desirable  to  capitalise  any  undistributed  profits  of the  Company
     (including  profits  carried and standing to any reserve or  reserves)  not
     required  for paying the fixed  dividends  on any shares  entitled to fixed
     preferential dividends with or without further participation in profits, or
     any sum  carried to reserve as a result of the sale or  revaluation  of the
     assets of the Company (other than goodwill) or any part thereof or, subject
     as  hereinafter  provided,  any sum standing to the credit of the Company's
     share premium  account or capital  redemption  reserve fund and accordingly
     that the Directors be authorised and directed to appropriate the profits or
     sum resolved to be  capitalised  to the Members in the  proportion in which
     such  profits or sum would have been  divisible  amongst  them had the same
     been applicable and had been applied in paying dividends, and to apply such
     profits or sum on their behalf, either in or towards paying up the amounts,
     if any,  for the time  being  unpaid  on any  shares  held by such  Members
     respectively,  or in paying up in full either at par or at such  premium as
     the said  resolution may provide,  any unissued shares or debentures of the
     Company, such shares or debentures to be allotted and distributed, credited
     as fully paid up, to and amongst such Members in the proportions aforesaid,
     or  partly  in one way and  partly  in the  other  provided  that the share
     premium account and the capital  redemption reserve fund and any unrealised
     profits  may not be  applied  in the  paying  up of any  debentures  of the
     Company.

139. Whenever  such a  resolution  as  aforesaid  shall  have been  passed,  the
     Directors shall make all  appropriations and applications of the profits or
     sum resolved to be  capitalised  thereby,  and all allotments and issues of
     fully paid shares or  debentures,  if any, and generally  shall do all acts
     and  things  required  to give  effect  thereto,  with  full  power  to the
     Directors to make such provision by the issue of certificates  representing
     part of a  shareholding  or  fractions  of shares or by payments in cash or
     otherwise  as they think fit in the case of shares or  debentures  becoming
     distributable  in  fractions,  and also to authorise any person to enter on
     behalf of all the Members  entitled  to the benefit of such  appropriations
     and  applications  into an  agreement  with the Company  providing  for the
     allotment to them  respectively,  credited as fully paid up, of any further
     shares  or   debentures   to  which   they  may  be   entitled   upon  such
     capitalisation,  and any  agreement  made  under  such  authority  shall be
     effective and binding on all such Members.

Accounts and Audit

140. The Company shall keep accounting records at the Office or such other place
     in the Island of Jersey as the  Directors  may from time to time  determine
     and the Directors  shall prepare  accounts of the Company,  made up to such
     date in each year as the Directors  shall from time to time  determine,  in
     accordance with and subject to the provisions of the Law.

141. No Member shall have any right to inspect any  accounting  records or other
     book  or  document  of the  Company  except  as  conferred  by  the  Law or
     authorised by the Directors or by resolution of the Company.

142. The Directors,  or the Company by resolution in general  meeting,  may from
     time to time  appoint  auditors  for any period or  periods to examine  the
     accounts of the Company and to report thereon in accordance with the Law.

Notices

143. Any notice to be given to or by any person pursuant to these Articles shall
     be in writing, save as provided in Article 109 hereof. In the case of joint
     holders  of a share,  all  notices  shall be given to that one of the joint
     holders  whose name  stands  first in the  Register in respect of the joint
     holding  and notice so given  shall be  sufficient  notice to all the joint
     holders.


                                       24
<PAGE>

144. Any  notice  may be  posted  to or left at the  registered  address  of any
     person, and any notice so posted shall be deemed to be served one clear day
     after the day it was posted.

145. Any Member present in person at any meeting of the Company  shall,  for all
     purposes,  be deemed to have received due notice of such meeting and, where
     requisite, of the purposes for which such meeting was convened.

146. Any notice or document served on a Member shall,  notwithstanding that such
     Member be then dead or  bankrupt  and whether or not the Company has notice
     of his death or  bankruptcy,  be  deemed  to have been duly  served on such
     Member as sole or joint  holder,  unless  his name shall at the time of the
     service of the notice or document have been removed from the Register,  and
     such service shall for all purposes be deemed a sufficient  service of such
     notice or document on all persons  interested  (whether  jointly with or as
     claiming  through  or under  him) in the  shares  of such  Member  it being
     provided  that any such notice or document to be sent by the Company  shall
     be sent from the Island of Jersey.

147. Notwithstanding  any of the provisions of these Articles,  any notice to be
     given by the  Company  to a  Director  or to a  Member  may be given in any
     manner agreed in advance by any such Director or Member.

Winding Up

148. If the Company is wound up, the holders of the shares entitled to the fixed
     cumulative  preferential dividend pursuant to Article 126 of these Articles
     shall be entitled  to receive out of the surplus  assets of the Company the
     arrears (if any) of the preferential dividend aforesaid down to the date of
     commencement  of the  winding-up,  whether  earned  or  declared  or not in
     priority to any other payment out of the surplus assets,  and thereafter to
     participate rateably with the holders of all other classes of shares in the
     residue (if any) of such  surplus  assets as shall  remain after paying off
     the capital paid up on the shares  (including  those  entitled to the fixed
     cumulative preferential dividend) in the Company.

149. Subject to any particular rights or limitations for the time being attached
     to any shares,  as may be  specified  in these  Articles or upon which such
     shares may be issued,  if the Company is wound up, the assets available for
     distribution  among the Members  shall be applied  first in repaying to the
     Members the amount paid up on their shares respectively, and if such assets
     shall be more than sufficient to repay to the Members the whole amount paid
     up on their shares,  the balance shall be distributed  among the Members in
     proportion  to the  amount  which  at the time of the  commencement  of the
     winding up had been actually paid up on their said shares respectively.

150. If the Company is wound up, the Company may, with the sanction of a Special
     Resolution and any other sanction  required by the Law, divide the whole or
     any part of the assets of the  Company  among the Members in specie and the
     liquidator or, where there is no liquidator,  the Directors,  may, for that
     purpose,  value any assets and determine how the division  shall be carried
     out as between the Members or  different  classes of Members,  and with the
     like  sanction,  vest the whole or any part of the assets in trustees  upon
     such  trusts for the  benefit of the  Members as he with the like  sanction
     determines,  but no Member  shall be  compelled  to accept any assets  upon
     which there is a liability.


                                       25
<PAGE>

Indemnity

151. In so far as the Law allows, every present or former officer of the Company
     shall be indemnified  out of the assets of the Company  against any loss or
     liability  incurred  by him by  reason  of being  or  having  been  such an
     officer.

152. The Directors are empowered to arrange for the purchase and  maintenance in
     the name of and at the  expense of the Company of  insurance  cover for the
     benefit of any officer or former officer of the Company,  the Secretary and
     any agent,  servant or employee of the Company  against any liability which
     is  incurred  by any such person by reason of the fact that he is or was an
     officer of the Company,  the Secretary or an agent,  servant or employee of
     the Company or by reason of any act or omission by or of any such person.

Non-Application of Standard Table

153. The regulations  constituting the Standard Table in the Companies (Standard
     Table) (Jersey) Order 1992 shall not apply to the Company.



                                       26
<PAGE>


                             ARTICLES OF ASSOCIATION

                                      INDEX

ARTICLE                                                                 PAGE No.
-------                                                                 --------
Accounts and Audit                                                           24
Alteration of Share Capital                                                   4
Alternate Directors                                                          14
Appointment of Directors                                                     16
Authentication of Documents                                                  21
Calls on Shares                                                               6
Capitalisation                                                               24
Class Meetings                                                               10
Corporate Members                                                            14
Directors                                                                    14
Dividends                                                                    22
Executive Directors                                                          15
Forfeiture of Shares                                                          7
General Meetings                                                             10
Indemnity                                                                    26
Interpretation                                                                1
Joint Holders of Shares                                                       5
Lien                                                                          6
Minute Book                                                                  21
Non-Application of Standard Table                                            26
Notice of General Meetings                                                   10
Notices                                                                      24
Powers of Directors                                                          17
Preliminary                                                                   3
Proceedings at General Meetings                                              11
Proceedings of Directors                                                     19
Reduction of Share Capital                                                    4
Register of Members                                                           6
Reserve Fund                                                                 23
Resignation, Disqualification and Removal of Directors                       17
Seals                                                                        21
Secretary                                                                    21
Share Capital and Shares                                                      3
Share Certificates                                                            5
Share Premium Account                                                        23
Transactions with Directors                                                  18
Transfer and Transmission of Shares                                           8
Variation of Rights                                                           5
Winding Up                                                                   25



                                       27
<PAGE>

Signatures for and on behalf of the Subscribers to the Memorandum of Assocation


Juris Limited                               /s/
                                           ------------------------
                                           Director



Lively Limited                             /s/
                                           ------------------------
                                           Director



Witness to the above signatures            /s/ Marjorie Mauger
                                           ------------------------
                                           Marjorie Mauger,
                                           18 Grenville Street
                                           St. Helier,
                                           Jersey,
                                           Channel Islands



<PAGE>


                                                                       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.





