<PAGE>

          CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED
         SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
                     TO A REQUEST FOR CONFIDENTIAL TREATMENT

                                                                   EXHIBIT 10.17

                                                                  EXECUTION COPY

                            AIRCRAFT LEASE AGREEMENT

                                   Dated as of

                                December 23, 2004

                                     between

                        WELLS FARGO BANK NORTHWEST, N.A.,
                  NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
                        TRUSTEE UNDER THE TRUST AGREEMENT

                                       as

                                     Lessor

                                       and

                       COMPANIA PANAMENA DE AVIACION, S.A.

                                       as

                                     Lessee

                                in respect of one

                            Boeing B737-800 Aircraft

                       Manufacturer's Serial Number 29670

<PAGE>

                                      INDEX

CLAUSE                                                                      PAGE

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                     PAGE
<S>                                                                                  <C>
1.       INTERPRETATION.........................................................       6

     1.1      DEFINITIONS.......................................................       6

     1.2      CONSTRUCTION:.....................................................      30

2.       REPRESENTATIONS AND WARRANTIES.........................................      31

     2.1      LESSEE'S REPRESENTATIONS AND WARRANTIES:..........................      31

     2.2      LESSEE'S FURTHER REPRESENTATIONS AND WARRANTIES:..................      35

     2.3      REPETITION:.......................................................      36

     2.4      LESSOR'S REPRESENTATIONS AND WARRANTIES:..........................      37

     2.5      REPETITION:.......................................................      38

3.       CONDITIONS PRECEDENT...................................................      38

     3.1      CONDITIONS PRECEDENT:.............................................      38

     3.2      FURTHER CONDITIONS PRECEDENT:.....................................      41

     3.3      LESSEE CONDITIONS PRECEDENT:......................................      41

     3.4      WAIVER:...........................................................      42

     3.5      POST-CLOSING MATTERS:.............................................      42

4.       COMMENCEMENT...........................................................      43

     4.1      LEASING:..........................................................      43

     4.2      DELIVERY:.........................................................      43

     4.3      DELAYED DELIVERY:.................................................      43

     4.4      TERMINATION FOR NON-DELIVERY:.....................................      44

     4.5      PURCHASE OF AIRCRAFT:.............................................      44

5.       PAYMENTS...............................................................      44

     5.1      SECURITY DEPOSIT AND LETTER OF CREDIT:............................      44

     5.2      RENTAL PERIODS:...................................................      45

     5.3      RENT:.............................................................      45
</TABLE>

                                        i

<PAGE>

<TABLE>
<CAPTION>
                                                                                     PAGE
<S>                                                                                  <C>
     5.4      SUPPLEMENTAL RENT:................................................      45

     5.5      PAYMENTS:.........................................................      51

     5.6      DEFAULT INTEREST:.................................................      51

     5.7      WITHHOLDING:......................................................      51

     5.8      TAX INDEMNITY:....................................................      52

     5.9      SALES TAX:........................................................      52

     5.10     VALUE ADDED TAX:..................................................      53

     5.11     PAYMENTS; TAX REPORTS; INFORMATION:...............................      53

     5.12     CONTEST OF CLAIM FOR TAX..........................................      55

     5.13     INDEMNITIES TO BE PAID ON AN AFTER-TAX BASIS/SURVIVAL:............      58

     5.14     ABSOLUTE OBLIGATIONS:.............................................      58

     5.15     SECURITY:.........................................................      59

     5.16     CURRENCY INDEMNITY:...............................................      60

     5.17     SETOFF:...........................................................      61

6.       MANUFACTURER'S WARRANTIES..............................................      61

7.       LESSOR'S COVENANTS.....................................................      62

     7.1      QUIET ENJOYMENT:..................................................      62

     7.2      LESSOR OBLIGATIONS FOLLOWING FINAL EXPIRY DATE:...................      62

     7.3      UNAPPLIED SUPPLEMENTAL RENT:......................................      63

     7.4      MAINTENANCE CONTRIBUTIONS:........................................      63

     7.5      CLAIMS FOR REIMBURSEMENT:.........................................      64

8.       LESSEE'S COVENANTS.....................................................      65

     8.1      DURATION:.........................................................      65

     8.2      INFORMATION:......................................................      65

     8.3      LAWFUL AND SAFE OPERATION:........................................      67

     8.4      OUTGOINGS:........................................................      68

     8.5      SUB-LEASING:......................................................      69

     8.6      INSPECTION:.......................................................      70

     8.7      TITLE:............................................................      70

     8.8      GENERAL:..........................................................      72

     8.9      NON-DISCRIMINATION:...............................................      74
</TABLE>

                                       ii

<PAGE>

<TABLE>
<CAPTION>
                                                                                     PAGE
<S>                                                                                  <C>
     8.10     RECORDS:..........................................................      74

     8.11     PROTECTION:.......................................................      75

     8.12     MAINTENANCE AND REPAIR:...........................................      77

     8.13     PERMANENT REPLACEMENT OF ENGINES AND PARTS:.......................      79

     8.14     REMOVAL AND INTERCHANGE OF ENGINES:...............................      80

     8.15     REMOVAL AND INTERCHANGE OF PARTS:.................................      81

     8.16     TEMPORARY INSTALLATION OF ENGINES AND PARTS:......................      81

     8.17     POOLING OF ENGINES AND PARTS:.....................................      82

     8.18     EQUIPMENT CHANGES:................................................      82

     8.19     THIRD PARTY:......................................................      83

9.       INSURANCE..............................................................      83

     9.1      INSURANCES:.......................................................      83

     9.2      REQUIREMENTS......................................................      84

     9.3      STANDARDS.........................................................      84

     9.4      CHANGE............................................................      84

     9.5      INSURANCE COVENANTS...............................................      85

     9.6      RENEWAL OF INSURANCES.............................................      86

     9.7      FAILURE TO INSURE.................................................      86

     9.8      CONTINUING INSURANCE FOR INDEMNITY................................      87

10.      INDEMNITY..............................................................      87

     10.1     GENERAL:..........................................................      87

     10.2     NOTIFICATION:.....................................................      89

     10.3     CONTEST:..........................................................      89

     10.4     SUBROGRATION:.....................................................      90

     10.5     DURATION:.........................................................      91

11.      EVENTS OF LOSS.........................................................      91

     11.1     EVENTS OF LOSS....................................................      91

     11.2     REQUISITION:......................................................      92

12.      RETURN OF AIRCRAFT.....................................................      93

     12.1     RETURN:...........................................................      93

     12.2     FINAL INSPECTION:.................................................      93
</TABLE>

                                       iii

<PAGE>

<TABLE>
<CAPTION>
                                                                                     PAGE
<S>                                                                                  <C>
     12.3     NON-COMPLIANCE:...................................................      93

     12.4     ACKNOWLEDGEMENT:..................................................      94

     12.5     REDELIVERY MAINTENANCE ADJUSTMENT:................................      94

     12.6     EXPORT DOCUMENTS:.................................................      94

     12.7     MAINTENANCE PROGRAM...............................................      95

     12.8     FUEL:.............................................................      95

13.      DEFAULT................................................................      95

     13.1     EVENTS:...........................................................      95

     13.2     RIGHTS AND REMEDIES:..............................................     100

     13.3     POWER OF ATTORNEY:................................................     104

14.      ASSIGNMENT.............................................................     105

     14.1     ASSIGNMENT BY LESSEE:.............................................     105

     14.2     ASSIGNMENT BY LESSOR:.............................................     105

     14.3     GRANTS OF SECURITY INTERESTS:.....................................     106

15.      MISCELLANEOUS..........................................................     107

     15.1     SURVIVAL:.........................................................     107

     15.2     WAIVERS, REMEDIES CUMULATIVE:.....................................     107

     15.3     DELEGATION:.......................................................     107

     15.4     CERTIFICATES:.....................................................     107

     15.5     APPROPRIATION:....................................................     107

     15.6     SEVERABILITY:.....................................................     108

     15.7     REMEDY:...........................................................     108

     15.8     EXPENSES:.........................................................     108

     15.9     TIME OF ESSENCE:..................................................     109

     15.10    NOTICES:..........................................................     109

     15.11    LAW AND JURISDICTION:.............................................     110

     15.12    SOLE AND ENTIRE AGREEMENT:........................................     112

     15.13    INDEMNITIES:......................................................     113

     15.14    COUNTERPARTS:.....................................................     113

     15.15    LANGUAGE:.........................................................     113

     15.16    NO BROKERS:.......................................................     113
</TABLE>

                                       iv

<PAGE>

<TABLE>
<CAPTION>
                                                                                     PAGE
<S>                                                                                  <C>

     15.17    CONFIDENTIALITY:..................................................     113

     15.18    LIABILITY OF LESSOR LIMITED:......................................     114

16.      DISCLAIMERS AND WAIVERS................................................     114

     16.1     EXCLUSION:........................................................     115

     16.2     WAIVER:...........................................................     116

     16.3     DISCLAIMER OF CONSEQUENTIAL DAMAGES:..............................     116

     16.4     CONFIRMATION:.....................................................     116

SCHEDULE 1    PART 1 DESCRIPTION OF AIRCRAFT....................................     117

SCHEDULE 2    FORM OF ACCEPTANCE CERTIFICATE....................................     131

SCHEDULE 3    REDELIVERY CONDITIONS AND REDELIVERY MAINTENANCE ADJUSTMENT.......     137

SCHEDULE 4    INSURANCE REQUIREMENTS............................................     140

SCHEDULE 5    ACKNOWLEDGEMENTS IN CONNECTION WITH FINANCING.....................     144

SCHEDULE 6    FORM OF MONTHLY STATUS REPORT.....................................     150

SCHEDULE 7    ECONOMIC VARIABLES................................................     152

SCHEDULE 8    FORM OF LEASE SUPPLEMENT NO. 1....................................     157

SCHEDULE 9    FORM OF IRREVOCABLE POWER OF ATTORNEY.............................     160

SCHEDULE 10   FORM OF COPA HOLDINGS GUARANTEE...................................       1

SCHEDULE 11   AIRWORTHINESS DIRECTIVE COST SHARING FORMULA......................      13

SCHEDULE 12   FORM of WARRANTY ASSIGNMENT.......................................      14
</TABLE>

                                       iv

<PAGE>

THIS AIRCRAFT LEASE AGREEMENT (this "Agreement") is made as of the 23rd day of
December, 2004 between:

(1)      WELLS FARGO BANK NORTHWEST, N.A., a national banking association formed
         under the federal laws of the United States of America, with its
         principal place of business at 299 South Main Street, Salt Lake City,
         Utah 84111, not in its individual capacity (except when referred to as
         "WFB"), but solely as trustee under the Trust Agreement (as defined
         below) (the "Lessor"); and

(2)      COMPANIA PANAMENA DE AVIACION, S.A., a corporation formed under the
         laws of the Republic of Panama with its principal place of business at
         Avenida Justo Arosemena y Calle 39, Apartado 1572, Panama 1, Republic
         of Panama ("Lessee").

         WHEREAS: Lessor wishes to lease to Lessee and Lessee is willing to
         lease from Lessor the Aircraft on the terms of this Agreement.

         IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS

         In this Agreement the following expressions have the meanings set out
opposite:

AAC                                 the Autoridad de Aeronautica Civil or any
                                    successor agency charged with supervising
                                    civil aviation in the Republic of Panama.

ACCEPTANCE CERTIFICATE              a certificate of the Lessor substantially in
                                    the form set out in Schedule 2.

AFFILIATE                           as to any Person, any other Person that,
                                    directly or indirectly, is in control of, is
                                    controlled by, or is under common control
                                    with, such Person. For purposes of this
                                    definition, "control" of a Person means the
                                    power, directly or indirectly, either to (a)
                                    vote 50% or more of the securities having
                                    ordinary voting power for the election of
                                    directors (or persons performing similar
                                    functions) of such Person or (b) direct or
                                    cause the direction of the management and
                                    policies of such person, whether by contract
                                    or otherwise.

AFTER-TAX BASIS                     means, with respect to any amount (an
                                    "Amount") required by any Transaction
                                    Document to be paid on an "After Tax Basis"

                                        6

<PAGE>

                                    to or for the benefit of any Person, such
                                    Amount plus an additional amount that will
                                    cause the sum of such amounts, after
                                    subtracting the amount of all Taxes
                                    (including Lessor Taxes) required to be paid
                                    by such Person as a result of the receipt
                                    (actual or constructive) or accrual of such
                                    Amount plus the additional amount payable
                                    pursuant to this sentence (net of any
                                    current actual reduction in such Person's
                                    liability for Lessor Taxes caused by the
                                    payment of such Amount) to be equal to the
                                    amount that such Person would receive if
                                    such Taxes were not required to be paid by
                                    such Person.

AGREED MAINTENANCE PERFORMER        unless otherwise agreed by Lessor and
                                    Lessee, a Person approved by the FAA to
                                    perform maintenance and/or modification
                                    services on commercial aircraft and/or
                                    commercial aircraft engines.

AGREED VALUE                        has the meaning specified in Schedule 7.

AIR AUTHORITY                       the AAC.

AIRCRAFT                            the aircraft described in Part 1 of
                                    Schedule 1 (which term includes, unless the
                                    context otherwise requires, all Engines,
                                    Parts and, except in respect of Clause 9 and
                                    Schedule 4 hereof, Aircraft Documents).

AIRCRAFT DOCUMENTS                  the documents, data, manuals and records
                                    identified in Part 2 of Schedule 1 and all
                                    additions, renewals, revisions and
                                    replacements from time to time made in
                                    accordance with this Agreement.

AIRCRAFT PURCHASE AGREEMENT         the aircraft sale and purchase agreement
                                    dated as of October 1, 2003 between the
                                    Initial Purchaser and the Beneficiary
                                    insofar as it relates to the Aircraft
                                    between such parties in connection
                                    therewith.

AIRFRAME                            the Aircraft, excluding the Engines and
                                    Aircraft Documents.

AIRFRAME 6C/24,000 FLIGHT HOUR      means the 6C/24,000 Flight Hour block check

                                       7
<PAGE>

BLOCK STRUCTURAL CHECK              including  inspections, and system check,
                                    all in accordance with the Approved
                                    Maintenance Program. Included are all
                                    routine and non-routine 6C check tasks and
                                    any maintenance or replacement of any part
                                    failing any 6C check routine requirement for
                                    an operational or functional test of the
                                    part while installed on the Aircraft.

AIRFRAME 6C/24,000 FLIGHT HOUR      has the meaning specified in Clause
BLOCK STRUCTURAL CHECK              5.4(a)(i).
SUPPLEMENTAL RENT

AIRFRAME 6C/24,000 FLIGHT HOUR      has the meaning specified in Schedule 7.
BLOCK STRUCTURAL CHECK SUPPLEMENTAL
RENT RATE

AIRWORTHINESS DIRECTIVE OR AD       an airworthiness directive issued by the FAA
                                    and/or the AAC.

ANNUAL EXPIRY DATE                  each annual anniversary date of the Delivery
                                    Date which occurs before (or on) the Final
                                    Expiry Date.

ANNUAL SUPPLEMENTAL RENT ADJUSTMENT has the meaning specified in Schedule 7.

APPRAISAL PROCEDURE                 the following procedure for determining the
                                    "fair market rental value" of the Aircraft
                                    or any part thereof pursuant to Clause
                                    13.2(c)(ii)(b): (a) Lessor shall select an
                                    internationally recognized independent
                                    aircraft appraiser experienced in appraising
                                    aircraft of the make and model of the
                                    Aircraft in its sole and absolute discretion
                                    who shall make a determination of "fair
                                    market rental value" of the Aircraft or part
                                    thereof in accordance with the terms hereof
                                    and customary industry practices; and (b)
                                    the fees and expenses of the appraiser shall
                                    be paid by Lessee. "Fair market rental
                                    value" shall mean the value determined by an
                                    appraisal completed on an "as-is" and
                                    "where-is" basis.

APPROVED MAINTENANCE PROGRAM OR     an Air Authority approved maintenance
LESSEE'S APPROVED MAINTENANCE       program for the Aircraft based on the

                                       8
<PAGE>

PROGRAM                             Maintenance Planning Document, as amended by
                                    Lessee based on Lessee's operating
                                    experience, and encompassing scheduled
                                    maintenance (including block maintenance),
                                    condition-monitored maintenance, and/or
                                    on-condition maintenance of Airframe,
                                    Engines and Parts, including servicing,
                                    testing, preventive maintenance, repairs,
                                    structural inspections, system checks,
                                    overhauls, approved modifications, mandatory
                                    service bulletins, engineering orders,
                                    airworthiness directives, corrosion control,
                                    inspections and treatments.

APU                                 the auxiliary power unit installed on the
                                    Aircraft on the Delivery Date or any
                                    replacement auxiliary power unit installed
                                    in accordance with this Agreement, as
                                    applicable.

APU PERFORMANCE RESTORATION         means an off-wing APU shop visits including
                                    disassembly, inspection, component repair
                                    and balancing, testing and re-assembly of
                                    the relevant APU, accomplished in accordance
                                    with the APU manufacturer's component
                                    maintenance manual, with a scheduled Life
                                    Limited Part and Airworthiness Directive
                                    release of no less than 6,000 Cycles and 3
                                    years and on-condition release of no less
                                    than 9,000 Flight Hours and 6,000 Cycles and
                                    3 years.

APU SUPPLEMENTAL RENT               has the meaning specified in Clause
                                    5.4(a)(iv).

APU SUPPLEMENTAL RENT RATE          has the meaning specified in Schedule 7.

ASSIGNMENT                          an assignment by Lessor of its right, title
                                    and interest in and to this Agreement in
                                    favor of Financing Parties.

ASSUMED ANNUAL UTILIZATION          has the meaning specified in Schedule 7.

ASSUMED ANNUAL UTILIZATION          has the meaning specified in Schedule 7.
ADJUSTMENT TABLE

ASSUMED LIBOR RATE                  has the meaning specified in Schedule 7.

                                       9
<PAGE>

ASSUMED RATIO                       has the meaning specified in Schedule 7.

ASSUMED RATIO ADJUSTMENT TABLE      has the meaning specified in Schedule 7.

ASSUMED RENT                        has the meaning specified in Schedule 7.

BENEFICIARY                         RBS Aerospace Limited, a limited company
                                    incorporated in Ireland with registered
                                    address at 1 George's Quay Plaza, George's
                                    Quay, Dublin 2, Ireland.

BILL OF SALE                        the full warranty bill of sale duly executed
                                    and delivered by Initial Purchaser to
                                    Lessor, pursuant to and in accordance with
                                    the terms of the Aircraft Purchase
                                    Agreement.

BOEING                              The Boeing Company, a Delaware corporation.

BUSINESS DAY                        means, in the case of payments, any day
                                    (other than a Saturday or Sunday) on which
                                    banks are open for business in New York
                                    City, New York, USA or, in all other cases,
                                    any day (other than a Saturday or Sunday) on
                                    which banks are open for business in New
                                    York City, New York, USA, London, England,
                                    Dublin, Ireland and in the Republic of
                                    Panama.

COMMONLY CONTROLLED ENTITY          an entity, whether or not incorporated, that
                                    is under common control with Lessee within
                                    the meaning of Section 4001 of ERISA or is
                                    part of a group that includes Lessee and
                                    that is treated as a single employer under
                                    Section 414 of the Internal Revenue Code.

COPA HOLDINGS GUARANTEE             a guarantee agreement substantially in the
                                    form of Schedule 10.

COUNTRY OF INCORPORATION            Republic of Panama.

COUNTRY OF REGISTRATION             Republic of Panama.

CROSS-DEFAULT AMOUNT                has the meaning specified in Schedule 7.

CYCLE                               one takeoff and landing of the Aircraft.

                                       10
<PAGE>

DAMAGE NOTIFICATION THRESHOLD       has the meaning specified in Schedule 7.

DEFAULT                             any Event of Default and any event which
                                    with the giving of notice or lapse of time,
                                    or both, would constitute an Event of
                                    Default.

DELIVERY                            the delivery of the Aircraft by Lessor to
                                    Lessee pursuant to this Agreement.

DELIVERY DATE                       the date on which Delivery of the Aircraft
                                    occurs in accordance with this Agreement.

DELIVERY LOCATION                   Boeing Field, Seattle, Washington or such
                                    other location as Lessor and Lessee may
                                    agree.

DELTA                               Delta Air Lines, Inc.

DISCOUNT RATE                       has the meaning specified in Schedule 7.

DOLLAR(S) AND $                     the lawful currency of the United States of
                                    America.

ENGINE                              whether or not installed on the Aircraft:

                                    (a)      each engine of the manufacture and
                                             model specified in Part 1 of
                                             Schedule 1 which Lessor delivers to
                                             Lessee with the Aircraft on the
                                             Delivery Date, such engines being
                                             described as to serial numbers on
                                             the Certificate of Acceptance; or

                                    (b)      any engine which has replaced that
                                             engine, title to which has or
                                             should have, passed to Lessor in
                                             accordance with this Agreement;

                                    and in each case includes all modules and
                                    Parts from time to time belonging to or
                                    installed in that engine but excludes any
                                    properly replaced engine title to which has,
                                    or should have, passed to Lessee pursuant to
                                    this Agreement.

ENGINE CYCLE                        the operation of an engine installed on an
                                    aircraft from and

                                       11
<PAGE>

                                    including a take-off to and including the
                                    landing of that aircraft.

ENGINE EVENT OF LOSS                the occurrence with respect to an Engine
                                    only, whether or not installed on the
                                    Airframe, of any of those events described
                                    in the definition of Event of Loss.

ENGINE FLIGHT HOUR                  each hour or part thereof (rounded to the
                                    nearest 1/100th of an Hour) that an engine
                                    is operated, elapsing from the moment the
                                    wheels of the airframe on which such engine
                                    is installed leave the ground until the
                                    wheels of such airframe next touch the
                                    ground.

ENGINE LLP SUPPLEMENTAL RENT        has the meaning specified in Clause
                                    5.4(a)(ii).

ENGINE LLP SUPPLEMENTAL RENT RATE   has the meaning specified in Schedule 7.

ENGINE MANUFACTURER                 means CFM International, Inc.

ENGINE PERFORMANCE RESTORATION      means an off-wing engine shop visit
                                    including performance restoration or full
                                    overhaul of core modules of the relevant
                                    Engine, accomplished in accordance with the
                                    Engine manufacturer's workscope planning
                                    guide as customized for Lessee, with a
                                    scheduled Life Limited Part and
                                    Airworthiness Directive release of no less
                                    than 7,500 Cycles and 3 years and
                                    on-condition release of no less than 11,000
                                    Flight Hours and 7,500 Cycles and 3 years.

ENGINE SUPPLEMENTAL RENT            has the meaning specified in Clause
                                    5.4(a)(iii).

ENGINE SUPPLEMENTAL RENT RATE       has the meaning specified in Schedule 7.

ERISA                               means the Employee Retirement Income
                                    Security Act of 1974, as amended.

EVENT OF DEFAULT                    an event specified in Clause 13.1.

EVENT OF LOSS                       with respect to the Aircraft, the Airframe
                                    or an Engine:

                                    (a)      the actual or constructive total
                                             loss of such property (including
                                             any damage

                                       12
<PAGE>

                                             to such property which results in
                                             an insurance settlement on the
                                             basis of a total loss, or
                                             requisition for use or hire which
                                             results in an insurance settlement
                                             on the basis of a total loss);

                                    (b)      such property being destroyed,
                                             damaged beyond repair or
                                             permanently rendered unfit for
                                             normal use for any reason
                                             whatsoever;

                                    (c)      the requisition of title, or other
                                             compulsory acquisition, capture,
                                             seizure, deprivation, confiscation
                                             or detention (collectively, a
                                             "requisition") for any reason of
                                             such property by the government of
                                             the Country of Registration or
                                             other authority, but excluding
                                             requisition for use or hire not
                                             involving requisition of title; or

                                    (d)      the hijacking, theft, condemnation,
                                             confiscation, seizure or
                                             requisition (other than a
                                             requisition of title) for use or
                                             hire of such property for (i) more
                                             than sixty (60) days; or (ii) if
                                             earlier, a period ending on the
                                             Final Expiry Date.

                                    If an Event of Loss occurs with respect to
                                    the Airframe, an Event of Loss with respect
                                    to the Aircraft (including the Airframe and
                                    the Engine) shall be deemed to have
                                    occurred.

EXCLUDED COUNTRY                    (x) Iraq and Libya, and (y) any country to
                                    which the use of the Aircraft is prohibited
                                    by (i) the Dual-Use and Related Goods
                                    (Export Control) Regulations 1996 pursuant
                                    to the European Communities Act 1972, (ii)
                                    the Dual-Use and Related Goods (Export
                                    Control) (Amendment) Regulations 1997
                                    pursuant to the European Communities Act
                                    1972, (iii) the United States Export
                                    Administration Act 1979 (as amended), (iv)
                                    any successor legislation for and/or the
                                    export administration regulations
                                    promulgated under the foregoing

                                       13
<PAGE>

                                    or (iv) any sanctions orders or legislation
                                    from time to time promulgated by any of the
                                    United Nations, the European Union or any
                                    Government Entity of the Country of
                                    Registration or any other country having
                                    jurisdiction over Lessor or RBS, the effect
                                    of which prohibits the use of Boeing
                                    aircraft operated by Lessee on flights to
                                    and from such country.

FAA                                 the Federal Aviation Administration of the
                                    United States of America and any successor
                                    thereof.

FAR                                 means the Federal Aviation Regulations set
                                    forth in Title 14 of the United States Code
                                    of Federal Regulations, as amended and
                                    modified from time to time.

FINAL DELIVERY DATE                 December 31, 2005.

FINAL EXPIRY DATE                   the date falling 90 months after the
                                    Delivery Date, or if earlier the date on
                                    which:

                                    (a)      Lessor receives the Agreed Value
                                             and other amounts then due and
                                             payable to it by Lessee following
                                             an Event of Loss pursuant to Clause
                                             11; or

                                    (b)      the Term of this Agreement shall
                                             end in accordance with Clause 13.2.

FINAL INSPECTION                    has the meaning specified in Clause 1.1 of
                                    Schedule 3 hereto.

FINANCIAL INDEBTEDNESS              means any indebtedness in respect of:

                                    (a)      moneys borrowed or raised;

                                    (b)      any liability under any debenture,
                                             bond, note, loan stock, acceptance,
                                             documentary credit or other
                                             security;

                                    (c)      obligations under finance leases;

                                    (d)      the acquisition cost of any asset
                                             to the extent payable before or
                                             after the time

                                       14
<PAGE>

                                             of acquisition or possession, not
                                             being indebtedness in respect of
                                             the purchase of goods or services
                                             in the ordinary course of trading,
                                             payment for which is deferred for a
                                             period of not greater than thirty
                                             (30) days or, in respect of goods
                                             or services the purchase price of
                                             which is not material, ninety (90)
                                             days; or

                                    (e)      any guarantee, indemnity or similar
                                             assurance against financial loss of
                                             any person in respect of the above.

FINANCING PARTIES                   RBS and such other Persons as may from time
                                    to time provide to Owner and/or Lessor debt,
                                    equity or other forms of financing with
                                    respect to the Aircraft, and/or for whose
                                    benefit security over, or rights relating
                                    to, the Aircraft and/or this Agreement is
                                    granted by Owner and/or Lessor, with or
                                    without recourse, whether at the request of
                                    Owner and/or Lessor. FINANCING PARTIES'
                                    REPRESENTATIVE such Person, if any, as may
                                    be designated as such from time to time in a
                                    written notice from Lessor to Lessee.

FLIGHT HOUR                         each hour (computed to the nearest hundredth
                                    of an hour) elapsing from the moment the
                                    wheels of the Aircraft leave the ground on
                                    take off until the wheels of the Aircraft
                                    next touch the ground.

GAAP                                means generally accepted accounting
                                    principles in effect from time to time in
                                    the Republic of Panama provided such
                                    standards are consistent with international
                                    accounting standards; otherwise, in
                                    accordance with international accounting
                                    standards; or, should at any time, Lessee or
                                    Guarantor, as applicable, elect, at its sole
                                    discretion to maintain their financial
                                    statements in accordance with US GAAP,
                                    generally accepted accounting principles
                                    from time to

                                       15
<PAGE>

                                    time in effect in the United States.

GENEVA CONVENTION                   means the Convention on the International
                                    Recognition of Rights in Aircraft signed at
                                    Geneva, Switzerland on 19 June 1948, and
                                    amended from time to time.

GOVERNING LAW                       the laws of the State of New York.

GOVERNMENT ENTITY                   (a)      any national government, political
                                             subdivision thereof, or local
                                             jurisdiction therein;

                                    (b)      any instrumentality, board,
                                             commission, court, or agency of any
                                             thereof, however constituted; and

                                    (c)      any association, organization, or
                                             institution of which any of the
                                             above is a member or to whose
                                             jurisdiction any thereof is
                                             subject.

GUARANTOR                           Copa Holdings, S.A.

HABITUAL BASE                       Republic of Panama.

HEAD LEASE                          if Owner is not the same entity as Lessor,
                                    any aircraft lease agreement between Owner
                                    and Lessor in respect of the Aircraft.

INDEMNIFIED TAX                     has the meaning specified in Clause 5.11(b).

INDEMNITEE                          each of the following: (i) Beneficiary,
                                    (ii) Initial Purchaser (but only for claims
                                    arising against Initial Purchaser solely as
                                    a result of Initial Purchaser being a party
                                    in the chain of title and where no act or
                                    omission of Initial Purchaser, its
                                    successors, assigns, officers, or employees,
                                    allegedly contributed to the event leading
                                    to indemnification requirement), (iii)
                                    Lessor and Owner, (iv) each Financing Party,
                                    (v) each security trustee or other Financing
                                    Parties' Representative, and (vi) each
                                    shareholder, Subsidiary, Affiliate,
                                    beneficiary, member, director, officer,
                                    agent and employee of any of the

                                       16
<PAGE>

                                    Persons described in items (i) - (v).

INITIAL PURCHASER                   means Delta.

INSURANCES                          has the meaning specified in Clause 9.1

INTERNAL REVENUE CODE               the U.S. Internal Revenue Code of 1986, as
                                    amended.

INTEREST RATE                       the rate equal to LIBOR during the
                                    applicable period plus three and one-half
                                    percent (3.5%) per annum, but not to exceed
                                    the maximum amount permitted by law.

JAA                                 the body referred to as the "Joint Aviation
                                    Authority" established by the members of the
                                    European Civil Aviation Conference. The term
                                    "JAA" shall also include the European
                                    Aviation Safety Agency ("EASA") as the
                                    context admits or requires.

LANDING GEAR                        the landing gear assembly of the Aircraft
                                    meaning the complete strut assembly,
                                    consisting of inner and outer cylinders and
                                    all associated parts that comprise each
                                    landing gear assembly as listed in the
                                    Aircraft Documents including side struts,
                                    braces, uplock and downlock mechanisms, and
                                    electrical wiring and hydraulic hardware but
                                    excluding ratable parts including, without
                                    limitation, wheels, tires, brakes,
                                    transducers and switch assemblies.

LANDING GEAR SUPPLEMENTAL RENT      has the meaning specified in Clause
                                    5.4(a)(v).

LANDING GEAR SUPPLEMENTAL RENT RATE has the meaning specified in Schedule 7.

LEASE SUPPLEMENT NO. 1              means a Lease Supplement No. 1 to this
                                    Agreement substantially in the form of
                                    Schedule 8 hereto, duly completed and
                                    executed by Lessor and Lessee.

LESSEE CONTROLLED CONTEST           has the meaning specified in Clause 5.11(c).

LESSEE POWER OF ATTORNEY            means a Lessee Power of Attorney

                                       17
<PAGE>

                                    substantially in the form of Schedule 9.

LESSOR LIEN                         (a)      a Mortgage, an Assignment and any
                                             other charge, pledge, lien,
                                             security interest, hypothecation or
                                             encumbrance whatsoever from time to
                                             time created by or through Owner,
                                             Lessor or Beneficiary in connection
                                             with the financing of the Aircraft;

                                    (b)      any other security interest or
                                             encumbrance in respect of the
                                             Aircraft which results from acts or
                                             omissions of or claims against
                                             Owner, Lessor or Beneficiary not
                                             related to the transactions
                                             contemplated by or permitted under
                                             this Agreement or from claims for
                                             which Lessee is not responsible
                                             under this Agreement; and

                                    (c)      liens in respect of the Aircraft
                                             for Lessor Taxes.

LESSOR TAX                          any of the following Taxes:

                                    (a)      any Tax imposed (by withholding or
                                             otherwise) on, or calculated by
                                             reference to, the gross or net
                                             income (including any minimum Tax
                                             or personal holding company tax),
                                             profits (including any excess
                                             profits Tax or accumulated earnings
                                             Tax), gains, gross or net receipts,
                                             capital, or net worth, corporate
                                             franchise or conduct of business of
                                             a Tax Indemnitee by any
                                             jurisdiction under the laws of
                                             which such Tax Indemnitee is
                                             incorporated or otherwise organized
                                             or in which such Tax Indemnitee has
                                             an office or other fixed place of
                                             business or is engaged in business,
                                             provided that "Lessor Taxes" shall
                                             not include (i) any Sales Tax or
                                             (ii) any Tax imposed by any
                                             Government Entity or other taxing
                                             authority of any jurisdiction if
                                             and to the extent that

                                       18
<PAGE>

                                             such Tax is a result of any
                                             connection between Lessee or the
                                             Aircraft, the Airframe, any Engine
                                             or any Part or any interest in any
                                             thereof with the jurisdiction
                                             imposing the Tax, including,
                                             without limitation, any one or more
                                             of the following: (A) the
                                             registration, use, operation, or
                                             presence of the Aircraft, the
                                             Airframe, any Engine or any Part or
                                             any interest in any thereof in the
                                             jurisdiction imposing the Tax, or
                                             (B) the incorporation or other
                                             organization of Lessee or any
                                             Specified Person under the law of
                                             the jurisdiction imposing the Tax,
                                             or (C) the management, residence,
                                             presence, place of business, acts,
                                             activities or transactions of
                                             Lessee or any Specified Person in
                                             the jurisdiction imposing the Tax,
                                             or (D) the payment of any amount
                                             payable by or for the account of
                                             Lessee or any Specified Person
                                             pursuant to any Transaction
                                             Document in or from the
                                             jurisdiction imposing the Tax; or

                                    (b)      Taxes imposed with respect to any
                                             period commencing (and, in the case
                                             of (i), ending) or event occurring
                                             (i) prior to the Delivery Date or
                                             (ii) after the Final Expiry Date
                                             and in either case, unrelated to
                                             Lessor's dealings with Lessee with
                                             respect to the transactions
                                             contemplated by this Agreement; or

                                    (c)      any Tax imposed by any Government
                                             Entity in the Country of
                                             Registration on or with respect to
                                             the sale, assignment, transfer or
                                             other disposition of all or any
                                             part of (i) Lessor's or Owner's
                                             right, title and interest in the
                                             Aircraft or this Agreement, (ii)
                                             any Tax Indemnitee's interest in
                                             Lessor or any Transaction Document
                                             and (iii) any Financing

                                       19
<PAGE>

                                             Party's loan to the Owner relating
                                             to, or security over, or rights
                                             relating to, the Aircraft other
                                             than any sale, assignment, transfer
                                             or other disposition that occurs in
                                             connection with (w) an Event of
                                             Loss, or (x) an exercise of
                                             remedies after the occurrence and
                                             during the continuance of an Event
                                             of Default, or (y) a substitution
                                             or replacement of the Aircraft, the
                                             Airframe, any Engine or any Part,
                                             or (z) the maintenance, repair or
                                             pooling of the Aircraft, the
                                             Airframe, any Engine or any Part;
                                             or

                                    (d)      any Tax caused directly by the
                                             gross negligence or willful
                                             misconduct of any Tax Indemnitee
                                             (other than any gross negligence
                                             caused by an act or omission of
                                             Lessee or any Specified Person) or
                                             the breach by Lessor of any
                                             covenant of Lessor in this
                                             Agreement; or

                                    (e)      any Tax imposed on or payable by a
                                             Tax Indemnitee to the extent caused
                                             directly by, and would not have
                                             been imposed but for, the existence
                                             of a Lessor Lien; or

                                    (f)      with respect to any Tax Indemnitee,
                                             Taxes imposed to the extent the
                                             same results from the failure by
                                             such Tax Indemnitee to pay, or to
                                             file any required Tax return or to
                                             provide required information in
                                             respect of, any Tax on a proper and
                                             timely basis (provided, however,
                                             that, with respect to any Tax
                                             required to be paid or any Tax
                                             return required to be filed solely
                                             as a result of the transactions
                                             contemplated by the Transaction
                                             Documents, such Person has before
                                             the due date for payment of such
                                             Tax or the filing of such Tax
                                             return either received a written
                                             demand therefor or

                                       20
<PAGE>

                                             otherwise been made aware in
                                             writing of the imposition of such
                                             Tax and the due dates for payment
                                             thereof or the filing of such Tax
                                             return as applicable) other than
                                             where any such failure arises as a
                                             result of any breach by Lessee of
                                             any provision of, or the default by
                                             Lessee in the performance of, its
                                             obligations under this Agreement or
                                             as a result of any Event of Default
                                             occurring or otherwise arising as a
                                             result of the willful misconduct or
                                             gross negligence of Lessee; or

                                    (g)      in the case of a transferee of a
                                             Tax Indemnitee, Taxes to the extent
                                             that the aggregate amount of such
                                             Taxes exceeds the aggregate amount
                                             of the Taxes that would have been
                                             imposed on or payable by the
                                             transferor Tax Indemnitee and for
                                             which Lessee would have been
                                             required to indemnify the
                                             transferor Tax Indemnitee pursuant
                                             to Clause 5.7, 5.8, 5.9 or 5.10
                                             under applicable laws in effect on
                                             the date of transfer; or

                                    (h)      Any Tax to the extent increased or
                                             not reduced as a result of the
                                             failure of a Tax Indemnitee to file
                                             any Tax Document, to supply a tax
                                             identification number or to comply
                                             with any certification of tax
                                             residence or other documentation
                                             requirement of applicable law, in
                                             each case, that is a condition to
                                             the allowance of any exemption
                                             from, reduction in rate of, or
                                             other relief from, such Tax,
                                             provided that (1) Lessee shall have
                                             given such Tax Indemnitee timely
                                             written notice of such requirement
                                             and shall have delivered to such
                                             Tax Indemnitee such forms as may be
                                             necessary to comply with such
                                             requirement and accompanying

                                       21
<PAGE>

                                             instructions issued by the relevant
                                             Government Entity or other tax
                                             authority as to the proper
                                             completion thereof and (2) such Tax
                                             Indemnitee is entitled under
                                             applicable law to provide the
                                             requested certification or other
                                             documentation; provided, however,
                                             that such Tax Indemnitee shall not
                                             be required to comply with any such
                                             certification, information,
                                             documentation, reporting or other
                                             requirement if such Tax Indemnitee
                                             determines in its sole discretion
                                             exercised in good faith that such
                                             compliance may result in any
                                             adverse consequences to such Tax
                                             Indemnitee.

LIBID                                        in relation to any period and
                                             amount in respect of which an
                                             interest rate is to be determined
                                             pursuant thereto, LIBOR for such
                                             amount and such period minus 12.5
                                             basis points (but in no event shall
                                             LIBID be less than zero).

LIBOR                               in relation to any period and amount in
                                    respect of which an interest rate is to be
                                    determined pursuant hereto:

                                    (a)      the offered rate (if any) appearing
                                             on page 3750 (or its successor or
                                             replacement page) of the Telerate
                                             Screen for dollars for the
                                             specified period at 11:00 a.m. on
                                             the Quotation Date therefor; or

                                    (b)      if no such rate is available on
                                             page 3750 (or its successor or
                                             replacement page) of the Telerate
                                             Screen, the rate determined by
                                             Lessor to be the arithmetic mean
                                             (rounded upwards, if not already
                                             such a multiple, to the nearest
                                             whole multiple of one sixteenth of
                                             one percent) of the rates (as
                                             notified to Lessor) at which each
                                             of the Reference Banks (on the
                                             basis that at least two Reference
                                             Banks so notify Lessor) was
                                             offering to prime

                                       22
<PAGE>

                                             banks in the London Interbank
                                             Market, on the Quotation Date,
                                             deposits in dollars for the
                                             specified period;

                                    for the purposes of this definition,
                                    SPECIFIED PERIOD means the period having a
                                    duration equal to or as close as practicable
                                    to the relevant period in respect of which
                                    LIBOR fails to be determined in relation to
                                    any unpaid sum.

LIFE LIMITED PARTS                  any Part that has a pre-determined life
                                    limit as mandated by the manufacturer of
                                    such Part, the FAA or any other Governmental
                                    Entity having jurisdiction over matters
                                    relating to airworthiness, which requires
                                    any such Part to be discarded upon reaching
                                    such life limit.

LOSSES                              any and all cost, expense (including any and
                                    all legal fees and expenses and the fees and
                                    expenses of other professional advisers),
                                    claims, proceedings, losses, liabilities,
                                    obligations, damages (whether direct,
                                    indirect, special, incidental or
                                    consequential), suits, judgments, fees,
                                    penalties or fines (whether criminal or
                                    civil) of any kind or nature whatsoever,
                                    including any of the foregoing arising or
                                    imposed with or without any Indemnitee's
                                    fault or negligence, whether passive or
                                    active or under the doctrine of strict
                                    liability.

MAINTENANCE PLANNING DOCUMENT       the recommended maintenance program for the
OR MANUFACTURER'S MAINTENANCE       Aircraft issued and in effect from time to
PLANNING DOCUMENT                   time by the Manufacturer.

MAJOR CHECKS                        means any C check, multiple C check or
                                    heavier check (including associated
                                    structural inspections and corrosion
                                    prevention and control items) for the
                                    Aircraft as set out in the Approved
                                    Maintenance Program.

MANDATORY ORDER OR MO               a mandatory order issued by the FAA and/or
                                    the AAC.

MANUFACTURER                        Boeing.

                                       23
<PAGE>

MAXIMUM DEDUCTIBLE AMOUNT           has the meaning specified in Schedule 7.

MINIMUM LIABILITY COVERAGE          has the meaning specified in Schedule 7.

MINIMUM WAR RISK COVERAGE           has the meaning specified in Schedule 7.

MONTH                               is a reference to a period starting on one
                                    day in a calendar month and ending on the
                                    numerically corresponding day in the next
                                    calendar month (and references to "months"
                                    shall be construed accordingly) save that,
                                    where any such period would otherwise end on
                                    a non-Business Day, it shall end on the next
                                    Business Day, provided that if a period
                                    starts on the last Business Day in a
                                    calendar month or if there is no numerically
                                    corresponding day in the month in which that
                                    period ends, that period shall end on the
                                    last Business Day in that later month.

MORTGAGE                            any Mortgage over the Aircraft granted by
                                    Lessor in favor of the Financing Parties.

OTHER AGREEMENTS                    any aircraft lease agreement (other than
                                    this Agreement) or other aircraft financing
                                    agreement made or to be made between (i)
                                    Lessee, and (ii) Lessor, Beneficiary or any
                                    Affiliate of Lessor or Beneficiary or any
                                    trustee for the benefit of Lessor or
                                    Beneficiary or for the benefit of any
                                    Affiliate of Lessor or Beneficiary.

OWNER                               Lessor or such other Person notified in
                                    writing by Lessor to Lessee.

PART                                whether or not installed on the Aircraft or
                                    any Engine:

                                    (a)      any component, furnishing or
                                             equipment (other than a complete
                                             Engine) furnished with the Aircraft
                                             on the Delivery Date; and

                                    (b)      any other component, furnishing or
                                             equipment (other than a complete
                                             Engine) title to which has, or
                                             should have, passed to Owner
                                             pursuant to this

                                       24
<PAGE>

                                             Agreement;

                                    but excludes any such items title to which
                                    has, or should have, passed to Lessee
                                    pursuant to this Agreement.

