Document:

AIRCRAFT LEASE AGREEMENT

                          Dated as of September 5, 2000

                                     BETWEEN

                            AMERICAN TRANS AIR, INC.

                                    as LESSEE

                                       and

                     INTERNATIONAL LEASE FINANCE CORPORATION

                                    as LESSOR

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 Aircraft Make and Model:                New Boeing 737-800
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 Aircraft Manufacturer's Serial Number:  28246
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 Aircraft Registration Mark:             Per Estoppel and Acceptance Certificate
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 Make and Model of Engines:              CFM56-7B-27
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 Serial Numbers of Engines:              Per Estoppel and Acceptance Certificate
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                       NEW BOEING 737-800 AIRCRAFT NO. 8

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                                TABLE OF CONTENTS

ARTICLE 1       SUMMARY OF TRANSACTION.........................................2
      1.1       Description of Aircraft........................................2
      1.2       Scheduled Delivery Date and Location...........................2
      1.3       Lease Term.....................................................2
      1.4       Security Deposit...............................................2
      1.5       Transaction Fee................................................2
      1.6       Rent During Lease Term.........................................2
      1.7       Country of Aircraft Registration...............................4
      1.8       Maintenance Program............................................4
      1.9       Agreed Value of Aircraft.......................................4
      1.10      LESSOR's Bank Account..........................................4

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

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

ARTICLE 4       LEASE TERM....................................................12
      4.1       Lease Term....................................................12
      4.2       "Expiration Date".............................................12
      4.3       "Termination Date"............................................12

ARTICLE 5       SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER
                PAYMENTS......................................................13
      5.1       Security Deposit..............................................13
      5.2       Transaction Fee...............................................14
      5.3       Rent..........................................................14
      5.4       LESSOR's Bank Account.........................................15
      5.5       Default Interest..............................................16
      5.6       No Deductions or Withholdings.................................16
      5.7       Value Added Taxes.............................................16
      5.8       Net Lease.....................................................17
      5.9       LESSOR Performance of LESSEE Obligation.......................18
      5.10      Consideration for Rent and other Amounts......................18

ARTICLE 6       INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19
      6.1       LESSEE Selection of Aircraft..................................19
      6.2       Agency Agreement..............................................19
      6.3       Procurement of BFE............................................19
      6.4       Assignment of Training........................................19
      6.5       LESSEE Inspection of Aircraft.................................19
      6.6       Aircraft at Delivery..........................................19
      6.7       Delivery of the Aircraft to LESSEE............................20
      6.8       LESSEE Acceptance of Aircraft.................................20

ARTICLE 7       PRE-DELIVERY, DELIVERY AND POST-DELIVERY
                DOCUMENTARY AND OTHER REQUIREMENTS............................21
      7.1       Pre-Delivery Requirements.....................................21
      7.2       Delivery Requirements.........................................22
      7.3       Post-Delivery Requirements....................................23

ARTICLE 8       DISCLAIMERS...................................................24
      8.1       "As Is, Where Is".............................................24
      8.2       Waiver of Warranty of Description.............................24
      8.3       LESSEE Waiver.................................................25
      8.4       Conclusive Proof..............................................25
      8.5       No LESSOR Liability for Losses................................25
      8.6       No Liability to Repair or Replace.............................25
      8.7       No Waiver.....................................................26

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

ARTICLE 10      OPERATION OF AIRCRAFT.........................................28
      10.1      Costs of Operation............................................28
      10.2      Compliance with Laws..........................................28
      10.3      Training......................................................28
      10.4      No Violation of Insurance Policies............................28
      10.5      Flight Charges................................................29

ARTICLE 11      SUBLEASES.....................................................30
      11.1      No Sublease without LESSOR Consent............................30
      11.2      LESSOR Costs..................................................30
      11.3      Any Approved Sublease.........................................30
      11.4      Assignment of Sublease........................................30
      11.5      Continued Responsibility of LESSEE............................30

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

ARTICLE 13      TITLE AND REGISTRATION........................................37
      13.1      Title to the Aircraft During Lease Term.......................37
      13.2      Registration of Aircraft......................................37
      13.3      Filing of this Lease..........................................37
      13.4      Evidence of Registration and Filings..........................37

