UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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

                                    FORM 10-Q

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


           X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          ---            SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2002

                                       OR

              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          ---            SECURITIES EXCHANGE ACT OF 1934

               For the transition period from _______ to ________


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

                          Commission File No. 333-82153

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


                             AIRCRAFT FINANCE TRUST
                             ----------------------
             (Exact name of registrant as specified in its charter)

                                   51-6512392
                        (IRS Employer Identification No.)

                                    DELAWARE
         (State or other jurisdiction of incorporation or organization)

    1100 North Market Street, Rodney Square North, Wilmington, Delaware 19890
                                 (302) 651-1000
          (Address and telephone number of principal executive offices)




Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                          Yes  X                  No
                              ---                    ---

                      This document consists of 25 pages.
<PAGE>

                             Aircraft Finance Trust

            FORM 10-Q - For the Quarterly Period Ended June 30, 2002




                                      INDEX



Part I.       Financial Information                                         Page

         Item 1.      Financial Statements

               a)     Consolidated Balance Sheets - June 30, 2002 and
                      December 31, 2001........................................3

               b)     Consolidated Statements of (Loss) Income - Three
                      and Six Months Ended June 30, 2002 and June 30, 2001.....4

               c)     Consolidated Statements of Changes in Beneficial
                      Interest Holders' Deficit - Six Months Ended
                      June 30, 2002 and Year Ended December 31, 2001...........5

               d)     Consolidated Statements of Cash Flows - Six Months
                      Ended June 30, 2002 and June 30, 2001....................6

               e)     Notes to Consolidated Financial Statements...............7

         Item 2.      Management's Discussion and Analysis of
                      Financial Condition and Results of Operations............9

         Item 3.      Quantitative and Qualitative Disclosures about
                      Market Risk.............................................17


Part II.      Other Information

         Item 6.      Exhibits and Reports on Form 8-K........................19

         Signatures   ........................................................20


                                       2
<PAGE>


                          Part I. Financial Information
                          -----------------------------

Item 1.       Financial Statements


                     Aircraft Finance Trust and Subsidiaries
                           Consolidated Balance Sheets
                                   (unaudited)
                             (dollars in thousands)

                                                        June 30,    December 31,
                                                          2002          2001
                                                        --------    ------------
                                     Assets

Cash and cash equivalents                             $    77,601   $    76,729
Restricted cash                                            10,781        10,895
Receivables and other assets                                8,580         7,156
Aircraft, net                                           1,022,304     1,041,199
                                                      -----------   -----------

     Total assets                                     $ 1,119,266   $ 1,135,979
                                                      ===========   ===========

              Liabilities and Beneficial Interest Holders' Deficit

Accounts payable and accrued liabilities              $     6,091   $     4,293
Deferred rental income                                      4,275         5,629
Derivative contracts                                       31,438        32,691
Security and other deposits                                42,889        43,346
Notes payable:
     Class A-1                                            512,500       512,500
     Class A-2                                            263,914       271,171
     Class B                                              119,096       119,096
     Class C                                              100,502       106,000
     Class D                                               63,859        64,000
                                                      -----------   -----------
     Total notes payable                                1,059,871     1,072,767
                                                      -----------   -----------

     Total liabilities                                  1,144,564     1,158,726
                                                      -----------   -----------

Beneficial interest holders' deficit:
     Beneficial interest                                    6,140         9,944
     Accumulated other comprehensive loss                 (31,438)      (32,691)
                                                      -----------   -----------

     Total beneficial interest holders' deficit           (25,298)      (22,747)
                                                      -----------   -----------

     Total liabilities and beneficial interest
       holders' deficit                               $ 1,119,266   $ 1,135,979
                                                      ===========   ===========

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

                                       3
<PAGE>


                     Aircraft Finance Trust and Subsidiaries
                    Consolidated Statements of (Loss) Income
                                   (unaudited)
                             (dollars in thousands)




                                      Three Months Ended      Six Months Ended
                                           June 30,               June 30,
                                       2002         2001      2002        2001
                                     --------    --------   --------    --------
Revenues:
   Rental and other income
      from operating leases          $ 30,553    $ 36,112   $ 61,083    $ 72,517
   Interest income                        427         957        814       2,246
                                     --------    --------   --------    --------

      Total revenues                   30,980      37,069     61,897      74,763
                                     --------    --------   --------    --------

Expenses:
   Interest expense                    16,818      18,361     33,868      37,239
   Depreciation expense                10,542      11,089     20,986      22,066
   Operating expense                    4,537       4,567      7,870       9,047
   Administration and other             1,463       1,514      2,977       2,986
                                     --------    --------   --------    --------

      Total expenses                   33,360      35,531     65,701      71,338
                                     --------    --------   --------    --------

Net (Loss) Income                    $ (2,380)   $  1,538   $ (3,804)   $  3,425
                                     ========    ========   ========    ========

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

                                       4
<PAGE>

                     Aircraft Finance Trust and Subsidiaries
    Consolidated Statement of Changes in Beneficial Interest Holders' Deficit
                                   (unaudited)
                             (dollars in thousands)


                                          Accumulated
                                      Other Comprehensive   Beneficial
                                          Income (Loss)      Interest    Total
                                          -------------      --------    -----


Balance at December 31, 2001                $(32,691)       $  9,944   $(22,747)

   Comprehensive income:

   Net loss                                     --            (3,804)    (3,804)

   Other comprehensive income:
   Changes in derivative instruments
     Changes in fair value of
     derivatives                               1,253            --        1,253
                                            --------        --------   --------

Total comprehensive income                                               (2,551)
                                                                       --------

Balance at June 30, 2002                    $(31,438)       $  6,140   $(25,298)
                                            ========        ========   ========

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


                                       5
<PAGE>

                     Aircraft Finance Trust and Subsidiaries
                      Consolidated Statements of Cash Flows
                                   (unaudited)
                             (dollars in thousands)

                                                     Six Months     Six Months
                                                        Ended          Ended
                                                    June 30, 2002  June 30, 2001

Cash Flows from Operating Activities:
Net (loss) income                                     $ (3,804)      $  3,425
Adjustments to reconcile net (loss) income to
     net cash provided by operating activities:
     Depreciation expense                               20,986         22,066
Changes in assets and liabilities:
     Receivables and other assets                       (1,424)          (489)
     Restricted cash                                       114             34
     Accounts payable and accrued liabilities              897         (1,205)
     Deferred rental income                             (1,354)          (513)
     Security and other deposits                          (457)         5,508
                                                      --------       --------

