================================================================================
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)

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

                For the quarterly period ended September 30, 2000
                                               ------------------

                                       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 number 0-17785
                                                -------

                         AIRCRAFT INCOME PARTNERS L.P.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


                 DELAWARE                             13-3430508
         -------------------------------          ------------------
         (State or other jurisdiction of           (I.R.S. Employer
          incorporation or organization)          Identification No.)


         FIVE CAMBRIDGE CENTER, CAMBRIDGE, MA         02142-1493
        ---------------------------------------   ------------------
        (Address of principal executive office)       (Zip Code)


     Registrant's telephone number, including area code (617) 234-3000
                                                         -------------


Indicate by check mark whether 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
                                         -----       -----

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


                                    1 OF 15



<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000

                         PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS.

BALANCE SHEETS (UNAUDITED)

                                              SEPTEMBER 30,  DECEMBER 31,
                                                   2000          1999
                                              ------------   -----------
Assets

Equipment held for sale, net                    $     --     $  573,982
Cash and cash equivalents                        3,904,377    7,411,200
Other receivables                                     --         34,560
                                                ----------   ----------
     Total Assets                               $3,904,377   $8,019,742
                                                ==========   ==========

LIABILITIES AND PARTNERS' EQUITY

Liabilities:

Accounts payable and accrued expenses           $   99,718   $  115,253
                                                ----------   ----------
       Total Liabilities                            99,718      115,253
                                                ----------   ----------
Commitments and Contingencies

Partners' Equity:

Limited partners' equity (385,805 units
   issued and outstanding)                       3,415,238    7,105,085
General partner's equity                           389,421      799,404
                                                ----------   ----------
       Total Partners' Equity                    3,804,659    7,904,489
                                                ----------   ----------
       Total Liabilities and Partners' Equity   $3,904,377   $8,019,742
                                                ==========   ==========




                       See notes to financial statements.



                                     2 of 15


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000

STATEMENTS OF OPERATIONS (UNAUDITED)

                                              FOR THE NINE MONTHS ENDED
                                             ----------------------------
                                             SEPTEMBER 30,  SEPTEMBER 30,
                                                 2000          1999
                                             ------------    ------------
Revenues:
     Settlement income                        $      --      $ 1,638,913
     Interest                                     199,740        152,966
     Other income                                    --           98,672
                                              -----------    -----------
       Total revenues                             199,740      1,890,551
                                              -----------    -----------
Costs and Expenses:
     Provision for equipment impairment              --        2,071,000
     General and administrative                   291,080        470,832
     Operating                                      8,490        201,397
     Other expenses                                  --           38,000
                                              -----------    -----------
       Total costs and expenses                   299,570      2,781,229
                                              -----------    -----------
       Loss before gain on sale of aircraft       (99,830)      (890,678)
       Gain on sale of aircraft - net                --          111,550
                                              -----------    -----------
       Net loss                               $   (99,830)   $  (779,128)
                                              ===========    ===========
Net loss attributable to:
       Limited partners                       $   (89,847)   $  (701,215)
       General partner                             (9,983)       (77,913)
                                              -----------    -----------
                                              $   (99,830)   $  (779,128)
                                              ===========    ===========
Net loss per unit of limited partnership
     interest (385,805 units outstanding)     $     (0.23)   $     (1.82)
                                              ===========    ===========


                       See notes to financial statements.



                                     3 of 15

<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000

STATEMENTS OF OPERATIONS (UNAUDITED)


                                               FOR THE THREE MONTHS ENDED
                                               --------------------------
                                               SEPTEMBER 30, SEPTEMBER 30,
                                                   2000          1999
                                               -----------   ------------
Revenues:
     Settlement income                          $     --     $1,638,913
     Interest                                       59,196       68,142
                                                ----------   ----------
       Total revenues                               59,196    1,707,055
                                                ----------   ----------
Costs and Expenses:
     General and administrative                     56,487      136,195
     Operating                                        --         10,310
                                                ----------   ----------
       Total costs and expenses                     56,487      146,505
                                                ----------   ----------
       Income before gain on sale of aircraft        2,709    1,560,550
       Gain on sale of aircraft - net                 --        111,550
                                                ----------   ----------
       Net income                               $    2,709   $1,672,100
                                                ==========   ==========
Net income attributable to:
       Limited partners                         $    2,438   $1,504,890
       General partner                                 271      167,210
                                                ----------   ----------
                                                $    2,709   $1,672,100
                                                ==========   ==========
Net income per unit of limited partnership
     interest (385,805 units outstanding)       $     0.01   $     3.90
                                                ==========   ==========



                       See notes to financial statements.