<PAGE>



                                                                      EXHIBIT 12



         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)) and internal  control over financial  reporting 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  us  by  others   within  those   entities,
                           particularly  during the period in which this  annual
                           report is being prepared;

                  (b)      designed   such  internal   control  over   financial
                           reporting,  or  caused  such  internal  control  over
                           financial   reporting   to  be   designed   under  my
                           supervision,    to   provide   reasonable   assurance
                           regarding the reliability of financial  reporting and
                           the preparation of financial  statements for external
                           purposes  in  accordance   with  generally   accepted
                           accounting principles;

                  (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



<PAGE>

                           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:  December 23, 2003

                                             By:   /s/ Frederick W. Bradley, Jr.
                                                   -----------------------------
                                                   Frederick W. Bradley, Jr.
                                                   Chairman of the Board1



------------
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.



<PAGE>



                                                                      EXHIBIT 13


         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:  December 23, 2003

                                             By:   /s/ Frederick W. Bradley, Jr.
                                                   -----------------------------
                                                   Frederick W. Bradley, Jr.
                                                   Chairman of the Board1


------------
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.



<PAGE>





AIRCRAFT LEASE PORTFOLIO
SECURITISATION 92-1 LIMITED






Financial Statements for the years ended

30 June 2003, 2002 and 2001 together with
independent auditors' report







<PAGE>


AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED



REPORT AND FINANCIAL STATEMENTS 2003


CONTENTS                                                                    Page
--------                                                                    ----

Independent auditors' report                                                   1

Consolidated statements of operations                                          2

Consolidated balance sheets                                                    3

Consolidated statement of cash flows                                           4

Consolidated statements of changes in shareholders' deficit                    5

Organisation of group                                                          6

Statement of accounting policies                                               7

Notes to the consolidated financial statements                                10




<PAGE>



INDEPENDENT  AUDITORS'  REPORT TO THE BOARD OF  DIRECTORS  AND  SHAREHOLDERS  OF
AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


We have audited the accompanying  consolidated balance sheets as of 30 June 2003
and 2002,  and the related  consolidated  statements of  operations,  changes in
shareholders'  deficit  and  cashflows  for each of the years in the three  year
period ended 30 June 2003. These financial  statements are the responsibility of
the directors.  Our  responsibility  is to express an opinion on these financial
statements based on our audits.


We conducted our audits in accordance with generally accepted auditing standards
in the  United  States of  America.  These  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes  assessing the accounting  policies used and
significant  estimates  made by the directors as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

As  described  more  fully  in  notes 1 and 3 to the  financial  statements  the
September  11,  2001  terrorist  attacks  on the United  States,  as well as the
military  action  of the  United  States  and its  allies  in  Afghanistan,  the
terrorist attacks in Bali and Saudi Arabia,  the war in Iraq and the outbreak of
the Severe Acute Respiratory Syndrome (SARS) virus combined with the slowdown in
the aircraft  industry  prior to September 11, 2001,  have all had a significant
adverse  effect on the  aircraft  industry  in general  and on the Group.  These
events have adversely affected the ability of the Company's lessees to make rent
and other  payments and the Company's  ability to re-lease  aircraft on a timely
basis and at rates similar to those  previously  obtained in the market and have
also reduced the value that the Company's  aircraft would realise on sale. These
events 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  step up  interest on any of the Notes,  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, or to repay the principal of the Class B Notes in full.


In our opinion the financial  statements referred to above present fairly in all
material  respects,  the consolidated  financial  position of the Group as of 30
June  2003 and  2002,  and the  results  of their  consolidated  operations  and
cashflows  for each of the years in the three year period ended 30 June 2003, in
conformity with generally accepted accounting principles in the United States of
America.


KPMG

Chartered Accountants

Dublin



December 23, 2003


                                                                               1

                                      F-1
<PAGE>



AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                        Year ended   Year ended    Year ended
                                                           30 June      30 June       30 June
                                                              2001         2002          2003
                                         Note              US$'000      US$'000       US$'000
                                         ----           ----------   ----------    ----------
<S>                                      <C>            <C>          <C>           <C>
REVENUES
Aircraft leasing                          2,6               37,948       32,605        19,758
Interest income                                              1,782          781           728
---------------                                         ----------   ----------    ----------

                                                            39,730       33,386        20,486
                                                        ----------   ----------    ----------

EXPENSES
General and administrative expenses                          3,018        3,565         5,867
Interest expense                            7               27,862       19,110        18,631
Amortisation of refinancing costs          13                1,176            -             -
Depreciation                                1               17,588       16,360        11,999
Impairment in aircraft values               1               30,259       20,321        14,378
Loss on sale of aircraft                                         -            -         1,152
Provision for maintenance charges           4               10,108        4,569        (1,684)
Bad debt expense                                             2,374           77           803
Interest on lessee deposits                                    381          149             -
---------------------------                             ----------   ----------    ----------

Total expenses                                              92,766       64,151        51,146
                                                        ----------   ----------    ----------
NET LOSS BEFORE INCOME TAXES                               (53,036)     (30,765)      (30,660)
Income taxes                                9                  (20)         (24)         (225)
                                                        ----------   ----------    ----------
NET LOSS                                                   (53,056)     (30,789)      (30,885)
                                                        ==========   ==========    ==========


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                                                                            2

                                      F-2
</TABLE>


<PAGE>






AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


CONSOLIDATED BALANCE SHEETS

                                                           30 June      30 June
                                                              2002         2003
                                                Note       US$'000      US$'000
                                               -----    ----------   ----------

ASSETS
Cash and cash equivalents                                    6,274        3,806
Restricted cash                                             23,907       22,691
Trade receivables                                 8          1,487        2,471
Aircraft - core portfolio                         1        189,693      163,316
Aircraft - available for sale                     1         33,626            -
                                                        ----------   ----------
TOTAL ASSETS                                               254,987      192,284
                                                        ==========   ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Interest payable                                  7         36,853       49,295
Prepaid and deferred lease revenue                             924          208
Accrued expenses and other liabilities                       9,709        4,043
Income taxes payable                                            23          247
Long-term debt                                    3        319,283      282,183
Maintenance reserves                              4         19,023       17,797
Security deposits                                 5          2,458        2,682
                                                        ----------   ----------
TOTAL LIABILITIES                                          388,273      356,455

Share capital, 15,000 shares authorised at $1
par value, 10 shares issued and outstanding
                                                                 -            -
Retained deficit                                          (133,286)    (164,171)
                                                        ----------   ----------
Shareholders' deficit                                     (133,286)    (164,171)
                                                        ----------   ----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                254,987      192,284
                                                        ==========   ==========




The  accompanying  notes  are an  integral  part of these  consolidated  balance
sheets.