PARTICIPATION AGREEMENT             the Participation Agreement dated as of the
                                    date hereof between Beneficiary, Lessor and
                                    Lessee.

PERMITTED LIEN                      (a)      any lien for any Tax (i) which has
                                             not been assessed or (ii) if
                                             assessed, which is not yet due and
                                             payable or (iii) if assessed and
                                             due and payable, which is being
                                             contested in good faith by
                                             appropriate proceedings in
                                             accordance with applicable law;

                                    (b)      any lien of a repairer, mechanic,
                                             carrier, hangar-keeper or other
                                             similar lien arising in the
                                             ordinary course of business or by
                                             operation of law in respect of
                                             obligations which are not overdue
                                             or are being contested in good
                                             faith by appropriate proceedings in
                                             accordance with applicable law;

                                             but only if (in the case of both
                                             (a) and (b)) (i) adequate resources
                                             have been provided by Lessee, or
                                             adequate reserves have been
                                             established and are maintained in
                                             the accounting records of Lessee in
                                             accordance with GAAP, for the
                                             payment of the Taxes or
                                             obligations; and (ii) such
                                             proceedings, or the continued
                                             existence of the lien, do not give
                                             rise to any material likelihood of
                                             the sale, forfeiture or other loss
                                             of the Aircraft or any interest
                                             therein or of criminal liability on
                                             Owner, Lessor, Beneficiary or any
                                             Financing Party;

                                    (c)      any Lessor Lien; and

                                    (d)      any lien arising out of any
                                             judgment or

                                       25
<PAGE>

                                             award against Lessee so long as
                                             such judgment or award shall,
                                             within 45 days after the entry
                                             thereof, have been discharged or
                                             vacated, or execution thereof
                                             stayed pending appeal or shall have
                                             been discharged, vacated or
                                             reversed within 45 days after the
                                             expiration of such stay, and so
                                             long as during any such 45 day
                                             period, there is not, or any such
                                             judgment or award does not involve,
                                             any material risk of the sale,
                                             forfeiture or loss of the Aircraft,
                                             Airframe, any Engine, or any of the
                                             Aircraft Documents or any interest
                                             therein or any discernable risk of
                                             criminal liability or any material
                                             risk of civil penalty against
                                             Owner, Lessor, Beneficiary or any
                                             Financing Party.

PERSON                              any individual person, corporation, company,
                                    partnership, limited liability company,
                                    firm, joint stock company, joint venture,
                                    trust, estate, unincorporated organization,
                                    association, Government Entity, or other
                                    entity, or any commercial or other
                                    arrangement or relationship that is deemed
                                    to be an entity for the purpose of any
                                    applicable law.

PRICE ESCALATION ADJUSTMENTS        has the meaning specified in Schedule 7.

QUOTATION DATE                      means, in relation to any period in respect
                                    of which LIBOR is to be determined, the day
                                    two Business Days before the beginning of
                                    such period.

RBS                                 Royal Bank of Scotland plc.

REDELIVERY DATE                     the Final Expiry Date.

REDELIVERY LOCATION                 Miami International Airport, Miami, Florida,
                                    or such other location in the continental
                                    United States of America as Lessor and
                                    Lessee may agree.

                                       26
<PAGE>

REFERENCE BANKS                     means The Royal Bank of Scotland plc, Bank
                                    of America NT&SA and Citibank N.A.

REFUND                              has the meaning specified in Clause 5.11(d).

RENT                                all amounts payable pursuant to Clause 5.3.

RENT ADJUSTMENT FACTOR              has the meaning specified in Schedule 7.

RENT COMMENCEMENT DATE              the date on which Lessor tenders the
                                    Aircraft for Delivery to Lessee under and in
                                    accordance with Clauses 4.1 and 4.2.

RENT DATE                           the first day of each Rental Period.

RENTAL PERIOD                       each period ascertained in accordance with
                                    Clause 5.2.

RETURN CONDITIONS                   means the conditions specified in
                                    Schedule 3.

SALES TAX                           any Tax that is, or is in the nature of, a
                                    sales, use, rental, leasing, value added,
                                    turnover, services, goods and services,
                                    consumption, transaction privilege, or
                                    similar Tax.

SCHEDULED DELIVERY DATE             Month of May 2005.

SECURITY DEPOSIT                    all amounts payable pursuant to Clause 5.1.

SECURITY DEPOSIT AMOUNT             has the meaning specified in Schedule 7.

SECURITY INTEREST                   any mortgage, charge, pledge, lien, security
                                    interest, assignment, hypothecation, right
                                    of setoff or other agreement or arrangement
                                    having the effect of creating an encumbrance
                                    other than a Permitted Lien.

SELLER                              Boeing.

SIMILAR LAWS                        any federal, state, local, non-U.S. or other
                                    laws or regulations that are similar to
                                    Section 406 of ERISA or Section 4975 of the
                                    Internal Revenue Code.

SOLVENT                             when used with respect to any Person, means
                                    that, as of any date of determination, (a)
                                    the amount of the "present fair saleable
                                    value" of

                                       27
<PAGE>

                                    the assets of such Person will, as of such
                                    date, exceed the amount of all "liabilities
                                    of such Person, contingent or otherwise", as
                                    of such date, as such quoted terms are
                                    determined in accordance with applicable
                                    Panamanian and U.S. federal and state laws
                                    governing determinations of the insolvency
                                    of debtors, (b) the present fair saleable
                                    value of the assets of such Person will, as
                                    of such date, be greater than the amount
                                    that will be required to pay the liability
                                    of such Person on its debts as such debts
                                    become absolute and matured, (c) such Person
                                    will not have in its good faith opinion, as
                                    of such date, an unreasonably small amount
                                    of capital with which to conduct its
                                    business, and (d) such Person will be able
                                    to pay its debts as they mature. For
                                    purposes of this definition, (i) "debt"
                                    means liability on a "claim", and (ii)
                                    "claim" means any (x) right to payment,
                                    whether or not such a right is reduced to
                                    judgment, liquidated, unliquidated, fixed,
                                    contingent, matured, unmatured, disputed,
                                    undisputed, legal, equitable, secured or
                                    unsecured or (y) right to an equitable
                                    remedy for breach of performance if such
                                    breach gives rise to a right to payment,
                                    whether or not such right to an equitable
                                    remedy is reduced to judgment, fixed,
                                    contingent, matured or unmatured, disputed,
                                    undisputed, secured or unsecured.

SPECIFIED PERSON                    any sublessee or any other Person that uses
                                    or has the right to use or has possession or
                                    custody of the Aircraft, the Airframe, any
                                    Engine or any Part, or any shareholder,
                                    Subsidiary, Affiliate, contractor, director,
                                    officer, agent or employee of any of the
                                    foregoing.

SUBSIDIARY                          (a)      in relation to any reference to
                                             accounts, any company whose
                                             accounts are consolidated with the
                                             accounts of Lessee in accordance
                                             with GAAP;

                                    (b)      for any other purpose an entity
                                             from

                                       28
<PAGE>

                                             time to time:

                                             (i)      of which another has
                                                      direct or indirect control
                                                      or owns directly or
                                                      indirectly more than 50
                                                      percent of the voting
                                                      share capital; or

                                             (ii)     which is a direct or
                                                      indirect subsidiary of
                                                      another under the laws of
                                                      the jurisdiction of its
                                                      incorporation.

SUPPLEMENTAL RENT                   all amounts payable pursuant to Clause 5.4.

SUPPLEMENTAL RENT RATE              any of the Airframe 6C/24,000 Flight Hour
                                    Block Structural Check Supplemental Rent
                                    Rate, the Engine LLP Supplemental Rent Rate,
                                    the Engine Supplemental Rent Rate, the APU
                                    Supplemental Rent Rate and the Landing Gear
                                    Supplemental Rent Rate.

TAX                                 any present and future tax (including,
                                    without limitation, any gross receipts,
                                    gross or net income, franchise, doing
                                    business, sales, transfer, business,
                                    occupation, fuel, leasing, turnover, excess
                                    profits, registration, capital gains,
                                    import/export, use, rental, leasing, value
                                    added, goods and services, consumption,
                                    transaction privilege, excise, property,
                                    license, documentary or stamp tax), duty,
                                    levy, assessment, impost, withholding or
                                    other similar charge, and any penalty,
                                    additions to tax, fine, surcharge or
                                    interest relating thereto, imposed by any
                                    Government Entity or other taxing authority
                                    in any jurisdiction or by any international
                                    or multinational authority.

TAX CLAIM                           has the meaning specified in Clause 5.12(a).

TAX DOCUMENT                        has the meaning specified in Clause 5.11(b).

TAX INDEMNITEE                      each of the following: (i) Owner,
                                    (ii) Beneficiary, (iii) Lessor, (iv) each
                                    Financing Party, (v) each security trustee
                                    or other Financing Parties' Representative,
                                    and

                                       29
<PAGE>

                                    (vi) each shareholder, Subsidiary,
                                    Affiliate, beneficiary, member, director,
                                    officer, agent and employee of any of the
                                    Persons described in items (i) - (v).

TAX SAVING                          has the meaning specified in Clause 5.11(d).

TERM OR LEASE TERM                  the period commencing on the Delivery Date
                                    and ending on but excluding the next
                                    succeeding Annual Expiry Date or, if
                                    earlier, on the Final Expiry Date, provided
                                    that the Term shall be automatically renewed
                                    on each Annual Expiry Date for consecutive
                                    periods of one year's duration up until and
                                    including the Final Expiry Date, subject to
                                    the provisions of Clauses 11 and 13.2.

TRANSACTION DOCUMENTS               this Agreement, the Participation Agreement,
                                    the Trust Agreement, the Aircraft Purchase
                                    Agreement, the Warranty Assignment, the Bill
                                    of Sale, the Acceptance Certificate, Lease
                                    Supplement No. 1, the Lessee Power of
                                    Attorney and the Copa Holdings Guarantee,
                                    and all documents, instruments and
                                    certificates delivered pursuant hereto or
                                    thereto.

TRUST AGREEMENT                     means the Trust Agreement dated the date
                                    hereof between Beneficiary, as trustor, and
                                    Wells Fargo Bank Northwest, N.A., as
                                    trustee.

UCC                                 Uniform Commercial Code, as the same may be
                                    in effect in any applicable jurisdiction
                                    within the United States.

UNUSED SUPPLEMENTAL RENT            an amount equal, from time to time, to all
                                    Supplemental Rent paid by Lessee and not
                                    repaid to, or as directed by, Lessee by
                                    Lessor or applied to Lessee's obligations as
                                    provided under this Agreement.

WARRANTY ASSIGNMENT                 a Warranty Assignment substantially in the
                                    form of Schedule 12.

1.2   CONSTRUCTION:

      (a)   In this Agreement, unless the contrary intention is stated, a
            reference to:

                                       30
<PAGE>

                  (i)   each of "Lessor" or "Lessee" or any other Person
                        includes without prejudice to the provisions of this
                        Agreement any successor in title to it and any permitted
                        assignee;

                  (ii)  words importing the plural form shall apply to the
                        singular and vice versa;

                  (iii) any document shall include that document as amended,
                        novated, supplemented or otherwise modified from time to
                        time and includes all exhibits, appendices, attachments
                        and supplements thereto;

                  (iv)  a "law" (1) includes any statute, decree, constitution,
                        regulation, order, judgment or directive or requirement
                        of any Government Entity; (2) includes any treaty, pact,
                        compact or other agreement to which any Government
                        Entity is a signatory or party; (3) includes any
                        judicial or administrative interpretation or application
                        thereof and (4) is a reference to that provision as
                        amended, substituted or reenacted;

                  (v)   a Clause or a Schedule is a reference to a clause of or
                        a schedule to this Agreement; and

                  (vi)  the words "include," "includes," and "including" are
                        deemed to be followed by the words "without limitation"
                        whether or not such words appear;

            (b)   the headings in this Agreement are to be ignored in construing
                  this Agreement.

2.    REPRESENTATIONS AND WARRANTIES

      2.1   LESSEE'S REPRESENTATIONS AND WARRANTIES:

            Lessee represents and warrants to Lessor that:

            (a)   STATUS: Lessee is a corporation duly incorporated and validly
                  existing under the laws of the Country of Incorporation and
                  has the corporate power to own its assets and carry on its
                  business as it is being conducted and is the holder of all
                  necessary air transportation and other licenses or permits
                  required in connection therewith and with the use and
                  operation of the Aircraft;

            (b)   POWER AND AUTHORITY: Lessee has the corporate power to enter
                  into and perform, and has taken all necessary corporate action
                  to authorize the entry into, performance and delivery of, this
                  Agreement and each of the

                                       31
<PAGE>

                  other Transaction Documents to which it is a party and the
                  transactions contemplated hereby and thereby;

            (c)   LEGAL VALIDITY: this Agreement and each of the other
                  Transaction Documents to which it is a party has been duly
                  authorized by Lessee, each of this Agreement and the
                  Participation Agreement has been duly executed and delivered
                  by Lessee and each of this Agreement and the Participation
                  Agreement does, and each of the other Transaction Documents
                  when executed and delivered by Lessee (subject to execution
                  and delivery by the other parties thereto) will, constitute a
                  legal, valid and binding obligation of Lessee, enforceable
                  against Lessee in accordance with its terms, except as
                  enforceability may be limited, by applicable bankruptcy,
                  insolvency or other laws affecting creditors' rights generally
                  and/or general principles of equity;

            (d)   NON-CONFLICT: the entry into and performance by Lessee of, and
                  the transactions contemplated by, this Agreement does not and
                  will not:

                  (i)   conflict with any laws binding on Lessee;

                  (ii)  conflict with the constitutional documents of Lessee; or

                  (iii) conflict with or result in default under any indenture,
                        mortgage, contract, agreement or other document which is
                        binding upon Lessee or any of its assets or result in
                        the creation of any Security Interest over any of its
                        assets (other than the Security Deposit);

            (e)   AUTHORIZATION: all authorizations, consents, registrations and
                  notifications required under the laws of the Country of
                  Incorporation and the Country of Registration and any other
                  relevant jurisdictions in connection with the entry into and
                  performance by Lessee of, and the validity and enforceability
                  against Lessee of, this Agreement and the other Transaction
                  Documents to which it is a party and the transactions
                  contemplated hereby and thereby, have been (or will on or
                  before the Delivery Date have been) obtained or effected (as
                  appropriate) and are (or will on their being obtained or
                  effected be) in full force and effect, except as provided in
                  Section 8.11(f);

            (f)   NO IMMUNITY:

                  (i)   Lessee is subject to civil and commercial law with
                        respect to its obligations under this Agreement and the
                        other Transaction Documents; and

                  (ii)  neither Lessee nor any of its assets is entitled to any
                        right of immunity from suit, jurisdiction, attachment
                        prior to judgment, attachment in

                                       32
<PAGE>

                        aid of execution, set-off, execution or other legal
                        process, and the entry into and performance of this
                        Agreement and the other Transaction Documents by Lessee
                        constitute private and commercial acts;

            (g)   ACCOUNTS: the audited consolidated financial statements of
                  Lessee and its Subsidiaries most recently delivered to Lessor:

                  (i)   have been prepared in accordance with GAAP; and

                  (ii)  fairly represent the consolidated financial condition of
                        Lessee and its Subsidiaries as at the date thereof;

            (h)   FULL DISCLOSURE: its audited financial statements referred to
                  in Clause 2.1(g) provided to Lessor by Lessee for the purposes
                  of this Agreement do not contain any untrue or materially
                  misleading statement of a material fact;

            (i)   MATERIAL ADVERSE EFFECT: No event has occurred since December
                  31, 2003 which constitutes, or which with the giving of notice
                  and/or lapse of time or both would constitute, a contravention
                  of, or default under, any agreement or instrument by which
                  Lessee or Guarantor or any of their assets are bound or
                  affected, being a contravention or default which might either
                  have a material adverse effect on the financial condition,
                  business, assets or operations of Lessee or Guarantor or on
                  their ability to observe and perform their obligations under
                  the Transaction Documents;

            (j)   TAXES:

                  (i)   Lessee has filed or caused to be filed in such manner as
                        is required by law or regulation all Tax returns which
                        Lessee is required by any applicable law to file with
                        any Government Entity or other taxing authority, and has
                        paid or caused to be paid all Taxes reported on such
                        returns to be due or which have become due pursuant to
                        any notice, demand or assessment received by Lessee or
                        any of its Affiliates, except for any such notice,
                        demand or assessment (A) which is being contested in
                        good faith in accordance with the applicable law, (B)
                        which does not and will not involve a material risk of
                        sale, forfeiture or loss of the Aircraft, the Airframe,
                        any Engine or any Part, and (C) for which an adequate
                        reserve has been established and maintained in the
                        accounting records of Lessee in accordance with GAAP;

                  (ii)  no material claim for any Tax has been asserted against
                        Lessee by any Government Entity or other taxing
                        authority other than claims that are included in the
                        liabilities for Taxes in the audited consolidated
                        financial statements described in Clause 2.1(g) or

                                       33
<PAGE>

                        which are being contested in good faith by appropriate
                        proceedings and with respect to which appropriate
                        reserves have been maintained to the extent required by
                        GAAP and which arose after the date of such audited
                        consolidated financial statements and which does not and
                        will not involve a material risk of sale, forfeiture or
                        loss of the Aircraft;

                  (iii) all applicable customs duties and Sales Taxes in respect
                        of the Aircraft, its sale to Lessor and lease hereunder
                        to Lessee on the Delivery date, have been paid;

                  (iv)  there is no Tax of the Country of Incorporation or the
                        Country of Registration, or any taxing authority of
                        either thereof or therein which is imposed in respect of
                        any payment to be made by Lessee to Lessor pursuant to
                        the Transaction Documents, or is imposed on or by virtue
                        of the execution, delivery or performance of the
                        Transaction Documents; and

                  (v)   there is no Tax of the Country of Incorporation or the
                        Country of Registration, or any taxing authority of
                        either thereof or therein which is imposed in respect of
                        any payment to be made to Lessee pursuant to the
                        Transaction Documents, or is imposed on any Lender on or
                        by virtue of the execution, delivery or performance of
                        the Transaction Documents;

            (k)   NO DOING BUSINESS: neither Lessor nor Beneficiary is or will
                  be deemed to be resident, domiciled or carrying on business in
                  The Republic of Panama or be subject to taxation in The
                  Republic of Panama by reason only of the execution,
                  performance and/or enforcement of any of the Transaction
                  Documents;

            (l)   ENFORCEMENT: in any execution proceedings taken in The
                  Republic of Panama for the enforcement of the Transaction
                  Documents, the courts of The Republic of Panama will give
                  effect to and enforce any final (non-appealable) judgment
                  granted in the United States, without re-examination or
                  re-litigation of any matter adjudicated therein, provided that
                  if a final and conclusive judgment in respect of any of the
                  Transaction Documents is given by a foreign court of competent
                  jurisdiction to deal with any action arising therefrom, such
                  judgment would be recognized and enforced in the Courts of the
                  Republic of Panama without retrial of the originating action
                  by instituting exequatur proceedings in the Supreme Court of
                  Panama and upon determination by such tribunal that: (i) the
                  courts of the judgment country would in similar circumstances
                  recognize a final and conclusive judgment of the Courts of the
                  Republic of Panama; (ii) the judgment has been issued as a
                  consequence of an action "in personam"; (iii) the judgment was
                  rendered after personal service on the defendant;

                                       34
<PAGE>

                  (iv) the cause of action upon which judgment was based does
                  not contravene public policy of Panama; and (v) the documents
                  evidencing the judgment are in authentic form according to the
                  laws of the judgment country and have been duly legalized by
                  Panamanian Consul; and no filing, recording, registering of or
                  with respect to the Transaction Documents will be necessary in
                  the Republic of Panama in order to protect, preserve or
                  perfect the validity and enforceability of the Transaction
                  Documents, and the interests thereby created, except as stated
                  in Section 8.11(f);

            (m)   POWER OF ATTORNEY: the Lessee Power of Attorney remains in
                  full force and effect;

            (n)   UCC MATTERS: the "location" of Lessee, for purposes of Section
                  9-307 of the Uniform Commercial Code of the State of New York,
                  is in the State of Florida;

            (o)   SOLVENCY: Lessee is Solvent; and

            (p)   ERISA: (A) the execution, delivery and performance of the
                  Transaction Documents will not involve any transaction in
                  connection with which a civil penalty could be assessed
                  pursuant to Section 502 of ERISA, any tax could be imposed
                  under Section 4975 of the Internal Revenue Code; or a
                  violation of any Similar Laws could result and (B) neither
                  Lessee nor any Subsidiary or Commonly Controlled Entity (i)
                  maintains, contributes to or has any liability in respect of,
                  (ii) is obligated to maintain or contribute to, or has, at any
                  time within the five years preceding the date of this
                  representation, maintained, contributed to or had any
                  liability in respect of or (iii) has been obligated to
                  maintain or contribute to, any employee benefit plan that is
                  subject to Title IV of ERISA.

      2.2   LESSEE'S FURTHER REPRESENTATIONS AND WARRANTIES:

            Lessee further represents and warrants to Lessor that:

            (a)   NO DEFAULT: no Default has occurred and is continuing or would
                  result from the entry into or performance of this Agreement
                  and the other Transaction Documents;

            (b)   REGISTRATION:

                  (i)   except for (x) the filing of UCC financing Statements
                        with regard to the Lease, and the Security Deposit in
                        the District of Columbia, all of which shall have been
                        accomplished on or before the Delivery Date, and (y) the
                        filing and recordation of this Agreement, the Lease
                        Supplement No. 1 and the Bill of Sale as provided in
                        Clause 8.11(f), it is not necessary or advisable under

                                       35
<PAGE>

                        the laws of the Country of Incorporation, the Country of
                        Registration or the Habitual Base in order to ensure the
                        validity, effectiveness and enforceability of this
                        Agreement or the other Transaction Documents or to,
                        establish, perfect or protect the property rights of
                        Lessor in or with respect to the Aircraft or any Engine
                        or Part, or the Security Deposit, that this Agreement or
                        any other Transaction Document or any other document or
                        instrument relating thereto be filed, registered or
                        recorded or that any other action be taken; and

                  (ii)  upon completion of the filings referenced in Clause
                        2.2(b)(i) and the recordation, registration or indexing
                        of the instruments so filed by the appropriate
                        Government Entities, under the laws of the Country of
                        Incorporation, the Country of Registration and the
                        Habitual Base and the other jurisdictions referred to in
                        Clause 8.11(f), the property rights of Lessor and
                        Beneficiary in the Aircraft, the Lease and the Security
                        Deposit will be fully established and perfected;

            (c)   LITIGATION: no litigation, arbitration or administrative
                  proceedings are pending or to its knowledge threatened against
                  Lessee in any jurisdiction which reasonably may be expected to
                  have a material adverse effect upon its financial condition or
                  business or its ability to perform its obligations under this
                  Agreement;

            (d)   PARI PASSU: the obligations of Lessee under this Agreement
                  rank at least pari passu with all other present and future
                  unsecured and unsubordinated obligations (including contingent
                  obligations) of Lessee, with the exception of such obligations
                  as are mandatorily preferred by law and not by virtue of any
                  contract;

            (e)   MATERIAL ADVERSE CHANGE: there has been no material adverse
                  change in the consolidated financial condition or operations
                  of Lessee and its Subsidiaries or the financial condition or
                  operations of Lessee since the date as to which the financial
                  statements most recently provided to Lessor on or prior to the
                  Delivery Date were drawn up; and

            (f)   NO BROKERS: Lessee has not engaged the services of a broker or
                  similar representative or agent for the purposes of procuring
                  the leasing of the Aircraft pursuant to this Agreement.

      2.3   REPETITION:

            The representations and warranties in Clause 2.1 and Clause 2.2 will
            survive the execution of this Agreement. The representations and
            warranties contained in Clause 2.1 and Clause 2.2 will be deemed to
            be repeated by Lessee on the

                                       36
<PAGE>

            Delivery Date and the representations set forth in Clause 2.1(a)
            through (h), (j)(iii), (1), (m) and (n) will be deemed to be
            repeated by Lessee on each Rent Date with reference to the facts and
            circumstances then existing.

      2.4   LESSOR'S REPRESENTATIONS AND WARRANTIES:

            Lessor (as to clauses (b), (c), (d), (e), (f), (g) and (h) and WFB
            (as to clauses (a), (b), (c), (d), (e), (f), (g) and (h)) represents
            and warrants to Lessee that:

            (a)   STATUS: WFB is a national banking association duly
                  incorporated and validly existing under the federal laws of
                  the United States and has the corporate power to own its
                  assets and carry on its business as it is being conducted;

            (b)   POWER AND AUTHORITY: each of Lessor and WFB has the corporate
                  power to enter into and perform, and has taken all necessary
                  corporate action to authorize the entry into, performance and
                  delivery of, this Agreement and the other Transaction
                  Documents to which it is a party and the transactions
                  contemplated by this Agreement and the other Transaction
                  Documents to which it is a party;

            (c)   LEGAL VALIDITY: each of the Transaction Documents to which it
                  is a party has been duly authorized, executed and delivered by
                  it, and constitutes its legal, valid and binding obligations,
                  enforceable against it in accordance with their respective
                  terms except insofar as enforceability may be limited by (i)
                  applicable bankruptcy, insolvency or other laws affecting
                  creditors' rights generally or (ii) general principles of
                  equity;

            (d)   NON-CONFLICT: the entry into and performance by it of, and the
                  transactions contemplated by, this Agreement and the other
                  Transaction Documents to which it is a party do not and will
                  not:

                  (i)   conflict with any laws, rules or regulations binding on
                        it;

                  (ii)  conflict with the constitutional documents of Lessor or
                        WFB; or

                  (iii) conflict with any indenture, mortgage, contract or other
                        document which is binding upon it or any of its assets;

            (e)   AUTHORIZATION: all authorizations, consents, registrations and
                  notifications required under the laws of the State of Utah,
                  the State of New York (the place of closing) and the federal
                  laws of the United States in connection with the entry into,
                  performance, validity and enforceability of, and the
                  transactions contemplated by, this Agreement and the other
                  Transaction Documents to which it is a party have been (or
                  will on or before the Delivery Date have been) obtained or
                  effected (as appropriate)

                                       37
<PAGE>

                  and are (or will on their being obtained or effected be) in
                  full force and effect;

            (f)   NO IMMUNITY:

                  (i)   it is subject to civil commercial law with respect to
                        its obligations under this Agreement and the other
                        Transaction Documents to which it is a party; and

                  (ii)  neither it nor any of its assets is entitled to any
                        right of immunity and the entry into and performance of
                        this Agreement and the other Transaction Documents to
                        which it is a party by it constitute private and
                        commercial acts;

            (g)   TITLE: At the time of Delivery, Lessor shall have good title
                  to the Aircraft, free and clear of any Liens;

            (h)   NO BROKERS: Lessor has not engaged the services of a broker or
                  similar representative agent for the purposes of this
                  Agreement and the transactions contemplated herein;

      2.5   REPETITION:

            The representations and warranties in Clause 2.4 will survive the
            execution of this Agreement and will be deemed to be repeated by
            Lessor on the Delivery Date with reference to the facts and
            circumstances then existing.

3.    CONDITIONS PRECEDENT

      3.1   CONDITIONS PRECEDENT:

            Lessor's obligation to deliver and lease the Aircraft under this
            Agreement is subject to satisfaction of each of the following
            conditions:

            (a)   receipt by Lessor and Beneficiary from Lessee of the following
                  satisfactory in form and substance to Lessor:

                  (i)   TRANSACTION DOCUMENTS: each Transaction Document shall
                        have been duly executed and delivered by each party
                        thereto other than Lessor;

                  (ii)  CONSTITUTIONAL DOCUMENTS: a copy of the constitutional
                        documents of Lessee and the Guarantor;

                  (iii) RESOLUTIONS: a copy of a resolution of the board of
                        directors of Lessee and Guarantor, in each case
                        approving the terms of, and the transactions
                        contemplated by, this Agreement and the other

                                       38
<PAGE>

                        Transaction Documents to which it is a party, resolving
                        that it enter into this Agreement and the other
                        Transaction Documents to which it is a party, and
                        authorizing execution of this Agreement and the other
                        Transaction Documents to which it is a party and
                        consummation of the transactions contemplated hereby and
                        thereby;

                  (iv)  OPINIONS: (i) an opinion reasonably satisfactory in form
                        and substance to Lessor (based on New York law) by
                        Greenberg Traurig, P.A., (ii) an opinion reasonably
                        satisfactory in form and substance to Lessor (based on
                        Panamanian law) by Galindo Arias & Lopez, Panamanian
                        counsel to Lessee, (iii) at Lessor's cost, an opinion
                        reasonably satisfactory in form and substance to
                        Beneficiary by Patton, Moreno & Asvat, Panamanian
                        counsel to the Lessor and Beneficiary, with respect to
                        Panamanian law; and (iv) at Lessor's cost, a
                        jurisdictional review by Patton, Moreno & Asvat,
                        Panamanian counsel to Lessor and Beneficiary, as to the
                        rights of creditors and lessors of aircraft under
                        Panamanian law, satisfactory in form and substance to
                        Beneficiary;

                  (v)   APPROVALS: evidence of the issuance of each approval,
                        license and consent which is required in relation to, or
                        in connection with the performance by Lessee of any of
                        its obligations under this Agreement and the other
                        Transaction Documents;

                  (vi)  LICENSES: copies of Lessee's air transport license, air
                        operator's certificates and all other material licenses,
                        certificates and permits required by Lessee in relation
                        to, or in connection with, the operation of the
                        Aircraft;

                  (vii) CERTIFICATE: a certificate of a duly authorized officer
                        of Lessee:

                        (a)   setting out a specimen of the signature of each
                              Person authorized to execute documents on behalf
                              of Lessee pursuant to the resolutions referred to
                              in Clause 3.1(a)(iii);

                        (b)   certifying that each copy of each document
                              specified in Clause 3.1(a)(ii) and (iii) is
                              correct, complete and in full force and effect;
                              and

                        (c)   certifying as to the matters stated in Clause
                              3.2(a), (b) and (d);

                  (viii)UCC FINANCING STATEMENTS: UCC financing statements with
                        respect to the Aircraft and this Agreement in a form
                        acceptable to Lessor shall have been prepared for filing
                        with the appropriate Government Entity in the District
                        of Columbia;

                                       39
<PAGE>

                  (ix)     PAYMENTS: all sums due to Lessor under this Agreement
                           on or before the Delivery Date including, without
                           limitation, the first payment of Rent and the full
                           amount of the Security Deposit;

                  (x)      INSURANCES: a certificate of insurance and broker's
                           letter of undertaking satisfactory to Lessor and
                           evidencing that Lessee is taking the required steps
                           to ensure due compliance with the provisions of this
                           Agreement as to Insurances with effect on and after
                           the Delivery Date,

                  (xi)     FINANCIAL STATEMENTS: the latest available financial
                           statements and accompanying documents of Lessee as
                           described in Clause 8.2(b)(i) and (ii);

                  (xii)    TITLE: Initial Purchaser shall have transferred good
                           title to the Aircraft to Lessor and Lessor shall have
                           received a signed original of the Bill of Sale;

                  (xiii)   AUTHORIZATION: the Aircraft shall have been certified
                           by the FAA as to type and airworthiness for export to
                           Panama, and Lessee shall have permanent or temporary
                           authority to operate the Aircraft, and copies of
                           relevant documents shall have been delivered to
                           Lessor;

                  (xiv)    PROCESS AGENT: a letter from the process agent
                           appointed by Lessee in this Agreement accepting that
                           appointment;

                  (xv)     ACCEPTANCE CERTIFICATE: the Acceptance Certificate,
                           dated, fully completed, and executed by Lessee on
                           behalf of Lessor;

                  (xvi)    IMPORT: evidence that any required import license,
                           and all customs formalities relating to the import of
                           the Aircraft into the Habitual Base have been
                           obtained or complied with (if no such licenses or
                           formalities are required, a statement to that effect
                           included in the legal opinion described in paragraph
                           (ii) will satisfy Lessee's obligation under this
                           paragraph (ix)), and evidence that the import of the
                           Aircraft into the Habitual Base is exempt from Taxes,
                           or that any such Taxes have been paid in full;

                  (xvii)   POWERS OF ATTORNEY: the Lessee Power of Attorney; and

                  (xviii)  REGISTRATION, RECORDINGS: receipt by Lessor of
                           evidence that on the Delivery Date the Aircraft has
                           been provisionally registered under the laws of the
                           Country of Registration and that this Agreement,
                           Lease Supplement No. 1 and the Bill of Sale will be
                           recorded with the Public Registry of Panama as
                           required by Section 8.11(f), and that all filings,
                           registrations, recordings and other actions have been
                           or will be taken which are necessary or

                                       40
<PAGE>

                        advisable to ensure the validity, effectiveness and
                        enforceability of this Agreement and the other
                        Transaction Documents and to protect the rights and
                        interests of Lessor in the Aircraft;

                  (xix) MANUFACTURER DELIVERY DOCUMENTS: receipt by Lessor of
                        originals of the Manufacturer delivery documents,
                        including certified copies of the relevant bills of sale
                        (FAA and full warranty);

                  (xx)  GENERAL: such other documents and financial information
                        as Lessor may reasonably request in order to (i)
                        consummate or give effect to the transactions
                        contemplated by this Agreement and the Transaction
                        Documents and (ii) assess the financial and commercial
                        condition of Lessee, present and future, and Lessor's
                        being satisfied in its sole discretion with such
                        financial and commercial condition.

      3.2   FURTHER CONDITIONS PRECEDENT:

            The obligations of Lessor to deliver and lease the Aircraft under
            this Agreement are subject to the further conditions precedent that:

            (a)   the representations and warranties of Lessee under Clauses 2.1
                  and 2.2 are correct and would be correct if repeated on
                  Delivery of the Aircraft under this Agreement;

            (b)   no Default has occurred and is continuing or would reasonably
                  be expected to result from the leasing of the Aircraft to
                  Lessee under this Agreement;

            (c)   no change shall have occurred after the date of the execution
                  and delivery of this Agreement in laws that in the case of
                  Lessor or Beneficiary, in the reasonable opinion of counsel,
                  would make it illegal for such Person to participate in this
                  transaction or to make its Loan available to Lessor; and

            (d)   no action or proceeding or governmental action shall have been
                  instituted or threatened before any court or governmental
                  agency, nor shall any order, judgment or decree have been
                  issued or proposed to be issued by any court or governmental
                  agency at the time of the Delivery Date to set aside,
                  restrain, enjoin or prevent the completion and consummation of
                  this Agreement or the other Transaction Documents or the
                  transactions contemplated hereby and thereby.

      3.3   LESSEE CONDITIONS PRECEDENT:

            Lessee's obligation to accept delivery and to lease the Aircraft are
            subject to the following additional conditions precedent:

                                       41
<PAGE>

            (a)   receipt by Lessee on or before the Delivery Date of:

                  (i)   a certificate signed by a duly authorized officer of
                        Lessor certifying that Lessor's representations and
                        warranties in Clause 2.4 are true and correct on the
                        Delivery Date as if given on such date;

                  (ii)  each of this Agreement, Lease Supplement No. 1 and the
                        Participation Agreement, duly executed and delivered by
                        Lessor, and the Warranty Assignment duly executed and
                        delivered by the parties thereto;

                  (iii) Initial Purchaser shall have transferred good title to
                        the Aircraft to Lessor and Lessor shall have received a
                        signed original of the Bill of Sale;

                  (iv)  the Aircraft shall have been certified by the FAA as to
                        type and airworthiness for export to Panama, and Lessee
                        shall have permanent or temporary authority to operate
                        the Aircraft, and copies of relevant documents shall
                        have been delivered to Lessor; and

                  (v)   receipt by Lessee of all documents required to operate
                        the Aircraft in Panama.

            (b)   Lessor shall have tendered delivery of the Aircraft to Lessee
                  in accordance with Clauses 4.1 and 4.2.

      3.4   WAIVER:

            (a)   The conditions specified in Clauses 3.1 and 3.2 are for the
                  sole benefit of Lessor and may be waived or deferred in whole
                  or in part by Lessor. Such waiver or deferral may be subject
                  to such conditions as shall be accepted by Lessee.

            (b)   The conditions specified in Clause 3.3 are for the sole
                  benefit of Lessee and may be waived or deferred in whole or in
                  part by Lessee. Such waiver or deferral may be subject to such
                  conditions as shall be accepted by Lessor.

      3.5   POST-CLOSING MATTERS:

            Lessee shall, at its sole cost and expense, provide to Lessor (i)
            evidence that the UCC Financing Statement referenced in Clause
            2.2(b)(i)(y) has been duly filed with the appropriate Government
            Entity in the District of Columbia (which evidence may take the form
            of a filed-stamped copy of such UCC financing statement), (ii)
            evidence that the AAC has issued a permanent registration

                                       42
<PAGE>

            certificate for the Aircraft as required by Section 8.11(f)(iii) and
            (iii) an opinion of Panamanian counsel to Lessee as to the making of
            proper filings as required by Section 8.11(f)(i).

4.    COMMENCEMENT

      4.1   LEASING:

            (a)   Subject to satisfaction of the conditions set forth in Clauses
                  3.1 and 3.2, Lessor will lease the Aircraft to Lessee and
                  Lessee will take the Aircraft on lease for the Term, which
                  shall commence on the Delivery Date immediately upon transfer
                  of title to the Aircraft from Seller to Lessor, and which
                  leasing shall be unconditionally and irrevocably evidenced by
                  Lessee's execution and delivery of Lease Supplement No. 1; and

            (b)   Lessee will be responsible for all risks associated with any
                  loss of or damage to the Aircraft or caused by the operation
                  of the Aircraft from the execution of Lease Supplement No. 1
                  until the return of the Aircraft to Lessor pursuant to the
                  terms of this Agreement.

      4.2   DELIVERY:

            Lessor shall deliver the Aircraft to Lessee immediately following
            delivery thereof by the Manufacturer. Immediately following Lessor's
            purchase of the Aircraft from Seller, Lessor will tender the
            Aircraft for Delivery to Lessee and Lessee will unconditionally and
            irrevocably effect acceptance of the Aircraft by execution and
            delivery to Lessor of the duly completed and executed Lease
            Supplement No. 1, notwithstanding any delay in Delivery after the
            Scheduled Delivery Date, subject to Section 4.4. Simultaneously with
            Lessor's purchase of the Aircraft, Lessee will execute, as agent of
            Lessor, and deliver to Delta the Acceptance Certificate. Upon
            execution and delivery by Lessee of Lease Supplement No. 1, Lessee's
            acceptance of the Aircraft under this Agreement shall be
            unconditional and irrevocable for all purposes. Lessor will include
            Lessee, and Lessee will participate, in all stages of the acceptance
            procedure of the Aircraft from the Manufacturer and Lessee shall be
            satisfied that the Aircraft as delivered from Manufacturer meets the
            delivery conditions set forth on Schedule 1 hereof.

      4.3   DELAYED DELIVERY:

            It is intended that the Delivery Date will be the Scheduled Delivery
            Date. However, Lessor shall not be responsible for any loss or
            damages, including without limitation loss of profit, arising from
            or in connection with any delay in the delivery of or failure to
            deliver the Aircraft to Lessee under this Agreement on the Scheduled
            Delivery Date for any reason whatsoever. Notwithstanding any such
            delay, Lessor shall not be excused from its obligation to Deliver
            the Aircraft to Lessee unless such delay resulted from any cause
            which is outside the control of Lessor.

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<PAGE>

      4.4   TERMINATION FOR NON-DELIVERY:

            The parties agree that if Delivery of the Aircraft has not occurred
            for any reason whatsoever including, without limitation, any
            circumstance described in Clause 4.2 or 4.3 above, on or before the
            Final Delivery Date, then unless the parties shall have agreed in
            writing to extend the Delivery Date and the Final Delivery Date,
            this Agreement shall immediately terminate. Upon such termination,
            neither party will have any further obligations or liability under
            this Agreement other than pursuant to Clause 15.8 except that Lessor
            will repay the amount of the Security Deposit.

      4.5   PURCHASE OF AIRCRAFT:

            Lessee agrees that Lessor's obligation to deliver the Aircraft to
            Lessee under the terms of this Agreement is expressly subject to
            Lessor obtaining good title to the Aircraft from Initial Purchaser
            pursuant to the Aircraft Purchase Agreement.

5.    PAYMENTS

      5.1   SECURITY DEPOSIT AND LETTER OF CREDIT:

            (a)   PAYMENT: Lessee shall pay to Lessor a Security Deposit in cash
                  in the amount defined as the Security Deposit Amount in
                  Schedule 7 hereof in the following installments:

                  (i)   US**Material Redacted** at the time this Agreement is
                        executed;

                  (ii)  US**Material Redacted** three months prior to Delivery
                        Date; and

                  (iii) the balance to be paid no later than three Business Days
                        prior to Delivery Date.

            (b)   CONCERNING THE SECURITY DEPOSIT:

                  (i)   The Security Deposit shall be deposited in a designated
                        account of the Lessor maintained at the Royal Bank of
                        Scotland, New York Branch or such other account in the
                        United States as Lessor shall designate in writing.
                        Lessor will not hold the Security Deposit as agent or on
                        trust for Lessee or in any similar fiduciary capacity.

                  (ii)  Lessee may provide the Security Deposit in the form of a
                        letter of credit, issued by a bank satisfactory to
                        Lessor, having a term of no more than one year, and
                        otherwise in form and substance (including the
                        designation of the presentment location) satisfactory to
                        Lessor.

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<PAGE>

            (c)   CONCERNING THE LETTER OF CREDIT:

                  If at any time prior to the Final Expiry Date, the long-term
                  unsecured unsubordinated and unguaranteed debt obligations as
                  rated by Moody's Investors Services Inc. or Standard & Poor's
                  Corporation of the then current bank issuing the letter of
                  credit shall be less than A2 and A respectively or shall be on
                  creditwatch by either of such agencies, Lessee shall procure
                  that the relevant letter of credit is replaced by a letter of
                  credit by another bank acceptable to Lessor (in its sole
                  discretion).

      5.2   RENTAL PERIODS:

            The Term will be divided into Rental Periods. The first Rental
            Period will commence on the Delivery Date, and each subsequent
            Rental Period will commence on the date succeeding the last day of
            the previous Rental Period. Each Rental Period will end on but
            exclude the numerically corresponding day in the next Month except
            that if a Rental Period would otherwise overrun the Final Expiry
            Date, it will end on the Final Expiry Date.

      5.3   RENT:

            (a)   TIME OF PAYMENT: Lessee will pay to Lessor Rent in advance on
                  each Rent Date. Payment must be initiated in such manner as to
                  ensure that Lessor receives credit for the payment on the Rent
                  Date. If a Rental Period begins on a non-Business Day, the
                  Rent payable in respect of that Rental Period shall be paid on
                  the Business Day immediately following the date on which such
                  Rental Period commences.

            (b)   AMOUNT: The Rent payable in respect of each Rental Period
                  shall be the Assumed Rent based on the Assumed LIBOR Rate and
                  will be adjusted upward or downward by the Rent Adjustment
                  Factor. On each Rent Calculation Date (as defined below), the
                  Rent shall be calculated and set for the six consecutive
                  Rental Periods immediately following such Rent Calculation
                  Date. For purposes of this Clause 5.3(b), "Rent Calculation
                  Date" shall mean the date that falls three days prior to the
                  Delivery Date and each six-month anniversary thereof;
                  provided, however, if such date or any such anniversary
                  thereof is not a Business Day, then the Rent Calculation Date
                  shall be the immediately preceding Business Day.