ARTICLE 14      IDENTIFICATION PLATES.........................................38
      14.1      Airframe Identification Plates................................38
      14.2      Engine Identification Plates..................................38

ARTICLE 15      TAXES.........................................................39
      15.1      General Obligation of LESSEE..................................39
      15.2      Exceptions to Indemnity.......................................39
      15.3      After-Tax Basis...............................................40
      15.4      Claims and Contests...........................................40
      15.5      Refunds.......................................................41
      15.6      Cooperation in Filing Tax Returns.............................41

ARTICLE 16      INDEMNITIES...................................................42
      16.1      General Indemnity.............................................42
      16.2      Exceptions to General Indemnities.............................43
      16.3      After-Tax Basis...............................................44
      16.4      Timing of Payment.............................................44
      16.5      Subrogation...................................................44
      16.6      Notice........................................................44
      16.7      Refunds.......................................................44
      16.8      Defense of Claims.............................................45
      16.9      Survival of Obligation........................................45

ARTICLE 17      INSURANCE.....................................................46
      17.1      Categories of Insurance.......................................46
      17.2      Insurance for Indemnities.....................................46
      17.3      Insurance required by Manufacturer............................46
      17.4      Renewal.......................................................46
      17.5      Assignment of Rights by LESSOR................................46
      17.6      Deductibles...................................................46
      17.7      Other Insurance...............................................47
      17.8      Information...................................................47
      17.9      Currency......................................................47
      17.10     Grounding of Aircraft.........................................47
      17.11     Failure to Insure.............................................47
      17.12     Limit on Hull in favor of LESSEE..............................47
      17.13     Marketplace Limitations.......................................48

ARTICLE 18      LOSS, DAMAGE AND REQUISITION..................................49
      18.1      Definitions...................................................49
      18.2      Notice of Total Loss..........................................50
      18.3      Total Loss of Aircraft or Airframe............................50
      18.4      Surviving Engine(s)...........................................51
      18.5      Total Loss of Engine and not Airframe.........................51
      18.6      Other Loss or Damage..........................................52
      18.7      Copy of Insurance Policy......................................53
      18.8      Government Requisition........................................53
      18.9      Conveyance to LESSEE..........................................53

ARTICLE 19      CRAF PROGRAM..................................................54
      19.1      Dedication to CRAF............................................54
      19.2      Notice to LESSOR..............................................54
      19.3      Requisition of Engine.........................................54
      19.4      Government Indemnification....................................54
      19.5      No Geographic Limits..........................................54
      19.6      Notice of Default.............................................55
      19.7      Receipt of Payments...........................................55

ARTICLE 20      REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56
      20.1      Representations and Warranties................................56
      20.2      Covenants.....................................................58

ARTICLE 21      REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61
      21.1      Representations and Warranties................................61
      21.2      Covenant of Quiet Enjoyment...................................62

ARTICLE 22      FINANCIAL AND RELATED INFORMATION.............................63

ARTICLE 23      RETURN OF AIRCRAFT............................................64
      23.1      Date of Return................................................64
      23.2      Technical Report..............................................64
      23.3      Return Location...............................................64
      23.4      Full Aircraft Documentation Review............................64
      23.5      Aircraft Inspection...........................................64
      23.6      Certificate of Airworthiness Matters..........................65
      23.7      General Condition of Aircraft at Return.......................66
      23.8      Checks Prior to Return........................................69
      23.9      Part Lives....................................................72
      23.10     Export and Deregistration of Aircraft.........................74
      23.11     LESSEE's Continuing Obligations...............................75
      23.12     Airport and Navigation Charges................................75
      23.13     Return Acceptance Certificate.................................76
      23.14     Indemnities and Insurance.....................................76

ARTICLE 24      ASSIGNMENT....................................................77
      24.1      No Assignment by LESSEE.......................................77
      24.2      Sale or Assignment by LESSOR..................................77
      24.3      LESSOR's Lender...............................................79
      24.4      LESSEE Cooperation............................................79
      24.5      Protections...................................................79