Signed on behalf of the Board:





Director



December 23, 2003


                                                                               3

                                      F-3
<PAGE>





AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                       Note           Year ended    Year ended   Year ended
                                                                         30 June       30 June      30 June
                                                                            2001          2002         2003
                                                       Note              US$'000      US$'000       US$'000
                                                       ----          -----------    ----------   ----------
<S>                                                    <C>           <C>            <C>          <C>
NET LOSS FOR THE YEAR                                                    (53,056)      (30,789)     (30,885)
Adjustments to reconcile net loss to net cash
provided by operating activities:
  Depreciation                                            1               17,588        16,360       11,999
  Amortisation                                           13                1,176             -            -
  Impairment in aircraft values                           1               30,259        20,321       14,378
  Loss on sale of aircraft                                                     -             -        1,152

Changes in:
  Accounts receivable                                     8                2,195          (492)        (984)
  Interest payable                                        7                8,010         6,779       12,442
  Accrued expenses, other liabilities and
  income taxes payable                                                     5,074         4,391       (5,442)
  Prepaid and deferred lease revenue                                        (120)          184         (716)
  Maintenance                                             4                9,489          (283)      (1,226)
  Security deposits                                       5               (1,385)         (332)         224
                                                                     -----------    ----------   ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES
                                                                          19,230        16,139          942
                                                                     -----------    ----------   ----------
NET CASH PROVIDED BY INVESTING ACTIVITIES
  Proceeds from sale of aircraft                                               -             -       32,474
                                                                     -----------    ----------   ----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Repayment on long term debt                             3              (17,641)      (16,207)     (37,100)
  Dividends relating to a prior year                                          (2)            -            -
                                                                     -----------    ----------   ----------
NET CASH USED IN FINANCING ACTIVITIES
                                                                         (17,643)      (16,207)     (37,100)
                                                                     -----------    ----------   ----------

NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS                                                                1,587           (68)      (3,684)

CASH AND CASH EQUIVALENTS AT START OF YEAR
                                                                          28,662        30,249       30,181
                                                                     -----------    ----------   ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR
                                                                          30,249        30,181       26,497
                                                                     ===========    ==========   ==========



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                                                                                          4

                                      F-4

</TABLE>

<PAGE>




AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT

<TABLE>
<CAPTION>

                                                                           Share      Retained    Shareholders'
                                           Shares         Shares         Capital      Earnings           Equity
                                       Authorised         Issued         US$'000       US$'000          US$'000
                                      -----------        -------        --------     ---------     ------------
       <S>                            <C>                <C>            <C>          <C>           <C>
       Balance 30 June 2000                15,000             10               -       (49,441)         (49,441)
       Net loss                                 -              -               -       (53,056)         (53,056)
                                      -----------        -------        --------     ---------     ------------
       Balance 30 June 2001                15,000             10               -      (102,497)        (102,497)
       Net loss                                 -              -               -       (30,789)         (30,789)
                                      -----------        -------        --------     ---------     ------------
       Balance 30 June 2002                15,000             10               -      (133,286)        (133,286)
       Net loss                                 -              -               -       (30,885)         (30,885)
                                      -----------        -------        --------     ---------     ------------
       Balance 30 June 2003                15,000             10               -      (164,171)        (164,171)
                                      ===========        =======        ========     =========     ============





The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.






                                                                                                              5

                                      F-5

</TABLE>

<PAGE>


AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


ORGANISATION OF GROUP

Background

Aircraft  Lease  Portfolio  Securitisation  92-1  Limited  (the  "Company")  was
incorporated in Jersey, Channel Islands as a private company on May 13, 1992 and
was  re-registered  as a public  company on June 15, 1992. The Company has three
wholly owned  subsidiaries,  Carotene  Limited,  a company  incorporated  in the
Republic of Ireland, ALPS 92-1 UK Limited, a company incorporated under the laws
of England and Wales and ALPS 92-1 France SARL, a company incorporated in France
on  December  15, 2003  (together  the  "Subsidiaries"  and,  together  with the
Company, the "Group").

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 debis  AirFinance  (formerly known as AerFi Group
plc and,  prior to that,  GPA Group plc) and  received  delivery and legal title
from GPA Group plc 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.  An  additional  aircraft  (the "WFC  Aircraft")  was  purchased  on
November 27, 1996 from Whirlpool  Financial  Corporation ("WFC") and on July 24,
1997 one  aircraft was sold to WFC and the fleet of aircraft was reduced from 14
to 13. Two aircraft were sold in the year ended June 30, 2000 reducing the fleet
size to 11. In the year ended June 30, 2003 two aircraft were sold on October 1,
2002 and December 20, 2002, respectively, reducing the fleet size to 9.

In June 1996 the  Company  elected to  refinance  the debt raised to finance the
initial aircraft  acquisition in 1992 (the "Prior Debt") through the issuance of
notes (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
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 which are held by WFC. The Company believed
that the  revised  schedule  for sale of the  Company's  then  current  aircraft
portfolio would allow it to realise 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 June 1996  (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 June 27,  1996
with an aggregate  face amount of  approximately  US$394  million.  The proceeds
together with cash balances previously held in reserve accounts were utilized to
repay the  outstanding  interest  on the  Prior  Debt,  the  US$367  million  of
outstanding  principal  on the Prior  Debt,  the  refinancing  expenses of US$13
million,  the  premium  paid to the holders of certain of the Prior Debt of US$4
million and to create an aircraft  purchase  reserve account for the purchase of
the WFC  Aircraft.  In addition the super  mezzanine  loan of US$78  million was
repaid by the Company in connection with such refinancing.

Upon receipt of the proceeds of the Notes,  the mortgages  over the aircraft and
the  security in respect of the leases and certain  other  property in favour of
the previous  security trustee were released and transferred to the new security
trustee,  Bankers Trustee Company Limited (now renamed  Deutsche Trustee Company
Limited) (the "Security Trustee"), for the benefit of the holders of the Notes.

The  Company  is  obligated  to pay  interest  on the Notes and a portion of the
principal  of the Class A Notes from the cash  flows  generated  by the  Group'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
entered into by the Company on June 27, 1996 (the "Deed of Charge").




                                                                               6
                                      F-6

<PAGE>



AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


STATEMENT OF ACCOUNTING POLICIES

Basis of preparation

The  accounting  policies  followed  in  the  preparation  of  the  accompanying
consolidated  financial  statements conform with generally  accepted  accounting
principles in the United States.

The  consolidated  financial  statements are prepared on the going concern basis
and under the historic cost  convention  and are stated in US dollars,  which is
the  principal  operating  currency of the Group and of the  aviation  industry.
Although the Group balance sheet shows that there are  liabilities  considerably
in excess of assets,  the terms of the Notes are such  that,  prior to the final
maturity of the Notes, the Noteholders are only entitled to receive interest and
principal  repayments  to the  extent  that  cash is  available.  Therefore  the
Directors believe that the Group is a going concern.

Basis of consolidation

The consolidated  financial  statements include the results of the Subsidiaries.
All intercompany profits, transactions and account balances have been eliminated
in the consolidated financial statements.

Revenue recognition

The Group enters into operating  leases with aircraft  operators.  Rental income
from operating leases is recorded on a straight line basis over the lease terms.
Lease rentals  received in accordance  with  individual  lease  agreements are a
mixture of payments in advance and in arrears.  Some lease  rentals are based on
"power by the  hour"  fixed  hourly  rates and  others on fixed  monthly  rates.
Revenue from leases with  escalating  or scheduled  rental  increases  ("stepped
rentals") is recognised on a straight line basis over the lives of those leases.

Maintenance reserves

In most lease contracts the lessee has the obligation for  maintenance  costs on
airframes  and engines,  and in many lease  contracts the lessee makes a full or
partial prepayment, calculated at an hourly rate, into a fund held by the Group,
from which maintenance  expenditures for major checks are disbursed. The balance
of these funds is included in the  provision  for  maintenance  except where the
Directors  estimate  that a surplus  exists,  in which case any surplus,  to the
extent  retainable by the Group,  is taken to income as a reduction of expenses.
In addition,  the Group may incur  maintenance  costs on the  re-leasing  of the
aircraft  due to the  requirement  to  restore  the  aircraft  to an  acceptable
maintenance  condition prior to leasing.  In some lease contracts,  the Group is
required  to make a  contribution  to the  fund if the  maintenance  expenditure
exceeds the amount in the fund.

Taxation

The  Company  has been  granted  exempt  company  status by the Jersey  taxation
authorities.  It pays an exempt company fee of (pound)600 per annum. Taxation is
provided on the profits of the Subsidiaries at the current rates.

Aircraft

Aircraft have been divided into two classes:  (i) Aircraft held for use and (ii)
Aircraft held for sale at the balance sheet date.