      5.4   SUPPLEMENTAL RENT:

            (a)   AMOUNT: Lessee will pay Supplemental Rent to Lessor in
                  relation to each calendar month (or part of a month) of the
                  Term, on the 10th day following the end of that calendar month
                  (except that the last payment of Supplemental Rent during the
                  Term shall be paid on the Final Expiry Date), calculated as
                  follows:

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<PAGE>

                  (i)   AIRFRAME: in respect of an Airframe 6C/24,000 Flight
                        Hour Block Structural Check, an amount equal to the
                        Airframe 6C/24,000 Flight Hour Block Structural Check
                        Supplemental Rent Rate, pro-rated on a per diem basis,
                        if applicable, for any calendar month which falls
                        partially within the Term and partially outside the Term
                        (the "Airframe 6C/24,000 Flight Hour Block Structural
                        Check Supplemental Rent");

                  (ii)  ENGINE LIFE-LIMITED PARTS: in respect of the
                        Life-Limited Parts for each Engine, an amount equal to
                        the Engine LLP Supplemental Rent Rate for each Engine
                        Cycle operated by that Engine during that calendar month
                        ("Engine LLP Supplemental Rent"); provided, however,
                        Lessee shall have no obligation to make any payment of
                        Engine LLP Supplemental Rent in respect of any period
                        during which the Engine installed on the Aircraft is
                        subject to a maintenance cost per hour agreement or
                        similar arrangement with the Agreed Maintenance
                        Performer so long as (x) such agreement or arrangement
                        is approved in advance (i.e., before the enrollment of
                        the Engine installed on the Aircraft in any such
                        agreement or arrangement) in writing by Lessor (such
                        approval not to be unreasonably withheld), and (y) in
                        the event that the Engine installed on the Aircraft is
                        enrolled in any such agreement or arrangement before
                        Lessor approves such agreement or arrangement, or in the
                        event that any Engine enrolled in any such agreement or
                        arrangement is to be installed on the Aircraft before
                        Lessor approves such agreement or arrangement, then
                        Lessee shall pay and continue to pay Engine LLP
                        Supplemental Rent in accordance with this subclause for
                        all periods prior to the time at which Lessee obtains
                        Lessor's written approval (which approval shall not be
                        unreasonably delayed) of the applicable agreement or
                        arrangement (if ever);and (z) for the avoidance of doubt
                        it is agreed that at least one of the criteria upon
                        which such a maintenance cost per hour agreement will be
                        approved by the Lessor shall be a requirement for that
                        agreement to expressly include an adequate fund
                        provision specifically allocated to LLP's to which the
                        Lessor will have rights of access under certain
                        conditions, and drawdowns on such LLP fund will not
                        diminish the adequacy of any fund allocation applicable
                        to the engine performance restoration.

                  (iii) ENGINE PERFORMANCE RESTORATION: in respect of each
                        Engine, an amount equal to the Engine Supplemental Rent
                        Rate for each Engine Flight Hour (or fraction thereof)
                        operated by that Engine during that calendar month
                        ("Engine Supplemental Rent"); provided, however, Lessee
                        shall have no obligation to make any payment of Engine
                        Supplemental Rent in respect of any period

                                       46
<PAGE>

                        during which the Engine installed on the Aircraft is
                        subject to a maintenance cost per hour agreement or
                        similar arrangement with the Agreed Maintenance
                        Performer so long as (x) such agreement or arrangement
                        is approved in advance (i.e., before the enrollment of
                        the Engine installed on the Aircraft in any such
                        agreement or arrangement) in writing by Lessor (such
                        approval not to be unreasonably withheld), and (y) in
                        the event that the Engine installed on the Aircraft is
                        enrolled in any such agreement or arrangement before
                        Lessor approves such agreement or arrangement, or in the
                        event that any Engine enrolled in any such agreement or
                        arrangement is to be installed on the Aircraft before
                        Lessor approves such agreement or arrangement, then
                        Lessee shall pay and continue to pay Engine Supplemental
                        Rent in accordance with this subclause for all periods
                        prior to the time at which Lessee obtains Lessor's
                        written approval (which approval shall not be
                        unreasonably delayed) of the applicable agreement or
                        arrangement (if ever);

                  (iv)  APU: in respect of the APU, an amount equal to the APU
                        Supplemental Rent Rate for each Flight Hour operated by
                        the APU during that calendar month ("APU Supplemental
                        Rent"); provided, however, Lessee shall have no
                        obligation to make any payment of APU Supplemental Rent
                        in respect of any period during which the APU installed
                        on the Aircraft is subject to a maintenance cost per
                        hour agreement or similar arrangement with the APU
                        manufacturer or Agreed Maintenance Performer so long as
                        (x) such agreement or arrangement is approved in advance
                        (i.e., before the enrollment of the APU installed on the
                        Aircraft in any such agreement or arrangement) in
                        writing by Lessor (such approval not to be unreasonably
                        withheld), and (y) in the event that the APU installed
                        on the Aircraft is enrolled in any such agreement or
                        arrangement before Lessor approves such agreement or
                        arrangement, or in the event that any APU enrolled in
                        any such agreement or arrangement is to be installed on
                        the Aircraft before Lessor approves such agreement or
                        arrangement, then Lessee shall pay and continue to pay
                        APU Supplemental Rent in accordance with this subclause
                        for all periods prior to the time at which Lessee
                        obtains Lessor's written approval (which approval shall
                        not be unreasonably delayed) of the applicable agreement
                        or arrangement (if ever); and

                  (v)   LANDING GEAR: in respect of the Landing Gear, an amount
                        equal to the Landing Gear Supplemental Rent Rate,
                        pro-rated on a per diem basis, if applicable, for any
                        calendar month which falls partially within the Term and
                        partially outside the Term ("Landing Gear Supplemental
                        Rent");

                                       47
<PAGE>

                        provided that with respect to any maintenance cost per
                        hour agreement described in subclauses (iii) and (iv)
                        above to be approved by Lessor, such agreement must (or
                        as otherwise reasonably agreed by Lessor and Lessee)
                        have (i) payments and maintenance structured on a fully
                        restored zero-time basis where the Approved Maintenance
                        Performer will be responsible for the payment of the
                        redelivery maintenance adjustment provided for in Part 3
                        of Schedule 3 for all Engine or APU use since the last
                        Engine Performance Restoration or APU Performance
                        Restoration, as applicable, during the Lease Term or
                        since new if no such Engine Performance Restoration or
                        APU Performance Restoration, as applicable, has been
                        accomplished during the Lease Term, (ii) payments and/or
                        corresponding maintenance inclusive of all applicable
                        airworthiness directives, manufacturer category 1/2/3
                        service bulletins, and domestic object damage, (iii)
                        satisfactory restrictions on the use of multiple repair
                        used serviceable exchange parts, incident materials,
                        manufacturer approved FAA PMA parts, and parts with
                        non-manufacturer approved repairs, (iv) satisfactory
                        flight hour and calendar warranty provisions and
                        periods, (v) satisfactory test cell performance
                        guarantees and performance retention guarantees, and
                        (vi) satisfactory provisions for assignment to Lessor.

                  (b)   ADJUSTMENT: The Supplemental Rent Rates, if applicable,
                        shall be adjusted after the Delivery Date not more
                        frequently than annually (with any such adjustment
                        having retrospective application as appropriate to
                        reflect the provisions of paragraph (ii) below and the
                        amount required to give effect to such retrospective
                        application shall be payable by Lessee upon demand by
                        Lessor) based on the following:

                        (i)   ANNUAL SUPPLEMENTAL RENT ADJUSTMENT: upwards by
                              the Annual Supplemental Rent Adjustment commencing
                              on January 1, 2005 and each annual anniversary
                              date thereafter; and

                        (ii)  HOUR TO CYCLE RATIO ADJUSTMENT: Lessor and Lessee
                              acknowledge that the Engine Supplemental Rent Rate
                              is based upon the assumption that the Aircraft
                              will operate on the Assumed Ratio. If that
                              assumption proves to be incorrect at any time for
                              any period of twelve (12) consecutive months
                              during the Term based upon Lessee's actual
                              operating experience during such twelve (12)
                              months, and in the case of the Assumed Ratio the
                              hour to cycle ratio differs from the Assumed Ratio
                              by more than 0.1 during such twelve (12) month
                              period, (i) Lessor shall have the right, upon
                              written notice to Lessee, to adjust the Engine
                              Supplemental Rent Rate (in the case of a decrease
                              in the ratio below the Assumed Ratio) and (ii)
                              Lessor will make that adjustment (in the case of
                              an increase in the ratio above the Assumed Ratio)
                              in respect of Engine Supplemental Rent payable for
                              the next year of the Lease Term. The Engine
                              Supplemental Rent Rate shall be adjusted by

                                       48
<PAGE>

                              calculating the actual engine hour to cycle ratio
                              for the applicable 12-month period and using that
                              to select the corresponding Engine Supplemental
                              Rent Adjusted Value adjustment dollar figure from
                              the Assumed Ratio Adjustment Table in Schedule 7.
                              If actual hour to cycle ratio falls outside the
                              specific ratios set forth in the Assumed Ratio
                              Adjustment Table in Schedule 7, then the Engine
                              Supplemental Rent Adjusted Value shall be
                              determined by extrapolating (or interpolating)
                              from (or between) the nearest observed values in
                              the table.

                        (iii) ANNUAL UTILIZATION ADJUSTMENT: Lessor and Lessee
                              acknowledge that the Airframe 6C/24,000 Flight
                              Hour Block Structural Check Supplemental Rent Rate
                              is based upon the assumption that the Airframe
                              will operate at the Assumed Annual Utilization. If
                              that assumption proves to be incorrect at any time
                              for any period of twelve (12) consecutive months
                              during the Term based upon Lessee's actual
                              operating experience during such twelve (12)
                              months, (i) Lessor shall have the right, upon
                              written notice to Lessee, to adjust the Airframe
                              6C/24,000 Flight Hour Block Structural Check
                              Supplemental Rent Rate (in the case of utilization
                              above the Assumed Annual Utilization) and (ii)
                              Lessor, upon written request from Lessee, will
                              make that adjustment (in the case of an increase
                              in the utilization below the Assumed Annual
                              Utilization). The Airframe 6C/24,000 Flight Hour
                              Block Structural Check Supplemental Rent Rate
                              shall be adjusted by calculating the actual
                              Airframe utilization for the applicable 12-month
                              period and using that to select the corresponding
                              Airframe Structural Check Reserve Amount from the
                              Assumed Annual Utilization Adjustment Table in
                              Schedule 7. If actual utilization falls outside
                              the specific values set forth in the Assumed
                              Annual Utilization Adjustment Table in Schedule 7,
                              then the adjusted value shall be determined by
                              extrapolating (or interpolating) from (or between)
                              the nearest observed values in the table.

                  (c)   ADJUSTMENT/ABATEMENT FOR ENGINE EVENT OF LOSS: If
                        following an Engine Event of Loss the maintenance status
                        for the replacement Engine (pursuant to Clause 8.13(a))
                        is such that the Engine LLP Supplemental Rent and Engine
                        Supplemental Rent held with respect to the Engine which
                        suffered the Engine Event of Loss differs from that
                        which corresponds to the maintenance status of such
                        replacement Engine, Lessor shall calculate the amount of
                        the adjustment to the amounts of Engine LLP Supplemental
                        Rent and Engine Supplemental Rent in respect of such
                        Engine required so that the amounts then held correspond
                        to the status of the replacement Engine. Any adjustment
                        which requires an increase in the amounts held as Engine
                        LLP Supplemental Rent and the Engine Supplemental Rent
                        shall be promptly paid by Lessee to Lessor in cash. Any
                        adjustment which

                                       49
<PAGE>

                        requires a decrease in amounts held as Engine LLP
                        Supplemental Rent and/or Engine Supplemental Rent shall
                        be effected, so long as no Default or Event of Default
                        is then in existence by Lessor abating Lessee's payment
                        of Engine LLP Supplemental Rent and/or Engine
                        Supplemental Rent in respect of such replacement Engine
                        until the amounts of Engine LLP Supplemental Rent and/or
                        Engine Supplemental Rent correspond to the status of the
                        replacement Engine.

                  (d)   LESSOR'S PROPERTY: Lessee acknowledges and agrees that
                        Supplemental Rent is additional rent for the leasing of
                        the Aircraft and not cash collateral or other collateral
                        security for Lessee's maintenance obligations under this
                        Agreement. Once paid all Supplemental Rent is the
                        property of Lessor, it is not refundable to Lessee under
                        any circumstances whatsoever and Lessee has no interest
                        therein whatsoever. The foregoing is subject to Lessor's
                        obligations under and in accordance with Clause 7.4 or
                        11.1(b) of this Agreement.

                  (e)   SHORTFALLS. In any case in which the amount paid to
                        Lessee by Lessor pursuant to Clause 7.4 is not
                        sufficient to pay the cost of such check, overhaul,
                        inspection, performance restoration or parts
                        replacement, Lessee shall be obliged to and shall meet
                        such shortfall from its own resources and shall not
                        subsequently be permitted to claim reimbursement of such
                        amounts under this Agreement.

                  (f)   LETTERS OF CREDIT. At Lessee's option and with Lessor's
                        agreement Lessee may provide at the Delivery Date and
                        annually thereafter during the Lease Term, letters of
                        credit issued by a bank acceptable to Lessor, in lieu of
                        Supplemental Rent, in respect of Aircraft utilization in
                        Flight Hours, Cycles or calendar months as appropriate
                        to each maintenance event type. Each letter of credit
                        shall have validity of 6 months or until issue of a
                        replacement letter of credit (whichever occurs later).
                        Payment of the redelivery maintenance adjustments at the
                        Redelivery Date by Lessee to Lessor pursuant to Clause
                        12.5 will terminate Lessor's requirement for such
                        letters of credit. In addition, each letter of credit
                        shall be issued in a form and from a bank acceptable to
                        Lessor. The first letter of credit issued at the
                        Delivery Date shall be for the amount of Supplemental
                        Rent that would accrue for the first 3 months of
                        operation with an assumed utilization of 250 Flight
                        Hours and 83 Cycles per month and the amount of
                        Supplemental Rent that would have accrued on the last
                        day of the month prior to the Delivery Date.
                        Semi-annually thereafter, the letter of credit shall be
                        the amount of Supplemental Rent that would have accrued
                        on the last day of the month prior to issue plus that
                        which would accrue for the following 3 months of
                        operation with an assumed utilization of 250 Flight
                        Hours and 83 Cycles per month less any Supplemental Rent
                        reimbursement that would have occurred in respect of the
                        maintenance events outlined herein to reduce the
                        Supplemental Rent balance in respect

                                       50
<PAGE>


                        of that maintenance event by the lesser of (a) the
                        relevant Supplemental Rent balance and (b) the valid
                        invoice in respect of that maintenance event.

      5.5   PAYMENTS:

                        All payments by Lessee to Lessor under this Agreement
                        will be made for value on the due date in Dollars and in
                        same day funds to the account in the United States as
                        Lessor may advise Lessee and Beneficiary in writing.

      5.6   DEFAULT INTEREST:

            If Lessee fails to pay any amount payable under this Agreement on
            the due date, Lessee will pay on demand from time to time to Lessor
            interest (both before and after judgment) on that amount, from the
            due date to the date of payment in full by Lessee to Lessor, at the
            Interest Rate. All such interest will be compounded monthly and
            calculated on the basis of the actual number of days elapsed and a
            360 day year.

      5.7   WITHHOLDING:

            (a)   All payments by Lessee, or with respect to any obligation of
                  Lessee, under or in connection with any of the Transaction
                  Documents will be made without setoff or counterclaim, free
                  and clear of and without deduction or withholding for or on
                  account of any Tax or other amount, except to the extent that
                  any such deduction or withholding is required by applicable
                  law with respect to any Tax;

            (b)   if any Tax is required by any applicable law to be deducted or
                  withheld from or with respect to any amount payable by Lessee
                  or with respect to any obligation of Lessee under any of the
                  Transaction Documents to or for the benefit of any Tax
                  Indemnitee, Lessee shall:

                  (i)   unless such Tax is a Lessor Tax, pay such additional
                        amount as shall be necessary to enable such Tax
                        Indemnitee to receive, after such deduction or
                        withholding (including any deduction or withholding with
                        respect to such additional amount) and after subtracting
                        the net amount of all Taxes (including Lessor Taxes)
                        payable by such Tax Indemnitee as a result of such Tax
                        Indemnitee's receipt or accrual of such additional
                        amount, the amount which such Tax Indemnitee would have
                        received if such deduction or withholding had not been
                        required;

                  (ii)  pay the amount required to be deducted or withheld to
                        the appropriate Government Entity or other taxing
                        authority in a timely and proper manner; and

                                       51
<PAGE>

                  (iii) deliver to such Tax Indemnitee, not later than thirty
                        (30) days after the date on which such payment is paid,
                        an original receipt issued by the relevant Government
                        Entity or other taxing authority or other documentation
                        reasonably acceptable to such Tax Indemnitee verifying
                        that the obligation described in subclause (ii) has been
                        timely and properly performed.

      5.8   TAX INDEMNITY:

            Lessee shall pay, and on demand shall indemnify, protect, defend and
            hold harmless each Tax Indemnitee from and against, all Taxes (other
            than any and all Lessor Taxes or any Taxes which Lessee would not be
            responsible for under Clause 14.2(b)) which are imposed upon,
            attributable to, or with respect to, or are required to be paid in
            connection with, or as a result of, any of the payments or
            transactions or activities contemplated in the Transaction Documents
            (regardless of how or when such Taxes are imposed, whether imposed
            upon a Tax Indemnitee, Lessee, the Aircraft or otherwise),
            including, without limitation, Taxes imposed on or with respect to,
            or required to be paid in connection with or as a result of
            (directly or indirectly), any of the following: (i) the Aircraft,
            the Airframe, any Engine or any Part or any interest in any thereof,
            (ii) the purchase, acceptance, delivery, financing, mortgaging,
            registration, re-registration, de-registration, importation,
            exportation, ownership, leasing, subleasing, wet-leasing,
            chartering, presence, management, control, possession, performance,
            use, operation, repair, maintenance, condition, service, overhaul,
            substitution, replacement, pooling, interchange, removal,
            alteration, improvement, modification, refurbishment,
            transportation, landing, storage, redelivery, repossession, sale,
            transfer of title or other disposition of the Aircraft, the
            Airframe, any Engine or any Part or any interest in any thereof, or
            (iii) any Rent, receipts, gains, earnings, income, insurance
            proceeds, or other amounts paid or payable or received or receivable
            with respect to the Aircraft, the Airframe, any Engine or any Part
            or any interest in any thereof or the transactions contemplated in
            the Transaction Documents, or (iv) any of the Transaction Documents
            or any amendment or supplement thereto or the execution, delivery,
            filing, recording, performance or enforcement of any thereof.

            Each Tax Indemnitee shall, at the expense of Lessee, take
            commercially reasonable actions with a view toward mitigating any
            event or circumstance which would give rise to or result in a claim
            for indemnification pursuant to this Clause 5.8 or a withholding Tax
            pursuant to Clause 5.7; provided, however, nothing herein shall
            require any Tax Indemnitees to take any action which it shall have
            determined, in its sole discretion exercised in good faith, may
            result in a material economic, legal or regulatory disadvantage to
            such Tax Indemnitee.

      5.9   SALES TAX:

                                       52
<PAGE>

            All amounts payable by Lessee, or with respect to any obligation of
            Lessee, under this Agreement and the other Transaction Documents,
            are exclusive of any Sales Tax. If any Sales Tax is required by any
            applicable law to be paid with respect to any of the transactions,
            activities or payments contemplated in any of the Transaction
            Documents, Lessee shall (i) pay such Sales Tax to the appropriate
            Government Entity or other taxing authority in a timely and proper
            manner, and indemnify each Tax Indemnitee from and against such
            Sales Tax, in accordance with the provisions of this Clause 5, and
            (ii) deliver to Lessor, not later than thirty (30) days after the
            date on which such Sales Tax is due, an original receipt issued by
            the relevant Government Entity or other taxing authority or other
            documentation reasonably acceptable to such Tax Indemnitee verifying
            that the obligation described in subclause (i) has been properly
            performed.

      5.10  VALUE ADDED TAX:

            (a)   For the purposes of this Clause 5:

                  (i)   VAT means value added tax and any goods and services,
                        sales or turnover tax, imposition or levy of a like
                        nature; and

                  (ii)  SUPPLY includes anything on or in respect of which VAT
                        is chargeable;

            (b)   Lessee shall pay to Lessor or the relevant taxing authority,
                  as the case may be, the amount of any VAT chargeable in
                  respect of any supply for VAT purposes under this Agreement in
                  a timely and proper manner; and

            (c)   Each amount stated as payable by Lessee under this Agreement
                  is exclusive of VAT (if any), and if VAT is payable in respect
                  of any amount as aforesaid, Lessee shall pay all such VAT and
                  shall indemnify Lessor against any claims for the same (and
                  where appropriate Lessee shall increase the payments which
                  would otherwise be required to be made hereunder so that
                  Lessor is left in the same position as it would have been in
                  had no VAT been payable); and Lessee shall provide evidence to
                  Lessor, if available, in respect of payment of any such VAT.

      5.11  PAYMENTS; TAX REPORTS; INFORMATION:

            (a)   PAYMENTS: Lessee shall pay each Indemnified Tax (as defined in
                  Clause 5.11(b)) in a timely and proper manner directly to the
                  relevant taxing authority, to the extent that direct payment
                  by Lessee is permitted by applicable law, and shall deliver to
                  the Tax Indemnitee for the account of which Lessee paid such
                  Tax the original (or a certified copy of an) official receipt
                  for Lessee's payment of such Tax (if obtainable by Lessee) or
                  such other documentary evidence of Lessee's payment of such
                  Tax as is reasonably acceptable to such Tax Indemnitee. Any
                  additional amount payable by Lessee directly to any Tax
                  Indemnitee pursuant to Clause 5.7

                                       53
<PAGE>

                  shall be paid together with the payment to which such
                  additional amount relates. Any amount payable by Lessee
                  directly to any Tax Indemnitee pursuant to Clause 5.8, 5.9 or
                  5.10 shall be paid in immediately available funds within ten
                  (10) days after Lessee receives such Tax Indemnitee's written
                  demand therefor. Any claim for payment pursuant hereto shall
                  be made by Lessor or the relevant Tax Indemnitee in writing,
                  accompanied by a certificate of an officer of such Tax
                  Indemnitee setting forth in reasonable detail the amount and
                  method of calculation of the payment so demanded.

            (b)   REPORTS: If any report, return, certification, statement or
                  other document (a "Tax Document") is required to be filed by
                  any Tax Indemnitee with respect to any Tax for which Lessee is
                  required to indemnify such Tax Indemnitee pursuant to this
                  Clause 5 (an "Indemnified Tax"), Lessee shall promptly notify
                  such Tax Indemnitee of such requirement and:

                  (i)   if permitted by applicable law, prepare and file such
                        Tax Document in a timely and proper manner (except for
                        any such Tax Document which such Tax Indemnitee notifies
                        Lessee that such Tax Indemnitee intends to prepare and
                        file) and deliver a copy of such Tax Document to such
                        Tax Indemnitee, provided that such Tax Indemnitee
                        delivers to Lessee, at Lessee's timely written request
                        and expense, such information within such Tax
                        Indemnitee's reasonable control as Lessee may reasonably
                        request and as may be reasonably necessary for Lessee to
                        prepare such Tax Document; or

                  (ii)  if Lessee is not permitted by applicable law to file
                        such Tax Document, Lessee shall prepare and deliver to
                        such Tax Indemnitee a proposed form of such Tax Document
                        within a reasonable time prior to the time such Tax
                        Document is required to be filed;

            (c)   INFORMATION: Lessee shall furnish to each Tax Indemnitee,
                  promptly after receipt of such Tax Indemnitee's written
                  request therefor, such documents and other information as such
                  Tax Indemnitee may reasonably request to enable such Tax
                  Indemnitee to comply with its Tax reporting, payment, audit
                  and litigation requirements relating to such Tax Indemnitee's
                  participation in the transactions contemplated in the
                  Transaction Documents. Each of Lessor and Beneficiary shall
                  furnish to Lessee such information maintained in the regular
                  course of its business as is (i) reasonably requested by
                  Lessee in writing, (ii) reasonably necessary to enable Lessee
                  to comply with its Tax reporting, payment, audit and
                  litigation requirements relating to the transactions
                  contemplated in the Transaction Documents, and (iii) not
                  otherwise available to Lessee; provided that Lessor shall not
                  be required to furnish or disclose to Lessee

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                  or any other Person any Tax return or other document relating
                  to the tax affairs of Lessor or any of its Affiliates; and

            (d)   REFUNDS; TAX SAVINGS: If and to the extent that a Tax
                  Indemnitee (x) receives a refund (in cash or as an offset
                  against any liability for a Lessor Tax) of any Indemnified Tax
                  previously paid by Lessee or for which Lessee previously paid
                  an indemnity to a Tax Indemnitee pursuant to Clause 5.7, 5.8,
                  5.9 or 5.10 (a "Refund"), or (y) actually realizes a reduction
                  in its liability for any Lessor Tax as a result of any
                  deduction, Tax credit or other Tax benefit for any Indemnified
                  Tax paid by Lessee or for which Lessee previously paid an
                  indemnity to a Tax Indemnitee pursuant to Clause 5.7, 5.8, 5.9
                  or 5.10 (a "Tax Saving"), such Tax Indemnitee shall pay to
                  Lessee, the amount of such actual Refund or Tax Saving minus
                  the net amount of all Taxes payable by such Tax Indemnitee
                  with respect to the receipt or accrual of such Refund or Tax
                  Saving and minus all costs and expenses incurred by such Tax
                  Indemnitee with respect to claiming and obtaining such Refund
                  or Tax Savings, provided, however, that if a Default or an
                  Event of Default exists and is continuing, such Tax Indemnitee
                  may hold the amount then due to Lessee under this Clause
                  5.11(d) until such Default or Event of Default ceases to
                  exist, and provided, further, that in no event shall such
                  payment exceed (i) the amount of all prior payments by Lessee
                  to such Tax Indemnitee under Clause 5.7, 5.8, 5.9 or 5.10
                  minus (ii) the amount of all prior payments by such Tax
                  Indemnitee pursuant to this Clause 5.11(d), but any such
                  excess shall be carried forward and applied as a credit to
                  reduce any future indemnity liability of Lessee under Clause
                  5.7, 5.8, 5.9 or 5.10. If a Tax Indemnitee pays Lessee any
                  amount under this Clause 5.11(d) and if and to the extent that
                  it is subsequently determined by the taxing authority having
                  jurisdiction that such Tax Indemnitee was not entitled to the
                  Tax Saving or Refund for which such Tax Indemnitee made such
                  payment to Lessee, such determination shall be treated as the
                  imposition of a Tax for which Lessee is obligated to indemnify
                  such Tax Indemnitee pursuant to the provisions of Clause 5.8,
                  without regard to the exclusion of Lessor Taxes in Clause 5.8.

      5.12  CONTEST OF CLAIM FOR TAX

            (a)   If a claim shall be made for or in respect of any Tax
                  (including withholding Taxes) for which the Lessee is
                  obligated pursuant to Clauses 5.7, 5.8, 5.9 or 5.10, to
                  indemnify such Tax Indemnitee (a "Tax Claim"), such Tax
                  Indemnitee shall give Lessee written notice of such Tax Claim
                  as soon as reasonably practicable, provided that any failure
                  of such Tax Indemnitee to give such notice or any delay by
                  such Tax Indemnitee in giving such notice shall not affect the
                  obligations of Lessee under this Clause 5 unless, and only to
                  the extent that, the failure to promptly provide such notice
                  results in (A) a material increase in the amount which Lessee

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<PAGE>

                  is required to indemnify, (B) material additional obligations
                  for Lessee in defending against such Tax Claim or (C)
                  precluding or materially prejudicing Lessee's right to defend
                  any such Tax Claim. If Lessee delivers to such Tax Indemnitee
                  within thirty days after the date of receipt of such Tax
                  Indemnitee's notice, a written request that such Tax
                  Indemnitee contest such Tax Claim (or, in the case of a Lessee
                  Controlled Contest, permit Lessee to contest such Tax Claim)
                  and if (and only so long as) the conditions described in
                  clause 5.12(b) are satisfied, such Tax Indemnitee shall, in
                  good faith and at Lessee's expense, contest (or, in the case
                  of a Lessee Controlled Contest, permit Lessee to contest if
                  permitted by applicable law) the validity, applicability or
                  amount (as the case may be) of the Taxes that are the subject
                  of such Tax Claim by (x) resisting payment thereof, (y) not
                  paying such Taxes except under protest if protest is necessary
                  and proper, or (z) if payment is made, using reasonable
                  efforts to obtain a refund thereof in administrative and/or
                  judicial proceedings permitted by applicable law (including
                  all appeals, other than, as appellant, an appeal or petition
                  to the United States Supreme Court or the equivalent court of
                  any other jurisdiction).

            (b)   CONDITIONS: A Tax Indemnitee's obligation under Clause 5.12(a)
                  with respect to any Tax Claim is subject to the satisfaction
                  of the following conditions at the time the contest is
                  requested and at all times while the contest (if any) is
                  continuing: (i) no Default described in Clause 13.1(a) or (g)
                  or Event of Default shall have occurred and be continuing,
                  (ii) the amount of the Tax Claim (plus, if the Tax that is the
                  subject of the Tax Claim is a recurring Tax, the aggregate
                  amount of all similar Tax Claims with respect to all
                  subsequent tax periods during the remainder of the Term) shall
                  exceed the Tax Contest Threshold, (iii) if requested by such
                  Tax Indemnitee, such Tax Indemnitee shall have received (at
                  Lessee's expense) from independent tax counsel selected by
                  Lessee and reasonably acceptable to such Tax Indemnitee a
                  written opinion that there is a realistic expectation that
                  such contest will be successful, (iv) Lessee shall have agreed
                  to pay, and shall be paying, on demand and on an After-Tax
                  Basis, all reasonable costs and expenses incurred by such Tax
                  Indemnitee in connection with the contest of such Tax Claim,
                  (v) if the contest is to be conducted in a manner requiring
                  payment of the Tax Claim, Lessee shall have advanced to such
                  Tax Indemnitee, without interest, the amount of the Tax Claim
                  and shall have agreed to indemnify such Tax Indemnitee on an
                  After-Tax Basis for any adverse Tax consequences of such
                  interest-free advance, (vi) Lessee shall have agreed in
                  writing that the Taxes that are the subject of the Tax Claim
                  are Indemnified Taxes, except to the extent that the final
                  determination of such contest demonstrates that such Taxes are
                  Lessor Taxes and (vii) Lessor shall have determined in good
                  faith that the action to be taken will not result in any risk
                  of criminal penalty or any material risk of sale, forfeiture
                  or loss of, or the creation of any Lien (other than a
                  Permitted Lien) on, the Aircraft.

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<PAGE>

            (c)   LESSEE CONTROLLED CONTESTS: For the purposes of this Clause 5,
                  the words "Lessee Controlled Contest" means a contest pursuant
                  to this Clause 5.12 involving only Indemnified Taxes, provided
                  that (i) such contest may be conducted under applicable law in
                  the name of Lessee and participation by a Tax Indemnitee in
                  the contest is not required, (ii) no tax return of a Tax
                  Indemnitee is held open with respect to which such Tax
                  Indemnitee may reasonably be considered to have an actual or
                  potential liability for Taxes that are not Indemnified Taxes,
                  and (iii) no Tax Indemnitee shall then be contesting the same
                  Tax in the same jurisdiction. Lessee shall, at its expense,
                  conduct and control any Lessee Controlled Contest and, in the
                  case of any contest involving a claim for one or more
                  Indemnified Taxes and a claim for one or more Lessor Taxes,
                  conduct and control such contest to the extent that it relates
                  to claims for Indemnified Taxes, but only to the extent that
                  the contest of the claims for Indemnified Taxes may be and are
                  severed from the contest of claims for Lessor Taxes (and
                  Lessor shall, at the request and expense of Lessee, use
                  reasonable efforts in good faith to obtain such severance),
                  provided, however, that in no event shall the Lessee be
                  permitted, or a Tax Indemnitee be required, to take any action
                  pursuant to this Clause 5.12 unless (and only so long as) the
                  conditions described in clause 5.12(b) are satisfied. With
                  respect to any contest conducted by the Lessee, the Lessee
                  shall retain control over such contest but shall consult in
                  good faith with Lessor and shall consider in good faith
                  reasonable requests of Lessor including reasonable requests to
                  participate in such contest.

            (d)   TAX INDEMNITEE CONTROLLED CONTESTS: The affected Tax
                  Indemnitee shall, at the expense of Lessee, conduct and
                  control any contest (other than a Lessee Controlled Contest)
                  of a Tax Claim pursuant to this Clause 5.12, provided,
                  however, that in no event shall the Tax Indemnitee be required
                  to commence or continue any contest pursuant to this Clause
                  5.12 unless (and only so long as) the conditions described in
                  clause 5.12(b) are satisfied. With respect to any contest
                  conducted by the a Tax Indemnitee, the Tax Indemnitee shall
                  have sole control over such contest (including choice of
                  forum) but shall consult in good faith with Lessee and shall
                  consider in good faith reasonable requests of Lessee including
                  reasonable requests to participate in such contest.

            (e)   No Tax Indemnitee shall settle or compromise any Tax Claim or
                  contest proceeding or (except as permitted by Clause 5.12(a))
                  refrain from appealing any adverse determination with respect
                  thereto without the prior written consent of Lessee, provided
                  that a Tax Indemnitee may in its sole discretion
                  unconditionally waive in writing its right to the
                  indemnification provided for in Clause 5.8 with respect to any
                  Tax Claim and refrain from contesting, or continuing the
                  contest of, such claim, in which event:

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<PAGE>

                  (i)   Lessee shall have no liability to such Tax Indemnitee
                        with respect to such Tax Claim (and, if the Indemnified
                        Tax that is the subject of such Tax Claim is a recurring
                        Tax, with respect to any corresponding claim with
                        respect to any other taxable period if and to the extent
                        that such failure to contest causes the contest of such
                        corresponding claim to be precluded), and

                  (ii)  the Tax Indemnitee shall refund to Lessee any amounts
                        theretofore paid or advanced by Lessee with respect to
                        such Indemnified Tax, excluding all contest costs
                        described in Clause 5.12(b)(iv) above.

            (f)   Upon a final determination of a contest pursuant to this
                  Clause 5.12:

                  (i)   if the amount of the indemnity payable by Lessee
                        pursuant to this Clause 5 with respect to the contested
                        Tax Claim exceeds the amount (if any) advanced by Lessee
                        to the Tax Indemnitee pursuant to Clause 5.12(b)(v),
                        Lessee shall pay to the Tax Indemnitee the amount of
                        such excess not later than thirty (30) days after the
                        day on which Lessee receives the Tax Indemnitee's
                        written demand for the indemnity payable by the Lessee
                        after the date of such final determination; or

                  (ii)  if the amount (if any) of the advance made by Lessee to
                        the Tax Indemnitee pursuant to Clause 5.12(b)(v) exceeds
                        the amount of the indemnity payable by Lessee to the Tax
                        Indemnitee pursuant to this Clause 5 with respect to the
                        contested Tax Claim, the Tax Indemnitee shall pay to
                        Lessee the amount of such excess not later than thirty
                        (30) days after the date on which the Lessor receives
                        the Lessee's written demand therefor after the date of
                        such final determination.

      5.13  INDEMNITIES TO BE PAID ON AN AFTER-TAX BASIS/SURVIVAL:

            Any indemnity or other amount payable by Lessee pursuant to Clause
            5.7, 5.8, 5.9 or 5.10 shall be paid on an After-Tax Basis.

            All the obligations and liabilities of Lessee under this Clause 5
            shall survive and remain in full force and effect, notwithstanding
            the expiration or earlier termination or cancellation of this
            Agreement and the return of the Aircraft to Lessor, until all such
            obligations have been fully performed and all such liabilities have
            been paid in full.

      5.14  ABSOLUTE OBLIGATIONS:

            This Agreement is a net lease. Lessee's payment and other
            obligations under this Agreement are absolute and unconditional
            irrespective of any contingency whatsoever including (but not
            limited to):

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            (a)   any right of setoff, counterclaim, recoupment, defense or
                  other right which either party to this Agreement may have
                  against the other, or which Lessee may have against the
                  Manufacturer or any other Person for any reason whatsoever;

            (b)   any unavailability of the Aircraft for any reason (other than
                  Lessor's failure to properly tender delivery of the Aircraft
                  in accordance with this Agreement), including, but not limited
                  to, a requisition of the Aircraft or any prohibition or
                  interruption of or interference with or other restriction
                  against Lessee's use, operation or possession of the Aircraft;

            (c)   any lack or invalidity of title or any other defect in title,
                  airworthiness, merchantability, fitness for any purpose,
                  condition, design, or operation of any kind or nature of the
                  Aircraft for any particular use or trade, or for registration
                  or documentation under the laws of any relevant jurisdiction,
                  or any Event of Loss in respect of or any damage to the
                  Aircraft occurring after Delivery;

            (d)   any insolvency, bankruptcy, reorganization, arrangement,
                  readjustment of debt, dissolution, liquidation or similar
                  proceedings by or against Lessor or Lessee;

            (e)   any invalidity or unenforceability or lack of due
                  authorization of, or other defect in, this Agreement or any
                  other Transaction Document; and

            (f)   any other cause which but for this provision would or might
                  otherwise have the effect of terminating or in any way
                  affecting any obligation of Lessee under this Agreement.

            Nothing in this Clause 5.14 will be construed so as to limit
            Lessee's right to institute separate legal proceedings or otherwise
            independently pursue any claim against Lessor or any other Person in
            the event of a breach of Clause 7.1 or to otherwise limit Lessee's
            rights and remedies to pursue in a court of law any claim it may
            have against Lessor or any other Person.

      5.15  SECURITY:

            (a)   To the fullest extent permitted by law and by way of
                  continuing security, Lessee grants a security interest in the
                  Security Deposit and all rights of Lessee to payment thereof,
                  the debt represented thereby and/or any and all interest of
                  Lessee therein to Lessor by way of first priority possessory
                  security interest as security for Lessee's obligations under
                  this Agreement and the Other Transaction Documents (the
                  "Secured Liabilities"). Except as expressly permitted or
                  required under this Agreement, including without limitation as
                  set forth in Clauses 4.4 and 7.2 hereof, Lessee will not be
                  entitled to repayment of the Security Deposit. Lessee will not
                  assign, transfer or otherwise dispose of all or part of its
                  rights in the

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<PAGE>

                  Security Deposit and Lessee agrees that it will enter into any
                  additional documents and instruments necessary or reasonably
                  requested by Lessor to evidence, create or perfect Lessor's
                  Security Interest in and to the Security Deposit;

            (b)   If Lessee fails to comply with any provision of this Agreement
                  or any Event of Default has occurred and is continuing, Lessor
                  may immediately or at any time thereafter, without prior
                  notice to Lessee:

                  (i)   setoff all or any part of the Secured Liabilities
                        against the liabilities of Lessor in respect of the
                        Security Deposit; and/or

                  (ii)  apply or appropriate the Security Deposit in or towards
                        the payment or discharge of the Secured Liabilities in
                        such order as Lessor sees fit; and/or

                  (iii) exercise any other remedy or right available under
                        applicable law.

            (c)   If Lessor has exercised the setoff described in subclause (b)
                  above, Lessee shall, following a demand in writing from
                  Lessor, promptly restore the Security Deposit to the level at
                  which they stood immediately prior to such setoff.

      5.16  CURRENCY INDEMNITY:

            (a)   Except for Losses suffered or incurred by Lessor and in
                  respect of which Lessee has an obligation to indemnify Lessor
                  hereunder, which shall be payable by Lessee to Lessor in the
                  currency and in the amount in which such Loss is suffered or
                  incurred, all amounts payable to Lessor under this Agreement
                  shall be payable in Dollars in New York and payment in Dollars
                  in New York is of the essence.

            (b)   If Lessor receives an amount in respect of Lessee's liability
                  under this Agreement or if such liability is converted into a
                  claim, proof, judgment or order in a currency other than the
                  currency (the "contractual currency") in which the amount is
                  expressed to be payable under this Agreement:

                  (i)   Lessee will indemnify Lessor, on an After-Tax Basis, as
                        an independent obligation against any loss arising out
                        of or as a result of such conversion;

                  (ii)  if the amount received by Lessor, when converted into
                        the contractual currency (at the market rate at which
                        Lessor is able on the relevant date to purchase the
                        contractual currency in London or at its option New York
                        with that other currency), is less than the amount owed
                        in the contractual currency, Lessee will, forthwith on

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                        demand, pay to Lessor an amount in the contractual
                        currency equal to the deficit; and

                  (iii) Lessee will pay to Lessor on demand any exchange costs
                        and Taxes (other than Lessor Taxes) payable in
                        connection with the conversion;

            (c)   Lessee waives any right it may have in any jurisdiction to pay
                  any amount under this Agreement in a currency other than that
                  in which it is expressed to be payable.

      5.17  SETOFF:

            Lessor may set off any matured obligation owed by Lessee under this
            Agreement or the Other Agreements against any obligation owed by
            Lessor to Lessee, regardless of the place of payment or currency. If
            the obligations are in different currencies, Lessor may convert
            either obligation at the market rate of exchange available in London
            or at its option New York for the purpose of the setoff.

6.    MANUFACTURER'S WARRANTIES

            (a)   So long as no Event of Default has occurred which is
                  continuing, with effect from Delivery, Lessor assigns to
                  Lessee, and authorizes Lessee to exercise such rights as
                  Lessor may have under any warranty with respect to the
                  Aircraft, any Engine or any Part made by any manufacturer,
                  vendor, sub-contractor or supplier (including compensation for
                  loss of use of the Aircraft) to the extent that the same may
                  be assigned or otherwise made available to Lessee. In
                  furtherance of the foregoing, Lessor shall take such actions,
                  at Lessee's cost and expense, as Lessee may reasonably request
                  to make such warranties available to Lessee. Manufacturer
                  shall deliver its consent to the assignment of any such
                  warranties upon Delivery of the Aircraft. Lessee will give
                  Lessor prompt written notice of any warranty claim in excess
                  of the Warranty Claim Notification Threshold which is settled
                  with Lessee on the basis of a cash payment other than
                  reimbursements for work performed directly by Lessee;

            (b)   If any Default has occurred and is continuing, Lessor may:

                  (i)   retain for its own account any such proceeds previously
                        paid to Lessor which would have been remitted to Lessee
                        under this Clause 6 in the absence of such Default; and

                  (ii)  cause any proceeds of any pending claims to be paid to
                        Lessor, rather than Lessee;

                  until Lessee shall have cured any such Default whereupon
                  Lessor shall pay any such proceeds which have not otherwise
                  been applied to Lessee.

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<PAGE>

            (c)   On the Final Expiry Date, all rights held by Lessee derived
                  from any warranties referenced in this Clause 6 (other than in
                  respect of claims pending or discovered (provided the claim is
                  filed promptly after the Final Expiry Date) as of the Final
                  Expiry Date) shall immediately revert to Lessor, without any
                  further act or deed by any Person; provided, however, Lessee
                  shall nonetheless take such actions, at Lessee's cost and
                  expense, as Lessor may reasonably request to ensure that all
                  such rights are made available to Lessor; and

            (d)   Notwithstanding anything to the contrary set forth above in
                  this Clause 6 or elsewhere in this Agreement, nothing in this
                  Clause 6 shall be deemed to impose any liability or obligation
                  on Lessor to transfer, assign or otherwise make available to
                  Lessee any rights with respect to any warranties other than
                  such rights, if any, as may have been transferred, assigned or
                  otherwise made available to Lessor.

