<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 10.16

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

                            AIRCRAFT LEASE AGREEMENT

                            Dated as of March 4, 2004

                                     BETWEEN

                   COMPANIA PANAMENA DE AVIACION, S.A. (COPA)

                                    as LESSEE

                                       and

                     INTERNATIONAL LEASE FINANCE CORPORATION

                                    as LESSOR

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

<TABLE>
<S>                                                   <C>
Aircraft Make and Model:                              New B737-700 or 800

Aircraft Manufacturer's Serial Number:                32800

Aircraft Registration Mark:                           Per Estoppel and Acceptance Certificate

Make and Model of Engines:                            Per Estoppel and Acceptance Certificate

Serial Numbers of Engines:                            Per Estoppel and Acceptance Certificate
</TABLE>

                               NEW AIRCRAFT NO. 2

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                PAGE
<S>                                                                                                             <C>
ARTICLE 1 SUMMARY OF TRANSACTION............................................................................      1
      1.1   Description of Aircraft.........................................................................      1
      1.2   Scheduled Delivery Date and Location............................................................      1
      1.3   Initial Lease Term..............................................................................      1
      1.4   **Material Redacted**...........................................................................      1
      1.5   Security Deposit................................................................................      2
      1.6   Transaction Fee.................................................................................      2
      1.7   Rent During Initial Lease Term..................................................................      2
      1.8   **Material Redacted**...........................................................................      3
      1.9   Reserves........................................................................................      3
      1.10  Additional Rent for Excess Airframe and Engine Cycles...........................................      3
      1.11  Country of Aircraft Registration................................................................      4
      1.12  Maintenance Program.............................................................................      4
      1.13  Agreed Value of Aircraft........................................................................      4
      1.14  LESSOR's Bank Account...........................................................................      4

ARTICLE 2 DEFINITIONS.......................................................................................      5
      2.1   General Definitions.............................................................................      5
      2.2   Specific Definitions............................................................................      9

ARTICLE 3 Place and Date of Delivery.......................................................................      11
      3.1   Place of Delivery..............................................................................      11
      3.2   Scheduled Delivery Date........................................................................      11
      3.3   Delivery subject to Manufacturer Delivery......................................................      11
      3.4   No LESSOR Liability............................................................................      11
      3.5   Total Loss of Aircraft prior to Delivery.......................................................      11
      3.6   Cancellation for Delay.........................................................................      11

ARTICLE 4 LEASE TERM **Material Redacted**.................................................................      12
      4.1   Initial Lease Term.............................................................................      12
      4.2   **Material Redacted**..........................................................................      12
      4.3   "Lease Term" and "Expiration Date".............................................................      12
      4.4   "Termination Date".............................................................................      12

ARTICLE 5 SECURITY DEPOSIT, TRANSACTION FEE, RENT, RESERVES AND OTHER PAYMENTS.............................      13
      5.1   Security Deposit...............................................................................      13
      5.2   Transaction Fee................................................................................      14
      5.3   Rent...........................................................................................      14
      5.4   Reserves.......................................................................................      15
      5.5   Additional Rent for Excess Cycles..............................................................      16
      5.6   LESSOR's Bank Account..........................................................................      17
      5.7   Default Interest...............................................................................      17
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                              <C>
      5.8   No Deductions or Withholdings..................................................................      18
      5.9   Net Lease......................................................................................      18
      5.10  Currency Indemnity.............................................................................      19
      5.11  LESSOR Performance of LESSEE Obligation........................................................      19
      5.12  Consideration for Rent and other Amounts.......................................................      19

ARTICLE 6 INVOLVEMENT WITH AIRCRAFT MANUFACTURER...........................................................      20
      6.1   LESSEE Selection of Aircraft...................................................................      20
      6.2   Agency Agreement...............................................................................      20
      6.3   Procurement of BFE.............................................................................      20
      6.4   Assignment of Training.........................................................................      20
      6.5   LESSEE Inspection of Aircraft..................................................................      20
      6.6   Aircraft at Delivery...........................................................................      20
      6.7   Delivery of the Aircraft to LESSEE.............................................................      21
      6.8   LESSEE Acceptance of Aircraft..................................................................      21

ARTICLE 7 PRE-DELIVERY, DELIVERY AND POST-DELIVERY  DOCUMENTARY AND OTHER REQUIREMENTS.....................      22
      7.1   Pre-Delivery Requirements......................................................................      22
      7.2   Delivery Requirements..........................................................................      22
      7.3   Post-Delivery Requirements.....................................................................      24

ARTICLE 8 DISCLAIMERS......................................................................................      25
      8.1   "As Is, Where Is"..............................................................................      25
      8.2   Waiver of Warranty of Description..............................................................      25
      8.3   LESSEE Waiver..................................................................................      26
      8.4   Conclusive Proof...............................................................................      26
      8.5   No LESSOR Liability for Losses.................................................................      26
      8.6   No Liability to Repair or Replace..............................................................      26
      8.7   No Waiver......................................................................................      26

ARTICLE 9 MANUFACTURERS' AND VENDORS' WARRANTIES...........................................................      27
      9.1   Warranties.....................................................................................      27
      9.2   Reassignment...................................................................................      27
      9.3   Warranty Claims................................................................................      27

ARTICLE 10 OPERATION OF AIRCRAFT...........................................................................      28
      10.1  Costs of Operation.............................................................................      28
      10.2  Compliance with Laws...........................................................................      28
      10.3  Training.......................................................................................      28
      10.4  No Violation of Insurance Policies.............................................................      28
      10.5  Flight and Airport Charges.....................................................................      28

ARTICLE 11 SUBLEASES.......................................................................................      30
      11.1  No Sublease without LESSOR Consent.............................................................      30
      11.2  LESSOR Costs...................................................................................      30
      11.3  Any Approved Sublease..........................................................................      30
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                              <C>
      11.4  Assignment of Sublease.........................................................................      30
      11.5  Wet Leases.....................................................................................      30
      11.6  Continued Responsibility of LESSEE.............................................................      30

ARTICLE 12 MAINTENANCE OF AIRCRAFT.........................................................................      31
      12.1  General Obligation.............................................................................      31
      12.2  Specific Engine Requirements...................................................................      31
      12.3  Specific Obligations...........................................................................      32
      12.4  Replacement of Parts...........................................................................      33
      12.5  Removal of Engines.............................................................................      34
      12.6  Removal of APU.................................................................................      35
      12.7  Pooling of Engines, APU and Parts..............................................................      35
      12.8  Installation of Engines on other aircraft......................................................      35
      12.9  Engine Thrust Rating...........................................................................      36
      12.10 Modifications..................................................................................      36
      12.11 Performance of Work by Third Parties...........................................................      37
      12.12 Reporting Requirements.........................................................................      37
      12.13 Information Regarding Maintenance Program......................................................      38
      12.14 LESSOR Rights to Inspect Aircraft..............................................................      38

ARTICLE 13 USE OF RESERVES.................................................................................      39
      13.1  Airframe Reserves..............................................................................      39
      13.2  Engine Performance Restoration Reserves........................................................      39
      13.3  Engine LLP Reserves............................................................................      39
      13.4  Reimbursement..................................................................................      40
      13.5  Reimbursement Adjustment.......................................................................      40
      13.6  Costs in Excess of Reserves....................................................................      40
      13.7  Reimbursement after Termination Date...........................................................      41

ARTICLE 14 TITLE AND REGISTRATION..........................................................................      42
      14.1  Title to the Aircraft During Lease Term........................................................      42
      14.2  Registration of Aircraft.......................................................................      42
      14.3  Filing of Otis Lease...........................................................................      42
      14.4  Evidence of Registration and Filings...........................................................      42

ARTICLE 15 IDENTIFICATION PLATES...........................................................................      43
      15.1  Airframe Identification Plates.................................................................      43
      15.2  Engine Identification Plates...................................................................      43
      15.3  APU Identification Plate.......................................................................      43

ARTICLE 16 TAXES...........................................................................................      45
      16.1  General Obligation of LESSEE...................................................................      45
      16.2  Exceptions to Indemnity........................................................................      45
      16.3  After-Tax Basis................................................................................      46
      16.4  Timing of Payment..............................................................................      46
      16.5  Contests.......................................................................................      46
      16.6  Refunds........................................................................................      47
</TABLE>

                                      iii

<PAGE>

<TABLE>
<S>                                                                                                              <C>
      16.7  Cooperation in Filing Tax Returns..............................................................      47
      16.8  Tax Restructuring..............................................................................      47
      16.9  Survival of Obligations........................................................................      47

ARTICLE 17 INDEMNITIES.....................................................................................      48
      17.1  General Indemnity..............................................................................      48
      17.2  Exceptions to General Indemnities..............................................................      49
      17.3  After-Tax Basis................................................................................      49
      17.4  Timing of Payment..............................................................................      49
      17.5  Subrogation....................................................................................      49
      17.6  Notice.........................................................................................      50
      17.7  Refunds........................................................................................      50
      17.8  Defense of Claims..............................................................................      50
      17.9  Survival of Obligation.........................................................................      50

ARTICLE 18 INSURANCE.......................................................................................      51
      18.1  Categories of Insurance........................................................................      51
      18.2  Write-back of any Date Recognition Exclusion...................................................      51
      18.3  Installation of Third Party Engine.............................................................      51
      18.4  Insurance for Indemnities......................................................................      51
      18.5  Insurance required by Manufacturer.............................................................      51
      18.6  Renewal........................................................................................      51
      18.7  Assignment of Rights by LESSOR.................................................................      51
      18.8  Deductibles....................................................................................      52
      18.9  Insurance for Wet Lease Operations.............................................................      52
      18.10 Other Insurance................................................................................      52
      18.11 Information....................................................................................      52
      18.12 Currency.......................................................................................      52
      18.13 Grounding of Aircraft..........................................................................      52
      18.14 Failure to Insure..............................................................................      52
      18.15 Reinsurance....................................................................................      53
      18.16 Limit on Hull in favor of LESSEE...............................................................      53

ARTICLE 19 LOSS, DAMAGE AND REQUISITION....................................................................      54
      19.1  Definitions....................................................................................      54
      19.2  Notice of Total Loss...........................................................................      55
      19.3  Total Loss of Aircraft or Airframe.............................................................      55
      19.4  Surviving Engine(s)............................................................................      56
      19.5  Total Loss of Engine and not Airframe..........................................................      56
      19.6  Total Loss of APU..............................................................................      57
      19.7  Other Loss or Damage...........................................................................      57
      19.8  Copy of Insurance Policy.......................................................................      58
      19.9  Government Requisition.........................................................................      58
      19.10 LESSOR Retention of Reserves...................................................................      58
</TABLE>

                                       iv

<PAGE>

<TABLE>
<S>                                                                                                              <C>
ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE.............................................      59
      20.1  Representations and Warranties.................................................................      59
      20.2  Covenants......................................................................................      61

ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR.............................................      63
      21.1  Representations and Warranties.................................................................      63
      21.2  Covenant of Quiet Enjoyment....................................................................      64

ARTICLE 22 FINANCIAL AND OTHER INFORMATION.................................................................      65

ARTICLE 23 RETURN OF AIRCRAFT..............................................................................      66
      23.1  Date of Return.................................................................................      66
      23.2  Last Engine Shop Visits........................................................................      66
      23.3  Technical Report...............................................................................      66
      23.4  Return Location................................................................................      66
      23.5  Full Aircraft Documentation Review.............................................................      66
      23.6  Copy of LESSEE's Maintenance Program...........................................................      67
      23.7  Aircraft Inspection............................................................................      67
      23.8  Certificate of Airworthiness Matters...........................................................      68
      23.9  General Condition of Aircraft at Return........................................................      68
      23.10 Checks Prior to Return.........................................................................      71
      23.11 Part Lives.....................................................................................      73
      23.12 Export and Deregistration of Aircraft..........................................................      75
      23.13 LESSEE's Continuing Obligations................................................................      75
      23.14 Airport and Navigation Charges.................................................................      76
      23.15 Return Acceptance Receipt......................................................................      76
      23.16 Indemnities and Insurance......................................................................      76
      23.17 Storage........................................................................................      76

ARTICLE 24 ASSIGNMENT......................................................................................      77
      24.1  No Assignment by LESSEE........................................................................      77
      24.2  Sale or Assignment by LESSOR...................................................................      77
      24.3  LESSOR's Lender................................................................................      77
      24.4  LESSEE Cooperation.............................................................................      77
      24.5  Protections....................................................................................      78

ARTICLE 25 DEFAULT OF LESSEE...............................................................................      79
      25.1  LESSEE Notice to LESSOR........................................................................      79
      25.2  Events of Default..............................................................................      79
      25.3  LESSOR's General Rights........................................................................      80
      25.4  Deregistration and Export of Aircraft..........................................................      81
      25.5  LESSEE Liability for Damages...................................................................      81
      25.6  Waiver of Default..............................................................................      82
      25.7  Present Value of Payments......................................................................      82
      25.8  Use of "Termination Date"......................................................................      82
</TABLE>

                                       v

<PAGE>

<TABLE>
<S>                                                                                                              <C>
ARTICLE 26 NOTICES.........................................................................................      83
      26.1  Manner of Sending Notices......................................................................      83
      26.2  Notice Information.............................................................................      83

ARTICLE 27 GOVERNING LAW AND JURISDICTION..................................................................      84
      27.1  California Law.................................................................................      84
      27.2  Non-Exclusive Jurisdiction in California.......................................................      84
      27.3  Service of Process.............................................................................      84
      27.4  Prevailing Party in Dispute....................................................................      84
      27.5  Waiver.........................................................................................      84

ARTICLE 28 MISCELLANEOUS...................................................................................      85
      28.1  Press Releases.................................................................................      85
      28.2  Power of Attorney..............................................................................      85
      28.3  LESSOR Performance for LESSEE..................................................................      85
      28.4  LESSOR's Payment Obligations...................................................................      85
      28.5  Application of Payments........................................................................      85
      28.6  Usury Laws.....................................................................................      85
      28.7  Delegation of Authority by LESSOR..............................................................      85
      28.8  Confidentiality................................................................................      85
      28.9  Rights of Parties..............................................................................      86
      28.10 Further Assurances.............................................................................      86
      28.11 Translations of Lease..........................................................................      86
      28.12 Use of Word "including"........................................................................      86
      28.13 Headings.......................................................................................      86
      28.14 Invalidity of any Provision....................................................................      86
      28.15 Negotiation....................................................................................      86
      28.16 Time is of the Essence.........................................................................      86
      28.17 Amendments in Writing..........................................................................      87
      28.18 Counterparts...................................................................................      87
      28.19 Delivery of Documents by Fax...................................................................      87
      28.20 Entire Agreement...............................................................................      87
      28.21 **Material Redacted**..........................................................................      87
</TABLE>

                                       vi

<PAGE>

<TABLE>
<S>                                                                                                     <C>
EXHIBIT A  AIRCRAFT DESCRIPTION...............................................................          104
EXHIBIT B  AGENCY AGREEMENT...................................................................          106
EXHIBIT C  CERTIFICATE OF INSURANCE...........................................................          110
EXHIBIT D  BROKERS' LETTER OF UNDERTAKING.....................................................          117
EXHIBIT E  ESTOPPEL AND ACCEPTANCE CERTIFICATE................................................          119
EXHIBIT F  OPINION OF COUNSEL.................................................................          126
EXHIBIT G  FORM OF POWER OF ATTORNEY..........................................................          131
EXHIBIT H  ASSIGNMENT OF RIGHTS (AIRFRAME)....................................................          133
EXHIBIT I  ASSIGNMENT OF RIGHTS (ENGINES).....................................................          138
EXHIBIT J  RETURN ACCEPTANCE RECEIPT..........................................................          141
EXHIBIT K  MONTHLY REPORT.....................................................................          154
EXHIBIT L  AIRCRAFT DOCUMENTATION.............................................................          157
EXHIBIT M  TECHNICAL EVALUATION REPORT........................................................          159
</TABLE>

                                      vii

<PAGE>

                            AIRCRAFT LEASE AGREEMENT

      THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of March 4,
2004.

      BETWEEN:

      COMPANIA PANAMENA DE AVIACION, S.A. (COPA), a Panamanian corporation whose
address and principal place of business is at Avenida Justo Arosemena y Calle
39, Apartado 1572, Panama 1, Panama ("LESSEE") and

      INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose
address and principal place of business is at 1999 Avenue of the Stars, 39th
Floor, Los Angeles, California 90067, United States of America ("LESSOR").

      The subject matter of this Lease is one (1) new B737 - 700 or B737 - 800
aircraft (election to be made by LESSEE in accordance with the terms of this
Lease). In consideration of and subject to the mutual covenants, terms and
conditions contained in this Lease, LESSOR hereby agrees to lease to LESSEE and
LESSEE hereby agrees to lease from LESSOR the aircraft and the parties further
agree as follows:

                                   ARTICLE 1
                             SUMMARY OF TRANSACTION

      The following is a summary of the lease transaction between LESSEE and
LESSOR. It is set forth for the convenience of the parties only and will not be
deemed in any way to amend, detract from or simplify the other provisions of
this Lease.

1.1 DESCRIPTION OF AIRCRAFT

      One new B737-700 or B737-800 aircraft (LESSEE must elect model type on or
      before March 1, 2004)

1.2 SCHEDULED DELIVERY DATE AND LOCATION

      In the month of February 2005 at Seattle, Washington

1.3 INITIAL LEASE TERM

      The term of leasing of the Aircraft will commence on the delivery date and
      continue for twelve (12) months with six (6) successive, automatic twelve
      (12) month extensions and one (1) automatic three (3) month extension

1.4 **MATERIAL REDACTED**

      **Material Redacted**

<PAGE>

1.5 SECURITY DEPOSIT

      **Material Redacted**, payable as follows (in U.S. Dollars) to be held,
      returned, applied and/or refunded in accordance with the terms of this
      Lease:

<TABLE>
<CAPTION>
                      PAYMENT DATE                                  AMOUNT
--------------------------------------------------------------    ----------
<S>                                                               <C>
2 business days following LOI Execution.......................    **Material
                                                                  Redacted**
2 business days following Lease execution.....................    **Material
                                                                  Redacted**
On or before March 15, 2004...................................    **Material
                                                                  Redacted**
On or before August 2, 2004...................................    **Material
                                                                  Redacted**
</TABLE>

1.6 TRANSACTION FEE

      **Material Redacted**, payable within 2 business days after execution of
      this Lease

1.7 RENT DURING INITIAL LEASE TERM

      Payable monthly in advance and equal to the sum of:

    (a)

<TABLE>
<S>                                  <C>                      <C>
Month 1.......................       **Material Redacted**    **Material Redacted**
Month 2.......................       **Material Redacted**    **Material Redacted**
Remainder of initial lease term      **Material Redacted**    **Material Redacted**
</TABLE>

            All amounts in the table above are per month expressed in January
            2004 U.S. Dollars*

      *The above base rent is expressed in January 2004 U.S. Dollars and will
      increase in accordance with Boeing's announced escalation rates for the
      period from and including the 1st day of January 2004 through and
      including the delivery date of the Aircraft;

         plus

      (b) **Material Redacted** per month of the incremental cost (net of
      Manufacturer charges) of (i) all BFE approved by LESSOR (whether
      buyer-furnished equipment or seller-purchased equipment) paid for by
      LESSOR in place of or in addition to LESSEE's specification BFE for the
      Aircraft as specified in LESSEE's

                                       2

<PAGE>

      specification for the Aircraft and (ii) all other agreed-to changes to
      LESSEE's specification for the Aircraft paid for by LESSOR. **Material
      Redacted**

      *The election of -700 or -800 will be made by giving written notice to
      LESSOR on or before March 1, 2004. In the event that LESSEE makes no
      election, the Aircraft will be a -700.

1.8   **MATERIAL REDACTED**

        **Material Redacted**

1.9   RESERVES

          Payable as follows:

<TABLE>
<CAPTION>
  TYPE OF RESERVES                                               AMOUNT OF RESERVES
-----------------------     --------------------------------------------------------------------------------------
<S>                         <C>
Airframe Reserves:          Year 1: **Material Redacted** * per airframe flight hour
                            Year 2: **Material Redacted** * per airframe flight hour
                            Year 3: **Material Redacted** * per airframe flight hour
                            Year 4: **Material Redacted** * per airframe flight hour
                            Years 5 - 8: **Material Redacted** * per airframe flight hour

                            *Each of the airframe reserves amounts will be increased by
                            **Material Redacted** per airframe flight hour in the event that LESSEE elects the -800

Engine Performance             Each of the figures below is per engine flight hour for each engine*:

Restoration Reserves: *        Year 1: **Material Redacted**
                               Year 2: **Material Redacted**
                               Year 3: **Material Redacted**
                               Year 4: **Material Redacted**
                               Years 5 - 8: **Material Redacted**

Engine LLP Reserves:           **Material Redacted** per engine cycle for each engine
</TABLE>

      *Engine reserves will be paid each month at the applicable rate based on
      the thrust rating at which a particular Engine is operated.

1.10  ADDITIONAL RENT FOR EXCESS AIRFRAME AND ENGINE CYCLES

         **Material Redacted** for each cycle the airframe and **Material
         Redacted** for each cycle an engine operated during a calendar year in
         excess of the

                                       3
<PAGE>

         maximum number of cycles which would result from an average hour/cycle
         ratio of **Material Redacted** hours to **Material Redacted** cycle

1.11  COUNTRY OF AIRCRAFT REGISTRATION

         Republic of Panama or at LESSEE's request, the United States (if
         permitted by law)

1.12  MAINTENANCE PROGRAM

         LESSEE's Maintenance Program

1.13  AGREED VALUE OF AIRCRAFT

         **Material Redacted**
         **Material Redacted**
         *The agreed value is expressed in January 2004 U.S. Dollars and will
         increase in accordance with Boeing's announced escalation rates for the
         period from and including the 1st day of January 2004 through and
         including the delivery date of the Aircraft. **Material Redacted**

1.14  LESSOR'S BANK ACCOUNT

         International Lease Finance Corporation
         JPMorgan Chase Bank
         270 Park Avenue
         New York, New York 10017
         ABA# 021000021

                                       4
<PAGE>

                                    ARTICLE 2
                                   DEFINITIONS

      Except where the context otherwise requires, the following words have the
following meanings for all purposes of this Lease. The definitions are equally
applicable to the singular and plural forms of the words. Any agreement defined
below includes each amendment, modification, supplement and waiver thereto in
effect from time to time.

2.1   GENERAL DEFINITIONS.

            "AIRCRAFT" means the Airframe, two (2) Engines, APU, Parts and as
the context permits, Aircraft Documentation, collectively. As the context
requires, "Aircraft" may also mean the Airframe, any Engine, the APU, any Part,
the Aircraft Documentation or any part thereof individually. For example, in the
context of return to LESSOR the term "Aircraft" means the Airframe, Engines,
APU, Parts and Aircraft Documentation collectively, yet in the context of LESSEE
not creating any Security Interests other than Permitted Liens on the Aircraft,
the term "Aircraft" means any of the Airframe, any Engine, the APU, any Part or
the Aircraft Documentation individually.

            "AIRCRAFT DOCUMENTATION" means all (a) log books, Aircraft records,
manuals and other documents provided to LESSEE in connection with the Aircraft,
(b) documents listed in the Estoppel and Acceptance Certificate and Exhibit L
and (c) any other documents required to be maintained during the Lease Term and
until the Termination Date by the Aviation Authority, LESSEE's Maintenance
Program and this Lease.

            "AIRFRAME" means the airframe listed in the Estoppel and Acceptance
Certificate executed at Delivery together with all Parts relating thereto
(except Engines or engines and the APU).

            "AIRWORTHINESS DIRECTIVES" or "ADS" means all airworthiness
directives (or equivalent) applicable to the Aircraft issued either by the
Aviation Authority or the aviation authority of the country of manufacture of
the Aircraft.

            "APU" means (a) the auxiliary power unit of the Aircraft listed in
the Estoppel and Acceptance Certificate executed at Delivery, (b) any
replacement auxiliary power unit acquired by LESSOR and leased to LESSEE
pursuant to Article 19.6 following a Total Loss of the APU; and (c) all Parts
installed in or on such APU at Delivery (or substituted, renewed or replacement
Parts in accordance with this Lease) so long as title thereto is or remains
vested in LESSOR in accordance with the terms of Article 12.4.

            "AVIATION AUTHORITY" means the Authoridad de Aeronautica Civil of
the Republic of Panama or any Government Entity which under the Laws of the
Republic of Panama from time to time has control over civil aviation or the
registration, airworthiness or operation of aircraft in the Republic of Panama.
If the Aircraft is registered in a country other than the Republic of Panama,
"Aviation Authority" means the agency which regulates civil aviation in such
other country.

                                       5
<PAGE>

            "AVIATION DOCUMENTS" means any or all of the following which at any
time may be obtainable from the Aviation Authority: (a) if required, a temporary
certificate of airworthiness from the Aviation Authority allowing the Aircraft
to be flown after Delivery to the State of Registration, (b) an application for
registration of the Aircraft with the appropriate authority in the State of
Registration, (c) the certificate of registration for the Aircraft issued by the
State of Registration, (d) a full certificate of airworthiness for the Aircraft
specifying transport category (passenger), (e) an air transport license, (f) an
air operator's certificate, (g) such recordation of LESSOR's title to the
Aircraft and interest in this Lease as may be available in the State of
Registration and (h) all such other authorizations, approvals, consents and
certificates in the State of Registration as may be required to enable LESSEE
lawfully to operate the Aircraft.

