Document:

<PAGE>

                                                                   Exhibit 10.71

                                                               EXECUTION VERSION

TO THE EXTENT THAT THIS AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER
(AS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS AIRCRAFT LEASE AGREEMENT MAY BE
CREATED THROUGH TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE
ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART DESIGNATED
AS THE ORIGINAL ON THE SIGNATURE PAGE OF THIS AGREEMENT BY GE CAPITAL
AVIATION SERVICES, INC.

                            AIRCRAFT LEASE AGREEMENT

                            DATED AS OF MAY 12, 2000

                                     BETWEEN

                        AVIATION FINANCIAL SERVICES INC.

                                    AS LESSOR

                                       AND

                              ALOHA AIRLINES, INC.

                                    AS LESSEE

                  IN RESPECT OF AIRCRAFT: BOEING MODEL 737-700
                                SERIAL NO: 30830
                          U.S. REGISTRATION NO.: N742AL

                        ---------------------------------
                        INCORPORATING THE PROVISIONS OF A

                             COMMON TERMS AGREEMENT

                             DATED AS OF MAY 12,2000

<PAGE>

                        AIRCRAFT LEASE AGREEMENT

THIS AIRCRAFT LEASE AGREEMENT is made as of May 12,2000 and is

BETWEEN:

(1) AVIATION FINANCIAL SERVICES INC., a corporation incorporated under the
    Laws of the State of Delaware having its principal place of business and
    chief executive office at 201 High Ridge Road, Stamford, Connecticut
    06927 ("LESSOR"); and

    ALOHA AIRLINES, INC., a corporation incorporated under the Laws of the
    State of Delaware with its principal place of business and chief
    executive office at 371 Aokea Street, Honolulu, Hawaii 96819 ("LESSEE").

WHEREAS:

(A) Lessee wishes to lease the Aircraft (as defined below) from Lessor, and
    Lessor wishes to lease the Aircraft to Lessee, on the terms and subject
    to the conditions provided herein;

(B) General Electric Capital Corporation ("GECC"), an Affiliate of Lessor,
    and Lessee have entered into the Common Terms Agreement (as defined
    below) in respect of aircraft that may be leased from time to time by
    Lessee or one of its Affiliates from GECC or one of its Affiliates; and

(C) Lessor and Lessee wish to incorporate by reference such Common Terms
    Agreement, as well as Schedules A and B attached hereto, into this
    Aircraft Lease Agreement for the Aircraft and a true and complete copy
    of such Common Terms Agreement is attached hereto as Schedule C;

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

1.  INTERPRETATION

1.1 DEFINITIONS: In this Aircraft Lease Agreement, the following capitalized
    words and expressions have the respective meanings set forth below:

    AIRCRAFT means the Airframe and Engines described on Schedule A hereto.

    AIRFRAME STRUCTURAL CHECK, AIRFRAME SUPPLEMENTAL RENT, ANNUAL
    SUPPLEMENTAL RENT ADJUSTMENT, APU SUPPLEMENTAL RENT AND ASSUMED RATIO
    are not applicable.

    COMMON TERMS AGREEMENT means the "Aircraft Lease Common Terms Agreement"
    dated as of May 12, 2000 executed by GECC and Lessee (as in effect on
    the date hereof

                                  -1-

<PAGE>

   without, unless Lessor and Lessee otherwise expressly agree, giving
   any effect to any subsequent amendment, supplement, waiver or other
   modification thereto), and which forms part of this Aircraft Lease
   Agreement.

   DELIVERY CONDITION REQUIREMENTS means the requirements specified in Part
   II of Schedule A.

   DELIVERY LOCATION means Seattle, Washington or such other location
   as Lessor and Lessee mutually agree in order to minimize any Taxes
   that may be applicable to the Delivery.

   DEPOSIT means all amounts payable pursuant to Section 3.1 hereof

   ENGINE SUPPLEMENTAL RENT AND ENGINE LLP SUPPLEMENTAL RENT are not
   applicable.

   FINAL DELIVERY DATE means the date that is 90 days after the last
   day of the Scheduled Delivery Month.

   FINANCING DOCUMENTS means the documents, if any, relating to any
   indebtedness of Lessor secured, in whole or in part, by Lessor's
   interest in the Aircraft and this Aircraft Lease Agreement.

   FINANCING DOCUMENTS CONTEST RIGHTS, FINANCING DOCUMENTS INDEMNITY
   AMOUNTS AND FINANCING DOCUMENTS TAX AMOUNTS are all inapplicable.

   FINANCING PARTIES means the Persons, if any, that hold the
   indebtedness of Lessor evidenced by the Financing Documents, and
   shall include the Financing Parties Representative.

   FINANCING PARTIES' REPRESENTATIVE the Person, if any, identified by
   Lessor to Lessee in writing as the representative of the Financing
   Parties and the beneficiary of the Security Interest in the Aircraft
   and this Aircraft Lease Agreement created by the Financing
   Documents, and its successors and assigns.

   GUARANTOR is inapplicable.

   INDEMNITEE means each of Lessor, Owner, GECC, GECAS, the Financing
   Parties and their respective successors and permitted assigns, and
   each of their respective shareholders, subsidiaries, affiliates,
   partners, contractors, directors, officers, representatives, agents
   and employees.

   LANDING GEAR SUPPLEMENTAL RENT is not applicable.

                                 -2-

<PAGE>

   MANUFACTURER means the manufacturer of the Airframe or an Engine, as
   the case may be, as set forth on Schedule A hereto.

   OWNER means Lessor.

   PRE-APPROVED BANK means (i) First Hawaiian Bank for so long as its
   long-term unsecured Dollar denominated debt carries a rating from
   S&P of A- or better, and (ii) any bank organized under the laws of
   the United States or any State thereof, or the New York branch of a
   major international bank for only so long as its long-term Dollar
   denominated unsecured debt (or if it does not have long-term
   unsecured Dollar denominated debt, its parent corporation's
   long-term unsecured Dollar denominated debt) carries a rating from
   S&P of A or better.

   REDELIVERY LOCATION means any location in the State of Washington,
   Oregon or California as Lessor may designate to Lessee or such other
   location as may be agreed in writing by Lessor and Lessee.

   RENT COMMENCEMENT DATE means the date on which Lessor tenders the
   Aircraft under Clause 4.3.(a) of the Common Terms Agreement and the
   Lessee Conditions Precedent are met or could reasonably be expected
   to be met if the Delivery of the Aircraft had occurred.

   SCHEDULED DELIVERY DATE means the date that Aircraft is scheduled to
   be delivered by Lessor to Lessee under the Lease, as notified by
   Lessor to Lessee pursuant to Section 4.1 of the Common Terms
   Agreement, and, notwithstanding any subsequent delays in delivery,
   the "Scheduled Delivery Date" shall remain the first such date
   notified by Lessor to Lessee pursuant to Section 4.1 of the Common
   Terms Agreement.

   SCHEDULED DELIVERY MONTH means May 2001.

   SCHEDULED DELIVERY WEEK means the week during which the Scheduled
   Delivery Date is anticipated to fall, as the same is notified by
   Lessor to Lessee pursuant to Section 4.1 of the Common Terms
   Agreement.

   SCHEDULED EXPIRY DATE means the day immediately preceding the
   fifteenth (15th) anniversary of the Rent Commencement Date (or in
   the event that such date is a day that is not a Business Day, the
   immediately preceding Business Day), which date shall be
   specifically set forth in Lease Supplement No. 1; provided, however,
   that Lessee shall receive a credit for Rent actually paid by Lessee
   to Lessor, on a per them basis, against other obligations owed by
   Lessee to Lessor at the Return Occasion in respect of any
   non-Business Days which are truncated from the Term based on this
   provision.

   STATE OF DESIGN means the United States.

                                 -3-

<PAGE>

    TAX INDEMNITEE means each of Owner, Lessor, and each member of the
    consolidated group of which Lessor or Owner is a member for United
    States Federal Income Tax purposes, and their successors and
    permitted assigns.

1.2 INTERPRETATION: Unless otherwise defined herein, words and expressions
    defined in the Common Terms Agreement have the same respective meanings
    for the purposes of this Aircraft Lease Agreement. The construction
    provisions of Section 1.2 of the Common Terms Agreement shall apply to
    this Aircraft Lease Agreement.

2.  LEASING

2.1 AGREEMENT TO LEASE: Subject to the terms and conditions of the Lease,
    Lessor will lease the Aircraft to Lessee and Lessee will take delivery
    of and lease the Aircraft from Lessor in accordance with the Lease for
    the duration of the Term.

2.2 TERM: Subject to Sections 4.1 through 4.4 of the Common Terms Agreement,
    Delivery of the Aircraft will occur at the Delivery Location, whereupon
    Lessee shall accept the Aircraft hereunder and evidence such Delivery
    and acceptance by executing and delivering Lease Supplement No. 1 as
    provided in Section 4.3 of the Common Terms Agreement. The Term will
    commence on the Delivery Date, which Delivery Date is scheduled to occur
    in the Scheduled Delivery Month, and will expire on the Scheduled Expiry
    Date unless terminated earlier in accordance with the provisions of the
    Lease.

2.3 [Not applicable].

3.  PAYMENTS

3.1 DEPOSIT AND LETTER OF CREDIT: Lessee shall pay to Lessor the Deposit in
    cash (to which Deposit Section 5.13 of the Common Terms Agreement shall
    apply) in the amount and at the times provided in Schedule B hereto.
    Lessee shall be permitted to deliver to Lessor an irrevocable Letter of
    Credit in lieu of a portion of the Deposit in an amount up to the amount
    provided in Schedule B as the LC Amount, which Letter of Credit shall
    comply with the provisions of Section 5.14 of the Common Terms Agreement

3.2 RENT: Lessee shall pay Rent to Lessor on each Rent Date during the Term
    in the amount provided in Schedule B hereto and as provided in Sections
    5.2 and 5.3 of the Common Terms Agreement. The first installment of Rent
    shall be due and payable on the Rent Commencement Date as defined
    herein.

3.3 SUPPLEMENTAL RENT: Lessee shall have no obligation to pay Supplemental
    Rent.

                                  -4-

<PAGE>

3.4 LESSOR'S MAINTENANCE CONTRIBUTION: Lessor shall have no obligation to
    make Maintenance Contribution payments.

3.5 LESSOR'S BANK ACCOUNT: For the purposes of Section 5.5 of the Common
    Terms Agreement, Lessor's bank account and wire transfer particulars, to
    which all payments to Lessor shall be made, are at the date hereof:
    Bankers Trust Company, New York, ABA 021 001033, For the account of:
    Aviation Financial Services Inc., Account Number: 50-259-862.

3.6 MACRS: Lessor has assumed that MACRS Deductions shall be available in
    respect of the leasing of the Aircraft and accordingly the provisions of
    Section 5.7(d) of the Common Terms Agreement and the related provisions
    of Schedule B shall apply under this Agreement.

4.  CONDITION OF THE AIRCRAFT AT DELIVERY

4.1 On the Delivery Date, as a condition to Lessee's obligation to accept
    delivery thereof, the Aircraft shall be in the condition provided in
    Part III of Schedule A hereto.

5.  CONDITION OF THE AIRCRAFT AT REDELIVERY

5.1 On the Return Occasion, Lessee shall redeliver the Aircraft to Lessor at
    the Redelivery Location and at such redelivery the Aircraft shall be in
    the condition provided in Part II of Schedule A hereto and in the Common
    Terms Agreement, including Schedule 6 of the Common Terms Agreement.

6.  ADDRESSES FOR NOTICES

    The addresses and facsimile and telephone numbers of Lessor and Lessee
    are as follows:

    Lessor:           Aviation Financial Services Inc.
    Address:          c/o GE Capital Aviation Services
                      201 High Ridge Road
                      Stamford, CT 06927
    Attention:        Executive Vice President Risk and Portfolio Management
    Facsimile:        (203) 357-4585
    Telephone:        (203) 357-3776

    Lessee:           Aloha Airlines, Inc.
    Address:          371 Aokea Street
                      Honolulu, Hawaii 96819
    Attention:        Executive Vice President and Chief Financial Officer
    Facsimile:        (808) 833-3100
    Telephone:        (808) 836-4245

                                  -5-

<PAGE>

7.  THE SCHEDULES AND COMMON TERMS AGREEMENT

    ALL THE PROVISIONS OF SCHEDULE A HERETO, SCHEDULE B HERETO, AND THE
    COMMON TERMS AGREEMENT, ARE INCORPORATED BY REFERENCE HEREIN AND ARE
    PART OF THIS AIRCRAFT LEASE AGREEMENT AS IF THEY WERE SET OUT IN FULL
    HEREIN. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BY ITS
    SIGNATURE BELOW, THE LESSEE ACKNOWLEDGES AND AGREES THAT THE LEASE OF
    THE AIRCRAFT HEREUNDER IS ON AN "AS IS, WHERE IS" BASIS AND THAT THE
    DISCLAIMERS, EXCULPATIONS AND LIMITATIONS OF LIABILITY, INDEMNITEES, THE
    CHOICE OF NEW YORK LAW AS THE GOVERNING LAW, THE LESSEE'S SUBMISSION TO
    PERSONAL JURISDICTION IN NEW YORK, AND THE WAIVER OF ANY RIGHT TO A
    TRIAL BY JURY PROVIDED FOR IN THE COMMON TERMS AGREEMENT ARE
    INCORPORATED HEREIN BY SUCH REFERENCE AND ARE PART OF THIS AIRCRAFT
    LEASE AGREEMENT AS IF THE SAME WERE SET OUT IN FULL HEREIN.

8.  NO AMENDMENT EXCEPT IN WRITING

    No provision of this Lease, including any provision of Schedule A,
    Schedule B or the Common Terms Agreement, may be amended, rescinded,
    changed, waived, discharged, terminated or otherwise modified in any way
    whatsoever, except by a writing signed by the party to be charged.
    Lessor and Lessee acknowledge their agreement to the provisions of this
    Section 8 by their signatures below.

      [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. THE
                         SIGNATURE PAGE FOLLOWS]

                                  -6-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement, each by their duly authorized representative(s), as of the date
shown at the beginning of this Aircraft Lease Agreement.

LESSOR:                                  LESSEE:

AVIATION FINANCIAL SERVICES INC.         ALOHA AIRLINES, INC.

By: /s/  [Illegible]                     By:
   ----------------------------------       ----------------------------------
Name:    Norm Liu                        Name:
   ----------------------------------       ----------------------------------
Title: VICE PRESIDENT                    Title:
   ----------------------------------       ----------------------------------

                                         By:
                                            ----------------------------------
                                         Name:
                                            ----------------------------------
                                         Title:
                                            ----------------------------------

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement, each by their duly authorized representative(s), as of the date
shown at the beginning of this Aircraft Lease Agreement.

LESSOR:                                  LESSEE:

AVIATION FINANCIAL SERVICES INC.         ALOHA AIRLINES, INC.

By:                                      By: /s/ Brenda F. Cutwright
   ----------------------------------       ----------------------------------
Name:                                    Name: Brenda F. Cutwright
   ----------------------------------       ----------------------------------
Title:                                   Title: Exec. Vice President & CFO
   ----------------------------------       ----------------------------------

                                         By: /s/ James M. King
                                            ----------------------------------
                                         Name: James M. King
                                            ----------------------------------
                                         Title: VP Planning & Development
                                            ----------------------------------

<PAGE>

                                 SCHEDULE A

                  PART I-AIRFRAME AND ENGINES DESCRIPTION

AIRCRAFT
--------
     Manufacturer:              Boeing

     Model:                     737-700 ETOPS

     Serial Number:             30830

     U.S. Registration No.      To be advised at Delivery and included in Lease
                                Supplement No. 1

ENGINES (each of which has 750 or more rated takeoff horsepower or the
-------
equivalent of such horsepower)

     Engine Type:               CFM56-7B24
     Serial Nos:                To be advised at Delivery and included in Lease
                                Supplement No. 1

                               A-1

<PAGE>

                                 SCHEDULE A

                   PART II - DELIVERY CONDITION REQUIREMENTS

Set forth below is a description of the condition in which the Aircraft must
be in order for Lessee to be obligated to accept the Aircraft under the Lease.
It is solely a description of such condition precedent and shall not be
construed as a representation, warranty or agreement of any kind whatsoever,
express or implied, by Lessor with respect to the Aircraft or its condition,
all of which have been disclaimed by Lessor and waived by Lessee as set forth
in the Lease, including in the Common Terms Agreement.

DELIVERY CONDITION REQUIREMENTS:.

This "DELIVERY CONDITION REQUIREMENTS" are as follows:

     Airframe,           New from Manufacturer, configured in
     Engines,            accordance with GECAS Detail Specification
     Components:         D6-38808-34 (Revision D), except as
                         modified in accordance with the
                         specification changes noted on the Appendix
                         to this Schedule A-Part II

     Livery Painting:    Lessee's current livery as in effect on the date of
                         this Aircraft Lease Agreement, or such other
                         livery as Lessee may specify in writing to
                         Lessor so long as Lessee provides to Lessor,
                         reasonably in advance of the Scheduled
                         Delivery Month so as to permit Lessor to make
                         all necessary arrangements for such painting, all
                         technical specifications necessary in order to
                         complete the painting of the Aircraft in such
                         livery

                                   A-2

<PAGE>

                                                                   APPENDIX TO
                                                           SCHEDULE A, PART II

                            SPECIFICATION CHANGES

The following table outlines those specification items which the Lessee has
identified as requiring modification to make the GEF specification compatible
with those aircraft currently in operation by Lessee. Each of the items
listed under the column marked GECAS (left) shall be' modified during
production to reflect the configuration listed in the Aloha column (right).
All such modifications shall be accomplished at Lessor's expense.

Notwithstanding the above, it is furthered agreed that Lessee will afford
Lessor or its designated representative the opportunity to discuss alternate
proposals with regard to those modifications below which cause BFE vendor
changes to Lessor's baseline specification (ref D6-38808-34);

<Table>
<Caption>

<S>     <C>                                                       <C>                       <C>
01      GENERAL AIRPLANE DESCRIPTION                              GECAS                     ALOHA
        Manuals/Instrumentation Units                             Metric                    English

03      GENERAL AIRPLANE CRITERIA
        Operational Capabilities
         Max Taxi Weight                                          133,500 lbs               155,000 lbs
         Max Takeoff Weight                                       133,000 lbs               154,500 lbs

11      PLACARDS and MARKINGS
        Exterior Registry Markings                                No                        Yes

21      AIR CONDITIONING
        Cabin Ascent Rate (ft/min)                                600                       750
        Cabin Descent Rate (ft/min)                               350                       500

22      AUTOMATIC FLIGHT CONTROL
        DFCS Features
        Control Wheel Steering Reversion in Approach Mode         Yes                       No
        Altitude Alert (ft)                                       300/900                   200/900

23      COMMUNICATION
        Voice Recorder                                            (1) Allied Signal 980-    (1) Loral Fairchild
                                                                  6022-001 ARINC            2100-1020-00
                                                                  557
        Man ON/Auto OFF Switch                                    YA607-YA670               Yes
        Audio Entertainment                                       None                      Matsushita (MPES)
                                                                                            RDAX1302-11
        Video Entertainment                                       None                      SONY/PSU
                                                                                            mounted

</Table>

                                     A-3

<PAGE>

<Table>
<Caption>

<S>     <C>                                                       <C>                       <C>
        Monitors                                                 Structural Provs 5         VCC same as GEF
                                                                 Centerline Ovhd
        Video Control Center (VCC)                               Structural Provs Aft
                                                                 RH Stow Bin
        HF System                                                Single/Complete            Dual
                                                                 Provs for second
        Transceiver                                              (1) Rockwell 822-          (2) Rockwell 822
                                                                 0990-001 ARINC             0330-001
                                                                 719753

        VHF System                                               Dual/Complete Provs        Triple
                                                                 for Third

        Transceiver                                              (2) Allied Signal 064-     (3) Rockwell 822
                                                                 50000-0110 ARINC           1047-002
                                                                 716
        8.33 KHZ Spacing
           Capable                                               YA601-YA606                Yes
           Activated                                             YA607-YA670                No
        ACARS                                                    Part- Provisions for       Rockwell 822-0666
                                                                 ARINC 724B                 003
        ELT No                                                                              Artex. 453-0004.

24      ELECTRICAL POWER
        Standby Power Load Additions
         Captain's Pilot Heat                                    YA607-YA670                No
         ATC No. I                                               No                         Yes
25     EQUIPMENT FURNISHINGS                                                                See NOTE 1
       Interior Layout (See Attached)                            LOPS-377-0201              LOPS-377-0203
                                                                                            12F@38"/112Y@
                                                                                            31" with fixed class
                                                                                            divider.
       Overwater Equipped                                        No, Lifevests Only         Yes, 3 x 46 man
        Lifeline                                                 Yes                        Liferafts
       Installed Positions                                       G1, G4B                    Gl, G2, G4B
       Provisions                                                G2 (Seat Track-3/          G2 half galley
                                                                 Power/Water/ Drain/        underbin (Jamco)
                                                                 Ovhd Ties)

       Windscreen(s)                                             Fwd RH Sta 336.75          Fwd Left Hand with
                                                                                            emerg. Equip.
                                                                                            stowage and closet
                                                                                            at BS350
       Class Divider(s)                                                                     Fixed
        Rails                                                    Yes (Basic)                Yes (Basic)
        Stow Bin Cutout                                          YA610-YA670 Yes            No
       Center Overhead Stowage Bmis                              No                         Yes (3)
                                                                                            (1) Forward
                                                                                            (2) Center

</Table>

                                    A-4

<PAGE>

<Table>
<Caption>

<S>    <C>                                                       <C>                        <C>
28     FUEL
       Measuring Sticks
         Conversion Tables                                       NDU to Kilograms           NDU to Pounds

29     HYDRAULIC POWER
       Engine Driven Pump                                        Abex                       Vickers
                                                                 10-62167-2
       AC Electric Pump                                          Abex
                                                                 10-60556-30
31     INDICATING/RECORDING SYSTEMS
       Flight Data Recorder                                      AlliedSignal 980-          L-3
                                                                 4700-042 ARINC             Communications
                                                                 747                        2100-4043-00
       Digital Flight Data Acquisition Unit                      Teledyne 2233000-85        AlliedSignal 967-
                                                                 ARINC 717                  0212-002
       Printer                                                   Part Provs Half            Full Format
                                                                 Format
       Data Loader                                               Connector                  AlliedSignal 964-
                                                                                            0401-016
       Display Format                                            EFIS/MAP                   PFD/ND
       Engine Instrument Display                                 Side-by-Side               Over/Under
       Engine Fuel Flow                                          N/A                        Full Time Display
       Radio Altitude Display                                    Below ADI                  Above ADI
       Round Dial & Digital Radio Altitude                       N/A                        Yes
       Ground Speed - Below Airspeed Tape                        N/A                        Yes
       Landing Altitude Reference Bar                            N/A                        Yes
       Baro Mins Pointer                                         N/A                        Yes
       Radio Altitude Height Alert Display                       No                         2500 Feet
       ADF Pointers in NAV Mode Display                          Suppressed
       TCAS 3 NM Range Ring - Nav Display                        No                         Yes
       FMC/ADIRU Position Difference Display                     Exceedence
       Weather Radar Range Area                                  Yes                        Yes
       TCAS Resolution Advisory                                  ADI                        ADI
       ILS Failure Flags                                         Inhibited
       ILS Localizer Deviation Expanded Scale                    Autopilot & Flt Dir        Autopilot & Flt Dir
       Oil Quantity Display                                      % Full Quantity            Quarts
       Approach Minimums                                         Radio Based
       Airspeed Bug #5                                           Disabled                   80 Knots
       Control Surface Position - System Display                 N/A                        Yes
32     NOSE GEAR TAXI LIGHT                                      250 Watt                   450 Watt
33     LIGHTING
       Passenger Cabin Lighting (Zone)                           Single                     Two

</Table>

                                    A-5

<PAGE>

<Table>
<Caption>

<S>    <C>                                                        <C>                        <C>
       Escape Path Lighting                                                                  Seat Mounted

34     NAVIGATION
       Standby Altitude Indicator                                 (1) BF Goodrich 501-       Sextent
                                                                  1657-02
       Ground Proximity Warning Computer                          AlliedSignal 965-        AlliedSignal 965-
                                                                  0976-003-204-204          0976-003-204-204
                                                                  (Enhanced)                (Enhanced)
         Callouts                                                 Bank Angle (Basic)        Bank Angle (Basic)
                                                                                            "Plus 100
                                                                                            Minimums"
       VHF Nav (VOR)/Marker Beacon Receiver                       (2) AlliedSignal 066-     Rockwell 822-0297-
                                                                  50012-0101 ARINC          001
                                                                  711
       Multi-Mode Receiver (MMR)(ILS/GPS)                         (2) AlliedSignal 066-     Rockwell 822-1152-
                                                                  50029-1101                002
       ATC Transponder                                            (2) AlliedSignal 066-     Rockwell 822-0336-
                                                                  01127-1301 ARINC          001
                                                                  718
       TCAS Change 7                                              AlliedSignal 066-         No
                                                                  0 1127-1601 YA609-
                                                                  YA670
       DME Interrogator                                           (2) AlliedSignal 066-     Rockwell 822-0329-
                                                                  50013-0101 ARINC          001
                                                                  709
       ADF Receiver                                               (1) AlliedSignal 066-     (2) Rockwell 822-
                                                                  50014-0101 ARINC          0299-001
                                                                  712
         Dual                                                     Provisions
       TCAS Computer                                              (1) AlliedSignal 066-     Rockwell 622-8971-
                                                                  50000-1508 ARINC          020
                                                                  735
       TCAS Change 7                                              AlliedSignal 066-         No
                                                                  50000-2220 YA609-
                                                                  YA670
       Flight Management Computer System
         Computer                                                 (1) Smiths Indust 10-     (2) Smiths Indust
                                                                  62225-003                 10-62225-003
         2nd Computer                                             Partial Provisions        Installed
       CDU/MCDU                                                   CDU                       MCDU
       Date Base Size
         1 MEG                                                    YA601
         2 MEG                                                    YA602-YA670               Yes
       Built-In Test Equip Printer Receptacles                    No                        No
       FMCS Definition
         Runaway Offset Position                                  Feet                      Feet
         Alternate Destinations Predictions                       Inhibit                   Yes

</Table>

                                     A-6

<PAGE>

<Table>
<Caption>

<S>    <C>                                                        <C>                        <C>

         Retention of Original Waypoints                          Inhibit                    Yes
         Message Recall                                           Inhibit                    Yes
       LRRA Transceiver                                           (2) AlliedSignal 066-      Rockwell 822-0334-
                                                                  50007-0101                 002
       Weather Radar Transceiver                                  (1) AlliedSignal 066-      Rockwell 622-5132-
                                                                  50008-0405                 633
         Predictive Windshear                                     Activated                  Activated

35     OXYGEN
       Flight Crew System - Press Breathing                       Yes                       No

38     WATER/WASTE
       Potable Water: CapNol (US Gallons)                         40/40                     60/50

39     E6PANEL                                                                              Yes

52      DOORS
        Airstairs, Forward                                        Part Provisions +         Installed
                                                                  Install Data Kit

</Table>

                                       A-7

<PAGE>

                                   SCHEDULE A

           PART III- PROCEDURES AND OPERATING CONDITION AT REDELIVERY

            On the Return Occasion the Aircraft, subject to ordinary wear and
            tear of a kind and to an extent consistent with similar aircraft
            engaged in commercial airline operations, will be redelivered to
            Lessor by Lessee in accordance with the procedures and in any event
            in the condition set out below. For the avoidance of doubt, any
            damage assessment and/or rectification criteria used in assessing
            the redelivery condition shall be as prescribed in the
            Manufacturer's structural repair manual ("SRM") and/or the
            Manufacturer's Maintenance Planning Document, as appropriate. Any
            damage outside the scope of the SRM shall require FAA 8110-3
            certification.

   1.1      FINAL INSPECTION

            Immediately prior to the Return Occasion, Lessee will make the
            Aircraft available to Lessor and Owner for inspection ("FINAL
            INSPECTION") in order to verify that the condition of the Aircraft
            complies with the Lease. The Final Inspection will include, and be
            long enough to permit Lessor to:

            (a)     inspect the Aircraft Documents and Records;

            (b)     inspect the Aircraft (with Lessee to open or remove panels
                    as reasonably requested by Lessor or Owner based on Lessor's
                    or Owner's visual observation of the Aircraft and/or their
                    respective review of the Aircraft Documents and Records),
                    uninstalled Parts and the APU (including a complete video
                    borescope inspection of the APU);

            (c)     inspect the Engines, including (i) a complete video
                    borescope inspection of (A) the low pressure and high
                    pressure compressors and (B) turbine area and (ii) power
                    assurance runs (including full take-off power engine run-up
                    performed in accordance with the performance test in the
                    Engine Manufacturer's test specifications, and the Engines
                    shall not exceed corrected limits for all parameters using
                    temperature corrected charts); and

            (d)     observe a two hour demonstration flight at Lessee's cost
                    (with up to three (to the extent permitted by FARS) of
                    Lessor's and Owner's representatives as on-board
                    observers).

            Furthermore, Lessee acknowledges that a purchaser or the next
            operator of the Aircraft may need to inspect the Aircraft, the
            Engines and the Aircraft Documents and Records prior to redelivery
            and Lessee hereby agrees to cooperate reasonably at all times
            during the Term

                                       A-8

<PAGE>

            with Lessor, Owner and/or such purchaser or such next operator in
            order to coordinate, assist and grant access for the above
            inspections and/or sale or subsequent lease as applicable.

            Lessor or Owner, as the case may be, is responsible for and will
            indemnify Lessee against all Losses arising from the death or injury
            to any observer or any employee of Lessor or Owner, as the case may
            be, in connection with the inspection of the Aircraft under this
            Section 1.1.

   1.2    GENERAL CONDITION

          The Aircraft will:

          (a)       be in the same configuration as at Delivery after giving
                    effect to any post-Delivery modifications to the Aircraft
                    paid for or otherwise provided by or on behalf of Lessor (or
                    as permitted by the Lease or as otherwise mutually agreed),
                    be in as good operating condition and appearance as when
                    delivered to Lessee (after giving effect to any such
                    post-Delivery modifications), except for ordinary wear and
                    tear and alterations and modifications authorized or
                    required under the Lease and paid for by Lessee or a
                    Sub-Lessee, and be clean by major passenger airline
                    standards;

          (b)       have installed the full complement of equipment, parts,
                    accessories, furnishings and loose equipment as when
                    originally delivered to Lessee (subject to Lessee's rights
                    under Section 8.12 to reverse certain Equipment Changes,
                    after giving effect to all modifications, repairs or
                    maintenance performed during the Term, regardless of whether
                    paid for by Lessee or Lessor) and the Aircraft (including
                    the Aircraft Documents and Records) shall be in a condition
                    suitable for immediate registration with the FAA (assuming
                    that the Owner qualifies for such registration) and
                    immediate operations under FAR Part 121 with a new operator,
                    without waiver, unless the benefit of such waiver is
                    applicable to the next operator of the Aircraft; and if any
                    of the engines or parts tendered for redelivery with the
                    Aircraft is not one of the Engines or Parts referred to in
                    the Certificate of Technical Acceptance or a Replacement
                    Engine installed pursuant to Section 8.11(b) following an
                    Engine Event of Loss, Lessor shall have no obligation to
                    accept such engine or part unless Lessee furnishes to Lessor
                    all the documents and evidence in respect of such engine or
                    part in accordance with Section 8.11(b), as if such engine
                    were a Replacement Engine or replacement Part, and otherwise
                    complies with such Section 8.11(b) with respect thereto;

          (c)       have in existence a valid and effective certificate of
                    airworthiness (and if required by Lessor, a valid and
                    effective export certificate of airworthiness) with
                    respect to

                                       A-9

<PAGE>

                    the Aircraft issued by the Air Authority (in the case of an
                    export certificate of airworthiness no earlier than 30 days
                    prior to the redelivery);

          (d)       comply with the Manufacturer's original specifications as at
                    the Delivery, except as modified during the Term in
                    accordance with the Manufacturer's service bulletins or
                    letters, Airworthiness Directives, Air Authority approved
                    data or otherwise as permitted by the Lease;

          (e)       be fresh out of a "C" Check (or higher check if applicable)
                    in block format (which shall be the next sequential "C"
                    Check under Lessee's Maintenance Program following the last
                    regularly scheduled "C" Check performed by Lessee prior to
                    the Return Occasion if Lessee's Maintenance Program is based
                    on the then current Manufacturer's Maintenance Planning
                    Document in block format. If Lessee's Maintenance Program is
                    not based on the Manufacturer's Maintenance Planning
                    Document in block format, then Lessee shall integrate the
                    Aircraft Maintenance Program onto the then current
                    Manufacturer's Maintenance Planning Document Block
                    Maintenance Program such that all airframe inspections
                    falling due within the "C" check interval (which shall not
                    be less than 4,000 Flight Hours) as defined in and in
                    accordance with the Manufacturer's Maintenance Planning
                    Document have been accomplished;

          (f)       have had accomplished all outstanding Airworthiness
                    Directives affecting that model of Aircraft issued by the
                    FAA requiring action during the Term or within 180 days
                    after the Return Occasion or the Scheduled Expiry Date,
                    whichever is later; for this purpose, compliance shall be by
                    terminating action if

                    (i)       Lessee has complied by terminating action for
                              sixty-five percent (65%) of the aircraft of the
                              same model and series then operated by Lessee; or

                    (ii)      the latest date permitted by such Airworthiness
                              Directive for required compliance by terminating
                              action falls within 180 days after the Return
                              Occasion or the Scheduled Expiry Date, whichever
                              is later.

                    (iii)     In no event shall there be any non-transferable
                              time extensions, waivers, deviations or
                              alternative means of compliance with any
                              Airworthiness Directions or other Regulations.

          (g)       have installed all applicable vendor's and Manufacturer's
                    service bulletin kits received free of charge by Lessee
                    during the Term that are appropriate for the Aircraft and to
                    the extent not installed, those kits will be furnished free
                    of charge to Lessor;

                                      A-10

<PAGE>

          (h)       have the fuselage, empennage, wings and pylons stripped (or
                    sanded if only three or less coats of paint) and painted in
                    such livery as Lessor may designate in accordance with
                    standard industry practice;

          (i)       have all signs and decals clean, secure and legible;

          (j)       [NOT APPLICABLE];

          (k)       have no open, deferred, continued, carry over or placarded
                    maintenance items or watch items or placarded log book
                    items, and all other log book discrepancies shall be
                    cleared;

          (l)       all discrepancies discovered during the inspections
                    described above which exceed the Manufacturer's maintenance
                    manual allowable limits for in-service aircraft shall have
                    been repaired in accordance with FAA-approved procedures;

          (m)       all repairs of a temporary or interim nature, requiring
                    repetitive inspections or future upgrading, including
                    external doublers with blind fasteners, shall be upgraded to
                    permanent repair in accordance with the Manufacturer's
                    Maintenance Planning Document or structural repair manual;
                    and

          (n)       all systems shall be fully operational for their intended
                    functions in accordance with the Manufacturer's Maintenance
                    Planning Document specifications.

1.3       COMPONENTS

          (a)       If the Aircraft Lease Agreement specifies Minimum Component
                    Flight Hours and/or Minimum Component Cycles, each Airframe
                    Flight Hour and Cycle controlled Hard Time Component (other
                    than the APU) shall have not less than the Minimum Component
                    Flight Hours and the Minimum Component Cycles of life
                    remaining to the next scheduled removal, in accordance with
                    the Lessee's Maintenance Program and shall be supported by
                    appropriate certification documentation indicating TSN, CSN,
                    TSO and CSO such as FAA form 8130-1; for this purpose "Hard
                    Time Component" means any component which has a limited
                    on-wing life in accordance with the Manufacturer's
                    Maintenance Planning Document and which can have life fully
                    restored through appropriate maintenance;

          (b)       If the Aircraft Lease Agreement specifies a Minimum
                    Component Calendar Life, each calendar-limited component
                    including safety equipment will have not less than its
                    Minimum Component Calendar Life remaining to the next
                    scheduled removal in accordance with the Lessee's
                    Maintenance Program;

          (c)       Each "on-condition" and "condition-monitored" component will
                    be serviceable;

                                      A-11

<PAGE>

          (d)       The installed components as a group will have an average of
                    total flight time since new of not more than that of the
                    Airframe;

          (e)       If the Aircraft Lease Agreement specifies Minimum Component
                    Flight Hours and/or Minimum Component Cycles, each Airframe
                    Life-Limited Component will have not less than the Minimum
                    Component Flight Hours and the Minimum Component Cycles
                    remaining to next scheduled removal and will be supported by
                    certification documentation necessary to demonstrate
                    back-to-birth traceability; for this purpose "Airframe
                    Life-Limited Component" means a component with an ultimate
                    life which cannot be restored through appropriate
                    maintenance.

1.4       ENGINES

          Each Engine (or a Replacement Engine as and to the extent permitted by
          Section 1.2(b)) will be installed on the Aircraft and comply with the
          following:

          (a)       If the Aircraft Lease Agreement specifies a Minimum Engine
                    Flight Hours and/or Minimum Engine Cycles, each Engine will
                    have not less than the Minimum Engine Flight Hours and
                    Minimum Engine Cycles expected life remaining to the next
                    scheduled removal. The expected life remaining will be
                    determined by third party mutually acceptable to both Lessor
                    and Lessee (at Lessor's cost) or by the Engine Manufacturer,
                    in each case based on the inspection and checks to be
                    performed at the Return Occasion in accordance with the
                    Lease;

          (b)       Each Engine shall have just completed at the location for
                    Lessor's acceptance on the Return Occasion a hot (including
                    combustion chamber) and cold section video borescope
                    inspection, which inspection shall be performed at Lessor's
                    expense, and a power assurance run performed at Lessee's
                    expense in accordance with the Lessee's Maintenance Program
                    or Manufacturer's Maintenance Planning Document and any
                    defects discovered in such inspections which exceed the
                    Engine manufacturer's in-service limits shall be corrected
                    at Lessee's expense. Lessee shall cause such borescope
                    inspections to be performed and to be recorded on videotape
                    by an agency selected by Lessor and shall provide Lessor
                    with a copy of such videotape on the Return Occasion. No
                    Engine shall be on "watch" for any reason requiring any
                    special or out of sequence inspection. Each Engine shall
                    comply with the operations specification of Lessee without
                    waiver or exceptions. All items beyond the Engine
                    manufacturer's in-service limits shall be repaired;

          (c)       If the Aircraft Lease Agreement specifies Minimum Component
                    Cycles, each Engine Life-Limited Component will have not
                    less than the Minimum Component Cycles remaining per the
                    manufacturer's then current limitations for the part

                                      A-12

<PAGE>

                    number in question, and will be supported by certification
                    documentation necessary to demonstrate back-to-birth
                    traceability; for this purpose "Engine Life-Limited
                    Component" means a component with an ultimate life which
                    cannot be restored through appropriate maintenance; and

1.5       FUSELAGE, WINDOWS AND DOORS

          (a)       The fuselage will be free of major dents and abrasions in
                    excess of the limits specified in Manufacturer's Maintenance
                    Planning Document or structural repair manual; loose or
                    pulled or missing rivets shall be replaced;

          (b)       Windows will be free of delamination, blemishes and crazing,
                    in excess of the limits specified in the Manufacturer's
                    Maintenance Planning Document or structural repair manual
                    and will be properly sealed; and

          (c)       Doors will be free moving, correctly rigged and be fitted
                    with serviceable seals.

1.6       WINGS AND EMPENNAGE

          (a)       Leading edges will be free from damage in excess of the
                    limits specified in the Manufacturer's Maintenance Planning
                    Document or structural repair manual; and

          (b)       Unpainted surfaces of the wings and empennage will be
                    polished.

1.7       INTERIOR AND COCKPIT

          All soft furnishings, including but not limited to carpets, seat
          covers and curtains, will be in good condition, clean and free of
          stains and meet FAR fire resistance regulations.

1.8       LANDING GEAR; WHEELS AND BRAKES

          (a)       The Landing Gear and wheel wells will be clean, free of
                    leaks and repaired as necessary;

          (b)       Each installed Landing Gear shall have no more Cycles
                    accumulated than the Airframe and, if the Aircraft Lease
                    Agreement specifies Minimum Landing Gear Flight Hours and/or
                    Minimum Landing Gear Cycles and Minimum Landing Gear
                    Calendar Time, not less than the Minimum Landing Gear Flight
                    Hours and the Minimum Landing Gear Cycles and the Minimum
                    Landing Gear Calendar Time shall be remaining to the next
                    scheduled overhaul or removal, as the case may be, of each
                    installed Landing Gear in accordance with the then current
                    Manufacturer's Maintenance Planning Document and Lessee's
                    Maintenance Program; and

          (c)       The wheels and brakes will have not less than half of their
                    useful life remaining.

                                      A-13

<PAGE>

1.9       RETURN OF AUXILIARY POWER UNIT (APU)

          The APU shall have just completed a borescope inspection and shall
          meet all air outputs and temperature limitations under load in
          accordance with the Lessee's Maintenance Program and the APU
          manufacturer's maintenance manual, and any defects discovered in such
          inspection, which exceed the APU manufacturer's in-service limits,
          shall be corrected at Lessee's expense. If the Aircraft Lease
          Agreement specifies a Minimum APU Limit, the APU shall have not more
          than the Minimum APU Limit since the last gas path refurbishment. If
          the Aircraft Lease Agreement specifies a Minimum APU LLP Limit, APU
          Life Limited Parts shall have not less than the Minimum APU LLP Limit
          of useful life remaining on average.

1.10      CORROSION

          (a)       The Aircraft shall be in compliance with the Manufacturer's
                    corrosion prevention and control program (CPCP)
                    requirements. All CPCP inspections which would normally be
                    accomplished while access is provided during structural
                    inspection in accordance with the Lessee's Maintenance
                    Program during the Term shall have been accomplished;

          (b)       The entire fuselage will be substantially free from
                    corrosion and will be adequately treated in accordance with
                    Lessee's corrosion prevention program and the Manufacturer's
                    Maintenance Planning Document; and

          (c)       Fuel tanks will be free from contamination and corrosion and
                    a tank treatment program will be in operation.

1.11      FUEL

          If the Aircraft Lease Agreement specifies a Minimum Measurable Fuel
          Requirement, at redelivery, the Aircraft fuel tanks shall contain at
          least enough fuel to meet the Minimum Measurable Fuel Requirement.

1.12      MAINTENANCE PROGRAM

          (a)       Prior to the Return Occasion and upon Lessor's or Owner's
                    request, Lessee will provide Lessor or Owner or its agent
                    reasonable access to the Lessee's Maintenance Program and
                    the Aircraft Documents and Records in order to facilitate
                    the Aircraft's integration into any subsequent operator's
                    fleet; and

          (b)       Lessee will, if requested by Lessor or Owner to do so,
                    provide sufficient access to Lessee's Maintenance Program in
                    order to integrate the Aircraft to the next operator's
                    maintenance program. Lessor and any Person to whom Lessor
                    grants

                                      A-14

<PAGE>

                    access to Lessee's Maintenance Program shall agree that it
                    will not disclose the contents of the Lessee's Maintenance
                    Program to any Person except to the extent necessary to
                    monitor Lessee's compliance with the Lease and/or to bridge
                    the maintenance program for the Aircraft from the Lessee's
                    Maintenance Program to another program after the Return
                    Occasion.

1.13      AIRCRAFT DOCUMENTS

          At redelivery Lessee will deliver to Lessor and Owner all current and
          complete historical records required to be maintained relevant to the
          Aircraft, including documents, manuals, data, overhaul records, life
          limited part traceability to "zero time since new", log books,
          original delivery documents serviceable parts tags, FAA forms,
          modification records and inspection records, and including each of the
          Aircraft Documents and Records.

1.13.     ETOPS:

          The Aircraft shall be certified by the FAA for 180 minutes ETOPS
          operation or shall be in such condition as to be eligible for
          certification by the FAA for 180 minutes ETOPS operation.

                                      A-15

<PAGE>

                                   SCHEDULE B
                                COMMERCIAL TERMS

             Lessor and Lessee hereby agree that the definitions and other
    commercial and financial terms set forth in this Schedule B shall apply to
    the leasing of the Aircraft under the Lease.

             In addition, Lessor and Lessee understand and agree that the
    commercial and financial information contained in this Schedule B are
    considered by Lessor and Lessee as proprietary and confidential. Lessor and
    Lessee each hereby agree, and any of their assignees, upon becoming such
    shall agree that it will treat this Schedule B as proprietary and
    confidential and will not, without the prior written consent of the other,
    disclose or cause to be disclosed, the terms hereof or thereof to any
    Person, except to its agents, representatives, advisors, employees, counsel,
    underwriters, auditors, investors, financing parties, head lessors
    and sub-lessees as necessary or appropriate for the leasing transaction
    which is the subject hereof, or except (a) as may be required by applicable
    Law or pursuant to an order, or a valid and binding request, issued by any
    court or other Government Entity having jurisdiction over Lessor, Lessee or
    the assignee of either of them, as the case may be, or (b) as necessary to
    enable Lessor or its assignee to make transfers, assignments or other
    dispositions to potential transferees, assignees or participants of its
    interest in and to the Lease.

             In connection with any such disclosure or any filing of the
    information contained herein or therein pursuant to any such applicable Law,
    Lessor, Lessee or the assignee of either of them, as the case may be, shall
    request and use its best reasonable efforts to obtain confidential treatment
    of this Schedule B and the other party will cooperate in making and
    supporting any such request for confidential treatment.

    PART I            CASUALTY OCCURRENCE DEFINITIONS

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]

                                       B-1

<PAGE>

    PART II         DEPOSIT; DISCOUNT RATE; LC AMOUNT; INTEREST RATE

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]

    PART III        RENT

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]

                                       B-2

<PAGE>

     PART IV          TAX DEFINITIONS; SPECIAL TAX INDEMNITY

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]

                                       B-3

<PAGE>

      PART V            SUPPLEMENTAL RENT - NOT APPLICABLE

      PART VI           MAINTENANCE AND RETURN CONDITION DEFINITIONS;
                        AIRWORTHINESS DIRECTIVE SHARING PAYMENTS

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]

                                       B-4

<PAGE>

     PART VII SUBLEASE FEE

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]

     PART VIII UTILIZATION RATIO

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]

                                       B-6

<PAGE>

                                                               EXECUTION VERSION
                                                               -----------------

                     -------------------------------------
                                 AIRCRAFT LEASE

                             COMMON TERMS AGREEMENT
                     -------------------------------------

                             DATED AS OF MAY 12,2000

                                     BETWEEN

                      GENERAL ELECTRIC CAPITAL CORPORATION

                                       And

                              ALOHA AIRLINES, INC.

<PAGE>

                                    CONTENTS
<TABLE>
<CAPTION>

  SECTION                                                                   PAGE
<S>       <C>                                                                <C>
  1.      INTERPRETATION ...................................................  1

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

  3.      CONDITIONS PRECEDENT .............................................  2

  4.      COMMENCEMENT .....................................................  3

  5.      PAYMENTS .........................................................  5

  6.      MANUFACTURER'S WARRANTIES ........................................ 19

  7.      LESSOR'S COVENANTS ............................................... 20

  8.      LESSEE'S COVENANTS ............................................... 20

  9.      INSURANCE ........................................................ 38

  10.     INDEMNITY ........................................................ 39

  11.     EVENTS OF LOSS ................................................... 41

  12.     RETURN OF AIRCRAFT ............................................... 42

  13.     DEFAULT .......................................................... 45

  14.     TRANSFER ......................................................... 52

  15.     MISCELLANEOUS .................................................... 54

  16.     DISCLAIMERS AND WAIVERS .......................................... 58

  17.     BROKERS AND OTHER THIRD PARTIES .................................. 61
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                <C>
 Schedule 1        Definitions
 Schedule 2        Representations and Warranties
 Schedule 3        Conditions Precedent
 Schedule 4        Pre-Delivery Procedures and Delivery Condition
 Schedule 5        Certificate of Technical Acceptance
 Schedule 6        [NOT APPLICABLE]
 Schedule 7        Insurance Requirements
 Schedule 8        Form of Lessee's Legal Opinion
 Schedule 9        Events of Default
 Schedule 10       [NOT APPLICABLE]
 Schedule 11       Form of Lease Termination Certificate
 Schedule 12       Form of Lease Supplement No. 1
 Schedule 13       Form of Letter of Credit
 Schedule 14       Maintenance Performers
 Schedule 15       Technical Report
</TABLE>

<PAGE>

                             COMMON TERMS AGREEMENT

THIS COMMON TERMS AGREEMENT (this "CTA") is made as of May 12,2000 BETWEEN:

(1)  GENERAL ELECTRIC CAPITAL CORPORATION ("GE CAPITAL") and

(2)  ALOHA AIRLINES, INC. ("ALOHA")

 WHEREAS:

     (A)  From time to time, Aloha or one of its Affiliates may wish to lease
          commercial aircraft from GE Capital or one of its Affiliates, and GE
          Capital or one of its Affiliates may wish to lease commercial
          aircraft to Aloha or one of its Affiliates;

     (B)  Each party hereto wishes to provide in one document for certain common
          terms and conditions, as hereinafter provided in this CTA, that will
          be applicable, unless otherwise stated, to each such lease referred to
          in Recital (A); and

     (C)  Each such lease transaction will be concluded only on the terms of an
          agreement entitled "Aircraft Lease Agreement," which together with
          this CTA (which will be incorporated into and become part of such
          Aircraft Lease Agreement), will constitute the lease for the
          applicable aircraft as identified therein;

NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.   INTERPRETATION

1.1  Definitions

     All references herein to "Lease" mean the integrated agreement consisting
     of the various documents comprising the Lease as defined in Schedule 1. In
     the Lease, capitalized words and expressions have the meanings set out for
     them in Schedule 1 and in the Aircraft Lease Agreement.

1.2  Construction

     (a)  In the Lease, unless otherwise stated, a reference to:

          (i)  "Lessor," "Lessee," "GECAS," "Owner" or any other Person includes
               any of their successors and assignees;

          (ii) plural concepts shall include the singular and vice versa;

<PAGE>

          (iii) any document (except this CTA unless Lessor and Lessee otherwise
               expressly agree) shall include any changes to that document and
               any replacement for it;

          (iv) a Section or a Schedule is a reference to a clause of or a
               schedule to this CTA;

          (v)  any Regulation shall include any changes to that Regulation and
               any replacement for it;

          (vi) an obligation of a Person refers to any obligation that Person
               has under or in relation to the Lease; and

          (vii) "includes", "including", "include" or similar terms shall not be
               construed as limiting and shall mean "including, without
               limitation."

     (b)  Headings to Sections and Schedules in the Lease are not intended to
          affect their meaning.

2.   REPRESENTATIONS AND WARRANTIES

2.1  Lessee's Representations and Warranties

     Lessee hereby makes the representations and warranties set out in Section
     1.1 of Schedule 2 as of the date of execution of the Aircraft Lease
     Agreement and as of the Delivery Date, and Lessee understands that these
     statements must be true, both when the Aircraft Lease Agreement is executed
     and on the Delivery Date.

2.2  Lessor's Representations and Warranties

     Lessor hereby makes the representations and warranties set out in Section
     1.2 of Schedule 2 as of the date of execution of the Aircraft Lease
     Agreement and as of the Delivery Date, and Lessor understands that these
     statements must be true, both when the Aircraft Lease Agreement is executed
     and on the Delivery Date.

3.   CONDITIONS PRECEDENT

3.1  Conditions Precedent

     Lessor need not deliver and start the leasing of the Aircraft under the
     Lease unless each of the Lessor Conditions Precedent is satisfied or waived
     in writing by Lessor. Lessee need not accept and start the leasing of the
     Aircraft under the Lease unless each of the Lessee Conditions Precedent is
     satisfied or waived in writing by Lessee; provided, however, in the event
     that Lessee fails to accept and start the leasing of the Aircraft under the
     Lease, any Lessee Condition Precedent which reasonably could be expected to
     be met if the Delivery of the Aircraft had

                                      - 2 -
<PAGE>

     occurred shall be deemed to have been satisfied or waived for purposes of
     determining Lessee's liability for Rent in respect of the Aircraft in
     accordance with Section 4.1(b) below.

3.2  Waiver

     If any Lessor Condition Precedent is not satisfied, or waived in writing by
     Lessor, on or before the Delivery Date and Lessor (in its absolute
     discretion) nonetheless agrees to deliver the Aircraft to Lessee and to
     start the leasing of the Aircraft, Lessee will ensure that such Lessor
     Condition Precedent is fulfilled within 15 days after the Delivery Date,
     and Lessor may treat as an Event of Default the failure of Lessee to do so.

4.   COMMENCEMENT

4.1  Leasing

     (a)  Lessor shall notify Lessee of the Scheduled Delivery Week as soon as
          possible, but no later than at least thirty (30) days prior to the
          Scheduled Delivery Month, and Lessor shall notify Lessee of the
          Scheduled Delivery Date as soon as possible, but no later than at
          least one (1) week prior to the Scheduled Delivery Week. Subject to
          Sections 3.1 and 4.4, Lessor will lease the Aircraft to Lessee and
          Lessee will take the Aircraft on lease for the Term, which shall
          commence on the Delivery Date, and which shall be evidenced by
          Lessee's execution of Lease Supplement No. 1.

     (b)  If (i) Lessee is unwilling or unable to accept delivery of the
          Aircraft on the date on which Lessor tenders the Aircraft for Delivery
          to Lessee under and in accordance with Section 4.3(a), or Lessee fails
          to fulfil any Lessor Condition Precedent on or before such date, and
          (ii) the Lessee Conditions Precedent are met (or could reasonably be
          expected to be met if Delivery had occurred), then the Rent
          Commencement Date for the Aircraft shall be deemed to have occurred on
          the date on which it is tendered by Lessor for Delivery in accordance
          with subclause (ii) of this Section 4.1(b), and Lessee shall be
          obligated to pay Rent for the Aircraft on and from such date
          regardless of whether the Delivery Date occurs or whether Lessee
          executes Lease Supplement No. 1, but Lessor shall have no obligation
          to deliver, and Lessee shall have no lease interest in the Aircraft or
          other right to possession of the Aircraft, unless and until Lessee
          fulfils all Lessor Conditions Precedent as and when provided in the
          Lease and Lessee accepts delivery of the Aircraft as evidenced by its
          execution of Lease Supplement No. 1, and so long as no Default has
          occurred and is continuing.

     (c)  Lessee will be responsible for all risks associated with any loss of
          or damage to the Aircraft from the Rent Commencement Date until
          possession of the Aircraft is returned

                                      - 3 -
<PAGE>

          to Lessor on the Return Occasion and Lessor executes and delivers to
          Lessee the acknowledgement contemplated by Section 12.4.

4.2  Procedure before Delivery

     Lessor and Lessee will follow the Pre-Delivery Procedure.

4.3  Delivery and Acceptance

     (a)  After the Pre-Delivery Procedure has been carried out:

          (i)  Subject to Section 3.1, Lessor will tender delivery of the
               Aircraft to Lessee at the Delivery Location.

          (ii) Subject to Section 3.1, Lessee will accept the Aircraft. Upon
               such acceptance, Lessee must also provide evidence of its
               acceptance by signing Lease Supplement No. 1 and delivering it to
               Lessor.

     (b)  Lessee's acceptance of the Aircraft shall be regarded as absolute,
          unconditional and irrevocable.

4.4  Delayed Delivery

     If Delivery takes place after the Scheduled Delivery Date or does not
     happen due to an Unforeseen Event or for any other reason (other than
     Lessor's willful misconduct in the performance of its obligation to deliver
     the Aircraft under and subject to the conditions in the Lease):

     (a)  Lessor will not be responsible for any Losses that Lessee suffers
          resulting from the delay or from the non-delivery of the Aircraft;

     (b)  Lessee will not, except in the circumstances described in Section
          4.4(c), be entitled to terminate the Lease or to reject the Aircraft
          when it is offered for Delivery because of the delay.

     (c)  If the Aircraft has not been tendered for Delivery, in accordance with
          Section 4.3, by the Final Delivery Date, either party may terminate
          the Lease by delivering notice to the other party within 10 days of
          such Final Delivery Date (and if such notice is not delivered within
          such 10-day period the Final Delivery Date will be deemed extended for
          one additional period of 90 days). Upon the delivery of any such
          notice or automatically on the expiration of such 90-day period if no
          such notice has been delivered, all obligations of each party under
          the Lease will end on the date of such notice or the date of the

                                      - 4 -
<PAGE>

          expiration of such period, as the case may be, except that Lessor will
          repay to Lessee the Deposit (if any) or return to Lessee or cancel any
          Letter of Credit and Lessee will remain obligated under its indemnity
          set forth in Section 3 of Schedule 4.

     (d)  Lessee hereby agrees that its only right or remedy for a delay in or
          failure of delivery of the Aircraft due to an Unforeseen Event or for
          any other reason (other than Lessor's willful misconduct in the
          performance of its obligation to deliver the Aircraft under and
          subject to the conditions in the Lease) is the remedy set forth in
          Section 4.4(c) above and Lessee hereby waives any rights it may have
          under Section 2A-406 of the UCC or otherwise for any delay in or
          failure of delivery.

5.   PAYMENTS

5.1  Deposit

     Lessee shall pay Lessor any Deposit that is specified in Section 3 of the
     Aircraft Lease Agreement.

5.2  Rental Periods

     The first Rental Period will start on the Rent Commencement Date and each
     subsequent Rental Period will start on the date immediately following the
     last day of the previous Rental Period. Each Rental Period will end on the
     date immediately before the numerically corresponding day in the next
     month, except that:

     (a)  if there is no numerically corresponding day in that month, it will
          end on the last day of that month; and

     (b)  if a Rental Period would otherwise overrun the Expiry Date, it will
          end on the Expiry Date.

5.3  Rent

     (a)  TIME OF PAYMENT: Lessee will pay to Lessor or its order Rent in
          advance on each Rent Date. Lessor must receive value for the payment
          on each Rent Date. If a Rental Period begins on a day which is not a
          Business Day, the Rent payable in respect of that Rental Period shall
          be paid on the Business Day immediately following that day.

     (b)  AMOUNT: The Rent payable during the Term shall be calculated in
          accordance with Schedule B of the Aircraft Lease Agreement.

                                      - 5 -
<PAGE>

5.4  Supplemental Rent

     (a)  AMOUNT: If, under the Aircraft Lease Agreement, Lessee is required to
          pay Supplemental Rent, Lessee will pay that Supplemental Rent, at the
          rates referred to in Section 3 of the Aircraft Lease Agreement, to
          Lessor in relation to each calendar month (or part of a month) of the
          Term, on the fifteenth day following the end of that calendar month
          (except that the last payment of Supplemental Rent during the Term
          shall be paid on the Expiry Date).

     (b)  ADJUSTMENT: If, under the Aircraft Lease Agreement, Lessee is required
          to pay Supplemental Rent, the Supplemental Rent rates shall be
          adjusted after the Delivery Date in the manner provided in the
          Aircraft Lease Agreement.

     (c)  LESSOR'S PROPERTY: Lessee acknowledges and agrees that Supplemental
          Rent is additional rent for the leasing of the Aircraft and not cash
          collateral or other collateral security for Lessee's maintenance
          obligations under the Lease. Once paid all Supplemental Rent is the
          property of Lessor, it is not refundable to Lessee under any
          circumstances whatsoever and Lessee has no interest therein
          whatsoever.

5.5  Payments

     All payments by Lessee to Lessor under the Lease will be made for value on
     the due date in Dollars and in immediately available funds by wire transfer
     to the Lessor's Account as specified in the Aircraft Lease Agreement.

5.6  Withholding and Tax Credit

     (a)  WITHHOLDING: Lessee must not deduct any amount from any of its
          payments under the Lease, for or on account of any Taxes, unless it is
          required by law to do so, in which case Lessee must:

          (i)  deduct the minimum amount necessary to comply with the Law;

          (ii) pay Lessor an extra amount so that Lessor receives a net amount
               on the relevant payment date, that is equal to the amount that it
               would have received if the reduction had not been made (provided
               that Lessee shall have no obligation to pay Lessor an extra
               amount on account of withholding in relation to any Taxes with
               respect to which Lessee is not required to indemnify Lessor under
               Section 5.7). The amount of any such payment to Lessor must take
               into account the tax treatment of that payment to Lessor applying
               the principles of Section 5.10 such that Lessor shall be in no
               worse position than it would have been if the deduction had not
               applied in the first place;

                                     - 6 -
<PAGE>

          (iii) pay the Tax to the relevant taxing authority according to the
                relevant Law; and

           (iv) obtain a receipt (if one is available) from the relevant taxing
                authority and give it to Lessor.

     (b)  TAX CREDIT: If Lessor, in good faith, determines that it has realized
          a tax benefit (by way of deduction, credit or otherwise) as a result
          of any payment for which Lessee is liable under Section 5.6(a),
          Section 5.7, Section 5.10, Section 5.21 or Section 10, Lessor shall
          pay to Lessee as soon as practicable after the tax benefit has been
          realized (but not before Lessee has made all payments and indemnities
          to Lessor required under this Section or Section 5.7), an amount which
          will ensure that (after taking account of the payment itself) Lessor
          is in no better and no worse position than it would have been if the
          Tax giving rise to the payment hereunder had not been incurred.

          Nothing in this Section 5.6(b) shall:

          (i)  interfere with the right of Lessor to arrange its tax affairs in
               whatever manner it thinks fit; or

          (ii) oblige Lessor to disclose any information relating to its Tax
               affairs or any Tax computations (other than information
               reasonably necessary for Lessee to verify Lessor's determination,
               which information may be supplied on a confidential basis to an
               independent third party reasonably acceptable to Lessor and
               Lessee).

5.7  Tax Indemnity

     (a)  General:

          (i)  Except as provided in Section 53(c), Lessee will on demand pay
               and indemnify each Tax Indemnitee against any and all Taxes
               levied or imposed against or upon or payable by such Tax
               Indemnitee or Lessee and arising from, with respect to or in
               connection with the transactions pursuant to the Lease, including
               all Taxes relating or attributable to Lessee, the Lease or the
               Aircraft, directly or indirectly, in connection with the
               importation, exportation, registration, ownership (but only to
               the extent relating to or attributable to or arising as a result
               of the possession, operation, use or maintenance of the Aircraft
               by Lessee), leasing, sub-leasing, purchase, delivery, possession,
               use, operation, repair, maintenance, overhaul, transportation,
               landing, storage, presence or redelivery of the Aircraft or any
               part thereof or any rent, receipts, insurance proceeds, income,
               indemnification payment or other amounts arising therefrom, or
               the making of any Equipment Change or the permanent replacement
               of any Engine.

                                     - 7 -
<PAGE>

          (ii) All Taxes indemnified pursuant to this Section 5.7(a) shall be
               paid by Lessee directly to the appropriate taxing authority (to
               the extent permitted by applicable Law) at or before the time
               prescribed by applicable Law. After any payment by Lessee of any
               Tax directly to a taxing authority, Lessee shall furnish to
               Lessor, on request, a certified copy of a receipt for Lessee's
               payment of such Tax or such other evidence of payment of such Tax
               as is reasonably obtainable by Lessee and reasonably acceptable
               to Lessor.

          (iii) Any amount payable by Lessee to a Tax Indemnitee pursuant to
               Section 5.7(a) shall be paid within ten days after receipt of a
               written demand therefor from the relevant Tax Indemnitee
               accompanied by a written statement describing in reasonable
               detail the basis for such indemnity and the computation of the
               amount so payable, provided that if an amount of any indemnified
               Tax is being contested in accordance with Section 5.9 and Lessee
               shall have duly performed (and shall continue to perform) all its
               obligations under Section 5.9 with respect to such contest, then
               payment of the indemnity with respect to such Tax under Section
               5.7(a) shall, at Lessee's election, be deferred until the date
               the contest has been completed.

     (b)  Sales and Use Taxes:

          (i)  Without limiting Section 5.7(a) above, Lessee shall pay to Lessor
               (or, if permitted by applicable Law and if requested by Lessor,
               Lessee shall pay to the relevant tax authority for the account of
               Lessor):

               (y)  all sales, use, excise, rental, value added, goods and
                    services and similar taxes ("SALES TAXES") required to be
                    paid to the tax authority of the jurisdiction in which the
                    Delivery Location is situated or to the jurisdiction of the
                    Habitual Base or the State of Incorporation with respect to
                    the lease of the Aircraft to Lessee pursuant to the Lease
                    unless Lessee delivers to Lessor on or prior to the Delivery
                    Date such exemption certificate or other document as may be
                    required by applicable law to evidence Lessor's entitlement
                    to exemption from all Sales Taxes imposed by each such
                    jurisdiction with respect to the lease of the Aircraft
                    pursuant to the Lease; and

               (z)  all Sales Taxes required to be paid to the tax authority of
                    any jurisdiction in which the Aircraft may be used, operated
                    or otherwise located from time to time unless Lessee deliver
                    to Lessor such exemption certificates or other documents as
                    may be required by applicable law to evidence Lessee's
                    entitlement to exemption from all Sales Taxes imposed by
                    each

                                      - 8 -
<PAGE>

                    such jurisdiction with respect to the lease of the Aircraft
                    pursuant to the Lease.

          (ii) Lessee and Lessor will cooperate with each other in connection
               with the preparation and filing of any exemption application or
               similar document that is reasonably necessary or desirable under
               applicable Law to avoid the imposition of any Sales Taxes with
               respect to the transactions contemplated by the Lease.

          (iii) The specific obligations with respect to sales and use taxes set
               forth in this Section 5.7(b) are in addition to, and are not in
               substitution for, Lessee's obligation to indemnify for sales and
               use taxes pursuant to Section 5.7(a).

     (c)  Lessee is not required to indemnify a Tax Indemnitee under Section
          5.7(a) or Section 5.7(b) to the extent that the Tax arises because of:

          (i)  the willful misconduct or gross negligence of the Tax Indemnitee
               seeking indemnity under Section 5.7;

          (ii) a Tax liability a Tax Indemnitee has which would have arisen even
               if the Lease had not been entered into;

         (iii) a Tax liability charged on or measured by a Tax Indemnitee's net
               income, profits or gains by any Government Entity in the United
               States; but excluding any Tax (A) that is a Sales Tax (other than
               a Sales Tax that is enacted by a Government Entity as a
               substitute for or replacement of a Tax charged on or measured by
               net income, profits, or gains as a revenue source for that
               Government Entity (a "Replacement Sales Tax")) or (B) that is
               imposed by any government or taxing authority of any jurisdiction
               (other than the United States federal government) if and to the
               extent that such Tax (including a Replacement Sales Tax) results
               from (x) the use, operation, presence, registration or location
               of the Aircraft, the Airframe, any Engine or any Part in the
               jurisdiction imposing the Tax, or (y) the situs of organization,
               any place of business or any activity of Lessee or any other
               Person having use, possession or custody of the Aircraft, the
               Airframe, any Engine or any Part in the jurisdiction imposing the
               Tax;

          (iv) a Tax liability charged with respect to the period, or an event
               occurring, (x) prior to the Delivery Date or (y) after the Expiry
               Date and, in either case, unrelated to Lessor's dealings with
               Lessee or to the transactions contemplated by the Lease;

          (v)  a Tax liability arising out of any voluntary transfer or
               disposition by a Tax Indemnitee of any equitable or legal
               interest in the Aircraft or any part thereof or

                                     - 9 -
<PAGE>

               this Agreement to any Person (including a transfer or disposition
               by way of security but excluding a transfer or disposition
               pursuant to the exercise of remedies in connection with an Event
               Default), provided, however, that Lessor shall in connection with
               an Event of Default comply with any request as Lessee shall make
               concerning the appropriate jurisdiction in which such disposition
               shall be made unless Lessor reasonably determines (and advises
               Lessee) that compliance with such request by Lessee would
               generate an adverse consequence or prejudice Lessor; or

          (vi) a Tax liability with respect to a Tax based on or measured by the
               value or principal amount of any loan or promissory note (or
               security therefor) entered into by a Tax Indemnitee or anyone
               claiming an interest in the Aircraft or any portion thereof
               through a Tax Indemnitee; or

          (vii) a Tax liability arising out of a Replacement Sales Tax as
               described in Section 5.7(c)(iii), but excluding a Replacement
               Sales Tax described in Section 5.7(c)(iii)(B).

     (d)  Lessee will also indemnify each Tax Indemnitee, on an After-Tax Basis,
          as set forth in the Section entitled "Special Tax Indemnity" in
          Schedule B of the Aircraft Lease Agreement, and the provisions of
          Section 5.9 (TAX CONTEST AND INFORMATION) shall apply thereto.

5.8  [NOT APPLICABLE]

5.9  Tax Contest and Information

     (a)  If a Tax Indemnitee receives a notice of an audit or a written claim
          for any Tax for which Lessee would be required to pay an indemnity
          pursuant to Section 5.6 or Section 5.7, Lessor or such Tax Indemnitee
          shall notify Lessee promptly of such audit or claim, provided that any
          failure to provide such notice will not relieve Lessee of any
          indemnification obligation pursuant to Section 5.6 or 5.7 except to
          the extent that such failure precludes the right to contest such
          Taxes. If requested by Lessee in writing promptly after receipt of
          notice hereunder, Lessor shall or Lessor shall cause, to the extent
          that it has the ability to do so through relationship or contractual
          privity, such Tax Indemnitee to, upon receipt of indemnity
          satisfactory to it and at the expense of Lessee (including all costs,
          expenses, legal and accountants' fees and disbursements, and
          penalties, interest and additions to tax incurred in contesting such
          claim) permit Lessee to contest such audit or claim, or, if such
          contest (w) relates to an income tax, (x) involves Taxes in addition
          to those for which Lessee is responsible hereunder, (y) may not, under
          applicable law be conducted by Lessee, or (z) is one for which Lessee
          requests in writing

                                     - 10 -
<PAGE>

          that Lessor or the Tax Indemnitee conduct such contest, Lessor shall,
          or Lessor shall cause, to the extent that it has the ability to do so
          through relationship or contractual privity, the appropriate Tax
          Indemnitee to in good faith contest such audit or claim, by (i)
          resisting payment thereof if practicable and appropriate, (ii) not
          paying the same except under protest if protest is necessary and
          proper, or (iii) if payment is made, using reasonable efforts to
          obtain a refund of such Taxes in appropriate administrative and
          judicial proceedings. Lessor or the Tax Indemnitee shall determine the
          method of any contest conducted by Lessor or the Tax Indemnitee and
          (in good faith consultation with Lessee) control the conduct thereof,
          except that with respect to matters described in clause (y) or in
          clause (z) above which are not also described in clause (w) or clause
          (x) above Lessor shall and Lessor shall cause, to the extent that it
          has the ability to do so through relationship or contractual privity,
          the Tax Indemnitee to comply with the reasonable instructions of
          Lessee regarding the method of any contest conducted by Lessor or the
          Tax Indemnitee and Lessee shall (in good faith consultation with
          Lessor) control the conduct thereof. Lessee shall determine the method
          of any contest conducted by Lessee and (in good faith consultation
          with Lessor or the Tax Indemnitee) control the conduct thereof. Lessee
          shall pay in full all payments of Rent and other amounts payable
          pursuant to the Lease, without reduction for or on account of any Tax
          (except as provided in Section 5.6), while such contest is continuing.
          Lessor shall not be required to contest, or to continue to contest, a
          claim for Taxes under this Section 5.9 if (x) such contest would
          result in a risk of criminal penalties or risk of a sale, forfeiture
          or loss of, or the imposition of a Security Interest (other than a
          Permitted Lien) on, the Aircraft, or (y) Lessee shall not have
          furnished, at Lessee's expense, an opinion of independent tax counsel
          selected by Lessor and reasonably satisfactory to Lessee, that a
          reasonable basis exists for such contest, or (z) a Default shall be
          continuing (unless Lessee shall have provided security reasonably
          satisfactory to Lessor securing Lessee's performance of its
          obligations under this Section 5.9). If Lessor or any Tax Indemnitee
          contests any claim for Taxes by making a payment and seeking a refund
          thereof, then Lessee shall advance to Lessor or such Tax Indemnitee,
          on an interest-free basis, an amount equal to the Taxes to be paid by
          Lessor or such Tax Indemnitee in connection with the contest and shall
          indemnify Lessor or such Tax Indemnitee on an After-Tax Basis for any
          adverse tax consequences to Lessor or such Tax Indemnitee of such
          interest-free advance. Upon the final determination of any contest
          pursuant to this Section 5.9 in respect of any Taxes for which Lessee
          shall have made an advance to Lessor or a Tax Indemnitee in accordance
          with the immediately preceding sentence, the amount of Lessee's
          obligation shall be determined as if such advance had not been made;
          any indemnity obligation of Lessee to Lessor or a Tax Indemnitee under
          this Section 5.9 and Lessor's or such Tax Indemnitee's obligation to
          repay the advance will be satisfied first by setoff against each
          other, and any difference owing by either party shall be paid within
          ten days after such final determination.

                                     - 11 -
<PAGE>

     (b)  If Lessor or any Tax Indemnitee obtains a refund or reimbursement of
          all or any part of any Taxes for which a full indemnity was paid by
          Lessee, Lessor shall and Lessor shall cause such Tax Indemnitee to pay
          Lessee the amount of such refund or reimbursement, reduced by any
          Taxes imposed on Lessor or such Tax Indemnitee on receipt or accrual
          of such refund or reimbursement and increased by any Taxes saved by
          Lessor or such Tax Indemnitee by reason of the deductibility of such
          payment by Lessor or such Tax Indemnitee. If, in addition to such
          refund or reimbursement, Lessor or such Tax Indemnitee receives an
          amount of interest on such refund or reimbursement or a recovery of
          costs or attorney's fees with respect thereto that were paid by
          Lessee, Lessor or such Tax Indemnitee shall pay to Lessee the portion
          of such interest or recovered costs or attorney's fees which is fairly
          attributable to such refund, reduced by any Taxes imposed by Lessor or
          such Tax Indemnitee on receipt or accrual of such interest and
          increased by any Taxes saved by reason of the deductibility of such
          payment by Lessor or such Tax Indemnitee. Neither Lessor nor the Tax
          Indemnitee shall be required to make any payment to Lessee pursuant to
          this Section 5.9 if, and for so long as, a Default shall have occurred
          and be continuing.

     (c)  Lessor or a Tax Indemnitee in its sole discretion (by written notice
          to Lessee) may waive its rights to indemnification pursuant to Section
          5.7 with respect to any claim for any Tax and may refrain from
          contesting or continuing the contest of such claim, in which event
          Lessee shall have no obligation to indemnify Lessor for the Taxes that
          are the subject of such claim. If Lessor agrees to a settlement of any
          contest conducted pursuant to this Section 5.9 without the prior
          written consent of Lessee, which consent shall not be unreasonably
          withheld, then Lessor shall be deemed to have waived its rights to the
          indemnification provided for in Section 5.7 with respect to the Tax
          liability accepted in such settlement or with respect to which
          Lessee's ability to avoid or minimize, directly or by instruction to
          the Lessor or such Tax Indemnitee regarding how to avoid or minimize,
          Taxes has been materially impaired as a result of failure of the
          Lessor or such Tax Indemnitee to so contest or continue to contest.

     (d)  Information:

          (i)  If Lessee is required by any applicable Law, or by any third
               party, to deliver any report or return in connection with any
               Taxes for which Lessee would be obligated to indemnify Lessor or
               any other Tax Indemnitee under the Lease, Lessee will complete
               the same and, on request, supply a copy of the report or return
               to Lessor.

          (ii) If any report, return or statement is required to be made by
               Lessor or any other Tax Indemnitee with respect to any Tax for
               which there is an indemnity obligation of Lessee under the Lease,
               and Lessee knows of, or reasonably should

                                     - 12 -
<PAGE>

               have known of, such return, report or statement, Lessee will
               promptly notify Lessor of the requirement and:

               (y)  if permitted by applicable Law, make and timely file such
                    report, return or statement (except for any report, return
                    or statement that Lessor has notified Lessee that Lessor or
                    any other Tax Indemnitee intends to prepare and file),
                    prepare such return in such manner as will show Lessor as
                    lessor of the Aircraft and the ownership of the Aircraft in
                    Lessor if required or appropriate, and provide Lessor upon
                    request a copy of each such report, return or statement
                    filed by Lessee, or

               (z)  if Lessee is not permitted by applicable Law to file any
                    such report, return or statement, Lessee will prepare and
                    deliver to Lessor a proposed form of such report, return or
                    statement within a reasonable time prior to the time such
                    report, return or statement is to be filed.

          (iii) Lessee will provide such information and documents as Lessor may
               reasonably request to enable Lessor or any other Tax Indemnitee
               to comply with its tax filing, audit and litigation obligations.
               Lessor or any other Tax Indemnitee will provide such information
               or documents, at Lessee's expense, that Lessee does not otherwise
               have as Lessee may reasonably request and which are necessary to
               enable Lessee to comply with its obligations under the Lease
               (including Sections 5.6 and 5.7 of the CTA and Schedule B of the
               Aircraft Lease Agreement) or to minimize Taxes that are the
               subject of any filing, audit, or contest under this Section 5.9.

5.10 Indemnity Payments - After-Tax Basis

     The amount of any payment made under Section 5.7 (TAX INDEMNITY) (including
     Section 5.7(d)), Section 5.21 (EXPENSES) or Section 10 (INDEMNITY) to or
     for the benefit of any Indemnitee, shall include such amount as may be
     necessary to hold such Indemnitee harmless on an After-Tax Basis from all
     Taxes required to be paid by such Indemnitee with respect to such payment
     or indemnity (including any payments pursuant to this Section 5.10.

5.11 Lessor Obligations Following Expiry Date

     Within 91 days (or such shorter period after the Expiry Date to which
     Lessor may agree after Lessee demonstrates to Lessor's reasonable
     satisfaction that Lessee has a net worth, determined in accordance with
     GAAP, of not less than Five Million Dollars ($5,000,000.00) as of the
     Expiry Date) after:

                                     - 13 -
<PAGE>

     (a)  redelivery of the Aircraft to Lessor in accordance with and in the
          condition required by the Lease; or

     (b)  payment to Lessor of the Agreed Value following an Event of Loss after
          the Delivery Date;

     and in each case so long as all amounts which may then be due and payable
     under the Lease and the Other Agreements shall have been paid in full and
     (no other Default has occurred and is continuing:

          (i)  Lessor will pay to Lessee the balance of the Deposit (if any);

          (ii) Lessor will pay to Lessee the amount of any Rent received in
               respect of any period falling after the date of redelivery of the
               Aircraft or payment of the Agreed Value, as the case may be; and

          (iii) Lessor will return to Lessee or cancel any Letter of Credit.

5.12 Net Lease

     The Lease is a net lease. The Lessee's obligation to pay Rent and to
     perform all of its other obligations under the Lease is absolute and
     unconditional no matter what happens and no matter how fundamental or
     unforeseen the event, including any of the following: (a) any right of
     set-off, counterclaim, recoupment, defense or other right which either
     party to the Lease may have against the other (including any right of
     reimbursement) or which Lessee may have against the Manufacturer, any
     manufacturer or seller of or any Person providing services with respect to
     the Aircraft, any Engine or any Part or any other Person, for any reason
     whatsoever; (b) any unavailability of the Aircraft for any reason,
     including a requisition of the Aircraft or any prohibition or interruption
     of or interference with or other restriction against Lessee's use,
     operation or possession of the Aircraft (whether or not the same would, but
     for this provision, result in the termination of the Lease by operation of
     law); (c) any lack or invalidity of title or any other defect in title,
     airworthiness, merchantability, fitness for any purpose, condition, design,
     or operation of any kind or nature of the Aircraft for any particular use
     or trade, or for registration or documentation under the Laws of any
     relevant jurisdiction, or any Event of Loss in respect of or any damage to
     the Aircraft; (d) any insolvency, bankruptcy, reorganization, arrangement,
     readjustment of debt, dissolution, liquidation or similar proceedings by or
     against Lessor, Lessee or any other Person; (e) any invalidity or
     unenforceability or lack of due authorization of, or other defect in, the
     Lease; (f) any Security Interests or Taxes; and/or (g) any other cause or
     circumstance which but for this provision would or might otherwise have the
     effect of terminating or in any way affecting any obligation of Lessee
     under the Lease. Lessee acknowledges and agrees that it has used its own
     judgement in selecting the Aircraft, and has not relied on Lessor or

                                     - 14 -
<PAGE>

     on any information supplied by Lessor, that Lessor is not a manufacturer of
     or dealer in aircraft and that Lessor has all of the rights and benefits of
     a lessor under a lease to which Section 2A-407 of the UCC applies as
     provided in such Section 2A-407.

     Except as expressly set forth elsewhere in the Lease, Lessee hereby waives,
     to the extent permitted by applicable Law, any and all right which it may
     now have or which at any time hereafter may be conferred upon it, by
     statute or otherwise, to terminate, abate, cancel, quit, reduce, defer,
     suspend or surrender the Lease or the Aircraft or any obligation imposed
     upon Lessee under the Lease (including payment of Rent or Supplemental
     Rent).

     Each payment of Rent or Supplemental Rent made by Lessee shall be final.
     Lessee will not seek to recover all or any part of any payment of Rent or
     Supplemental Rent for any reason whatsoever except manifest error.

     If for any reason whatsoever the Lease shall be terminated in whole or in
     part by operation of Law, except as specifically provided in the Lease,
     Lessee waives all rights (if any) to any termination or diminution in its
     Rent or Supplemental Rent obligations hereunder and-nonetheless agrees to
     pay to Lessor, an amount equal to each Rent and Supplemental Rent payment
     at the time such payments would have become due and payable in accordance
     with the terms thereof had the Lease not been terminated in whole or in
     part and so long as such payments are made and all other terms and
     conditions hereof are complied with by Lessee, Lessor and Lessee will deem
     the Lease to remain in full force and effect and Lessee shall continue in
     possession of the Aircraft under the terms and conditions of the Lease.

     Nothing in this Section 5.12 will be construed to limit Lessee's night to
     institute separate legal proceedings against Lessor in the event of
     Lessor's breach of the Lease as and to the extent permitted by Sections 7.1
     and 16.3 of this CTA, or to limit Lessee's rights and remedies against any
     other Person.

5.13 Further Provisions regarding Deposit

     (a)  If, under the Lease, Lessee is required to pay a Deposit, Lessee
          hereby grants a security interest in the Deposit to Lessor and the
          remaining provisions of this Section shall apply. Lessee agrees that
          Lessor shall be entitled to commingle the Deposit with Lessor's
          general or other funds, Lessor will have no obligation to pay any
          interest thereon and Lessor will not hold any such funds as agent or
          in trust for Lessee or in any similar fiduciary capacity. In this
          regard, Lessee acknowledges and agrees that it is not located in the
          State of New York within the meaning of Section 7-101 1-c. (b) of the
          New York General Obligations Law and, therefore, the requirements of
          Section 7-101 of the New York General Obligations Law to the effect
          that Lessor hold the Deposit in a separate, interest bearing account
          do not apply.

                                     - 15 -
<PAGE>

     (b)  If any Event of Default or any Default under clause (g) of Schedule 9
          shall have occurred and be continuing, in addition to all rights and
          remedies accorded to Lessor elsewhere in the Lease or under Law in
          respect of the Deposit, Lessor may immediately or at any time
          thereafter, without prior notice to Lessee, apply all or part of the
          Deposit in or towards the payment or discharge of any matured
          obligation owed by Lessee or any affiliate or associate of Lessee
          under the Lease or the Other Agreements, in such order as Lessor sees
          fit, and/or exercise any of the rights of set-off described in Section
          5.20 against all or part of the Deposit.

     (c)  If Lessor exercises the rights described in Section 5.13(b) above,
          Lessee shall, following a demand in writing from Lessor, immediately
          restore the Deposit to the level at which it stood immediately prior
          to such exercise.

5.14 Letter of Credit

     (a)  If, under the Lease, Lessee is required or elects to provide Lessor
          with a Letter of Credit, the provisions of this Section shall apply.
          Any Letter of Credit provided by Lessee to Lessor will be issued and
          payable by a Pre-Approved Bank or another bank acceptable to Lessor in
          its sole and absolute discretion and in substantially the form of
          Schedule 13, or in another form and substance acceptable to Lessor in
          its sole and absolute discretion, and, if not issued by a Pre-Approved
          Bank or by the New York branch of a major international bank
          acceptable to Lessor in its sole and absolute discretion from time to
          time, will be confirmed by and payable at the New York branch of a
          major international bank acceptable to Lessor in its sole and absolute
          discretion from time to time, and will be issued as security for all
          payment obligations of Lessee or any its Affiliates under the Lease
          and each Other Agreement (including any and all Losses suffered or
          incurred by Lessor or any of its Affiliates in respect of which Lessee
          or any if its Affiliates is obligated under the Lease or each Other
          Agreement), which shall remain in full force and effect until the
          Required LC Expiry Date and may be drawn down by Lessor upon demand at
          any time or times prior to the Required LC Expiry Date following (i)
          the occurrence of an Event of Default or a Default under clause (g) of
          Schedule 9, or (ii) the receipt by Lessor of notice of non-renewal of
          the Letter of Credit under Section 5.14(b) below.

     (b)  The Letter of Credit may have a validity period or periods ending
          prior to the Required LC Expiry Date, provided that (i) the Letter of
          Credit shall be renewed automatically, without further act or deed by
          any party, until such time as Lessor receives notice of non-renewal of
          the Letter Credit, (ii) notice of non-renewal of the Letter of Credit
          shall be provided to Lessor no less than 30 Business Days prior to its
          then scheduled expiry date, (iii) Lessor shall be entitled to draw the
          full amount of the Letter of Credit immediately in

                                     - 16 -
<PAGE>

          the event that Lessor receives any notice of non-renewal of the Letter
          of Credit; and (iv) a Letter of Credit shall remain in force at all
          times up to the Required LC Expiry Date.

     (c)  If at any time during the Term, the current issuing or confirming bank
          for the Letter of Credit ceases to meet the requirements set forth in
          the definition of Pre-Approved Bank, Lessee shall within five (5)
          Business Days after the date of notice from Lessor of such decrease in
          credit rating, cause the Letter of Credit to be replaced by a Letter
          of Credit issued by another bank that meets the definition of a
          Pre-Approved Bank and (if requested by Lessor in its sole and absolute
          discretion) that such replacement Letter of Credit is confirmed by an
          another bank that meets the requirement of a Pre-Approved Bank.

     (d)  If Lessor makes a drawing under the Letter of Credit, Lessee shall,
          following a demand in writing by Lessor, immediately cause the maximum
          amount available for drawing under the Letter of Credit to be restored
          to the level at which it stood immediately prior to such drawing.

5.15 Guarantee

     If, under the Aircraft Lease Agreement, Lessee is required to provide
     Lessor with a Guarantee, Lessee will on or prior to the Delivery Date
     provide Lessor with the Guarantee.

5.16 Late Payment Interest

     If Lessee fails to pay any amount payable under the Lease on the due date,
     Lessee will pay on demand from time to time to Lessor interest (both before
     and after judgement) on that amount, from the due date to the date of
     payment in full by Lessee to Lessor, at the Interest Rate. All such
     interest will be compounded monthly and calculated on the basis of the
     actual number of days elapsed in the month, assuming a 30 day month and a
     360 day year.