     Net cash provided by operating activities          14,958         28,826
                                                      --------       --------

Cash Flows from Investing Activities:
Aircraft improvements                                   (1,190)        (2,254)
                                                      --------       --------

     Net cash used in investing activities              (1,190)        (2,254)
                                                      --------       --------

Cash Flows from Financing Activities:
Repayment of notes payable                             (12,896)       (32,629)
                                                      --------       --------

     Net cash used in financing activities             (12,896)       (32,629)
                                                      --------       --------

Net Increase (Decrease) in Cash and Cash
  Equivalents                                              872         (6,057)

Cash and Cash Equivalents at Beginning of
  Period                                                76,729         76,658
                                                      --------       --------

Cash and Cash Equivalents at End of Period            $ 77,601       $ 70,601
                                                      ========       ========

Supplemental Cash Flow Information:
     Cash paid for interest expense                   $ 34,109       $ 37,512
                                                      ========       ========

     Non-Cash Investing Activities:
         Aircraft improvements accrued but not
         paid                                         $    901       $   --
                                                      ========       ========

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

                                       6
<PAGE>


                     Aircraft Finance Trust and Subsidiaries
                   Notes to Consolidated Financial Statements
                                   (unaudited)

                                  June 30, 2002


Note 1 - Organization

         Aircraft  Finance Trust is a special purpose  statutory  business trust
that was formed on April 13, 1999 under the laws of Delaware.  Aircraft  Finance
Trust and its three subsidiaries  (collectively  "Aircraft Finance") were formed
to conduct certain limited activities,  including buying,  owning,  leasing, and
selling commercial jet aircraft and related activities.

         On May 5, 1999, Aircraft Finance completed a securitization transaction
in which it received  proceeds  from a private  placement  offering of notes and
from the issuance of beneficial  interest  certificates and simultaneously  paid
for the acquisition of 36 commercial jet aircraft.


Note 2 - Basis of Presentation

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America and the rules and  regulations  of the  Securities  and
Exchange Commission for interim financial statements. Accordingly, these interim
statements do not include all of the information  and  disclosures  required for
annual  financial  statements.  In the opinion of  management,  all  adjustments
(consisting  solely of adjustments of a normal recurring nature) necessary for a
fair presentation of these interim results have been included.  All intercompany
accounts  and  transactions  have been  eliminated.  The results for the interim
periods are not  necessarily  indicative of the results that may be expected for
the year ended December 31, 2002. Certain financial  statement items in the 2001
Period have been reclassified to conform to the 2002 Period presentation.

         These interim  unaudited  consolidated  financial  statements should be
read in conjunction with Aircraft Finance's  consolidated  financial  statements
and  accompanying  notes included in the Annual Report on Form 10-K for the year
ended December 31, 2001 filed with the Securities and Exchange Commission.

Use of Estimates

         The  preparation of financial  statements in conformity with accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities  and disclosures of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during  the  reporting  period.  While  management  believes  that the
estimates and related  assumptions  used in the preparation of the  consolidated
financial  statements  are  appropriate,  actual results could differ from those
estimates.   Significant   estimates   are  made  in  the   assessment   of  the
collectibility of receivables, depreciable lives and estimated salvage values of
leased  aircraft and  estimates of expected  maintenance  and overhaul  costs in
connection with certain leases of aircraft.

                                       7
<PAGE>


Note 3 - Risks and Uncertainties

         On  September  11,  2001,  terrorists  hijacked and crashed four United
States commercial  aircraft,  with attendant  significant loss of life, property
damage  and  economic   disruption.   Any  additional   terrorist  attacks,  the
anti-terrorist  activity in Afghanistan  and  throughout the world,  any further
military or economic  responses by the United  States,  including any changes to
the United States aircraft industry by way of law, regulation or otherwise,  may
increase  airline costs or cause declines in air travel  demand.  In addition to
the  September  11,  2001  events,  the  decline  in the  United  States and the
worldwide economy has adversely  affected both Aircraft Finance and its lessees.
Aircraft Finance's lessees' revenues and expenses are also likely to be affected
by the lessees'  ability to operate in the current  competitive  environment and
worsening  economic  conditions.  These and other  factors have led to increased
bankruptcies and  consolidations of airlines.  Higher costs (including,  but not
limited to, increased costs for security measures,  insurance premiums and fuel)
are expected to adversely impact airlines' financial position as well.

         There is much  uncertainty  with  respect  to the short to medium  term
future prospects of the world aviation industry  following the preexisting world
economic  downturn,  which was exacerbated by the terrorist attacks of September
11, 2001. It cannot be  determined  when, or if, the United States and the world
aviation  industry  and the  overall  economy in both the United  States and the
world will  improve.  These  conditions  have  affected  the ability of Aircraft
Finance's   lessees  to  comply  with  the  terms  of  their   leases,   causing
restructuring of lease  agreements.  Such  restructurings  have included reduced
rental rates, deferred payments or early returns of aircraft.  These events have
also  contributed  to an excess  of  aircraft  in the  market  place,  which has
resulted in a significant number of aircraft being parked. These excess aircraft
impact the market by causing  decreases in the market value of the  aircraft,  a
more competitive  leasing market,  reductions in lease rates,  increased storage
costs and increased downtime. These events have impaired the ability of Aircraft
Finance to re-lease  aircraft on a timely basis and at  favorable  rates and may
reduce the value of the aircraft for possible  sale.  All of these  factors have
had and  will  likely  continue  to have an  adverse  effect  on the  cash  flow
generated from Aircraft Finance's  aircraft.  Such reductions in cash flows will
have a negative impact on the amount and timing of payments that will be made by
Aircraft Finance on the Notes.  There can be no assurances as to if and when the
aircraft leasing market,  and subsequently cash flows to Aircraft Finance,  will
improve.