            "BASIC ENGINE" means those units and components of the Engine which
are used to induce and convert fuel/air mixture into thrust/power; to transmit
power to the fan and accessory drives; to supplement the function of other
defined systems external to the Engine; and to control and direct the flow of
internal lubrication, plus all essential accessories as supplied by the Engine
manufacturer. The nacelle, installed components related to the Aircraft systems,
thrust reversers, QEC and the primary exhaust nozzle are excluded.

            "BEE" means any equipment which is to be provided by the purchaser
of the Aircraft (whether actually provided by LESSOR as buyer-furnished
equipment or Manufacturer as seller-purchased equipment).

            "BUSINESS DAY" means a day other than a Saturday or Sunday on which
the banks in the Republic of Panama and the city where LESSOR's Bank is located
are open for the transaction of business of the type required by this Lease.

            "CREDITOR" means any lessor, owner, bank, lender, mortgagee or other
Person which is the owner of or has any interest in an aircraft engine or
aircraft operated by LESSEE.

            "CREDITOR AGREEMENT" means the applicable agreement between a
Creditor and LESSEE or between Creditors pursuant to which such Creditor owns,
leases or has an interest in either a Boeing B737-NG aircraft operated by LESSEE
on which an Engine may be installed or in an aircraft engine which may be
installed on the Airframe.

            "DEFAULT" means any event which, upon the giving of notice, the
lapse of time and/or a relevant determination, would constitute an Event of
Default.

            "DELIVERY" means the delivery of the Aircraft from LESSOR to LESSEE
pursuant to Articles 3 and 6.

            "DELIVERY DATE" means the date on which Delivery takes place.
"DOLLARS," and "$" means the lawful currency of the U.S.

            "ENGINE" means (a) each of the engines listed on the Estoppel and
Acceptance Certificate; (b) any replacement engine acquired by LESSOR and leased
to LESSEE pursuant to Article 19.5 following a Total Loss of an Engine; and (c)
all Parts installed in or on any of such engines at Delivery (or substituted,
renewed or replacement Parts in accordance with this Lease)

                                       6
<PAGE>

so long as title thereto is or remains vested in LESSOR in accordance with the
terms of Article 12.4.

            "EUROCONTROL" means the European Organization for the Safety of Air
Navigation established by the Convention related to the Co-operation for the
Safety of Air Navigation (Eurocontrol) signed on December 13, 1960, as amended.

            "EVENT OF DEFAULT" means any of the events referred to in Article
25.2.

            "FAA" means the Federal Aviation Administration of the Department of
Transportation or any successor thereto under the Laws of the U.S.

            "FARS" means the U.S. Federal Aviation Regulations embodied in Title
14 of the U.S. Code of Federal Regulations, as amended from time to time, or any
successor regulations thereto.

            "GENEVA CONVENTION" means the Convention on the International
Recognition of Rights in Aircraft signed in Geneva, Switzerland on June 19,
1948.

            "GOVERNMENT ENTITY" means any (a) national, state or local
government, (b) board, commission, department, division, instrumentality, court,
agency or political subdivision thereof and (c) association, organization or
institution of which any of the entities listed in (a) or (b) is a member or to
whose jurisdiction any such entity is subject.

            "LANDING GEAR" means the installed main and nose landing gear,
components and their associated actuators, side braces and parts.

            "LAW" means any (a) statute, decree, constitution; regulation, order
or any directive of any Government Entity, (b) treaty, pact, compact or other
agreement to which any Government Entity is a signatory or party, (c) judicial
or administrative interpretation or application of any of the foregoing or (d)
any binding judicial precedent having the force of law.

            "LEASE" means this Aircraft Lease Agreement, together with all
Exhibits hereto.

            "LESSOR'S LIEN" means any Security Interest created by LESSOR.

            "MAINTENANCE PROGRAM" means LESSEE's maintenance program as approved
by the Aviation Authority or such other maintenance program as LESSOR may, in
its discretion, accept in writing.

            "MANUFACTURER" means The Boeing Company.

            "MPD" means the Maintenance Planning Document published by
Manufacturer and applicable to the Aircraft.

            "OVERHAUL" means the full reconditioning of the Aircraft, an Engine,
the APU, Landing Gear, module or Part, as the case may be, in which such
equipment has been fully disassembled; cleaned; thoroughly inspected; and
returned to such condition specified by the

                                       7
<PAGE>

applicable manufacturer's manual as shall permit the operation of such Engine,
APU, Part, Landing Gear, etc. for the maximum period of time, hours or cycles,
as applicable, as specified by the relevant manufacturer's Overhaul manual.

            "PART" means any part, component, appliance, system module, engine
module, accessory, material, instrument, communications equipment, furnishing,
LESSEE-furnished or LESSOR-purchased equipment or other item of equipment (other
than complete Engines or engines or the APU) for the time being installed in or
attached to the Airframe, any Engine or the APU or which, having been removed
from the Airframe, any Engine or the APU, remains the property of LESSOR.

            "PDM" means the post Delivery modification during which the
installation of a blended winglet system and LESSEE's in flight entertainment
system will be installed. Scheduling, arranging and coordinating the arrival at
the PDM location of the Aircraft, BFE, material and parts will be LESSEE's
responsibility.

            "PERMITTED LIEN" means (a) LESSOR's Liens; (b) Security Interests
arising in the ordinary course of LESSEE's business for Taxes either not yet
assessed or, if assessed, not yet due or being contested in good faith in
accordance with Article 16.5; (c) materialmen's, mechanics', workmen's,
repairmen's, employees' liens or similar Security Interests (including liens for
airport and navigation facility fees) arising by operation of Law after the
Delivery Date in the ordinary course of LESSEE's business for amounts which are
either not yet due or are being contested in good faith by appropriate
proceedings (and for which adequate reserves have been made or, when required in
order to pursue such proceedings, an adequate bond has been provided) so long as
such proceedings do not involve any danger of sale, forfeiture or loss of the
Aircraft; or liens on LESSEE's interest arising out of judgments or awards
against LESSOR.

            "PERSON" means any individual, firm, partnership, joint venture,
trust, corporation, company, Government Entity, committee, department, authority
or any body, incorporated or unincorporated, whether having distinct legal
personality or not.

            "PRIME RATE" means the rate of interest from time to time announced
by JPMorgan Chase Bank in New York as its prime commercial lending rate.

            "PROHIBITED COUNTRY" means any country to which the export and/or
use (as applicable) of a B737-700 / 800 aircraft with CFM56-7B engines attached
thereto is not permitted under (a) any United Nations sanctions, (b) the Council
Regulation (EC) No. 149/2003 which updates and amends Council Regulation (EC)
1334/2000, (c) the United States Export Administration Act 1979 (as amended) or
any successor legislation and/or the Export Administration Regulations
promulgated thereunder, (d) where applicable, the various regulations
administered from time to time by the Office of Foreign Assets Control of the
U.S. Treasury Department, (e) any similar or corresponding legislation then in
effect in the U.S., the United Kingdom, France, Spain or Germany or (f) any
subsequent United Nations Sanctions Orders the effect of which prohibits or
restricts the export and/or use of B737-700 / 800 aircraft with CFM56-7B engines
attached thereto to such country. For purposes of this Lease, Prohibited Country
will be defined by applicable regulations listed above which are updated,
amended and

                                       8
<PAGE>

superseded from time to time, the violation of which may reasonably be expected
to result in civil, criminal or seizure liability for LESSEE, LESSOR or the
Aircraft.

            "QEC" means all interface parts which are installed between the
Engine pylon and the Basic Engine.

            "RETURN CHECK" means the accomplishment of all work cards specified
in the Maintenance Program and the MPD which (a) are necessary to clear the
Aircraft of all such tasks **Material Redacted**, or (b) are required to be
performed at lesser intervals than **Material Redacted**. If pursuant to the
then-current MPD, the performance interval for a task is shorter than every
**Material Redacted**, then such task will also be performed. All non-routine
tasks generated as a result of the performance of these work cards must also be
performed. For avoidance of doubt, if the inspection interval pursuant to the
then-current MPD for a particular work card only refers to one or two of the
three measurement tests, then the most restrictive measurement test or tests
referred to in the then-current MPD will be utilized in determining whether the
task must be performed.

            "SECURITY INTEREST" means any encumbrance or security interest,
however and wherever created or arising including (without prejudice to the
generality of the foregoing) any right of ownership, security, mortgage, pledge,
charge, encumbrance, lease, lien, statutory or other right in rem,
hypothecation, title retention, attachment, levy, claim or right of possession
or detention.

            "STATE OF REGISTRATION" means the Republic of Panama, the United
States of America at LESSEE's request (if permitted by Law) or such other
country or state of registration of the Aircraft as LESSOR may, in its sole, but
reasonable discretion, approve in writing.

            "U.S." means the United States of America.

2.2   SPECIFIC DEFINITIONS. The following terms are defined in the Articles
referenced below:

<TABLE>
<CAPTION>
           TERMS                                                   ARTICLE
------------------------------                                     --------
<S>                                                                <C>
Agreed Value                                                        19.1
Airframe Reserves                                                   5.4.1
Default Interest                                                    5.7
Delivery Location                                                   3.1
Engine LLP Reserves                                                 5.4.1
Engine Performance Restoration                                      5.4.1
Reserves
Expenses                                                            17.1
Expiration Date                                                     4.3
**Material Redacted**                                               4.2.1
Indemnitees                                                         17.1
Initial Lease Term                                                  4.1
Lease Term                                                          4.3
LESSOR's Assignee                                                   24.2.1
</TABLE>

                                       9
<PAGE>

<TABLE>
<S>                                                                 <C>
LESSOR's Bank                                                       5.6
LESSOR's Lender                                                     24.3
Manufacturer's Escalation Rate                                      5.3.1
Modification                                                        12.10.1
Net Total Loss Proceeds                                             19.1
Operative Documents                                                 20.1.3
Rent                                                                5.3.1
Reserves                                                            5.4.1
Scheduled Delivery Date                                             3.2
Security Deposit                                                    5.1.1
Taxes                                                               16.1
Termination Date                                                    4.4
Total Loss                                                          19.1
Total Loss Date                                                     19.1
Total Loss Proceeds                                                 19.1
Transaction Fee                                                     5.2
</TABLE>

                                       10
<PAGE>

                                    ARTICLE 3
                           PLACE AND DATE OF DELIVERY

3.1   PLACE OF DELIVERY. Delivery of the Aircraft by LESSOR to LESSEE will
occur at Manufacturer's facility in Seattle, Washington or such other place as
may be agreed in writing between the parties (the "DELIVERY LOCATION").

3.2   SCHEDULED DELIVERY DATE. As of the date of this Lease, Delivery of the
Aircraft from Manufacturer to LESSOR and LESSOR to LESSEE is scheduled to occur
in the month of February 2005. LESSOR will notify LESSEE in writing (or other
method so long as LESSEE acknowledges such notice) from time to time and in a
timely manner of the exact date on which LESSOR expects Delivery to take place
(the "SCHEDULED DELIVERY DATE").

3.3   DELIVERY SUBJECT TO MANUFACTURER DELIVERY. LESSOR and LESSEE expressly
acknowledge that Delivery of the Aircraft to by LESSOR to LESSEE is subject to
and conditioned upon delivery of the Aircraft by Manufacturer to LESSOR.

3.4   NO LESSOR LIABILITY. LESSOR will not be liable for any loss or expense,
or any loss of profit, arising from any delay or failure in Delivery to LESSEE
unless such delay or failure arises as a direct consequence of the willful
misconduct of LESSOR, and in no event will LESSOR be liable for any delay or
failure which is caused by any breach or delay on the part of Manufacturer or
any BFE supplier.

3.5   TOTAL LOSS OF AIRCRAFT PRIOR TO DELIVERY. If a Total Loss of the Aircraft
occurs prior to Delivery, neither party will have any further liability to the
other except that LESSOR will return to LESSEE the Security Deposit in
accordance with Article 5.1.3 and any prepaid Rent.

3.6   CANCELLATION FOR DELAY. Promptly after LESSOR becomes aware that in
Manufacturer's opinion a delay will cause Delivery to be delayed beyond December
31, 2005, LESSOR will promptly notify LESSEE in writing (or other method so long
as LESSEE acknowledges such notice). By written notice given within ten (10)
Business Days after LESSEE's receipt of such LESSOR notice, LESSEE may by
written notice to LESSOR terminate this Lease and this Lease will terminate on
the date of receipt of such notice. In the event of such termination, neither
party will have any further liability to the other party except that LESSOR will
promptly return to LESSEE the Security Deposit in accordance with Article 5.1.3
and any prepaid Rent. If LESSEE does not give notice of termination within such
ten (10) Business Days, LESSEE loses all right to terminate under this Article
3.6 unless otherwise agreed in writing by the parties. **Material Redacted**

                                       11
<PAGE>

                                    ARTICLE 4
                      LEASE TERM AND **MATERIAL REDACTED**

4.1   INITIAL LEASE TERM. The term of leasing of the Aircraft will commence on
the Delivery Date and continue for twelve (12) months with six (6) successive,
automatic twelve (12) month extensions and one (1) automatic three (3) month
extension (the "INITIAL LEASE TERM") unless this Lease shall be earlier
terminated or extended pursuant to the provisions of Article 4.2.1.
Notwithstanding the foregoing, LESSOR and LESSEE will cooperate to modify the
return date to allow LESSEE to perform the return C-check as near as possible to
the expiration of the prior C-check without unduly prejudicing the marketing of
the Aircraft to a follow-on operator.

4.2   **MATERIAL REDACTED**

    4.2.1 **Material Redacted**

    4.2.2 **Material Redacted**

4.3   "LEASE TERM" AND "EXPIRATION DATE". "LEASE TERM" means the term of
leasing commencing on the Delivery Date and terminating on the Expiration Date.
"EXPIRATION DATE" means the date on which LESSEE is required to redeliver the
Aircraft to LESSOR in the condition required by this Lease on the last day of
the Initial Lease Term **Material Redacted**.

4.4   "TERMINATION DATE". If LESSEE returns the Aircraft to LESSOR on the
Expiration Date in the condition required by Article 23, then "TERMINATION DATE"
has the same meaning as "Expiration Date", If LESSEE does not do so, then
"TERMINATION DATE" means the date on which the first of the following events
occurs:

      (a) there is a Total Loss of the Aircraft prior to Delivery pursuant to
      Article 3.5;

      (b) cancellation of this Lease occurs pursuant to Article 3.6;

      (c) there is a Total Loss of the Aircraft and payment is made to LESSOR in
      accordance with Article 19.3;

      (d) an Event of Default occurs and LESSOR repossesses the Aircraft or
      otherwise terminates this Lease pursuant to Article 25.3 prior to the
      Expiration Date and recovers possession and control of the Aircraft;

      (e) an Event of Default occurs hereunder by LESSEE returning the Aircraft
      in the condition required by this Lease after the Expiration Date; or

      (f) an Event of Default occurs and LESSOR repossesses the Aircraft or
      otherwise terminates this Lease pursuant to Article 25.3 after the
      Expiration Date and recovers possession and control of the Aircraft.

                                       12
<PAGE>

                                   ARTICLE 5
                    SECURITY DEPOSIT, TRANSACTION FEE, RENT,
                           RESERVES AND OTHER PAYMENTS

5.1   SECURITY DEPOSIT.

    5.1.1   LESSEE will pay LESSOR a security deposit of **Material Redacted**
            for its lease of the Aircraft (the "SECURITY DEPOSIT"). The Security
            Deposit is payable as follows (in US$):

<TABLE>
<CAPTION>
           PAYMENT DATE                    AMOUNT (-700)                    AMOUNT (-800)
-----------------------------------    ---------------------            ---------------------
<S>                                    <C>                              <C>
Two (2) Business Days following
LOI Execution **Material
Redacted**.........................    **Material Redacted**            **Material Redacted**

Two (2) Business Days following
Lease execution **Material
Redacted**.........................    **Material Redacted**            **Material Redacted**

On or before March 15, 2004
**Material Redacted**..............    **Material Redacted**            **Material Redacted**

On or before August 2, 2004
**Material Redacted**..............    **Material Redacted**            **Material Redacted**

TOTAL..............................    **Material Redacted**            **Material Redacted**
</TABLE>

      5.1.2 The Security Deposit may be commingled with LESSOR's general funds
            and any interest earned on such Security Deposit will be for
            LESSOR's account. If the Security Deposit is reduced below the
            required amount by application to meet LESSEE's unperformed
            obligations under this Lease, LESSEE will replenish the Security
            Deposit within ten (10) days after LESSOR's demand therefor. The
            Security Deposit will serve as security for the performance by
            LESSEE of its obligations under this Lease and any other agreements
            between LESSEE and LESSOR relating to aircraft, engines, aircraft
            equipment or the extension of credit and may be applied by LESSOR
            upon the occurrence of an Event of Default hereunder or of a default
            by LESSEE under any such other agreements.

      5.1.3 Upon termination of this Lease in accordance with Article 4.4,
            LESSOR will promptly return to LESSEE the amount of the Security
            Deposit then held by LESSOR (so long as no default by LESSEE exists
            under any other agreement between LESSEE and LESSOR relating to
            aircraft, engines or aircraft equipment or the extension of credit
            by LESSOR to LESSEE), without interest, less an amount determined by
            LESSOR to be a reasonable estimate of the costs,

                                       13
<PAGE>

            if any, which LESSOR will incur to remedy any Default or Event of
            Default which has occurred and is continuing under this Lease,
            including the correction of any discrepancies from the required
            condition of the Aircraft on return of the Aircraft.

5.2   TRANSACTION FEE. Within two (2) Business Days after execution of this
Lease, LESSEE will pay LESSOR a nonrefundable transaction fee of **Material
Redacted** (the "TRANSACTION FEE").

5.3   RENT.

    5.3.1   LESSEE will pay LESSOR the following amounts monthly in advance as
            rent for the Aircraft (the "RENT"):

        INITIAL LEASE TERM: Payable monthly in advance and equal to the sum of:

                  (a)
<TABLE>
<S>                                   <C>                                <C>
Months 1 and 2                        **Material Redacted** (in the      **Material Redacted** (in the
                                      event that LESSEE elects -700)     event that LESSEE elects -800)

Remainder of Initial Lease Term       **Material Redacted** (in the      **Material Redacted** (in the
                                      event that LESSEE elects -700)     event that LESSEE elects - 800)
</TABLE>

      All amounts in the table above are per month expressed in January 2004
      U.S. Dollars* (prorated for any partial month during the Lease Term or
      during the first and last calendar month of the Lease Term if such month
      is less than a full month)

      *The above base rent is expressed in January 2004 U.S. Dollars and will
      increase in accordance with Boeing's announced escalation rates for the
      period from and including the 1st of January 2004 through and including
      the Delivery Date of the Aircraft (the "MANUFACTURER'S ESCALATION RATE");

      plus

            (b) **Material Redacted** per month of the incremental cost (net of
            Manufacturer charges) of (i) all BFE approved by LESSOR (whether
            buyer-furnished equipment or seller-purchased equipment) paid for by
            LESSOR in place of or in addition to LESSEE's Specification BFE for
            the Aircraft as specified in LESSEE's Specification for the Aircraft
            and (ii) all other agreed-to changes to LESSEE's Specification for
            the Aircraft paid for by LESSOR. **Material Redacted**.

            Any increases to the above base rent during the Lease Term will be
            calculated immediately prior to Delivery. **Material Redacted**

                                       14
<PAGE>

       **Material Redacted**:

       **Material Redacted**.

       5.3.2   The first payment of Rent during the Lease Term will be paid no
               later than three (3) Business Days prior to the Scheduled
               Delivery Date. Each subsequent payment of Rent will be due
               monthly thereafter no later than the same day of the month as the
               Delivery Date of the Aircraft except that, if such day is not a
               Business Day, the Rent will be due on the immediately preceding
               Business Day. If Delivery occurred on the 29th, 30th or 31st of
               the month and in any given month during the Lease Term there is
               no such corresponding date, Rent will be payable on the last
               Business Day of such month. In the event that after LESSEE has
               paid the Rent three days prior to the Scheduled Delivery Date and
               then prior to Delivery the Delivery is delayed by more than seven
               (7) days, LESSOR will refund the Rent to LESSEE and LESSEE will
               repay the Rent prior to the Delivery Date.

      5.4   RESERVES.

       5.4.1   LESSEE will pay to LESSOR supplemental Rent, based on LESSEE's
               use of the Aircraft during the Lease Term, in the form of the
               following reserves in the following amounts (individually,
               "AIRFRAME RESERVES", "ENGINE PERFORMANCE RESTORATION RESERVES"
               and "ENGINE LLP RESERVES" and collectively "RESERVES"):

<TABLE>
<CAPTION>
   TYPE OF RESERVES                                                         AMOUNT OF RESERVES
-----------------------                           -------------------------------------------------------------------
<S>                                               <C>
Airframe Reserves:                                Year 1: **Material Redacted** * per Airframe flight hour
                                                  Year 2: **Material Redacted** * per Airframe flight hour
                                                  Year 3: **Material Redacted** * per Airframe flight hour
                                                  Year 4: **Material Redacted** * per Airframe flight hour
                                                  Years 5 - 8: **Material Redacted** * per Airframe flight hour

                                                  *Each of the Airframe Reserves amounts will be increased by
                                                  **Material Redacted** per Airframe flight hour in the event that
                                                  LESSEE elects the - 800.
</TABLE>

                                       15
<PAGE>

<TABLE>
<S>                                               <C>
Engine Performance                                Each of the figures below is per Engine flight hour for each Engine
Restoration Reserves*:                            (payable when the Engine is utilized on the Aircraft or another
                                                  aircraft)*:

                                                  Year 1: **Material Redacted**
                                                  Year 2: **Material Redacted**
                                                  Year 3: **Material Redacted**
                                                  Year 4: **Material Redacted**
                                                  Years 5 - 8: **Material Redacted**
Engine LLP Reserves:                              **Material Redacted** per Engine cycle for each Engine (payable
                                                  when the Engine is utilized on the Aircraft or another aircraft)
</TABLE>

           *Engine Reserves will be paid each month at the applicable rate
           based on the thrust rating at which a particular Engine is operated
           during such month.

     5.4.2  The amount of the Engine Performance Restoration Reserves and
            Engine LLP Reserves set forth in Article 5.4.1 will be increased
            by LESSOR in the event of an increase in the thrust rating of an
            Engine in accordance with Article 12.9.

     5.4.3  Such Reserves will be paid on or before the 10th day of the
            calendar month next following the month in which the Delivery
            Date occurs and on or before the 10th day of each succeeding
            calendar month for flying performed during the calendar month
            prior to payment. All Reserves for flying performed during the
            month in which the Termination Date occurs will be paid on the
            Termination Date, unless otherwise agreed by the parties.

     5.4.4  No interest will accrue or be paid at any time to LESSEE on such
            Reserves and, subject to LESSOR's obligations under Article 13,
            LESSOR may commingle the Reserves with LESSOR'S general funds.

5.5   ADDITIONAL RENT FOR EXCESS CYCLES. If in any calendar year (or portion
thereof) of the Lease Term the Airframe or any Engine operated more cycles than
the maximum number of cycles which would result from an average hour/cycle ratio
of **Material Redacted** hours to **Material Redacted** cycle, LESSEE will pay
LESSOR as additional Rent **Material Redacted** for each Airframe cycle and
**Material Redacted** **Material Redacted** for each Engine cycle the Airframe
and any Engine actually operated during such calendar year (or portion thereof)
in excess of the number of cycles which result from an average hour/cycle ratio
of **Material Redacted** hours to **Material Redacted** cycle. A calculation
will be made as of December 31 of each year and such additional Rent will be due
and payable by LESSEE on the date on which the next Reserves payment is due (in
accordance with Article 5.4.3) following such hour/cycle calculation period.

     Example: If the Airframe operated **Material Redacted** hours in a
     calendar year, it would have **Material Redacted** cycles resulting from
     an average hour/cycle ratio of **Material Redacted** hours to **Material
     Redacted** cycle. If in fact the Airframe

                                       16
<PAGE>

     operated **Material Redacted** cycles in such calendar year, the Airframe
     operated **Material Redacted** excess cycles in such calendar year and
     LESSEE will pay LESSOR **Material Redacted** (**Material Redacted** excess
     cycles x **Material Redacted** = **Material Redacted**).

     Similarly, if an Engine which is rated at **Material Redacted** thrust
     operated **Material Redacted** cycles in such calendar year, such Engine
     operated **Material Redacted** excess cycles in such calendar year and
     LESSEE will pay LESSOR **Material Redacted** (**Material Redacted** excess
     cycles x **Material Redacted** = **Material Redacted**).

     Alternatively, if an Engine which is rated at **Material Redacted** thrust
     operated **Material Redacted** cycles in such calendar year, such Engine
     operated **Material Redacted** excess cycles in such calendar year and
     LESSEE will pay LESSOR **Material Redacted** (**Material Redacted** excess
     cycles x **Material Redacted** = **Material Redacted**).

5.6   LESSOR'S BANK ACCOUNT. The Security Deposit, Transaction Fee, Rent,
Reserves and any other payment due under this Lease will be paid by wire
transfer of immediately available U.S. Dollar funds to LESSOR's bank account at:

          International Lease Finance Corporation
          JPMorgan Chase Bank
          270 Park Avenue
          New York, New York 10017
          ABA# 021000021

or to such other bank account in the United States (or such other jurisdiction
as may be agreed) as LESSOR may from time to time designate by at least three
(3) days prior written notice ("LESSOR'S BANK"). When it is stated in this Lease
that an installment of the Security Deposit, the monthly Rent, Reserves or any
other payment is due or must be paid or made by LESSEE by a specific date, then
such payment actually must be received by LESSOR's Bank on or before such
specific date on or before close of business (local time), even if, in order for
such payment to be received by LESSOR's Bank by such specific date, LESSEE must
initiate the wire transfer prior to such specific date.