7.    LESSOR'S COVENANTS

      7.1   QUIET ENJOYMENT:

            Provided no Event of Default has occurred and is continuing, neither
            Lessor nor any Person claiming through or under Lessor (excluding a
            Person claiming through Lessor with respect to any Losses, Taxes or
            other liability for which Lessee is obligated to indemnify Lessor
            under this Agreement or for which Lessee is otherwise responsible
            under this Agreement) will disturb the quiet use, possession and
            enjoyment of the Aircraft by Lessee in accordance with the terms of
            this Agreement; but the proper exercise by Lessor of its rights
            under or in connection with this Agreement will not constitute such
            a disturbance. The foregoing covenant is given by Lessor in lieu of
            the rights of Lessee arising under, and Lessee hereby waives and
            disclaims any and all rights arising under, Section 2A-211 of the
            UCC. Lessee agrees that its only right with respect to a default by
            Lessor under this Agreement, including a breach of the foregoing
            covenant, is to make a claim against Lessor for actual damages
            resulting directly therefrom and in any event subject to Clause 16.3
            hereof.

      7.2   LESSOR OBLIGATIONS FOLLOWING FINAL EXPIRY DATE:

            Within thirty (30) days following the Final Expiry Date, or such
            later time as Lessee has paid to Lessor all amounts which may then
            be due and payable under this Agreement and/or the Other Agreements,
            so long as no Default or Event of Default has occurred and is
            continuing, Lessor will pay to Lessee an amount (the "Relevant Cash
            Amount") equal to the amount (if any) of the Security Deposit then
            held and not applied by Lessor pursuant to Clauses 5.15 or 13.2,
            together with Interest (as defined below). Should a Default or Event
            of Default have occurred and be then continuing, Lessor shall retain
            the Relevant Cash Amount, may apply the same in full or partial
            satisfaction of any such Default or Event of

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            Default and shall return such Relevant Cash Amount to Lessee less
            any amount so applied promptly after such Default or Event of
            Default ceases to exist.

            For the purposes of this Clause 7.2, "Interest" means interest at
            the rate of six-month Dollar LIBID on an amount equal to the
            Relevant Cash Amount for a period equal to the period during which
            such amount was held by Lessor (net of any and all Taxes).

      7.3   UNAPPLIED SUPPLEMENTAL RENT:

            So long as no Default or Event of Default has then occurred and is
            continuing, on the Final Expiry Date Lessor shall pay to Lessee an
            amount equal to the Unused Supplemental Rent minus the Landing Gear
            Supplemental Rent. Should a Default or Event of Default have
            occurred and be then continuing, Lessor shall retain the amounts
            otherwise payable to Lessee under this Clause 7.3 until such time as
            such Default or Event of Default shall have ceased to exist
            whereupon it shall promptly pay to Lessee such amounts less any
            amount thereof applied in full or partial cure of such Default or
            Event of Default.

      7.4   MAINTENANCE CONTRIBUTIONS:

            (a)   Provided no Default has occurred and is continuing, Lessor
                  will pay (as a separate and independent obligation and not as
                  a return of Supplemental Rent) the following amounts to the
                  relevant Agreed Maintenance Performer (or to Lessee, shall
                  Lessor have received evidence of payment of the relevant
                  Agreed Maintenance Performer), up to the amount owing to it
                  (with any remaining balance to be paid to Lessee), by way of
                  contribution to the cost of maintenance of the Aircraft
                  performed by any Agreed Maintenance Performer:

                  (i)   AIRFRAME: With respect to the Airframe, the completion,
                        in accordance with this Agreement, of the Airframe
                        6C/24,000 Hour Block Structural Check, an amount equal
                        to the aggregate amount of the Airframe 6C/24,000 Hour
                        Block Supplemental Rent actually paid by Lessee at the
                        date such work starts less the aggregate amount
                        previously paid by Lessor under this sub-clause;

                  (ii)  ENGINE LIFE-LIMITED PARTS: With respect to Life-Limited
                        Parts within any Engine, the replacement, in accordance
                        with this Agreement, of those Parts, the lesser of (x)
                        the amount of that invoice and (y) an amount equal to
                        the aggregate amount of the Engine LLP Supplemental Rent
                        actually paid in respect of that Engine paid by Lessee
                        at the date such work starts less the aggregate amount
                        previously paid in respect of that Engine by Lessor
                        under this sub-clause;

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<PAGE>

                  (iii) ENGINE PERFORMANCE RESTORATION: With respect to any
                        Engine, the performance, in accordance with this
                        Agreement, of Engine Performance Restoration in respect
                        of that Engine, an amount equal to the aggregate amount
                        of the Engine Supplemental Rent actually paid by Lessee
                        in respect of that Engine at the date such work starts
                        less the aggregate amount previously paid in respect of
                        that Engine by Lessor under this sub-clause;

                  (iv)  APU PERFORMANCE RESTORATION: With respect to the APU,
                        the performance, in accordance with this Agreement, of
                        all APU Performance Restoration shop visits, an amount
                        equal to the aggregate amount of the APU Supplemental
                        Rent actually paid by Lessee at the date such work
                        starts less the aggregate amount previously paid by
                        Lessor under this sub-clause; and

                  (v)   LANDING GEAR: With respect to the Landing Gear, the
                        performance in accordance with this Agreement, of all
                        work on the Landing Gear in the nature of overhaul and
                        requiring removal and disassembly, an amount equal to
                        the aggregate amount of the Landing Gear Supplemental
                        Rent actually paid by Lessee at the date such work
                        starts less the aggregate amount previously paid by
                        Lessor under this sub-clause.

      7.5   CLAIMS FOR REIMBURSEMENT:

            Lessee shall promptly submit to Lessor invoices with customary
            detail for labor and materials for all maintenance for which
            reimbursement is sought under Clause 7.4. Lessor shall, subject as
            provided below, pay to Lessee all amounts reimbursable hereunder
            within thirty (30) days of actual receipt of (i) an invoice for the
            relevant work, (ii) evidence of payment thereof and (iii) the agreed
            workscope maintenance plans, the final report and such other
            supporting documentation as typically provided by the Agreed
            Maintenance Performer, in each case reasonably satisfactory to
            Lessor, evidencing the performance of such maintenance.
            Notwithstanding the above Lessor and Lessee may agree a mutually
            satisfactory mechanism for the acceptance by Lessor of preliminary
            invoices. If within ten (10) days following the expiry of such
            thirty (30) day period referred to above, Lessor has not provided a
            detailed and reasoned explanation to Lessee as to why it is not
            satisfied with such invoices and supporting documentation, Lessor
            shall be deemed to be so satisfied for the purposes of this Clause
            7.5; provided however that no reimbursement shall be made in respect
            of (i) components unless they are scheduled to be overhauled at that
            check and their lives are fully restored (and if this is not the
            case, a pro-rating payment adjustment will be made in respect of
            overhauls or replacements that are made before the relevant
            component scheduled life limit); (ii) any maintenance resulting from
            design faults or damage covered by warranty or caused by accidental
            damage, foreign objects, faulty maintenance, operational mishandling
            (unless the same shall result in a full

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            restoration) or line related quick engine change (QEC) kit
            maintenance (unless such maintenance is carried out at a different
            facility to the relevant Airframe check) or line replacement unit
            component maintenance; (iii) any cost items which are the costs of
            removal, reinstallation, transportation or are exchange, handling or
            similar costs or charges; (iv) any cost which is in excess of the
            relevant manufacturer's list price for the relevant parts or
            maintenance work; or (v) any maintenance, overhaul, renewal,
            replacement or repair which may be reimbursable out of any insurance
            claim (assuming, for these purposes, that no deductibles applied to
            the relevant insurances).

            Any overhaul, performance restoration or other work performed by
            Lessee or by any Affiliate of Lessee shall be invoiced at Lessee's
            or such Affiliate's standard rate in respect of performing such work
            (which shall be no higher than the standard rate then prevailing in
            the United States aviation industry in respect of performing such
            work).

8.    LESSEE'S COVENANTS

      8.1   DURATION:

            The undertakings in this Clause and in Clause 12 will:

            (a)   except as otherwise stated, be performed at the expense of
                  Lessee; and

            (b)   remain in force until the Final Expiry Date in accordance with
                  this Agreement and thereafter to the extent of any accrued
                  rights of Lessor in relation to those undertakings.

      8.2   INFORMATION:

            Lessee will:

            (a)   notify Lessor promptly of the occurrence of any Event of Loss
                  and of any Default or any other event which reasonably may be
                  expected to have a materially adverse effect on Lessee's
                  ability to perform any of its obligations under this
                  Agreement;

            (b)   furnish to Lessor:

                  (i)   as soon as available but not in any event later than 90
                        days after the last day of each fiscal quarter of
                        Lessee, the consolidated financial statements of Lessee
                        as soon as they are available (and comprising a balance
                        sheet, a profit and loss statement and a statement of
                        cash flows) prepared for the most recent previous
                        financial quarter certified by a duly authorized
                        financial officer of Lessee as being true and correct,
                        each prepared in accordance with GAAP;

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                  (ii)  as soon as available but in no event later than 120 days
                        after the last day of each financial year of Lessee, its
                        audited consolidated balance sheet as of such day and
                        its audited consolidated profit and loss statement and
                        audited consolidated statement of cash flows for the
                        year ending on such day (each prepared in accordance
                        with GAAP); and

                  (iii) on request from time to time, such other information
                        regarding Lessee as Lessor may reasonably request;

            (c)   without duplication of the information contained in the
                  monthly reports furnished pursuant to Clause 8.2(e) below,
                  promptly furnish to Lessor all information Lessor from time to
                  time reasonably requests regarding the Aircraft, any Engine or
                  any Part, its use, location and condition including, without
                  limitation, the hours available on the Aircraft and any Engine
                  until the next scheduled Major Check, or Engine overhaul or
                  shop visit, as the case may be;

            (d)   on request by Lessor from time to time, furnish to Lessor
                  evidence reasonably satisfactory to Lessor that all Taxes and
                  charges incurred by Lessee with respect to the Aircraft,
                  including without limitation all payments due to the relevant
                  air traffic control authorities, have been paid and discharged
                  in full;

            (e)   within ten days following the end of each calendar month
                  during the Term, provide Lessor with a monthly report on the
                  Aircraft and each Engine substantially in the form of Schedule
                  6 or in such other form as Lessor may reasonably request from
                  time to time with respect to such calendar month (or portion
                  thereof falling within the Term);

            (f)   without duplication of information or reporting provided under
                  paragraph (e) above, give Lessor not less than 30 days' prior
                  written notice as to the time and location of all Major
                  Checks;

            (g)   without duplication of information or reporting provided under
                  paragraph (e) above, notify Lessor, promptly, of the removal
                  of any Engine for the purpose of Engine Performance
                  Restoration; and

            (h)   promptly notify Lessor of:

                  (i)   any loss, theft, damage or destruction to the Aircraft,
                        any Engine or any Part, or any modification to the
                        Aircraft, if in any such case the potential cost would
                        reasonably be expected to exceed the Damage Notification
                        Threshold; and

                  (ii)  any claim or other occurrence likely to give rise to a
                        claim under the Insurances in excess of the Damage
                        Notification Threshold and

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                        provide, from time to time upon request by Lessor, the
                        status of any negotiations with the insurance brokers
                        over any such claim.

      8.3   LAWFUL AND SAFE OPERATION:

            Lessee will operate the Aircraft only for commercial purposes from
            the Delivery Date until the date on which the Aircraft is returned
            to Lessor pursuant to this Agreement; provided, that Lessee must
            always:

            (a)   comply with the law for the time being in force in any country
                  or jurisdiction which may for the time being be applicable to
                  the Aircraft or, so far as concerns the use and operation of
                  the Aircraft, an owner or operator thereof, and take all
                  reasonable steps to ensure that the Aircraft is not used for
                  any illegal purpose;

            (b)   not use the Aircraft in any manner contrary to any
                  recommendation of the manufacturers of the Aircraft, any
                  Engine or any Part or any recommendation or regulation of the
                  Air Authority or for any purpose for which the Aircraft is not
                  designed or reasonably suitable;

            (c)   ensure that the crew and engineers employed by Lessee have the
                  qualifications and hold the licenses required by the Air
                  Authority and applicable law;

            (d)   use the Aircraft solely in commercial or other operations
                  primarily in passenger service and in passenger configuration
                  for which Lessee is duly authorized by the Air Authority and
                  applicable law;

            (e)   not use the Aircraft for the carriage of any goods, materials,
                  livestock or items of cargo which involves a change of
                  passenger configuration (or is inconsistent with passenger
                  service and passenger configuration) or which could reasonably
                  be expected to cause damage to the Aircraft or which would not
                  be adequately covered by the Insurances, or any item or
                  substance whose possession or carriage is illegal under any
                  applicable law. Lessee will comply with any carriage
                  regulations or restrictions from time to time issued by IATA;

            (f)   not use the Aircraft for purposes of training, qualifying or
                  re-confirming the status of cockpit personnel, except for the
                  benefit of Lessee's cockpit personnel, and then only if the
                  use of the Aircraft for such purpose is not disproportionate
                  to the use of other aircraft of the same type operated by
                  Lessee for such purpose;

            (g)   not cause or permit the Aircraft to proceed to, or remain at,
                  any location in an Excluded Country; provided, however, that
                  no Default shall occur, if, due to climatic or atmospheric
                  conditions, acts of God or to preserve the Aircraft or any
                  Engine or Part or to preserve the life or safety of

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                  passengers and/or crew, the Aircraft proceeds to an Excluded
                  Country and the Lessee causes the Aircraft to be removed from
                  such Excluded Country as soon as practicable after such
                  conditions shall have ceased to exist;

            (h)   obtain and maintain in full force all certificates, licenses,
                  permits and authorizations for the time being required for the
                  use and operation of the Aircraft, and for the making of
                  payments required by, and the compliance by Lessee with, its
                  other obligations under this Agreement;

            (i)   not use, operate, or locate the Aircraft or suffer or permit
                  the Aircraft to be used, operated or located (x) in any manner
                  not covered by the Insurances, or (y)(A) in any recognized or
                  threatened area of hostilities (unless covered by war risk and
                  allied perils insurance pursuant to Schedule 4) or (B) in any
                  area excluded from coverage by the Insurances, or (z) in any
                  manner which would prejudice the interests of the Indemnitees
                  in the Insurances, the Aircraft, any Engine or any Part;

            (j)   not operate, maintain, insure or deal with the Aircraft or any
                  Engine or Part in a manner which discriminates against the
                  Aircraft or such Engine or Part, when compared with the manner
                  in which Lessee operates, maintains, insures or deals with
                  similar aircraft, engines or parts in Lessee's fleet;

            (k)   promptly pay or cause to be paid within such period as may be
                  agreed between Lessee and the relevant Government Entity all
                  license, registration, navigation and airport fees and charges
                  assessed and demanded by any Governmental Authority relating
                  to the Aircraft which if not paid within such period would
                  give rise to a Lien on the Aircraft other than a Permitted
                  Lien; and

            (l)   In the event that the Aircraft is detained or arrested in
                  connection with outstanding charges incurred during the Lease
                  Term in connection with (i) the furnishing, issue or provision
                  of information, directions and other facilities in connection
                  with the navigation or movement of aircraft (including the
                  control or movement of vehicles in any part of an airport used
                  for the movement of aircraft), or (ii) the landing, parking or
                  taking off of aircraft at airports or for the use of, or
                  services provided at, airports, then, without prejudice to
                  Lessor's rights under Clause 13, Lessee agrees that it shall
                  promptly discharge such charges and procure that such
                  detention or arrest is lifted. Neither Lessor nor any
                  Financing Party shall have any liability whatsoever as a
                  result of any detention or arrest of the Aircraft in respect
                  of any such charges or in relation to such detention or arrest
                  or the lifting thereof.

      8.4   OUTGOINGS:

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            Lessee will, except as otherwise expressly set forth herein,
            promptly pay on an After-Tax Basis:

            (a)   all license, registration, filing, recording and landing fees
                  and all other amounts of any nature imposed by any Government
                  Entity with respect to the Aircraft, including without
                  limitation, ownership, delivery, leasing, possession, use,
                  operation, return, sale or other disposition of the Aircraft
                  (other than any such fees or amounts which are attributable to
                  a sale or other disposition of any right, title or interest in
                  or to the Aircraft or this Lease and other Transaction
                  Documents by Lessor, Owner or Beneficiary except to the extent
                  such sale or other disposition arise as a result of and during
                  the continuance of an Event of Default or is required by the
                  terms of the Transaction Documents); and

            (b)   all rent, fees, charges and other amounts in respect of any
                  premises where the Aircraft or any Part thereof is located
                  from time to time;

            (in each case other than Taxes because Lessee's indemnification
            obligations with respect to Taxes are set forth in Clauses 5.7, 5.8,
            5.9, 5.10 and 5.13) except to the extent that such payment is being
            contested in good faith by appropriate proceedings, in respect of
            which adequate resources have been provided by Lessee and nonpayment
            of which does not give rise to any material likelihood of the
            Aircraft or any interest therein being sold, forfeited or otherwise
            lost or of criminal liability on the part of Owner, Lessor or any
            Financing Party.

      8.5   SUB-LEASING:

            (a)   Except as otherwise set forth in this Clause 8.5, Lessee will
                  not, without the prior written consent of Lessor, sublease or
                  otherwise part with possession of the Aircraft, the Engines or
                  any Part except that Lessee may part with possession (i) with
                  respect to the Aircraft, the Engines or any Part to the
                  relevant manufacturers for testing or similar purposes or to
                  an Agreed Maintenance Performer for testing, service, repair,
                  maintenance or overhaul work, or alterations, modifications or
                  additions to the extent required or permitted by this
                  Agreement; and (ii) with respect to an Engine or Part, as
                  expressly permitted by this Agreement;

            (b)   Notwithstanding Clause 8.5(a), Lessee shall be permitted to
                  wet lease the Aircraft for a term (including renewals) not to
                  exceed six months, provided the Aircraft (i) shall be operated
                  solely by regular employees of Lessee (or by personnel
                  contracted by Lessee in the same manner as with respect to its
                  other flight operations) possessing all current certificates
                  and licenses that are required by applicable Regulations,
                  including by the Country of Registration, and shall remain in
                  the operational control and possession of Lessee, (ii) shall
                  be subject to insurance coverage as provided for in this
                  Agreement, (iii) shall be used and operated in

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                  accordance with this Agreement and shall be maintained or
                  caused to be maintained by Lessee in accordance with the
                  Approved Maintenance Program and Lessee's normal maintenance
                  practices and (iv) shall not be subject to any change in its
                  Habitual Base or Country of Registration.

      8.6   INSPECTION:

            (a)   Lessor and any Person designated by Lessor may at reasonable
                  times and on reasonable written notice, at their own expense,
                  visit, inspect and survey the Aircraft, any Engine, any Part
                  or the Aircraft Documents (or any portion thereof); provided,
                  however, that (i) any inspection of the Aircraft will not
                  interfere with the maintenance or operation of the Aircraft,
                  or otherwise disrupt Lessee's normal business operations, (ii)
                  any inspection of the Aircraft Documents shall occur only
                  during normal business hours, (iii) any inspection of the
                  Aircraft shall occur only during regularly scheduled
                  maintenance (Lessee to notify Lessor, upon request, of the
                  next scheduled maintenance) and (iv) Lessor shall not perform
                  an inspection more than once in any calendar year (except
                  during the last year of the Lease Term or if a Default or
                  Event of Default shall have occurred and be continuing, in
                  which case the frequency of such inspection rights shall be
                  reasonable but otherwise unlimited). Lessee shall comply with
                  the reasonable requests of Lessor or its designee during the
                  course of such inspection including (x) any request to travel
                  on the flight deck as an observer, subject to any applicable
                  Regulations and insurances, and (y) any requests to conduct
                  visual, walk-around inspections of the Aircraft during
                  regularly scheduled maintenance for the Aircraft and requests
                  to go on board the Aircraft and/or to open any panels, bays,
                  etc. during any such walk-around inspection, provided no such
                  request shall materially affect the date of completion of such
                  maintenance and return of the Aircraft to revenue service;

            (b)   Lessee will pay to Lessor on demand all reasonable
                  out-of-pocket expenses incurred by Lessor in connection with
                  any such visit, inspection or survey to the extent that such
                  visit, inspection or survey is made to verify the correction
                  of defects identified by Lessor during a prior visit,
                  inspection or survey; and

            (c)   Lessor will have no duty or liability to make, or arising out
                  of any such visit, inspection or survey.

      8.7   TITLE:

            Lessee will:

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            (a)   not do or knowingly permit to be done or omit or knowingly
                  permit to be omitted to be done any act or thing which might
                  reasonably be expected to jeopardize the title of Owner in and
                  to the Aircraft or any Engine;

            (b)   on all occasions when the ownership of the Aircraft, any
                  Engine or any Part is relevant, make clear to third parties
                  that title is held by Owner;

            (c)   not at any time (i) represent or hold out Owner, Lessor,
                  Beneficiary or the Financing Parties as carrying goods or
                  passengers on the Aircraft or as being in any way connected or
                  associated with any operation or carriage (whether for hire or
                  reward or gratuitously) which may be undertaken by Lessee; or
                  (ii) pledge the credit of Owner, Lessor, Beneficiary or the
                  Financing Parties;

            (d)   ensure that there is always affixed, and not removed or in any
                  way obscured, a fireproof plate (having dimensions of not less
                  than 10 cm. x 7 cm.) in a reasonably prominent position on
                  Aircraft and on each Engine stating:

                  "THIS [AIRCRAFT/ENGINE] IS OWNED BY WELLS FARGO BANK
                  NORTHWEST, N.A., AS TRUSTEE, AND IS LEASED TO Compania
                  Panamena de Aviacion, S.A."

            (e)   not create or permit to exist any Security Interest upon the
                  Aircraft, any Engine or any Part;

            (f)   not do or permit to be done anything outside the scope of
                  normal airline operations and procedures which may reasonably
                  be expected to cause the Aircraft, any Engine or any Part to
                  become subject to penalty, forfeiture, impounding, detention,
                  damage or destruction and without prejudice to the foregoing,
                  if any such penalty, forfeiture, impounding, detention, damage
                  or destruction occurs, give Lessor notice thereof as promptly
                  as reasonably practicable and promptly commence and diligently
                  prosecute all steps necessary to procure the immediate release
                  of the Aircraft, any Engine or Part, as the case may be;

            (g)   not abandon the Aircraft, any Engine or any Part;

            (h)   pay and discharge or cause to be paid and discharged when due
                  and payable or make adequate provision by way of security or
                  otherwise for all debts, damages, claims and liabilities
                  before they give rise to a Security Interest over or affecting
                  the Aircraft, any Engine or any Part except to the extent the
                  same are being contested in good faith by appropriate
                  proceedings during the pendency of such proceedings and
                  adequate resources therefor have been provided in accordance
                  with GAAP; and

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            (i)   not attempt, or hold itself out as having any power, to sell,
                  lease (except as permitted by this Agreement) or otherwise
                  dispose of the Aircraft, any Engine or any Part.

      8.8   GENERAL:

            Lessee will:

            (a)   maintain its business as a commercial airline, will preserve
                  its corporate existence (other than as permitted in Clause
                  8.8(c)) and will maintain such of its rights, privileges,
                  licenses and franchises as are required to perform its
                  obligations under this Agreement;

            (b)   not change its "location" (as determined with reference to and
                  for purposes of Section 9-307 of the UCC) in such manner as
                  would, pursuant to Section 9-307 of the UCC, change the
                  location for filing financing statements or renewals thereof
                  from the District of Columbia, except upon 10 days prior
                  written notice thereof to Lessor;

            (c)   not consolidate or merge into or with any other corporation or
                  other Person, and not convey, transfer, lease or otherwise
                  dispose of all or substantially all of its property and other
                  assets to, or acquire all or substantially all of the property
                  or other assets or capital stock of (if such acquisition is
                  analogous in either purpose or effect to a consolidation or
                  merger), any corporation or other Person without the prior
                  written consent of the Lessor, such consent not to be
                  unreasonably withheld, unless:

                  (i)   the Person formed by such consolidation or into which
                        Lessee is merged or the Person that acquires by
                        conveyance, transfer or lease all or substantially all
                        of the assets of Lessee (the "Lessee Successor"):

                        (a)   has a tangible net worth (determined in accordance
                              with GAAP) equal to or greater than that of Lessee
                              immediately prior to such merger or consolidation;

                        (b)   shall execute and deliver to Lessor, Owner and
                              Beneficiary an agreement in a form reasonably
                              satisfactory to such Persons containing an
                              assumption by such Lessee Successor of the due and
                              punctual performance and observance of each
                              covenant and condition to be performed or observed
                              by Lessee under each of the Transaction Documents
                              to which Lessee is a party, whether actual or
                              contingent or relating to the period before or
                              after the date of such assumption; and

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                        (c)   the Copa Holdings Guarantee shall continue to be
                              applicable and enforceable in accordance with its
                              terms;

                  (ii)  immediately after giving effect to such transaction, no
                        Default or Event of Default shall have occurred and be
                        continuing;

                  (iii) Lessee shall have delivered to Lessor, Owner and
                        Beneficiary (x) a certificate of an officer to the
                        effect that such consolidation, merger, conveyance,
                        transfer or lease and the assumption agreement described
                        in clause (i) above comply with this Clause 8.8(c) and
                        that all conditions precedent herein provided for
                        relating to such transaction have been complied with and
                        that such assumption agreement has been duly authorized,
                        executed and delivered by the Lessee Successor,
                        constitutes its legal, valid and binding obligation and
                        is enforceable against such Lessee Successor in
                        accordance with its terms, except as the same may be
                        limited by applicable bankruptcy, insolvency,
                        reorganization, moratorium or similar laws affecting the
                        rights of creditors generally and by principles of
                        equity, and (y) an opinion of counsel in form and
                        substance reasonable satisfactory to Lessor and
                        Beneficiary; and

                  (iv)  Such filings and recordings shall have been made and
                        Lessee shall have delivered to Lessor such other
                        opinions and documents, in each case as either of them
                        shall reasonably request.

                  Upon any consolidation or merger, or any conveyance, transfer
                  or lease of all or substantially all of the assets of Lessee
                  in accordance with this Clause 8.8(c), the Lessee Successor
                  shall succeed to, be substituted for, and may exercise every
                  right and power of, and shall assume every obligation and
                  liability of, Lessee under this Lease with the same effect as
                  if the Lessee Successor had been named as Lessee herein. No
                  such conveyance, transfer or lease of all or substantially all
                  of the assets of Lessee shall have the effect of releasing
                  Lessee or any Lessee Successor which shall theretofore have
                  become such in the manner prescribed in this Clause 8.8(c)
                  from any liability under the Transaction Documents. Nothing
                  contained herein shall permit any lease, sublease or other
                  arrangement for the use, operation or possession of the
                  Aircraft except in compliance with the applicable provisions
                  of this Lease.

            (d)   the obligation of Lessee to pay in U.S. Dollars outside The
                  Republic of Panama is of the essence to Lessor. If for any
                  reason any exchange control or other legal prohibition or
                  restriction shall be imposed by The Republic of Panama with
                  respect to the payment in U.S. Dollars outside The Republic of
                  Panama, Lessee shall forthwith obtain any permit,
                  authorization, waiver or exemption as may be necessary to
                  permit the free

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                  transfer of such U.S. Dollars to designated places outside The
                  Republic of Panama or obtain all necessary waivers and
                  exemptions therefrom, and if Lessee shall for any reason,
                  because of legal restrictions or otherwise, be unable to
                  obtain such permit, authorization, waiver or exemption, it
                  shall forthwith make all necessary and satisfactory
                  arrangements with reputable banking or other financing
                  institutions to provide satisfactory assurance to Lessor that
                  all of Lessee's obligations hereunder will be satisfied as
                  they arise in the manner contemplated by this Lease.

      8.9   NON-DISCRIMINATION:

            Without limiting any other provision of this Agreement, Lessee will
            cause the Aircraft and the Engines to be maintained and used, in
            substantially the same manner and with substantially the same care
            as used by or on behalf of Lessee with respect to similar aircraft
            and engines of like make, model and vintage operated by Lessee.
            Lessee also agrees that it will not, nor will it permit anyone to,
            discriminate in a manner in any way adverse to the interests of
            Lessor, Owner or any Financing Party in the Aircraft (as compared to
            other aircraft of the same type operated by or on behalf of Lessee)
            with respect to its use, operation or maintenance, modification or
            alteration during the Lease Term other than the withdrawal of the
            Aircraft from use and operation as is necessary to prepare the
            Aircraft for return to Lessor upon such expiration, cancellation or
            termination.

      8.10  RECORDS:

            Lessee will:

            (a)   procure that accurate, complete and current records of all
                  flights made by, and all maintenance carried out on, the
                  Aircraft (including in relation to each Engine and Part
                  subsequently installed, before the installation) are kept in
                  English and in such manner as the Air Authority may from time
                  to time require (including, but not limited to the
                  requirements of FAR 91.417, FAR 121.380 and the requirements
                  of the Approved Maintenance Program). The maintenance records
                  will form part of the Aircraft Documents;

            (b)   procure access (in house or through third parties) to a
                  revision service in respect of, and will maintain with
                  appropriate revisions in English and in accordance with FAR
                  91.417 and FAR 121.380, all technical publications required by
                  applicable laws and sound practice of major international air
                  transport operators in respect of the Aircraft; and

            (c)   retain the Aircraft Documents and other materials at Lessee's
                  principal place of business, and subject to applicable law,
                  regulation and legal process not permit any other person to
                  have possession of or control over the same without Lessor's
                  prior written consent, except for an Approved

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                  Maintenance Provider while completing maintenance, testing,
                  repair, modification or other services in respect of the
                  Aircraft or any Engine or Part.

      8.11  PROTECTION:

            Lessee will:

            (a)   take all actions reasonably requested by Lessor that are
                  within Lessee's control to keep the Aircraft registered with
                  the Air Authority in the name of Owner;

            (b)   make any and all filings required to be made with the Air
                  Authority registry that are within its control and take all
                  other actions within its control that are requested by Lessor
                  and necessary or advisable to reflect on the Air Authority
                  registry any change in the ownership of the Aircraft, or in
                  the interests of Lessor, Owner or the Financing Parties in
                  this Agreement or the Aircraft, any modification to the
                  Aircraft (such as the permanent replacement of any Engine or
                  Part in accordance with this Agreement) or as a result of any
                  change in applicable law. Lessor will bear any costs incurred
                  as a consequence of a transfer by Lessor, Owner or the
                  Financing Parties of the interests of Lessor, Owner or the
                  Financing Parties in this Agreement or the Aircraft or a
                  change in the identity of Lessor, Owner or the Financing
                  Parties (in each case, unrelated to the replacement of any
                  Engine or Part by Lessee or a Default), and Lessee will bear
                  any other costs incurred in complying with this Clause,
                  including in connection with the replacement of any Engine or
                  Part by Lessee in accordance herewith; and

            (c)   do all acts and things (including, without limitation, making
                  any filing or registration with the Air Authority or any other
                  Government Entity or as required to comply with the Geneva
                  Convention where applicable) and execute and deliver all
                  documents (including, without limitation, any amendment of
                  this Agreement) as may from time to time be required by
                  Lessor:

                  (i)   following any change in the ownership or financing of
                        the Aircraft which is permitted pursuant to Clause 14 or
                        in the manner of securing Lessor's obligations to the
                        Financing Parties, in each case at the cost of Lessor;
                        or

                  (ii)  following any modification of the Aircraft, any Engine
                        or any Part or the permanent replacement of any Engine
                        or Part in accordance with this Agreement, so as to
                        ensure that the rights of Lessor as owner of the
                        Aircraft and under this Agreement apply with the same
                        effect as before; or

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                  (iii) to establish, maintain, preserve, perfect and protect
                        the rights of Lessor under this Agreement or in the
                        Aircraft and, at the cost of Lessor, the rights of any
                        Financing Party, in particular (without limitation), if
                        in the Country of Registration there shall be, or shall
                        be brought into force, any legislative or other
                        provisions giving effect to the Geneva Convention or
                        otherwise relating to recognition of rights in aircraft,
                        Lessee shall at its own cost forthwith do all such acts
                        as may be necessary to perfect recognition of Lessor's
                        title to and interest in the Aircraft and, at the cost
                        of Lessor, the rights of any Financing party as
                        mortgagee and/or assignee in accordance with such
                        legislative or other provisions.

                  If the Country of Incorporation has, or at any time brings
                  into force, any legislative or other provisions giving effect
                  to the Convention on International Interests in Mobile
                  Equipment (the "Convention") and/or the Protocol to the
                  Convention on International Interests in Mobile Equipment on
                  Matters Specific to Aircraft Equipment (the "Protocol"),
                  Lessee at its own cost and expense shall from time to time, do
                  or cause to be done any and all acts and things which may be
                  required or desirable (in the reasonable opinion of Lessor) to
                  ensure that Lessor and, at the cost of Lessor, any Financing
                  Party have the full benefit of the Convention and/or the
                  Protocol in connection with the Aircraft and any Engine,
                  including (but not limited to):

                  (A)   any matters connected with registering, perfecting,
                        preserving and/or enhancing any international
                        interest(s) vested in Lessor with respect to the
                        Aircraft and/or any Engine and constituted by this
                        Agreement;

                  (B)   entry in to agreements (subordination or otherwise) to
                        protect and/or enhance and/or improve the priority of
                        any international interest(s) referred to in the
                        foregoing paragraph (A); and

                  (C)   excluding in writing the application of any provisions
                        of the Convention and/or Protocol that Lessor may deem
                        desirable in connection with the foregoing.

            In this sub clause the following terms have the following meanings:

            INTERNATIONAL INTEREST has the meaning as expressed in the
            Convention and Protocol;

            STATE has the meaning as expressed in the Convention and Protocol;
            and

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            STATE IN WHICH LESSEE IS SITUATED IN shall be constructed in
            accordance with the expression "state in which the debtor is
            situated in" as set out in Article 4 of the Convention.

            (d)   if at any time subsequent to the initial registration of the
                  Aircraft and the initial filing of Uniform Commercial Code
                  financing statements, any other filing or any recording or
                  other act becomes necessary to perfect, protect and preserve
                  the rights and interests of Lessor hereunder and in the
                  Aircraft and the Security Deposit, including without
                  limitation the filing of continuation statements with respect
                  to filed Uniform Commercial Code financing statements, at its
                  cost and expense, procure that such filings, recordings and
                  acts are done pursuant to applicable law. Lessee agrees that
                  Lessor is hereby authorized to make any filings or recordings
                  referred to in this paragraph;

            (e)   not to revoke the Lessee Power of Attorney; and

            (f)   to cause the following:

                  (i)   the filing of a Spanish language Public Deed with
                        respect to the Bill of Sale, the Trust Agreement, this
                        Agreement and Lease Supplement No. 1 at the Public
                        Registry of Panama within 48 hours after the date and
                        time of Delivery;

                  (ii)  the obtaining of a temporary `certificado de matricula'
                        from the National Aeronautic Registry of the Civil
                        Aviation Authority of Panama with respect to the
                        Aircraft at or before Delivery;

                  (iii) the obtaining of a permanent `certificado de matricula'
                        from the National Aeronautic Registry of the Civil
                        Aviation Authority of Panama promptly, and in any event
                        within 45 days after Delivery; and

                  (iv)  promptly and in due course after Delivery, a Public
                        Registry Certificate confirming registration of the
                        Public Deed referred to in the preceding clause (i).

      8.12  MAINTENANCE AND REPAIR:

            Lessee will, at its own expense:

            (a)   keep the Aircraft airworthy (except during any period during
                  which the Aircraft is undergoing maintenance, repair or
                  modification as required or permitted hereunder) in all
                  respects and in good repair and condition;

            (b)   not change the Approved Maintenance Program without all
                  necessary approvals from the Air Authority; provided, however,
                  that if any such

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                  change adversely affects the interests of Lessor with respect
                  to the maintenance status of the Aircraft (or payments in
                  respect of such status) required pursuant to the provisions of
                  Clause 12 and Schedule 3 of this Agreement, then the
                  requirements of such provisions shall be deemed adjusted so
                  that the maintenance condition of the Aircraft at redelivery
                  required thereby is not diminished, and the payments to or by
                  Lessor are not adversely changed from the maintenance
                  condition and payments that would have been required in the
                  absence of such change to the Approved Maintenance Program;

            (c)   provide Lessor with a summary of, access to and information
                  regarding substantial changes to the Approved Maintenance
                  Program;

            (d)   maintain the Aircraft in accordance with the Approved
                  Maintenance Program through an Agreed Maintenance Performer;

            (e)   maintain the Aircraft in accordance with the rules and
                  regulations of the Air Authority applicable to the Aircraft;

            (f)   comply (or cause compliance) with all Mandatory Orders and
                  Airworthiness Directives and similar mandatory requirements
                  applicable to the Aircraft, any Engine or Part having a
                  compliance date during the Term or existing as of the Final
                  Expiry Date and having a compliance date within 180 days after
                  the Final Expiry Date and which are required by the Air
                  Authority or the FAA (provided that in relation to
                  Airworthiness Directives Lessor and Lessee agree to the cost
                  sharing formula set out in Schedule 11);

            (g)   comply (or cause compliance) with all applicable laws and the
                  regulations of the Air Authority and other aviation
                  authorities with jurisdiction over Lessee or the Aircraft, any
                  Engine or Part regardless of upon whom such requirements are
                  imposed and which relate to the maintenance, condition, use or
                  operation of the Aircraft or require any modification or
                  alteration to the Aircraft, any Engine or Part; and

            (h)   maintain in good standing a current certificate of
                  airworthiness (in the appropriate category for the nature of
                  the operations of the Aircraft) for the Aircraft issued by the
                  Air Authority except where (i) the Aircraft is undergoing
                  maintenance, modification or repair required or permitted by
                  this Agreement; or (ii) the Air Authority shall have withdrawn
                  or suspended such certificate in respect of all aircraft of
                  the same model or period of manufacture as the Aircraft (in
                  which case Lessee shall comply with all directions of the Air
                  Authority in connection with such withdrawal or suspension).
                  Lessee will from time to time provide to Lessor a copy of the
                  certificate of airworthiness promptly after receipt of a
                  written request.

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      8.13  PERMANENT REPLACEMENT OF ENGINES AND PARTS:

            (a)   Subject to Clauses 8.14 and 8.16, Lessee shall promptly
                  procure the replacement of any Engine (an "Original Engine")
                  which has suffered an Engine Event of Loss, and Lessee may
                  procure the replacement of any Engine (an "Original Engine")
                  in order to comply with the requirements of the Return
                  Conditions, in each case with an engine complying with the
                  following conditions:

                  (i)   it is of the same manufacturer and model (or, at
                        Lessee's option, an improved model), it is suitable for
                        installation and use on the Airframe without impairing
                        the value or utility of the Airframe and it is
                        compatible with the remaining installed Engine, it has
                        equivalent interchangeable modification status,
                        equivalent or lower flight hours elapsed and cycles
                        elapsed since Life Limited Parts replacement and since
                        last Engine Performance Restoration, equivalent
                        remaining warranty status as the Original Engine and
                        equivalent or greater value and utility as the Original
                        Engine; at the time of the engine replacement Lessor or
                        Lessee, as applicable, shall adjust the Engine
                        Supplemental Rent to reflect the maintenance utility of
                        the replacement engine;

                  (ii)  it has become and remains the property of Lessor free
                        from Security Interests (except Permitted Liens) and on
                        installation on the Aircraft will without further act be
                        subject to this Agreement; and Lessee shall supply to
                        Lessor with an officer's certificate demonstrating full
                        compliance with this Clause 8.13(a); and

                  (iii) Lessee has full details of its source and maintenance
                        records with back to birth traceability on all Life
                        Limited Parts.

                  Such replacement Engine shall be deemed an "Engine" as defined
                  herein for all purposes hereunder. Lessee agrees to promptly
                  notify Lessor of any such substitution, and provide Lessor
                  with an officer's certificate confirming full compliance with
                  this Clause 11.1(e). Lessee agrees to take such action and
                  execute such documents, including a warranty bill of sale, as
                  Lessor may reasonably request in order that any such
                  replacement Engine shall be duly and properly titled in the
                  name of Owner and leased by Lessor hereunder to the same
                  extent as the Engine thereby. Lessor shall take such action
                  and shall execute such documents, and shall cause Owner to
                  take such action and execute such documents, as are reasonably
                  necessary to convey title to the Engine replaced pursuant to
                  the preceding sentence to Lessee. Such conveyance shall be
                  free of and warranted as against Lessor Liens, but otherwise
                  without representation or warranty, express or implied.

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            (b)   Subject to Clause 8.16 hereof, Lessee shall promptly procure
                  the replacement of any Part which has become time-, cycle- or
                  calendar-expired, lost, stolen, seized, confiscated,
                  destroyed, damaged beyond repair, unserviceable or permanently
                  rendered unfit for use, with a part complying with the
                  following conditions:

                  (i)   it is of the same manufacturer and model (or, at
                        Lessee's option, an improved model), it is in as good
                        operating condition as the replaced Part, it has
                        equivalent interchangeable modification status and
                        equivalent or more hours available until the next
                        scheduled check, inspection, overhaul and shop visit as
                        the replaced Part and it is of an equivalent or greater
                        value and utility as the replaced Part;

                  (ii)  it has become and remains the property of Lessor free
                        from Security Interests (except Permitted Liens) and on
                        installation on the Aircraft will without further act be
                        subject to this Agreement; and Lessee shall supply to
                        Lessor all such title documents as Lessor may require in
                        good faith to evidence and perfect the same; and

                  (iii) Lessee has full details of its source and maintenance
                        records with back to birth traceability as to Life
                        Limited Parts.

            (c)   Any Part so replaced, upon satisfaction of the requirements
                  set forth above, shall become the property of Lessee free and
                  clear of Lessor Liens.

      8.14  REMOVAL AND INTERCHANGE OF ENGINES:

            Lessee will:

            (a)   ensure that no Engine is removed from the Airframe unless it
                  is promptly replaced as expressly permitted by this Agreement;

            (b)   ensure that any Engine which is not installed on the Aircraft,
                  or an aircraft permitted by paragraph (d) below is, except as
                  expressly permitted by this Agreement, properly and safely
                  stored (unless installed on another airframe operated by
                  Lessee as permitted hereunder) and insured, and kept free from
                  Security Interests (other than Permitted Liens), and either
                  (i) has been inducted into a repair shop and is undergoing
                  repair or (ii) unserviceable awaiting repair shop visit for no
                  longer than 45 days; and

            (c)   be permitted, if no Event of Default has occurred and is
                  continuing, to install any Engine on an aircraft operated by
                  Lessee (or, any permitted sub-lessee), provided that neither
                  (i) the provisions of any applicable law nor (ii) the terms of
                  any lease or other agreement or Security Interest to which
                  such aircraft or engine is subject, prohibit such installation
                  or will

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                  have the effect at any time of divesting or impairing the
                  title and interests of Lessor as owner and any Financing Party
                  as mortgagee of such Engine.

            Lessee shall obtain from the lessor of any airframe on which an
            Engine is installed and from any holder of a Security Interest in
            any airframe on which an Engine is installed, an agreement (which
            may be in the form of a relevant clause in any lease agreement,
            mortgage, security agreement or similar agreement in respect of such
            airframe) in writing for the benefit of the Lessor (or directly with
            the Lessor) that such Person will respect the interests of Lessor as
            owner and lessor, respectively, and of the Financing Parties, in
            such Engine and will not acquire or claim any right, title or
            interest in such Engine as a result of such Engine being installed
            on such other airframe at any time while such Engine is subject to
            this Agreement. Provided Lessee shall have received from a lessor of
            or secured party holding a Security Interest in any airframe leased
            to Lessee or owned by Lessee and subject to a Security Interest
            under such an agreement, Lessor hereby agrees for the benefit of
            such lessor or secured party that Lessor will not acquire or claim
            as against such lessor or secured party, any rights, title or
            interest in any engine covered by such lease or Security Interest as
            a result of any such engine being installed on the Airframe at any
            time while such engine is subject to such lease or Security
            Interest.