5.17 Currency

     (a)  Except for Losses and expenses suffered or incurred by Lessor, which
          shall be payable by Lessee to Lessor in the currency and in the amount
          in which such Loss is suffered or incurred, all amounts payable to
          Lessor under the Lease shall be payable in Dollars in New York and
          payment in Dollars in New York is of the essence. Lessee must
          indemnify Lessor against any Loss Lessor suffers if:

          (i)  Lessor receives an amount relating to Lessee's obligations in a
               different currency from that in which payments should be made
               under the Lease; or

          (ii) Lessee pays a judgement or claim in a different currency from
               that in which payments should be made under the Lease.

                                     - 17 -
<PAGE>

     (b)  Lessee relinquishes any right to pay any amount under the Lease in a
          currency which is different from the currency provided in the Lease.
          Notwithstanding any such receipt, judgement or claim described in
          Section 5.17(a), Lessee shall have a separate obligation to pay, and
          Lessor shall have a separate claim against Lessee for, amounts to be
          indemnified by Lessee under this Section 5.17.

5.18 Certificates

     Except where expressly provided in the Lease, any certificate or
     determination by Lessor as to any rate of interest or as to any other
     amount payable under the Lease will, in the absence of manifest error, be
     presumed to be correct.

5.19 Appropriation

     If any sum paid or recovered by Lessor in respect of the liabilities of
     Lessee under the Lease is less than the amount then due, Lessor may apply
     that sum to amounts due under the Lease in such proportions and order and
     generally in such manner as Lessor may determine in its sole discretion.

5.20 Set-off

     (a)  In this sub-clause, references to Lessee will also include Lessee
          Affiliates.

     (b)  Lessor may, without notice, set-off any obligations owed by Lessee
          under the Lease or under the Other Agreements against any obligation
          Lessor or any of its Affiliates owes Lessee under the Lease or under
          the Other Agreements, regardless of the place of payment or currency.
          Promptly after making any such set-off, Lessor shall notify Lessee
          thereof, including in such notice such information about the set-off
          as may be reasonably required to enable a reasonable person to
          identify the claims so set off and to verify the calculation of the
          set-off, but neither failure to give such notice nor any alleged
          defect in such notice shall affect the effectiveness of any such
          set-off.

     If the obligations are in different currencies, Lessor may convert either
     obligation at the market rate of exchange available in New York. If the
     amount of an obligation is unknown, Lessor may estimate the amount. Any
     difference between the estimated obligation and the actual obligation will
     be paid by either Lessor or Lessee, as appropriate, when the amount becomes
     known.

5.21 Expenses

     Lessee will pay to Lessor on demand all reasonable expenses (including all
     legal fees and expenses and the fees and expenses of other professional
     advisers) that the Lessor suffers or incurs:

                                     - 18 -
<PAGE>

     (a)  to deal with any amendments, extensions, consents or waivers that are
          required in connection with the Lease (but excluding any expenses
          incurred by Lessor or Owner in connection with any change in the
          ownership or financing of the Aircraft or a change in the Lease that
          is otherwise requested by Lessor or Owner, and in each case unrelated
          to any consent, waiver or amendment requested by Lessee or any other
          act or omission of Lessee) or to deal with any replacement of any
          Engine or Part (except for the replacement of an Engine by or at the
          request of Lessor prior to the Delivery Date);

     (b)  for FAA counsel and otherwise to act upon any advice and obtain
          assistance to perfect the Lease, in the State of Registry and the
          State of Incorporation (and any other appropriate place); and

     (c)  in contemplation of, or otherwise in connection with, the enforcement
          or preservation of any of Lessor's rights under the Lease (including
          under Section 10) or in respect of the repossession of any Aircraft.

     All amounts payable pursuant to this Section 5.21 will be paid in the
     currency in which they are incurred by Lessor.

6.   MANUFACTURER'S WARRANTIES

     (a)  So long as no Default has occurred which is continuing, Lessor shall
          make available to Lessee during the Term the benefit of all
          manufacturer's warranties in relation to the repair or remedy of any
          defect in the Aircraft (including compensation for loss of use of the
          Aircraft) to the extent that it is permitted to do so. In furtherance
          of the foregoing, Lessor shall take such actions, at Lessee's cost and
          expense, as Lessee may reasonably request to make such warranties
          available to Lessee.

     (b)  If a Default has occurred and is continuing Lessor may immediately
          recover from Lessee the proceeds of any warranty claims previously
          paid to Lessee to the extent that such claims relate to any defect in
          the Aircraft not fully and completely rectified by Lessee before such
          Default and Lessor may:

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

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

                                     - 19 -
<PAGE>

     (c)  Lessee will take all steps at the end of the Term as may be reasonably
          required to ensure that the benefit of any warranties relating to the
          Aircraft which have not expired is vested in Lessor.

7.   LESSOR'S COVENANTS

7.1  Quiet Enjoyment

     So long as no Default has occurred and is continuing, Lessor will not
     interfere with Lessee's right to quiet use and possession of the Aircraft
     during the Term. Exercise by Lessor of its rights of inspection or other
     rights provided to it under the Lease in the absence of a Default shall
     not be considered to be a breach of the foregoing covenant. Lessee agrees
     that its only right with respect to a default by Lessor under the Lease is
     to make a claim against Lessor for actual damages resulting directly
     therefrom and in any event subject to Section 16.3 hereof, and Lessee
     hereby waives any and all other rights or remedies it may have under
     Section 2A-211 of the UCC or Sections 2A-508 through 2A-522 of the UCC or
     otherwise.

7.2  Maintenance Contributions

     If, under the Aircraft Lease Agreement for the Aircraft, Lessee is required
     to pay Supplemental Rent, then provided no Default has occurred and is
     continuing, Lessor will pay such amounts, if any, as may be specified in
     the Aircraft Lease Agreement to Lessee by way of contribution to the cost
     of maintenance of the Aircraft, which payments, if any, shall be made in
     the amounts and in the manner specified in the Aircraft Lease Agreement.

8.   LESSEE'S COVENANTS

8.1  Duration: Lessee shall perform and comply, or cause its Permitted
     Sub-Lessee or maintenance contractor to perform and comply, with its
     undertakings and covenants in the Lease at all times during the Term. All
     such undertakings and covenants shall, except where expressly otherwise
     stated, be performed at the expense of Lessee.

8.2  Information

     Lessee will:

     (a)  provide Lessor with a Technical Report for the Aircraft within 15 days
          after the end of each calendar month throughout the Term and otherwise
          provide Lessor with a Technical Report for the Aircraft within thirty
          (30) days after Lessor's request therefor;

     (b)  provide Lessor with the Financial Information;

                                     - 20 -
<PAGE>

     (c)  (i) notify Lessor of any Event of Loss and of any event which is
          likely to result in an insurance claim in excess of the Damage
          Notification Threshold promptly after the occurrence of any such
          event, (ii) consult with Lessor in the course of, and keep Lessor
          fully apprised as to the details of, any negotiations with its
          insurers or insurance brokers (and, in the case of repairable damage,
          with any applicable repair facility) with respect to any insurance
          claim arising out of such event, and (iii) obtain Lessor's prior
          approval before agreeing to any disposition of any insurance claim in
          excess of the Damage Notification Threshold;

     (d)  upon the occurrence of any event which is likely to give rise to an
          insurance claim under any of the Insurances relating to the Aircraft,
          Lessee shall promptly execute and deliver all documents and
          instruments and take all such other action as may reasonably be
          required to initiate and process any such claim under the applicable
          insurance, and in any event, Lessee shall initiate such claim, execute
          such documents or instruments and take such other action promptly
          following a written request by Lessor that Lessee initiate such claim,
          execute such document or instrument or take such other action;

     (e)  provide Lessor, upon request, with evidence that all Taxes and charges
          that are due and payable and were incurred by Lessee in connection
          with the Aircraft, its location and its operations, including those
          invoiced by airports and air traffic control authorities have been
          paid in full (or are being contested in good faith by appropriate
          proceedings in respect of which adequate reserves have been provided
          by Lessee and non-payment of which does not give rise to any risk of
          the Aircraft or any interest therein being sold, forfeited or
          otherwise lost or of criminal liability on the part of Lessor or
          Owner);

     (f)  provide Lessor with such other information concerning the location,
          condition, use and operation of the Aircraft or concerning the
          business or financial affairs of Lessee, as Lessor may from time to
          time reasonably request;

     (g)  [NOT APPLICABLE];

     (h)  [NOT APPLICABLE];

     (i)  notify Lessor promptly as to any material modification to Lessee's
          Maintenance Program (including, without limitation, any change from
          maintenance on a block format to maintenance on a phase-basis);
          provided, however, that Lessee shall not make any modifications to
          Lessee's Maintenance Program which may adversely affect the return
          conditions specified in Part III of Schedule A to the Aircraft Lease
          Agreement without prior consultation with Lessor. For the avoidance of
          doubt, changes to Lessee's Maintenance Program extending or shortening
          times between scheduled overhaul of Parts

                                     - 21 -
<PAGE>

          shall not be deemed to be material modification or to adversely affect
          the return conditions;

8.3  Lawful and Safe Operation

     Lessee will operate the Aircraft for commercial purposes from the Delivery
     Date until the Return Occasion from a base within the State of Registry
     or from such other base outside the State of Registry pursuant to a
     sub-lease or a wet-lease complying with Section 8.4(a), provided, always
     that Lessee must not use or operate the Aircraft or suffer or permit the
     Aircraft to be used or operated:

     (a)  in violation of any applicable Regulations or in a manner causing
          Lessor, Owner, any Financing Party or GECAS to be in violation of (i)
          any applicable Regulations of the United States, (ii) any applicable
          Regulations of any jurisdiction of which Lessee is notified in
          writing by Lessor as a jurisdiction applicable to Lessor, Owner,
          GECAS or any Financing Party, or (iii) any applicable Regulations of
          any other jurisdiction into which or over which the Aircraft is
          operated; provided, however, that nothing in Section 8.3(a)(ii) shall
          be deemed to require Lessee to comply with any Regulations of any
          jurisdiction other than the United States which pertain to the
          maintenance or modification of aircraft.

     (b)  for any purpose for which the Aircraft was not designed or which is
          illegal;

     (c)  to carry cargo which could reasonably be expected to damage the
          Aircraft;

     (d)  in any circumstances or place where the Aircraft is not covered by the
          Insurances; or

     (e)  for purposes of training, qualifying or re-confirming the status of
          cockpit personnel except for the benefit of Lessee's or a Permitted
          Sub-Lessee's cockpit personnel, and then only if the use of the
          Aircraft for such purpose is not disproportionate to the use for such
          purpose of other aircraft of the same type operated by Lessee or such
          Permitted Sub-Lessee, as the case may be.

8.4  Subleasing

     (a)  AT NO TIME PRIOR TO THE RETURN OCCASION WELL LESSEE SUB-LEASE,
          WET-LEASE OR OTHERWISE GIVE POSSESSION OR CONTROL OF THE AIRCRAFT OR
          ANY ENGINE TO, OR OTHERWISE PERMIT THE AIRCRAFT OR ANY ENGINE TO BE IN
          THE POSSESSION OR CONTROL OF, ANY PERSON EXCEPT:

                                     - 22 -
<PAGE>

          (i)  when the prior written consent of Lessor has been obtained, which
               consent shall not be unreasonably withheld (it being expressly
               acknowledged by Lessor and Lessee that the withholding of
               Lessor's consent in respect of any sub-lease or wet lease shall
               not be deemed to be unreasonable if the terms of such sub-lease
               do not comply with the conditions set out in Section 8.4(b) or
               the terms of such wet lease do not comply with Section 8.4(c), as
               the case may be); or

          (ii) where the Aircraft or Engine is delivered to a manufacturer or
               maintenance facility for work to be done on it as required or
               permitted under the Lease; or

          (iii) to a sub-lessee of the Aircraft to which Lessor consents in
               writing (a "PERMITTED SUB-LESSEE"), pursuant to a sub-lease to
               which Lessor consents in (a "PERMITTED SUB-LEASE"), which
               complies with the conditions set out in Section 8.4(b), and
               provided that no Default shall have occurred and be continuing at
               the commencement of such sub-lease;

          (iv) on a wet-lease which complies with Section 8.4(c); or (v) with
               respect to an Engine, as permitted under Section 8.11.

     (b)  If Lessor grants its consent to a proposed sub-lessee and a proposed
          sub-lease, in addition to any conditions required by Lessor as part of
          any such consent of Lessor, each of the following conditions shall be
          required to be satisfied in relation to any Permitted Sub Lease prior
          to any sub-leasing pursuant to this Section:

          (i)  NOTIFICATION: at least 30 days prior to entering into any
               Permitted Sub-Lease, Lessee shall give Lessor written notice,
               specifying the identity of the Permitted Sub-Lessee, the term of
               the Permitted Sub-Lease, the delivery date under the Permitted
               Sub-Lease and the habitual base of the Permitted Sub-Lessee;

          (ii) TERM: the term of the Permitted Sub-Lease shall not be capable of
               extending beyond one month (or such shorter period as Lessor may
               agree (which agreement shall not be unreasonably withheld) in
               giving its consent to such Permitted Sub-Lease) before the
               Scheduled Expiry Date;

          (iii) FORM: a Permitted Sub-Lease shall:

               (aa) not contain provisions inconsistent with the provisions of
                    the Lease (but may impose additional or more stringent
                    obligations on any Permitted Sub-Lessee than are imposed on
                    Lessee under the Lease);

                                     - 23 -
<PAGE>

               (bb) provide that no further subleases of the Aircraft by such
                    Permitted Sub-Lessee are permitted; and

               (cc) include provisions substantially identical to or having
                    substantially the same effect as Sections 2.1, 5.6, 5.7,
                    5.10, 5.12, 5.16, 5.17, 5.21, 8, 9, 10, 11, 13, 15.1, 15.8
                    and 16 and Schedules 2 (Section 1.1), 7 and 9 of the Lease
                    (but the Permitted Sub-Lease may impose additional or more
                    stringent obligations on any Permitted Sub-Lessee than are
                    imposed on Lessee under the Lease);

          (iv) SUBORDINATION AND ASSIGNMENT: the Permitted Sub-Lease shall
               provide that (aa) the Permitted Sub-Lease is subject and
               subordinate to the Lease in all respects and the rights of the
               Permitted Sub-Lessee under the Permitted Sub-Lease are subject
               and subordinate in all respects to the rights of Lessor under the
               Lease; and (bb) prior to delivery of the Aircraft to the
               Permitted Sub-Lessee (as a condition precedent thereof), the
               Permitted Sub-Lessee shall provide an acknowledgement to Lessor
               and Owner in a form, reasonably satisfactory to Lessor,
               confirming its agreement to this provision and confirming that,
               except to the extent, if any, that it receives a quiet enjoyment
               letter from Lessor pursuant to Section 8.4(b)(v) below, its
               rights to possession of the Aircraft under the Permitted
               Sub-Lease will terminate immediately upon the termination of the
               Lease, and that it will redeliver the Aircraft to Lessor, upon
               notification from Lessor that an Event of Default has occurred
               and that it has, as a result thereof, terminated Lessee's right
               to possession of the Aircraft under the Lease (the "SUBORDINATION
               ACKNOWLEDGEMENT"). The Permitted Sub-Lease shall be assigned, as
               security, to Lessor for Lessee's obligations under the Lease,
               pursuant to an agreement reasonably acceptable to Lessor (the
               "SUB-LEASE ASSIGNMENT") (and, if applicable, Lessor's interest in
               such Sub-Lease Assignment may be reassigned, as security, to
               Owner and/or the Financing Parties' Representative);

          (v)  QUIET ENJOYMENT: the Permitted Sub-Lease shall provide that the
               Permitted Sub-Lessee shall have the right to quiet enjoyment of
               the Aircraft for so long as no Event of Default has occurred
               under the Lease; provided, however, that, upon request by a
               Permitted Sub-Lessee, Lessor shall, and shall cause the Financing
               Parties Representative (if applicable) to, execute and deliver to
               the Permitted Sub-Lessee a letter of quiet enjoyment in respect
               of the Permitted Sub-Lessee's use and possession of the Aircraft
               for so long as no event of default occurs under the Permitted
               Sub-Lease, notwithstanding the occurrence of an Event of Default
               under the Lease, in a form substantially similar to Section 7.1
               hereof if Lessor is satisfied in its sole discretion as to (i)
               the creditworthiness of the Proposed Sub-

                                     - 24 -
<PAGE>

               Lessee at the time of such request, (ii) the sufficiency of the
               rentals and other payment obligations, including indemnities
               under the Permitted Sub-Lease to discharge in full the Rent and
               the indemnity obligations of Lessee under the Lease, (iii) the
               installment frequency of the rent payable under the Permitted
               Sub-Lease, (iv) the acknowledgment of and agreement by the
               Permitted Sub-Lessee to be bound by the provisions of Section 16
               hereof, (v) the acknowledgment by each of the Permitted
               Sub-Lessee and the Lessee that Lessor shall have no greater
               liability to either Permitted Sub-Lessee or the Lessee in respect
               of Lessor's obligations under Section 7.1 hereof or under such
               letter than Lessor would have had under Section 7.1 in the
               absence of the Permitted Sub-Lease, (vi) the form and substance
               of the Subordination Acknowledgment, and (vii) the terms of the
               Permitted Sub-Lease in respect of the matters contemplated by
               this Section 8.4(b);

          (vi) OBLIGATIONS OF LESSEE: Lessee shall remain primarily liable under
               the Lease for the performance and observance of all its
               obligations to the same extent as if no Permitted Sub-Lease had
               been entered into. To the extent that the Permitted Sub-Lessee
               properly performs an obligation under the Permitted Sub-Lease,
               Lessor agrees that such performance shall also be regarded as
               discharging (to such extent) Lessee's corresponding obligation;

          (vii) INSURANCES: all insurance requirements herein shall be complied
               with either by Lessee or by the Permitted Sub-Lessee as if
               references in the insurance provisions of the Lease to "Lessee"
               were references to "the Permitted Sub-Lessee", and Lessee shall
               provide or cause the Permitted Sub-Lessee to provide the
               insurance certificate and brokers' letter of undertaking referred
               to in Section 9.3(c)(ii) at least five (5) Business Days prior to
               the commencement of the Permitted Sub-Lease;

          (viii) REGISTRATION: there shall be no change in the registration of
               the Aircraft from its State of Registry;

          (ix) REPOSSESSION OR POLITICAL RISK INSURANCE: if reasonably required
               by Lessor or if required of Lessor by Owner or the Financing
               Parties' Representative, repossession or political risk
               insurance, as the case may be, shall be obtained by Lessor at
               Lessee's cost, provided that repossession or political risk
               insurance , as the case may be, will not be required if the
               Permitted Sub-Lessee meets the requirements of Sections 8.7(iv)
               and (v). If repossession or political risk insurance is required,
               the Permitted Sub-Lease must provide that, if any such
               repossession or political risk, as the case may be, insurance
               cannot be obtained or renewed, a termination event will occur
               upon notice by Lessor to Lessee or the

                                     - 25 -
<PAGE>

               Permitted Sub-Lessee of an inability to procure repossession or
               political risk, as the case may be, insurance;

          (x)  LEGAL OPINIONS: as a condition precedent to the effectiveness of
               the Permitted Sub-Lease, Lessee shall provide to Lessor the
               following legal opinions (at Lessee's or Permitted Sub-Lessee's
               expense) addressed to Lessor, Owner and the Financing Parties'
               Representative from counsel reasonably acceptable to Lessor;

               (aa) a legal opinion in relation to the Permitted Sub-Lease in
                    form and substance reasonably satisfactory to, and
                    containing such other matters set out in Schedule 8
                    requested by, Lessor and confirming further that each of the
                    Subordination Acknowledgement, the Permitted Sub-Lease and
                    the Sub-Lease Assignment is valid, binding and (except as
                    limited by any equitable principles and applicable
                    bankruptcy, insolvency, reorganization, moratorium or
                    similar laws affecting creditors' or lessors' rights
                    generally) enforceable against Permitted Sub-Lessee and, in
                    the case of the Sub-Lease Assignment, properly perfected as
                    against Lessee;

               (bb) if the Habitual Base is not in the United States, one or
                    more legal opinions in form and from counsel reasonably
                    acceptable to Lessor to the effect, inter alia, that
                    Lessor's, Owner's and Financing Parties' Representative's
                    interests in the Aircraft will be recognized under the laws
                    of such country or countries (it being expressly understood
                    that there shall be no requirement that any single legal
                    point or issue be covered in opinions from more than one
                    counsel except to the extent, if any, that the laws of more
                    than one jurisdiction may be at issue); and

               (cc) such opinions as may be required under the Financing
                    Documents.

               Final forms of the foregoing opinion or opinions (x) shall be
               forwarded promptly to Lessor at least five Business Days prior to
               the effective date of the Permitted Sub-Lease, and (y) may, if
               different opinions are required hereunder, be made by a single
               counsel qualified to render opinions in each such country;

          (xi) FILINGS: Lessee shall co-operate with Lessor (at no cost to
               Lessor) in connection with the execution and filing of any
               documents reasonably required by Lessor to be executed and filed
               from time to time with any registry or authority in the Habitual
               Base, the State of Registration and State of Incorporation (of
               each of Lessee and the Permitted Sub-Lessee) in order to protect
               the interests of Lessor, Owner and Financing Parties'
               Representative in and to the Aircraft, the Lease or

                                     - 26 -
<PAGE>

               the Permitted Sub-Lease and/or to ensure the validity,
               enforcement or priority thereof;

         (xii) EXPENSES: Lessee will pay to Lessor on demand all reasonable out
               of pocket expenses (including legal, survey and other costs) and
               Taxes payable or incurred by Lessor, Owner or Financing Parties'
               Representative in connection with the review and approval of the
               documentation required pursuant to this Section or otherwise
               incurred in connection with any requested sub-lease or the
               sub-leasing of the Aircraft thereunder, and will pay any Sublease
               Fee specified in the Aircraft Lease Agreement for such Aircraft;

        (xiii) PERMITTED SUB-LEASE: Promptly after its execution, Lessee shall
               provide Lessor with a copy of the signed Permitted Sub-Lease;

         (xiv) ACKNOWLEDGEMENT BY GUARANTOR: If a Guarantee is required under
               the Aircraft Lease Agreement, Lessee shall provide to Lessor at
               least five Business Days prior to the effective date of the
               Permitted Sub-Lease an acknowledgement by Guarantor of the
               Permitted Sub-Lease and confirmation that the Guarantee will
               remain in full force and effect during the term of such Permitted
               Sub-Lease;

          (xv) FINANCING RESTRICTIONS AND REQUIREMENTS: If Lessee requests
               Lessor's consent to a sub-lease, it will not be unreasonable for
               Lessor to decline its consent to such sub-lease, if such
               sub-lease would result in a breach by Lessor of the restrictions
               contained in or give rise to any liability or adversely affect
               Lessor's rights or obligations or otherwise result in a detriment
               under any of the Financing Documents; and

         (xvi) MAINTENANCE PROGRAM: Lessee shall, or shall cause the Permitted
               Sub-Lessee to, provide Lessor with such information as Lessor may
               reasonably request with respect to the Maintenance Program of the
               Permitted Sub-Lessee, and Lessor shall be reasonably satisfied
               with the Maintenance Program of the Permitted Sub-Lessee.

     (c)  Notwithstanding Section 8.4 (a), Lessee shall be permitted to wet
          lease the Aircraft provided such wet lease constitutes an arrangement
          whereby Lessee agrees to furnish the Aircraft to a third party
          pursuant to which the Aircraft (i) shall be operated solely by regular
          employees of Lessee possessing all current certificates and licenses
          that are required by applicable Regulations, including by the State of
          Registry, and shall remain in the operational control and possession
          of Lessee, (ii) shall be subject to insurance coverage as provided for
          in the Lease, (iii) shall be used and operated in accordance with the
          Lease and shall be maintained or caused to be maintained by Lessee in
          accordance

                                     - 27 -
<PAGE>

          with Lessee's Maintenance Program and Lessee's normal maintenance
          practices, (iv) shall not be subject to any change in its State of
          Registry, and (v) shall not be operated out of a Habitual Base located
          outside the United States; and provided always that, such arrangement
          is expressly subordinated to the Lease and the rights of Lessor and
          Owner thereunder and to the Aircraft, and Lessee provides Lessor with
          all opinions, certificates and other documents requested by Lessor
          which are required to be provided, and takes all other action
          requested by Lessor which is required of Lessee or Lessor under any
          Financing Document in connection with such a wet lease.

8.5  Inspection

     (a)  Lessee will permit Lessor's, Owner's and the Financing Parties'
          Representative representatives to inspect the Aircraft at any time.
          Unless a Default has occurred and is continuing, any such Person will
          give Lessee reasonable notice of inspection and will ensure that it
          does not result in a disruption to the scheduled operation or
          maintenance of the Aircraft. Lessee shall comply with the reasonable
          requests of Lessor's, Owner's and the Financing Parties'
          Representative representatives during the course of an inspection,
          including any request to travel on the flight deck of the Aircraft as
          an observer, subject, to any applicable Regulations and insurance
          requirements.

     (b)  The cost of conducting an inspection shall be borne by Lessor, Owner
          or the Financing Parties, as the case may be, unless, as a result of
          that inspection, Lessee is found to be in material default of its
          obligations under the Lease in which case the cost shall be borne by
          Lessee.

     (c)  No liability or obligation will be incurred by Lessor, Owner,
          Financing Parties' Representative or the Financing Parties, as the
          case may be, by reason of non-exercise by any of them of the
          inspection rights referred to in this Section.

8.6  Ownership; Property Interests; Related Matters

     (a)  Lessee will:

          (i)  fix and maintain Nameplates containing the Nameplate Inscription
               in a prominent position in the cockpit or cabin of the Aircraft
               and on each Engine;

          (ii) in any circumstance where such interests are relevant, take all
               reasonable steps to make sure that all relevant Persons know
               about the interests of Owner, Lessor and Financing Parties
               Representative in the Aircraft; and

         (iii) pay all navigation charges, air traffic control charges, landing
               charges or other amounts of any nature imposed by any Government
               Entity with respect to

                                     - 28 -
<PAGE>

               Lessee, the Aircraft and/or the Lease except to the extent that,
               in the reasonable opinion of Lessor, such payment is being
               contested in good faith by appropriate proceedings in respect of
               which adequate reserves have been provided by Lessee and
               non-payment of which does not give rise to any material
               likelihood of the Aircraft or any interest therein being sold,
               forfeited or otherwise lost or of criminal liability on the part
               of Lessor or Owner.

     (b)  Lessee will not:

          (i)  represent that it is the owner of the Aircraft or that it has an
               economic interest (equivlent to ownership) in the Aircraft for
               Tax treatment or other purposes;

          (ii) take any action or fail to take any action, other than action
               required under the Lease (including under Section 7.1). to be
               taken by Lessor, Affiliates of Lessor, Owner or a Financing
               Party, if such action or omission could result in a forfeiture or
               seizure of the Aircraft or otherwise similarly put Owner's and/or
               Lessor's and/or Financing Parties' Representative's rights or
               interests at risk;

          (iii) represent to others that Owner, Lessor or Financing Parties'
               Representative is associated with or responsible for the business
               activities and/or flight operations of Lessee;

          (iv) allow the Aircraft or Owner's, Lessor's or Financing Parties'
               Representative's interest in it or the Lease to become or remain
               subject to any Security Interest (other than a Permitted Lien);
               or

          (v)  allow the name of any Person to be placed on the Aircraft or any
               Engine as a designation that could reasonably be interpreted as a
               claim of ownership or as a Security Interest; provided, that
               Lessee may place thereon, or allow a Permitted Sub-Lessee to
               place thereon, its customary livery, insignia and colors.

8.7  General

               Lessee will:

          (i)  maintain its business as a commercial scheduled airline, will
               preserve its corporate existence (other than as permitted in
               Section 8.7 (vii) below) and will maintain all rights,
               privileges, licenses and franchises material thereto or material
               to performing its obligations under the Lease;

          (ii) not operate, maintain, insure or deal with, or keep records with
               respect to, the Aircraft in a manner which discriminates against
               the Aircraft adversely insofar as

                                     - 29 -
<PAGE>

               Lessor's, Owner's or Financing Parties' interests are concerned,
               when compared with the manner in which Lessee operates,
               maintains, insures or deals with, or keep records with respect
               to, similar aircraft, engines or parts in Lessee's fleet;
               provided, however, in the event that Lessee determines that any
               particular expenditure or modification may not be prudent during
               the last nine months prior to the Scheduled Expiry Date, then
               Lessor and Lessee shall discuss the issue and negotiate in good
               faith to agree on a mutually acceptable solution.

         (iii) not change the location of its chief executive office from that
               described in the heading of the Aircraft Lease Agreement or
               otherwise be located (as defined in Section 9-103(3)(d) of the
               UCC) at any place in the United States other than the location
               described the heading of the Aircraft Lease Agreement, except
               upon 30 days prior written notice thereof to Lessor;

          (iv) remain a Certificated Air Carrier and maintain its status so as
               to fall within the purview of Section 1110 of Title 11 of the
               U.S.C. or any analogous statute;

          (v)  remain a "citizen of the United States" as defined in Section
               40102(a)(15)(c) of Title 49 of the U.S.C.;

          (vi) not liquidate or dissolve; and

         (vii) not consolidate with or merge into or with any other corporation
               or other Person, and not convey, transfer, lease or otherwise
               dispose of all or substantially all of its property and other
               assets to, or acquire all or any substantial part of the property
               or other assets or capital stock of (if such acquisition is
               analogous in either purpose or effect to a consolidation or
               merger), any corporation or other Person, unless Lessee provides
               Lessor with written notice of such transaction promptly following
               Lessee's execution of a binding agreement or commitment to enter
               into any such transaction, which notice shall in any event be
               provided no later than 30 days prior to the effectiveness or
               consummation of any such transaction and which notice shall
               describe such transaction in reasonable detail and contain or be
               accompanied by evidence reasonably satisfactory to Lessor
               demonstrating that such transaction will comply with the
               following requirements of this Section and unless:

               (x)  such transaction shall not have any material adverse effect
                    on the rights of Lessor, Owner or the Financing Parties'
                    Representative under or in respect of the Lease or the
                    Aircraft; and all applicable requirements of the Financing
                    Documents shall have been complied with in connection
                    therewith;

                                     - 30 -
<PAGE>

               (y)  the Person formed by or surviving such consolidation or
                    merger or the Person which acquires by conveyance, transfer,
                    lease or other disposition all or substantially all of such
                    property and other assets or stock (the "SUCCESSOR ENTITY"):
                    (A) shall be a corporation organized and existing under the
                    laws of the United States or any State thereof or the
                    District of Columbia; (B) immediately after giving effect to
                    such transaction, shall be Lessee or shall have acquired or
                    succeeded to all or substantially all of the property and
                    other assets of Lessee (if such assets are being
                    transferred) as an entirety, and shall have a tangible net
                    worth (determined in accordance with GAAP) of not less than
                    Lessee's tangible net worth (determined in accordance with
                    GAAP) immediately prior to such transaction; (C) shall be a
                    "citizen of the United States" of America as defined in
                    Section 40102(a)(15)(c) of Title 49 of the U.S.C. and a
                    Certificated Air Carrier; and (D) shall execute and deliver
                    to Lessor such recordations and filings with any
                    Governmental Entity and such other documents as Lessor
                    determines shall be reasonably necessary or advisable to
                    evidence, or in connection with, such consolidation,
                    merger, sale, lease, transfer or other disposition and an
                    agreement, in form and substance reasonably satisfactory to
                    Lessor which is a legal, valid, binding and enforceable
                    assumption by such Successor Entity of the due and punctual
                    performance and observance of each covenant and condition of
                    the Lease and the other related documents to which Lessee is
                    a party, and an officer's certificate to such effect and to
                    the effect that the other requirements of this Section have
                    been satisfied, and a legal opinion from counsel to such
                    effect and otherwise in such form and substance reasonably
                    satisfactory to Lessor; and

               (z)  no Default shall have occurred and be continuing or shall
                    occur as a result thereof.

8.8  Records

     Lessee will keep all Aircraft Documents and Records:

     (a)  in English;

     (b)  according to good United States airline practice; and

     (c)  so they meet the requirements of applicable Regulations (including FAR
          91.417) and Lessee's Maintenance Program.

                                     - 31 -
<PAGE>

8.9  Protection

     Lessee will:

     (a)  take all actions requested by Lessor that are within Lessee's control
          to keep the Aircraft registered with the Air Authority in the name of
          Owner and, if applicable, subject to the first-priority Security
          Interest in favor of Financing Parties' Representative; and

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

8.10 Maintenance and Repair

     Lessee will maintain, overhaul and repair the Aircraft (or arrange for the
     Aircraft to be maintained, overhauled and repaired, through the Maintenance
     Performer), so that:

     (a)  the Aircraft is kept in as good operating condition and repair as the
          condition of the Aircraft as at Delivery and after giving effect to
          any post-Delivery modifications, repairs or maintenance paid for or
          otherwise provided by or on behalf of Lessor, except for ordinary wear
          and tear;

     (b)  the Lessee has a current certificate of airworthiness (issued by the
          Air Authority in the appropriate public transport category) for the
          Aircraft;

     (c)  the Aircraft complies with (i) all applicable Regulations including
          the standard stipulated by FAR Part 121 Subpart L and any other rules
          and regulations of the FAA and, subject to the provisions of
          ss.8.10(d), in at least the same manner and with at least the same
          care, including record keeping, maintenance scheduling, modification
          status and technical condition, as is the case with respect to similar
          aircraft owned or otherwise operated by Lessee and as if Lessee were
          to retain and continue operating the Aircraft in its fleet after

                                     - 32 -
<PAGE>

          the Expiry Date, including all maintenance to the Airframe, any Engine
          or any Part required to maintain all warranties, performance
          guaranties or service life policies that are assigned by Lessor to
          Lessee in full force and effect; and (ii) the requirements of all
          Airworthiness Directives and all service bulletins designated by the
          State of Design or State of Registry as "mandatory," and to be carried
          out before the Return Occasion or the Scheduled Expiry Date, whichever
          is later, or within a period of 180 days after the Return Occasion or
          the Scheduled Expiry Date, whichever is later; and

     (d)  all maintenance is carried out according to Lessee's Maintenance
          Program in at least the same manner and with at least the same care,
          including maintenance scheduling, modification status and technical
          condition, as is the case with respect to similar aircraft owned or
          otherwise operated by Lessee; provided, however, in the event that
          Lessee determines that any particular expenditure or modification may
          not be prudent during the last nine months prior to the Scheduled
          Expiry Date, then Lessor and Lessee shall discuss the issue and
          negotiate in good faith to agree on a mutually acceptable solution.

8.11 Removal of Engines and Parts

     (a)  GENERAL: Lessee must replace, within one hundred and five (105) days
          thereof, any Engine that has suffered an Engine Event of Loss in
          accordance with Section 8.11(b), and any Part which is permanently
          removed from the Aircraft must be replaced in accordance with Section
          8.11(b). Any Part which otherwise is lost, stolen, destroyed, seized,
          obsolete, confiscated, damaged beyond repair or permanently rendered
          unfit for any reason, must be replaced in accordance with Section
          8.1l(b). Any Engine or Part may be installed on another aircraft
          Lessee owns or leases in accordance with Section 8.11(c). Lessee may
          temporarily install an engine or part in accordance with Section
          8.11(d). Lessee shall obtain from any Person to whom possession of an
          Engine is given (other than (i) any Maintenance Performer to whom an
          Engine is delivered for maintenance, repair or overhaul, (ii) the
          Engine Manufacturer, or (iii) any other Person to whom an Engine is
          given solely for purpose of transporting the Engine), and from the
          lessor of any airframe on which an Engine is installed and from any
          holder of a Security Interest in any airframe on which an Engine is
          installed, an agreement in writing (which agreement, in the case of a
          lease or Security Interest, may be contained in the applicable lease
          or Security Interest agreement covering such airframe) that such
          Person will not acquire or claim any rights, title or interest in such
          Engine as a result of such Engine being installed on such other
          airframe at any time while such Engine is subject to the Lease. In the
          event Lessee shall have received from a lessor of or secured party
          holding a Security Interest in any airframe leased to Lessee or owned
          by Lessee a written agreement pursuant to the foregoing sentence and
          the lease or Security Interest covering such airframe also covers an
          engine or engines owned by the lessor under such lease or subject to
          such Security

                                     - 33 -
<PAGE>

          Interest in favor of the secured party under such Security Interest,
          Lessor hereby agrees for the benefit of such lessor or secured party
          that Lessor will not acquire or claim as against such lessor or
          secured party, any rights, title or interest in any such engine as a
          result of such engine being installed on the Airframe at any time
          while such engine is owned by such lessor and subject to such lease or
          such Security Interest in favor of such secured party.

     (b)  PERMANENT REPLACEMENT: If Lessee permanently replaces an Engine or
          Part:

          (i)  in the case of an Engine, the replacement engine must be of the
               same manufacturer and model, or at Lessee's option an engine of
               an improved model, and have equivalent or better remaining useful
               life and modification status as the Engine it replaces, and is
               otherwise of an equivalent or better value and utility and
               suitable for installation and use on the Airframe without
               impairing the value or utility of the Airframe and compatible
               with the remaining installed Engine(s);

          (ii) in the case of a Part, the replacement part must be in good
               operating condition, have a value and utility the same or better
               than the Part it is replacing, be of the same or a more advanced
               make and model and be of the same interchangeable modification
               status as the Part it is replacing;

         (iii) the replacement engine or part must have become and remain,
               until replaced in accordance with this Section, the property of
               Owner free from Security Interests (other than Permitted Liens),
               and subject to the applicable Financing Documents;

          (iv) Lessee must have full details of the source and maintenance
               records of the replacement engine or part and in the case of
               serialized rotable parts, also have a complete service history;
               and

          (v)  Lessee must comply with the requirements of the Financing
               Documents in connection with any such replacement including to
               provide such legal opinions and other documents as may be
               required under the Financing Documents.

     (c)  OTHER AIRCRAFT: An Engine or Part may be installed on an aircraft
          which Lessee owns or leases if

          (i)  no Event of Default has occurred and is continuing;

          (ii) Lessee or a Permitted Sub-Lessee has operational control over the
               aircraft;

         (iii) Owner keeps the ownership of the Engine or Part concerned until
               replaced in accordance with Section 8.11(b);

                                     - 34 -
<PAGE>

          (iv) the Engine or Part does not become subject to a Security Interest
               and the applicable airframe is not subject to any Security
               Interest except a Permitted Lien or a lease or Security Interest
               described in Section 8.11(a) above; and

          (v)  the Engine or Part is replaced in accordance with Section 8.11(b)
               or is removed from the aircraft as soon as practicable under
               Lessee's engine rotation program but not later than the Expiry
               Date.

     (d)  TEMPORARY REPLACEMENT: Lessee may install any engine or part on the
          Aircraft as a temporary replacement if

          (i)  no Event of Default has occurred and is continuing;

          (ii) there is not available an engine or part complying with the.
               requirements of the Lease for a replacement Engine or Part;

         (iii) it would result in an unreasonable disruption of the operation
               of the Aircraft or the business of Lessee to have the Aircraft
               grounded until such time as an engine or part complying with the
               requirements of the Lease for a replacement Engine or Part
               becomes available for installation;

          (iv) as soon as practicable (under Lessee's engine rotation program in
               the case of an engine) after an engine or part is installed on
               the Aircraft, but before the earlier of sixty (60) days after
               such temporary replacement or the Expiry Date, Lessee removes
               that engine or part and replaces it with the original Engine or
               Part (or by an engine or part which is allowed by Section
               8.11(b)); and

          (v)  the Insurances for the Aircraft are not adversely affected.

     (e)  POOLING/INTERCHANGE: Lessee shall not subject any Engine or Part to
          any pooling, interchange, lease or similar arrangement unless Lessee
          obtains Lessor's prior written consent thereto, which consent shall
          not be unreasonably withheld.

     (f)  ENGINES: Notwithstanding anything to the contrary set forth in
          Sections 8.11(c) and (d) above, so long as no Default shall have
          occurred and be continuing, any Engine may remain installed on an
          aircraft other than the Aircraft, and any auxiliary power unit may
          remain installed on the Aircraft indefinitely during the Term;
          provided, however, (i) upon the occurrence of any Default, Lessee
          shall promptly, and in any case within sixty (60) days following the
          occurrence of such Default, cause each Engine to be re-installed on
          the Aircraft, or, at Lessee's election, cause any of the Engines to be
          replaced by a replacement Engine meeting the requirements of, and in
          accordance with, Section 8.11(b), and (ii) in any event Lessee shall
          cause such Engine to be either re-installed on the Aircraft or

                                     - 35 -
<PAGE>

          replaced by a replacement Engine meeting the requirements of, and in
          accordance with, Section 8.11(b) on or before the Expiry Date.

     (g)  APU: Notwithstanding anything to the contrary set forth in Sections
          8.11(c) and (d) above, so long as no Default shall have occurred and
          be continuing, the APU may remain installed on an aircraft other than
          the Aircraft, and any auxiliary power unit may remain installed on the
          Aircraft indefinitely during the Term; provided, however, (i) upon the
          occurrence of any Default, Lessee shall promptly, and in any case
          within sixty (60) days following the occurrence of such Default, cause
          the APU to be re-installed on the Aircraft, or, at Lessee's election,
          cause the APU to be replaced by a replacement auxiliary power unit
          meeting the requirements of, and in accordance with, Section 8.11(b),
          and (ii) in any event Lessee shall cause the APU to be either
          re-installed on the Aircraft or replaced by a Replacement APU meeting
          the requirements of, and in accordance with, Section 8.11(b) on or
          before the Expiry Date.

8.12 Equipment Changes

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

     (i)  is expressly permitted or required by the Lease; or

     (ii) has (x) a cost (including labor) of less than the Modification
          Approval Amount or (y) the prior written approval of Lessor, and (z)
          in either case, does not diminish the condition, utility,
          airworthiness or value of the Aircraft.

     So long as no Default has occurred and is continuing, Lessee may remove or
     reverse any Equipment Change provided that the Equipment Change is not
     required pursuant to the terms of the Lease or to maintain the Insurances
     and removal or reversal does not diminish the value, utility, airworthiness
     or condition of the Aircraft assuming that such Equipment Change was not
     made and that Aircraft is maintained in accordance with the Lease.
     Furthermore, Lessor may require Lessee to remove or reverse any Equipment
     Change on the Expiry Date and to restore the Aircraft to its condition
     prior to that Equipment Change. Any Equipment Change not so removed or
     reversed becomes the property of Lessor or Owner, as the case may be, at
     the Expiry Date.

8.13 Title on an Equipment Change

     Title to any equipment that is installed on the Airframe shall, except in
     the case of an engine or an auxiliary power unit or a temporary replacement
     of a Part or any In-Flight Equipment, vest in Owner solely by virtue of its
     attachment to the Airframe or an Engine and it shall then be subject

                                     - 36 -
<PAGE>

     to the Lease and, if applicable, the Financing Documents, as if it were
     attached to the Aircraft at Delivery. In the case of any replacement of an
     Engine or the APU pursuant to Section 8.1l(b), and otherwise if so
     requested by Lessor, Lessee will provide a properly executed bill of sale
     or similar instrument to evidence the vesting of good and marketable title,
     free and clear of Security Interest (except Lessor Liens), to any such
     Replacement Engine, Replacement APU or other equipment in Owner and all
     documents required under the Financing Documents. After Lessor has
     determined that Lessee has permanently replaced an Engine or the APU in
     accordance with Section 8.11(b) and this Section 8.13, Lessor will, or will
     procure that Owner will, without recourse or warranty (except as to the
     absence of Lessor's Liens), transfer to Lessee or will procure that Owner
     will transfer to Lessee all of Lessor's or Owner's, as the case may be,
     rights to the engine or the auxiliary power unit that has been replaced, on
     an AS IS, WHERE IS basis, and will at Lessee's expense provide or will
     procure that Owner provides a bill of sale or similar instrument as Lessee
     may reasonably request to evidence such transfer. Lessee shall indemnify,
     on an After-Tax Basis, Lessor, Owner and each other Tax Indemnitee for all
     fees, expenses and Taxes incurred by Lessor, Owner or any other Tax
     Indemnitee in connection with any such transfer.

8.14 Inflight Equipment

     (a)  Notwithstanding any other provision of this Agreement, Lessor
          acknowledges that Lessee may at any time during the Term install a
          telephone system and/or an inflight entertainment system for passenger
          use (collectively, the Inflight Equipment) on the Aircraft
          notwithstanding that the Inflight Equipment may not be owned by Lessee
          provided that:

          (i)  Lessee shall give Lessor notice of the installation of any Might
               Equipment on the Aircraft and the name and address of the owner
               of such Inflight Equipment;

          (ii) the documents pursuant to which the owner of the Inflight
               Equipment installs same on the Aircraft shall provide that such
               owner shall not have any lien, security interest, claim or other
               encumbrance on or against the Aircraft, and such owner only right
               with respect to the Aircraft shall be to remove the Inflight
               Equipment from the Aircraft and, such documents shall also
               provide that such owner shall remove the Inflight Equipment from
               the Aircraft not later than the earlier of (A) thirty (30) days
               after notice from Lessor of the occurrence of an Event of
               Default, and (B) the Expiry Date;

          (iii) such right of removal is subject to and conditioned upon such
               owner restoring, or causing Lessee to restore, all alterations
               made to the Aircraft in connection with the installation of the
               Inflight Equipment to the condition prior to the installation
               thereof (ordinary wear and tear excepted).

     (b)  Lessor acknowledges that at all times:

          (i)  the owner of the Inflight Equipment has and will retain sole and
               exclusive right and title to and in the Inflight Equipment;

          (ii) the Inflight Equipment shall not constitute a Part or a part of
               the Aircraft;

                                     - 37 -
<PAGE>

         (iii) title to the Inflight Equipment shall not transfer to or from
               Lessor pursuant to Clauses 8.12 and 8.13; and

          (iv) the Inflight Equipment shall not become subject to the Security
               Interest of any Person to whom Lessor grants a Security Interest
               in the Aircraft pursuant to Clause 14.1.

9.   INSURANCE

9.1  Insurance

     Lessee will maintain the Insurance in full force during the Term, and
     thereafter as expressly required in the Lease, which Insurance shall be of
     the type usual and customary in the industry for comparable operators
     operating similar equipment in similar circumstances, and shall be through
     reputable brokers and insurers of recognized standing in the commercial
     aviation insurance industry. The Insurance shall in any event meet the
     requirements set forth in Schedule 7.

9.2  [NOT APPLICABLE]

9.3  Insurance Undertakings and Information: Lessee will:

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

          (i)  invalidates or may invalidate any Insurance; or

          (ii) renders or may render void or voidable the whole or any part of
               any Insurance; or

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

     (b)  not take out any insurance or reinsurance in respect of the Aircraft
          other than that which is required under the Lease which adversely
          affects the Insurance required to be maintained hereunder; provided,
          however, Lessee may purchase a separate "hull total loss" policy with
          respect to the Aircraft in such amount as Lessee may desire;

     (c)  commence renewal procedures at least 30 days prior to expiry of any of
          the Insurance and provide to Lessor:

          (i)  if requested by Lessor in writing, a written status report of
               renewal negotiation as of the time of the request;

          (ii) [NOT APPLICABLE];

                                     - 38 -
<PAGE>

         (iii) receipt of certificates of insurance (and where appropriate
               certificates of reinsurance), and broker's (and any reinsurance
               broker's) letter of undertaking in a form acceptable to Lessor,
               detailing the coverage and confirming compliance with the
               specified insurance requirements of the Lease and, in the case of
               the broker's letter of undertaking, opining that the Insurance
               complies with the requirements of the Lease on or before each
               renewal date;

     (d)  on reasonable request, provide to Lessor copies of documents or other
          information evidencing the Insurances; and

     (e)  provide any other insurance and reinsurance related information, or
          assistance, in respect of the Insurance as Lessor may reasonably
          require.

9.4  Failure to Insure

     If Lessee fails to maintain any of the  Insurance in  compliance  with the
     Lease:

     (a)  each of the Indemnitees will be entitled but not bound (without
          prejudice to any other rights of Lessor under the Lease) to pay the
          premiums due or to effect and maintain insurance satisfactory to such
          Indemnitee or otherwise remedy Lessee's failure in such manner
          (including, without limitation to effect and maintain an "owner's
          interest" policy) as such Indemnitee considers appropriate. Any sums
          so expended by any such Indemnitee will become immediately due and
          payable by Lessee on demand by Lessor together with interest thereon
          at the Interest Rate, from the date of expenditure by such Indemnitee
          up to the date of reimbursement by Lessee; and

     (b)  Lessor at any time while such failure is continuing may require the
          Aircraft to remain at any airport or to proceed to and remain at any
          airport designated by Lessor until the failure is remedied to Lessor's
          reasonable satisfaction.

9.5  Continuing Indemnity

     Lessee shall effect and maintain product legal liability insurance after
     the Expiry Date with respect to its liability under Section 10 (INDEMNITY)
     for two years, and such insurance shall name each Indemnitee as an
     additional insured.

10.  INDEMNITY

     (a)  Except as provided in Section 10(b) below, Lessee agrees to assume
          liability for and to indemnify each of the Indemnitees against and
          agrees to pay on demand any and all Losses which an Indemnitee may at
          any time suffer or incur at any time, whether directly or indirectly,
          arising out of, related to or in any way connected with:

                                     - 39 -
<PAGE>

          (i)  the ownership, maintenance, overhaul, service, repair, delivery,
               possession, transfer of ownership or possession, import, export,
               registration, control, storage, modification, leasing, insurance,
               inspection, testing, design, date processing, sub-leasing, use,
               condition, redelivery or other matters relating to the Aircraft,
               any Engine or any Part (regardless of whether in the air or on
               the ground, and regardless of whether such Losses are based on
               strict liability in tort, any act or omission, including the
               negligence, of any Indemnitee, or otherwise); or

          (ii) any breach by the Lessee of any of its obligations under the
               Lease; or

         (iii) the design, testing or use of or any article or material in, the
               Aircraft, any Engine or any Part or its use or operation,
               including any defect in design and regardless of whether it is
               discoverable, and any infringement of patent, copyright,
               trademark, design or other proprietary right claimed by any
               Person or a breach of any obligation of confidentiality claimed
               to be owed to any Person.

               For the avoidance of doubt, the reference to "ownership" in
               clause (i) shall not require Lessee to indemnify Lessor in
               respect of (y) any defect in Lessor's or Owner's title to the
               Aircraft or (z) any decline in residual value of the Aircraft if
               Lessee shall have fully complied with its obligations under the
               Lease.

     (b)  Lessee is not required to indemnify any particular Indemnitee
          (provided that (i) Lessor and its Subsidiaries and Affiliates and its
          and their officers, directors, representatives, agents, partners,
          contractors and employees shall be treated as a single Indemnitee, and
          (ii) each Financing Party and its shareholders, subsidiaries,
          affiliates, partners, contractors, directors, officers,
          representatives, agents and employees shall be treated as a single
          Indemnitee) under this Section, to the extent a particular Loss is:

          (i)  caused solely by the willful misconduct of that Indemnitee or
               gross negligence of that Indemnitee, other than gross negligence
               imputed to that Indemnitee by reason of its interest in the
               Aircraft or the Lease;

          (ii) caused solely by Lessor's breach of the Lease which does not
               result from a Default;

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

          (iv) caused solely by an event which occurs before the commencement of
               the Term (except where the Loss is suffered during the Tenn as a
               result of a pre-Delivery defect in or such Loss otherwise arises
               out of or relates to or is any way

                                     - 40 -
<PAGE>

               connected with the manufacture, design, maintenance, repair,
               rebuilding, overhaul or modification of the Aircraft);

          (v)  caused solely by an event which occurs after the redelivery of
               the Aircraft to Lessor in compliance with the Lease and is not
               attributable to any act, omission, event or circumstance
               occurring prior to such redelivery;

          (vi) caused solely as a result of any sale, assignment, transfer or
               other disposition (whether voluntary or involuntary) by such
               Indemnitee of the Aircraft or Engine or any interest therein that
               is not a replacement thereof under the Lease or is otherwise not
               contemplated under the Lease, and unless such sale, transfer or
               other disposition has resulted from or occurred following a
               Default; or

         (vii) consists of normal administrative costs and expenses of such
               Indemnitee (but excluding any such costs or expenses resulting
               from the occurrence of any Default); or

        (viii) consists of costs or expenses for which Lessor has expressly
               agreed to be responsible under any other provision of the
               Lease.

11.  EVENTS OF LOSS

11.1 Events of Loss

     (a)  If an Event of Loss occurs prior to Delivery of the Aircraft, the
          Lease will immediately terminate and except as expressly stated in the
          Lease neither party will have any further obligation other than
          pursuant to Section 5.21 and Section 3 of Schedule 4, except that
          Lessor will return the Deposit (if any) to Lessee and return to Lessee
          or cancel any Letter of Credit.

     (b)  If an Event of Loss occurs after Delivery, Lessee will pay the Agreed
          Value to Lessor on or prior to the earlier of (i) sixty (60) days
          after the Event of Loss and (ii) the date of receipt of insurance
          proceeds in respect of that Event of Loss.

     (c)  Subject to the rights of any insurers and reinsurers or other third
          party, upon irrevocable payment in full to Lessor of the Agreed Value
          and all other amounts which may be or become payable to Lessor under
          the Lease, and if Lessee requests such transfer, Lessor will, or will
          procure that Owner will, without recourse or warranty (except as to
          the absence of Lessor's Liens) transfer to Lessee or will procure that
          Owner transfers to Lessee or to Lessee's designee legal and beneficial
          title, subject to no Lessor's Liens (but otherwise without warranty),
          to the Aircraft, on an AS IS, WHERE IS basis, and will at Lessee's
          expense, execute and deliver or will procure that Owner executes and
          delivers

                                     - 41 -
<PAGE>

          such bills of sale and other documents and instruments as Lessee may
          reasonably request to evidence (on the public record or otherwise)
          such transfer, free and clear of all rights of Lessor and Owner and
          Lessor Liens. Lessee shall indemnify, on an After-Tax Basis, Lessor,
          Owner and each other Tax Indemnitee for all fees, expenses and Taxes
          incurred by Lessor, Owner or any other Tax Indemnitee in connection
          with any such transfer.

11.2 Requisition

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

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

     (b)  so long as no Default has occurred and is continuing, Lessee will be
          entitled to any compensation paid by the requisitioning authority in
          respect of such authority's use of the Aircraft, such Engine or such
          Part during the Term. Lessee will, as soon as practicable after the
          end of any such requisition, cause the Aircraft to be put into the
          condition required by the Lease. Lessor will be entitled to all
          compensation payable by the requisitioning authority in respect of any
          change in the structure, state or condition of the Aircraft arising
          during the period of requisition, and Lessor will apply such
          compensation in reimbursing Lessee for the cost of complying with its
          obligations under the Lease in respect of any such change, but, if any
          Default has occurred and is continuing, Lessor may apply the
          compensation in or towards settlement of any amounts owing by Lessee
          under the Lease and/or under any Other Agreement.

12.  RETURN OF AIRCRAFT

12.1 Return

     On the Expiry Date or redelivery of the Aircraft pursuant to Section 13.2
     or termination of the leasing of the Aircraft under the Lease, Lessee will,
     unless an Event of Loss has occurred, redeliver the Aircraft and the
     Aircraft Documents and Records at Lessee's expense to Lessor at the
     Redelivery Location, in accordance with the procedures and in compliance
     with the conditions set forth in the Aircraft Lease Agreement, free and
     clear of all Security Interests (other than Lessor Liens) and in a
     condition qualifying for and having a valid and fully effective
     certification of airworthiness under FAR Part 121. Lessor shall commence
     the Final Inspection in accordance with the Aircraft Lease Agreement
     promptly upon Lessee making the Aircraft and the Aircraft Documents and
     Records available for the Final Inspection provided that Lessee gives

                                     - 42 -
<PAGE>

     Lessor no less than thirty (30) days prior written notice of the
     availability of the Aircraft and the Aircraft Documents and Records for
     such inspection.

12.2 Non-Compliance

     If at the time of Final Inspection Lessee has not fully complied with any
     of its obligations under the Lease (including, without limitation, Part III
     of Schedule A to the Aircraft Lease Agreement), or Lessee fails to make the
     Aircraft available to Lessor on a timely basis for inspection and
     redelivery pursuant to Section 12.1 and Part III of Schedule A to the
     Aircraft Lease Agreement (whether such failure is due to any act or
     omission of Lessee or any other circumstance whatsoever), the Term shall be
     extended until the time when the Aircraft has been redelivered to Lessor in
     full compliance with the Lease, for the sole purpose of enabling such
     non-compliance or failure to be promptly rectified, and during such
     extension period:

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

     (b)  all Lessee's obligations and covenants under the Lease will remain in
          full force until Lessee so redelivers the Aircraft; and

     (c)  Lessee shall pay Rent to Lessor at a rate per month equal to the
          amount of Rent payable in respect of the last scheduled Rental Period
          plus 50 per cent thereof, calculated on a per diem basis; provided,
          however, with respect to the portion of such extension, if any,
          attributable solely to a good faith dispute between Lessor and Lessee
          as to the meaning of some particular language in the Lease applicable
          to the return of the Aircraft, whether set forth in Part III of
          Schedule A to the Aircraft Lease Agreement or elsewhere (but not, for
          the avoidance of doubt, in respect of any dispute as to the result or
          outcome of any inspection or check required in connection with the
          Final Inspection under the Lease), Lessee shall pay to Lessor Rent,
          calculated on a per diem basis, at 50% of the rate otherwise
          applicable, which rate shall be equal to (i) 50% of the rate
          applicable to the last scheduled Rental Period, without giving effect
          to the 50% premium required in the introductory clause of this
          paragraph (c), if as of the Scheduled Expiry Date the Aircraft is in
          full compliance with the requirements of the Lease for return to
          Lessor (other than the item in dispute), and (ii) 50% of the rate
          specified in the introductory clause of this paragraph (c), or 75% of
          the rate applicable to the last scheduled Rental Period, if the rate
          specified in the introductory clause of this paragraph (c) becomes
          applicable as of the Scheduled Expiry Date due to Lessee's failure to
          comply with its obligations in respect of the Final Inspection in a
          timely manner or the Aircraft otherwise fails to comply as of the
          Scheduled Delivery Date with the requirements of the Lease for return
          to Lessor in any respect other than in reference to the disputed
          language. For so long as the Aircraft remains non-compliant with any
          requirements of the Lease other than those that are the

                                     - 43 -
<PAGE>

          subject of the disputed language, Lessee shall pay to Lessor Rent in
          the amount specified in the introductory clause of this paragraph (c),
          and the Rent rate specified in this clause (ii) shall become
          applicable, if at all, only from and after such time as the Aircraft
          is brought into compliance with all requirements of the Lease for
          return to Lessor (including, but not limited to, Part III of Schedule
          A to the Aircraft Lease Agreement) other than the with respect to the
          items that are the subject of the disputed language, such that the
          disputed language remains as the sole cause in the delay in the return
          of the Aircraft to Lessor.

     Any such extension shall not prejudice Lessor's right to treat such
     non-compliance or failure as an Event of Default at any time, and to
     enforce such rights and remedies as may be available to Lessor in respect
     thereof under the terms of the Lease or applicable Law. Without limiting
     the generality of the foregoing, Lessee's Rent obligation under paragraph
     (c) above shall be without prejudice to Lessor's rights to terminate the
     letting of the Aircraft and to indemnification pursuant to Section 13.3.

     Lessor may elect (either on first tender of the Aircraft by Lessee or at
     any time during the said extension period) to accept redelivery of the
     Aircraft notwithstanding non-compliance with Section 12.1 or Part III of
     Schedule A to the Aircraft lease Agreement, in which case Lessee will
     indemnify Lessor on an After-Tax Basis, and provide cash to Lessor (in an
     amount satisfactory to Lessor) as security for that indemnity, in respect
     of the cost to Lessor of putting the Aircraft into the condition required
     by the Lease.

12.3 Redelivery

     Upon redelivery Lessee will provide to Lessor, upon Lessor's request, all
     documents necessary to export the Aircraft from the United States
     (including a valid and subsisting export certificate of airworthiness for
     the Aircraft) or required in relation to the deregistration of the Aircraft
     with the Air Authority.

12.4 Acknowledgement

     Provided Lessee has complied with its obligations under Section 12 hereof
     and Part III of Schedule A to the Aircraft Lease Agreement, following
     redelivery of the Aircraft by Lessee to Lessor at the Redelivery Location,
     Lessor will deliver to Lessee an acknowledgement confirming that Lessee has
     redelivered the Aircraft to Lessor in accordance with the Lease which
     acknowledgement shall be without prejudice to Lessor's accrued and
     continuing rights under the Lease or any Other Agreement.

                                     - 44 -
<PAGE>

13.  DEFAULT

13.1 Events

     The occurrence of any of the Events of Default will constitute a
     repudiation (but not a termination) of the Lease by Lessee (whether the
     occurrence of any such Event of Default is voluntary or involuntary or
     occurs by operation of Law or pursuant to or in compliance with any
     judgement, decree or order of any court or any order, rule or regulation of
     any Government Entity).

13.2 Rights and Remedies

     If an Event of Default occurs, Lessor may at its option (and without
     prejudice to any of its other rights under the Lease), at any time
     thereafter (without notice to Lessee except as required under applicable
     Law):

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

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

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

          (i)  all Rent and other amounts which are or become due and payable
               hereunder prior to the earlier to occur of the date Lessor sells
               or re-leases the Aircraft or receives payment of the amount
               calculated pursuant to clause (ii) below;

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

               A.   in the event that Lessor has re-let the Aircraft on terms
                    (other than rental payment terms) which, taken as a whole,
                    Lessor reasonably regards as being substantially similar to
                    the material economic terms of the Lease (taking into
                    account factors affecting the degree of risk associated with
                    such re-lease and/or the residual value of the Aircraft
                    thereunder, but

                                     - 45 -
<PAGE>

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

               B.   in the event that Lessor has not re-let the Aircraft or has
                    sold the Aircraft or has re-let the Aircraft on terms which,
                    taken as a whole, Lessor does not reasonably regard as being
                    substantially similar to the material economic terms of the
                    Lease (taking into account factors affecting the degree of
                    risk associated with such re-lease and/or the residual value
                    of the Aircraft thereunder, but excluding the rental payment
                    terms), an amount equal to the fair market rental value
                    (determined pursuant to the Appraisal Procedure) of the
                    Aircraft for the period commencing with the date that Lessor
                    reasonably anticipates that the Aircraft could be re-let at
                    such rental rate and ending with the date that the Term was
                    scheduled to expire (determined without reference to any
                    right of Lessor to cancel the leasing of the Aircraft,
                    whether or not such right is exercised), discounted
                    periodically (equal to installment frequency) to present
                    worth at the Discount Rate to the date of payment by Lessee.

         (iii) all costs and other incidental damages associated with Lessor's
               exercise of its remedies hereunder or otherwise incurred by
               Lessor as a result of an Event of Default, including repossession
               costs, legal fees, Aircraft storage, maintenance and insurance
               costs, Aircraft re-lease or sale costs (including, in the case of
               a re lease, any costs incurred to transition the Aircraft to the
               next operator's maintenance program) and Lessor's internal costs
               and expenses (including the cost of personnel time calculated
               based upon the compensation paid to the individuals involved on
               an annual basis and a general Lessor overhead allocation), all
               such costs and incidental damages being referred to herein
               collectively as "Enforcement and Remarketing Costs";

          (iv) any loss, premium, penalty or expense which may be incurred in
               repaying funds raised to finance the Aircraft or in unwinding any
               financial instrument relating in whole or in part to Lessor's
               financing of the Aircraft, all such amounts being referred to
               herein collectively as "Unwind Expenses";

          (v)  any loss, cost, expense or liability, or damage to Lessor's
               residual interest in the Aircraft, sustained by Lessor due to
               Lessee's failure to maintain the Aircraft in

                                     - 46 -
<PAGE>

               accordance with the terms of this Agreement or Lessee's failure
               to redeliver the Aircraft in the condition required by this
               Agreement, including any consequential loss of revenues or
               profits, all such amounts being referred to herein collectively
               as "Aircraft Condition Damages"; and

          (vi) such additional amount, if any, as may be necessary to place
               Lessor in the same economic position, on an After-Tax Basis, as
               Lessor would have been in if Lessee had timely performed each of
               its obligations under this Agreement; and/or

     (d)  either:

          (i)  enter upon the premises where all or any part of the Aircraft is
               located and take immediate possession of and, at Lessor's sole
               option, remove the same (and/or any engine which is not an Engine
               but which is installed on the Airframe, subject to the rights of
               the lessor or secured party thereof), all without liability
               accruing to Lessor for or by reason of such entry or taking of
               possession whether for the restoration of damage to property,
               conversion or otherwise, caused by such entry or taking, except
               damages caused by gross negligence or willful misconduct; or

          (ii) by delivering notice to Lessee, require Lessee to redeliver the
               Aircraft to Lessor at Phoenix Sky Harbor International Airport in
               Phoenix, Arizona (or such other location as Lessor may require)
               on the date specified in such notice and in all respects in the
               condition required by the Lease upon the Return Occasion (it
               being understood that Lessee shall not delay any such return for
               the purpose of placing the Aircraft in such condition, but shall
               nevertheless be liable to Lessor for the failure of the Aircraft
               to be in such condition); and/or

     (e)  sell at private or public sale, as Lessor may determine, or hold, use,
          operate or lease to others the Aircraft as Lessor in its sole
          discretion may determine, all free and clear of any rights of Lessee;
          and/or

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

          (i)  all Rent and other amounts which are or are expected to become
               due and payable hereunder prior to the payment date specified by
               Lessor;

                                     - 47 -
<PAGE>

          (ii) an amount equaling the aggregate Rent for the remainder of the
               Term (determined without reference to any right of Lessor to
               cancel the leasing of the Aircraft, whether or not such right is
               exercised), discounted periodically (equal to installment
               frequency) to present worth at the Discount Rate to the payment
               date specified by Lessee to Lessor, less the applicable amount
               set forth below:

               A.   in the event that Lessor has re-let the Aircraft on terms
                    (other than rental payment terms) which, taken as a whole,
                    Lessor reasonably regards as being substantially similar to
                    the material economic terms of the Lease (taking into
                    account factors affecting the degree of risk associated with
                    such re-lease and/or the residual value of the Aircraft
                    thereunder, but excluding the rental payment terms), an
                    amount equal to the aggregate basic rental payments to
                    become due under such re-lease for the period coinciding
                    with the remainder of the Term (determined without reference
                    to any right of Lessor to cancel the leasing of the
                    Aircraft, whether or not such right is exercised),
                    discounted periodically (equal to installment frequency) to
                    present worth at the Discount Rate to the date of payment by
                    Lessee; or

               B.   in the event that Lessor has not re-let the Aircraft or has
                    sold the Aircraft or has re-let the Aircraft on terms which,
                    taken as a whole, Lessor does not reasonably regard as being
                    substantially similar to the material economic terms of the
                    Lease (taking into account factors affecting the degree of
                    risk associated with such release and/or the residual value
                    of the Aircraft thereunder, but excluding the rental payment
                    terms), an amount equal to the fair market rental value
                    (determined pursuant to the Appraisal Procedure) of the
                    Aircraft for the period commencing with the date that Lessor
                    reasonably anticipates that the Aircraft could be re-let at
                    such rental rate and ending with the date that the Term was
                    scheduled to expire (determined without reference to any
                    right of Lessor to cancel the leasing of the Aircraft,
                    whether or not such right is exercised), discounted
                    periodically (equal to installment frequency) to present
                    worth at the Discount Rate to the date of payment by Lessee;

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

          (iv) such additional amount, if any, as may be necessary to place
               Lessor in the same economic position, on an After-Tax Basis, as
               Lessor would have been in if Lessee had timely performed each of
               its obligations under this Agreement;

                                     - 48 -
<PAGE>

          (v)  it being understood that, to the extent that any of the foregoing
               amounts represents an estimate by Lessor of losses, damages,
               costs or expenses which Lessor expects to incur, (y) Lessor shall
               adjust the amount thereof as needed to reflect the actual amount
               of such losses, damages, costs or expenses incurred by Lessor
               when substantially all of such amounts become known to Lessor,
               but Lessee shall nevertheless be obligated to pay the amount
               demanded by Lessor (subject to such subsequent adjustment in
               which (i) amounts, if any, actually paid by Lessee to Lessor upon
               such demand as may exceed the actual amount of losses, damages,
               costs or expenses incurred by Lessor as finally determined by
               Lessor are refunded to Lessee or otherwise credited to the
               account of Lessee and (ii) additional amounts, if any, as may be
               required to cure any shortfall between the estimated amounts paid
               by Lessee and the actual amount of losses, damages, costs or
               expenses incurred by Lessor as finally determined by Lessor are
               paid by Lessee to Lessor), and (z) notwithstanding the amount
               specified in such demand, Lessor shall be entitled to claim such
               other (and greater) amount in any action against Lessee
               hereunder; and/or

     (g)  draw upon the Deposit or the Letter of Credit and apply such amounts
          to any amounts owing to Lessor hereunder and/or make demand against
          any Guarantor for any or all of the foregoing.

     In addition to the foregoing, Lessor shall be entitled to exercise such
     other rights and remedies as may be available under applicable Law and
     Lessee shall be liable on an After-Tax Basis for, and shall pay Lessor on
     demand: (i) interest on all unpaid amounts at the Interest Rate, from the
     due date until the date of payment in full; (ii) all reasonable legal fees
     and other reasonable costs and expenses incurred by Lessor by reason of the
     occurrence of any Event of Default or the exercise of Lessor's remedies
     with respect thereto; and (iii) all reasonable expenses, disbursements,
     costs and fees incurred in (A) repossessing, storing, preserving, shipping,
     maintaining, repairing and refurbishing the Aircraft, the Airframe, any
     Engine or Part to the condition required by Section 12 hereof and (B)
     preparing the Aircraft, the Airframe, an Engine or Part for sale or lease,
     advertising the sale or lease of the Aircraft, the Airframe, an Engine or
     Part and selling or releasing the Aircraft, the Airframe, an Engine or
     Part.

     Lessor is hereby authorized and instructed, but shall have no obligation,
     to make any expenditures which Lessor, in its sole discretion, considers
     advisable to repair and restore the Aircraft, the Airframe, an Engine or
     Part to the condition required by Section 12 hereof (it being understood
     that Lessee shall be liable for all such expenditures).

     Lessee hereby agrees that, in the event of the return to or repossession by
     Lessor of the Aircraft, the Airframe, an Engine or Part, any rights in any
     warranty (express or implied) previously

                                     - 49 -
<PAGE>

     assigned to Lessee or other-wise held by Lessee shall without further act,
     notice or writing be assigned or reassigned to Lessor, if assignable.

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

                                     - 50 -
<PAGE>

13.3 Power of Attorney: Lessee hereby appoints Lessor as the attorney-in-fact of
     Lessee, with full authority in the place and stead of Lessee and in the
     name of Lessee or otherwise, for the purpose of carrying out the provisions
     of the Lease and taking any action and executing any instrument that Lessor
     may deem necessary or advisable to accomplish the purposes hereof;
     provided, however, that Lessor may only take action or execute instruments
     under this Section 13 after an Event of Default has occurred and is
     continuing. Lessee hereby declares that the foregoing powers are granted
     for valuable consideration, constitute powers granted as security for the
     performance of the obligations of Lessee hereunder and are coupled with an
     interest and shall be irrevocable. Without limiting the generality of the
     foregoing or any other rights of Lessor under the Lease, upon the
     occurrence and during the continuation of an Event of Default, Lessor shall
     have the sole and exclusive right and power to (i) settle, compromise,
     adjust or defend any actions, suits or proceedings relating to or
     pertaining to the Aircraft, Airframe or any Engine, or the Lease and (ii)
     make proof of loss, appear in and prosecute any action arising from any
     policy or policies of insurance maintained pursuant to the Lease, and
     settle, adjust or compromise any claims for loss, damage or destruction
     under, or take any other action in respect of, any such policy or policies.

13.4 Sale or Re-Lease

     If an Event of Default occurs, Lessor may sell or re-lease or otherwise
     deal with the Aircraft at such time and in such manner and on such terms as
     Lessor considers appropriate in its absolute discretion, free and clear of
     any interest of Lessee, as if the Lease had never been entered into. Lessor
     shall have no duty or obligation to sell the Aircraft, and Lessor shall be
     obligated to attempt to re-lease the Aircraft only to the extent, if any,
     that it is required to do so under Article 2A of the UCC, and Lessee hereby
     disclaims any right to compel Lessor to sell or otherwise release the
     Aircraft.

13.5 Removal of Lease from FAA Registry

     If an Event of Default occurs, Lessee will at the request of Lessor
     immediately take all steps necessary to enable the Aircraft to be
     redelivered to Lessor in accordance with and free and clear of the Lease
     and Lessee hereby irrevocably and by way of security for its obligations
     under the Lease appoints (which appointment is coupled with an interest)
     Lessor as its attorney-in-fact to execute and deliver any documentation and
     to do any act or thing not prohibited by Law required in connection with
     the foregoing during the continuance of an Event of Default. Without
     limiting the foregoing, Lessor may file with the FAA the Lease Termination
     Certificate provided to Lessor under the Lease.

                                     - 51 -
<PAGE>

14.  TRANSFER

14.1 Lessee

     LESSEE WELL NOT ASSIGN, DELEGATE OR OTHERWISE TRANSFER (VOLUNTARILY,
     INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE) ANY OF ITS RIGHTS OR
     OBLIGATIONS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR THIS
     CTA), OR CREATE OR PERMIT TO EXIST ANY SECURITY INTEREST OVER ANY OF ITS
     RIGHTS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR THIS
     CTA), AND ANY ATTEMPT TO DO SO SHALL BE NULL AND VOID. The foregoing shall
     not be construed to prohibit a Permitted Sub-Lease.

14.2 Lessor

     Lessee acknowledges and agrees that Lessor will, if applicable under the
     Financing Documents, assign as security Lessor's interest in the Lease as
     described in the Acknowledgement and Agreement referred to in Schedule 3.

     In addition insofar as Lessee is concerned, Lessor may, without the consent
     of Lessee, further transfer all or any of its rights or obligations under
     the Lease or all or any of its right, title or interest in and to the
     Aircraft, including pursuant to:

     (a)  a sale and leaseback; or

     (b)  a novation or assignment of the Lease and/or a sale of the Aircraft
          (including to a special purpose or securitization or monetization
          trust, fund, limited liability company, corporation, partnership or
          other vehicle or in connection with any other direct or indirect
          raising of capital); or

     (c)  a secured loan financing.

     Lessor will promptly notify Lessee of any transfer and Lessee agrees
     promptly to execute and deliver in connection with any transfer such
     documents and assurances (including an acknowledgement of the transfer and
     a certificate as to the absence of any Default under the Lease) and to take
     such further action as Lessor may reasonably request to establish or
     protect the rights and remedies created or intended to be created in favor
     of the transferee in connection with any transfer. After any transfer, the
     transferee shall be entitled to be an Indemnitee and to such other rights
     under the Lease as Lessor shall specify. Upon an assignment or novation
     described in clause (b), Lessor shall be released from all obligations and
     liabilities under the Lease to the extent such obligations and liabilities
     are assumed by such transferee, and the Lease, including this CTA as in
     effect at that time and as incorporated in the Aircraft Lease Agreement,
     shall be

                                     - 52 -
<PAGE>

     deemed applicable as between Lessee and the transferee of the Lease and may
     be amended, supplemented or otherwise modified without the consent of the
     transferor (if this CTA is applicable to the Other Agreements not so
     transferred, it shall remain in full force and effect and may be amended,
     supplemented or otherwise modified without the consent of the transferee).
     Notwithstanding any such assignment or novation, Lessor, Owner, Financing
     Parties' Representative and each other Indemnitee shall continue to be
     entitled to indemnification under Section 10, and shall continue to be
     named as an additional insured under all Insurances referred to in Section
     9 for a period of not less than two years after such transfer. The
     agreements, covenants, obligations and liabilities contained in the Lease,
     including all obligations to pay Rent and indemnify each Indemnitee, are
     made for the benefit of Lessor (and, in the case of Section 10, each other
     Indemnitee) and its or their respective successors and assigns,
     notwithstanding the possibility that any such Person was not originally a
     party to the Lease or may, at the time such enforcement is sought, not be a
     party to the Lease.

14.3 Conditions

     In connection with any such transfer by Lessor:

     (a)  QUIET ENJOYMENT: as a condition precedent to such transfer becoming
          effective, Lessor will procure that the transferee or any new owner of
          the Aircraft or any new holder of a Security Interest in the Aircraft
          or any holder of an interest in the Aircraft or the Lease (by way of
          security or otherwise), as the case may be, shall in the case of a
          transferee that is the "Lessor" acknowledge Lessor's obligation under
          Section 7.1 or, if not the Lessor, execute and deliver to Lessee a
          letter of quiet enjoyment in respect of Lessee's use and possession of
          the Aircraft in a form substantially similar to Section 7.1 hereof;

     (b)  COSTS: Lessor shall reimburse to Lessee its reasonable out-of-pocket
          expenses (including reasonable legal fees and expenses) actually
          incurred in connection with co-operating with Lessor in relation to
          any such transfer referred to in this Section 14, provided that such
          expenses are substantiated to Lessor's reasonable satisfaction;

     (c)  RIGHTS OF LESSEE: as a condition precedent to any transfer becoming
          effective, such transfer shall not, at the time of the transfer,
          materially expand Lessee's obligations under the Lease or materially
          reduce Lessee's rights under the Lease, in each case as compared to
          what such obligations and rights would have been in the absence of
          such transfer; provided, however, that no transfer to any Person that
          meets the requirements of a "citizen of the United States" under 49
          U.S.C. Section 40102(a)(15) shall be deemed to materially expand
          Lessee's obligations or materially restrict Lessee's rights under the
          Lease.

                                     - 53 -
<PAGE>

15.  MISCELLANEOUS

15.1 Survival

     Lessee's obligations under Section 3 of Schedule 4, under Sections 5.6,
     5.7, 5.10, 5.21, 9.5, 10, 12, and 13.2 and under any other provision of the
     Lease providing for an obligation on the part of the Lessee to indemnify
     Lessor or any other Indemnitee shall survive the expiration or any
     termination of the Lease and continue in full force and effect.

15.2 Waivers, Remedies Cumulative

     The rights of Lessor under the Lease may be exercised as often as
     necessary, are cumulative and not exclusive of its rights under any Law;
     and may be waived only in writing and specifically. Delay by Lessor in
     exercising, or non-exercise of, any such right will not constitute a waiver
     of that right.

15.3 Delegation

     Lessor may delegate to any Person all or any of the rights, powers or
     discretion vested in it by the Lease, and any such delegation may be made
     upon such terms and conditions and subject to such regulations (including
     power to sub-delegate) as Lessor in its absolute discretion thinks fit.

15.4 Severability

     If a provision of the Lease is or becomes illegal, invalid or unenforceable
     in any jurisdiction, that will not affect:

     (a)  the legality, validity or enforceability in that jurisdiction of any
          other provision of the Lease; or

     (b)  the legality, validity or enforceability in any other jurisdiction of
          that or any other provision of the Lease.

15.5 Remedy

     If Lessee fails to comply with any provision of the Lease, Lessor may,
     without being in any way obliged to do so or responsible for so doing and
     without prejudice to the ability of Lessor to treat such non-compliance as
     a Default, effect compliance on behalf of Lessee, whereupon Lessee shall
     become liable to pay immediately any sums expended by Lessor together with
     all costs and expenses (including legal fees and expenses) in connection
     with the non-compliance.

                                     - 54 -
<PAGE>

15.6 Time of Essence

     The time stipulated in the Lease for all payments payable by Lessee and the
     prompt, punctual performance of Lessee's other obligations under the Lease
     are of the essence of the Lease.

15.7 Notices

     All notices under, or in connection with, the Lease will, unless otherwise
     stated, be given in writing by means of a overnight courier service or
     facsimile. Any such notice is deemed effectively to be given when received
     by the recipient (or if receipt is refused by the intended recipient, when
     so refused).

     The addresses and facsimile and telephone numbers of Lessee and Lessor are
     as set forth in the Aircraft Lease Agreement.

15.8 Governing Law; Jurisdiction; WAIVER OF JURY TRIAL

     (a)  PURSUANT TO AND IN ACCORDANCE WITH SECTION 5-1401 OF THE NEW YORK
          GENERAL OBLIGATIONS LAW, THE PARTIES HERETO AGREE THAT THE LEASE IN
          ALL RESPECTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
          THE LAWS OF THE STATE OF NEW YORK, UNITED STATES, AS APPLIED TO
          CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK
          (EXCLUSIVE OF SECTION 7-101 OF THE NEW YORK GENERAL OBLIGATIONS LAW
          WHICH IS INAPPLICABLE TO THE LEASE). THE PARTIES AGREE THAT THE LEASE
          WAS EXECUTED AND DELIVERED IN THE STATE OF NEW YORK.

     (b)  Pursuant to and in accordance with Section 5-1402 of the New York
          General Obligations Law, Lessee and Lessor each agree that the United
          States District Court for the Southern District of New York and any
          New York state court sitting in the County of New York, New York, and
          all related appellate courts, are to have non-exclusive jurisdiction
          to settle any disputes arising out of or relating to the Lease and
          submits itself and its property to the non-exclusive jurisdiction of
          the foregoing courts with respect to such disputes.

     (c)  Without prejudice to any other mode of service, Lessee:

          (i)  appoints CT Corporation System, 1633 Broadway, New York, New York
               10019, as its agent for service of process relating to any
               proceedings before the New York courts in connection with the
               Lease and agrees to maintain the process agent in New York
               notified to Lessor;

                                     - 55 -
<PAGE>

          (ii) agrees that failure by a process agent to notify Lessee of the
               process shall not invalidate the proceedings concerned;

         (iii) consents to the service of process relating to any such
               proceedings by prepaid mailing of a copy of the process to
               Lessee's agent at the address identified in paragraph (i) or by
               prepaid mailing by air mail, certified or registered mail of a
               copy of the process to Lessee at the address set forth in Section
               15.7.

     (d)  [NOT APPLICABLE.]

     (e)  Each of Lessor and Lessee:

          (i)  waives to the fullest extent permitted by Law any objection which
               it may now or hereafter have to the courts referred to in Section
               15.8(b) above on grounds of inconvenient foram or otherwise as
               regards proceedings in connection with the Lease;

          (ii) waives to the fullest extent permitted by Law any objection which
               it may now or hereafter have to the laying of venue of any suit,
               action or proceeding arising out of or relating to the Lease
               brought in the courts referred to in Section 15.8(b); and

          (iii) agrees that a judgement or order of any court referred to in
               Section 15.8(b) in connection with the Lease is conclusive and
               binding on it and may be enforced against it in the courts of any
               other jurisdiction.

     (f)  Nothing in this Section 15.8 limits the right of either party to bring
          proceedings against the other in connection with the Lease:

          (i)  in any other court of competent jurisdiction; or

          (ii) concurrently in more than one jurisdiction.

     (g)  Each of Lessee and Lessor irrevocably and unconditionally:

          (i)  agrees that if the other brings legal proceedings against it or
               its assets in relation to the Lease no sovereign or other
               immunity from such legal proceedings (which will be deemed to
               include suit, court jurisdiction, attachment prior to judgement,
               attachment in aid of execution of a judgement, other attachment,
               the obtaining of judgement, execution of a judgement or other
               enforcement or legal process or remedy) will be claimed by or on
               behalf of itself or with respect to its assets; and

                                     - 56 -
<PAGE>

          (ii) waives any such right of immunity which it or its assets now has
               or may in the future acquire and agrees that the foregoing waiver
               shall have the fullest extent permitted under the Foreign
               Sovereign Immunities Act of 1976 of the United States and is
               intended to be irrevocable for the purposes of such Act.

     (h)  EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
          WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL IN RESPECT OF ANY CLAIM OR
          CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE LEASE OR ANY DEALINGS
          BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE
          TRANSACTIONS'CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP
          BEING ESTABLISHED, including, without limitation, contract claims,
          tort claims, breach of duty claims and other common law and statutory
          claims. Each of Lessor and Lessee represents and warrants that each
          has reviewed and voluntarily waives its jury trial rights following
          consultation with its legal counsel. THIS WAIVER IS IRREVOCABLE, AND
          THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
          SUPPLEMENTS OR MODIFICATIONS TO THE LEASE. In the event of litigation,
          this Section may be filed as a written consent to a trial by the
          court.

15.9 Sole and Entire Agreement; True Lease; Section 1110

     (a)  ENTIRE AGREEMENT: The Lease is the sole and entire agreement between
          Lessor and Lessee in relation to the leasing of the Aircraft, and
          supersedes all previous agreements in relation to that leasing. Any
          amendments to the Lease must be made in writing and signed on behalf
          of Lessor and Lessee.

     (b)  TRUE LEASE: The parties intend and agree that the Lease:

          (i)  constitutes a "true lease", and not a "security interest" as
               defined in Section 1-201(37) of the UCC;

          (ii) constitutes a "true lease" for United States Federal income tax
               purposes; and

         (iii) confers only a leasehold interest on Lessee in and to the
               Aircraft on and subject to the terms of the Lease, and no
               ownership or other interest with respect to the Aircraft is
               provided to Lessee under the Lease.

     Lessee shall not file a tax return that is inconsistent with the provisions
     of this Section 15.9(b).

     (c)  SECTION 1110: Lessee acknowledges that Lessor would not have entered
          into the Lease unless it had available to it the benefits of a lessor
          under Section 1110 of Title 11 of the

                                     - 57 -
<PAGE>

          U.S.C. Lessee covenants and agrees with Lessor that to better ensure
          the availability of such benefits, Lessee shall not oppose any motion,
          petition or application filed by Lessor with any bankruptcy court
          having jurisdiction over Lessee whereby Lessor seeks recovery of
          possession of the Aircraft under said Section 1110, except in a
          situation in which Lessee shall have complied with the requirements of
          said Section 1110 to be fulfilled in order to entitle Lessee to
          continued use and possession of the Aircraft hereunder. In the event
          said Section 1110 is amended, or if it is repealed and another statute
          is enacted in lieu thereof, Lessor and Lessee agree to amend the Lease
          and take such other action not inconsistent with the Lease as Lessor
          reasonably requests so as to afford to Lessor the rights and benefits
          as such amended or substituted statute confers upon owners and lessors
          of aircraft similarly situated to Lessor.

15.10 Indemnitees

     All rights expressed to be granted to each Indemnitee (other than Lessor)
     under the Lease are given to Lessor on behalf of that Indemnitee, and each
     Indemnitee is an express third party beneficiary thereof.