5.7   DEFAULT INTEREST. If LESSOR's Bank does not receive the Rent or any other
amount on or before the specific date when due, LESSOR will suffer loss and
damage the exact nature and amount of which are difficult or impossible to
ascertain. LESSEE will pay LESSOR as supplemental Rent (by way of agreed
compensation and not as a penalty) interest on any due and unpaid amounts
payable by LESSEE under this Lease. Interest will be calculated at a per annum
rate (based on a 360 day year) which is equal to **Material Redacted** plus the
Prime Rate in effect on the date on which the amount was originally due for the
period from the date the amount originally was due through the date the amount
actually is received at LESSOR's Bank or, in the case of LESSOR's performance of
LESSEE's obligations hereunder, from the date of payment by LESSOR through the
date of LESSEE's repayment to LESSOR ("DEFAULT Interest"). Default Interest will
accrue on a day-to-day basis and be compounded monthly.

                                       17
<PAGE>

5.8   NO DEDUCTIONS OR WITHHOLDINGS. Subject to Article 16 of this Lease, All
payments by LESSEE under this Lease, including the Security Deposit, Transaction
Fee, Rent, Reserves, Default Interest, fees, indemnities or any other item, will
be made in full without any deduction or withholding whether in respect of
set-off, counterclaim, duties, or Taxes (in accordance with Article 16) imposed
in the State of Registration or any jurisdiction from which such payments are
made unless LESSEE is prohibited by Law from doing so, in which event LESSEE
will gross up the payment amount such that the net payment received by LESSOR
after any deduction or withholding equals the amounts called for under this
Lease. LESSEE will also do all of the following:

      (a) Ensure that the deduction or withholding does not exceed the minimum
      amount legally required;

      (b) Pay to the relevant Government Entities within the period for payment
      permitted by applicable Law the full amount of the deduction or
      withholding (including the full amount of any deduction or withholding
      from any additional amount paid pursuant hereto); and

      (c) Furnish to LESSOR within thirty (30) days after each payment an
      official receipt of the relevant Government Entities involved for all
      amounts so deducted or withheld.

5.9   NET LEASE.

    5.9.1   This Lease is a net lease and LESSEE's obligation to pay Rent and
            make other payments in accordance with this Lease will be absolute
            and unconditional under any and all circumstances and regardless of
            other events, including the following:

          (a) any right of set-off, counterclaim, recoupment, defense or other
          right (including any right of reimbursement) which LESSEE may have
          against LESSOR, Manufacturer, the Engine manufacturer or any other
          person for any reason, including any claim LESSEE may have for the
          foregoing;

          (b) unavailability or interruption in use of the Aircraft for any
          reason, including a requisition thereof or any prohibition or
          interference with or other restriction against LESSEE's use,
          operation or possession of the Aircraft (whether by Law or
          otherwise), any defect in title, airworthiness, merchantability,
          fitness for any purpose, condition, design, specification or
          operation of any kind or nature of the Aircraft, the ineligibility
          of the Aircraft for any particular use or trade or for registration
          under the Laws of any jurisdiction or Total Loss of the Aircraft in
          accordance with Article 19.3;

          (c) insolvency, bankruptcy, reorganization, arrangement,
          readjustment of debt, dissolution, liquidation, receivership,
          administration or similar proceedings by or against LESSOR, LESSEE,
          Manufacturer, the Engine manufacturer or any other Person;

                                       18
<PAGE>

          (d) invalidity or unenforceability or lack of due authorization of
          or other defect in this Lease;

          (e) failure or delay on the part of any party to perform its
          obligations under this Lease; or

          (f) any other circumstance which but for this provision would or
          might have the effect of terminating or in any other way affecting
          any obligation of LESSEE hereunder.

    5.9.2   Nothing in Article 5.9 will be construed to limit LESSEE's rights
            and remedies in the event of LESSOR's breach of its warranty of
            quiet enjoyment set forth in Article 21.2 or to limit LESSEE's
            rights and remedies to pursue in a court of law any claim it may
            have against LESSOR or any other Person.

5.10  CURRENCY INDEMNITY. If under any applicable Law, whether as a result of a
judgment against LESSEE or the liquidation of LESSEE or for any other reason,
any payment hereunder is required to be made or recovered in a currency other
than Dollars then, to the extent that the payment (when converted into Dollars
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 payable under this Lease, LESSEE
will as a separate and independent obligation, fully indemnify LESSOR against
the amount of the shortfall. If the amount received by LESSOR upon converting
the payment into Dollars exceeds the amount payable under this Lease, LESSOR
will remit such excess to LESSEE. For the purposes of this paragraph "rate of
exchange" means the rate at which LESSOR is able on the relevant date to
purchase Dollars in New York or London (at LESSOR's option) with such other
currency.

5.11  LESSOR PERFORMANCE OF LESSEE OBLIGATION. If LESSEE fails to make any
payment under this Lease to a third party in connection with the Aircraft or
fails to perform any other obligation required under this Lease, LESSOR may (but
is not required to) at its election and without waiver of its rights perform
such obligation and/or pay such amount. Within five (5) Business Days after
written notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE,
LESSEE will repay such amount to LESSOR together with Default Interest. Such
payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR
hereunder. Any payment, performance or compliance by LESSOR of a LESSEE
obligation hereunder will not affect the occurrence or continuance of a Default
or Event of Default, as the case may be.

5.12  CONSIDERATION FOR RENT AND OTHER AMOUNTS. The amount of the Rent and other
payments contained herein are in consideration of LESSEE's waiver of warranties
and indemnities set forth in Articles 8 and 17, respectively, and the other
provisions of this Lease.

                                       19
<PAGE>

                                    ARTICLE 6
                     INVOLVEMENT WITH AIRCRAFT MANUFACTURER

6.1   LESSEE SELECTION OF AIRCRAFT. LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF
THE AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY
MANUFACTURER. LESSEE COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT
IN SELECTING THE AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE, DESIGN AND TYPE.
LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER, REPAIRER OR SERVICING
AGENT OF THE AIRCRAFT.

6.2   AGENCY AGREEMENT. Certain obligations remain to be performed by LESSOR in
connection with the manufacture, fabrication and completion of the Aircraft by
Manufacturer which will be performed by LESSEE (as provided in the Agency
Agreement). LESSEE will act as LESSOR's agent with respect to some of these
matters pursuant to the terms of an Agency Agreement to be entered into between
LESSEE and LESSOR in the form set forth in Exhibit B.

6.3   PROCUREMENT OF BFE. Unless otherwise agreed, LESSOR will procure all BFE
for the Aircraft in accordance with the Aircraft specification. In respect of
any additional BFE not part of LESSEE's Specification as of the date hereof,
LESSOR and LESSEE shall use reasonable efforts to purchase such BFE under the
supplier contract which provides the most favorable pricing.

6.4   ASSIGNMENT OF TRAINING. LESSOR hereby assigns to LESSEE all rights to
training to which LESSOR is entitled as a result of LESSOR's purchase of the
Aircraft and lease of the Aircraft to LESSEE. If LESSEE fails to take Delivery
of the Aircraft when tendered in accordance with Article 6.7, LESSEE will
immediately pay to LESSOR an amount equal to the Dollar value of such training
based on what the training would have cost LESSEE had LESSEE purchased such
training directly from Manufacturer.

6.5   LESSEE INSPECTION OF AIRCRAFT. During the course of final assembly of the
Aircraft, and at Delivery, LESSEE will have its own representative present to
inspect the Aircraft and to ensure its conformity with LESSEE's needs and the
terms of this Lease. LESSEE will have ground inspection and acceptance flight
rights with respect to the Aircraft. LESSEE acknowledges that, as between LESSEE
and LESSOR, in accepting the Aircraft LESSEE is relying on its own inspection
and knowledge of the Aircraft in determining whether the Aircraft meets the
requirements of this Lease.

6.6   AIRCRAFT AT DELIVERY. At Delivery, the Aircraft will be as set forth in
Exhibit A, as such description may be modified by any change requests agreed to
among LESSEE, LESSOR and Manufacturer (which will be reflected in amendment(s)
to this Lease). In the event of any discrepancies, LESSEE and LESSOR will
cooperate in good faith with one another and with Manufacturer and the Engine
manufacturer, as applicable, in order to arrive at a mutually acceptable
resolution of any such discrepancies. LESSOR will use commercially reasonable
efforts to cause Manufacturer to correct any discrepancies prior to Delivery or
will cause Manufacturer to provide a commitment letter which will provide that
any discrepancies which exist at Delivery will be corrected at no cost to
LESSEE.

                                       20
<PAGE>

6.7   DELIVERY OF THE AIRCRAFT TO LESSEE. Subject to LESSEE and LESSOR having
performed all of the conditions precedent to Delivery set forth herein,
immediately following delivery of the Aircraft from Manufacturer to LESSOR,
LESSOR will deliver the Aircraft to LESSEE at the Delivery Location. Provided
that the Aircraft is in the condition required by Article 6.6, upon the tender
of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft and the
date of tender by LESSOR to LESSEE will be deemed to be the Delivery Date for
all purposes under this Lease, including, but not limited to, the commencement
of LESSEE's obligation to pay Rent hereunder.

6.8   LESSEE ACCEPTANCE OF AIRCRAFT. If LESSEE fails to (a) comply with its
obligations set forth in Article 6.2 (other than as a direct result of a failure
by LESSOR to comply with LESSOR's obligations hereunder or under the Agency
Agreement), (b) comply with the conditions contained in Articles 7.1 and 7.2 so
as to allow Delivery to take place immediately following delivery of the
Aircraft by Manufacturer to LESSOR or (c) take delivery of the Aircraft when
properly tendered for delivery by LESSOR in the condition required hereunder,
LESSEE will indemnify LESSOR for all costs and expenses incurred by LESSOR as a
direct result thereof including (without limitation) any payments other than the
purchase price which LESSOR becomes obliged to make to Manufacturer.

                                       21
<PAGE>

                                    ARTICLE 7
                    PRE-DELIVERY, DELIVERY AND POST-DELIVERY
                       DOCUMENTARY AND OTHER REQUIREMENTS

7.1   PRE-DELIVERY REQUIREMENTS. LESSEE will do each of the following prior to
the Scheduled Delivery Date of the Aircraft within the time frames set forth
below:

    7.1.1   Within one (1) month after execution of this Lease, LESSEE will
            deliver to LESSOR each of the following:

          (a) copies of resolutions of the Board of Directors of LESSEE or other
          written evidence of appropriate corporate action, duly certifying and
          authorizing the lease of the Aircraft hereunder and the execution,
          delivery and performance of this Lease, together with an incumbency
          certificate as to the person or persons authorized to execute and
          deliver documents on behalf of LESSEE hereunder;

          (b) an opinion of counsel in the form and substance of Exhibit F.

    7.1.2   At least ten (10) days prior to the Scheduled Delivery Date, LESSEE
            will have delivered to LESSOR a Certificate of Insurance and
            Brokers' Letter of Undertaking in the form and substance of Exhibits
            C and D, respectively, (or other form reasonably satisfactory to
            LESSOR) from LESSEE's insurance brokers evidencing insurance of the
            Aircraft in accordance with this Lease from the Delivery Date.

    7.1.3   At least three (3) Business Days prior to the Scheduled Delivery
            Date, LESSEE will do each of the following:

          (a) pay to LESSOR the first monthly installment of Rent in accordance
          with Article 5.3.2;

          (b) provide LESSOR with a copy of such Aviation Documents as may be
          available prior to the Scheduled Delivery Date;

          (c) provide LESSOR with a power of attorney empowering LESSEE's
          representative, who may be an officer or employee of LESSEE, to accept
          the Aircraft on behalf of LESSEE;

          (d) provide LESSOR with a power of attorney in the form of Exhibit G;
          and

          (e) provide LESSOR with such other documents as LESSOR may reasonably
          request.

7.2   DELIVERY REQUIREMENTS. On the Delivery Date of the Aircraft, each of the
following will occur:

                                       22
<PAGE>

    7.2.1   LESSEE will execute and deliver to LESSOR an Estoppel and Acceptance
            Certificate in the form of Exhibit E covering the Aircraft and
            effective as of the Delivery Date.

    7.2.2   if not previously done, LESSEE and LESSOR will sign an amendment or
            supplement to Exhibit A evidencing all agreed-to changes to the
            specification of the Aircraft.

    7.2.3   LESSEE will deliver a certificate signed by an officer of LESSEE
            stating all of the following:

          (a) the representations and warranties contained in Article 20 are
          true and accurate on and as of the Delivery Date as though made on and
          as of such date (except to the extent that such representations and
          warranties relate solely to an earlier date);

          (b) no Default or Event of Default has occurred and is continuing or
          will result from LESSEE's lease of the Aircraft hereunder; and

          (c) to the extent applicable, such officer has examined the Creditor
          Agreements between LESSEE and the other Creditors and such Creditor
          Agreements contain terms pursuant to which, subject to reciprocal
          rights, such Creditors have agreed that they will not obtain any
          right, title or interest in an Engine which is installed on another
          aircraft (or, if this is not the case, such officer will identify in
          the certificate the parties, the aircraft and the Creditor Agreements
          for which this statement is untrue).

    7.2.4   LESSEE's counsel will deliver an opinion confirming the matters set
            forth in the opinion of counsel described in Article 7.1 and
            advising that all filing and other requirements described in the
            earlier opinion of counsel have been met to the extent the same may
            be met prior to Delivery of the Aircraft.

    7.2.5   If any Creditor Agreement provides or contemplates that such
            Creditor will obtain any right, title or interest in an Engine which
            is installed on such Creditor's aircraft, LESSEE will deliver (if
            reasonably available) to LESSOR an engines cooperation agreement in
            form and substance acceptable to LESSOR which is executed by LESSEE
            and LESSEE's Creditors (as defined therein); provided, however, to
            the extent such agreement has not been so delivered, LESSEE hereby
            agrees that LESSEE will not install an Engine on such Aircraft until
            such agreement shall have been delivered.

    7.2.6   LESSOR will deliver to LESSEE an assignment of Manufacturer and
            Engine manufacturer rights in the form and substance of Exhibits H
            and I, respectively, and concurrently therewith LESSOR, to the
            extent it has not previously done so, will be deemed to have
            assigned all product assurance and product support applicable to the
            owner or operator of the Aircraft to LESSEE during the Lease Term.

                                       23
<PAGE>

    7.2.7   LESSEE will deliver to LESSOR a copy of such Aviation Documents as
            have not been previously delivered which are available.

    7.3 POST-DELIVERY REQUIREMENTS.

    7.3.1   As soon as reasonably practicable after Delivery but not later than
            thirty (30) days after arrival of the Aircraft in Panama, if not
            previously provided, LESSEE will do each of the following:

          (a) procure registration of the Aircraft in the register of aircraft
          of the State of Registration showing LESSOR as the owner and provide
          evidence of the same to LESSOR;

          (b) provide LESSOR with copies of all Aviation Documents not
          previously delivered; and

          (c) if the Aircraft could not be registered at Delivery, provide
          LESSOR with a follow-up opinion of counsel advising that the Aircraft
          has been registered in the State of Registration and that all
          necessary filings have been made.

    7.3.2   Within forty five (45) days after Delivery, LESSEE will provide
            LESSOR with a Technical Evaluation Report for the Aircraft in the
            form and substance of Exhibit M, as revised.

                                       24
<PAGE>

                                    ARTICLE 8
                                   DISCLAIMERS

      LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL
BE IN THE CONDITION REQUIRED BY ARTICLE 6. SUCH COMMITMENT OR COVENANT ON THE
PART OF LESSOR EXPIRES AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY
UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT AND EXECUTION OF THE ESTOPPEL AND
ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND LESSEE:

8.1   "AS IS, WHERE IS". LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS,
WHERE IS". LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR
NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR
WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR
COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE
CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY TO THE
PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY
ENGINE, ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP,
MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE,
MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE
(INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT
DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY
PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b)
THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER
INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) ANY OTHER REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART
THEREOF, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED.

8.2   WAIVER OF WARRANTY OF DESCRIPTION. IN CONSIDERATION OF (a) LESSEE'S RIGHTS
HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY
EXISTING AND ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER,
LESSEE HEREBY AGREES THAT ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS
EXECUTION AND DELIVERY OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE CONSTITUTE
LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS LESSEE MAY HAVE
AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH
DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN
SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE. EVEN IF AT ANY
TIME THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY
IMPAIRS THE

                                       25

<PAGE>

VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE
AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED
AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE AIRCRAFT WITHOUT
DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS
REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF
DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR
FOR DAMAGES OR RELIEF ARISING OUT OF THE FAILURE OF THE AIRCRAFT TO CONFORM TO
SUCH DESCRIPTION.

8.3   LESSEE WAIVER. LESSEE hereby waives as between itself and LESSOR and
agrees not to seek to establish or enforce any rights and remedies, express or
implied (whether statutory or otherwise) against LESSOR or the Aircraft relating
to any of the matters mentioned in Articles 8.1 or 8.2 and the leasing thereof
by LESSOR to LESSEE.

8.4   CONCLUSIVE PROOF. DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND
ACCEPTANCE CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE
THAT LESSEE'S TECHNICAL EXPERTS HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT AND
ENGINES AND (a) EACH IS AIRWORTHY AND IN GOOD WORKING ORDER AND REPAIR AND (b)
THE AIRCRAFT AND ENGINES AND THE AIRCRAFT DOCUMENTATION ARE WITHOUT DEFECT
(WHETHER OR NOT DISCOVERABLE AT DELIVERY) AND IN EVERY WAY SATISFACTORY TO
LESSEE.

8.5   NO LESSOR LIABILITY FOR LOSSES. LESSEE agrees that LESSOR will not be
liable to LESSEE, any sublessee or any Person, whether in contract or tort and
however arising, for any cost, loss or damage (consequential or otherwise)
arising out of the condition of the Aircraft, whether or not due in whole or in
part to an act or omission or the active or passive negligence of LESSOR but
excluding acts resulting from the willful misconduct of LESSOR.

8.6   NO LIABILITY TO REPAIR OR REPLACE. LESSOR will not be liable for any
expense in repairing or replacing any item of the Aircraft or be liable to
supply another aircraft or any item in lieu of the Aircraft or any Part thereof
if the same is lost, confiscated, damaged, destroyed or otherwise rendered unfit
for use.

8.7   NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be
deemed to be a waiver by LESSEE of any rights it may have against Manufacturer,
the Engine manufacturer or any other Person including, without limitation,
rights LESSEE may have under Article 9 of this Lease.

                                       26
<PAGE>

                                    ARTICLE 9
                     MANUFACTURERS' AND VENDORS' WARRANTIES

9.1   WARRANTIES. As set forth in Article 7.2.5, at Delivery LESSOR will assign
to LESSEE for the duration of the Lease Term the benefit of all warranties and
indemnities given to LESSOR by Manufacturer and the Engine manufacturer.
Effective on the Delivery Date, all other vendor warranties with respect to the
Aircraft are hereby assigned by LESSOR to LESSEE. Additionally, LESSOR will
cooperate in a commercially reasonable manner with LESSEE in order to enforce
any material warranty claims and take all other actions reasonably necessary to
effectively assign to LESSEE and to secure the benefits for LESSEE of such
warranties.

9.2   REASSIGNMENT. On the Termination Date, the benefit of any warranty
assigned by LESSOR to LESSEE pursuant to Articles 7.2.5 and 9.1 will be
reassigned automatically to LESSOR or its designee (with the exception of any
claims and rights of payment to LESSEE arising prior to the Termination Date).
LESSEE'S rights under such warranties (including LESSEE's claims and rights to
payment thereunder) will revert to LESSOR during any period in which an Event of
Default is continuing. Similarly, any additional warranties received by LESSEE
from Manufacturer, Engine manufacturer and any other vendor or repair facility
for work performed on the Aircraft, Engine or any Part during the Lease Term
will be automatically assigned by LESSEE to LESSOR or its designee on the
Termination Date (with the exception of any claims and rights of payment to
LESSEE arising prior to the Termination Date). LESSEE at its own cost and
expense will do all such things and execute such documents as may be required
for these purposes.

9.3   WARRANTY CLAIMS. LESSEE will diligently and: promptly pursue any valid
claims it may have against Manufacturer and others under such warranties with
respect to the Aircraft.

                                       27
<PAGE>

                                   ARTICLE 10
                              OPERATION OF AIRCRAFT

10.1  COSTS OF OPERATION. LESSEE will pay all costs incurred in the operation
of the Aircraft during the Lease Term and until the Termination Date, for profit
or otherwise, including the costs of flight crews, cabin personnel, fuel, oil,
lubricants, maintenance, insurance, storage, landing and navigation fees,
airport charges, passenger service and any and all other expenses of any kind or
nature, directly or indirectly, in connection with or related to the use,
movement and operation of the Aircraft. The obligations, covenants and
liabilities of LESSEE under this paragraph arising prior to return of the
Aircraft to LESSOR will continue in full force and effect, notwithstanding the
termination of this Lease or expiration of the Lease Term.

10.2  COMPLIANCE WITH LAWS. Except as otherwise provided in this Lease, LESSEE
agrees throughout the Lease Term and until the Termination Date to maintain
operational control of the Aircraft and use the Aircraft in accordance with
applicable Laws of the State of Registration and of any country, state,
territory or municipality into or over which LESSEE may operate. LESSEE will not
employ, suffer or cause the Aircraft to be used in any business which is
forbidden by Law or in any manner which may reasonably be expected to render it
liable to condemnation, destruction, seizure, or confiscation by any authority.
LESSEE will not permit the Aircraft to fly to any airport or country if so doing
would cause LESSEE or LESSOR to be in violation of any Law applicable to either
of them or the Aircraft except as may be necessary to preserve the Aircraft or
the safety, well being or life of passengers or crew, provided, however, that in
such event LESSEE will take reasonable actions to remove the Aircraft from such
airport or country as soon as reasonably practical.

10.3  TRAINING. LESSEE will not use the Aircraft for testing or for training of
flight crew members other than LESSEE crew members and will not use the Aircraft
for training any more than it utilizes for training the other aircraft in its
fleet.

10.4  NO VIOLATION OF INSURANCE POLICIES. LESSEE will not use or permit the
Aircraft to be used in any manner or for any purpose which is not covered by the
insurance policies LESSEE is required to carry and maintain as set forth in this
Lease. LESSEE will not carry any goods of any description excepted or exempted
from such policies or do any other act or permit to be done anything which may
reasonably be expected to invalidate or limit any such insurance policy.

10.5  FLIGHT AND AIRPORT CHARGES.

    10.5.1   LESSEE will pay promptly when due all airport or enroute navigation
            charges (including Eurocontrol charges if and when applicable),
            navigation service charges, landing fees and all charges payable by
            LESSEE for the use of or for services provided at any airport,
            whether in respect of the Aircraft or any other aircraft of LESSEE
            which, if unpaid, may reasonably be expected to subject the Aircraft
            to any lien, and will indemnify and hold LESSOR harmless in respect
            of the same. This indemnity will continue in full force and effect
            notwithstanding the termination or expiration of the Lease Term for
            any reason or the return of the Aircraft.

                                       28
<PAGE>

   10.5.2   If requested by LESSOR (but not more often than each six (6) months
            unless a Default or Event of Default shall have occurred and be
            continuing), LESSEE will provide LESSOR with a list of the airports
            to which LESSEE regularly operates the Aircraft or its other
            aircraft (in the event that the operation of such other aircraft may
            reasonably be expected to give rise to a lien on the Aircraft for
            navigation, landing, parking, storage or other similar charges).
            LESSEE hereby authorizes Eurocontrol (if and when applicable) or
            another aviation authority or airport or creditor claiming rights on
            the Aircraft to confirm the status of LESSEE'S payments to such
            creditor for the Aircraft and its other aircraft, as and when
            requested by LESSOR.

                                       29
<PAGE>

                                   ARTICLE 11
                                    SUBLEASES

11.1  NO SUBLEASE WITHOUT LESSOR CONSENT. LESSEE WILL NOT SUBLEASE OR PART WITH
POSSESSION OF THE AIRCRAFT (EXCEPT FOR MODIFICATION, MAINTENANCE, TESTING,
SERVICE AND/OR REPAIR) AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR
(NOT TO BE UNREASONABLY WITHHELD OR DELAYED) AND IN ACCORDANCE WITH SUCH
REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND
LESSEE.

11.2  LESSOR COSTS. LESSEE will indemnify LESSOR on demand for all out-of-pocket
expenses (including reasonable legal fees) incurred in connection with LESSOR's
assessment of the subleasing proposal (whether or not LESSOR's consent to such
sublease is ultimately given) and implementation of the sublease.

11.3  ANY APPROVED SUBLEASE. Any sublease approved by LESSOR will be for a term
no greater than the remaining Lease Term. The applicable sublease agreement will
contain provisions consistent with this Lease protecting LESSOR's title to the
Aircraft, providing appropriate LESSOR disclaimers and indemnities, regarding
the maintenance and repair standards for the Aircraft and concerning the
insurances which will be carried by the sublessee and the circumstances which
constitute a Total Loss of the Aircraft. Any such sublease will be subject and
subordinate to this Lease. LESSOR will have an opportunity to review the
proposed sublease agreement reasonably in advance in order to determine that it
meets the requirements of this Article 11.3. In its sole and reasonable
discretion, LESSOR may require an opinion of counsel in connection with such
sublease, including LESSOR's right to repossess the Aircraft in the event of an
Event of Default hereunder or under the sublease. LESSEE will not amend the
terms of any approved sublease agreement without the prior written consent of
LESSOR, which consent will not be unreasonably withheld.