      8.15  REMOVAL AND INTERCHANGE OF PARTS:

            Lessee will, subject to Clause 8.16:

            (a)   ensure that no Part is at any time removed from the Aircraft
                  unless it is promptly replaced by a part complying with Clause
                  8.13(b);

            (b)   ensure that any Part which is not installed on the Aircraft
                  (or any other aircraft as expressly permitted by this
                  Agreement) is properly and safely stored and insured, and kept
                  free from Security Interests (other than Permitted Liens); and

            (c)   be permitted, if no Event of Default has occurred and is
                  continuing, to install any Part on an aircraft operated by
                  Lessee (or any permitted sub-lessee), provided that Clause
                  8.14(d) would be complied with in respect of such Part if it
                  were an Engine.

      8.16  TEMPORARY INSTALLATION OF ENGINES AND PARTS:

            Notwithstanding the provisions of Clause 8.13 and Clause 8.15,
            Lessee will be permitted, if no Event of Default has occurred and is
            continuing, to install, or permit the installation of, any engine or
            part on the Aircraft by way of replacement if:

            (a)   there is not available to Lessee or, where there is a
                  permitted sublease in place, the sub-lessee thereunder, at the
                  time and in the place that engine or

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                  part is required to be installed on the Aircraft, a
                  replacement engine or, as the case may be, part complying with
                  the requirements of Clause 8.13 above;

            (b)   it would result in a disruption of the operation of the
                  Aircraft and/or the business of Lessee or, where there is a
                  permitted sublease in place, the sub-lessee thereunder, to
                  ground the Aircraft until an engine or part, as the case may
                  be, complying with the requirements of Clause 8.13 above
                  becomes available for installation on the Aircraft; and

            (c)   as soon as practicable after installation of the same on the
                  Aircraft but, in any event, no later than the earlier of (i)
                  the next Major Check or Engine Shop Visit (as applicable) or
                  (ii) the Final Expiry Date, Lessee or, where there is a
                  permitted sublease in place, the sub-lessee thereunder,
                  removes any such engine or part and replaces it with the
                  Engine or Part replaced by it or by an engine or part, as the
                  case may be, complying with Clause 8.13 above.

      8.17  POOLING OF ENGINES AND PARTS:

            Without prejudice to its rights pursuant to Clauses 8.14(d) and
            8.15(c), Lessee shall not without the prior written consent of
            Lessor, which consent shall not be unreasonably withheld or delayed,
            permit or enter into any agreement or arrangement for the pooling or
            interchange of any Engine or Part with any other Person.

      8.18  EQUIPMENT CHANGES:

            (a)   Lessee shall not make any modification or addition to the
                  Aircraft (each an "Equipment Change"), except for an Equipment
                  Change which:

                  (i)   is completed in connection with the post-Delivery
                        installation of the In-flight
                        Entertainment/Communications System (IFE) or the
                        Winglets; or

                  (ii)  is expressly permitted by this Agreement; or

                  (iii) does not diminish the value, utility, condition, or
                        airworthiness of the Aircraft and either (aa)
                        constitutes a modification to the class configuration or
                        passenger seating in the cabin, or (bb) has a cost of
                        less than US$250,000, or (cc) has the prior written
                        approval of Lessor which approval shall not be
                        unreasonably withheld or delayed; or

                  (iv)  arises due to the requirements of the Air Authority
                        and/or the FAA or otherwise constitutes an obligation of
                        Lessee under this Agreement.

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            (b)   So long as no Default or Event of Default has occurred and is
                  continuing, Lessee may remove any Equipment Change to the
                  extent it is severable from the Aircraft and (i) such
                  Equipment Change is not required by the Air Authority and/or
                  the FAA and (ii) such severance will not adversely affect the
                  value, utility, condition or airworthiness of the Aircraft as
                  compared to value, utility, condition or airworthiness of the
                  Aircraft immediately prior to such severance, assuming the
                  Aircraft was of the value and utility and in the condition and
                  repair required by the terms of this Agreement; and

            (c)   Title to Equipment Change, whether or not the removal of which
                  is permitted pursuant to Clause 8.18(b), will on installation
                  and until such permitted removal, without further act, vest in
                  Lessor subject to this Agreement free and clear of all
                  Security Interests (other than Permitted Liens). Lessee will
                  at its own expense take all such steps and execute, and
                  procure the execution of, all such instruments as Lessor may
                  require and which are necessary to ensure that title so passes
                  to Lessor according to all applicable laws. At any time when
                  requested by Lessor, Lessee will provide evidence to Lessor's
                  satisfaction (including the provision, if required, to Lessor
                  of bills of sale and legal opinions) that title has so passed
                  to Lessor. Upon any permitted removal thereof, Lessor will, at
                  Lessee's cost and upon Lessee's request, provide Lessee with
                  such documents as Lessee shall reasonably request to cause
                  title to such modifications to vest in Lessee free and clear
                  of Lessor Liens but otherwise without representation or
                  warranty, express or implied.

      8.19  THIRD PARTY:

            All the obligations of Lessee under this Agreement shall continue in
            full force and effect notwithstanding any parting with possession of
            the Aircraft by Lessee (other than redelivery of the Aircraft by
            Lessee to Lessor pursuant to Clause 12).

9.    INSURANCE

      9.1   INSURANCES:

            (a)   Lessee shall, at its own expense, maintain in full force
                  during the Lease Period insurances in respect of the Aircraft
                  in terms, amounts, form and substance customarily maintained
                  by similar carriers operating similar aircraft in similar
                  circumstances otherwise satisfactory to Lessor (acting
                  reasonably) complying with the requirements of this Clause 9
                  and Schedule 4 (the "Insurances", which expression includes,
                  where the context so admits, any relevant re-insurance(s));

            (b)   The Insurances shall be effected through such brokers and with
                  such insurers (in each case which are properly licensed and
                  are operating in

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                  accordance with Panamanian law), and shall be subject to such
                  deductibles and subject to such exclusions, as may (in each
                  case) be indicated in Schedule 4 or otherwise satisfactory to
                  Lessor; and

            (c)   The Insurances shall be effected either:

                  (i)   on a direct basis with insurers of recognized standing
                        who normally participate in aviation insurances in the
                        leading international insurance markets and led by
                        reputable underwriter(s) satisfactory to Lessor, acting
                        reasonably (and for such purposes Lessee's current lead
                        underwriter is deemed to be satisfactory to Lessor); or

                  (ii)  with a single insurer or group of insurers approved by
                        Lessor who does not fully retain the risk but effects
                        substantial reinsurance with reinsurers in the leading
                        international insurance markets and through brokers each
                        of recognized standing and acceptable to Lessor for a
                        percentage acceptable to Lessor (acting reasonably) of
                        all risks insured (and for such purposes Lessee's
                        current lead underwriter is deemed to be acceptable to
                        Lessor).

      9.2   REQUIREMENTS

            Lessor's current requirements as to the Insurances are as specified
            in this Clause and in Schedule 4. Lessor may from time to time and
            in good faith stipulate other requirements for the Insurances so
            that (a) the scope and level of cover are maintained in line with
            best industry practice of similar carriers operating similar
            aircraft in similar circumstances, and (b) the interests of Lessor
            and the other Indemnitees continue to be prudently protected,
            provided that other requirements shall not reduce the maximum
            deductibles, nor raise the minimum war and allied perils liabilities
            amount, unless Lessee shall have raised the same on a fleet wide
            basis..

      9.3   STANDARDS

            Lessee shall be obligated to maintain insurance in respect of the
            Aircraft for the purposes of this Agreement which reflects Lloyds'
            endorsement AVN67B (as at the date hereof) or the equivalent
            thereof. In the event that any provision of AVN67B (as at the date
            hereof) conflicts or is otherwise inconsistent with the requirements
            of this Clause 9 and Schedule 4 then (so long as it shall be general
            industry practice to insure aircraft financed or leased on the basis
            of such endorsement) the provisions of AVN67B shall prevail and such
            endorsement shall be deemed to satisfy the requirements of this
            Agreement.

      9.4   CHANGE

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            If at any time Lessor, following a change in circumstances and
            acting reasonably, decides to revoke its approval of any insurer or
            reinsurer, Lessor and/or its brokers shall consult with Lessee and
            Lessee's insurers or, if applicable, brokers regarding whether that
            approval should be revoked to protect the interests of the parties
            insured. If, following the consultation, Lessor considers that any
            change should be made, Lessee shall then, as promptly as reasonably
            practicable, arrange or procure the arrangement of alternative cover
            satisfactory to Lessor, provided such change is approved by each
            other Lessor or secured lender on aircraft in Lessee's fleet
            affected by such change and does not otherwise make compliance by
            Lessee with the insurance requirements set forth in this Clause 9 or
            in Schedule 4 hereto impossible or not practicable.

      9.5   INSURANCE COVENANTS

            Lessee shall:

            (a)   ensure that all legal requirements as to insurance of the
                  Aircraft, any Engine or any Part which may from time to time
                  be imposed by the laws of the Country of Registration or any
                  state, from or over which the Aircraft may be flown, in so far
                  as they affect or concern the operation of the Aircraft, are
                  complied with, and in particular those requirements compliance
                  with which is necessary to ensure that:

                  (i)   the Aircraft is not in danger of detention or
                        forfeiture;

                  (ii)  the Insurances remain valid and in full force and
                        effect; and

                  (iii) the interests of the Indemnitees in the Insurances and
                        the Aircraft or any Part are not thereby prejudiced;

            (b)   comply with the terms and conditions of each policy of the
                  Insurances and not do, consent or agree to any act or omission
                  which:

                  (i)   invalidates or may be reasonably expected to invalidate
                        the Insurances; or

                  (ii)  renders or may be reasonably expected to render void or
                        voidable the whole or any part of any of the Insurances;
                        or

                  (iii) brings any particular insured liability within the scope
                        of an exclusion or exception to the Insurances;

            (c)   not without the prior written approval of Lessor take out any
                  additional insurance or reinsurance in respect of the Aircraft
                  which would prejudice the rights of Lessor or any additional
                  insured in respect of the policies required to be maintained
                  by Lessee hereunder, unless relating solely to

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                  liability insurances, hull total loss, business interruption,
                  profit commission and deductible risk;

            (d)   on request, provide to Lessor evidence that the Insurance
                  premiums have been paid;

            (e)   not make any modification or alteration to the Insurances
                  material and adverse to the interests of any of the
                  Indemnitees;

            (f)   be responsible for any deductible under the Insurances;

            (g)   if at any time insurance clause AVN 2000 or its successor is
                  endorsed on the policies of Insurance, ensure that the
                  insurance write back clauses AVN 2001 and AVN 2002 as
                  applicable (or any equivalent clauses) are endorsed on the
                  policies of Insurance required to be maintained under this
                  Agreement and give and comply with all representations,
                  warranties and undertakings required by the insurers or
                  reinsurers in connection with such clauses; and

            (h)   provide any other material information and assistance in
                  respect of the Insurances which Lessor may from time to time
                  reasonably request for substantial reasons.

      9.6   RENEWAL OF INSURANCES

            Lessee shall commence renewal procedures in a timely manner prior to
            expiry of any of the Insurances, and provide to Lessor:

            (a)   upon the request of Lessor, a written status report of renewal
                  negotiations 10 days prior to each expiry date;

            (b)   confirmation of completion of renewal prior to each expiry
                  date; and

            (c)   certificates of insurance (and where appropriate certificates
                  of reinsurance), and a broker's letter of undertaking in a
                  form acceptable to Lessor in English, detailing the coverage
                  and confirming the insurers' (and any reinsurers') agreement
                  to the specified insurance requirements of this Agreement
                  within seven days after each renewal date (and, in the case of
                  the reinsurance certificate and reinsurance broker's letter of
                  undertaking, within 14 days after each renewal date).

      9.7   FAILURE TO INSURE

            If Lessee fails to maintain the Insurances in compliance with this
            Agreement, Lessee shall:

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            (a)   forthwith ground or cause to be grounded the Aircraft and
                  shall keep or procure that the Aircraft be kept grounded until
                  such time as the Insurances shall again be in full force and
                  effect; and

            (b)   immediately notify Lessor of the non-compliance of the
                  Insurances and provide Lessor with full details of any steps
                  which Lessee is taking or proposes to take, in order to remedy
                  such non-compliance;

            and each of the Indemnitees will be entitled but not bound (without
            prejudice to any other rights of Lessor under this Agreement):

                  (i)   to pay the premiums due or to effect and maintain
                        insurances required hereunder but not maintained in
                        accordance herewith or otherwise remedy Lessee's failure
                        in such manner (including, without limitation to effect
                        and maintain an "owner's interest" policy) as Lessor
                        acting in good faith considers appropriate. Any sums so
                        expended by Lessor will become immediately due and
                        payable by Lessee to Lessor together with interest
                        thereon at the Default Rate, from the date of
                        expenditure by Lessor up to the date of reimbursement by
                        Lessee; and

                  (ii)  at any time while such failure is continuing to require
                        the Aircraft to remain at any airport or to proceed to
                        and remain at any airport designated by it until the
                        failure is remedied.

      9.8   CONTINUING INSURANCE FOR INDEMNITY

            Lessor may require Lessee to effect and to maintain (at no cost to
            Lessor) liability insurance after the Final Expiry Date with respect
            to its liability under the indemnities in Clause 10 for such period
            as Lessor may reasonably require (but in any event for not more than
            two years following the Final Expiry Date or until completion of the
            next C Check (or equivalent check) with respect to the Aircraft
            (whichever is the earlier to occur)) which provides for each
            Indemnitee to be named as additional insured. Lessee's obligation in
            this Clause shall not be affected by Lessee ceasing to be lessee of
            the Aircraft and/or any of the Indemnitees ceasing to have any
            interest in respect of the Aircraft.

10.   INDEMNITY

      10.1  GENERAL:

            Lessee agrees to defend, indemnify and hold harmless the
            Indemnitees, on demand and on an After-Tax Basis, from and against
            any and all Losses (regardless of when the same is made or incurred,
            whether before, during or after the Term):

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            (a)   which may at any time be imposed, incurred, suffered or
                  asserted, directly or indirectly as a result of or connected
                  with the possession, delivery, performance, management,
                  ownership or possession, registration, control, maintenance,
                  condition, service, repair, overhaul, leasing, use, operation,
                  modification, insurance, inspection, testing, design,
                  sublease, condition or return of, or other matters relating
                  to, the Aircraft, any Engine or Part (either in the air or on
                  the ground) whether or not such Losses may be attributable to
                  any defect in the Aircraft, any Engine or any Part, whether or
                  not discoverable, or to its design, testing or use or
                  otherwise, and regardless of when the same arises or whether
                  it arises out of or is attributable to any act or omission,
                  negligent or otherwise, of any Indemnitee or to strict
                  liability; or

            (b)   which without duplication of recovery arise out of any act or
                  omission which invalidates or which renders voidable any of
                  the Insurances; or

            (c)   which without duplication of recovery may at any time be
                  suffered or incurred as a consequence of (i) any design,
                  article or material in the Aircraft, any Engine or any Part,
                  including any defect in design and regardless of whether it is
                  discoverable; or (ii) its operation or use during the Term
                  hereof constituting an infringement of patent, copyright,
                  trademark, design or other proprietary right; or

            (d)   which may at any time be suffered or incurred, directly or
                  indirectly, as a result of any breach by Lessee of any of its
                  obligations under this Agreement.

            but excluding any Losses in relation to a particular Indemnitee to
            the extent that such Losses:

                  (i)   are covered pursuant to any other indemnity provision of
                        this Agreement or in respect of which Lessor has agreed
                        to not seek reimbursement from Lessee pursuant to an
                        express provision of this Agreement; or

                  (ii)  arise as a result of the gross negligence (other than
                        gross negligence imputed to that Indemnitee by reason of
                        its interest in the Aircraft or this Agreement), willful
                        misconduct of that Indemnitee or any Indemnitee or
                        breach of any representation, warranty or obligation
                        hereunder or under any other Transaction Document; or

                  (iii) consists of Taxes (but without prejudice to any
                        Indemnitee's rights under any other provision of this
                        Agreement relating to Taxes); or

                  (iv)  arise as a result of a Lessor Lien; or

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                  (v)   represents or constitutes ordinary and usual operation
                        or overhead expenses of such Indemnitee, except to the
                        extent that the same arise on the occurrence of an Event
                        of Default; or

                  (vi)  is attributable to an event or circumstances which occur
                        after the Final Expiry Date unless such Loss results
                        from, or arises out of, any act, omission or
                        circumstance existing during the Term; or

                  (vii) are attributable to the sale, assignment or other
                        transfer (voluntary or involuntary) of all or part of
                        any Indemnitee's interest in or to the Aircraft, any
                        Engine or Part, this Agreement or any Transaction
                        Document other than a sale, assignment or other transfer
                        required by the terms of a Transaction Document, arising
                        as a result of or otherwise in connection with an Event
                        of Default or an Event of Loss or if requested by, or
                        consented to, by Lessee; or

                  (viii) are costs or expenses of entering into amendments to
                        this Agreement and/or other Transaction Documents not
                        required by the terms of a Transaction Document, and not
                        requested by, or consented to, by Lessee.

      10.2  NOTIFICATION:

            Lessor shall promptly notify Lessee in writing of any matter for
            which Lessee is obligated to indemnify under this Clause 10 (each a
            "Claim"); provided, however, the delay or failure of Lessor to give
            notice to Lessee in accordance with this Clause 10.2 will not
            discharge or release Lessee from any of its indemnity obligations
            under Clause 10.1 except, and only to the extent, that such delay or
            failure was attributable to circumstances which were, given
            reasonable diligence, impractical or impossible for Lessor to avoid
            and results in a material increase in the amount which Lessee is
            required to indemnify, materially prejudices or precludes Lessee's
            right to defend any such Claim or results in material, additional
            obligations for Lessee in defending against any suit or proceeding
            relating to such matter.

      10.3  CONTEST:

            Lessor and Lessee will consult with one another to consider what
            action may properly be taken to defend or otherwise resist or
            mitigate any Claim. Provided no Default or Event of Default shall
            have occurred and be continuing, Lessee shall, following such
            consultation, have the right to assume and conduct promptly and
            diligently the defense of the relevant Indemnitee with respect to
            such Claim, and no Claim will be settled by an Indemnitee without
            the prior written consent of Lessee (not to be unreasonably withheld
            or delayed), provided that:

            (a)   Lessee shall have consulted, and shall continue to consult,
                  with Lessor as to the defense and conduct thereof;

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            (b)   Lessee shall have made, and continue to make, adequate
                  provision or reserve with respect to such Claim and any
                  associated costs and expenses (in accordance with GAAP) and
                  shall have fully indemnified or agreed to indemnify the
                  Indemnitees for all costs, liabilities, expenses or damages on
                  an After Tax Basis arising as a result of such Claim or its
                  defense by Lessee of such Indemnitee pursuant to this Clause;
                  provided, however, that Lessee shall not be bound by such an
                  agreement to indemnify to the extent that it is established
                  that, in accordance with the terms of this Clause 10, that
                  Lessee is not liable to such Indemnitees in respect of such
                  Claim.

            (c)   without prejudice to Lessee's continued right to contest any
                  Claim, no Indemnitee shall be prevented by this Clause 10.3
                  from settling or paying any Claim immediately if such
                  Indemnitee is required by applicable law to do so but such
                  Indemnitee shall pay over to Lessee any amount paid by Lessee
                  by way of indemnity in respect of such settlement or payment
                  which is later refunded to such Indemnitee if (i) Lessee
                  agrees that it was liable for such claim under this Clause 10
                  and (ii) Lessee establishes that it would have been successful
                  in respect of such contest and (iii) no Default has occurred
                  and is continuing, and if a Default shall have occurred and be
                  continuing the same shall be retained by Lessor until such
                  Default (and any other Default) shall have been cured then
                  promptly paid to Lessee to the extent not applied in
                  satisfaction of Lessee's obligations in respect of any
                  Default; and

            Lessor shall be entitled, upon consultation with and prior written
            notice to Lessee, to terminate Lessee's participation in the defense
            of a Claim where an act or omission of Lessee indicates that the
            interests of any Indemnitee have a reasonable likelihood of being
            materially adversely prejudiced by Lessee's continued participation
            in the defense of such Claim.

      10.4  SUBROGRATION:

            Upon payment in full to an Indemnitee of any demand for
            indemnification under this Agreement, Lessee will be subrogated to
            any rights and remedies of such Indemnitee in respect of the Loss in
            respect of which such payment has been made (a "Subrogated Claim")
            and without warranty as to the enforceability of such rights, and
            subject to the following provisions:

            (a)   such Indemnitee shall, at the sole cost and expense of Lessee,
                  assist Lessee in any manner reasonably requested by Lessee for
                  the purpose of enforcing and obtaining the rights and benefits
                  intended to be conferred by this Clause 10.4 upon Lessee;

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            (b)   Lessee shall keep Lessor fully informed of any Subrogated
                  Claim by Lessee, shall consult with Lessor regarding the
                  conduct of such Subrogated Claim; and

            Unless doing so would materially prejudice Lessee's ability to
            recover on such Subrogated Claim, Lessee shall pursue any Subrogated
            Claim in its own name, as subrogee to the rights thereto.

      10.5  DURATION:

            The indemnities contained in this Agreement will continue in full
            force after the Final Expiry Date.

11.   EVENTS OF LOSS

      11.1  EVENTS OF LOSS

            (a)   PRE-DELIVERY: If an Event of Loss occurs prior to delivery of
                  the Aircraft to Lessee, this Agreement will immediately
                  terminate and except as expressly stated in this Agreement
                  neither party will have any further obligation or liability
                  under this Agreement other than pursuant to Clause 15.8,
                  except that Lessor will refund to Lessee the amount of any
                  Security Deposit and any other amounts paid by or on behalf of
                  Lessee under this Agreement; and

            (b)   POST-DELIVERY: If an Event of Loss occurs after delivery of
                  the Aircraft to Lessee, Lessee will pay the Agreed Value to
                  Lessor on or prior to the earlier of (i) ninety (90) days
                  after the Event of Loss; and (ii) the date of receipt of the
                  insurance proceeds in respect of that Event of Loss. Subject
                  to the rights of any insurers and reinsurers or other third
                  party, upon irrevocable payment in full to Lessor of that
                  amount and all other amounts which are then due and owing to
                  Lessor under this Agreement, Lessor will without recourse or
                  warranty (except as to the absence of Lessor Liens) procure
                  that Owner shall transfer to Lessee all right, title and
                  interest in and to the Aircraft, all on an as is, where is,
                  basis, and will at Lessee's expense, execute and deliver such
                  bills of sale and other documents and instruments as Lessee
                  may reasonably request to evidence (on the public record or
                  otherwise) the transfer and the vesting of Owner's rights in
                  the Aircraft in Lessee, free and clear of (x) all rights of
                  Owner and Lessor and (y) all Lessor Liens. The receipt by
                  Lessor of the insurance proceeds in respect of the Event of
                  Loss on or prior to the date required pursuant to this Clause
                  11.1(b) shall discharge Lessee from its obligation to pay the
                  Agreed Value to Lessor, provided such proceeds are not less
                  than the Agreed Value and are available to Lessor to be
                  applied to pay such Agreed Value and any excess of insurance
                  proceeds (and any other amounts if any, paid to Lessor by or
                  on behalf of Lessee) over and above the Agreed

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                  Value, less any other amounts due and owing on the date of
                  payment of the Agreed Value by Lessee to Lessor hereunder,
                  shall be promptly refunded to Lessee or as otherwise required
                  by law. If the insurance proceeds are paid initially to Lessee
                  and not to Lessor, they may be retained by Lessee if Lessee
                  shall have paid the Agreed Value and all other amounts then
                  due and owing to Lessor, otherwise Lessee shall pay the Agreed
                  Value to Lessor immediately upon the receipt by Lessee of such
                  proceeds. If Lessee pays the Agreed Value and all other
                  amounts due and owing to Lessor in accordance with this Clause
                  11.1(b), Lessor shall promptly assign (and shall procure that
                  Owner assigns) to Lessee its rights under the Insurances to
                  receive the insurance proceeds in respect of the Event of Loss
                  (to the extent that such proceeds shall not have been paid to
                  Lessee). Additionally, but without duplication, upon receipt
                  by Lessor of the Agreed Value and any other amounts then due
                  and owing by Lessee hereunder following an Event of Loss,
                  Lessor shall pay or cause to be paid to Lessee amounts equal
                  to any amounts held by Lessor or to its order as Supplemental
                  Rent less any portion thereof theretofore applied or paid by
                  Lessor to Lessee or its order in accordance with the terms and
                  provisions of this Agreement.

      11.2  REQUISITION:

            During any requisition for use or hire of the Aircraft, any Engine
            or Part which does not constitute an Event of Loss:

            (a)   the Rent and other charges payable under this Agreement will
                  not be suspended or abated either in whole or in part, and
                  Lessee will not be released from any of its other obligations
                  under this Agreement (other than operational obligations with
                  which Lessee is unable to comply by virtue of the
                  requisition); and

            (b)   so long as no Default or Event of Default has occurred and is
                  continuing, Lessee will be entitled to any hire or other
                  compensation paid by the requisitioning authority during the
                  Term. Lessee will, as soon as practicable after the end of any
                  such requisition, cause the Aircraft to be put into the
                  condition required by this Agreement. Lessor will be entitled
                  to all compensation payable by the requisitioning authority in
                  respect of any change in the structure, state or condition of
                  the Aircraft arising during the period of requisition, and
                  Lessor will apply such compensation in reimbursing Lessee for
                  the cost of complying with its obligations under this
                  Agreement in respect of any such change; provided, however, if
                  any Default or Event of Default has occurred and is
                  continuing, Lessor may apply the compensation or hire in or
                  towards settlement of any amounts owing by Lessee under this
                  Agreement or the other Transaction Documents and any excess
                  thereof shall be applied as described above.

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12.   RETURN OF AIRCRAFT

      12.1  RETURN:

            On the Final Expiry Date, Lessee will, unless an Event of Loss shall
            have occurred, at its expense, redeliver the Aircraft and Aircraft
            Documents to Lessor at the Redelivery Location, in a condition
            complying with Schedule 3, free and clear of all Security Interests
            and Permitted Liens (other than Lessor Liens).

      12.2  FINAL INSPECTION:

            Immediately prior to redelivery of the Aircraft, Lessee will make
            the Aircraft available to Lessor for the Final Inspection, as set
            forth in Schedule 3.

      12.3  NON-COMPLIANCE:

            (a)   If at the time of completion of Final Inspection Lessee has
                  not fully complied with its obligation to redeliver the
                  Aircraft and Aircraft Documents to Lessor in the condition and
                  status required under this Agreement (including Schedule 3
                  hereto), or Lessee fails to make the Aircraft available to
                  Lessor on a timely basis for inspection and redelivery
                  pursuant to Clause 12.1 and Schedule 3 hereto, the Term may
                  be, upon written notice by Lessor acting in good faith in this
                  regard, extended up to the time when the Aircraft has been
                  redelivered to Lessor in full compliance with this Agreement,
                  for the sole purpose of enabling such non-compliance or
                  failure to be promptly rectified, and during such extension
                  period:

                  (i)   Lessee shall not use the Aircraft in flight operations
                        except those related directly to the redelivery of the
                        Aircraft to Lessor;

                  (ii)  all Lessee's obligations and covenants under this
                        Agreement will remain in full force until Lessee so
                        redelivers the Aircraft

                  (iii)

                        (A)   if such extension is due to any act or omission of
                              Lessor or any Person claiming through Lessor,
                              Lessee shall not be obligated to pay Rent during
                              such extension period and Lessor shall promptly
                              after receipt of an invoice, reimburse Lessee for
                              any and all out-of-pocket expenses incurred for
                              the maintenance of Insurances, maintenance,
                              storage, testing, inspection, repair and parking
                              of the Aircraft to the extent such expenses are
                              attributable to any such act or omission of
                              Lessor, or

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                        (B)   otherwise, Lessee shall pay Rent to Lessor during
                              such extension period at a rate per month equal to
                              the amount of Rent payable in respect of the last
                              scheduled Rental Period at a rate per month equal
                              to the Rent payable in respect of the last
                              scheduled Rental Period plus, after the first ten
                              (10) days of such extension period, thirty-five
                              percent (35%) prorated for actual time elapsed.

            (b)   Unless otherwise agreed by Lessee and Lessor any extension of
                  the Term under this Clause 12.3 (other than an extension
                  arising as a result of an act or omission of Lessor, Owner or
                  Beneficiary) shall not prejudice Lessor's right to treat such
                  non-compliance or failure as an Event of Default at any time,
                  and to enforce such rights and remedies as may be available to
                  Lessor in respect thereof under the terms of this Agreement or
                  applicable law. Without limiting the generality of the
                  foregoing, Lessee's Rent obligation under Clause 12.3(a)(iii)
                  above shall be without prejudice to (but without duplication
                  of) Lessor's rights under Clause 13; and

            (c)   Lessor may elect (either on first tender of the Aircraft by
                  Lessee or at any time during the said extension period) to
                  accept redelivery of the Aircraft notwithstanding
                  non-compliance with Clause 12.1 or Schedule 3, in which case
                  Lessee will indemnify Lessor on an After-Tax Basis, and
                  provide cash to Lessor (in an amount satisfactory to Lessor
                  acting reasonably) as security for that indemnity in respect
                  of the actual cost to Lessor of putting the Aircraft into the
                  condition required by this Agreement based upon reasonable
                  prevailing market labor rates and costs of materials.

      12.4  ACKNOWLEDGEMENT:

            Provided Lessee has complied with its obligations under this Clause
            12 (including Schedule 3), upon redelivery of the Aircraft by Lessee
            to Lessor at the Redelivery Location, Lessor will deliver to Lessee
            an acknowledgement confirming that Lessee has redelivered the
            Aircraft to Lessor in accordance with this Clause 12 (including
            Schedule 3).

      12.5  REDELIVERY MAINTENANCE ADJUSTMENT:

            On the Final Expiry Date, Lessee shall make maintenance adjustment
            payments to Lessor on an After-Tax Basis in accordance with Part 3
            of Schedule 3 hereto.

      12.6  EXPORT DOCUMENTS:

            Upon redelivery Lessee shall provide to Lessor all documents
            necessary to export the Aircraft from the Habitual Base (including,
            without limitation, a valid and subsisting export license for the
            Aircraft if required by the relevant Governmental Authorities of the
            Habitual Base) and required in relation to the deregistration of the
            Aircraft with the Air Authority.

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      12.7  MAINTENANCE PROGRAM

            Prior to the Final Expiry Date and upon Lessor's request, Lessee
            shall provide Lessor or its agent reasonable access to the Aircraft
            Documents (including without limitation all completed maintenance
            records) and the Approved Maintenance Program as updated and
            maintained by Lessee up to the date of redelivery in order to
            facilitate the Aircraft's integration into any subsequent operator's
            fleet including a cross-reference of Lessee's Approved Maintenance
            Program items including task-cards to the MRB (Maintenance Review
            Board) or Manufacturer's Maintenance Planning Document items, as
            appropriate.

      12.8  FUEL:

            Upon redelivery of the Aircraft to Lessor, an adjustment shall be
            made in favor of Lessor or Lessee, as the case may be, in respect of
            fuel on board on the Delivery Date and the Final Expiry Date at the
            lower of the price then prevailing or then available at the
            Redelivery Location.

13.   DEFAULT

      13.1  EVENTS:

            Each of the following events will constitute an Event of Default
            (whether the occurrence of any such events is voluntary or
            involuntary or occurs by operation of law or pursuant to or in
            compliance with any judgment, decree or order of any court or any
            order, rule or regulation of any Government Entity):

            (a)   NONPAYMENT: Lessee fails to make any payment of Security
                  Deposit, Rent, Supplemental Rent or Agreed Value or any
                  payment pursuant to Clause 12.5 within three (3) Business Days
                  following the due date or, in the case of other sums payable
                  to Lessor or any other Indemnitee, within ten (10) Business
                  Days following the date of receipt of demand therefor or the
                  date otherwise due in accordance with this Agreement;

            (b)   INSURANCE: Lessee fails to comply with any provision of Clause
                  9 or any insurance required to be maintained under this
                  Agreement is cancelled or terminated or notice of cancellation
                  is given in respect of any such insurance and no substitute
                  insurance meeting the requirements of Clause 9 and Schedule 4
                  of this Agreement has been procured;

            (c)   BREACH: Lessee fails to comply with any provision of this
                  Agreement that is not otherwise addressed in this Clause 13.1
                  and, if such failure is capable of remedy, the failure
                  continues for 30 days after receipt by Lessee of notice from
                  Lessor to Lessee;

            (d)   REPRESENTATION: any representation or warranty made (or deemed
                  to be repeated) by Lessee in or pursuant to this Agreement is
                  or proves to have

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                  been incorrect in any material respect when made or deemed to
                  be repeated and, if such incorrectness is capable of remedy,
                  the same continues for 30 days after receipt of notice by
                  Lessee from Lessor;

            (e)   CROSS DEFAULT:

                  (i)   Financial Indebtedness of Lessee having a principal
                        amount in the aggregate in excess of the Cross-Default
                        Amount (or the equivalent thereof in other currencies)
                        is or are not paid when due or within any originally
                        agreed upon applicable grace period relating thereto; or

                  (ii)  any such Financial Indebtedness becomes due prior to the
                        date when it would otherwise have become due as a result
                        of an event of default (howsoever described); or

                  (iii) any event of default, howsoever described, occurs under
                        any Other Agreement; or

                  (iv)  any event of default, howsoever described, occurs under
                        any aircraft lease agreement in which Lessee is lessee
                        and as a result thereof a dispossessory remedy is
                        exercised by or on behalf of the lessor; provided that,
                        should the relevant event of default not relate to
                        payment of rent under such lease, such exercise of a
                        dispossessory remedy is not frivolous or vexatious under
                        prevailing circumstances.

            (f)   BANKRUPTCY, ETC.:

                  (i)   Lessee or Guarantor shall consent to, or commence any
                        case, proceeding or other action seeking, the
                        appointment of a custodian, receiver, trustee,
                        liquidator or other similar official of itself or of a
                        substantial part of its property, or shall admit in
                        writing its inability to pay its debts generally as they
                        come due, or shall suspend payments on its indebtedness
                        or a moratorium shall be declared in respect of all or a
                        substantial part of the indebtedness of Lessee or
                        Guarantor, or a court of competent jurisdiction shall
                        determine that Lessee or Guarantor is generally not
                        paying its debts as such debts become due, or Lessee or
                        Guarantor shall make a general assignment for the
                        benefit of creditors; or

                  (ii)  Lessee or Guarantor shall file a voluntary petition in
                        bankruptcy or a voluntary petition or an answer seeking
                        reorganization, suspension of payments (suspension de
                        pagos) or relief with respect to it in a proceeding
                        under any bankruptcy or insolvency or other similar laws
                        (as now or hereafter in effect) or an answer admitting
                        the material allegations of a petition filed against
                        Lessee

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                        or Guarantor in any such proceeding, or Lessee or
                        Guarantor shall, by voluntary petition, answer or
                        consent, seek relief under the provisions of any now
                        existing or future bankruptcy, insolvency, liquidation,
                        receivership, administrative receivership,
                        administration, suspension of payments or other similar
                        law providing for the reorganization or winding-up of
                        debtors, or providing for an agreement, composition,
                        extension or adjustment with its creditors; or

                  (iii) if the Lessee or Guarantor convenes a general meeting of
                        its creditors with a view to a general readjustment or
                        general rescheduling of its indebtedness (or a
                        substantial part thereof); or

                  (iv)  if the Lessee or Guarantor becomes or is declared
                        insolvent (en quiebra) or in suspension of payments
                        (suspension de pagos) or any application is made to any
                        court for the Lessee or Guarantor to be declared
                        insolvent (en quiebra) or in suspension of payments
                        (suspension de pagos) or the Lessee or Guarantor is
                        deemed for the purposes of any law of The Republic of
                        Panama to be unable to pay its debts as they fall due or
                        to be insolvent; and in the case of any such event which
                        occurs without the consent of the Lessee, a period of 60
                        days shall have elapsed without such event being cured,
                        dismissed, stayed or eliminated; or

                  (v)   an order, judgment or decree shall be entered in any
                        proceeding by any court of competent jurisdiction
                        appointing, without the consent of Lessee or Guarantor,
                        a custodian, receiver, trustee, liquidator or other
                        similar official of Lessee or Guarantor or any
                        substantial part of its property, or sequestering any
                        substantial part of the property of Lessee or Guarantor
                        (other than for the purposes of amalgamation, merger or
                        reorganization not involving or arising out of
                        insolvency), and any such order, judgment or decree or
                        appointment or sequestration shall remain in force
                        undismissed, unstayed or unvacated for a period of 60
                        days after the date of entry thereof; or

                  (vi)  a petition against Lessee or Guarantor in a proceeding
                        under applicable bankruptcy, insolvency or other similar
                        laws, as now or hereafter in effect, shall be filed and
                        shall not be stayed, withdrawn or dismissed within 60
                        days thereafter, or if, under the provisions of any law
                        providing for reorganization or winding-up of debtors
                        which may apply to Lessee or Guarantor, any court of
                        competent jurisdiction shall assume jurisdiction,
                        custody or control of Lessee or Guarantor of any
                        substantial part of its property and such jurisdiction,
                        custody or control shall remain in force

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                        unrelinquished, unstayed or unterminated for a period of
                        60 days; or

                  (vii) any additional proceeding similar to those referred to
                        in paragraph (i), (ii), (iii), (iv), (v) or (vi) above
                        for the relief of financially distressed debtors under
                        the laws of the United States or The Republic of Panama
                        or any other jurisdiction is instituted, taken or
                        commenced by or against Lessee or Guarantor, voluntarily
                        or involuntarily, and if involuntarily, has not been
                        stayed or dismissed within 60 days.

            (g)   SUSPENSION OF BUSINESS: Lessee ceases to operate as a
                  regularly scheduled air carrier or suspends such operations
                  for a period in excess of ninety (90) days other than as a
                  result of war, insurrection, acts of terrorism, acts of God
                  (such as fires, floods or earthquakes), labor strife or strike
                  or regulatory order affecting all similarly situated operators
                  of similar aircraft or all aircraft of the same type and
                  vintage as the Aircraft; or

            (h)   DISPOSAL: Lessee disposes, conveys or transfers all or
                  substantially all of its assets, liquidates or dissolves or
                  consolidates or merges with any other Person (whether by one
                  or a series of transactions, related or not) except as
                  permitted in Clause 8.8(c); or

            (i)   DELIVERY: Lessee fails to accept delivery of the Aircraft when
                  validly tendered pursuant to this Agreement by Lessor; or

            (j)   REDELIVERY: Lessee fails to return the Aircraft to Lessor on
                  the Final Expiry Date in accordance with Clause 12 and
                  Schedule 3, except as otherwise provided in Sub-Clause 12.3;
                  or

            (k)   LITIGATION: a judgment for the payment of money not covered by
                  insurance in excess of the Cross-Default Amount (or the
                  equivalent thereof in other currencies) shall be rendered
                  against Lessee or Guarantor and the same shall remain
                  undischarged for a period of sixty (60) days, unless during
                  such period, execution of such judgment shall have been
                  effectively stayed by agreement of the parties involved or by
                  court order or such judgment shall have been adequately
                  bonded; or

            (l)   ASSIGNMENT/TRANSFER/SUBLEASE: Lessee makes or permits any
                  assignment or transfer of Lessee's interest in this Agreement,
                  or of Lessee's right to possession of the Aircraft or the
                  Airframe, or Lessee subleases the Aircraft, the Airframe or
                  any Engine, in any case except as expressly permitted or
                  required in this Agreement; or

            (m)   ARREST/ATTACHMENT: Any arrest is made, or any attachment or
                  other kind of judicial lien over the Aircraft is registered
                  (excluding an attachment or

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                  judicial lien which constitutes a Permitted Lien), and such
                  arrest, attachment or judicial lien is not discharged by
                  Lessee within 60 days thereafter; or

            (n)   APPROVALS: any consent, authorization, license, certificate or
                  approval of or registration with or declaration to any
                  Government Entity required in connection with this Agreement,
                  including, without limitation:

                  (i)   any authorization required by Lessee to obtain and
                        transfer freely dollars (or any other relevant currency)
                        out of any relevant country; or

                  (ii)  any authorization required by Lessee to authorize, or
                        required in connection with, the execution, delivery,
                        validity, enforceability or admissibility in evidence of
                        this Agreement or any other Transaction Document or the
                        performance by Lessee of its obligations under this
                        Agreement or any other Transaction Document; or

                  (iii) the registration of the Aircraft or the Aircraft's
                        certificate of airworthiness; or

                  (iv)  any airline license or air transport license required by
                        Lessee,

            is withheld, or is revoked, suspended, cancelled, withdrawn,
            terminated or not renewed, or otherwise ceases to be in full force
            (other than, in the case of subclause (iii) above, as a result of
            any act or omission of Lessor or any party claiming by or through
            Lessor not resulting from an act or omission of the Lessee) and is
            not, as applicable, restored, replaced, returned, re-granted or
            renewed within sixty (60) days; or

            (o)   ADVERSE CHANGE: any event or series of events occurs which, in
                  the reasonable opinion of Lessor, might reasonably be expected
                  to have a material adverse effect on the financial condition
                  or operations of Lessee or on the ability of Lessee to comply
                  with its obligations under this Agreement; or

            (p)   UNLAWFUL: it is or becomes unlawful for Lessee (other than as
                  a result of any act or omission of Lessor or any Person
                  claiming by or through Lessor not attributable to an act or
                  omission of Lessee) to perform any of its obligations under
                  this Agreement or any other Transaction Document, or this
                  Agreement or any other Transaction Document is or becomes
                  wholly or partly invalid or unenforceable and the same
                  continues for a period in excess of sixty (60) days; or

            (q)   CHANGE OF CONTROL: Any Person or group of Persons acquires
                  control of Lessee without the prior consent of Lessor, which
                  consent shall not be

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                  unreasonably withheld or delayed. This Section 13.1(q) shall
                  not apply in the event that a current shareholder or Affiliate
                  of Lessee acquires control of Lessee. As used herein, the term
                  "control" shall mean the direct or indirect right to control
                  in excess of 50% of the voting shares of Lessee.