(i)    Aircraft held for use
Aircraft  held for use are  stated at cost less  accumulated  depreciation  less
impairment  charges.  Cost  comprises  the net  purchase  price of the  aircraft
acquired by the Company.  The aircraft are  depreciated on a straight line basis
so as to write  off the cost of the  assets  to a  residual  value of 10% over a
period of 25 years from the date of manufacture.  The estimates of useful lives,
depreciation  rates  and  residual  values  are  reviewed  periodically  by  the
Directors of the Company.

The Directors have applied Statement of Financial  Accounting Standards ("SFAS")
144,  Accounting for the Impairment or Disposal of Long-Lived Assets, as at June
30, 2003.  Under the terms of this  accounting  standard,  the  Directors of the
Company  review  the  carrying  value  of the  aircraft  against  the sum of the
estimated  undiscounted  future net cashflows  including the estimated  eventual
sales values of the aircraft.  This review has determined that shortfalls  exist
for each of the aircraft,  all of which are  classified  as held for use,  where
their carrying value was greater than the sum of these undiscounted cashflows.

The  application  of SFAS 144 has  resulted  in an  impairment  charge for these
aircraft equal to the difference between their carrying value and fair value. In
determining fair value, the Directors use external valuations.  For the purposes
of measuring  impairment losses for long-lived assets, fair value is the average
of the "Appraised  Current Market  Values",  as calculated by three  independent
professional aircraft appraisers (the "Appraisers").




                                                                               7

                                      F-7

<PAGE>

AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


STATEMENT OF ACCOUNTING POLICIES


Aircraft (continued)

(ii)   Aircraft held for sale
Aircraft held for sale are defined as those where there were active  discussions
being held at the balance sheet date with specific identified buyers. In respect
of these aircraft held for sale, the asset is separately identified and included
as part of the  portfolio at the lower of the carrying  amount and its estimated
net realizable value less costs to sell.  Depreciation is discontinued and gains
or losses  arising on the  revaluation of such assets are taken to the provision
for impairment. At June 30, 2003 no aircraft were held for sale.

Cash and cash equivalents

Cash and cash  equivalents  include  demand  deposits  with banks and all highly
liquid investments with an original maturity of 3 months or less.

Restricted cash

Except as noted  below,  the  Company's  collection  account is  required  to be
maintained at a balance equal to US$22,691,000 (the "Liquidity Reserve Amount").
In March  2003,  the level of the  Liquidity  Reserve  Amount was  reduced  from
$23,907,000 with the approval of the rating agencies which rate the Notes.  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,  subject to Board  approval,  other Group  expenses and
liabilities,  including,  among other things, interest due on the Class A Notes,
Class B Notes and Class C Notes and costs  incurred in removing any lien imposed
by  Eurocontrol,  in performing  airworthiness  directives 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
Notes,  Class B Notes, Class C Notes and Class D Notes provided that the balance
of funds in the collection account does not fall below the "Maintenance  Reserve
Amount" (currently US$10 million).

Political risk insurance

The Group paid political risk insurance  premiums in respect of certain aircraft
to its insurers in the fiscal year ended June 30, 2001.  These were  recoverable
under most leases from the lessee and are included in amounts billed to aircraft
operations.  The Group recognised the insurance  premiums paid as an expense and
accounted  for the amount  recovered  from  lessees  on an  accruals  basis.  No
political  risk  insurance  premiums  were paid by the Group in the fiscal years
ended June 30, 2002 and June 30, 2003.

Foreign currency

Transactions  in  foreign  currencies  are  translated  into US  dollars  at the
exchange  rate  prevailing  as of  the  date  of  the  transaction.  Assets  and
liabilities  denominated in foreign currencies are translated into US dollars at
the rate of exchange prevailing at the year end. Any gain or loss arising from a
change in exchange rates  subsequent to the date of the  transaction is included
in the Statement of Operations.  The Group's foreign  exchange  transactions are
not significant, as all revenues and most costs are denominated in US dollars.

Use of estimates

In preparing the financial  statements in  conformity  with  generally  accepted
accounting principles,  management is required to make estimates and assumptions
that affect the amounts of reported assets and liabilities as of the date of the
financial statements. The same is true of revenues and expenses reported for the
year. Actual results could differ from those estimates.

The  determination  of the maintenance  provision is based on an analysis of the
lease  portfolio and reflects an amount which, in the Directors'  judgement,  is
adequate to provide for all potential costs at the balance sheet date.

Bad debt provision

The Directors  review all  outstanding  debtors and full provisions are made for
those amounts believed to be unrecoverable.


                                                                               8

                                      F-8

<PAGE>


AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


STATEMENT OF ACCOUNTING POLICIES

Recently Issued Accounting Standards

In December 2002, the Financial  Accounting Standards Board ("FASB") issued SFAS
148  "Accounting for stock based  compensation - transition and  disclosure,  an
amendment to SFAS 123".  This statement  amends SFAS 123 `Accounting for stock -
based  compensation',  to  provide  alternative  methods  of  transition  for  a
voluntary change to the fair value method of accounting for stock based employee
compensation.  In addition, this statement amends the disclosure requirements of
SFAS 123 to require  prominent  disclosures in both annual and interim financial
statements.  Certain of the  disclosure  modifications  are  required for fiscal
years  ending  after  December  15,  2002.  The Company  has no  employee  stock
compensation  plans and does not issue equity  instruments in exchange for goods
and services.  Accordingly  the application of SFAS 148 does not have any effect
on the Company's financial statements.

In November 2002, the FASB issued Interpretation no. 45 "Guarantor's  accounting
and disclosure  requirements for guarantees,  including  indirect  guarantees of
indebtedness to others" ("FIN 45") and  interpretation of SFAS 5, 57 and 107 and
a rescission of SFAS 34. This Interpretation elaborates on the disclosures to be
made by a guarantor  in its interim and annual  financial  statements  about its
obligations under guarantees issued.  The  Interpretation  also clarifies that a
guarantor is required to recognise, at inception of a guarantee, a liability for
the  fair  value  of  the  obligation   under  the  guarantee.   The  disclosure
requirements  are  effective  for  financial  statements  of interim  and annual
periods  ending after  December 31, 2002. The Company has adopted the disclosure
requirements  and will apply the recognition and measurement  provisions for all
guarantees  entered into or modified after December 31, 2002. In the period from
January 1, 2003 to date the Company has not entered into any guarantees.

On April 30, 2003 the FASB issued SFAS 149, "Amendment of SFAS 133 on Derivative
Instruments  and Hedging  Activities",  to address (1) decisions  reached by the
Derivatives  Implementation  Group, (2) developments in other FASB projects that
address  financial  instruments,  and (3)  implementation  issues related to the
definition  of a derivative.  SFAS 149 has multiple  effective  date  provisions
depending  on the nature of the  amendments  to SFAS 133.  The Company  does not
utilise  derivative  instruments  nor  does it  engage  in  hedging  activities.
Accordingly,  the  application of SFAS 149 is not expected to have any effect on
future financial statements.

On May 15,  2003 the FASB  issued SFAS 150,  "Accounting  for Certain  Financial
Instruments  with  Characteristics  of both  Liabilities  and Equity".  SFAS 150
establishes  standards  for  how an  insurer  classifies  and  measures  certain
financial  instruments with characteristics of both liabilities and equity. SFAS
150 is effective for all financial  instruments  entered into or modified  after
May 31, 2003. For  unmodified  financial  instruments  existing at May 31, 2003,
SFAS 150 is effective at the  beginning of the first  interim  period  beginning
after June 15, 2003, except for mandatorily  redeemable financial instruments of
non-public  entities.  As  the  Company  does  not  currently  have  any  equity
instruments outstanding,  the new standard is not expected to have any effect on
future financial statements.