Note 4 - Derivative Financial Instruments

Interest Rate Swap Agreements

         As of June 30, 2002, Aircraft Finance was a party to five interest rate
swap  agreements.  Three  were  entered  into on May 5, 1999 and two on July 15,
2000. The total aggregate gross notional principal amount of these interest rate
swaps is $785 million at June 30, 2002.  Under the agreements,  Aircraft Finance
will pay a fixed rate of interest  on the  notional  amount to the  counterparty
and, in turn, the  counterparty  will pay Aircraft Finance a rate of interest on
the notional amount based on LIBOR. The one-month LIBOR rate with respect to the
Swaps (and the Notes) was 1.84% as of June 30, 2002 and 1.90% as of December 31,
2001.  On June 30,  2002,  the  fair  value of these  interest  rate  swaps  was
approximately  ($31.4) million compared to ($32.7) million on December 31, 2001.
Due to the potential  volatility of LIBOR, the fair value of Aircraft  Finance's
interest rate swap agreements is also subject to volatility.  The change in fair
value of the interest rate swaps was due to changes in market  interest rates as
well as the expiration of two swap agreements,  as discussed below.  This change
was recorded in other comprehensive  income in the equity section of the balance
sheet.

                                       8
<PAGE>


         Two of Aircraft  Finance's swap agreements expired on January 15, 2002.
The notional amounts of these two swap agreements totaled $80 million.

         The  following  table  presents,  as of June 30, 2002, a summary of the
terms  of  Aircraft  Finance's  interest  rate  swap  agreements:   (dollars  in
thousands)

  Fixed      Rate to be        Rate to be
Notional  paid by Aircraft    received by           Maturity         Estimated
 Amount        Finance      Aircraft Finance          Date          fair value
 ------        -------      ----------------          ----          ----------
$175,000        5.56%            LIBOR            October 15, 2002   $ (2,106)
 345,000        5.65%            LIBOR            January 15, 2004    (15,352)
 230,000        5.71%            LIBOR           November 15, 2004    (12,183)
  20,000        7.14%            LIBOR            October 15, 2002       (352)
  15,000        7.17%            LIBOR                May 15, 2005     (1,445)
                                                                     --------
                                                                     $(31,438)
                                                                     ========


Note 5 - Restructured Leases

         During the six months  ended June 30,  2002 ("2002  Period"),  Aircraft
Finance entered into restructuring  agreements for six aircraft.  Because of the
nature  of  restructuring  and as  permitted  by SFAS No.  13:  "Accounting  for
Leases",  the effect of the restructuring was accounted for  prospectively.  The
effect on the 2002 Period  revenue due to the  restructurings  was a decrease of
$2.8 million compared to revenue had the restructurings not occurred.


Note 6 - Subsequent Events

         On July 30, 2002 Donald G. Butler,  Equity Trustee of Aircraft  Finance
resigned effective August 30, 2002. A majority (by percentage) of the registered
holders of the residual interest of Aircraft Finance appointed Andrew Dickson as
the new Equity Trustee effective August 31, 2002.


Item 2.       Management's  Discussion  and Analysis of Financial  Condition and
              Results of Operations

         On May 5, 1999,  Aircraft Finance issued $1,209 million of Asset Backed
Notes (the  "Initial  Notes").  The Initial  Notes were issued in five  classes:
Class A-1,  Class  A-2,  Class B,  Class C and Class D. The  Initial  Notes were
issued  simultaneously  with the  execution of an agreement  for the sale of the
beneficial  interest of Aircraft  Finance  for $39 million and an  agreement  to
acquire 36  commercial  jet  aircraft for $1,196  million.  On January 20, 2000,
Aircraft  Finance  completed an exchange offer whereby  Aircraft  Finance issued
four  classes  of new notes (the  "Exchange  Notes")  in  exchange  for the four
corresponding  classes of the Initial Notes. The terms of the Exchange Notes are
identical  in all  material  respects  to the  Initial  Notes,  except  that the
Exchange Notes are registered under the Securities Act of 1933, as amended.  The
Class D Notes remain  unchanged.  $3 million of the Class A-2 Initial  Notes was
not tendered in the exchange offer and remain outstanding.


                                       9
<PAGE>

         Aircraft  Finance  is a special  purpose  entity  which  owns  aircraft
subject to operating leases.  Aircraft  Finance's  business consists of aircraft
leasing  activities.  Aircraft  Finance  may  also  engage  in  acquisitions  of
additional  aircraft  and sales of  aircraft.  Any  acquisitions  of  additional
aircraft and the related issuance of additional notes will require  confirmation
by the rating  agencies  that they will not lower,  qualify  or  withdraw  their
ratings on the outstanding Notes as a result.  Aircraft Finance's aggregate cash
flows from such activities will be used to service the interest and principal on
the  outstanding  Notes and to make  distributions  of remaining  amounts to the
holders of the beneficial interest  certificates,  after the payment of expenses
incurred by Aircraft Finance.

         Aircraft  Finance's  ability  to  generate  sufficient  cash  from  its
aircraft  assets to service the outstanding  Notes will depend  primarily on the
rental rates it can achieve on leases, the lessees' ability to perform according
to the terms of the leases and the prices it can achieve on any aircraft  sales.
Aircraft  Finance's ability to service the outstanding Notes will also depend on
the  level of  Aircraft  Finance's  operating  expenses,  including  maintenance
obligations  that  are  expected  to  increase  as the  aircraft  age,  and  any
unforeseen  liabilities.  In  particular,  the timing and amount of  maintenance
related  expenditures  by Aircraft  Finance is expected  to  fluctuate,  and may
fluctuate  significantly,  from period to period.  Such fluctuations will affect
the amount and timing of payments  that will be paid by Aircraft  Finance on the
Notes. The indenture governing the Notes requires that Aircraft Finance maintain
a cash  reserve  balance on  deposit  in its  collections  account  and  permits
Aircraft Finance to establish a credit facility, in order to provide a source of
liquidity for Aircraft Finance's obligations.

         Any statements  contained herein that are not historical facts, or that
might be considered an opinion or projection,  whether expressed or implied, are
meant as, and should be considered,  forward-looking  statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on assumptions  and opinions  concerning a variety of known
and  unknown  risks.  If  any  assumptions  or  opinions  prove  incorrect,  any
forward-looking  statements  made  on  that  basis  may  also  prove  materially
incorrect.  Aircraft Finance assumes no obligation to update any forward-looking
statements to reflect  actual  results or changes in the factors  affecting such
forward-looking statements.