ARTICLE 25      DEFAULT OF LESSEE.............................................80
      25.1      LESSEE Notice to LESSOR.......................................80
      25.2      Events of Default.............................................80
      25.3      LESSOR's General Rights.......................................82
      25.4      Deregistration and Export of Aircraft.........................83
      25.5      LESSEE Liability for Damages..................................83
      25.6      Waiver of Default.............................................84
      25.7      Present Value of Payments.....................................84
      25.8      Use of "Termination Date".....................................84

ARTICLE 26      NOTICES.......................................................85
      26.1      Manner of Sending Notices.....................................85
      26.2      Notice Information............................................85

ARTICLE 27      GOVERNING LAW AND JURISDICTION................................86
      27.1      California Law................................................86
      27.2      Non-Exclusive Jurisdiction in California......................86
      27.3      Service of Process............................................86
      27.4      Prevailing Party in Dispute...................................86
      27.5      Waiver........................................................86

ARTICLE 28      MISCELLANEOUS.................................................87
      28.1      Press Releases................................................87
      28.2      LESSOR Performance for LESSEE.................................87
      28.3      LESSOR's Payment Obligations..................................87
      28.4      Application of Payments.......................................87
      28.5      Usury Laws....................................................87
      28.6      Delegation by LESSOR..........................................87
      28.7      Confidentiality...............................................88
      28.8      Rights of Parties.............................................88
      28.9      Further Assurances............................................88
      28.10     Use of Word "including".......................................88
      28.11     Headings......................................................88
      28.12     Invalidity of any Provision...................................88
      28.13     Negotiation...................................................88
      28.14     Time is of the Essence........................................89
      28.15     Amendments in Writing.........................................89
      28.16     Counterparts..................................................89
      28.17     Delivery of Documents by Fax..................................89
      28.18     Entire Agreement..............................................89

EXHIBIT A       AIRCRAFT DESCRIPTION..........................................91

EXHIBIT B       AGENCY AGREEMENT..............................................92

EXHIBIT C       CERTIFICATE OF INSURANCE......................................96

EXHIBIT D       BROKERS' LETTER OF UNDERTAKING...............................102

EXHIBIT E       ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104

EXHIBIT F       OPINION OF COUNSEL...........................................111

EXHIBIT G       ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114

EXHIBIT H       ASSIGNMENT OF RIGHTS (ENGINES)...............................119

EXHIBIT I       RETURN ACCEPTANCE RECEIPT....................................123

EXHIBIT J       MONTHLY REPORT...............................................134

EXHIBIT K       AIRCRAFT DOCUMENTATION.......................................138

EXHIBIT L       TECHNICAL EVALUATION REPORT..................................140

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                            AIRCRAFT LEASE AGREEMENT

     THIS AIRCRAFT  LEASE  AGREEMENT is made and entered into as of September 5,
2000.

         BETWEEN:

     AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal
place of business is at 7337 West Washington Street,  Indianapolis International
Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and

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

     The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In
consideration  of and  subject to the  mutual  covenants,  terms and  conditions
contained  in this  Lease,  LESSOR  hereby  agrees to lease to LESSEE and LESSEE
hereby agrees to lease from LESSOR the aircraft and the parties further agree as
follows:

<PAGE>

         ARTICLE 1             SUMMARY OF TRANSACTION

     The  information  in this  Article 1 is a summary of the lease  transaction
between  LESSEE and LESSOR.  It is set forth for the  convenience of the parties
only and will not be deemed in any way to amend,  detract  from or simplify  the
other provisions of this Lease.