                                     4 of 15

<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000


STATEMENT OF PARTNERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>

                                            LIMITED        GENERAL        TOTAL
                                           PARTNERS'      PARTNER'S     PARTNERS'
                                            EQUITY          EQUITY       EQUITY
                                          -----------    -----------    -----------
<S>                                       <C>            <C>            <C>
Balance - January 1, 2000                 $ 7,105,085    $   799,404    $ 7,904,489
    Net loss                                  (89,847)        (9,983)       (99,830)
    Distribution to partners ($9.33 per
      limited partnership unit)            (3,600,000)      (400,000)    (4,000,000)
                                          -----------    -----------    -----------
Balance - September 30, 2000              $ 3,415,238    $   389,421    $ 3,804,659
                                          ===========    ===========    ===========

</TABLE>







                       See notes to financial statements.

                                     5 of 15



<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000

STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>

                                                                               FOR THE NINE MONTHS ENDED
                                                                              ---------------------------
                                                                              SEPTEMBER 30, SEPTEMBER 30,
                                                                                  2000          1999
                                                                              ------------   ------------
<S>                                                                           <C>            <C>
Cash Flows from Operating Activities:
Net loss                                                                      $   (99,830)   $  (779,128)
Adjustments to reconcile net loss to net cash used in operating activities:
     Provision for equipment impairment                                              --        2,071,000
     Gain on sale of aircraft, net                                                   --         (111,550)
     Value of marketable securities received in
       settlement bankruptcy claims                                                  --       (1,213,052)
     Changes in assets and liabilities:
       Accounts receivable                                                           --          445,000
       Deferred costs                                                                --            5,132
       Prepaid expenses                                                              --           (9,978)
       Other receivables                                                           34,560         29,717
       Accounts payable and accrued expenses                                      (15,535)      (400,735)
                                                                              -----------    -----------
Net cash (used in) provided by operating activities                               (80,805)        36,406
                                                                              -----------    -----------
Cash Flows from Investing Activities:
     Proceeds from sale of aircraft, net                                          573,982      1,935,977
                                                                              -----------    -----------
Cash provided by investing activities                                             573,982      1,935,977
                                                                              -----------    -----------
Cash Flows from Financing Activities:
     Distribution to Partners                                                  (4,000,000)          --
                                                                              -----------    -----------
Cash used in financing activities                                              (4,000,000)          --
                                                                              -----------    -----------
Net (decrease) increase in cash and cash equivalents                           (3,506,823)     1,972,383
Cash and cash equivalents, beginning of period                                  7,411,200      4,199,804
                                                                              -----------    -----------
Cash and cash equivalents, end of period                                      $ 3,904,377    $ 6,172,187
                                                                              ===========    ===========
</TABLE>

                       See notes to financial statements.

                                     6 of 15


<PAGE>

                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000

                          NOTES TO FINANCIAL STATEMENTS

1.   INTERIM FINANCIAL INFORMATION

     The accompanying financial statements, footnotes and discussions should be
     read in conjunction with the financial statements, related footnotes and
     discussions contained in the Aircraft Income Partners L.P. (the
     "Partnership") Annual Report on Form 10-K for the year ended December 31,
     1999. The financial information contained herein is unaudited. In the
     opinion of management, all adjustments necessary for a fair presentation of
     such financial information have been included. All adjustments are of a
     normal recurring nature. The balance sheet at December 31, 1999 was derived
     from audited financial statements at such date.

     The results of operations for the three and nine months ended September 30,
     2000 and 1999 are not necessarily indicative of the results to be expected
     for the full year.