15.11 Counterparts

     The Lease (including the Aircraft Lease Agreement and this CTA) may be
     executed in two or more counterparts, each of which shall be deemed an
     original, but all of which together shall constitute one and the same
     instrument. To the extent, if any, that the Lease constitutes chattel paper
     (as such term is defined in the Uniform Commercial Code as in effect in any
     applicable jurisdiction), no security interest in the Lease may be created
     through the transfer or possession of any counterpart other than the
     original counterpart, which shall be identified as the counterpart
     designated as the "original" on the signature page of the Aircraft Lease
     Agreement by Financing Parties' Representative, Owner or Lessor, as the
     case may be.

15.12 Language

     All notices to be given under the Lease will be in English. All documents
     delivered to Lessor pursuant to the Lease (including any documents to be
     delivered pursuant to the Conditions Precedent) will be in English.

16.  DISCLAIMERS AND WAIVERS

     LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND CONFIRMATIONS SET
     FORTH IN CLAUSES 16.1 TO 16.4 BELOW SHALL APPLY AT ALL TIMES DURING THE
     TERM. LESSEE'S ACCEPTANCE OF THE AIRCRAFT IN ACCORDANCE WITH SECTION 4.3
     SHALL BE CONCLUSIVE EVIDENCE THAT

                                      - 58 -
<PAGE>

     LESSEE HAS FULLY INSPECTED THE AIRCRAFT AND EVERY PART THEREOF AND THAT THE
     AIRCRAFT, THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS AND RECORDS ARE
     TECHNICALLY ACCEPTABLE TO LESSEE AND SATISFY THE DELIVERY CONDITION
     REQUIREMENTS AND ARE IN SUITABLE CONDITION FOR DELIVERY TO AND ACCEPTANCE
     BY LESSEE.

16.1 Exclusion

     THE AIRCRAFT IS LEASED AND DELIVERED UNDER THE LEASE "AS IS, WHERE IS," AND
     LESSEE AGREES AND ACKNOWLEDGES THAT:

     (a)  LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS NOT AND
          WILL NOT BE DEEMED TO HAVE ACCEPTED, MADE OR GIVEN (WHETHER BY VIRTUE
          OF HAVING DONE OR FAILED TO DO ANY ACT, OR HAVING ACQUIRED OR FAILED
          TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THE LEASE OR OTHERWISE),
          ANY GUARANTEES, COVENANTS, WARRANTIES OR REPRESENTATIONS, EXPRESS OR
          IMPLIED, WITH RESPECT TO, THE AIRCRAFT OR ANY ENGINE OR PART OR ANY
          SERVICES PROVIDED BY LESSOR UNDER THE LEASE, INCLUDING (BUT NOT
          LIMITED TO) THE TITLE (EXCEPT AS AND TO THE EXTENT EXPRESSLY PROVIDED
          IN SECTION 7.1), DESCRIPTION, AIRWORTHINESS, COMPLIANCE WITH
          SPECIFICATIONS, OPERATION, MERCHANTABILITY, QUALITY, FREEDOM FROM
          INFRINGEMENT OF PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY
          RIGHTS, FITNESS FOR ANY PARTICULAR USE OR PURPOSE, VALUE, DURABILITY,
          DATE PROCESSING, CONDITION, OR DESIGN, OR AS TO THE QUALITY OF THE
          MATERIAL OR WORKMANSHIP, THE ABSENCE OF LATENT OR OTHER DEFECTS,
          WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER MATTER WHATSOEVER,
          EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A
          COURSE OF PERFORMANCE OR DEALING OR USAGE OF TRADE) WITH RESPECT TO
          THE AIRCRAFT, ANY ENGINE OR ANY PART OR ANY SERVICES PROVIDED BY
          LESSOR UNDER THE LEASE; AND

     (b)  LESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY WHATSOEVER TO LESSEE
          (WHETHER ARISING IN CONTRACT OR IN TORT, AND WHETHER ARISING BY
          REFERENCE TO NEGLIGENCE, MISREPRESENTATION OR STRICT LIABILITY OF
          LESSOR OR OTHERWISE) FOR:

          (i)  ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED
               DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY ENGINE OR BY ANY
               INADEQUACY THEREOF OR DEFICIENCY OR

                                     - 59 -
<PAGE>

               DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION
               THEREWITH (EXCEPT FOR DIRECT DAMAGES DUE TO LESSOR'S BREACH AS
               AND TO THE EXTENT EXPRESSLY PROVIDED IN SECTION 4.4 OR 7.1
               HEREOF);

          (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS
               RELATING THERETO;

         (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED
               PROFITS OR ANY OTHER DIRECT (EXCEPT FOR DIRECT DAMAGES DUE TO
               LESSOR'S BREACH AS PROVIDED IN SECTION 4.4 or 7.1), INDIRECT OR
               CONSEQUENTIAL LOSS OR DAMAGE; OR

          (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
               IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT, ANY ENGINE OR ANY
               PART.

16.2 Waiver

     LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND LESSOR, ALL ITS RIGHTS IN
     RESPECT OF ANY CONDITION, WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
     ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER AND WHENEVER
     ARISING AT ANY TIME IN RESPECT OF OR OUT OF ANY OF THE MATTERS REFERRED TO
     IN SECTION 16.1.

16.3 Disclaimer Of Consequential Damages

     LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY
     DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER, FOR
     INTERRUPTION OF SERVICE, LOSS OF BUSINESS, LOST PROFITS OR REVENUES OR
     CONSEQUENTIAL DAMAGES (AS DEFINED IN SECTION 2A-520 OF THE UCC OR
     OTHERWISE) AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF ANY OF
     THE AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF LESSOR CONTAINED IN THE
     LEASE (INCLUDING A BREACH BY LESSOR UNDER SECTION 4.4 OR 7.1).

16.4 Confirmation

     LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS SECTION 16
     AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS PAYABLE UNDER THE LEASE HAVE
     BEEN CALCULATED BASED ON ITS PROVISIONS.

                                     - 60 -
<PAGE>

16.5 Limitation

     LESSOR HEREBY EXPRESSLY AGREES AND ACKNOWLEDGES THAT NOTHING IN THIS
     SECTION 16 SHALL DEROGATE FROM LESSOR'S OBLIGATIONS UNDER, OR OTHERWISE
     LIMIT LESSOR'S LIABILITY IN RESPECT OF, SECTIONS 2.2, 4.4(c), 7.1,
     7.2, 14.2 or 14.3 HEREOF OR SECTION 2(c) OF SCHEDULE 4 HERETO.

17.  BROKERS AND OTHER THIRD PARTIES

17.1 No Brokers

     Each of the parties hereby represents and warrants to the other that it has
     not paid, agreed to pay or caused to be paid directly or indirectly in any
     form, any commission, percentage, contingent fee, brokerage or other
     similar payments of any kind, in connection with the establishment or
     operation of the Lease, to any Person (other than fees payable to legal
     advisers or portfolio services).

17.2 Indemnity

     Each party agrees to indemnify and hold the other harmless from and against
     any and all claims, suits, damages, costs and expenses (including,
     reasonable legal fees and expenses) asserted by any agent, broker or other
     third party for any commission or compensation of any nature whatsoever
     based upon the Lease or the Aircraft, if such claim, suit, damage, cost or
     expense arises out of any breach by the indemnifying party, its employees
     or agents of Section 17.1.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
                           THE SIGNATURE PAGE FOLLOWS.

                                     - 61 -
<PAGE>

IN WITNESS WEHREOF the parties hereto have executed the Common Terms Agreement
on the date shown at the beginning of the document.

GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ NORM LIN
        --------------------------
Name:   Norm Lin
        --------------------------
Title:  Vice President
        --------------------------

ALOHA AIRLINES, INC.

By:
        --------------------------
Name:
        --------------------------
Title:
        --------------------------

By:
        --------------------------
Name:
        --------------------------
Title:
        --------------------------

<PAGE>

IN WITNESS WHEREOF the parties hereto have executed the Common Terms Agreement
on the date shown at the beginning of the document.

GENERAL ELECTRIC CAPITAL CORPORATION

By:
        --------------------------
Name:
        --------------------------
Title:
        --------------------------

ALOHA AIRLINES, INC.

By: /s/ Brenda F. Cutwright
        --------------------------
Name:   Brenda F. Cutwright
        --------------------------
Title:  Exec. Vice President & CFO
        --------------------------

By: /s/ James M. King
        --------------------------
Name:   James M. King
        --------------------------
Title:  VP Planning & Development
        --------------------------

<PAGE>

                                   SCHEDULE 1
                                   DEFINITIONS

The following words and expressions have the respective meanings set forth
below:

Act means the Federal Aviation Act of 1958, as amended, and as recodified in
Title 49 U.S.C. pursuant to Public Law 103-272, or any similar legislation of
the United States enacted in substitution or replacement thereof.

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

AFTER-TAX BASIS means in the case of any amount payable on an "After-Tax Basis"
to or for the benefit of any Person (including any amount payable pursuant to
this definition) that the total amount paid shall be, such that the Person
actually realizes the amount payable, after deduction from the total amount paid
of the net amount of all Taxes required to be paid by such Person with respect
to the receipt or accrual by it of such amount.

AGREED VALUE has the meaning given in the Aircraft Lease Agreement.

AIR AUTHORITY means the FAA.

AIRCRAFT has the meaning given in the Aircraft Lease Agreement.

AIRCRAFT DOCUMENTS AND RECORDS means the documents, data and records identified
in the list attached to the Certificate of Technical Acceptance, and any other
documents and records Lessee is required to maintain under Section 8.8, and all
additions, renewals, revisions and replacements from time to time made to any of
the foregoing in accordance with the Lease.

AIRCRAFT LEASE AGREEMENT means the specific aircraft lease agreement for the
Aircraft entered or to be entered into between the parties hereto or Affiliates
thereof.

AIRFRAME means the Aircraft, excluding the Engines and Aircraft Documents and
Records.

AIRFRAME STRUCTURAL CHECK has the meaning given in the Aircraft Lease Agreement.

AIRFRAME SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.

                                       1-1
<PAGE>

AIRWORTHINESS DIRECTIVE means an airworthiness directive issued by the State of
Design or the State of Registry.

ANNUAL SUPPLEMENTAL RENT ADJUSTMENT has the meaning given in the Aircraft Lease
Agreement.

APPRAISAL PROCEDURE means the following procedure for determining the "fair
market rental value" of the Aircraft pursuant to Sections 13.2 and 13.4 of the
CTA: (a) Lessor shall select an independent aircraft appraiser in its sole and
absolute discretion who shall make a determination of "fair market rental value"
of the Aircraft; and (b) the fees and expenses of the appraiser shall be paid by
Lessee. "Fair market rental value" shall mean the value determined by an
appraisal completed on an "as-is" and "where-is" basis.

APU means the auxiliary power unit installed on the Aircraft on the Delivery
Date and any replacement auxiliary power unit installed on the Aircraft and
title to which is transferred to Owner in accordance with the Lease.

APU SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease Agreement.

ASSUMED UTILIZATION has the meaning given in the Aircraft Lease Agreement.

ASSUMED RATIO has the meaning given in the Aircraft Lease Agreement.

BUSINESS DAY means any day other than a Saturday, Sunday or other day on which
banking institutions in New York, New York or Honolulu, Hawaii are authorized or
required by Law to be closed.

"C" CHECK means a block "C" check in accordance with Lessee's Maintenance
Program or, if the Lessee's Maintenance Program is not based on the
Manufacturer's Maintenance Planning Document on a block basis, in accordance
with the Manufacturer's Maintenance Planning Document.

CERTIFICATE OF TECHNICAL ACCEPTANCE means a certificate of technical acceptance
in the form of Part 1 or Part 2, as applicable, of Schedule 5.

CERTIFICATED AIR CARRIER means any Person (except the United States Government)
that is a "citizen of the United States of America" (as defined in Section 40102
of Title 49 of the U.S.C.) and holding a Certificate of Public Convenience and
Necessity issued under Section 41102 of Title 49 of U.S.C. by the Department of
Transportation or any predecessor or successor agency thereto, and an air
carrier operating certificate issued pursuant to Chapter 447 of Title 49 of
U.S.C. or, in the event such certificates shall no longer be applicable, any
Person (except the United States Government) that is a citizen of the United
States (as defined in Section 40102 of Title 49 of the U.S.C.) and legally
engaged in the business of transporting for hire passengers or cargo by air
predominantly to, from or between points within the United States of America,
and, in either event, operating commercial jet aircraft capable of carrying ten
or more individuals or 6,000 pounds or more of cargo, which also is certificated
so as to entitle Lessor, as a lessor, to the benefits of Section 1110 of Title
11 of U.S.C. with respect to the Aircraft.

                                       1-2
<PAGE>

CONDITIONS PRECEDENT means Lessee Conditions Precedent and Lessor's Conditions
Precedent, collectively, or any of them, as the context may require.

CYCLE means one take-off and landing of the Aircraft.

DAMAGE NOTIFICATION THRESHOLD has the meaning given in the Aircraft Lease
Agreement.

DEDUCTIBLE AMOUNT has the meaning given in the Aircraft Lease Agreement.

DEFAULT means any Event of Default or any event or. circumstance which, with.
the giving of notice and/or lapse of time and/or determination of materiality
and/or fulfillment of any other condition, would constitute an Event of Default.

DEFECT means any defect or non-conformity with the Delivery Condition
Requirements notified by Lessee to Lessor during the Pre-Delivery Procedure.

DELIVERY means delivery of the Aircraft by Lessor to Lessee under the Lease.

DELIVERY CONDITION REQUIREMENTS has the meaning given in the Aircraft Lease
Agreement.

DELIVERY DATE means the date on which Delivery occurs.

DELIVERY LOCATION has the meaning given in the Aircraft Lease Agreement.

DEPOSIT has the meaning given in the Aircraft Lease Agreement.

DISCOUNT RATE has the meaning given in the Aircraft Lease Agreement.

DOLLARS AND $ means the lawful currency of the United States.

ENGINE means, whether or not installed on the Aircraft:

     (a)  each engine of the manufacture and model specified in the Aircraft
          Lease Agreement for the Aircraft which Lessor offers to Lessee for
          delivery with the Airframe on the Delivery Date, such engines being
          described as to serial numbers on the Certificate of Technical
          Acceptance; and

     (b)  any Replacement Engine, with effect from the time when title thereto
          has passed to Owner in accordance with the Lease;

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

ENGINE CYCLE means operation of an engine on an aircraft from and including a
take-off to and including the landing of that aircraft.

                                       1-3
<PAGE>

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

ENGINE FLIGHT HOUR means each hour or part thereof an Engine is operated,
elapsing from the moment the wheels of an aircraft on which such Engine is
installed leave the ground until the wheels of such aircraft next touch the
ground.

ENGINE LLP REPLACEMENT has the meaning given in Section 7.2(ii);

ENGINE LLP SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.

ENGINE REFURBISHMENT means all scheduled and unscheduled off the wing Engine
maintenance and repair accomplished for each module in accordance with the
performance restoration or full overhaul sections of the Manufacturer's
workscope planning guide.

ENGINE SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease Agreement.

EQUIPMENT CHANGE has the meaning given in Section 8.12.

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

EVENT OF DEFAULT means any event or condition specified in Schedule 9.

EVENT OF LOSS means with respect to the Aircraft (including for the purposes of
this definition the Airframe):

     (a)  the actual or constructive, compromised, arranged or agreed total loss
          of the Aircraft; or

     (b)  the Aircraft being destroyed, damaged beyond reasonable economic
          repair as determined by Lessor or permanently rendered unfit for
          normal use for any reason whatsoever; or

     (c)  the Aircraft being condemned, confiscated or requisitioned for title,
          or title to the Aircraft being otherwise compulsorily acquired by the
          government of the State of Registry or any other Government Entity; or

     (d)  the Aircraft being hijacked, stolen, confiscated, detained, seized,
          condemned or requisitioned for use or hire for the lesser of (i) a
          period of more than 30 days (or 60 days in the case of requisition for
          use or hire by the government of the State of Registry) or (ii) a
          period equal to or exceeding the remaining balance of the Term; or

     (e)  as a result of any rule, regulation, order or other action by the FAA
          the use of the Aircraft by Lessee or any Permitted Sub Lessee shall
          have been prohibited for a period of twelve (12) consecutive months.

                                       1-4
<PAGE>

EXPIRY DATE means the Scheduled Expiry Date or, if earlier (i) the date when
Lessor acting in accordance with the provisions of the Lease, terminates the
leasing of the Aircraft to Lessee under the Lease, or (ii) subject to the
provisions of Section 11.1 and 11.2, the date when Lessor receives the Agreed
Value together with any other amounts then due and unpaid under the Lease and
the Other Agreements following an Event of Loss; provided, that if the Term is
extended pursuant to Section 12.2, the Expiry Date shall be extended to the date
to which the Term is extended pursuant to Section 12.2.

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

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

FINAL DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.

FINAL INSPECTION has the meaning given in Section 1.1 of Part III of Schedule A
to the Aircraft Lease Agreement.

FINANCIAL INDEBTEDNESS means any indebtedness in respect of:
     (a)  money's borrowed or raised;

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

     (c)  the acquisition cost of any asset to the extent payable before or
          after the time of acquisition or possession (exclusive of trade
          payables); or

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

FINANCIAL INFORMATION means:

     (a)  as soon as available but not in any event later than 60 days after the
          last day of each fiscal quarter of Lessee, the consolidated financial
          statements of Aloha Airgroup, Inc. (consisting of a balance sheet and
          statements of operations and of retained earnings and cash flows)
          prepared for the most recent previous fiscal quarter certified by a
          qualified financial officer of Aloha Airgroup, Inc. as being true and
          correct and fairly presenting its financial condition and results of
          operation in accordance with GAAP (subject to year end adjustments);
          and

     (b)  as soon as available but not in any event later than 120 days after
          the last day of each fiscal year of Lessee, the audited combined
          financial statements of Aloha Airgroup, Inc. (consisting of a balance
          sheet and statements of operations and of retained earnings and cash
          flows), prepared for the fiscal year. then most recently ended
          certified by the independent auditors of Aloha Airgroup, Inc. without
          qualification.

                                       1-5
<PAGE>

FINANCING DOCUMENTS (if applicable) has the meaning given in the Aircraft Lease
Agreement.

FINANCING DOCUMENTS CONTEST RIGHTS (if applicable) has the meaning given in the
Aircraft Lease Agreement.

FINANCING DOCUMENTS INDEMNITY AMOUNTS (if applicable) has the meaning given in
the Aircraft Lease Agreement.

FINANCING DOCUMENTS TAX AMOUNTS (if applicable) has the meaning given in the
Aircraft Lease Agreement.

FINANCING PARTIES (if applicable) has the meaning given in the Aircraft Lease
Agreement.

FINANCING PARTIES' REPRESENTATIVE (if applicable) has the meaning given in the
Aircraft Lease Agreement.

FINANCING STATEMENTS means Uniform Commercial Code Financing Statements in
respect of the Lease and the Aircraft and Engines leased thereunder prepared in
a form acceptable for filing with the applicable Government Entities in the
state in which Lessee's chief executive office is located (as the term "chief
executive office" is defined in Article 9 of the Uniform Commercial Code as in
effect in such state) and such other jurisdictions as Lessor shall reasonably
require.

FLIGHT HOUR means each hour or part thereof elapsing from the moment the wheels
of the Aircraft leave the ground on take off until the wheels of the Aircraft
next touch the ground.

GAAP means generally accepted accounting principles in the United States.

GE CAPITAL means General Electric Capital Corporation.

GECAS means either or both of GE Capital Aviation Services, Limited and GE
Capital Aviation Services, Inc.

GOVERNMENT ENTITY means:

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

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

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

                                       1-6
<PAGE>

GUARANTEE means, if applicable, a guarantee by the Guarantor in form and
substance reasonably acceptable to Lessor and references to the Guarantee
include reference to any replacement or re-issued guarantee.

GUARANTOR (if applicable) has the meaning given in the Aircraft Lease Agreement.

HABITUAL BASE means the jurisdiction in which the Aircraft's primary aircraft
operations center is located.

INDEMNITEE has the meaning given in the Aircraft Lease Agreement.

INTEREST RATE has the meaning given in the Aircraft Lease Agreement.

INSURANCE means the insurance in respect of the Aircraft in form and substance
satisfactory to Lessor, and includes any insurance and reinsurance required by
Section 9 and Schedule 7.

LANDING GEAR means the landing gear assembly of the Aircraft excluding any
rotable components.

LANDING GEAR SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.

LAW means and includes (a) any statute, decree, constitution, regulation, order,
judgement or other directive of any Government Entity; (b) any treaty, pact,
compact or other agreement to which any Government Entity is a signatory or
party; (c) any judicial or administrative interpretation or application of any
Law described in (a) or (b) above; and (d) any amendment or revision of any Law
described in (a), (b) or (c) above.

LC AMOUNT has the meaning given in the Aircraft Lease Agreement.

LEASE means the Aircraft Lease Agreement for the Aircraft (of which this CTA
forms a part), any schedules or documents executed pursuant to the Schedules
hereto or pursuant to the Aircraft Lease Agreement, any Lease Supplement to the
Lease (including Lease Supplement No. 1), and any side letters related to the
Lease.

LEASE SUPPLEMENT means any Lease Supplement executed and delivered with respect
to the Lease.

LEASE SUPPLEMENT NO. 1 means a Lease Supplement No. 1 substantially in the form
of Schedule 12.

LEASE TERMINATION CERTIFICATE means a Lease Termination Certificate
substantially in the form of Schedule 11 in respect of the Lease.

LESSEE means the Person named as Lessee in the Aircraft Lease Agreement.

LESSEE AFFILIATE means any Subsidiary or other Affiliate for the time being of
Lessee.

LESSEE CONDITIONS PRECEDENT means the conditions specified in Part B of Schedule
3.

                                       1-7
<PAGE>

LESSEE'S MAINTENANCE PROGRAM means the Maintenance Program specifically approved
by the Air Authority for maintenance of the Aircraft by Lessee, or at any time
that a Permitted Sub-Lease approved by Lessor and meeting the requirements of
Section 8.4(b) is in effect, by the Permitted Sub-Lessee under such Permitted
Sub-Lease.

LESSOR means the Person named as Lessor in the Aircraft Lease Agreement.

LESSOR CONDITIONS PRECEDENT means the conditions specified in Part A of Schedule
3.

LESSOR LIEN means (i) any Security Interest whatsoever from time to time created
by Lessor or Owner in connection with the financing of the Aircraft, including
the Financing Documents, and (ii) any other Security Interest in the Aircraft
which (a) results from acts of or claims against Lessor or Owner or any
affiliate of Lessor or Owner that do not relate to the transactions contemplated
by the Lease or by any other contract or agreement between Lessee or any
affiliate of Lessee and Lessor or Owner or any affiliate of Lessor or Owner and
(b) is not attributable to Lessee or Lessee's use or possession of the Aircraft.

LESSOR/OWNER TAX JURISDICTION has the meaning given in the Aircraft Lease
Agreement.

LESSOR TAXES means Taxes for which Lessee is not obligated to indemnify Lessor
and/or Owner and/or a Financing Party as provided in Section 5.7(c).

LETTER OF CREDIT means any letter of credit issued in relation to the Lease
pursuant to Section 5.14 and any replacement or renewal of that letter of
credit.

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

MAINTENANCE CONTRIBUTIONS means, as and if applicable, all amounts payable by
Lessor pursuant to Section 7.2.

MAINTENANCE PERFORMER means (1) any of the Persons identified on Schedule 14
hereto (until such time as Lessor delivers written notice to Lessee of the
removal of any such Person from the list of Maintenance Performers), or (ii)
such other mutually acceptable Persons as may be added to Schedule 14 hereto
from time to time (Lessee shall advise Lessor in writing of any request to add a
Person to Schedule 14 and Lessor shall respond in writing).

MAINTENANCE PROGRAM means an Air Authority approved maintenance program for the
Aircraft and encompassing scheduled maintenance, condition-monitored
maintenance, and/or on-condition

                                       1-8
<PAGE>

maintenance of Airframe, Engines and Parts, including servicing, testing,
preventive maintenance, repairs, structural inspections, system checks,
overhauls, approved modifications, engineering orders, airworthiness directives,
corrosion control, inspections and treatments.

MAJOR CHECKS means any C-check, multiple C-check or heavier check (including
structural inspections and CPCP) suggested for commercial aircraft of the same
model as the Aircraft by its manufacturer (however denominated) as set out in
the Lessee's Maintenance Program.

MANUFACTURER has the meaning given in the Aircraft Lease Agreement.

MANUFACTURER'S MAINTENANCE PLANNING DOCUMENT means the recommended maintenance
program for the Aircraft issued by the Manufacturer as in effect at the time of
any applicable determination.

MINIMUM AIRFRAME LIFE LIMITED COMPONENT CYCLES has the meaning given in the
Aircraft Lease Agreement.

MINIMUM AIRFRAME LIFE LIMITED COMPONENT FLIGHT HOURS has the meaning given in
the Aircraft Lease Agreement.

MINIMUM APU LIMIT has the meaning given in the Aircraft Lease Agreement.

MINIMUM APU LLP LIMIT has the meaning given in the Aircraft Lease Agreement.

MINIMUM COMPONENT CALENDAR LIFE has the meaning given in the Aircraft Lease
Agreement.

MINIMUM COMPONENT CYCLES has the meaning given in the Aircraft Lease Agreement.

MINIMUM COMPONENT FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.

MINIMUM ENGINE CYCLES has the meaning given in the Aircraft Lease Agreement.

MINIMUM ENGINE FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.

MINIMUM LANDING GEAR CALENDAR TIME has the meaning given in the Aircraft Lease
Agreement.

MINIMUM LANDING GEAR CYCLES has the meaning given in the Aircraft Lease
Agreement.

MINIMUM LANDING GEAR FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.

MINIMUM LIABILITY COVERAGE has the meaning given in the Aircraft Lease
Agreement.

MINIMUM MEASURABLE FUEL REQUIREMENT has the meaning given in the Aircraft Lease
Agreement.

NAMEPLATE INSCRIPTION means the inscription to be included on the Nameplates as
reasonably requested by Lessor from time to time.

                                       1-9
<PAGE>

NAMEPLATES means the fireproof plates to be installed on the Aircraft in
accordance with Section 8.6(a).

OTHER AGREEMENTS means any aircraft, engine or spare parts related lease or
financing agreement (including an aircraft, engine or spare parts related loan,
hire purchase, conditional sale, credit sale or security agreement) from time to
time entered into between Lessor (or any Subsidiary or Affiliate of Lessor), on
the one hand, and Lessee (or any Subsidiary or Affiliate of Lessee), on the
other hand.

OWNER has the meaning given in the Aircraft Lease Agreement.

PART means, whether or not installed on the Aircraft:

     (a)  any component, furnishing or equipment (other than a complete Engine
          or engine) incorporated or installed in or attached to or furnished
          with the Aircraft on the Delivery Date or thereafter if paid for or
          otherwise provided by or on behalf of Lessor; and

     (b)  any other component, furnishing or equipment (other than a complete
          Engine or engine), with effect from the time when title thereto has
          passed to Owner pursuant to the Lease;

     (c)  but excludes any such items title to which has passed to Lessee
          pursuant to the Lease.

PART 36 OR FAR PART 36 means Part 36 of the FAR, as amended or modified from
time to time.

PART 121 OR FAR PART 121 means Part 121 of the FAR, as amended or modified from
time to time.

PERMITTED LIEN means:

     (a)  any lien for Taxes not assessed or, if assessed, not yet due and
          payable, or being diligently contested in good faith by appropriate
          proceedings;

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

     (C)  any Lessor Lien; and

     (d)  rights of others under any sub-lease or other arrangements to the
          extent expressly permitted under Section 8.4;

 but only if (in the case of both (a) and (b)) (i) adequate  reserves have been
 provided by Lessee for the payment of such Taxes or obligations;  and (ii) such
 proceedings,  or the  continued  existence of the lien, do not give rise to any
 risk of the sale,  forfeiture  or other loss of the  Aircraft  or any  interest
 therein or of criminal liability on the part of Lessor or Owner.

                                      1-10
<PAGE>

PERMITTED SUB-LEASE means any sub-lease of the Aircraft to a Permitted
Sub-Lessee to which Lessor has consented as provided for in Section 8.4(a).

PERMITTED SUB-LESSEE means any sub-lessee of the Aircraft to which Lessor has
consented as provided in Section 8.4(a).

PERSON means any individual person, any form of corporate or business
association, trust, Government Entity, or organization or association of which
any of the above is a member or a participant.

PRE-APPROVED BANK has the meaning given in the Aircraft Lease Agreement.

PRE-DELIVERY PROCEDURE means the procedure leading to Delivery as specified in
Schedule 4.

REDELIVERY LOCATION has the meaning given in the Aircraft Lease Agreement.

REGULATIONS means any Law or regulation, official directive or recommendation,
mandatory requirement, or contractual undertaking, or airworthiness requirements
or limitations, which applies to Lessee or the Aircraft and any Law or
regulation, official directive or recommendation or mandatory requirement which
applies to Lessor, Owner, Financing Parties' Representative or GECAS.

RENT means the basic monthly "Rent", as defined in Schedule B of the Aircraft
Lease Agreement, and payable pursuant to Section 5.3.

RENT COMMENCEMENT DATE has the meaning given in the Aircraft Lease Agreement.

RENTAL PERIOD means each period ascertained in accordance with Section 5.2.

RENT DATE means the first day of each Rental Period.

REPLACEMENT APU means an "APU" that has duly replaced the APU in accordance with
the requirements of Section 8.11(b).

REPLACEMENT ENGINE means an "Engine" that has duly replaced an "Engine" in
accordance with the requirements of Section 8.11(b).

REQUIRED LC EXPIRY DATE means the date being 91 days after the Expiry Date.

RETURN OCCASION means the date on which the Aircraft is redelivered to Lessor in
accordance with Section 12.

SCHEDULED DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.

SCHEDULED DELIVERY MONTH has the meainng given in the Aircraft Lease Agreement.

SCHEDULED DELIVERY WEEK has the meaning given in the Aircraft Lease Agreement.

                                      1-11
<PAGE>

SCHEDULED EXPIRY DATE has the meaning given in the Aircraft Lease Agreement.

SECURITY INTEREST means any mortgage, chattel mortgage, security interest,
charge, pledge, lien, conditional sale agreement, title retention agreement,
equipment trust agreement, encumbrance, assignment, hypothecation, right of
detention, right of set-off or any other agreement or arrangement having the
effect of conferring security.

STATE OF DESIGN has the meaning specified in the Aircraft Lease Agreement.

STATE OF INCORPORATION means the United States and the state of organization of
the applicable Person as identified in the heading of the Aircraft Lease
Agreement.

STATE OF REGISTRY means the United States.

SUBSIDIARY means:

     (a)  in relation to any reference to financial statements, any Person whose
          financial statements are consolidated with the accounts of Lessee in
          accordance with GAAP; and

     (b)  for any other purpose, an entity from time to time of which another
          has direct or indirect control or owns directly or indirectly more
          than 50 percent of the voting share capital or similar equity
          interests.

SUPPLEMENTAL RENT means, as and if applicable, all amounts payable under the
Lease in respect of each of Airframe Supplemental Rent, Engine Supplemental
Rent, Engine LLP Supplemental Rent, APU Supplemental Rent and Landing Gear
Supplemental Rent.

TAXES means any and all present and future taxes, duties, withholdings, levies,
assessments, imposts, fees and other governmental charges of all kinds
(including any value added or similar tax and any stamp, documentary, license,
registration or similar fees or tax) imposed by a Government Entity, together
with any penalties, fines, surcharges and interest thereon and any additions
thereto.

TAX INDEMNITEE has the meaning given in the Aircraft Lease Agreement.

TECHNICAL REPORT means a monthly report of the Flight Hours, Cycles, Engine
Flight Hours and Engine Cycles operated by the Airframe and Engines in respect
of each calendar month substantially in the form attached as Schedule 15.

TERM means the period commencing on the Delivery Date and ending on the Expiry
Date.

UCC means the Uniform Commercial Code as in effect in the State of New York.

UNFORESEEN EVENT means:

                                      1-12
<PAGE>

     (a)  civil disturbance or act of any Government Entity;

     (b)  natural disaster or any other act of God;

     (c)  Law of, or any allocation or other action by, a Government Entity or
          any unexpected shortage of labor, materials or facilities affecting
          the Aircraft;

     (d)  any damage or Defect;

     (e)  labor disputes;

     (f)  breach of contract by any Person (other than Lessor), or other failure
          to deliver or redeliver the Aircraft by any Person (whether or not a
          breach) with possession or control of the Aircraft (other than by
          Lessor, if it has possession and control of the Aircraft), including
          any failure to deliver or delay in delivery by any prior lessee, any
          seller of the Aircraft or any Person performing modifications or
          maintenance to the Aircraft and any breach by any prior lessee, seller
          or modification or maintenance performer or failure to cooperate by
          any prior lessee, seller or modification or maintenance performer, or
          any "excusable" or "inexcusable" delay under. any previous lease,
          purchase or modification or maintenance agreement for the Aircraft, or
          any purchase or modification or maintenance agreement for the Aircraft
          terminating prior to Delivery (including due to Lessor or an Affiliate
          of Lessor voluntarily terminating such agreement);

     (g)  delays in obtaining the Aircraft or any equipment or services for the
          Aircraft;

     (h)  any delay due to Air Authority certifications; or

     (i)  any other cause beyond the control of Lessor or not occasioned by
          Lessor's gross negligence or willful misconduct.

UNITED STATES means the United States of America.

U.S.C. means the United States Code.

                                      1-13
<PAGE>

                                   SCHEDULE 2
                         REPRESENTATIONS AND WARRANTIES

1.1  LESSEE'S REPRESENTATIONS AND WARRANTIES

LESSEE'S representations and warranties to Lessor as of the date of execution of
the Lease and the Delivery Date are as follows:

     (a)  STATUS: It is duly organized, validly existing and in good standing in
          its State of Incorporation.

     (b)  NON-CONFLICT: Execution, delivery and performance of the Lease do not
          contravene or breach any Regulation applicable to Lessee.

     (c)  POWER AND AUTHORITY: It has all corporate and other power and
          authority to execute, deliver and perform the Lease, and the Lease has
          been duly authorized, executed and delivered by Lessee.

     (d)  LEGAL VALIDITY: The Lease is its legal, valid and binding obligation,
          enforceable against Lessee in accordance with its terms.

     (e)  NO EVENT OF DEFAULT: No Event of Default has occurred and is
          continuing or would occur because of Delivery.

     (f)  LITIGATION: It is not involved in any litigation or other dispute
          which could materially and adversely affect its financial condition or
          its ability to perform its obligations under the Lease.

     (g)  FINANCIAL INFORMATION: Its audited financial statements most recently
          delivered to Lessor:

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

          (ii) are true and correct and present fairly the financial condition
               and results of operations of Lessee as at the date thereof and
               for the period then ending.

     (h)  FULL DISCLOSURE: Neither the audited financial statements referred to
          in paragraph (g) nor any other financial, operational or credit
          related information provided to Lessor by Lessee for the purposes of
          the Lease contains as of the date thereof any untrue statement of a
          material fact or omits to state any material fact necessary in order
          to make the statements therein not misleading in the light of the
          circumstances under which they were made.

                                       2-1
<PAGE>

     (i)  LOCATION: Lessee's chief executive office (as that term is defined in
          Article 9 of the UCC) is located at the address set forth in the
          heading of the Aircraft Lease Agreement; and the records of the Lessee
          concerning the Aircraft are maintained at such chief executive office
          or at the Habitual Base of the Aircraft.

     (j)  CERTIFICATED AIR CARRIER: Lessee is a Certificated Air Carrier and
          Lessor, as lessor of the Aircraft to Lessee, is entitled to the
          benefits of Section 1110 of Title 11 of the U.S.C. with respect to the
          Aircraft.

     (k)  CITIZEN OF THE UNITED STATES: Lessee is a "citizen of the United
          States" as defined in Section 40102 of Title 49 of the U.S.C.

     (l)  ERISA: Lessee is not engaged in any transaction in connection with
          which it could be subjected to either a civil penalty assessed
          pursuant to Section 502 of ERISA or any tax imposed by Section 4975 of
          the Internal Revenue Code; no material liability to the Pension
          Benefit Guaranty Corporation has been or is expected by Lessee to be
          incurred with respect to any employee pension benefit plan (as defined
          in Section 3 of ERISA) maintained by Lessee or by any trade or
          business (whether or not incorporated) which together with Lessee
          would be treated as a single employer under Section 4001 of ERISA and
          Section 414 of the Internal Revenue Code; there has been no reportable
          event (as defined in Section 4043(b) of ERISA) with respect to any
          such employee pension benefit plan; no notice of intent to terminate
          any such employee pension benefit plan has been filed or is expected
          to be filed, nor has any such employee pension benefit been
          terminated; no circumstance exists or is anticipated that constitutes
          or would constitute grounds under Section 4042 of ERISA for the
          Pension Benefit Guaranty Corporation to institute proceedings to
          terminate, or to appoint a trustee to manage the administration of,
          such an employee pension benefit plan; and no accumulated funding
          deficiency (as defined in Section 302 of ERISA or Section 412 of the
          Internal Revenue Code), whether or not waived, exists with respect to
          any such employee pension benefit plan.

     (m)  MATERIAL ADVERSE CHANGE: there has been no material adverse change in
          the financial condition or operations of Lessee and Lessee Affiliates
          or in the ability of Lessee to comply with its obligations under the
          Lease since the date of the financial statements most recently
          provided to Lessor on or prior to the date of the Aircraft Lease
          Agreement.

1.2  LESSOR'S REPRESENTATIONS AND WARRANTIES

Lessor's representations and warranties to Lessee as of the date of execution of
the Lease and the Delivery Date are as follows:

     (a)  STATUS: It is duly organized, validly existing and in good standing in
          its State of Incorporation.

                                       2-2
<PAGE>

     (b)  NON-CONFLICT: Execution, delivery and performance of the Lease do not
          contravene or breach any Regulation applicable to Lessor.

     (c)  POWER AND AUTHORITY: It has all corporate and other power and
          authority to execute, deliver and perform the Lease, and the Lease has
          been duly authorized, executed and delivered by Lessor.

     (d)  LEGAL VALIDITY: The Lease is its legal, valid and binding obligation,
          enforceable against Lessor in accordance with its terms.

     (e)  CITIZEN OF THE UNITED STATES: Lessor is a "citizen of the United
          States" as defined in Section 40102 of Title 49 of the U.S.C. and the
          FAR.

                                       2-3

<PAGE>

                                   SCHEDULE 3
                              CONDITIONS PRECEDENT

 PART A - LESSOR CONDITIONS PRECEDENT

 The conditions  precedent to Lessor's obligation to deliver and to commence the
 leasing of the  Aircraft  are as follows.  All  documents  delivered  to Lessor
 pursuant to this Schedule 3 will be in English:

 1.1  PRELIMINARY CONDITIONS

 Lessor will receive from Lessee,  not later than two Business Days prior to the
 Scheduled  Delivery  Date,  each of the  following,  satisfactory  in form  and
 substance to Lessor:

          (a)     OPINION(S): forms of the opinion(s) substantially in the form
                  of Schedule 8 that will be issued on the  Delivery  Date by
                  legal counsel(s) reasonably acceptable to Lessor with respect
                  to the laws of the State of New York, the state of the
                  location of Lessee's chief executive offices and the general
                  corporate laws of the State of Incorporation;

          (b)     APPROVALS: evidence of the issue of each approval, license and
                  consent, if any, which is required in relation to, or in
                  connection with the performance by Lessee of any of its
                  obligations under the Lease;

          (c)     IMPORT: evidence that any required license, and all customs
                  formalities, relating to the import of the Aircraft into the
                  Habitual Base have been obtained or complied with, and that
                  the import of the Aircraft into the Habitual Base is exempt
                  from Taxes;

          (d)     PROCESS AGENT: a letter from the process agent appointed by
                  Lessee in the Lease accepting that appointment;

          (e)     LICENSES: copies of Lessee's air transport license, air
                  carrier operating certificate, air operator's certificates,
                  including authority to operate the Aircraft under FAR Part
                  121, and a Certificate of Public Convenience and Necessity
                  issued under Section 40102 of Title 49 of U.S.C.;

          (f)     UCC: Financing Statements with respect to the Lease and the
                  Aircraft in a form reasonably acceptable to Lessor shall have
                  been executed and delivered by Lessee to Lessor and duly filed
                  in each junisdiction reasonably requested by Lessor;

          (g)      Letter of Credit (if applicable): the form of the Letter of
                   Credit;

          (h)      General: such other documents as Lessor may reasonably
                   request.

                                                3-1

<PAGE>

1.2  FINAL CONDITIONS

          (a)      Final Documents: Lessor shall receive on or before the
                   Delivery Date each of the following:

                   (i)      CERTIFICATE OF TECHNICAL ACCEPTANCE AND LEASE
                            SUPPLEMENT NO. 1: each of the Certificate of
                            Technical Acceptance and Lease Supplement No. 1,
                            dated and fully completed, and executed by Lessee,
                            and, in the case of Lease Supplement No. 1, filed
                            for recording at the FAA (together with the CTA);

                   (ii)     OPINIONS: a signed original (or facsimile
                            transmission thereof) of each of the opinions
                            referred to in Section 1.1(a) of this  Schedule,
                            dated the Delivery Date;

                   (iii)    PAYMENTS:  all sums due to Lessor under the Lease on
                            or before the  Delivery  Date,  including  the first
                            payment of Rent and, if  applicable,  the balance of
                            the Deposit;

                   (iv)     INSURANCE: certificates of insurance, an opinion and
                            undertaking from Lessee's insurance broker and other
                            evidence reasonably satisfactory to Lessor that
                            Lessee is taking the required steps to ensure due
                            compliance with the provisions of the Agreement as
                            to Insurance with effect on and after the Delivery
                            Date;

                   (v)      FINANCIAL INFORMATION: the latest Financial
                            Information of Lessee requested by Lessor;

                   (vi)     LETTER OF CREDIT (if applicable): the Letter of
                            Credit;

                   (vii)    GUARANTEE  (if  applicable):   the  Guarantee,  duly
                            executed  and  delivered  by the  Guarantor,  and an
                            opinion  of legal  counsel  acceptable  to Lessor in
                            respect of the Guarantee in form and substance
                            acceptable to Lessor and its legal counsel;

                   (viii)   LESSEE'S MAINTENANCE PROGRAM: such information and
                            documents relating to the Lessee's Maintenance
                            Program as Lessor may reasonably require;

                   (ix)     FILINGS:  evidence  that on the  Delivery  Date  all
                            filings, registrations, recordings and other actions
                            have been or will be taken  which are  necessary  or
                            advisable to ensure the validity,  effectiveness and
                            enforceability  of  the  Lease  and to  protect  the
                            interests of Owner and, if applicable, the Financing
                            Parties in the Aircraft,  any Engine or any Part and
                            in the Lease;

                   (x)      FAA OPINION:  evidence  that there will be issued an
                            opinion of ___________ or other counsel reasonably
                            acceptable to Lessor who are recognized specialists
                            with regard to FAA registration matters in a form
                            reasonably acceptable to Lessor as

                                               3-2

<PAGE>

                           to the due filing for recordation of the Lease and,
                           if applicable, the Financing Documents, (the costs
                           for which shall be paid by Lessee);

                   (xi)    CERTIFICATE OF LEASE TERMINATION: a certificate of
                           lease termination executed by a duly authorized
                           officer of Lessee substantially in the form of
                           Schedule 11 acknowledging that the Lease is no
                           longer in effect with  respect to the  Aircraft
                           and Engines,  which  certificate  Lessor will hold in
                           escrow to be filed at the FAA upon the  expiration or
                           other termination of the Lease;

                  (xii)    ACKNOWLEDGEMENT  AND  AGREEMENT  RE  ASSIGNMENT  (if
                           applicable):   an  acknowledgement  of  and  certain
                           agreements  with respect to the assignment by Lessor
                           of  this  Lease  to  Owner  and  Financing  Parties'
                           Representative  in the form  previously  provided to
                           Lessee   or   as   Owner   or   Financing   Parties'
                           Representative may otherwise reasonably request; and

                  (xiii)   GENERAL: such other documents as Lessor may
                           reasonably request;

          (c)     REPRESENTATIONS/WARRANTIES: the representations and warranties
                  of Lessee in Schedule 2 shall be true and correct in all
                  material respects, and would be true and correct in all
                  material respects if repeated on Delivery; and

          (d)      NO DEFAULT: no Default shall have occurred and be continuing
                   on Delivery or could reasonably be expected to result from
                   the leasing of the Aircraft to Lessee under the Lease.

 PART B - LESSEE CONDITIONS PRECEDENT

 The conditions  precedent to Lessee's  obligation to accept and to commence the
 leasing of the  Aircraft  are as follows.  All  documents  delivered  to Lessee
 pursuant to this Schedule 3 will be in English.

          (a)      FINAL DOCUMENTS:  Lessee shall receive on or before the
                   Delivery Date for the Aircraft each of the following:

                   (i)     LEASE  SUPPLEMENT  NO. 1: Lease  Supplement  No. 1,
                           dated and executed by Lessor and filed for recording
                           at the FAA (together with the CTA); and

                  (ii)     Acknowledgement re Quiet Enjoyment: if Lessee is
                           required to deliver an acknowledgement of or
                           agreement with respect to the assignment by Lessor
                           of the Lease to Owner or Financing Parties'
                           Representative, an agreement by each such Person
                           (Owner, Financing Parties' Representative or both,
                           as the case may be) as to itself to the effect set
                           forth in Section 7.1;

                                                    3-3

<PAGE>

                  (iii)     REPRESENTATIONS/WARRANTIES:  the representations and
                            warranties of Lessor in Schedule 2 shall be true and
                            correct in all material respects,  and would be true
                            and correct in all material  respects if repeated on
                            Delivery; and

                   (iv)     Delivery Condition Requirements: tender by Lessor of
                            delivery of the Aircraft in compliance with the
                            Delivery Condition Requirements.

                                                 3-4

<PAGE>

                                   SCHEDULE 4
                 PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION

                         REQUIREMENTS - PART 1 (NEW AIRCRAFT)

 1.       LICENSES

          (a)      It is the  responsibility  of Lessee to obtain all  licenses,
                   permits or approvals  necessary  to export or  transport  the
                   Aircraft from the Delivery Location.

          (b)      Lessor  will  provide  Lessee  with  any  required  data  and
                   information  for the purposes of obtaining any such licenses,
                   permits or approvals.

 2.       INSPECTION

          Except as otherwise provided in the Aircraft Lease Agreement:

          (a)     Subject to any applicable purchase agreement, Lessee may
                  inspect the Aircraft (including such  rights as Lessor has
                  to be present and inspect, on an ongoing basis, the
                  manufacture of the Aircraft and including a demonstration
                  flight at no expense to Lessee with up to two (2)
                  representatives of Lessee on the Aircraft as observers) to
                  ensure that the Aircraft fulfils the Delivery Condition
                  Requirements.

          (b)     If Lessee's inspection of the Aircraft shows that the Aircraft
                  does not fulfil the Delivery Condition Requirements, Lessor
                  will correct any defects and make the Aircraft available for
                  re-inspection by Lessee provided that, in Lessor's reasonable
                  opinion, it is not impracticable or prohibitively expensive
                  to  correct the defect.

          (c)     If Lessor notifies Lessee that it does not intend to correct
                  the defect, either party may terminate the Lease, and upon
                  such termination neither party shall have any further
                  liability to any party under this Lease, except that Lessor
                  shall promptly return to Lessee the Deposit and/or the Letter
                  of Credit, if any, to Lessor.

3.   INDEMNITY

         Lessee is responsible  for and will indemnify each  Indemnitee  against
         all Losses arising from death or injury to any observer or any employee
         of Lessee in connection with the inspection of the Aircraft.

                                         4-1

<PAGE>

                                      SCHEDULE4
                   PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION

                         REQUIREMENTS - PART 2 (USED AIRCRAFT)

1.         LICENSES

           (a)      It is the  responsibility  of Lessee to obtain all licenses,
                    permits or approvals  necessary  to export or transport  the
                    Aircraft from the Delivery Location.

           (b)      Lessor  will  provide  Lessee  with  any  required  data and
                    information for the purposes of obtaining any such licenses,
                    permits or approvals.

2.        INSPECTION

          Except as otherwise provided in the Aircraft Lease Agreement:

          (a)      Subject to any applicable purchase agreement or prior lease,
                   Lessee may inspect the Aircraft (including a demonstration
                   flight at no expense to Lessee with up to two (2)
                   representatives of Lessee on the Aircraft as observers)
                   to ensure that the Aircraft fulfils the Delivery Condition
                   Requirements.

           (b)     If Lessee's inspection of the Aircraft shows that the
                   Aircraft does not fulfil the Delivery Condition Requirements,
                   Lessor will correct any defects and make the Aircraft
                   available for re-inspection by Lessee provided that, in
                   Lessor's reasonable opinion, it is not impracticable or
                   prohibitively expensive to correct the defect.

          (c)      If Lessor notifies Lessee that it does not intend to correct
                   the defect, either party may terminate the Lease, and upon
                   such termination neither party shall have any further
                   liability to any party under this Lease, except that Lessor
                   shall promptly return to Lessee the Deposit and/or the Letter
                   of Credit, if any, to Lessor.

3.        INDEMNITY

          Lessee is responsible for and will indemnify each  Indemnitee  against
          all  Losses  arising  from  death or  injury  to any  observer  or any
          employee of Lessee in connection with the inspection of the Aircraft.

                                         4-2

<PAGE>

                                  SCHEDULE 5

           CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 1 (NEW AIRCRAFT)

  This Certificate of Technical Acceptance is delivered, on the date set out
  below by _________ ("Lessee") to ____________ ("Lessor") pursuant to the
  Aircraft Lease Agreement dated _______________ between Lessor and Lessee
  (the "Lease"). The capitalized terms used in this Certificate shall have the
  meaning given to such terms in the Lease.

  DETAILS OF ACCEPTANCE

  Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this
  _______ day of __________, at ___________, technically accepted the following,
  in accordance with the provisions of the Lease:

  ____________ Aircraft, Manufacturer's Serial Number ______________;

  ____________ Engines:

  Engine Number       Manufacturer's Serial Number

  [To be completed at Delivery]

  (each of which has 750 or more rated take off horsepower or the equivalent of
  such horsepower)

  Fuel Status:      Kilos/lbs _____________; and

  Loose Equipment Check List: in accordance with the list signed by Lessor and
  Lessee and attached hereto.

  Aircraft Documents and Records: in accordance with the list signed by Lessor
  and Lessee and attached hereto.

  LOPA drawing attached.

  HOURS AND CYCLES DATA (AS OF DELIVERY DATE)

  Airframe:

  Time Since New:______________              Cycles Since New: ___________

  Landing Gear (Main and Nose)

  Time Since New: [, Center]                  Cycles Since New ___________

  Engines

  Position:                                   Time Since New: ____________

                                              Cycles Since New:___________

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

  Auxiliary Power Unit:

  Number of Flight Hours/APU Hours

  (as applicable) since New:___________________

                                        5-1

<PAGE>

 ACCEPTANCE:

 Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
 and Records  are  technically  acceptable  to it,  satisfy all of the  Delivery
 Condition Requirements and are in the condition for delivery and acceptance as
 required under the Lease.

 IN WITNESS WHEREOF, Lessee and  Lessor  have,  by  their  duly  authorized
 representative,  executed this Certificate of Technical  Acceptance on the date
 in paragraph 1 above.

 LESSEE:_________________________________

 By: ____________________________________

 Title: _________________________________

 LESSOR:_________________________________

 By: ____________________________________

 Title: _________________________________

                                          5-2

<PAGE>

                                        SCHEDULE 5

                 CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 2 (USED AIRCRAFT)

 This  Certificate  of Technical  Acceptance is  delivered,  on the date set out
 below by ___________ ("Lessee") to ____________("Lessor") pursuant to the
 Aircraft Lease Agreement dated between Lessor and Lessee (the "Lease").  The
 capitalized  terms used in  this Certificate shall have the meaning given to
 such terms in the Lease.

 DETAILS OF ACCEPTANCE

 Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this
 __________ day of ________, at ____________, technically accepted the
 following, in accordance with the provisions of the Lease:

 ___________ Aircraft, Manufacturer's Serial Number ____________;

 ___________ Engines:

 Engine Number         Manufacturer's Serial Number

 [to be completed at Delivery]

 (each of which has 750 or more rated take off horsepower or the equivalent of
 such horsepower)

 Fuel Status:   Kilos/lbs _______; and

 Loose Equipment Check List: in accordance with the list signed by Lessor and
 Lessee and attached hereto.

 Aircraft Documents and Records: in accordance with the list signed by Lessor
 and Lessee and attached hereto.

 HOURS AND CYCLES DATA (as of Delivery Date)

 Airframe:

 Number of Hours since last Airframe Structural Check: _________ hours

 "C" Check (or Equivalent)

 Interval: ___________________________

 Time Since: _________________________

 Landing Gear Overhaul:

 Number of Cycles Since Last Overhaul:

                                        5-3

<PAGE>

 [__] Gear _________________________________ cycles

 Interval: _______________________________

 Engines:

 Number of Hours Since Last Engine Refurbishment:

 SIN _____________:______________ hours

 Hot Section Inspection:

 Interval: ________________________________

 Time Since (S/N ____________):_____________

 Time Remaining to First Restriction:

 Engine S/N:

 Hours:________________ Restriction: _________________

 Cycles: ______________ Restriction: _________________

 Average Cycles in Life Limited Parts (see attached Schedule): _______________

 Auxiliary Power Unit:

 Number of APU Hours since Last Heavy Shop Visit:

 _______________ hours     Date accomplished ______________

 Hot Section Inspection:

 Interval: _____________________________

 Time Since: ___________________________

 Interior Equipment:

 LOPA - attached _______________________

 Emergency drawing - attached ________________________

 Galley Equipment _________________________

                                         5-4

<PAGE>

 ACCEPTANCE:

 Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
 and Records  are  technically  acceptable  to it,  satisfy all of the  Delivery
 Condition  Requirements and are in the condition for delivery and acceptance as
 required under the Lease.

 IN  WITNESS  WHEREOF,   Lessee  and  Lessor  have,  by  their  duly  authorized
 representative,  executed this Certificate of Technical  Acceptance on the date
 in paragraph 1 above.

 LESSEE:

 By: ________________________________

 Title: _____________________________

 LESSOR:

 By: ________________________________

 Title: _____________________________

 By: ________________________________

 Title: _____________________________

                                           5-5

<PAGE>

                                    SCHEDULE 6

                                 [NOT APPLICABLE]

                                        6-1

<PAGE>

                                   SCHEDULE 7
                             INSURANCE REQUIREMENTS

1.1  TYPES OF INSURANCE

 The Insurances required to be maintained are as follows:

          (a)     HULL ALL RISKS of loss or damage while flying, taxiing and on
                  the ground with respect to the Aircraft on an agreed value
                  basis for not less than the Agreed Value and not more than
                  110% of the Agreed Value and with a deductible not exceeding
                  the Deductible Amount;

          (b)     HULL WAR AND ALLIED PERILS, being such risks excluded from the
                  Hull All Risks Policy, to the fullest extent available from
                  the leading international insurance markets for the Agreed
                  Value; provided that, when the Aircraft is being operated in
                  or over the Untied States or Canada, coverage may be limited
                  to such  coverage as is usual and customary for comparable
                  airlines, operating similar equipment in similar
                  circumstances, namely subject to the North American buy-back;

          (c)     ALL RISKS (including War and Allied Risk except when on the
                  ground or in transit other than by air) property insurance on
                  all Engines and Parts when not installed on the Aircraft for
                  like kind and quality value and including engine test and
                  running risks; and

          (d)     COMPREHENSIVE AIRCRAFT THIRD PARTY, PROPERTY DAMAGE,
                  PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD
                  PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a combined
                  single limit (bodily injury/property damage) of an amount not
                  less than the Minimum Liability Coverage for the time being
                  for any one occurrence (but in respect of products and
                  personal injury liability, this limit may be an aggregate
                  limit for any and all losses occurring during the currency of
                  the policy).  War and Allied Risks are also to be covered
                  under the policy in line with prudent market practice for
                  comparable airlines, operating similar equipment in similar
                  circumstances.

1.2  TERMS OF HULL AND SPARES INSURANCE

All required hull and spares insurance, so far as it relates to the Aircraft,
will:

          (a)      LOSS PAYEE: name Lessor, as loss payee (without imposing on
                   Lessor any obligation imposed on the insured, including the
                   liability to pay any calls, commissions or premiums);

          (b)      PAYMENT OF LOSSES: Losses will be payable in Dollars to
                   Lessor for all amounts up to the Agreed Value and to Lessee
                   for any excess above the Agreed Value (which excess shall
                   not exceed 10% of the Agreed Value), except where the
                   insurance payment does not

                                               7-1

<PAGE>

                   exceed the Damage Notification  Threshold,  and no Default is
                   in existence, in which case the loss will be settled with and
                   paid to Lessee;

          (c)      50150 PROVISION: if separate Hull "all risks" and "war risks"
                   insurances are arranged, include a 50150 provision in
                   accordance with market practice (AVS. 103 is the current
                   London market language); and

          (d)      NO OPTION TO REPLACE: confirm that the insurers are not
                   entitled to replace the Aircraft in the event of an insured
                   Event of Loss and are not entitled to replace any Engine in
                   the event of an Engine Event of Loss with respect to such
                   Engine.

1.3  TERMS OF LIABILITY INSURANCE

 All required liability insurances will:

          (a)      ADDITIONAL INSUREDS: include each Indemnitee, as additional
                   insureds for its respective rights and interests, warranted,
                   each as to itself only, no operational interest (without
                   imposing on any such Person any obligation imposed on the
                   insured, including the liability to pay any calls,
                   commissions or premiums);

          (b)      SEVERABILITY: include a severability of interests clause
                   which provides that the insurance, except for the limit of
                   liability, will operate to give each insured the same
                   protection as if there were a separate policy issued to each
                   insured; and

          (c)      PRIMARY POLICY: contain a provision confirming that the
                   policy is primary without right of contribution and the
                   liability of the insurers will not be affected by any other
                   insurance of which Lessor, any Indemnitee or Lessee has the
                   benefit so as to reduce the amount payable to the additional
                   insureds under such policies.

1.4  TERMS OF ALL INSURANCES

 All Insurances will:

          (a)      INDUSTRY PRACTICE: be in accordance with standard industry
                   practice for airlines operating similar aircraft in similar
                   circumstances;

          (b)      DOLLARS: provide cover denominated in Dollars;

          (c)      WORLDWIDE: operate on a worldwide basis subject to such
                   limitations and exclusions as are in line with industry
                   practice obtained by prudent United States-based
                   international air carriers;

          (d)      BREACH OF WARRANTY: provide that, in relation to the
                   interests of each of the additional assureds, the Insurances
                   will not be invalidated by any act or omission by Lessee,
                   or any other Person other than the respective additional
                   assureds seeking protection and shall

                                              7-2

<PAGE>

                   insure  the  interests  of  each of the  additional  assureds
                   regardless of any breach or violation by Lessee, or any other
                   Person other than the respective  additional  assured seeking
                   protection  of  any  warranty,   declaration   or  condition,
                   contained in such Insurances;

          (e)      SUBROGATION: provide that the insurers will hold harmless and
                   waive any  rights of  recourse  or  subrogation  against  the
                   additional insureds to the extent Lessee has waived its
                   rights against the additional insureds in the Lease;

          (f)      PREMIUMS:  provide that the additional  insureds will have no
                   obligation or responsibility  for the payment of any premiums
                   due (but reserve the right to pay the same should any of
                   them elect so to do) and that the insurers  will not exercise
                   any right of set-off,  counter claim or other  deduction,  by
                   attachment  or  otherwise,  in  respect of any  premium  due
                   against the respective  interests of the additional  insureds
                   other than outstanding premiums relating to the Aircraft, any
                   Engine or Part the subject of the relevant claim;

          (g)      Cancellation/Change:   provide  that  the   Insurances   will
                   continue unaltered for the benefit of the additional insureds
                   for at least 30 days after written notice by registered  mail
                   or telex of any cancellation, change, event of non-payment of
                   premium or installment thereof has been sent by insurer(s) to
                   Lessor, or where an insurance broker is appointed to the
                   insurance broker who shall promptly send on such notice to
                   Lessor, except in the case of war risks for which 7 days (or
                   such lesser period as is or may be customarily available in
                   respect of war risks or allied perils) will be given, or in
                   the case of war between the 5 great powers or nuclear peril
                   for which termination is automatic; and

          (h)      [NOT APPLICABLE]

          (i)      [INTENTIONALLY OMITTED.]

          (j)      INDEMNITIES: accept and insure the indemnity provisions of
                   the Lease to the extent of the risks covered by the policies.

1.5  DEDUCTIBLES

 Lessee shall be responsible for any and all deductibles under the Insurances.

1.6  APPLICATION OF INSURANCE PROCEEDS

 The Insurances will be endorsed to provide for payment of proceeds as follows:

          (a)      EVENT OF LOSS: all insurance payments up to the Agreed Value
                   received as the result of an Event of Loss occurring during
                   the Term will be paid to Lessor as loss payee and any amount
                   in excess of the Agreed Value (which excess shall not exceed
                   10% of the Agreed Value) shall be paid to Lessee;

                                        7-3

<PAGE>

          (b)      EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
                   proceeds of any damage or loss to the Aircraft, any Engine or
                   any Part occurring during the Term not constituting an Event
                   of Loss and in excess of the Damage Notification Threshold
                   will be paid to the appropriate repair facility, and applied
                   in payment (or paid to Lessee and/or Lessor as reimbursement)
                   for repairs or replacement property upon Lessor being
                   satisfied that the repairs or replacement have been effected
                   in accordance with the Lease.

          (c)      BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
                   amounts below the Damage Notification Threshold shall be paid
                   by the insurer directly to Lessee;

          (d)      LIABILITY PROCEEDS: all insurance proceeds in respect of
                   third party liability will be paid by the insurers to the
                   relevant third party in satisfaction of the relevant
                   liability or to Owner, Lessor, Financing Partners'
                   Representative or Lessee, as the case may be, in
                   reimbursement of any payment so made;

          (e)      DEFAULT: notwithstanding any of the foregoing paragraphs, if
                   at the time of the payment of any such insurance proceeds a
                   Default has occurred and is continuing, all such proceeds
                   will be paid to Lessor, Owner or Financing Parties'
                   Representative, as the case may be, or retained to be applied
                   toward payment of any amounts which may be or become payable
                   by Lessee in such order as Lessor or Owner, as the case may
                   be, may elect until such time as no Default is continuing and
                   then applied as described above; and to the extent that
                   insurance proceeds are paid to Lessee, Lessee agrees to hold
                   such proceeds in trust and comply with the foregoing
                   provisions and apply or pay over such proceeds as so
                   required.

1.7  UNITED STATES GOVERNMENTAL INDEMNITY

          Notwithstanding  any of the  foregoing  paragraphs,  in the event of a
          Permitted  Sub-Lease to, or a requisition of use by, the United States
          or any Governmental  Entity whose  obligations have the full faith and
          credit of the federal  Government of the United States,  Lessor agrees
          to accept in lieu of insurance required  hereunder  indemnification or
          insurance  from the United States or such a  Governmental  Entity in a
          form reasonably  acceptable to Lessor and Owner and against such risks
          and in such  amounts  and on such  terms  such that when  added to the
          Insurance maintained by Lessee,  Lessee is in full compliance with the
          requirements of Section 9 and this Schedule.

                                          7-4

<PAGE>

                                      SCHEDULE 8

                     FORM OF LESSEE'S AND GUARANTOR'S LEGAL OPINION

 [Lessor]

 [Owner]

 [Financing Parties' Representative]

 Ladies and Gentlemen:

 1.       You have asked us to render an opinion in connection with the
          transaction governed by or subject to, inter alia, the following
          documents.

          (a)     the Lease as defined below;

          (b)     the [Articles/Certificate of Incorporation and By-laws]* of
                  Lessee; and

                  [*Counsel should amend this reference as necessary to describe
                  the actual constitutional documents of Lessee].

          (c)     all other documents, approvals and consents of whatever nature
                  and wherever kept which it was, in our judgement and to our
                  knowledge, necessary or appropriate to examine to enable us
                  to give the opinion expressed below.

         Words and expressions used and not otherwise defined herein will bear
         the same meanings as defined in an Aircraft Lease Agreement dated,
         ___________, _________ between ____________ ("Lessor")  and __________
         ("Lessee")  in respect of one ____________ aircraft with manufacturer's
         serial number ____________ together with the installed ______________
         engines (the "Aircraft").  As used herein the term "Lease" means and
         includes the Aircraft Lease Agreement which incorporates the Common
         Terms  Agreement (as defined therein) and Lease Supplement No.____ .
         Also, for the purposes of this opinion, the term "Lease" includes the
         Acknowledgment and Agreement dated as of the date hereof executed by
         Lessee in favor of Owner and Financing Parties' Representative.

2.       Having considered the documents listed in paragraph 1 above, and having
         regard to the relevant laws of __________, we are pleased to advise
         that in our opinion:-

         (a)     Lessee is a company duly incorporated and in good standing
                 under the laws _______of and is qualified to do business as a
                 foreign corporation in each jurisdiction where failure to so
                 qualify would have a materially adverse effect on Lessee's
                 business or its ability to perform its obligations under the
                 Lease;

         (b)     Lessee has the corporate power to enter into and perform, and
                 has taken all necessary corporate action to authorize the entry
                 into, and the execution, delivery and performance by it of, the
                 Lease and the transactions contemplated by the Lease;

                                              8-1

<PAGE>

          (c)      the entry into and performance by Lessee of, and the
                   transactions contemplated by, the Lease do not and will not
                   (x) conflict with any laws binding on Lessee, (y) conflict
                   with the  [Articles/Certificate  of Incorporation or By-laws]
                   of Lessee; or (z) conflict with or result in default under
                   any agreement or instrument which is binding upon Lessee or
                   any of its assets or result in the creation of any Security
                   Interest on any of its assets;

          (d)      no authorizations, consents, licenses, approvals and
                   registrations (other than those which have been obtained and
                   of which copies are attached hereto) are necessary or
                   desirable to be obtained from any governmental or other
                   regulatory authorities in the United States or any other
                   jurisdiction  having  jurisdiction over Lessee, its
                   operations or its properties to enable Lessee (x) to enter
                   into and perform the transactions  contemplated by the Lease,
                   (y) to  operate the Aircraft in the United States and on
                   international flights for the transport of fare-paying
                   passengers, or (z) to make the payments provided for in
                   the Lease;

          (e)      except for the filing and  recordation of [a bill of sale in
                   favor of the Owner,] the  Financing  Documents  and the Lease
                   with the FAA (which filing has been duly made on or before
                   this date) and the filing of Financing Statements in _______,
                   it is  not  necessary  or  desirable,  to  ensure  the
                   priority,  validity and enforceability of all the obligations
                   of Lessee  under the Lease,  as against  Lessee and all third
                   parties, or to perfect the interests of Lessor, Owner or
                   Financing Parties' Representative in and to the Aircraft or
                   the Lease, that the Lease be filed, registered, recorded or
                   notarized in any public office or elsewhere or that any other
                   instrument be signed, delivered, filed, registered or
                   recorded, that any tax or duty be paid or that any other
                   action whatsoever be taken;

          (f)      the Lease has been duly executed and delivered on behalf of
                   Lessee  and constitutes the legal, valid and binding
                   obligation of Lessee, enforceable against Lessee in
                   accordance with its terms;

          (g)      [NOT APPLICABLE];

          (h)      there is no applicable usury or interest limitation law in
                   ______________ applicable to payments in accordance with the
                   Lease;

          (i)      there are no registration,  stamp or other taxes or duties of
                   any kind payable in __________ in  connection with the
                   execution, performance or enforcement by legal proceedings
                   of the Lease or the Guaranty;

          (j)      the choice of New York law to govern the Lease will be upheld
                   as a valid choice of law in any action in the courts of.

          (k)      the consent to the jurisdiction by Lessee contained in the
                   Lease is valid and binding on Lessee;

                                              8-2

<PAGE>

          (l)      Lessee is a Certificated Air Carrier;

          (m)      Lessee is a "citizen of the United States" as defined in
                   49 U.S.C. Section 40102(a)(15);

          (n)      Lessee's "chief executive office" (as referenced in the
                   Uniform Commercial Code adopted in the State of
                   ______________) is _____________________;

          (o)      Lessor will not violate any law or regulation of the States
                   of _______________ or New York or any federal laws or
                   regulations of the  United States of America and Lessor will
                   not become  liable to income tax in the State of ________
                   solely by reason of Lessor entering into the Lease with
                   Lessee or performing its obligations thereunder or
                   enforcement of its rights thereunder;

          (p)      It is not necessary for Lessor to establish a place of
                   business or be licensed or qualified to do business in the
                   State of _____________ or New York in order for Lessor to
                   enforce any provisions of the Lease; and

          (q)      Lessor is entitled to the benefits of Section 1110 of
                   Title 11 of the U.S.C. with respect to the Aircraft and
                   the Lease.

                                                         Very truly yours,

  [If there is a Guarantor/Guarantee the opinion must also include paragraphs
  (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (o) and (p) revised to
  be applicable to the Guarantor/Guarantee]

                                       8-3

<PAGE>

                                   SCHEDULE 9
                               EVENTS OF DEFAULT

 Each of the following events or conditions constitutes an Event of Default:

          (a)      NON-PAYMENT: Lessee fails to make any payment of Rent,
                   Supplemental Rent or any other amount payable under the Lease
                   on the due date and such failure continues for three (3)
                   Business Days or more; or

          (b)      INSURANCE:  Lessee fails to comply with any provision of
                   Section 9 (other than the requirement to provide Lessor with
                   evidence of renewal of any policy on or before the renewal
                   date where the policy has actually been renewed on or prior
                   to such date) or Schedule 7, or any insurance required to be
                   maintained under the Lease is cancelled or terminated, or a
                   notice of cancellation is given in respect of any such
                   insurance; or

          (c)      BREACH: (i) Lessee fails to provide Lessor with evidence of
                   renewal of any insurance policy on or before the renewal date
                   for that policy where the policy has actually been renewed on
                   or prior to such date and such failure continues for 24 hours
                   after notice from Lessor to Lessee of such  failure to
                   comply; or (ii) Lessee fails to comply with any other
                   provision of the Lease not referenced in this Schedule 9
                   and, if such failure is in the opinion of Lessor capable of
                   remedy, such failure continues for 30 days after notice from
                   Lessor to Lessee; or

          (d)      REPRESENTATION: any representation or warranty made (or
                   deemed to be repeated) by Lessee in or pursuant to the Lease
                   or in any document executed by Lessee in connection with or
                   pursuant to the Lease or in any document or in any
                   certificate is or proves to have been incorrect in any
                   material respect when made or deemed to be repeated; or

          (e)      CROSS-DEFAULT:

                   (i)      any amount in respect of Financial  Indebtedness  of
                            Lessee or any Lessee  Affiliate  having a  principal
                            amount in excess of Five Hundred Thousand  Dollars
                            ($500,000) is not paid when due;

                  (ii)      any such  Financial  Indebtedness  becomes  due  or
                            capable of being declared due prior to the date when
                            it would  otherwise  have become due; or becomes due
                            as a result of an event of default or termination
                            event, howsoever described, on the part of Lessee
                            or any other Person prior to the date when it would
                            otherwise have become due; or

                  (iii)    the security for any such Financial Indebtedness
                           becomes enforceable; or

                                            9-1

<PAGE>

                   (iv)     any event of default or termination event, howsoever
                            described,  occurs under any Other Agreement, or any
                            other  lease,  hire  purchase,  conditional  sale or
                            credit  sale  agreement  of  Lessee  or  any  Lessee
                            Affiliate; or

          (f)     APPROVALS: any consent, authorization, license, certificate or
                  approval  of  or  registration  with  or  declaration  to  any
                  Government  Entity  required to be obtained or  maintained  by
                  Lessee in  connection  with the Lease and/or the  operation of
                  the Aircraft  (including any airline  license or air transport
                  license including authority to operate the Aircraft under Part
                  121 of the FARs, a Certificate  of  Convenience  and Necessity
                  issued under the Act and any air carrier operating certificate
                  issued under the Act) is modified in a materially  prejudicial
                  manner or is withheld,  or is revoked,  suspended,  cancelled,
                  withdrawn,  terminated or not renewed,  or otherwise ceases to
                  be in full force; or

          (g)      BANKRUPTCY, ETC:

                   (i)      Lessee or any Lessee Affiliate consents to the
                            appointment of a custodian, receiver, trustee or
                            liquidator of itself or all or a material part of
                            its property or its  consolidated property, or
                            Lessee or any Lessee Affiliate admits in writing its
                            inability to, or is unable to, or does not, pay its
                            debts generally as they come due, or makes a general
                            assignment for the  benefit  of creditors, or Lessee
                            or any Lessee Affiliate files a voluntary  petition
                            in  bankruptcy  or  voluntary petition seeking
                            reorganization in a proceeding under any  bankruptcy
                            or insolvency laws (as now or hereafter  in effect),
                            or an answer admitting  the material allegations of
                            a petition filed against Lessee in any such
                            proceeding, or Lessee or any Lessee Affiliate by
                            voluntary petition, answer or consent seeks relief
                            under the provisions of any other bankruptcy,
                            insolvency  or other similar law providing  for the
                            reorganization or winding-up of debtors, or provides
                            for an agreement, composition, extension or
                            adjustment with its creditors, or any board of
                            directors or shareholder action is taken by Lessee
                            or any Lessee Affiliate in furtherance of any
                            of the foregoing,  whether or not the same is fully-
                            effected or accomplished; or

                   (ii)     An order, judgement or decree is entered by any
                            court appointing, without the consent of  Lessee or
                            any Lessee Affiliate, a custodian, receiver, trustee
                            or liquidator of or sequestering any of Lessee's or
                            any Lessee Affiliate's property, and any such order,
                            judgement or decree of appointment or sequestration
                            remains in effect, undismissed, unstayed or
                            unvacated for a period of 30 days after the date of
                            entry thereof or at any time an order for relief is
                            granted; or

                  (iii)     An involuntary petition against Lessee or any Lessee
                            Affiliate or other proceeding under the United
                            States Federal Bankruptcy laws or other insolvency
                            laws (as now or hereafter in effect) is filed and is
                            not withdrawn or dismissed

                                             9-2

<PAGE>

                           within 30 days thereafter or at any time an order for
                           relief is granted in such  proceeding,  or if,  under
                           the    provisions    of   any   law   providing   for
                           reorganization  or  winding-up  of debtors  which may
                           apply to Lessee or any Lessee Affiliate, any court of
                           competent  jurisdiction assumes jurisdiction over, or
                           custody or control of, Lessee or any Lessee Affiliate
                           or of all or any material  part of Lessee's or Lessee
                           Affiliates' property, and such jurisdiction,  custody
                           or  control   remains   in  effect,   unrelinquished,
                           unstayed or  unterminated  for a period of 30 days or
                           at any time an order for  relief is  granted  in such
                           proceeding; or

          (h)      SUSPENSION OF BUSINESS: Lessee suspends or ceases or takes
                   substantive steps to suspend or cease to carry on all or a
                   material part of its business as a Certificated Air Carrier
                   (other than as a result of a labor dispute with Lessee's
                   employees); or

          (i)      RIGHTS AND REMEDIES: Lessee or any other Person claiming by
                   or through Lessee challenges  the  existence, validity,
                   enforceability or priority of the Lease or the rights of
                   Lessor as lessor or of Owner as owner in respect of the
                   Aircraft or Financing Parties' Representative as holder of
                   a first priority Security Interest in the Aircraft and the
                   Lease; or Change of Control: any single person or group of
                   persons acquire control of Lessee or Guarantor without the
                   previous consent in writing of Lessor; or

          (k)      DELIVERY: Lessee fails to comply with its obligation under
                   Section 4 to accept delivery of the Aircraft or Lessee fails
                   to comply with its obligations under Section 2 of Part III
                   of Schedule A to the  Aircraft Lease Agreement; or

          (l)      ADVERSE CHANGE: any event or series of events occurs which,
                   in the reasonable opinion of Lessor, could be expected to
                   have a material adverse effect on the financial condition or
                   operations of Lessee or Guarantor or on the ability of Lessee
                   to comply with its obligations under the Lease or on the
                   ability of Guarantor to comply with its obligations under the
                   Guarantee; or

          (m)      Letter of Credit:

                   (i)      the issuer of the Letter of Credit (if any) fails to
                            make any  payment  under that  Letter of Credit when
                            due; or

                   (ii)     any such Letter of Credit is not in full force or,
                            for any reason ceases to constitute the legal, valid
                            and binding obligation of the issuer; or

                   (iii)    any of the events listed in paragraph (g) above
                            applies to such issuer (references in those sub-
                            paragraphs to Lessee being deemed to be to the
                            issuer); or

                                           9-3

<PAGE>

                   (iv)     where applicable, any Letter of Credit is not
                            renewed, extended or reissued within the time, or
                            replaced when, required by Section 5.14; or

                    (v)     any consent, authorization, license, certificate or
                            approval of or registration with or declaration to
                            any Governmental Entity required to be obtained or
                            maintained by the issuer of the Letter of Credit in
                            connection with the Letter of Credit is modified in
                            a materially prejudicial manner or is withheld,
                            revoked, suspended, cancelled, withdrawn, terminated
                            or not renewed, or otherwise ceases to be in full
                            force; or

                   (vi)     and each reference in this paragraph (m) to "the
                            issuer" shall include a reference to any confirming
                            bank for the Letter of Credit

          (n)      REDELIVERY: Lessee fails to return the Aircraft to Lessor on
                   the Expiry Date in accordance with Section 12; or

          (o)      LITIGATION: a judgement for the payment of money not covered
                   by insurance in excess of Six Hundred Fifty Thousand Dollars
                   ($650,000) (or the equivalent thereof in other currencies)
                   shall be rendered against Lessee or any Lessee Affiliate and
                   the same shall remain undischarged for a period of 30 days,
                   unless during such period, execution of such judgement shall
                   have been effectively stayed by agreement of the parties
                   involved or by court order or such judgement shall have been
                   adequately bonded; or

           (p)     GUARANTEE:

                    (i)     any  representation or warranty made by Guarantor is
                            or  proves to have been  incorrect  in any  material
                            respect  when  made  or  deemed  to be  repeated  or
                            Guarantor fails to make any payment or comply with
                            any other obligation under the Guarantee when due;
                            or

                    (ii)    the Guarantor repudiates,  revokes or claims that it
                            has no further  obligations  under the  Guarantee or
                            the Guarantee ceases to be in full force or, for any
                            reason, ceases to be the legal, valid and binding
                            obligation of Guarantor; or

                   (iii)    any of the events listed in paragraph (f)(i) or (g)
                            above  occurs  in  respect  of  Guarantor  (and for
                            purposes of this paragraph(s),  references in those
                            paragraphs   to  Lessee   shall  be  deemed  to  be
                            references to Guarantor); or

           (q)      UNLAWFUL: it becomes unlawful for Lessee to perform any of
                    its obligations under the Lease or the Lease becomes wholly
                    or partly invalid or unenforceable; or

           (r)      TRANSFER/LESSEE REQUIREMENTS: Lessee makes or permits any
                    assignment or transfer of the Lease, or any interest herein,
                    or of the right to possession of the Aircraft, the

                                               9-4

<PAGE>

                   Airframe,  or any Engine, or any obligations under the Lease,
                   or  Lessee  subleases  the  Aircraft,  in any case  except as
                   expressly  permitted  in the Lease;  or Lessee  breaches  any
                   provision of Section 8.7; or

          (s)      ENGINE LOSS: Lessee falls to timely comply with its
                   obligations under Sections 8.11(a) and 8.11(b) with respect
                   to an Engine Event of Loss.

          (t)      OTHER:  Such other events, if any, as may be specified in the
                   Aircraft Lease Agreement.

                                                9-5

<PAGE>

                                            SCREDULE10

                                          [NOT APPLICABLE]

                                                10-1

<PAGE>

                                        SCHEDULE 11

                           FORM OF LEASE TERMINATION CERTIFICATE

 The  undersigned  hereby certify that the Aircraft Lease  Agreement dated as of
 ____________, ______ between the undersigned Lessor and undersigned Lessee, and
 as further described in the Appendix attached hereto, has terminated (except as
 described in Section 15.1 of the Common Terms Agreement incorporated therein)
 and the aircraft and aircraft engines covered thereby are no longer subject to
 the terms thereof. This certificate may be executed in one or more counterparts
 each of which when taken together shall constitute one and the same instrument.

          DATED this __________ day of ______________, _____________

 LESSOR                                                       LESSEE

 [ INSERT LESSOR'S NAME ]                       [  INSERT LESSEE'S NAME ]

 By:_______________________________         By:________________________________

 Title:____________________________         Title:_____________________________

                                       11-1

<PAGE>

                                     SCHEDULE 12

                            FORM OF LEASE SUPPLEMENT NO. I

              LEASE SUPPLEMENT NO. 1, dated __________, __________,   between
     ________________________________, [a corporation organized under the laws
     of ____________________] [, not in its individual capacity, but solely as
     owner trustee] ("Lessor"), and ___________________________, a corporation
     organized under the laws of the _______________________ ("Lessee").

              Lessor and Lessee have previously entered into that certain
     Aircraft Lease Agreement dated as of ___________________, including the
     Common Terms Agreement as defined therein (collectively, herein referred
     to as the "Agreement" and the defined terms therein being hereinafter used
     with the same meaning). The Agreement provides for the execution and
     delivery from time to time of a Lease Supplement substantially in the form
     hereof for the purpose of leasing the aircraft described below under the
     Agreement as and when delivered by Lessor to Lessee in accordance with the
    terms thereof.

              The  Agreement and this Lease  Supplement  relate to the Aircraft,
     Engines and Parts as more precisely  described below and in the Certificate
     of Technical Acceptance.  A counterpart of the Agreement is attached hereto
     and this Lease Supplement and the Agreement shall form one document.

              In  consideration  of the premises  and other good and  sufficient
     consideration, Lessor and Lessee hereby agree as follows:

     1.       Lessor hereby delivers and leases to Lessee under and pursuant to
     the Agreement and Lessee hereby accepts, acknowledges receipt of possession
     and leases from Lessor under and pursuant to the  Agreement, that certain
     ___________ aircraft, and the ____________ (___) _________________________
     Engines  (each of which  Engines has 750 or more rated takeoff horsepower
     or the equivalent of such horsepower) described in Schedule 1 hereto,
     together with the Aircraft Documents and Records described in the Agreement
     (the "Delivered Aircraft").

     2.       The Delivery Date of the Delivered Aircraft is the date of this
     Lease Supplement set forth in the opening paragraph hereof.

     3.       The Term for the Delivered Aircraft shall commence on the Delivery
     Date and shall end on the Expiry Date, with respect to which the Scheduled
     Expiry Date shall be [insert date].

     4.       The amount of Rent for the Delivered Aircraft is set forth in
     Schedule B to the Agreement.

                                          12-1

<PAGE>

     5. Lessee  hereby  confirms to Lessor that (i) the  Delivered  Aircraft and
     each delivered Engine have been duly marked in accordance with the terms of
     Section 8.6(a) of the  Agreement,  (ii) the Aircraft is insured as required
     by the  Agreement,  (iii)  the  representations  and  warranties  of Lessee
     referred to in Section 2.1 of the Agreement are hereby repeated with effect
     as of the date first above  written,  (iv) having  inspected  the Delivered
     Aircraft,  Lessee  acknowledges that the Delivered  Aircraft  satisfies all
     conditions required for Lessee's acceptance of delivery as set forth in the
     Agreement,  and (v) the  execution  and  delivery of this Lease  Supplement
     signifies  absolute and  irrevocable  acceptance by Lessee of the Delivered
     Aircraft for all purposes hereof and of the Agreement.

     6. All of the terms and provisions of the Agreement are hereby incorporated
     by  reference in this Lease  Supplement  to the same extent as if fully set
     forth herein.

     7. This Lease  Supplement  may be executed  in any number of  counterparts;
     each of such  counterparts,  shall  for all  purposes  be  deemed  to be an
     original;  and all such counterparts shall together  constitute but one and
     the same Lease Supplement.

              IN  WITNESS  WHEREOF,  Lessor and Lessee  have  caused  this Lease
     Supplement  No. 1 to be duly  executed  as of the day and year first  above
     written.

     LESSOR,                             LESSEE,

     [INSERT LESSOR'S NAME]              [INSERT LESSEE'S NAME]

     By:________________________         By: __________________________

     Name:______________________         Name:_________________________

     Title:_____________________         Title:________________________

                                     12-2

<PAGE>

                                   SCHEDULE 13

                            FORM OF LETTER OF CREDIT

                        IRREVOCABLE STANDBY LETTER OF CREDIT

     BENEFICIARY:
     Aviation Financial Services, Inc.
     Attention:_________________
     201 High Ridge Road
     Stamford, CT 06927

     Gentlemen:

              We hereby establish our irrevocable Standby Letter of Credit
     No. S/B ____________ dated February ___, 2000 (this "Letter of Credit")
     in your favor in connection with the leasing of one Boeing 737-700
     aircraft by Aviation Financial Services Inc. ("Beneficiary") to Aloha
     Airlines, Inc. ("Customer"). All bank charges relating to this Letter of
     Credit are for the account of Customer.

              At the request of Customer for account of same, we hereby
     establish this Irrevocable Standby Letter of Credit No. S/B ______ (this
     "Letter of Credit") to authorise you to draw on First Hawaiian Bank,
     Honolulu, Hawaii an amount or amounts not exceeding in aggregate
     US$____________ (__________ United  States Dollars) upon receipt by us of
     the following demand certificate from Beneficiary, accompanied by a copy
     of this Letter of Credit (which certificate and copy may be presented to
     us by telecopy at telecopy no. ________):

             "The undersigned are two authorised signatories of Aviation
             Financial Services Inc ("Beneficiary"). Beneficiary hereby draws
             upon the Irrevocable Standby Letter of Credit No. S/B____________
             of first Hawaiian Bank Honolulu, Hawaii dated____________.
             Beneficiary hereby instructs you to transfer US$_______________
             (____________ United States Dollars) to Bankers Trust Company,
             New York, ABA 021 001 033, For the account of: Aviation Financial
             Services Inc., Account Number: 50-259-862, immediately, with telex
             confirmation to us of such payment."

              We  hereby  agree  with  you  that  drawings  drawn  under  and in
     compliance  with the terms of this Letter of Credit received on or prior to
     the first anniversary of the date of this Letter of Credit (as the same may
     be extended  pursuant to the terms hereof,  the "Expiration  Date") will be
     duly  honoured  upon  receipt by us of such a demand  certificate.  Partial
     drawings  are  permitted.  This  Letter  of Credit  shall be  automatically
     renewed for  successive  one year periods  until at least _______________,
     unless at least thirty (30) business days prior to the then current
     Expiration Date, we notify you in writing by certified mail, return receipt
     requested, at the address set forth above or such other address as
     Beneficiary may have notified to us in writing, of our election not to
     renew this Letter of Credit beyond the then current Expiration Date. In
     the event of such non-

                                           13-1

<PAGE>

     renewal, the full amount of this  Letter of Credit may be drawn down upon
     presentation of a demand certificate as provided above.