                                                                               9

                                      F-9

<PAGE>




AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.     AIRCRAFT

<TABLE>
<CAPTION>

                                                                                       30 June      30 June
                                                                                          2002         2003
                                                                                       US$'000      US$'000
                                                                                     ---------     --------
       <S>                                                                           <C>           <C>
       COST LESS IMPAIRMENT
       Beginning of year                                                               378,524      304,406
       Impairment write-down                                                           (20,321)     (14,378)
       Reclassification to aircraft available for                                      (53,797)           -
       sale
                                                                                      --------     --------
       End of year                                                                     304,406      290,028
                                                                                      --------     --------
       ACCUMULATED DEPRECIATION
       Beginning of year                                                               118,524      114,713
       Depreciation expense                                                             16,360       11,999
       Reclassification to aircraft available for sale                                 (20,171)           -
                                                                                      --------     --------
       End of year                                                                     114,713      126,712
                                                                                      --------     --------
       Net carrying value - core portfolio                                             189,693      163,316
       Net carrying value - available for sale                                          33,626            -
                                                                                      --------     --------
                                                                                       223,319      163,316
                                                                                      ========    =========
       Average Appraised Base Value at the end of
       year (unaudited)                                                                279,500      205,820
                                                                                      ========    =========

       Number of aircraft at the end of the year                                            11            9
                                                                                      ========    =========




       The  "Appraised  Base Value"  represents the  Appraisers'  opinion of the
       underlying  economic value of an 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 Appraisers.

       As  discussed in the  Statement of  Accounting  Policies,  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  have  determined  that the carrying  value for each of the
       Company's  aircraft,  all of which  are  classified  as held for use,  is
       greater than the estimated  undiscounted  future  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 used average  Appraised  Current
       Market Value,  which was in aggregate  US$163,316,667 as at June 30, 2003
       for the nine aircraft, and represents the Appraisers' opinion of the most
       likely  trading price that may be generated for an aircraft under current
       market conditions. The 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.


                                                                                                         10

                                      F-10

</TABLE>

<PAGE>


AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.     AIRCRAFT (CONTINUED)

       Appraised  Current  Market Values have been  estimated by the  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;  the proceeds  realized upon a sale of an
       aircraft  may  be  less  than  the   Appraised   Current   Market  Value,
       particularly in current market  conditions as discussed in note 3. In the
       current  environment,  there is a lack of hard data available on which to
       base aircraft  valuations  and  therefore  the appraisal  process is more
       difficult.

       The Directors believe that as a result of the factors discussed above and
       in note 3 the sales value of the  aircraft  in the current  market may be
       less than the average  Appraised  Current  Market  Value and the carrying
       value as at June 30, 2003.  Also,  if it were  necessary to dispose of an
       aircraft  quickly,  the  proceeds  from the sale of such  aircraft  would
       probably  be even  less  than the value in the  current  market.  In that
       event, further write-downs would most likely be required.

       The application of the accounting  policies in the fiscal year ended June
       30, 2003 has led to an impairment charge of US$14.378  million.  Previous
       charges  were  made at June 30,  2002 and  June  30,  2001 for  US$20.321
       million  and  US$30.259  million,  respectively.  At June  30,  2002  the
       impairment  charge  carried  forward  represents  write-downs  to average
       Appraised Current Market Values at June 30, 2002 and 2001.

       The  decline in the fair value of the  aircraft is due  primarily  to the
       ageing of the aircraft and those market conditions  (described in note 3)
       which have had a negative  effect on aircraft  values.  These  conditions
       have also resulted in a reduction in lease rates.

       The Deed of Charge sets out the following  "Trust Note Sales Goals" which
       require the Company to approve sales of aircraft on an ongoing basis:



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


       The Company was in compliance  with and had exceeded the Trust Note Sales
       Goals as of June 27,  2001 and was  required  to sell a further  US$54.33
       million (as measured by Initial  Appraised Value) worth of aircraft to be
       in compliance with the Trust Note Sales Goals as of June 27, 2002.

       In order to meet the Trust  Note  Sales  Goals,  following  an  extensive
       marketing effort by Babcock & Brown,  the Group's aircraft  servicer (the
       "Servicer"),  the Company entered into  non-binding  agreements to sell a
       B737-300  aircraft (MSN 24914 on lease to Malev) and an A320-200 aircraft
       (MSN 283 on lease to Air Canada) to two separate  purchasers  by June 27,
       2002.  These  aircraft were  therefore  classified as held for sale as at
       June 30, 2002.

       The sale of MSN 24914 was completed on October 1, 2002. Despite extensive
       efforts to complete  the sale of MSN 283, the Company was informed by the
       prospective  purchaser  on  November  5, 2002 that it had  decided not to
       proceed with the transaction  for reasons outside the Company's  control.
       MSN 283 was  subsequently  sold to a different  purchaser on December 20,
       2002. As a result,  the Company was not in compliance with the Trust Note
       Sales Goals from November 5, 2002 to December 20, 2002.



                                                                              11

                                      F-11

<PAGE>


AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.     AIRCRAFT (CONTINUED)

       In the period from June 1996 to date,  the Company has sold five aircraft
       totalling  US$133.19 million  (measured by Initial Appraised Value).  The
       Company  needed  to sell an  additional  US$66.81  million  (measured  by
       Initial  Appraised  Value) worth of aircraft to comply with the June 2003
       Trust Note Sales Goal and would need to sell all the  aircraft  to comply
       with the June 2004  Trust  Notes  Sales  Goal.  At the  direction  of the
       Company, the Servicer has been marketing each of the aircraft for sale in
       order to meet the ongoing  Trust Note Sales Goals.  However,  the current
       market for sale of used aircraft is extremely poor and it is not clear if
       and when the market will approve.

       In the  fiscal  year  ended June 30,  2003 the  marketing  efforts of the
       Servicer  resulted in two offers to purchase the B757-200  aircraft  with
       MSN 25054, but both offers were at prices significantly below the Class C
       Note  Target  Price (as  defined in the Deed of  Charge).  After  careful
       consideration of these offers,  the Company's  obligations under the Deed
       of Charge (notably,  the Business Objectives (as defined below) contained
       therein)  and the current  and  possible  future  market  conditions  for
       aircraft  sales and leasing,  the Company  concluded that it would not be
       consistent with the terms of the Deed of Charge for the Company to accept
       either such offer.

       The  Company  did not comply  with the Trust Note Sales Goal for June 27,
       2003  as it was  unable,  given  the  current  aircraft  industry  market
       conditions,  to sell sufficient  aircraft at the sales prices required by
       the Company's current business objectives (the "Business Objectives") set
       out in the Deed of  Charge.  Given the  continuing  depressed  market for
       aircraft  sales and the  requirement  to achieve sales prices  consistent
       with the Company's current Business  Objectives,  the Company believes it
       will not be able to comply  with the Trust  Note  Sales Goal for June 27,
       2004.

       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 66
       2/3%  or more  of the  aggregate  outstanding  principal  balance  of the
       directing class of the Noteholders,  which will be Class A so long as any
       Class A Notes are  outstanding.  The Deed of Charge further provides that
       the  failure  to  comply  with the  Trust  Note  Sales  Goals  gives  the
       Noteholders  the  right to  replace  the  Servicer  at the  direction  of
       Noteholders  representing  at  least  75%  of the  aggregate  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-exemption 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 (as defined in the Deed of Charge) 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 Notes 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-exemption 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 (as defined in the Deed of Charge).

       The market conditions  described in note 3 have had a significant adverse
       effect on  aircraft  values in  general  and  therefore  have  negatively
       impacted  the price of the  aircraft  sold during the year,  and are also
       expected to impact on future sales prices.



                                                                              12

                                      F-12
<PAGE>


AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2.     OPERATING LEASES
       As at June 30, 2003 all of the aircraft  were leased on operating  leases
       to eight lessees.  As set out in the table below,  the aircraft leased to
       Asiana was  redelivered on December 13, 2003 and on December 18, 2003 the
       aircraft was re-leased to Batavia, an Indonesian lessee.
       The following table shows the scheduled terminations by aircraft type and
       lessee for the leases relating to the aircraft as of June 30, 2003:
<TABLE>
<CAPTION>


                                      Manufacturer's                             Month and year of     % of Revenue Year
       Aircraft type                   Serial number                 Lessee             expiration    ended 30 June 2003
       -------------                  --------------    -------------------      -----------------    -------------------
       <S>                            <C>               <C>                      <C>                  <C>
       B737-400                                23869                  Asiana       December 2003(1)              15.75%
       B737-400                                23870           Travel Servis        October 2005(2)              13.30%
       B737-400                                24519                  Skynet             March 2005               4.23%
       B737-500                                24898          China Southern         March 2004 (3)              12.63%
       B757-200                                25054    First Choice Airways         April 2005 (4)               2.71%
       B767-300ER                              24952              Air Canada         March 2004 (5)              20.23%
       B767-300ER                              25000              Air Canada               May 2007               9.20%
       MD83                                    49785               Meridiana         March 2004 (6)               5.90%
       MD83                                    49786           Allegiant Air       October 2003 (7)               3.53%

</TABLE>

(1)  The Asiana lease  terminated  on December  18,  2003.  Batavia has signed a
     lease  agreement dated December 13, 2003 for this aircraft for a lease term
     beginning December 18, 2003 and ending on March 31, 2007.