Recent Developments

The Aircraft and Lessees

         In January 2002,  Aircraft  Finance  entered into a restructured  lease
agreement  with a lessee  based in the United  States with respect to a B737-300
aircraft to reduce the rents  starting  from January 2002 and give the lessor an
extension option for 31 months. This aircraft  represents  approximately 2.7% of
the aggregate appraised value at December 31, 2001.

         In  March  2002,  Aircraft  Finance  entered  into  restructured  lease
agreements with a lessee based in Brazil with respect to two B767-200ER aircraft
and one B737-300 aircraft.  These  restructured  agreements allow this lessee to
defer overdue rent payments and maintenance  reserves  retroactively  during the
period from and including June 26, 2001 to and including  October 26, 2001. This
deferral  is to be repaid  with  interest  over  eleven  months  from the period
beginning October 2001. Additionally,  the restructured agreements have caused a
reduction  in the  rents  starting  from  September  26,  2001 to the end of the
respective  lease terms and an extension  of such lease terms for 24 months.  In
June 2002, the B737-300 was  repossessed  from this lessee due to default.  This
aircraft is physically located in the United Kingdom and is currently undergoing
a  maintenance  event.  A Letter of Intent will be signed to terminate the lease
contract. In July 2002, a restructured agreement was signed to shorten the lease

                                       10
<PAGE>

term of the two B767-200ER  aircraft from an expiration date of February 2012 to
an expiration  date of November 2004.  The agreement  allows the lessor to apply
security deposits towards payment of the lessee's unpaid May, June and July 2002
rent  obligations.  These three  aircraft  represent  approximately  7.8% of the
aggregate appraised value at December 31, 2001.

         In March 2002,  Aircraft  Finance  entered  into a  restructured  lease
agreement  with a lessee based in Mexico with respect to one A320-200  aircraft.
This agreement  allows this lessee to defer rental payments during the period of
December 2001 to March 2002 to be repaid with interest over 24 months  beginning
April  2002.  This  aircraft  represents  approximately  2.6%  of the  aggregate
appraised value at December 31, 2001.

         In March 2002, the B737-300 aircraft formerly leased to British Midland
was  delivered  to a lessee based in the United  Kingdom for a five-year  lease.
This aircraft represents  approximately 2.5% of the aggregate appraised value at
December 31, 2001.

         In March  2002,  an early  termination  agreement  was  signed  for one
B737-400  aircraft with a lessee based in India. The lease  termination date was
amended  to March  2002.  Additionally,  in  April  2002,  an early  termination
agreement was signed for a second  B737-400  aircraft with the same lessee based
in India.  The lease  termination date was amended to April 2002. As part of the
redelivery   requirements  under  the  contract,   the  aircraft  are  currently
undergoing  a heavy  maintenance  event in the United  Kingdom.  In July 2002, a
Letter of Intent was signed with a lessee  based in  Indonesia  for a seven-year
lease of the two B737-400.  The lease has a lessee option to terminate the lease
after four years. These aircraft  represent  approximately 4.4% of the aggregate
appraised value at December 31, 2001.

         In April 2002, one B737-400 aircraft,  previously repossessed from City
Bird France, was delivered to a lessee based in Portugal for a three-year lease.
This aircraft represents  approximately 2.7% of the aggregate appraised value at
December 31, 2001.

         In April 2002,  Aircraft  Finance  entered  into a  restructured  lease
agreement with a lessee based in Ireland with respect to one B737-400  aircraft.
This agreement  allows this lessee to defer rental payments during the period of
November 2001 to February 2002 to be repaid with interest over 7 months starting
from June 2002.  This aircraft  represents  approximately  2.7% of the aggregate
appraised value at December 31, 2001.

         In May 2002,  a contract  was signed with a lessee based in Egypt for a
five-year  lease of one MD-83  aircraft,  which was  returned in May 2002 from a
lessee  based in Italy,  with an expected  delivery  date of August  2002.  This
aircraft  represents  approximately  1.8% of the  aggregate  appraised  value at
December 31, 2001.

         In May 2002, the lease of one DC-10-30  aircraft with a lessee based in
the United States expired.  This aircraft  represents  approximately 1.1% of the
aggregate  appraised  value at December 31, 2001 and is currently being prepared
for redelivery to the Trust.

         In May 2002,  a Letter of Intent was signed with a lessee  based in New
Zealand for a twelve-year lease of one B737-300 aircraft, which will be returned
in  October  2002  from a lessee  based in the  United  Kingdom.  This  aircraft
represents  approximately 2.6% of the aggregate  appraised value at December 31,
2001.

                                       11
<PAGE>


         In June  2002,  a Letter of Intent was  signed  with a lessee  based in
Norway for a three-year  lease of one  B737-300  aircraft  which was  previously
returned from a lessee based in Brazil. This aircraft  represents  approximately
2.5% of the aggregate appraised value at December 31, 2001.

         The restructuring events discussed above caused a reduction in Aircraft
Finance's  revenues by $2.8  million in the Period  ended June 30, 2002 and will
decrease Aircraft  Finance's  revenues in the future as well. Such reductions of
revenues,  restructurings,  or any similar future events could negatively impact
Aircraft  Finance's  ability to timely pay  scheduled  interest on certain  Note
classes  and/or to repay the  principal  of certain Note classes at the expected
maturity dates of those classes.

Current Market Conditions

         On  September  11,  2001,  terrorists  hijacked and crashed four United
States commercial  aircraft,  with attendant  significant loss of life, property
damage  and  economic   disruption.   Any  additional   terrorist  attacks,  the
anti-terrorist  activity in Afghanistan  and  throughout the world,  any further
military or economic  responses by the United  States,  including any changes to
the United States aircraft industry by way of law, regulation or otherwise,  may
increase  airline costs or cause declines in air travel  demand.  In addition to
the  September  11,  2001  events,  the  decline  in the  United  States and the
worldwide economy has adversely  affected both Aircraft Finance and its lessees.
Aircraft Finance's lessees' revenues and expenses are also likely to be affected
by the lessees'  ability to operate in the current  competitive  environment and
worsening  economic  conditions.  These and other  factors have led to increased
bankruptcies and  consolidations of airlines.  Higher costs (including,  but not
limited to, increased costs for security measures,  insurance premiums and fuel)
are expected to adversely impact airlines' financial position as well.