              If a drawing by you hereunder  does not, in any instance,  conform
     to the provisions of this Letter of Credit, we shall give you prompt notice
     that the  purported  drawing  was not  effected  in  accordance  with  such
     provisions,  stating  the  reasons  therefor,  and that we are  holding any
     documents  presented  in  connection  therewith  at  your  disposal  or are
     returning the same to you, as we may elect.

              This  Letter  of  Credit  is   transferable   and  constitutes  an
     obligation  to make  payment  against  documents.  Except to the extent the
     express provisions hereof conflict, this Letter of Credit is issued subject
     to the Uniform Customs and Practice for Documentary Credits (1993 Revision)
     International Chamber of Commerce Publication No. 500 ("Uniform Customs").

                                           Sincerely,

                                           FIRST HAWAIIAN BANK

    ______________________________         ____________________________
     Authorised Signature                  Authorised Signature

                                     13-2

<PAGE>

                                   SCHEDULE 14

                              MAINTENANCE PERFORMERS

     Air New Zealand Limited
     Repair Station #ANZZ188C
     Christchurch

     Aviation Management Systems
     Repair Station #ZM7R567Y
     Sky Harbor Int'l Airport

     Aviation Management Systems
     Repair Station #D8LR566Y
     Goodyear, AZ

     BFGoodrich Aerospace MRO
     Repair Station #HN6R593N
     Everett, WA

     Conair Aviation Ltd.
     Repair Station #AMO 10-75
     Abbotsford, B.C.

     Spar Aerospace Limited
     Repair Station #AMO 03-57
     Canada

                                           14-1

<PAGE>

                             AIRCRAFT LEASE NOVATION
                             AND AMENDMENT AGREEMENT

                          DATED AS OF FEBRUARY 28, 2001

                        AVIATION FINANCIAL SERVICES INC.
                               AS EXISTING LESSOR

                              ALOHA AIRLINES, INC.
                                    AS LESSEE

                           CASTLE HARBOUR LEASING INC.
                                  AS NEW LESSOR

                                  IN RESPECT OF
                AIRCRAFT LEASE AGREEMENT DATED AS OF MAY 12, 2000
              RELATING TO BOEING 737-700 AIRCRAFT BEARING msn 30830

<PAGE>

2.3   PRE-EFFECTIVE TIME RIGHTS AND REMEDIES: Without prejudice to the rights of
      New Lessor under the Novated Lease and in consideration of the payment by
      Existing Lessor to Lessee of US$5 (receipt and sufficiency of which are
      hereby acknowledged), New Lessor, Lessee and Existing Lessor agree that
      Existing Lessor and Lessee shall have the same rights and remedies against
      each other pursuant to this Clause 2.3 as each would have had under the
      Lease in respect of any losses, liabilities or claims suffered or incurred
      or brought against or payments due to each other in respect of or
      attributable to the period of the Term prior to the Effective Time as if
      Existing Lessor had remained the Lessor under the Lease, and New Lessor
      shall not be responsible to Lessee in respect of any such losses,
      liabilities or claims, nor shall Lessee exercise any set-off or
      counterclaim in respect of any such losses, liabilities or claims against
      New Lessor.

3.    LEASE AMENDMENTS

3.1   AMENDMENTS: As of, and with effect from, the Effective Time the Lease
      shall be (and it is hereby) amended as follows:

      (a)   the expressions THIS LEASE and THE LEASE shall be construed,
            wherever they appear in the Lease and wherever the context so
            permits, as if they referred to the Novated Lease;

      (b)   the expression LESSOR shall be construed, wherever it appears in the
            Lease, as if it referred to New Lessor in place of Existing Lessor
            (other than Recital B to the Aircraft Lease Agreement, in which case
            the expression LESSOR shall be construed to mean General Electric
            Capital Corporation, a New York corporation);

      (c)   Clause 3.4 of the Aircraft Lease Agreement shall be amended and
            restated in its entirety as follows:

            LESSOR'S BANK ACCOUNT: For the purposes of Clause 5.5 of the Common
            Terms Agreement, Lessor's bank account and wire transfer
            particulars, to which all payments to Lessor shall be made, are at
            the date hereof

                  Bankers Trust Company
                  New York
                  ABA 021001033

                  For the account of
                  Castle Harbour Leasing Inc
                  Account Number: 50-263-968

      3.2   REFERENCES IN OTHER DOCUMENTS: With effect from the Effective Time,
            all references to the Lease contained in any documents delivered
            under or pursuant to the Lease shall be construed as references to
            the Novated Lease (as it may be further amended from time to time).

      4.    DEPOSIT

            As of the Effective Time the portion of the Deposit actually paid by
            Lessee as of the date hereof ($286,400) shall be transferred by
            Existing Lessor to New Lessor, and:

<PAGE>

            (a)   New Lessor acknowledges and agrees with Lessee, with effect
                  from the Effective Time, that such moneys have been paid by
                  Lessee in accordance with the Novated Lease and further
                  acknowledges and agrees that Lessee shall have no further
                  obligation to make any payment in respect of the Deposit which
                  have become due and payable before the Effective Time and in
                  respect of which Lessee has made payment in favour of Existing
                  Lessor;

            (b)   each of New Lessor, Lessee and Existing Lessor agrees that any
                  amounts in respect of the Deposit which become due and payable
                  at or after the Effective Time shall be payable by Lessee to
                  New Lessor in accordance with the Novated Lease;

            (c)   Existing Lessor acknowledges that it has released and has no
                  continuing security or other interest in the moneys and
                  amounts transferred to New Lessor under this clause.

      5.    EFFECTIVE TIME

            This Agreement shall become effective at the time (the "EFFECTIVE
            TIME") at which this Agreement shall have been executed by all of
            the parties hereto, and such signatures shall have been delivered to
            New Lessor. New Lessor shall notify each of Existing Lessor and
            Lessee in writing of the Effective Time promptly upon its
            determination of the same. Filing of this Agreement with the FAA
            shall evidence that the Effective Time has occurred.

      6.    MISCELLANEOUS

      6.1   CONTINUING EFFECT: Save as provided for herein, the Novated Lease
            and all provisions thereof shall continue in full force and effect
            as the legal, valid and binding rights and obligations of each of
            New Lessor and Lessee enforceable in accordance with their
            respective terms. All representations, warranties and agreements
            contained in this Agreement shall continue in full force and effect
            after the Effective Time.

      6.2   VARIATION: The provisions of this Agreement shall not be varied
            otherwise than by an instrument in writing executed by or on behalf
            of all the parties; provided that New Lessor and Lessee shall be
            entitled to amend, modify or vary the terms of the Novated Lease
            after the Effective Time without reference to Existing Lessor.

      6.3   NOTICES: Every notice, request, demand or other communication under
            this Agreement shall be made in accordance with Clause 15.7 of the
            Novated Lease and shall be sent to Existing Lessor and Lessee to the
            addresses for notices set forth in Clause 6 of the Aircraft Lease
            Agreement and every notice, request, demand or other communication
            to New Lessor under this Agreement and the Novated Lease shall be
            sent to:

                             c/o GE Capital Aviation Services, Inc.
                             201 High Ridge Road
                             Stamford, CT 06927

           Attention:        Contracts Leader
           Facsimile:        203-357-3201
           Telephone:        203-357-3776

<PAGE>

6.4   COUNTERPARTS: This Agreement may be executed in any number of counterparts
      and by any party hereto in separate counterparts, each of which when so
      executed shall be deemed to be an original and all of which, when taken
      together, shall constitute one and the same agreement.

6.5   LEASE PROVISIONS: The provisions of Clauses 14 (Assignment), 15.2
      (Waivers, Remedies Cumulative), 15.4 (Severability), and 15.8 (Governing
      Law; Jurisdiction; WAIVER OF JURY TRIAL) of the Lease shall apply to this
      Agreement as if set out in full herein.

6.6   NAMEPLATES: New Lessor hereby advises Lessee that the Nameplate
      Inscription on the Nameplates installed on the Aircraft in accordance with
      the requirements of Clause 8.6(a) shall read as follows:

      "This Aircraft/Engine is owned by Castle Harbour Leasing Inc., and is
      leased to Aloha Airlines, Inc. and may not be operated by any other
      person without the prior written consent of Castle Harbour Leasing Inc."

6.7   EXPENSES: New Lessor hereby agrees that it will, upon written request from
      Lessee accompanied by written evidence as to the amount of such fees and
      expenses reasonably satisfactory to New Lessor, reimburse Lessee, or cause
      Lessee to be reimbursed, for the reasonable fees and disbursements of
      Lessee's outside legal counsel relating to the review, negotiation and
      execution of this Agreement.

6.8   ENTIRE AGREEMENT: The Novated Lease and this Agreement together constitute
      the sole and entire agreement between Lessee and New Lessor in relation to
      the leasing of the Aircraft, and supersede all previous agreements in
      relation to that leasing.

<PAGE>

   IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
   and year first herein written.

   SIGNED for and on behalf of AVIATION FINANCIAL SERVICES INC.

   By:   /s/  Charles H. Meyer
      -------------------------------
   Name:
        -----------------------------
   Title:
         ----------------------------

   SIGNED for and on behalf of ALOHA AIRLINES, INC.

   By:
      -------------------------------
   Name:
        -----------------------------
   Title:
         ----------------------------

   By:
      -------------------------------
   Name:
        -----------------------------
   Title:
         ----------------------------

   SIGNED for and on behalf of CASTLE HARBOUR LEASING INC.,

   By:   /s/  Charles H. Meyer
      -------------------------------
   Name:
        -----------------------------
   Title:
         ----------------------------

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first herein written.

SIGNED for and on behalf of AVIATION FINANCIAL SERVICES INC.

By:
   -------------------------------
Name:
     -----------------------------
Title:
      ----------------------------

SIGNED for and on behalf of ALOHA AIRLINES, INC.

By:  /s/ G.R. Zander
   -------------------------------
Name:   Glenn R. Zander
     -----------------------------
Title:  President & CEO
      ----------------------------

By:  /s/ James M. King
   -------------------------------
Name:   James M. King
     -----------------------------
Title:  SR VP Planning &
        Business Day
      ----------------------------

SIGNED for and on behalf of CASTLE HARBOUR LEASING INC.,

By:
   -------------------------------
Name:
     -----------------------------
Title:
      ----------------------------

<PAGE>

                             LEASE SUPPLEMENT NO. 1

          LEASE SUPPLEMENT NO. 1, dated May 25, 2001 between Castle Harbour
 Leasing Inc., a corporation organized under the laws of the State of Delaware,
 as successor in interest to Aviation Financial Services, Inc. ("Lessor"), and
 Aloha Airlines, Inc., a corporation organized under the laws of the State of
 Delaware ("Lessee").

          Lessor's predecessor in interest and Lessee have previously entered
 into that certain Aircraft Lease Agreement dated as of May 12, 2000, which
 incorporates the Common Terms Agreement as defined therein (collectively,
 herein referred to as the "Agreement" and the defined terms therein being
 hereinafter used with the same meaning). The Agreement provides for the
 execution and delivery from time to time of a Lease Supplement substantially in
 the form hereof for the purpose of leasing the aircraft described below under
 the Agreement as and when delivered by Lessor to Lessee in accordance with the
 terms thereof.

          The Agreement and this Lease Supplement relate to the Aircraft,
 Engines and Parts as more precisely described below and in the Certificate of
 Technical Acceptance. A counterpart of the Agreement is attached hereto and
 this Lease Supplement and the Agreement shall form one document.

          In consideration of the premises and other good and sufficient
 consideration, Lessor and Lessee hereby agree as follows:

          1 . Lessor hereby delivers and leases to Lessee under and pursuant to
 the Agreement and Lessee hereby accepts, acknowledges receipt of possession and
 leases from Lessor under and pursuant to the Agreement, that certain Boeing
 737-76N aircraft, and the two (2) CFM56-7B26 Engines (each of which Engines has
 750 or more rated takeoff horsepower or the equivalent of such horsepower)
 described in Schedule 1 hereto, together with the Aircraft Documents and
 Records described in the Agreement (the "Delivered Aircraft").

          2. The Delivery Date of the Delivered Aircraft is the date of this
 Lease Supplement set forth in the opening paragraph hereof.

          3. The Term for the Delivered Aircraft shall commence on the Delivery
 Date and shall end on the Expiry Date, with respect to which the Scheduled
 Expiry Date shall be May 24, 2016.

          4. The amount of Rent for the Delivered Aircraft is set forth in
 Schedule B to the Agreement.

          5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft
 and each delivered Engine have been duly marked in accordance with the terms of
 Section 8.6(a) of the Agreement, (ii) the Aircraft is insured as required by
 the Agreement, (iii) the representations and warranties of Lessee referred to
 in Section 2.1 of the Agreement are hereby repeated with effect as of the date
 first above written, (iv) having inspected the Delivered Aircraft, Lessee
 acknowledges that the Delivered Aircraft satisfies all conditions required for
 Lessee's acceptance of delivery as set forth in the Agreement, and (v) the
 execution and delivery of this Lease Supplement signifies absolute

<PAGE>

 and irrevocable acceptance by Lessee of the Delivered Aircraft for all purposes
 hereof and of the Agreement.

          6. All of the terms and provisions of the Agreement are hereby
 incorporated by reference in this Lease Supplement to the same extent as if
 fully set forth herein.

          7. This Lease Supplement may be executed in any number of
 counterparts; each of such counterparts, shall for all purposes be deemed to be
 an original; and all such counterparts shall together constitute but one and
 the same Lease Supplement.

<PAGE>

               IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
      Supplement No. 1 to be duly executed as of the day and year first above
      written.

      LESSOR,                           LESSEE,

      CASTLE HARBOUR LEASING INC.       ALOHA AIRLINES, INC.

      By: /s/ Charles H. Meyer          By:___________________________
         ------------------------

      Name: Charles H. Meyer            Name:_________________________
           ----------------------

      Title:     Vice President         Title:________________________
           ----------------------

                                        By:___________________________

                                        Name:_________________________

                                        Title:________________________

<PAGE>

           IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
   Supplement No. 1 to be duly executed as of the day and year first above
   written.

  LESSOR,                             LESSEE,

  CASTLE HARBOUR LEASING INC.         ALOHA AIRLINES, INC.

  By:______________________________   By:  /s/ Brenda F. Cutwright
                                           --------------------------------
  Name:____________________________   Name:   Brenda F. Cutwright
                                           --------------------------------

  Title:___________________________   Title:  Exec. Vice President & CFO
                                            -------------------------------

                                      By:   /s/ James M. King
                                         ----------------------------------

                                      Name:     James M. King
                                           --------------------------------

                                      Title:   Sr. Vice President Planning
                                               and Business Development
                                            -------------------------------

<PAGE>

                                   SCHEDULE 1

 Aircraft Manufacturer:                      Boeing
 Aircraft Model and Series:                  737-76N
 Registration Mark:                          N741AL
 Manufacturer's Serial Number:               30830
 Engine Manufacturer and Model:              CFMI Model CFM56-7B26
 Engine Serial Numbers:                      _________ and __________

<PAGE>

                                                             EXECUTION VERSION

             AGREEMENT AND AMENDMENT TO AIRCRAFT LEASE AGREEMENT

                           DATED DECEMBER 14,2001

                                   BETWEEN

                         CASTLE HARBOUR LEASING INC.

                                  AS LESSOR

                                     AND

                            ALOHA AIRLINES, INC.

                                  AS LESSEE

             AGREEMENT AND AMENDMENT TO AIRCRAFT LEASE AGREEMENT

                                in respect of
              Aircraft Lease Agreement dated as of May 12, 2000
relating to Boeing Model 737-700 aircraft manufacturer's serial number 30830

<PAGE>

THIS AGREEMENT is made on December 14,2001 ("AGREEMENT")

BETWEEN:

CASTLE HARBOUR LEASING INC., a company incorporated under the laws of Delaware
whose principal office is at c/o GE Capital Aviation Services, Inc., 201 High
Ridge Road, Stamford, CT 06927, U.S.A. ("LESSOR"); and

ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at 371 Aokea Street, Honolulu, HI 96819, U.S.A.
and its chief executive office at 500 Ala Moana Blvd., Two Waterfront Tower,
Suite 500, Honolulu, HI 96813, U.S.A. ("LESSEE").

WHEREAS:

(A)     By an Aircraft Lease Agreement dated as of May 12, 2000 ("ORIGINAL
        LEASE") between Lessee, as lessee, and Aviation Financial Services Inc.
        ("AFSI"), as lessor, which incorporates by reference that certain
        Aircraft Lease Common Terms Agreement dated as of May 12, 2000
        executed by General Electric Capital Corporation and Lessee (the
        "CIA"), as the same has been amended by (i) that certain letter
        agreement dated May 12, 2000 entered into between AFSI and Lessee, (ii)
        that certain Aircraft Lease Novation and Amendment Agreement dated as
        of February 28, 2001 (the "NOVATION AGREEMENT") among AFSI, as existing
        lessor, Lessor, as new lessor and Lessee, (iii) that certain letter
        agreement dated March 20, 2001 entered into between Lessor and Lessee,
        (iv) that certain letter agreement dated May 24, 2001 entered into
        between Lessor and Lessee, (v) Lease Supplement No. 1 dated May 24,
        2001 entered into between Lessor and Lessee, and (vi) that certain
        letter agreement dated August 15, 2001 entered into between Lessor and
        Lessee (collectively, and. as amended or supplemented from time to
        time, the "LEASE") Lessor leased to Lessee and Lessee took on lease one
        Boeing model 737-700 aircraft with manufacturer's serial number 30830
        (the "Aircraft") on the terms and subject to the conditions contained
        therein.

(B)     The Original Lease, together with the Novation Agreement and Lease
        Supplement No. 1 thereto, have been recorded by the FAA and assigned
        conveyance numbers by the FAA as set forth on' Schedule 1 hereto.

(C)     Lessee has requested Lessor to permit Lessee to defer the payment of a
        portion of the Rent and to amend the Lease to change certain provisions
        therein subject to the terms and conditions of this Agreement.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS: Capitalised terms used herein but not defined shall have
         the respective meanings ascribed to such terms in the Lease.

1.2      CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
         shall apply to this Agreement as if the same were set out in full
         herein. From and after the effective date of this Agreement (as
         notified to Lessee pursuant to the Notice), all references in the Lease
         to "the Lease," the "Aircraft Lease Agreement," "hereunder" or the like
         shall mean the Lease as amended by this Agreement.

                                       1

<PAGE>

2.       REPRESENTATIONS AND WARRANTIES

         Lessee hereby repeats the representations and warranties in Clause 2.1
         of the CTA as if made with reference to the facts and circumstances
         existing as at the date hereof and as if the references in such
         representations and warranties to the "Lease" referred to the Lease as
         amended by this Agreement.

3.       DEFERRAL OF RENT

3.1      DEFINITION OF DEFERRED AMOUNT: The term "Deferred Amount" is defined in
         Clause 2 of Schedule 2 hereto.

3.2      TERMS OF RENT DEFERRAL: Each Deferred Amount shall be deferred as set
         forth in Clause 3 of Schedule 2 hereto.

4.       LETTER OF CREDIT

4.1      DEFINITION OF LETTER OF CREDIT PROCEEDS: The term "Letter of Credit
         Proceeds" is defined in Clause 2 of Schedule 2 hereto.

4.2      APPLICATION OF LETTER OF CREDIT PROCEEDS: The Letter of Credit Proceeds
         shall be applied as set forth in Clause 4.1 of Schedule 2 hereto.

4.3      RESTORATION OF LETTER OF CREDIT: The Letter of Credit shall be restored
         by Lessee as set forth in Clause 4.2 of Schedule 2 hereto.

4.4      REMAINING AMOUNTS AVAILABLE UNDER LETTER OF CREDIT: Lessor shall
         continue to hold the Letter of Credit and shall be entitled to draw the
         remaining amounts available for drawing in accordance with the Lease,
         and Lessee shall ensure that the Letter of Credit complies with all
         requirements of Section 5.14 of the CTA and Section 3.1 of the Lease,
         except as set forth in Clause 4.2 of Schedule 2 hereto.

5.       AMENDMENTS TO LEASE

5.1      AMENDMENT TO CLAUSE 1.1: The following new definition is hereby added
         to Clause 1.1 of the Lease:

         Deferred Amount has the meaning assigned to it in the Agreement and
         Amendment to Aircraft Lease Agreement dated December 14,2001 between
         Lessor and Lessee.

5.2      EVENTS OF DEFAULT

         (a)      In lieu of paragraph (a) (Non-payment) of Schedule 9 to the
                  CTA, the following shall constitute an Event of Default:

                           NON-PAYMENT: Lessee fails to make any payment of
                           Rent, Supplemental Rent or any other amount payable
                           under the Lease (including, without limitation, any
                           repayment of a Deferred Amount due under the
                           Agreement and Amendment to Aircraft Lease Agreement
                           dated December 14, 2001 between Lessor and Lessee) on
                           the due date and such failure continues for three (3)
                           Business Days or more.

                                       2

<PAGE>

         (b)      In addition to the Events of Default set forth in paragraph
                  (m) of Schedule 9 to the CTA, the following shall constitute
                  an Event of Default:

                           the Letter of Credit is not restored as set forth in
                           Clause 4.3 of the Agreement and Amendment to Aircraft
                           Lease Agreement dated December 14, 2001 between
                           Lessor and Lessee.

5.3      RIGHTS AND REMEDIES ON DEFAULT: In addition to the rights and remedies
         set forth in Clause 13.2 of the CTA, the following shall be an
         additional right of Lessor:

                           Upon the occurrence of an Event of Default, the
                           entire outstanding Deferred Amounts, together with
                           interest thereon at the Interest Rate, shall
                           become immediately due and payable by Lessee.

5.4      AMENDMENT TO THE CTA: Lessor and Lessee hereby acknowledge and agree
         that (i) the Amendment of Aircraft Lease Common Terms Agreement
         attached hereto as Schedule 3 is hereby incorporated by this reference
         and made an integral part of the Lease, and (ii) all references in the
         Lease to the "CTA" or "Common Terms Agreement" shall mean the CTA as
         amended by such amendment.

6.       CONDITIONS PRECEDENT

6.1      CONDITIONS: This Agreement shall take effect upon issuance by Lessor of
         a notice to Lessee (the "NOTICE") confirming the satisfaction of each
         of the following conditions and receipt of the following documents by
         Lessor on or prior to December 31, 2001:

         (a)      RESOLUTIONS: a copy of a resolution of the board of directors
                  of Lessee approving the terms of, and transactions
                  contemplated by, this Agreement, resolving that it enter into
                  this Agreement, and authorising a specified person or persons
                  to execute this Agreement;

         (b)      LEGAL OPINION: a legal opinion from Lessee's counsel in a form
                  reasonably satisfactory to Lessor; and

         (c)      OTHER: such other documents as Lessor may reasonably request.

6.2      FURTHER CONDITIONS PRECEDENT: Lessor's obligations under this Agreement
         are subject to the further conditions precedent that as of the date of
         issuance of the Notice:

         (a)      the representations and warranties of Lessee under Clause 2 of
                  this Agreement and under Clause 2.1 of the CTA shall be true
                  and correct; and

         (b)      no Default shall have occurred and be continuing or might
                  result from the leasing of the Aircraft to Lessee under the
                  Lease as amended hereby.

6.3      WAIVER: The conditions specified in Clauses 6.1 and 6.2 are for the
         sole benefit of Lessor and may be waived or deferred (in whole or in
         part and with or without conditions) by Lessor.

7.       MISCELLANEOUS

7.1      FURTHER ASSURANCES: Lessee agrees from time to time to do and perform
         such other and further acts and execute and deliver any and all such
         other instruments as may be required by law or

                                       3

<PAGE>

         reasonably requested by Lessor to establish, maintain and protect the
         rights and remedies of Lessor and to carry out and effect the intent
         and purpose of this Agreement.

7.2      COUNTERPARTS: This Agreement may be executed in any number of separate
         counterparts, and each counterpart shall when executed and delivered be
         an original document, but all counterparts shall together constitute
         one and the same instrument.

7.3      GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
         jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
         Agreement as if the same were set out in full herein.

7.4      VARIATION: The provisions of this Agreement shall not be varied
         otherwise than by an instrument in writing executed by or on behalf of
         Lessor and Lessee.

7.5      INVALIDITY OF ANY PROVISION: If any provision of this Agreement becomes
         invalid, illegal or unenforceable in any respect under any law, the
         validity, legality and enforceability of the remaining provisions shall
         not in any way be affected or impaired.

7.6      COSTS AND EXPENSES: Whether or not the conditions specified in Clause 6
         are fulfilled, Lessee shall pay to Lessor on demand all fees, costs and
         expenses incurred or payable by Lessor in connection with the
         preparation, negotiation and completion of this Agreement and
         performance of the transactions contemplated hereby.

8.       CONTINUATION OF LEASE

         Save as expressly amended by this Agreement, the Lease shall continue
         in full and unvaried force and effect as the legal, valid and binding
         rights and obligations of each of Lessor and Lessee enforceable in
         accordance with their respective terms.

                                       4

<PAGE>

IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
CASTLE HARBOUR LEASING INC.

By: /s/ Charles H. Meyer
   ------------------------------------
Name: CHARLES H. MEYER
   ------------------------------------
Title: VICE PRESIDENT
   ------------------------------------

Signed for and on behalf of
ALOHA AIRLINES, INC.

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------

<PAGE>

IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
CASTLE HARBOUR LEASING INC.

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------

Signed for and on behalf of
ALOHA AIRLINES INC.

By: /s/ Brenda F. Cutwright
   ------------------------------------
Name: Brenda F. Cutwright
   ------------------------------------
Title: Exec. Vice President & CFO
   ------------------------------------

By: /s/ James M. King
   ------------------------------------
Name: JAMES M. KING
   ------------------------------------
Title: SENIOR VICE PRESIDENT
       PLANNING & BUSINESS DEVELOPMENT
   ------------------------------------

<PAGE>

                                   SCHEDULE 1

        Aircraft Lease Agreement dated as of May 12, 2000 between Aviation
Financial Services Inc., as lessor, and Aloha Airlines, Inc., as lessee,
which was recorded by the Federal Aviation Administration on June 19, 2001
and assigned Conveyance No. YY031223, as assigned and supplemented by the
following described instruments:

DOCUMENT                               FAA RECORDING DATE   FAA CONVEYANCE NO.
--------                               ------------------   ------------------
Aircraft Lease Novation and                 06/19/01             YY031223
Amendment Agreement among
Aviation Financial Services Inc.,
as existing lessor, Aloha Airlines,
Inc., as lessee, and Castle Harbour
Leasing Inc., as new lessor
Lease Supplement No. 1                      06/19/01             YY031223

                              Schedule 1-1

<PAGE>

                                  SCHEDULE 2

                            CERTAIN FINANCIAL TERMS

1.       CONFIDENTIALITY

Lessor and Lessee understand that the commercial and financial information
contained in this Schedule 2 to this Agreement are considered by Lessor and
Lessee as proprietary and confidential. Lessor and Lessee each hereby agree,
and any of their assignees, upon becoming such shall agree that it will treat
this Schedule 2 as proprietary and confidential and will not without the prior
written-consent of the other, disclose or cause to be disclosed, the terms
hereof to any person or entity/ except to its employees, counsel, underwriters
and auditors as necessary or appropriate for the leasing transaction which is
the subject hereof, or except (a) as may be required by applicable law or
pursuant to an order, or a valid and binding request, issued by any court or
other Government Entity having jurisdiction over Lessor, Lessee or the assignee
of either of them, as the case may be, or (b) as necessary to enable Lessor or
its assignee to make transfers, assignments or other dispositions to potential
transferees, assignees or participants of its interest in and to the Lease and
this Agreement. In connection with any such disclosure or any filing of the
information contained herein pursuant to any such applicable law, Lessor,
Lessee or the assignee of either of them, as the case may be, shall request and
use its best reasonable efforts to obtain confidential treatment of this
Schedule 2 and the other party will cooperate in making and supporting any such
request for confidential treatment.

2.      DEFINITIONS OF CERTAIN TERMS

[This provision has been omitted as confidential information, and is
separately filed with the Commission.]

3.      TERMS OF RENT DEFERRAL

Provided that each of the conditions precedent set forth in Section 6 of this
Agreement are satisfied and that no Event of Default has occurred and is
continuing under the Lease on any Rent Date, Lessee and Lessor agree that
effective as of the Rent Date on which each Deferred Amount would otherwise
be due under the Lease, each Deferred Amount shall be deferred as follows:

[This provision has been omitted as confidential information, and is
separately filed with the Commission.]

                                 Schedule 2-1

<PAGE>

4.       LETTER OF CREDIT

[This provision has been omitted as confidential information, and is
separately filed with the Commission.]

                                  Schedule 2-2

<PAGE>

                                   SCHEDULE 3

                                  AMENDMENT TO

                      AIRCRAFT LEASE COMMON TERMS AGREEMENT

                                  Schedule 2-4

<PAGE>

                                                               EXECUTION VERSION

                                  AMENDMENT TO

                      AIRCRAFT LEASE COMMON TERMS AGREEMENT

                             DATED DECEMBER 14, 2001

                                     BETWEEN

                      GENERAL ELECTRIC CAPITAL CORPORATION

                                    AS LESSOR

                                       AND

                              ALOHA AIRLINES, INC.

                                    AS LESSEE

<PAGE>

THIS AMENDMENT TO AIRCRAFT LEASE COMMON TERMS AGREEMENT is made on December 14,
2001 (this "AGREEMENT")

BETWEEN:

GENERAL ELECTRIC CAPITAL CORPORATION, a company incorporated under the laws of
Delaware whose principal office is at 201 Long Ridge Road, Stamford, CT 06927,
U.S.A. ("GE CAPITAL") and

ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at 371 Aokea Street, Honolulu, HI 96819, U.S.A.
and its chief executive office at 500 Ala Moana Blvd., Two Waterfront Tower,
Suite 500, Honolulu, HI 96813, U.S.A. ("ALOHA").

WHEREAS:

(A)      GE Capital and Aloha have previously entered into that certain Aircraft
         Lease Common Terms Agreement dated as of May 12, 2000 (the "CTA");

(B)      GE Capital and Aloha desire to amend the CTA on the terms set forth in
         this Agreement.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS: From and after the effective date of this Agreement (as
         notified to Lessee pursuant to the Notice), all references herein to
         the "Lease" mean the integrated agreement consisting of the various
         documents comprising the Lease as defined in Schedule 1 to the CTA as
         the same is amended by this Agreement and all references in the Lease
         to "the Lease," the "Aircraft Lease Agreement," "hereunder" or the like
         shall mean the Lease as amended by this Agreement. Capitalized terms
         used herein but not defined shall have the respective meanings ascribed
         to such terms in the Lease.

1.2      CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
         shall apply to this Agreement as if the same were set out in full
         herein.

2.       AMENDMENT TO CTA

2.1      Schedule 7 to the CTA is hereby amended to read in its entirety as set
         forth on Schedule 7 attached to this Agreement.

3.       MISCELLANEOUS

3.1      FURTHER ASSURANCES: Aloha agrees from time to time to do and perform
         such other and further acts and execute and deliver any and all such
         other instruments as may be required by law or reasonably requested by
         GE Capital to establish, maintain and protect the rights and remedies
         of GE Capital and to carry out and effect the intent and purpose of
         this Agreement and of any Lease in which the CTA as amended by this
         Agreement may be incorporated.

                                        1

<PAGE>

3.2      COUNTERPARTS: This Agreement may be executed in any number of separate
         counterparts, and each counterpart shall when executed and delivered be
         an original document, but all counterparts shall together constitute
         one and the same instrument.

3.3      GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
         Jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
         Agreement as if the same were set out in full herein.

3.4      VARIATION: The provisions of this Agreement shall not be varied
         otherwise than by an instrument in writing executed by or on behalf of
         GE Capital and Aloha.

3.5      INVALIDITY OF ANY PROVISION: If any provision of this Agreement becomes
         invalid, illegal or unenforceable in any respect under any law, the
         validity, legality and enforceability of the remaining provisions shall
         not in any way be affected or impaired.

3.6      COSTS AND EXPENSES: Aloha shall pay to GE Capital on demand all fees,
         costs and expenses incurred or payable by GE Capital in connection with
         the preparation, negotiation and completion of this Agreement and
         performance of the transactions contemplated hereby.

4.       CONTINUATION OF COMMON TERMS AGREEMENT

         Save as expressly amended by this Agreement, the CTA shall continue in
         full and unvaried force and effect as the legal, valid and binding
         rights and obligations of each of GE Capital and Aloha enforceable in
         accordance with their respective terms.

                                        2

<PAGE>

IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ Norman Liu
   ------------------------------------
Name: NORMAN LIU
   ------------------------------------
Title: VICE PRESIDENT
   ------------------------------------

Signed for and on behalf of
ALOHA AIRLINES, INC.

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------

<PAGE>

IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------

Signed for and on behalf of
ALOHA AIRLINES, INC.

By: /s/ Brenda F. Cutwright
   ------------------------------------
Name: Brenda F. Cutwright
   ------------------------------------
Title: Exec. Vice President & CFO
   ------------------------------------

By: /s/ James M. King
   ------------------------------------
Name: JAMES M. KING
   ------------------------------------
Title: SENIOR VICE PRESIDENT
       PLANNING & BUSINESS DEVELOPMENT
   ------------------------------------

<PAGE>

                                  SCHEDULE 7

                            INSURANCE REQUIREMENTS

1.1     TYPES OF INSURANCE

The Insurances required to be maintained are as follows:

        (a)      HULL ALL RISKS of loss or damage while flying, taxiing and on
                 the ground with respect to the Aircraft on an agreed value
                 basis for not less than the Agreed Value and not more than
                 110% of the Agreed Value and with a deductible not exceeding
                 the Deductible Amount;

        (b)      HULL WAR RISKS AND ALLIED PERILS in accordance with LSW555B or
                 its equivalent form reasonably acceptable to Lessor (or an
                 agreement of the United States Government to insure against or
                 indemnify for substantially the same risks) in an amount not
                 less than the Agreed Value;

        (c)      ALL RISKS (including War and Allied Risk except when on the
                 ground or in transit other than by air) property insurance on
                 all Engines and Parts when not installed on the Aircraft for
                 like kind and quality value and including engine test and
                 running risks; and

        (d)      COMPREHENSIVE AIRCRAFT THIRD PARTY, PROPERTY DAMAGE,
                 PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD
                 PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a combined
                 single limit (bodily injury/property damage) of an amount not
                 less than the Minimum Liability Coverage for the time being
                 for any one occurrence (but in respect of products and
                 personal injury liability, this limit may be an aggregate
                 limit for any and all losses occurring during the currency of
                 the policy). War and Allied Risks are also to be covered under
                 the policy in line with prudent market practice for comparable
                 airlines, operating similar equipment in similar
                 circumstances. In addition, without limitation of the
                 requirements of the preceding sentence (and notwithstanding
                 anything to the contrary contained in the preceding sentence),
                 the Lessee shall in all events maintain war risk and allied
                 perils liability insurance in accordance with London form
                 AVN52C (as in effect on September 1, 2001) or its equivalent
                 form reasonably acceptable to Lessor (or an agreement of the
                 United States Government to insure against or indemnify for
                 substantially the same risks), from time to time, with respect
                 to the Aircraft in an amount not less than the Minimum
                 Liability Coverage.

1.2      TERMS OF HULL AND SPARES INSURANCE

All required hull and spares insurance, so far as it relates to the Aircraft,
will:

        (a)      LOSS PAYEE: name Lessor, as loss payee (without imposing on
                 Lessor any obligation imposed on the insured, including the
                 liability to pay any calls, commissions or premiums);

        (b)      PAYMENT OF LOSSES: Losses will be payable in Dollars to Lessor
                 for all amounts up to the Agreed Value and to Lessee for any
                 excess above the Agreed Value

                                       4

<PAGE>

                 (which excess shall not exceed 10% of the Agreed Value),
                 except where the insurance payment does not exceed the Damage
                 Notification Threshold, and no Default is in existence, in
                 which case the loss will be settled with and paid to Lessee;

        (c)      50/50 PROVISION: if separate Hull "all risks" and "war risks"
                 insurances are arranged, include a 50/50 provision in
                 accordance with market practice (AVS. 103 is the current
                 London market language); and

        (d)      NO OPTION TO REPLACE: confirm that the insurers are not
                 entitled to replace the Aircraft in the event of an insured
                 Event of Loss and are not entitled to replace any Engine in
                 the event of an Engine Event of Loss with respect to such
                 Engine.

1.3      TERMS OF LIABILITY INSURANCE

All required liability insurances will:

        (a)      ADDITIONAL INSUREDS: include each Indemnitee, as additional
                 insureds for its respective rights and interests, warranted,
                 each as to itself only, no operational interest (without
                 imposing on any such Person any obligation imposed on the
                 insured, including the liability to pay any calls, commissions
                 or premiums);

        (b)      SEVERABILITY: include a severability of interests clause which
                 provides that the insurance, except for the limit of
                 liability, will operate to give each insured the same
                 protection as if there were a separate policy issued to each
                 insured; and

        (c)      PRIMARY POLICY: contain a provision confirming that the policy
                 is primary without right of contribution and the liability of
                 the insurers will not be affected by any other insurance of
                 which Lessor, any Indemnitee or Lessee has the benefit so as
                 to reduce the amount payable to the additional insureds under
                 such policies.

1.4      TERMS OF ALL INSURANCES

All Insurances will:

        (a)      INDUSTRY PRACTICE: be in accordance with standard industry
                 practice for airlines operating similar aircraft in similar
                 circumstances;

        (b)      DOLLARS: provide cover denominated in Dollars;

        (c)      WORLDWIDE: operate on a worldwide basis subject to such
                 limitations and exclusions as are in line with industry
                 practice obtained by prudent United States based international
                 air carriers;

        (d)      BREACH OF WARRANTY: provide that, in relation to the interests
                 of each of the additional assureds, the Insurances will not be
                 invalidated by any act or omission by Lessee, or any other
                 Person other than the respective additional assureds seeking
                 protection and shall insure the interests of each of the
                 additional assureds regardless of any breach or violation by
                 Lessee, or any other Person other than the respective
                 additional assured seeking protection of any warranty,
                 declaration or condition, contained in such Insurances;

                                      5

<PAGE>

        (e)      SUBROGATION: provide that the insurers will hold harmless and
                 waive any rights of recourse or subrogation against the
                 additional insureds to the extent Lessee has waived its rights
                 against the additional insureds in the Lease;

        (f)      PREMIUMS: provide that the additional insureds will have no
                 obligation or responsibility for the payment of any premiums
                 due (but reserve the right to pay the same should any of them
                 elect so to do) and that the insurers will not exercise any
                 right of set-off, counter-claim or other deduction, by
                 attachment or otherwise, in respect of any premium due against
                 the respective interests of the additional insureds other than
                 outstanding premiums relating to the Aircraft, any Engine or
                 Part the subject of the relevant claim;

        (g)      CANCELLATION/CHANGE: provide that the Insurances will
                 continue unaltered for the benefit of the additional insureds
                 for at least 30 days after written notice by registered mail
                 or telex of any cancellation, change, event of non-payment of
                 premium or installment thereof has been sent by insurer(s) to
                 Lessor, or where an insurance broker is appointed to the
                 insurance broker who shall promptly send on such notice to
                 Lessor, except in the case of war risks for which 7 days (or
                 such lesser period as is or may be customarily available in
                 respect of war risks or allied perils) will be given, or in
                 the case of war between the 5 great powers or nuclear peril
                 for which termination is automatic; and

        (h)      [NOT APPLICABLE]

        (i)      [INTENTIONALLY OMITTED.]

        (j)      INDEMNITIES: accept and insure the indemnity provisions of the
                 Lease to the extent of the risks covered by the policies.

1.5      DEDUCTIBLES

Lessee shall be responsible for any and all deductibles under the Insurances.

1.6      APPLICATION OF INSURANCE PROCEEDS

The Insurances will be endorsed to provide for payment of proceeds as follows:

        (a)      EVENT OF LOSS: all insurance payments up to the Agreed Value
                 received as the result of an Event of Loss occurring during
                 the Term will be paid to Lessor as loss payee and any amount
                 in excess of the Agreed Value (which excess shall not exceed
                 10% of the Agreed Value) shall be paid to Lessee;

        (b)      EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
                 proceeds of any damage or loss to the Aircraft, any Engine or
                 any Part occurring during the Term not constituting an Event
                 of Loss and in excess of the Damage Notification Threshold
                 will be paid to the appropriate repair facility, and applied
                 in payment (or paid to Lessee and/or Lessor as reimbursement)
                 for repairs or replacement property upon Lessor being
                 satisfied that the repairs or replacement have been effected
                 in accordance with the Lease.

        (c)      BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
                 amounts below

                                       6

<PAGE>

                 the Damage Notification Threshold shall be paid by the insurer
                 directly to Lessee;

        (d)      LIABILITY PROCEEDS: all insurance proceeds in respect of third
                 party liability will be paid by the insurers to the relevant
                 third party in satisfaction of the relevant liability or to
                 Owner, Lessor, Financing Partners' Representative or Lessee,
                 as the case may be, in reimbursement of any payment so made;

        (e)      DEFAULT: notwithstanding any of the foregoing paragraphs, if
                 at the time of the payment of any such insurance proceeds a
                 Default has occurred and is continuing, all such proceeds will
                 be paid to Lessor, Owner or Financing Parties' Representative,
                 as the case may be, or retained to be applied toward payment
                 of any amounts which may be or become payable by Lessee in
                 such order as Lessor or Owner, as the case may be, may elect
                 until such time as no Default is continuing and then applied
                 as described above; and to the extent that insurance proceeds
                 are paid to Lessee, Lessee agrees to hold such proceeds in
                 trust and comply with the foregoing provisions and apply or
                 pay over such proceeds as so required.

1.7      UNITED STATES GOVERNMENTAL INDEMNITY

Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, the United States or any Governmental
Entity whose obligations have the full faith and credit of the federal
Government of the United States, Lessor agrees to accept in lieu of insurance
required hereunder indemnification or insurance from the United States or such
a Governmental Entity in a form reasonably acceptable to Lessor and Owner and
against such risks and in such amounts and on such terms such that when added
to the Insurance maintained by Lessee, Lessee is in full compliance with the
requirements of Section 9 and this Schedule.

                                        7

<PAGE>

                                                             EXECUTION VERSION

                                  AMENDMENT TO

                      AIRCRAFT LEASE COMMON TERMS AGREEMENT

                             DATED DECEMBER 14, 2001

                                     BETWEEN

                      GENERAL ELECTRIC CAPITAL CORPORATION

                                    AS LESSOR

                                       AND

                              ALOHA AIRLINES, INC.

                                    AS LESSEE

<PAGE>

THIS AMENDMENT TO AIRCRAFT LEASE COMMON TERMS AGREEMENT is made on December
14, 2001 (this "AGREEMENT")

BETWEEN:

GENERAL ELECTRIC CAPITAL CORPORATION, a company incorporated under the laws of
Delaware whose principal office is at 201 Long Ridge Road, Stamford, CT 06927,
U.S.A. ("GE CAPITAL"); and

ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at 371 Aokea Street, Honolulu, HI 96819, U.S.A.
and its chief executive office at 500 Ala Moana Blvd., Two Waterfront Tower,
Suite 500, Honolulu, HI 96813, U.S.A. ("ALOHA").

WHEREAS:

(A)      GE Capital and Aloha have previously entered into that certain Aircraft
         Lease Common Terms Agreement dated as of May 12, 2000 (the "CTA");

(B)      GE Capital and Aloha desire to amend the CTA on the terms set forth in
         this Agreement.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS: From and after the effective date of this Agreement (as
         notified to Lessee pursuant to the Notice), all references herein to
         the "Lease" mean the integrated agreement consisting of the various
         documents comprising the Lease as defined in Schedule 1 to the CTA as
         the same is amended by this Agreement and all references in the Lease
         to "the Lease," the "Aircraft Lease Agreement," "hereunder" or the like
         shall mean the Lease as amended by this Agreement. Capitalized terms
         used herein but not defined shall have the respective meanings ascribed
         to such terms in the Lease.

1.2      CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
         shall apply to this Agreement as if the same were set out in full
         herein.

2.       AMENDMENT TO CTA

2.1      Schedule 7 to the CTA is hereby amended to read in its entirety as set
         forth on Schedule 7 attached to this Agreement.

3.       MISCELLANEOUS

3.1      FURTHER ASSURANCES: Aloha agrees from time to time to do and perform
         such other and further acts and execute and deliver any and all such
         other instruments as may be required by law or reasonably requested by
         GE Capital to establish, maintain and protect the rights and remedies
         of GE Capital and to carry out and effect the intent and purpose of
         this Agreement and of any Lease in which the CTA as amended by this
         Agreement may be incorporated.

                                        1

<PAGE>

3.2      COUNTERPARTS: This Agreement may be executed in any number of separate
         counterparts, and each counterpart shall when executed and delivered be
         an original document, but all counterparts shall together constitute
         one and the same instrument.

3.3      GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
         Jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
         Agreement as if the same were set out in full herein.

3.4      VARIATION: The provisions of this Agreement shall not be varied
         otherwise than by an instrument in writing executed by or on behalf of
         GE Capital and Aloha.

3.5      INVALIDITY OF ANY PROVISION: If any provision of this Agreement becomes
         invalid, illegal or unenforceable in any respect under any law, the
         validity, legality and enforceability of the remaining provisions shall
         not in any way be affected or impaired.

3.6      COSTS AND EXPENSES: Aloha shall pay to GE Capital on demand all fees,
         costs and expenses incurred or payable by GE Capital in connection with
         the preparation, negotiation and completion of this Agreement and
         performance of the transactions contemplated hereby.

4.       CONTINUATION OF COMMON TERMS AGREEMENT

         Save as expressly amended by this Agreement, the CTA shall continue in
         full and unvaried force and effect as the legal, valid and binding
         rights and obligations of each of GE Capital and Aloha enforceable in
         accordance with their respective terms.

                                        2

<PAGE>

IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ Norman Liu
   ------------------------------------
Name: NORMAN LIU
   ------------------------------------
Title: VICE PRESIDENT
   ------------------------------------

Signed for and on behalf of
ALOHA AIRLINES, INC.

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------

<PAGE>

IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------

Signed for and on behalf of
ALOHA AIRLINES, INC.

By: /s/ Brenda F. Cutwright
   ------------------------------------
Name: Brenda F. Cutwright
   ------------------------------------
Title: Exec. Vice President & CFO
   ------------------------------------

By: /s/ James M. King
   ------------------------------------
Name: JAMES M. KING
   ------------------------------------
Title: SENIOR VICE PRESIDENT
       PLANNING & BUSINESS DEVELOPMENT
   ------------------------------------

<PAGE>

                                   SCHEDULE 7

                             INSURANCE REQUIREMENTS

1.1     TYPES OF INSURANCE

The Insurances required to be maintained are as follows:

         (a)      HULL ALL RISKS of loss or damage while flying, taxiing and on
                  the ground with respect to the Aircraft on an agreed value
                  basis for not less than the Agreed Value and not more than
                  110% of the Agreed Value and with a deductible not exceeding
                  the Deductible Amount;

         (b)      HULL WAR Risks AND ALLIED PERILS in accordance with LSW555B or
                  its equivalent form reasonably acceptable to Lessor (or an
                  agreement of the United States Government to insure against or
                  indemnify for substantially the same risks) in an amount not
                  less than the Agreed Value;

         (c)      All RISKS (including War and Allied Risk except when on the
                  ground or in transit other than by air) property insurance on
                  all Engines and Parts when not installed on the Aircraft for
                  like kind and quality value and including engine test and
                  running risks; and

         (d)      COMPREHENSIVE AIRCRAFT THIRD PARTY, PROPERTY DAMAGE,
                  PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD
                  PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a combined
                  single limit (bodily injury/property damage) of an amount not
                  less than the Minimum Liability Coverage for the time being
                  for any one occurrence (but in respect of products and
                  personal injury liability, this limit may be an aggregate
                  limit for any and all losses occurring during the currency of
                  the policy). War and Allied Risks are also to be covered
                  under the policy in line with prudent market practice for
                  comparable airlines, operating similar equipment in similar
                  circumstances. In addition, without limitation of the
                  requirements of the preceding sentence (and notwithstanding
                  anything to the contrary contained in the preceding sentence),
                  the Lessee shall in all events maintain war risk and allied
                  perils liability insurance in accordance with London form
                  AVN52C (as in effect on September 1, 2001) or its equivalent
                  form reaonsably acceptable to Lessor (or an agreement of the
                  United States Government to insure against or indemnify for
                  substantially the same risks), from time to time, with respect
                  to the Aircraft in an amount not less than the Minimum
                  Liability Coverage.

1.2      TERMS OF HULL AND SPARES INSURANCE

All required hull and spares insurance, so far as it relates to the Aircraft,
will:

         (a)      LOSS PAYEE: name Lessor, as loss payee (without imposing on
                  Lessor any obligation imposed on the insured, including the
                  liability to pay any calls, commissions or premiums);

         (b)      PAYMENT OF LOSSES: Losses will be payable in Dollars to Lessor
                  for all amounts up to the Agreed Value and to Lessee for any
                  excess above the Agreed Value

                                        4

<PAGE>

                  (which excess shall not exceed 10% of the Agreed Value),
                  except where the insurance payment does not exceed the Damage
                  Notification Threshold, and no Default is in existence, in
                  which case the loss will be settled with and paid to Lessee;

         (c)      50/50 PROVISION: if separate Hull "all risks" and "war risks"
                  insurances are arranged, include a 50/50 provision in
                  accordance with market practice (AVS. 103 is the current
                  London market language); and

         (d)      NO OPTION TO REPLACE: confirm that the insurers are not
                  entitled to replace the Aircraft in the event of an insured
                  Event of Loss and are not entitled to replace any Engine in
                  the event of an Engine Event of Loss with respect to such
                  Engine.

1.3      TERMS OF LIABILITY INSURANCE

All required liability insurances will:

         (a)      ADDITIONAL INSUREDS: include each Indemnitee, as additional
                  insureds for its respective rights and interests, warranted,
                  each as to itself only, no operational interest (without
                  imposing on any such Person any obligation imposed on the
                  insured, including the liability to pay any calls, commissions
                  or premiums);

         (b)      SEVERABILITY: include a severability of interests clause which
                  provides that the insurance, except for the limit of
                  liability, will operate to give each insured the same
                  protection as if there were a separate policy issued to each
                  insured; and

         (c)      PRIMARY POLICY: contain a provision confirming that the policy
                  is primary without right of contribution and the liability of
                  the insurers will not be affected by any other insurance of
                  which Lessor, any Indemnitee or Lessee has the benefit so as
                  to reduce the amount payable to the additional insureds under
                  such policies.

1.4      TERMS OF ALL INSURANCES

All Insurances will:

         (a)      INDUSTRY PRACTICE: be in accordance with standard industry
                  practice for airlines operating similar aircraft in similar
                  circumstances;

         (b)      DOLLARS: provide cover denominated in Dollars;

         (c)      WORLDWIDE: operate on a worldwide basis subject to such
                  limitations and exclusions as are in line with industry
                  practice obtained by prudent United States based international
                  air carriers;

         (d)      BREACH OF WARRANTY: provide that, in relation to the interests
                  of each of the additional assureds, the Insurances will not be
                  invalidated by any act or omission by Lessee, or any other
                  Person other than the respective additional assureds seeking
                  protection and shall insure the interests of each of the
                  additional assureds regardless of any breach or violation by
                  Lessee, or any other Person other than the respective
                  additional assured seeking protection of any warranty,
                  declaration or condition, contained in such Insurances;

                                        5

<PAGE>

         (e)      SUBROGATION: provide that the insurers will hold harmless and
                  waive any rights of recourse or subrogation against the
                  additional insureds to the extent Lessee has waived its rights
                  against the additional insureds in the Lease;

         (f)      PREMIUMS: provide that the additional insureds will have no
                  obligation or responsibility for the payment of any premiums
                  due (but reserve the right to pay the same should any of them
                  elect so to do) and that the insurers will not exercise any
                  right of set-off, counter-claim or other deduction, by
                  attachment or otherwise, in respect of any premium due against
                  the respective interests of the additional insureds other than
                  outstanding premiums relating to the Aircraft, any Engine or
                  Part the subject of the relevant claim;

         (g)      Cancellation/Change: provide that the Insurances will
                  continue unaltered for the benefit of the additional insureds
                  for at least 30 days after written notice by registered mail
                  or telex of any cancellation, change, event of non-payment of
                  premium or installment thereof has been sent by insurer(s) to
                  Lessor, or where an insurance broker is appointed to the
                  insurance broker who shall promptly send on such notice to
                  Lessor, except in the case of war risks for which 7 days (or
                  such lesser period as is or may be customarily available in
                  respect of war risks or allied perils) will be given, or in
                  the case of war between the 5 great powers or nuclear peril
                  for which termination is automatic; and

         (h)      [NOT APPLICABLE]

         (i)      [INTENTIONALLY OMITTED.]

         (j)      INDEMNITIES: accept and insure the indemnity provisions of the
                  Lease to the extent of the risks covered by the policies.

1.5      DEDUCTIBLES

Lessee shall be responsible for any and all deductibles under the Insurances.

1.6      APPLICATION OF INSURANCE PROCEEDS

The Insurances will be endorsed to provide for payment of proceeds as follows:

         (a)      EVENT OF LOSS: all insurance payments up to the Agreed Value
                  received as the result of an Event of Loss occurring during
                  the Term will be paid to Lessor as loss payee and any amount
                  in excess of the Agreed Value (which excess shall not exceed
                  10% of the Agreed Value) shall be paid to Lessee;

         (b)      EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
                  proceeds of any damage or loss to the Aircraft, any Engine or
                  any Part occurring during the Term not constituting an Event
                  of Loss and in excess of the Damage Notification Threshold
                  will be paid to the appropriate repair facility, and applied
                  in payment (or paid to Lessee and/or Lessor as reimbursement)
                  for repairs or replacement property upon Lessor being
                  satisfied that the repairs or replacement have been effected
                  in accordance with the Lease.

         (c)      BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
                  amounts below

                                        6

<PAGE>

                  the Damage Notification Threshold shall be paid by the insurer
                  directly to Lessee;

         (d)      LIABILITY PROCEEDS: all insurance proceeds in respect of third
                  party liability will be paid by the insurers to the relevant
                  third party in satisfaction of the relevant liability or to
                  Owner, Lessor, Financing Partners' Representative or Lessee,
                  as the case may be, in reimbursement of any payment so made;

         (e)      DEFAULT: notwithstanding any of the foregoing paragraphs, if
                  at the time of the payment of any such insurance proceeds a
                  Default has occurred and is continuing, all such proceeds will
                  be paid to Lessor, Owner or Financing Parties' Representative,
                  as the case may be, or retained to be applied toward payment
                  of any amounts which may be or become payable by Lessee in
                  such order as Lessor or Owner, as the case may be, may elect
                  until such time as no Default is continuing and then applied
                  as described above; and to the extent that insurance proceeds
                  are paid to Lessee, Lessee agrees to hold such proceeds in
                  trust and comply with the foregoing provisions and apply or
                  pay over such proceeds as so required.

1.7      UNITED STATES GOVERNMENTAL INDEMNITY

Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, the United States or any Governmental
Entity whose obligations have the full faith and credit of the federal
Government of the United States, Lessor agrees to accept in lieu of insurance
required hereunder indemnification or insurance from the United States or such a
Governmental Entity in a form reasonably acceptable to Lessor and Owner and
against such risks and in such amounts and on such terms such that when added to
the Insurance maintained by Lessee, Lessee is in full compliance with the
requirements of Section 9 and this Schedule.

                                        7

<PAGE>

                                                   May 12, 2000

Aloha Airlines, Inc.
371 Aokea Street
Honolulu, Hawaii 96819
Attn: Executive Vice President and Chief Financial Officer

     Re:  Aircraft Lease Agreement dated as of May 12, 2000 between Aviation
          Financial Services, Inc., as Lessor, and Aloha Airlines, Inc., as
          Lessee, in respect of One Boeing 737-700 Aircraft Bearing MSN 30830,
          incorporating the terms of that certain Common Terms Agreement dated
          as of May 12, 2000 (the "CTA") between General Electric Capital
          Corporation and Aloha Airlines, Inc. (collectively, the "Lease")

Ladies and Gentlemen:

We refer to the Lease, as defined above, and capitalized terms used without
definition herein have the meanings assigned to them in the Lease. This letter
will serve as the acknowledgment of Aviation Financial Services, Inc., as lessor
("Lessor") under the Lease, that neither of the following situations shall
constitute an "Event of Default" under the Lease pursuant to Section (h) of
Schedule 9 to the CTA:

     1.   Cessation or temporary suspension of Lessee's trans-Pacific route
          between Hawaii and California (or any other location within the
          continental United States); or

     2.   Cessation or temporary suspension of any segment of Lessee's business
          which accounted for ten percent (10%) or less of the gross revenues of
          Lessee over the last three fiscal years immediately preceding the date
          of suspension or cessation (which calculation shall be made on a
          cumulative basis taking into account any and all segments of Lessee's
          business suspended or ceased within such three-year period).

For the avoidance of doubt, Lessor and Lessee expressly acknowledge and agree
that nothing in this letter agreement shall be deemed to derogate from or modify
any other provisions of the Lease. Without limiting the foregoing, Lessee
expressly acknowledges and agrees that, in the event that Lessee's utilization
of the Aircraft results in an operational ratio of less than one Flight Hour per
Cycle for a period of twelve (12) consecutive months, an "Event of Default"
shall arise pursuant to Part VIII of Schedule B to the Lease, regardless of
whether or not such operation arises out of or as a result of any suspension of
Lessee's trans-Pacific route.

<PAGE>

Please indicate your acceptance of and agreement with the terms set forth in
this letter by signing in the space provided below and return one fully-executed
counterpart of this letter to Lessor.

                                         Very truly yours,

                                         AVIATION FINANCIAL SERVICES, INC.

                                         By:      /s/ Norm Liu
                                             -----------------------------------
                                         Name:        Norm Liu
                                               ---------------------------------
                                         Title:       Vice President
                                                --------------------------------

ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------

<PAGE>

Please indicate your acceptance of and agreement with the terms set forth in
this letter by signing in the space provided below and return one fully-executed
counterpart of this letter to Lessor.

                                         Very truly yours,

                                         AVIATION FINANCIAL SERVICES, INC.

                                         By:
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------

ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:      /s/ Brenda F. Cutwright
    -----------------------------------
Name:  Brenda F. Cutwright
      ---------------------------------
Title: Executive Vice President & CFO
       --------------------------------

By:      /s/ James M. King
    -----------------------------------
Name:  James M. King
      ---------------------------------
Title: VP Planning & Development
       --------------------------------

<PAGE>

                                                               EXECUTION VERSION

                                                   March 20, 2001

Aloha Airlines, Inc.
371 Aokea Street
Honolulu, Hawaii 96819
Attn: Executive Vice President and Chief Financial Officer

     Re:  Aircraft Lease Agreement dated as of May 12, 2000 between Aviation
          Financial Services Inc. ("AFSI"), as lessor, and Aloha Airlines, Inc.,
          as Lessee ("LESSEE"), in respect of One Boeing 737-700 Aircraft
          Bearing MSN 30830 and U.S. Reg. No. N742AL, which incorporates the
          terms of that certain Common Terms Agreement dated as of May 12, 2000
          between General Electric Capital Corporation and Aloha Airlines, Inc.
          (i) as modified by that certain Letter Agreement dated May 12, 2000
          between AFSI and Lessee, and (ii) as assigned and novated by that
          certain Aircraft Lease Novation and Amendment Agreement among AFSI, as
          existing lessor, Castle Harbour Leasing Inc., as new lessor
          ("Lessor"), and Lessee (collectively, and as amended or supplemented
          from time to time, the "LEASE")

Ladies and Gentlemen:

     We refer to the Lease, as defined above, and capitalized terms used without
definition herein have the meanings assigned to them in the Lease. Lessor and
Lessee desire to enter into this Letter Agreement in order to document their
mutual understanding in respect of certain additional changes in the
specifications for the Aircraft to be completed prior to Delivery.

     1. SCOPE OF CHANGES TO DELIVERY CONDITIONS. Lessor and Lessee hereby
acknowledge and agree that, notwithstanding anything to the contrary set forth
in the Lease, at Delivery under the Lease, (i) the engine thrust capacity of the
Aircraft shall have been modified from the level currently specified in the
GECAS Detail Specification D6-38808-34 (Revision D) as incorporated in the
Purchase Agreement No. 1905 dated as of April 1996 (the "PURCHASE AGREEMENT")
between General Electric Capital Corporation, as buyer, and The Boeing Company,
as seller, to include 26,000 lbs. Engine thrust bump option (the "ENGINE THRUST
BUMP UPGRADE"), and (ii) the Aircraft shall be modified to include partial
provisions for the installation of the Honeywell SATCOM system (the "SATCOM
PROVISIONS"). Completion of the Engine Thrust Bump Upgrade and the installation
of the

<PAGE>

SATCOM Provisions shall each be deemed one of the "Delivery Condition
Requirements" for all purposes of the Lease.

     2.   COST OF CHANGES AND EFFECT ON RENT.

[This provision has been omitted as confidential information, and is
separately filed with the Commission.]

     3. LIMITATION ON AMENDMENT. Except as expressly modified by this Letter
Agreement, all of the terms and provisions of the Lease remain in full force and
effect and are hereby ratified and confirmed by the parties.

<PAGE>

     Please indicate your acceptance of and agreement with the terms set forth
in this Letter Agreement by signing in the space provided below and return one
fully-executed counterpart of this Letter Agreement to Lessor.

                                         Very truly yours,

                                         CASTLE HARBOUR LEASING, INC.

                                         By:
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------

ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:      /s/ Brenda F. Cutwright
    -----------------------------------
Name:  Brenda F. Cutwright
      ---------------------------------
         EXECUTIVE VICE PRESIDENT AND
Title:     CHIEF FINANCIAL OFFICER
       --------------------------------

By:      /s/ James M. King
    -----------------------------------
Name:  James M. King
      ---------------------------------
            SENIOR VICE PRESIDENT
Title:  PLANNING & BUSINESS DEVELOPMENT
       --------------------------------

<PAGE>

     Please indicate your acceptance of and agreement with the terms set forth
in this Letter Agreement by signing in the space provided below and return one
fully-executed counterpart of this Letter Agreement to Lessor.

                                         Very truly yours,

                                         CASTLE HARBOUR LEASING, INC.

                                         By:        /s/ Charles H. Meyer
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------

ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------

By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------

<PAGE>

                                                   May 24, 2001

Aloha Airlines, Inc.
37l Aokea Street
Honolulu, Hawaii 96819
Attn: Executive Vice President and Chief Financial Officer

     Re:  Aircraft Lease Agreement dated as of May 12, 2000 between Aviation
          Financial Services Inc. ("AFSI"), as lessor, and Aloha Airlines, Inc.,
          as Lessee ("LESSEE"), in respect of One Boeing 737-700 Aircraft
          Bearing MSN 30830 and U.S. Reg. No. N742AL, which incorporates the
          terms of that certain Common Terms Agreement dated as of May 12, 2000
          between General Electric Capital Corporation and Aloha Airlines, Inc.
          (i) as modified by that certain Letter Agreement dated May 12, 2000
          between AFSI and Lessee, (ii) as assigned and novated by that certain
          Aircraft Lease Novation and Amendment Agreement among AFSI, as
          existing lessor, Castle Harbour Leasing Inc., as new lessor
          ("Lessor"), and Lessee, (iii) as modified by that certain Letter
          Agreement dated March 20, 2001 (collectively, and as amended or
          supplemented from time to time, the "LEASE")

Ladies and Gentlemen:

     We refer to the Lease, as defined above, and capitalized terms used without
definition herein have the meanings assigned to them in the Lease. Lessor and
Lessee desire to enter into this Letter Agreement in order to document their
mutual understanding in respect of the determination of the actual amount of
Rent pursuant to Part III of Schedule B to the Lease.

     1. RENT. [This provision has been omitted as confidential information, and
is separately filed with the Commission.]

     2. LIMITATION ON AMENDMENT. Except as expressly modified by this Letter
Agreement, all of the terms and provisions of the Lease remain in full force and
effect and are hereby ratified and confirmed by the parties.

<PAGE>

     Please indicate your acceptance of and agreement with the terms set forth
in this Letter Agreement by signing in the space provided below and return one
fully-executed counterpart of this Letter Agreement to Lessor.

                                         Very truly yours,

                                         CASTLE HARBOUR LEASING, INC.

                                         By:        /s/ Charles H. Meyer
                                             -----------------------------------
                                         Name:        Charles H. Meyer
                                               ---------------------------------
                                         Title:        Vice President
                                                --------------------------------

ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------

By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------

<PAGE>

     Please indicate your acceptance of and agreement with the terms set forth
in this Letter Agreement by signing in the space provided below and return one
fully-executed counterpart of this Letter Agreement to Lessor.

                                         Very truly yours,

                                         CASTLE HARBOUR LEASING, INC.

                                         By:
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------

ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:      /s/ Glenn R. Zander
    -----------------------------------
Name:  Glenn R. Zander
      ---------------------------------
Title: President & CEO
       --------------------------------

By:      /s/ James M. King
    -----------------------------------
Name:  James M. King
      ---------------------------------
Title: SR VP Planning & Business Dev.
       --------------------------------<PAGE>

                                                                   Exhibit 10.72

                                                               COUNTERPART NO. 2

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

                            AIRCRAFT LEASE AGREEMENT
                          dated as of November 29, 1995

                                     between

                      WILMINGTON TRUST COMPANY, not in its
                    individual capacity but solely as Trustee
                   f/b/o ITOCHU AirLease (Europe) Limited and
                       Marubeni Airleasing (U.K.) Limited,

                                     Lessor

                                       and

                              ALOHA AIRLINES, INC.,

                                     Lessee

                           One Boeing 737-25A Aircraft

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

 THIS LEASE HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH THERE IS ONE
 COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER ORIGINAL" AND ALL
 OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER THAN 1. TO THE EXTENT
 THAT THIS LEASE CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, AS
 IN EFFECT IN ANY APPLICABLE JURISDICTION, NO SECURITY INTEREST MAY BE CREATED
 OR PERFECTED BY POSSESSION OF ANY COUNTERPART OF THIS LEASE OTHER THAN SAID
 COUNTERPART NO. 1.

<PAGE>

                                                              COUNTERPART NO. 7

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

                            AIRCRAFT LEASE AGREEMENT
                          dated as of November 29, 1995

                                     between

                      WILMINGTON TRUST COMPANY, not in its
                    individual capacity but solely as Trustee
                   f/b/o ITOCHU AirLease (Europe) Limited and
                       Marubeni Airleasing (U.K.) Limited,

                                     Lessor

                                       and

                              ALOHA AIRLINES, INC.,

                                     Lessee

                           One Boeing 737-25A Aircraft

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

 THIS LEASE HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH THERE IS ONE
 COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER ORIGINAL" AND ALL
 OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER THAN 1. TO THE EXTENT
 THAT THIS LEASE CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, AS
 IN EFFECT IN ANY APPLICABLE JURISDICTION, NO SECURITY INTEREST MAY BE CREATED
 OR PERFECTED BY POSSESSION OF ANY COUNTERPART OF THIS LEASE OTHER THAN SAID
 COUNTERPART NO. 1.

<PAGE>

                               Table of Contents
                               -----------------
<Table>
<Caption>
                                                                         Page
                                                                         ----
 <S>                     <C>                                              <C>
 Section 1.              Definitions . . . . . . . . . . . . . . .          1

 Section 2.              Lease and Conditions . . . . . . . . . . .         9

 Section 3.              Delivery and Acceptance; Term . . . . . .         14

 Section 4.              Rent . . . . . . . . . . . . . . . . . .          15

 Section S.              Representations and Warranties . . . . .          17

 Section 6.              Possession and Use; Registration . . . .          24

 Section 7.              Information . . . . . . . . . . . . . . .         33

 Section 8.              Covenants of Lessee . . . . . . . . . . .         35

 Section 9.              Replacement of Parts; Alterations,
                         Modifications and Additions . . . . . . .         37

 Section 10.             General Tax Indemnity . . . . . . . . . .         40

 Section 11.             Casualty Occurrences . . . . . . . . . . .        47

 Section 12.             Insurance . . . . . . . . . . . . . . . .         51

 Section 13.             Indemnification . . . . . . . . . . . . . .       56

 Section 14.             Liens . . . . . . . . . . . . . . . . . .         58

 Section 15.             Perfection of Title and Further
                         Assurances . . . . . . . . . . . . . . .          59

 Section 16.             Return of Aircraft and Records . . . . . .        60

 Section 17.             Events of Default . . . . . . . . . . . .         67

 Section 18.             Remedies . . . . . . . . . . . . . . . .          69

 Section 19.             Alienation . . . . . . . . . . . . . . .          73

 Section 20.             Miscellaneous . . . . . . . . . . . . . .         75

 Section 21.             Security Deposit . . . . . . . . . . . . .        81
</Table>

                                       -i-

<PAGE>

 EXHIBITS

    Exhibit A            -      Schedule and Description of Aircraft

    Exhibit B-1          -      Aircraft Documents on the Delivery Date

    Exhibit B-2          -      Aircraft Documents on the Return Occasion

    Exhibit C-1          -      Financial Information

    Exhibit C-2          -      Definitions and Values

    Exhibit D            -      Lease Supplement

    Exhibit E            -      Return Condition Requirements

    Exhibit F            -      Lessee's Counsel Opinion

    Exhibit G            -      Approved Insurance Broker Report

    Exhibit H            -      Insurance Special Provisions

    Exhibit I            -      Form of Redelivery Acknowledgment

    EXHIBIT J            -      Monthly Aircraft Utilization and
                                Status Report

    EXHIBIT K            -      List of Documents to Be Supplied Annually

                                      -ii-

<PAGE>

                                                           RECORDED

                                                Federal Aviation Administration

                                               Date  1-25-96     Time  3:38 PM
                                                   ----------       ----------
                                               Conveyance Number    II004730
                                                                  ------------
                                               By  /s/ Donna Jennings
                                               -------------------------------
                                                    Conveyances Examiner

                            AIRCRAFT LEASE AGREEMENT

                   THIS AIRCRAFT LEASE AGREEMENT, dated as of November 29, 1995
 (the "Lease") , between (1) WILMINGTON TRUST COMPANY, not in its individual
 capacity but solely as Trustee f/b/o ITOCHU AirLease (Europe) Limited and
 Marubeni Airleasing (U.K.) Limited (Wilmington Trust Company, in such capacity,
 is herein called "Lessor") , and (2) Aloha Airlines, Inc., a corporation
 organized under the laws of Hawaii (herein called "Lessee").

                   WHEREAS, Lessee desires to lease from Lessor and Lessor is
 willing to lease to Lessee the aircraft described herein upon and subject to
 the terms and conditions of this Lease;

                   NOW, THEREFORE, In consideration of the mutual promises,
 covenants, terms and conditions contained herein, Lessor and Lessee agree as
 follows:

                   Section 1. DEFINITIONS.

                   The following terms shall have the following respective
meanings for all purposes of this Lease Agreement (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

                   AFFILIATE shall mean, with respect to any Person, any other
 Person directly or indirectly controlling, controlled by or under common
 control with such Person.

                   AIRCRAFT shall mean the Airframe together with (i) the
 Engines, whether or not installed on the Aircraft, (ii) all Parts, (iii) spare
 parts or ancillary equipment or devices' furnished with the Aircraft under this
 Lease, (iv) all Aircraft Documents, and (v) all substitutions, replacements and
 renewals of any and all thereof.

                   AIRCRAFT DOCUMENTS shall mean, as applicable, the items
 identified on Exhibit B-1 hereto provided to Lessee on the Delivery Date and
 Exhibit B-2 hereto provided to Lessor on the Return Occasion, all of which
 shall be maintained in the English language.

                   AIRCRAFT MAINTENANCE MANUAL shall mean the aircraft
 maintenance manual which constitutes part of the Maintenance Program.

<PAGE>

                  AIRFRAME shall mean (a) the aircraft described on Exhibit A,
 but not including any Engine installed thereon, and (b) any and all Parts so
 long as the same shall be incorporated or installed on or attached to the
 Airframe, or so long as title thereto shall remain vested in Lessor in
 accordance with the terms of Section 9, after removal from the Airframe.

                  APPROVED INSURANCE BROKER shall mean any reputable insurance
 broker of internationally recognized responsibility and standing specializing
 in aircraft insurance.

                  APPROVED INSURER shall mean any reputable insurance company or
 insurance broker of internationally recognized responsibility and standing
 specializing in aircraft insurance.

                  APU shall mean the auxiliary power unit.

                  BASIC RENT shall mean the rent for the Aircraft specified on
 Exhibit C-1 and payable throughout the Term for the Aircraft pursuant to
 Section 4(a).

                  BASIC RENT PAYMENT DATE shall have the meaning set forth in
Exhibit C-1 hereto.

                  BUSINESS DAY shall mean any day other than a Saturday, Sunday
 or other day on which banking institutions in Delaware, Hawaii, New York,
 London or Dublin are authorized or required by law to be closed.

                  C CHECK is defined in the Maintenance Program and equivalent
 to a "C" Check as defined in Boeing's "B737-200 Maintenance Planning Data" Doc.
 D6-17594. A "C" Check is currently performed at 3,000 Flight Hour intervals.

                  CASUALTY OCCURRENCE shall mean any of the following events
 with respect to the Aircraft, Airframe or any Engine: (a) loss of such property
 or its use due to theft or disappearance for a period in excess of sixty (60)
 consecutive days, or any destruction, damage beyond economic repair or
 rendition of such property permanently unfit for normal use by Lessee for any
 reason whatsoever; (b) any damage to such property which results in an
 insurance settlement with respect to such property on the basis of a total loss
 or on the basis of a compromised or constructive total loss, (c) the
 condemnation, confiscation, appropriation or seizure of title, or requisition
 of title to such property; (d) the appropriation or seizure of the use of such
 property by or on the authority of any Governmental Entity or purported
 Governmental Entity, which in any such case shall have resulted in the loss of
 possession thereof

                                       -2-

<PAGE>

 by Lessee for a period in excess of one hundred eighty (180) consecutive days
 (or for such shorter period ending on the date which is seven (7) days from the
 date of receipt of an insurance settlement with respect to such property on the
 basis of a total loss); or (e) prohibition under any applicable Law of the use
 of the Aircraft for commercial transportation of passengers for a period of six
 (6) months.

                  CASUALTY VALUE shall mean the value as specified on Exhibit
 C-1 hereto.

                  CERTIFIED AIR CARRIER shall mean a United States "air carrier"
 within the meaning of Section 40102(a)(2) of the Federal Aviation Act engaged
 in regularly scheduled air transportation of passengers who is a "citizen of
 the United States" within the meaning of Section 40102(a)(15) of the Federal
 Aviation Act holding a certificate of public convenience and necessity issued
 by the FAA pursuant to the Federal Aviation Act or by a similar authority under
 legislation hereafter enacted.

                  CLAIMS shall have the meaning set forth in Section 13.

                  CODE shall mean the United States Internal Revenue Code of
 1986, as amended, and any successor thereto, as interpreted by the rules and
 regulations issued thereunder, in each case as in effect from time to time.

                  COMMONLY CONTROLLED PERSON shall mean any trade or business,
 whether or not incorporated, which is at any relevant time a member of the same
 controlled group of corporations (within the meaning of Section 414(b) of the
 Code) or affiliated service group (within the meaning of Section 414(m) or (o)
 of the Code) as, or under common control (within the meaning of Section 414(c)
 of the Code) with, Lessee.

                  CYCLE shall mean a cycle commencing each time the wheels of
 the Airframe (or any other airframe on which an Engine or Part is installed,
 but only insofar as the calculation of Cycles is required with reference to the
 relevant Engine or Part) leave the ground on take-off and finishing when the
 wheels of such Airframe (or any other airframe on which such Engine or Part is
 installed) touch the ground in landing.

                  D CHECK is defined in the Maintenance Program and is
 equivalent to a "D Check" or "heavy structural inspection" as defined in
 "Boeing's B737-200 Maintenance Planning Data" Doc. D6-17594. A "D" Check is
 currently performed at 12,000 Flight Hour intervals.

                                       -3-

<PAGE>

                  DEFAULT shall mean an Event of Default or event which would
 constitute an Event of Default but for the lapse of time or the giving of
 notice or both.

                  DELIVERY DATE shall mean the date on which the Aircraft is
 delivered to and accepted by Lessee for purposes of this Lease.

                  DELIVERY LOCATION shall mean the location specified on Exhibit
 C-2 hereto for the delivery of the Aircraft by Lessor to Lessee.

                  DETAILED SPECIFICATIONS means the detailed specifications
 number D6-32410-181 Revision C dated December 1, 1987 relating to the Aircraft
 to be provided to Lessor on or before the Effective Date.

                  DOLLARS shall mean lawful currency of the United States of
America.

                  ENGINE shall mean any engine installed on or furnished with
 the Aircraft on the Delivery Date, such engine being identified as to
 manufacturer and type on Exhibit A hereto and which will be further identified
 as to manufacturer serial number in the Lease Supplement, and any Replacement
 Engine which may from time to time be substituted therefor pursuant to Section
 11; together in each case with any and all Parts incorporated or installed in
 or attached thereto or any and all Parts removed therefrom so long as title
 thereto remains vested in Lessor in accordance with the terms of Section 9
 after removal from such engine. Except as otherwise set forth herein, at such
 time as a Replacement Engine shall be so substituted, such replaced engine
 shall cease to be an Engine hereunder. The term "Engines" means, as of any date
 of determination, all Engines then leased hereunder.

                 EQUIPMENT shall mean the Airframe, each Engine and the
Aircraft Documents.

                  ERISA shall mean the Employee Retirement Income Security Act
 of 1974, as amended, and any successor statute thereto, as interpreted by the
 rules and regulations thereunder, all as the same may be in effect from time to
 time.

                  ESTIMATED DELIVERY DATE shall mean the date specified on
 Exhibit C-2 hereto, which the. parties anticipate to be the Delivery Date.

                  EVENT OF DEFAULT shall have the meaning specified in any one
or more clauses in Section 17.

                                       -4-

<PAGE>

                   EXPIRATION DATE shall mean the date specified in the Lease
Supplement for expiration of the Term.

                   FAA shall mean the Federal Aviation Administration of the
 United States Department of Transportation or any successor.

                   FEDERAL AVIATION ACT shall mean Subtitle VII, Part A of Title
 49 of the United States Code, as amended.

                   FINAL INSPECTION shall have the meaning set forth in Section
16(b).

                   FLIGHT HOUR shall mean each hour and any fractional portion
 of an hour which elapses from the time the wheels of the Airframe (or any other
 airframe on which an Engine or Part is installed, but only insofar as the
 calculation of Flight Hours is required with reference to the relevant Engine
 or Part) leave the ground on take-off to the time when the wheels of such
 Airframe (or any other airframe on which such Engine or Part is installed)
 touch the ground on landing.

                   GOVERNMENTAL ENTITY shall mean any federal, state, municipal
or other governmental department, commission, board, bureau, court, legislature,
agency, instrumentality or authority, domestic or foreign.

                   INDEMNITEE shall mean Wilmington Trust Company in its
 individual capacity, Lessor, each Beneficiary, each Lender and, in each case
 their respective Affiliates, officers, directors, shareholders, agents and
 employees and their respective successors and assigns.

                   ITEM means the Aircraft or Airframe or any Engine in each
 case including Parts constituting a part of any thereof.

                   LAW shall mean and include (i) any statute, decree,
 constitution, regulation, order, judgment or other directive of any
 Governmental Entity; (ii) any treaty, pact, compact or other agreement to which
 any Governmental Entity is a signatory or party; (iii) any judicial or
 administrative interpretation or application of any Law described in (i) or
 (ii) above; and (iv) any amendment or revision of any Law described in (i),
 (ii) or (iii) above.

                   LEASE SUPPLEMENT shall mean the Lease Supplement,
 substantially in the form of Exhibit D hereto, entered into between Lessor and
 Lessee.

                   LENDER shall mean each Person who now or hereafter makes a
loan to the Lessor or any Beneficiary or otherwise

                                       -5-

<PAGE>

 finances the Beneficiaries' interest in the Aircraft and for whose benefit
 Lessor grants a security interest in the Aircraft and the Lease.

                  LESSOR'S LIENS shall mean Liens arising as a result of (i)
 claims against Lessor or any Beneficiary not related to the transactions
 contemplated by this Lease; or (ii) acts of Lessor or any Beneficiary, not
 contemplated and expressly permitted under this Lease; or (iii) Taxes imposed
 against Lessor which are not indemnified against by Lessee pursuant to Section
 10; or (iv) claims against Lessor arising out of the voluntary transfer by
 Lessor of all or any part of its interests in the Aircraft or this Lease, other
 than a transfer pursuant to Section 11 or 18 hereof.

                  LIBOR shall mean the offered rate (rounded up to the nearest
 1/32 of one percent) for deposits in Dollars for six-month periods which appear
 on the Telerate Page 3750 as of 11:00 a.m., London time, on the day that is two
 (2) Business Days preceding that date for which LIBOR is being determined. If
 at least two (2) such offered rates appear on the Telerate Page 3750, the rate
 will be the arithmetic mean of such offered rates (rounded up to the nearest
 1/32 of one percent).

                  LIEN shall mean any mortgage, pledge, lien, charge,
 encumbrance, lease, exercise of rights, security interest or claim.

                  MAINTENANCE PROGRAM shall mean an FAA approved maintenance
 program as in effect from time to time for the Aircraft encompassing scheduled
 maintenance, condition monitored maintenance and on-condition maintenance of
 the Airframe, Engines and components of the Aircraft in accordance with the
 Manufacturer's maintenance planning document. Upon request by Lessor or any
 Beneficiary a copy of such Maintenance Program shall be made available to
 Lessor or such Beneficiary.

                  MORTGAGE CONVENTION shall mean the Convention for the
 International Recognition of Rights in Aircraft, signed (ad referendum) at
 Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
 excluding the terms of any adhesion thereto or ratification thereof containing
 reservations to which the United States of America does not accede.

                  OPERATIVE DOCUMENTS shall mean this Lease, the Lease
 Supplement, the Trust Agreement and the Supplemental Agreement.

                  PARTS shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings

                                       -6-

<PAGE>

 and other equipment of whatever nature (other than complete Engines or
 engines), which may now or from time to time be incorporated or installed in or
 attached to the Airframe or any Engine. Except as otherwise set forth herein,
 at such time as a replacement part shall be substituted for a Part in
 accordance with Section 9 hereof, the Part so removed shall cease to be a Part
 hereunder.

                  PBGC shall mean the Pension Benefit Guaranty Corporation
 established pursuant to Subtitle A of Part IV of ERISA, and any successor
 thereof.

                  PERSON shall mean and include any individual person,
 corporation, partnership, limited liability company, firm, joint stock company,
 joint venture, trust, estate, unincorporated organization, association or
 Governmental Entity.

                  PLAN shall mean any employee pension benefit plan (as defined
 in Section 3(2) of ERISA) maintained or contributed to at any time, or required
 to be contributed to, by Lessee or any Commonly Controlled Person.

                  REMOVABLE PART shall have the meaning set forth in Section
 9(b).

                  RENT shall mean Basic Rent and Supplemental Rent,
collectively.

                  REPLACEMENT ENGINE shall mean an engine of the same
 manufacturer and model and having not less than equivalent value, utility,
 modification and remaining warranty status as the Engine it is intended to
 replace under Section 11(b) hereof, or, at Lessee's option, an engine of the
 same manufacturer as such Engine but of an improved model, and otherwise of not
 less than equivalent value and utility and suitable for installation and use on
 the Airframe without impairing the value or utility of the Airframe.

                  RETURN OCCASION shall mean the event that occurs when
 possession of the Aircraft is returned from Lessee to Lessor at the end of the
 Term of this Lease or upon Lessor taking possession pursuant to Section 18.

                  SUPPLEMENTAL RENT shall mean any and all amounts, liabilities
 and obligations (other than Basic Rent) which Lessee assumes or agrees to pay
 hereunder, including without limitation (i) any payment of Casualty Value; (ii)
 any payment of indemnity required by Sections 10 or 13 hereof; and (iii) to the
 extent permitted by applicable Law, interest at the Overdue Rate (all
 computations of interest at the Overdue Rate under this Lease to be made on the
 basis

                                      -7-

<PAGE>

 of a 360-day year for the actual number of days elapsed) calculated on any
 Rent not paid when due hereunder until the same is paid.

                  TAXES shall mean any and all sales, use, business, gross
 income, personal property, transfer, fuel, leasing, occupational, value added,
 excess profits, excise, gross receipts, franchise, stamp, income, levies,
 imposts, withholdings or other taxes or duties of any nature whatsoever now or
 hereafter imposed, levied, collected, withheld or assessed, together with any
 penalties, fines, charges or interest thereon.

                  TELERATE PAGE 3750 shall mean the display page so designed on
 the Dow Jones Telerate Service (or such other page as may replace that page on
 that service, or such other service as may be nominated as the information
 vendor, for the purpose of displaying comparable rates).

                  TERM shall mean the term of this Lease specified in the Lease
Supplement hereto.

                  WET LEASE shall mean any arrangement whereby Lessee agrees to
 operate the Aircraft under a contractual arrangement with a third party
 pursuant to which no rights to any aircraft specifically identified by serial
 number or registration number are granted to such third party and pursuant to
 which the Aircraft (i) remains at all times under the sole and complete
 operational control of Lessee, (ii) shall be operated solely by cockpit crew
 employed by Lessee possessing all current certificates and licenses required by
 applicable Laws and (iii) shall be maintained by Lessee in accordance with all
 the provisions of the Lease including, but not limited to, Sections 6(d) and 12
 (it being understood and agreed by Lessor and Lessee that any Wet Lease shall,
 by its terms, be in all cases subject and subordinate to this Lease).

                  The terms SECURITY DEPOSIT, SECURITY DEPOSIT ADIUSTMENT and
 SECURITY LETTER OF CREDIT shall have the meanings set forth in Exhibit C-1
 hereto.

                  The terms ASSIGNMENT AGREEMENT, ASSIGNMENT AGREEMENT N685MA,
 BENEFICIARY, BENEFICIARY'S ADDRESS, DEDUCTIBLE AMOUNT, DELIVERY LOCATION,
 ENGINE MANUFACTURER, ESTIMATED DELIVERY DATE, LAST BASIC RENT PAYMENT DATE,
 LEASE IDENTIFICATION, LESSEE'S ADDRESS, LESSOR'S ADDRESS, MANUFACTURER, OTHER
 LEASE, OVERDUE RATE, PAYMENT LOCATIONS, PERMITTED JURISDICTION, PERMITTED
 SUBLESSEES, PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE, RETURN LOCATION,
 SUPPLEMENTAL AGREEMENT, TRUST AGREEMENT and TRUSTEE shall have the meanings set
 forth on Exhibit C-2 hereto.

                                       -8-

<PAGE>

                   Section 2. LEASE AND CONDITIONS.