(2)  Travel  Servis  signed a lease  amendment  and  extension  agreement  dated
     December 16, 2003 to extend this lease until March 31, 2007.

(3)  China Southern  signed a lease  amendment and extension in agreement  dated
     December  17, 2003 to extend this lease for twenty four months  until March
     31, 2006.

(4)  Formerly known as Air 2000.

(5)  A memorandum of understanding dated October 10, 2003 executed by Air Canada
     extends this lease for thirty six months until March 31, 2007.

(6)  Meridiana signed a lease amendment and extension agreement dated October 5,
     2003 to extend this lease until March 31, 2006.

(7)  Allegiant  Air  signed a lease  amendment  and  extension  agreement  dated
     October  9,  2003 to  extend  this  lease  until  the next C check for this
     aircraft  (estimated to occur in March 2005) with an option to extend until
     the following C check (estimated to occur in June 2006).

The following is a schedule of future  minimum lease  rentals  receivable  under
operating leases as of December 23, 2003. A number of leases operate on a "power
by the hour" basis and, as such, future rentals are dependent upon lessee usage.
Some of these  "power  by the  hour"  leases  have no  minimum  rentals  and are
therefore not included in the schedule.

       Year ending 30 June                               US$'000
       -------------------                              --------
       2004                                               10,585
       2005                                                7,882
       2006                                                5,054
       2007                                                2,673
       2008                                                    -
                                                        --------
                                                          26,194
                                                        ========

The above  minimum  lease rentals would be reduced to the extent that any of the
aircraft are sold while on lease.  The leases have charges attached to them such
that they represent  security for the Notes issued by the Company,  as described
in note 3 below.



                                                                              13

                                      F-13

<PAGE>




3.     LONG TERM DEBT

       The Notes are  secured by a first  priority  security  interest  over the
       Company's assets,  which consist of the aircraft,  the leases and amounts
       on deposit in certain accounts.

<TABLE>
<CAPTION>

                                                                                           Outstanding        Outstanding
                                                                                             principal          principal
                                                                                         balance as at      balance as at
       Notes                  Expected final       Interest rate  Step up interest           June 2002       30 June 2003
       Notes                   Payment date*       (per annum)**   rate (per annum)            US$'000            US$'000
       -------                --------------       -------------   --------------        -------------      --------------
       <S>                    <C>                  <C>             <C>                   <C>                <C>
       Class A                  15 May 2002          LIBOR+0.37%               0.5%            113,505             85,618
       Class B                 15 July 2002          LIBOR+0.95%               0.5%             47,254             40,064
       Class C                 15 July 2002          LIBOR+1.35%               0.5%             41,583             39,560
       Class D                 15 July 2002               12.75%               1.0%             34,023             34,023
       Class E                          N/A               10.00%                N/A             82,918             82,918

                                                                                               319,283            282,183
</TABLE>


       *    as determined at date of issue based on certain  assumptions made
            at the time of issue.

       **   payable monthly in arrears.

       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.

       At various  times  during  fiscal  year 2003,  certain  target  principal
       payments scheduled to be paid to holders of the Class A, Class B, Class C
       and Class D Notes,  certain interest payments due to holders of the Class
       A, Class B, Class C and Class D Notes and all interest payments scheduled
       to be paid to holders of the Class E Note were in arrears. As at June 30,
       2003, these arrears  consisted of US$2.042 million of Class A Note Target
       Principal,  US$4.304 million of Class C Note Target  Principal,  US$5.177
       million of Class D Note  Target  Principal,  US$0.565  million of Class A
       Note step up interest, US$0.220 million of Class B Note step up interest,
       US$0.207  million of Class C Note step up interest,  US$2.805  million of
       Class D Note regular  interest,  US$0.326 million of Class D Note step up
       interest, US$0.504 million of Class D Note default interest and US$45.105
       million of Class E Note  interest.  The failure to pay all of the regular
       interest (excluding default and step up interest) owing to the holders of
       the Class D Notes at certain  times during the fiscal year ended June 30,
       2003 was an event of default under the Deed of Charge.

       The Deed of Charge  provides that, so long as the Class A Notes,  Class B
       Notes or Class C Notes are  outstanding,  the only  remedy  available  to
       holders of the Class D Notes for an event of default caused by failure to
       pay regular Class D Note interest is that default  interest of 1% of such
       unpaid  interest shall accrue and be owed to holders of the Class D Notes
       in  accordance  with the  priority of  payments  set forth in the Deed of
       Charge.

       The Company did not have  sufficient  funds to repay the Class A Notes on
       their  expected  final  payment  date of May 15,  2002  and did not  have
       sufficient  funds 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 that, to the extent the Company does
       not repay in full the principal of those Notes by such dates, the Company
       pay these Noteholders additional step-up interest as per the rates stated
       in the above  table 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 be paid only to the  extent  that
       there are  available  collections  in  accordance  with the  priority  of
       payments  set out in the Deed of Charge.  The Company  paid some  step-up
       interest in fiscal year 2002, but its current  projections  indicate that
       it will not have  sufficient  funds to pay any further  step-up  interest
       during fiscal year 2004 or beyond. The Company's current projections also
       indicate that it will not have sufficient  funds to pay any further Class
       D Note interest.



                                                                              14

                                      F-14

<PAGE>


AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


3.     LONG TERM DEBT (CONTINUED)

       Global  economic  conditions,  as  exacerbated  by the September 11, 2001
       terrorist  attacks on the United States as well as the military action of
       the U.S. and its allies in Afghanistan, the terrorist attacks in Bali and
       Saudi  Arabia,  the war in Iraq  and the  outbreak  of the  Severe  Acute
       Respiratory  Syndrome (SARS) virus,  have each had a significant  adverse
       effect on the airline industry in general and on the Group.  Although the
       World Health  Organisation  recently removed the last remaining  negative
       travel  recommendations  related to SARS,  some scientists have suggested
       the  possibility  that new cases of SARS may  emerge  during  the  coming
       winter season.

       Each of these events highlighted the deteriorating  business fundamentals
       in the industry that have been further weakened by passengers'  fears and
       economic  recession.  The  impact of these  events  has been seen in most
       airlines  cutting their flight schedules with many taking the opportunity
       to retire aircraft from service.  Some carriers have filed for bankruptcy
       (including Air Canada,  one of the Company's  largest lessees as measured
       by annual lease revenue) or consolidated, while others, including many of
       the  Company's  lessees,  have  suffered  large  losses  or  face  severe
       financial difficulties.

       There has been a significant increase of aircraft on the market available
       for sale or lease  (especially  older technology and less  fuel-efficient
       aircraft or models no longer in production),  increasing  pressure on the
       rentals  and sales  prices  offered.  As a result of the loss of investor
       appetite and the  difficulty  in obtaining  financing for the purchase of
       aircraft,  there are few buyers of  aircraft on  operating  lease and the
       resulting illiquidity in the market has caused sale prices of aircraft to
       further decline.  There have been few aircraft sale transactions of which
       the  Company is aware in the last  twelve  months.  The sales  prices the
       Company  received for the two aircraft sold in the fiscal year ended June
       30,  2003,  in an  attempt to comply  with the Trust  Note  Sales  Goals,
       reflected the industry wide decline in sales prices for older aircraft.