2.   CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES

     The general partner of the Partnership, Integrated Aircraft Fund Management
     Corp. ("IAFM"), is indirectly a wholly owned subsidiary of Presidio Capital
     Corp. ("Presidio").

     Subject to the provisions of the Agreement of the Limited Partner's
     ("Partnership Agreement"), Presidio controls the Partnership through its
     indirect ownership of all of the shares of IAFM. On August 28, 1997, an
     affiliate of NorthStar Capital Partners acquired all of the Class B shares
     of Presidio, the corporate parent of IAFM. This acquisition, when
     aggregated with previous acquisitions, caused NorthStar Capital Partners to
     acquire indirect control of IAFM. Effective July 31, 1998, Presidio is
     indirectly owned by NorthStar Capital Investment Corp. ("NorthStar"), a
     Maryland corporation.

     In August 1997, Presidio entered into a management agreement with NorthStar
     Presidio Management Company, LLC ("NorthStar Presidio"), an affiliate of
     NorthStar. Under the terms of the management agreement, NorthStar Presidio
     provided, until October 21, 1999, the day-to-day management of Presidio and
     its direct and indirect subsidiaries and affiliates. For the nine months
     ended September 30, 1999, reimbursable expense paid to NorthStar Presidio
     amounted $32,421.

     On October 21, 1999, Presidio entered into a new Services Agreement with
     AP-PCC III, L.P (the "Agent") pursuant to which the Agent was retained and
     is compensated by Presidio to provide asset management and investor
     relation services to the Partnership and other entities affiliated with the
     Partnership, which were previously provided by NorthStar Presidio.

     As a result of this agreement, the Agent has the duty to direct the day to
     day affairs of the Partnership, including, without limitation, reviewing
     and analyzing potential sale, financing or restructuring proposals
     regarding the Partnership's assets, preparation of all Partnership reports,
     maintaining Partnership records and maintaining bank accounts of the
     Partnership. The Agent is not permitted, however, without the consent of
     Presidio, or as otherwise required under the terms of the Partnership
     Agreement to, among other things, cause the Partnership to acquire an asset
     or file for bankruptcy.

                                     7 of 15


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000

                          NOTES TO FINANCIAL STATEMENTS


2.   CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)

     In order to facilitate the provision by the Agent of the asset management
     services and the investor relations services, effective October 25, 1999,
     the officers and directors of the General Partner resigned and nominees of
     the Agent were elected as the officers and directors of the General
     Partner.

     The Agent is an affiliate of Winthrop Financial Associates, a Boston-based
     company that provides asset management services, investor relation services
     and property management services to over 150 limited partnerships which own
     commercial property and other assets. The General Partner does not believe
     that this relationship will have a material effect on the operations of the
     Partnership.

     IAFM is entitled to a 10 percent interest in the net income, loss and
     distributions from operations and cash from sales. IAFM received $400,000
     in distributions for the nine months ended September 30, 2000. No
     distributions were paid with respect to the nine months ended September 30,
     1999.

     In addition, IAFM receives the management fee provided for in the
     Partnership Agreement which is equal to 4% of Distributions of Cash from
     Operations from Operating Leases and 2% of Distributions of Cash from
     Operations from Full Payout Leases, as such terms are defined in the
     Limited Partnership Agreement. In conjunction with such services, IAFM did
     not earn any management fees for the nine months ended September 30, 2000
     and 1999.

3.   AIRCRAFT SALES

     On January 19, 2000, the Partnership sold to an unaffiliated third party
     its sole remaining aircraft, a McDonnell Douglas DC9-30, for gross proceeds
     of $650,000. Costs associated with the sale amounted to approximately
     $77,000. At the time of the sale, the aircraft had a net carrying value of
     approximately $574,000.

     On June 1, 1999, the Partnership sold two McDonnell Douglas DC9-32 aircraft
     to an unaffiliated third party for gross sale proceeds of $1,910,000,
     exclusive of selling expenses of approximately $86,000. At the time of
     sale, the aircraft had a net carrying value of approximately $1,824,000. In
     the quarter ended September 30, 1999, the Partnership received an
     additional $111,550 relating to the sale of the aircraft as a result of the
     Partnership providing the records for the engines.