                   (a) Lessor hereby agrees to lease the Aircraft to Lessee, and
 Lessee hereby agrees to lease the Aircraft from Lessor, on the terms and
 conditions of this Lease, as supplemented by the Lease Supplement.

                   (b) Lessor's obligation to lease the Aircraft hereunder to
 Lessee shall be subject to the satisfaction of the following conditions
 precedent, in each case subject to the reasonable satisfaction of Lessor and
 each Beneficiary:

                   (i)    the absence of any Default hereunder;

                  (ii)    the absence of any material adverse change in
      Lessee's financial condition or in Lessee's ability to carry on its
      business from September 30, 1995 to the Delivery Date;

                 (iii)   the absence of any default or event of default by
      Lessee under any aircraft lease or obligation for the payment of borrowed
      money to which the Lessee is a party;

                  (iv)    no action or proceeding shall be pending nor shall
      any governmental action be threatened before any court or governmental
      agency of competent jurisdiction, nor shall any order, judgment or decree
      have been issued or proposed to be issued by any court or governmental
      agency, to set aside, restrain, enjoin or prevent the completion and
      consummation of this Lease or any other Operative Documents or the
      transactions contemplated hereby or thereby;

                   (v)     receipt of every consent, approval or authorization
      of, and the giving of every notice to, any third party that is required in
      order to execute and deliver this Lease and to perform the transactions
      contemplated hereby and each such consent, approval or authorization shall
      be valid and effective and shall not have been revoked;

                  (vi)    receipt of the approval of the Board of Directors of
      each Beneficiary and any other Affiliate of each Beneficiary as such
      Beneficiary, in its sole discretion, deems necessary;

                  (vii)   receipt by Lessor and each Beneficiary of the
      following documents on or before the Delivery Date, all of which shall be
      reasonably satisfactory in form and substance to Lessor and each
      Beneficiary:

                                       -9-

<PAGE>

                           (1) a Lease Supplement in the form of Exhibit D, duly
           authorized, executed and delivered by Lessee, and effective as of the
           Delivery Date of the Aircraft;

                           (2) a certified copy of the resolutions of the Board
           of Directors of Lessee evidencing due authority of Lessee for the
           execution, delivery and performance of this Lease, the Lease
           Supplement and all other documents related hereto or thereto,
           together with an incumbency certificate as to the person or persons
           authorized to execute and deliver such documents on behalf of Lessee;

                           (3) a favorable opinion of Lessee's counsel, dated
           the Delivery Date, substantially in the form as set forth on Exhibit
           F hereto and of special aviation counsel, dated the Delivery Date, in
           form and scope acceptable to Lessor and the Beneficiaries;

                          (4) a certificate signed by a duly authorized officer
           of Lessee, dated the Delivery Date, stating that: (i) the
           representations and warranties contained' in Section 5(d) hereof are
           true and accurate on and as of such date as though made on and as of
           such time; (ii) no event has occurred and is continuing, or would
           result from the lease of the Aircraft, which constitutes a Default;
           and (iii) since September 30, 1995 there has not occurred any
           material adverse change in Lessee's financial condition or in
           Lessee's ability to carry on its business;

                           (5) an opinion or report, dated the Delivery Date,
           signed by an Approved Insurance Broker or Approved Insurer as to the
           due compliance with the insurance provisions of Section 12 hereof
           with respect to the Aircraft, substantially in the form as set forth
           on Exhibit G hereto;

                           (6) certificates of an Approved Insurance Broker
           evidencing the insurance as required by Section 12 hereof

                                      -10-

<PAGE>

           together with such special provisions as set forth on Exhibit H
           hereto;

                           (7) certified copies of all necessary consents from
           any Governmental Entities or such other Persons as to the
           transactions contemplated by this Lease;

                           (8) such financial information concerning Lessee and
           other documents and matters incidental to any of the foregoing as
           Lessor or any Beneficiary may reasonably request; and

                           (9) a duly executed original of the Security Letter
           of Credit.

           (vii) the Lease, the Lease Supplement, an application for
      registration of the Aircraft on AC Form 8050-1 in the name of the
      Trustee, the Trust Agreement, and the affidavit of citizenship of the
      Trustee shall have been duly filed for recordation (or shall be in the
      process of being so fully filed for recordation) with the FAA pursuant to
      the Federal Aviation Act and precautionary UCC filings with respect to
      the Lease shall have been duly executed and delivered and shall have been
      duly filed in Hawaii and all places in which such filings are necessary
      or advisable to establish and perfect Trustee's right, title and interest
      in the Equipment.

                   (c) Lessee's obligation to lease the Aircraft hereunder from
 Lessor shall be conditional upon (i) the receipt by Lessee of a certified copy
 of the resolutions of the Board of Directors of Lessor evidencing due authority
 of Lessor for the execution, delivery and performance of the Trust Agreement
 and this Lease and all other documents related thereto, together with an
 incumbency certificate as to the person or persons authorized to execute and
 deliver such documents on behalf of Lessor, (ii) the receipt by Lessee of
 certification by Lessor to the effect that Lessor's representations and
 warranties herein are true as at the Delivery Date, and (iii) the continued
 effectiveness of the registration of the Aircraft with the FAA.

                   (d) Lessee's obligation to lease the Aircraft hereunder from
Lessor shall also be conditioned upon the Aircraft being delivered to Lessee in
the following condition:

                           (1) The Aircraft shall be airworthy and in good
           operating condition

                                      -11-

<PAGE>

           with all of the Aircraft equipment, components and systems;

                           (2) The Aircraft shall be clean;

                           (3) The Aircraft shall meet the requirements for
           airworthiness certification by the FAA;

                           (4) A borescope of the Engines and the inspection of
           the APU in accordance with the Manufacturer's or APU manufacturer's
           recommendation shall have been performed at the direction of Lessee
           but under the control and at the cost of the Beneficiaries, and any
           discrepancies discovered in connection therewith shall have been
           corrected;

                           (5) Lessor shall, in cooperation with the
           Beneficiaries, retain a flight crew at competitive market rates to
           conduct a functional check flight, not to exceed two hours (the
           "Acceptance Flight"), to demonstrate the airworthiness of the
           Aircraft and proper functioning of all systems and components. At
           all times during such Acceptance Flight, the flight crew shall be
           under the direction of the Beneficiaries and the Beneficiaries shall
           be in command of the Aircraft. The Acceptance Flight shall be
           conducted after the conclusion of Lessee's ground inspection and
           technical acceptance of the Aircraft on the Delivery Date, PROVIDED,
           HOWEVER, that such technical inspection shall be subject to the
           satisfactory completion of the Acceptance Flight, as provided below.
           If, during the Acceptance Flight, no discrepancy or malfunction is
           detected with respect to the airworthiness or operational nature of
           the Aircraft by normal airline standards, then (i) the delivery of
           the Aircraft from Lessor to Lessee hereunder shall occur, the
           Aircraft shall be accepted by Lessee hereunder whilst the Aircraft
           is located at the Delivery Location, and Lessee shall execute and
           deliver the Lease Supplement, (ii) the Aircraft shall continue en
           route to a location selected by Lessee (the "Ferry Location"), under
           the operational control of Lessee from the time of such delivery and
           acceptance (the Acceptance Flight shall terminate at the time of
           such delivery and acceptance, and that portion of the flight from
           the Delivery Location to the Ferry Location is herein called the
           "Ferry Flight"), and (iii) Lessee shall bear the costs of the flight
           crew, fuel and other costs

                                      -12-

<PAGE>

           relating to the Ferry Flight and shall reimburse the Beneficiaries
           therefor promptly following receipt of the Beneficiaries, invoice
           therefor, PROVIDED, HOWEVER, that, if any discrepancy or malfunction
           is detected with respect to the airworthiness during the Acceptance
           Flight, then, at Lessee's option after consultation with Lessor,
           either (A) the Aircraft shall be delivered to and accepted by Lessee
           at the Delivery Location and shall be ferried to the Ferry Location,
           as provided in clauses (i), (ii) and (iii) above, where Lessee shall
           remedy such discrepancy or malfunction at the cost (without mark up)
           of the Beneficiaries (provided that such subsequent repair or
           maintenance work shall not affect Lessee's acceptance of the
           Aircraft hereunder), or (B) the Aircraft shall return to the
           Beneficiaries' storage and maintenance facility where such
           discrepancy or malfunction shall be corrected at the Beneficiaries'
           expense, in which case the Delivery Date shall be postponed to such
           date as the Beneficiaries shall advise, subject to the second
           paragraph of Section 3(c) below. Any discrepancy or malfunction
           detected of an airworthiness nature shall be corrected by Lessee or
           the Beneficiaries in accordance with clause (A) or (B) above, as
           applicable, at Beneficiaries, expense. If during the Acceptance
           Flight a discrepancy or malfunction is detected with respect to the
           operational nature of the Aircraft by normal airline standards but
           no discrepancy or malfunction is detected with respect to the
           airworthiness of the Aircraft, then the Aircraft shall be delivered
           to and accepted by Lessee at the Delivery Location as provided in
           clause (A) above, and Lessee shall remedy such discrepancy or
           malfunction at the cost (without mark up) of the Beneficiaries.

           In anticipation of the occurrence of the Delivery Date, the
           Beneficiaries retained a flight crew to conduct the Acceptance
           Flight and will incur costs relating to such retention. In
           connection therewith, Lessee agrees to reimburse the Beneficiaries,
           promptly following Lessee's receipt of an invoice therefor, for
           one-half of the costs incurred by the Beneficiaries in connection
           with retaining such flight crew for the Acceptance Flight, which
           costs relate to the period commencing on and including November 29,
           1995 and ending on the day immediately preceding the Delivery Date.

                                      -13-

<PAGE>

                   Section 3. Delivery and Acceptance; Term.

                   (a) DELIVERY. It is anticipated that the Aircraft will become
 available for delivery on or about the Estimated Delivery Date set forth on
 Exhibit C-2.

                   (b) PLACE OF DELIVERY AND ACCEPTANCE. The Aircraft shall be
 delivered to Lessee at the Delivery Location set forth on Exhibit C-2.

                   (c) FORCE MAJEURE. Notwithstanding any other provision
hereof to the contrary, Lessor shall not have any obligation to lease the
Aircraft to Lessee on account of its or Beneficiaries, inability to deliver the
Aircraft if such inability or delay results from (i) loss or destruction of the
Aircraft or any substantial part of the Aircraft or damage to the Aircraft for
any reason whatsoever, including but not limited to, the negligence of the
Beneficiaries or (ii) any other cause occurring without the negligence of the
Beneficiaries and beyond the reasonable control of the Beneficiaries (after use
of reasonable diligence), including but not limited to war, warlike operations,
acts of government or governmental priorities, insurrections or riots, strikes
or labor troubles causing cessation, slow down or interruption of work, riots,
fire, floods, explosions, earthquakes, accidents, epidemics or quarantine
restrictions, mechanical failure, inability for any reason to obtain materials,
accessories, equipment or parts, delays in transportation or any act of God or
a public enemy.

                   In the event that delivery of the Equipment is delayed for a
 period in excess of 60 days beyond the Estimated Delivery Date (because of the
 occurrence of an event described in clause (i) or (ii) above) Lessee or Lessor
 shall have the right to terminate this Lease upon written notice to the other
 and neither Lessee nor Lessor shall have any further obligations to the other
 hereunder except that Lessor or the Beneficiaries shall return the Security
 Deposit to Lessee subject to and in accordance with Section 21(a) hereof.

                   (d) ACCEPTANCE OF AIRCRAFT. The Aircraft to be leased
 hereunder shall be delivered to Lessee "AS IS, WHERE IS" and SUBJECT TO EACH
 AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTION
 5(a) HEREOF. Representatives of Lessee shall inspect the Aircraft on or prior
 to the Estimated Delivery Date to verify that the Aircraft is in the condition
 required by Section 2(d). In the event the Aircraft does not fulfill all of the
 conditions set forth in Section 2(d) and if Lessee does not accept delivery of
 the Aircraft with discrepancies to be corrected pursuant to Section 2(d)(5),
 then Lessor shall have (A) with respect to any matter which affects the

                                      -14-

<PAGE>

 airworthiness of the Aircraft, fifteen (15) days within which to cure any
 deficiency in the Aircraft, without cost to Lessee, and (B) with respect to any
 other matter, sixty (60) days within which to cure any deficiency with the
 Aircraft, without cost to Lessee; Lessee shall then reinspect the Aircraft and
 if the Aircraft is then in compliance with the conditions set forth in Section
 2(d), Lessee shall accept delivery of the Aircraft. In no event shall Lessor or
 the Beneficiaries have the right pursuant to the foregoing paragraph (c) or
 this paragraph (d) or both to extend the Delivery Date beyond the date that is
 sixty (60) days after the Estimated Delivery Date. Upon acceptance of the
 Aircraft Lessee shall thereupon indicate and confirm its acceptance of the
 Aircraft by delivery to Lessor of a Lease Supplement, dated the Delivery Date,
 in the form set forth as Exhibit D hereto.

                   The execution by Lessee of the Lease Supplement shall
 constitute Lessee's acknowledgment that the Aircraft is in the condition
 required hereby on the Delivery Date and Lessee's absolute, unconditional and
 irrevocable acceptance of the Aircraft hereunder for all purposes of this
 Lease.

                   (e) TERM OF LEASE. The Term of this Lease shall commence on
 the Delivery Date and shall continue for 96 months until the Expiration Date
 set forth in the Lease Supplement, subject to earlier termination by Lessor or
 a Beneficiary following the occurrence of an Event of Default, as hereinafter
 provided or pursuant to paragraph 2(ii) of the Supplemental Agreement.

                   Section 4. RENT.

                   (a) RENT. Lessee covenants and agrees to pay to Lessor, or
its assigns, the following as Rent:

                   (i) BASIC RENT: The Basic Rent as set forth on Exhibit C-1
hereto throughout the Term hereof, payable in consecutive installments in
advance on each Basic Rent Payment Date.

                   (ii) SUPPLEMENTAL RENT: Any and all Supplemental Rent as and
when the same becomes due.

                   (b) PLACE AND METHOD OF PAYMENT. All Basic Rent and
 Supplemental Rent and other amounts payable under this Lease shall be paid on
 the due date in immediately available funds in Dollars by wire transfer, at
 the Payment Locations specified on Exhibit C-2 hereto, or at such other
 location as Lessor shall designate in writing. Any Rent due on a day other than
 a Business Day (in New York, Dublin, London and Honolulu only) shall be due on
 the next preceding Business Day.

                                      -15-

<PAGE>

                   (c) PROHIBITION AGAINST SETOFF, COUNTERCLAIM, ETC. This Lease
 is a net lease. Subject to Section 20(f), Lessee's obligation to pay all Rent
 hereunder shall be absolute and unconditional and shall not be affected or
 reduced by any circumstance, including, without limitation, (i) any setoff,
 counterclaim, recoupment, defense or other right which Lessee may have against
 Lessor, any Beneficiary, the Manufacturer, the Engine Manufacturer, any seller
 of or person providing services with respect to the Aircraft or any other
 Person, for any reason whatsoever; (ii) any defect in the title, airworthiness
 or eligibility for registration under applicable Law, or any condition, design,
 operation or fitness for use of, or any damage to or loss or destruction of,
 the Aircraft, or any interruption or cessation in the use or possession thereof
 by Lessee for any reason whatsoever, whether arising out of or related to an
 act or omission of Lessee, or any other Person; (iii) any Liens with respect to
 the Aircraft; (iv) the invalidity or unenforceability or lack of due
 authorization or other infirmity of this Lease or any absence of right, power
 or authority of Lessor or Lessee to enter into this Lease; (v) any insolvency,
 bankruptcy, reorganization or similar proceedings by or against Lessor or
 Lessee; (vi) any other circumstance or happening of any nature whatsoever,
 similar to any of the foregoing; or (vii) any Taxes (other Taxes to which
 Lessee's indemnity does not extend pursuant to the provisions of Section 10);
 it being the express intention of Lessor and Lessee that all Rent payable
 hereunder shall be payable in all events, unless the obligation to pay the same
 shall be terminated pursuant to the express provisions of this Lease. Nothing
 in this paragraph (c) shall constitute a waiver by Lessee of any right or claim
 that Lessee may separately assert against Lessor or any Beneficiary.

                   Lessee hereby waives, to the extent permitted by applicable
 Law, any and all rights which it may now have or which at any time hereafter
 may be conferred upon it, by Law or otherwise, to terminate this Lease or any
 obligation imposed upon Lessee hereunder or in relation hereto.

                   If for any reason whatsoever this Lease shall be terminated
 in whole or in part by operation of law (other than termination under any
 bankruptcy laws as now or hereafter in effect), Lessee nonetheless agrees to
 pay to Lessor amounts equal to the Rent payments hereunder at the time such
 payments would have become due and payable in accordance with the terms hereof
 had this Lease not been terminated so long as Lessee is able to use, possess
 and quietly enjoy the Aircraft, and so long as such payments are made and all
 other terms and conditions hereof are complied

                                      -16-

<PAGE>

with by Lessor and Lessee, Lessor and Lessee will deem this Lease to remain in
full force and effect.

                   Section 5. REPRESENTATIONS AND WARRANTIES.

                   (a) WARRANTIES AND DISCLAIMER OF WARRANTIES.

                  LESSOR AND EACH BENEFICIARY HAVE NOT AND SHALL NOT BE DEEMED
TO HAVE MADE (WHETHER BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS LEASE,
OR HAVING ACQUIRED THE AIRCRAFT, OR HAVING DONE OR FAILED TO DO ANY ACT, OR
HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS
LEASE OR OTHERWISE), AND LESSOR AND EACH BENEFICIARY HEREBY SPECIFICALLY
DISCLAIM, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY, FREEDOM FROM CLAIMS OF INFRINGEMENT OR THE LIKE, OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP OF THE AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER REPRESENTATION
OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY
ARISING FROM A COURSE OF PERFORMANCE OR DEALING OR USAGE OF TRADE), WITH
RESPECT TO THE AIRCRAFT; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH. WARRANTY OR WARRANTIES.
LESSOR AND EACH BENEFICIARY SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY TO
LESSEE OR ANY OTHER PERSON, WHETHER ARISING IN CONTRACT OR TORT OUT OF ANY
NEGLIGENCE OR STRICT LIABILITY OF LESSOR OR SUCH BENEFICIARY OR OTHERWISE, FOR
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR
INDIRECTLY BY THE AIRCRAFT OR ANY ENGINE OR BY ANY INADEQUACY THEREOF OR
DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION
THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS
RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR
ANTICIPATED PROFITS OR CONSEQUENTIAL DAMAGES OR (iv) THE DELIVERY, OPERATION,
SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT. THE
WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION ARE EXCLUSIVE AND IN
LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED,
AND LESSOR AND EACH BENEFICIARY SHALL NOT BE DEEMED TO HAVE MADE BY OTHER
WARRANTIES, EXCEPT THAT EACH BENEFICIARY MAKES THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THE SUPPLEMENTAL AGREEMENT AND:

                   (b) LESSOR REPRESENTATIONS AND WARRANTIES.

                  Lessor hereby makes the following representations and
warranties:

                                      -17-

<PAGE>

                   (i) the Aircraft is duly registered with the FAA in the name
      of Lessor and, on the Delivery Date, Lessor shall be the FAA-registered
      owner of the Aircraft and the Aircraft shall be free and clear of any and
      all Lessor Liens attributable to it other than the interests of the
      Beneficiaries under the Trust Agreement;

                   (ii) Lessor is a banking corporation duly organized and
      validly existing and in good standing under the laws of Delaware, and has
      the corporate power and authority to carry on its business as presently
      conducted and to perform its obligations under this Lease;

                   (iii) the making and performance by Lessor of this Lease and
      any other Operative Document to which Lessor is a party have been duly
      authorized by all necessary corporate action on the part of Lessor and
      will not violate any provision of any law, governmental rule or
      regulation of the State of Delaware or of the United States of America
      governing the banking and trust powers of Lessor or its Certificate of
      Incorporation or By-Laws;

                   (iv) this Lease has been duly entered into and delivered by
      Lessor, and this Lease does, and each other Operative Document when
      executed and delivered by Lessor hereunder will, constitute legal, valid
      and binding obligations of Lessor, enforceable in accordance with their
      respective terms except as may be limited by bankruptcy, insolvency,
      reorganization, moratorium or other similar laws affecting the
      enforcement of creditors, rights generally, and, to the extent that
      certain remedies require or may require enforcement by a court of equity,
      by such principles of equity (regardless of whether such enforceability
      is considered in a proceeding in equity or at law) as a court having
      jurisdiction may impose and by laws which may affect some of such
      remedies but which do not make available remedies inadequate for the
      substantial realization of the benefits provided herein;

                   (v) neither the execution and delivery by Lessor of this
      Lease and any other Operative Document to which it is a party nor the
      performance by it of any of its obligations hereunder or thereunder, nor
      the compliance by it with the terms and conditions hereof or thereof,
      will violate, conflict with or result in any breach of any terms,
      conditions or provisions of, or provisions of, or

                                      -18-

<PAGE>

      constitute a default under, any law of the State of Delaware or the
      United States of America governing the banking and trust powers of Lessor
      or court judgment or decree applicable to it or pursuant to which it was
      organized or any agreement or instrument to which it is a party or by
      which it or any of its property is bound, or result in the creation or
      imposition of any Lessor's Lien attributable to it on the Aircraft other
      than as provided for in this Lease (such representation being made in
      reliance upon and subject to the accuracy of the representation and
      warranty contained in the last sentence of Section 5(d)(xvi));

                   (vi) neither the execution and delivery nor the performance
      by Lessor of this Lease and any Operative Document to which Lessor is a
      party requires any consent or approval of, giving of notice to,
      registration with, or taking of any other action in respect of any
      governmental authority or agency in the State of Delaware;

                   (vii) no registration, recording, filing or notarization of
      this Lease in the State of Delaware and no other action by Lessor is
      necessary to be taken in the State of Delaware to ensure the validity or
      enforceability of the obligations of Lessor or the rights of Lessee
      hereunder;

                   (viii) there are no pending or, to the knowledge of Lessor,
      threatened actions or proceedings before any court, governmental or
      administrative agency or arbitral body which actions or proceedings could
      have a material and adverse effect on Lessor's ability to perform its
      obligations under this Lease or any other Operative Document to which it
      is a party;

                   (ix) Lessor shall obtain, make and maintain in full force and
      effect, promptly renew from time to time and comply with the terms of all
      consents, permissions, licenses, authorizations, approvals, registrations
      and filings which may from time to time be required in the State of
      Delaware in order to enable it to perform its obligations hereunder or
      for the enforceability or admissibility in evidence hereof; and

                   (x) Lessor is a "citizen of the United States" within the
      meaning of Section 40102(a)(15) of the Federal Aviation Act.

                                      -19-

<PAGE>

                   (c) MANUFACTURERS' WARRANTIES. So long as no Default and no
 Event of Default shall have occurred and be continuing and so long as the Term
 shall remain in effect, Lessee may exercise for the account of Lessor such
 rights as Lessor may have under any warranty, express or implied, with respect
 to the Aircraft made by the Manufacturer or the Engine Manufacturer, to the
 extent that the same may be assigned or otherwise made available to Lessee;
 provided, however, that upon an Event of Default all such rights shall
 immediately revert to Lessor including all claims thereunder whether or not
 perfected, and such reversion shall occur at the earlier of (A) written notice
 from Lessor to Lessee to such effect, and (B) the expiration or any termination
 of the Term. Lessor agrees to execute and deliver such further documents and
 instruments and to do such further acts, deeds, matters or things (at Lessee's
 expense) as may be necessary to enable Lessee to obtain whatever warranty
 service furnished for the Aircraft or the Engines by the Manufacturer or the
 Engine Manufacturer, respectively, as is available to the Lessor.

                   (d) LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee hereby
 makes the following representations and warranties, which representations and
 warranties shall survive the execution and delivery of this Lease and the
 delivery of the Aircraft:

                   (i) Lessee is a corporation duly organized and existing under
      the Laws of the State of Hawaii and has the corporate power and authority
      to carry on its business as presently conducted and to perform its
      obligations under this Lease;

                   (ii) this Lease has been duly authorized by all necessary
      corporate action on the part of Lessee and does not require any approval
      of stockholders of Lessee (or if such approval is required, such approval
      has been obtained), and neither the execution and delivery hereof nor the
      consummation of the transactions contemplated hereby nor compliance by
      Lessee with any of the terms and provisions hereof will contravene any
      Law applicable to Lessee or the corporate charter or by-laws of Lessee-or
      result in any breach of, or constitute any default under, or result in
      the creation of any Lien upon any property of Lessee under, any credit
      agreement or instrument, or other agreement or-instrument to which Lessee
      is a party or by which Lessee or its properties or assets are bound or
      affected;

                   (iii) Lessee has received every consent, approval or
      authorization of, and has given every

                                      -20-

<PAGE>

      notice to, each Governmental Entity having jurisdiction with respect to
      the execution, delivery or performance of this Lease that is required for
      Lessee to execute and deliver this Lease and to perform the transactions
      contemplated hereby and each such consent, approval or authorization is
      valid and effective and has not been revoked;

                   (iv) this Lease has been duly executed and delivered by
      Lessee, and the Lease does, and the Lease Supplement when executed and
      delivered by Lessee will, constitute legal, valid and binding obligations
      of Lessee, enforceable in accordance with their respective terms, except
      as enforcement thereof may be limited by applicable bankruptcy,
      insolvency, reorganization, moratorium or other similar laws affecting
      the enforcement of creditors, rights generally, and, to the extent that
      certain remedies require or may require enforcement by a court of equity,
      by such principles of equity (regardless of whether such enforceability
      is considered in a proceeding in equity or at law) as a court having
      jurisdiction may impose and by Laws which may affect some of such
      remedies but which do not make the available remedies inadequate for the
      substantial realization of the benefits provided herein;

                   (v) there are no suits or proceedings (other than those
      heretofore disclosed in writing to each Beneficiary) pending or, to the
      knowledge of Lessee, threatened in any court or before any regulatory
      commission, board or other administrative governmental agency against or
      affecting Lessee which might have a materially adverse effect on the
      current business or financial condition of Lessee;

                   (vi) Lessee has filed or caused to be filed all tax returns
      which are required to be filed by it, and has paid or caused to be paid
      all Taxes shown to be due or payable on said returns or on any assessment
      received by Lessee, except to the extent being contested in good faith by
      appropriate proceedings, and for the payment of which adequate reserves
      have been provided;

                   (vii) except for the filing for recordation of the FAA Bills
      of Sale, an application for registration of the Aircraft on AC Form
      8050-1 in the name of the Lessor, the Trust Agreement, the affidavit of
      citizenship of the Lessor and this Lease and the Lease Supplement with
      the FAA, the

                                      -21-

<PAGE>

      filing with the Hawaii Bureau of Conveyances, Hawaii of precautionary UCC
      financing statements and continuation statements at periodic intervals
      with respect to the Aircraft and the placing on the Aircraft and on each
      Engine of the plates containing the legends referred to in Section 6(f)
      hereof, no further filing or recording of this Lease or of any other
      document and no further under the Laws of any Governmental Entity in
      order to (A) fully protect and establish Lessor's title to, interest in
      and property rights with respect to the Aircraft as against Lessee or
      any third party or (B) ensure the validity, effectiveness and enforce
      ability of this Lease;

                   (viii) Lessee is not in default in the performance of any of
      its obligations (a) for the payment of indebtedness for borrowed money or
      of any interest or premium thereon or (b) for the payment of rent under
      any lease or agreement to lease real, personal or mixed property;

                   (ix) the Maintenance Program for the Aircraft complies with
      all FAA requirements;

                   (x) the consolidated financial statements of Aloha Airgroup,
      Inc. (including Lessee), including the balance sheets and audited
      statements of income and retained earnings of Lessee, for the preceding
      two fiscal years and for the period ending September 30, 1995, copies of
      which have been furnished to Lessor, are prepared in accordance with
      generally accepted accounting principles, and present fairly the
      financial position and operations of Lessee, and subsequent to the
      conclusion of the last such period, there has been no material adverse
      change in such position or operations;

                   (xi) there are no withholding or other Taxes to be deducted
      from any payment to be made by Lessee under this Lease (other Taxes to
      which Lessee's indemnity does not extend pursuant to the provisions of
      Section 10);

                   (xii) Lessee is a Certified Air Carrier and holds all
      licenses, certificates, permits and franchises from the appropriate
      agencies of the United States of America and/or all other governmental
      authorities having jurisdiction which are necessary to authorize the
      Lessee to engage in air transport and to carry on its business as

                                      -22-

<PAGE>

       presently conducted and to be conducted with the Aircraft;

                   (xiii) Lessee is a "citizen of the United States" as defined
      in Section 40102(a)(15) of the Federal Aviation Act;

                   (xiv) Lessor is entitled to the benefits of Section 1110 of
      Title 11 of the united States Code with respect to the Aircraft and the
      Engines;

                  (xv) Lessee's chief executive office (as such term is defined
      in Article 9 of the Uniform Commercial Code) and the place where it keeps
      its corporate records concerning the Aircraft, all its interest in, to
      and under any Operative Document and its contracts relating thereto, are
      located in Honolulu, Hawaii;

                   (xvi) Neither Lessee nor any Person who was at such time a
      Commonly Controlled Person has terminated any Plan or withdrawn from any
      multiemployer plan (as defined in Section 4001(a)(3) of ERISA) in a
      manner which has or could reasonably be expected to result in any
      liability under Title IV of ERISA, and no event or condition has occurred
      or exists as a result of which any such liability could reasonably be
      expected to be incurred. No Plan maintained or contributed to (or
      required to be contributed to) by Lessee or any Person who was at such
      time a Commonly Controlled Person has incurred an "accumulated funding
      deficiency" (as defined in Section 302 of ERISA). No Lien imposed under
      the Code or ERISA on the assets of Lessee or any Commonly Controlled
      Person exists or is reasonably likely to arise on account of any Plan. No
      prohibited transaction (as defined in Section 406 of ERISA or Section
      4975 of the Code) has occurred which has subjected or could subject
      Lessee or any Commonly Controlled Person to any liability under Section
      502(i) of ERISA or Section 4975 of the Code. The execution and delivery
      by Lessee of this Lease and the consummation of the transactions
      contemplated hereby will not constitute a prohibited transaction within
      the meaning of Section 406 of ERISA or Section 4975 of the Code; and

                   (xvii) No part of the Rent or other payments made by Lessee
      under the Operative Documents will be made with the assets of any plan
      (or its related trust) as defined in Section 4975(e) of the Code or of
      any employee benefit plan (or its

                                      -23-

<PAGE>

                   related trust) as defined in Section 3(3) of ERISA.

                   Section 6. POSSESSION AND USE; REGISTRATION.

                   (a) POSSESSION.

                   (i) SUBLEASE, ASSIGNMENT AND TRANSFER. Without the prior
 written consent of Lessor and each Beneficiary, Lessee will not assign this
 Lease or sublet, transfer or relinquish possession of the Aircraft, Airframe or
 any Engine or install any Engine or permit any Engine to be installed on any
 airframe other than the Airframe or under any circumstances permit the
 Aircraft, Airframe or any Engine to be used by any other Person for any purpose
 whatsoever, provided that so long as (A) no Default or Event of Default shall
 have occurred and be continuing, (B) the action to be taken shall not affect
 the registration of the Aircraft with the FAA and (C) all necessary approvals
 of each Governmental Entity having jurisdiction over the Aircraft have been
 obtained, then Lessee, without the prior written consent of Lessor and each
 Beneficiary, may:

                   (1) subject any Engine to normal interchange or pooling
      agreements or similar arrangements in each case customary in the airline
      industry and entered into in the ordinary course of its business with
      Permitted Sublessees or an air carrier approved by Lessor and each
      Beneficiary or an FAA licensed engine overhaul agency, provided that
      Lessee shall give the Beneficiaries 30 days' prior notice thereof
      (together with a copy of the applicable pooling or interchange
      agreement); and provided further, however, that: (A) no such agreement or
      arrangement results in or requires the transfer of title to such Engine;
      or (B) if Lessor's title to such Engine shall be divested under any such
      agreement or arrangement, such divestiture shall be deemed to be a
      Casualty occurrence with respect to such Engine and Lessee shall comply
      with Section 11(b) hereof in respect thereof;

                   (2) deliver possession of the Aircraft, the Airframe or any
      Engines to the manufacturer thereof for testing or other similar purposes
      or to any organization for service, repair, maintenance, testing or
      overhaul work on the Aircraft, Airframe or Engine or any Part thereof or
      for alterations or modifications in or additions to the Aircraft,
      Airframe or Engine to the extent required or permitted by the terms of
      Section 9 hereof;

                                      -24-

<PAGE>

                   (3) install an Engine on an airframe (other than the
      Airframe) owned by Lessee free and clear of all Liens except: (A) those
      of the type permitted under Section 14 hereof and those which apply only
      to the engines (other than Engines), appliances, parts, instruments,
      appurtenances, accessories, furnishings and other equipment (other than
      Parts) installed on such airframe (but not to the airframe as an
      entirety); and (B) the rights of the participants under normal
      interchange agreements which are customary in the airline industry and do
      not contemplate, permit, result in or require the transfer of title to
      theairframe, engines or parts installed thereon;

                   (4) install an Engine on an airframe leased to Lessee or
      owned by Lessee subject to a conditional sale or other security
      agreement, provided, that: (A) such airframe is free and clear of all
      Liens except the rights of the parties to the lease or conditional sale
      or other security agreement covering such airframe and except Liens of
      the type permitted by clauses (A) and (B) of Section 6(a)(i)(3), and the
      Lien of any mortgage which either by its terms does not apply to the
      Engine or which effectively provides that each Engine leased to Lessee
      hereby shall not become subject to the Lien thereof or to any rights of
      any party thereunder other than Lessee (with respect to Lessee's rights
      expressly granted hereunder), notwithstanding the installation of such
      Engine on any airframe subject to the Lien of such mortgage, unless and
      until Lessee shall become the owner of such Engine and Lessor shall have
      no further interest therein, all pursuant to the express terms of this
      Lease (as evidenced by a written instrument signed by Lessor); and (B)
      there shall be in effect a written agreement of the lessor or secured
      party of such airframe (which may be the lease or conditional sale or
      other security agreement covering such airframe) substantially similar
      in effect to the agreement of Lessor in Section 6(b) below whereby such
      lessor or secured party effectively and expressly agrees that neither it
      nor its successors or assigns will acquire or claim any right, title or
      interest in any Engine by reason of such Engine being installed on such
      airframe at any time while such Engine is subject to this Lease, and a
      copy of such agreement shall be provided to Lessor or any Beneficiary
      upon its request;

                                      -25-

<PAGE>

                   (5) sublease the Airframe and the Engines or the engines then
      installed on the Airframe or any Engine to any Permitted Sublessee;
      PROVIDED, that such Permitted Sublessee shall not (i) have consented to
      the appointment of a receiver, trustee or liquidator or admitted in
      writing its inability to pay its debts generally as they become due or
      filed a voluntary petition in bankruptcy or a voluntary petition seeking
      reorganization in a proceeding under any bankruptcy laws, (ii) have had
      an involuntary order, judgment or decree entered against such Permitted
      Sublessee by any court appointing a receiver, trustee or liquidator for
      such Permitted Sublessee or (iii) be in default under any lease or
      financing agreement to which such Permitted Sublessee is a party; and

                   (6) enter into a Wet Lease for the Aircraft in the ordinary
      course of its business for a term or terms (including any renewal terms
      or extensions) that do not extend beyond the Term.

                   (ii) CERTAIN LIMITATIONS ON TRANSFERS. With respect to any
 assignment, sublet, transfer or relinquishment of possession pursuant to
 Section 6(a)(i) (other than a transfer of an Engine which is deemed a Casualty
 Occurrence) or any other assignment, sublet or transfer of possession consented
 to in writing by Lessor and the Beneficiary:

                   (1) Lessee shall remain primarily liable hereunder for the
      performance of all of the terms of this Lease to the same extent as if
      such transfer had not occurred, and no sublease or other relinquishment
      of possession of the Equipment shall in any way discharge or diminish any
      of Lessee's obligations to Lessor under this Lease or any of Lessor's
      rights hereunder and such rights shall continue as if such sublease or
      transfer had not occurred;

                   (2) the term of any sublease (including, without limitation,
      any option of the sublessee to renew or extend the sublease), interchange
      or pooling arrangement shall not continue beyond the end of the Term;

                   (3) any sublease permitted by this Section 6 shall in
      addition expressly provide that (v) such sublease is subject and
      subordinate to all of the terms of this Lease and all rights of Lessor
      under this Lease, including without limitation Lessor's

                                      -26-

<PAGE>

      rights to repossession pursuant to Section 18 and to void such Permitted
      Sublessee's right to possession upon such repossession, shall apply, (w)
      such Permitted Sublessee consents to the security assignment by Lessee to
      Lessor of all of Lessee's right, title and interest in such sublease for
      purposes of securing Lessee's obligations hereunder and that Permitted
      Sublessee, upon receipt of a written notice from Lessor that an Event of
      Default has occurred and is continuing, will make all payments under such
      sublease to, and, if this Lease has been declared in default pursuant to
      Section 18 hereof, will return the Equipment only to, Lessor, or as
      directed by Lessor, for so long as such Event of Default shall continue,
      (x) the maintenance, operation and insurance provisions of such sublease
      shall be substantially the same as the provisions of this Lease (whether
      by requiring such obligations to be performed by such Permitted
      Sublessee, by Lessee or by both), (y) the Aircraft shall not be operated
      or used other than as provided in this Lease, and (z) the Lessor may void
      or terminate such sublease following an Event of Default hereunder but
      only during the period as such Event of Default shall continue;

                   (4) prior to the commencement of any sublease to a Permitted
      Sublessee, Lessee shall give Lessor and each Beneficiary no less than 10
      days written notice of the proposed sublease of the Airframe or Engine,
      as the case may be, which notice shall include the identity of the
      Permitted Sublessee, the term and rental rate of the sublease and a copy
      of such sublease; PROVIDED, HOWEVER, that Lessee shall use its reasonable
      efforts to give such notice earlier than such 10 days if practicable
      under the circumstances and to advise Lessor and the Beneficiaries at any
      time at which Lessee commences substantial discussions or negotiations
      with any Permitted Sublessee with respect to the potential sublease of
      the Aircraft;

                   (5) any sublease shall-expressly prohibit any assignment or
      further sublease of the Aircraft or any assignment of the rights under
      such sublease;

                   (6) any Wet Lease shall have a term that does not exceed
       beyond the end of the Term; and

                   (7) the Person with which and for which any Wet Lease is
       entered into shall be an airline that is a

                                      -27-

<PAGE>

      resident of, is domiciled in, and maintains its principal base of
      operations in, a Permitted Jurisdiction.

 Prior to entering into any sublease of the Airframe and any Engine or engine or
 any Engine to a Permitted Sublessee, Lessee shall (A) execute and deliver to
 Lessor and each Beneficiary an assignment of and grant of a security interest
 in all of Lessee's right, title and interest in such sublease, which assignment
 shall be in form and substance reasonably satisfactory to Lessor and each
 Beneficiary, contain the consent to such assignment of such Permitted
 Sublessee, and be recordable under the Federal Aviation Act and shall be
 executed, delivered and filed with the FAA for recordation at Lessee's expense
 on or before commencement of such sublease (provided that such assignment may
 specify that Lessor may not exercise any of the rights or remedies of the
 Lessee under such sublease including, without limitation, any right to receive
 rentals under such sublease or to interfere with the rights of the Lessee to
 grant waivers or consents under, or to amend the provisions of, any such
 sublease) unless, and only so long as, an Event of Default hereunder shall have
 occurred and be continuing, and (B) execute and deliver to Lessor an
 appropriately completed Uniform Commercial Code financing statement, for filing
 in Hawaii and each other applicable jurisdiction, evidencing the assignment by
 Lessee to Lessor of such sublease. In connection with such a sublease of the
 Aircraft, Lessee shall provide to Lessor and each Beneficiary, at Lessee's or
 Permitted Sublessee's expense and on or before commencement of such sublease, a
 legal opinion from counsel to the Permitted Sublessee in form and substance
 reasonably satisfactory to Lessor and each Beneficiary, as to the due execution
 and delivery and enforceability of such sublease and assignment of sublease and
 as to such other matters as Lessor or such Beneficiary may reasonably request.
 Lessee agrees that any such security assignment granted to the Lessor may be
 assigned to the Lender, if any, it being understood that such assignment shall
 be consistent and not contravene the foregoing provisions. Any monies received
 by Lessor or Lender pursuant to the exercise of its rights under the assignment
 of any sublease shall be held by Lessor or the Lender as additional security
 for the performance by Lessee of its obligations under this Lease and, to the
 extent not applied against amounts due and owing by Lessee hereunder and the
 exercise of remedies hereunder, shall be returned to Lessee at such time as no
 Event of Default shall be continuing. All costs and expenses (including
 reasonable legal fees and expenses) incurred by Lessor, Lender or any
 Beneficiary in connection with any sublease or the assignment thereof shall be
 borne by Lessee and reimbursed by Lessee upon demand.

                                      -28-

<PAGE>

                   (b) RECIPROCAL RECOGNITION OF RIGHTS. In the event Lessee
 shall have received from the lessor or secured party of any airframe leased to
 Lessee or owned by Lessee subject to a conditional sale or other security
 agreement a written agreement complying with clause (B) of Section 6(a)(i)(4)
 hereof (which agreement may be contained in the lease, conditional sale
 agreement or security agreement relating to such airframe), and such lease or
 conditional sale or other security agreement covering such airframe also covers
 an engine or engines owned by the lessor under such lease or subject to a
 security interest in favor of the secured party under such conditional sale or
 other security agreement, Lessor hereby agrees for the benefit of such lessor
 or secured party that Lessor will not acquire or claim, as against such lessor
 or secured party, any right, title or interest in any such engine as the result
 of such engine being installed on the Airframe at any time while such engine is
 subject to such lease or conditional sale or other security agreement and owned
 by such lessor or subject to a security interest in favor of such secured
 party. Lessor also hereby agrees for the benefit of the mortgagee under any
 mortgage complying with clause (A) of Section 6(a)(i)(4) hereof, relating to
 installation of an Engine on an airframe leased to Lessee, that Lessor will not
 acquire or claim, as against such mortgagee, any right, title or interest in
 any engine subject to the Lien of such mortgage as the result of such engine
 being installed on the Airframe at any time while such engine is subject to the
 Lien of such mortgage.

                   (c) LAWFUL INSURED OPERATIONS. Lessee will not permit the
 Aircraft to be maintained, used or operated in violation of any Law of any
 Governmental Entity, or in violation of any airworthiness certificate, or
 license or registration issued by any such authority, or contrary to the
 Manufacturer's or Engine Manufacturer's operating manuals or instructions for
 the Aircraft or the Engines. In the event that any such Law requires alteration
 of the Aircraft, then, subject to Section 1 of the Supplemental Agreement,
 Lessee shall comply therewith at its sole expense and shall maintain the same
 in proper condition for operation under such Laws. Lessee agrees not to operate
 the Aircraft, or permit the Aircraft to be operated, (i) unless the Aircraft is
 covered by insurance as required by the provisions hereof or (ii) contrary to
 the terms of such insurance. Lessee also agrees not to operate or locate the
 Aircraft or suffer or permit the Aircraft to be operated or located in any area
 excluded from coverage by any insurance policy issued pursuant to the
 requirements of this Lease.

                   (d) MAINTENANCE. Lessee, at its own cost and expense, shall,
 or shall cause a maintenance contract center that is FAA certified for the
 contracted maintenance of the

                                      -29-

<PAGE>

 Aircraft and located in the united States of America or Canada, to:

                   (i) service, repair, maintain, overhaul and test, or cause
      the same to be done to, each Item leased hereunder (A) so as to keep such
      Item in the same condition as when delivered to Lessee hereunder, fair
      wear and tear excepted, and in good operating condition, (B) so as to
      keep the Aircraft in the condition necessary to enable the airworthiness
      certification of the Aircraft to be maintained in good standing at all
      times under all applicable FAA rules and regulations, (C) so as to meet
      the standards observed by Lessee with respect to aircraft of similar type
      owned or leased by Lessee and operated on similar routes, and in a manner
      which does not adversely discriminate against the Aircraft compared to
      similar aircraft operated by Lessee and in a similar manner and with care
      as that undertaken by the majority of airlines based in the United States
      of America which operate Boeing 737-200ADV aircraft (it being understood
      that the obligations hereby imposed upon Lessee by reference to the
      manner and care undertaken by other airlines is not intended to supersede
      Lessee's obligations herein with respect to the specific and express
      terms of this Lease), (D) in strict compliance with Lesseel's
      FAA-approved Maintenance Program applicable to the Aircraft (including
      the corrosion prevention control program (CPCP/D6-38528) and aging
      aircraft program (D6-38505 revision H as applicable per airworthiness
      directive or per effectivity)), a true and complete copy of which shall
      be delivered by Lessee to the Lessor which Maintenance Program shall be
      in substantial conformance with the Manufacturer's recommended
      maintenance planning document;

                   (ii) maintain all records, logs and other materials required
      by the FAA or the Maintenance Program in respect of the Aircraft with all
      such records, logs and other material being maintained in the English
      language;

                   (iii) promptly furnish to Lessor or each Beneficiary such
      information, in English, as may be required to enable Lessor or such
      Beneficiary to file any reports required to be filed by such Lessor or
      Beneficiary with any governmental authority concerning the Aircraft;

                                      -30-

<PAGE>

                   (iv) incorporate into the Aircraft all manufacturer mandatory
      requirements, orders, "alert" and, to the extent scheduled for a majority
      of Lessee's other owned or leased aircraft of the same model,
      "recommended" service bulletins issued by the manufacturers and vendors
      of the Items (so far as such manufacturers and vendors issue such service
      bulletins) which become due for compliance during the Term without
      waiver, exception, deferment or carryover and, in addition, all other
      service bulletins that Lessee adopts during the Term for a majority of
      other aircraft of the same model in Lessee's fleet;

                   (v) carry out, on each Item, all applicable regulatory
      regulations, mandatory requirements, orders and airworthiness directives
      which the FAA may from time to time issue and which become due during or
      within three months following the expiration of the Term (or within six
      months following the expiration of the Term if requested by the
      Beneficiaries at Beneficiaries' cost; however, the Term will not be
      deemed extended solely as a result of the additional work to terminate
      the airworthiness directives due after three months after the expiration
      of the Term and requested by the Beneficiaries) with respect to such
      Item, without waiver, exception, deferment or carryover beyond the
      expiration of the Term (except as expressly set forth in the Supplemental
      Agreement); provided that any inspections and terminating action required
      by such regulatory regulations, mandatory requirements, orders and
      airworthiness directives to be performed by a particular date shall be
      performed by such date;

                   (vi) maintain, service, repair and overhaul the Airframe and
      all Engines to comply with all warranty requirements;

                   (vii) except when required by maintenance or expressly
      permitted by Section 6(a) above, equip the Airframe at all times with two
      Engines;

                   (viii) make available to Lessor upon its reasonable request
      during the Term, one or more persons with sufficient technical knowledge
      to assist the Lessor or each Beneficiary in its examination of such
      materials and documents relating to the maintenance and condition of the
      Aircraft as the Lessor or each Beneficiary shall from time to time
      reasonably request; and

                                      -31-

<PAGE>

                   (ix) without prejudice to Lessee's obligations to repair the
      Aircraft pursuant to the terms hereof, if any damage occurs to the
      Aircraft which results in the need for repairs where the costs of such
      repairs are expected to exceed US$500,000, Lessee shall promptly notify
      Lessor and each Beneficiary of the details of the repairs required and
      shall furnish them with a workscope relating thereto, and Lessee shall
      comply with any reasonable direction of Lessor or each Beneficiary as to
      the conduct of the repairs to the Aircraft; PROVIDED, HOWEVER, that the
      Beneficiaries shall review such workscope and inform Lessee of any
      comments thereon or objections thereto within three Business Days after
      their receipt thereof; PROVIDED FURTHER, HOWEVER, that Lessee shall be
      permitted to use a maintenance contractor to perform its obligations
      pursuant to this Section 6(d) so long as such maintenance contractor is a
      repair facility approved by the FAA for the contracted repair of the
      Aircraft which is located in the United States of America or Canada, or
      other facility acceptable to the Lessor and each Beneficiary.

                   (e) REGISTRATION. So long as no Event of Default shall have
 occurred and be continuing, Lessor shall cause the Aircraft to be duly
 registered in the name of Lessor with the FAA under the Federal Aviation Act as
 at the Delivery Date, shall take such actions as are reasonably appropriate (so
 long as such actions pose no material burden or risk to Lessor or the
 Beneficiaries) to maintain such registration during the Term, and shall not
 take any action to interfere with or cancel such registration; provided that,
 after the Delivery Date, Lessee shall monitor and, to the extent not relating
 to the U.S. citizenship of the Beneficiaries, maintain such registration;
 PROVIDED, FURTHER, HOWEVER, that (i) if Lessor shall at any time cease to be a
 "citizen of the United States" (as defined in the Federal Aviation Act) and if
 such requirement shall then be necessary to maintain such registration, then
 the Beneficiaries shall take such action as shall be reasonable and appropriate
 to maintain such registration (including by appointing a successor trustee
 under the Trust Agreement or establishing a voting trust covering the
 Aircraft), (ii) Lessee and Lessor shall cooperate reasonably and in good faith
 to maintain such registration, and (iii) Lessee shall, at Lessee's expense,
 be responsible for the filing and registration of the Lease (as supplemented by
 the Lease Supplement) and for maintaining such registration throughout the
 Term.

                                      -32-

<PAGE>

                   (f) INSIGNIA. Upon delivery of the Aircraft, Lessee agrees to
 promptly place the Lease Identification in the cockpit in a prominent location
 and to place the Lease Identification on each Engine. Lessee agrees to make
 such reasonable changes to the Lease Identification as Lessor may request from
 time to time.

                   Section 7. INFORMATION.

                   During the term of this Lease, Lessee agrees to furnish
 Lessor and each Beneficiary the following:

                   (i) within sixty (60) days following the end of each quarter
      of Lessee's fiscal year, except the last such quarter of such year, an
      unaudited consolidated balance sheet of Aloha Airgroup, Inc. (including
      Lessee) prepared as of the close of each quarterly period, together with
      the related unaudited profit and loss statement for such period;

                   (ii) within one hundred twenty (120) days or such longer
      period as reasonably justified after the close of each fiscal year of
      Lessee, an audited consolidated balance sheet, profit and loss statement
      and statement of stockholders' equity of Aloha Airgroup, Inc. (prepared
      on a consolidated basis including Lessee), as of the close of such fiscal
      year, reported on by Lessee's independent certified accountants of
      recognized standing;

                   (iii) within one hundred twenty (120) days after the close of
      each fiscal year of Lessee, a certificate signed by a duly authorized
      officer of Lessee, stating (a) that such officer is familiar with the
      relevant terms of this Lease and has made a review of Lessee's compliance
      herewith during the preceding fiscal year and (b) that no event has
      occurred which constitutes a Default, or, if such an event has occurred,
      the nature thereof and action Lessee has taken or is taking to cure the
      same;

                   (iv) from time to time upon request, Lessee will at no cost
      to Lessor or each Beneficiary provide Lessor or each Beneficiary
      certified true and complete copies in the English language of the
      Maintenance Program; provided that Lessor or such Beneficiary shall
      maintain the confidentiality thereof and shall not disclose the contents
      thereof to any Person, except as permitted by Section 20(k) and except to
      the extent necessary

                                      -33-

<PAGE>

      to bridge the Aircraft from the Maintenance Program to the maintenance of
      a subsequent lessee or buyer of the Aircraft or as required by the Law of
      a jurisdiction in which the Aircraft will be based, operated or
      registered;

                   (v) Lessee will use its reasonable efforts to provide the
      Beneficiaries on or before the fifth day of each calendar month
      commencing with the next calendar month of the Delivery Date, and shall
      in any event provide to the Beneficiaries upon request of a Beneficiary,
      with a properly completed Monthly Aircraft Utilization and Status Report
      in the Form of Exhibit J hereto for the preceding calendar month
      operation of the aircraft;

                   (vi) Lessee will use its reasonable efforts to provide the
      Beneficiaries, on or before the 15th day of January of each year
      (commencing with January 1996), and shall in any event provide Lessor and
      the Beneficiaries upon request of a Beneficiary in English, the
      information and documentation for the preceding calendar year as listed
      in Exhibit K hereto; PROVIDED, HOWEVER, that if (i) a Default or an Event
      of Default shall have occurred and be continuing or (ii) Lessee's
      financial condition changes adversely from its financial condition at the
      time of the Delivery Date, then, upon notice and a request from Lessor or
      a Beneficiary, Lessee shall provide such information on a quarterly basis
      on the 15th day of each January, April, July and October, commencing with
      the first of such dates to follow the date of such notice.

                   (vii) Lessee will use its reasonable efforts to provide the
      Beneficiaries, within forty-five (45) days prior to the scheduled
      performance of a block C or D check on the Aircraft, and shall in any
      event provide Lessor and the Beneficiaries upon request of a Beneficiary
      with written notice of the time and location of such scheduled block C or
      D check; and

                   (viii) from time to time such other information regarding the
      business, operations or the financial condition of Lessee as the Lessor
      or any Beneficiary may from time to time reasonably request, including
      reports from time to time as to location, condition, use, operation,
      maintenance and insuring of the Aircraft and the Engines

                                      -34-

<PAGE>

       (including total time spent in the air and time between overhauls).

                  Lessee shall permit Lessor, each Beneficiary and their
 respective designees on at least seven (7) days' prior written notice to visit
 and inspect the Aircraft, its condition, use and operation and the records
 maintained in connection therewith during normal business hours; PROVIDED,
 HOWEVER, that this shall not unreasonably interfere with Lessee's quiet use and
 enjoyment of the Aircraft PROVIDED FURTHER, HOWEVER, that Lessor or the
 Beneficiaries may conduct such visit and inspection at any time and with or
 without notice if an Event of Default has occurred and is continuing. Lessor
 and each Beneficiary shall have no duty to make any such inspection and shall
 not incur any liability or obligation by reason of not making any such
 inspection. Lessor's or any Beneficiary's failure to object to any condition
 or procedure observed or observable in the course of an inspection hereunder
 shall not be deemed to waive or modify any of the terms of this Lease with
 respect to such condition or procedure. If such inspection is carried out
 during a C Check or D Check, then Lessee will open any areas of the Aircraft
 upon reasonable request of Lessor or a Beneficiary; PROVIDED, HOWEVER, that,
 with respect to any C Check (other than the last C Check to occur prior to the
 Return Occasion) the areas to be opened will be limited to those areas that are
 in the zones of the Aircraft in which Lessee or its maintenance contractor are
 working; provided further, however, that, with respect to the last C Check to
 occur prior to the Return Occasion, Lessee will open any areas of the Aircraft
 upon the reasonable request of Lessor or a Beneficiary.

                   Section 8. COVENANTS OF LESSEE.

                   Lessee covenants and agrees that:

                   (i) MAINTENANCE OF CORPORATE EXISTENCE. Except as provided in
 Section 8(iv) below, during the term of this Lease, Lessee will preserve and
 maintain its corporate existence. Lessee shall also preserve and maintain its
 rights, privileges, licenses and franchises in all jurisdictions where the
 failure to do so would have a materially adversely effect upon the Lessee's
 ability to meet its obligations under this Lease and the other Operative
 Documents.

                 (ii) MAINTENANCE OF STATUS. Lessee is, and shall remain so long
 as it shall be Lessee under this Lease, duly qualified to operate the Aircraft
 under applicable Law.

               (iii) PAYMENT OF TAXES. Lessee will pay or cause to be paid all
 taxes, assessments and governmental charges

                                      -35-

<PAGE>

 or levies imposed upon it, or upon its income or profits, or upon any property
 belonging to it, prior to the date on which penalties attached thereto and
 prior to the date on which any lawful claim, if not paid, would become a Lien
 upon any of the material property of Lessee.

                 (iv) CONSOLIDATION, MERGER, ETC. Without the prior written
 consent of Lessor and each Beneficiary, Lessee shall not consolidate with,
 merge with or merge into any other Person or convey, transfer or lease
 substantially all of its assets as an entirety to any other Person unless, upon
 and after giving effect to such transaction, (A) the surviving entity has at
 least the same net worth and gross assets as the Lessee immediately prior to
 such transaction, such surviving entity is Certified Air Carrier and a "citizen
 of the United States" as defined in Section 101(16) of the Federal Aviation
 Act, (C) Lessor shall continue to be entitled to the benefits of Section 1110
 of the United States Bankruptcy Code, as in effect from time to time, and (D)
 each of the Operative Documents shall continue in full force and effect and
 shall constitute the legally binding and enforceable obligation of such
 surviving entity.

                   (v) PLACE OF BUSINESS. Lessee will notify Lessor in writing
 prior to any change of its principal place of business or chief executive
 office.

                 (vi) NOTICE OF DEFAULT. Promptly after a responsible officer of
 Lessee obtains knowledge of an event or circumstance that such officer knows
 constitutes a Default hereunder, Lessee shall notify Lessor in writing of such
 Default.

               (vii) GOVERNMENTAL CONSENTS. Lessee undertakes to maintain in
 full force and effect all governmental consents, licenses, authorizations,
 approvals, declarations, filings and registrations obtained or effected in
 connection with this Lease (other than those relating to the perfection of a
 Lender's interest herein and subject to Section 5(b)(i) and Section 6;
 provided, however, if so requested by a Beneficiary, Lessee shall cooperate
 with the Beneficiary, at Beneficiary's cost, to perfect the interest of the
 Lender) and every document or instrument contemplated hereby (including without
 limitation foreign exchange and transfer permits regarding Dollar amounts due
 hereunder and thereunder) and to take all such additional action as may be
 proper or advisable in connection herewith or therewith. Lessee further
 undertakes to obtain or effect any new or additional governmental consents,
 licenses, authorizations, approvals, declarations, filings or registrations as
 may become necessary for the performance of any of the terms and conditions of
 this Lease or any other document or instrument contemplated hereby; PROVIDED,
 HOWEVER, that Lessee shall

                                      -36-

<PAGE>

 not be required to effect or maintain any governmental consent, authorization
 or license that is required by a governmental authority in Delaware, Japan,
 Ireland, New York or the United Kingdom unless required in connection with the
 conduct of Lessee's business, the operation or maintenance by Lessee of the
 Aircraft or the performance of Lessee's other obligations under this Lease.

             (viii) SUSPENSION, CESSATION, ETC. Lessee shall not (i) voluntarily
 suspend all or substantially all of its certificated operations; or (ii)
 voluntarily or involuntarily permit to be revoked, canceled or otherwise
 terminated all or substantially all of the franchises, concessions, permits,
 rights or privileges required for the conduct of business and operations of
 Lessee or the free and continued use and exercise thereof.

                 (ix) CERTIFIED AIR CARRIER. Lessee shall at all times remain a
Certified Air Carrier.

                   Section 9. REPLACEMENT OF PARTS; ALTERATIONS, MODIFICATIONS
                              AND ADDITIONS.

                   (a) REPLACEMENT OF PARTS. Lessee, at its own cost and
 expense, will promptly replace all Parts which may from time to time become
 worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair
 or permanently rendered unfit for use for any reason whatsoever. In addition,
 in the ordinary course of maintenance, service, repair, overhaul or testing,
 Lessee may at its own cost and expense cause to be removed any Parts, whether
 or not worn out, destroyed, damaged beyond repair or permanently rendered unfit
 for use, provided that Lessee shall replace at its own cost and expense such
 Parts as promptly as practicable. All replacement Parts shall be free and clear
 of all Liens, other than Liens permitted by Section 14 hereof, shall be in at
 least the same modification status and service bulletin accomplishment status,
 shall be fully interchangeable as to form, fit and function, shall have been
 overhauled or repaired and inspected by an agency acceptable to the FAA and
 shall be in as good an operating condition as, and have a utility at least
 equal to and a value and remaining warranty reasonably approximating, the Parts
 replaced (assuming such replaced Parts were in the condition and repair in
 which they were required to be maintained by the terms hereof) and all
 historical records since new or last overhaul relating to such Parts (and all
 historical records since manufacture with respect to Engines, Landing Gears,
 the APU and all life limited parts installed on any Engine, Landing Gear or
 APU) shall be maintained by Lessee.

                                      -37-

<PAGE>

                   All Parts owned by Lessor which are at any time removed from
 the Aircraft shall remain the property of Lessor and subject to this Lease, no
 matter where located, until such time as such Parts shall be replaced by Parts
 which have been incorporated or installed in or attached to the Aircraft and
 which meet the requirements for replacement Parts specified above. Immediately
 upon any replacement Part becoming incorporated or installed in or attached to
 the Aircraft as above provided, (i) title to the removed Part shall thereupon
 vest in Lessee, free and clear of all rights of Lessor, (ii) title to such
 replacement Part shall thereupon vest solely in Lessor and (iii) such
 replacement Part shall become subject to this Lease and be deemed a Part for
 all purposes hereof to the same extent as the Part which it has replaced.

                   (b) ALTERATIONS, MODIFICATIONS AND ADDITIONS. Lessee, at its
 own expense, shall make such alterations and modifications and additions to the
 Aircraft as may be required from time to time to meet the applicable standards
 of the FAA or to comply with any Law, or, if performed by Lessee with respect
 to a majority of its 737 fleet, any bulletin of the manufacturer of the
 Aircraft, Engines or Parts. In addition, Lessee, at its own expense, may from
 time to time make alterations and modifications in and additions to the
 Aircraft, provided no such alteration, modification or addition diminishes the
 remaining warranty, value or utility, or impairs the condition or
 airworthiness, of the Aircraft. Title to all Parts incorporated or installed in
 or attached or added to the Aircraft as the result of such alteration,
 modification or addition shall vest immediately in Lessor and become subject to
 this Lease, without the necessity for any further act of transfer, document or
 notice. Notwithstanding the foregoing sentence of this Section 9(b), Lessor
 agrees that so long as no Event of Default shall have occurred and be
 continuing, Lessee may, at such time during the Term, remove any Part of the
 Aircraft without replacement, provided that (i) such Part is in addition to,
 and not in replacement or substitution for, any Part originally incorporated or
 installed in or attached to the Aircraft at the time of delivery thereof
 hereunder or any Part in replacement of, or substitution for, any such
 originally incorporated or installed or attached Part, (ii) such Part is not
 required to be incorporated or installed in or attached or added to the
 Aircraft pursuant to the terms of this Section 9 and (iii) such Part can be
 removed from the Aircraft without diminishing or impairing the value, utility,
 condition, cosmetic appearance or airworthiness which the Aircraft would have
 had at such time had such alteration, modification or addition not occurred.
 Upon the removal by Lessee of any such Part as provided in the preceding
 sentence, title thereto shall, without further act, vest in Lessee and such
 Part shall no longer be deemed part

                                      -38-

<PAGE>

 of the Aircraft (such a part is herein called a "Removable Part"). Lessee, at
 its sole expense, shall repair any damage to the Aircraft resulting from any
 such removal. Any Part not removed by Lessee as above provided prior to the
 return of the Aircraft to Lessor hereunder whether pursuant to Section 16,
 Section 18 or otherwise shall remain the property of Lessor. If any Removable
 Part is (i) owned by any third party and leased to Lessee, (ii) sold to Lessee
 subject to a conditional sales contract or other security interest or (iii)
 leased to Lessee pursuant to a lease which is subject to a security interest in
 favor of any third party, then Lessor will not acquire or claim, as against
 such lessor, conditional vendor or secured party, any right, title or interest
 in any such Removable Part as the result of such Removable Part being installed
 in the Aircraft; provided, however, (a) that Lessor's inability to so acquire
 or claim is subject to the express condition that such lessor, conditional
 vendor or secured party shall not acquire or claim, as against Lessor, any
 right, title or interest in the Aircraft, or any Part other than its interest
 in such Removable Part by reason of such Removable Part being installed
 thereon, and (b) that all of Lessee's right, title and interest in and to any
 Removable Part not removed by Lessee within sixty (60) days after an Event of
 Default shall, at such time, automatically become the property of Lessor and be
 subject to this Lease.

                   In addition, with the prior written consent of the
 Beneficiaries, Lessee may, at its own expense, substitute or replace any Part
 that is originally installed on the Aircraft on the Delivery Date with another
 Part provided that (i) no such substitution or replacement diminishes the
 remaining warranty, value or utility, or impairs the condition or
 airworthiness, of the Aircraft, (ii) title to all Parts incorporated or
 installed in or attached or added to the Aircraft as the result of such
 substitution or replacement shall vest immediately in Lessor free and clear of
 Liens, other than those permitted by Section 14, and become subject to this
 Lease, without the necessity for any further act of transfer, document or
 notice, (iii) such substituted or replacement Parts can be removed from the
 Aircraft without diminishing or impairing the value, utility, condition,
 cosmetic appearance or airworthiness which the Aircraft would have had at such
 time had such substitution or replacement not occurred, (iv) Lessee, at its
 sole expense, shall repair any damage to the Aircraft resulting from any such
 removal, and (v) nothing herein shall diminish or alter any of Lessee's
 obligations under Section 16 or Exhibit E hereof to return the Aircraft on the
 Return Occasion with all Parts (or substitution or replacement Parts of the
 same make and model) that were originally installed on the Aircraft in the
 condition required thereby (and including within this clause (v)

                                      -39-

<PAGE>

 Lessee's obligation by the Return Occasion to re-install any Part for which a
 substitution or replacement Part was installed on the Aircraft pursuant to this
 paragraph).

                  In no event shall Lessor bear any liability or cost for any
 alteration, modification or addition to, or for any grounding or suspension of
 certification of, the Aircraft, or for any loss of revenue arising therefrom.
 Lessee shall make no material alterations, modifications or additions to the
 Aircraft (such as removal of seats, galleys, lavatories, major avionics
 equipment or the like) that would affect the marketability of the Aircraft
 without Lessor's and each Beneficiary's prior written consent. if Lessor and
 each Beneficiary grant such consent, title to such removed Parts shall remain
 with Lessor and Lessor and the Beneficiaries may request Lessee to reinstall
 such Parts prior to termination of this Lease. If Lessor or Beneficiaries
 request Lessee to reinstall such Parts, title to the Parts removed shall vest
 in Lessee. All costs associated with such removal and reinstallation shall be
 borne by Lessee.

                   Section 10. GENERAL TAX INDEMNITY.

                   (a) CERTAIN UNITED STATES TAXES. Lessee shall indemnify and
 hold each Indemnitee harmless from and against all United States Withholding
 Taxes (as defined herein) and United States Transportation Taxes (as defined
 herein) which are imposed on such Indemnitee after the date hereof as a result
 of a Tax Law Change (as defined herein). All payments required to be made by
 Lessee under this Lease or any other Operative Document to any Indemnitee shall
 be made free and clear of, and without deduction for or on account of, any such
 United States Withholding Taxes or United States Transportation Taxes. If any
 such United States Withholding Taxes or United States Transportation Taxes are
 required to be withheld or deducted from any such payments, Lessee shall (i)
 within the period for payment permitted by applicable law pay to the
 appropriate Governmental Entity or taxing authority the full amount of such
 United States Withholding Taxes or United States Transportation Taxes (and any
 such additional United States Withholding Taxes or United States Transportation
 Taxes in respect of the payment required under clause (ii) hereof) and make
 such reports and filings in connection therewith in the manner required by
 applicable Law, and (ii) pay to the relevant Indemnitee an additional amount
 which (after deduction of all Taxes of any nature incurred by reason of the
 payment or receipt of such additional amount) will be sufficient to yield to
 the relevant Indemnitee the full amount which would have been received by it
 had no deduction or withholding been made. Lessor will, and will cause each
 Indemnitee to, provide Lessee with such forms or certificates as may from time
 to

                                      -40-

<PAGE>

 time be requested by Lessee (and required by applicable law) in order to
 establish an exemption from (or reduced rate of) any such United States
 Withholding Taxes or United States Transportation Taxes. As used herein, (x)
 the term "TAX LAW CHANGE" means any change after the date hereof in the Code or
 any treaty or other international agreement to which the United States is a
 party, any proposed, final or temporary regulations thereunder, or the judicial
 or official administrative interpretation of any of the foregoing; (y) the term
 "UNITED STATES TRANSPORTATION TAXES" means the Taxes described in Section 887
 of the Code or any successor to such Section; and (z) the term "UNITED STATES
 WITHHOLDING TAXES" means Taxes imposed by the United States and which are
 collected by withholding at source, or deduction from, any payments by Lessee
 hereunder. Notwithstanding the foregoing, Lessee shall have no responsibility
 for, and shall be entitled to withhold and deduct from payments hereunder or
 any other Operative Documents, any such United States Withholding Taxes or
 United States Transportation Taxes:

                   (A) which are imposed by reason of a voluntary transfer or
      other disposition by the relevant Indemnitee of the Aircraft or this
      Lease or any interest in either thereof (but not including any transfer
      or disposition which occurs pursuant to the exercise of remedies arising
      out of an Event of Default) or which exceed the amount of such United
      States Withholding Taxes or United States Transportation Taxes which
      would have been imposed had there not been such a transfer or
      disposition;

                  (B) which are imposed on an Indemnitee by reason of a failure
      by such Indemnitee to comply with its obligations set forth in the second
      preceding sentence of this Section 10(a) or as a direct result of the
      breach by such Indemnitee of this Lease or the gross negligence or
      willful misconduct of such Indemnitee;

                   (C) which are imposed solely as a direct result of events or
      circumstances occurring or arising after return of the Aircraft to Lessor
      in accordance with this Lease and the performance by Lessee of all of its
      obligations hereunder; or

                   (D) which the relevant Indemnitee is entitled to utilize as a
      credit against or in reduction of its liability, if any, for Taxes
      imposed by the United States for which Lessee is not responsible under
      Section 10(b) hereof.

                   (b) GENERAL TAX INDEMNITY. In addition, and whether or not
      any of the transactions contemplated by any of the Operative Documents
      are consummated, except as set

                                      -41-

<PAGE>

 forth in Section 10(c), Lessee agrees for the express benefit of each
 Indemnitee to pay promptly when due, and to indemnify and hold harmless such
 Indemnitee from, all Taxes (whether imposed upon such Indemnitee, the Aircraft,
 the Airframe, the Engines, this Lease or any other Operative Document or
 otherwise), by any Governmental Entity or taxing authority in the United States
 of America or any other country or any taxing authority or political
 subdivision thereof or therein or by any international taxing authority, upon
 or with respect to, based upon or measured by any of the following:

          (i) (x) the Aircraft, the Airframe, any Engine or any Part thereof, or
 interest therein, this Lease or any of the other Operative Documents, (y) the
 importation, exportation, condition, manufacture, purchase (under the
 Operative Documents or otherwise), ownership, delivery, redelivery,
 nondelivery, acceptance, rejection, assignment, possession, repossession,
 return, use, performance, operation, control, settlement of any insurance or
 other claim, sale, mortgaging, pledging, financing, leasing, subleasing, liens,
 rental, retirement, abandonment, registration, preparation, installation,
 modification, repair, testing, maintenance, replacement, transportation,
 storage, location, condition, registration, reregistration, deregistration,
 sale, transfer of title or other application or disposition of the Aircraft,
 the Airframe, any Engine or any Part thereof or (z) the rentals, receipts or
 earnings arising therefrom (including without limitation the Rent) and any
 other amounts paid or payable with respect thereto or under any Operative
 Document, or

          (ii) the Lease or the other Operative Documents, or

          (iii) otherwise with respect to or in connection with the transactions
 contemplated by the Lease and the other Operative Documents.

                   (c) EXCEPTIONS TO INDEMNITY. The indemnity provided for in
 Section 10(b) does not extend to any of the following Taxes:

          (i) Taxes imposed on any Indemnitee in any jurisdiction in which such
 Indemnitee is subject to such Taxes solely as a result of transactions or
 activities unrelated to the transactions or activities contemplated by the
 Operative Documents;

                                      -42-

<PAGE>

          (ii) Taxes imposed on an Indemnitee as a result of a voluntary
 transfer or other disposition of the Aircraft or this Lease or any interest in
 either thereof by the Lessor or such Indemnitee unless such transfer or
 disposition occurs pursuant to the exercise of remedies arising out of an Event
 of Default (provided that Lessor and such Indemnitee shall in such event
 consider in good faith any reasonable request by Lessee concerning an
 appropriate jurisdiction in which such sale, transfer or disposition shall be
 made);

          (iii) Taxes attributable solely to events or circumstances occurring
 or arising after return of the Aircraft to Lessor in accordance with this Lease
 and the performance by Lessee of all of its obligations hereunder;

          (iv) Taxes on an Indemnitee resulting solely as a direct result of the
 breach of this Lease, gross negligence or willful misconduct of such
 Indemnitee;

          (v) Taxes which (A) are United States federal income Taxes (other than
 United States Withholding Taxes or United States Transportation Taxes) or any
 value added, consumption or similar Taxes which are imposed in lieu of or in
 replacement of United States federal income Taxes to which the relevant
 Indemnitee was theretofore subject or (B) are Taxes on, based on, or measured
 by the net income of an Indemnitee and are imposed by any Governmental Entity
 (other than the United States) or taxing authority thereof (or any Taxes which
 are expressly imposed by such Governmental Entity or taxing authority in lieu
 of Taxes on, based on, or measured by net income) except to the extent that
 such Taxes are imposed by reason of the use or operation of the Aircraft, the
 presence of Lessee or the making of payments by Lessee from, such jurisdiction;
 PROVIDED, HOWEVER, that this exclusion shall not apply to Taxes which are, or
 are in the nature of, sales, use, excise and similar Taxes;

          (vi) Taxes (other than Taxes described in Section 10(c)(v)) which are
 imposed in any taxing jurisdiction except to the extent that (A) such Taxes are
 imposed solely by reason of the use or operation of the Aircraft, the presence
 of Lessee or the making of payments by Lessee from, such jurisdiction ("Use
 Jurisdiction Taxes") and (B) such Use Jurisdiction Taxes exceed in the
 aggregate the amount of Taxes which would have been payable in such
 jurisdiction in the absence therein of the use or operation of the Aircraft,
 the presence of Lessee or the making of payments by Lessee from, such
 jurisdiction;

                                      -43-

<PAGE>

          (vii) Taxes arising out of, with respect to, based on or measured by
 the granting by any Indemnitee of a security interest in the Aircraft or any
 portion thereof or the value or principal amount of any debt created by any
 Indemnitee; or

          (viii) Taxes for which the relevant Indemnitee has expressly assumed
 responsibility under this Lease or any other Operative Document.

                   (d) AFTER TAX BASIS. The amount which Lessee is required to
 pay or indemnify against with respect to any amounts required to be paid or
 indemnified against under this Section 10 or Section 13 shall include an
 additional amount necessary to hold the recipient of the payment or indemnity
 harmless on an after-tax basis from all Taxes (whether or not such taxes are
 excluded under Section 10(a) or 10(c)), required to be paid by such recipient
 with respect to such payment or indemnity, so as to restore the recipient on an
 after-tax basis to the same position such recipient would have been in had such
 amounts not been incurred or payable, after giving credit to Lessee for any
 savings by such recipient in respect to any such Taxes by reason of deductions,
 credits, allocations, or allowances in respect of the payment or accrual of the
 amount indemnified against, including, without limitation, amounts described in
 Section 10(a), Section 10(b) and/or this Section 10(d). All determinations as
 to the amount and timing of realization of such tax savings shall be made by
 the relevant Indemnitee in its sole good faith discretion, it being understood
 that (i) Lessee shall have no right to examine or inspect any tax returns or
 reports of such Indemnitee or any documents or records relating thereto, and
 that (ii) a failure by the relevant Indemnitee to comply with its obligations
 under this Section 10(d) shall not excuse Lessee from the performance of its
 obligations under this Section 10 or Section 13.

                   (e) TIMING OF PAYMENT. Any amount due and payable to the
 relevant Indemnitee pursuant to this Section 10 will be paid within 10 days
 after receipt of a written demand therefor from such Indemnitee accompanied by
 a written statement describing in reasonable detail the basis for such
 indemnity and the computation of the amount so payable; PROVIDED, HOWEVER, that
 such amount need not be paid by Lessee prior to the later of (i) five days
 prior to the date the applicable Tax is payable to the appropriate Governmental
 Entity or taxing authority or (ii) in the case of amounts which are being
 contested by Lessee in good faith or by Lessor pursuant to Section 10(f), the
 date such contest is finally resolved. If requested in writing by Lessee, and
 at Lessee's sole cost and expense, any calculations by an Indemnitee of any
 amount due and payable

                                      -44-

<PAGE>

 hereunder shall be subject to review and verification by a firm of independent
 certified public accounts of internationally recognized stature selected by
 such Indemnitee and reasonably acceptable to Lessee (such approval not to be
 unreasonably withheld or delayed). Such Indemnitee shall make available to such
 accounting firm such information as shall be necessary for purposes of such
 review and verification (but such information shall be held by such accounting
 firm in strictest confidence and shall not in any event be disclosed or made
 available to Lessee). If the result of such review is that Lessee was liable
 for a smaller amount, the excess payment shall be returned by such Indemnitee
 forthwith.

                   (f) TAX CONTESTS. (i) If written claim is made against an
 Indemnitee for, or any Indemnitee acquires actual knowledge of a claim relating
 to, Taxes with respect to which Lessee is or may be liable for a payment or
 indemnity hereunder, such Indemnitee will, and Lessor shall cause such
 Indemnitee to, promptly give Lessee notice in writing of such claim or Tax;
 PROVIDED, HOWEVER, that such Indemnitee's failure to give notice will not
 relieve Lessee of its obligations hereunder, except as to Taxes and expenses
 which would have been avoidable in the absence of, and penalties resulting
 from, such Indemnitee's failure to give such notice. So long as (i) a contest
 of such Taxes does not involve any danger of the sale, forfeiture or loss of
 the Aircraft or any interest therein, (ii) Lessee has provided Lessor with an
 opinion of independent tax counsel acceptable to such Indemnitee that a
 meritorious basis exists for contesting such claim and (iii) Lessee has made
 adequate reserves for such Taxes or, if required by the relevant Indemnitee, an
 adequate bond has been posted by Lessee, then the Indemnitee at Lessee's
 written request will in good faith, with due diligence and at Lessee's sole
 cost and expense, contest (or, upon Lessee's written request, permit Lessee to
 contest in the name of the Indemnitee) the validity, applicability or amount of
 such Taxes. If such contest is to be initiated by the payment of, and the
 claiming of a refund for, any Taxes, Lessee shall advance to the relevant
 Indemnitee sufficient funds (on an interest-free basis) to make such payments
 and shall have agreed to indemnify such Indemnitee for any tax consequences
 resulting from such advance of funds. Although the relevant Indemnitee may
 consult in good faith with Lessee concerning the conduct of any contest, such
 Indemnitee shall control the conduct of all proceedings relating to any such
 contest which is brought by or on behalf of such Indemnitee. Any contest
 initiated hereunder may be settled or discontinued by the relevant Indemnitee
 at any time provided that such Indemnitee shall have waived any right to
 indemnification for the Taxes being contested. Notwithstanding the foregoing,
 if (x) a claim relates solely to Taxes for which

                                      -45-

<PAGE>

 the Lessee has acknowledged in writing that it is liable under this Section 10,
 (y) such claim can be severed and contested separately from all other claims
 asserted against the relevant Indemnitee by the same taxing authority, and (z)
 Lessee has made adequate reserves for the Taxes claimed or, if requested by
 such Indemnitee, has posted an adequate bond for the payment of such Taxes,
 then Lessee may, at its sole cost and expense, assume control of the contest of
 such claim, provided that Lessee shall keep such Indemnitee fully informed as
 to the conduct of all proceedings relating to such contest.

                   (g) REFUNDS. Upon receipt by the relevant Indemnitee of a
 refund of all or any part of any Taxes (including without limitation any
 deductions or withholdings referred to in Section 10(a)) which Lessee has paid,
 such Indemnitee will, and Lessor will cause such Indemnitee to, pay to Lessee
 the net amount of such taxes refunded, together with any interest (and, to the
 extent previously paid by Lessee, any attorneys' fees or other costs awarded as
 a result of a contest pursuant to Section 10(f)) received by such Indemnitee
 with respect thereto; PROVIDED, HOWEVER, that no amount shall be payable to the
 Lessee under this Section 10(g) if a Default or an Event of Default shall have
 occurred and be continuing or prior to the time that Lessee shall have paid to
 the relevant Indemnitee all amounts then due and owing to such Indemnitee under
 this Section 10.

                   (h) COOPERATION IN FILING TAX RETURNS. In case any report or
 return is required with respect to any Taxes which are subject to
 indemnification by Lessee under this Section 10, Lessee will either make such
 report or return in such manner as will show the respective interests of Lessor
 and/or each relevant Indemnitee in the Aircraft, and send a copy of such report
 or return to Lessor and such Indemnitee or will notify the Lessor or such
 Indemnitee of such requirement, prepare such report or return in such manner as
 shall be reasonably satisfactory to the Lessor or such Indemnitee, and present
 such report or return to Lessor or such Indemnitee for execution and proper
 filing. If actual notice is given by any taxing authority to an Indemnitee that
 a report or return is required to be filed with respect to any such Taxes
 referred to in this Section 10, the Indemnitee shall, and Lessor shall cause
 the Indemnitee to, promptly notify Lessee of such required report or return.
 Each Indemnitee agrees, and Lessor shall cause each Indemnitee, to respond to
 any reasonable request of Lessee for information within the control of such
 Indemnitee with respect to the filing of any such report or return, but Lessee
 agrees to pay any reasonable costs, fees or other charges of independent
 counsel or independent accountants incurred in connection with such response or
 request. Lessee will cooperate with each Indemnitee in providing

                                      -46-

<PAGE>

 information which may reasonably be required to fulfill such Indemnitee's tax
 filing requirements and any audit information request arising from such filing.
 Each Indemnitee shall, and Lessor shall cause each Indemnitee to, cooperate
 with Lessee in providing information which may reasonably be required to
 fulfill Lessee's tax filing requirements and any audit information request
 arising from such filing.

                   (i) TAX SAVINGS. If as a result of the payment or accrual of
 Taxes paid or indemnified by the Lessee an Indemnitee shall realize and
 recognize any savings with respect to Taxes, such Indemnitee shall promptly
 notify the Lessee that it has realized and recognized such savings and shall
 pay to the Lessee within thirty (30) days of the realization of such savings an
 amount equal to (i) the net reduction in Taxes realized and recognized by such
 Indemnitee and (ii) the amount of any further net reduction in taxes realized
 and recognized under such tax laws as a result of payments pursuant to this
 sentence; PROVIDED, HOWEVER, that no amount shall be payable to the Lessee
 under this Section 10(i) if a Default or an Event of Default shall have
 occurred and be continuing or prior to the time that Lessee shall have paid to
 the relevant Indemnitee all amounts then due and owing to such Indemnitee under
 this Section 10 and that a subsequent disallowance of any such tax savings
 shall be subject to indemnity hereunder without regard to any exclusions set
 forth in this Section 10. All determinations as to the amount and timing of
 realization of such tax savings shall be made by the relevant Indemnitee in its
 sole good faith discretion, it being understood that (i) Lessee shall have no
 right to examine or inspect any tax returns or reports of such Indemnitee
 or any documents or records relating thereto, and that (ii) a failure by the
 relevant Indemnitee to comply with its obligations under this Section 10(i)
 shall not excuse Lessee from the performance of its obligations under this
 Section 10.

                   (j) REVERSE INDEMNITY. If Lessee shall be required to pay any
 amount attributable to Taxes of any Indemnitee for which Lessee is not
 responsible under this Section 10, such Indemnitee shall reimburse Lessee for
 the amount of any such excess payment within 5 days after demand therefor.

                   Section 11. CASUALTY OCCURRENCES.

                   (a) CASUALTY OCCURRENCE WITH RESPECT TO THE AIRFRAME.
 Promptly (and in any event within seven (7) days) after a Casualty Occurrence
 with respect to the Airframe and any Engine then installed thereon, Lessee
 shall give Lessor and each Beneficiary written notice of such occurrence. On
 the thirtieth (30th) day (or earlier if the insurance or

                                      -47-

<PAGE>

 other proceeds have been paid earlier) after the date of the Casualty
 Occurrence, Lessee shall pay to Lessor in immediately available funds the
 sum  of (A) the Casualty Value of the Aircraft less an amount equal to the
 daily  equivalent of Basic Rent (computed on the basis of a 365-day year)
 for each day  during the period commencing the day after the payment of
 Casualty Value and  extending to the day before the Basic Rent Payment Date
 immediately succeeding the date of payment of such Casualty Value and (B)
 all other Rent, other than  amounts paid pursuant to clause (A), then due
 and payable. Upon such payment  (i) the obligation of Lessee to make further
 payments of Basic Rent hereunder  shall terminate, (ii) the Term shall
 terminate with respect to the Aircraft and  (iii) Lessor will transfer to
 Lessee or applicable insurer, free and clear of Lessor's Liens and all other
 Liens arising by or through Lessor, any Beneficiary or any Lender but
 otherwise without recourse or warranty, all of Lessor's right, title and
 interest, if any, in and to the Airframe and Engines (if any) suffering the
 Casualty Occurrence, as well as all of Lessor's right, title and interest in
 and to any Engine constituting part of the Aircraft but not installed
 thereon at the time of the Casualty Occurrence; provided, however, that
 there shall be excluded from such transfer any and all claims against any
 Persons which arose prior to the date of such transfer, including without
 limitation any and all claims against any Persons who may have been
 responsible, in whole or in part, for the events giving rise to such
 Casualty Occurrence.