         There is much  uncertainty  with  respect  to the short to medium  term
future prospects of the world aviation industry  following the preexisting world
economic  downturn,  which was exacerbated by the terrorist attacks of September
11, 2001. It cannot be  determined  when, or if, the United States and the world
aviation  industry  and the  overall  economy in both the United  States and the
world will  improve.  These  conditions  have  affected  the ability of Aircraft
Finance's   lessees  to  comply  with  the  terms  of  their   leases,   causing
restructuring of lease  agreements.  Such  restructurings  have included reduced
rental rates, deferred payments or early returns of aircraft.  These events have
also  contributed  to an excess  of  aircraft  in the  market  place,  which has
resulted in a significant number of aircraft being parked. These excess aircraft
impact the market by causing  decreases in the market value of the  aircraft,  a
more competitive  leasing market,  reductions in lease rates,  increased storage
costs and increased downtime. These events have impaired the ability of Aircraft
Finance to re-lease  aircraft on a timely basis and at  favorable  rates and may
reduce the value of the aircraft for possible  sale.  All of these  factors have
had and  will  likely  continue  to have an  adverse  effect  on the  cash  flow
generated from Aircraft Finance's  aircraft.  Such reductions in cash flows will
have a negative impact on the amount and timing of payments that will be made by
Aircraft Finance on the Notes.  There can be no assurances as to if and when the
aircraft leasing market,  and subsequently cash flows to Aircraft Finance,  will
improve.


Other Developments

         Under the terms of the  indenture,  Aircraft  Finance  is  required  to
obtain annual  appraisals of its aircraft.  In February 2002,  Aircraft  Finance
received  appraisals  of the adjusted base values of the aircraft as of December
31, 2001 from three independent appraisers that are members of the International
Society of  Transport  Aircraft  Trading,  as  required  by the  indenture.  The
aggregate of the average of the three  appraisals (the current  appraised value)

                                       12
<PAGE>

of the aircraft at December 31, 2001 was $1,067.9 million. Such average is below
the assumed portfolio values set forth in the indenture relating to the Notes.

         At June 30, 2002, there were five lessees on non-accrual  status.  With
respect to these  lessees all six  aircraft  have been  returned  early and five
aircraft  have  been  subsequently  re-leased.  The  total  amount  of rent  and
maintenance  reserve payments  outstanding under the leases for the six aircraft
from these five lessees  amounted to  approximately  $6.8 million as of June 30,
2002. One of these lessees,  based in Brazil, owed approximately $1.0 million at
June  30,  2002  for  outstanding   maintenance  reserve  payments,   after  the
application of a $1.0 million cash security deposit.  The second lessee based in
the  United  States  owed  approximately  $1.0  million  at June  30,  2002  for
outstanding  maintenance  reserve payments after the application of $1.1 million
of cash security  deposits and a letter of credit.  The third  lessee,  based in
Turkey,  owed  approximately  $3.4 million at June 30, 2002 for outstanding rent
and maintenance  reserve  payments after the application of $1.3 million of cash
security  deposits,  letters  of  credit,  and  the  sale  of  shares  of  stock
transferred  to  the  lessor.  The  fourth  lessee,   based  in  Belgium,   owed
approximately  $0.5  million at June 30, 2002 for  outstanding  rent.  The fifth
lessee,  based in Canada,  owed  approximately $0.9 million at June 30, 2002 for
outstanding rent and maintenance reserve payments.

         As of June 30, 2002, Aircraft Finance has repaid principal on the Notes
of $149.1  million,  as compared to $142.0  million based on revenue and expense
assumptions  found in the Offering  Memorandum  dated April 21, 1999. For a more
detailed analysis of Aircraft Finance's  performance compared to the assumptions
in the Offering Memorandum, see the unaudited Exhibit 99.1.

         The beneficial  interests in Aircraft Finance were originally purchased
by UniCapital AFT-I, Inc. (51%) and UniCapital AFT-II, Inc. (49%), each of which
were then wholly-owned indirect subsidiaries of UniCapital Air Group, Inc., then
a wholly-owned subsidiary of UniCapital Coporation ("UniCapital").  During 1999,
2000, and 2001,  UniCapital sold all of its ownership of AFT-I, Inc., and AFT-I,
Inc. and AFT-II,  Inc.  sold certain of their  beneficial  interests in Aircraft
Finance to financial services companies. In addition,  during 2001, AFT-II, Inc.
transferred  certain  of  its  remaining  interests  to  AFT-III,  Inc.,  then a
wholly-owned indirect subsidiary of UniCapital.  Also during 2001, AFT-III, Inc.
transferred certain of its remaining interests in Aircraft Finance to one of the
financial services  companies.  On December 11, 2000,  UniCapital and the entity
that  directly  owns  AFT-II,  Inc.  and  AFT-III,   Inc.  filed  petitions  for
reorganization  under  Chapter  11 of the  United  States  Bankruptcy  Code (the
"Bankruptcy  Code") in the U. S. Bankruptcy  Court for the Southern  District of
New York (the  "Bankruptcy  Court").  On January 9, 2002, the  Bankruptcy  Court
entered  a  Confirmation  Order  in  which it  approved  a plan for  Unicapital,
including  substantially all of its direct and indirect subsidiaries,  to emerge
from  reorganization  under Chapter 11 of the Bankruptcy Code. In February 2002,
UniCapital  AFT-I,   Inc.,  then  a  wholly  owned  subsidiary  of  TransCapital
Corporation, sold 1.1% or all of its beneficial interests in Aircraft Finance to
UniCapital Air Group, Inc. and TransCapital  Corporation sold 7.4% or all of its
beneficial  interests in Aircraft  Finance to UniCapital  Air Group,  Inc. As of
June 30, 2002,  financial  services  companies owned 62.5% of Aircraft  Finance,
AFT-II,  Inc.  owned 1.6% of  Aircraft  Finance,  AFT-III,  Inc.  owned 27.4% of
Aircraft Finance and UniCapital Air Group,  Inc. owned 8.5% of Aircraft Finance.
As of June 30, 2002, each of AFT-II,  AFT-III and UniCapital Air Group, Inc. are
wholly owned subsidiaries of Banc of America Leasing Commercial Markets, LLC, an
affiliate of Bank of America, N.A.

         On July 30, 2002 Donald G. Butler,  Equity Trustee of Aircraft  Finance
resigned effective August 30, 2002. A majority (by percentage) of the registered
holders of the residual interest of Aircraft Finance appointed Andrew Dickson as
the new Equity Trustee effective August 31, 2002.