11.4  ASSIGNMENT OF SUBLEASE. Any approved sublease will be assigned to LESSOR
as security. LESSEE will deliver the original counterpart of the sublease to
LESSOR and make any filings necessary to protect LESSOR's security interest.

11.5  WET LEASES. The wet leasing of the Aircraft during the Lease Term (in
which LESSEE and its crews retain operational control of the Aircraft) will not
be considered a sublease of the Aircraft and will be permitted without LESSOR's
consent, provided that (a) the Aircraft remains registered in the State of
Registration, (b) the Aircraft will be operated in accordance with applicable
rules related to any Prohibited Country, (c) LESSEE provides LESSOR with either
a certified copy of the applicable provisions from the wet lease agreement or an
officer's certificate indicating whether LESSEE or the wet lessee will be
responsible for maintaining the primary passenger, baggage and cargo liability
insurance relating to operation under the wet lease and (d) LESSEE complies with
Article 18.9.

11.6  CONTINUED RESPONSIBILITY OF LESSEE. LESSEE will continue to be responsible
for performance of its obligations under this Lease during any period of
sublease or wet lease.

                                       30
<PAGE>

                                   ARTICLE 12
                             MAINTENANCE OF AIRCRAFT

12.1  GENERAL OBLIGATION. During the Lease Term and until the Termination Date,
LESSEE alone has the obligation, at its expense, to maintain and repair the
Aircraft, Engines, APU and all of the Parts (a) in accordance with the
Maintenance Program, (b) in accordance with the rules and regulations of the
Aviation Authority, (c) in accordance with Manufacturer's type design, (d) in
accordance with any other regulations or requirements necessary in order to
maintain a valid Certificate of Airworthiness for the Aircraft and meet the
requirements at all times during the Lease Term and upon return of the Aircraft
to LESSOR for issuance of a Standard Certificate of Airworthiness for transport
category aircraft issued by the FAA in accordance with FAR Part 21 (except
during those periods when the Aircraft is undergoing maintenance, Modification
or repairs as required or permitted by this Lease and to the extent in conflict
with the requirements of the Aviation Authority) and (e) in the same manner and
with the same care as used by LESSEE with respect to aircraft and engines of
like make and model operated by LESSEE and without in any way discriminating
against the Aircraft as compared to such other aircraft.

12.2  SPECIFIC ENGINE REQUIREMENTS.

    12.2.1    No Engine will remain in an unserviceable condition for more than
              three (3) months unless engine restoration is ongoing and has not
              been suspended or delayed without reasonable technical cause and
              LESSEE uses commercially reasonable efforts to cause such Engine
              to be returned to service.

    12.2.2    When replacing Parts in the Engines, LESSEE will utilize only
              original equipment manufacturer parts (OEM parts). The foregoing
              will not apply to QEC and thrust reverser Parts.

    12.2.3    LESSEE will not discriminate against the Engines with respect to
              Overhaul build standards and life-limited Part replacements and,
              in any event, at each performance restoration shop visit on an
              Engine, LESSEE will (a) build the Engine life-limited Parts to at
              least **Material Redacted** cycles remaining and (b) perform, at a
              minimum, a performance restoration workscope sufficient to allow
              such Engine to achieve at least **Material Redacted** hours and
              **Material Redacted** cycles of operation following such shop
              visit. Notwithstanding the foregoing, LESSOR agrees that the
              performance restoration workscope contained in the maintenance
              cost per flight hour when agreed to among LESSEE, LESSOR and
              LESSEE's engine maintenance provider will be substituted for the
              performance restoration workscope described above. Failing the
              foregoing, LESSOR and LESSEE agree to negotiate in good faith and
              agree on a performance restoration workscope for the last engine
              shop visit which is reasonable in view of the age and condition of
              the Engine, the required condition at return and the cost of such
              restoration to LESSEE and LESSOR.

                                       31
<PAGE>

    12.2.4    With respect to the last Engine shop visit of an Engine prior to
              return of the Aircraft, LESSEE will submit to LESSOR in advance
              the intended workscope of such shop visit. If LESSOR requests,
              LESSEE will perform additional work at such shop visit at LESSOR's
              cost provided that if the same shall result in delay in
              redelivery, extension of the Lease Term or cause the Engine to be
              removed from service for a period in excess of the period the
              Engine would have been removed to revenue service absent such
              additional work, no Rent or other costs will be payable by LESSEE
              for the period which is attributable solely to LESSOR's requested
              work (unless and to the extent LESSOR and LESSEE shall have
              otherwise agreed in writing).

    12.2.5    Except as otherwise agreed by the parties (including, pursuant to
              any side letter) LESSEE will not enter into any Engine maintenance
              cost per flight hour, power-by-the-hour or similar agreement with
              the Engine manufacturer or any other Engine maintenance facility
              or organization without LESSOR's prior written consent which
              consent shall not be unreasonably withheld or delayed. LESSEE will
              at its cost be responsible for performing all work necessary to
              meet the return conditions with respect to the Engines set forth
              in Article 23 even if such work is not covered by LESSEE's Engine
              maintenance agreement. Without limiting the foregoing, any such
              Engine maintenance agreement will provide that:

    (a) LESSOR will receive and retain the monthly Engine Performance
    Restoration Reserves paid by LESSEE until an Engine shop visit has been
    completed;

    (b) LESSEE will pay the Engine maintenance facility directly for any
    Engine Overhaul and repair costs in excess of the Engine Performance
    Restoration Reserves, including any differential between the hourly Engine
    Performance Restoration Reserves payable by LESSEE to LESSOR and the
    hourly rates charged by the Engine maintenance facility; and

    (c) LESSEE will pay the Engine maintenance facility directly for any
    services provided by the Engine maintenance facility over and above repair
    of the Engines, such as trend monitoring, spare engines or spare parts.

12.3  SPECIFIC OBLIGATIONS.  Without limiting Article 12.1, LESSEE agrees that
such maintenance and repairs will include but will not be limited to each of the
following specific items:

    (a) performance in accordance with the Maintenance Program of all routine
    and non-routine maintenance work;

    (b) incorporation in the Aircraft of all Airworthiness Directives, all
    mandatory service bulletins of Manufacturer, the Engine manufacturer and
    other vendors or manufacturers of Parts incorporated on the Aircraft and any
    service bulletins which must be performed in order to maintain the
    warranties on the Aircraft, Engines, APU and Parts;

                                       32
<PAGE>

      (c) incorporation in the Aircraft of all other service bulletins of
      Manufacturer, the Engine manufacturer and other vendors which LESSEE
      schedules to adopt within the Lease Term for the rest of its B737-700 /
      800 aircraft fleet. It is the intent of the parties that the Aircraft will
      not be discriminated from the rest of LESSEE's fleet in service bulletin
      compliance (including method of compliance) or other maintenance matters
      unless LESSEE's exclusion of the such modification is reasonable giving
      consideration to the remaining Lease Term and industry practice;

      (d) incorporation in the Maintenance Program for the Aircraft of a
      corrosion prevention and control program as recommended by Manufacturer
      and the correction of any discrepancies in accordance with the
      recommendations of Manufacturer and the Structural Repair Manual. In
      addition, all inspected areas will be properly treated with corrosion
      inhibitor as recommended by Manufacturer;

      (e) maintaining in English and keeping in an up-to-date status the records
      and historical documents set forth in Attachment 1 of Exhibit J;

      (f) maintaining historical records, in English, for on condition,
      condition-monitored, hard time and life-limited Parts (including an FAA
      Form 8130 or JAA Form 1) from the manufacturer of such Part or a repair
      facility which evidence that such Part is new or overhauled and establish
      authenticity, total time in service and time since overhaul for such
      Part), the hours and cycles the Aircraft and Engines operate and all
      maintenance and repairs performed on the Aircraft; and

      (g) properly documenting all repairs, Modifications and alterations and
      the addition, removal or replacement of equipment, systems or components
      in accordance with the rules and regulations of the Aviation Authority and
      reflecting such items in the Aircraft Documentation, including
      Manufacturer's manuals, as required by such rules and regulations. In
      addition, all repairs to the Aircraft will be accomplished in accordance
      with Manufacturer's Structural Repair Manual (or FAA-approved data
      supported by an FAA Form 8110-3 or equivalent). All Modifications and
      alterations will also be accomplished in accordance with FAA-approved data
      supported by FAA Form 8110-3 or equivalent.

12.4  REPLACEMENT OF PARTS.

    12.4.1  LESSEE, at its own cost and expense, will promptly replace all Parts
            which may from time to time become worn out, lost, stolen,
            destroyed, seized, confiscated, damaged beyond repair or rendered
            unfit or beyond economical repair (BER) for use for any reason. In
            the ordinary course of maintenance, service, repair, overhaul or
            testing, LESSEE may remove any Part provided that LESSEE replaces
            such Part as promptly as reasonably practicable. All replacement
            Parts will (a) be owned by LESSEE free and clear of all Security
            Interests (except Permitted Liens) of any kind or description (or,
            if not owned by LESSEE, LESSEE guarantees to LESSOR such title and
            clearance of all Security Interests), (b) be in airworthy condition,
            and of at least equivalent model, service bulletin and modification
            status and have a value and utility at least

                                       33
<PAGE>

            equal to the Parts replaced, assuming such replaced Parts were in
            the condition and repair required to be maintained by the terms
            hereof and (c) have a current "serviceable tag" (an FAA Form 8130 or
            JAA Form 1) of the manufacturer or maintenance facility providing
            such items to LESSEE, indicating that such Parts are new,
            serviceable or Overhauled. So long as a substitution meets the
            requirements of the Maintenance Program and Aviation Authority,
            LESSEE may substitute for any Part a part that does not meet the
            requirements of the foregoing sentence if a complying Part cannot be
            procured or installed within the available ground time of the
            Aircraft and as soon as practicable the noncomplying part is removed
            and replaced by a complying Part. With respect to replacement
            modules in an Engine, the replacement module will not have been
            previously operated at a higher thrust rating than the replaced
            module. As set forth in Article 12.2.2, LESSEE may not replace any
            Part in the Engines, excluding QEC and thrust reversers, with a part
            other than an original equipment manufacturer part (an OEM part).
            With respect to replacement modules in an Engine, the replacement
            module will not have been previously operated at a higher thrust
            rating than the replaced module.

    12.4.2  All Parts removed from the Airframe, any Engine or the APU will
            remain the property of LESSOR and subject to this Lease no matter
            where located, until such time as such Parts have been replaced by
            Parts (which have been incorporated or installed in or attached to
            the Airframe, such Engine or the APU) which meet the requirements
            for replacement Parts specified above and title to such replacement
            Parts has passed to LESSOR under the Laws of the State of
            Registration and the lex situs. To the extent permitted by the Laws
            of the State of Registration and the lex situs it is the intent of
            LESSOR and LESSEE that without further act and immediately upon any
            replacement Part becoming incorporated, installed or attached to the
            Airframe, an Engine or the APU as above provided, (a) title to the
            removed Part will thereupon vest in LESSEE, free and clear of all
            rights of LESSOR and LESSOR Liens and LESSOR will, upon LESSEE's
            reasonable request, provide LESSEE with a bill of sale thereto, (b)
            title to the replacement Part will thereupon vest in LESSOR free and
            clear of all rights of LESSEE free and clear of all rights of LESSEE
            and liens (other than LESSOR Liens) and LESSEE will, upon LESSOR's
            reasonable request, provide LESSOR with a bill of sale thereto and
            (c) such replacement Part will become subject to this Lease and be
            deemed to be a Part hereunder to the same extent as the Parts
            originally incorporated or installed in or attached to the Airframe,
            such Engine or the APU.

12.5  REMOVAL OF ENGINES.

    12.5.1  If an Engine is removed for testing, service, repair, maintenance,
            Overhaul work, alterations or modifications, title to such Engine
            will at all times remain vested in LESSOR.

                                       34
<PAGE>

    12.5.2  LESSEE will be entitled to remove any of the Engines from the
            Aircraft and install another engine or engines on the Aircraft,
            provided that LESSEE complies with each of the following
            obligations:

      (a) the insurance requirements set forth in Article 18 and Exhibit C are
      in place;

      (b) LESSEE ensures that the identification plates referred to in Article
      15 are not removed from any Engine upon such Engine being detached from
      the Aircraft; and

      (c) title to the Engine remains with LESSOR free from all Security
      Interests (except Permitted Liens) regardless of the location of the
      Engine or its attachment to or detachment from the Aircraft.

12.6  REMOVAL OF APU.

    12.6.1  If the APU is removed for testing, service, repair, maintenance,
            Overhaul work, alterations or modifications, title to the APU will
            at all times remain vested in LESSOR.

    12.6.2  LESSEE will be entitled to remove the APU from the Aircraft and
            install another auxiliary power unit on the Aircraft, provided that
            LESSEE complies with each of the following obligations:

      (a) the insurance requirements set forth in Article 18 and Exhibit C are
      in place;

      (b) LESSEE ensures that the identification plates referred to in Article
      15 are not removed from the APU; and

      (c) title to the APU remains with LESSOR free from all Security Interests
      (except Permitted Liens) regardless of the location of the APU or its
      attachment to or detachment from the Aircraft.

12.7  POOLING OF ENGINES, APU AND PARTS. With LESSOR's prior written consent,
not to be unreasonably withheld or delayed, LESSEE may subject the Engines, APU
and Parts to normal interchange or pooling agreements with responsible
international scheduled commercial air carriers customary in the airline
industry and entered into by LESSEE in the ordinary course of its business with
respect to its entire B737-700 / 800 fleet so long as (a) in the case of pooling
of an Engine or APU, such Engine or APU is returned to LESSEE within one hundred
eighty (180) days, (b) no transfer of title to the Engine or APU occurs, (c) all
other terms of this Lease continue to be observed with respect to the Engines,
APU or Parts, including but not limited to Articles 8, 10, 12, 14, 15, 16, 17,
18 and 19 and (d) LESSEE continues to be fully responsible to LESSOR for the
performance of all of its obligations hereunder.

12.8  INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the
Aircraft may be installed on another aircraft in LESSEE's fleet which utilizes
engines of the same type as the Engine only if one of the situations described
in this Article 12.8 exists:

                                       35
<PAGE>

    12.8.1  LESSEE or LESSOR has title to such other aircraft free and clear of
            all Security Interests (except Permitted Liens).

    12.8.2  LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft
            enter into an engines cooperation agreement in form and substance
            acceptable to LESSOR in which each party agrees to recognize one
            another's rights in the engines. LESSEE will reimburse LESSOR and
            LESSOR's Lender for their reasonable attorneys' fees and costs in
            negotiating and finalizing engine cooperation agreement arrangements
            with LESSEE and its Creditors.

    12.8.3  Such other aircraft is subject to a Creditor Agreement (but no other
            Security Interests except Permitted Liens) which by its terms
            expressly or effectively states that such Creditor and its
            successors and assigns will not acquire any right, title or interest
            in any Engine by reason of such Engine being installed on such
            aircraft provided the owner of such Engine provides reciprocal title
            recognition provisions. To evidence the foregoing, at or before
            Delivery, LESSEE will provide LESSOR with an officer's certificate
            as to this matter (and, officer's certificate will be provided
            during the Lease Term with respect to other Creditor Agreements
            regarding aircraft entering LESSEE's operating fleet subsequent to
            Delivery). LESSEE hereby agrees that if LESSOR's title to an Engine
            is in fact impaired under any such Creditor Agreement, such
            impairment will be a Total Loss of such Engine and the provisions of
            Article 19.5 will apply. To the extent another Creditor Agreement
            contains such provisions, then LESSOR hereby agrees for the benefit
            of the Creditor of such Creditor Agreement that neither LESSOR nor
            its successors or assigns will acquire or claim any right, title or
            interest in any engine in which LESSEE or another Creditor has an
            interest as a result of such engine being installed on the Airframe.

12.9  ENGINE THRUST RATING. If an Engine is utilized by LESSEE on the Aircraft
or on any other airframe (or if the Engine is utilized by any sublessee or user
under a pooling arrangement in accordance with this Lease) at a thrust rating
greater than the thrust rating set forth in Exhibit A, LESSEE will promptly
notify LESSOR and the amounts of Engine Performance Restoration Reserves and, if
applicable, Engine LLP Reserves, set forth in Article 5.4.1 will be increased in
an amount consistent with Engine manufacturer's published data. Notwithstanding
anything to the contrary herein, Engine Performance Restoration Reserves shall
be calculated with respect to any relevant period based on the thrust rating at
which the Engine is actually operated, from time to time, during such period.

12.10 MODIFICATIONS.

    12.10.1 No modification, alteration, addition or removal to the Aircraft
            ("MODIFICATION") expected to cost over **Material Redacted**
            **Material Redacted** or deviation from the Aircraft's original type
            design or configuration will be made without the prior written
            consent of LESSOR, which consent will not be unreasonably withheld
            or delayed. The term Modification does not include Airworthiness
            Directives or Manufacturer's recommended

                                       36
<PAGE>

            service bulletins, for which LESSOR's consent is not required.
            **Material Redacted**.

    12.10.2 LESSOR may review LESSEE's proposed designs, plans, engineering
            drawings and diagrams, and flight and maintenance manual revisions
            for any proposed Modification. If requested by LESSOR, LESSEE will
            furnish LESSOR (at LESSEE's expense) with such documents in final
            form and any other documents required by Law, as a result of such
            Modification. All Modifications incorporated on the Aircraft will be
            properly documented in the Aircraft Documentation and be fully
            approved by the Aviation Authority.

    12.10.3 Notwithstanding any other provision of this Lease, no Modification
            will be made which has the effect of decreasing the utility or value
            of the Aircraft or invalidating any warranty applicable to the
            Aircraft.

    12.10.4 No Modification will be made by LESSEE if an Event of Default exists
            and is continuing hereunder.

    12.10.5 Unless otherwise agreed by LESSOR in writing, all permanent or
            structural Modifications will promptly become a part of the Aircraft
            and LESSEE relinquishes to LESSOR all rights and title thereto.
            However, all temporary and non-structural Modifications will remain
            the property of LESSEE and, at LESSOR's request and LESSEE's cost,
            will be removed from the Aircraft prior to return of the Aircraft,
            with LESSEE restoring the Aircraft to the condition it was in prior
            to the Modification in a manner cosmetically acceptable to LESSOR
            (considering international passenger airline standards).
            Notwithstanding the foregoing, no such removal will be permitted
            without LESSOR's permission after the occurrence of an Event of
            Default hereunder and immediately upon the occurrence of an Event of
            Default hereunder, without the requirement of any further act or
            notice, all right, title and interest in such Modifications will
            immediately vest in LESSOR.

    12.10.6 LESSOR will bear no liability for the cost of Modifications of the
            Aircraft whether in the event of grounding or suspensions of
            certification, or for any other cause.

12.11 PERFORMANCE OF WORK BY THIRD PARTIES. Whenever maintenance and repair work
on the Aircraft or Engines will be regularly performed by a Person other than
LESSEE, such Person will be an FAA-authorized repair station.

12.12 REPORTING REQUIREMENTS.

    12.12.1 Commencing with a report furnished ten (10) days after the end of
            the calendar month in which Delivery occurs, LESSEE will furnish to
            LESSOR a Monthly Report in English in the form attached hereto as
            Exhibit K. Each Monthly Report will be furnished within ten (10)
            days after the end of each calendar month, except that the Monthly
            Report pertaining to the last month (or any

                                       37
<PAGE>

            portion thereof) of this Lease will be furnished to LESSOR on the
            Termination Date.

    12.12.2 Once each eighteen months during the Lease Term, LESSEE will provide
            LESSOR with an updated Technical Evaluation Report for the Aircraft
            in the form and substance of Exhibit M, as revised.

    12.12.3 From time to time, LESSEE will provide LESSOR with such other
            technical information or documents as LESSOR may reasonably request.

12.13 INFORMATION REGARDING MAINTENANCE PROGRAM. Upon reasonable notice to
LESSEE, LESSEE will provide LESSOR with access to the Maintenance Program for
the Aircraft, as reasonably requested by LESSOR.

12.14 LESSOR RIGHTS TO INSPECT AIRCRAFT. On reasonable notice, LESSOR and/or its
authorized agents or representatives will have the right to inspect the Aircraft
and Aircraft Documentation. LESSOR agrees that such requests will be coordinated
with LESSEE so as to cause the minimum practical disturbance to LESSEE's
operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the
Aircraft and Aircraft Documentation available to such authorized technical
teams. LESSOR will have no duty to make any such inspection and will not incur
any liability or obligation by reason of (and LESSEE's indemnity obligations
pursuant to Article 17 will apply notwithstanding) making or not making any such
inspection or by reason of any reports it receives or any reviews it may make of
the Aircraft records.

                                       38
<PAGE>

                                   ARTICLE 13
                                 USE OF RESERVES

13.1  AIRFRAME RESERVES. LESSOR will reimburse LESSEE from the Airframe Reserves
for the actual cost of performing all task as described in the MPD (including
systems, zonal, CPCP, SID, structural and lubrication) performed during the
Airframe heavy checks (performed at **Material Redacted** and **Material
Redacted** years) any non routine tasks and the rectification of and
deficiencies resulting from such inspection (including materials), with work
performed for all other causes excluded, including those causes set forth in
Article 13.5. Subject to Article 16.1 and excluding exchange fees and handling,
packaging and shipping charges, reimbursement will be made up to the amount in
the Airframe Reserves on the commencement date of the structural check.

13.2  ENGINE PERFORMANCE RESTORATION RESERVES.

    13.2.1  LESSOR will reimburse LESSEE from the Engine Performance Restoration
            Reserves for the actual cost associated with performance restoration
            of the Basic Engine during completed Engine shop visits (i.e. heavy
            maintenance visits) requiring off-wing teardown and/or disassembly
            as described in Article 12.2.3, with work performed for all other
            causes excluded, including those causes set forth in Article 13.5.
            Subject to Article 16.1 and excluding exchange fees and handling,
            packaging and shipping charges, reimbursement for an Engine will be
            made up to the amount in the Engine Performance Restoration Reserves
            applicable to such Engine at the time of removal of such Engine.

    13.2.2  Reimbursement from the Engine Performance Restoration Reserves will
            be limited as to each module of such Engine in accordance with the
            following percentages of the remaining total amount in the Engine
            Performance Restoration Reserves for such Engine:

                  **Material Redacted** % Fan and Accessory Gearbox Module

                  **Material Redacted** % High Pressure Compressor

                  **Material Redacted** % High Pressure Turbine

                  **Material Redacted** % Low Pressure Turbine

    13.2.3  LESSEE will not enter into any Engine maintenance cost per flight
            hour, power-by-the-hour or similar agreement for the Engines with
            the Engine manufacturer or any other Engine maintenance facility or
            organization without LESSOR's consent.

13.3  ENGINE LLP RESERVES. LESSOR will reimburse LESSEE from the Engine LLP
Reserves for an Engine for the actual out-of-pocket materials cost without
overhead, LESSEE mark-up or profit factor associated with the replacement of
life-limited Parts in such Engine during completed Engine shop visits (i.e.
heavy maintenance visits) requiring off-wing teardown and/or disassembly as
described in Article 1.2.2.3, with work performed for all other causes

                                       39
<PAGE>

excluded, including those causes set forth in Article 13.5. Subject to Article
16.1 and excluding exchange fees and handling, packaging and shipping charges,
reimbursement for replacement of life-limited Parts in an Engine will be made up
to the amount in the Engine LLP Reserves applicable to such Engine at the time
of removal of such Engine.

13.4  REIMBURSEMENT. LESSEE will be entitled to reimbursement from the Reserves
after the work is completed and the Airframe or Engine has left the repair
agency, by submitting invoices and proper documentation within six (6) months
after completion of the work. LESSOR shall reimburse LESSEE from the Reserves
promptly and in any event within thirty (30) days after LESSEE has delivered to
LESSOR such invoices and proper documentation. LESSEE may only seek
reimbursement from the Airframe Reserves one time in any calendar year. For the
Airframe, proper documentation includes a list of all routine and non-routine
work cards with corresponding references to the MPD and an itemized labor and
materials report. For the Engine, proper documentation includes a description of
the reason for removal, a shop teardown report, a shop findings report, a full
description of the workscope and complete disk records for the Engine both prior
to and after the shop visit. Both the invoice supplied by the Engine repair
facility and that submitted by LESSEE to LESSOR with respect to an Engine will
state whether or not credits were provided due to life remaining on any removed
Engine Parts and the amount of any such credits will be itemized.

13.5  REIMBURSEMENT ADJUSTMENT. By way of example, among the exclusions from
reimbursement are those items resulting from repairs covered by LESSEE's or a
third party's insurance, (deductibles being for the account of LESSEE) or
warranties or required as a result of an Airworthiness Directive, manufacturer's
service bulletin, negligent maintenance or installation, improper operations,
misuse, neglect, accident, incident, ingestion, or other accidental cause.
Reimbursement from the Reserves will not be available for the quick engine
change (QEC) Parts, thrust reversers or any of their associated components. All
invoices subject to reimbursement from LESSOR will be reduced (by adjustment
between LESSEE and LESSOR retroactively if necessary) by the actual amounts
received by LESSEE on account of such work from responsible third parties or
other sources, such as insurance proceeds, manufacturer's warranties,
guarantees, concessions and credits (including, with respect to Engines, credits
due to life remaining on any removed Engine Parts). Notwithstanding the
foregoing, in the event that accident, incident or other accidental cause
necessitates a repair and during the course of such repair the workscope results
in performance restoration to, the Engine or installation of LLPs with more life
remaining, the performance restoration portion or LLP life betterment of such
repair workscope may be claimed by LESSEE from Engine Performance Restoration
Reserves or Engine LLP Reserves (as applicable).