                   (b) CASUALTY OCCURRENCE WITH RESPECT TO AN ENGINE. Upon a
 Casualty Occurrence with respect to an Engine only, Lessee shall give Lessor
 and each Beneficiary prompt written notice thereof and shall, within forty-five
 (45) days after such occurrence, convey to Lessor, as replacement for the
 Engine suffering a Casualty Occurrence, title to a Replacement Engine;
 PROVIDED, HOWEVER, that such 45-day period shall be extended to 180 days after
 the occurrence of such Casualty Occurrence if Lessee shall, prior to the end of
 such 45-day period, have delivered to Lessor or the Beneficiaries all proceeds
 of the insurance payable with respect to such damaged Engine and the amount of
 such proceeds is at least equal to the replacement value thereof (as determined
 reasonably and in good faith by the Beneficiaries). Each Replacement Engine
 shall be (i) free of all Liens, (ii) in as good an operating condition as the
 Engine being replaced, assuming the Engine being replaced was in the condition
 and repair required by the terms hereof immediately prior to the Casualty
 Occurrence, and (iii) in a condition (including as to the status of all logs,
 records and technical documents) acceptable to the Beneficiaries in their sole
 discretion, as evidenced by their written acknowledgement thereof. Prior to or
 at the time of any such conveyance, Lessee, at its own expense, will promptly

                                      -48-

<PAGE>

 (i) furnish Lessor with a full warranty bill of sale, in form and substance
 reasonably satisfactory to Lessor and each Beneficiary, with respect to such
 Replacement Engine; (ii) cause a supplement hereto, in form and substance
 reasonably satisfactory to Lessor and each Beneficiary, subjecting such
 Replacement Engine to this Lease, to be duly executed by Lessee, and recorded
 pursuant to applicable Law; (iii) furnish Lessor and each Beneficiary with such
 evidence of title to such Replacement Engine and of compliance with the
 insurance provisions of Section 12 hereof with respect to such Replacement
 Engine as Lessor or such Beneficiary may reasonably request; (iv) if reasonably
 requested by Lessor or any Beneficiary, furnish Lessor with an opinion of
 Lessee's counsel to the effect that title to such Replacement Engine has been
 duly conveyed to Lessor and each Beneficiary, and that such Replacement Engine
 is duly leased hereunder; (vi) furnish a certificate signed by a duly
 authorized financial officer or executive of Lessee certifying that, upon
 consummation of such replacement, no Default will exist hereunder; (vii)
 furnish Lessor and each Beneficiary with such documents (including but not
 limited to all technical documents) as Lessor or such Beneficiary may
 reasonably request in connection with the consummation of the transactions
 contemplated by this Section 11(b), in each case in form and substance
 satisfactory to Lessor and such Beneficiary; and (viii) furnish such financing
 statement covering the Replacement Engine as may be requested by Lessor or any
 Beneficiary. Upon full compliance by Lessee with the terms of this Section
 11(b), Lessor will transfer to Lessee all of Lessor's right, title and interest
 in the Engine which suffered the Casualty Occurrence free and clear of Lessor's
 Liens and all other Liens arising by or through Lessor, any Beneficiary or any
 Lender. For all purposes hereof, each such Replacement Engine shall be deemed
 part of the property leased hereunder, shall be deemed an "Engine" as defined
 herein and shall be deemed part of the Aircraft. No Casualty Occurrence covered
 by this Section 11(b) shall result in any reduction in Rent.

                   (c) APPLICATION OF PROCEEDS AND PAYMENTS. Any payments
 received at any time by Lessor or by Lessee from any insurer under any policy
 of insurance (other than liability insurance) shall be applied in the manner
 specified in Section 12(d), 12(e) or 12(f) hereof as applicable. Subject to
 Section 11(f) hereof, any payments received at any time by Lessor or Lessee
 from any Governmental Entity or other Person with respect to a Casualty
 Occurrence will be applied as follows:

          (i) unless clause (ii) below is applicable, so much of such
     payments  as shall not exceed the Casualty Value required to be paid by
     Lessee

                                      -49-

<PAGE>

     pursuant to Section 11(a) of this Lease shall be paid to Lessor in
     reduction of  Lessee's obligation to pay such Casualty Value if not
     already paid by Lessee  or, if already paid by Lessee (unless a Default
     shall have occurred and be  continuing), shall be applied by Lessor to
     reimburse Lessee for its payment of  such Casualty Value and the balance
     of such payment, if any, remaining  thereafter (if such payment is
     received with respect to insurance other than  liability insurance)
     (unless a Default shall have occurred and be continuing)  shall be paid
     over to, or retained by, Lessee, except to the extent any such  amount
     is specifically allocable to an interest of Lessor; or

        (ii) if such payments are received as a result of a Casualty
     Occurrence  with respect to an Engine which is being replaced pursuant
     to Section 11(b),  unless a Default shall have occurred and be
     continuing (and except as otherwise  contemplated by Section 11(b) if
     the 45-day period specified for the  replacement thereof is to be
     extended to 180 days, as therein provided), all  such payments shall be
     paid over to, or retained by, Lessee if Lessee shall  have fully
     performed or, concurrently therewith has fully performed, the terms  of
     Section 11(b) and of Section 15 hereof with respect to the Casualty
     Occurrence for which such payments are made.

                   (d) REQUISITION FOR USE BY GOVERNMENT WITH RESPECT TO THE
 AIRCRAFT. In the event of the requisition for use by a Governmental Entity of
 the Airframe or any Engine (other than a requisition constituting a Casualty
 Occurrence), all Lessee's obligations under this Lease with respect to the
 Airframe or Engine shall continue to the same extent as if such requisition had
 not occurred. All payments received by Lessor or Lessee from the Governmental
 Entity for the use of the Airframe or Engine during the Term therefor shall be
 paid over to, or retained by, Lessee if no Default shall have occurred and be
 continuing; and all payments received by Lessor or Lessee from the Governmental
 Entity for the use of such item after the Term therefor shall be paid over to,
 or retained by, Lessor.

                   (e) OTHER DISPOSITIONS. Any amounts not payable to or
 retainable by Lessee pursuant to this Section 11 or Section 12 hereof because a
 Default shall have occurred and be continuing shall be held by Lessor and shall
 be paid over to Lessee when such Default shall cease to be continuing, except
 that if Lessor shall have theretofore declared this Lease to be in default
 pursuant to Section 18 hereof, such amounts shall be retained by Lessor and
 disposed of in

                                      -50-

<PAGE>

 accordance with the provisions thereof, with any balance remaining to be paid
 to Lessee.

                   (f) APPLICATION IN DEFAULT. Any amount referred to in clause
 (i) or (ii) of Section 11(c) which is otherwise payable to Lessee shall not be
 paid to Lessee, or, if it has been previously paid to Lessee, and not yet
 applied by Lessee as permitted or required hereunder shall be delivered from
 Lessee to Lessor if at the time of such payment a Default shall have occurred
 and be continuing. In such case, all such amounts shall be paid to and held by
 Lessor as security for the obligations of Lessee or, at the option of Lessor,
 applied by Lessor toward payment of any of Lessee's obligations at the time due
 hereunder, as Lessor may elect. At such time as there shall not be continuing
 any such Default, all such amounts at the time held by Lessor in excess of the
 amount, if any, which Lessor has elected for application as provided above
 shall be paid to Lessee.

 Section 12. INSURANCE.

                   (a) PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE. Lessee
 will carry and maintain in effect, at its own expense, with Approved Insurers,
 comprehensive public liability insurance (including, without limitation,
 contractual liability and passenger legal liability) and property damage
 insurance with respect to the Aircraft of the type usual and customary by
 commercial scheduled airline standards for airline carriers operating similar
 aircraft and providing for no less coverage than is carried by Lessee on
 similar aircraft in its fleet. Such insurance shall be in an amount not less
 than the amount applicable to similar passenger aircraft and engines which
 comprise Lessee's fleet, and in any event not less than the amount under
 "Public Liability and Property Damage Insurance" as set forth on Exhibit C-2
 hereto Lessee shall not discriminate against the Aircraft in providing such
 insurance.

                   (b) INSURANCE AGAINST LOSS OR DAMAGE. Lessee, at its own
 expense, will maintain in effect with Approved Insurers "all-risk" ground and
 flight aircraft hull insurance (which shall include, but not be limited to,
 comprehensive war risk and allied perils, hijacking, a disappearance clause and
 coverage against strikes, riots, commotions or labor disturbances, malicious
 acts or acts of sabotage and unlawful seizure (including confiscation, arrest,
 nationalization, seizure, restraint, detention, appropriation, requisition or
 destruction thereat, by or under authority of any Governmental Entity), or
 wrongful exercise of control of the Aircraft in flight by a person on board the
 Aircraft acting without the consent of Lessee) covering the Aircraft and "all
 risk" coverage insurance with

                                      -51-

<PAGE>

 respect to Engines and Parts while not installed on the Aircraft or an
 aircraft, which in each case is at least as broad as coverage maintained by
 passenger airlines similarly situated to Lessee and operating similar aircraft
 and engines which comprise Lessee's fleet (it being understood that the
 obligations hereby imposed upon Lessee by reference to coverage maintained by
 other airlines is not intended to result in an increase in the definition of
 Casualty Value). Such insurance shall be for an amount not less than the
 Casualty Value for the Aircraft and, where "all-risk" hull and war risk are
 insured separately, shall, in relation to the applicable policies, incorporate
 a 50/50 clause based on AVS 103, between the underwriters. Such insurance may
 include provisions for deductibles in an amount usual and customary by
 commercial scheduled airline standards for airline carriers operating similar
 aircraft provided that (i) the amount of such deductibles must be no greater
 than the lowest deductible amount applying to any B737-25A aircraft in Lessee's
 fleet and (ii) in no event shall the amount of such deductibles exceed the
 amount under "Deductible Amount" set forth on Exhibit C-2 hereto.

                   (c) REQUIRED POLICY DESIGNATIONS AND PROVISIONS. Each and any
 policy of insurance obtained and maintained pursuant to this Section, and each
 and any policy obtained in substitution or replacement for any such policies,
 shall: (i) designate Lessor as owner of the Aircraft covered thereby, and shall
 designate Lessor (in its individual capacity and as Owner Trustee), each
 Beneficiary and their assigns as additional insureds (and, with respect to each
 policy of insurance obtained and maintained pursuant to Section 12(b) hereof,
 Beneficiaries as loss payee), as their interests may appear warranted each as
 to itself no operational interest (but without imposing upon Lessor, any
 Beneficiary or their assigns, any obligation to pay any premiums for any such
 policies); (ii) expressly provide that, in respect of the interests of Lessor,
 each Beneficiary and their assigns, in such policies, the insurance shall not
 be invalidated by any action or omission of Lessee, and shall insure Lessor,
 such Beneficiary and their assigns, regardless of any breach or violation of
 any warranty, declaration or condition contained in such policies by Lessee;
 (iii) provide that if such insurance is canceled by the Approved Insurers for
 any reason whatsoever, or is adversely changed in any way with respect to the
 interests of Lessor, any Beneficiary or their assigns, or if such insurance is
 allowed to lapse for nonpayment of premium, such cancellation, adverse change
 or lapse shall not be effective as to Lessor, such Beneficiary and their
 assigns, for thirty (30) days (seven (7) days or such lesser period as may be
 applicable in the case of any war risks or allied perils coverage) after
 receipt by Lessor and such Beneficiary of written notice by such insurer or
 insurers to

                                      -52-

<PAGE>

 Lessor and such Beneficiary of such prospective cancellation, change or lapse,
 (iv) include coverage for the territorial limits of any country in which the
 Aircraft may at any time be located; (v) provide that, as against Lessor, each
 Beneficiary and their assigns, the insurer waives any rights of set-off,
 counterclaim or any other deduction, whether by attachment or otherwise, and
 waives any rights it may have to be subrogated to any right of any insured
 against Lessor, such Beneficiary or their assigns, with respect to the Aircraft
 to the same extent that Lessee has waived its rights of subrogation by the
 terms of its agreements to indemnify any such party pursuant to this Lease; and
 (vi) provide that (a) unless Lessor or any Beneficiary shall provide written
 notice to the Approved Insurers that an Event of Default shall have occurred
 and be continuing, any payment in respect of any damage or loss not in excess
 of $500,000 shall be payable directly to the Lessee or its order; PROVIDED,
 that Lessor and each Beneficiary shall be given prompt written notice of any
 payment in respect of any damage or loss to the Aircraft in excess of $150,000
 and (b) any payment in respect of any damage or loss in excess of $500,000 (or
 all proceeds whether or not in excess of $500,000 if an Event of Default shall
 have occurred and be continuing), shall be payable directly to the
 Beneficiaries or their assignees as loss payees, for the account of all
 interests. Each such liability policy shall be primary without right of
 contribution from any other insurance which may be carried by Lessor, any
 Beneficiary or their assigns, and shall expressly provide that all of the
 provisions thereof shall operate in the same manner as if there were a separate
 policy covering each insured, provided that such provisions shall not operate
 to increase the insurer's limit of liability.

                   Lessee shall have the right to carry insurance in reasonable
 excess of the amounts required hereunder and the proceeds of such excess
 insurance shall be payable to Lessee; PROVIDED that any such excess insurance
 shall not prejudice the insurance required to be maintained by Lessee hereunder
 and Lessee shall, upon request of a Beneficiary, notify the Beneficiaries of
 the nature and amount of such excess insurance. Similarly, Lessor and each
 Beneficiary shall have the right to carry additional and separate insurance for
 its own benefit at its own expense, without, however, thereby limiting Lessee's
 obligations under this Section 12.

                   (d) APPLICATION OF INSURANCE PROCEEDS FOR A CASUALTY
 OCCURRENCE. It is agreed that insurance payments which arise from any policy of
 insurance carried by Lessee and received as the result of the occurrence of a
 Casualty Occurrence shall be applied as follows:

                                      -53-

<PAGE>

                   (i) if such payments are received with respect to a Casualty
      Occurrence relating to the Airframe and Engines or engines installed on
      the Airframe, so much of such payments as shall not exceed the amounts
      due under Section 11(a) hereof shall be paid to Lessor for immediate
      application toward sums owed by Lessee, and the balance to Lessee; and

                   (ii) if such payments are received with respect to a Casualty
      Occurrence  relating to an Engine under circumstances contemplated by
      Section 11(b) hereof, such payment shall be paid over to Lessee,
      provided that Lessee shall have fully performed or, concurrently
      therewith, fully performs the terms of Section 11(b) hereof.

                   (e) APPLICATION OF INSURANCE PROCEEDS FOR OTHER THAN A
CASUALTY OCCURRENCE. As between Lessor and Lessee all insurance payments in
excess of $500,000 that are received by Lessor or the Beneficiaries under
policies required to be maintained by Lessee pursuant to Section 12(b) as a
result of any property damage or loss to the Airframe or any Engine not
constituting a Casualty Occurrence, or to any Part will be held by Lessor or
the Beneficiaries until Lessee furnishes Lessor with satisfactory evidence
that the repairs or replacement property Lessee is required to perform or
obtain in accordance with the terms of Section 9 of this Lease have been made
or obtained by Lessee or, to the extent necessary to enable Lessee to make
required progress payments in accordance with the workscope relating to the
repair of the Aircraft, Lessor or the Beneficiaries shall make such interim
progress payments upon receipt of copies of appropriate invoices or other
evidence of the completion of the related work or the purchasing of related
materials in accordance with the terms of such workscope or the related
repair contract. Upon receipt of such evidence of repair or replacement,
Lessor shall pay Lessee the amount of the insurance payment received with
respect to such loss less the amount of any progress payments made to Lessee
pursuant to this Section 12(e).

                   (f) APPLICATION IN DEFAULT. Any amount referred to in
Section 12(d)(i) or (ii) or Section 12(e) which is otherwise payable to
Lessee shall not be paid to Lessee, or, if it has been previously paid to
Lessee, shall be delivered by Lessee to Lessor, if at the time of such
payment, an Event of Default shall have occurred and be continuing. In either
case, all such amounts shall be held by Lessor as security for the
obligations of Lessee or, at the option of Lessor, applied by Lessor toward
payment of any of Lessee's obligations at the time due hereunder. At such
time as

                                     -54-
<PAGE>

there shall not be continuing any such Event of Default, all such amounts at
the time held by Lessor in excess of the amount, if any, which Lessor has
elected for application as provided above shall be paid to Lessee.

                   (g) CERTIFICATES OF INSURANCE. On or before the Delivery
Date, and thereafter on each renewal by Lessee of the insurance required
hereby, but not less often than annually, Lessee will furnish to Lessor and
each Beneficiary a certificate executed and delivered by an Approved Insurance
Broker who is authorized by an Approved Insurer, appointed by Lessee,
describing in reasonable detail insurance carried on the Aircraft and
certifying that the insurance then maintained on the Aircraft complies with
Section 12 of this Lease. Lessee will cause such Approved Insurance Broker who
is authorized by an Approved Insurer to agree to advise Lessor and each
Beneficiary in writing at least thirty (30) days (seven (7) days or such lesser
period as may be applicable in the case of any war risk and allied perils
coverage) prior to the termination or cancellation by the underwriters for any
reason (including, without limitation, failure to pay the premium therefor) of
any such insurance. Lessee further agrees to cause such Approved Insurance
Broker (i) to advise Lessor and each Beneficiary in writing (x) as soon as such
Approved Insurance Broker has knowledge that any insurance coverage carried and
maintained on the Aircraft pursuant to this Section 12 will not be renewed or
available upon expiration of the then existing insurance and (y) not later than
seven (7) days prior to the expiration of the then existing insurance if Lessee
has not given notice renewal instructions to the Approved Insurance Broker, and
(ii) to deliver directly to Lessor and each Beneficiary the certificate of
insurance described above in this paragraph (g) upon such renewal.

                   (h) Any insurance described above shall be placed and
maintained throughout the Term in the London, Tokyo, United States, French or
German aviation insurance markets with Approved Insurers, and Lessee's
obligations under this Section 12 shall not be terminated or diminished in any
respect for any reason, including any subleasing of the Aircraft; PROVIDED,
HOWEVER, that if, in connection with any sublease of the Aircraft permitted
hereby, the Permitted Sublessee is required by law to place or maintain some or
any part of the insurance required hereby in an aviation insurance market other
than the London, Tokyo, United States, French or German aviation insurance
market, then Lessee shall cause such Permitted Sublessee to place and maintain
in the London, Tokyo or United States aviation insurance market re-insurance
policies fully covering such insurance, and any such re-insurance policy shall
contain a "cut through" clause in form, scope and substance reasonably
satisfactory to Lessor and each Beneficiary. In the event

                                     -55-
<PAGE>

of any sublease of the Aircraft, Lessee shall cause to be delivered to Lessor
and to each Beneficiary at least five Business Days prior to the commencement
of such sublease, appropriate certificates of insurance and re-insurance
complying with the requirements of CLAUSE (g) above.

                   (i) Notwithstanding anything in this Section 12 to the
contrary, during the period of any CRAF activation contemplated in Section
11(d) of this Lease, Lessor will accept the indemnification by the full faith
and credit of the United States government in lieu of the insurance coverage
required by this Section 12; provided, however, that (i) such indemnification
by the United States government shall provide coverage against the same risks
and on the terms as the risks and terms required by Section 12, (ii) such
indemnification shall be in amounts that are not less than the insurance
coverage contemplated in this Section 12, and (iii) Lessee shall not subject
the Aircraft to the CRAF program without the Beneficiaries, prior written
consent.

                   Section 13. INDEMNIFICATION.

                   Subject only to the limitations described in the last
paragraph of this Section 13, Lessee agrees to indemnify, reimburse, hold
harmless, protect and defend each Indemnitee for, from and against any and all
claims, damages, losses, liabilities, demands, suits, judgments, causes of
action, legal proceedings, whether civil or criminal, penalties, fines and
other sanctions, and any reasonable attorney's fees and other reasonable costs
and expenses in connection herewith or therewith, including any of the
foregoing arising or imposed with or without Lessor's or Beneficiaries' fault
or negligence (whether passive or active) or under the doctrine of strict
liability (any and all of which are hereafter referred to as "Claims") which in
any way may result from, pertain to or arise in any manner out of, or are in
any manner related to (i) the Aircraft or any this Lease or Operative Documents
or any document executed in connection herewith, or the breach of any
representation, warranty or agreement made by Lessee hereunder or under any
other such document, or (ii) the condition, manufacture, re-delivery, lease,
acceptance, rejection, possession, return, disposition, storage, maintenance,
use or operation of the Aircraft either in the air or on the ground, or (iii)
any defect in the Aircraft (whether or not discovered or discoverable by Lessee
or Lessor or any Beneficiary) arising from the material or any articles used
therein or from the design, testing or use thereof or from any maintenance,
service, repair, overhaul or testing of the Aircraft, whether or not the
Aircraft is in the possession of Lessee, and regardless of where the Aircraft
may then be located, or (iv) any transaction,

                                     -56-
<PAGE>

approval or document contemplated by this Lease, Operative Documents or given
or entered into in connection herewith; provided, however, that Lessee shall be
subrogated to all rights and remedies which Lessor may have against the
Manufacturer of the Aircraft and its subcontractors or any other party as to
any such Claims, but only to the extent that Lessee satisfies its
indemnification to the Indemnitees with respect to such Claims. Nothing herein
shall require Lessee to indemnify any Indemnitee in respect of any Claim to the
extent the facts or circumstances that form the basis for such Claim arose or
existed prior to the Delivery Date, unless such Claim or any losses, costs
(including attorneys, fees or expenses) or damages arise or are increased as a
result of a breach by Lessee of its agreements herein or otherwise relate to
such a breach (including the breach of any obligation to remedy a fact or
circumstance that arose or existed prior to the Delivery Date). In the event
Lessee is required to indemnify any Indemnitee hereunder, Lessee shall, upon
demand, pay to such Indemnitee an amount which, after deduction of all Taxes
and like charges required to be paid by such Indemnitee in respect of such
payment, is equal to the amount of the indemnification required; provided,
however, that Lessee shall not be required to pay or discharge any Claim
brought by a third party so long as the validity or the amount thereof shall be
diligently contested in good faith and on reasonable grounds by Lessee, at no
cost or expense to Lessor.

                   Subject to Lessee's rights under Section 20(f), Lessee hereby
waives, and releases each Indemnitee from, any Claims (whether existing now or
hereafter arising) for or on account of or arising or in any way connected with
injury to or death of personnel of Lessee or loss or damage to property of
Lessee or the loss of use of any property which may result from or arise in any
manner out of or in relation to the ownership, leasing, condition, use or
operation of the Aircraft, either in the air or on the ground, or which may be
caused by any defect in the Aircraft from the material or any article used
therein or from the design or testing thereof, or use thereof, or from any
maintenance, service, repair, overhaul or testing of the Aircraft regardless of
when such defect may be discovered, whether or not the Aircraft is at the time
in the possession of Lessee, and regardless of the location of the Aircraft at
any such time.

                   The indemnities contained in this Section 13 shall continue
in full force and effect notwithstanding the expiration or other termination of
this Lease and are expressly made for the benefit of and shall be enforceable
by each Indemnitee; PROVIDED, that, unless an Event of Default shall have
occurred and be continuing, Lessee shall not be obligated to pay any indemnity
pursuant to this

                                     -57-
<PAGE>

Section 13 with respect to any amount to the extent that such amount arises out
of or is measured by acts, failures to act, events or periods of time (or any
combination of the foregoing) that occur after the Aircraft has been
redelivered to Lessor pursuant to and in accordance with Section 16 hereof
(under circumstances not involving a repossession pursuant to Section 18
hereof) and is no longer subject to this Lease and all obligations of the
Lessee under this Lease have been discharged (other than obligations which by
their express terms survive the expiration of the Term of this Lease) unless
any such act or event shall itself result from or be attributable to an act or
omission of Lessee which occurred prior to the redelivery of the Aircraft and
the discharge of Lessee's obligations under the Lease.

                   Notwithstanding the foregoing provisions of this Section 13,
Lessee shall not be obligated to make any payment by way of indemnity to any
Indemnitee in respect of any Claims to the extent such Claims result from the
willful misconduct or gross negligence of such Indemnitee or to the extent
relating solely to the breach or misrepresentation of Lessor or a Beneficiary
under an Operative Document.

                   Section 14. LIENS.

                   Lessee shall not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to the Aircraft or
Engines, title thereto or any interest therein, except (i) the respective
rights of Lessor and Lessee as herein provided; (ii) Lessor's Liens or any
other Lien arising by or through Lessor, a Beneficiary or a Lender with
respect to the Aircraft or Engines; (iii) Liens for Taxes either not yet due
or being contested in accordance with Section 10 hereof, so long as adequate
reserves are maintained with respect to such Liens and so long as the
Aircraft or such Engine is not in danger of being lost, sold, confiscated,
forfeited or seized as a result of any such Lien or contest; and (iv)
inchoate materialmen's, mechanics', workmen's, repairmen's, employees' or
other like Liens arising in the ordinary course of business, which either are
not due and owing or are being contested in good faith by Lessee so long as
the Aircraft or such Engine is not in danger of being lost, sold,
confiscated, forfeited or seized as a result of any such Lien or contest.
Lessee shall promptly, at its own expense, take such action as may be
necessary to duly discharge any Lien (except for the Liens referred to in
clauses (i), (ii), (iii) and (iv) of this Section 14) if the same shall arise
at any time with respect to the Aircraft or any Engine (including any Part).

                                     -58-
<PAGE>

                   Section 15. PERFECTION OF TITLE AND FURTHER ASSURANCES.

                   If at any time, any filing or recording is reasonably
necessary to protect the interests of Lessor or the Beneficiaries, Lessee, upon
request by Lessor or any Beneficiary, shall cause this Lease and any and all
additional instruments which shall be executed pursuant to the terms hereof, to
be kept, filed and recorded and to be re-executed, re-filed and re-recorded in
the appropriate office or offices pursuant to applicable Laws, to perfect,
protect and preserve the rights and interests of Lessor hereunder and in the
Aircraft. At the reasonable request of Lessor or any Beneficiary, Lessee shall
furnish to Lessor and each Beneficiary an opinion of counsel or other evidence
satisfactory to Lessor of each such filing or re-filing and recordation or
re-recordation. All costs (including attorneys' fees and expenses) relating to
effecting and maintaining the registration of this Lease, including the Lease
Supplement, or any related document, shall be borne and paid by Lessee. All
costs (including attorneys' fees and expenses) relating to effecting and
maintaining the registration of the Aircraft with the FAA shall be borne and
paid by Lessor or the Beneficiaries, provided that Lessee shall cooperate with
Lessor and the Beneficiaries in connection therewith as provided above and bear
the cost of changing the registration number of the Aircraft.

                   Without limiting the foregoing, Lessee shall do or cause
to be done, at Lessee's cost and expense, any and all acts and things which
may be required under the terms of the Mortgage Convention to perfect and
preserve the title and interest of Lessor in the Aircraft within the
jurisdiction of any signatory which has ratified the Mortgage Convention if
such jurisdiction is in the territory in which Lessee intends to operate the
Aircraft, as Lessor or any Beneficiary may reasonably request. Lessee shall
also do or cause to be done, at its own expense, any and all acts and things
which may be required of an aircraft operator under the terms of any other
Law involving any jurisdiction in which Lessee intends to operate, or any and
all acts and things which Lessor or any Beneficiary may reasonably request,
to perfect and preserve Lessor's ownership rights regarding the Aircraft
within any such jurisdiction.

                   In addition, Lessee will promptly and duly execute and
deliver to Lessor such further documents and assurances and take such further
actions as it may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Lease and to establish
and protect the rights and remedies created or intended to be created in
favor of Lessor hereunder, including, without limitation, if reasonably
requested by Lessor at the expense

                                     -59-
<PAGE>

of Lessee, the execution and delivery or supplements or amendments hereto in
recordable form, subjecting to this Lease any Replacement Engine and the
recording or filing of counterparts thereof, in accordance with the Laws of any
appropriate jurisdiction.

                   Section 16. RETURN OF AIRCRAFT AND RECORDS.

               (a) RETURN.

               (i) On the Return Occasion, Lessee will, unless Casualty
                   Occurrence has occurred, at its expense, redeliver the
                   Aircraft to Lessor at the Return Location in a condition
                   complying with the requirements of Exhibit E and this
                   Section 16:

                   (A) free and clear of all Liens (other than Lessor's Liens
                       or any Lien arising by or through Lessor, any Beneficiary
                       or any Lender);

                   (B) having the benefits of any indemnities and warranties
                       which have been assigned to and are held by Lessee
                       relating to the Aircraft assigned to Lessor;

                   (C) duly registered in the name of Lessor with the FAA;

                   (D) unless otherwise agreed by the Beneficiaries in a
                       condition so as to ensure the Aircraft has either a
                       current, valid and existing certification of
                       airworthiness for airline operation or (at the
                       Beneficiaries, election) an export certificate of
                       airworthiness, in either case, issued by the FAA; and

                   (E) if specified by the Beneficiaries, Lessee shall cooperate
                       with Lessor to ensure that the Aircraft is deregistered
                       from the FAA;

               provided that Lessee complies with the foregoing and with all
               of its obligations under this Lease, Lessor shall technically
               accept redelivery of the Aircraft from Lessee at Lessee's
               maintenance facilities in Honolulu, Hawaii before the
               commencement of any storage period (it being understood that
               if during the ferry flight to the Return Location any defect
               or non-compliance which was purportedly corrected in connection
               with the Final Inspection shall reoccur, Lessee shall be
               responsible for rectifying such defect or non-compliance);
               PROVIDED, HOWEVER, that if a C Check shall be performed in
               connection with the Return

                                     -60-
<PAGE>

               Occasion, then such technical inspection and acceptance shall
               occur at the location of the facility in the United States of
               America or Canada approved by FAA for C Check of 737-200
               aircraft at which such C Check is performed.

              (ii) In the event that Lessee does not return the Aircraft to
                   Lessor on the specified date of expiration or earlier
                   termination of this Lease, for any cause (other than due
                   to the fault of Lessor, any Beneficiary or the Lender),
                   then the obligations of Lessee under this Lease shall
                   continue and such continued use shall not be considered a
                   renewal of the terms of this Lease or a waiver of any
                   right of Lessor hereunder and Lessor may terminate
                   Lessee's right as to the Aircraft on written notice to
                   Lessee and Lessee shall fully indemnify Lessor, the
                   Lender and each other Indemnitee on demand against all
                   losses, liabilities, actions, proceedings, costs and
                   expenses thereby suffered or incurred by Lessor, the
                   Lender or any other Indemnitee. During such continued
                   use, damages in an amount equal to Basic Rent (as
                   provided below) shall continue to be paid by Lessee to
                   Lessor, and the performance of other obligations of
                   Lessee to Lessor shall continue hereunder. Basic Rent
                   shall be pro-rated on a daily basis for each day until
                   the Aircraft is actually delivered to Lessor, and all
                   other terms and conditions of this Lease shall remain in
                   full force and effect. Payment shall be made promptly
                   upon presentation of Lessor's invoice and any failure to
                   pay shall constitute a default of Lessee.

               (b) FINAL INSPECTION. At least 10 days prior to redelivery of the
Aircraft, Lessee will take the Aircraft out of service and make the Aircraft
and all Aircraft Documents available to Lessor and the Beneficiaries for
inspection at Lessee's facilities in Honolulu, Hawaii (or at the location of
the facility in the United States of America or Canada approved by FAA for
the C Check of 737-200 aircraft at which the C Check shall be performed, as
provided in Section 16(a)(i) above, if applicable) (the "Final Inspection")
in order to verify that the condition of the Aircraft complies with this
Lease, and Lessor's and the Beneficiaries, representatives shall use their
reasonable efforts to cause their representatives to commence such compliance
verification as promptly as practicable at or following the beginning of such
10-day period. Lessee agrees, at the Beneficiaries, request, to furnish due
evidence that all service, maintenance, repairs, overhauls and modifications
required under this Lease have been duly

                                     -61-
<PAGE>

performed. Lessee shall make available to Lessor and the Beneficiaries at
Lessee's principal maintenance base, not less than fifteen (15) Business Days
prior to commencement of the Final Inspection, such documentation regarding the
condition, use, maintenance, operation and history of the Aircraft during the
Term, as requested by the Beneficiaries in order to enable Lessor and the
Beneficiaries to verify that the condition of the Aircraft complies with this
Lease. To the fullest extent possible, the Final Inspection shall be carried
out during the C Check referred to in paragraph 2(a) of Exhibit E. The Final
Inspection will consist of and be long enough to permit Lessor and the
Beneficiaries to:

               (i) generally review, test (as observer) and inspect the
                   Aircraft to Lessor's and the Beneficiaries, satisfaction
                   (which will include the opening of any areas of the
                   Aircraft if Lessor or the Beneficiaries reasonably
                   believe, based on prior inspections or other evidence,
                   that the opening of such areas would reveal that the
                   Aircraft does not completely comply with the requirements
                   of Exhibit E and this Section 16), to satisfy Lessor and
                   the Beneficiaries that the Aircraft completely complies
                   with the requirements of Exhibit E and this Section 16;

              (ii) inspect the Aircraft Documents;

             (iii) inspect the un-installed Parts;

              (iv) observe a two hour demonstration flight (with up to four
                   of Lessor's or the Beneficiaries' representatives as
                   on-board observers);

               (v) inspect the Engines, including, without limitation (i) by
                   observing a performance test in accordance with limits set
                   forth in the engine section of the Aircraft Maintenance
                   Manual and (ii) by performing a full and complete
                   borescope inspection of (a) the low pressure and high
                   pressure compressors and (b) turbine area; and

              (vi) inspect the APU, including, without limitation (i) an APU
                   condition run (as observer) and (ii) by a full and
                   complete borescope inspection.

The actions contemplated by the foregoing clauses (i) through (iv) shall be
performed at Lessee's expense; provided that, unless an Event of Default
shall have

                                     -62-
<PAGE>

occurred or any inspection carried out under the foregoing clauses (i)
through (iv) reveals discrepancies which require a further inspection, Lessee
shall not be required to bear the travel and lodging expenses of Lessor's or
the Beneficiaries, representatives.

                   (c) NON-COMPLIANCE. To the extent that, at the time of Final
Inspection, the condition of the Aircraft does not comply with this Lease,
Lessee will at the Beneficiaries, option:

                   (i) immediately rectify the non-compliance and, to the
                       extent the non-compliance extends beyond the Return
                       Occasion, the Term will be automatically extended
                       (including the obligation to pay Rent as referred to
                       in Section 16(a)(ii)) and this Lease will remain in
                       force until the non-compliance has been rectified; or

                  (ii) redeliver the Aircraft to Lessor and pay to Lessor
                       such amount as is mutually agreed to put the Aircraft
                       into the condition required by this Lease. Lessor
                       shall make all reasonable efforts to minimize such
                       costs.

                   (d) REDELIVERY. If applicable, upon redelivery Lessee will
provide to Lessor and the Beneficiaries all documents (other than those as may
be required to be supplied by Lessor or the Beneficiaries) necessary to export
the Aircraft from the United States (including, without limitation, a valid and
subsisting export license, if applicable, for the Aircraft) and required in
relation to the deregistration of the Aircraft with the FAA.

                   In the event that Beneficiaries request Lessee to secure an
export license (a) such request must be made upon sufficient notice in order to
grant Lessee adequate time to procure such export license, (b) Lessor will
render such timely assistance as is reasonably necessary, and (c) this may be
requested in relation to the Return Occasion or subsequent to the Return
Occasion.

                   (e) ACKNOWLEDGEMENT. Upon return of the Aircraft in
accordance with the terms of this Lease, Lessor shall execute and deliver a
Redelivery Acknowledgement in the form of Exhibit I hereto to Lessee.

                   (f) MAINTENANCE PROGRAM.

                   (i) Prior to the Return Occasion (unless the Aircraft has
                       suffered a Casualty Occurrence) and upon Lessor's or a
                       Beneficiary's request,

                                      -63-
<PAGE>

                       Lessee will provide Lessor or such Beneficiary or its
                       agent, in either case at Lessee's cost, reasonable
                       access to the Maintenance Program and the Aircraft
                       Documents in order to facilitate the Aircraft's
                       integration into any subsequent operator's fleet.

                  (ii) Lessee will, if requested by Lessor or a Beneficiary
                       to do so, upon return of the Aircraft deliver to
                       Lessor or the Beneficiaries a certified true, current
                       and complete copy of the Maintenance Program in
                       English. Lessor and the Beneficiaries agree that they
                       will not disclose the contents of the Maintenance
                       Program to any person or entity except to the extent
                       necessary to monitor Lessee's compliance with this
                       Lease and/or to bridge the maintenance program for the
                       Aircraft from the Maintenance Program to another
                       maintenance program after the Return occasion.

                   (g) FUEL. The amount of fuel in the Aircraft shall be no less
than the amount of fuel upon Delivery Date. If requested by Lessor, Lessee will
fuel the Aircraft in excess of the required amount by the preceding sentence at
the Return Location, and Lessor will pay for the fuel exceeding such
requirement on board the Aircraft on the Return Occasion at the direct cost
paid by Lessee (without mark-up).

                   (h) STORAGE. If the Final Inspection is carried out in
Honolulu, Hawaii and a Beneficiary requests in writing then Lessee shall, at
Lessee's cost and expense during the first sixty (60) days and thereafter
Lessor's cost and expense, provide Lessor with, or assist Lessor in procuring,
storage facilities for the Aircraft for up to one hundred twenty (120) days.
Such storage shall be at Lessee's maintenance base or if such maintenance base
will be eventually unable to perform the required maintenance, any other
location agreed between Lessor and Lessee which base or location is capable of
performing any required maintenance on the Aircraft. With respect to the
Aircraft while in storage, Lessee will maintain, or procure the maintenance
of, an amount of fuel in each tank as required in accordance with the storage
procedures at the storage location and as set forth herein. Lessee agrees,
during such storage period, to perform, or procure the performance of, such
maintenance required to maintain the airworthiness of the Aircraft (i) in
accordance with the storage procedures prescribed by the Manufacturer or
Lessee's Maintenance Program and (ii) in a condition required to be

                                     -64-
<PAGE>

maintained at redelivery pursuant to the terms of Section 16(a). Risk of loss
or damage to the Aircraft shall pass to Lessor at the commencement of storage,
but Lessee will carry insurance, with Lessor and each Beneficiary named as an
additional insured, on the Aircraft during such storage period as though the
Aircraft were to remain in Lessee's fleet in accordance with the provisions of
Section 12, except that Lessee shall not be required to maintain "all risks"
flight insurance during such storage period but shall maintain insurance
policies that cover the Aircraft in storage and test flights of the Aircraft on
an hourly basis (as typically available and maintained under similar
circumstances involving the storage and maintenance of aircraft). All amounts
hereunder relating to storage, insurance and maintenance work for the first 60
days of such storage period shall be for the account of Lessee and thereafter,
shall be for the account of Lessor. Incremental costs incurred by Lessee after
the first 60 days of storage which would not have been incurred had such
storage period not exceeded 60 days shall be reimbursed by Lessor. Lessee
further agrees to perform, or procure the performance of, at Lessor's cost, any
other maintenance that Lessor may reasonably request. If, following the storage
of the Aircraft in Hawaii, the Beneficiaries ferry the Aircraft to a location
designated by the Beneficiaries in the Western Continental United States (the
"Designated Location"), Lessee will reimburse the Beneficiaries for the cost of
the ferry flight of the Aircraft from the storage location in Hawaii to such
Designated Location. If the Aircraft is ferried to a location other than in the
Western Continental United States, other than following a Default or an Event
of Default, then (i) the Beneficiaries will bear any additional ferry flight
costs and expenses incurred that are beyond the costs and expenses that would
have been incurred if the Aircraft were ferried to a location in the Western
Continental United States, and (ii) Lessee will bear the ferry flight costs and
expenses that are equivalent to the ferrying of the Aircraft to a location in
the Western Continental United States and shall pay such amount to Lessor or
the Beneficiaries upon demand by Lessor or the Beneficiaries therefor.

                   (i) MAINTENANCE FOR RE-REGISTRATION. Lessee, at Lessee's
cost, will, upon written notice from a Beneficiary not less than sixty (60)
days prior to a Return Occasion, carry out such extra maintenance, repair or
modification as may be required to enable the Aircraft to be in a condition
to ensure that the Aircraft will meet and comply with (i) the requirements of
any other country selected by the Beneficiaries and (ii) all civil aviation
regulations, orders, rules and airworthiness directives of such country to
permit the immediate re-registration and securing of a certificate of
airworthiness in such country for the

                                     -65-
<PAGE>

Aircraft (provided such regulations, orders, rules and airworthiness directives
are no more restrictive than those of the FAA, and, so long as Lessee is
otherwise in compliance with this Section 16 and Exhibit E, the time required
to perform such extra maintenance shall not constitute an extension of the
Term). If the cost of such maintenance, repair or modification exceeds the cost
of the maintenance, repair or modification which Lessee would otherwise have
incurred to ensure the Aircraft shall be in condition to comply with the terms
of this Lease, Lessor shall promptly pay Lessee the difference between such
costs at actual cost (without mark-up) to Lessee.

                   (j) ASSISTANCE FOR FUTURE LEASING/SALE.

                       (i) Lessor or any Beneficiary may, from time to time
                   during the last year of the Term, wish to make the
                   Aircraft available for inspection to designated
                   representatives or technical teams evaluating the Aircraft
                   for use after the end of the Term. Lessor or any
                   Beneficiary agrees to give Lessee not less than five (5)
                   days, advance notice of such inspection and Lessee agrees
                   to co-operate fully with Lessor's or such Beneficiary's
                   requests in making the Aircraft and Aircraft Documents
                   available to such authorized technical team. Lessor agrees
                   to be responsible for its costs in connection with any
                   such inspection and that such request will be reasonable
                   and will be coordinated with Lessee so as not to
                   unreasonably interfere with the operation or maintenance
                   of the Aircraft or the conduct of Lessee's business
                   (unless an Event of Default shall have occurred and be
                   continuing); PROVIDED, HOWEVER, that, unless an Event of
                   Default shall have occurred and be continuing, no such
                   inspection shall result in the delay of a scheduled flight
                   of Lessee;

                       (ii) Subject to prior coordination between the
                   Beneficiaries and Lessee, Lessee agrees that, during the
                   last year of the Term and following redelivery of the
                   Aircraft to Lessor, Lessee shall at any Beneficiary's
                   reasonable request and Lessee's cost make available to
                   Lessor and the Beneficiaries for such reasonable period as
                   the Beneficiaries may reasonably require technical and
                   engineering personnel qualified to provide the
                   Beneficiaries and any subsequent lessee or purchaser of
                   the Aircraft with such information as will enable any
                   subsequent lessee or purchaser of the Aircraft to be able
                   to bridge the Aircraft onto the maintenance program of
                   such subsequent lessee or purchaser.

                                     -66-
<PAGE>

                   Section 17. EVENTS OF DEFAULT.

                   Any one or more of the following occurrences or events shall
constitute an Event of Default:

                   (a) Lessee shall fail to make any payment of Rent to Lessor
when due under this Lease and such payment shall be overdue for a period of
five (5) Business Days;

                   (b) Lessee shall fail to obtain and maintain any insurance
required under the provisions of Section 12 hereof; or shall operate the
Aircraft outside of the scope of the insurance coverage maintained with respect
to the Aircraft;

                   (c) Any representation or warranty made by Lessee herein or
in any document or certificate furnished to Lessor in connection herewith or
therewith or pursuant hereto is incorrect at the time given in any material
respect and such failure shall continue unremedied for a period of three (3)
Business Days after notice thereof has been given to Lessee hereunder or Lessee
otherwise has notice thereof;

                   (d) Lessee shall fail to timely comply with the provisions of
Section 21 (Security Deposit) hereof;

                   (e) Lessee shall directly or indirectly create, incur, assume
or suffer to exist any Lien on or with respect to the Aircraft or Engines,
title thereto or any interest therein, except as expressly permitted by Section
14;

                   (f) Lessee shall at any time not be a Certified Air Carrier
holding all licenses, certificates, permits and franchises from the appropriate
agencies of the United States of America and all other governmental authorities
having jurisdiction over Lessee and its operations which are necessary to
authorize the Lessee to engage in air transport and to carry on its intra-state
passenger operations within Hawaii as presently conducted and in connection
with the operation of aircraft, including the Aircraft; or Lessee shall lose or
suffer a suspension of its United States air carrier license or certificate
under Part 121 of the FAA Regulations or certificate under Chapter 411 of
Subtitle VII, Part A of Title 49 of the United States Code, as amended;

                   (g) Lessee shall fail to perform or observe in any material
respect any other covenant, condition or agreement to be performed or observed
by it pursuant to this Lease and such failure shall continue for a period of
thirty (30) days after the earlier to occur of (1) Lessee's attaining or having
knowledge thereof and (2) written notice thereof is given to Lessee;

                   (h) Lessee consents to the appointment of a receiver,
trustee or liquidator of itself or of a

                                      -67-
<PAGE>

substantial part of its property, or Lessee admits in writing its inability to
pay its debts generally as they come due or makes a general assignment for the
benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a
voluntary petition seeking reorganization in a proceeding under any bankruptcy
laws (as now or hereafter in effect), or an answer admitting the material
allegations of a petition filed against Lessee in any such proceeding, or
Lessee by voluntary petition, answer or consent seeks relief under the
provisions of any bankruptcy or other similar law providing for the
reorganization or winding-up of corporations, or provides for an agreement,
composition, extension or adjustment with its creditors;

                   (i) An order, judgment or decree is entered by any court,
with or without the consent of Lessee, appointing a receiver, trustee or
liquidator for Lessee or of all or any substantial part of its property (save
for the purposes of an amalgamation, merger or reconstruction not involving
insolvency), or all or any substantial part of the property of Lessee is
sequestered, and any such order, judgment or decree of appointment or
sequestration remains in effect, undismissed, unstayed or unvacated for a
period of sixty (60) days after the date of entry thereof;

                   (j) A petition against Lessee in a proceeding under the
bankruptcy, insolvency or other similar Laws (as now or hereafter in effect) of
any Governmental Entity is filed and is not withdrawn or dismissed within sixty
(60) days thereafter, or if, under the provisions of any Law providing for
reorganization or winding-up of corporations which may apply to Lessee, any
court of competent jurisdiction assumes jurisdiction over, or custody or
control of, Lessee or of all or any substantial part of its property and such
jurisdiction, custody or control remains in effect, unrelinquished, unstayed or
unterminated for a period of sixty (60) days;

                   (k) (i) A final judgment for the payment of money not covered
by insurance in excess of $500,000, or (ii) final judgments for the payment of
money not covered by insurance in excess of $500,000 in the aggregate, shall be
rendered against Lessee and the same shall remain undischarged for a period of
ninety (90) days during which execution thereof shall not be effectively stayed
by agreement of the parties involved, stayed by court order or adequately
bonded;

                   (1) Attachments or other Liens shall be issued or entered
against substantially all of the property of Lessee and shall remain
undischarged or unbonded for forty-five (45) days except for security interests
created in connection with monies borrowed or obligations agreed to by Lessee
in the ordinary course of its business;

                                     -68-
<PAGE>

                   (m) Lessee shall default in the payment of any obligation for
the payment of borrowed money, for the deferred purchase price of property or
for the payment of rent or hire under any lease of aircraft when the same
becomes due, in any such case if the outstanding amount thereof (or, in the
case of a lease, if the aggregate rentals during the term thereof) exceeds
$500,000; or Lessee shall default in the performance of any other term,
agreement or condition contained in any material agreement or instrument under
or by which any such obligation having any unpaid balance of at least
$1,000,000 is created, evidenced or secured, if the effect of such default is
to cause such obligation to become due prior to its stated maturity; or Lessee
shall default in the payment when due of any other amount owed to Lessor or
each Beneficiary;

                   (n) Lessee voluntarily suspends all or substantially all of
its operations or the franchises, concessions, permits, rights or privileges
required for the conduct of the business and operations of Lessee shall be
revoked, canceled or otherwise terminated or the free and continued use and
exercise thereof curtailed or prevented, and as a result of any of the
foregoing the predominant business activity of Lessee shall cease to be that of
a commercial airline; or

                   (o) An "Event of Default" (as therein defined) shall have
occurred and be continuing under any Other Lease.

                   Section 18. REMEDIES.

                   Upon the occurrence of any Event of Default and any time
thereafter so long as the same shall be continuing, Lessor may, at its option
and without notice to Lessee, exercise one or more of the following remedies as
Lessor in its sole discretion shall elect, to the extent available and
permitted by, and subject to compliance with any mandatory requirements of,
applicable Law then in effect:

                   (a) Demand that Lessee, and Lessee shall upon the written
demand of Lessor and at Lessee's expense, immediately return the Aircraft to
Lessor at any location in Hawaii or in the continental United States as
specified by Lessor or the Beneficiaries and in the manner specified in such
notice and in the condition specified in Section 16, in which event such return
shall not be delayed for purposes of complying with the return conditions
specified in Section 16 hereof (none of which conditions shall be deemed to
affect Lessor's possession of the Aircraft) or delayed for any other reason.
Notwithstanding the foregoing, at Lessor's option Lessee shall be required
thereafter to take such actions as would be required by the provisions of this
Lease if the Aircraft were being returned at the end of the Term hereof. In
addition, Lessor, at its option and to the extent permitted by applicable Law,
may enter upon the premises where all or any part of the Aircraft is located

                                     -69-
<PAGE>

and take immediate possession of and, at Lessor's sole option, remove the same
(and/or any engine which is not an Engine but which is installed on the
Airframe, subject to the rights of the owner, lessor or secured party thereof)
by summary proceedings or otherwise, all without liability accruing to Lessor
or any Beneficiary for or by reason of such entry or taking of possession
whether for the restoration of damage to property, or otherwise, caused by such
entry or taking, provided that all actions of Lessor in this respect are
reasonable in the circumstances and excepting damages caused by gross
negligence or willful misconduct.

                   (b) Sell at private or public sale, as Lessor may determine,
or hold, use, operate or lease to others the Aircraft as Lessor in its sole
discretion may determine, all free and clear of any rights of Lessee; PROVIDED,
HOWEVER, that nothing herein shall be construed as limiting any right of Lessor
or any Beneficiary to sell, lease, assign or otherwise dispose of all or any
part of the Aircraft under any circumstances (whether or not during the
existence or continuance of an Event of Default) during the Term, subject only
to Lessee's rights under SECTION 20(f).

                   (c) Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) of this Section 18, Lessor, by thirty (30) days written notice to
Lessee specifying a payment date, may demand that Lessee pay to Lessor, and
Lessee shall pay to Lessor, on the payment date specified in such notice, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent due for the period commencing after the date specified for payment
in such notice), any unpaid Rent for the Aircraft (prorated in the case of
Basic Rent on a daily basis) to and including the payment date specified in
such Notice, plus the aggregate amount of all payments of Basic Rent for the
remainder of the Term, discounted periodically (equal to installment frequency)
to present worth at the interest rate of four percent (4%) per annum.

                   (d) In the event Lessor, pursuant to Section 18(b) above,
shall have sold the Aircraft, then Lessor, in lieu of exercising its rights
under Section 18(c) above, may, if it shall so elect, demand that Lessee pay
Lessor, and Lessee shall pay to Lessor, as liquidated damages for loss of
bargain and not as a penalty (in lieu of the Basic Rent due for the period
commencing after such sale occurs), any unpaid Rent for the Aircraft due to and
including the date of sale, plus the amount by which the Appraised Value (as
hereafter defined) of the Aircraft, computed as of the date of such sale,
exceeds the net cash proceeds of such sale. As used herein, "Appraised Value"
means the fair market sales value of the Aircraft, as determined by an
internationally recognized aircraft appraiser selected by the Beneficiaries (i)
on the basis of either a physical inspection of the Aircraft or on the basis of
a "desk top"

                                     -70-
<PAGE>

appraisal, as the Beneficiaries shall determine, (ii) on the assumption that
the Aircraft has been maintained in accordance with the requirements of this
Lease and is in the condition required by Section 16 and Exhibit E, whether or
not any such assumption is in fact the case, and (iii) at Lessee's cost and
expense.

                   (e) De-register the Aircraft from the Aircraft Registry at
the FAA, and proceed to re-register the Aircraft with the FAA or any other
aircraft registry of any jurisdiction, in any case, in the name of Lessor,
either or both Beneficiaries or any other Person, as the Beneficiaries shall
determine.

                   (f) In the event that Lessor, pursuant to Section 18(b)
above, shall, after having exercised reasonable efforts under the
circumstances, have re-let the Aircraft under a lease which extends at least to
the date upon which the Term for the Aircraft would have expired but for
Lessee's default, Lessor, in lieu of exercising its rights under Section 18(c)
above with respect to the Aircraft, may, if it shall so elect, demand that
Lessee pay Lessor, and Lessee shall pay Lessor, as liquidated damages for loss
of bargain and not as a penalty (in lieu of the Basic Rent for the Aircraft due
after the time of re-letting) any unpaid Rent for the Aircraft due up to the
date of re-letting, plus the amount, if any, by which the aggregate Basic Rent
for the Aircraft (such Basic Rent being computed on the assumption that the
Basic Rent as in effect on the date of such demand shall remain in effect at
all times thereafter), which would otherwise have become due over the Term,
discounted periodically (equal to installment frequency) to present worth as of
the date of re-letting at the interest rate of four percent (4%) per annum,
exceeds the aggregate basic rental payments to become due under the re-letting
from the date of such re-letting to the date upon with the Term for the
Aircraft would have expired but for Lessee's default, discounted periodically
(equal to installment frequency) to present worth as of the date of the
re-letting at the interest rate of four percent (4%) per annum.

                   (g) Proceed by appropriate court action or actions, either at
law or in equity, to enforce performance by Lessee of the applicable covenants
of this Lease and to recover damages for the breach thereof and to rescind this
Lease.

                   (h) Terminate Lessee's right to possession and use of the
Aircraft under this Lease by written notice (which notice shall be effective
upon dispatch) and repossess the Aircraft, whereupon, Lessee shall forthwith
deliver the Aircraft and all Aircraft Documents to Lessor or the Beneficiaries
at such location as Lessor or the Beneficiaries shall specify.

                                     -71-
<PAGE>

                   (i) Seize or foreclose upon any collateral pledged to secure
the obligations of Lessee hereunder; liquidate, dispose of, and realize upon
any such collateral; and apply the proceeds thereof to the obligations of
Lessee hereunder, in any case, as Lessor shall determine.

                   (j) Draw any amount available to be drawn under any Security
Deposit or the Security Letter of Credit, and to apply the proceeds thereof to
the obligations of Lessee hereunder, in any case, as Lessor shall determine.

                   In addition to the foregoing, Lessee shall be liable for any
and all unpaid Rent during or after the exercise of any of the aforementioned
remedies, together with interest on such unpaid amounts at the Overdue Rate,
and until satisfaction of all of Lessee's obligations to Lessor hereunder and
for all reasonable legal fees and other reasonable costs and expenses incurred
by Lessor by reason of the occurrence of any Event of Default or the exercise
of Lessor's remedies with respect thereto, including all costs and expenses
incurred in connection with the return of the Aircraft in accordance with the
terms of Section 16 hereof or in placing the Aircraft in the condition and with
airworthiness certification as required by such Section.

                   In effecting any repossession, each of Lessor and each
Beneficiary and its representatives and agents, to the extent permitted by law,
shall: (i) have the right to enter upon any premises where it reasonably
believes the Aircraft, the Airframe, an Engine or Part to be located and Lessee
shall cooperate in giving Lessor such access; (ii) not be liable, in conversion
or otherwise, for the taking of any personal property of Lessee which is in or
attached to the Aircraft, the Airframe, an Engine or Part which is repossessed;
provided, however, that Lessor shall return to Lessee all personal property of
Lessee or its passengers which were on the Aircraft at the time Lessor re-takes
possession of the Aircraft; (iii) not be liable or responsible, in any manner,
for any inadvertent damage or injury to any of Lessee's property in
repossessing and holding the Aircraft, the Airframe, an Engine or Part, except
for that caused by or in connection with Lessor's gross negligence or willful
acts; and (iv) have the right to maintain possession of and dispose of the
Aircraft, the Airframe an Engine or Part on any premises owned by Lessee or
under Lessee's control.

                   If requested by Lessor, Lessee, at its sole expense, shall
assemble and make the Aircraft, the Airframe, an engine or Part available at a
place designated by Lessor in accordance with Section 16 hereof. Lessee hereby
agrees that, in the event of the return to or repossession by Lessor of the
Aircraft, the Airframe, an Engine or Part, any rights in any warranty (express
or implied) heretofore assigned to Lessee or otherwise held by Lessee shall
without further act, notice or writing be assigned or-reassigned to

                                     -72-
<PAGE>

Lessor, if assignable. Lessee shall be liable to Lessor for all reasonable
expenses (including reasonable attorneys, fees and expenses), disbursements,
costs and fees incurred in (i) re-possessing, storing and shipping the
Aircraft, the Airframe, an Engine or Part and maintaining, repairing and
refurbishing the Aircraft, the Airframe, an Engine or Part to the condition
required by Section 16 hereof and (ii) preparing the Aircraft, the Airframe, an
Engine or Part for sale or lease, advertising the sale or lease of the
Aircraft, the Airframe, an Engine or Part and selling or releasing the
Aircraft, the Airframe, an Engine or Part. Lessor is hereby authorized and
instructed, at its option, to make reasonable expenditures which Lessor
considers advisable to repair, restore, store, insure or maintain the Aircraft,
the Airframe, an Engine or Part to the condition required by Section 16 hereof,
all at Lessee's sole expense.

                   Lessee shall cooperate reasonably and in good faith with
Lessor and any Beneficiary in connection with the exercise by Lessor or either
Beneficiary of the rights and remedies provided hereby or at law upon and
following the occurrence of an Event of Default, including by executing and
delivering such instruments as Lessor or any Beneficiary shall reasonably
request. In furtherance of the foregoing, Lessee hereby constitutes and
appoints Lessor as the true and lawful agent and attorney-in-fact for Lessee
for purposes of executing and delivering any instrument that may be necessary
or appropriate in order to carry into effect any right or remedy of Lessor or
any Beneficiary hereunder upon and following the occurrence of an Event of
Default, including any consent to the de-registration of the Aircraft from the
FAA. Any such instrument signed pursuant to the foregoing appointment may be
signed in Lessee's name or in the name of Lessor. The foregoing appointment is
coupled with an interest and is irrevocable.

                   No remedy referred to in this Section 18 is intended to be
exclusive, but, to the extent permissible hereunder or under applicable Law,
each shall be cumulative and in addition to any other remedy referred to above
or otherwise available to Lessor at Law or in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No express or implied waiver by Lessor of any Default shall in
any way be, or be construed to be, a waiver of any future or subsequent
Default.

                   Section 19. ALIENATION.

                   Lessor and each Beneficiary shall have the right at its sole
cost and expense to assign, sell, encumber or otherwise dispose of any interest
of Lessor or such Beneficiary in, to or under the Aircraft, the Trust Agreement
or this Lease and/or the proceeds hereof, subject to the rights of Lessee under
the provisions of this Lease,

                                     -73-
<PAGE>

including by sale, transfer, pledge, assignment or other disposition to any
Lender or to any other Person (other than an air carrier engaged in the airline
business); PROVIDED, HOWEVER, that unless an Event of Default shall have
occurred and be continuing, neither Lessor nor any Beneficiary shall undertake
any action that (i) interferes with Lessee's rights under Section 20(f) hereof,
(ii) disqualifies the Aircraft for registry with the FAA, or (iii) results in
an increase in any liability of Lessee under Section 10, unless Lessor and each
Beneficiary agree to waive their rights to be indemnified for any such increase
in liability. To effect or facilitate any such sale, transfer, pledge,
assignment, or other disposition, Lessee agrees to provide, at Lessor's sole
cost and expense, such agreements, consents, conveyances or documents as may be
reasonably requested by Lessor or such Beneficiary, which shall include,
without limitation, a consent to such disposition executed by Lessee and in the
case of an assignment of the Lease (other than an assignment for security
purposes) an unrestricted release of Lessor from any obligations under this
Lease arising after the date of such assignment; PROVIDED, HOWEVER, that such
release shall not affect any liability of Lessor or such Beneficiary arising on
or before the date of such assignment. Lessee hereby agrees that it will not
assert against an assignee any Claim or defense which it may have against
Lessor or such Beneficiary; PROVIDED, HOWEVER, that any such Claim or defense
will survive such assignment and continue to be maintained against Lessor or
such Beneficiary. No assignment or transfer hereunder shall result in Lessee
being obligated to pay for the account of Lessor or such Beneficiary any
greater amount than it would otherwise be obligated to pay hereunder, including
without limitation any obligation of Lessee to pay amounts pursuant to Section
10. The agreements, covenants, obligations, and liabilities contained herein
including, but not limited to, all obligations to pay Rent and indemnify each
Indemnitee are made for the benefit of each Indemnitee and their respective
successors and assigns. In the event this Lease is assigned, or otherwise
disposed of by Lessor or either Beneficiary, any assignee, transferee or
mortgagee shall agree in writing with Lessee as a condition precedent thereto
to be bound by the provisions of this Lease and not to disturb or otherwise
interfere with the quiet enjoyment of Lessee of the Aircraft in accordance with
the terms of this Lease so long as no Event of Default shall have occurred and
be continuing.

                   Lessee shall include each Lender or any Person to whom an
interest herein is assigned as an additional insured and loss payee in
accordance with the provisions of Section 12 hereof and indemnify such Lender
to the same extent Lessee has agreed to indemnify Lessor pursuant to Sections
10 and 13 hereof. No Lender or any Person to whom an interest herein is
assigned shall have any liability for the obligations of Lessor under any
provision of this Lease.

                                     -74-

<PAGE>

Section 20. MISCELLANEOUS.

     (a) SEVERABILITY, AMENDMENT AND CONSTRUCTION. Any provision of this
Lease which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof; any
such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by Law, Lessee hereby waives any provisions of Law
which renders any provisions hereof prohibited or unenforceable in any
respect. Lessee may not assign this Lease or its rights hereunder. This
Lease supersedes any prior or contemporaneous agreements, whether oral or in
writing, of the parties hereto and shall constitute the entire agreements of
the parties hereto. No term or provision of this Lease may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing expressed to be a supplement or amendment to this Lease signed under
hand by an officer of the party against which the enforcement of the change,
waiver, discharge or termination is sought. This Lease shall constitute an
agreement of lease, and nothing herein shall be construed as conveying to
Lessee any right, title or interest in the Aircraft or any Engine or Part
except as a lessee only. The headings in this Lease are for convenience of
reference only and shall not define or limit any of the terms of provisions
hereof. Whenever required by the context hereof, the singular shall include
the plural and vice versa. Reference to this Lease shall mean this Lease as
amended or supplemented from time to time.

     (b) GOVERNING LAW; JURISDICTION. This Lease shall in all respects be
governed by, and construed in accordance with, the laws of the State of New
York, except that the provisions of Section 21(a) (Security Deposit) and
Section 21(b)(vi) shall be governed by the laws of the State of Delaware.

     A. Lessee and Lessor each hereby irrevocably and expressly submit to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the New York Supreme Court, New York
County for the purposes of any suit, action or proceeding arising out of
this Lease or the Operative Documents. Final judgment against Lessee or
Lessor in any such suit shall be conclusive, and may be enforced in any
other jurisdictions by suit on the judgment or as otherwise permitted by
applicable Law, a certified or true copy of which shall be conclusive
evidence of the fact and of the amount of any indebtedness or liability of
such party therein described; PROVIDED, HOWEVER, that Lessor or Lessee may
at its option bring suit, or institute other judicial proceedings against
the other party or any of its assets, in the courts of any

                                      -75-

<PAGE>

country or place where such party or such assets may be found.

     B. Each of Lessee and Lessor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any suit,
action or proceeding brought in any court located in New York City, New York
and hereby further irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.

     C. The foregoing submission to jurisdiction shall not be construed so
as to limit the right of either party to take proceedings against the other
in whatsoever jurisdictions shall to it seem fit nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction, whether concurrently or not.

     D. Lessee hereby irrevocably appoints CT Corporation System, Inc., 1633
Broadway, New York, New York 10019, as Lessee's agent and attorney-in-fact
(the "Agent"), upon whom all service of summonses and other legal processes
may be made with respect to any action, suit or proceeding relating to this
Lease or any other Operative Document. The appointment of such Agent shall
be irrevocable, and if the Agent revokes such relationship, prior to the
effective date of such revocation, Lessee shall appoint a successor, which
successor shall be in accordance with the provisions hereof. Prior to such
change Lessee shall notify Lessor of such change of Agent. Lessee consents
and agrees that any service under or in connection with this Lease shall be
duly completed and served if mailed to Lessee at its address specified below
or to the Agent at the address specified above, in either case, by
registered or certified mail.

     (c) NOTICES. All notices required under the terms and provisions hereof
shall be in writing and any such notice shall become effective when
deposited in the mails, registered with proper postage for air mail prepaid,
or, if in the form of a telegram, telex or telecopy, when received,
addressed if to the Lessee, the Lessor or any Beneficiary at their
respective addresses set forth in Exhibit C-2 (or such other address as may
be designated by the Lessee, the Lessor or such Beneficiary to the others).

     (d) LESSOR'S RIGHT TO PERFORM FOR LESSEE. if Lessee fails to make any
payment of Supplemental Rent required to be made by it hereunder or fails to
perform or comply with any covenant, agreement or obligation contained
herein, Lessor or any Beneficiary shall have the right but not the obligation
 to make such payment or conform or comply with such agreement, covenant or
obligation, and the amount of such payment and the amount of the reasonable
expenses of Lessor or such Beneficiary incurred in connection with such
payment or the performance thereof or compliance therewith,

                                      -76-

<PAGE>

together with interest thereon at the Overdue Rate, shall be payable by
Lessee to Lessor or such Beneficiary (as Supplemental Rent) upon demand.
Lessor agrees to notify Lessee in writing prior to making any payment under
this Section 20(d) (giving Lessee the opportunity to rectify the omission),
unless the Aircraft will be in danger of loss, sale, confiscation,
forfeiture or seizure should such payment not be made. The taking of any
such action by Lessor or any Beneficiary pursuant to this Subsection 20(d)
shall not constitute a waiver or release of any obligation of Lessee under
the Lease, nor a waiver of any Event of Default which may arise out of
Lessee's nonperformance of such obligation, nor an election or waiver by
Lessor of any remedy or right available to Lessor under or in relation to
this Lease.

     (e) COUNTER PARTS. This Lease may be executed simultaneously  in two or
more counterparts, each of which shall be deemed an original, but all  of
which together shall constitute one and the same instrument. To the extent,
if any, that this Lease constitutes chattel paper (as such term is defined in
 the Uniform Commercial Code as in effect in any applicable jurisdiction) no
security interest in this Lease may be created through the transfer or
possession of any counterpart other than the counterpart which has been
marked  "Counterpart No. 1 - Chattel Paper Original" on the cover page
thereof.

     (f) QUIET ENJOYMENT. Lessor covenants that so long as an  Event of
Default shall not have occurred and be continuing, Lessee shall be  entitled
to quiet use, possession and enjoyment of the Aircraft in accordance  with
the terms of this Lease, without interference by Lessor or by any Person
lawfully claiming by or through Lessor.

     (g) BROKERS. Each party agrees to indemnify and hold the  other harmless
from and against any and all claims, suits, damages, costs and  expenses
(including, but not limited to, reasonable attorneys' fees) asserted  by any
agent, broker or other third party for any commission or compensation of  any
nature whatsoever based upon the lease of the Aircraft, if such claim,
damage, cost or expense arises out of any action or alleged action by the
indemnifying party, its employees or agents.

     (h) FUNDING INDEMNITY. Without prejudice to any other rights  Lessor or
each Beneficiary may have under the terms of this Lease or any of the
Operative Documents or otherwise,

         (A) if Lessor or each Beneficiary (and/or any of Beneficiary's
             Affiliates) enters into any Dollar based bank funding or
             financing arrangement (including, without limitation, any swap,
             hedge or similar arrangement, but excluding any currency swap or
             currency hedge to which Lessee has not

                                      -77-

<PAGE>

             consented) in connection with the fixing of the Basic Rent,
             which is payable during the Term, and if the Aircraft shall not
             be delivered to Lessee in accordance with the terms of this
             Lease (other than by reason of the willful default of Lessor),
             Lessee shall indemnify Lessor or each Beneficiary (and/or any of
             Beneficiary's Affiliates) against, and shall pay on an after tax
             basis to Lessor or each Beneficiary (and/or any of Beneficiary's
             Affiliates) forthwith on demand, subject to the proviso set
             forth below, all costs, fees (including, without limitation,
             legal fees) expenses, obligations, liabilities and any other
             amounts notified by the Beneficiaries to the Lessee (which
             notification shall set out in reasonable detail the calculation
             of the amounts claimed therein and such notification shall, in
             the absence of manifest error, be conclusive) as having been
             incurred, suffered or expended by Lessor or any Beneficiary
             (and/or any of Beneficiary's Affiliates) or arising in connection
             with the amendment, variation, rolling over, termination,
             reconstitution, hedging, unwinding, covering or other adjustment
             of any Dollar based bank funding or financing arrangement
             (including, without limitation, any swap, hedge or similar
             arrangement, but excluding any currency swap or currency hedge to
             which Lessee has not consented) entered into or committed by
             Lessor or any Beneficiary (and/or any of Beneficiary"s Affiliates)
             for the purposes of the financing of the Aircraft and/or its
             leasing to Lessee on the basis of the Basic Rent provided for
             under this Lease; PROVIDED, HOWEVER, that if the interruption of
             the Beneficiaries' funding results in a gain to the Beneficiaries
             (net of Taxes or other charges incurred in connection therewith),
             then, so long as no Default exists, the Beneficiaries shall remit
             the amount of such gain (net of their costs relating to the
             negotiation, preparation and execution of this Agreement and the
             consummation of the transactions contemplated hereby) to Lessee;

         (B) if an Event of Default occurs and the Aircraft is not delivered
             or is repossessed in accordance with the terms of this Agreement
             or otherwise, or if the Term is terminated earlier than the
             Expiration Date by any reason including but not limited to the
             early termination of the Term referred in clause 2(ii)(B) of the
             Supplemental Agreement or a Casualty Occurrence (if such Casualty
             Occurrence is covered by the insurance required by Section 12),
             then Lessee shall indemnify Lessor or each Beneficiary (and/or
             Beneficiary's Affiliate) against and shall pay on

                                      -78-

<PAGE>

             an after tax basis to Lessor (and/or Beneficiary's Affiliate)
             forthwith on demand, subject as provided below, all reasonable
             costs, fees (including, without limitation, legal fees), expenses
             obligations, liabilities and other amounts notified by the
             Beneficiaries to Lessee (which notification shall set out the
             calculation of the amounts claimed therein and such notification
             shall, in the absence of manifest error, be conclusive) as having
             been incurred, suffered or expended in connection with the
             amendment, variation, rolling over, termination, reconstitution,
             hedging, unwinding, covering or other adjustment of any Dollar
             based bank funding or financing arrangement (including, without
             limitation, any swap, hedge or similar arrangement, but excluding
             any currency swap or currency hedge to which Lessee has not
             consented) entered into or committed by Lessor or each Beneficiary
             (and/or any of Beneficiary's Affiliates) for the purposes of the
             financing of the Aircraft by Lessor or each Beneficiary and/or its
             leasing of the Aircraft to Lessee on the basis of the fixed Basic
             Rent provided for under this Lease;

             PROVIDED THAT the provisions of (A) or (B) shall not impose or be
             deemed to impose on Lessee any obligation for payment of any
             amount representing the principal amount of any bank funding
             or financing arrangement.

     (i) PAYMENTS IN U.S. DOLLARS. All amounts to be paid hereunder to
Lessor or Lessee shall be paid in Dollars, in immediately available funds.
Lessee acknowledges that the specification of Dollars in this transaction is
of the essence and that Dollars shall be the currency of account in any and
all events. The obligations of Lessee or Lessor hereunder, to Lessor or
Lessee, respectively, shall not be discharged by an amount paid in another
currency, whether pursuant to a judgment or otherwise, to the extent that the
 amount so paid on prompt conversion to Dollars under normal banking
procedures does not yield the amount of Dollars owing to Lessor. In the
event that any payment by Lessee or Lessor, respectively, whether pursuant
to judgment or otherwise to Lessor or Lessee, respectively, upon conversion
does not yield such amount of Dollars, Lessor or Lessee, as the case may be,
shall have a separate cause of action against Lessee or Lessor, as the case
may be, for the additional amount necessary to yield the amount of Dollars
due and owing to Lessor or Lessee, as the case may be.

     (j) COSTS. Each party hereto shall bear its own costs in respect of the
preparation, negotiation and execution of this Lease, the Lease Supplement
and any document ancillary thereto; PROVIDED, HOWEVER, that Lessor shall bear

                                      -79-

<PAGE>

the costs and expenses incurred in connection with the registration of the
Aircraft with the FAA (including the legal fees and expenses of special FAA
counsel) and Lessee shall bear the costs and expenses incurred in connection
with the filing and registration of the Lease and any change in the FAA
registration number of the Aircraft requested by Lessee and approved by the
Beneficiaries (including, without limitation, the legal fees and expenses of
special FAA counsel).

     (k) CONFIDENTIALITY. Neither Lessor nor Lessee hereto shall, at any
time during the Term or after its termination or expiration, disclose to any
Person any information relating to the matters set forth in this Lease or
the business, financial or other affairs a confidential nature relating to
the other party which may, in the course of the transactions contemplated
hereby, have been disclosed or discovered, except that any such information
may be so disclosed (i) with the written authority of the other party
hereto, (ii) so far as may be necessary for the proper performance of its
obligations hereunder, including the filing of this Lease with the FAA,
(iii) to the extent required by law, ordered by a court of competent
jurisdiction or by the relevant Governmental Entity responsible for taxation
or any other applicable regulatory authority, (iv) to such party's auditors,
counsel or other professional advisers, (v) to any Affiliate of a
Beneficiary and (vi) to the extent required in connection with a public
offering of debt or equity securities by Lessee. The parties hereto shall
use all reasonable endeavors to prevent any such disclosure as aforesaid,
except that Lessor or any Beneficiary may provide any potential purchaser of
the Aircraft, any Lender or any potential assignee of this Lease or any of
the Operative Documents with such information that any such person shall
reasonably request of Lessor or such Beneficiary.

     (l) SECTION 1110. The parties agree that Lessor and the Beneficiaries
are entitled to the benefits and protections of Section 1110 of the U.S.
Bankruptcy Code ("Section 1110"), and Lessee shall take such actions and
effect such filings as may be necessary to enable Lessor and the
Beneficiaries to continue to be entitled to such benefits and protections at
all times from the date of the execution and delivery hereof until such time
as the Aircraft is returned to Lessor or the Beneficiaries in compliance
with the return conditions herein and this Lease is terminated. Lessee
acknowledges that this Section is of fundamental importance to the
transactions contemplated hereby and that neither Lessor nor the
Beneficiaries would have entered into this Lease but for the rights intended
to be conveyed to Lessor and the Beneficiaries by this Section and the
protection and benefits of Section 1110.

     (m) CONCERNING THE LESSOR. Wilmington Trust Company is entering into
this Lease solely in its capacity

                                      -80-

<PAGE>

as Trustee under the Trust Agreement and not in its individual capacity. As
such, Wilmington Trust Company shall not be liable for or on account of any
statements, representations, warranties, covenants or obligations stated to
be those of Lessor hereunder.

     (n) TRUE LEASE. THIS LEASE SHALL CONSTITUTE AN AGREEMENT OF LEASE AND
IS A TRUE OPERATING LEASE, AND NOTHING HEREIN SHALL BE CONSTRUED AS
CONVEYING TO LESSEE ANY RIGHT, TITLE, OR INTEREST IN THE AIRCRAFT OR ANY
ENGINE OR PART EXCEPT AS A LESSEE ONLY. WITHOUT LIMITING THE FOREGOING,
LESSEE WILL NOT FILE A TAX RETURN OR TAKE ANY OTHER ACTION WHICH IS
INCONSISTENT WITH THE FOREGOING.

     Section 21. SECURITY DEPOSIT.

     (a) SECURITY DEPOSIT. Lessor hereby acknowledges Beneficiaries' receipt
from Lessee of the Security Deposit subject to the Security Deposit
Adjustment. In the event that the transactions contemplated by this Lease
are not consummated (other than due to the fault of Lessee or the occurrence
of an Event of Default), Lessor shall cause the Beneficiary to refund the
Security Deposit (so long as no Default or Event of Default has occurred,
without deducting any costs incurred by any Beneficiary or Lessor in
connection with the proposed leasing of the Aircraft hereunder but after
deducting the break funding costs incurred by the Beneficiaries and specified
 in Section 20(h), if any) to Lessee. The Security Deposit is received by
Lessor or the Beneficiaries as security for the timely and faithful
performance by Lessee of all of Lessee's obligations under this Lease, and
Lessee hereby grants Lessor a security interest therein and in all other
sums deposited under this Section 21(a). Lessee agrees to execute and file
with the appropriate Governmental Entities any and all documents necessary
or reasonably requested by Lessor or any Beneficiary to evidence and perfect
such security assignment in favor of Lessor. If Lessee fails to pay Rent
hereunder when due or to pay any other sums due or to perform any of the
other terms and provisions of this Lease or is otherwise in Default
hereunder, in addition to all other rights Lessor shall have under the New
York Uniform Commercial Code as a secured party, Lessor may use, apply or
retain all or any portion of the Security Deposit in partial payment for
sums due to Lessor by Lessee, to compensate Lessor for any sums it may in
its discretion advance as a result of a Default by Lessee or to apply toward
losses or expenses Lessor may suffer or incur as a result of Lessee's
Default hereunder. If Lessor uses or applies all or any portion of such
Security Deposit, such application shall not be deemed a cure of any
Defaults, and Lessee shall within five (5) days after written demand
therefor deposit with Lessor in cash an amount sufficient to restore the
Security Deposit to the aggregate amount of such Security Deposit prior to
Lessor's use or application and the failure of Lessee to do so shall be a
material breach of

                                      -81-

<PAGE>

this Lease by Lessee. Provided Lessee is not in Default under this Lease,
such Security Deposit, less any costs incurred by Lessor in connection with
the termination of the Lease or return of the Aircraft, shall be returned to
Lessee promptly after the Expiration Date and Lessee's return of the
Aircraft in compliance with Section 16 hereof. Lessee shall not be entitled
to any interest earned on the Security Deposit.

     (b) SECURITY LETTER OF CREDIT.

         (i) Lessee hereby agrees with Lessor that, subject to paragraph
             (vi) below, Lessee shall deliver to Lessor (or if specified by
             the Beneficiaries, the Beneficiaries) the duly executed Security
             Letter of Credit for the amount specified in Exhibit C-1.

        (ii) The Security Letter of Credit shall remain in full force and
             effect from the date hereof until the date that is three months
             after the Expiration Date, provided that it may be renewable
             annually so long as Lessor or the Beneficiaries may draw upon the
             Security Letter of Credit at any time if the Security Letter of
             Credit is not renewed on or before thirty (30) days prior to its
             stated expiration or if Lessor or a Beneficiary receives a
             termination notice from the issuing bank or institution.

       (iii) Lessor or the Beneficiaries may draw upon the Security Letter of
             Credit upon the occurrence and during the continuation of an
             Event of Default and apply the proceeds thereof in or towards the
             satisfaction of any sum or obligation due to Lessor or any
             Beneficiary by Lessee which either Lessee fails to pay on the
             due date or, as the case may be, the date of demand or after any
             applicable grace period permitted for the payment thereof and/or
             under this Lease or any of the Operative Documents or to
             compensate Lessor or any Beneficiary for any sum which it may in
             its discretion advance or expend as a result of the failure of
             Lessee to comply with any of its obligations under this Lease or
             any of the Operative Documents or in respect of any Default or
             Event of Default, in respect of any indemnity payments, in any
             case by delivering to the issuing bank or institutions a notice
             in accordance with the terms of the Security Letter of Credit.
             No such drawing under the Security Letter of Credit shall operate
             to relieve Lessee of any obligation hereunder or constitute the
             satisfaction of any such obligation (except to the extent of the
             proceeds of such payment actually received by Lessor and the
             Beneficiaries).

                                      -82-

<PAGE>

        (iv) Upon any such drawing by Lessor or a Beneficiary, Lessee shall
             reimburse the issuing bank and or a Beneficiary otherwise take
             such action as may be necessary in order to restore the amount
             available for drawing under the Security Letter of Credit to the
             amount of such Security Letter of Credit specified in Exhibit C-1
             promptly (and in any event within five Business Days) after such
             Lessor's drawing and shall procure promptly that the issuing bank
             or institutions forward a further letter of credit or guarantee
             to Lessor evidencing that the amount has so been restored.

         (v) Provided that no Default, or Event of Default has occurred and is
             continuing, Lessor shall return the Security Letter of Credit to
             Lessee for cancellation promptly after the date upon which the
             Aircraft is redelivered to Lessor in accordance with the terms of
             this Lease.

        (vi) Notwithstanding the foregoing provisions of this Section 21(b),
             Lessee may, on the Delivery Date, in lieu of the delivery to the
             Beneficiaries of the Security Letter of Credit on the Delivery
             Date, deposit with the Beneficiaries an amount in cash equal to
             the amount of the Security Letter of Credit, as specified in
             Exhibit C-1 (the "Security Letter of Credit Amount"). If Lessee
             elects to make such deposit in lieu of the delivery of the
             Security Letter of Credit, then Lessee shall effect such deposit
             by wire transfer of funds to an account specified by one of the
             Beneficiaries, and such Security Letter of Credit Amount shall
             constitute part of the Security Deposit and shall be held by the
             Beneficiaries as collateral security for the payment and
             performance by the Lessee of its obligations hereunder and under
             the other Operative Documents. The Beneficiaries shall have the
             same rights, and shall be permitted to apply such Security Letter
             of Credit Amount in the same manner, as is set forth in
             Sections 18(i) and 21(a) above with respect to the Security
             Deposit. Following the Delivery Date, Lessee shall have the
             option of substituting the Security Letter of Credit described
             above in this Section 21(b) in exchange for the Security Letter
             of Credit Amount deposited with the Beneficiaries pursuant to
             this clause (vi). To effect such substitution, Lessee shall
             deliver the originally issued and executed Security Letter of
             Credit (in the form and scope and in the amount required by
             Exhibit C-1) to Lessor, and, promptly after Lessor's receipt
             thereof, the Beneficiaries shall, so long as no Default or Event
             of Default shall have occurred and be continuing, return the
             Security Letter of

                                      -83-

<PAGE>

             Credit Amount paid on the Delivery Date pursuant to this
             clause (iv) to Lessee. If Lessee does not substitute the Security
             Letter of Credit Amount with the Security Letter of Credit, so
             long as no Default or Event of Default shall have occurred and be
             continuing, the Security Letter of Credit Amount will be returned
             to Lessee promptly after the return of the Aircraft pursuant to
             Section 21(a).

                                      -84-

<PAGE>

     IN WITNESS WHEREOF, Lessor and Lessee each have caused this Lease to be
duly executed by their authorized officers as of the day and year first
above written.

                                          LESSOR:

                                          WILMINGTON TRUST COMPANY, not in its
                                          individual capacity but solely as
                                          Trustee f/b/o ITOCHU AirLease
                                          (Europe) Limited and Marubeni
                                          Airleasing (U.K.)

                                          By: /s/ Myfanwy Phillips Bonilla
                                              ----------------------------
                                          Name: Myfanwy Phillips Bonilla
                                          Title: Assis. Vice President

                                          LESSEE:

                                          ALOHA AIRLINES, INC.

                                          By:
                                              ----------------------------
                                          Name:
                                          Title:

                                          By:
                                              ----------------------------
                                          Name:
                                          Title:

<PAGE>

     IN WITNESS WHEREOF, Lessor and Lessee each have caused this Lease to be
duly executed by their authorized officers as of the day and year first
above written.

                                          LESSOR:

                                          WILMINGTON TRUST COMPANY, not in its
                                          individual capacity but solely as
                                          Trustee f/b/o ITOCHU AirLease
                                          (Europe) Limited and Marubeni
                                          Airleasing (U.K.)

                                          By:
                                              ----------------------------
                                          Name:
                                          Title:

                                          LESSEE:

                                          ALOHA AIRLINES, INC.