                                       13
<PAGE>


Results of Operations

         Aircraft  Finance  reported a net loss of $2.4 million during the three
months ended June 30, 2002 ("2002  Quarter") on total  revenues of $31.0 million
compared to net income of $1.5  million,  on total  revenues  of $37.1  million,
during the three months ended June 30, 2001 ("2001  Quarter").  Aircraft Finance
reported a net loss of $3.8 million on total revenue of $61.9 million during the
six months  ended June 30, 2002 ("2002  Period")  compared to net income of $3.4
million on total revenue of $74.8  million  during the six months ended June 30,
2001 ("2001  Period").  The change to a net loss in the 2002  Quarter and Period
from net income in the 2001 Quarter and Period was primarily due to lower rental
and  other  income  from  operating  leases  as well as  lower  interest  income
partially offset by lower interest expense,  depreciation  expense and operating
expenses,  as further explained below.  Aircraft Finance's revenues consisted of
rental and other income from operating leases and interest income earned on cash
balances.

         Rental and other income from operating leases was $30.6 million for the
2002 Quarter  compared to $36.1 million for the 2001 Quarter,  and $61.1 million
for the 2002 Period compared to $72.5 million for the 2001 Period.  The decrease
is primarily due to  restructured  leases that resulted in reduction or deferral
of rental  income,  aircraft  that were  re-leased  at lower  rental rates after
having had downtime and several off-lease aircraft during the 2002 Period.

         Interest income was $0.4 million for the 2002 Quarter  compared to $1.0
million for the 2001 Quarter,  and $0.8 million for the 2002 Period  compared to
$2.2 million for the 2001 Period.  The decrease in interest  income is primarily
due to lower interest rates earned on cash balances.  Interest  income is earned
on Aircraft  Finance's  cash balances,  which are invested in short-term  highly
liquid investments as permitted by the indenture.  The amount of interest income
earned varies based upon the current interest rates paid on such investments and
the level of cash balances held by Aircraft Finance.

         Interest  expense,  including  interest  rate  swap  payments  of  $7.5
million,  was $16.8  million for the 2002  Quarter  compared  to $18.4  million,
including interest rate swap payments of $2.4 million, for the 2001 Quarter. For
the 2002 Period interest expense was $33.9 million,  including net interest rate
swap payments of $15.2 million,  compared to $37.2 million,  including  interest
rate swap  payments  of $2.3  million,  for the 2001  Period.  This  decrease is
primarily  due to lower LIBOR rates,  and the continued  paydown of  outstanding
principal  balances  on the  Notes,  as  well  as  the  expiration  of two  swap
agreements  in January  2002.  Interest  expense is paid on  Aircraft  Finance's
outstanding  Notes. The weighted average interest rate on the Notes for the 2002
Quarter and 2002 Period was 6.24% and 6.32%, respectively, compared to 6.60% and
6.67%  for the 2001  Quarter  and 2001  Period,  respectively.  The  outstanding
balance of the Notes at June 30, 2002 and June 30, 2001 was $1,059.9 million and
$1,094.2  million,  respectively.  Interest  expense  varies based on the actual
interest  rates on the  floating  rate Notes,  the  interest  rate swap costs or
proceeds and the outstanding principal balances of the Notes.

         Depreciation expense was $10.5 million for the 2002 Quarter compared to
$11.1  million  for the 2001  Quarter,  and $21.0  million  for the 2002  Period
compared to $22.1  million for the 2001  Period.  The  decrease in  depreciation
expense is primarily due to the write down of the book value of several aircraft
during the Quarter ended  September 30, 2001 that resulted in a reduction of the
monthly depreciation expense.

         Operating  expense was $4.5  million for the 2002  Quarter  compared to
$4.6 million for the 2001 Quarter, and $7.9 million for the 2002 Period compared
to $9.0  million  for the 2001  Period.  The  decrease in  operating  expense is
primarily due to lower maintenance and repairs expense due to off-lease aircraft

                                       14
<PAGE>

and lower winter utilization, offset somewhat by higher direct lease expense due
to costs  related  to  redelivery  of some  aircraft  during  the  2002  Period.
Operating expense consists primarily of aircraft  maintenance  expense and lease
related costs. Many of Aircraft  Finance's lease contracts require the lessee to
bear the obligation for maintenance costs on airframes and engines,  and require
the lessee to make  certain  payments to the lessor,  calculated  on measures of
usage to cover the expected costs of scheduled  maintenance  charges,  including
major  airframe  and engine  overhauls.  Such amounts are included in rental and
other income from operating  leases.  Under the provisions for many leases,  for
certain  airframe  and  engine  overhauls,  the lessee is  reimbursed  for costs
incurred up to, but not exceeding,  related payments made by the lessee,  to the
lessor  based on those  measures of usage.  Reserves are  maintained  at amounts
considered adequate to cover those expected payments for maintenance costs.

         Administrative  and other  expenses were $1.5 million for both the 2002
Quarter and the 2001 Quarter,  and $3.0 million for both the 2002 Period and the
2001  Period.  These  expenses  consist  primarily  of fees paid to the  service
providers and other general and  administrative  costs.  The most significant of
these fees was the  servicer  fee,  which  amounted to $1.0  million in the 2002
Quarter  compared to $1.1 million in the 2001 Quarter,  and $2.0 million for the
2002 Period compared to $2.2 million for the 2001 Period.  A portion of the fees
paid to the  Servicer  corresponds  to rental  payments due and  received.  This
portion of the Servicer Fee is based upon a fixed  percentage of rental receipts
and will vary with rental income of Aircraft  Finance.  The decrease in servicer
fee was offset by an increase in other general and administrative  expenses such
as D&O insurance, legal costs and consultant fees.

         On June  30,  2002,  the fair  value of the  interest  rate  swaps  was
approximately  ($31.4) million compared to ($32.7) million on December 31, 2001.
The change in the fair value of derivatives  of $1.3 million,  was recorded as a
component of other  comprehensive  income,  and accumulated other  comprehensive
loss of ($31.4) million was recorded in the Consolidated Statement of Changes in
Beneficial Interest Holders' Deficit.