13.6  COSTS IN EXCESS OF RESERVES. LESSEE will be responsible for payment of all
costs in excess of the amounts reimbursed hereunder. If on any occasion the
balance in the Airframe Reserves, Engine Performance Restoration Reserves for a
particular Engine or Engine LLP Reserves for a particular Engine (at the time of
the structural check, in the case of the Airframe, or at the time of removal, in
the case of an Engine, the Landing Gear and the APU) is insufficient to satisfy
a claim for reimbursement in respect of the Airframe or such Engine, as
applicable, the shortfall may not be carried forward or made the subject of any
further claim for reimbursement.

                                       40
<PAGE>

13.7  REIMBURSEMENT AFTER TERMINATION DATE. LESSEE may not submit any invoice
for reimbursement from the Reserves after the Termination Date unless on or
prior to such date LESSEE has notified LESSOR in writing that such outstanding
invoice will be submitted after the Termination Date and the anticipated amount
of such invoice. So long as LESSEE has provided such notice to LESSOR, LESSEE
may then submit outstanding invoices at any time within six (6) months after the
Termination Date. Subject to the foregoing, any balance remaining in the
Reserves on the Termination Date will be retained by LESSOR, **Material
Redacted**.

                                       41
<PAGE>

                                   ARTICLE 14
                             TITLE AND REGISTRATION

14.1  TITLE TO THE AIRCRAFT DURING LEASE TERM. Title to the Aircraft will be and
remain vested in LESSOR. LESSOR and LESSEE intend this Lease to be a "true
lease". LESSEE will have no right, title or interest in the Aircraft except as
provided in this Lease.

14.2  REGISTRATION OF AIRCRAFT. LESSEE at its sole cost and expense will (a)
register and maintain registration of the Aircraft in the name of LESSOR at the
register of aircraft in the State of Registration and (b) from time to time take
all other steps then required by Law (including the Geneva Convention if
applicable) or by practice, custom or understanding or as LESSOR may reasonably
request to protect and perfect LESSOR's interest in the Aircraft and this Lease
in the State of Registration or in any other jurisdictions in or over which
LESSEE may operate the Aircraft.

14.3  FILING OF OTIS LEASE. To the extent permitted by Law and in accordance
with the requirements of the Law from time to time, LESSEE at its sole cost and
expense will cause this Lease to be kept, filed, recorded and refilled or
rerecorded in the State of Registration and in any other offices necessary to
protect LESSOR's rights hereunder.

14.4  EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request
from time to time (but not more often than once annually unless a Default or
Event of Default shall have occurred and be continuing), LESSEE will furnish to
LESSOR an opinion of counsel or other evidence reasonably satisfactory to
LESSOR of the registrations and filings required hereunder.

                                       42
<PAGE>

                                   ARTICLE 15
                              IDENTIFICATION PLATES

      LESSOR will affix and LESSEE will at all times maintain on the Airframe,
each Engine and the APU the identification plates containing the following
legends or any other legend requested by LESSOR in writing:

15.1  AIRFRAME IDENTIFICATION PLATES.

<TABLE>
<S>                  <C>
Location:            One to be affixed to the Aircraft structure above the forward entry door
                     adjacent to and not less prominent than that of Manufacturer's data plate
                     and another in a prominent place on the flight deck.

Size:                No smaller than 2" x 3".

Legend:              "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION AND IS
                     OPERATED UNDER LEASE BY COMPANIA PANAMENA DE AVIACION, S.A.

                     MANUFACTURER'S SERIAL NO: 32800

                     OWNER'S ADDRESS:

                     INTERNATIONAL LEASE FINANCE CORPORATION
                     10250 Constellation Boulevard, 34th Floor
                     Los Angeles, California 90067, U.S.A.
                     Fax: (310) 788-1990
</TABLE>

15.2  ENGINE IDENTIFICATION PLATES.

<TABLE>
<S>                 <C>
Location:           The legend on the plate must be no less prominent than the Engine data
                    plate and must be visible.

Size:               No smaller than 1" x 4".

Legend:             "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION,
                    LOS ANGELES, CALIFORNIA, USA AND IS OPERATED UNDER LEASE BY COMPANIA
                    PANAMENA DE AVIACION, S.A."
</TABLE>

15.3  APU IDENTIFICATION PLATE.

<TABLE>
<S>                 <C>
Location:           The legend on the plate must be visible.

Size:               No smaller than 1" x 3".

Legend:             "THIS APU IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION,
                    LOS ANGELES, CALIFORNIA,
</TABLE>

                                       43
<PAGE>

                    USA AND IS OPERATED UNDER LEASE BY COMPANIA PANAMENA DE
                    AVIACION, S.A."

                                       44
<PAGE>

                                   ARTICLE 16
                                      TAXES

16.1  GENERAL OBLIGATION OF LESSEE. Except as set forth in Article 16.2, LESSEE
agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a
full indemnity basis from, all license and registration fees and all taxes,
fees, levies, imposts, duties, charges, deductions or withholdings of any nature
(including without limitation any value added, franchise, transfer, sales, gross
receipts, use, business, excise, turnover, personal property, stamp or other
tax) together with any assessments, penalties, fines, additions to tax or
interest thereon, however or wherever imposed (whether imposed upon LESSEE,
LESSOR, on all or part of the Aircraft, the Engines or otherwise), by any
Government Entity or taxing authority in the U.S., Panama or any foreign country
or by any international taxing authority (including the City or County of Los
Angeles), upon or with respect to, based upon or measured by any of the
following (collectively, "TAXES"):

      (a) the Aircraft, Engines, APU or any Parts;

      (b) the use, operation or maintenance of the Aircraft or carriage of
      passengers or freight during the Lease Term and until the Termination
      Date;

      (c) this Lease, the payments due hereunder and the terms and conditions
      hereof; and

      (d) the ownership, financing, delivery, import or export, return, sale,
      payment of Total Loss Proceeds or other disposition of the Aircraft.

16.2  EXCEPTIONS TO INDEMNITY. The indemnity provided for in Article 16.1 does
not extend to any of the following Taxes:

      (a) Taxes imposed by the U.S. or the State of California on the net
      income, gross receipts, capital, turnover or net worth and franchise taxes
      of LESSOR;

      (b) Taxes in jurisdictions in which LESSOR would have been subject to Tax
      to the extent that the parties had not consummated this transaction;
      provided, however, that if LESSEE's operation of the Aircraft to a
      jurisdiction and the operation of other aircraft owned by LESSOR to such
      jurisdiction causes LESSOR to be liable for any tax, then LESSEE will pay
      the portion of such Tax attributed to LESSEE's operations in such
      jurisdiction;

      (c) Taxes imposed in connection with a LESSOR's voluntary transfer or
      other disposition of all or any part of its interest in the Aircraft (or
      any part thereof) or this Lease other than resulting from an Event of
      Default which shall have occurred and be continuing or other foreclosure,
      seizure or sale of the Aircraft resulting from LESSEE's action or
      inaction;

      (d) Taxes imposed as a direct result of any LESSOR Lien;

                                       45
<PAGE>

      (e) any additional or incremental tax which arise solely as a result of
      LESSOR's failure to provide information necessary, for LESSEE to properly
      complete and file any tax return or request an otherwise legally available
      exemption;

      (f) Taxes solely attributable a sale or transfer of the Aircraft not
      resulting from an act or omission of LESSEE;

      (g) Taxes attributable to the period prior to Delivery or after the
      Termination Date; or

      (h) Taxes attributable to LESSOR's gross negligence, willful misconduct or
      breach of this Lease.

16.3  AFTER-TAX BASIS. The amount which LESSEE is required to pay with respect
to any Taxes indemnified against under Article 16.1 is an amount sufficient to
restore LESSOR on an after-tax basis to the same position LESSOR would have been
in had such Taxes not been incurred. LESSEE may satisfy its obligations under
this Article 16 by paying and indemnifying LESSOR for Taxes payable by LESSEE
hereunder or grossing up payments made pursuant to this Lease in an amount
sufficient to allow LESSOR to pay such Taxes and receive the full benefit of
this Lease provided LESSEE will not be obligated to pay such Tax obligations
twice as a result of gross-up and indemnity.

16.4  TIMING OF PAYMENT. Any amount payable to LESSOR pursuant to this Article
16 will be paid within thirty (30) days after receipt of a written demand
therefor from LESSOR accompanied by a written statement describing in reasonable
detail the basis for such indemnity and the computation of the amount so
payable; provided, however, that such amount need not be paid by LESSEE prior to
the earlier of (a) the date any Tax is payable to the appropriate Government
Entity or taxing authority or (b) in the case of amounts which are being
contested by LESSEE in good faith or by LESSOR pursuant to Article 16.5, the
date such contest is finally resolved.

16.5  CONTESTS. If a claim is made against LESSOR for Taxes with respect to
which LESSEE is liable for a payment or indemnity under this Lease, LESSOR will
promptly give LESSEE notice in writing of such claim; provided, however, that
LESSOR's failure to give notice will not relieve LESSEE of its obligations
hereunder except to the extent such failure impairs or precludes LESSEE's
ability to contest the claim or to the extent such failure results in additional
liability to LESSEE. So long as (a) a contest of such Taxes does not involve any
danger of the sale, forfeiture or loss of the Aircraft or any interest therein,
(b) if LESSOR so requests, LESSEE has provided LESSOR with an opinion of
independent tax counsel that a reasonable basis exists for contesting such claim
and (c) adequate reserves have been made for such Taxes or, if required, an
adequate bond has been posted, then LESSOR at LESSEE's written request will in
good faith, with due diligence and at LESSEE's expense, contest (or permit
LESSEE to contest in the name of LESSEE or LESSOR) the validity, applicability
or amount of such Taxes.

                                       46
<PAGE>

16.6  REFUNDS. Upon receipt by LESSOR of a refund of all or any part of any
Taxes (including any deductions or withholdings referred to in Article 5.8)
which LESSEE has paid, LESSOR will pay to LESSEE the net amount of such Taxes
refunded.

16.7  COOPERATION IN FILING TAX RETURNS. LESSEE and LESSOR will cooperate with
one another in providing information which may be reasonably required to fulfill
each party's tax filing requirements and any audit information request arising
from such filing.

16.8  TAX RESTRUCTURING. In the event that any withholding, value added tax or
similar tax or duty is payable in the State of Registration or any jurisdiction
from which such payments originate in respect of any Rent, Reserves or other
amounts payable pursuant to this Lease, LESSEE and LESSOR will cooperate in good
faith to restructure this Lease in a manner which minimizes or eliminates any
such tax including a synthetic lease through another country which has favorable
tax treatment of such payments.

16.9  SURVIVAL OF OBLIGATIONS. The representations, warranties, indemnities and
agreements of LESSEE provided for in this Article 16 will survive the
Termination Date.

                                       47
<PAGE>

                                   ARTICLE 17
                                   INDEMNITIES

17.1  GENERAL INDEMNITY. Except as set forth in Article 17.2, LESSEE agrees to
indemnify and hold harmless LESSOR and its officers, directors, employees,
agents and shareholders (individually an "INDEMNITEE" and collectively
"INDEMNITEES") from any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, disbursements and expenses (including
legal fees, costs and related expenses) of every kind and nature, whether or not
any of the transactions contemplated by this Lease are consummated (collectively
"EXPENSES"), which are imposed on, incurred by or asserted against any
Indemnitee and which are in any way relating to, based on or arising out of any
of the following:

      (a) this Lease or any transactions contemplated hereby;

      (b) the operation, possession, use, non-use, control, leasing, subleasing,
      maintenance, storage, overhaul, testing or inspections of the Aircraft,
      any Engine, the APU or any Part (whether by LESSEE, any sublessee or any
      other Person other than LESSOR or any Person claiming by or through LESSOR
      in violation of LESSOR's covenant of quiet enjoyment contained in Article
      21.2) during the Lease Term and until the Termination Date or the
      acceptance flights at return, whether or not the same is in compliance
      with the terms of this Lease, including without limitation claims for
      death, personal injury, property damage, other loss or harm to any Person
      and claims relating to any Laws, including without limitation
      environmental control, noise and pollution laws, rules or regulations;

      (c) the manufacture, design, acceptance, improper rejection, delivery,
      return, sale after an Event of Default, import, export, condition, repair,
      modification, servicing, customer, product support, information or
      training provided by Manufacturer and other vendors, airworthiness,
      registration, reregistration, performance, sublease, merchantability,
      fitness for use, substitution or replacement of an Engine, APU or any Part
      by LESSEE under this Lease or other transfer of use or possession of the
      Aircraft, an Engine, the APU or any Part, including under a pooling or
      interchange arrangement, including without limitation latent and other
      defects, whether or not discoverable and patent, trademark or copyright
      infringement;

      (d) the prevention or attempt to prevent the arrest, confiscation,
      seizure, taking in execution, impounding, forfeiture or detention of the
      Aircraft, or in securing the release of the Aircraft; or

      (e) as a consequence of any Default or Event of Default by LESSEE.

The foregoing indemnity by LESSEE is intended to include and cover any Expense
to which an Indemnitee may be subject (in contract, tort, strict liability or
under any other theory) regardless of the negligence, active or passive or any
other type, of such Indemnitee, so long as such Expense does not fall within any
of the exceptions listed in Article 17.2.

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<PAGE>

17.2  EXCEPTIONS TO GENERAL INDEMNITIES. The indemnity provided for in Article
17.1 will not extend to Expenses of any Indemnitee to the extent resulting from
or arising out of any of the following:

      (a) Expenses which have resulted from the willful misconduct of such
      Indemnitee;

      (b) Expenses which are attributable to acts or events which occur after
      the Termination Date and return of the Aircraft to LESSOR in the condition
      required hereunder, but in any such case only to the extent not
      attributable to acts or omissions of LESSEE;

      (c) **Material Redacted**;

      (d) **Material Redacted**;

      (e) **Material Redacted**;

      (f) Expenses solely attributable a sale or transfer of the Aircraft not
      resulting from an act or omission of LESSEE;

      (g) Expenses representing Taxes, it being acknowledged that the terms of
      Article 16 apply exclusively to LESSEE's indemnity obligations with
      respect to Taxes; or

      (h) Expenses due to the breach by LESSOR (or any person lawfully claiming
      through LESSOR) of its covenant of quiet enjoyment pursuant to Article
      21.2 (except to the extent covered by the insurances LESSEE is required to
      carry pursuant to Article 18 or other LESSEE insurances).

17.3  AFTER-TAX BASIS. The amount which LESSEE will be required to pay with
respect to any Expense indemnified against under Article 17.1 will be an amount
sufficient to restore the Indemnitee, on an after-tax basis, to the same
position such Indemnitee would have been in had such Expense not been incurred
after taking into account the amount of any credits, deductions or other Tax
benefits or savings realized by such Indemnitee.

17.4  TIMING OF PAYMENT. It is the intent of the parties that each Indemnitee
will have the right to indemnification for Expenses hereunder as soon as a claim
is made and as soon as an Expense is incurred, whether or not such claim is
meritorious and whether or not liability is established (but subject to Article
17.8). LESSEE will pay an Indemnitee for Expenses pursuant to this Article 17
within thirty (30) days after receipt of a written demand therefor from such
Indemnitee accompanied by a written statement describing in reasonable detail
the basis for such indemnity.

17.5 SUBROGATION. Upon the payment in full of any indemnity pursuant to this
Article 17 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee
in respect of the matter against which such indemnity has been made.

                                       49
<PAGE>

17.6  NOTICE. Each Indemnitee and LESSEE will give prompt written notice one to
the other of any liability of which such party has knowledge for which LESSEE
is, or may be, liable under Article 17.1; provided, however, that failure to
give such notice will not terminate any of the rights of Indemnitees under this
Article 17 except to the extent that LESSEE has been prejudiced by the failure
to provide such notice.

17.7  REFUNDS. If any Indemnitee obtains a recovery of all or any part of any
amount which LESSEE has paid to such Indemnitee, such Indemnitee will pay to
LESSEE the net amount recovered by such Indemnitee.

17.8  DEFENSE OF CLAIMS. Unless an Event of Default has occurred and is
continuing, LESSEE and its insurers will have the right (in each such case at
LESSEE's sole expense) to investigate or, provided that LESSEE or its insurers
have not reserved the right to dispute liability with respect to any insurance
policies pursuant to which coverage is sought, defend or compromise any claim
covered by insurance for which indemnification is sought pursuant to Article
17.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect
thereto. If LESSEE or its insurers are retaining attorneys to handle such claim,
such counsel must be reasonably satisfactory to the Indemnitees. If not, the
Indemnitees will have the right to retain counsel of their choice at LESSEE's
expense.

17.9  SURVIVAL OF OBLIGATION. Notwithstanding anything in this Lease to the
contrary, the provisions of this Article 17 will survive the Termination Date
and continue in full force and effect notwithstanding any breach by LESSOR or
LESSEE of the terms of this Lease, the termination of the lease of the Aircraft
to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease.

                                       50
<PAGE>

                                   ARTICLE 18
                                    INSURANCE

18.1  CATEGORIES OF INSURANCE. Throughout the Lease Term and until the
Termination Date, LESSEE will, at its own expense, effect and maintain in full
force-and effect the types of insurance and amounts of insurance (including
deductibles) described in Exhibit C through such brokers and with such insurers
as may be approved by LESSOR (acting reasonably and in consultation with the
other providers of LESSEE's aircraft), such approval not to be unreasonably
withheld, in London or New York or such other insurance markets as mutually
agreed upon by the parties.

18.2  WRITE-BACK OF ANY DATE RECOGNITION EXCLUSION. In the event any of LESSEE's
insurances (either the primary insurance or the reinsurance) contain any date
recognition exclusion clause or similar clause excluding from such insurance
coverage damage to any property (including the Aircraft) or death or injury to
any person on account of accidents, incidents or occurrences caused by date
recognition or other Year 2000-related problems, LESSEE at its cost will obtain
for the benefit of itself and LESSOR the broadest write-back available in the
insurance market where Lessee places its insurance with respect to such
exclusion.

18.3  INSTALLATION OF THIRD PARTY ENGINE. If LESSEE installs an engine not
owned by LESSOR on the Aircraft, either (a) LESSEE's hull insurance on the
Aircraft will automatically increase to such higher amount as is necessary in
order to satisfy both LESSOR's requirement to receive the Agreed Value in the
event of a Total Loss and the amount required by the third party engine owner or
(b) separate additional insurance on such engine will attach in order to satisfy
separately the requirements of the LESSEE to such third party engine owner.

18.4  INSURANCE FOR INDEMNITIES. The insurance referred to in Article 18.1 will
in each case include and insure (to the extent of the risks covered by the
policies) the indemnity provisions of Article 17 and LESSEE will maintain such
insurance of the indemnities for a minimum of two (2) years following the
Termination Date.

18.5  INSURANCE REQUIRED BY MANUFACTURER. During the Lease Term, LESSEE will
carry such insurance as may be required by Manufacturer in connection with
LESSOR's assignment of Manufacturer's warranties and product support to LESSEE.

18.6  RENEWAL. Prior to the expiration or termination date of any insurance
required hereunder, LESSEE will provide LESSOR with fax confirmation from
LESSEE's insurance brokers that renewed certificates of insurance evidencing the
renewal or replacement of such insurance and complying with Exhibit C will be
issued on the termination date of the prior certificate. Within seven (7) days
after such renewal, LESSEE will furnish its brokers' certificates of insurance
to LESSOR.

18.7  ASSIGNMENT OF RIGHTS BY LESSOR. If LESSOR assigns all or any of its rights
under this Lease as permitted by this Lease or otherwise disposes of any
interest in the Aircraft to any other Person as permitted by this Lease, LESSEE
will, upon request, procure that such Person hereunder be substituted as loss
payee for LESSOR (without duplication in respect of hull, all

                                       51
<PAGE>

risks, hull war and allied perils risk coverage) and/or be added as an
additional assured in the policies effected hereunder and enjoy the same rights
and insurance enjoyed by LESSOR under such policies. LESSOR will nevertheless
continue to be covered by such policies.

18.8  DEDUCTIBLES. If there is a material adverse change in the financial
condition of LESSEE which LESSOR reasonably believes will cause LESSEE to be
unable to pay the deductible upon the occurrence of a partial loss of the
Aircraft or an Engine, then LESSOR (acting reasonably and in consultation with
the other providers of LESSEE's aircraft) may require LESSEE at LESSEE's expense
to lower its deductibles on the insurance maintained hereunder to a level which
is available on commercially reasonable terms in the insurance market.

18.9  INSURANCE FOR WET LEASE OPERATIONS. In the event LESSEE is performing wet
lease operations with the Aircraft pursuant to Article 11.5 and the wet lessee
is carrying the primary passenger, baggage and cargo liability insurance with
respect to the flights, then such insurance must meet the requirements of
Exhibit C, including with respect to the amounts of coverage, naming of LESSOR
as an additional insured and inclusion of the other endorsements set forth in
Exhibit C. Moreover, LESSEE will at such times carry contingent passenger,
baggage and cargo liability insurances for such flights. Prior to commencement
of wet lease operations for a particular wet lessee where wet lessee will
provide such coverage, LESSOR will receive certificates of insurance from the
insurance brokers for LESSEE and, if applicable, the wet lessee evidencing such
coverages.

18.10 OTHER INSURANCE. LESSOR may (acting reasonably and in consultation with
the other providers of LESSEE's aircraft) from time to time by notice to LESSEE
require LESSEE at LESSEE's expense to effect such other insurance or such
variations to the terms of the existing insurance as may then be customary in
the airline industry for aircraft of the same type as the Aircraft operated by
similarly situated operators and at the time commonly available in the insurance
market.

18.11 INFORMATION. LESSEE will provide LESSOR with any information reasonably
requested by LESSOR from time to time concerning the insurance maintained with
respect to the Aircraft or in connection with any claim being made or proposed
to be made thereunder.

18.12 CURRENCY. All proceeds of insurance pursuant to this Lease will be payable
in Dollars except as may be otherwise agreed by LESSOR except that third party
liability coverage may be payable in the currency of the claim.

18.13 GROUNDING OF AIRCRAFT. If at any time any of the insurance required
pursuant to this Lease will cease to be in full force and effect, LESSEE will
promptly ground the Aircraft and keep the Aircraft grounded until such time as
such insurance is in full force and effect again.

18.14 FAILURE TO INSURE. If at any time LESSEE fails to maintain insurance in
compliance with this Article 18, LESSOR will be entitled but not bound to do any
of the following (without prejudice to any other rights which it may have under
this Lease by reason of such failure):

      (a) to pay any premiums due or to effect or maintain insurance meeting the
      requirements hereof or otherwise remedy such failure in such manner as
      LESSOR

                                       52
<PAGE>

      considers appropriate (and LESSEE will upon demand reimburse LESSOR in
      full for any amount so expended in that connection); or

      (b) at any time while such failure is continuing, to require the Aircraft
      to remain at any airport or (as the case may be), proceed to and remain at
      any airport designated by LESSOR, until such failure is remedied.

18.15 REINSURANCE. Any reinsurance will be maintained with reinsurers and
brokers approved by LESSOR (acting reasonably and in consultation with the other
providers of LESSEE's aircraft). Such reinsurance will contain each of the
following terms and will in all other respects (including amount) be
satisfactory to LESSOR:

      (a) the same terms as the original insurance;

      (b) a cut-through and assignment clause satisfactory to LESSOR (acting
      reasonably and in consultation with the other providers of LESSEE's
      aircraft) and in accordance with industry practice; and

      (c) payment will be made notwithstanding (i) any bankruptcy, insolvency,
      liquidation or dissolution of any of the original insurers and/or (ii)
      that the original insurers have made no payment under the original
      insurance policies.

18.16 LIMIT ON HULL IN FAVOR OF LESSEE. LESSEE may carry hull all risks or hull
war and allied perils on the Aircraft in excess of the Agreed Value (which is
payable to LESSOR) only to the extent such excess insurance which would be
payable to LESSEE in the event of a Total Loss does not exceed **Material
Redacted** of the Agreed Value and only to the extent that such additional
insurance will not prejudice the insurances required herein or the recovery by
LESSOR thereunder. LESSEE agrees that it will not create or permit to exist any
liens or encumbrances over the insurances, or its interest therein, except as
constituted by this Lease.

                                       53
<PAGE>

                                   ARTICLE 19
                          LOSS, DAMAGE AND REQUISITION

            Throughout the Lease Term and until the Termination Date, LESSEE
will bear all risk of loss, theft, damage and destruction to the Aircraft.

19.1  DEFINITIONS. In this Article 19 and this Lease:

            "AGREED VALUE" means an amount equal to **Material Redacted** is
expressed in January 2004 U.S. Dollars which amount will increase in accordance
with Manufacturer's Escalation Rate. **Material Redacted**.

            "NET TOTAL LOSS PROCEEDS" means the Total Loss Proceeds actually
received by LESSOR following a Total Loss, less any legal and other
out-of-pocket expenses, taxes or duties incurred by LESSOR in connection with
the collection of such proceeds.