     1.1 DESCRIPTION OF AIRCRAFT

     One new Boeing 737-800 aircraft

     1.2 SCHEDULED DELIVERY DATE AND LOCATION

     In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington

     1.3 LEASE TERM

     15 years

     1.4 SECURITY DEPOSIT

     (CONFIDENTIAL MATERIAL OMITTED)

     1.5 TRANSACTION FEE

     (CONFIDENTIAL MATERIAL OMITTED)

     1.6 RENT DURING LEASE TERM

     Payable monthly in advance and equal to the sum of:

     (a The following amounts for the following years of the Lease Term:

            LEASE PERIOD                       MONTHLY RENTAL AMOUNT*

            (CONFIDENTIAL MATERIAL OMITTED)

     *The above base rent is  expressed  in January  1999  U.S.Dollars  and will
increase in the following amounts for the following periods:

            PERIOD                             ESCALATION FACTOR

            (CONFIDENTIAL MATERIAL OMITTED)

<PAGE>

     1.7 COUNTRY OF AIRCRAFT REGISTRATION

     U.S.

     1.8 MAINTENANCE PROGRAM

     LESSEE's Maintenance Program

     1.9 AGREED VALUE OF AIRCRAFT

     (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001
U.S.  Dollars and will  increase in  accordance  with  Manufacturer's  announced
escalation  rate from March 1, 2001 to the Delivery Date. On each annual renewal
date of LESSEE's  insurance policy  commencing on the renewal date following the
first  anniversary  of the Lease  Term,  the Agreed  Value will  decrease by two
percent (2.0%) of the then existing Agreed Value.

     1.10 LESSOR'S BANK ACCOUNT

          (Confidential Material Omitted)

<PAGE>

         ARTICLE 2             DEFINITIONS

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

     2.1 GENERAL DEFINITIONS.

                "ACT" means the Federal  Aviation  Act of 1958,  as amended from
time to time, or any successor act thereto.

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

                "AIRCRAFT  DOCUMENTATION"  means  all  (a) log  books,  Aircraft
records,  manuals and other documents  provided to LESSEE in connection with the
Aircraft,  (b) documents  listed in Exhibits E and K and (c) any other documents
required  to be  maintained  during  the Lease Term by the  Aviation  Authority,
LESSEE's Maintenance Program and this Lease.

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

                "AIRWORTHINESS  DIRECTIVES"  or "ADS"  means  all  airworthiness
directives (or equivalent) of the FAA and the Aviation  Authority  applicable to
the Aircraft.

                "APU" means the auxiliary power unit of the Aircraft.

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

<PAGE>

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

                "BANKRUPTCY  CODE" means The  Bankruptcy  Reform Act of 1978 (11
U.S.C. ss.ss.  101-1330),  as amended or supplemented from time to time, and any
successor statute, and all of the rules and regulations issued or promulgated in
connection therewith.

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

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

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

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

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

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

<PAGE>

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

                "DELIVERY DATE" means the date on which Delivery takes place.

                "DOLLARS" and "$" means the lawful currency of the U.S.

                "ENGINE"  means (a) each of the engines  listed on the  Estoppel
and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and
leased to LESSEE  pursuant to Article 18.5  following a Total Loss of an Engine;
including  in each  case all Parts  installed  in or on any of such  engines  at
Delivery (or substituted,  renewed or replacement  Parts in accordance with this
Lease) so long as title  thereto  is or remains  vested in LESSOR in  accordance
with the terms of Article 12.3.

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

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

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

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

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

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

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

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

<PAGE>

                "LESSOR'S LIEN" means any Security  Interest  created by LESSOR,
or arising from a claim against LESSOR completely unrelated to this Lease or the
other Operative Documents.

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

                "MANUFACTURER" means The Boeing Company, a Delaware corporation.

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

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

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

                "PERMITTED   INSTITUTION"   means  any  Person   (other  than  a
commercial air carrier, a commercial aircraft operator, a freight forwarder,  or
an affiliate of any of the foregoing),  with either:  (a) a combined capital and
surplus or net worth of at least; or (b) have a credit rating on the majority of
its  unsecured  debt  which is at  least  equal  to BBB or its  equivalent  from
Standard and Poor's Rating Group, a division of The McGraw-Hill Companies,  Inc.
or Moody's Investors Service, Inc.