       Lease rates have also been suffering from the increase in availability of
       aircraft and the reduction in aircraft values.  As a result,  the Company
       has  experienced a significant  decline in lease rates upon re-leasing or
       extensions of leases,  requests from certain lessees to restructure their
       leases and an increasing  number of  "power-by-the-hour"  leases in which
       lease  rates  are  based on the  number  of  hours  the  lessee  uses the
       aircraft.  The Company's  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 the
       Company,  as lessor,  agree to contribute  towards  certain  maintenance,
       overhaul and airworthiness  directive expenses which in earlier years had
       typically been fully covered by lessees.

       These factors have negatively  impacted projected rental amounts and sale
       proceeds  through to the final maturity date of the Notes (June 15, 2006)
       and consequently  have had a significant  adverse effect 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 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 the
       principal  of the  Class B Notes  in  full  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 following order:

       1.  Classes A, B, and C regular interest

       2.  Class A principal

       3.  Class B principal

       4.  Class C principal

       5.  Class D regular interest

       6.  Class D principal

       7.  Classes A, B, C and D step-up interest and default interest

       8.  Class E interest

       9.  Class E principal



                                                                              15

                                      F-15

<PAGE>

AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



3.     LONG TERM DEBT (CONTINUED)

       The Class E Notes will not, except in certain circumstances,  receive any
       principal payments until the outstanding  principal amount of each of the
       Class A Notes,  Class B  Notes,  Class C Notes  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 on the Notes on any day prior
       to their final maturity date due to insufficient  cash  collections  will
       not constitute an event of default under the Deed of Charge.  The limited
       recourse  nature of the Notes means that no  payments  will be payable in
       excess of the available collections.


4.     MAINTENANCE RESERVES

                                          30 June        30 June       30 June
                                             2001           2002          2003
                                          US$'000        US$'000       US$'000
                                         --------       --------      --------
       Opening balance                      9,817         19,306        19,023
       Received during year                 5,850          6,574         2,774
       Claims by lessees                   (6,469)       (11,426)       (2,316)
       Provision for maintenance in year   10,108          4,569        (1,684)
                                         --------       --------      --------
       Closing balance                     19,306         19,023        17,797
                                         --------       --------      --------
       Due within one year                  2,380          5,388         5,622
       Due after one year                  16,926         13,635        12,175
                                         --------       --------      --------
                                           19,306         19,023        17,797
                                         ========       ========      ========

       As at June 30, 2003 all of the lessees are responsible under the terms of
       their  leases to maintain  the  aircraft  and six of the lessees  provide
       security  for  such   obligations   through  regular   contributions   to
       maintenance reserves held by the Group. In addition,  the Group may incur
       maintenance   costs  on  the  re-leasing  of  the  aircraft  due  to  the
       requirement  to  restore  the  aircraft  to  an  acceptable   maintenance
       condition prior to leasing.  In addition,  in some lease  contracts,  the
       Group  is  required  to  make  a  contribution   where  the   maintenance
       expenditure exceeds the amount in the fund.

       Inherent  uncertainties make it difficult to determine whether the future
       obligations of the Group to meet future  maintenance  payments can be met
       out of the proceeds of future maintenance receipts.

       Whilst any surplus in  maintenance  funds at the  termination  of a lease
       previously  generally  accrued  to the  Group,  due to  current  economic
       factors in the airline  industry,  lessees have been exerting pressure on
       lessors to transfer any excess  maintenance  funds upon the re-leasing of
       an  aircraft.  In order  to  re-lease  aircraft,  the  Group is  granting
       maintenance credits as part of the terms of the new leases and expects to
       continue to grant such  credits on new leases.  Lessor  contributions  to
       maintenance costs resulted in a provision of US$1,684,000  being released
       in the year ended June 30, 2003 (2002 - a charge of US$4,569,000).


5.     SECURITY DEPOSITS

       Security deposits of US$2,682,000 at June 30, 2003 and of US$2,458,000 at
       June 30, 2002 are held as security for obligations in accordance with the
       terms of certain  leases.  The deposits are held as cash and are included
       within the restricted cash balance.




                                                                              16

                                      F-16

<PAGE>




6.     REVENUES AND CONCENTRATION OF CREDIT RISK

i) Distribution of leasing revenues by geographic area

                            For the year     For the year      For the year
                                   ended            ended             ended
                                 30 June          30 June           30 June
                                    2001             2002              2003
                                 US$'000          US$'000           US$'000
                            ------------     ------------     -------------
       Europe                     20,305           15,198            6,973
       Americas                   11,140           10,022            6,341
       Asia/Pacific                6,503            7,385            6,444
                            ------------     ------------     -------------
                                  37,948           32,605           19,758
                            ============     ============     =============
       ii) Concentration of credit risk


       Credit  risk with  respect  to trade  accounts  receivable  is  generally
       diversified  due to the Group's fleet of aircraft being comprised of nine
       aircraft,  all of which were on lease to eight lessees in eight countries
       as at June 30, 2003.

       The Group manages its exposure to leases with lessees based in particular
       countries through obtaining security in the form of deposits,  letters of
       credit and guarantees.

       The Group  continually  evaluates the financial  position of lessees and,
       based on this  evaluation,  the  amounts  outstanding  and the  available
       security, makes an appropriate provision for doubtful debts.

       Four lessees accounted for 29.43%, 15.75%, 13.30% and 12.63% respectively
       of the Group's aggregate lease revenues for the year ended June 30, 2003.
       No other  lessee  accounted  for more than 10% of the  Group's  aggregate
       lease revenues for such period.


7.     INTEREST EXPENSE
<TABLE>
<CAPTION>

                                                                                Statement of Operations
                                                                       -----------------------------------------------
                                                                       For the year     For the year      For the year
                                                                              ended            ended             ended
                                                                       30 June 2001     30 June 2002      30 June 2003
                                                                       -----------      ------------     -------------
                           Accrual 30                   Accrual 30
                            June 2002           Paid     June 2003
                              US$'000        US$'000       US$'000          US$'000         US$'000        US$'000
                           -----------       ---------     ----------      ----------      ----------     ----------
       <S>                 <C>               <C>           <C>             <C>             <C>            <C>
       New notes
       Class A                     147         (1,977)          599         (8,624)         (3,438)       (2,429)
       Class B                      60         (1,120)          246         (3,233)         (1,567)       (1,306)
       Class C                      59         (1,198)          237         (3,014)          (1539)       (1,376)
       Class D                     519         (1,894)        3,454         (4,699)         (4,619)       (4,829)
                                   785         (6,189)       4,536         (19,570)        (11,163)       (9,940)
                           -----------       ---------     ----------      ----------      ----------     ----------
       Class E                  36,068              -       44,759          (8,292)         (7,947)       (8,691)
                           -----------       ---------     ----------      ----------      ----------     ----------
       Total                    36,853         (6,189)      49,295         (27,862)        (19,110)      (18,631)
                          ============       =========     ==========      ==========      ==========    ===========

8.     TRADE RECEIVABLES


                                                                            30 June      30 June          30 June
                                                                               2001         2002             2003
                                                                            US$'000      US$'000          US$'000
                                                                         ----------      ----------     ----------
       Gross receivables                                                        995        1,487            3,273
       Allowance for bad debts                                                    -            -             (802)
                                                                         ----------      ----------     ----------
       Net receivables                                                          995        1,487             2,471
                                                                         ==========      ==========     ==========




                                                                                                                17

                                      F-17

</TABLE>

<PAGE>




AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


9.     INCOME TAXES

       The Company pays an annual charge (currently  (pound)600) to qualify as a
       tax exempt  company  under Jersey law. This fee is included in the profit
       and loss accounts as it is not dependent on the Company's  results.  ALPS
       92-1  UK  Limited  is  subject  to UK  taxation  on  its  profits  at the
       applicable rate and Carotene  Limited is subject to Irish taxation on its
       profits at the applicable rate. Taxable income is the same as book income
       for both of these entities. Accordingly, there are no deferred taxes. Net
       operating loss carry forwards at June 30, 2003 were zero.