         Moody's Investors Service, Inc. ("Moody's"), one of the rating agencies
for the Notes,  announced  the  downgrade  of the Class C and Class D Notes in a
press release issued on March 18, 2002. The Class C Notes were  downgraded  from
Baa2 to Ba1 and the  Class D Notes  were  downgraded  from Ba2 to B2.  The press
release states that factors affecting  Moody's downgrade  included concerns over
(i)  possible  loss of cash  flow  due to  lease  restructurings  following  the
September  11 crisis  and  continued  re-leasing  at  reduced  rates in the near
future,  (ii) the  significant  percentage  of aircraft  that will be coming off
lease  within  twelve  months  of  December  31,  2001,  (iii)  the level of the
delinquent  lessees  and the number of  grounded  aircraft,  (iv) the  potential
volatility of future cash flows due to the  proportion  of widebody  aircraft in
the aircraft portfolio and (v) the decrease in the aggregate  appraised value of
the aircraft as of December 31, 2001.

Liquidity

         Aircraft Finance held cash and cash  equivalents of $77.6 million,  and
restricted cash of $10.8 million at June 30, 2002, compared to $70.6 million and
$17.7 million,  respectively,  at June 30, 2001. The liquidity  reserve  amount,
which is included in cash and cash equivalents, was $52 million at June 30, 2002
and December 31, 2001. The liquidity  reserve amount is required under the terms
of the  indenture and is intended to serve as a source of liquidity for Aircraft
Finance's maintenance obligations and other contingent costs.

                                       15
<PAGE>


         At June 30,  2002 there were six  aircraft  that were on the ground and
not earning revenue. In addition, aircraft re-leased during the six month period
ended June 30, 2002 were  re-leased  at  significantly  lower  rental  rates and
certain aircraft experienced significant downtime before being re-leased.

         Additional leases were  restructured  during the six month period ended
June 30, 2002 in addition to those restructured in December 2001 as discussed in
"Recent Developments".  In combination, the above events significantly decreased
cash flows for Aircraft Finance.  Given the current leasing  environment,  it is
likely  that such  reductions  in cash flow will  continue  for the  foreseeable
future.  However,  given the liquidity  reserve amount and other reserve amounts
Aircraft  Finance has in effect,  it is believed that  Aircraft  Finance will be
able to meet its interest obligations over the next twelve months.

Cash Flows from Operating Activities

         Aircraft Finance's cash flows from operating  activities depend on many
factors  including,  but not limited to, the performance of lessees and Aircraft
Finance's  ability to  re-lease  aircraft,  the average  cost of the Notes,  the
effectiveness  of its interest  rate hedging  policies,  the ability of interest
rate swap  providers to perform under the terms of the swap  agreements  and the
ability of Aircraft Finance to refinance  certain  subclasses of Notes that have
not been repaid with lease cash flows.

         Net cash provided by operating  activities for the 2002 Period amounted
to $15.0 million,  primarily  reflecting a net loss of $3.8 million  adjusted by
non-cash  depreciation  expense of $21.0  million  and an  increase  in accounts
payable and accrued  liabilities  related to operations  of $0.9 million.  These
were offset by an increase in receivables and other assets of $1.4 million,  and
decreases  in deferred  rental  income of $1.4  million and  security  and other
deposits of $0.5 million.  Receivables  increased due to a termination  fee owed
but not paid and an increase in deferred income due to restructuring of leases.

         Net cash provided by operating  activities for the 2001 Period amounted
to $28.8 million,  primarily  reflecting net income of $3.4 million  adjusted by
non-cash  depreciation  expense of $22.0  million and  increase in security  and
other  deposits  of $5.5  million.  These were offset by  decreases  in accounts
payable and accrued liabilities of $1.2 million,  deferred rental income of $0.5
million, and an increase in receivables and other assets of $0.5 million.

Cash Flows from Investing and Financing Activities

         Net cash used in investing  activities for the 2002 Period  amounted to
$1.2 million for capitalized aircraft  improvements  (consisting of $2.1 million
of capitalized aircraft  improvements net of accrued liabilities of $0.9 million
related to capitalized aircraft  improvements)  compared to $2.3 million for the
2001 Period.

         Net cash used in financing  activities for the 2002 Period  amounted to
$12.9 million due to principal  repayment on the Notes. As a result, the balance
of these Notes was $1,059.9  million at June 30, 2002. As a result of the annual
average  base value  appraisals  dated  December  31,  2001 being lower than the
assumed portfolio values set forth in the indenture  additional  principal would
be required to be redirected to certain Classes of Notes if sufficient cash were
available to do so.  Generally,  principal and interest is repaid on these Notes
monthly based upon the cash  collected,  the  anticipated  expenses and the cash
balances held by Aircraft Finance on the calculation date. As a result,  monthly
principal  payments  on the Notes  will vary  depending  on  Aircraft  Finance's
revenues and expenses  for the month.  Lower cash  repayment of the Notes in the
2002 Period  compared to the 2001 Period was due to less cash  collected  during
the 2002 Period  compared to the 2001 Period.  Lower cash  collected  was due to

                                       16
<PAGE>

lower  rental  payments and other  payments  from  operating  leases in the 2002
Period as discussed in "Results of Operations".

         Net cash used in financing  activities for the 2001 Period  amounted to
$32.6 million due to principal  repayment on the Notes. As a result, the balance
of these Notes was  $1,094.2  million at June 30,  2001.  During the 2001 Period
additional  principal was redirected to certain  Classes of Notes as a result of
the annual base value appraisals of aircraft.

         At June 30, 2002,  Aircraft  Finance was a party to five  interest rate
swap agreements.  Three of these agreements were entered into on May 5, 1999 and
the other two were entered  into on June 29, 2000 but had an  effective  date of
July 15, 2000.  The net aggregate  amount due to be paid or received by Aircraft
Finance under these agreements is determined  monthly and is due on the same day
as the payments under the Notes.  The net economic effect of these interest rate
swaps was to hedge  Aircraft  Finance's  variable  interest  rate  exposure from
movements in interest rates over the duration of certain lease terms. Please see
"Item 3. Quantitative and Qualitative Disclosures about Market Risk" for further
information about these interest rate swap agreements.