            "TOTAL LOSS" means any of the following in relation to the Aircraft,
Airframe, any Engine or the APU and "TOTAL LOSS DATE" means the date set forth
in parenthesis after each Total Loss:

      (a) destruction, damage beyond repair or being rendered permanently unfit
      for normal use for any reason (the date such event occurs or, if not
      known, the date on which the Aircraft, Airframe, Engine or APU was last
      heard of);

      (b) actual, constructive, compromised, arranged or agreed total loss (the
      earlier of the date on which the loss is agreed or compromised by the
      insurers or forty five (45) days after the date of notice to LESSEE's
      brokers or insurers claiming such total loss);

      (c) requisition of title, confiscation, forfeiture or any compulsory
      acquisition or other similar event (the date on which the same takes
      effect);

      (d) sequestration, detention, seizure or any similar event for more than
      forty-five (45) consecutive days (the earlier of the date on which
      insurers make payment on the basis of a total loss or the date of
      expiration of such period);

      (e) requisition for use for more than one hundred eighty (180) consecutive
      days, except as set forth in Article 19.9 (the earlier of the date on
      which the insurers make payment on the basis of a total loss or the date
      of expiration of such period);

      (f) in the case of an Engine, the event described in Article 12.8.3 (the
      date on which the same takes effect);

      (g) a proper, lawful sale of the Aircraft in connection with Eurocontrol
      charges owed by LESSEE (the date on which the sale occurs);

                                       54
<PAGE>

      (h) any sale of the Aircraft in connection with a LESSEE bankruptcy,
      whether by an administrator, trustee or court (the date on which the
      intent to sell the Aircraft becomes known); or

      (i) any other occurrence not permitted under this Lease (including a
      violation of the covenant of quiet enjoyment contained in Article 21.2)
      which deprives LESSEE of use or possession for a period of ninety (90)
      consecutive days or longer (the 90th day of such period) except where full
      insurance on the Aircraft is in effect or a full indemnity acceptable to
      LESSOR in lieu thereof exists and all other provisions of this Lease are
      being complied with (the ninetieth (90th) day of such period).

            "TOTAL LOSS PROCEEDS" means the proceeds of any insurance or any
compensation or similar payment arising in respect of a Total Loss.

19.2  NOTICE OF TOTAL LOSS. LESSEE will notify LESSOR in writing within three
(3) Business Days after a Total Loss Date of the Aircraft, Airframe, any Engine
or the APU.

19.3  TOTAL LOSS OF AIRCRAFT OR AIRFRAME. If the Total Loss of the Aircraft or
Airframe occurs during the Lease Term, the following will occur:

    19.3.1  After the Total Loss Date and until receipt by LESSOR of the Agreed
            Value and all other amounts then due under this Lease, LESSEE will
            continue to pay Rent and the parties will perform all of their other
            obligations under this Lease.

    19.3.2  On the date which is the earlier of the following dates:

      (a) the date on which the Total Loss Proceeds of the Aircraft or the
      Airframe are paid by LESSEE's insurance underwriters or brokers and

      (b) the date which falls forty (45) days after the Total Loss Date,

      LESSEE will pay to LESSOR an amount equal to the sum of:

      (c) the Agreed Value and

      (d) all other amounts then accrued under this Lease, less an amount equal
      to the Net Total Loss Proceeds received by LESSOR by such date.

    19.3.3  LESSOR will apply the Net Total Loss Proceeds and any amounts
            received from LESSEE pursuant to Article 19.3.2 as follows:

      (a) first, in discharge of any unpaid Rent and any other amounts accrued
      and unpaid up to the date of LESSOR's receipt of the Agreed Value;

      (b) second, in discharge of the Agreed Value; and

      (c) third, payment of the balance, if any, to LESSEE.

                                       55
<PAGE>

    19.3.4  Upon receipt by LESSOR of all monies payable by LESSEE in Article
            19.3, provided no Default or Event of Default has occurred and is
            continuing, this Lease will terminate except for LESSEE's
            obligations under Articles 10.5, 16 and 17 which survive the
            Termination Date.

FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO
LESSOR PURSUANT TO THIS ARTICLE 19.3 WHEN A TOTAL LOSS OF THE AIRFRAME OCCURS
EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE, ENGINES OR THE APU.

19.4  SURVIVING ENGINE(S). If a Total Loss of the Airframe occurs and there has
not been a Total Loss of an Engine or Engines, then, provided no Default or
Event of Default has occurred and is continuing, at the request of LESSEE
(subject to agreement of relevant insurers) and on receipt of all monies due
under Article 19.3 and payment by LESSEE of all airport, navigation and other
charges on the Aircraft then due and owing, if any, LESSOR will transfer all its
right, title and interest in the surviving Engine(s) to LESSEE, but without any
responsibility, condition or warranty on the part of LESSOR other than as to
freedom from any LESSOR's Liens.

19.5  TOTAL LOSS OF ENGINE AND NOT AIRFRAME.

    19.5.1  Upon a Total Loss of any Engine not installed on the Airframe or a
            Total Loss of an Engine installed on the Airframe not involving a
            Total Loss of the Airframe, LESSEE will replace such Engine as soon
            as reasonably possible by duly conveying or causing to be conveyed
            to LESSOR title to another engine from LESSEE (or another Person
            with reasonable net worth or a guarantee from LESSEE) (a) free and
            clear of all Security Interests (except Permitted Liens) of any kind
            or description, (b) in airworthy condition and of the same or
            improved model, service bulletin and modification status and having
            a value and utility at least equal to the Engine which sustained the
            Total Loss, (c) not older (by reference to serial number or
            manufacture date) than the older of the two Engines delivered by
            LESSOR to LESSEE with the Aircraft on the Delivery Date and (d) in
            the same or better operating condition as the Engine which sustained
            a Total Loss, including time in service, hours and cycles since new
            and hours and cycles available to the next inspection, Overhaul or
            scheduled or anticipated removal. Such replacement engine will be an
            "Engine" as defined herein and the Engine which sustained such Total
            Loss will cease to be an "Engine".

    19.5.2  LESSEE agrees at its own expense to take such action as LESSOR may
            reasonably request in order that any such replacement Engine becomes
            the property of LESSOR and is leased hereunder on the same terms as
            the destroyed Engine. LESSEE's obligation to pay Rent will continue
            in full force and effect, but an amount equal to the Net Total Loss
            Proceeds received by LESSOR with respect to such destroyed Engine
            will, subject to LESSOR's right to deduct therefrom any amounts then
            due and payable by LESSEE under this Lease, be promptly paid to
            LESSEE.

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<PAGE>

    19.5.3  Notwithstanding Articles 19.5.1 and 19.5.2, if at the time of a
            Total Loss of an Engine not installed on the Aircraft or a Total
            Loss of an Engine installed on the Airframe not involving a Total
            Loss of the Airframe, LESSOR and LESSEE are parties to a spare
            engine lease pursuant to which LESSOR is leasing a spare engine to
            LESSEE of the same model and type as the Engine which has suffered
            such Total Loss, LESSOR will receive from LESSEE the replacement
            cost of the Engine instead of accepting a replacement engine. One
            (1) of such LESSOR spare engines will then be substituted under this
            Lease for the Engine which suffered such Total Loss and the
            applicable spare engine lease will terminate.

19.6  TOTAL LOSS OF APU.

    19.6.1  Upon a Total Loss of the APU when not installed on the Airframe or a
            Total Loss of the APU while installed on the Airframe not involving
            a Total Loss of the Airframe, LESSEE will replace such APU as soon
            as reasonably possible by duly conveying or causing to be conveyed
            to LESSOR title to another auxiliary power unit (a) free and clear
            of all Security Interests (except Permitted Liens) of any kind or
            description, (b) in airworthy condition and of the same or improved
            model, service bulletin and modification status and having a value
            and utility at least equal to the APU which sustained the Total
            Loss, (c) not older (by reference to serial number or manufacture
            date) than the APU delivered by LESSOR to LESSEE with the Aircraft
            on the Delivery Date and (d) in the same or better operating
            condition as the APU which sustained the Total Loss, including time
            in service, hours and cycles since new and hours and cycles
            available to the next inspection, Overhaul or scheduled or
            anticipated removal. Such replacement auxiliary power unit will be
            the "APU" as defined herein and the auxiliary power unit which
            sustained such Total Loss will cease to be the "APU".

    19.6.2  LESSEE agrees at its own expense to take such action as LESSOR may
            reasonably request in order that any such replacement APU becomes
            the property of LESSOR and is leased hereunder on the same terms as
            the destroyed APU. LESSEE's obligation to pay Rent will continue in
            full force and effect, but an amount equal to the Net Total Loss
            Proceeds received by LESSOR with respect to such destroyed APU will,
            subject to LESSOR's right to deduct therefrom any amounts then due
            and payable by LESSEE under this Lease, promptly be paid to LESSEE.

19.7  OTHER LOSS OR DAMAGE.

    19.7.1  If the Aircraft or any Part thereof suffers loss or damage not
            constituting a Total Loss of the Aircraft or the Airframe or any
            Engine or the APU, all the obligations of LESSEE under this Lease
            (including payment of Rent) will continue in full force.

    19.7.2  In the event of any loss or damage to the Aircraft or Airframe which
            does not constitute a Total Loss of the Aircraft or the Airframe, or
            any loss or damage to

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            an Engine or the APU which does not constitute a Total Loss of such
            Engine or the APU, LESSEE will at its sole cost and expense fully
            repair the Aircraft, Engine or APU in order that the Aircraft,
            Engine or APU is placed in an airworthy condition and substantially
            the same condition as it was prior to such loss or damage. All
            repairs will be performed in a manner which preserves and maintains
            all warranties and service life policies to the same extent as they
            existed prior to such loss or damage. LESSEE will notify LESSOR
            promptly of any loss, theft or damage to the Aircraft for which the
            cost of repairs is estimated to exceed **Material Redacted**,
            together with LESSEE's proposal for carrying out the repair. In the
            event that LESSOR does not agree with LESSEE's proposals for repair,
            LESSOR will so notify LESSEE within two (2) Business Days after its
            receipt of such proposal. LESSEE and LESSOR will then consult with
            Manufacturer and LESSEE and LESSOR agree to accept as conclusive,
            and be bound by, Manufacturer's directions or recommendations as to
            the manner in which to carry out such repairs. If Manufacturer
            declines to give directions or recommendations, LESSEE will carry
            out the repairs in accordance with the reasonable directions of
            LESSOR.

19.8  COPY OF INSURANCE POLICY. Promptly after the occurrence of a partial loss
or Total Loss of the Aircraft, an Engine or the APU, LESSEE will provide LESSOR
with all reasonable assistance in determining coverage under LESSEE's insurance
policy.

19.9  GOVERNMENT REQUISITION. If the Aircraft, Airframe, any Engine or the APU
is requisitioned for use by any Goverment Entity, LESSEE will promptly notify
LESSOR of such requisition. All of LESSEE's obligations hereunder will continue
as if such requisition had not occurred. So long as no Default or Event of
Default has occurred and is continuing, all payments received by LESSOR or
LESSEE from such Government Entity will be paid over to or retained by LESSEE.
If a Default or Event of Default has occurred and is continuing, all payments
received by LESSEE or LESSOR from such Government Entity may be used by LESSOR
to satisfy any obligations owing by LESSEE.

19.10 LESSOR RETENTION OF RESERVES.  **Material Redacted**.

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                                   ARTICLE 20
                         REPRESENTATIONS, WARRANTIES AND
                               COVENANTS OF LESSEE

20.1  REPRESENTATIONS AND WARRANTIES. LESSEE represents and warrants the
following to LESSOR as of the date of execution of this Lease and as of the
Delivery Date:

    20.1.1  Corporate Status. LESSEE is a corporation duly incorporated, validly
            existing and in good standing under the Laws of Panama. It has the
            corporate power and authority to carry on its business as presently
            conducted and to perform its obligations hereunder.

    20.1.2  Governmental Approvals. No authorization, approval, consent, license
            or order of, or registration with, or the giving of notice to the
            Aviation Authority or any other Government Entity is required for
            the valid authorization, execution, delivery and performance by
            LESSEE of this Lease, except as will have been duly effected as of
            the Delivery Date.

    20.1.3  Binding. LESSEE's Board of Directors has authorized LESSEE to enter
            into this Lease, any Side Letters hereto and any other documentation
            in connection with the leasing of the Aircraft from LESSOR
            (collectively, the "OPERATIVE DOCUMENTS") and perform its
            obligations under the Operative Documents. This Lease and the other
            Operative Documents have been duly executed and delivered by LESSEE
            and represent the valid and binding obligations of LESSEE,
            enforceable in accordance with their terms except as enforceability
            may be limited by bankruptcy, insolvency, reorganization or other
            Laws of general application affecting creditors' rights and except
            by general principles of equity. When executed by LESSEE at
            Delivery, the same will apply to the Estoppel and Acceptance
            Certificate.

    20.1.4  No Breach. The execution and delivery of the Operative Documents,
            the consummation by LESSEE of the transactions contemplated herein
            and compliance by LESSEE with the terms and provisions hereof do not
            and will not contravene any Law applicable to LESSEE, or result in
            any breach of or constitute any default under or result in the
            creation of any Security Interest upon any property of LESSEE,
            pursuant to any indenture, mortgage, chattel mortgage, deed of
            trust, conditional sales contract, bank loan or credit agreement,
            corporate charter, by-law or other agreement or instrument to which
            LESSEE is a party or by which LESSEE or its properties or assets may
            be bound or affected. When executed by LESSEE at Delivery, the same
            will apply to the Estoppel and Acceptance Certificate.

    20.1.5  Filings. Except for any filing or recording that may be required by
            the Aviation Authority, no filing or recording of any instrument or
            document (including the filing of any financial statement) is
            necessary under the Laws of the State of Registration and any
            applicable states in order for this Lease to constitute a valid and
            perfected lease of record relating to the Aircraft.

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<PAGE>

    20.1.6  Translation or Notarization. None of the Lease or any other
            Operative Document needs to be translated, notarized, legalized,
            apostilled or consularized as a condition to the legality, validity,
            filing, enforceability or admissibility in evidence thereof.

    20.1.7  Licenses. LESSEE holds all required licenses, certificates and
            permits from applicable Government Entities in Panama for the
            conduct of its business as a certificated air carrier as presently
            conducted and performance of its obligations under this Lease.

    20.1.8  No Suits. To the knowledge of LESSEE after reasonable inquiry, there
            are no suits, arbitrations or other proceedings pending or
            threatened before any court or administrative agency against or
            affecting LESSEE which, if adversely determined, would have a
            material adverse effect on LESSEE's ability to perform under this
            Lease, except as described in the financial statements provided to
            LESSOR pursuant to Article 22.

    20.1.9  No Withholding. Under the Laws of Panama currently in effect, LESSEE
            will not be required to deduct any withholding or other Tax from any
            payment it may make under this Lease.

    20.1.10 No Restrictions on Payments. Under the Laws of Panama, there are no
            present restrictions on LESSEE making the payments required by this
            Lease.

    20.1.11 General Obligations. The obligations of LESSEE under this Lease are
            direct, general and unconditional obligations of LESSEE and rank or
            will 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 reason of any contract.

    20.1.12 No Sovereign Immunity. LESSEE, under the Laws of Panama or of any
            other jurisdiction affecting LESSEE, is subject to private
            commercial law and suit. Neither LESSEE nor its properties or assets
            is entitled to sovereign immunity under any such Laws. LESSEE's
            performance of its obligations hereunder constitute commercial acts
            done for commercial purposes.

    20.1.13 Tax Returns. All necessary returns have been delivered by LESSEE to
            all relevant taxation authorities in the jurisdiction of its
            incorporation and all taxes due and payable by LESSEE (other than
            such Taxes the amount or imposition of which are being contested by
            LESSEE by appropriate proceedings) have been paid.

    20.1.14 No Material Adverse Effect. LESSEE is not in default under any
            agreement to which it is a party or by which it may be bound which
            default would have a material adverse effect on LESSEE's ability to
            perform under this Lease.

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<PAGE>

    20.1.15 No Default or Event of Default under this Lease. At the time of
            execution of this Lease, no Default or Event of Default has occurred
            and is continuing and the financial statements provided to LESSOR
            pursuant to Article 22 fairly present the financial condition of
            LESSEE as of the date referenced therein.

20.2  COVENANTS. LESSEE covenants to LESSOR that it will comply with the
following throughout the entire Lease Tenn:

    20.2.1  Licensing. LESSEE will hold all required licenses, certificates and
            permits from applicable Government Entities in Panama for the
            conduct of its business as a certificated air carrier and
            performance of its obligations under this Lease. LESSEE will advise
            LESSOR promptly in the event any such licenses, certificates or
            permits are cancelled, terminated, revoked or not renewed.

    20.2.2  Payments. If at any time any such restrictions may be applicable,
            LESSEE will obtain all certificates, licenses, permits, exemptions
            and other authorizations which are from time to time required for
            the making of the payments required by this Lease on the dates and
            in the amounts and currency which are stipulated herein, and will
            maintain the same in full force and effect for so long as the same
            will be required.

    20.2.3  Sovereign Immunity. LESSEE, under the Laws of Panama or of any other
            jurisdiction affecting LESSEE, will continue to be subject to
            private commercial law and suit. Neither LESSEE nor its properties
            or assets are currently entitled to sovereign immunity under any
            such Laws. LESSEE's performance of its obligations hereunder will
            constitute commercial acts done for commercial purposes. LESSEE will
            advise LESSOR promptly of any change in the foregoing.

    20.2.4  Information about Suits. LESSEE will promptly give to LESSOR a
            notice in writing of any suit, arbitration or proceeding before any
            court, administrative agency or Government Entity which, if
            adversely determined, would materially adversely affect LESSEE's
            ability to perform under this Lease.

    20.2.5  Restrictions on Mergers. LESSEE will not sell or convey
            substantially all of its property and assets (except capital asset
            replacement in the normal course of business) or merge or
            consolidate with or into any other corporation unless (a) LESSEE is
            the surviving entity and, as such, has a net worth equivalent to its
            net worth as of the date hereof, or (b) LESSEE has obtained LESSOR's
            prior written consent which will not be unreasonably withheld or
            delayed.

    20.2.6  Restriction on Relinquishment of Possession. LESSEE will not,
            without the prior consent of LESSOR, deliver, transfer or relinquish
            possession of the Aircraft except in accordance with Articles 11 and
            12.

    20.2.7  No Security Interests. LESSEE will not create or agree to or permit
            to arise any Security Interest (other than Permitted Liens) on or
            with respect to the Aircraft, title thereto or any interest therein.
            LESSEE will promptly, at its own expense,

                                       61
<PAGE>

            take all action as may be necessary to discharge or remove any such
            Security Interest if it exists at any time. LESSEE will within
            promptly after becoming aware of the existence of any such Security
            Interest give written notice thereof to LESSOR.

    20.2.8  Representations to Other Parties. LESSEE will not represent or hold
            out LESSOR as carrying goods or passengers on the Aircraft or as
            being in any way connected or associated with any operation of the
            Aircraft.

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<PAGE>

                                   ARTICLE 21
                         REPRESENTATIONS, WARRANTIES AND
                               COVENANTS OF LESSOR

21.1  REPRESENTATIONS AND WARRANTIES. LESSOR represents and warrants the
following to LESSEE as of the date of execution of the Lease and as of the
Delivery Date and ALL OTHER WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN
ACCORDANCE WITH ARTICLE 8:

    21.1.1  Corporate Status. LESSOR is a corporation duly incorporated, validly
            existing and in good standing under the Laws of the State of
            California. It has the corporate power and authority to carry on its
            business as presently conducted and to perform its obligations
            hereunder.

    21.1.2  No Suits. To the knowledge of LESSOR after reasonable inquiry, there
            are no suits, arbitrations or other proceedings pending or
            threatened before any court or administrative agency against or
            affecting LESSOR which, if adversely determined, would have a
            material adverse effect on LESSOR's ability to perform under this
            Lease.

    21.1.3  Governmental Approvals. No authorization, approval, consent, license
            or order of, or registration with, or the giving of notice to any
            U.S. Government Entity is required for the valid authorization,
            execution, delivery and performance by LESSOR of this Lease.

    21.1.4  Binding. This Lease and the other Operative Documents have been duly
            authorized, executed and delivered by LESSOR and represent the valid
            and binding obligations of LESSOR, enforceable in accordance with
            their terms except as enforceability may be limited by bankruptcy,
            insolvency, reorganization or other Laws of general application
            affecting the enforcement of creditors' rights or general principles
            of equity.

    21.1.5  No Breach. The execution and delivery of the Operative Documents,
            the consummation by LESSOR of the transactions contemplated herein
            and compliance by LESSOR with the terms and provisions hereof do not
            and will not contravene any Law applicable to LESSOR, or result in
            any breach of or constitute any default under any indenture,
            mortgage, chattel mortgage, deed of trust, conditional sales
            contract, bank loan or credit agreement, corporate charter, by-law
            or other agreement or instrument to which LESSOR is a party or by
            which LESSOR or its properties or assets may be bound or affected.

    21.1.6  Title to Aircraft. On the Delivery Date LESSOR will have good and
            valid title to the Aircraft.

    21.1.7  Consents. LESSOR has obtained or will obtain all necessary consents
            with respect to the entry into or performance of its obligations
            under this Lease.

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<PAGE>

    21.1.8  No Default. At the time of execution of this Lease, LESSOR is not in
            default under any agreement to which it is a party or by which it
            may be bound which default would have a material adverse effect on
            LESSOR's ability to perform under this Lease.

21.2  COVENANT OF QUIET ENJOYMENT. So long as no Default or Event of Default has
occurred and is continuing hereunder, LESSOR covenants that neither LESSOR nor
any person lawfully claiming by or through LESSOR will interfere with or
otherwise disturb LESSEE's quiet, peaceful use and enjoyment of the Aircraft.

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<PAGE>

                                   ARTICLE 22
                         FINANCIAL AND OTHER INFORMATION

      LESSEE agrees to furnish each of the following to LESSOR:

(a) within sixty (60) days after the end of each fiscal quarter of LESSEE, three
(3) copies of the unaudited consolidated financial statements (including a
balance sheet and profit and loss statement) prepared for such quarter in
accordance with international generally accepted accounting principles;

(b) within one hundred twenty (120) days after the end of each fiscal year of
LESSEE, three (3) copies of the audited consolidated financial statements
(including a balance sheet and profit and loss statement) prepared as of the
close of such fiscal year in accordance with international generally accepted
accounting principles. LESSEE's chief financial officer will also provide a
certificate stating that no Default or Event of Default exists under this Lease
or, if a Default or Event of Default does exist, then such officer will describe
both the nature of the Default or Event of Default and measures being taken by
LESSEE to remedy the same;

(c) promptly after distribution, three (3) copies of all reports and financial
statements which LESSEE sends or makes available to other aircraft lessors; and

(d) from time to time, such other reasonable information as LESSOR or LESSOR's
Lender (subject to the confidentiality restrictions set forth in Article 28.8)
may reasonably request concerning the location, condition, use and operation of
the Aircraft or the financial condition of LESSEE.

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<PAGE>

                                   ARTICLE 23
                               RETURN OF AIRCRAFT

23.1  DATE OF RETURN. LESSEE is obligated to return the Aircraft, Engines, APU,
Parts and Aircraft Documentation to LESSOR on the Expiration Date, unless a
Total Loss of the Aircraft occurred prior to the Expiration Date and this Lease
was terminated early in accordance with Article 19.3. If an Event of Default
occurs hereunder by LESSEE failing to return the Aircraft on the Expiration Date
or if an Event of Default occurs prior to or after the Expiration Date and
LESSOR repossesses the Aircraft, the return requirements set forth in this
Article 23 nonetheless must be met on the date the Aircraft is actually returned
to LESSOR or repossessed by LESSOR.

23.2  LAST ENGINE SHOP VISITS. With respect to the last Engine shop visit of an
Engine prior to return of the Aircraft, LESSEE will submit to LESSOR in advance
the intended workscope of such shop visit. If LESSOR requests, LESSEE will
perform additional work at such shop visit at LESSOR's cost provided that if the
same shall result in delay in redelivery, extension of the Lease Term or cause
the Engine to be removed from service early or for a period in excess of the
period the Engine would have been removed from revenue service absent such
additional work, no Rent or other costs will be payable by LESSEE for the period
which is attributable solely to LESSOR's requested work (unless and to the
extent LESSEE shall have otherwise agreed in writing). In the event that LESSOR
requests LESSEE to remove an Engine from service for additional work, LESSOR
will use reasonable efforts to provide a spare engine or will reimburse LESSEE
for the cost of any spare engine provided or procured by LESSEE.

23.3  TECHNICAL REPORT. Six (6) months prior to the Expiration Date (and in an
updated form at return of the Aircraft), LESSEE will provide LESSOR with a
Technical Evaluation Report in the form and substance of Exhibit M, as revised,
and, in addition upon LESSOR's request, will make cc-pies available of (a)
drawings of the interior configuration of the Aircraft both as it presently
exists and as it will exist at return, (b) an Airworthiness Directive status
list, (c) a service bulletin incorporation list, (d) rotable tracked, hard-time
and life-limited component listings, (e) a list of LESSEE-initiated
modifications and alterations, (f) interior material burn certificates, (g)
access to the Aircraft Maintenance Program, (h) the complete workscope for the
checks, inspections and other work to be performed prior to return, (i) a
forecast of the checks, inspections and other work to be performed within 18
months after return of the Aircraft, (j) a list of all no-charge service
bulletin kits with respect to the Aircraft which were ordered by LESSEE from
Manufacturer or the Engine manufacturer, (k) current Engine disk sheets and a
description of the last shop visit for each Engine and (1) any other data which
is reasonably requested by LESSOR.