      13.2  RIGHTS AND REMEDIES:

            If an Event of Default occurs, Lessor may at its option (and without
            prejudice to any of its other rights under this Agreement), at any
            time thereafter so long as the same shall be continuing (without
            notice to Lessee except as specified or required under applicable
            law):

            (a)   by notice to Lessee and with immediate effect cancel the
                  leasing of the Aircraft (but without prejudice to the
                  continuing obligations of Lessee under this Agreement),
                  whereupon the Lease Term and all rights of Lessee under this
                  Agreement shall cease; and/or

            (b)   proceed by appropriate court action or actions to enforce
                  performance of this Agreement including the payment of all
                  Rent and all other amounts payable to Lessor or any Indemnitee
                  pursuant to the terms of this Agreement; and/or

            (c)   proceed by appropriate court action or actions to recover
                  damages for the breach of this Agreement which shall include:

                  (i)   all Rent and other amounts which are or become due and
                        payable under this Agreement prior to (A) in the case of
                        clause (ii)(a) below, the date Lessor re-leases the
                        Aircraft, (B) in the case of clause (ii)(b) below
                        (unless the proviso thereto is applicable), the date
                        Lessor is tendered or obtains possession of the
                        Aircraft, and (C) otherwise, the date Lessor specifies
                        for payment of the amounts determined pursuant to this
                        clause (c); or, in any case, if earlier, (x) the date on
                        which Lessee tenders full payment of the amounts
                        determined as provided in this clause (c), or (y) the
                        date on which Lessor obtains or is tendered possession
                        of the Aircraft (such applicable date, the "Reference
                        Date");

                  (ii)  an amount (the "Mitigated Rent Amount") equal to the
                        aggregate Rent for the remainder of the Term (determined
                        without reference to any right of Lessor to cancel the
                        leasing of the Aircraft, whether or not such right is
                        exercised), discounted periodically (equal to
                        installment frequency) to present worth at the Discount
                        Rate to the Reference Date, less the applicable amount,
                        if any, set forth below:

                        (a)   in the event that Lessor has re-let the Aircraft
                              on terms (other than rental payment terms) which,
                              taken as a whole, Lessor reasonably regards as
                              being substantially similar to

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                              the terms of this Agreement, an amount equal to
                              the aggregate basic rental payments to become due
                              under such re-lease for the period coinciding with
                              the remainder of the Term (determined without
                              reference to any right of Lessor to cancel the
                              leasing of the Aircraft, whether or not such right
                              is exercised), discounted periodically (equal to
                              installment frequency) to present worth at the
                              Discount Rate to the Reference Date; or

                        (b)   in the event that Lessor elects to retain the
                              Aircraft or has sold the Aircraft or has re-let
                              the Aircraft on terms (other than rental payment
                              terms) which, taken as a whole, Lessor does not
                              reasonably regard as being substantially similar
                              to the terms of this Agreement, an amount equal to
                              the fair market rental value (determined pursuant
                              to the Appraisal Procedure) of the Aircraft for
                              the period commencing with the date that Lessor
                              reasonably anticipates that the Aircraft could be
                              re-let at such rental rate and ending with the
                              date that the Term was scheduled to expire
                              (determined without reference to any right of
                              Lessor to cancel the leasing of the Aircraft,
                              whether or not such right is exercised),
                              discounted periodically (equal to installment
                              frequency) to present worth at the Discount Rate
                              to the Reference Date; provided that, if Lessor is
                              unable after reasonable effort to dispose of the
                              Aircraft or if circumstances reasonably indicate
                              that such effort will not be availing, the
                              Mitigated Rent Amount shall be determined pursuant
                              to clause (ii) above without subtracting any
                              amounts pursuant to this clause (b);

                  (iii) all costs, expenses and other incidental damages
                        incurred by Lessor in exercising its remedies hereunder
                        or otherwise incurred by Lessor as a result of an Event
                        of Default, including repossession costs, legal fees,
                        Aircraft storage, preservation, shipment, repair,
                        refurbishment, modification, maintenance and insurance
                        costs, Aircraft re-lease or sale costs (including any
                        costs incurred prepare the Aircraft for sale or lease,
                        advertising costs, sale or lease costs (including
                        commissions), in any way relating to the Aircraft or any
                        Part, including to put the Aircraft in the condition
                        required in Clause 12 and Schedule 3, or in the
                        Redelivery Location, all such costs and incidental
                        damages being referred to herein collectively as
                        "Enforcement and Remarketing Costs";

                  (iv)  without duplication, any loss, cost, expense or damage
                        to Lessor's residual interest in the Aircraft, incurred
                        by Lessor due to Lessee's failure to maintain the
                        Aircraft in accordance with the terms of this Agreement
                        or Lessee's failure to redeliver the Aircraft in the

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                        condition required by this Agreement, if any, including
                        any consequential loss of revenue or profits, all such
                        amounts being referred to herein collectively as
                        "Aircraft Condition Damages"; and

                  (v)   without duplication, any premium, penalty or incremental
                        expense which may be incurred as a result of such Event
                        of Default in repaying funds received by Lessor to
                        finance the Aircraft or in unwinding any financial
                        instrument relating in whole or in part to Lessor's
                        financing of the Aircraft, all such amounts being herein
                        referred to collectively as "Unwind Expenses";

                  provided, however, that if the measure of damages provided in
                  clauses (i)-(v) above is inadequate to place Lessor in the
                  same economic position, on an After-Tax Basis, as Lessor would
                  have been in if Lessee had timely performed each of its
                  obligations under this Agreement, then Lessor shall be
                  entitled to recover as damages such additional amount, giving
                  due credit for payments or proceeds of dispositions of the
                  Aircraft, as is necessary to place Lessor in such economic
                  position; and/or

            (d)   either:

                  (i)   enter upon the premises where all or any part of the
                        Aircraft and/or any Engine is located and take immediate
                        possession of and, at Lessor's sole option, remove the
                        same, all without liability accruing to Lessor for or by
                        reason of such entry or taking of possession whether for
                        the restoration of damage to property, conversion or
                        otherwise, caused by such entry or taking, except
                        damages caused by Lessor's gross negligence or willful
                        misconduct; or

                  (ii)  by delivering notice to Lessee, require Lessee to
                        redeliver the Aircraft and/or any Engine to Lessor at
                        the Redelivery Location on the date specified in such
                        notice and in all respects in the condition required by
                        this Agreement upon the return pursuant to Clause 12 (it
                        being understood that Lessee shall not delay any such
                        return for the purpose of placing the Aircraft and/or
                        any Engine in such condition, but shall nevertheless be
                        liable to Lessor for the failure of the Aircraft and/or
                        any Engine to be in such condition); and/or

            (e)   sell at private or public sale, as Lessor may determine, or
                  hold, use, operate or lease to others the Aircraft and/or any
                  Engine as Lessor in its sole discretion may determine, all
                  free and clear of any rights of Lessee as if this Agreement
                  had not been entered into, it being agreed that Lessor shall
                  have no obligation or duty to sell the Aircraft and/or any
                  Engine and Lessor shall be obligated to attempt to re-lease
                  the Aircraft only to the

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                  extent, if any, that it is required to do so under Article 2A
                  of the UCC; and/or

            (f)   by written notice to Lessee specifying a payment date (which
                  shall be a date not earlier than five (5) Business Days
                  following the date of such notice), Lessor may demand that
                  Lessee pay to Lessor, and Lessee shall pay to Lessor on the
                  payment date specified in such notice (in lieu of the Rent due
                  for the period commencing after the date specified for payment
                  in such notice) the sum of the following amounts:

                  (i)   all Rent and other amounts which are, or will become,
                        due and payable under this Agreement prior to the
                        Reference Date (references therein to clause (c) being
                        deemed references to this clause (f));

                  (ii)  an amount equal to the Mitigated Rent Amount; and

                  (iii) an amount equal to Lessor's reasonably anticipated
                        Enforcement and Remarketing Costs, Unwind Expenses and
                        Aircraft Condition Damages;

                  provided, however, that if the measure of damages provided in
                  clauses (i)-(ii) above is inadequate to place Lessor in the
                  same economic position, on an After-Tax Basis, as Lessor would
                  have been in if Lessee had timely performed each of its
                  obligations under this Agreement, then Lessor shall be
                  entitled to recover as damages such additional amount, giving
                  due credit for payments or proceeds of dispositions of the
                  Aircraft, as is necessary to place Lessor in such economic
                  position; it being understood that (subject to any final
                  non-appealable judgment of a court of competent jurisdiction),
                  to the extent that any of the foregoing amounts in clause
                  (iii) above represents an estimate by Lessor of losses,
                  damages, costs or expenses which Lessor reasonably anticipates
                  to incur, (x) Lessor shall adjust (upward or downward, as the
                  case may be) the amount thereof as needed to reflect the
                  actual amount of such losses, damages, costs or expenses
                  incurred by Lessor when substantially all of such amounts
                  become known to Lessor, but Lessee shall remain obligated to
                  pay the amount demanded by Lessor in accordance with clause
                  (iii) above (subject to such subsequent adjustment) and (y)
                  notwithstanding the amount specified in such demand, Lessor
                  shall be entitled to claim such other (and greater) amount as
                  described in subclause (x) in any action against Lessee
                  hereunder; and/or

            (g)   draw upon the Security Deposit and apply such amounts to any
                  amounts owing to Lessor hereunder,

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            In addition to the foregoing, Lessor shall be entitled to exercise
            such other rights and remedies as may be available under applicable
            law and Lessee shall be liable on an After-Tax Basis for, and shall
            pay Lessor on demand interest on all unpaid amounts at the Interest
            Rate, from the due date until the date of payment in full.

            Lessee hereby agrees that, in the event of the return to or
            repossession by Lessor of the Aircraft and/or any Engine or any
            Part, any rights in any warranty (express or implied) previously
            assigned to Lessee or otherwise held by Lessee shall without further
            act, notice or writing be assigned or reassigned to Lessor, if
            assignable, subject to the terms hereof.

            No remedy referred to in this Clause 13 is intended to be exclusive,
            but, to the extent permissible under this Agreement or under
            applicable law, each shall be cumulative and in addition to any
            other remedy referred to above or otherwise available to Lessor at
            law or in equity; and the exercise or beginning of exercise by
            Lessor of any one or more of such remedies shall not preclude the
            simultaneous or later exercise by Lessor of any or all of such other
            remedies; provided, however, that nothing in this Clause 13 shall be
            construed to permit Lessor to obtain a duplicate recovery of any
            element of damages to which Lessor is entitled or to obtain damages
            in excess of those permitted by law. No express or implied waiver by
            Lessor of any Default or Event of Default shall in any way be, or be
            construed to be, a waiver of any future or subsequent Default or
            Event of Default.

      13.3  POWER OF ATTORNEY:

            Lessee hereby appoints Lessor as the attorney-in-fact of Lessee,
            with full authority in the place and stead of Lessee and in the name
            of Lessee or otherwise, for the purpose of carrying out the
            provisions of this Agreement in accordance with the terms and
            conditions hereof and taking any action and executing any instrument
            that Lessor may, acting reasonably, deem necessary or advisable to
            accomplish the purposes hereof (including, but not limited to, the
            return of the Aircraft and, upon termination or cancellation of this
            Agreement, the removal of this Agreement from public records);
            provided, however, that Lessor may only take action or execute
            instruments under this Clause 13 after an Event of Default has
            occurred and while it is continuing. Lessee hereby declares that the
            foregoing powers are granted for valuable consideration, constitute
            powers granted as security for the performance of the obligations of
            Lessee hereunder and are coupled with an interest and shall be
            irrevocable. Without limiting the generality of the foregoing or any
            other rights of Lessor under this Agreement, upon the occurrence and
            during the continuation of an Event of Default, Lessor shall have
            the sole and exclusive right and power to (i) settle, compromise,
            adjust or defend any actions, suits or proceedings relating to or
            pertaining to the Engine, any Part or this Agreement (other than
            suits between the parties hereto) and (ii) make proof of loss,
            appear in and prosecute any action arising from any policy or
            policies of insurance maintained pursuant to this Agreement, and
            settle, adjust or

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            compromise any claims for loss, damage or destruction under, or take
            any other action in respect of, any such policy or policies, but, in
            no event, may settle any matter by means of an admission of
            liability on the part of Lessee unless required by law to do so.

14.   ASSIGNMENT

      14.1  ASSIGNMENT BY LESSEE:

            LESSEE WILL NOT ASSIGN, DELEGATE OR OTHERWISE TRANSFER (VOLUNTARILY,
            INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE) ANY OF ITS RIGHTS
            OR OBLIGATIONS UNDER THIS AGREEMENT EXCEPT IN CONNECTION WITH A
            TRANSACTION PERMITTED BY CLAUSE 8.8(C), OR CREATE OR PERMIT TO EXIST
            ANY SECURITY INTEREST (OTHER THAN PERMITTED LIENS) OVER ANY OF ITS
            RIGHTS UNDER THIS AGREEMENT, AND ANY ATTEMPT TO DO SO SHALL BE NULL
            AND VOID.

      14.2  ASSIGNMENT BY LESSOR:

            (a)   Lessor or Owner may sell, assign or transfer all or any of
                  their respective rights under this Agreement and in the
                  Aircraft (a "Transfer") subject to compliance with the
                  following conditions:

                  (i)   the proposed purchaser, assignee or transferee (the
                        "Transferee") shall confirm, in favor of Lessee and
                        Guarantor, in writing its undertaking to perform the
                        obligations of Lessor under this Agreement and other
                        Transaction Documents (including without limitation, all
                        obligations in respect of any Security Deposit, proceeds
                        of insurance and/or Supplemental Rent), to the extent
                        the same arise on or after the effective date of
                        Transfer and confirm Lessor's covenant of quiet
                        enjoyment which confirmations shall be reasonably
                        satisfactory to Lessee, whereupon Lessor or Owner, as
                        the case may be, will be released from its obligations
                        under this Agreement and the Participation Agreement;

                  (ii)  the Transfer will not increase Lessee's and Guarantor's
                        indemnity or other obligations (including with respect
                        to withholding taxes) under this Agreement or the
                        Guaranty, as applicable or diminish Lessee's rights
                        under this Agreement (to be determined in each case at
                        the time of such Transfer by applying all applicable
                        laws as are in effect on the effective date of the
                        Transfer or which have been enacted on or prior to such
                        effective date but scheduled to come into effect
                        thereafter); and

                  (iii) unless an Event of Default has occurred and is
                        continuing, Lessor shall be responsible for and pay (on
                        or promptly after the time of

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                        such Transfer) Lessee's and Guarantor's legal and other
                        costs incurred in respect of such Transfer;

                  (iv)  the Transferee shall not be in bankruptcy or similar
                        proceedings at the time of the transfer;

                  (v)   no Transferee shall be an air carrier or Affiliate
                        (other than a financial institution or credit company)
                        of an air carrier in competition with Lessee and
                        operating similar aircraft; and

                  (vi)  the Transferee shall confirm in writing its agreement to
                        keep the trust structure, or another tax structure not
                        materially adversely affecting the tax position of this
                        Lessee, in place.

            (b)   Notwithstanding any such Transfer, Lessor, Owner and
                  Beneficiary will remain entitled to the benefit of each
                  indemnity under this Agreement to the extent that any claim
                  thereunder relates to any period prior to the effective date
                  of such Transfer, and shall remain entitled to the benefit of
                  the liability insurances effected pursuant to this Agreement
                  for a period of two years following the effective date of such
                  Transfer.

            (c)   Upon and subject to compliance by Lessor and any Transferee
                  with the terms and conditions of Clause 14.2(a), Lessee shall
                  execute and deliver in connection with such Transfer such
                  documents and assurances (including a consent to the Transfer)
                  and take such further action at Lessor's cost (unless an Event
                  of Default has occurred and is continuing) as Lessor may
                  reasonably request to establish or protect the rights and
                  remedies created or intended to be created in favor of
                  Transferee in connection with such Transfer.

      14.3  GRANTS OF SECURITY INTERESTS:

            Lessor or Owner shall be entitled at any time after the Delivery
            Date to grant a Security Interest in the Aircraft or its right,
            title and interest in this Agreement (each, an "Additional
            Mortgage") in favor of any Financing Party (each, an "Additional
            Mortgagee") provided the same shall not result in an increase of
            Lessee's obligations or liabilities hereunder on the date of such
            transaction nor restrict Lessee's rights in respect of this
            Agreement or the Aircraft. In the case of any such grant by Lessor
            or Owner of an Additional Mortgage to an Additional Mortgagee in all
            or any portion of Lessor's or Owner's rights, title and interest in
            and to the Aircraft and this Agreement, subject to this Clause 14.3
            and to Lessee receiving a letter of quiet enjoyment substantially
            similar to Part 4 of Schedule 5 (and including the additional
            paragraphs set forth in Part 5 of Schedule 5 if the Additional
            Mortgage includes an Assignment (or such substantially similar
            wording as Lessor and Lessee may agree)) from such Additional
            Mortgage and notice of assignment in a form reasonably acceptable to
            Lessee, Lessee shall

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            promptly, at the specific written request of Lessor, as the case may
            be, and with Lessor or Owner, as the case may be, paying all of
            Lessee's out-of-pocket costs and expenses execute an acknowledgement
            of assignment in such form as Lessor or Owner, as the case may be,
            may reasonably request.

15.   MISCELLANEOUS

      15.1  SURVIVAL:

            All provisions of this Agreement constituting an obligation on the
            part of either party to indemnify the other party or any other
            Indemnitee shall survive the expiration or any termination or
            cancellation of this Agreement and shall continue in full force and
            effect.

      15.2  WAIVERS, REMEDIES CUMULATIVE:

            The rights under this Agreement:

                  (i)   may be exercised as often as necessary;

                  (ii)  are cumulative and not exclusive of its rights under any
                        law; and

                  (iii) may be waived only in writing and specifically.

            Delay in exercising or nonexercise of any such right will not
            constitute a waiver of that right.

      15.3  DELEGATION:

            Lessor may delegate to any Person or Persons all or any of the
            trusts, powers or discretions vested in it by these presents and any
            such delegation may be made upon such terms and conditions and
            subject to such regulations (including power to subdelegate) as
            Lessor in its absolute discretion thinks fit, provided no such
            delegation shall affect the rights, obligations or liabilities of
            Lessee or Guarantor.

      15.4  CERTIFICATES:

            Save where expressly provided in this Agreement, any determination
            by Lessor (in accordance with the terms of this Agreement) as to any
            rate of interest payable under this Agreement will, in the absence
            of manifest error, be conclusive and binding on Lessee.

      15.5  APPROPRIATION:

            If any sum paid or recovered in respect of the liabilities of Lessee
            under this Agreement is less than the amount then due, Lessor may
            apply that sum to amounts due under this Agreement in such
            proportions and order and generally in

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            such manner as Lessor, acting reasonably, may determine and, upon
            written request, notify Lessee of such application.

      15.6  SEVERABILITY:

            If a provision of this Agreement is or becomes illegal, invalid or
            unenforceable in any jurisdiction, that will not affect:

            (a)   the legality, validity or enforceability in that jurisdiction
                  of any other provision of this Agreement; or

            (b)   the legality, validity or enforceability in any other
                  jurisdiction of that or any other provision of this Agreement.

      15.7  REMEDY:

            If Lessee fails to comply with any provision of this Agreement,
            Lessor may, without being in any way obliged to do so or responsible
            for so doing and without prejudice to the ability of Lessor to treat
            the noncompliance as a Default or an Event of Default, effect
            compliance on behalf of Lessee, whereupon Lessee shall become liable
            to pay immediately any sums expended by Lessor together with all
            costs and expenses (including legal costs) in connection therewith.

      15.8  EXPENSES:

            (a)   Each of Lessor and Lessee will pay its own expenses (including
                  legal, professional, and out-of-pocket expenses) incurred or
                  payable in connection with the negotiation, preparation, and
                  execution of this Agreement;

            (b)   Without duplication of any other amounts payable by Lessee
                  hereunder, Lessee will pay to Lessor promptly following demand
                  all reasonable expenses (including legal, professional, and
                  out-of-pocket expenses) related to any amendment to or
                  extension of any other documentation in connection with, or
                  the granting of any waiver or consent under, this Agreement
                  which has been requested by Lessee;

            (c)   Lessor will pay to Lessee promptly following demand all
                  reasonable expenses (including legal, professional, and
                  out-of-pocket expenses) related to any amendment to or
                  extension of any other documentation in connection with, or
                  the granting of any waiver or consent under, this Agreement
                  which has been requested by Lessor unless the same arises out
                  of, or is connected with, the occurrence of an Event of
                  Default;

            (d)   Without duplication of any other amounts payable by Lessee
                  hereunder, Lessee will pay to Lessor promptly following demand
                  all reasonable expenses (including legal and other costs)
                  payable or incurred by Lessor in

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                  connection with the enforcement of or preservation of any of
                  Lessor's rights under, this Agreement, or in respect of the
                  repossession of the Aircraft; and

            (e)   Except as provided in clause 14.2(a)(ii), Lessee will pay to
                  Lessor promptly following demand all reasonable expenses
                  (including legal, survey and other costs) payable or incurred
                  by Lessor in connection with (i) up to $2,000 with respect to
                  the Trust Agreement and the tax structure of this transaction,
                  and (ii) the filing or recording of this Agreement in the
                  Country of Registration, the Habitual Base and other states
                  (as appropriate given the operation of the Aircraft),
                  including, in each case, the provision of legal opinions, tax
                  advice (to the extent related to the Trust Agreement and the
                  tax structure of this transaction), stamp duties, notarial
                  fees, translations and registrations, if required by either
                  Lessor or Lessee.

            All expenses payable pursuant to this Clause 15.8 will be paid in
            the currency in which they are incurred by Lessor or Lessee, as the
            case may be.

      15.9  TIME OF ESSENCE:

            The time stipulated in this Agreement for all payments and for the
            performance of all other obligations under this Agreement will be of
            the essence of this Agreement.

      15.10 NOTICES:

            All notices under, or in connection with, this Agreement will,
            unless otherwise stated, be given in writing by letter or facsimile.
            Any such notice is deemed effectively to be given as follows:

                  (i)   if by letter, when delivered;

                  (i)   if by facsimile, when transmitted and full transmission
                        has been separately notified by telephone by the
                        transmitting party.

            The address, facsimile and telephone numbers of Lessee and Lessor
            are as follows:

            Lessee:      Address:         Compania Panamena de Aviacion, S.A.
                                          Avenida Justo Arosemena y Calle 39
                                          Apartado 1572
                                          Panama 1, Republic of Panama
                         Attn:            Vice President - Finance
                         Facsimile:       011.507.227.2522
                         Telephone:       011.507.227.2623

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            Lessor:      Address:         WELLS FARGO BANK NORTHWEST, N.A.
                                          299 South Main Street
                                          Salt Lake City, Utah 84111

                         Attn:            Corporate Trust Department
                         Facsimile:       +1 (801) 246-5053
                         Telephone:       +1 (801) 246-5630

      15.11 LAW AND JURISDICTION:

            (a)   This Agreement is governed by the Governing Law including all
                  matters of construction, validity and performance. This
                  Agreement is delivered in the State of New York;

            (b)   Both parties agree that the Supreme Court of the County of New
                  York, State of New York and the federal courts of the United
                  States of America sitting in the Southern District of New York
                  are to have jurisdiction to settle any disputes that may arise
                  in connection with or arising out of the legal relationships
                  established by this Agreement (including, without limitation,
                  claims for set-off or counterclaim) and the other Transaction
                  Documents or otherwise arising in connection with this
                  Agreement and the other Transaction Documents. Both parties
                  hereby irrevocably and unconditionally submit to the
                  jurisdiction of the Supreme Court of the City of New York,
                  State of New York and the federal courts of the United States
                  of America sitting in the Southern District of New York. The
                  submission to such jurisdiction shall not (and shall not be
                  construed so as to) limit the rights of any party to take
                  proceedings against any other party in any other court of
                  competent jurisdiction, nor shall the taking of proceedings in
                  any one or more jurisdictions preclude the taking of
                  proceedings in any other jurisdiction, whether concurrently or
                  not;

            (c)   Nothing in this Clause limits the right of either party to
                  bring proceedings against the other in connection with this
                  Agreement:

                  (i)   in any other court of competent jurisdiction; or

                  (ii)  concurrently in more than one jurisdiction.

            (d)   Each party irrevocably and unconditionally:

                  (i)   agrees that if the other party brings legal proceedings
                        against it or its assets in relation to this Agreement
                        no immunity from such legal proceedings (which will be
                        deemed to include, to the extent available, suit,
                        attachment prior to judgment, other attachment, the

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                        obtaining of judgment, execution or other enforcement)
                        will be claimed by or on behalf of itself or with
                        respect to its assets;

                  (ii)  waives, and agrees not to assert, by way of motion, as a
                        defense, or otherwise, in any such suit, action or
                        proceeding, the defense of sovereign immunity, any claim
                        that it is not personally subject to the jurisdiction of
                        the above-named courts by reason of sovereign immunity
                        or otherwise or that it is immune from any legal process
                        (whether thorough service of notice, attachment prior to
                        judgment, attachment in aid of execution, execution or
                        otherwise) with respect to itself of its property, or
                        any objection on the grounds of venue or forum non
                        conveniens or any similar grounds; and

                  (iii) consents generally in respect of any such proceedings to
                        the giving of any relief or the issue of any process in
                        connection with such proceedings including, without
                        limitation, the making, enforcement or execution against
                        any property whatsoever (irrespective of its use or
                        intended use) of any order or judgment which may be made
                        or given in such proceedings.

            (e)   Each party:

                  (i)   irrevocably waives objection to the Supreme Court of the
                        County of New York, State of New York and the federal
                        courts of the United States of America sitting in the
                        Southern District of New York on grounds of venue or
                        inconvenient forum or otherwise as regards proceedings
                        in connection with this Agreement; and

                  (ii)  agrees that a final (no longer appealable) judgment or
                        order of a court of the State of New York or a federal
                        court of the United States of America sitting in the
                        Southern District of New York in connection with this
                        Agreement is conclusive and binding on it and may be
                        enforced against it in the courts of any other
                        jurisdiction.

            (f)   EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND
                  UNCONDITIONALLY WAIVES ANY ALL RIGHTS TO A JURY TRIAL IN
                  RESPECT OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
                  OUT OF THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS OR
                  ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
                  THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE
                  LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED), INCLUDING,
                  WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
                  DUTY CLAIMS AND OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF
                  LESSOR AND LESSEE REPRESENTS AND WARRANTS THAT IT VOLUNTARILY

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                  WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH ITS
                  LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE AND THIS WAIVER
                  SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
                  SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR THE OTHER
                  TRANSACTION DOCUMENTS. IN THE EVENT OF LITIGATION, THIS CLAUSE
                  MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT;

            (g)   The parties hereto agree that, in the event of non-compliance
                  with any of its obligations under this Agreement by Lessee,
                  Lessor may bring an action against Lessee in respect of such
                  non-compliance under the laws of the state of New York or
                  under the laws governing civil aviation of the Republic of
                  Panama, or in any jurisdiction where Lessee or any of its
                  assets may be found. Lessee acknowledges that the laws
                  governing civil aviation of the Republic of Panama, in
                  Articles 20 and 24 of Law 21 of January 29, 2003, authorize
                  Lessor, in the event of non-compliance with any of its
                  obligations under this Agreement by Lessee, to terminate this
                  Agreement and take possession and material control of the
                  Aircraft in accordance with the terms of this Agreement,
                  without notice or judicial procedure; and

            (h)   Lessee shall at all times maintain an agent for service of
                  process in New York. Such agent shall be Corporate Service
                  Company (CSC), 1133 Avenue of the Americas, Suite 3100, New
                  York, New York 10036, and any claim form, judgment or other
                  notice of legal process shall be sufficiently served on Lessee
                  if delivered to such agent at its address for the time being.
                  If for any reason, such agent no longer serves as agent of
                  Lessee to receive service of process in New York, Lessee shall
                  promptly appoint another agent and advise Lessor thereof.

      15.12 SOLE AND ENTIRE AGREEMENT:

            (a)   ENTIRE AGREEMENT; AMENDMENTS: This Agreement and the other
                  Transaction Documents are the sole and entire agreement
                  between Lessor and Lessee in relation to the leasing of the
                  Aircraft, and supersede all previous agreements in relation to
                  that leasing. Any amendments hereto shall be made in writing
                  and signed on behalf of Lessor and Lessee; and

            (b)   TRUE LEASE: The parties intend and agree that this Agreement:

                  (i)   constitutes a "true lease" and not a "security interest"
                        as defined in Section 1-201(37) of the UCC; and

                  (ii)  confers only a leasehold interest on Lessee in and to
                        the Aircraft on and subject to the terms of this
                        Agreement, and no ownership or

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                        other interest with respect to the Aircraft is provided
                        to Lessee under this Agreement.

                  Lessee shall not file any tax return that is inconsistent with
                  the provisions of this Clause 15.12(b).

      15.13 INDEMNITIES:

            All rights expressed to be granted to each Indemnitee under this
            Agreement (other than Lessor and Beneficiary) are given to Lessor on
            behalf of that Indemnitee.

      15.14 COUNTERPARTS:

            This Agreement may be executed in counterparts each fully-executed
            set of which will constitute one and the same document.

      15.15 LANGUAGE:

            All notices to be given under this Agreement will be in English. All
            documents delivered to Lessor pursuant to this Agreement will be in
            English, or if not in English, will be accompanied by a certified
            English translation. If there is any inconsistency between the
            English version of this Agreement and any version in any other
            language, the English version will prevail.

      15.16 NO BROKERS:

            Each party agrees to indemnify and hold the other harmless from and
            against any and all claims, suits, damages, costs and expenses
            (including, but not limited to, reasonable attorneys' fees) asserted
            by any agent, broker or other third party for any commission or
            compensation of any nature whatsoever based upon the lease of the
            Aircraft, if such claim, suit, damage, cost or expense arises out of
            any action or alleged action by the indemnifying party, its
            employees or agents.

      15.17 CONFIDENTIALITY:

            (a)   Each of Lessor and Lessee agrees that it will endeavor to keep
                  all terms and provisions of this Agreement and the agreements
                  and documents related hereto, and all other information,
                  material, documents and data furnished by the other party
                  hereunder as confidential (except Aircraft Documents), and
                  that all such other information, material, documents and data
                  will not be furnished or disclosed by it to any other Person,
                  firm or corporation except (to the extent that such Person
                  agrees to be bound by the confidentiality standards of this
                  Clause) Beneficiary, any Financing Party, the Manufacturer,
                  the manufacturer of the Engines, the Air Authority or such
                  other governmental agency that may require submission of other
                  information, material, documents or data), without the other
                  party's prior written consent; provided, however, that both
                  parties hereby

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                  consent to the disclosure of any and all such confidential
                  information to their respective boards of directors and the
                  boards of directors of their respective affiliates; creditors,
                  Beneficiary, the Financing Parties and lawyers, accountants
                  and others providing professional services to Lessee, Lessor,
                  Beneficiary or any Financing Party; provided further that
                  neither party or other Person shall be deemed to be in breach
                  of this provision by virtue of it making any filing for public
                  record which is required under the laws of the Country of
                  Incorporation, the State of New York or the federal laws of
                  the United States of America; and

            (b)   The restrictions in Clause 15.17(a) with respect to disclosure
                  of confidential information shall not apply to any information
                  which any party demonstrates (i) becomes available to the
                  public other than as a result of a disclosure by such party or
                  its representatives; (ii) was available to such party on a
                  nonconfidential basis prior to its disclosure pursuant to this
                  Agreement; (iii) becomes available to such party on a
                  nonconfidential basis from a source other than the other party
                  hereto or its representatives, (iv) it is compelled to or
                  required to disclose by legal action; (v) is required in
                  connection with any litigation hereunder; (vi) is required in
                  connection with a disposition or other transfer of rights
                  permitted or consented to in writing by both parties
                  hereunder; or (vii) is required or advised based on legal
                  advice of counsel in order to protect and perfect the
                  interests and rights of Lessor hereunder; provided the
                  proposed transferee agrees in writing to be bound by the
                  provisions of this Clause 15.17, each party shall only be
                  required to use the same degree of care to prevent
                  unauthorized disclosure of the information described above as
                  it would use to prevent the disclosure of its own commercial
                  and financial information of the same or similar nature and
                  which it considers proprietary or confidential.

      15.18 LIABILITY OF LESSOR LIMITED:

            It is expressly agreed and understood that all representations,
            warranties and undertakings of Lessor hereunder shall be binding
            upon Lessor only in its capacity as trustee under the Trust
            Agreement, and neither the institution acting as Lessor nor the
            Beneficiary shall be liable in its individual capacity for any
            breach of Lessor's representations, warranties and undertakings
            except in the case of the institution acting as Lessor for breach of
            its own covenants, representations and warranties contained herein,
            to the extent covenanted or made in its individual capacity.

16.   DISCLAIMERS AND WAIVERS

            LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND
            CONFIRMATIONS SET FORTH IN CLAUSES 16.1 TO 16.3 BELOW SHALL APPLY AT
            ALL TIMES DURING THE TERM WITH EFFECT FROM

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            LESSEE'S ACCEPTANCE OF THE AIRCRAFT BY EXECUTION OF THE LEASE
            SUPPLEMENT NO.1, WHICH SHALL BE CONCLUSIVE EVIDENCE THAT LESSEE HAS
            FULLY INSPECTED THE AIRCRAFT AND EVERY PART THEREOF AND THAT THE
            AIRCRAFT, THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS ARE, AS
            BETWEEN LESSOR AND LESSEE, TECHNICALLY ACCEPTABLE AND ARE IN
            SUITABLE CONDITION FOR DELIVERY TO AND ACCEPTANCE BY LESSEE.

      16.1  EXCLUSION:

            THE AIRCRAFT IS DELIVERED "AS IS, WHERE IS" AND LESSEE AGREES AND
            ACKNOWLEDGES THAT AS BETWEEN LESSOR AND LESSEE:

            (A)   EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NONE OF
                  LESSOR, OWNER OR BENEFICIARY WILL BE DEEMED TO HAVE MADE OR
                  GIVEN, (WHETHER BY VIRTUE OF HAVING DONE OR FAILED TO DO ANY
                  ACT, OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER
                  OR IN RELATION TO THIS AGREEMENT OR OTHERWISE), AND WILL NOT
                  HAVE ANY LIABILITY IN RELATION TO, ANY WARRANTIES OR
                  REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO, THE
                  AIRCRAFT, ANY ENGINE OR ANY PART, INCLUDING BUT NOT LIMITED
                  TO: THE DESCRIPTION, AIRWORTHINESS, MERCHANTABILITY,
                  COMPLIANCE WITH SPECIFICATIONS, OPERATION, FREEDOM FROM
                  INFRINGEMENT OF PATENT OR OTHER PROPRIETARY RIGHTS, FITNESS
                  FOR ANY PARTICULAR USE OR PURPOSE, VALUE, DURABILITY,
                  CONDITION, OR DESIGN, OF THE AIRCRAFT OR ANY PART, OR AS TO
                  THE QUALITY OF THE MATERIAL OR WORKMANSHIP, THE ABSENCE OF
                  LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS TO
                  ANY OTHER MATTER WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY
                  IMPLIED WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR
                  DEALING OR USAGE OF TRADE) WITH RESPECT TO THE AIRCRAFT, ANY
                  ENGINE OR ANY PART; OR

            (B)   EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NONE OF
                  LESSOR, OWNER OR BENEFICIARY SHALL HAVE ANY OBLIGATION OR
                  LIABILITY WHATSOEVER TO LESSEE (WHETHER ARISING IN CONTRACT OR
                  IN TORT, AND WHETHER ARISING BY REFERENCE TO NEGLIGENCE OR
                  STRICT LIABILITY OF LESSOR OR OTHERWISE) FOR:

                  (i)   ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE
                        CAUSED DIRECTLY OR INDIRECTLY BY

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                        THE AIRCRAFT OR ANY ENGINE OR BY ANY INADEQUACY THEREOF
                        OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER
                        CIRCUMSTANCE IN CONNECTION THEREWITH;

                  (ii)  THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY
                        RISKS RELATING THERETO;

                  (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR
                        ANTICIPATED PROFITS OR ANY INDIRECT OR CONSEQUENTIAL
                        LOSS OR DAMAGE; OR

                  (iv)  THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
                        IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT, ANY ENGINE
                        OR ANY PART;

      16.2  WAIVER:

            LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND LESSOR, ALL ITS RIGHTS
            IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, ON
            THE PART OF LESSOR THAT IS DISCLAIMED HEREIN AND ALL CLAIMS AGAINST
            LESSOR HOWSOEVER AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR
            OUT OF ANY OF THE MATTERS WAIVED OR DISCLAIMED IN CLAUSE 16.1.

      16.3  DISCLAIMER OF CONSEQUENTIAL DAMAGES:

            LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY
            DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO
            RECOVER, LOST PROFITS OR REVENUES OR CONSEQUENTIAL DAMAGES (AS
            DEFINED IN SECTION 2A-520 OF THE UNIFORM COMMERCIAL CODE OR
            OTHERWISE) AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF
            ANY OF THE AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF LESSOR
            CONTAINED HEREIN.

      16.4  CONFIRMATION:

            LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS
            CLAUSE 16 AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS HAVE BEEN
            CALCULATED NOTWITHSTANDING ITS PROVISIONS.

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                                   SCHEDULE 1

                                     PART 1

                             DESCRIPTION OF AIRCRAFT

AIRCRAFT

Manufacturer:                       The Boeing Company

Model:                              B737-800

Serial Number:                      29670

Maximum Take Off Weight (MTOW):     174,200 lbs.

Maximum Landing Weight (MLW):       146,300 lbs.

Maximum Zero Fuel Weight (MZFW):    138,300 lbs.

Specification:                      Manufacturer's detailed specification number
                                    D6-38808-43-1 Revision A, dated October 31,
                                    2003 for B737-800NG model designation
                                    B737-8V3, including all Boeing Options and
                                    related Seller Furnished Equipment, Buyer
                                    Furnished Equipment and Seller Furnished
                                    Equipment.

ENGINES

Manufacturer:                       Two (2) CFM International, Inc.

Model:                              CFM56-7B26, rated at 26,300 lbs static take
                                    off thrust

Serial Numbers:                     [TBA] and [TBA]

APU

Manufacturer:                       Honeywell

Model:                              [TBA]

Serial Number:                      [TBA]

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Delivery Condition Requirements

1.    The Aircraft shall conform to the Description set out herein, as modified
      in accordance with Manufacturer approved service bulletins issued with
      respect to the aircraft on or prior to the Sale Date.

2.    With a Certificate of Airworthiness for Export issued by the FAA valid on
      the date of original new delivery from the Manufacturer in compliance with
      all FAA AD's and FAR's to FAR 121 Standard

3.    With a LOPA (Lay Out Passenger Arrangement) in accordance with Boeing
      database LOPA-378-1244 with 155 (14 business and 141 economy) class
      seating

And in addition;

4.    With MAS IFE Installed post Delivery

5.    With blended winglets installed post Delivery

      Note: The above post delivery modifications, items 5 & 6 above, will be
      the responsibility of Lessee and to Lessee's account. However, Lessor will
      reimburse Lessee the full amount of incorporating such modifications
      including installation at cost, up to $950,000 (October 2003 dollars) upon
      presentation with an invoice for the same.

With customary Lessor assignment to Lessee of all airframe, engine and equipment
warranties applicable to the Aircraft.

                                     PART 2

                               AIRCRAFT DOCUMENTS

I.      AIRCRAFT DOCUMENTS AT DELIVERY

        At Delivery, the following manuals and technical records will be
        delivered to Lessee:

        FLIGHT OPERATIONS

1     Airplane Flight Manual

2     Operations Manual

3     Quick Reference Handbook

4     Weight and Balance Manual

5     Dispatch Deviation Procedures Guide

6     Flight Crew Training Manual

7     Performance Engineer's Manual

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8     Jet Transport Performance Methods

9     FMC Supplemental Data Document

10    Operational Performance Software

11    Fault Reporting Manual

12    ETOPS Guide Vol. III

13    Flight Planning and Performance Manual

         MAINTENANCE

14    Aircraft Maintenance Manual

15    Wiring Diagram Manual

16    Systems Schematics Manual

17    Structural Repair Manual

18    Overhaul/Component Practices Manual

19    Standard Overhaul Practices Manual

20    Standard Wiring Practices Manual

21    Non-Destructive Test Manual

22    Services Bulletins and Index

23    Corrosion Prevention Manual

24    Fault Isolation Manual

25    Fuel Measuring Stick Manual

26    Power Plan Buildup Manual

27    In Service Activity Report (online only and not listed on worksheet)

28    All Operator Letters

29    Service Letters

30    Structural Item Interim Advisory

31    Maintenance Tips

32    Combined Index

         MAINTENANCE PLANNING

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33    Maintenance Planning Data Document

34    Maintenance Planning Data Tasks Masterfile (including in the digital
      version only to the Maintenance Task Cards)

35    Maintenance Task Cards and Index

36    Airline Maintenance Inspection Intervals Report

37    ETOPS Guide Vol. II

38    Configuration Maintenance and Procedures for Extended Range Operations

         SPARES

39    Illustrated Parts Catalog

40    Standards Books

      FACILITIES AND EQUIPMENT PLANNING

41    Facilities and Equipment Planning Document

42    Special Tool and Ground Handling Equipment Drawings (online only) and
      Index

43    Supplementary Tooling Documentation

44    Illustrated Tool and Equipment List/Manual

45    Aircraft Recovery Document

46    Airplane Characteristics for Airport Planning Document

47    Airplane Rescue and Fire Fighting Document

48    Engine Ground Handling Document

49    ETOPS Guide Vol. I

      SUPPLIER TECHNICAL DATA

50    Service Bulletins

51    Ground Support Equipment Data

52    Provisioning Information

53    Component Maintenance/Overhaul Manuals and Index

54    Publications Index

55    Product Support Supplier Directory

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II.   AIRCRAFT DOCUMENTS DURING TERM AND AT RETURN

Lessee shall maintain all documents, manuals, data, overhaul records, records
evidencing life limited part traceability to "zero time since new," log books
original new delivery documents, component records, applicable and required FAA
forms, modifications records and inspection records relating to the Aircraft,
each Engine and each Part in accordance with the requirements of Clause 8.10 of
this Agreement and in compliance with FAR 91.417 and FAR 121.380 during the
Term, and on the Final Expiry Date, Lessee shall return the Aircraft to Lessor
together with all such records, documents and manuals. Without limiting the
generality of the foregoing, the records required to be maintained by Lessee
during the Term include all of the following, and all of the documents and
manuals listed under Clause I of this Part 2 of this Schedule 1:

                                 A. CERTIFICATES

1     Certificate of Airworthiness (current)

2     Current Aircraft Registration Certificate

3     Export Certificate of Airworthiness (Air Authority)

4     Copy of Radio Station License (current)

5     Noise certificate (current)

6     Export Certificate of Airworthiness (original new delivery for Aircraft
      and each Engine)

7     Registration cancellation notice (Air Authority)

8     Copy of Air Operator Certificate

9     Certificate of Most Recent Release to Service

10    All Supplemental Type Certificates (STC) applied to the Aircraft

                          B. AIRCRAFT STATUS SUMMARIES

      Each status summary shall be in the English language and be certified by
      operator's Quality Control or Quality Assurance as being an accurate
      representation of aircraft status at transfer. All status summary
      documents to be signed and dated on first page by the Lessee's Manager of
      Aircraft Records or other appropriate individual.

1     Aircraft record of flight time and cycles (listing accumulated hours and
      cycles on specific dates).

2     Airworthiness Directive Applicability and Compliance Status Reports
      (Airframe, Engines and Appliances) Format/content as follows:

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            (a)   Airworthiness Directives listed in a chronological order; and

            (b)   All Airworthiness Directives applicable to the Aircraft,
                  Engine, APU or Aircraft Appliance type listed as follows:

                  -     AD number;

                  -     AD effective date;

                  -     title;

                  -     applicability status;

                  -     accomplishment status;

                  -     date or hours/cycles at last accomplishment action; and

                  -     date or hours/cycles of next action due (if applicable).

3     Manufacturer's Airworthiness Directive compliance status at time of
      manufacture as provided by Manufacturer at Aircraft Delivery.

4     Complete listing of all Engineering Orders accomplished against the
      Aircraft. For those Engineering Orders that are driven by a Service
      Bulletin, Airline will use best efforts to provide the applicable Service
      Bulletin number. The listing will otherwise include:

      -     title;

      -     date of accomplishment;

5     If applicable, Corrosion Prevention and Control Programme Task Status
      (showing last accomplishment and next due for each task) listing the
      Corrosion Prevention and Control Programme Tasks.

6     If applicable, Ageing Aircraft Inspection and Modification Programme)
      tasks status (showing task number, termination status as applicable, last
      accomplishment and next due for each item if open) if applicable.

7     List of Operator implemented Modifications Incorporated (Engineering
      Orders applied to Airframe, Engines and Appliances). Format/content as
      follows:

            (a)   Operator Modifications listed in numerical order; and

            (b)   Aviation Authority/FAA type certificate data approval for
                  modification provided.