Item 3.       Quantitative and Qualitative Disclosures about Market Risk

         Interest  incurred  by  Aircraft  Finance  on the Notes and the  rental
income  received  by  Aircraft  Finance  under  operating  leases  are  based on
combinations of variable and fixed measures of interest rates.  Aircraft Finance
is exposed to  interest  rate risk to the extent  that the mix of  variable  and
fixed  interest  obligations  under  the  Notes do not  correlate  to the mix of
variable and fixed rents under operating  leases.  Aircraft  Finance has engaged
advisors  to  monitor  interest  rates in  order to  mitigate  its  exposure  to
unfavorable variations. Aircraft Finance utilizes interest rate swaps that shift
the risk of fluctuations  in floating rates to the  counterparty in exchange for
fixed payments by Aircraft Finance.  Risks in the use of these instruments arise
from the  possible  inability of the  counterparties  to meet the terms of their
contracts and from market movements in securities values and interest rates.

         The controlling  trustees of Aircraft  Finance,  with the assistance of
Bankers Trust Company and Lehman  Brothers Inc., are  responsible  for reviewing
and approving  the overall  interest rate  management  policies and  transaction
authority  limits.  Counterparty  risk will be  monitored  on an ongoing  basis.
Counterparties  will  be  subject  to the  prior  approval  of  the  controlling
trustees.  Currently,  Aircraft Finance's counterparty is an affiliate of Lehman
Brothers Inc. Future  counterparties  may consist primarily of the affiliates of
major   United   States   and   European   financial   institutions,   including
special-purpose  derivative vehicles,  that have credit ratings, or that provide
collateralization  arrangements,  consistent with maintaining the ratings of the
Notes.

         Aircraft  Finance is a party to five  classes of Notes.  The  estimated
fair value of these  Notes at June 30,  2002 was  approximately  $916.4  million
compared to $900.1  million at December 31, 2001. The terms of each class of the
Notes,  including  the  outstanding  principal  amount at June 30, 2002,  are as
follows: (dollars in thousands)

                                       17
<PAGE>


             Outstanding
Class of      Principal                         Expected Final         Final
 Notes         Amount        Interest Rate       Payment Date      Maturity Date
 -----         ------        -------------       ------------      -------------
Class A-1   $  512,500       LIBOR + 0.48%        May 15, 2004      May 15, 2024
Class A-2      263,914       LIBOR + 0.50%       June 15, 2008      May 15, 2024
Class B        119,096       LIBOR + 1.15%        May 15, 2016      May 15, 2024
Class C        100,502               8.00%       July 15, 2016      May 15, 2024
Class D         63,859              11.00%     August 15, 2016      May 15, 2024
            ----------
            $1,059,871
            ==========

         Aircraft  Finance was a party to five interest rate swap  agreements at
June 30, 2002.  Under the agreements,  Aircraft Finance will pay a fixed rate of
interest  on  the  notional  amount  to  the  counterparty  and,  in  turn,  the
counterparty will pay Aircraft Finance a rate of interest on the notional amount
based on one month LIBOR. The one-month LIBOR rate with respect to the Notes and
the  Swaps as of June 30,  2002 and  December  31,  2001 was  1.84%  and  1.90%,
respectively.  Due to the  potential  volatility  of  LIBOR,  the fair  value of
Aircraft  Finance's interest rate swap agreements is also subject to volatility.
The change in fair value of the interest rate swaps was due to changes in market
interest  rates as well as the expiration of two swap  agreements,  as discussed
below.  This  change was  recorded in other  comprehensive  income in the equity
section of the balance sheet.

         Two of Aircraft  Finance's swap agreements expired on January 15, 2002.
The notional amounts of these two swap agreements totaled $80 million.

         The  following  table  presents,  as of June  30,  2002,  the  terms of
Aircraft Finance's interest rate swap agreements: (dollars in thousands)

  Fixed      Rate to be          Rate to be
Notional  paid by Aircraft  received by Aircraft     Maturity          Estimated
 Amount        Finance             Finance             Date           fair value
 ------        -------             -------             ----           ----------
$175,000        5.56%               LIBOR          October 15, 2002   $  (2,106)
 345,000        5.65%               LIBOR          January 15, 2004     (15,352)
 230,000        5.71%               LIBOR         November 15, 2004     (12,183)
  20,000        7.14%               LIBOR          October 15, 2002        (352)
  15,000        7.17%               LIBOR              May 15, 2005      (1,445)
                                                                      ---------
                                                                      $ (31,438)
                                                                      =========

         Aircraft  Finance  expects to enter into  additional  swaps, or sell at
market values or unwind part or all of its initial swaps and any future swaps on
a periodic basis in its efforts to mitigate its exposure to unfavorable  changes
in interest rates. Any changes in Aircraft Finance's policy regarding its use of
interest rate hedging  products will be subject to periodic review by the rating
agencies.

                                       18
<PAGE>


                           Part II. Other Information
                           --------------------------

Item 6.  Exhibits and Reports of Form 8-K

a.       Exhibits (numbered in accordance with Item 601 of Regulation S-K)

         99.1   Other information - Analysis of actual cash flows versus assumed
                case

b.       Reports on Form 8-K

         During the quarterly period ended June 30, 2002, Aircraft Finance filed
         reports on Form 8-K dated  April 15,  2002,  May 15,  2002 and June 17,
         2002.  Such reports on Form 8-K included  copies of the monthly reports
         to holders of the Notes.

                                       19
<PAGE>


                                   SIGNATURES



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                        AIRCRAFT FINANCE TRUST
                                        by Wilmington Trust Company,
                                        not in its individual capacity but
                                        solely as the Owner Trustee


        August 14, 2002                 By:     /S/CHARISSE L. RODGERS
        ---------------                         ----------------------
           Date                         Name:   Charisse L. Rodgers
                                        Title:  Assistant Vice President


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.



SIGNATURE                      TITLE                             DATE
---------                      -----                             ----


/S/DAVID H. TREITEL            Independent Controlling Trustee   August 14, 2002
-------------------                                              ---------------
David H. Treitel


/S/RICHARD E. CAVANAGH         Independent Controlling Trustee   August 14, 2002
----------------------                                           ---------------
Richard E. Cavanagh


/S/DONALD G. BUTLER            Equity Trustee and Controlling    August 14, 2002
-------------------            Trustee                           ---------------
Donald G. Butler


/S/CHARISSE L. RODGERS         Owner Trustee                     August 14, 2002
----------------------                                           ---------------
Wilmington Trust Company, not
in its individual capacity but
solely as the Owner Trustee

                                       20