                                          By: /s/ James M. King
                                              ----------------------------
                                          Name:  James M. King
                                          Title: Vice President - Planning
                                                 and Development

                                          By: /s/ Owen Sekimura
                                              ----------------------------
                                          Name: Owen Sekimura
                                          Title: Staff Vice President -
                                                 Finance and Controller

                                      -15-

<PAGE>

                                    EXHIBIT A
                                       to
                            AIRCRAFT LEASE AGREEMENT

                      SCHEDULE AND DESCRIPTION OF AIRCRAFT

<TABLE>
<CAPTION>
                                                                                   U.S.
                                                         MODEL AND             REGISTRATION          MANUFACTURER'S
ITEM                    MANUFACTURER                   CONFIGURATION               NUMBER            SERIAL NUMBER
-------------------------------------------------------------------------------------------------------------------
<S>                     <C>                            <C>                        <C>                  <C>

Aircraft                The Boeing Company             737-25A                    N685MA*              23791

Engines                 Pratt & Whitney                JT8D-17A                                        P709529

                        Pratt & Whitney                JT8D-17A                                        P709530

Auxiliary
  Power Unit            Garret                         GTCP85-129                                      P35274

Landing Gears

Left Gear               Menasco                        65-46100-52                                     MC02895P1486

Right Gear              Menasco                        65-46100-52                                     MC02896P1486

Nose Gear               BF Goodrich                    65-46200-63                                     T01406P1486

</TABLE>

*To be changed to N819AL

<PAGE>

                                   EXHIBIT B-1
                                       to
                            Aircraft Lease Agreement

                     Aircraft Documents on the Delivery Date

<TABLE>
<CAPTION>

BOX 1:         MIDWAY RECORDS
-----------------------------------------------------------------------
<S>           <C>                        <C>
725ML         C check                    5/28/89 1 of 2, 2 OF 2 IS
                                         MISSING
-----------------------------------------------------------------------
725ML         Hrs / Cycles               1990 thru 4/30/91 1 of 1
-----------------------------------------------------------------------
725ML         Log Pages                  Dec 89 - Jan / Feb 91
-----------------------------------------------------------------------
725ML         Log Pages                  March 1991
-----------------------------------------------------------------------
725ML         Log Pages                  Jan / Feb 91
-----------------------------------------------------------------------
725ML         Log Pages                  Sept/Oct/Nov/Dec 90
-----------------------------------------------------------------------
725ML         Log Pages                  July/Aug 90
-----------------------------------------------------------------------
725ML         Log Pages                  April/May/June 90
-----------------------------------------------------------------------
725ML         Log Pages                  Feb/March 90
-----------------------------------------------------------------------
725ML         N Items                    Nov 90 / 1 of 1
-----------------------------------------------------------------------
725ML         Job Cards                  89/90 (structural repair
                                         for aft cargo).
-----------------------------------------------------------------------
725ML         Special Inspection         1 of 1
-----------------------------------------------------------------------
725ML         Line, TS, B1, B2, B3,      1990/1991
              B4, B5.
-----------------------------------------------------------------------
725ML         CC1 Non-Routines           1 of 1
-----------------------------------------------------------------------
725ML         Component Change           Cardex files (copies)
              Records
-----------------------------------------------------------------------
725ML         Hrs / Cycles               1 book 88-89
-----------------------------------------------------------------------
725ML         C check                    11/23/90 (4 books)
-----------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

BOX 2:                 MARKAIR RECORDS
-----------------------------------------------------------------------
<S>          <C>
N685MA       ROUTINE MAINT. LOGS/JAN. 1993 thru SEPT. 1995
-----------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

BOX 3:                 MARKAIR RECORDS
-----------------------------------------------------------------------
<S>          <C>
N685MA       ROUTINE MAINT. LOGS/Jan. 1992 thru Dec. 1992
-----------------------------------------------------------------------
N685MA       ROUTINE MAINT. LOGS/Oct. 1 thru Oct. 31, 1995
-----------------------------------------------------------------------
N685MA       Midway Fire Block data
-----------------------------------------------------------------------
N685MA       Aircraft Historical File
-----------------------------------------------------------------------
N685MA       Certificates / Permits / Documents
-----------------------------------------------------------------------
N685MA       Miscellaneous Brochure
-----------------------------------------------------------------------
N685MA       Midway AD File
-----------------------------------------------------------------------
N685MA       Fuel Quantity Data (Boeing D6-32037-1)
-----------------------------------------------------------------------
N685MA       Detail Specification (737-25A-Rev. B)
-----------------------------------------------------------------------
N685MA       Readiness Log
-----------------------------------------------------------------------
N685MA       Deferred Maintenance Log
-----------------------------------------------------------------------
N685MA       Junk Tags / 1992, 1993, 1994
-----------------------------------------------------------------------
N685MA       Markair General Policies and Procedures Manual
-----------------------------------------------------------------------

</TABLE>

<PAGE>

                                   EXHIBIT B-1
                                       to
                            Aircraft Lease Agreement

                     Aircraft Documents on the Delivery Date

<TABLE>
<CAPTION>

BOX 4:          MARKAIR RECORDS
-----------------------------------------------------------------------
<S>             <C>                          <C>
N685MA          B2, Inspection Check         4/7 - 4/10/92
-----------------------------------------------------------------------
N685MA          B2, Inspection Check         7/1 - 7/22/92
-----------------------------------------------------------------------
N685MA          B3, Inspection Check         9/15-9/17/92
-----------------------------------------------------------------------
N685MA          B&C, Inspection Check        11/23/91-1/13/92 (2 BOOKS)
-----------------------------------------------------------------------
N685MA          C, Inspection Check          1/22-25/93
-----------------------------------------------------------------------
N685MA          B1, Inspection Check         7/21-7/23/93 (2 BOOKS)
-----------------------------------------------------------------------
N685MA          B2, Inspection Check         10/19-10/21/93
-----------------------------------------------------------------------
N685MA          B4, Inspection Check         4/17-4/22/93
-----------------------------------------------------------------------
N685MA          B1, Inspection Check         7/6-7/7/94
-----------------------------------------------------------------------
N685MA          B2, Inspection Check         9/22-9/23/94
-----------------------------------------------------------------------
N685MA          B3, Inspection Check         12/6-12/8/94
-----------------------------------------------------------------------
N685MA          B3, Inspection Check         1/4 - 1/5/94
-----------------------------------------------------------------------
N685MA          B4, Inspection Check         4/2/94
-----------------------------------------------------------------------
N685MA          C2, Inspection Check         4/12/94 - 4/22/94 (2 BOOKS)
-----------------------------------------------------------------------
N685MA          C3, Inspection Check         4/25 - 5/8/95 (2 BOOKS)
-----------------------------------------------------------------------
N685MA          B1, Inspection Check         7/22/95
-----------------------------------------------------------------------
N685MA          B4, Inspection Check         2/12/95 - 2/15/95
-----------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

BOX 5:                 MARKAIR RECORDS
-----------------------------------------------------------------------
<S>          <C>
N685MA       ESN: 709529 / GTC shop visit DTD 6/29/92
-----------------------------------------------------------------------
N685MA       ESN: 700520 / GTC shop visit DTD 2/17/93
-----------------------------------------------------------------------
N685MA       ESN: 709529 / Historical Records
-----------------------------------------------------------------------
N685MA       ESN: 709529 / Engine AD Log
-----------------------------------------------------------------------
N685MA       ESN: 709529 / C2 Disk Traceability
-----------------------------------------------------------------------
N685MA       ESN: 709530 / Historical Records
-----------------------------------------------------------------------
N685MA       ESN: 709530 / AD Log
-----------------------------------------------------------------------
N685MA       ESN: 709530 / WO LR 9122 (4 ea) Aviall 7/20/90
-----------------------------------------------------------------------
N685MA       ESN: 709530 / WO# LR 0181 (4 ea) Aviall 6/92
-----------------------------------------------------------------------
N685MA       APU S/N P-35274 / Historical Records
-----------------------------------------------------------------------
N685MA       APU S/N P-35274 / AD Log
-----------------------------------------------------------------------

</TABLE>

                                       -2-

<PAGE>

                                   EXHIBIT B-1
                                       to
                            Aircraft Lease Agreement

                     Aircraft Documents on the Delivery Date

<TABLE>
<CAPTION>

BOX 6:                 MARKAIR RECORDS
-----------------------------------------------------------------------
<S>          <C>
N685MA       Airframe AD Log
-----------------------------------------------------------------------
N685MA       Appliance AD Log
-----------------------------------------------------------------------
N685MA       MEA Logs
-----------------------------------------------------------------------
N685MA       Master Flight Log
-----------------------------------------------------------------------
N685MA       SB Log
-----------------------------------------------------------------------
N685MA       Galley Installation
-----------------------------------------------------------------------
N685MA       EO and Drawings
-----------------------------------------------------------------------
N685MA       Galley Manuals and Certification
-----------------------------------------------------------------------
N685MA       MEA'S
-----------------------------------------------------------------------
N685MA       S.B.'s
-----------------------------------------------------------------------
N685MA       Windshear TCAS & Mode S Installation Data
-----------------------------------------------------------------------
N685MA       Fleet Campaign's
-----------------------------------------------------------------------
N685MA       Structural Repairs
-----------------------------------------------------------------------
N685MA       Landing Gear Records
-----------------------------------------------------------------------
N685MA       Weight & Balance Data
-----------------------------------------------------------------------
N685MA       Markair Kardex File (Parts Tags)
-----------------------------------------------------------------------

</TABLE>

<PAGE>

                                   EXHIBIT B-2
                                       to
                            Aircraft Lease Agreement
                            ------------------------

                    AIRCRAFT DOCUMENTS ON THE RETURN OCCASION
                    -----------------------------------------

     All the Aircraft Documents delivered on the Delivery Date or any other
date (including without limitation those listed in Exhibit B-1) shall be
returned to Lessor along with the following:

A.   Manuals (in U.S. units) to be delivered with aircraft, as required:

     1. FAA Approved Airplane Flight Manual.
     2. Weight and balance control and loading manual with supplements.
     3. Operations Manual.
     4. Aircraft Maintenance Manual.
     5. DDPG including MEL.

B.   In addition, one copy of each of the following manuals will be delivered
     on the return occasion.

     1. Structural repair manual and supplements.
     2. Aircraft/engine/spare engine/APU Maintenance manual.
     3. Aircraft/engine/spare engine/APU illustrated parts catalog.
     4. Aircraft/engine/spare engine/APU wiring diagram, hook-up charts, wire
        list and equipment list.
     5. Maintenance and inspection procedures manual.
     6. General Policies & Procedures Manual.

C.   Airworthiness Directives Documentation. In accordance with 14 C.F.R.
     Part 121.380, Lessee shall deliver to Lessor on the return occasion all
     records associated with compliance airworthiness directives ("A.D."):

     1. A single, complete and current A.D. status list of the airframe,
        appliance, engines, spare engines and APU Airworthiness Directives and
        mandatory FAA regulation applicable to the Airframe, Engines, Spare
        Engines and APU. This list shall be provided in a format acceptable to
        buyer and shall include, but not limited to:

     a. A.D. number and revision number.
     b. A.D. title.
     c. Aircraft serial number, engine serial number and APU serial number.
     d. Engineering documentation reference.
     e. Manufacturers service bulletin references and cross-references, where
        appropriate.

<PAGE>

     f. Specifications of terminated or repetitive status.
     g. Date of initial accomplishment.
     h. Date of last maintenance accomplishment, if repetitive.
     i. Name and serial number of the internal maintenance form used to
        document accomplishment, if applicable.
     j. Specification of means by which compliance was accomplished
        (e.g., modified, repaired, inspected).

     The list shall be typed, certified and signed by an authorized quality
assurance representative of the Lessee.

     2. Legible copies of the completion documents that accomplish each A.D.
If the A.D. is a repetitive inspection, documentation of the last
accomplishment is sufficient. These documents must have the date of
accomplishment, the signature of a certified mechanic and/or inspector and
the mechanic's/inspector's certificate number or the repair station number
of the mechanic accomplishing the work. The document must reference the A.D.
number and company authorization which covered the A.D.

    3. Exemptions or deviations granted by the FAA (or equivalent) to Lessor
or Lessee, as the case may be, on A.D. compliance, including copy of
exemption request.

    4. Items 2 or 3 will be provided in individual document packages for
each A.D. Each package will contain all documents relative to that
A.D./Aircraft combination.

D.  Engineering Documentation

    1. A single, current list of airframe, engines, spare engines and APU
       service bulletins, engineering orders, major repairs and supplemental
       type certificates completed on the airframe, each engine, spare engine
       or the APU including references to engineering documentation, shall be
       provided with information similar to that described in item C.1 above.

    2. A current copy of all engineering documentation related to aircraft
       alterations and repair configuration changes. This shall include
       documentation for work done by any previous owner or operator, the
       manufacturer or any vendor. An index shall be provided. A current copy
       of all repairs that require follow-up action.

    3. Data package covering all non-manufacture/non-FAA approved repairs or
       alterations, including the submittal to the FAA for an STC or Form 337,
       if applicable.

    4. All open engineering deviations or material review board (MRB) records
       applicable to the airframe, engines, spare engines, APU's, parts,
       components and piece parts.

                                       -2-

<PAGE>

E.  Additional Documentation

    1. Maintenance program document.
    2. Location map of emergency equipment, with description.
    3. Interior configuration drawings.
    4. Weight and balance current status.
    5. FAA Export Certificate of airworthiness, if applicable.
    6. FAA certification of all components.
    7. FAA import certificate of airworthiness for all non-U.S. spare parts.
    8. Complete set of maintenance operations specifications.
    9. Master aircraft flight log.

F.  Individual aircraft, engine and spare engine records

    1. Major structural damage reports, if any.
    2. FAA Form 337, or equivalent, for major repair and alterations, if any.
    3. Engine/spare engine last shop visit report.
    4. Documentation and records concerning the last aircraft overhaul.
    5. Engine/spare engine trend monitoring data.
    6. Log books for last 12 months.
    7. List of open items, if any.
    8. Declaration for aircraft accident and major repairs, if any.
    9. Listing of aircraft, engine and spare engine components status by
       P/N - S/N description position - TBO - TSI - TSO - total time.
   10. Engine or spare engine life limited parts status and history (certified).
   11. Engine or spare engine log book, if applicable.
   12. APU - same documentation as items F. 10 and 11 above.
   13. Delivery letter w/serial number, total time/total cycles, time to the
       next inspection and the time to the inspection or removal of
       engines/spare engines or components.
   14. All engines, spare engines and APU records, up to and including the
       last major overhaul or heavy maintenance and shop visits.
   15. Manufacturers delivery document for engines, spare engine and APU.
   16. Last test cell run documents for engines, spare engines and APU.
   17. Borescope history for current installation for engines and spare
       engine, if applicable.
   18. Aircraft readiness log (manufacturers).
   19. Component records - time controlled components historical records
       w/installation and serviceability tags.

                                       -3-

<PAGE>

                                   EXHIBIT C-1
                                       to
                            AIRCRAFT LEASE AGREEMENT

                              FINANCIAL INFORMATION

Basic Rent:                     The Basic Rent payable monthly in advance on
                                each of the Basic Rent Payment Dates shall be
                                $115,279.80 per month.

Basic Rent Payment Date:        The Delivery Date and the date in each
                                subsequent month that numerically corresponds
                                to the Delivery Date; PROVIDED, that if any
                                such subsequent month does not have a date
                                that numerically corresponds to the Delivery
                                Date, the last day of such month; PROVIDED,
                                FURTHER, that if such date is not a Business
                                Day, then the Basic Rent Payment Date shall
                                be the next preceding Business Day.

Casualty Value:                 As at the Delivery Date and for the one year
                                period following the Delivery Date, the
                                Casualty Value shall be $14,000,000, and the
                                Casualty Value shall be reduced by $500,000
                                effective on each anniversary thereof which
                                reduced Casualty Value shall remain effective
                                for the one year period following the date of
                                such reduction, as follows:

<TABLE>
<CAPTION>
                                DATE OF                               CASUALTY
                                REDUCTION                              VALUE
                                ---------------                    -----------
<S>                             <C>                                <C>
                                Delivery Date                      $14,000,000
                                1st anniversary                     13,500,000
                                2nd anniversary                     13,000,000
                                3rd anniversary                     12,500,000
                                4th anniversary                     12,000,000
                                5th anniversary                     11,500,000
                                6th anniversary                     11,000,000
                                7th anniversary                     10,500,000
                                   and after
</TABLE>

Security Deposit:               Means a cash deposit in the amount of U.S.
                                $115,000 paid by Lessee to Lessor or the
                                Beneficiaries on November 10, 1995, together
                                with any increases in such amount pursuant
                                to Section 21(a) of the Lease and the
                                following definition of Security Deposit
                                Adjustment.

Security Deposit Adjustment:    The Security Deposit Adjustment Amount shall
                                be the amount, if any, by which the amount of
                                monthly Basic Rent specified above exceeds
                                the amount of the Security Deposit specified
                                above ($279.80), and an amount equal to such
                                difference shall be paid by Lessee to the
                                Beneficiaries on the Delivery Date for
                                application to the Security Deposit.

Security Letter of Credit:      Means an irrevocable letter of credit or
                                guarantee in the amount at all times the
                                greater of US$ 230,000 and an amount equal to
                                the aggregate of two (2) months Basic Rent
                                payments ($230,559.60), issued by an
                                institution and in form and substance
                                acceptable to Lessor and Beneficiary.

<PAGE>

                                   EXHIBIT C-2
                                       to
                            AIRCRAFT LEASE AGREEMENT

                             DEFINITIONS AND VALUES

Beneficiary:                    Means each of ITOCHU AirLease (Europe)
                                Limited and Marubeni Airleasing (U.K.)
                                Limited as beneficiary under the Trust
                                Agreement, together in each case with its
                                successors and permitted assigns under the
                                Trust Agreement.

Beneficiary's Address:          For ITOCHU AirLease (Europe) Limited:

                                Itochu AirLease (Europe)
                                   Limited
                                1, Earlsfort Centre
                                Hatch Street
                                Dublin 2
                                Ireland

                                Fax:       353-1-661-3278
                                Attention: Secretary

                                with copy to:

                                ITOCHU AirLease Corporation
                                NXB Aoyama Building 5 Fl.,
                                26-37 Minami-Aoyama 2-Chome,
                                Minato-Ku,
                                Tokyo,
                                Japan

                                Telex:               2423154 TKAFCJ
                                Fax:                 (813) 3497 8145
                                Attention:           the President

                                For Marubeni Airleasing (U.K.)
                                Limited:

                                120 Moorgate
                                London EC2M 6SS
                                United Kingdom
                                Telecopy No.:        (44) 171-826-8835

Deductible Amount:              $500,000

Delivery Location:              such state in the continental United States
                                reasonably determined by the

<PAGE>

Trustee:                        means Wilmington Trust Company, a Delaware
                                banking corporation,  not in its individual
                                capacity but solely as trustee under the
                                Trust Agreement or any successor Trustee
                                thereunder.

                                       -6-

<PAGE>

                                                        COUNTERPART NO.____

                                    EXHIBIT D
                                       to
                            AIRCRAFT LEASE AGREEMENT

                             LEASE SUPPLEMENT NO. 1

                           TO AIRCRAFT LEASE AGREEMENT
                          DATED AS OF NOVEMBER 29, 1995

                   LEASE SUPPLEMENT NO. 1, dated December 1, 1995, between
Wilmington Trust Company, not in its individual capacity but solely as Trustee
f/b/o ITOCHU AirLease (Europe) Limited and Marubeni Airleasing (U.K.) Limited
("Lessor"), and Aloha Airlines, Inc., a company organized under the laws of
Hawaii ("Lessee").

                   Lessor and Lessee have previously entered into that certain
Aircraft Lease Agreement dated as of November 29, 1995 (herein called the
"Lease" and the defined terms therein being hereinafter used with the same
meaning). The Lease provides for the execution and delivery from time to time
of a Lease Supplement substantially in the form hereof for the purpose of
leasing the aircraft described below under the Lease as and when delivered by
Lessor to Lessee in accordance with the terms thereof.

                   The Lease relates to the Aircraft, Parts and Engines as more
precisely described below. A counterpart of the Lease is attached hereto and
this Lease Supplement and the Lease shall form one document.

                   In consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:

                   1. Lessor hereby delivers and leases to Lessee under the
Lease and Lessee hereby accepts and leases from Lessor under the Lease, that
certain Boeing Model B-737-25A commercial jet aircraft, Airframe and the two
Pratt & Whitney JT8D-17A Engines (each of which engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower) described in Schedule
1 attached hereto and made a part hereof (the "Delivered Aircraft"). The
status of the Aircraft and Engines upon delivery thereof to Lessee shall be as
described on Schedule 2 attached hereto and made a part hereof.

                   2. (A) The Delivery Date of the Delivered Aircraft is the
date of this Lease Supplement set forth in the opening paragraph hereof.

                       (B) The time of the delivery and acceptance of the
Delivered  Aircraft is ____:____ __. m., at which time the

<PAGE>

Delivered Aircraft is located in the airspace over the State of Texas, United
States of America (such location is herein called the "Delivery Location").

                   3. The Term for the Delivered Aircraft shall commence on the
Delivery Date and shall end on the Expiration Date, which shall be December 1,
2003.

                   4. The amount of Basic Rent for the Delivered Aircraft is
payable in advance on each Basic Rent Payment Date.

                   5. Lessee hereby confirms to Lessor that (i) the Delivered
Aircraft and each Engine installed thereon or belonging thereto have been duly
marked in accordance with the terms of Section 6(f) of the Lease, (ii) Lessee
has accepted the Delivered Aircraft for all purposes hereof and of the Lease
and (iii) Lessee has inspected the Delivered Aircraft and the Delivered
Aircraft satisfies the conditions set forth in the Lease.

                   6. Lessor represents that all of its representations and
warranties contained in the Lease are true and correct on the date hereof.

                   7. All of the terms and provisions of the Lease Agreement are
hereby incorporated by reference in the Lease Supplement to the same extent as
if fully set forth herein.

                   8. The Lease Supplement may be executed in any number of
counterparts, each of such counterparts, except as provided in Section 20 (e)
of the Lease, shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same Lease Supplement.

THIS LEASE SUPPLEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH
THERE IS ONE COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER
ORIGINAL" AND ALL OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER
THAN 1. TO THE EXTENT THAT THIS LEASE SUPPLEMENT CONSTITUTES CHATTEL PAPER
UNDER THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN ANY APPLICABLE JURISDICTION,
NO SECURITY INTEREST MAY BE CREATED OR PERFECTED BY POSSESSION OF ANY
COUNTERPART OF THIS LEASE SUPPLEMENT OTHER THAN SAID COUNTERPART NO. 1.

                                      -2-

<PAGE>

                  IN WITNESS WHEREOF, Lessor and Lessee each have caused this
Lease Supplement to be duly executed by their authorized officers as of the
day and year first above written.

                                       LESSOR:
                                       WILMINGTON TRUST COMPANY, not
                                       in its individual capacity but
                                       solely as Trustee

                                       By:__________________________________
                                       Name:
                                       Title:

                                       LESSEE:

                                       ALOHA AIRLINES, INC.

                                       By:__________________________________
                                       Name:
                                       Title:

                                       By:__________________________________
                                       Name:
                                       Title:

                                      -3-

<PAGE>

                                   SCHEDULE 1
                                       TO
                             LEASE SUPPLEMENT NO. 1

                                 BOEING 737-25A
                                    AIRFRAME

<TABLE>
<CAPTION>
MANUFACTURER'S        U.S. REGISTRATION
SERIAL NO.            NUMBER                   TOTAL TIME*        TOTAL CYCLES*
--------------        -----------------        -----------        -------------

<S>                  <C>                       <C>                <C>
23791                N685MA                    23,859             14,057
                     (to be changed to
                      N819AL)

</TABLE>

                            INSTALLED PRATT & WHITNEY
                                     ENGINES
<TABLE>
<CAPTION>

MODEL NO.            SERIAL NO.                TOTAL TIME*        TOTAL CYCLES*
--------------        -----------------        -----------        -------------

<S>                  <C>                       <C>                <C>

JT8D-17A             P709529                   20,960             11,883

JT8D-17A             P709530                   22,100             12,908

</TABLE>

                                    INSTALLED
                              AUXILIARY POWER UNIT

<TABLE>
<CAPTION>

MODEL NO.            SERIAL NO.                TOTAL TIME         TOTAL CYCLES
--------------        -----------------        -----------        -------------
<S>                  <C>                       <C>                <C>
GTCP85-129           P35274                    (TACH Reading)

</TABLE>

<PAGE>

                                   SCHEDULE 1
                                       TO
                         LEASE SUPPLEMENT NO. 1 (cont'd)

                                  B737 AVIONICS
                               COMPONENT INVENTORY

<TABLE>
<CAPTION>

ITEM          PART NUMBER       SERIAL NUMBER               DESCRIPTION           POSITION/QUANTITY
 NO.
<S>           <C>               <C>                   <C>                          <C>

  1           622-4096-001           4581                      PA Amp                 E&E     1
  2            5140-1-112             339              Remote Electronics Unit        E&E     1
  3           622-8971-020           2119                     TCAS T/R                E&E     1
  4           622-1181-001          14400                      VHF T/R                E&E     1
  5           622-1396-001           5023                      VHF T/R                E&E     1
  6           622-7878-200        5128/5165                      ATC                  E&E     2
  7             NA 13UO2          255AKWO022                   Selcal                 E&E     1
  8           622-2921-001       10076/10061                     DME                  E&E     2
  9           080-20325-01     4603/4613/4602                T/Rectifier              E&E     3
 10             2-301-3              4782                   Batt Charger              E&E     1
 11            39B168-1-0            3276                 Static Inverter             E&E     1
 12           65-52811-109          D00485             Landing Gear Acc Unit          E&E     1
 13             42-651-01             443                     Anti-Skid               E&E     1
 14           65-52810-25           D01002            Air Condition Relay Unit        E&E     1
 15           65-73606-69           D01029                   Eng Acc Unit             E&E     1
 16           65-52808-7            D00496            Compartment Overheat Unit       E&E     1
 17           65-52806-235          D00870             Misc Solid State Switch        E&E     1
 18           165-52807-26          D00449              Slat Position Switch Unit     E&E     1
</TABLE>

                                       -2-

<PAGE>

<TABLE>
<CAPTION>

ITEM          PART NUMBER       SERIAL NUMBER               DESCRIPTION           POSITION/QUANTITY
 NO.
<S>           <C>               <C>                   <C>                          <C>

 19           522-2996-011           2012                  Marker Beacon              E&E     1
 20           777-1492-002           1582                       ADF                   E&E     1
 21           777-1492-004           4039                       ADF                   E&E     1
 22           965-0876-001            304                      GPWS                   E&E     1
 23           622-3890-003           1556                   Radio Alt                 E&E     1
 24            65-52801-31          D00446               APU Control Unit             E&E     1
 25            65-52809-15          D00306              Fire Detector Unit            E&E     1
 26             8TJ45-GAB         X0062 34B3          Fuel Flow Power Supply          E&E
 27               231-2            5556/6517            Window Heat Control           E&E     4
 28                                4314/7490                                          E&E
 29           522-3949-001           3701               Monitor Comparator            E&E     1
 30           622-3257-001         5662/2275               ILS NAV RCVR               E&E     2
 31            172938-001          6620/6623                NAV SW Unit               E&E     4
 32                                6630/6613                                          E&E
 33             HG48B13           P255/G1711                    ADC                   E&E     2
 34            4030952-906         88062826                  Yaw Damper               E&E     1
 35           163356-88-01          0000528            Performance Data Comp          E&E     1
 36             548376-6           097C-9045           Cabin Temp Controller          E&E     1
 37             87093613              P43               Pressure Controller           E&E     1
 38            2588424-902         84053253                 Rate of Turn              E&E     1
 39                101          812802UA/9118557A           Compass Rack              E&E     2
 40           622-2500-004        2343/1298                 Steering Comp             E&E     2
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

ITEM          PART NUMBER       SERIAL NUMBER               DESCRIPTION           POSITION/QUANTITY
 NO.
<S>           <C>               <C>                   <C>                          <C>
 41            65-52805-317        D01011                Flight Inst Acc Unit         E&E     1
 42             172938-001       6624/6615                   Switch Unit              E&E     4
 43                              6595/2678                                            E&E
 44            2590650-901        05872772                   Mach Trim Comp           E&E     1
 45            2588810-904        01851529                   Pitch Computer           E&E     1
 46            2588812-902        06871639                   Roll Computer            E&E     1
 47           65-52812-107         D00496                  Auto Pilot Acc Unit        E&E     1
 48            457300-0430          3394                        Omega RPU             E&E     1
 49             25582-003          8305313                       Battery              E&E     1
 50             2587335-11        84054627                      Vert Gyro             E&E     1
 51             2587335-11         8415034                      Vert Gyro             E&E     1
 52             2587335-11         0034163                      Vert Gyro             E&E     1
 53             2588302-4          0067044                   Direction Gyro           E&E     1
 54             2588302-4          84056507                  Direction Gyro           E&E     1
</TABLE>

<PAGE>

                                   SCHEDULE 2
                                       TO
                             LEASE SUPPLEMENT NO. 1

                                 Aircraft Status
                              ON THE DELIVERY DATE

AIRFRAME HEAVIEST CHECK ("D" CHECK OR EQUIVALENT):

<TABLE>

<S>                          <C>                          <C>
    Interval:                28,000 (Hrs)
    Time Remaining:          4,141

LANDING GEAR OVERHAUL:

    Interval:                Main Gear                    24,000 cycles
                             Nose Gear                    24,000 cycles

    Time Remaining:          Left Gear                     9,943 cycles
                             Right Gear                    9,943 cycles
                             Nose Gear                     9,943 cycles

ENGINES:

    Overhaul Interval:
    Time Remaining (S/N P709529):
    Time Remaining (S/N P709530):

    Hot Section Inspection:

      Interval:
      Time Remaining (S/N P709529):
      Time Remaining (S/N P709530):

TIME REMAINING TO FIRST RESTRICTION:

    Engine S/N:                                                 P709529
      Hours:                                                    9,040
      Cycles:                                                   3,117 (C07)
    Engine SIN:                                                 P709530
      Hours:                                                    7,900
      Cycles:                                                   2,092 (C07)

</TABLE>

<PAGE>

<TABLE>

<S>                          <C>                          <C>

AUXILIARY POWER UNIT:

    Hot Section Inspection:

         Interval:                                        On Condition
         Time Remaining:                                  On Condition

         Time Remaining to Next Limited
           or Scheduled Removal:                          On Condition

</TABLE>

                                       -2-

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

                                             Effective date:  10/20/95

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 21
------
Valve, Safety       720737-5       L-0001         14000H           13,817.6           3,977.2
RH                                                OH               7/3/92
Valve, Safety       720737-5       830678         14000H           13,817.6           3,977.2
LH                                                OH               7/3/92
Gasper Fan          21520-1         063           6000H            22,594.7           4,735
                                                  OH               6/15/95

ATA 23
------
Recorder,          93A100-80       52428          72 Mo.           14, 623.2H         2 Yrs., 6 Mo.
Voice                                             RPL
(Battery)

ATA 24
------
APU Generator      976J498-1       YK13122        6000H            20,471             2,602H
                                                  HT               10/20/94
Panel Bus          915F213-2       WE1347B        6000H            19,313.9           1,454H
Protection                                        BC               6/11/94
Gen. Cont.         948F458-1       NM4963         6000H            19,616.8H          1,757H
 Unit                                             BC               7/18/94
 APU
Gen. Cont.         948F458-1       PM5071         6000H            23,697H            5,838H
 Unit                                             BC               10/3/95
 Left
Gen. Cont.         948F458-1       XJ2186         6000H            21,639.9H          3,780.9H
 Unit                                             BC               2/18/95
 Right

ATA 25
------
Life Vest          KSE-35L8        527-691        24 Mo.           8/30/95            9 Mos.
 Rt. Aft                                          OH               23,304H
Life Vest          AV-35           541-064        24 Mo.           2/95               14 Mos.
 Co-pilot                                         O H              21,530H
Slide, Evac        D31354-         1112           24 Mo.           8/23/94            10 Mos.
 Rt. Aft           425                            OH               19,939.7H

</TABLE>

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 25
------
Slide, Evac         D31354-        1613           24 Mo.            8/24/94         10 Mos.
 Lt. Aft            433                           OH                19, 949H
Slide, Evac         11611-143      123-1          24 Mo.            9/12/95         23 Mos.
 Rt. Fwd                                          OH                23,459H
Slide, Evac         D31354-        0159           24 Mo.            2/15/95         7 Mos.
 Lt. Fwd            403                           OH                21,620H

Escape Slide        SEE NOTE (1) OF THE MARKAIR MAINTENANCE PROGRAM
 Bottles (4)

Life Vest           KSE-35L8       50287          24 Mo.            3/17/95          9/96
 Obs                                              OH                21,942H          8 Mos.
Life Vest           KSE-35L8       12323          24 Mo.            8/1/95           7/97
 Capts                                            OH                23,085H          22 Mos.
Life Vest           KSE-35L8       527-691        24 Mo.            8/30/95          7/97
Aft Right                                         OH                23,304H          21 Mos.
Life Vest           KSE-35L8       29358          24 Mo.            2/3/95           12/96
Left Aft                                          OH                21,474H          8 Mos.
Life Vest           AC-2           535-380        24 Mo.            4/29/95          3/97
Fwd FA                                            OH                22,259H          17 Mos.
Life Vest           KSE-35L8       541-064        24 Mo.            2/7/95           1/97
Co-pilot                                          OH                21,530.7         15 Mos.
Kit, Medical        017093         NHC1613        24 Mo.            11/28/94         11/96
                                                  OH                20,844H          13 Mos.
PEE                 4566M378       E9134322       120 Mo.           12/31/91         1/2000
R/A Closet                                        OH                                 60 Mos.
PEE                 4566M378       E9134326       120 Mo.           12/31/91         1/2000
L/A Closet                                        OH                                 60 Mos.
PEE                 4566M378       E9134942       120 Mo.           1/13/92          1/2000
Aft Closet                                        OH                                 60 Mos.
PEE                 4566M378       E9134751       120 Mo.           12/22/91         1/2000
Row 10                                            OH                                 60 Mos.
PEE                 4566M378       E9548209       120 Mo.           6/9/95           5/2002
Cockpit                                           OH                                 70 Mos.

</TABLE>

                                       -2-

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 26
------
Cartridge,          30903828       AEN-1-3       72 Mos.           5/28/93          50 Mos.
Fire                                             RPL
ext.: Rt.
Cartridge,          30903828       BTL23883B     120 Mos.          5/5/95           5/2005
Fire                               1             RPL
ext.: APU
Cartridge,          30903828       09015DI       72 Mos.           4/27/95          2/2001
Fire                                             RPL
ext.: Left
Fire Bottle         3307507        23883B1       WC/12 Mos         5/5/95            5/96
APU                                              HST/60 Mo         5/5/95            5/2000
Fire Bottle         33600011       10124D1       WC/12 Mos         4/27/95           5/98
Rt Eng.                                          HST/60 Mo         5/14/93           4/98
Fire Bottle         33600011       09015D1       WC/12 Mos         4/27/95           4/96
Left Eng.                                        HST/60 Mo         2/16/95           2/2000
Fire Ext.           892480         672AC         WC/12 Mos         5/1/95            5/96
Aft                                              HST/60 Mo                           7/96
Closet(H20)
Fire Ext.           898052         A-415392      WC/12 Mos         5/1/95            5/96
Aft. (halon)                                     HST/60 Mo         11/91             7/96
Fire Ext.           898052         B-615379      WC/12 Mos         5/1/95            5/96
Lt row                                           HST/60 Mo                           7/96
10/halon
Fire Ext.           898052         V-343826      WC/12 Mos         4/26/95           5/99
Fwd/(halon)                                      HST/60 Mo
Fire Ext.           898052         E494480       WC/12 Mos         4/29/95           4/96
cockpit/halon                                    HST/60 Mo                           5/99
Fire Bottle,        A800100-1      26-904        WC/12 Mos         4/13/94           Over Due
Lav. Aft                                         HST/60 Mo
Fire bottle,        A800100-1      26-906        WC/12 Mos         4/13/94           Over Due
Lav. Fwd                                         HST/60 Mo

</TABLE>

                                       -3-

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 27
------
Jackscrew,          65-49970-      KE00301        8000H            19,946H          3,787H
Stab. trim             17                         OH               8/24/94
Fuse assy           6213-4         219            22,400H          19,945H          18,487H
auto                                              BC
brk/rudder
Transmission        65-50321-      0812           16000H           15,275H          7,416H
No 1 flap              5                          OH
Transmission        65-50322-      0840           16000H           15,275H          7,416H
No 2 flap              12                         OH
Transmission        65-50323-      0911           16000H           15,275H          7,416H
No 3 flap              5                          OH
Transmission        65-50324-      0784           16000H           15,275H          7,416H
No 4 flap              3                          OH
Transmission        65-50325-      50007          16000H           15,275H          7,416H
No 5 flap              5                          OH
Transmission        65-50326-      62003          16000H           15,275H          7,416H
No 6 flap              6                          OH
Transmission        65-50327-      72004          16000H           15,275H          7,416H
No 7 flap              14                         OH
Transmission        65-50328-      82002          16000H           15,275H          7,416H
No 8 flap              7                          OH
Gearbox assy        65-51510-      7417           16000H           15,275H          7,416H
Rt angle/Left          1                          OH
Gearbox assy        65-51510-      1489           16000H           15,275H          7,416H
Rt angle/Rt            2                          OH
Gearbox assy        65-51513-      4778           16000H           15,275H          7,416H
Flap dr./Left          1                          OH
Gearbox assy        65-51513-      1877           16000H           15,275H          7,416H
Flap dr./Rt.           2                          OH
Power Unit          65-63851-      7241           16000H           15,275H          7,416H
Flap dr GBX            7                          OH

</TABLE>

                                      -4-

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 28
------
APU Fuel            AV16EI209      H1842C         20000H           19,898H          16,025H
S/0 VLV                 D                         OH               8/19/94
Left Fuel           61185          128            200001-1         19,876H          16,003H
S/0 VLV                                           OH               8/16/94
Right Fuel          61185          1813           20000H           20,015H          16,142H
S/0 VLV                                           OH               8/31/94
CF Fuel             61185          609            20000H           20,005H          16,146H
S/0 VLV                                           OH               8/31/94

ATA 31
------
ULB Batteries       9804100-       7040           6 Yrs.           12 Mar 94        41 Mos.
                      GXUS                        RPL

ATA 32
------
Fuse assy           6213-4         627            22,400H          19,917.7H        18,458H
Auto                                              OH               8/21/94
Brk/Rudder

ATA 34
------
Altimeter,          WL102AMS       AG102          24 Mo.           12/20/94         14 Mo.
Stby                   3                          IN
Transponder         TPR 720        5128           24 Mo.           4/27/95          18 Mo.
Mode S, Lt.                                       IN
Transponder         TPR 720        5165           24 Mo.           4/27/95          18 Mo.
Mode S, Rt.                                       IN

</TABLE>

                                       -5-

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 35
------
02 Cylinder         801307-00      223879/        36 Mo.           6/22/94          5/97
                                   29668          HST              5/94             19 Mo.
Portable 02         5500A1A-       771X/3596      60 Mo.           5/11/92          3/96
 Cyl                BF23A          4              HST                               5 Mo.
Portable 02         5500A1A-       151843P/1      60 Mo.           12/21/93         1/97
 Cyl                BF23A          3              HST                               15 Mo.
Row 1                              5454
Portable 02         56002C1AF      55934DB/2      60 Mo.           10/5/95          2/2000
 Cyl                23AM           3832           HST                               58 Mo.
Aft closet
Portable 02         5600-2ClA      74732DF/       60 Mo.           1/12/93          1/98
 Cyl                               41819          HST                               26 Mo.
Cockpit

02 Generators       Varies                        12 Yrs                            22 Mo.
-------------       ------                        ------                            ------
                    117003-17                     12 Yrs                            22  Mo.
                    117.00-12                     12 Yrs                            22  Mo.
                    803000-02                     12 Yrs                            22  Mo.
                    117003-12                     12 Yrs                            22  Mo.

</TABLE>

                                       -6-

<PAGE>

                                   SCHEDULE 4
                                       TO
                             LEASE SUPPLEMENT NO. 1

                                   A/C N685MA

                                    R/H SIDE

<TABLE>
<CAPTION>

DESC.                  PART NUMBER         SERIAL NUMBER          MODEL NUMBER
-----                  -----------         -------------          ------------
<S>                    <C>                 <C>                    <C>
 1. TRIPLE BURNS       86952102            310588                 JB5.2-3-58
 2. TRIPLE BURNS       86952024            310581                 JB5.2-3-59
 3. TRIPLE BURNS       86952022            310569                 JB5.2-3-59
 4. TRIPLE BURNS       86952022            310566                 JB5.2-3-59
 5. TRIPLE BURNS       86952022            310572                 JB5.2-3-59
 6. TRIPLE BURNS       86952022            310577                 JB5.2-3-59
 7. TRIPLE BURNS       86952022            310570                 JB5.2-3-59
 8. TRIPLE BURNS       86952022            310574                 JB5.2-3-59
 9. TRIPLE BURNS       86952022            310568                 JB5.2-3-59
10. TRIPLE BURNS       86952016            310562                 JB5.2-3-58
11. TRIPLE BURNS       86952022            310573                 JB5.2-3-59
12. TRIPLE BURNS       86952022            310579                 JB5.2-3-59
13. TRIPLE BURNS       86952022            310578                 JB5.2-3-59
14. TRIPLE BURNS       86952022            310571                 JB5.2-3-59
15. TRIPLE BURNS       86952022            310576                 JB5.2-3-59
16. TRIPLE BURNS       86952022            310564                 JB5.2-3-59
17. TRIPLE BURNS       86952022            310575                 JB5.2-3-59
18. TRIPLE BURNS       86952026            310582                 JB5.2-3-59
19. TRIPLE BURNS       86952014            310560                 JB5.2-3-58
20. DOUBLE BURNS       86953201            306409                 JB5.2-2-39

</TABLE>

                                       -1-

<PAGE>

                                   A/C N685MA

                                    L/H SIDE

<TABLE>
<CAPTION>

DESC.                  PART NUMBER         SERIAL NUMBER          MODEL NUMBER
-----                  -----------         -------------          ------------
<S>                    <C>                 <C>                    <C>
1.  TRIPLE BURNS       86952101            310587                 JB5.2-3-58
2.  TRIPLE BURNS       86952007            310556                 JB5.2-3-58
3.  TRIPLE BURNS       86952001            310548                 JB5.2-3-59
4.  TRIPLE BURNS       86952001            310545                 JB5.2-3-59
5.  TRIPLE BURNS       86952001            310541                 JB5.2-3-59
6.  TRIPLE BURNS       86952001            310542                 JB5.2-3-59
7.  TRIPLE BURNS       86952001            310539                 JB5.2-3-59
8.  TRIPLE BURNS       86952001            310550                 JB5.2-3-59
9.  TRIPLE BURNS       86952013            310559                 JB5.2-3-58
10. TRIPLE BURNS       86952015            310561                 JB5.2-3-58
11. TRIPLE BURNS       86952001            310544                 JB5.2-3-59
12. TRIPLE BURNS       86952003            310554                 JB5.2-3-59
13. TRIPLE BURNS       86952001            310547                 JB5.2-3-59
14. TRIPLE BURNS       86952001            310543                 JB5.2-3-59
15. TRIPLE BURNS       86952001            310553                 JB5.2-3-59
16. TRIPLE BURNS       86952001            310538                 JB5.2-3-59
17. TRIPLE BURNS       86952001            310538                 JB5.2-3-59
18. TRIPLE BURNS       86952001            310549                 JB5.2-3-59
19. TRIPLE BURNS       86952005            310555                 JB5.2-3-59
20. TRIPLE BURNS       86952017            310563                 JB5.2-3-56

</TABLE>

                                       -2-

<PAGE>

<TABLE>
<CAPTION>

                                                                                 AUDITED THRU L/P         165891      10/20/95
                                                                                 A/C TOTAL HOURS          23,859
                                                                                 A/C TOTAL CYCLES         14,057
INSTALLED ON  N685MA  POSITION 1
                                                                   HOURS       CYCLES
                                               LIMIT               SINCE       SINCE    TOTAL      TOTAL   TIME REMAINING
ITEM          POS     PART NO     S/N          HOURS      CYCLES   NEW         NEW      HOURS      CYCLES  HOURS      CYCLES

<S>           <c>     <c>         <c>          <c>        <c>      <c>         <c>      <c>        <c>     <c>        <c>

ENGINE        LEFT    JT8D-17A    P7095308     30,000     15,000   22,100     12,908    22,100     12,908  7,900      2,092
HUB (DISK)    C 01    817401G     P78775       NO LIMIT   20,000   NO LIMIT   12,908    NO LIMIT   12,908  NO LIMIT   7,092
DISK          C 02    5002402-01  N87756       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 03    800803      N58289       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK (HUB)    C 04    799504      P44646       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 05    745705      P93696       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 06    745706      P93306       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 07    774407      P81245       30,000     15,000   22,100     12,908    22,100     12,908  7,900      2,092
DISK (HUB)    C 08    5005808-01  N90080       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 09    701509      P97271       30,000     19,000   22,100     12,908    22,100     12,908  7,900      6,092
DISK          C 10    772510      P97761       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 11    772511      P03600       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 12    772512      P97578       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 13    5003613-01  P59603       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK (SHAFT)  T 01    5003601-01  N36371       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          T 02    5003102-01  P03367       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          T 03    5003103-01  N64721       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          T 04    5003104-01  N52111       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
LPT (SHAFT)                                    NO LIMIT   20,000   22,100     14,558    22,100     14,558  NO LIMIT   5,442

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                                 AUDITED THRU L/P         165891      10/20/95
                                                                                 A/C TOTAL HOURS          23,859
                                                                                 A/C TOTAL CYCLES         14,057
INSTALLED ON  N685MA  POSITION 2
                                                                   HOURS       CYCLES
                                               LIMIT               SINCE       SINCE    TOTAL      TOTAL   TIME REMAINING
ITEM          POS     PART NO     S/N          HOURS      CYCLES   NEW         NEW      HOURS      CYCLES  HOURS      CYCLES

<S>           <c>     <c>         <c>          <c>        <c>      <c>         <c>      <c>        <c>     <c>        <c>

ENGINE        RIGHT   JT8D-17A    P7095308     NO LIMIT   NO LIMIT 20,960     11,883    20,960     11,883  9,040      3,117
HUB (DISK)    C 01    817401      P23654       NO LIMIT   20,000   NO LIMIT   13,372    NO LIMIT   13,372  NO LIMIT   6,628
DISK          C 02    5002402-01C S56233       30,000     20,000   10,771     7,680     10,771     7,680   19,229     12,320
DISK          C 03    800803      P68371       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK (HUB)    C 04    799504      N90833       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 05    745705      P93614       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 06    745706      P93230       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 07    774407      P81364       30,000     15,000   20,960     11,883    20,960     11,883  9,040      3,117
DISK (HUB)    C 08    5005808-01  P43608       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 09    701509      P97641       30,000     19,000   20,960     11,883    20,960     11,883  9,040      7,117
DISK          C 10    772510      P97278       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 11    772511      P03553       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 12    772512      P97219       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 13    5003613-01  P92918       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          T 01    5003601-01  N36374       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          T 02    5003102-01  M12012       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          T 03    5003103-01  N64611       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          T 04    5003104-01  N52069       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
LPT (SHAFT)                                    NO LIMIT                                                    NO LIMIT

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                          AUDITED THRU L/P  165891                     TOTAL A/C HOURS  23859
INSTALLED ON: N685MA                                                  DATE  10/20/95                   TOTAL A/C CYCLES 14057

<S>                           <c>          <c>          <c>    <c>    <c>      <c>    <c>   <c>    <c>    <c>    <c>    <c>
NLG ASSEMBLY                  65-73762-5   T01406P1486  90,000 24,000                                                   9,943
SHOCK STRUT ASSY              65-46200-63  T01408P1486  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER ASSY           65-46210-25  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER                65-46211-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
STEERING PLATE, UPR           65-46210-27  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
STEERING PLATE, LWR (DRILLED) 65-46210-24  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER ASSY (DRILLED) 65-46215-14  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
METERING PIN ASSY             65-46200-54  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
METERING PIN                  65-46219-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
SUPPORT TUBE, METERING PIN    65-46229-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
DRAIN TUBE                    69-57991-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
SUPPORT TUBE, UPPER ORIFICE   69-73038-1   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
TUBE, ORIFICE SUPPORT         65-46226-9   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
STEM, ORIFICE SUPPORT         65C25707-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
GLAND NUT ASSY                65-46221-4   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
ORIFICE PLATE, UPPER          69-36622-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
TORSION LINK ASSY, UPPER      65-46202-9   JC-1917      90,000 24,000 08/28/92 14,378 7,445 23,971 6,612  9,481  65,028 17,388
TORSION LINK ASSY, LOWER      65-46288-5   32-58        90,000 24,000 08/28/92 14,378 7,445 28,383 6,612  9,481  61,617 17,388
STEERING COLLAR ASSY          65-46203-24  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, STEERING COLLAR         69-61383-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, STEERING COLLAR         69-61383-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
PIN, UPPER TORSION LINK       69-72698-1   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
PIN, LOWER TORSION LINK       69-72698-1   486-2 (ORIG) 90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, TORSION LINK APEX       69-35883-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
LOWER DRAG BRACE ASSY         65-46230-7   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
UPPER DRAG BRACE ASSY         65-80051-13  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
PIN, DRAG BRACE CENTER        69-35391-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, DRAG BRACE, CENTER      NAS1110-68D  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
PIN, UPPER DRAG BRACE         69-35394-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
PIN, UPPER DRAG BRACE         66-35394-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, LOWER DRAG BRACE        69-35396-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
LOCK BRACE ASSY, AFT          65-46240-11  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
LOCK LINK ASSY, FWD           65-46242-11  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, NOSE GEAR LOCK JOINT    NAS1105-52D  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
SHAFT, AFT LOCK MECHANISM     69-35385-1   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
TRUNNION PIN, LEFT HAND       69-35398-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
TRUNNION PIN, RIGHT HAND      69-41248-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                            AUDITED THRU L/P  165891                      TOTAL A/C HOURS  23859
INSTALLED ON: N685MA                                                    DATE  10/20/95                    TOTAL A/C CYCLES 14057

<S>                           <c>            <c>           <c>     <c>    <c>      <c>    <c>   <c>    <c>    <c>    <c>    <c>
LEFT NLG ASSEMBLY             65-73761-87    MC026895P1488 100,000 24,000                                                   9,943
SHOCK STRUT ASSY              65-46100-52    MC028958P1488 100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
OUTER CYLINDER ASSY           65-61740-10    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
INNER CYLINDER ASSY           65-46116-47    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ORIFICE SUPPORT TUBE ASSY     65-46159-7     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SUPPORT TUBE, ORIFICE         65-46160-7     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ORIFICE PLATE                 69-38980-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
METERING PIN                  65-46124-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
DRAIN TUBE                    65-46156-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
GLAND NUT                     69-39485-10    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, LOWER      65-46102-22    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, UPPER      65-87958-9     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UPPER DRAG STRUT ASSY         65-46103-11    1486 (ORIG)   100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LOWER DRAG STRUT ASSY         65-60579-3     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, LWR SIDE      65-46108-7     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ARM ASSY        65-46109-12    5104          100,000 24,000 12/16/91 12,391 5931  8,865  8,126  11,488 91,135 15,874
TRUNNION PIN ASSY             65-46113-5     34ORGA        100,000 24,000 12/16/91 12,391 5931  66,508 8,126  11,488 31,492 15,874
TEE BOLT ASSY, DRAG STRUT     65-46140-6     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TRUNNION LINK ASSY            65-63378-9     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, LOWER       69-72023-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, UPPER       69-72023-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, TEE FITTING ATTACHMENT  69-51833-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY.: LOWER DRAG STRUT  69-39473-9     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
FUSE BOLT ASSY, UPR DRAG      69-39476-6     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
NUT, TRUNNION PIN             69-41633-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, REACTION LINK 65-46107-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UPPER SIDE STRUT ASSY         65-46138-5     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LOWER SIDE STRUT ASSY         65-63397-9     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
REACTION LINK ASSY            65-46135-13    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPPER DOWNLOCK     65-46138-16    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LINK ASSY, LOWER DOWNLOCK     65-46139-9     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SHAFT, SPRING SUPPORT         69-38999-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY, REACTION LINK      69-38148-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY, UPPER SIDE STRUT   69-68149-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY, SIDE STRUT         69-68150-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK LINK PIVOT     69-41628-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK                69-42193-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ASSY, UPPER DOWNLOCK    69-62779-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ASSY            65-46108-3     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SUPPORT LINK ASSY             65-46112-22    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPLOCK             65-63887-5     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BELLCRANK ASSY                65-63663-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
HOOK ASSY                     65-46142-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SHAFT, UPLOCK SUPPORT         65-46146-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, REACTION LINK / UPLOCK  69-68148-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, OUTBD    69-39464-4     352           100,000 24,000 12/16/91 12,891 5931  8,126  8,126  11,468 91,874 15,874
BOLT ASSY, LOWER SIDE STRUT   69-68151-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
COLLAR, BELLCRANK RET, UPLOCK 69-51838-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
FUSE BOLT, FWD TRUNNION BRG   69-58854-3     486 (ORIG)    83,000  24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, INBRD    BACB301J20CD43 685           100,000 24,000 12/14/91 12,891 5931  8,126  8,126  11,468 91,874 9,943
BOLT, ACTUATOR ROD END        BACB301J16CD48 685/1         100,000 24,000 12/14/91 12,891 5931  8,126  8,126  11,468 91,874 9,943
BEARING ASSY, FWD TRUNNION    69-58871-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
NUT, AFT TRUNNION             65-84161-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                            AUDITED THRU L/P  165891                      TOTAL A/C HOURS  23859
INSTALLED ON: N685MA                                                    DATE  10/20/95                    TOTAL A/C CYCLES 14057

<S>                           <c>            <c>           <c>     <c>    <c>      <c>    <c>   <c>    <c>    <c>    <c>    <c>
RIGHT NLG ASSEMBLY            65-73761-87    MC02665P1488  100,000 24,000                                                   9,943
SHOCK STRUT ASSY              65-46100-52    MC02896P1488  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
OUTER CYLINDER ASSY           65-61740-10    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
INNER CYLINDER ASSY           65-46116-47    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ORIFICE SUPPORT TUBE ASSY     65-46159-7     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SUPPORT TUBE, ORIFICE         65-46160-7     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ORIFICE PLATE                 69-38980-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
METERING PIN                  65-46124-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
DRAIN TUBE                    65-46156-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
GLAND NUT                     69-39485-10    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, LOWER      65-46102-22    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, UPPER      65-87958-9     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UPPER DRAG STRUT ASSY         65-46103-11    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LOWER DRAG STRUT ASSY         65-60579-3     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, LWR SIDE      65-46105-7     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ARM ASSY        65-46109-12    1507          100,000 24,000 12/14/91 12,391 5931  34,655 8,126  11,488 65,345 15,874
TRUNNION PIN ASSY             65-46113-16    32-118        100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,488 91,674 15,874
TEE BOLT ASSY, DRAG STRUT     65-46140-6     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TRUNNION LINK ASSY            65-63378-9     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, LOWER       69-72023-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, UPPER       69-72023-2     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, TEE FITTING ATTACHMENT  69-51833-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY.: LOWER DRAG STRUT  69-39473-3     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
FUSE BOLT ASSY, UPR DRAG      69-39476-6     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
NUT, TRUNNION PIN             69-41633-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, REACTION LINK 65-46107-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UPPER SIDE STRUT ASSY         65-46138-5     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LOWER SIDE STRUT ASSY         65-63397-9     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
REACTION LINK ASSY            65-46135-13    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPPER DOWNLOCK     65-46138-16    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LINK ASSY, LOWER DOWNLOCK     65-46139-9     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SHAFT, SPRING SUPPORT         69-38999-3     685           100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,468 91,874 15,874
BOLT ASSY, REACTION LINK      69-38148-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY, UPPER SIDE STRUT   69-68149-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY, SIDE STRUT         69-68150-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK LINK PIVOT     69-41628-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK                69-42193-2     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ASSY, UPPER DOWNLOCK0   69-62779-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ASSY            65-46108-3     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SUPPORT LINK ASSY             65-46112-22    HI-106        100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,468 91,874 15,874
LINK ASSY, UPLOCK             65-63887-5     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BELLCRANK ASSY                65-63663-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
HOOK ASSY                     65-46142-2     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SHAFT, UPLOCK SUPPORT         65-46146-2     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, REACTION LINK / UPLOCK  69-68148-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, OUTBD    69-39464-4     482           100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,468 91,874 15,874
BOLT ASSY, LOWER SIDE STRUT   69-68151-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
COLLAR, BELLCRANK RET, UPLOCK 69-51838-2     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
FUSE BOLT, FWD TRUNNION BRG   69-58854-3     486-2 (ORIG)  83,000  24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, INBRD    BACB301J20CD43 685/2         100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,468 91,874 15,874
BOLT, ACTUATOR ROD END        BACB301J16CD48 685           100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,468 91,874 15,874
BEARING ASSY, FWD TRUNNION    69-58871-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
NUT, AFT TRUNNION             65-84161-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943

</TABLE>

<PAGE>

                                   EXHIBIT E
                                      to
                           AIRCRAFT LEASE AGREEMENT

                         RETURN CONDITION REQUIREMENTS

On the Return Occasion the Aircraft, subject to fair wear and tear generally,
will be in the following condition:

1    GENERAL CONDITION

The Aircraft shall:

     (a)  be clean by United States commercial airline standards;

     (b)  have  installed  the  full  complement  of  Engines,  Parts  and
          other equipment, parts and accessories and loose equipment

          (i)   which were installed on the Aircraft at the Delivery Date (or
                any replacements thereof made in accordance with the terms of
                this Lease);

          (ii)  as would be required by this Lease to be installed on the
                Aircraft if Lessee were to continue operating the same in
                continued regular service;

          (iii) each operating within limits approved by the FAA and fully
                functioning in accordance with its intended use;

          (iv)  which are in a condition suitable to permit immediate
                operation of the  Aircraft in commercial service under the
                FAA; and

          (v)   be in strict compliance with the Maintenance Program,
                including the corrosion prevention control program
                (CPCP/D6-38528) and the aging aircraft program (D6-38505 as
                applicable per the airworthiness directive or per
                effectivity).

     (c)  (i)   have in existence a current, valid and existing FAA
                certificate of airworthiness for airline operation or an FAA
                export certificate of airworthiness, as elected by the
                Beneficiaries in accordance with the terms of Section 16(d);

          (ii)  comply with (A)(1), all the requirements of US FAR Part 36
                Appendix C (Stage II) noise compliance (without waiver,
                restriction, deferment or exception) and (2) all the
                requirements for operation under United States FAR Part 121
                or (B)(1) if requested by the Beneficiaries in order to
                comply with the requirements of any other country selected by
                the Beneficiaries which follows the FAA rules and regulations
                contemplated by U.S. FAR Part 129, U.S. FAR

<PAGE>

                Part 121 and U.S. FAR Part 36, Appendix C and (2) all civil
                aviation regulations, orders, rules and airworthiness
                directives of such country to permit the immediate
                re-registration and securing of a certificate of
                airworthiness in such country for the Aircraft (provided that
                (i) such regulations, orders, rules and Airworthiness
                Directives are no more restrictive than those of the FAA, and
                (ii) to the extent the work, standards or requirements
                required to comply with this clause (B) is beyond the work,
                standards or requirements otherwise required by Section 16 or
                this Exhibit E, such work, standards or requirements will be
                performed pursuant to work orders and workscopes agreed upon
                by Lessee and the Beneficiaries and at the Beneficiaries'
                cost, and the Term will not be deemed extended as a result of
                such additional work). If requested to do so by the
                Beneficiaries, Lessee shall cooperate reasonably to comply
                with all requirements for domestic and over-water operations
                under U.S. FAR Part 129, provided that (i) the Beneficiaries
                inform Lessee of such requirements, (ii) Lessee and the
                Beneficiaries mutually agree upon the work required for such
                compliance and (iii) the Beneficiaries bear the cost of such
                compliance to the extent such compliance requires parts or
                labor not otherwise required to be performed by Lessee
                pursuant to Section 16 or this Exhibit E, and the Term will
                not be deemed extended as a result of such additional work
                solely to comply with the requirements for domestic and
                over-water operations under U.S. FAR Part 129.

     (d)  (i)   comply  with the  Detailed  Specifications  except and to the
                extent that such specifications have been altered as required
                or permitted by this Lease;

          (ii)  except  as  otherwise  provided  in the  Lease or in the
                Supplemental Agreement or as consented to by each
                Beneficiary, shall be in substantially the same configuration
                (including but not limited to, interior seating
                configuration, galleys and lavatories) as when the Aircraft
                was originally delivered to Lessee hereunder, save where
                changes have been made which do not impair its marketability
                or decrease its value, as determined by each Beneficiaries'
                sole determination;

     (e)  (i)   have had  carried  out on the  Aircraft  the  final
                completion  and termination of all open, deferred or
                continued maintenance items, and shall have had completed, on
                a terminating action basis, where terminating action is due
                for compliance, all outstanding mandatory, required, ordered
                and "earliest convenience" airworthiness directives issued by
                the FAA and all mandatory, alert, earliest convenience and
                recommended service bulletins (so long as the Manufacturer
                issues such service bulletins) (insofar, in the case of
                recommended service bulletins, as required by the
                Beneficiaries after consultation with Lessee, in which case
                any such recommended service bulletin shall be carried out
                (y) at Lessee's expense if Lessee shall be carrying or shall
                have carried out such service bulletin with respect to a
                majority of aircraft comprising its 737 fleet or (z) at the
                Beneficiaries' expense pursuant to the workscope or work
                order agreed upon by the Beneficiaries and Lessee, if Lessee
                shall not be carrying out such service bulletin with respect
                to a majority of aircraft comprising its 737 fleet) issued by
                the Manufacturer in

                                      -2-

<PAGE>

                each case which have a compliance or termination date on or
                before the date three (3) months (six (6) months upon request
                of and at the cost of the Beneficiaries and the Term will not
                be deemed extended solely as a result of such additional work
                required to terminate the airworthiness directives that are
                due after three (3) months following the Return Occasion and
                requested by the Beneficiaries) after the date of the Return
                Occasion (without waiver, restriction, deferment, exception,
                carry over, watch or repetitive status items or being on
                watch, except, in the case of airworthiness directives, (i)
                as expressly provided in the Supplemental Agreement or (ii)
                as Lessor shall otherwise specify in writing to Lessee);

          (ii)  have had permanently  and properly  repaired any damage to
                the Aircraft caused by ground handling equipment or impact
                damage caused by foreign objects which occurred during the
                Term that exceeds Manufacturer's limits for operation without
                restrictions or repetitive inspections;

          (iii) not have any open, deferred, continued or placarded log book
                items;

     (f)  all exterior logos and other proprietary marks shall be removed or
          painted over in accordance with proper industry practice and in a
          workmanlike manner; provided that, at the Beneficiaries' request,
          Lessee shall have Lessee's paint and markings stripped and
          re-painted white or in the livery selected by the Beneficiaries so
          long as the Beneficiaries bear the cost of such stripping and
          repainting, as mutually agreed by the Beneficiaries and Lessee
          Lessor shall be responsible for supplying the new livery template
          and sufficient paint; and the Term will not be deemed extended
          solely as a result of the additional work required at the
          Beneficiaries' request;

     (g)  have all signs and decals in English, clean, secure and legible;

     (h)  have heretofore been maintained in accordance with Section 6(d) of
          this Lease with the same care and consideration for the technical
          condition of the Aircraft as if it were to have been kept in
          continued regular service and operation by Lessee (it being
          understood that the obligations hereby imposed upon Lessee by
          reference to the care and consideration by Lessee as if the
          Aircraft were to be kept in continued regular service is not
          intended to supersede Lessee's obligations herein with respect to
          the specific and express terms of this Lease with respect to the
          maintenance, repair, alteration or return of the Aircraft);

     (i)  have had all repetitive airworthiness directives and mandatory
          orders and regulations in at least half-life or better condition;
          and

     (j)  have, upon return of the Aircraft, returned at least one (1)
          complete set of the Aircraft Documents related to the Aircraft and
          its maintenance and operation records in up-to-date status.

Lessee shall deliver to Lessor, at no cost to Lessor or the Beneficiaries,
all service bulletin kits relating to the Aircraft which have been furnished
to Lessee free of charge by any manufacturer for installation on the Aircraft
and which have not been so installed. In the event that such uninstalled

                                      -3-

<PAGE>

                                    Beneficiaries, taking into consideration
                                    and determination Tax consequence to Lessor
                                    and the Beneficiaries, which state shall be
                                    specified in the Lease Supplement.

Engine Manufacturer:                Pratt & Whitney.

Estimated Delivery Date:            November 30, 1995.

Last Basic Rent                     The Last Basic Rent Payment
Payment Date:                       Date shall be the ninety-sixth (96th)
                                    Basic Rent Payment Date.

Lease Identification:               This [Aircraft] [Engine] is owned by
                                    Wilmington Trust Company, not in its
                                    individual capacity but solely as Trustee
                                    for the benefit of ITOCHU AirLease
                                    (Europe) Limited and Marubeni Airleasing
                                    (UK) Limited, is leased to Aloha Airlines,
                                    Inc. and may not be operated by a third
                                    party without the prior written consent
                                    of Wilmington Trust Company, as trustee.

Lessee's Address:                   Aloha Airlines, Inc.
                                    371 Aokea Street
                                    Honolulu, Hawaii 96819
                                    Fax No.: (808) 833-3100
                                    Attention: Vice President -
                                      Finance and Chief Financial
                                      Officer

Lessor's Address:                   Wilmington Trust Company
                                    Rodney Square North
                                    Wilmington, Delaware 19890
                                    Attention: Corporate Trust
                                    Administration

                                    Fax No.: (302) 651-8882

Manufacturer:                       The Boeing Company.

Other Lease:                        Means each of Aircraft Lease Agreement
                                    A, dated as of December 1, 1991, between
                                    Lessee and First Security Bank of Utah,
                                    National Association, as owner trustee,
                                    and Aloha Airlines, Inc., as lessee, and
                                    Aircraft Lease Agreement B, dated as of
                                    December, 1991,

                                    -2-

<PAGE>

                                    between First Security Bank of Utah,
                                    National Association, as owner trustee,
                                    and Aloha Airlines, Inc., as lessee, as
                                    each may be supplemented or amended
                                    from time to time. The Other Leases relate
                                    to the leasing to Lessee of aircraft other
                                    than the Aircraft.

Overdue Rate:                       One month LIBOR, as in effect from time to
                                    time, plus 3-1/2% per annum, but not to
                                    exceed the maximum amount permitted by Law.

Payment Locations:                  For ITOCHU AirLease (Europe) Limited:

                                    Account Name: Citibank New York (ABA No.
                                    021000089) for the account of Citibank
                                    Dublin (account no. 10994598) in favor of
                                    ITOCHU AirLease (Europe) Limited (account
                                    no. 1-00-6793-017)

                                    For Marubeni Airleasing (U.K.) Limited:

                                    Harris Bank International Corporation
                                    ABA #026-007-760
                                    for the credit of
                                    The Mitsubishi Trust & Banking Corporation
                                    London Branch A/C#16011100
                                    UID No.107280
                                    for further credit to
                                    Marubeni Airleasing (UK) Ltd.
                                    Account #020-404391

                                    With respect to payments by
                                    Lessee of Basic Rent hereunder, 62.682% of
                                    such amounts shall be paid to ITOCHU
                                    AirLease (Europe) Limited (as above
                                    provided) and 37.318% of such amounts
                                    shall be paid to Marubeni Airleasing (U.K.)
                                    Limited (as above provided).

Permitted Jurisdictions:            Any member country of the European Union
                                    and the following:

                                    -3-

<PAGE>

                                    Argentina
                                    Australia
                                    Austria
                                    Brazil
                                    Canada
                                    Chile
                                    Finland
                                    Hong Kong
                                    Iceland
                                    New Zealand
                                    Norway
                                    Puerto Rico
                                    Singapore
                                    South Africa
                                    Sweden
                                    Switzerland
                                    United States of America

Permitted Sublessees:               Aer Lingus
                                    Air Canada
                                    Air France
                                    Air-Inter
                                    Air New Zealand
                                    Air Portugal
                                    Alitalia
                                    All Nippon Airways
                                    Ansett
                                    Austrian Airlines
                                    Braathens
                                    British Airways
                                    British Midland Airways
                                    Canadian Airlines International
                                    Cathey Pacific
                                    China Airlines
                                    Condor
                                    Iberia
                                    Japan Airlines
                                    Japan Air System
                                    Japan Asia Airways
                                    Korean Air
                                    Lufthansa
                                    Malaysian Airlines System
                                    Martinair Holland
                                    Qantas
                                    Royal Dutch Airlines
                                    Sabena
                                    Scandinavian Airlines System
                                    Singapore Airlines
                                    SwissAir
                                    Thai Airways International
                                    Alaska Airlines
                                    Continental Airlines
                                    Delta Airlines
                                    Southwest Airlines
                                    United Air Lines
                                    USAir

                                    -4-

<PAGE>

                                    Provided always that, at any time during
                                    the Term, the Beneficiaries may, by notice
                                    to Lessee, notify Lessee that any such
                                    Person no longer constitutes a Permitted
                                    Sublessee (which determination shall be
                                    made on a reasonable basis by the
                                    Beneficiaries), whereupon such Person shall
                                    no longer constitute a Permitted Sublessee.

Public Liability and                Five Hundred Million Dollars
Property Damage Insurance:          ($500,000,000) per occurrence or the
                                    highest amount carried by Lessee with
                                    respect to other narrow body aircraft in
                                    its fleet.

Return Location:                    Such location in the Western Continental
                                    United States  as may be selected by
                                    Lessor. If the Beneficiaries  request
                                    Lessee to return the Aircraft to a
                                    location other than in Western
                                    Continental United States, other than
                                    following a Default or an Event of Default,
                                    then Lessee and the Beneficiaries will
                                    cooperate reasonably and in good faith to
                                    arrange for such ferry flight, and the
                                    Beneficiaries will bear any additional
                                    ferry flight cost and expenses incurred by
                                    Lessee (without markup) that are beyond
                                    those costs and expenses that would have
                                    been incurred if the Aircraft were ferried
                                    to a location in the Western United States.

Supplemental Agreement:             means the Letter Agreement No. 1 dated as
                                    of November 29, 1995 executed by the parties
                                    hereto.

Trust Agreement:                    means Trust Agreement N685MA, dated as of
                                    December 27, 1991 between Wilmington Trust
                                    Company and each Beneficiary, as amended
                                    modified or supplemented from time to time.

                                    -57-

<PAGE>

kits were purchased, manufactured or ordered by Lessee and in stock or
undelivered pursuant to purchaser order, then Lessor shall have a right to
purchase such kits from Lessee, at Lessee's cost and expense (without mark-up),
such right being exercisable at any time during the sixty (60) day period
following the return of the Aircraft; provided that such period will be
extended to one hundred eighty (180) days if such kit is ordered by Lessee upon
request by the Beneficiaries.

Lessee shall have undertaken to use all reasonable endeavors (short of
grounding any aircraft or rescheduling any flight) to ensure that the Aircraft
shall have, on return of the Aircraft, no installed Part which shall have a
total time since new greater than 150% that of the Airframe. In any event,
Lessee shall not adversely discriminate against the Aircraft regarding the age
of Parts installed in the Aircraft compared with other aircraft operated by
Lessee.

2    AIRCRAFT MAINTENANCE ON RETURN

Prior to the Return Occasion and immediately prior to the return of the
Aircraft to Lessor, at Lessee's own expense:

     (a)  AIRFRAME

          (i)   Lessee shall, if requested by a Beneficiary, perform, or
                procure the performance of, a full and complete C Check or its
                equivalent including all phases, multiples and lower checks
                in accordance with the Maintenance Program. Lessee shall
                correct any deficiencies revealed during such C Check
                inspection using Manufacturer's limits and guidelines, as
                witnessed by the Beneficiaries' representative. Lessor will
                contribute to the cost of such C Check or equivalent by
                paying to Lessee the incrementary cost (without markup) to
                perform such C Check or equivalent.

         (ii)   The Airframe shall have no less than 4,000 Flight Hours
                remaining to the next due D Check and no less than 1,500
                Flight Hours remaining to the next due C Check under Lessee's
                Maintenance Program; PROVIDE, HOWEVER, that Lessee shall be
                permitted to return the Aircraft with less than 4,000 Flight
                Hours remaining until the next due D Check under Lessee's
                Maintenance Program if (A) at time of the Return Occasion,
                the Beneficiaries have entered into an agreement for the
                lease or sale of the Aircraft with a subsequent lessee, buyer
                or user of the Aircraft (a "Subsequent User"), and (B) the
                bridging of the Maintenance Program to the Subsequent User's
                maintenance program is approved in writing by the civil
                aviation authority having jurisdiction over the Subsequent
                User in a manner that permits the Subsequent User to actually
                have available to it as of the Return Occasion no less than
                4,000 Flight Hours remaining until the next due D check or
                its equivalent in accordance with the Subsequent User's
                maintenance program.

       (iii)    In addition to (i) above, if the Beneficiaries request that
                Lessee perform, or procure the performance of, D Check or
                equivalent, Lessee will perform, or procure the performance
                of, such D Check or equivalent, with Lessor contributing to
                the cost of such D Check or equivalent by paying to Lessee
                the incrementary cost (without markup) to perform such D
                Check or equivalent; provided that the Term will not be
                deemed to be extended solely because of such D Check or
                equivalent.

     (b)   The condition of the Aircraft and installed systems upon return to
           Lessor shall be as follows:

<PAGE>

        (i)     each Engine and each life limited Part therein shall have no
                less Flight Hours or Cycles or time (whichever is applicable
                and the more limiting factor) remaining until the next due
                scheduled removal, shop visit or overhaul refurbishment as on
                the Delivery Date, and the Engines shall have not less than
                2,250 Flight Hours and 1,500 Cycles remaining (whichever is
                the more limiting factor) until the next scheduled
                refurbishment and each life limited part within the Engines
                shall have not less than 3,000 Flight Hours and 2,000 Cycles
                remaining to the next scheduled replacement.

        (ii)   the APU and each life limited Part therein (if applicable)
               shall have no less hours or time (whichever is applicable and
               the more limiting factor) remaining until the next due
               scheduled removal and overhaul as on the Delivery Date, and
               Lessee shall have the option to swap APUs to meet the
               requirements of this paragraph (ii);

        (iii)  the Landing Gear of the Aircraft and other time or life limited
               parts of the Landing Gear shall have no less Flight Hours or
               Cycles or any other life limit (whichever is applicable and
               the more limiting factor) remaining until the next due
               scheduled removal and overhaul as on the Delivery Date, and
               Lessee shall have the option to swap Landing Gear to meet the
               requirements of this paragraph (iii).

3    OTHER MATTERS

     (a)   Provided  necessary  material and  instructions are received in due
           time (other than materials available by Lessee), any further work
           required by the Beneficiaries, which can be accommodated within
           the days already planned by Lessee for the above inspection and
           check as set forth in paragraph 2(a) above, shall be performed, or
           performance thereof shall be procured, by Lessee during the above
           check and Lessor shall reimburse Lessee for the incremental costs
           incurred (without mark-up).

     (b)   Each and every Part and time or calendar limited Part (including,
           without limitation, loose equipment) will have no less life
           remaining to the next scheduled removal, repair and overhaul as on
           the Delivery Date in accordance with the Maintenance Program or
           the recommended maintenance planning document of the manufacturer
           of the relevant Part, and Lessee shall have the option to swap
           Parts to meet the requirements of this paragraph (b).

     (c)   Each Engine and the APU will be  installed  on the  Aircraft and
           if not the engines or auxiliary power unit installed on the
           Delivery Date will be accompanied by all documentation that the
           Beneficiaries may reasonably require to evidence that title
           thereto is properly vested in Lessor in accordance with this Lease
           and will:

        (i)    have a power assurance run and a borescope inspection (or, in
               case of the APU, such other inspection as in accordance with
               Manufacturer's or APU manufacturer's recommendation) and, in a
               case where an Engine does not meet the on-wing operating
               criteria as required by Lessee's FAA approved engine
               Maintenance Program and limits of the Engine section of the
               Aircraft Maintenance Manual, if requested by Lessor, a test
               cell inspection which shall be performed at Lessee's expense
               with the Beneficiaries' representative entitled to be present
               and Lessee shall provide evidence satisfactory to the
               Beneficiaries (A) that the Engine meets the JT8D-17A limits
               established by the Manufacturer according to the power
               assurance check defined on the Aircraft

                                      -5-

<PAGE>

               Maintenance Manual with an EGT margin of no less than 18
               degrees centigrade at maximum rated takeoff power on a
               standard day and (B) reflecting the correction of any
               discrepancies from the guidelines set out by the Engine
               Manufacturer which may be discovered during any such
               inspection. All repairs shall be to the Beneficiaries'
               satisfaction;

        (ii)   if the Engine historical and maintenance records and/or trend
               monitoring data (or current test cell run report, if
               applicable) indicate a rate of acceleration in performance
               deterioration of any Engine including the APU which is higher
               than normal based on Lessee's maintenance experience in
               operating such engines, Lessee shall, prior to return, correct
               or cause to be corrected such conditions which are determined
               to have exceeded engine manufacturer's maintenance manual
               tolerances or otherwise be causing such performance
               deterioration; and

        (iii)  not have an Engine  which is "on  watch"  for any  reason
               requiring  any special or out of sequence inspection and each
               such Engine shall comply with the operations specification of
               Lessee without waiver, carry over, deferment, restriction or
               exceptions.

4    FUSELAGE, WINDOWS AND DOORS

     (a)   The  fuselage  will be free of all dents  and  abrasions,
           additional  scab patches am as at the Delivery Date and loose or
           pulled or missing rivets, beyond the limits set in the relevant
           structural repair manual (and all scab patches existing at the
           Delivery Date shall be monitored and maintained, including as to
           corrosion, during the Tenn);

     (b)   windows will be free of delamination, blemishes, crazing, beyond
           limits set in the relevant structural repair manual and will be
           properly sealed; and

     (c)   doors will be free moving, correctly rigged and be fitted with
           serviceable seals.

5    WINGS AND EMPENNAGE

     (a)   All  leading  edges  will be free from  damage,  beyond  limits
           set in the relevant structural repair manual; and

     (b)   all control surfaces will be cleaned (provided they shall have
           been waxed and polished during the preceding C Check);

     (c)   all unpainted cowlings and fairings will be cleaned (provided they
           shall have been polished during the preceding C Check); and

     (d)   wings will be free of fuel leaks.

6    INTERIOR

     (a)   Ceilings, sidewalls and bulkhead panels will be clean and free of
           cracks and stains (fair wear and tear excepted);

                                       -6-

<PAGE>

     (b)   carpets and seat covers will be in good condition, clean and free
           of stains, spots, chewing gum, tear or fraying (fair wear and tear
           excepted) and meet FAA fire resistance regulations;

     (c)   seals and panels will meet FAA fire resistance regulations and
           will be serviceable in good condition free of cracks and repainted
           as necessary; and

     (d)   emergency equipment having no less calendar life remaining as on
           the Delivery Date.

7    COCKPIT

     (a)   All fairing panels shall be clean, free of stains and cracks (fair
           wear and tear excepted), will be secure and repainted as necessary;

     (b)   floor coverings will be clean (fair wear and tear excepted) and
           effectively sealed;

     (c)   seat covers will be in good condition, clean, free of stains (fair
           wear and tear excepted) and will conform to FAA fire resistance
           regulations; and

     (d)   seats will be  serviceable,  in good  condition,  meet FAA fire
           resistance regulations and will be repainted as necessary.

8    CARGO COMPARTMENTS

     (a)   All panels will be in good  condition,  fair wear and tear
           excepted,  clean and free of cracks and any panels which have
           cracks will be replaced;

     (b)   all nets will be serviceable and in good condition, fair wear and
           tear excepted; (c) any repair shall be within the limits
           established in the Manufacturer's structural repair manual; and

     (d)   fabric cover shall be in good condition, fair wear and tear
           excepted, free of stains, spots, tear or fraying.

9    WHEEL WELLS AND UNDERCARRIAGE

     Each wheel well and undercarriage will be clean and free of leaks. The
     wheel wells will be repainted as necessary.

10   CORROSION

    (a)   The Aircraft will have been inspected and treated with respect to
           corrosion in strict adherence to that required by the Maintenance
           Program;

    (b)   the entire fuselage will be substantially free from corrosion and
           will be adequately treated and an approved corrosion prevention
           program will be in operation; and

                                       -7-

<PAGE>

     (c)   fuel tanks will be free from contamination and, if applicable, a
           corrosion and a tank treatment program will be in operation.

11   EQUIPMENT CHANGES

     Upon mutual discussion and agreement, Lessor may require Lessee to
     remove any Removable Part (but excluding a Removable Part the
     installation of which is a requirement of the FAA or this Lease) and
     restore the Aircraft to its condition prior to installation of that
     Removable Part. Where appropriate, compliance by Lessee with the
     redelivery conditions in this Schedule shall be measured by reference to
     the Boeing maintenance planning document.

12   NO LESSOR OR BENEFICIARY COMPENSATION

     Neither Lessor nor any Beneficiary shall be liable to Lessee, and Lessee
     shall not be entitled to any compensation, with respect to the return of
     the Airframe, the APU, any Landing Gear or any Part which, in any case,
     has more Flight Hours, Cycles or time remaining or is otherwise in
     better condition than the Flight Hours, Cycles, time remaining or
     condition required by this Lease (including but not limited to Sections
     2(a)(ii), 2(b)(ii), 2(b)(iii) and 3(b) of this Section E).

                                     -8-

<PAGE>

                                   EXHIBIT F
                                      to
                           AIRCRAFT LEASE AGREEMENT

                       [Letterhead of Lessee's Counsel]

                            [Date of Delivery Date]

The following is a summary of the items that should be included in Lessee's
Counsel Opinion:

                 1. Lessee is a corporation duly organized and existing under
the laws of the State of Hawaii and has the corporate power and authority to
carry on its business as presently conducted and to perform its obligations
under the Lease.

                 2. The execution, delivery and performance of the Operative
Documents have been duly authorized by all necessary corporate action of Lessee
and do not require any further approval of the Board of Directors or
stockholders of Lessee or approval or consent of any trustee or holders of
indebtedness or obligations of Lessee. Neither the execution and delivery
thereof nor the consummation of the transactions contemplated thereby nor
compliance by Lessee with any of the terms and provisions thereof will
contravene the certificate of incorporation or by-laws of Lessee or, to our
knowledge, any law applicable to Lessee and, to our knowledge, do not and will
not result in any breach of, or constitute a default under, or result in the
creation of any Lien upon any property of Lessee under, any credit agreement or
instrument, or other agreement or instrument to which Lessee is a party or by
which Lessee or its properties or assets are bound or affected.

                 3. Neither the execution and delivery by Lessee of the
Operative Document, nor the consummation of any of the transactions by Lessee
contemplated thereby, nor the compliance by the Lessee with any of the terms
and provisions thereof, requires the consent or approval of, or the giving of
notice to, or the registration with, or the taking of any other action in
respect of any federal or state governmental authority or agency, except for
the registration of the Aircraft, recordation and other actions referred to in
paragraph 6 below.

                 4. The Operative Document have been duly executed and
delivered by Lessee, and constitute the legal, valid and binding obligations of
Lessee, enforceable against Lessee in accordance with their respective terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and, to general principles of equity.

                 5. To our knowledge, there are no pending suits or proceedings
before any court or any regulatory commission, board or other administrative
governmental agency against or affecting Lessee which might have a materially
adverse effect on the current business or financial condition of Lessee.

                 6. Except for the appropriate registrations, recordings and
filings with the FAA, the filing of a precautionary UCC-1 financing statement
with the Hawaii Bureau of Conveyances and the placing on the Aircraft and on
each Engine of the plates containing the legends referred to in Section 6(f) of
the Lease

<PAGE>

Agreement, no further filing or recording of any document and no further action
is necessary or desirable in order to protect Lessor's right, title and
interest in and to the Aircraft as against Lessee or any third party.

                 7. Lessee is a Certified Air Carrier as defined in the Lease
Agreement.

                 8. Lessor is entitled to the benefits of Section 1110 of Title
11 of the United States Code with respect to the Aircraft and the Engines to
the extent that they constitute an "airframe" or "aircraft engines", as defined
in Section 101 of the Federal Aviation Act.

                                      -2-

<PAGE>

                                   EXHIBIT G
                                      to
                           AIRCRAFT LEASE AGREEMENT

                   [LETTERHEAD OF APPROVED INSURANCE BROKER]

                                                       [Date of Delivery Date]

Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890

        Re:   Insurance  Coverage for One Boeing  737-25A  Aircraft under
              Aircraft Lease Agreement, dated as of November 29, 1995,
              between  Wilmington Trust Company, not in its  individual
              capacity but solely as Trustee  f/b/o  ITOCHU  AirLease
              (Europe) Limited and Marubeni Airleasing (U.K.) Limited

Gentlemen:

                 This report is delivered to you pursuant to the provisions of
Section 2(b)(vii)(5) of the Aircraft Lease Agreement 23791, dated as of
November __, 1995 (the "Lease"), between Wilmington Trust Company, not in its
individual capacity but solely as Trustee (the "Lessor"), and Aloha Airlines,
Inc. (the "Lessee"). We are the firm of independent aircraft insurance brokers
(the "Approved Insurance Broker") who have been appointed by the Lessee to
deliver this report pursuant to Section 2(b)(vii)(5) of the Lease and we
understand that the Lessor has not objected to such appointment. Except as
otherwise defined herein, the terms used herein shall have the meanings set
forth in the Lease.

                 We have reviewed the Lease and particularly Section 12
thereof. We are also fully familiar with the Certificate of Insurance dated
November __, 1995 issued to you on behalf of the Approved Insurers as well as
the policies of insurance evidenced thereby.

                 As of the date of this report, it is our opinion as the
Approved Insurance Broker that the insurance presently carried and maintained
by the Lessee, as evidenced in the attached certificates, complies with the
terms and requirements of Section 12 of the Lease.

                 We agree to advise the Lessor and each Beneficiary in writing
promptly of any default in the payment of any premium and any other act or
omission on the part of the Lessee of which we have knowledge and which might
invalidate or render unenforceable, in whole or part, any insurance required
under the Lease on the Aircraft.

                                     Yours faithfully,

                          [APPROVED INSURANCE BROKER]

<PAGE>

Wilmington Trust Company
Date
Page 2

                                               ----------------------
                                                            [Title]

<PAGE>

                                   EXHIBIT H
                                      to
                           AIRCRAFT LEASE AGREEMENT

                SPECIAL PROVISIONS TO CERTIFICATE OF INSURANCE

                 The "special provisions" section of the Insurance Certificate
shall provide as follows:

                 1. In accordance with the Aircraft Lease Agreement, dated as
of November 29, 1995 (the "Lease"), between Lessor and Lessee, it is agreed to
include Lessor (in its individual capacity and as Owner Trustee), each
Beneficiary and their assigns as additional insureds, designate Lessor as owner
of the Aircraft, and designate the Beneficiaries and their assigns as loss
payees (but without imposing upon Lessor, such Beneficiary and their assigns
any obligation to pay any premiums).

                 2. It is agreed that in respect of the interests of Lessor,
each Beneficiary and their assigns, in the insurance coverage provided hereby,
such insurance coverage shall not be invalidated by any action or omission of
Lessee, and shall insure Lessor, such Beneficiary and their assigns, regardless
of any breach or violation of any warranty, declaration or condition contained
in such insurance coverage by Lessee.

                 3. It is agreed that if the insurance coverage provided hereby
is canceled for any reason whatsoever, or is adversely changed in any way with
respect to the interests of Lessor, any Beneficiary or their assigns, or if
such insurance is allowed to lapse for nonpayment of premium, such
cancellation, adverse change or lapse shall not be effective as to Lessor, such
Beneficiary and their assigns, for thirty (30) days (seven (7) days or such
lesser period as may be applicable in the case of any war risks and allied
perils coverage) after receipt by Lessor and such Beneficiary of written notice
of such prospective cancellation, change or lapse.

                 4. It is agreed that, as against Lessor, each Beneficiary and
their assigns, the Insurers waive any rights of setoff, counterclaim or any
other deduction, whether by attachment or otherwise, and waive any rights to be
subrogated to any right of any insured against Lessor, each Beneficiary or
their assigns, with respect to the Aircraft to the same extent that Lessee has
waived its rights of subrogation by the terms of its agreements to indemnify
any such party pursuant to this Lease.

                 5. The coverage provided hereunder is primary without right of
contribution from any other insurance which may be carried by Lessor, any
Beneficiary or their assigns. It is agreed that Lessor and each Beneficiary has
a right to carry insurance in excess of the amounts provided hereunder without
prejudice to the coverage hereunder provided.

                 6. A 50/50 clause is in effect between the all risk hull and
war risk covers.

<PAGE>

                                   EXHIBIT I
                                      to
                           AIRCRAFT LEASE AGREEMENT

                      FORM OF REDELIVERY ACKNOWLEDGEMENT

                 This Redelivery Acknowledgement is delivered, on the date set
out below, by WILMINGTON TRUST COMPANY ("Lessor") to ALOHA AIRLINES INC.
("Lessee") pursuant to the Lease Agreement dated November __, 1995 between
Lessor and Lessee (the "Agreement"). The capitalised terms used in this
Certificate shall have the meanings given to such terms in the Agreement.

1       DETAILS OF ACCEPTANCE

        Lessor hereby  confirms to Lessee that Lessor has at [     ] o'clock on
        [insert  date], at [       ], accepted redelivery of the following, in
        accordance with the provisions of the Agreement:

        (a)     Boeing Model 737-25A Airframe, Manufacturer's Serial No. 28791.

        (b)     Pratt and Whitney JT8D-17A Engine, Manufacturer's Serial
                Nos. [     ] and [     ].

        (c)     Fuel Status: Pounds [     ].

        (d)     Loose  Equipment  Check  List:  as per list signed by Lessor
               and Lessee and attached hereto.

2       CONFIRMATION

        Lessor confirms to Lessee that as at the time indicated above, being
        the Expiration Date, Lessor's authorized technical experts have
        inspected the Aircraft to ensure the Aircraft conforms to redelivery
        conditions specified in the Agreement and that the Aircraft is in
        accordance with the specifications of the Agreement and satisfactory
        in all respects save for the following:

                   [        ]
                   [        ]

<PAGE>

3       IN WITNESS WHEREOF, the Lessor has, by its duly authorized
        representative, executed this  Certificate on the date in paragraph 1
        above.