4.   DISTRIBUTION TO PARTNERS

     During February 2000, the Partnership declared and paid a $4,000,000
     distribution to partners of record as of January 1, 2000. Of this amount,
     the limited partners collectively received $3,600,000 or $9.33 per Unit.

                                     8 of 15

<PAGE>



                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000

                          NOTES TO FINANCIAL STATEMENTS


5.   COMMITMENTS AND CONTINGENCIES

     Tax Assessment

     In September 1996, the Partnership received proposed notices of assessment
     from the State of Hawaii with respect to general excise tax ("GET")
     aggregating approximately $1,338,000 (including interest and penalties) for
     the years 1991, 1992, 1993 and 1994. In July 1998, the Partnership received
     additional proposed notices of assessment for GET aggregating approximately
     $585,000 for the years 1995, 1996 and 1997. The state is alleging that GET
     is owed by the Partnership with respect to rents received from Aloha
     Airlines, Inc. ("Aloha") and Hawaiian Airlines, Inc. ("Hawaiian") under the
     leases between the Partnership and each of the airlines.

     The leases with both Aloha and Hawaiian provided for full indemnification
     of the Partnership for such taxes, but the bankruptcy of Hawaiian may
     relieve Hawaiian of its indemnification obligation for any periods prior to
     September 21, 1993, when Hawaiian and its affiliates sought bankruptcy
     protection. In any event, it is the Partnership, as taxpayer, which is
     ultimately liable for the GET, if it is applicable.

     The State of Hawaii has never previously applied the GET to rentals
     received by a lessor of aircraft where the lessor's only contact with the
     State of Hawaii is that it has leased its aircraft to airlines which are
     based in the state. Aloha and Hawaiian, as well as the Partnership, have
     separately engaged tax counsel and both airlines are cooperating with the
     Partnership in vigorously contesting the proposed assessments.

     The Partnership recently reached a settlement with Aloha pursuant to which
     Aloha agreed to indemnify the Partnership for any costs it may ultimately
     incur. The Partnership has further been advised that Hawaiian is pursuing a
     legislative remedy. In addition, both the Partnership and Hawaiian have
     independently filed an appeal with the taxing authority of the State of
     Hawaii challenging such assessment. The Partnership believes that the
     State's position on the applicability of GET in this instance is without
     merit. The Partnership has not recorded any provision or liability as a
     result of the proposed notices of assessment.

     Continental Airlines, Inc.

     During 1997, the leases of three McDonnell Douglas Model DC9-32 aircraft
     owned by the Partnership and leased to Continental Airlines, Inc.
     ("Continental") were extended to September 1998 (2 aircraft) and December
     1998 (1 aircraft) at a rental of $52,500 per month, per aircraft. Two of
     the aircrafts were returned in September 1998 and the third aircraft was
     returned in December 1998.

     At the end of the lease, the Partnership conducted inspections of the
     aircraft to ascertain whether the return conditions of the lease were
     satisfied. On May 5, 1999, First Security Bank, N.A., acting not in its
     individual capacity, but solely as trustee under a trust agreement in which
     the Partnership is beneficiary, filed a complaint against Continental in
     the United States District Court, Southern District of New York.

                                     9 of 15


<PAGE>



                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000


5.   COMMITMENTS AND CONTINGENCIES (CONTINUED)

     Continental Airlines, Inc. (Continued)

     The complaint seeks damages in an amount to be determined at trial but
     believed to be in excess of $3,000,000 arising out of Continental's i)
     failure to return the three DC9-32 aircraft in the return condition
     required by the lease and ii) failure to make a rent payment provided for
     in the lease. Continental has filed an answer denying the allegations in
     the complaint. Discovery in the matter including depositions is ongoing.

     Two of the Partnership's DC9-32 aircrafts were sold during 1999 and the
     remaining aircraft was sold on January 19, 2000.