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8     Structural Repair File with a detailed Scratch and Dent computer report as
      prepared by Lessee detailing the location of all external repairs and
      damages indicating their status in accordance with the Manufacturers
      structural repair manual showing general size and location of each
      external repair and basis for approval. Format/content as follows:

            (a)   records of accomplishment or compliance of each Major Repair
                  provided as follows:

                  -     Original signed/certified "dirty finger print" records;

                  -     Numbered and sorted by index number; and

            (b)   records for Major Repairs or repairs that do not conform to
                  the Manufacturer's Structural Repair Manual accompanied by the
                  appropriate Engineering Approval document issued by the State
                  of Washington FAA Form 8110-3 Statement or FAA Form 8100-9 (or
                  any successor of either), as applicable.

9     List of Major Alterations and Supplemental Type Certificate's Incorporated
      (STC's) (with reference to approved documentation used to accomplish).

10    List and Status of Airframe Life Limited Parts (if any) with full back to
      birth traceability support documents. Format/content as follows:

            (a)   each Life Limited Part fitted to the Airframe listed by part
                  number and unique serial number;

            (b)   detailed full back to birth traceability file supplied for
                  each individual Life Limited Part detailing on/off transaction
                  history for Engine LLPs, and FAA Form 8130-3's or equivalent
                  showing status of LLP at installation for other LLPs;

            (c)   original Airworthiness document issued when the Life Limited
                  Parts was new (such as the manufacturer's certificate of
                  conformity or readiness log document as appropriate); and

            (d)   if available, supplied tags and any other appropriate
                  certified document or job-card indicating hours/cycles or
                  calendar time at each on/off demonstrating unbroken trace of
                  the Hours/cycles or calendar time from birth up to current
                  time.

11    List and Status of Landing Gear Life Limited Parts for each Landing Gear
      with full back to birth traceability support documents Format/content as
      follows:

            (a)   each Life Limited Part fitted to Landing Gear listed by part
                  number and unique serial number;

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            (b)   detailed full back to birth traceability file supplied for
                  each individual Life Limited Part detailing on/off transaction
                  history, if available, otherwise FAA form 8130-3 or
                  equivalent; showing status of LLPs at installation.

            (c)   original Airworthiness tag document issued when the Life
                  Limited Parts was new (such as the manufacturer's tag,
                  certificate of conformity or readiness log document as
                  appropriate); and

            (d)   if available, supplied tags and any other appropriate
                  certified document or job-card indicating hours/cycles or
                  calendar time at each on/off demonstrating unbroken trace of
                  the Hours/cycles or calendar time from birth up to current
                  time.

12    List and Status of Engine Life Limited Parts with full back to birth
      traceability support documents. Format/content as follows:

            (a)   each Life Limited Part fitted to the engine identified by part
                  number and unique serial number;

            (b)   detailed full back to birth traceability file supplied for
                  each individual Life Limited Part detailing on/off transaction
                  history;

            (c)   original Airworthiness tag document issued when the Life
                  Limited Parts was new (such as the manufacturer's tag,
                  certificate of conformity or readiness log document as
                  appropriate) provided;

            (d)   full back to birth traceability file for each Life Limited
                  Part provided, to include the Airworthiness approval tag (JAA
                  form 1 or FAA form 8130-3 or equivalent) pertaining to each
                  subsequent (if any) on/off transaction up to and including
                  installation on the subject airframe; and

            (e)   supplied tags and any other appropriate certified document or
                  job-card indicating hours/cycles or calendar time at each
                  on/off demonstrating unbroken trace of the Hours/cycles or
                  calendar time from birth up to current time.

13    List and Status of Auxiliary Power Unit (APU) Life Limited Parts (if any)
      with full back to birth traceability support documents Format/content as
      follows:

            (a)   each Life Limited Part fitted to the APU identified by part
                  number and unique serial number;

            (b)   detailed full back to birth traceability file supplied for
                  each individual Life Limited Part detailing on/off transaction
                  history;

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            (c)   original Airworthiness tag document issued when the Life
                  Limited Parts was new (such as the manufacturer's tag,
                  certificate of conformity or readiness log document as
                  appropriate) provided;

            (d)   full back to birth traceability file for each Life Limited
                  Part provided, to include the Airworthiness approval tag (JAA
                  form 1 or FAA form 8130-3 or equivalent) pertaining to each
                  subsequent (if any) on/off transaction up to and including
                  installation on the subject airframe; and

            (e)   supplied tags and any other appropriate certified document or
                  job-card indicating hours/cycles or calendar time at each
                  on/off demonstrating unbroken trace of the Hours/cycles or
                  calendar time from birth up to current time.

14    Check/Inspection History and Current Status

15    List and Current Status of Time-Controlled Components Format/content as
      follows:

            (a)   Time-Controlled Components fitted to the Aircraft listed by
                  part number and unique serial number; and

            (b)   Airworthiness approval tag (JAA form 1 or FAA form 8130-3 or
                  equivalent) provided for Time-Controlled Components.

16    Inventory of Installed Serialized On-Condition/Condition Monitored
      Components . Format/content as follows:

            (a)   Serialised Components fitted to the Aircraft listed by part
                  number and unique serial number; and

            (b)   Airworthiness approval tag (JAA form 1 or FAA form 8130-3 or
                  equivalent) provided for Serialised Components.

17    List of Deferred Maintenance Items (if no Deferred Maintenance Items are
      "open" at transfer, a signed statement to that effect is required).

        List and Status of any Out-of-Phase Checks, Special Inspection
        Requirements, Time Limited Repairs, etc. (If none exist or if
        requirements are incorporated into aircraft status reports, then a
        signed statement to that effect is required.)

18    If applicable, Supplemental Structural Inspection (SSID) Status (showing
      last accomplishment and next due for each task). Format/content as
      follows:

        listing the Supplemental Structural Inspections in a numerical or
        chronological order as applicable.

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                         C. AIRCRAFT MAINTENANCE RECORDS

        Airframe inspection, maintenance, modification, and repair documents
        with maintenance and/or inspection signatures (as required) and
        description of work done.

1     Aircraft Flight and Maintenance Log Sheets for one year.

2     Most recent Airframe inspection, maintenance, modification and repair
      documents with maintenance and/or inspection signatures (as required) and
      description of work done.

3     Last "A", and all systems "C" and Structural Checks (or equivalents). (In
      the event that a check is performed in phases, all phases necessary to
      constitute a complete block check are required. In the event that check
      content varies by multiples of the check, all multiples necessary to
      constitute a complete cycle are required.)

4     Airworthiness Directive, Service Bulletin and Modification compliance
      documents including engineering orders, drawings, shop cards, etc., as
      necessary to establish method of compliance, quality control acceptance,
      and approval authority.

5     Corrosion Prevention and Control Programme compliance documents and
      inspection findings as applicable including records of accomplishment or
      compliance provided (the original signed/certified "dirty finger print"
      workcards).

6     Documentation for Operator Modifications such as engineering orders,
      drawings, FAA Form 8110-3 or FAA Form 8100-9 (as appropriate),
      Supplemental Type Certificates, Master Change Notice, FAA type certificate
      conformity approval from manufacturer or approved design organisation
      etc., as necessary to define work done, certification basis, and approval
      authority.

7     Without duplication, supporting documentation for Operator Modifications
      such as engineering orders, drawings, FAA Form 8110-3 or FAA Form 8100-9
      (as appropriate), Supplemental Type Certificates, Master Change Notice,
      FAA type certificate conformity approval from manufacturer or approved
      design organisation etc., as necessary to define work done, certification
      basis, and approval authority.

8     Aircraft weight and balance records (including weight change ledger, most
      recent weighing report and individual flight control weight and balance
      data).

9     Test Flight Reports, to the extent available.

10    X-Ray Inspection findings (pictures/film) as applicable, to the extent
      available.

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                          D. AIRCRAFT HISTORY RECORDS

1     Copies of maintenance logs for one year, and last available Lessee
      Reliability reports and equivalent, or those retained as required by the
      Federal Aviation Regulations (FARs).

2     Accident and Incident Reports (if none, then a signed "no
      Incident/Accident" statement from operator's Quality Control Manager).

3     Aircraft Log Book(s) or equivalent data and Aviation Authority Operation
      and Modification Log Book(s) (as applicable), for the last year or those
      retained as required by the FARs.

                      E. ENGINE RECORDS (FOR EACH ENGINE)

        Each status summary shall be in the English language and be certified by
        operator's Quality Control or Quality Assurance as being an accurate
        representation of engine status at transfer.

1     Certified statement as to following:

            -     Time and Cycles since new

            -     Time and Cycles since performance restoration on each engine
                  module

            -     Flying hours and cycles in Lessee's operation

2     Airworthiness Directive Applicability and Compliance Report

3     Current Manufacturer Modification and Service Bulletin Status

4     List of Operator Modifications Incorporated, if any including supporting
      documentation with Manufacturer approval and JAA/FAA Type Certificate
      conformity, as applicable

5     List of all Major Repairs and Alterations, if any

6     List and Current Status of Life Limited Components

7     Check/Inspection Status

8     Accessory Status sheet with certified TSO for each rotable item installed

9     Last shop visit JAA Form I/FAA form 8130-3 or equivalent serviceable tag
      (or copies) for each of the accessory rotables and last JAA Form I/FAA
      form 8130-3 or equivalent overhaul tags (or copies) for each of the
      accessory rotables with a hard-time overhaul requirement

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10    Repair, overhaul and inspection documents including JAA Form I/FAA form
      8130-3 for each shop visit (minimum acceptable is shop visit history
      through last performance restoration shop visit and if different, last
      overhaul of each module)

11    Documents demonstrating installation and full traceability back to birth
      (to new) for each Life Limited Part

12    Engine Condition Monitoring Report for last six months

13    Last three (3) months of pilot reports from the aircraft records system
      for the aircraft to which engine was fitted, as required by FAA's

14    Reason for last engine removal, engine change paperwork and date of engine
      removal

15    Most recent certified engine borescope (videotaped)

16    Most recent fuel, oil sampling, magnetic chip detector and vibration
      survey results

17    Most recent on-wing ground performance run specifying engine OATL (outside
      air temperature limit) at rated thrust

18    Last certified Test Cell Run specifying engine OATL

19    Manufacturer delivery documents i.e. Data Submittal

20    Engine Oil used

21    Any incidents during operation since last performance restoration shop
      visit with action taken i.e. IFSD/FOD/oil loss etc.

                                 F. APU RECORDS

        Each status summary shall be in the English language and be certified by
        operator's Quality Control or Quality Assurance as being an accurate
        representation of APU status at transfer.

1     Certified statement as to following:

            -     Hours and Cycles since new

            -     Hours and Cycles since shop visit

            -     Lessee's Method for APU Time Accrual

2     Airworthiness Directive Applicability and Compliance Report

3     Current Manufacturer Service Bulletin Status

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4     List of Operator Modifications Incorporated, if any including supporting
      documentation with Manufacturer approval and FAA Type Certificate
      conformity

5     List and Current Status of Life Limited Components

6     Accessory Status Sheet with certified time since overhaul for each rotable
      item installed

7     Last overhaul tags (or copies) for each of the accessory rotables

8     Certified and Updated APU Log Book from new (with manufacturer delivery
      documents and including record of installation and removal and accumulated
      time and cycles)

9     Repair, overhaul and inspection documents including, as applicable, JAA
      Form I/FAA forms 8130-3 and 337

10    Documents demonstrating installation and full traceability back to birth
      (to new) for each Life Limited Part

11    List of Line Replaceable Units (LRU)/QEC Rotable items missing from APU
      (if any for any spare APU redelivery)

12    Last three (3) months of pilot reports from the aircraft records system
      for the aircraft to which APU was fitted

13    Reason for last APU removal, removal paperwork and date of APU removal

14    Last certified test cell run

                              G. COMPONENT RECORDS

1     Time Controlled Component Installation records and certified records of
      last overhaul, if applicable

2     Documents demonstrating installation and full traceability back to birth
      (to new) for each Type Certificate Life Limited Part

3     Serviceable tags for Serialised On-Condition/Condition Monitored
      Components, as required by FAA

4     Landing gear records to include Life Limited Parts status and back to
      birth traceability, modification status, inventory of all sub-assemblies
      with part numbers and serial numbers specified, Airworthiness Directive
      status including detailed workshop workscope provided by the Agreed
      Maintenance Performer, last overhaul documentation including JAA form
      I/FAA form 8130-3 serviceable tag

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                      H. MISCELLANEOUS TECHNICAL DOCUMENTS

1     Maintenance Program Specifications including a cross-reference to
      Manufacturer's maintenance planning document to be made available

2     Reference material necessary for interpretation of status summaries, i.e.
      Operator part numbers Cross Reference to Manufacturer's part numbers

3     Interior configuration drawings (L.O.P.A. and Emergency Equipment
      Locations; Galley Drawings)

4     Aircraft Detail Specification

5     Loose Equipment Inventory such as galley trolleys / containers / oven
      trays / oven inserts

6     Seat, cushion and fabric cover Material Burn Test documents for applicable
      FAA if provided by Aircraft Manufacturer during Delivery (Lessee shall be
      responsible only for providing burn test documents for any replacement
      materials installed after Delivery)

7     Flight Data Recorder - Print / Copy of Last Read-Out as applicable under
      Lessee's Approved Maintenance Program

                                      130
<PAGE>

                                   SCHEDULE 2

                         FORM OF ACCEPTANCE CERTIFICATE

                FORM OF AIRCRAFT TECHNICAL ACCEPTANCE CERTIFICATE

      This Aircraft Technical Acceptance Certificate is given, on and as of the
date set forth below, by Wells Fargo Bank Northwest, N.A., not in its individual
capacity, but solely as trustee ("TRUSTEE") for the benefit of RBS Aerospace
Limited ("RBS") under the Trust Agreement dated as of December 23, 2004 between
Trustee and RBS, to Delta Air Lines, Inc. ("SELLER") pursuant to the Aircraft
Sale and Purchase Agreement dated as of October 1, 2003 between RBS and Seller
(the "AGREEMENT", terms used herein being used as defined in the Agreement):

      Trustee hereby indicates and confirms to Seller, its successors and
assigns, that the Trustee has, at ____ o'clock _. m. on this ____ day of
_____________, 2005 at Boeing Field, Seattle, Washington, completed its
technical inspection and flight test of the following Aircraft and inspection of
its related Technical Documents in accordance with the provisions of the
Agreement, and that Trustee is ready to accept Delivery of such Aircraft and
Technical Documents from Seller under the Agreement (it being understood that
Trustee may be entering into a delivery concessions letter with Boeing to
resolve any technical issues at a later date):

      (a)   one Boeing model 737-800 jet airframe, manufacturer's serial number
            _________
            Registration number __________
            Total Time: __________
            Total Cycles: __________

      (b)   Two CFM International CFM56-7B ______ Engines

                     Serial Numbers           Total Time            Total Cycles
            1.
            2.
            (each of the Engines having _________ pounds thrust rating or its
            equivalent)

      (c)   [APU manufacturer and model #]

                     Serial Number            Total Time            Total Cycles

      (d)   Landing Gear

                     Serial Number            Total Time            Total Cycles
            Nose
            Main right
            Main left

      (e)   Fuel status: _________ kilos

      (f)   Loose Equipment Check List: Signed by Seller and Trustee and
            attached hereto.

                                      131
<PAGE>

      (g)   Statement of Non-Conformance: Signed by Seller and Trustee and
            attached hereto.

                                      132
<PAGE>

IN WITNESS WHEREOF, Trustee has caused this Aircraft Technical Acceptance
Certificate to be executed in its name, by its duly authorized officer(s) or
representative(s), pursuant to due corporate authority, all as of the date
written in paragraph 1 above.

WELLS FARGO BANK NORTHWEST, N.A., not in its individual capacity, but solely as
trustee for the benefit of RBS Aerospace Limited under the Trust Agreement dated
as of December 23, 2004 between itself and RBS Aerospace Limited

By: COMPANIA PANAMENA DE AVIACION, S.A.,
    its agent

    By: ____________________________
        Name: ______________________
        Title: _____________________

                                      133
<PAGE>

                      FORM OF AIRCRAFT DELIVERY CERTIFICATE

      This Aircraft Delivery Certificate is given, on and as of the date set
forth below, by Wells Fargo Bank Northwest, N.A., not in its individual
capacity, but solely as trustee ("TRUSTEE") for the benefit of RBS Aerospace
Limited ("RBS") under the Trust Agreement dated as of December 23, 2004 between
Trustee and RBS, to Delta Air Lines, Inc. ("SELLER") pursuant to the Aircraft
Sale and Purchase Agreement dated as of October 1, 2003 between Buyer and Seller
(the "AGREEMENT", terms used herein being used as defined in the Agreement):

      1.    DETAILS OF DELIVERY

      Trustee hereby indicates and confirms to Seller, its successors and
assigns, that the Trustee has, at ___ o'clock _. m. on this ___ day of
___________, 2005 at Boeing Field, Seattle, Washington, received and accepted
the following Aircraft in accordance with the provisions of the Agreement:

      (a)   one Boeing model 737-800 jet airframe, manufacturer's serial number
            _________
            Registration number ________
            Total Time: ________
            Total Cycles: ________

      (b)   Two CFM International CFM56-7B Engines

                     Serial Numbers           Total Time            Total Cycles
            1.
            2.

            (each of the Engines having _________ pounds thrust rating or its
            equivalent)

      (c)   [make and model] APU

                     Serial Number            Total Time            Total Cycles

      (d)   Landing Gear

                     Serial Number            Total Time            Total Cycles
            Nose
            Main right
            Main left

      (e)   Fuel status: _________ kilos

      (f)   Loose Equipment Check List: Signed by Seller and Trustee and
            attached hereto.

      (g)   Statement of Non-Conformance: Signed by Seller and Trustee and
attached hereto.

      2.    CONFIRMATION OF UNDERTAKINGS

            The Trustee confirms that as of the Delivery at the time specified
            above:

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<PAGE>

            (i) The Aircraft was duly accepted by Trustee in accordance with and
subject to the provisions of the Agreement and the execution and delivery of
this Aircraft Delivery Certificate further confirms the acceptance of the
Aircraft by Trustee for all purposes of the Agreement, subject only to the items
noted on the Statement of Non-Conformance; and

            (ii) the Aircraft is insured in accordance with the Agreement.

IN WITNESS WHEREOF, Trustee has caused this Aircraft Delivery Certificate to be
executed in its name, by its duly authorized officer(s) or representative(s),
pursuant to due corporate authority, all as of the date written in paragraph 1
above.

WELLS FARGO BANK NORTHWEST, N.A., not in its individual capacity,
but solely as trustee for the benefit of RBS Aerospace Limited
under the Trust Agreement dated as of December 23, 2004
between itself and RBS Aerospace Limited

By: COMPANIA PANAMENA DE AVIACION, S.A.,
    its attorney-in-fact

    By: ____________________________
        Name: ______________________
        Title: _____________________

                                      135
<PAGE>

                     FORM OF RECEIPT FOR TECHNICAL DOCUMENTS

                                          One Boeing 737-800 Aircraft
                                          Manufacturer's Serial No. ____________

      The undersigned hereby acknowledges receipt of all of the Technical
Documents listed on Exhibit D to the Aircraft Sale and Purchase Agreement dated
as of October 1, 2003 (the Agreement) between Delta Air Lines, Inc. ("SELLER")
and RBS Aerospace Limited.

      By this acceptance, Trustee assumes any and all risks of the use and
ownership of all the Technical Documents or any part thereof, and for itself and
its respective officers, directors, agents, employees, representatives,
successors and assigns, does hereby release any claim it may have against Seller
arising out of the use or possession of such Documents.

                                    WELLS FARGO BANK NORTHWEST,
                                    N.A., not in its individual capacity,
                                    but solely as trustee for the benefit of RBS
                                    Aerospace Limited under the Trust Agreement
                                    dated as of December 23, 2004 between itself
                                    and RBS Aerospace Limited

                                    By: COMPANIA PANAMENA DE AVIACION, S.A., for
                                        and on behalf of the Trustee

                                        By: ____________________________________
                                            Name: ___________________________
                                            Title: __________________________

                                      136
<PAGE>

                                   SCHEDULE 3

           REDELIVERY CONDITIONS AND REDELIVERY MAINTENANCE ADJUSTMENT

                            PART 1 RETURN CONDITIONS:

                              **Material Redacted**

                                   **7 pages**

                                      137
<PAGE>

                                     PART 2

                           [Intentionally left blank]

                                      138
<PAGE>

                                     PART 3

                       MAINTENANCE REDELIVERY ADJUSTMENTS

                              **Material Redacted**

                                   **2 pages**

                                      139
<PAGE>

                                   SCHEDULE 4

                             INSURANCE REQUIREMENTS

1. Types of Insurance

The Insurances required to be maintained are as follows:

(a)   Hull insurance covering loss of or damage while flying and on the ground
      with respect to the Aircraft on an agreed value basis for the Agreed Value
      and with a deductible not exceeding the Maximum Deductible Amount, or such
      other greater amount as is consistent with market practice in the airline
      insurance industry from time to time and similar carriers operating
      similar aircraft in similar circumstances;

(b)   Hull War and Allied Perils insurance, being such risks excluded from the
      Hull All insurance to the extent reasonably commercially available from
      the leading international insurance markets (except for confiscation by
      the Country of Registration), for an amount no less than the Minimum War
      Risk Coverage;

(c)   Hull All Risks (including War and Allied Perils except when on the ground
      or in transit other than by air) property insurance on all Engines and
      Parts when not installed on the Aircraft on an "agreed value" basis for
      their full replacement value and including engine test and running risks;

(d)   Aircraft Third Party, Property Damage, Passenger, Baggage, Cargo and Mail
      and Airline General Third Party (including Products) Legal Liability for a
      combined single limit (bodily injury/property damage) of an amount not
      less than the Minimum Liability Coverage for the time being for any one
      occurrence (but in respect of products and personal injury liability, this
      limit may be an aggregate limit for any and all losses occurring during
      the currency of the policy). War and Allied Perils are also to be covered
      under the policy to the extent reasonably commercially available from the
      leading international airline insurance markets (which coverage shall
      include but not be limited to an extended war risk coverage endorsement
      equivalent to the terms of AVN52D).

2.    Terms of Hull and Spares Insurance

All required hull and spares insurance, so far as it relates to the Aircraft,
will:

(a)   ADDITIONAL INSUREDS: name Lessor, Beneficiary, Owner, if different from
      Lessor, and each Financing Party and their respective successors and
      permitted assigns as additional assureds for their respective rights and
      interests;

(b)   SETTLEMENT OF LOSSES: provide that any loss will be adjusted between
      Lessee and Insurers subject to prior approval before settlement with
      Lessor, and will be payable in Dollars to Lessor up to the Agreed Value,
      for the account of all interests, except where the loss does

                                      140
<PAGE>

      not exceed the Damage Notification Threshold, and Lessor has not notified
      the insurers to the contrary, in which case the loss will be settled with
      and paid to Lessee;

(c)   50/50 PROVISION: if separate "Hull" and "war risks and allied perils"
      insurances are arranged, include a 50/50 provision in accordance with
      market practice (AVS. 103 or its equivalent);

3.    Terms of Liability Insurance

All required liability insurances will:

(a)   ADDITIONAL INSUREDS: include Lessor, Owner, if different from Lessor,
      Initial Purchaser (but only for claims arising against Initial Purchaser
      solely as a result of Initial Purchaser being a party in the chain of
      title and where no act or omission of Initial Purchaser, its successors,
      assigns, officers, or employees, allegedly contributed to the event
      leading to indemnification requirement), and each of the other
      Indemnitees, as additional insureds (each an "Additional Insured") for
      their respective rights and interests, warranted, each as to itself only,
      no operational interest; however, no party shall be included as an
      Additional Insured in respect of its liability, if any, as Manufacturer,
      repairer, supplier or servicing agent of the Aircraft or any part thereof;

(b)   SEVERABILITY: include a severability of interests clause which provides
      that the insurance, except for the limit of liability, will operate to
      give each insured the same protection as if there was a separate policy
      issued to each insured;

(c)   PRIMARY POLICY: contain a provision confirming that the policy is primary
      without right of contribution, and the liability of the insurers will not
      be affected by any other insurance of which any Additional Insured may
      have the benefit so as to reduce the amount payable to the additional
      insureds under such policies;

4.    Terms of All Insurances

All Insurances will:

(a)   BEST INDUSTRY PRACTICE: be in accordance with normal industry practice of
      similar airlines operating similar aircraft in similar circumstances;

(b)   DOLLARS: provide cover denominated in dollars and any other currencies
      which Lessor may reasonably require in relation to liability insurance;

(c)   WORLDWIDE: operate on a worldwide basis subject to such limitations and
      exclusions as are standard at the date hereof in the London or New York
      aviation market or as Lessor may agree;

(d)   BREACH OF WARRANTY: provide that, in relation to the interests of each of
      the Additional Insureds, the Insurances will not be invalidated by any act
      or omission by Lessee, or any other insured other than the respective
      Additional Insureds seeking protection and shall

                                      141
<PAGE>

      insure the interests of each of the additional assureds regardless of any
      breach or violation by Lessee, or any other Person other than the
      respective additional assured seeking protection of any warranty,
      declaration or condition, contained in such Insurances;

(e)   SUBROGATION: provide that the insurers will hold harmless and waive any
      rights of recourse against the Additional Insureds or to be subrogated to
      any rights of Lessor or Lessee;

(f)   PREMIUMS: provide that the Additional Insureds will have no obligation or
      responsibility for the payment of any premiums due (but reserve the right
      to pay the same should any of them elect to do so) and that the insurers
      will not exercise any right of set-off or counter-claim in respect of any
      premium due against the respective interests of the Additional Insureds
      other than outstanding premiums relating to the Aircraft, any Engine or
      Part the subject of the relevant claim;

(g)   CANCELLATION/CHANGE: provide that the Insurances will continue unaltered
      for the benefit of the Additional Insureds for at least 30 days (ten days
      in the event of cancellation due to non-payment of premium) after written
      notice by registered mail or fax of any cancellation, change, event of
      non-payment of premium or installment thereof has been sent to Lessee's
      broker of record, except in the case of war risks for which 7 days (or
      such lesser period as is or may be customarily available in respect of war
      risks or allied perils) will be given, or in the case of war between the
      five great powers or nuclear peril for which termination is automatic;

(h)   REINSURANCE: any reinsurance will:

      (i)   be on the same terms as the original insurances and will include the
            provisions of this Schedule,

      (ii)  provide that notwithstanding any bankruptcy, insolvency,
            liquidation, dissolution or similar proceedings of or affecting the
            reinsured that the reinsurers' liability will be to make such
            payments as would have fallen due under the relevant policy of
            reinsurance if the reinsured had (immediately before such
            bankruptcy, insolvency, liquidation, dissolution or similar
            proceedings) discharged its obligations in full under the original
            insurance policies in respect of which the then relevant policy of
            reinsurance has been effected; and

      (iii) contain a "cut-through" clause in the following form (or otherwise
            satisfactory to Lessor):

            "The Reinsurers and the Reinsured hereby mutually agree that, in the
            event of any claim arising under the reinsurances in respect of a
            total loss or other claim, as provided by the Aircraft Lease
            Agreement dated as of December 23, 2004 and made between Lessor and
            Lessee, such claim is to be paid to the Person named as sole loss
            payee under the primary insurances, the Reinsurers will in lieu of
            payment to the Reinsured, its successors in interest and assigns pay
            to the Person named as sole loss payee under the primary insurances
            effected by the Reinsured

                                      142
<PAGE>

            that portion of any loss due for which the Reinsurers would
            otherwise be liable to pay the Reinsured (subject to proof of loss),
            it being understood and agreed that any such payment by the
            Reinsurers will (to the extent of such payment) fully discharge and
            release the Reinsurers from any and all further liability in
            connection therewith; subject to such provisions not contravening
            any Law of the State of Incorporation;" and

5.    Deductibles

Lessee shall be responsible for any and all deductibles under the Insurances.

6.    Application of Insurance Proceeds

The Insurances will be endorsed to provide for payment of proceeds as follows:

(a)   TOTAL LOSS: all insurance payments up to the Agreed Value (and all other
      amounts which are then payable by Lessee to Lessor) received as the result
      of a Total Loss occurring during the Lease Period will be paid to Lessor
      up to the Agreed Value;

(b)   EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance proceeds of any
      property, damage or loss to the Aircraft, any Engine or any Part occurring
      during the Lease Period not constituting a Total Loss and in excess of the
      Damage Notification Threshold for repairs or replacement property upon
      Lessor being satisfied that the repairs or replacements have been effected
      in accordance with this Agreement. Any balance remaining shall be paid to
      Lessee;

(c)   BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in amounts below
      the Damage Notification Threshold may be paid by the insurer directly to
      Lessee;

(d)   DEFAULT: notwithstanding the foregoing paragraphs, if at the time of the
      payment of any such insurance proceeds a Default has occurred and is
      continuing, all such proceeds will be paid to or retained by Lessor to be
      applied toward payment of any amounts which may be or become payable by
      Lessee in such order as Lessor may elect, and any remainder after cure of
      such Default shall be paid to Lessee.

In the event of a conflict between the provisions hereof and the provisions of
AVN 67B or its equivalent, the latter shall control and the provisions hereof
shall be deemed modified accordingly; provided that the provisions of AVN 67B
shall continue to reflect industry practice. To the extent that insurance
proceeds are paid to Lessee, Lessee agrees to comply with the foregoing
provisions and apply or pay over such proceeds as so required.

                                      143
<PAGE>

                                   SCHEDULE 5

                  ACKNOWLEDGEMENTS IN CONNECTION WITH FINANCING

                                     PART 1

                              NOTICE OF ASSIGNMENT

From: Wells Fargo Bank Northwest, N.A., not in its individual capacity, but
      solely as trustee under the Trust Agreement

To:   Compania Panamena de Aviacion, S.A.

                                                                          [Date]

Dear Sirs,

We hereby give you notice that by an Assignment dated [ ], 200_ (the
"Assignment") between us and [ ] of [ ] ("Assignee") we have assigned as
security to Assignee all our right, title and interest in and to the Aircraft
Lease Agreement dated as of December 23, 2004 (the "Lease") between ourselves
and yourselves relating to one Boeing B[ ] aircraft with manufacturer's serial
number [ ] together with the two [ ] engines (the "Aircraft").

Henceforth all monies that may be payable by you under the Lease shall continue
to be paid to the bank account specified in the Lease unless and until the
Assignee otherwise directs, whereupon you are authorized and required to comply
with the Assignee's directions.

This notice and the instructions herein contained are irrevocable. Please
acknowledge receipt of this notice to the Assignee on the enclosed
Acknowledgement. You are hereby authorized to assume the obligations expressed
to be assumed by you thereunder to the effect that, so far as the same would
otherwise be incompatible therewith, your obligations to us under the Lease will
be modified accordingly.

Yours faithfully,

Wells Fargo Bank Northwest, N.A.,
 not in its individual capacity,
 but solely as trustee under
 the Trust Agreement

By: ____________________________
    Name:
    Title:

                                      144
<PAGE>

                                     PART 2

                                 ACKNOWLEDGEMENT

From: Compania Panamena de Aviacion, S.A.

To:   [      ]                                                            [Date]

Dear Sirs,

We acknowledge receipt of a Notice of Assignment dated [ ] (the "Assignment
Notice") relating to an assignment (the "Assignment") between Wells Fargo Bank
Northwest, N.A., not in its individual capacity, but solely as trustee under the
Trust Agreement (the "Assignor"), and you. [Subject to the fulfillment or
satisfaction of the requirements of Clause 14.2 of the Lease and your agreement
in our favor to be bound by the obligations of Lessor as set forth in and in
accordance with the Lease and further subject to the receipt of a Quiet
Enjoyment Letter in the form attached hereto and to your counter-signature and
that of Assignor hereof,] we acknowledge that we will not challenge the
effectiveness of the Assignment to confer on you all rights, title and interest
of the Assignor under the Aircraft Lease Agreement dated as of December 23, 2004
between Assignor and ourselves (the "Lease") in respect of one Boeing B[ ]
aircraft with manufacturer's serial number [ ] together with the two [ ]
engines.

In consideration of the foregoing and of payment to us of $1 and for other
valuable consideration, receipt of which we hereby acknowledge, we hereby agree
as follows:

If you issue to us a notice (a "Lessor Default Notice") that your rights as
assignee under the Assignment have become exercisable we agree that we will
thereafter (a) pay to you at such account as you may nominate all rentals and
other amounts from time to time payable by us under the Lease; (b) perform,
observe and comply with all our other undertakings and obligations under the
Lease in your favor and for your benefit as if you were named as "Lessor"
therein instead of the Assignor; and (c) if you so request, enter into a lease
with you or your nominee, on the same terms (mutatis mutandis) as the Lease.

If the Assignor is in breach of any of its obligations, express or implied,
under the Lease, or if any event occurs which would permit us to terminate,
cancel or surrender the Lease we will (a) immediately upon becoming aware of it,
give you notice of such breach or event, (b) accept as adequate remedy for any
such breach performance by you of such obligations within 7 days of our written
notice to you; and (c) if you so request, enter into a lease with you or your
nominee on terms identical to the Lease, mutatis mutandis.

We agree that after issue by you of any Lessor Default Notice, we will not
recognize the exercise by the Assignor of any of its rights and powers under the
Lease unless and until requested to do so by you.

                                      145
<PAGE>

We agree that you will have the benefit of Clause 10 of the Lease (Indemnity),
subject, however, to all of the limitations set forth in the Lease, and agree
that we are bound by the terms of such clause, as though the same were set out
herein in full, mutatis mutandis.

Yours faithfully,

For and on behalf of Compania Panamena de Aviacion, S.A.

By: ____________________________
    Name:
    Title:

ACKNOWLEDGEMENT AND AGREEMENT OF
ASSIGNOR AND ASSIGNEE:

The agreements of Compania Panamena de Aviacion, S.A. ("COPA") set forth in the
foregoing Acknowledgment are hereby acknowledged and agreed to by each of
Assignor and ____________ ("Assignee") in all respects, and so far as the
obligations of COPA set forth above would otherwise be incompatible with the
obligations of COPA to the Assignor under the Lease, the obligations of COPA
under the Lease shall be modified accordingly.

ASSIGNOR:
Wells Fargo Bank Northwest, N.A.,
 not in its individual capacity,
 but solely as trustee under
 the Trust Agreement

By: ____________________________
    Name:
    Title:

ASSIGNEE:

_________________________________

                                      146
<PAGE>

                                     PART 3

                  FORM OF LETTER OF QUIET ENJOYMENT FROM OWNER

[Date]

COMPANIA PANAMENA DE AVIACION, S.A.

                                                               ___________, 200_

Dear Sirs,

Boeing B[  ] Aircraft with Manufacturer's Serial Number _____ (the "Aircraft")

      We refer to the Lease Agreement dated as of ___________ __, 200_ (the
"Head Lease") between [Owner] (the "Owner"), as lessor, and Wells Fargo Bank
Northwest, N.A., not in its individual capacity, but solely as trustee under the
Trust Agreement (the "Lessor"), as lessee, and the Aircraft Lease Agreement
dated as of December 23, 2004 between Lessor, as lessor and Compania Panamena de
Aviacion, S.A. ("COPA"), as lessee, relating to the Aircraft (the "Lease
Agreement").

      For good and valuable consideration receipt of which is hereby
acknowledged, Owner confirms to you that it will not disturb the quiet use,
possession and enjoyment of the Aircraft by COPA throughout the term of the
Lease Agreement in accordance with the terms of the Lease Agreement so long as
no Event of Default then exists under the Lease Agreement.

Yours sincerely,

__________________________
[Owner].

                                      147
<PAGE>

                                     PART 4

           [FORM OF LETTER OF QUIET ENJOYMENT FROM FINANCING PARTIES]

                      [NAME AND ADDRESS OF FINANCING PARTY]

[Date]

Compania Panamena de Aviacion, S.A.

Dear Sirs,

Boeing B[ ] Aircraft with Manufacturer's Serial Number ______ (the "Aircraft")

      We refer to the Aircraft Lease Agreement dated as of ______________, 2004
between Wells Fargo Bank Northwest, N.A., not in its individual capacity, but
solely as trustee under the Trust Agreement ("Lessor") and Compania Panamena de
Aviacion, S.A. ("COPA") relating to the Aircraft (the "Lease Agreement").

      For good and valuable consideration receipt of which is hereby
acknowledged, we confirm to you that we will not disturb the quiet use,
possession and enjoyment of the Aircraft by COPA throughout the term of the
Lease Agreement in accordance with the terms of the Lease Agreement, so long as
no Event of Default then exists under the Lease Agreement.

Yours sincerely,

____________________________
[Financing Parties]

                                      148
<PAGE>

                                     PART 5

           ADDITIONAL PARAGRAPHS FOR FORM OF LETTER OF QUIET ENJOYMENT

1.    Until such time as COPA has received a notice (herein, a "Lessor Rights
      Notice") from Assignee stating that Assignee has succeeded to the rights
      of Lessor under the Lease Agreement to exercise and receive any of the
      claims, rights, powers, privileges, remedies and other benefits of Lessor
      as "Lessor" under the Lease Agreement (collectively referred to herein as
      "Lessor's Rights and Powers"), COPA shall be entitled to acknowledge and
      rely upon the exercise by Lessor of all of Lessor's Rights and Powers, and
      any consent, notice, approval, amendment, waiver or release or other
      exercise of Lessor's Rights and Powers by Lessor shall be binding upon
      Lessor and Assignee for all purposes.

2.    Assignee's exercise or receipt of Lessor's Rights and Powers shall be
      subject to all of the terms and conditions of the Lease Agreement, to the
      same extent as if exercised by Lessor.

3.    Any security deposit, letter of credit and/or insurance payments under any
      policy maintained by Lessee pursuant to the Lease Agreement received or
      held by Assignee at any time shall be held subject to the terms of the
      Lease Agreement and shall be applied only in the manner permitted under
      the terms of the Lease Agreement.

                                      149
<PAGE>

                                   SCHEDULE 6

                          FORM OF MONTHLY STATUS REPORT

                             FORM OF MONTHLY REPORT

                         REPORT FOR MONTH _____________

Aircraft Type: Boeing B737-800
Manufacturer's Serial Number: [ ][ ]
Engine Type: CFM56-7B26
AIRFRAME DURING PERIOD SINCE NEW
Airframe Flight Hours
Airframe Block Hours
Aircraft Cycles

Time remaining to Airframe 6C/24,000 Flight Hour Block Structural Check

ENGINES ENGINE POS #1 ENGINE POS #2

Serial Number of Engine

Present Location of Engine

Engine Flight Hours since new

Cycles since new

Engine Flight Hours performed during period

Engine Cycles flown during period

Date of last shop visit/type of shop visit

Engine Cycles flown since last shop visit

Serial number of engine installed on the Airframe

APU

Serial Number of Original

Present location of original APU

APU Hours (original APU)

Date of last shop visit/type of shop visit

APU Hours since last shop visit

APU Cycles since last shop visit

                                      150
<PAGE>

Serial number of APU installed on the Airframe

MAINTENANCE CHECKS COMPLETED
   NUMBER  DATE    HOURS   CYCLES

"A" check

"C" check

Structural inspection

NEXT CHECKS DUE

   NUMBER  DATE    HOURS   CYCLES

"C" Check

Structural inspection

   HOURS/CYCLES FLOWN DURING MONTH X       US$ PER FLIGHT HOUR/CYCLE    =

OVERHAUL RESERVES
Engine Performance Restoration
S/N ____________             X    / Flight Hour   =
Engine Performance Restoration
S/N ____________             X    / Flight Hour   =
Engine LLP
S/N ____________             X    / Cycle =
Engine LLP
S/N ____________             X    / Cycle =
APU Performance Restoration            X    / APU operating Cycle   =

RELEVANT MAINTENANCE TASK       US$ PER MONTH
Airframe 6C/24,000 Flight
Hour Block Structural Check

Landing Gear overhaul

TOTAL AMOUNT OF MAINTENANCE RESERVES

                                      151
<PAGE>

                                   SCHEDULE 7

                               ECONOMIC VARIABLES

AGREED VALUE                  **Material Redacted**

AIRFRAME 6C/24,000            US**Material Redacted** per Flight Hour
FLIGHT HOUR BLOCK
STRUCTURAL CHECK
SUPPLEMENTAL RENT
RATE

ANNUAL SUPPLEMENTAL           3%
RENT ADJUSTMENT

APU SUPPLEMENTAL              US**Material Redacted** per Airframe Flight Hour
RENT RATE

ASSUMED LIBOR RATE            1.25%

ASSUMED RATIO                 Flight Hour to Cycle ratio: 2.3 to 1

ASSUMED ANNUAL                3,000 Flight Hours
UTILIZATION

ASSUMED RENT                  **Material Redacted**

CROSS-DEFAULT AMOUNT          US$3,000,000

DAMAGE NOTIFICATION           US$500,000
THRESHOLD

DISCOUNT RATE                 4.5%

ENGINE LLP                    US**Material Redacted** per Cycle per Engine
SUPPLEMENTAL RENT
RATE

ENGINE SUPPLEMENTAL           US**Material Redacted** per Flight Hour per Engine
RENT RATE

LANDING GEAR                  US**Material Redacted** per Month
SUPPLEMENTAL RENT
RATE

                                      152
<PAGE>

MAXIMUM DEDUCTIBLE            US**Material Redacted**
AMOUNT

MINIMUM LIABILITY             US**Material Redacted**
COVERAGE

MINIMUM WAR RISK              US**Material Redacted**
COVERAGE

SECURITY DEPOSIT              **Material Redacted**
AMOUNT

TAX CONTEST THRESHOLD         US$50,000

WARRANTY CLAIM                US$100,000
NOTIFICATION THRESHOLD

                                      153
<PAGE>

                        ASSUMED RATIO ADJUSTMENT TABLE*

<TABLE>
<CAPTION>
                              Engine Supplemental
Flight Hour / Cycle           Rent Adjusted Value
-------------------           -------------------
<S>                           <C>
      .75:1                   **Material Redacted**
       1:01                   **Material Redacted**
     1.25:1                   **Material Redacted**
      1.5:1                   **Material Redacted**
     1.75:1                   **Material Redacted**
      2:01                    **Material Redacted**
     2.25:1                   **Material Redacted**
      2.5:1                   **Material Redacted**
     2.75:1                   **Material Redacted**
      3:01                    **Material Redacted**
      4:01                    **Material Redacted**
    all higher                **Material Redacted**
</TABLE>

                   ASSUMED ANNUAL UTILIZATION ADJUSTMENT TABLE

<TABLE>
<CAPTION>
                                         Airframe Structural Check
  Annual Utilisation                          Reserve Amount $
(Airframe Flight Hours)                            (2004)**
<S>                                      <C>
         2,800                                      66.5

         3,000                                       62

         3,200                                      58.5

         3,400                                       55

         3,600                                       52

         3,800                                       50

         4,000                                       47

         4,200                                       45
</TABLE>

----------
* Operation 3000 Hrs / 1300 cycles per year (Ratio 23:1).

** The above USD rates to be escalated by 3%, compounded annually, commencing
January 1, 2005.

                                      154
<PAGE>

                             RENT ADJUSTMENT FACTOR

The rental shall be adjusted, upwards or downwards, by the following adjustment
factors for every one hundredth of one per cent (0.01%) change, upwards or
downwards, in the Assumed LIBOR Rate of 1.25% for the applicable 6-month period.
(Values in US$):

                                                            N FACTOR*
     SIX MONTH PERIODS                                      ---------
(COMMENCING ON DELIVERY DATE)                                 (US$)
----------------------------
         Period 1                                     **Material Redacted**

         Period 2                                     **Material Redacted**

         Period 3                                     **Material Redacted**

         Period 4                                     **Material Redacted**

         Period 5                                     **Material Redacted**

         Period 6                                     **Material Redacted**

         Period 7                                     **Material Redacted**

         Period 8                                     **Material Redacted**

         Period 9                                     **Material Redacted**

         Period 10                                    **Material Redacted**

         Period 11                                    **Material Redacted**

         Period 12                                    **Material Redacted**

         Period 13                                    **Material Redacted**

         Period 14                                    **Material Redacted**

         Period 15                                    **Material Redacted**

* Adjustment Factors to be adjusted in accordance with the Price Escalation
  Adjustment from July 2004 until the Delivery Date. The formula for the
  calculation of the Price Escalation Adjustment is set out in Schedule 7.