                                                           LESSOR:

                                                   By:
                                                         ---------------------
                                                   Title:
                                                         ---------------------
                                                   Date:
                                                         ---------------------

       The "special provisions" section of the Insurance Certificate shall
       provide as follows:

                                      -2-

<PAGE>

                                   EXHIBIT J
                                      to
                           AIRCRAFT LEASE AGREEMENT

Monthly Aircraft Utilization & Status Report

Monthly Aircraft Utilization and Status Report Provided
UNDER  THE LEASE CONTRACT BETWEEN ALOHA AIRLINES, INC. AND WILMINTON TRUST
COMPANY, AS TRUSTEE

MONTH ENDING:
Aircraft  Registration Number:
Airframe Make and Model: Boeing:
Total Time on Airframe Since New:
Total Cycles on Airframe Since New:

<TABLE>
<CAPTION>

                       MONTHLY                 TOTAL
                       FLIGHT      MONTHLY     FLIGHT      TOTAL                   DATE INST
           SERIAL NO.  HOURS       CYCLES      HOURS       CYCLES      LOCATION    (REMOVED)
<S>        <C>         <C>         <C>         <C>         <C>         <C>         <C>
Airframe

Engines & APU's Subject to Lease

Engine #1

Engine #2

APU

Other Engines & APU's Installed on Airframe

Engine #1

Engine #2

APU

Engines & APU's permanently removed from Service During Month

</TABLE>

                                 MAJOR MAINTENANCE

<TABLE>
<CAPTION>

              MAINTENANCE CHECK                            DATE ACCOMPLISHED
<S>                                            <C>
"A" CHECK - HOURS

"B" CHECK - HOURS

"C" CHECK - HOURS

"D" CHECK - HOURS

</TABLE>

            APU and Engine data represent the times and cycles of the airframes
each is installed on.

            The Aircraft, Engines, modules and APU subject to the Lease for
this Aircraft have been kept in good order and repair, or are being restored to
the condition required by the Lease.

MAJOR STRUCTURAL REPAIR:
MAJOR MODIFICATIONS/AD's:
MISCELLANEOUS/ACCIDENTS/INCIDENTS:
FOR AND ON BEHALF OF VARIG S.A.

NAME:

TITLE:

<PAGE>

                                   EXHIBIT K
                                      to
                           AIRCRAFT LEASE AGREEMENT

                   LIST OF DOCUMENTS TO BE SUPPLIED ANNUALLY

1.      AIRWORTHINESS DIRECTIVE SUMMARY UPDATES WILL BE SUPPLIED ANNUALLY

2.      SERVICE BULLETIN AND LESSEE'S ORIGINATED MODS SUMMARY
        UPDATES WILL BE SUPPLIED ANNUALLY

3.      ENGINEERING ORDER (DT)

4.      LAST SHOP VISIT REPORT (FORM 337) FOR ENGINES AND APU WILL BE SUPPLIED
        AS APPLICABLE.

5.      LIFE LIMITED PARTS STATUS FOR AIRFRAME/ENGINE/APU/LANDING GEAR WITH
        COPY OF SERVICEABLE TAGS AS APPLICABLE.

6.      LISTING OF TIME/CALENDAR CONTROLLED COMPONENTS BY PIN,  S/N -
        DESCRIPTION-POSITION-TBO-TSI-TSO-TOTAL TIME.

7.      AIRCRAFT MASTER FLIGHT LOG (COMPUTER RUN OF TOTAL TT/TC RECORDED
        DAILY). UPDATES WILL BE PROVIDED.

8.      CURRENT AND FUTURE REVISIONS OF ALOHA 737 MAINTENANCE PROGRAM (EPM), AS
        APPLICABLE.

9.      LISTING OF ALL MAJOR 737 STRUCTURAL REPAIRS (N685MA) AS APPLICABLE.

10.     ANTICIPATED DATE OF NEXT SCHEDULED D CHECK OR C CHECK.

<PAGE>

                                                            COUNTERPART NO. 7

                            LEASE SUPPLEMENT NO. 1

                          TO AIRCRAFT LEASE AGREEMENT
                         DATED AS OF NOVEMBER 29, 1995

                 LEASE SUPPLEMENT NO. 1, dated December 1, 1995, between
Wilmington Trust Company, not in its individual capacity but solely as
Trustee f/b/o ITOCHU AirLease (Europe) Limited and Marubeni Airleasing (U.K.)
Limited ("Lessor"), and Aloha Airlines, Inc., a company organized under the
laws of Hawaii ("Lessee").

                 Lessor and Lessee have previously entered into that certain
Aircraft Lease Agreement dated as of November 29, 1995 (herein called the
"Lease" and the defined terms therein being hereinafter used with the same
meaning). The Lease provides for the execution and delivery from time to time
of a Lease Supplement substantially in the form hereof for the purpose of
leasing the aircraft described below under the Lease as and when delivered by
Lessor to Lessee in accordance with the terms thereof.

                 The Lease relates to the Aircraft, Parts and Engines as more
precisely described below. A counterpart of the Lease is attached hereto and
this Lease Supplement and the Lease shall form one document.

                 In consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:

                 1. Lessor hereby delivers and leases to Lessee under the
Lease and Lessee hereby accepts and leases from Lessor under the Lease, that
certain Boeing Model B-737-25A commercial jet aircraft, Airframe and the two
Pratt & Whitney JT8D-17A Engines (each of which engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower) described in
Schedule 1 attached hereto and made a part hereof (the "Delivered Aircraft").
The status of the Aircraft and Engines upon delivery thereof to Lessee shall
be as described on Schedule 2 attached hereto and made a part hereof.

                 2. (A) The Delivery Date of the Delivered Aircraft is the
date of this Lease Supplement set forth in the opening paragraph hereof.

                    (B) The time of the delivery and acceptance of the
Delivered Aircraft is 12:30 p.m. Central Time, at which

<PAGE>

time the Delivered Aircraft is located in the airspace over the State of
Texas, United States of America (such location is herein called the "Delivery
Location").

                  3. The Term for the Delivered Aircraft shall commence on
the Delivery Date and shall end on the Expiration Date, which shall be
December 1, 2003.

                  4. The amount of Basic Rent for the Delivered Aircraft is
payable in advance on each Basic Rent Payment Date.

                  5. Lessee hereby confirms to Lessor that (i) the Delivered
Aircraft and each Engine installed thereon or belonging thereto have been
duly marked in accordance with the terms of Section 6(f) of the Lease, (ii)
Lessee has accepted the Delivered Aircraft for all purposes hereof and of the
Lease and (iii) Lessee has inspected the Delivered Aircraft and the Delivered
Aircraft satisfies the conditions set forth in the Lease.

                  6. Lessor represents that all of its representations and
warranties contained in the Lease are true and correct on the date hereof.

                  7. All of the terms and provisions of the Lease Agreement
are hereby incorporated by reference in the Lease Supplement to the same
extent as if fully set forth herein.

                  8. The Lease Supplement may be executed in any number of
counterparts, each of such counterparts, except as provided in Section 20(e)
of the Lease, shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same Lease Supplement.

THIS LEASE SUPPLEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH
THERE IS ONE COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER
ORIGINAL" AND ALL OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER
THAN 1. TO THE EXTENT THAT THIS LEASE SUPPLEMENT CONSTITUTES CHATTEL PAPER
UNDER THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN ANY APPLICABLE
JURISDICTION, NO SECURITY INTEREST MAY BE CREATED OR PERFECTED BY POSSESSION
OF ANY COUNTERPART OF THIS LEASE SUPPLEMENT OTHER THAN SAID COUNTERPART NO. 1.

                                      -2-

<PAGE>

                  IN WITNESS WHEREOF, Lessor and Lessee each have caused
this Lease Supplement to be duly executed by their authorized officers as of
the day and year first above written.

                                      LESSOR:

                                      WILMINGTON TRUST COMPANY, not
                                      in its individual capacity but
                                      solely as Trustee

                                      By: /s/ M. P. Bonilla
                                         ------------------------------------
                                      Name: Myfanwy Phillips Bonilla
                                         ------------------------------------
                                      Title: Asst. Vice President

                                      LESSEE:

                                      ALOHA, AIRLINES, INC

                                      By:
                                         ------------------------------------
                                      Name:
                                         ------------------------------------
                                      Title:
                                         ------------------------------------

                                      By:
                                         ------------------------------------
                                      Name:
                                         ------------------------------------
                                      Title:
                                         ------------------------------------

<PAGE>

                  IN WITNESS WHEREOF, Lessor and Lessee each have caused this
Lease Supplement to be duly executed by their authorized officers as of the
day and year first above written.

                                      LESSOR:

                                      WILMINGTON TRUST COMPANY, not
                                      in its individual capacity but
                                      solely as Trustee

                                      By:
                                         ------------------------------------
                                      Name:
                                         ------------------------------------
                                      Title:
                                         ------------------------------------

                                      LESSEE:

                                      ALOHA AIRLINES, INC.

                                      By: /s/ Brenda F. Cutwright
                                         ------------------------------------
                                      Name: Brenda F. Cutwright
                                         ------------------------------------
                                      Title: SR. VICE PRESIDENT FINANCE &
                                             PLANNING AND CFO
                                         ------------------------------------

                                      By: /s/ James M. King
                                         ------------------------------------
                                      Name: James M. King
                                         ------------------------------------
                                      Title: VICE PRESIDENT PLANNING &
                                             DEVELOPMENT
                                         ------------------------------------

<PAGE>

                                  SCHEDULE 1
                                      TO
                            LEASE SUPPLEMENT NO. 1

                                BOEING 737-25A
                                   AIRFRAME

<TABLE>
<CAPTION>

MANUFACTURER'S           U.S. REGISTRATION
SERIAL NO.               NUMBER                         TOTAL TIME*          TOTAL CYCLES*
--------------           -----------------              -----------          -------------
<S>                      <C>                            <C>                  <C>

23791                    N685MA                         23,859               14,057
                         (to be changed to
                         N819AL)

                           INSTALLED PRATT & WHITNEY
                                    ENGINES

MODEL NO.                SERIAL NO.                     TOTAL TIME*          TOTAL CYCLES*
---------                ----------                     -----------          -------------
JT8D-17A                 P709529                        20,960               11,883
JT8D-17A                 P709530                        22,100               12,908

                                   INSTALLED
                             AUXILIARY POWER UNIT

MODEL NO.                SERIAL NO.                     TOTAL TIME*          TOTAL CYCLES*
---------                ----------                     -----------          -------------
GTCP85-129               P35274                         (TACH Reading)

</TABLE>

<PAGE>

                                   SCHEDULE 1
                                       TO
                         LEASE SUPPLEMENT NO. 1 (cont'd)

                                  B737 AVIONICS
                               COMPONENT INVENTORY

<TABLE>
<CAPTION>

ITEM    PART NUMBER             SERIAL NUMBER                       DESCRIPTION            POSITION/QUANTITY
NO.
----    ------------------      -------------             ---------------------------      -------------------
<S>     <C>                     <C>                       <C>                              <C>        <C>

1       622-4096-001                4581                             PA Amp                E&E        1
2       5140-1-112                   339                     Remote Electronics Unit       E&E        1
3       622-8971-020                2119                            TCAS T/R               E&E        1
4       622-1181-001               14400                            VHF T/R                E&E        1
5       622-1396-001                5023                            VHF T/R                E&E        1
6       622-7878-200              5128/5165                            ATC                 E&E        2
7       NA 13UO2                 255AKWO022                         Selcal                 E&E        1
8       622-2921-001             10076/10061                           DME                 E&E        2
9       080-20325-01           4603/4613/4602                      T/Rectifier             E&E        3
10      2-301-3                     4782                          Batt Charger             E&E        1
11      39B168-1-0                  3276                         Static Inverter           E&E        1
12      65-52811-109               D00485                     Landing Gear Acc Unit        E&E        1
13      42-651-01                   443                            Anti-Skid               E&E        1
14      65-52810-25                D01002                   Air Condition Relay Unit       E&E        1
15      65-73606-69                D01029                          Eng Acc Unit            E&E        1
16      65-52808-7                 D00496                  Compartment Overheat Unit       E&E        1
17      65-52806-235               D00870                   Misc Solid State Switch        E&E        1
18      65-52807-26                D00449                  Slat Position Switch Unit       E&E        1

</TABLE>

                                       -2-

<PAGE>

<TABLE>
<CAPTION>

ITEM    PART NUMBER             SERIAL NUMBER                       DESCRIPTION            POSITION/QUANTITY
NO.
----    ------------------      -------------             ---------------------------      -------------------
<S>     <C>                     <C>                       <C>                              <C>        <C>

19      522-2996-011                2012                          Marker Beacon            E&E        1
20      777-1492-002                1582                               ADF                 E&E        1
21      777-1492-004                4039                               ADF                 E&E        1
22      965-0876-001                304                                GPWS                E&E        1
23      622-3890-003                1556                             Radio Alt             E&E        1
24      65-52801-31                D00446                         APU Control Unit         E&E        1
25      65-52809-15                D00306                        Fire Detector Unit        E&E        1
26      8TJ45-GAB                X0062 34B3                    Fuel Flow Power Supply      E&E
27      231-2                    5556/6517                      Window Heat Control        E&E        4
28                               4314/7490                                                 E&E
29      522-3949-001               3701                         Monitor Comparator         E&E        1
30      622-3257-001             5662/2275                         ILS NAV RCVR            E&E        2
31      172938-001               6620/6623                          NAV SW Unit            E&E        4
32                               6630/6613                                                 E&E
33      HG48B13                  P255/G1711                             ADC                E&E        2
34      4030952-906              88062826                         Yaw Damper               E&E        1
35      163356-88-01             0000528                      Performance Data Comp        E&E        1
36      548376-6                 097C-9045                    Cabin Temp Controller        E&E        1
37      87093613                   P43                         Pressure Controller         E&E        1
38      2588424-902              84053253                          Rate of Turn            E&E        1
39      101                  812802UA/9118557A                     Compass Rack            E&E        2
40      622-2500-004             2343/1298                        Steering Comp            E&E        2

</TABLE>

                                       -3-

<PAGE>

<TABLE>
<CAPTION>

ITEM    PART NUMBER             SERIAL NUMBER                       DESCRIPTION            POSITION/QUANTITY
NO.
----    ------------------      -------------             ---------------------------      -------------------
<S>     <C>                     <C>                       <C>                              <C>        <C>

41     65-52805-317               D01011                      Flight Inst Acc Unit         E&E        1
42     172938-001               6624/6615                          Switch Unit             E&E        4
43                              6595/2678                                                  E&E
44     2590650-901              05872772                         Mach Trim Comp            E&E        1
45     2588810-904              01851529                         Pitch Computer            E&E        1
46     2588812-902              06871639                         Roll Computer             E&E        1
47     65-52812-107              D00496                       Auto Pilot Acc Unit          E&E        1
48     457300-0430               3394                              Omega RPU               E&E        1
49     25582-003                8305313                             Battery                E&E        1
50     2587335-11               84054627                           Vert Gyro               E&E        1
51     2587335-11               8415034                            Vert Gyro               E&E        1
52     2587335-11               0034163                            Vert Gyro               E&E        1
53     2588302-4                0067044                         Direction Gyro             E&E        1
54     2588302-4                84056507                        Direction Gyro             E&E        1

</TABLE>

                                       -4-

<PAGE>

                                  SCHEDULE 2
                                      TO
                            LEASE SUPPLEMENT NO. 1

                                AIRCRAFT STATUS
                             ON THE DELIVERY DATE

AIRFRAME HEAVIEST CHECK ("D" CHECK OR EQUIVALENT):

Interval:                    28,000 (Hrs)
Time Remaining:              4,141

LANDING GEAR OVERHAUL:

Interval:                    Main Gear               24,000 cycles
                             Nose Gear               24,000 cycles
Time Remaining:              Left Gear                9,943 cycles
                             Right Gear               9,943 cycles
                             Nose Gear                9,943 cycles

ENGINES:

Overhaul Interval:
Time Remaining (S/N P709529):
Time Remaining (S/N P709530):

Hot Section Inspection:

Interval:
Time Remaining (S/N P709529):
Time Remaining (S/N P709530):

TIME REMAINING TO FIRST RESTRICTION:

Engine S/N:                  P709529
 Hours:                      9,040
 Cycles:                     3,117 (C07)
Engine S/N:                  P709530
 Hours:                      7,900
 Cycles:                     2,092 (C07)

<PAGE>

AUXILIARY POWER UNIT:

Hot Section Inspection:

Interval:                              On Condition
Time Remaining:                        On Condition

Time Remaining to Next Limited
 or Scheduled Removal:                 On Condition

                                      -2-

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

                                             Effective date:  10/20/95

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 21
------
Valve, Safety       720737-5       L-0001         14000H           13,817.6           3,977.2
RH                                                OH               7/3/92
Valve, Safety       720737-5       830678         14000H           13,817.6           3,977.2
LH                                                OH               7/3/92
Gasper Fan          21520-1         063           6000H            22,594.7           4,735
                                                  OH               6/15/95

ATA 23
------
Recorder,          93A100-80       52428          72 Mo.           14, 623.2H         2 Yrs., 6 Mo.
Voice                                             RPL
(Battery)

ATA 24
------
APU Generator      976J498-1       YK13122        6000H            20,471             2,602H
                                                  HT               10/20/94
Panel Bus          915F213-2       WE1347B        6000H            19,313.9           1,454H
Protection                                        BC               6/11/94
Gen. Cont.         948F458-1       NM4963         6000H            19,616.8H          1,757H
 Unit                                             BC               7/18/94
 APU
Gen. Cont.         948F458-1       PM5071         6000H            23,697H            5,838H
 Unit                                             BC               10/3/95
 Left
Gen. Cont.         948F458-1       XJ2186         6000H            21,639.9H          3,780.9H
 Unit                                             BC               2/18/95
 Right

ATA 25
------
Life Vest          KSE-35L8        527-691        24 Mo.           8/30/95            9 Mos.
 Rt. Aft                                          OH               23,304H
Life Vest          AV-35           541-064        24 Mo.           2/95               14 Mos.
 Co-pilot                                         O H              21,530H
Slide, Evac        D31354-         1112           24 Mo.           8/23/94            10 Mos.
 Rt. Aft           425                            OH               19,939.7H

</TABLE>

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 25
------
Slide, Evac         D31354-        1613           24 Mo.            8/24/94         10 Mos.
 Lt. Aft            433                           OH                19, 949H
Slide, Evac         11611-143      123-1          24 Mo.            9/12/95         23 Mos.
 Rt. Fwd                                          OH                23,459H
Slide, Evac         D31354-        0159           24 Mo.            2/15/95         7 Mos.
 Lt. Fwd            403                           OH                21,620H

Escape Slide        SEE NOTE (1) OF THE MARKAIR MAINTENANCE PROGRAM
 Bottles (4)

Life Vest           KSE-35L8       50287          24 Mo.            3/17/95          9/96
 Obs                                              OH                21,942H          8 Mos.
Life Vest           KSE-35L8       12323          24 Mo.            8/1/95           7/97
 Capts                                            OH                23,085H          22 Mos.
Life Vest           KSE-35L8       527-691        24 Mo.            8/30/95          7/97
Aft Right                                         OH                23,304H          21 Mos.
Life Vest           KSE-35L8       29358          24 Mo.            2/3/95           12/96
Left Aft                                          OH                21,474H          8 Mos.
Life Vest           AC-2           535-380        24 Mo.            4/29/95          3/97
Fwd FA                                            OH                22,259H          17 Mos.
Life Vest           KSE-35L8       541-064        24 Mo.            2/7/95           1/97
Co-pilot                                          OH                21,530.7         15 Mos.
Kit, Medical        017093         NHC1613        24 Mo.            11/28/94         11/96
                                                  OH                20,844H          13 Mos.
PEE                 4566M378       E9134322       120 Mo.           12/31/91         1/2000
R/A Closet                                        OH                                 60 Mos.
PEE                 4566M378       E9134326       120 Mo.           12/31/91         1/2000
L/A Closet                                        OH                                 60 Mos.
PEE                 4566M378       E9134942       120 Mo.           1/13/92          1/2000
Aft Closet                                        OH                                 60 Mos.
PEE                 4566M378       E9134751       120 Mo.           12/22/91         1/2000
Row 10                                            OH                                 60 Mos.
PEE                 4566M378       E9548209       120 Mo.           6/9/95           5/2002
Cockpit                                           OH                                 70 Mos.

</TABLE>

                                       -2-

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 26
------
Cartridge,          30903828       AEN-1-3       72 Mos.           5/28/93          50 Mos.
Fire                                             RPL
ext.: Rt.
Cartridge,          30903828       BTL23883B     120 Mos.          5/5/95           5/2005
Fire                               1             RPL
ext.: APU
Cartridge,          30903828       09015DI       72 Mos.           4/27/95          2/2001
Fire                                             RPL
ext.: Left
Fire Bottle         3307507        23883B1       WC/12 Mos         5/5/95            5/96
APU                                              HST/60 Mo         5/5/95            5/2000
Fire Bottle         33600011       10124D1       WC/12 Mos         4/27/95           5/98
Rt Eng.                                          HST/60 Mo         5/14/93           4/98
Fire Bottle         33600011       09015D1       WC/12 Mos         4/27/95           4/96
Left Eng.                                        HST/60 Mo         2/16/95           2/2000
Fire Ext.           892480         672AC         WC/12 Mos         5/1/95            5/96
Aft                                              HST/60 Mo                           7/96
Closet(H20)
Fire Ext.           898052         A-415392      WC/12 Mos         5/1/95            5/96
Aft. (halon)                                     HST/60 Mo         11/91             7/96
Fire Ext.           898052         B-615379      WC/12 Mos         5/1/95            5/96
Lt row                                           HST/60 Mo                           7/96
10/halon
Fire Ext.           898052         V-343826      WC/12 Mos         4/26/95           5/99
Fwd/(halon)                                      HST/60 Mo
Fire Ext.           898052         E494480       WC/12 Mos         4/29/95           4/96
cockpit/halon                                    HST/60 Mo                           5/99
Fire Bottle,        A800100-1      26-904        WC/12 Mos         4/13/94           Over Due
Lav. Aft                                         HST/60 Mo
Fire bottle,        A800100-1      26-906        WC/12 Mos         4/13/94           Over Due
Lav. Fwd                                         HST/60 Mo

</TABLE>

                                       -3-

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 27
------
Jackscrew,          65-49970-      KE00301        8000H            19,946H          3,787H
Stab. trim             17                         OH               8/24/94
Fuse assy           6213-4         219            22,400H          19,945H          18,487H
auto                                              BC
brk/rudder
Transmission        65-50321-      0812           16000H           15,275H          7,416H
No 1 flap              5                          OH
Transmission        65-50322-      0840           16000H           15,275H          7,416H
No 2 flap              12                         OH
Transmission        65-50323-      0911           16000H           15,275H          7,416H
No 3 flap              5                          OH
Transmission        65-50324-      0784           16000H           15,275H          7,416H
No 4 flap              3                          OH
Transmission        65-50325-      50007          16000H           15,275H          7,416H
No 5 flap              5                          OH
Transmission        65-50326-      62003          16000H           15,275H          7,416H
No 6 flap              6                          OH
Transmission        65-50327-      72004          16000H           15,275H          7,416H
No 7 flap              14                         OH
Transmission        65-50328-      82002          16000H           15,275H          7,416H
No 8 flap              7                          OH
Gearbox assy        65-51510-      7417           16000H           15,275H          7,416H
Rt angle/Left          1                          OH
Gearbox assy        65-51510-      1489           16000H           15,275H          7,416H
Rt angle/Rt            2                          OH
Gearbox assy        65-51513-      4778           16000H           15,275H          7,416H
Flap dr./Left          1                          OH
Gearbox assy        65-51513-      1877           16000H           15,275H          7,416H
Flap dr./Rt.           2                          OH
Power Unit          65-63851-      7241           16000H           15,275H          7,416H
Flap dr GBX            7                          OH

</TABLE>

                                      -4-

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 28
------
APU Fuel            AV16EI209      H1842C         20000H           19,898H          16,025H
S/0 VLV                 D                         OH               8/19/94
Left Fuel           61185          128            200001-1         19,876H          16,003H
S/0 VLV                                           OH               8/16/94
Right Fuel          61185          1813           20000H           20,015H          16,142H
S/0 VLV                                           OH               8/31/94
CF Fuel             61185          609            20000H           20,005H          16,146H
S/0 VLV                                           OH               8/31/94

ATA 31
------
ULB Batteries       9804100-       7040           6 Yrs.           12 Mar 94        41 Mos.
                      GXUS                        RPL

ATA 32
------
Fuse assy           6213-4         627            22,400H          19,917.7H        18,458H
Auto                                              OH               8/21/94
Brk/Rudder

ATA 34
------
Altimeter,          WL102AMS       AG102          24 Mo.           12/20/94         14 Mo.
Stby                   3                          IN
Transponder         TPR 720        5128           24 Mo.           4/27/95          18 Mo.
Mode S, Lt.                                       IN
Transponder         TPR 720        5165           24 Mo.           4/27/95          18 Mo.
Mode S, Rt.                                       IN

</TABLE>

                                       -5-

<PAGE>

                                  SCHEDULE 3
                                      TO
                            LEASE SUPPLEMENT NO. 1

                      Aircraft Status on The Delivery Date

                    Time and Calendar Controlled Components
                  (excluding engines, landing gear, and APU).

<TABLE>
<CAPTION>
                                                                   AIRCRAFT
COMPONENT           PART                                              HR.
POSITION            NUMBER         SERIAL #       LIMIT              TSI            REMAINING
---------           --------       ---------      -------          ----------       ---------
<S>                 <C>            <C>            <C>              <C>              <C>

ATA 35
------
02 Cylinder         801307-00      223879/        36 Mo.           6/22/94          5/97
                                   29668          HST              5/94             19 Mo.
Portable 02         5500A1A-       771X/3596      60 Mo.           5/11/92          3/96
 Cyl                BF23A          4              HST                               5 Mo.
Portable 02         5500A1A-       151843P/1      60 Mo.           12/21/93         1/97
 Cyl                BF23A          3              HST                               15 Mo.
Row 1                              5454
Portable 02         56002C1AF      55934DB/2      60 Mo.           10/5/95          2/2000
 Cyl                23AM           3832           HST                               58 Mo.
Aft closet
Portable 02         5600-2ClA      74732DF/       60 Mo.           1/12/93          1/98
 Cyl                               41819          HST                               26 Mo.
Cockpit

02 Generators       Varies                        12 Yrs                            22 Mo.
-------------       ------                        ------                            ------
                    117003-17                     12 Yrs                            22  Mo.
                    117.00-12                     12 Yrs                            22  Mo.
                    803000-02                     12 Yrs                            22  Mo.
                    117003-12                     12 Yrs                            22  Mo.

</TABLE>

                                       -6-

<PAGE>

                                   SCHEDULE 4
                                       TO
                             LEASE SUPPLEMENT NO. 1

                                   A/C N685MA

                                    R/H SIDE

<TABLE>
<CAPTION>

DESC.                  PART NUMBER         SERIAL NUMBER          MODEL NUMBER
-----                  -----------         -------------          ------------
<S>                    <C>                 <C>                    <C>
 1. TRIPLE BURNS       86952102            310588                 JB5.2-3-58
 2. TRIPLE BURNS       86952024            310581                 JB5.2-3-59
 3. TRIPLE BURNS       86952022            310569                 JB5.2-3-59
 4. TRIPLE BURNS       86952022            310566                 JB5.2-3-59
 5. TRIPLE BURNS       86952022            310572                 JB5.2-3-59
 6. TRIPLE BURNS       86952022            310577                 JB5.2-3-59
 7. TRIPLE BURNS       86952022            310570                 JB5.2-3-59
 8. TRIPLE BURNS       86952022            310574                 JB5.2-3-59
 9. TRIPLE BURNS       86952022            310568                 JB5.2-3-59
10. TRIPLE BURNS       86952016            310562                 JB5.2-3-58
11. TRIPLE BURNS       86952022            310573                 JB5.2-3-59
12. TRIPLE BURNS       86952022            310579                 JB5.2-3-59
13. TRIPLE BURNS       86952022            310578                 JB5.2-3-59
14. TRIPLE BURNS       86952022            310571                 JB5.2-3-59
15. TRIPLE BURNS       86952022            310576                 JB5.2-3-59
16. TRIPLE BURNS       86952022            310564                 JB5.2-3-59
17. TRIPLE BURNS       86952022            310575                 JB5.2-3-59
18. TRIPLE BURNS       86952026            310582                 JB5.2-3-59
19. TRIPLE BURNS       86952014            310560                 JB5.2-3-58
20. DOUBLE BURNS       86953201            306409                 JB5.2-2-39

</TABLE>

                                       -1-

<PAGE>

                                   A/C N685MA

                                    L/H SIDE

<TABLE>
<CAPTION>

DESC.                  PART NUMBER         SERIAL NUMBER          MODEL NUMBER
-----                  -----------         -------------          ------------
<S>                    <C>                 <C>                    <C>
1.  TRIPLE BURNS       86952101            310587                 JB5.2-3-58
2.  TRIPLE BURNS       86952007            310556                 JB5.2-3-58
3.  TRIPLE BURNS       86952001            310548                 JB5.2-3-59
4.  TRIPLE BURNS       86952001            310545                 JB5.2-3-59
5.  TRIPLE BURNS       86952001            310541                 JB5.2-3-59
6.  TRIPLE BURNS       86952001            310542                 JB5.2-3-59
7.  TRIPLE BURNS       86952001            310539                 JB5.2-3-59
8.  TRIPLE BURNS       86952001            310550                 JB5.2-3-59
9.  TRIPLE BURNS       86952013            310559                 JB5.2-3-58
10. TRIPLE BURNS       86952015            310561                 JB5.2-3-58
11. TRIPLE BURNS       86952001            310544                 JB5.2-3-59
12. TRIPLE BURNS       86952003            310554                 JB5.2-3-59
13. TRIPLE BURNS       86952001            310547                 JB5.2-3-59
14. TRIPLE BURNS       86952001            310543                 JB5.2-3-59
15. TRIPLE BURNS       86952001            310553                 JB5.2-3-59
16. TRIPLE BURNS       86952001            310538                 JB5.2-3-59
17. TRIPLE BURNS       86952001            310538                 JB5.2-3-59
18. TRIPLE BURNS       86952001            310549                 JB5.2-3-59
19. TRIPLE BURNS       86952005            310555                 JB5.2-3-59
20. TRIPLE BURNS       86952017            310563                 JB5.2-3-56

</TABLE>

                                       -2-

<PAGE>

<TABLE>
<CAPTION>

                                                                                 AUDITED THRU L/P         165891      10/20/95
                                                                                 A/C TOTAL HOURS          23,859
                                                                                 A/C TOTAL CYCLES         14,057
INSTALLED ON  N685MA  POSITION 1
                                                                   HOURS       CYCLES
                                               LIMIT               SINCE       SINCE    TOTAL      TOTAL   TIME REMAINING
ITEM          POS     PART NO     S/N          HOURS      CYCLES   NEW         NEW      HOURS      CYCLES  HOURS      CYCLES

<S>           <c>     <c>         <c>          <c>        <c>      <c>         <c>      <c>        <c>     <c>        <c>

ENGINE        LEFT    JT8D-17A    P7095308     30,000     15,000   22,100     12,908    22,100     12,908  7,900      2,092
HUB (DISK)    C 01    817401G     P78775       NO LIMIT   20,000   NO LIMIT   12,908    NO LIMIT   12,908  NO LIMIT   7,092
DISK          C 02    5002402-01  N87756       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 03    800803      N58289       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK (HUB)    C 04    799504      P44646       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 05    745705      P93696       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 06    745706      P93306       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 07    774407      P81245       30,000     15,000   22,100     12,908    22,100     12,908  7,900      2,092
DISK (HUB)    C 08    5005808-01  N90080       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 09    701509      P97271       30,000     19,000   22,100     12,908    22,100     12,908  7,900      6,092
DISK          C 10    772510      P97761       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 11    772511      P03600       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 12    772512      P97578       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          C 13    5003613-01  P59603       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK (SHAFT)  T 01    5003601-01  N36371       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          T 02    5003102-01  P03367       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          T 03    5003103-01  N64721       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
DISK          T 04    5003104-01  N52111       30,000     20,000   22,100     12,908    22,100     12,908  7,900      7,092
LPT (SHAFT)                                    NO LIMIT   20,000   22,100     14,558    22,100     14,558  NO LIMIT   5,442

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                                 AUDITED THRU L/P         165891      10/20/95
                                                                                 A/C TOTAL HOURS          23,859
                                                                                 A/C TOTAL CYCLES         14,057
INSTALLED ON  N685MA  POSITION 2
                                                                   HOURS       CYCLES
                                               LIMIT               SINCE       SINCE    TOTAL      TOTAL   TIME REMAINING
ITEM          POS     PART NO     S/N          HOURS      CYCLES   NEW         NEW      HOURS      CYCLES  HOURS      CYCLES

<S>           <c>     <c>         <c>          <c>        <c>      <c>         <c>      <c>        <c>     <c>        <c>

ENGINE        RIGHT   JT8D-17A    P7095308     NO LIMIT   NO LIMIT 20,960     11,883    20,960     11,883  9,040      3,117
HUB (DISK)    C 01    817401      P23654       NO LIMIT   20,000   NO LIMIT   13,372    NO LIMIT   13,372  NO LIMIT   6,628
DISK          C 02    5002402-01C S56233       30,000     20,000   10,771     7,680     10,771     7,680   19,229     12,320
DISK          C 03    800803      P68371       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK (HUB)    C 04    799504      N90833       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 05    745705      P93614       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 06    745706      P93230       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 07    774407      P81364       30,000     15,000   20,960     11,883    20,960     11,883  9,040      3,117
DISK (HUB)    C 08    5005808-01  P43608       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 09    701509      P97641       30,000     19,000   20,960     11,883    20,960     11,883  9,040      7,117
DISK          C 10    772510      P97278       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 11    772511      P03553       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 12    772512      P97219       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          C 13    5003613-01  P92918       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          T 01    5003601-01  N36374       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          T 02    5003102-01  M12012       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          T 03    5003103-01  N64611       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
DISK          T 04    5003104-01  N52069       30,000     20,000   20,960     11,883    20,960     11,883  9,040      8,117
LPT (SHAFT)                                    NO LIMIT                                                    NO LIMIT

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                          AUDITED THRU L/P  165891                     TOTAL A/C HOURS  23859
INSTALLED ON: N685MA                                                  DATE  10/20/95                   TOTAL A/C CYCLES 14057

<S>                           <c>          <c>          <c>    <c>    <c>      <c>    <c>   <c>    <c>    <c>    <c>    <c>
NLG ASSEMBLY                  65-73762-5   T01406P1486  90,000 24,000                                                   9,943
SHOCK STRUT ASSY              65-46200-63  T01408P1486  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER ASSY           65-46210-25  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER                65-46211-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
STEERING PLATE, UPR           65-46210-27  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
STEERING PLATE, LWR (DRILLED) 65-46210-24  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
OUTER CYLINDER ASSY (DRILLED) 65-46215-14  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
METERING PIN ASSY             65-46200-54  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
METERING PIN                  65-46219-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
SUPPORT TUBE, METERING PIN    65-46229-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
DRAIN TUBE                    69-57991-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
SUPPORT TUBE, UPPER ORIFICE   69-73038-1   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
TUBE, ORIFICE SUPPORT         65-46226-9   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
STEM, ORIFICE SUPPORT         65C25707-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
GLAND NUT ASSY                65-46221-4   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
ORIFICE PLATE, UPPER          69-36622-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
TORSION LINK ASSY, UPPER      65-46202-9   JC-1917      90,000 24,000 08/28/92 14,378 7,445 23,971 6,612  9,481  65,028 17,388
TORSION LINK ASSY, LOWER      65-46288-5   32-58        90,000 24,000 08/28/92 14,378 7,445 28,383 6,612  9,481  61,617 17,388
STEERING COLLAR ASSY          65-46203-24  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, STEERING COLLAR         69-61383-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, STEERING COLLAR         69-61383-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
PIN, UPPER TORSION LINK       69-72698-1   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
PIN, LOWER TORSION LINK       69-72698-1   486-2 (ORIG) 90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, TORSION LINK APEX       69-35883-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
LOWER DRAG BRACE ASSY         65-46230-7   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
UPPER DRAG BRACE ASSY         65-80051-13  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
PIN, DRAG BRACE CENTER        69-35391-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, DRAG BRACE, CENTER      NAS1110-68D  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
PIN, UPPER DRAG BRACE         69-35394-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
PIN, UPPER DRAG BRACE         66-35394-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, LOWER DRAG BRACE        69-35396-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
LOCK BRACE ASSY, AFT          65-46240-11  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
LOCK LINK ASSY, FWD           65-46242-11  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
BOLT, NOSE GEAR LOCK JOINT    NAS1105-52D  1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
SHAFT, AFT LOCK MECHANISM     69-35385-1   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
TRUNNION PIN, LEFT HAND       69-35398-2   1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943
TRUNNION PIN, RIGHT HAND      69-41248-    1486 (ORIG)  90,000 24,000 12/17/87 0      0     14,057 14,057 23,859 75,943 9,943

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                            AUDITED THRU L/P  165891                      TOTAL A/C HOURS  23859
INSTALLED ON: N685MA                                                    DATE  10/20/95                    TOTAL A/C CYCLES 14057

<S>                           <c>            <c>           <c>     <c>    <c>      <c>    <c>   <c>    <c>    <c>    <c>    <c>
LEFT NLG ASSEMBLY             65-73761-87    MC026895P1488 100,000 24,000                                                   9,943
SHOCK STRUT ASSY              65-46100-52    MC028958P1488 100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
OUTER CYLINDER ASSY           65-61740-10    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
INNER CYLINDER ASSY           65-46116-47    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ORIFICE SUPPORT TUBE ASSY     65-46159-7     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SUPPORT TUBE, ORIFICE         65-46160-7     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ORIFICE PLATE                 69-38980-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
METERING PIN                  65-46124-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
DRAIN TUBE                    65-46156-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
GLAND NUT                     69-39485-10    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, LOWER      65-46102-22    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, UPPER      65-87958-9     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UPPER DRAG STRUT ASSY         65-46103-11    1486 (ORIG)   100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LOWER DRAG STRUT ASSY         65-60579-3     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, LWR SIDE      65-46108-7     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ARM ASSY        65-46109-12    5104          100,000 24,000 12/16/91 12,391 5931  8,865  8,126  11,488 91,135 15,874
TRUNNION PIN ASSY             65-46113-5     34ORGA        100,000 24,000 12/16/91 12,391 5931  66,508 8,126  11,488 31,492 15,874
TEE BOLT ASSY, DRAG STRUT     65-46140-6     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TRUNNION LINK ASSY            65-63378-9     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, LOWER       69-72023-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, UPPER       69-72023-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, TEE FITTING ATTACHMENT  69-51833-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY.: LOWER DRAG STRUT  69-39473-9     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
FUSE BOLT ASSY, UPR DRAG      69-39476-6     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
NUT, TRUNNION PIN             69-41633-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, REACTION LINK 65-46107-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UPPER SIDE STRUT ASSY         65-46138-5     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LOWER SIDE STRUT ASSY         65-63397-9     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
REACTION LINK ASSY            65-46135-13    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPPER DOWNLOCK     65-46138-16    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LINK ASSY, LOWER DOWNLOCK     65-46139-9     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SHAFT, SPRING SUPPORT         69-38999-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY, REACTION LINK      69-38148-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY, UPPER SIDE STRUT   69-68149-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY, SIDE STRUT         69-68150-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK LINK PIVOT     69-41628-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK                69-42193-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ASSY, UPPER DOWNLOCK    69-62779-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ASSY            65-46108-3     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SUPPORT LINK ASSY             65-46112-22    486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPLOCK             65-63887-5     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BELLCRANK ASSY                65-63663-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
HOOK ASSY                     65-46142-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SHAFT, UPLOCK SUPPORT         65-46146-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, REACTION LINK / UPLOCK  69-68148-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, OUTBD    69-39464-4     352           100,000 24,000 12/16/91 12,891 5931  8,126  8,126  11,468 91,874 15,874
BOLT ASSY, LOWER SIDE STRUT   69-68151-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
COLLAR, BELLCRANK RET, UPLOCK 69-51838-2     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
FUSE BOLT, FWD TRUNNION BRG   69-58854-3     486 (ORIG)    83,000  24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, INBRD    BACB301J20CD43 685           100,000 24,000 12/14/91 12,891 5931  8,126  8,126  11,468 91,874 15,874
BOLT, ACTUATOR ROD END        BACB301J16CD48 685/1         100,000 24,000 12/14/91 12,891 5931  8,126  8,126  11,468 91,874 15,874
BEARING ASSY, FWD TRUNNION    69-58871-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
NUT, AFT TRUNNION             65-84161-1     486 (ORIG)    100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                            AUDITED THRU L/P  165891                      TOTAL A/C HOURS  23859
INSTALLED ON: N685MA                                                    DATE  10/20/95                    TOTAL A/C CYCLES 14057

<S>                           <c>            <c>           <c>     <c>    <c>      <c>    <c>   <c>    <c>    <c>    <c>    <c>
RIGHT NLG ASSEMBLY            65-73761-87    MC02665P1488  100,000 24,000                                                   9,943
SHOCK STRUT ASSY              65-46100-52    MC02896P1488  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
OUTER CYLINDER ASSY           65-61740-10    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
INNER CYLINDER ASSY           65-46116-47    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ORIFICE SUPPORT TUBE ASSY     65-46159-7     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SUPPORT TUBE, ORIFICE         65-46160-7     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ORIFICE PLATE                 69-38980-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
METERING PIN                  65-46124-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
DRAIN TUBE                    65-46156-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
GLAND NUT                     69-39485-10    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, LOWER      65-46102-22    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK ASSY, UPPER      65-87958-9     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UPPER DRAG STRUT ASSY         65-46103-11    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LOWER DRAG STRUT ASSY         65-60579-3     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, LWR SIDE      65-46105-7     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ARM ASSY        65-46109-12    1507          100,000 24,000 12/14/91 12,391 5931  34,655 8,126  11,488 65,345 15,874
TRUNNION PIN ASSY             65-46113-16    32-118        100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,488 91,674 15,874
TEE BOLT ASSY, DRAG STRUT     65-46140-6     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TRUNNION LINK ASSY            65-63378-9     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, LOWER       69-72023-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
TORSION LINK PIN, UPPER       69-72023-2     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, TEE FITTING ATTACHMENT  69-51833-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY.: LOWER DRAG STRUT  69-39473-3     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
FUSE BOLT ASSY, UPR DRAG      69-39476-6     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
NUT, TRUNNION PIN             69-41633-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UNIVERSAL ASSY, REACTION LINK 65-46107-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
UPPER SIDE STRUT ASSY         65-46138-5     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LOWER SIDE STRUT ASSY         65-63397-9     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
REACTION LINK ASSY            65-46135-13    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LINK ASSY, UPPER DOWNLOCK     65-46138-16    486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
LINK ASSY, LOWER DOWNLOCK     65-46139-9     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SHAFT, SPRING SUPPORT         69-38999-3     685           100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,468 91,874 15,874
BOLT ASSY, REACTION LINK      69-38148-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY, UPPER SIDE STRUT   69-68149-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT ASSY, SIDE STRUT         69-68150-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK LINK PIVOT     69-41628-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, DOWNLOCK                69-42193-2     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ASSY, UPPER DOWNLOCK0   69-62779-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
ACTUATOR BEAM ASSY            65-46108-3     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SUPPORT LINK ASSY             65-46112-22    HI-106        100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,468 91,874 15,874
LINK ASSY, UPLOCK             65-63887-5     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BELLCRANK ASSY                65-63663-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
HOOK ASSY                     65-46142-2     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
SHAFT, UPLOCK SUPPORT         65-46146-2     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, REACTION LINK / UPLOCK  69-68148-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, OUTBD    69-39464-4     482           100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,468 91,874 15,874
BOLT ASSY, LOWER SIDE STRUT   69-68151-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
COLLAR, BELLCRANK RET, UPLOCK 69-51838-2     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
FUSE BOLT, FWD TRUNNION BRG   69-58854-3     486-2 (ORIG)  83,000  24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
BOLT, ACTUATOR BEAM, INBRD    BACB301J20CD43 685/2         100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,468 91,874 15,874
BOLT, ACTUATOR ROD END        BACB301J16CD48 685           100,000 24,000 12/14/91 12,391 5931  8,126  8,126  11,468 91,874 15,874
BEARING ASSY, FWD TRUNNION    69-58871-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943
NUT, AFT TRUNNION             65-84161-1     486-2 (ORIG)  100,000 24,000 12/17/87 0      0     14,057 14,057 23,859 85,943 9,943

</TABLE>

<PAGE>

                                                               COUNTERPART NO. 2

                             LEASE SUPPLEMENT NO. 2

                           TO AIRCRAFT LEASE AGREEMENT
                          DATED AS OF NOVEMBER 29, 1995

                   LEASE SUPPLEMENT NO. 2, dated April 12, 1996, between
 Wilmington Trust Company, not in its individual capacity but solely as Trustee
 f/b/o ITOCHU AirLease (Europe) Limited and Marubeni Airleasing (U.K.) Limited
 ("Lessor"), and Aloha Airlines, Inc., a company organized under the laws of
 Hawaii ("Lessee").

                Lessor and Lessee have previously entered into that certain
 Aircraft Lease Agreement dated as of November 29, 1995, as supplemented by
 Lease Supplement No. 1, dated December 1, 1995 (as amended, modified or
 supplemented and in effect from time to time, the "Lease" and the defined terms
 therein being hereinafter used with the same meaning), which was filed with the
 FAA as one instrument and recorded on January 25, 1996 as Conveyance No.
 11004730. Lessor and Lessee desire to supplement the Lease in order (1) to
 subject to the Lease two Pratt & Whitney model JT8D-9A engines described below,
 and (2) to remove from the terms of the Lease two Pratt & Whitney model
 JT8D-17A engines described below.

                   In consideration of the premises and other good and
 sufficient consideration, Lessor and Lessee hereby agree as follows:

                   1. Lessor hereby leases to Lessee under the Lease and Lessee
 hereby leases from Lessor under the Lease, two (2) Pratt & Whitney JT8D-9A
 Engines bearing Manufacturer's Serial Numbers 665868 and 655877, each having
 750 or more rated takeoff horsepower, together with (1) all parts, appliances,
 components, accessories and equipment currently installed on, or attached to
 any such engine and (2) all flight, engineering, maintenance, overhaul and
 repair manuals, drawings, records, logs, documents and other data relating to
 the above described engines or parts (such engines, together with the items
 identified in clauses (1) and (2) above, are referred to herein collectively as
 the "9A Engines"). For all purposes of the Lease, each of the 9A Engines shall
 be deemed an "Engine" as defined in the Lease, and part of the Aircraft and
 each such Engine shall be maintained, insured and returned to Lessor in the
 manner and at the times set forth in the Lease.

                                                          RECORDED

                                              FEDERAL AVIATION ADMINISTRATION

                                              Date  4-29-96     Time  1:07
                                                   ---------          --------

                                              Conveyance Number  ZZ011203
                                                               ------------

                                              By /s/       [Illegible]
                                                      --------------------

<PAGE>

                   2. There are hereby removed from the terms of the Lease the
 two (2) Pratt & Whitney JT8D-17A Engines bearing Manufacturer's Serial Numbers
 P709529 and P709530, each having 750 or more rated takeoff horsepower, together
 with (1) all parts, appliances, components, accessories and equipment currently
 installed on, or attached to any such engine and (2) all flight, engineering,
 maintenance, overhaul and repair manuals, drawings, records, logs, documents
 and other data relating to the above described engines or parts (such engines,
 together with the items identified in clauses (1) and (2) above, are referred
 to herein collectively as the "0riginal 17A Engines"). Lessee and Lessor
 acknowledge that the Original 17A Engines are, effective on this date, no
 longer subject to the terms of the Lease and that Lessee has no interest
 therein or thereto under the Lease.

                   3. From the date hereof until the last day of the Term,
 Lessee shall affix and keep a metal nameplate of reasonable dimensions in a
 reasonably prominent position on each of the 9A Engines bearing the Lease
 Identification (such name plate to be furnished by Lessee and affixed on or
 prior to the date hereof).

                   4. Lessee represents that all of its representations and
 warranties contained in the Lease are true and correct on the date hereof and
 that no Default or Event of Default has occurred and is continuing.

                   5. All of the terms and provisions of the Lease Agreement are
 hereby incorporated by reference in this Lease Supplement to the same extent as
 if fully set forth herein. The Lease is hereby ratified and confirmed and,
 except as set forth herein, remains unamended and in full force and effect.

                   6. This Lease Supplement may be executed in any number of
 counterparts, each of such counterparts, except as provided in Section 20(e) of
 the Lease, shall for all purposes be deemed to be an original and all such
 counterparts shall together constitute but one and the same Lease Supplement.

 THIS LEASE SUPPLEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH
 THERE IS ONE COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER
 ORIGINAL'' AND ALL OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER
 THAN 1. TO THE EXTENT THAT THIS LEASE SUPPLEMENT CONSTITUTES CHATTEL PAPER
 UNDER THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN ANY APPLICABLE JURISDICTION,
 NO SECURITY INTEREST MAY BE CREATED OR PERFECTED BY POSSESSION OF ANY
 COUNTERPART OF THIS LEASE SUPPLEMENT OTHER THAN SAID COUNTERPART NO. 1.

<PAGE>

                  IN WITNESS WHEREOF, Lessor and Lessee each have caused this
Lease Supplement to be duly executed by their authorized officers as of the day
and year first above written.

                                            LESSOR:

                                            WILMINGTON TRUST COMPANY, not
                                            in its individual capacity but
                                            solely as Trustee.

                                            By:     M.P. Bonilla
                                                  ----------------------------
                                            Name:   MYFANWY PHILLIPS BONILLA
                                                  ----------------------------
                                            Title:  ASSISTANT VICE PRESIDENT
                                                  ----------------------------

                                            LESSEE:

                                            ALOHA AIRLINES, INC.

                                            By:
                                                  ----------------------------
                                            Name:
                                                  ----------------------------
                                            Title:
                                                  ----------------------------

                                            By:
                                                  ----------------------------
                                            Name:
                                                  ----------------------------
                                            Title:
                                                  ----------------------------

<PAGE>

                  IN WITNESS WHEREOF, Lessor and Lessee each have caused this
 Lease Supplement to be duly executed by their authorized officers as of the day
 and year first above written.

                                            LESSOR:

                                            WILMINGTON TRUST COMPANY, not
                                            in its individual capacity but
                                            solely as Trustee.

                                            By:
                                                  ----------------------------
                                            Name:
                                                  ----------------------------
                                            Title:
                                                  ----------------------------

                                            LESSEE:

                                            ALOHA AIRLINES, INC.

                                            By:    /s/  Brenda F. Cutwright
                                                  ----------------------------
                                            Name:       Brenda F. Cutwright
                                                  ----------------------------
                                            Title: Sr. Vice President Finance
                                                      & Planning and CFO
                                                  ----------------------------

                                            By:    /s/  James M. King
                                                  ----------------------------
                                            Name:       James M. King
                                                  ----------------------------
                                            Title:  Vice President Planning &
                                                          Development
                                                  ----------------------------

<PAGE>

                                                        COUNTERPART NO.
                                                                       -------

                             LEASE SUPPLEMENT NO. 2

                           TO AIRCRAFT LEASE AGREEMENT
                          DATED AS OF NOVEMBER 29, 1995

                  LEASE SUPPLEMENT NO. 2, dated April 12, 1996, between
 Wilmington Trust Company, not in its individual capacity but solely as Trustee
 f/b/o ITOCHU AirLease (Europe) Limited and Marubeni Airleasing (U.K.) Limited
 ("Lessor"), and Aloha Airlines, Inc., a company organized under the laws of
 Hawaii ("Lessee").

                  Lessor and Lessee have previously entered into that certain
 Aircraft Lease Agreement dated as of November 29, 1995, as supplemented by
 Lease Supplement No. 1, dated December 1, 1995 (as amended, modified or
 supplemented and in effect from time to time, the "Lease" and the defined terms
 therein being hereinafter used with the same meaning), which was filed with the
 FAA as one instrument and recorded on January 25, 1996 as Conveyance No.
 11004730. Lessor and Lessee desire to supplement the Lease in order (1) to
 subject to the Lease two Pratt & Whitney model JT8D-9A engines described below,
 and (2) to remove from the terms of the Lease two Pratt & Whitney model
 JT8D-17A engines described below.

                  In consideration of the premises and other good and sufficient
 consideration, Lessor and Lessee hereby agree as follows:

                  1. Lessor hereby leases to Lessee under the Lease and Lessee
 hereby leases from Lessor under the Lease, two (2) Pratt & Whitney JT8D-9A
 Engines bearing Manufacturer's Serial Numbers 665868 and 655877, each having
 750 or more rated takeoff horsepower, together with (1) all parts, appliances,
 components, accessories and equipment currently installed on, or attached to
 any such engine and (2) all flight, engineering, maintenance, overhaul and
 repair manuals, drawings, records, logs, documents and other data relating to
 the above described engines or parts (such engines, together with the items
 identified in clauses (1) and (2) above, are referred to herein collectively as
 the "9A Engines"). For all purposes of the Lease, each of the 9A Engines shall
 be deemed an "Engine" as defined in the Lease, and part of the Aircraft and
 each such Engine shall be maintained, insured and returned to Lessor in the
 manner and at the times set forth in the Lease.

<PAGE>

                  2. There are hereby removed from the terms of the Lease the
 two (2) Pratt & Whitney JT8D-17A Engines bearing Manufacturer's Serial Numbers
 P709529 and P709530, each having 750 or more rated takeoff horsepower, together
 with (1) all parts, appliances, components, accessories and equipment currently
 installed on, or attached to any such engine and (2) all flight, engineering,
 maintenance, overhaul and repair manuals, drawings, records, logs, documents
 and other data relating to the above described engines or parts (such engines,
 together with the items identified in clauses (1) and (2) above, are referred
 to herein collectively as the "Original 17A Engines"). Lessee and Lessor
 acknowledge that the Original 17A Engines are, effective on this date, no
 longer subject to the terms of the Lease and that Lessee has no interest
 therein or thereto under the Lease.

                  3. From the date hereof until the last day of the Term, Lessee
 shall affix and keep a metal nameplate of reasonable dimensions in a reasonably
 prominent position on each of the 9A Engines bearing the Lease Identification
 (such name plate to be furnished by Lessee and affixed on or prior to the date
 hereof).

                  4. Lessee represents that all of its representations and
 warranties contained in the Lease are true and correct on the date hereof and
 that no Default or Event of Default has occurred and is continuing.

                  5. All of the terms and provisions of the Lease Agreement are
 hereby incorporated by reference in this Lease Supplement to the same extent as
 if fully set forth herein. The Lease is hereby ratified and confirmed and,
 except as set forth herein, remains unamended and in full force and effect.

                  6. This Lease Supplement may be executed in any number of
 counterparts, each of such counterparts, except as provided in Section 20(e) of
 the Lease, shall for all purposes be deemed to be an original and all such
 counterparts shall together constitute but one and the same Lease Supplement.

 THIS LEASE SUPPLEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS, OF WHICH
 THERE IS ONE COUNTERPART DESIGNATED AS "COUNTERPART NO. 1 - CHATTEL PAPER
 ORIGINAL" AND ALL OTHER COUNTERPARTS SHALL BE DESIGNATED WITH NUMBERS OTHER
 THAN 1. TO THE EXTENT THAT THIS LEASE SUPPLEMENT CONSTITUTES CHATTEL PAPER
 UNDER THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN ANY APPLICABLE JURISDICTION,
 NO SECURITY INTEREST MAY BE CREATED OR PERFECTED BY POSSESSION OF ANY
 COUNTERPART OF THIS LEASE SUPPLEMENT OTHER THAN SAID COUNTERPART NO. 1.

<PAGE>

                  IN WITNESS WHEREOF, Lessor and Lessee each have caused this
 Lease Supplement to be duly executed by their authorized officers as of the day
 and year first above written.

                                            LESSOR:

                                            WILMINGTON TRUST COMPANY, not
                                            in its individual capacity but
                                            solely as Trustee.

                                            By:       M. P. Bonilla
                                                  ----------------------------
                                            Name:   MYFANWY PHILLIPS BONILLA
                                                  ----------------------------
                                            Title:  ASSISTANT VICE PRESIDENT
                                                  ----------------------------

                                            LESSEE:

                                            ALOHA AIRLINES, INC.

                                            By:
                                                  ----------------------------
                                            Name:
                                                  ----------------------------
                                            Title:
                                                  ----------------------------

                                            By:
                                                  ----------------------------
                                            Name:
                                                  ----------------------------
                                            Title:
                                                  ----------------------------

<PAGE>

                  IN WITNESS WHEREOF, - Lessor and Les-gee each have caused this
 Lease Supplement to he duly executed by their authorized officers as of the day
 and year first above written.

                                            LESSOR:

                                            WILMINGTON TRUST COMPANY, not
                                            in its individual capacity but
                                            solely as Trustee.

                                            By:
                                                  ----------------------------
                                            Name:
                                                  ----------------------------
                                            Title:
                                                  ----------------------------

                                            LESSEE:

                                            ALOHA AIRLINES, INC.

                                            By:    /s/  Brenda F. Cutwright
                                                  ----------------------------
                                            Name:       Brenda F. Cutwright
                                                  ----------------------------
                                            Title: Sr. Vice President Finance
                                                      & Planning and CFO
                                                  ----------------------------

                                            By:    /s/  James M. King
                                                  ----------------------------
                                            Name:       James M. King
                                                  ----------------------------
                                            Title:  Vice President Planning &
                                                          Development
                                                  ----------------------------

<PAGE>

                    ASSIGNMENT, ASSUMPTION, AMENDMENT AND CONSENT

                   THIS ASSIGNMENT,  ASSUMPTION, AMENDMENT AND CONSENT
 ("Assignment"), dated as of December 26, 1996 is between WILMINGTON TRUST
 COMPANY, not in its individual capacity but solely as Trustee f/b/o ITOCHU
 AirLease (Europe) Limited and Marubeni Airleasing (U.K) Limited ("Lessor"),
 ALOHA AIRLINES, INC., a Hawaii Corporation ("Assignor"), and ALOHA AIRLINES,
 INC., a Delaware corporation ("Assignee").

                                    RECITALS

                   WHEREAS, Lessor and Assignor entered into that certain
 Aircraft Lease Agreement dated as of November 29, 1995, as it may be
 supplemented or amended from time to time (the "Lease"), pursuant to which
 Assignor leased from Lessor one (1) Boeing model 737-25A aircraft bearing
 manufacturer's serial number 23791 and registration mark N819AL (the
 "Aircraft");

                   WHEREAS, effective December 26, 1996, Assignor merged with
 Assignee, and Assignee emerged as the surviving entity and the successor in
 interest to Lessee.

                                    AGREEMENT

                   NOW, THEREFORE, in consideration of these presents and for
other valuable consideration, the parties agree as follows.

                   1. CERTAIN DEFINED TERMS. Unless otherwise defined herein or
 the context otherwise requires, all capitalized terms used in this Assignment
 shall have the respective meanings assigned to them in the Lease.

                   2. ASSIGNMENT. As of December 26, 1996 (the "Effective
 Date"), the Assignor hereby sells, assigns, transfers and conveys to Assignee
 all of the Assignor's right, title and interest in and to the Lease, as if
 Assignee were the original party to the Lease.

                   3. ASSUMPTION BY ASSIGNEE. Assignee hereby accepts the
 foregoing sale, assignment, transfer and conveyance of all of the Assignor's
 right, title, interest, obligations and liabilities in, to and under the Lease
 to the Assignee and, as of the Effective Date, agrees to assume and to be bound
 by all the terms of, and to undertake all of the obligations of the Assignor
 contained in, the Lease, including without limitation, all such obligations
 existing at or prior to, or attributable to acts or events occurring prior to
 the Effective Date.

<PAGE>

                   4. LESSOR CONSENT.

                      (a) Pursuant to Section 8(i) of the Lease, Lessor
acknowledges and consents to the foregoing sale, assignment, transfer and
conveyance of all of the Assignor's right, title, interest, obligations and
liabilities in, to and under the Lease to the Assignee under this Assignment,
and acknowledge the rights and obligations of the Assignee described in this
Assignment.

                      (b) Lessor further acknowledges and agrees that from
and after the Effective Date Assignee shall be deemed the "Lessee" for all
purposes of the Lease and each reference in the Lease to the Assignor as
"Lessee" shall be deemed after the Effective Date for all purposes to refer to
the Assignee and that, from and after the Effective Date Lessor will perform
its obligations under the Lease, in all respects as if Assignee were the
original party to the Lease as "Lessee" thereunder.

                   5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ASSIGNEE.
Assignee represents and warrants as follows:

                   (a) Assignee is a corporation duly organized and existing in
 good standing under the Laws of the State of Delaware and has the corporate
 power and authority to carry on its business as presently conducted and to
 perform its obligations under this Assignment.

                   (b) This Assignment has been duly authorized by all necessary
 corporate action on the part of Assignee and does not require any approval of
 the stockholders of Assignee (or if such approval is required, such approval
 has been obtained), and neither the execution and delivery hereof nor the
 consummation of the transactions contemplated hereby nor compliance by Assignee
 with any of the terms and provisions hereof will contravene any Law applicable
 to Assignee or result in any breach of, or constitute any default under, or
 result in the creation of, any Lien upon any property of Assignee under, any
 credit agreement or instrument, or other agreement or instrument to which
 Assignee is a party or by which Assignee or its properties or assets may be
 bound or affected.

                   (c) Assignee has received or has complied with every
 necessary consent, approval, order, or authorization of, or registration with,
 or the giving of prior notice to, any Governmental Entity having jurisdiction
 with respect to the use and operation of the Aircraft and the execution and
 delivery of this Assignment of the validity and enforceability hereof.

                   (d) This Assignment has been duly entered into and delivered
by Assignee and constitutes a valid, legal and binding

<PAGE>

obligation of Assignee, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, reorganization, moratorium or
other similar Laws and by general principles of equity, whether considered in a
proceeding at Law or in equity.

                   (e) Assignee is a Certified Air Carrier and holds all
licenses, certificates, permits and franchises from the appropriate agencies of
the United States of America and/or all other governmental authorities having
jurisdiction which are necessary to authorize the Assignee to engage in air
transport and to carry on its business as presently conducted and to be
conducted with the Aircraft.

                   (f) Assignee is a "citizen of the United States" as defined
in 40102(a)(15) of Title 49 of the United States Code.

                   6. GOVERNING LAW. This Assignment shall governed by the Laws
of the State of New York.

              [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]

<PAGE>

                  IN WITNESS WHEREOF, the undersigned parties have caused this
Assignment, Assumption, Amendment and Consent to be duly executed and delivered
by their duly authorized officers as of the date first written above.

 ASSIGNOR:                             ALOHA AIRLINES, INC.,
                                       A HAWAII CORPORATION

                                       By:   /s/ Brenda F. Cutwright
                                          ------------------------------------
                                       Name:   BRENDA F. CUTWRIGHT
                                            ----------------------------------
                                       Title:   SR. VICE PRESIDENT FINANCE &
                                                PLANNING AND CFO
                                             ---------------------------------

                                       By:   /s/ Owen Sekimura
                                          ------------------------------------
                                       Name:   OWEN SEKIMURA
                                            ----------------------------------
                                       Title:   STAFF VICE PRESIDENT -
                                                FINANCE & CONTROLLER
                                             ---------------------------------

 ASSIGNEE:                             ALOHA AIRLINES, INC., A
                                       DELAWARE CORPORATION

                                       By:   /s/ Brenda F. Cutwright
                                          ------------------------------------
                                       Name:   BRENDA F. CUTWRIGHT
                                            ----------------------------------
                                       Title:   SR. VICE PRESIDENT FINANCE &
                                                PLANNING AND CFO
                                             ---------------------------------

                                       By:   /s/ Owen Sekimura
                                          ------------------------------------
                                       Name:   Owen Sekimura
                                            ----------------------------------
                                       Title:   STAFF VICE PRESIDENT -
                                                FINANCE & CONTROLLER
                                             ---------------------------------

 LESSOR:                               WILMINGTON TRUST COMPANY, NOT
                                       IN ITS INDIVIDUAL CAPACITY BUT
                                       SOLELY AS TRUSTEE F/B/O ITOCHU
                                       AIRLEASE (EUROPE) LIMITED AND
                                       MARUBENI AIRLEASING (U.K)
                                       LIMITED

                                       By:____________________________________

                                       Name:__________________________________

                                       Title:_________________________________

<PAGE>

                  IN WITNESS WHEREOF, the undersigned parties have caused this
 Assignment, Assumption, Amendment and Consent to be duly executed and delivered
 by their duly authorized officers as of the date first written above.

 ASSIGNOR:                             ALOHA AIRLINES, INC.,
                                       A HAWAII CORPORATION

                                       By:   /s/ Brenda F. Cutwright
                                          ------------------------------------
                                       Name:   BRENDA F. CUTWRIGHT
                                            ----------------------------------
                                       Title:   SR. VICE PRESIDENT FINANCE &
                                                PLANNING AND CFO
                                             ---------------------------------

                                       By:   /s/ Owen Sekimura
                                          ------------------------------------
                                       Name:   OWEN SEKIMURA
                                            ----------------------------------
                                       Title:   STAFF VICE PRESIDENT -
                                                FINANCE & CONTROLLER
                                             ---------------------------------

 ASSIGNEE:                             ALOHA AIRLINES, INC., A
                                       DELAWARE CORPORATION

                                       By:   /s/ Brenda F. Cutwright
                                          ------------------------------------
                                       Name:   BRENDA F. CUTWRIGHT
                                            ----------------------------------
                                       Title:   SR. VICE PRESIDENT FINANCE &
                                                PLANNING AND CFO
                                             ---------------------------------

                                       By:   /s/ Owen Sekimura
                                          ------------------------------------
                                       Name:   Owen Sekimura
                                            ----------------------------------
                                       Title:   STAFF VICE PRESIDENT -
                                                FINANCE & CONTROLLER
                                             ---------------------------------

 LESSOR:                               WILMINGTON TRUST COMPANY, NOT
                                       IN ITS INDIVIDUAL CAPACITY BUT
                                       SOLELY AS TRUSTEE F/B/O ITOCHU
                                       AIRLEASE (EUROPE) LIMITED AND
                                       MARUBENI AIRLEASING (U.K)
                                       LIMITED

                                       By:____________________________________

                                       Name:__________________________________

                                       Title:_________________________________

<PAGE>

                   IN WITNESS WHEREOF, the undersigned parties have caused this
 Assignment, Assumption, Amendment and Consent to be duly executed and delivered
 by their duly authorized officers as of the date first written above.

 ASSIGNOR:                             ALOHA AIRLINES, INC.,
                                       A HAWAII CORPORATION

                                       By:   /s/ Brenda F. Cutwright
                                          ------------------------------------
                                       Name:   BRENDA F. CUTWRIGHT
                                            ----------------------------------
                                       Title:   SR. VICE PRESIDENT FINANCE &
                                                PLANNING AND CFO
                                             ---------------------------------

                                       By:   /s/ Owen Sekimura
                                          ------------------------------------
                                       Name:   OWEN SEKIMURA
                                            ----------------------------------
                                       Title:   STAFF VICE PRESIDENT -
                                                FINANCE & CONTROLLER
                                             ---------------------------------

 ASSIGNEE:                             ALOHA AIRLINES, INC., A
                                       DELAWARE CORPORATION

                                       By:   /s/ Brenda F. Cutwright
                                          ------------------------------------
                                       Name:   BRENDA F. CUTWRIGHT
                                            ----------------------------------
                                       Title:   SR. VICE PRESIDENT FINANCE &
                                                PLANNING AND CFO
                                             ---------------------------------

                                       By:   /s/ Owen Sekimura
                                          ------------------------------------
                                       Name:   Owen Sekimura
                                            ----------------------------------
                                       Title:   STAFF VICE PRESIDENT -
                                                FINANCE & CONTROLLER
                                             ---------------------------------

 LESSOR:                               WILMINGTON TRUST COMPANY, NOT
                                       IN ITS INDIVIDUAL CAPACITY BUT
                                       SOLELY AS TRUSTEE F/B/O ITOCHU
                                       AIRLEASE (EUROPE) LIMITED AND
                                       MARUBENI AIRLEASING (U.K)
                                       LIMITED

                                       By:____________________________________

                                       Name:__________________________________

                                       Title:_________________________________

<PAGE>

                                     CONSENT

                  THIS CONSENT is made this ______ day of ________________,
1996 by WILMINGTON TRUST COMPANY, not in its individual capacity but solely as
Trustee f/b/o ITOCHU AirLease (Europe) Limited and Marubeni Airleasing (U.K)
Limited ("Lessor") in favor of Aloha Airlines, Inc., a Hawaii corporation
("Aloha Hawaii") and Aloha Airlines, Inc., a Delaware corporation ("Aloha
Delaware").

                                    RECITALS

                  WHEREAS, Lessor and Aloha Hawaii entered into that certain
 Aircraft Lease Agreement dated as of November 29, 1995 (the "Lease"), pursuant
 to which Aloha Hawaii leased from Lessor one (1) Boeing model 737-25A aircraft
 bearing manufacturer's serial number 23791 and registration mark N819AL (the
 "Aircraft");

                  WHEREAS, Aloha Hawaii and Aloha Delaware are wholly owned
 subsidiaries of Aloha Airgroup, Inc., a Hawaii corporation.

 WHEREAS, effective ____________________________________, 1996, Aloha Hawaii
 merged with Aloha Delaware, and Aloha Delaware emerged as the surviving entity
 and the successor in interest to Aloha Hawaii.

                  WHEREAS, as a result of the merger, all of the assets and
 liabilities of Aloha Hawaii, including the Lease, will become assets and
 liabilities of Aloha Delaware by operation of law.

                  WHEREAS, Aloha Hawaii has requested that Lessor consent to the
 merger and the transfer by operation of law of the Lease and the Notice of
 Assignment to Aloha Delaware.

                  NOW, THEREFORE, in consideration of these presents and for
 other valuable consideration, Lessor does hereby consent to the merger of Aloha
 Hawaii with and into Aloha Delaware and the transfer by operation of law of the
 Lease to Aloha Delaware, upon and subject to the condition that this consent
 shall not be construed as authorizing any other or further assignment of the
 Lease, and that all of the rights of the undersigned as set forth in the Lease
 are expressly reserved.

<PAGE>

                  IN WITNESS WHEREOF, the undersigned has executed this Consent
  as of the date first written above.

  LESSOR:                               WILMINGTON TRUST COMPANY,
                                        NOT IN ITS INDIVIDUAL
                                        CAPACITY BUT SOLELY AS
                                        TRUSTEE F/B/O ITOCHU
                                        AIRLEASE (EUROPE) LIMITED
                                        AND MARUBENI AIRLEASING
                                        (U.K) LIMITED

                                        By________________________________

                                        Name______________________________

                                        Title_____________________________

<PAGE>

                                LEASE ASSIGNMENT

         This Lease Assignment (this "Agreement") dated as of August 7, 1998 is
 entered into by and between (1) ITOCHU Airlease Limited, a company formed under
 the laws of the Republic of Ireland ("ITOCHU"), (ii) MA-Lease Limited, a
 company duly formed under the laws of England ("Marubeni"), (iii) Wilmington
 Trust Company, not in its individual capacity but solely as trustee f/b/o
 ITOCHU and Marubeni ("Trustee", and together With ITOCHU and Marubeni, each, an
 "Assignor" and collectivelly, "Assignors"), and Boeing Capital Corporation, a
 company duly formed under the laws of Delaware (the "Assignee").

                                    RECITALS

         WHEREAS, Trustee is the Lessor, under that certain Aircraft Lease
Agreement dated as of November 29, 1995 and recorded with the Federal
Aviation  Administration on ________, 199__, and assigned conveyance number
____________, with Aloha Airlines,  Inc., as the Lessee, as supplemented by
Lease Supplement No. 1 and as amended  and supplemented by Letter Agreement
No. 1 dated as of November 29, 1995  (collectively, the "Lease"), covering
one (1) Boeing 737-25A aircraft (as more  particularly described under the
Lease, the "Aircraft"),

         WHEREAS, pursuant to that certain Aircraft Purchase Agreement dated
as of August _________, 1998 (the "Purchase Agreement"), by and between
Assignors and Assignee, Assignors desire to assign, and Assignee desires to
accept, the assignment of the Assignors' rights, titles, interest in, to and
under the Lease;

         NOW, THEREFORE, in consideration of the premises and mutual agreements
 contained herein and for other good and valuable consideration, receipt of
 which is hereby acknowledged, the parties hereto agree as follows,

         Section 1, DEFINITIONS. Terms used herein but not defined shall have
the meanings set forth in the Lease.

         Section 2. ASSIGNMENT.  Assignor  hereby  assigns  to  Assignee  and
Assignee  hereby  accepts,  all of Assignors' right, title and interest under
the Lease.

         Section 3. ASSUMPTION OF  OBLIGATIONS. Assignee hereby assumes all
obligations of the Assignors under the Lease to the extent arising from and
after the date hereof,

         Section 4. AMENDMENTS TO THE LEASE. With respect to events occurring on
 and after the date hereof, all references to "Beneficiaries" contained in the
 Lease shall be deemed to be references to Lessor.

          Section 5. CONCERNING THE TRUSTEE. Wilmington Trust Company is
 entering into this Agreement solely in its capacity as Trustee under the Trust
 Agreement, except as otherwise expressly provided herein, and Wilmington Trust
 Company (or any successor Trustee) shall not be personally liable for or on
 account of any of the statements, representations, warranties, covenants or
 obligations of the Assignor hereunder; provided, however, that Wilmington Trust
 Company (or any other successor Trustee) shall be liable hereunder for its own
 gross negligence or willful misconduct or for breach of its covenants or its
 representations. and warranties to the extent covenanted or made in its
 individual capacity. extent covenanted or made in its individual capacity.

<PAGE>

        Section 6. MISCELLANEOUS.

        (a) This Agreement may be signed in one or more counterparts with the
same effect as if the signatures in each counterpart were upon a single
document. All counterparts shall be considered an original hereof.

        (b) The terms and provisions hereof shall inure to the benefit of and
be binding on the parties hereof and their respective successors and assigns.

        (c) This Agreement shall in all respects be governed by and construed
in accordance with the laws of the State of New York, including all matters
of construction, validity, and performance.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.

WILMINGTON TRUST COMPANY                       ITOCHU AIRLEASE LIMITED
not in its individual capacity but as          ("Assignor")
trustee ("Assignor")

By:    /s/ Bruce L. Besson                      By:      [Illegible]
     ------------------------------                  -------------------------
Name:  Bruce L. Besson                          Name:
     ------------------------------                  -------------------------
Title: V.P.                                     Title: ATTORNEY IN FACT
     ------------------------------                  -------------------------

MA-LEASE LIMITED                                BOEING CAPITAL CORPORATION
("Assignor")                                    ("Assignor")

By:    [Illegible]                              By:  /s/  Stephen J. Novak
     ------------------------------                  -------------------------
Name:                                           Name: Vice President
     ------------------------------                  -------------------------
Title: ATTORNEY IN FACT                         Title: Stephen J. Novak
     ------------------------------                  -------------------------

                                        2

<PAGE>

                                     CONSENT

          Reference is hereby made to the attached Lease Assignment (capitalized
 terms used herein without definition are used with the same meaning as in the
 Lease Assignment). The undersigned hereby consents to the assignment and
 assumption set forth therein and acknowledges that the Assignors shall, from
 and after the date hereof, be released from all further obligations under the
 Lease, except that such release shall not affect any liability arising on or
 before the effective date of the Lease Assignment.

          The undersigned hereby also agrees that Aloha Airlines, Inc. shall
 cause each of the Assignors to be added as an additional insured under the
 liability insurance policies required to be maintained by Aloha Airlines, Inc.,
 as Lessee, pursuant to the Lease. Aloha Airlines, Inc. agrees that its
 obligations to maintain such insurance shall continue until the earlier to
 occur of (i) two years after the date hereof, and (ii) the D check or its
 equivalent first occurring after the date hereof.

          IN WITNESS WHEREOF, the undersigned has executed this Consent as of
August 7, 1998.

ALOHA AIRLINES, INC.

By: /s/   Brenda F. Cutwright
    ---------------------------------
Name:  Brenda F. Cutwright
    ---------------------------------
       Sr. Vice President Finance &
Title:     Planning and CFO
    ---------------------------------

By: /s/   James M. King
    ---------------------------------
Name:   James M. King
    ---------------------------------
           Vice President
Title:  Planning & Development
    ---------------------------------

                                        3

<PAGE>

                                     CONSENT

          Reference Is hereby made to the attached Lease Assignment (capitalized
 terms used herein without definition are used with the same meaning as in the
 Lease Assignment). The undersigned hereby consents to the assignment and
 assumption set forth therein and acknowledges that the Assignors shall, from
 and after the date hereof, be released from all further obligations under the
 Lease, except that such release shall not affect any liability arising on or
 before the effective date of the Lease Assignment.

          The undersigned hereby also agrees that Aloha Airlines, Inc. shall
 cause each of the Assignors to be added as an additional insured under the
 liability insurance policies required to be maintained by Aloha Airlines, Inc.,
 as Lessee, pursuant to the Lease. Aloha Airlines, Inc. agrees that its
 obligations to maintain such insurance shall continue until the earlier to
 occur of (i) two years after the date hereof, and (ii) the D check or its
 equivalent first occurring after the date hereof.

          IN WITNESS WHEREOF, the undersigned has executed this Consent as of
August 7, 1998.

ALOHA AIRLINES, INC.

By: /s/   Brenda F. Cutwright
    ---------------------------------
Name:     Brenda F. Cutwright
    ---------------------------------
       Sr. Vice President Finance &
Title:     Planning and CFO
    ---------------------------------

By: /s/     James M. King
    ---------------------------------
Name:       James M. King
    ---------------------------------
           Vice President
Title:  Planning & Development
    ---------------------------------

                                        3

<PAGE>

                                     CONSENT

          Reference is hereby made to the attached Lease Assignment (capitalized
 terms used herein without definition are used with the same meaning as in the
 Lease Assignment). The undersigned hereby consents to the assignment and
 assumption set forth therein and acknowledges that the Assignors shall, from
 and after the date hereof, be released from all further obligations under the
 Lease, except that such release shall not affect any liability arising on or
 before the effective date of the Lease Assignment.

          The undersigned hereby also agrees that Aloha Airlines, Inc. shall
 cause each of the Assignors to be added as an additional insured under the
 liability insurance policies required to be maintained by Aloha Airlines, Inc.,
 as Lessee, pursuant to the Lease. Aloha Airlines, Inc. agrees that its
 obligations to maintain such insurance shall continue until the earlier to
 occur of (i) two years after the date hereof, and (ii) the D check or its
 equivalent first occurring after the date hereof.

          IN WITNESS WHEREOF, the undersigned has executed this Consent as of
August ___,1998.

 ALOHA AIRLINES, INC.

 By:
      ---------------------------------
 Name:
      ---------------------------------
 Title.
      ---------------------------------

 By:
      ---------------------------------
 Name:
      ---------------------------------
 Title:
      ---------------------------------

<PAGE>

                      LEASE EXTENSION AND AMENDMENT AGREEMENT

THIS LEASE EXTENSION AND AMENDMENT AGREEMENT (this "Agreement") dated as of
November ____, 2001, is by and between BOEING CAPITAL CORPORATION, a Delaware
corporation ("Lessor") and ALOHA AIRLINES, a Delaware corporation ("Lessee).

                                   WITNESSETH

WHEREAS, Lessor (as successor to Wilmington Trust Company, not in its individual
capacity but solely as trustee f/b/o ITOCHU AirLease (Europe) Limited and
Marubeni Airleasing (U.K) Limited, pursuant to certain Purchase Agreement and
Assignment Agreement dated June 22, 1998) are parties to Aircraft Lease
Agreement dated as of November 29, 1995 and filed with the Federal Aviation
Administration ("FAA") on January 25, 1996 as conveyance no. 11004730 (the
"Lease") as supplemented by Lease Supplement No. 1 filed with the FAA on
_________________________ as conveyance no. _________________________, as
further supplemented by Lease Supplement No. 2 filed with the FAA on April 29,
1996 as conveyance no. 22011203 (collectively the "Supplement"). The Lease and
the Lease Supplement shall be collectively referred to as the "Lease Agreement."

WHEREAS, pursuant to the Lease Agreement, Lessee agreed to lease from Lessor one
(1) Boeing Model 737-25A aircraft bearing manufacturer's serial number 23791
(the "Aircraft") for a term of ninety-six (96) months;

WHEREAS, Lessee desires to extend the lease Expiration Date from December 1,
2003 to February 1, 2004 and Lessor is willing to agree to this extension; and

WHEREAS, the parties hereto further desire to amend the Lease Agreement upon the
terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS

Except as otherwise defined in this Agreement the capitalized terms used herein
shall have the meanings attributed thereto in the Lease Agreement.

                                     Page 1

<PAGE>

SECTION 2. AMENDMENTS

The Lease Agreement is hereby amended in the following manner:

     2.1 Section 4.(a)(i) entitled "Basic Rent" is hereby deleted in its
entirety and the following is inserted in lieu thereof:

     "(i) BASIC RENT: The Basic Rent as set forth on Exhibit C-1 hereto
     throughout the Term hereof, payable in consecutive installments in arrears
     on each Basic Rent Payment Date."

     2.2 Exhibit C-1 definition "Basic Rent" is hereby deleted in its entirety
and the following is inserted in lieu thereof:

     [This provision has been omitted as confidential information, and
     is separately filed with the Commission.]

     2.3 Exhibit C-1 definition "Casualty Value" is hereby deleted in its
entirety and the following is inserted in lieu thereof:

     [This provision has been omitted as confidential information, and
     is separately filed with the Commission.]

     2.4 Exhibit C-1 definition "Security Deposit" is hereby deleted in its
entirety and the following is inserted in lieu thereof:

     [This provision has been omitted as confidential information, and
     is separately filed with the Commission.]

     2.5 Exhibit C-1 definition "Security Letter of Credit" is hereby deleted in
its entirety.

     2.6 Exhibit D, Article 3 is hereby deleted in its entirety and revised to
reflect the new expiration date of February 1, 2004. The following is inserted
in lieu thereof:

     "3. The term for the Delivered Aircraft shall commence on the Delivery Date
     and shall end on the Expiration Date, which shall be February 1, 2004."

                                     Page 2

<PAGE>

SECTION 3. TRANSFER OF PAYMENTS

     [This provision has been omitted as confidential information, and
is separately filed with the Commission.]

SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS

     4.1 REPRESENTATIONS AND WARRANTIES. Lessee hereby repeats the
representations and warranties in Section 3 of the Lease Agreement as if made
with reference to the facts and circumstances existing as at the date hereof and
as if the references in such representations and warranties to this Agreement
refer not to the Lease but rather to the Lease Agreement as amended by this
Agreement.

SECTION 5. CONDITIONS PRECEDENT

     This Agreement is subject to the satisfaction of each of the following
conditions or receipt of documents by Lessor, each in form and substance
satisfactory to Lessor:

     5.1 CORPORATE ACTION. Lessee, must have furnished to Lessor satisfactory
proof that Lessee has taken all corporate action necessary to authorize this
Agreement.

     5.2 OPINION OF COUNSEL. Lessor shall have received a legal opinion from
Lessee's counsel in form and substance satisfactory to Lessor and confirming,
INTER ALIA, that this Agreement has (i) been duly signed and delivered on behalf
of Lessee, (ii) that the representations, warranties and covenants of Lessee set
forth in this Agreement are valid and legally binding obligations of Lessee,
enforceable in accordance with their respective terms in the jurisdictions in
which the Aircraft will be registered, operated and located; (iii) this
Agreement and all other necessary documents have been, or will be, duly filed,
registered and recorded as necessary with the aviation or other comparable
authority in all places as may be necessary and all other action has been taken
to fully protect Lessor's title to the Aircraft against all persons whomsoever
(specifying in such opinion the location and nature of all such filings,
registrations or recordings); (iv) upon termination of the Lease Agreement for
any reason, Lessor will be able to promptly take possession of the Aircraft and
immediately return the Aircraft to facilities in the United States designated by
Lessor in a manner satisfactory to Lessor.

     5.3 APPROVAL OF LESSOR'S COUNSEL. All documents incident to this
transaction will satisfactory to counsel for Lessor.

     5.4 ADDITIONAL INFORMATION. Lessee must have furnished Lessor with any
other opinions, documents, evidence, materials and information as Lessor may
reasonably request.

                                     Page 3

<PAGE>

     5.5 ENGLISH. All certificates, opinions, statements, evidence, proof,
documents, materials and information required under this Section must be
furnished in English.

     5.6 INSURANCE. Lessee must have furnished to Lessor certificates of
insurance evidencing the insurance required under the Lease as extended hereby.

SECTION 6. CONDITIONS SUBSEQUENT

     6.1 RECORDATION. Immediately following execution of this Agreement by
Lessor and Lessee, the Agreement will be filed for recordation by Lessee with
the FAA, and all other necessary action will be taken by Lessee to fully protect
the title of Lessor in the Aircraft. Lessee agrees that failure to effect such
filings, registrations and/or recordations as of the date falling 2 weeks after
execution by the last party to execute this Agreement shall constitute an "Event
of Default" under the Lease Agreement and Lessor shall have the right to
exercise all remedies available to it under Section 13 of the Lease Agreement
with respect to such Event of Default.

SECTION 7. MISCELLANEOUS

     7.1 HEADINGS. The section and paragraph headings in this Agreement are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.

     7.2 CHOICE OF LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.

     7.3 COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

     7.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of, and shall be enforceable by and against, the parties
hereto and their respective successors and permitted assigns.

     7.5 EFFECT OF AGREEMENTS. Except as expressly amended hereby, the Lease
Agreement is and shall continue in full force and effect.

                                     Page 4

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.

                                     BOEING CAPITAL CORPORATION

                                     By:  /s/ [ILLEGIBLE]
                                         -------------------------------

                                     Its: Vice President
                                         -------------------------------

                                     ALOHA AIRLINES, INC.

                                     By:
                                         -------------------------------

                                     Its:
                                         -------------------------------

                                     By:
                                         -------------------------------

                                     Its:
                                         -------------------------------

                                     Page 5

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.

                                     BOEING CAPITAL CORPORATION

                                     By:
                                         -------------------------------

                                     Its:
                                         -------------------------------

                                     ALOHA AIRLINES, INC.

                                     By:  /s/ Brenda F. Cutwright
                                         -------------------------------
                                          BRENDA F. CUTWRIGHT

                                     Its: EXECUTIVE VICE PRESIDENT & CFO
                                         -------------------------------

                                     By:  /s/ James M. King
                                         -------------------------------
                                          JAMES M. KING

                                     Its: SENIOR VICE PRESIDENT PLANNING
                                          AND BUSINESS DEVELOPMENT
                                         -------------------------------

                                     Page 5

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.

                                     BOEING CAPITAL CORPORATION

                                     By:  /s/ [ILLEGIBLE]
                                         -------------------------------

                                     Its: Vice President
                                         -------------------------------

                                     ALOHA AIRLINES, INC.

                                     By:
                                         -------------------------------

                                     Its:
                                         -------------------------------

                                     By:
                                         -------------------------------

                                     Its:
                                         -------------------------------

                                     Page 5

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