                                    10 of 15


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

        The matters discussed in this Form 10-Q contain certain forward-looking
        statements and involve risks and uncertainties (including changing
        market conditions, competitive and regulatory matters, etc.) detailed
        in the disclosure contained in this Form 10-Q and the other filings
        with the Securities and Exchange Commission made by the Partnership
        from time to time. The discussion of the Partnership's liquidity,
        capital resources and results of operations, including forward-looking
        statements pertaining to such matters, does not take into account the
        effects of any changes to the Partnership's operations. Accordingly,
        actual results could differ materially from those projected in the
        forward-looking statements as a result of a number of factors,
        including those identified herein.

        This item should be read in conjunction with the financial statements
        and other items contained elsewhere in the report.

        Liquidity and Capital Resources

        The Partnership's level of liquidity based upon cash and cash
        equivalents decreased by $3,506,823 during the nine months ended
        September 30, 2000, as compared to December 31, 1999. The decrease is
        due to $4,000,000 of cash used for partner distributions (financing
        activities) and $80,805 of cash used in operations, which was partially
        offset by $573,982 of cash from the sale of the McDonnell Douglas
        DC-9-30 Aircraft (investing activities). At September 30, 2000, the
        Partnership had $3,904,377 in cash and cash equivalents which had been
        invested primarily in money market mutual funds.

        During February 2000, the Partnership declared and paid a $4,000,000
        distribution to the Unitholders of record as of January 1, 2000. Of
        this amount, the limited partners collectively received $3,600,000 or
        $9.33 per Unit. It is anticipated at this time that no further
        distributions will be made to partners until the resolution of the
        Hawaiian GET matter (see below).

        In November 1991, in connection with its reorganization under the
        United States Bankruptcy Code, Continental Airlines, Inc.
        ("Continental") rejected the leases of the three Boeing 727-100
        aircraft owned by the Partnership, which had been out of service since
        1991. Due to the condition and the related market for such aircraft,
        the Partnership provided aggregate allowances for equipment impairment
        of approximately $6,483,000. During 1993, the Partnership sold all
        three Boeing 727-100 aircrafts. The Partnership had retained its rights
        pursuant to a proof of claim and an administrative claim filed in the
        Continental Bankruptcy case with respect to such aircraft.

        In June 1999, the Partnership and Continental agreed to settle the
        foregoing claims. Pursuant to the settlement, the Partnership received
        $780,000 on August 24, 1999 as well as 8,684 shares of Continental's
        Class A stock and 24,179 shares of Continental's Class B stock and an
        additional $90,861 on September 22, 1999. On October 6, 1999, the
        Partnership sold all shares of stock for net proceeds aggregating
        approximately $1,213,000, which equaled the Partnership's cost basis in
        the stock. Subject to the resolution of third party claims against
        additional stock reserved under Continental's Plan of Reorganization,
        the Partnership may receive additional shares of Class A and Class B
        stock.

                                    11 of 15


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

        Liquidity and Capital Resources (Continued)

        During 1997, the leases of three McDonnell Douglas Model DC9-32
        aircrafts owned by the Partnership and leased to Continental were
        extended to September 1998 (2 aircrafts) and December 1998 (1 aircraft)
        at a rental of $52,500 per month, per aircraft. Two of the aircrafts
        were returned in September 1998 and the third aircraft was returned in
        December 1998.

        At the end of the lease, the Partnership conducted inspections of the
        aircraft to ascertain whether the return conditions of the lease were
        satisfied. On May 5, 1999, First Security Bank, N.A., acting not in its
        individual capacity, but solely as trustee under a trust agreement in
        which the Partnership is beneficiary, filed a complaint against
        Continental in the United States District Court, Southern District of
        New York. The complaint seeks damages in an amount to be determined at
        trial, but believed to be in excess of $3,000,000, arising out of
        Continental's i) failure to return the three DC9-32 aircraft in the
        return condition required by the lease and ii) failure to make a rent
        payment provided for in the lease. Continental has filed an answer
        denying the allegations in the complaint. Discovery in the matter
        including depositions is ongoing.

        Two of the Partnership's DC9-32 aircrafts were sold during 1999 and the
        remaining aircraft was sold on January 19, 2000.

        In September 1996 and July 1998, the Partnership received proposed
        notices of assessment from the State of Hawaii with respect to general
        excise tax of approximately $1,923,000 (including interest and
        penalties) for the years 1991 through 1997. The state is alleging that
        GET is owed by the Partnership with respect to rents received from
        Aloha Airlines, Inc. ("Aloha") and Hawaiian Airlines, Inc. ("Hawaiian")
        under the leases between the Partnership and each of the airlines.