23.4  RETURN LOCATION. LESSEE at its expense will return the Aircraft, Engines,
APU, Parts and Aircraft Documentation to LESSOR at Los Angeles, California or to
such other airport as may be mutually agreed to by LESSEE and LESSOR.

23.5  FULL AIRCRAFT DOCUMENTATION REVIEW. For the period commencing at least ten
(10) Business Days prior to the proposed redelivery date and continuing until
the date on which the Aircraft is returned to LESSOR in the condition required
by this Lease, LESSEE will provide for the review of LESSOR and/or its
representative all of the Aircraft records and historical

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<PAGE>

documents described in Exhibit L in one central room with access to telephone,
photocopy, fax and interne connections at the Aircraft return location.

23.6  COPY OF LESSEE'S MAINTENANCE PROGRAM. At return of the Aircraft and for
use by LESSOR only for the purpose of bridging the Aircraft from LESSEE's
Maintenance Program to the maintenance program of the next operator, LESSEE will
provide LESSOR with a copy of LESSEE's Maintenance Program.

23.7  AIRCRAFT INSPECTION.

    23.7.1  During the maintenance checks performed immediately prior to the
            proposed redelivery and at the actual return of the Aircraft, LESSOR
            and/or its representatives will have an opportunity to conduct a
            systems functional and operational inspection of the Aircraft (and
            other types of reasonable inspections based upon the Aircraft type,
            age, use and other known factors with respect to the Aircraft) and a
            full inspection of the Aircraft Documentation (including records and
            manuals), all to LESSOR's reasonable satisfaction. Any deficiencies
            from the Aircraft return condition requirements set forth in this
            Article 23 will be corrected by LESSEE at its cost prior to the
            acceptance flight described in Article 23.7.2.

    23.7.2  Immediately prior to the proposed redelivery of the Aircraft, LESSEE
            will carry out for LESSOR and/or LESSOR's representatives an
            Aircraft acceptance flight in accordance with Manufacturer's
            standard flight operation check flight procedures or, if agreed to
            in writing by LESSOR, in accordance with an airline acceptance
            flight procedure, either of which will be for the duration necessary
            to perform such check flight procedures but in any event not less
            than two (2) hours. Flight costs and fuel will be furnished by and
            at the expense of LESSEE, Any deficiencies from the Aircraft return
            condition requirements set forth in this Article 23 will be
            corrected by LESSEE at its cost prior to return of the Aircraft.

    23.7.3  To the extent that the ground inspection and acceptance flight
            extend beyond the Expiration Date, the Lease Term will be deemed to
            have been automatically extended and the obligations of LESSEE
            hereunder (including Article 23.13.3) will continue on a day-to-day
            basis until the Aircraft is accepted by LESSOR executing the Return
            Acceptance Receipt in the form of Exhibit J. In the event the Lease
            is extended solely as a result of work performed at LESSOR's request
            pursuant to Article 23.10.1, LESSEE will perform such additional
            work at LESSOR's cost provided that if the same shall result in
            delay in redelivery, extension of the Lease Term or cause the
            Aircraft to be removed from service for a period in excess of the
            period the Aircraft would have been removed to revenue service
            absent such additional work, no Rent or other costs will be payable
            by LESSEE for the period which is attributable solely to LESSOR's
            requested work (unless and to the extent LESSEE shall have otherwise
            agreed in writing).

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23.8  CERTIFICATE OF AIRWORTHINESS MATTERS.

    23.8.1  The Aircraft will possess a current Certificate of Airworthiness
            issued by the Aviation Authority (although this Certificate of
            Airworthiness may later be substituted by the Export Certificate of
            Airworthiness or equivalent if requested by LESSOR pursuant to
            Article 23.12). In addition, even if LESSEE must perform
            engineering, maintenance and repair work on the Aircraft beyond the
            requirements of Article 12, the Aircraft at return must be in the
            condition required in order to meet the requirements for issuance of
            a U.S. Standard Certificate of Airworthiness for transport category
            aircraft issued by the FAA in accordance with FAR Part 21 and, in
            addition, to meet the operating requirements of FAR Part 121 with no
            restrictions imposed.

    23.8.2  At LESSOR's request, LESSEE at its cost will demonstrate that the
            Aircraft meets the requirements for issuance of the U.S. Standard
            Certificate of Airworthiness for transport category aircraft
            specified in Article 23.8.1 by delivering to LESSOR at LESSOR's
            option either an actual U.S. Standard Certificate of Airworthiness
            (if the Aircraft is to be registered in the U.S.) or a letter
            acceptable to LESSOR signed by an FAA Designated Airworthiness
            Representative (DAR) or another Person acceptable to LESSOR stating
            that the DAR or such Person has inspected the Aircraft and Aircraft
            Documentation (including records and manuals) and has found that the
            Aircraft meets the requirements for issuance of a U.S. Standard
            Certificate of Airworthiness for transport category aircraft in
            accordance with FAR Part 21 and, in addition, meets the operating
            requirements of FAR Part 121 with no restrictions imposed.

    23.8.3  If the Aircraft is to be registered in a country other than in the
            U.S. after return from LESSEE, LESSOR may in its sole discretion
            waive the requirements of Article 23.8.2 and instead require that
            LESSEE at its expense (to the extent such expense is no greater than
            that which LESSEE would have incurred pursuant to Articles 23.8.1
            and 23.8.2, with any additional expenses being for LESSOR's account)
            put the Aircraft in a condition to meet the requirements for
            issuance of a Certificate of Airworthiness of the aviation authority
            of the next country of register.

23.9  GENERAL CONDITION OF AIRCRAFT AT RETURN.

    23.9.1  The Aircraft, Engines, APU and Parts will have been maintained and
            repaired in accordance with the Maintenance Program, the rules and
            regulations of the Aviation Authority and this Lease.

    23.9.2  Aircraft Documentation (including records and manuals) will have
            been maintained in an up-to-date status, in accordance with the
            rules and regulations of the Aviation Authority and the FAA and this
            Lease and in a form necessary in order to meet the requirements of
            Article 23.8.1. The records and historical documents set forth in
            Attachment 1 of Exhibit J will be in English. If LESSEE subscribes
            to Manufacturer's on-line data access services, LESSEE must

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<PAGE>

            nonetheless return the Aircraft manuals with all current revisions
            provided by Manufacturer in CD, microfilm or other format acceptable
            to LESSOR.

    23.9.3  The Aircraft will be in the same working order and condition as at
            Delivery (subject to the other provisions of this Article 23,
            reasonable wear and tear from normal flight operations excepted),
            with all pilot discrepancies and deferred maintenance items cleared
            on a terminating action basis.

    23.9.4  The Aircraft will be airworthy (conform to type design and be in a
            condition for safe operation), with all Aircraft equipment,
            components and systems operating in accordance with their intended
            use and within limits approved by Manufacturer, the Aviation
            Authority and the FAA.

    23.9.5  The Aircraft interior (including cabin and windows) and exterior
            will be clean and cosmetically acceptable to LESSOR, with all
            compartments free of foreign objects, dirt, grease, fluids, stains,
            grime, cracks, tears and rips and ready to be placed into immediate
            commercial airline operations.

    23.9.6  No special or unique Manufacturer, Engine manufacturer or Aviation
            Authority inspection or check requirements which are specific to the
            Aircraft or Engines (as opposed to all aircraft or engines of their
            types) will exist with respect to the Airframe, Engines and Aircraft
            equipment, components and systems.

    23.9.7  All repairs to the Aircraft will have been accomplished in
            accordance with Manufacturer's Structural Repair Manual (or
            FAA-approved data supported by FAA Form 8110-3) for the Aircraft.

    23.9.8  All modifications and alterations to the Aircraft will have been
            accomplished in accordance with FAA-approved data supported by FAA
            Form 8110-3.

    23.9.9  The Aircraft will be returned with LESSOR's Engines and APU
            installed and with the same equipment as at Delivery, subject only
            to those replacements, additions and Modifications permitted under
            this Lease. To the extent LESSEE performed a Modification which cost
            in excess of **Material Redacted** and LESSOR did not approve such
            Modification in accordance with Article 12.10.1, LESSOR may require
            LESSEE to return the Aircraft in its original condition prior to
            such Modification.

    23.9.10 All Airworthiness Directives which are issued prior to the date of
            return of the Aircraft and require compliance (either by means of
            repetitive inspections, modifications or terminating action) prior
            to return of the Aircraft to LESSOR or within **Material Redacted**
            after the Termination Date will have been complied with on the
            Aircraft on a terminating action basis at LESSEE's cost.
            Airworthiness Directives which do not have a terminating action will
            be accomplished at the highest level of inspection or modification
            possible. If, after using best efforts, LESSEE is unable to acquire
            the material, parts or components necessary to accomplish such
            Airworthiness Directive, LESSEE will pay to LESSOR upon return of
            the Aircraft the estimated cost of

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            terminating such Airworthiness Directive. If the estimated cost
            cannot be mutually agreed upon by LESSEE and LESSOR, LESSEE and
            LESSOR will each obtain an estimate from a reputable FAA approved
            maintenance facility (unaffiliated with LESSEE or LESSOR) and the
            estimated cost will be the average of the two estimates.

    23.9.11 All modifications which must be performed prior to the date of
            return of the Aircraft or within **Material Redacted** after the
            Termination Date in order to meet the FAA requirements for FAR Part
            121 operations will have been incorporated on the Aircraft at
            LESSEE's cost.

    23.9.12 The Aircraft will be in compliance with Manufacturer's Corrosion
            Prevention and Control Program (CPCP) specified for the model type
            by Manufacturer.

    23.9.13 If any waivers, deviations, dispensations, alternate means of
            compliance, extensions or carry-overs with respect to maintenance or
            operating requirements, repairs or Airworthiness Directives are
            granted by the Aviation Authority or permitted by the Maintenance
            Program, LESSEE at its sole cost and expense will nonetheless
            perform such maintenance or operating requirements, repairs or
            Airworthiness Directives as if such waivers, deviations,
            dispensations, alternate means of compliance, or extensions or
            carry-overs did not exist.

    23.9.14 The Aircraft will be free from any Security Interest except LESSOR's
            Liens and no circumstance will have so arisen whereby the Aircraft
            is or could become subject to any Security Interest or right of
            detention or sale in favor of the Aviation Authority, any airport
            authority, or any other authority.

    23.9.15 All no-charge vendor and Manufacturer's service bulletin kits
            received by LESSEE for the Aircraft but not installed thereon will
            be on board the Aircraft as cargo. All no-charge vendor and
            Manufacturer's service bulletin kits ordered by LESSEE but not yet
            received will, upon receipt by LESSEE, be forwarded as instructed by
            LESSOR. At LESSOR's request, any other service bulletin kit which
            LESSEE paid for will also be delivered to LESSOR on board the
            Aircraft, but LESSOR will reimburse LESSEE for its actual
            out-of-pocket costs for such kit, unless LESSEE purchased such kit
            as part of its implementation of a service bulletin on its fleet of
            aircraft of the same type as the Aircraft but had not yet installed
            such kit on the Aircraft, in which case such kit will be furnished
            free of charge to LESSOR.

    23.9.16 The Aircraft will be free of any leaks found to by outside of
            maintenance manual limits and any damage resulting therefrom. All
            repairs will have been performed on a permanent basis in accordance
            with the applicable manufacturer's instructions.

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    23.9.17 The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and
            water) will be serviced to full and the waste tank serviced in
            accordance with Manufacturer's instructions. Fuel tanks will be at
            least as full as at Delivery.

23.10 CHECKS PRIOR TO RETURN. Immediately prior to return of the Aircraft
to LESSOR, LESSEE at its expense will do each of the following:

    23.10.1 Have performed, by an FAA-approved repair station, a Return Check
            ("RETURN CHECK") means the accomplishment of all work cards
            specified in the Maintenance Program and the MPD which (a) are
            necessary to clear the Aircraft of all such tasks for **Material
            Redacted**, or (b) are required to be performed at lesser intervals
            than **Material Redacted**. If pursuant to the then-current MPD, the
            performance interval for a task is shorter than every **Material
            Redacted**, then such task will also be performed. All non-routine
            tasks generated as a result of the performance of these work cards
            must also be performed. For avoidance of doubt, if the inspection
            interval pursuant to the then-current MPD for a particular work card
            only refers to one or two of the three measurement tests, then the
            most restrictive measurement test or tests referred to in the
            then-current MPD will be utilized in determining whether the task
            must be performed.). LESSEE will also weigh the Aircraft. Any
            discrepancies revealed during such inspection will be corrected in
            accordance with Manufacturer's maintenance and repair manuals or
            FAA-approved data. LESSEE agrees to perform during such check any
            other work reasonably required by LESSOR (and not otherwise required
            under this Lease) and LESSOR will reimburse LESSEE for such work at
            LESSEE's preferred customer rates.

    23.10.2 Perform an internal and external corrosion inspection and correct
            any discrepancies in accordance with the recommendations of
            Manufacturer and the Structural Repair Manual. In addition, all
            inspected areas will be properly treated with corrosion inhibitor as
            recommended by Manufacturer.

    23.10.3 Remove LESSEE's exterior markings, including all exterior paint, by
            pneumatically scuff sanding (or stripping, if reasonably determined
            by LESSOR taking into account the condition of the exterior paint)
            the paint from the fuselage, empennage and Engine cowlings, and
            clean, reseal, refinish, prepare (including application of alodine
            or another corrosion inhibitor) and prime the surfaces to be
            painted, all in accordance with Manufacturer's and paint
            manufacturer's recommendations. LESSEE will then repaint the
            fuselage, empennage and Engine cowlings in the colors and logo
            specified by LESSOR. Such painting will be accomplished in such a
            manner as to result in a uniformly smooth and cosmetically
            acceptable aerodynamic surface. All external placards, signs and
            markings will be properly attached, free from damage, clean and
            legible. **Material Redacted**.

    23.10.4 Clean the exterior and interior of the Aircraft.

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    23.10.5  If reasonably required by LESSOR, apply touch-up paint to the
             interior of the Aircraft, including flight deck, and replace
             missing, broken or illegible placards.

    23.10.6  In accordance with Article 23.9.7, permanently repair damage to the
             Aircraft that exceeds Manufacturer's limits and replace any
             non-flush structural patch repairs installed on the Aircraft with
             flush-type repairs unless a flush-type repair is unavailable.

    23.10.7  With LESSOR and/or its representatives present, perform a full and
             complete hot and cold section videotape borescope on each Engine
             and its modules in accordance with the Engine manufacturer's
             maintenance manual.

    23.10.8  If the Engine historical and technical records and/or condition
             trend monitoring data of any Engine indicate an acceleration in the
             rate of deterioration in the performance of an Engine, LESSEE will
             correct, to LESSOR's reasonable satisfaction, such conditions which
             are determined to be causing such accelerated rate of
             deterioration.

    23.10.9  With LESSOR and/or its representatives present, accomplish a power
             assurance run on the Engines. LESSEE will evaluate the Engine
             performance and record the Engine power assurance test conditions
             and results on the Return Acceptance Receipt.

    23.10.10 LESSEE will provide evidence to LESSOR's reasonable satisfaction
             that the Engine historical and technical records, borescope
             inspection, trend monitoring and other checks specified in Article
             23.10.9 do not reveal any condition which would cause the Engines
             or any module to be unserviceable, beyond serviceable limits or
             serviceable with an increased frequency of inspection or with
             calendar time, flight hour or flight cycle restrictions under the
             Engine manufacturer's maintenance manual. LESSEE will correct any
             discrepancies in accordance with the guidelines set out by the
             Engine manufacturer which may be discovered during such inspection.

    23.10.11 In the event the Engine historical and technical records, borescope
             inspection, trend monitoring and other checks specified in Article
             23.10.9 result in a dispute regarding the conformity of an Engine
             with the requirements of this Article 23, LESSEE and LESSOR will
             consult with the Engine manufacturer and follow the Engine
             manufacturer's recommendations (including the accomplishment of an
             Engine test cell operational check) with regard to determining if
             such Engine complies with the requirements of this Article 23 and
             the manner in which any discrepancies from the requirements of this
             Article 23 will be rectified.

    23.10.12 If the APU historical and technical records and/or condition trend
             monitoring data indicate an acceleration in the rate of
             deterioration in the performance of the APU, LESSEE will correct,
             to LESSOR's reasonable satisfaction, such conditions which are
             determined to be causing such accelerated rate of deterioration.

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    23.10.13 With LESSOR and/or its representatives present, perform a full and
             complete hot and cold section videotape borescope on the APU in
             accordance with the APU manufacturer's procedures. LESSEE will
             provide evidence to LESSOR's satisfaction that the borescope
             inspection does not reveal any condition which would cause the APU
             to be unserviceable, beyond serviceable limits or serviceable with
             an increased frequency of inspection or with calendar time, flight
             hour or flight cycle restrictions. LESSEE will correct any
             discrepancies in accordance with the guidelines set out by the APU
             manufacturer which may be discovered during such inspection.

23.11 PART LIVES. At return, the condition of the Aircraft will be as follows:

    23.11.1  The Aircraft will have zero (0) hours consumed since the last
             Return Check or equivalent check per the MPD (excluding hours
             consumed on the acceptance flight and any ferry flight) sufficient
             to clear the Aircraft for **Material Redacted** of operation.

    23.11.2  Each Engine will meet all of the following:

      (a) Each Engine will have **Material Redacted** remaining until its next
      anticipated removal (based upon the Engine manufacturer's estimated mean
      time between removals for engines of the same type as the Engines).

      (b) Each Engine will have a remaining EGT margin sufficient to permit the
      operation of such Engine for the hours and cycles set forth in the
      preceding subparagraph, based upon the historical experience of LESSEE.

      (c) Each Part of an Engine which has a hard time limit will have
      **Material Redacted** of such Part's full allotment of hours and cycles
      remaining to operate until its next scheduled Overhaul or removal.
      However, if **Material Redacted** of such hard time Part's full allotment
      of hours and cycles remaining is less than **Material Redacted**, then
      such hard time Part will be returned with at least **Material Redacted**
      remaining. If such hard time Part's full allotment of hours and cycles is
      less than 4,000 hours or 4,000 cycles (whichever is applicable), then such
      hard time Part will be returned with zero (0) hours and cycles since its
      last Overhaul or refurbishment, as applicable.

      (d) Each Part of an Engine which has a life-limit will have at least
      **Material Redacted** remaining until removal. If such life-limited Part's
      full allotment of hours and cycles is less than **Material Redacted**,
      then such life-limited Part will be returned new.

      (e) No life-limited Part of an Engine or APU will have more hours or
      cycles consumed than such Engine's data plate.

    23.11.3  The APU will have no more than **Material Redacted** consumed since
             the last hot section refurbishment (excluding hours consumed on the
             acceptance flight and any ferry flight).

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          In addition, at return LESSEE will pay LESSOR an amount equal to the
          number of hours consumed on the APU at return since the last hot
          section refurbishment multiplied by an APU hot section refurbishment
          calculated as follows:

            such APU hot section refurbishment cost price per hour will be the
            quotient obtained by dividing (a) the expected cost of the next APU
            hot section refurbishment cost by (b) the full allotment of hours
            between hot section refurbishments as approved by the MPD. If LESSEE
            and LESSOR are unable to agree on the expected cost of the next
            scheduled APU hot section refurbishment, such cost will be
            established by taking the average of the price quotes submitted by
            two (2) reputable FAA-approved APU hot section refurbishment cost
            facilities (unaffiliated with LESSEE or LESSOR), one selected by
            LESSEE and the other selected by LESSOR.

    23.11.4  The Landing Gear will have **Material Redacted** of
             hours/cycles/calendar time (whichever is the more limiting factor)
             pursuant to the MPD remaining until the next Overhaul or scheduled
             removal.

          In addition, at return LESSEE will pay LESSOR an amount equal to the
          number of hours/cycles/days (whichever is the more limiting factor)
          consumed on each Landing Gear at return since the last Overhaul
          multiplied by a Landing Gear Overhaul cost per hour/cycle/day
          calculated as follows:

            such Landing Gear Overhaul cost price per hour/cycle/day will be the
            quotient obtained by dividing (a) the expected cost of the next
            Landing Gear Overhaul by (b) the full allotment of hours/cycles/days
            between scheduled Overhauls for such Landing Gear as approved by the
            MPD. If LESSEE and LESSOR are unable to agree on the expected cost
            of the next scheduled Landing Gear Overhaul, such cost will be
            established by taking the average of the price quotes submitted by
            two (2) reputable FAA-approved landing gear Overhaul facilities
            (unaffiliated with LESSEE or LESSOR), one selected by LESSEE and the
            other selected by LESSOR.

    23.11.5  Each Part of the Airframe or the APU which has a hard time
             (hour/cycle) limit to Overhaul or removal pursuant to the MPD will
             have **Material Redacted** of such Part's full allotment of hours
             and cycles remaining to operate until its next scheduled Overhaul
             or removal pursuant to the MPD. However, if **Material Redacted**
             of such hard time Part's full allotment of hours and cycles
             remaining is less than **Material Redacted**, then such hard time
             Part will be returned with at least **Material Redacted** remaining
             to operate until its next scheduled Overhaul or refurbishment
             pursuant to the MPD. If such hard time Part's full allotment of
             hours and cycles between, Overhauls or refurbishment pursuant to
             the MPD is less than **Material Redacted**, then such hard time
             Part will be returned zero (0) hours and zero (0) cycles out of
             Overhaul (except hours accumulated on any acceptance or ferry
             flight).

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    23.11.6  Each life-limited Part of the Airframe or the APU will have
             **Material Redacted** of such Part's full allotment of hours and
             cycles remaining to operate until removal pursuant to the MPD.
             However, if **Material Redacted** of such life-limited Part's full
             allotment of hours and cycles remaining is less than **Material
             Redacted**, then such life-limited Part will be returned with at
             least **Material Redacted** remaining to operate pursuant to the
             MPD. If such life-limited Part's full allotment of hours and cycles
             remaining to operate pursuant to the MPD is less than **Material
             Redacted**, then such life-limited Part will be returned with 100%
             of its total approved hours and cycles remaining.

    23.11.7  Each Part which has a calendar limit will have **Material
             Redacted** remaining to operate pursuant to the MPD after return of
             the Aircraft to LESSOR. If a Part has a total approved life
             pursuant to the MPD of **Material Redacted**, then such Part will
             be returned with 100% of its total approved life remaining.

    23.11.8  No Part of the Aircraft or Engine (excluding life-limited Parts on
             the Engine, which are covered by Article 23.11.2(e)) will have
             total hours and total cycles since new greater than **Material
             Redacted** of that of the Airframe **Material Redacted**.

    23.11.9  Each Aircraft tire and brake **Material Redacted** (except for the
             acceptance flight and any ferry flight).

23.12 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at its
cost will (a) provide an Export Certificate of Airworthiness or its equivalent
from the State of Registration so that the Aircraft can be exported to the
country designated by LESSOR, (b) assist with deregistration of the Aircraft
from the register of aircraft in the State of Registration, (c) assist with
arranging for prompt confirmation of such deregistration to be sent by the
registry in the State of Registration to the next country of registration and
(d) perform any other acts reasonably required by LESSOR in connection with the
foregoing. **Material Redacted**.

23.13 LESSEE'S CONTINUING OBLIGATIONS. In the event that LESSEE does not return
the Aircraft to LESSOR on the Expiration Date and in the condition required by
this Article 23 for any reason (whether or not the reason is within LESSEE's
control) unless such delay is as a result of work performed at the request of
LESSOR pursuant to Article 23.10.1 or is otherwise over and above LESSEE's
obligations pursuant to this Article 23:

    23.13.1  the obligations of LESSEE under this Lease will continue in full
             force and effect on a day-to-day basis until such return. This will
             not be considered a waiver of LESSEE's Event of Default or any
             right of LESSOR hereunder.

    23.13.2  **Material Redacted**.

    23.13.3  LESSEE will fully indemnify LESSOR on demand for all losses
             (including consequential damages), liabilities, actions,
             proceedings, costs and expenses thereby suffered or incurred by
             LESSOR and, in addition, until such time as the

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            Aircraft is redelivered to LESSOR and put into the condition
            required by this Article 23, instead of paying the Rent specified in
            Article 5.3, LESSEE will pay twice the amount of Rent for each day
            from the scheduled Expiration Date until the Termination Date (the
            monthly Rent payable under Article 5.3.1 will be prorated based on
            the actual number of days in the applicable month). Payment will be
            made upon presentation of LESSOR's invoice.

    23.13.4  LESSOR may elect, in its sole and absolute discretion, to accept
             the return of the Aircraft prior to the Aircraft being put in the
             condition required by this Article 23 and thereafter have any such
             non-conformance corrected at such time as LESSOR may deem
             appropriate (but within ninety (90) days following the return of
             the Aircraft) and at commercial rates then-charged by the Person
             selected by LESSOR to perform such correction. Any direct expenses
             incurred by LESSOR for such correction will be payable by LESSEE
             within fifteen (15) days following the submission of a written
             statement by LESSOR to LESSEE, identifying the items corrected and
             setting forth the expense of such corrections. LESSEE's obligation
             to pay such amounts will survive the Termination Date.

23.14 AIRPORT AND NAVIGATION CHARGES. LESSEE will ensure that at return of the
Aircraft any and all airport, navigation and other charges which give rise or
may if unpaid give rise to any lien, right of detention, right of sale or other
Security Interest in relation to the Aircraft, Engine, APU or any Part have been
paid and discharged in full and will at LESSOR's request produce evidence
thereof satisfactory to LESSOR, except to the extent being contested in good
faith provided LESSEE shall have agreed in writing to pay any such charges
determined pursuant to such contest to be due and owing to the relevant
authority.