                                      155
<PAGE>

                          PRICE ESCALATION ADJUSTMENTS

The Escalation Adjustment for the Aircraft will be determined by the following
formula:

      P(a) = P x ((L + M)/1.3665* - 1)

      where:

      P(a) =    Purchase Price Adjustment (includes the Engine price)

      L =     0.65 x  ECI/130.1

      M =     0.35 x  ICI/123.6

      P =     Aircraft Base Purchase Price in July, 2004 Dollars

      ECI is a value determined using the U.S. Department of Labor, Bureau of
      Labor Statistics "Employment Cost Index for workers in aerospace
      manufacturing" (ECI code 3721), calculated by establishing a three-month
      arithmetic average value (expressed as a decimal and rounded to the
      nearest tenth) using the values for the fifth, sixth and seventh months
      prior to the month of the Scheduled Delivery Date of the applicable
      Aircraft. As the Employment Cost Index values are only released on a
      quarterly basis, the value released for the month of March will be used
      for the months of January and February; the value for June used for April
      and May; the value for September used for July and August; and the value
      for December used for October and November.

      ICI is a value determined using the U.S. Department of Labor, Bureau of
      Labor Statistics "Producer Prices and Price Index - Industrial Commodities
      Index", calculated as a 3-month arithmetic average of the released monthly
      values (expressed as a decimal and rounded to the nearest tenth) using the
      values for the 5th, 6th and 7th months prior to the month of the Scheduled
      Delivery Date of the applicable Aircraft.

In determining the values of L and M, all calculations and resulting values will
be expressed as a decimal rounded to the nearest ten-thousand, where rounding of
the fourth digit will be increased to the next higher digit when the 5th digit
is equal to 5 or more. The values released by the Bureau of Labor Statistics and
available 30 days prior to the month of the Scheduled Delivery Date for each
Aircraft will be used to determine the ECI and ICI values for the applicable
months (including those noted as preliminary by the Bureau of Labor Statistics)
to calculate the Escalation Adjustment at the time of Delivery. The values will
be considered final and no further adjustments will be made after Aircraft
Delivery for any subsequent changes, revisions or corrections to published Index
values.

----------
*This is the July 2004 Adjustment Factor assuming escalation from a July 1995
base.

                                      156
<PAGE>

                                   SCHEDULE 8

                         FORM OF LEASE SUPPLEMENT NO. 1

      THIS LEASE AGREEMENT SUPPLEMENT NO. 1 (this "Lease Supplement No. 1") is
entered into on the ____ day of ____________, 2005 between Wells Fargo Bank
Northwest, N.A., not in its individual capacity, but solely as trustee under the
Trust Agreement ("Lessor"); and Compania Panamena de Aviacion, S.A., a
corporation organized under the laws of The Republic of Panama, with its
principal place of business at Avenida Justo Arosemena y Calle 39, Apartado
1572, Panama 1, Republic of Panama ("Lessee").

                                    RECITALS:

      A. Lessor and Lessee have previously entered into that certain Aircraft
Lease Agreement dated as of December 23, 2004 (the "Agreement"). The Agreement
provides for the execution and delivery from time to time of a Lease Supplement
substantially in the form hereof for the purpose of leasing the aircraft
described below under the Agreement as and when delivered by Lessor to Lessee in
accordance with the terms thereof.

      B. The Agreement and this Lease Supplement No. 1 relate to the Aircraft,
Engines and Parts as more precisely described below. A counterpart of the
Agreement is attached hereto and this Lease Supplement and the Agreement shall
form one document.

      In consideration of the premises and other good and valuable
consideration, receipt of which is hereby acknowledged, Lessor and Lessee hereby
agree as follows:

      1. Lessor hereby delivers and leases to Lessee under the Agreement, and
Lessee hereby accepts, acknowledges receipt of possession and leases from Lessor
under the Agreement, that certain A[ ] aircraft bearing manufacturer's serial
number [ ] and U.S. Registration No. [ ] and the two [ ] engines bearing
manufacturer's serial numbers [ ] and [ ] (each of which engines has 750 or more
rated takeoff horsepower or the equivalent of such horsepower) described below,
together with the Aircraft Documents described in the Agreement (collectively,
the "Delivered Aircraft").

      2. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement No. 1 set forth in the opening paragraph hereof.

      3. The Term of the Delivered Aircraft shall commence on the Delivery Date
and shall end on but exclude each Annual Expiry Date, subject to automatic
renewal at the end of the current Lease Term for consecutive periods of one (1)
year's duration, each commencing on the Annual Expiry Date and ending on but
excluding the next succeeding Annual Expiry Date, until the Final Expiry Date,
which shall be [insert date], subject to the provisions of Clauses 11 and 13.2
of the Lease Agreement.

      4. The amount of Rent for the Delivered Aircraft is set forth in Schedule
7 to the Agreement.

                                      157
<PAGE>

      5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft and
each delivered Engine have been duly marked in accordance with the terms of
Clause 8.7(d) of the Agreement, (ii) the Aircraft is insured as required by the
Agreement, (iii) the representations and warranties of Lessee referred to in
Clause 2.1 of the Agreement are hereby repeated with effect as of the date first
above written, (iv) having inspected the Delivered Aircraft, Lessee acknowledges
that the Delivered Aircraft satisfies all conditions required for Lessee's
acceptance of Delivery as set forth in the Agreement, and (v) the execution and
delivery of this Lease Supplement No. 1 signifies absolute, unconditional and
irrevocable acceptance by Lessee of the Delivered Aircraft for all purposes of
the Agreement.

      6. All of the terms and provisions of the Agreement are hereby
incorporated by reference in this Lease Supplement No. 1 to the same extent as
if fully set forth herein.

      7. This Lease Supplement may be executed in any number of counterparts;
each of such counterparts, shall for all purposes be deemed to be an original;
and all such counterparts shall together constitute but one and the same
instrument.

                                      158
<PAGE>

      IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. 1 to be duly executed as of the day and year first above written.

LESSOR:                                     LESSEE:

Wells Fargo Bank Northwest, N.A.,           COMPANIA PANAMENA DE AVIACION,
 not in its individual capacity,            S.A.
 but solely as trustee under
 the Trust Agreement

By: _____________________________           By: ____________________________

Name: ___________________________           Name:  _________________________

Title:  _________________________           Title:  ________________________

                                      159
<PAGE>

                                   SCHEDULE 9

                      FORM OF IRREVOCABLE POWER OF ATTORNEY

The undersigned acting on behalf of Compania Panamena de Aviacion, S.A. (the
"Lessee") hereby grants a power in favor of Wells Fargo Bank Northwest, N.A.,
not in its individual capacity, but solely as trustee under the Trust Agreement
(the "Lessor"), in order that through their attorneys and legal representatives
they may, in relation to the Boeing model B[ ] aircraft MSN [ ] leased by Lessor
to Lessee, carry out the following powers:

(A)   To carry out, after the occurrence and during the continuance of an Event
      of Default as defined in the Lease, such acts as Lessor may be obliged to
      carry out as a result of termination of the above-mentioned contract for
      any of the reasons set out therein in order for Lessor to recover
      possession, control and use of the aircraft in question, carrying out and
      continuing such procedures as may be necessary before the authorities and
      courts of the Republic of Panama in order to export such aircraft.

(B)   To carry out, after the occurrence and during the continuance of an Event
      of Default as defined in the Lease, such acts as may be necessary in
      relation to the use, operation and possession (including but without
      limitation the possession and Export) in relation to the return of one
      Boeing model B[ ] aircraft with manufacturer's serial number [ ], together
      with engines, equipment, records and other documents relating to such
      aircraft and to it leaving the jurisdiction and territory in which the
      aircraft is then situated, upon termination of the Aircraft Lease
      Agreement (herein the "Lease") of the Aircraft between Lessor and Lessee,
      whether (a) by reason of any breach which may be been declared by Lessor
      in accordance with the terms of the contract in the manner required
      thereby or (b) termination of the Lease in accordance with the terms and
      conditions of the Lease.

(C)   To grant power to such Lessor and to such Persons in order to carry out
      such acts and take such measures as may be necessary or appropriate in
      order to properly exercise the powers conferred above including power to
      represent Lessee before the Autoridad Aeronautica Civil in The Republic of
      Panama or any entity or agency thereof or any department of the government
      of The Republic of Panama and in the extent to which it is necessary to
      obtain control of the Aircraft, after the occurrence and during the
      continuance of an Event of Default as defined in the Lease, in any
      department or government agency in The Republic of Panama or any other
      country which may have jurisdiction over the Aircraft.

(E)   After the occurrence and during the continuance of an Event of Default as
      defined in the Lease, to carry out such declarations and matters and grant
      such public or private documents as may be necessary in the proper
      exercise of the powers conferred in the above paragraphs.

(F)   To delegate or substitute in favor of one or several people in whole or in
      part the powers conferred in this power.

<PAGE>

This power is granted to Lessor and its attorneys and legal representatives and
shall not be revoked, modified or limited in any manner without its consent.

                                             COMPANIA PANAMENA DE AVIACION, S.A.

                                             By:________________________________
                                                Name:
                                                Title:

                                      161
<PAGE>

                                   SCHEDULE 10

                      FORM OF COPA HOLDINGS, S.A. GUARANTEE

      THIS GUARANTY is given as of the ___ day of December, 2004 by COPA
HOLDINGS, S.A., a company formed under the laws of the Republic of Panama and
having its principal place of business at Avenida Justo Arosemena y Calle 39,
Apartado 1572, Panama 1, Republic of Panama (the "Guarantor") in favor of WELLS
FARGO BANK NORTHWEST, N.A., not in its individual capacity, but solely as
trustee under the Trust Agreement dated as of December ___, 2004, as Lessor (the
"Lessor") for the benefit of Lessor and Beneficiary, (collectively, the
"Guaranty Beneficiaries" and individually, a "Guaranty Beneficiary").

WHEREAS

(A) Compania Panamena de Aviacion, S.A. (the "Lessee") has leased from Lessor
and Lessor has leased to Lessee a Boeing B737-800 aircraft bearing
manufacturer's serial number 29670 (collectively together with all Parts, the
"Aircraft") pursuant to that certain Aircraft Lease Agreement dated as of
December ___, 2004 between the Lessee and Lessor (the "Lease").

(B) The Guaranty Beneficiaries desire support for the due and punctual payment,
observance and performance of all of the obligations and liabilities of Lessee
under or in respect of the Lease and the other Transaction Documents (together
with the Lease, as amended, supplemented or modified from time to time, the
"Operative Documents") to which Lessee is a party (the "Obligations"); and

(C) It is a condition precedent to the Lessor's obligation to lease the Aircraft
to Lessee and the right of the Lessee to lease the Aircraft from the Lessor that
Lessee cause the Guarantor to execute and deliver this Guaranty.

IT IS AGREED

1.    INTERPRETATION

1.1   Definitions: Capitalized terms (including those within the recitals), not
defined herein shall have the meaning ascribed to them in the Lease.

2.    GUARANTY

      For value received and to induce the Guaranty Beneficiaries to enter into
the Operative Documents, Guarantor, as a primary obligor and not as a surety,
does hereby absolutely, unconditionally and irrevocably guarantee to the
Guaranty Beneficiaries the due and punctual payment, observance and performance
by Lessee of all of the Obligations.

      Accordingly, upon the occurrence and during the continuance of an Event of
Default under the Lease, Guarantor shall forthwith without demand of any kind
pay, and perform all of such Obligations, to and for the benefit of the Guaranty
Beneficiaries, strictly in accordance with

<PAGE>

the terms of the Operative Documents. Guarantor further agrees to pay any and
all reasonable out-of-pocket costs and expenses (including reasonable fees and
disbursements of legal counsel) that may be paid or incurred by any Guaranty
Beneficiary in collecting any Obligations or in preserving or enforcing any
rights under this Guaranty or under the Obligations.

3.    ABSOLUTE AND CONTINUING GUARANTY

      The obligations of Guarantor under this Guaranty shall be absolute,
continuing, unconditional and irrevocable and this Guaranty shall remain in full
force and effect until such time as all of the Obligations are finally paid and
performed in full. The obligations of Guarantor set forth herein constitute the
full recourse obligations of Guarantor enforceable against it to the full extent
of all its assets and properties, notwithstanding any provision in the Lease or
any other Operative Documents limiting the liability of any Guaranty Beneficiary
or any other Person.

4.    STRICT OBSERVANCE

      To the maximum extent permitted by applicable law, the obligations of
Guarantor under this Guaranty shall not in any manner be affected by: (a) any
termination, amendment or modification of, or deletion from, or addition or
supplement to, or other change in the Lease or any other any of the Operative
Documents, or any other instrument or agreement applicable to any of the parties
to such agreements, or to the Aircraft or any part thereof, or any assignment,
mortgage or permitted transfer of any thereof, or of any interest therein, or
any leasing of the Aircraft, or any furnishing or acceptance of any security, or
any release of any security, for the Obligations, or the failure of any security
or the failure of any Person to perfect any interest in any collateral security;
(b) any failure, omission or delay on the part of Lessee or any other Person to
conform or comply with any term of any Operative Document; (c) any exercise or
nonexercise of any right, remedy, power or privilege under or in respect of any
Operative Document; (d) any extension of time or payment of or settlement,
compromise or subordination of, Rent or any other Obligation; (e) the exchange,
surrender, substitution or modification of any collateral security or guarantee
for any of the Obligations; (f) any failure, omission or delay on the part of
any of the Guaranty Beneficiaries to enforce, assert or exercise any right,
power or remedy conferred on it in this Guaranty, or any such failure, omission
or delay on the part of any of the Guaranty Beneficiaries in connection with any
Operative Document, or any other action on the part of the Guaranty
Beneficiaries; (g) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshalling of assets and liabilities or similar proceedings with
respect to Lessee, Guarantor, any other Person, or any of their respective
properties or creditors, or any action taken by any trustee or receiver or by
any court in any such proceeding; (h) any invalidity, illegality or
unenforceability, in whole or in part, of any of the Operative Documents; (i)
any defect in the title, compliance with specifications, condition, design,
operation or fitness for use of or any damage to or loss or destruction of, the
Aircraft, or any interruption or cessation in the use of the Aircraft or any
portion thereof by Lessee or any other Person for any reason whatsoever
(including any governmental prohibition or restriction, condemnation,
requisition, seizure or any other act on the part of any governmental or
military authority, or any act of God or of the public enemy) regardless of the
duration thereof (even though such duration would otherwise constitute a

<PAGE>

frustration of contract or an Event of Loss), whether or not resulting from
accident and whether or not without fault on the part of Lessee or any other
Person; (j) any permitted or non-permitted assignment of the Lease by Lessee or
any merger or consolidation of Lessee or Guarantor or any Affiliate into or with
any other corporation, or any sale, lease or transfer of any of the assets of
Lessee or Guarantor or any Affiliate to any other Person; (k) any change in the
ownership of any shares of capital stock of Lessee or any Affiliate, or any
change in the corporate relationship between Lessee or any Affiliate and
Guarantor, or any termination of such relationship; (l) any release or
discharge, by operation of law, of Guarantor from the performance or observance
of any obligation, covenant or agreement contained in this Guaranty, or any
release, discharge or cancellation of the Obligations, other than payment or
performance in full of the Obligations; (m) the imposition or operation of any
currency exchange controls in any country; (n) the effect of any foreign or
domestic laws, rules, regulations or actions of a court or governmental body or
entity; or (o) any other condition, event or circumstance which might otherwise
constitute a legal or equitable discharge, release or defense of a surety or
guarantor or otherwise, or which might otherwise limit recourse against
Guarantor, it being agreed that the obligations of Guarantor hereunder shall not
be discharged except by payment and performance in of the Obligations. No
failure to make demand or delay in making demand on Guarantor for satisfaction
of the obligations of Guarantor hereunder shall prejudice the right of the
Guaranty Beneficiaries to enforce the obligations of Guarantor hereunder.

5.    WAIVERS OF NOTICE, ETC.

      To the maximum extent permitted by applicable law, Guarantor hereby waives
diligence, presentment, demand, protest or notice of any kind whatsoever with
respect to this Guaranty or the Obligations, including: (a) notice of acceptance
of this Guaranty, notice of nonpayment or nonperformance of any of the
Obligations and (b) all notices required by statute, rule of law or otherwise
now or hereafter in effect to preserve any rights against Guarantor; and (w) any
right to the enforcement, assertion or exercise against Lessee or any other
Person or the Aircraft or any other collateral security for the Obligations of
any right, power, privilege or remedy conferred in any Agreement or otherwise,
(x) any requirement to exhaust any remedies, (y) any requirement of promptness
in commencing suit against any Person who may be or become liable thereon, and
(z) any other circumstance whatsoever which might otherwise constitute a legal
or equitable discharge, release or defense of Guarantor or any surety or which
might otherwise limit recourse against Guarantor other than payment and
performance in full of the Obligations.

6.    EXTENSIONS, ETC.

      Guarantor consents and agrees that the Guaranty Beneficiaries, or any of
them, may in their sole discretion, to the extent otherwise permitted by the
Operative Documents and to the maximum extent permitted by applicable Law, at
any time or from time to time, (i) extend or shorten the Term of the Lease
and/or renew, extend, or increase or decrease or otherwise change or modify the
amount, time, manner, place or terms of payment, performance or observance of
any or all of the Obligations, (ii) apply payments by Lessee or Guarantor to any
Obligations, (iii) exchange, release or surrender any security or property which
may at any time be held by it, (iv) release any surety or guarantor for or of
any of the Obligations, (v) settle or compromise any or all of the Obligations
with Lessee or any other Person liable thereon or (vi) subordinate the payment,
performance or observance of all or any part thereof to the payment, performance
or

<PAGE>

observance of any other debts or obligations which may be due or owing to them
or any other Person, all in such manner and upon such terms as the Guaranty
Beneficiaries, or any of them, may deem proper (but in any case, in conformity
with the provisions of the Operative Documents), without further assent from
Guarantor, who agrees to remain bound under this Guaranty notwithstanding any
such extension, change, modification, amendment, release, surrender, settlement,
compromise or subordination.

7.    NO WAIVER

      No failure on the part of any of the Guaranty Beneficiaries to exercise,
and no delay in exercising, any right or power under this Guaranty shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power preclude any other or further exercise thereof or the exercise of any
other right or power, or of any remedy, of any Guaranty Beneficiary under this
Guaranty, the Operative Documents or applicable law.

8.    GUARANTY OF PERFORMANCE

      This Guaranty is a guaranty of payment and performance and not of
collection and Guarantor waives any right to require that any action against
Lessee or any Affiliate be taken or exhausted prior to action being taken
against Guarantor. Guarantor shall pay to each Guaranty Beneficiary on demand
all reasonable attorneys' fees and other reasonable expenses incurred by such
Guaranty Beneficiary in exercising its rights and remedies provided hereunder,
together with interest on such sums as the Interest Rate, from the date of
demand by Lessor.

9.    REPRESENTATIONS AND WARRANTIES

      The Guarantor acknowledges that the Guaranty Beneficiaries have entered
into the Lease and the other Operative Documents to which they are,
respectively, parties on the basis of, and in reliance on, representations in
the following terms and the Guarantor represents and warrants as follows:

      (a)   STATUS: the Guarantor is duly incorporated with limited liability
            and validly existing under the laws of the Republic of Panama;

      (b)   POWERS AND AUTHORIZATIONS: the documents which contain or establish
            the Guarantor's constitution and the laws of the Republic of Panama
            include provisions which give power, and all necessary corporate
            authority has been obtained and action taken, for the Guarantor to
            own its assets, carry on its business and operations as they are now
            being conducted, and sign and deliver, and perform the transactions
            contemplated in this Guaranty, and this Guaranty constitutes the
            valid and binding obligation of the Guarantor enforceable in
            accordance with its terms;

      (c)   NON-VIOLATION: neither the signing and delivery of this Guaranty nor
            the performance of any of the transactions contemplated herein or
            therein does or will contravene or constitute a default under, or
            cause to be exceeded any limitation on it or the powers of its
            directors imposed by or contained in: (i) any law by which it or any
            of its assets is bound or affected; (ii) any document which contains
            or

<PAGE>

            establishes its constitution; or (iii) any agreement to which it is
            a party or by which any of its assets is bound;

      (d)   CONSENTS: no authorization, approval, consent, license, exemption,
            registration, recording, filing or notarization and no payment of
            any duty or tax and no other action whatsoever which has not been
            duly and unconditionally obtained, made or taken is necessary or
            desirable to ensure the validity, enforceability or priority of the
            liabilities and obligations of the Guarantor or the rights of the
            Lessor under this Guaranty;

      (e)   NO DEFAULT: no event has occurred which constitutes, or which with
            the giving of notice and/or the lapse of time and/or a relevant
            determination would constitute, a contravention of, or default
            under, any agreement or instrument by which the Guarantor or any of
            its assets is bound or affected being a contravention or default
            which might either have a material adverse effect on the business,
            assets or condition of the Guarantor or materially and adversely
            affect its ability to observe or perform its obligations under this
            Guaranty;

      (f)   LITIGATION: no litigation, arbitration or administrative proceeding
            or claim which might by itself or together with any other such
            proceedings or claims either have a material adverse effect on its
            business, assets or condition or materially and adversely affect its
            ability to observe or perform its obligations under this Guaranty,
            is presently in progress or pending or, to the knowledge of the
            Guarantor, threatened against the Guarantor or any of its assets;

      (g)   INFORMATION: the information furnished by the Guarantor in
            connection with this Guaranty does not contain any untrue statement
            or omit to state any fact the omission of which makes the statements
            therein, in the light of the circumstances under which they were
            made, misleading, and all expressions of expectation, intention,
            belief and opinion contained therein were made on reasonable grounds
            after due inquiry by the Guarantor;

      (h)   RANKING: the obligations of the Guarantor under this Guaranty rank,
            or will upon execution thereof by the Guarantor rank, at least pari
            passu in point of priority and security with all other present and
            future unsecured and unsubordinated obligations (including
            contingent obligations) of the Guarantor other than such obligations
            which may be mandatorily preferred by law;

      (i)   NO EVENT OF DEFAULT: to Guarantor's knowledge, no Event of Default
            has occurred and is continuing;

      (j)   NO SECURITY: the Guarantor has not taken or accepted any Security
            Interest from the Lessee or, in relation to the Obligations, from
            any third party.

      (k)   INVESTMENT COMPANY: Guarantors is not an "investment company" as
            defined in the investment Company Act of 1940, as amended.

<PAGE>

      (l)   SUBMISSION TO JURISDICTION: Guarantor has validly submitted to the
            jurisdiction of the Supreme Court of the State of New York in the
            County of New York, State of New York and the United States District
            Court for the Southern District of New York.

10.   UNDERTAKINGS

      The Guarantor undertakes with the Lessor, from the date of this Guaranty
until the Obligations have been unconditionally and irrevocably paid and
discharged in full, the satisfaction of which shall be confirmed in writing by
the Lessor, as follows:

      (a)   INFORMATION: it will deliver to the Lessor such additional financial
            information as the Lessor may from time to time (but, absent an
            Event of Default, not more frequently than once per calendar year)
            reasonably request;

      (b)   CONSENTS: the Guarantor will obtain and promptly renew from time to
            time, and will promptly deliver to the Lessor certified copies of,
            any authorization, approval, consent, license, exemption,
            registration, recording, filing or notarization as may be necessary
            or desirable to ensure the validity, enforceability or priority of
            the liabilities and obligations of the Guarantor or the rights of
            the Lessor under this Guaranty and the Guarantor shall comply with
            the terms of the same;

      (c)   NO SECURITY: the Guarantor shall not take or accept any security
            interest from the Lessee or from any third party with respect to the
            Obligations, without first obtaining the Lessor's written consent
            which consent shall not be unreasonably withheld;

      (d)   NATURE OF OBLIGATION: Guarantor's obligation to make all payments
            due hereunder and to perform its other obligations hereunder shall
            be absolute and unconditional and shall in no event be subject to
            any right of setoff, recoupment, deduction or counterclaim or any
            other defense which Guarantor or any other Person may now or
            hereafter have against any Guaranty Beneficiary or any other Person,
            which Guarantor hereby waives to the full extent permitted by law,
            save for payment and performance in full of the Obligations.

      (e)   LESSOR: Lessor (or any of its Affiliates) may set off any Obligation
            of Guarantor hereunder against any obligation owed by Lessor or any
            of its Affiliates to Lessee or Guarantor or any of their Affiliates,
            and, in the case of Lessor, to the extent permitted by Law, shall
            notify Guarantor promptly after any such set-off provided that the
            failure to give such notice shall not impair any rights or remedies
            of the Guaranty Beneficiaries hereunder.

      (f)   SUBROGATION: Guarantor shall become entitled to subrogation rights
            by reason of performance of any of its obligations hereunder,
            provided, that such rights are and shall be subject and subordinate
            to the rights of the Guaranty Beneficiaries against Lessee under the
            Lease in the event of any insolvency, bankruptcy, liquidation,
            reorganization or other similar proceedings related to Lessee, or in
            the event of

<PAGE>

            any proceedings for voluntary liquidation, dissolution or other
            winding up of Lessee, whether or not involving insolvency or
            bankruptcy proceedings, such that the Obligations shall be finally
            paid and performed in full before any payment in respect of a
            subrogation claim by Guarantor shall be made by or on behalf of
            Lessee and (b) notwithstanding the foregoing provisions or any other
            provision of this Guaranty or the Lease, if an Event of Default is
            in existence, Guarantor hereby irrevocably waives and relinquishes
            any and all rights of subrogation, contribution, reimbursement or
            other payment from Lessee or Lessee's estate, whether arising by
            contract or operation of law (including any such right arising under
            the United States Bankruptcy Code) or otherwise arising out of, or
            on account of, any sums which have been claimed or are thereafter
            claimable against Guarantor under this Guaranty, which waiver shall
            be in effect unless and until all of the Obligations shall have been
            finally paid and performed in full. The waiver and relinquishment of
            rights provided for in the immediately preceding sentence shall be
            irrevocable and unconditional regardless of whether any such right
            is reduced to judgment, liquidated, unliquidated, fixed, contingent,
            matured, unmatured, disputed, undisputed, secured, or unsecured.

      (g)   BANKRUPTCY, ETC.: Guarantor agrees that if at any time all or any
            part of any payment or performance theretofore applied by any
            Guaranty Beneficiary to any of the Obligations is or must be
            rescinded or returned by any Guaranty Beneficiary for any reason
            whatsoever (including the insolvency, bankruptcy or reorganization
            of Lessee), such Obligations shall, for the purposes of this
            Guaranty, to the extent that such payment or performance is or must
            be rescinded or returned, be deemed to have continued in existence,
            notwithstanding such application by the Guaranty Beneficiaries, and
            this Guaranty shall continue to be effective or be reinstated, as
            the case may be, as to such Obligations, all as though such
            application by a Guaranty Beneficiary had not been made. If an Event
            of Default shall at any time have occurred and be continuing, or the
            exercise of any remedy pursuant to the Lease, shall at such time be
            prevented by reason of the pendency against Lessee or any other
            Person of a case or proceeding under a bankruptcy, insolvency or
            similar law, or if the Lease or any other Operative Document shall
            be terminated as a result of a rejection or disaffirmance in a
            bankruptcy, insolvency or similar proceeding involving Lessee,
            Guarantor or any affiliate of Lessee or Guarantor, Guarantor agrees
            that, for purposes of this Guaranty and its obligations hereunder,
            the Lease or such other operative Documents shall be deemed to be in
            default with the same effect as if the Lease or such other Operative
            Documents had been enforceable in accordance with the terms thereof,
            and Guarantor shall forthwith pay all amounts, or any of them, to be
            paid thereunder, any interest thereon and any other amounts
            guaranteed hereunder or provided herein. In the circumstance
            described in the preceding sentence, any election of remedies and
            any determination of any such amount may be made solely for purposes
            of this Guaranty and any required notice or demand upon the Lessee
            is hereby waived by the Guarantor and may, at the option of a
            Guaranty Beneficiary, be given or made upon the Guarantor. Guarantor
            agrees that it shall be liable for the full amount of the
            Obligations guaranteed hereby, irrespective of and without regard
            to, any modification,

<PAGE>

            limitation or discharge of liability, rejection or disaffirmance
            that may result from or in connection with any bankruptcy,
            insolvency or similar proceeding involving Lessee or any other
            Person.

11.   CERTIFICATES

      A certificate of the Lessor issued at any time setting forth the amount of
any Obligations not then paid by the Lessee shall be conclusive evidence of such
amount against the Guarantor in the absence of any manifest error.

12.   MISCELLANEOUS PROVISIONS

12.1 Any communication or document to be made by one person to another pursuant
to this Guaranty shall be made in writing and shall be delivered personally, or
by courier (where the courier company is a reputable international or local
company) or by facsimile communication (unless that other person has, by fifteen
(15) days' written notice to the Lessor, specified another office address and/or
facsimile number) to that other person at the office address or facsimile number
set out below, and shall be deemed to have been made or delivered:

      (a)   in the case of any communication made by facsimile, when
            transmission of such facsimile communication has been completed and
            such transmission has been separately acknowledged by such other
            person in a manner provided for herein; or

      (b)   in the case of any communication made by courier, on the date of
            delivery as evidenced by the records of the courier company,

Provided that (i) any communication or document to be made or delivered to the
Lessor or any Guaranty Beneficiary shall be effective only when received by the
Lessor, and then only if the same is expressly marked for the attention of the
department or officer identified below (or such other department or officer as
the Lessor shall from time to time specify for this purpose) and (ii) any notice
received after close of business on any day shall not be deemed to have been
received until commencement of business on the immediately succeeding Business
Day.

To the Guarantor:

Address:                COMPANIA PANAMENA DE AVIACION, S.A.
                        Avenida Justo Arosemena y Calle 39
                        Apartado 1572
                        Panama 1, Republic of Panama
Facsimile:              011.507.227.2522
Attention:              Vice President - Finance

<PAGE>

With a copy to:

Address:                Greenberg Traurig, P.A.
                        1221 Brickell Ave
                        Miami, Florida 33131
Facsimile:              (305) 579 0717
Attention:              Jeffrey Tenen

To the Lessor or any Guaranty Beneficiary:

Address:                WELLS FARGO BANK NORTHWEST, N.A.,
                        as trustee and Lessor
                        299 South Main Street
                        Salt Lake City, UT 84111
Facsimile:              801-246-5053
Attention:              Corporate Trust Department

With a copy to:

Address:                RBS AEROSPACE LIMITED
                        1 George's Quay Plaza
                        George's Quay
                        Dublin 2
                        Ireland
Facsimile:              353-1-448-3390
Attention:              Head of Transaction Execution and Management

12.2  Any payment to the Lessor to be made hereunder shall be made:

      (a)   to the Lessor for the account of the Lessor or to such other bank or
            account as the Lessor may notify the Guarantor at the time of making
            a demand under this Guaranty; and

      (b)   in full without set off or counterclaim and free and clear of and
            without any deduction for, on or on account of any present or future
            taxes, levies, imposts, duties or other charges whatsoever unless
            the Guarantor is compelled by law to make any such deduction. If the
            Guarantor is compelled by law to make any such deduction from any
            payment to the Lessor, then the Guarantor will pay to the Lessor
            such additional amount as will result in the receipt by the Lessor
            of the full amount stated in any demand made by the Lessor under
            this Guaranty.

12.3 If the Guarantor fails to pay any amount to the Lessor upon receipt of
written demand in accordance with this Guaranty, the Guarantor shall pay
interest in U.S. dollars on that amount from the time of default up to the time
of actual payment (as well after as before judgment) at the Interest Rate.

<PAGE>

12.4 If, under any law, whether as a result of a judgment against the Guarantor
or the liquidation of the Guarantor or for any other reason, any payment under
or in connection with this Guaranty is made or is recovered in a currency (the
"Other Currency") other than that in which it is required to be paid hereunder
(the "Original Currency") then, to the extent that the payment to the Lessor
(when converted at the rate of exchange on the date of payment or, in the case
of a liquidation, the latest date for the determination of liabilities permitted
by the applicable law) falls short of the amount unpaid under this Guaranty, the
Guarantor shall, as a separate and independent obligation, fully indemnify the
Lessor against the amount of the shortfall; and for the purposes of this
sub-clause, "rate of exchange" means the rate at which the Lessor is able on the
relevant date to purchase the original currency in New York with the other
currency.

12.5 Any determination and demand in respect of any amount at any time due and
owing by the Guarantor to the Lessor pursuant to this Guaranty shall be made on
the same basis as is applicable to a demand or determination made by the Lessor
under the Lease.

12.6 If, in respect of any particular amount due and owing to the Lessor under
the Lease, a payment is made by the Guarantor under this Guaranty and that
amount is also paid under the Lease, the Lessor agrees, subject to applicable
law and provided that no Default or Event of Default has occurred and is
continuing (and to the extent it determines it can do so without prejudice to
the retention of the payment made under the Lease under applicable bankruptcy or
any other laws affecting creditors rights in general), to reimburse the
Guarantor for the amount paid hereunder which corresponds to that particular
amount.

12.7 If any provision of this Guaranty becomes invalid, illegal or unenforceable
in any respect under any law, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired.

13.   CHOICE OF LAW

      This Guaranty is governed by, and shall be construed in accordance with,
the laws of the State of New York including Title 14 Sections 5-1401 and 5-1402
of the General Obligations Law of the State of New York.

14.   JURISDICTION AND WAIVER

14.1 (a) The parties agree that the Supreme Court of the State of New York
sitting in New York County and the United States District Court for the Southern
District of New York shall have non-exclusive jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may arise out
of or in connection with this Guaranty (including, without limitation, claims
for set-off or counterclaim) or otherwise arising in connection with this
Guaranty;

      (b)   the Lessor or any Guaranty Beneficiary may in its absolute
            discretion take proceedings in the courts of any other country which
            may have jurisdiction, to whose jurisdiction the Guarantor
            irrevocably submits;

      (c)   the Guarantor irrevocably waives any objections on the ground of
            venue or forum non conveniens or any similar grounds;

<PAGE>

      (d)   the Guarantor irrevocably consents to service of process by mail or
            in any other manner permitted by the relevant law.

14.2 The Guarantor irrevocably waives and agrees not to claim any immunity from
suits and proceedings (including actions in rem) and from all forms of execution
or attachment (including attachment prior to judgment and attachment in aid of
execution) to which it or its property is now or may hereafter become entitled
under the laws of any jurisdiction and declares that such waiver shall be
effective to the fullest extent permitted by such laws.

14.3 The Guarantor shall at all times maintain an agent for service of process
in New York. Such agent shall be Corporation Service Company (CSC) with its
offices at 1133 Avenue of the Americas, Suite 3100, New York, NY 10036, and any
writ, judgment or other notice of legal process shall be sufficiently served on
the Guarantor if delivered to such agent at its address for the time being. The
Guarantor undertakes not to revoke the authority of the above agent and if, for
any reason, any such agent no longer serves as agent of the Guarantor to receive
service of process, the Guarantor shall promptly appoint another such agent and
advise the Lessor thereof.

14.4 This Guaranty shall be binding upon the successors and assigns of Guarantor
and shall inure to the benefit of the Guaranty Beneficiary, and its permitted
successors and assigns.

                            [Continued on next page]

<PAGE>

This Guaranty has been duly executed on the date first above written.

COPA HOLDINGS, S.A.

By:_______________________________________
   Name:
   Title:

AGREED AND ACCEPTED:

WELLS FARGO BANK NORTHWEST, N.A.,
not in its individual capacity but solely as trustee, Lessor

By: ______________________________________________
    Name:_________________________________________
    Title:________________________________________
    Date:_________________________________________

RBS AEROSPACE LIMITED

By: ______________________________________________
    Name:_________________________________________
    Title:________________________________________
    Date:_________________________________________

<PAGE>

                                   SCHEDULE 11

                  AIRWORTHINESS DIRECTIVE COST SHARING FORMULA

If the cost to the Lessee of effecting any Airworthiness Directive (not to
include a Mandatory Order) issued by the FAA (whether or not also issued by the
JAA) after the Delivery Date exceeds US$200,000 (2003), Lessor shall, upon
presentation to Lessor by Lessee of substantiating documentation and so long as
no Default or Event of Default has occurred and is continuing, reimburse Lessee
within 30 days for such Aircraft for a portion of such cost, such reimbursement
to be calculated as follows:

      R=    (60 - M) x (C - US$200,000 (2003)*)
            --------
               60

      where

      "R" means the portion of the cost of compliance to be reimbursed to
      Lessee.

      "M" means the number of months (including parts thereof) between (1) the
      earlier of (a) the date of completion of such modification and (b) the
      originally required date thereof and (2) the end of the Lease Term. Where
      the original required date thereof is after the end of the Lease Term for
      such Aircraft, M shall equal 0.

      "C" means the cost of completing such modification at an Approved
      Maintenance Provider's normal commercial labour charge rates plus
      reasonable cost of materials, subtracting any subsidy, warranty payment or
      other benefit provided to Lessee and excluding any loss or expenses
      incurred because of inability to operate such Aircraft.

Should an Event of Default have occurred and be at any relevant time continuing,
Lessor shall retain such amount until such Event of Default or Default shall
have been cured whereupon it shall pay to Lessee any such amount less any
portion thereof as was applied by Lessor to cure such Default or Event of
Default.

----------
* escalated at 3% commencing on January 1, 2005 and each annual anniversary date
thereafter.

<PAGE>

                                   SCHEDULE 12

                           FORM OF WARRANTY ASSIGNMENT

_________, 200_

The Boeing Company
P.O. Box 3707
Seattle, Washington 98124-2207

Attention:  Vice President - Contracts
            Mail Code 21-34

Ladies and Gentlemen:

In connection with: (i) the sale by Delta Air Lines Inc. ("SELLER") to Wells
Fargo Bank Northwest, N.A., not in its individual capacity but solely as trustee
("OWNER TRUSTEE") under the Trust Agreement dated as of December 23, 2004
between RBS Aerospace Limited ("RBS") and Wells Fargo Bank Northwest N.A., as
trustee ("BUYER") of the aircraft identified below, and (ii) the lease by Buyer
of such aircraft to Compania Panamena de Aviacion, S.A. ("LESSEE"); reference is
made to:

A. Purchase Agreement No. 2022 (the "PURCHASE AGREEMENT") and the Aircraft
General Terms Agreement AGTA-DAL (the "AGTA"), each dated as of October 21,
1997, between The Boeing Company ("BOEING") and Seller, excluding, as it relates
to the Purchase Agreement, all Articles, Tables, Exhibit A and Supplemental
Exhibits BFE/CDSPE/SPE/CSE, CS1, EE1, EWCBP1 and all Letter Agreements and, as
it relates to the AGTA, Articles 2 through 10, 13, 16.7, Exhibits A through E
and Appendices 8 and 9, but including Attachments 1, 2, 3 and 7 to Letter
Agreement No. 6-1162-RLL-3692 to the Purchase Agreement (titled "Lombard
Aviation Capital Matters") (the "AGREEMENT") under which Seller purchased
certain Boeing Model 737 aircraft, including the aircraft bearing Manufacturer's
Serial No. ________ (the "AIRCRAFT").

B. Aircraft Sale and Purchase Agreement dated as of October 1, 2003 between
Seller and RBS (the "ASPA"); and

C. Aircraft Lease Agreement (the "Lease") dated as of ____________, as
supplemented, between Buyer and Lessee.

Capitalized terms used herein without definition will have the same meaning as
in the Agreement.

Seller has sold the Aircraft to Buyer under the ASPA. To accomplish: (i) a
transfer of certain rights from Seller to Buyer in respect of the Aircraft under
the Agreement, all as authorized by the provisions thereof, the parties hereto
agree as follows:

<PAGE>

1. Seller hereby assigns to Buyer all of the rights of "Customer" in respect of
the Aircraft under the provisions of the Agreement set forth in the attached
Schedule I (collectively, the "SUBJECT RIGHTS").

2. Buyer acknowledges that it has reviewed and, in connection with any exercise
of the Subject Rights, agrees to be bound by and comply with, all of the
provisions of the Agreement set forth in Schedule I as well as the provisions of
the Agreement set forth in Schedule II, including, without limitation, the
DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in
Article 12 of Part 2 of Exhibit C to the AGTA and the insurance provisions in
Article 11 of the AGTA (collectively, the "DISCLOSED PROVISIONS").

3. Pursuant to the provisions of the Lease Buyer authorizes Lessee to exercise,
to the exclusion of Buyer, all rights and powers of Buyer with respect to the
Subject Rights in respect of the Aircraft. This authorization will continue
until Boeing receives written notice from Buyer to the contrary, addressed to
Vice President - Contracts, Mail Code 21-34, Boeing Commercial Airplanes, P. O.
Box 3707, Seattle, Washington, 98124-2207. Until Boeing receives such notice,
Boeing is entitled to deal exclusively with Lessee as "Customer" with respect to
the Aircraft under the Agreement. With respect to the rights, powers, duties and
obligations of "Customer" under the Agreement, all actions taken by Lessee or
agreements entered into by Lessee during the period prior to Boeing's receipt of
such notice is final and binding on Buyer. Further, any payments made by Boeing
as a result of claims made by Lessee prior to receipt of such notice are to be
made to the credit of Lessee.

4. Lessee accepts the authorization set forth in paragraph 3 above, acknowledges
that it has reviewed, and agrees to be bound by and to comply with, all of the
Disclosed Provisions, including those relating to any exclusion or limitation of
liabilities or warranties.

5. RBS and Seller will remain responsible for any payments due Boeing as a
result of obligations relating to the Aircraft incurred by Seller or Buyer, as
the case may be, to Boeing prior to the effective date hereof.

6. Each of Seller, Buyer and Lessee further agrees, upon the written request of
Boeing, promptly to execute and deliver such further assurances and documents
and take such further action as Boeing reasonably requests in order to obtain
the full benefits of such party's agreements herein.

7. It is expressly agreed and understood that all representations, warranties
and undertakings of Buyer hereunder shall be binding upon Buyer only in its
capacity as trustee under the Trust Agreement, and neither the institution
acting as Buyer nor RBS shall be liable in its individual capacity for any
breach thereof except in the case of the institution acting as Buyer for breach
of its own covenants, representations and warranties contained herein, to the
extent covenanted or made in its individual capacity.

<PAGE>

We request that Boeing acknowledge receipt hereof and confirm the transfer of
rights set forth above by signing the acknowledgment and forwarding one copy
hereof containing its acknowledgment to each of the undersigned.

Very truly yours,

DELTA AIR LINES, INC. (Seller)                 RBS AEROSPACE LIMITED (Buyer)

By ___________________________                 By ______________________________

Its __________________________                 Its _____________________________

Dated ________________________                 Dated ___________________________

WELLS FARGO BANK NORTHWEST,                    COMPANIA PANAMENA DE AVIACION,
N.A., not in its individual capacity,          S.A. (LESSEE)
but solely as trustee (Trustee) for the
benefit of RBS Aerospace Limited under
the Trust Agreement dated as of December
23, 2004 between itself and RBS
Aerospace Limited

By ___________________________                 By ______________________________

Its __________________________                 Its _____________________________

Dated ________________________                 Dated ___________________________

<PAGE>

Receipt of the above letter is acknowledged and transfer of rights under the
Purchase Agreement with respect to the Aircraft is confirmed, effective as of
this date.

THE BOEING COMPANY

By  ______________________________

Its  _______________________________

Dated  ____________________________

Aircraft Manufacturer's Serial Number ________________