        The leases with both Aloha and Hawaiian provide for full
        indemnification of the Partnership for such taxes, but the bankruptcy
        of Hawaiian may relieve Hawaiian of its indemnification obligation for
        any periods prior to September 21, 1993, when Hawaiian and its
        affiliates sought bankruptcy protection. In any event, it is the
        Partnership, as taxpayer, which is ultimately liable for the GET, if it
        is applicable.

        The State of Hawaii has never previously applied the GET to rentals
        received by a lessor of aircraft where the lessors only contact with
        the State of Hawaii is the fact that it has leased its aircraft to
        airlines which are based in the state. Aloha and Hawaiian, as well as
        the Partnership, have separately engaged tax counsel and both airlines
        are cooperating with the Partnership in vigorously contesting the
        proposed assessments.

        The Partnership recently reached a settlement with Aloha pursuant to
        which Aloha agreed to indemnify the Partnership for any costs it may
        ultimately incur. The Partnership has further been advised that
        Hawaiian is pursuing a legislative remedy. The Partnership believes
        that the State's position on the applicability of GET in this instance
        is without merit. The Partnership has not recorded any liability as a
        result of the proposed notices of assessment.

                                    12 of 15


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

        Liquidity and Capital Resources (Continued)

        Upon resolution of the tax examination relating to the GET, the general
        partner will then prepare a final accounting of the Partnership's
        assets and liabilities, commence the dissolution and termination of the
        Partnership and make a final distribution to partners.

        Results of Operations

        Net loss decreased for the nine month period ended September 30, 2000
        compared to the nine month period ended September 30, 1999, principally
        due to no settlement income, which was offset by no operating Aircraft
        expenses or impairment provision in the period ended September 30,
        2000. Net income decreased for the three months ended September 30,
        2000, as compared to 1999, due to no settlement income in the 2000
        period, slightly offset by a decline in general and administrative
        expenses.

        Revenues decreased for the three and nine month periods ended September
        30, 2000 compared to the corresponding periods of the prior year
        principally due to a decrease in settlement income. Interest income
        increased for the nine month period ended September 30, 2000 compared
        to the same period in 1999 due to higher invested cash balances.
        Interest income decreased for the three month period ended September
        30, 2000 compared to the same period in 1999 due to the distribution to
        partners in 2000, which resulting in lower invested cash balances.

        Costs and expenses decreased for the three and nine month periods ended
        September 30, 2000 compared to the corresponding periods of the prior
        year principally due to no Aircraft operations as all equipment has
        been sold as of February 2000. The decrease in general and
        administrative expenses is the result of lower professional fees.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

        The Partnership is not subject to market risk as its cash and cash
        equivalents are invested in short term money market mutual funds. The
        Partnership has no loans outstanding.

                                    13 of 15


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000


PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     A.   There were no material developments during the
          quarter in Registrant's lawsuit against Continental
          Airlines, Inc.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

     A.   Exhibits:  27 Financial Data Schedule.

     B.   Reports on Form 8-K: On August 2, 2000, the
          Registrant filed an 8-K to disclose the dismissal of
          its prior independent auditors

                                    14 of 15


<PAGE>


                          AIRCRAFT INCOME PARTNERS L.P.

                          FORM 10-Q SEPTEMBER 30, 2000


                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                               AIRCRAFT INCOME PARTNERS L.P.



                               BY: Integrated Aircraft Fund Management Corp.
                                   ---------------------------------------------
                                   General Partner



                                       BY:   /s/ MICHAEL L. ASHNER
                                          --------------------------------------
                                            Michael L. Ashner
                                            President and Director
                                            (Principal Executive Officer)

                                       BY:   /s/ CAROLYN B. TIFFANY
                                          --------------------------------------
                                            Carolyn B. Tiffany
                                            Vice President and Treasurer
                                            (Principal Financial and Accounting
                                             Officer)

                                             Dated: November 14, 2000



                                    15 of 15