23.15 RETURN ACCEPTANCE RECEIPT. Upon return of the Aircraft in accordance with
the terms of this Lease, LESSEE will prepare and execute two (2) Return
Acceptance Receipts in the form and substance of Exhibit J and LESSOR will
countersign and return one such Return Acceptance Receipt to LESSEE. In
addition, LESSEE and LESSOR will execute a Lease Termination for filing with the
FAA evidencing termination of this Lease.

23.16 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements set
forth in Articles 17 and 18, respectively, will apply to Indemnitees and
LESSOR's representatives during return of the Aircraft, including the ground
inspection and acceptance flight. With respect to the acceptance flight,
LESSOR's representatives will receive the same protections as LESSOR on LESSEE's
Aviation and Airline General Third Party Liability Insurance.

23.17 STORAGE. At LESSOR's request, LESSEE will continue to lease the Aircraft
under this Lease for a period not to exceed thirty (30) days. During this
period, LESSEE will have no obligations under this Lease except, at LESSOR's
cost, to park and store the Aircraft in accordance with Manufacturer's
recommended short term storage program at one of LESSEE's principal maintenance
facilities in the State of Registration and to maintain all insurance on the
Aircraft. LESSEE will not utilize the Aircraft for any reason during this
period.

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                                   ARTICLE 24
                                   ASSIGNMENT

24.1  NO ASSIGNMENT BY LESSEE. EXCEPT AS OTHERWISE PROVIDED HEREIN, NO
ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY LESSEE
OF ANY OF ITS RIGHTS OR OBLIGATIONS WITH RESPECT TO THE AIRCRAFT, ANY ENGINE OR
PART, OR THIS LEASE.

24.2  SALE OR ASSIGNMENT BY LESSOR.

    24.2.1   Subject to LESSEE's rights pursuant to this Lease, LESSOR may at
             any time and without LESSEE's consent sell, assign or transfer its
             rights, interest and obligations hereunder or with respect to the
             Aircraft to a third party ("LESSOR'S ASSIGNEE"). For a period of
             two (2) years after such sale or assignment and at LESSEE's cost,
             LESSEE will continue to name LESSOR as an additional insured under
             the Aviation and Airline General Third Party Liability Insurance
             specified in Exhibit C.

    24.2.2   The term "LESSOR" as used in this Lease means the lessor of the
             Aircraft at the time in question. In the event of the proper sale
             of the Aircraft and transfer of LESSOR's rights and obligations
             under this Lease, LESSOR's Assignee will become "LESSOR" of the
             Aircraft under this Lease and the transferring party (the prior
             "LESSOR") will be relieved of all liability to LESSEE under this
             Lease for obligations arising on and after the date the Aircraft is
             sold. LESSEE will acknowledge and accept LESSOR's Assignee as the
             new "LESSOR" under this Lease and will look solely to LESSOR's
             Assignee for the performance of all LESSOR obligations and
             covenants under this Lease arising on and after the Aircraft sale
             date provided such transfer, sale or assignment is in conformity
             with the requirements of this Article 24.

24.3  LESSOR'S LENDER. Subject to LESSEE's rights pursuant to this Lease, LESSOR
may at any time and without LESSEE's consent grant security interests over the
Aircraft and assign the benefit of this Lease to a lender ("LESSOR'S LENDER") as
security for LESSOR's obligations to LESSOR's Lender. Accordingly, if LESSOR's
Lender requires, as a condition to providing financing, any reasonable,
nonsubstantive modification of this Lease, LESSEE agrees to enter into an
agreement so modifying this Lease.

24.4  LESSEE COOPERATION. On request by LESSOR, LESSOR's Assignee or LESSOR's
Lender, LESSEE will execute all such documents (such as a lease assignment
agreement) as LESSOR, LESSOR's Assignee or LESSOR's Lender may reasonably
require to confirm LESSEE's obligations under this Lease and obtain LESSEE's
acknowledgment that LESSOR is not in breach of the Lease. LESSEE will provide
all other reasonable assistance and cooperation to LESSOR, LESSOR's Assignee and
LESSOR's Lender in connection with any such sale or assignment or the perfection
and maintenance of any such security interest, including, at LESSOR's cost,
making all necessary filings and registrations in the State of Registration and
providing all opinions of counsel with respect to matters reasonably requested
by LESSOR,

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LESSOR's Lender or LESSOR's Assignee. LESSOR will reimburse LESSEE for its
reasonable out-of-pocket costs in reviewing documents required by LESSOR or
LESSOR's Lender.

24.5  PROTECTIONS.

    24.5.1   **Material Redacted**.

    24.5.2   LESSOR will obtain for the benefit of LESSEE an acknowledgment from
             any LESSOR's Assignee or LESSOR's Lender that, so long as no Event
             of Default has occurred and is continuing hereunder, such Person
             and any Person lawfully claiming through such Person will not
             interfere with LESSEE's quiet, peaceful use and enjoyment of the
             Aircraft.

    24.5.3   **Material Redacted**.

    24.5.4   **Material Redacted**.

    24.5.5   **Material Redacted**.

    24.5.6   **Material Redacted**.

    24.5.7   Wherever the term "LESSOR" is used in this Lease in relation to any
             of the provisions relating to disclaimer, title and registration,
             indemnity and insurance contained in Articles 8, 14, 17 and 18,
             respectively, or with respect to Article 20.2.8, the term "LESSOR"
             will be deemed to include LESSOR's Assignee and LESSOR's Lender, if
             applicable. For avoidance of doubt, in the event of LESSOR's sale
             or financing of the Aircraft, the disclaimer and indemnity
             provisions contained in Articles 8 and 17 will continue to be
             applicable after the sale or assignment to International Lease
             Finance Corporation, as well as being applicable to LESSOR's
             Assignee and LESSOR's Lender.

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                                   ARTICLE 25
                                DEFAULT OF LESSEE

25.1  LESSEE NOTICE TO LESSOR. LESSEE will promptly notify LESSOR if LESSEE
becomes aware of the occurrence of any Default or Event of Default.

25.2  EVENTS OF DEFAULT. The occurrence of any of the following will constitute
an Event of Default and material breach of this Lease by LESSEE:

      (a) LESSEE fails to take delivery of the Aircraft when obligated to do so
      under the terms of this Lease;

      (b) LESSEE fails to make a Rent or other scheduled payment due hereunder
      in the manner and by the date provided herein and fails to make such
      payment within three (3) Business Days after the date such payment is due;

      (c) LESSEE fails to obtain or maintain the insurance required by Article
      18;

      (d) LESSEE fails to return the Aircraft to LESSOR on the Expiration Date
      in accordance with Article 23;

      (e) LESSEE fails to observe or perform any of its other obligations
      hereunder and fails to cure the same within thirty (30) days after written
      notice thereof to LESSEE. If such failure cannot by its nature be cured
      within thirty (30) days, LESSEE will have the reasonable number of days
      necessary to cure such failure (not to exceed a period of ninety (90)
      days) so long as it uses diligent efforts to do so;

      (f) any representation or warranty of LESSEE herein proves to be untrue in
      any material respect and if the effect of such misrepresentation is
      curable, will not have been cured within thirty (30) days after LESSEE
      learns of such misrepresentation including by written notice from LESSOR;

      (g) the registration of the Aircraft is cancelled other than as a result
      of an act or omission of LESSOR;

      (h) LESSEE abandons the Aircraft or Engines;

      (i) LESSEE temporarily discontinues (in the absence of other Defaults) or
      permanently discontinues business or sells or otherwise disposes of all or
      substantially all of its assets other than as permitted hereunder;

      (j) a material adverse change occurs in the financial condition of LESSEE
      which effects LESSEE's ability to perform its obligations hereunder;

      (k) LESSEE no longer possesses the licenses, certificates and permits
      required for the conduct of its business as a certificated air carrier in
      Panama and the failure to possess the same is not cured within sixty (60)
      days;

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      (l) LESSEE (i) suspends payment on its debts or other material
      obligations, (ii) is unable to or admits its inability to pay its debts or
      other material obligations as they fall due, (iii) is adjudicated or
      becomes bankrupt or insolvent or (iv) proposes or enters into any
      composition or other arrangement for the benefit of its creditors
      generally;

      (m) any proceedings, resolutions, filings or other steps are instituted or
      threatened with respect to LESSEE relating to the bankruptcy, liquidation,
      reorganization or protection from creditors of LESSEE or a substantial
      part of LESSEE's property. If instituted by LESSEE, the same will be an
      immediate Event of Default. If instituted by another Person, the same will
      be an Event of Default if not dismissed, remedied or relinquished within
      sixty (60) days;

      (n) any order, judgment or decree is entered by any court of competent
      jurisdiction appointing a receiver, trustee or liquidator of LESSEE or a
      substantial part of its property, or if a substantial part of LESSEE's
      property is to be sequestered. If instituted by or done with the consent
      of LESSEE, the same will be an immediate Event of Default. If instituted
      by another Person, the same will be an Event of Default if not dismissed,
      remedied or relinquished within sixty (60) days;

      (o) any indebtedness for borrowed moneys or a guarantee or similar
      obligation owed by LESSEE with an unpaid balance of at least **Material
      Redacted** is properly declared due before its stated maturity or LESSEE
      is properly in default beyond any applicable grace period under any
      agreement pursuant to which LESSEE has the right to possess and operate
      any aircraft; or

      (p) LESSEE is in default under any other lease or agreement between LESSEE
      and LESSOR and the same is not cured within its specified cure period.

25.3  LESSOR'S GENERAL RIGHTS. Upon the occurrence of any Event of Default,
LESSOR may do all or any of the following at its option (in addition to such
other rights and remedies which LESSOR may have by statute or otherwise but
subject to any requirements of applicable Law):

      (a) terminate this Lease by giving written notice to LESSEE;

      (b) require that LESSEE immediately cease flying the Aircraft and leave it
      parked in its then-current location by giving written notice to LESSEE, in
      which case LESSEE's obligations under this Lease will continue (including
      the obligations set forth in Articles 17 and 18);

      (c) require that LESSEE immediately move the Aircraft to an airport or
      other location designated by LESSOR and park the Aircraft there by giving
      written notice to LESSEE, in which case LESSEE's obligations under this
      Lease will continue (including the obligations set forth in Articles 17
      and 18);

      (d) take possession of the Aircraft. If LESSOR takes possession of the
      Aircraft, it may enter upon LESSEE's premises where the Aircraft is
      located without liability.

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      Upon repossession of the Aircraft, LESSOR will then be entitled to sell,
      lease or otherwise deal with the Aircraft as if this Lease had never been
      made. LESSOR will be entitled to the full benefit of its bargain with
      LESSEE;

      (e) for LESSEE's account, do anything that may reasonably be required to
      cure any default and recover from LESSEE all reasonable costs, including
      legal fees and expenses incurred in doing so and Default Interest;

      (f) proceed as appropriate to enforce performance of this Lease and to
      recover any damages for the breach hereof, including the amounts specified
      in Article 25.5; or

      (g) apply all or any portion of the Security Deposit and any other
      security deposits held by LESSOR pursuant to any other agreements between
      LESSOR and LESSEE to any amounts due.

25.4  DEREGISTRATION AND EXPORT OF AIRCRAFT. If an Event of Default has occurred
and is continuing, LESSOR may take all steps necessary to deregister the
Aircraft in and export the Aircraft from the State of Registration.

25.5  LESSEE LIABILITY FOR DAMAGES. If an Event of Default occurs, in addition
to all other remedies available at law or in equity, LESSOR has the right to
recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days
after LESSOR's written demand, all of the following:

      (a) all amounts which are then due and unpaid hereunder and which become
      due prior to the earlier of LESSOR's recovery of possession of the
      Aircraft or LESSEE making an effective tender thereof;

      (b) any losses suffered by LESSOR because of LESSOR's inability to place
      the Aircraft on lease with another lessee or to otherwise utilize the
      Aircraft on financial terms as favorable to LESSOR as the terms hereof or,
      if LESSOR elects to dispose of the Aircraft, the funds arising from a sale
      or other disposition of the Aircraft are not as profitable to LESSOR as
      leasing the Aircraft in accordance with the terms hereof would have been
      (and LESSOR will be entitled to accelerate any and all Rent which would
      have been due from the date of LESSOR's recovery or repossession of the
      Aircraft through the Expiration Date) which rent shall be discounted to
      present value less any amounts (i) in respect of a lease, which over its
      term shall be received by LESSOR discounted to present value as set forth
      above or (ii) in the case of a sale or other disposition, the amounts
      which were received by LESSOR is a result of such sale or other
      disposition (or if not relet or sold, less an amount equal to the fair
      market rental value of the aircraft for the balance of the Lease Term
      determined by an independent appraiser acceptable to LESSOR and LESSEE or
      chosen by a court);

      (c) all costs, associated with LESSOR's exercise of its remedies
      hereunder, including but not limited to repossession costs, legal fees,
      Aircraft storage costs, Aircraft re-lease or sale costs;

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      (d) any amount of principal, interest, fees or other sums paid or payable
      on account of funds borrowed in order to carry any unpaid amount;

      (e) any loss, premium, penalty or expense which may be incurred in
      repaying funds raised to finance the Aircraft or in unwinding any
      financial instrument relating in whole or in part to LESSOR's financing of
      the Aircraft;

      (f) any loss, cost, expense or liability sustained by LESSOR due to
      LESSEE's failure to redeliver the Aircraft in the condition required by
      this Lease; and

      (g) any other loss, damage, expense, cost or liability which LESSOR
      suffers or incurs as a direct result of the Event of Default and/or
      termination of this Lease, including (but without duplication of amounts
      due and payable pursuant to (f) above) an amount sufficient to compensate
      LESSOR for any loss of LESSOR's residual interest in the Aircraft caused
      by LESSEE's default.

25.6  WAIVER OF DEFAULT. By written notice to LESSEE, LESSOR may at its election
waive any Default or Event of Default and its consequences and rescind and annul
any prior notice of termination of this Lease. The respective rights of the
parties will then be as they would have been had no Default or Event of Default
occurred and no such notice been given.

25.7  PRESENT VALUE OF PAYMENTS. In calculating LESSOR's damages hereunder, upon
an Event of Default all Rent and other amounts which would have been due
hereunder during the Lease Term if an Event of Default had not occurred will be
calculated on a present value basis using a discounting rate of **Material
Redacted** per annum discounted to the earlier of the date on which LESSOR
obtains possession of the Aircraft or LESSEE makes an effective tender thereof.

25.8  USE OF "TERMINATION DATE". For avoidance of doubt, it is agreed that if
this Lease terminates and the Aircraft is repossessed by LESSOR due to an Event
of Default, then, notwithstanding the use of the term "Termination Date" in this
Lease, the period of the Lease Term and the "Expiration Date" will be utilized
in calculating the damages to which LESSOR is entitled pursuant to Article 25.5.
For example, it is agreed and understood that LESSOR is entitled to receive from
LESSEE the Rent and the benefit of LESSEE's insurance and maintenance of the
Aircraft until expiration of the Lease Term.

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                                   ARTICLE 26
                                     NOTICES

26.1  MANNER OF SENDING NOTICES. Any notice, request or information required or
permissible under this Lease will be in writing and in English. Notices will be
delivered in person or sent by fax, letter (mailed airmail, certified and return
receipt requested), or by expedited delivery addressed to the parties as set
forth in Article 26.2. In the case of a fax, notice will be deemed received on
the date set forth on the confirmation of receipt produced by the sender's fax
machine immediately after the fax is sent. In the case of a mailed letter,
notice will be deemed received upon actual receipt. In the case of a notice sent
by expedited delivery, notice will be deemed received on the date of delivery
set forth in the records of the Person which accomplished the delivery. If any
notice is sent by more than one of the above listed methods, notice will be
deemed received on the earliest possible date in accordance with the above
provisions.

26.2  NOTICE INFORMATION.  Notices will be sent:

If to LESSOR:      INTERNATIONAL LEASE FINANCE CORPORATION
                   Until February 28, 2004:
                   1999 Avenue of the Stars, 39th Floor
                   Los Angeles, California 90067, U.S.A.
                   On and after March 1, 2004:
                   10250 Constellation Boulevard, 34th Floor
                   Los Angeles, California 90067, U.S.A.
                   Attention: Legal Department
                   Fax:       310-788-1990
                   Telephone: 310-788-1999

If to LESSEE:      COMPANIA PANAMENDA DE AVIACION S.A. (COPA)
                   Avenida Justo Arosemena y Calle 39
                   Apartado 1572
                   Panama 1, Panama
                   Attention: Chief Executive Officer
                   Fax:       507-227-1952
                   Telephone: 570-207-6170

            or to such other places and numbers as either party directs in
writing to the other party.

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                                   ARTICLE 27
                         GOVERNING LAW AND JURISDICTION

27.1  CALIFORNIA LAW. This Lease is being delivered in the State of California
and the Lease and all other Operative Documents will in all respects be governed
by and construed in accordance with the Laws of the State of California
(notwithstanding the conflict Laws of the State of California).

27.2  NON-EXCLUSIVE JURISDICTION IN CALIFORNIA. As permitted by Section 410.40
of the California Code of Civil Procedure, the parties hereby irrevocably submit
to the non-exclusive jurisdiction of the Federal District Court for the Central
District of California and the State of California Superior or Municipal Court
in Los Angeles, California. Nothing herein will prevent either party from
bringing suit in any other appropriate jurisdiction.

27.3  SERVICE OF PROCESS. The parties hereby consent to the service of process
(a) in the manner directed by any of the courts referred to above, (b) in
accordance with Section 415.40 of the California Code of Civil Procedure by
mailing copies of the summons and complaint to the person to be served by
first-class mail to the address set forth in Article 26.2, postage prepaid,
return receipt requested, (c) in one of the manners specified in Article 26.1 or
(d) in accordance with the Hague Convention, if applicable.

27.4  PREVAILING PARTY IN DISPUTE. If any legal action or other proceeding is
brought in connection with or arises out of any provisions in this Lease, the
prevailing party will be entitled to recover reasonable attorneys' fees and
other costs incurred in such action or proceedings. The prevailing party will
also, to the extent permissible by Law, be entitled to receive pre- and post-
judgment Default Interest.

27.5  WAIVER. EACH OF LESSEE AND LESSOR HEREBY WAIVES THE RIGHT TO A TRIAL BY
JURY. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
EITHER OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN ANY OF
THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVES
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.

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                                   ARTICLE 28
                                  MISCELLANEOUS

28.1  PRESS RELEASES. The parties will give copies to one another, in advance
if possible, of all news, articles and other releases provided to the public
media regarding this Lease or the Aircraft.

28.2  POWER OF ATTORNEY. LESSEE hereby irrevocably appoints LESSOR as its
attorney for the purpose of putting into effect the intent of this Lease
following an Event of Default, including without limitation, the return,
repossession, deregistration and exportation of the Aircraft. To evidence this
appointment, LESSEE has executed the Power of Attorney in the form of Exhibit G.
LESSEE will take all steps required under the Laws of the State of Registration
to provide such power of attorney to LESSOR.

28.3  LESSOR PERFORMANCE FOR LESSEE. The exercise by LESSOR of its remedy of
performing a LESSEE obligation hereunder is not a waiver of and will not relieve
LESSEE from the performance of such obligation at any subsequent time or from
the performance of any of its other obligations hereunder.

28.4  LESSOR'S PAYMENT OBLIGATIONS. Any obligation of LESSOR under this Lease to
pay or release any amount to LESSEE is conditioned upon (a) all amounts then due
and payable by LESSEE to LESSOR under this Lease or under any other agreement
between LESSOR and LESSEE having been paid in full and (b) no Default or Event
of Default having occurred and continuing hereunder at the time such payment or
release of payment is payable to LESSEE.

28.5  APPLICATION OF PAYMENTS. Any amounts paid or recovered in respect of
LESSEE liabilities hereunder may be applied to Rent, Default Interest, fees or
any other amount due hereunder in such proportions, order and manner as LESSOR
determines.

28.6  USURY LAWS. The parties intend to contract in strict compliance with the
usury Laws of the State of California and, to the extent applicable, the U.S.
Notwithstanding anything to the contrary in the Operative Documents, LESSEE will
not be obligated to pay Default Interest or other interest in excess of the
maximum non-usurious interest rate, as in effect from time to time, which may by
applicable Law be charged, contracted for, reserved, received or collected by
LESSOR in connection with the Operative Documents. During any period of time in
which the then-applicable highest lawful rate is lower than the Default Interest
rate, Default Interest will accrue and be payable at such highest lawful rate;
however, if at later times such highest lawful rate is greater than the Default
Interest rate, then LESSEE will pay Default Interest at the highest lawful rate
until the Default Interest which is paid by LESSEE equals the amount of interest
that would have been payable in accordance with the interest rate set forth in
Article 5.7.

28.7  DELEGATION OF AUTHORITY BY LESSOR. LESSOR may delegate to any Person(s)
all or any of its authority to perform or exercise powers or discretion vested
in it by this Lease according to the terms of the Lease in LESSOR's reasonable
discretion.

28.8  CONFIDENTIALITY. The Operative Documents and all non-public information
(including financial information obtained pursuant to Article 22) obtained by
either party about the other are confidential and are between LESSOR and LESSEE
only and will not be disclosed

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<PAGE>

by a party to third parties (other than to such party's auditors or legal
advisors; as required in connection with any filings of this Lease in accordance
with Article 14; in connection with LESSOR's potential sale of the Aircraft or
assignment of this Lease; as required for enforcement by either party of its
rights and remedies with respect to this Lease or as required by applicable Law
including Tax law; or to a LESSOR's Lender which agrees in writing to be bound
by the terms of this Article 28.8 or similar confidentiality provisions) without
the prior written consent of the other party. If any disclosure will result in
an Operative Document becoming publicly available, LESSEE and LESSOR will
cooperate with one another to obtain confidential treatment as to the commercial
terms and other material provisions of such Operative Document.

28.9  RIGHTS OF PARTIES. The rights of the parties hereunder are cumulative, not
exclusive, may be exercised as often as each party considers appropriate and are
in addition to its rights under general Law. The rights of one party against the
other party are not capable of being waived or amended except by an express
waiver or amendment in writing. Any failure to exercise or any delay in
exercising any of such rights will not operate as a waiver or amendment of that
or any other such right. Any defective or partial exercise of any such rights
will not preclude any other or further exercise of that or any other such right
and no act or course of conduct or negotiation on a party's part or on its
behalf will in any way preclude such party from exercising any such right or
constitute a suspension or any amendment of any such right.

28.10 FURTHER ASSURANCES. Each party agrees from time to time to do and perform
such other and further acts and execute and deliver any and all such other
instruments as may be required by Law, reasonably requested by the auditors of
the other party or requested by the other party to establish, maintain or
protect the rights and remedies of the requesting party or to carry out and
effect the intent and purpose of this Lease.

28.11 TRANSLATIONS OF LEASE. If this Lease is translated into another language,
whether or not signed by LESSEE and LESSOR in such other language, solely the
terms and provisions of this English version of the Lease will prevail in any
dispute.

28.12 USE OF WORD "INCLUDING". The term "INCLUDING" is used herein without
limitation.

28.13 HEADINGS. All article and paragraph headings and captions are purely for
convenience and will not affect the interpretation of this Lease. Any reference
to a specific article, paragraph or section will be interpreted as a reference
to such article, paragraph or section of this Lease.

28.14 INVALIDITY OF ANY PROVISION. If any of the provisions of this Lease become
invalid, illegal or unenforceable in any respect under any Law, the validity,
legality and enforceability of the remaining provisions will not in any way be
affected or impaired.

28.15 NEGOTIATION. The terms of this Lease are agreed by LESSOR from its
principal place of business in Los Angeles, California.

28.16 TIME IS OF THE ESSENCE. Time is of the essence in the performance of all
obligations of the parties under this Lease and, consequently, all time
limitations set forth in the provisions of this Lease will be strictly observed.

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<PAGE>

28.17 AMENDMENTS IN WRITING. The provisions of this Lease may only be amended or
modified by a writing executed by LESSOR and LESSEE.

28.18 COUNTERPARTS. This Lease may be executed in any number of identical
counterparts, each of which will be deemed to be an original, and all of which
together will be deemed to be one and the same instrument when each party has
signed and delivered one such counterpart to the other party.

28.19 DELIVERY OF DOCUMENTS BY FAX. Delivery of an executed counterpart of this
Lease or of any other documents in connection with this Lease by fax will be
deemed as effective as delivery of an originally executed counterpart. Any party
delivering an executed counterpart of this Lease or other document by fax will
also deliver an originally executed counterpart, but the failure of any party to
deliver an originally executed counterpart of this Lease or such other document
will not affect the validity or effectiveness of this Lease or such other
document.

28.20 ENTIRE AGREEMENT. The Operative Documents constitute the entire agreement
between the parties in relation to the leasing of the Aircraft by LESSOR to
LESSEE and supersede all previous proposals, agreements and other written and
oral communications in relation hereto. The parties acknowledge that there have
been no representations, warranties, promises, guarantees or agreements, express
or implied, except as set forth herein.

28.21 **Material Redacted**.

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<PAGE>

      IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be
executed by their respective officers as of November 30, 2003.

INTERNATIONAL LEASE FINANCE             COMPANIA PANAMENA DE AVIACION,
CORPORATION                             S.A. (COPA)

By: /s/ David R. De Mars                By: /s/ Pedro Heilbron
    ------------------------------          ---------------------------

Its: Assistant Vice President           Its:   CEO

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