                                          30 June        30 June         30 June
                                             2001           2002            2003
                                          US$'000        US$'000         US$'000
                                         --------        -------        --------

       Foreign corporation tax                 20             24              11
       Foreign witholding tax (i)               -              -             214
                                         --------        -------        --------
                                               20             24             225
                                         ========        =======        ========

       (i)   Provision  has  been  made  in  respect  of  unpaid  United  States
       withholding  taxes relating to the  investment of certain  collections by
       the Cash Manager. The charge above represents the Directors' current best
       estimate as to the possible amounts that may eventually become payable in
       respect of these liabilities.



10.    COMMITMENTS

       The Group has no  long-term  contracts  other than those with its service
       providers as at June 30, 2003.

       The annual  commitment to Babcock & Brown,  the  Servicer,  is US$454,800
       plus 2% of all lease rentals collected.

       The annual  commitment to Deutsche Bank Trust Company Americas  (formerly
       Bankers Trust Company), the cash manager, is US$17,000.

       The annual commitment to Mourant & Co. Limited, the administrative agent,
       is  based  on  the  number  of  hours  worked  by  each  employee  of the
       administrative  agent on the  affairs of the  Company  multiplied  by the
       hourly rate of each such employee.

       The holders of the shares in the Company are entitled to receive,  out of
       the distributable profits of the Company, a fixed cumulative preferential
       dividend  at a rate of  US$1,500  per annum.  As the Company did not have
       distributable  profits as at June 30,  2003,  it did not pay a  dividend.
       Cumulative  unpaid  preferential  dividends  as at  June  30,  2003  were
       US$9,000.




                                                                              18

                                      F-18


<PAGE>



AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


11.    FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

       The book values and fair  values of the  Company's  financial  assets and
       financial liabilities as at June 30, 2003 are set out below:


<TABLE>
<CAPTION>


                                                                                        Estimated
                                                                       Book Value      Fair Value
                                                                    June 30, 2003   June 30, 2003
       Financial Assets                                                   US$'000         US$'000
       --------------------------------------------------          --------------   -------------
        <S>                                                        <C>              <C>

              Cash                                                         3,806            3,806
              Restricted Cash                                             22,691           22,691
                                                                   --------------   -------------
              Total                                                       26,497           26,497
                                                                   ==============   =============



       Financial Liabilities
          Indebtedness
              Class A                                                     85,618           68,494
              Class B                                                     40,064           20,032
              Class C                                                     39,560            5,934
              Class D                                                     34,023              340
              Class E                                                     82,918                -
                                                                   --------------   -------------
                                                                         282,183           94,800
                                                                   --------------   -------------
          Other
              Aircraft Maintenance reserves due after one                 12,175           12,175
              year
              Security deposits due after one year                         2,682            2,682
                                                                   --------------   -------------
                                                                          14,857           14,857
                                                                   --------------   -------------
              Total                                                      297,040          109,657
                                                                   ==============   =============


       Although the estimated fair values of the Class A to D Notes  outstanding
       have been  determined by reference to prices as at June 30, 2003 provided
       by an  independent  third  party,  these fair  values do not  necessarily
       reflect the market value of these Notes at a specific time and should not
       be relied  upon as a measure  of the value that  could be  realized  by a
       noteholder upon sale.

       The Directors have considered the fair value of the Class E Notes at June
       30, 2003 and, due to the current uncertainty in the aviation industry and
       the particular  characteristics  of these Notes,  do not believe it to be
       appropriate,  or possible,  to estimate with any degree of  certainty,  a
       fair value of these Notes in the current economic climate.

       The fair value of aircraft  maintenance  reserves and security  deposits,
       which are  subject to  floating  rates,  where  applicable,  is their par
       value.




                                                                                               19

                                      F-19


</TABLE>


<PAGE>


AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


12.    RELATED PARTY TRANSACTIONS

       a)         Babcock & Brown Limited

       Babcock & Brown acts as  Servicer  to the Group.  In addition to managing
       the Group's  aircraft,  Babcock & Brown also  manages  aircraft  owned by
       other third parties. Babcock & Brown may from time to time have conflicts
       of interest in performing its obligations to the Group and other entities
       to which it provides management, marketing and other services.

       Babcock & Brown  receives  an annual fee as  Servicer  which  amounted to
       US$1,323,686  for the year  ended  June  30,  2003  (2002:  US$1,180,714,
       2001:US$1,375,358).

       b)         Brian Chamness

       Mr B.  Chamness,  a director of the  Company,  was formerly an officer of
       WFC, the holder of the Class E Notes. He now acts as a consultant to WFC.


12.    RELATED PARTY TRANSACTIONS (CONTINUED)

       c)         Mr G. Adrian Robinson

       During the year the Group has entered into a lease agreement for aircraft
       MSN 25054 with Air 2000 (now re-named First Choice Airways). Mr G. Adrian
       Robinson,  a director of the  Company,  provides  consulting  services to
       First Choice Airways from time to time.

d)     Mourant & Co. Limited

       Mourant & Co. Limited acts as administrative agent to the Company and its
       subsidiary,  Mourant & Co. Secretaries Limited,  acts as the secretary of
       the Company.  Mourant & Co. Limited and Mourant & Co. Secretaries Limited
       are  affiliated  with  Mourant du Feu & Jeune,  the law firm that acts as
       Jersey legal counsel to the Group.


13.    CAPITALISED REFINANCING COSTS

                                      30 June     30 June         30 June
                                         2001        2002            2003
                                      US$'000     US$'000         US$'000
                                     ---------   ---------      ---------
       Balance at start of year          1,176           -              -
       Amortised during year            (1,176)          -              -
                                     ---------   ---------      ---------
       Balance at end of year                -           -              -
                                     =========   =========      =========

       During the refinancing of the Company in June 1996 costs were incurred in
       relation  to the Notes.  These  refinancing  costs were  capitalised  and
       amortised over the then expected life of the Notes.

14.    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

       i)         Income tax

       The Group made income tax  payments of $1,528  during the year ended June
       30, 2003,  $3,631 during the year ended June 30, 2002 and $17,748  during
       the year ended June 30, 2001.

       ii)        Interest paid

       The Company  made net  interest  payments of  $6,189,513  during the year
       ended June 30, 2003,  $12,331,000 during the year ended June 30, 2002 and
       $19,852,000 during the year ended June 30, 2001.



                                                                              20

                                      F-20


<PAGE>


AIRCRAFT LEASE PORTFOLIO SECURITISATION 92-1 LIMITED


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


15.    SUBSEQUENT EVENTS

       i) Due to the  liquidation  of the United  Kingdom  partnership of Arthur
       Andersen, the previous  administrative agent, Andersen Corporate Services
       (Jersey)   Limited,   and  the  previous  company   secretary,   Andersen
       Secretaries (Jersey) Limited,  which were both wholly owned by the United
       Kingdom  partnership of Arthur  Andersen,  were replaced by Mourant & Co.
       Limited and Mourant & Co. Secretaries Limited, respectively on October 1,
       2003. The rating  agencies which rate the Notes have confirmed that these
       changes will not result in a downgrade or withdrawal of their  respective
       ratings of the Notes.

       ii) On  September  11, 2003 KPMG  Channel  Islands  were  replaced as the
       Company's auditors by KPMG Ireland.  There were no disagreements  between
       KPMG Channel Islands and the Company or any other  reportable  event that
       caused the Company to replace KPMG Channel Islands with KPMG Ireland.

       iii) The interest  and  principal  arrears of the Company have  increased
       subsequent  to the year end.  At  December15,  2003,  the unpaid  amounts
       consisted of US$30.589 million of Class A Note Target Principal, US$0.741
       million of Class A Note  step-up  interest,  US$0.305  million of Class B
       Note step-up interest, US$4.304 million of Class C Note Target Principal,
       US$0.290  million of Class C Note step-up  interest,  US$5.177 million of
       Class D Note Target  Principal,  US$4.612 million of Class D Note regular
       interest,  US$0.661  million of Class D Note default  interest,  US$0.482
       million of Class D Note step-up interest and US$48.560 million of Class E
       Note interest.

       iv) On December  15, 2003 the Company  incorporated  a third wholly owned
       subsidiary,  ALPS 92-1 France SARL, to  facilitate  the leasing of one of
       the Company's B737-400 aircraft to an Indonesian lessee.



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                                      F-21

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