<PAGE>

                "PERMITTED   LIEN"  means  (a)  LESSOR's  Liens;   (b)  Security
Interests  arising in the ordinary course of LESSEE's  business for Taxes either
not yet due and payable or, if due and payable, being contested in good faith in
accordance  with  Article  15.4;  (c)  materialmen's,   mechanics',   workmen's,
repairmen's, employees' liens or similar Security Interests arising by operation
of Law after the Delivery Date in the ordinary  course of LESSEE's  business for
amounts  which are  either not yet due or are being  contested  in good faith by
appropriate proceedings (and for which adequate reserves have been made or, when
required  in  order  to  pursue  such  proceedings,  an  adequate  bond has been
provided)  so long as such  proceedings  do not involve any  material  danger of
sale,  forfeiture  or loss of the  Aircraft;  (d) the  rights of LESSOR  and any
LESSOR's  Lender  and the  rights  of  LESSEE  under  this  Lease  and the other
Operative  Documents;  (e) the rights of others under agreements or arrangements
to the extent  permitted by Articles 10 and 11.5; and (f) any Security  Interest
against  which LESSEE causes to be provided a bond in such amount and under such
terms and conditions as are reasonably satisfactory to LESSOR.

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

                "PRIME  RATE"  means  the  rate of  interest  from  time to time
announced  by Bank  of  America  Illinois  in  Chicago,  Illinois  as its  prime
commercial lending rate.

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

                "STATE OF REGISTRATION"  means the U.S. or such other country or
state of registration of the Aircraft as LESSOR may, in its absolute discretion,
approve in writing.

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

                "U.S.  AIR CARRIER"  means any U.S. air carrier who is a Citizen
of the U.S. holding an air carrier operating certificate issued by the Secretary
of  Transportation  pursuant to chapter 447 of the Act for  aircraft  capable of
carrying 10 or more  individuals or 6000 pounds or more of cargo, and as to whom
there is in force an air carrier  operating  certificate  issued pursuant to FAR
Part 121,  or who may operate as an air carrier by  certification  or  otherwise
under any successor or substitute provisions therefor or in the absence thereof.

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

                       TERMS                         ARTICLE

       Agreed Value                                  18.1
       CRAF Program                                  19.1
       CRAF Program Requisition                      19.1
       Period
       Default Interest                              5.5
       Delivery Location                             3.1
       Expenses                                      16.1
       Expiration Date                               4.3
       Indemnities                                   16.1
       Lease Term                                    4.1
       LESSEE Customization                          5.3.1
       Costs
       LESSOR's Assignee                             24.2.1
       LESSOR's Bank                                 5.4
       LESSOR's Lender                               24.3
       Manufacturer's Escalation                     5.3.1
       Rate
       Modifications                                 12.7.2
       Net Total Loss Proceeds                       18.1
       Operative Documents                           20.1.3
       Rent                                          5.3.1
       Return Check                                  23.8.1
       Scheduled Delivery Date                       3.2
       Security Deposit                              5.1.1
       Taxes                                         15.1
       Termination Date                              4.3
       Total Loss                                    18.1
       Total Loss Date                               18.1
       Total Loss Proceeds                           18.1
       Transaction Fee                               5.2

<PAGE>

         ARTICLE 3            PLACE AND DATE OF DELIVERY

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

     3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease,  delivery of the
Aircraft  from  Manufacturer  to  LESSOR is  scheduled  to occur in the month of
(CONFIDENTIAL  MATERIAL  OMITTED).  LESSOR  will not  agree to  reschedule  such
delivery without LESSEE's prior written consent.  LESSOR will notify LESSEE from
time to time and in a timely  manner of the exact date on which  LESSOR  expects
such delivery to take place (the "SCHEDULED DELIVERY DATE").

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

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

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

3.6  CANCELLATION  FOR  DELAY.  Promptly  after  LESSOR  becomes  aware  that in
Manufacturer's  opinion  a  delay  will  cause  Delivery  to be  delayed  beyond
(CONFIDENTIAL  MATERIAL  OMITTED)  LESSOR will notify LESSEE.  By written notice
given  within ten (10)  Business  Days  after  LESSEE's  receipt of such  LESSOR
notice,  either party may by written  notice to the other party  terminate  this
Lease and this Lease will  terminate on the date of receipt of such  notice.  In
the event of such termination,  neither party will have any further liability to
the other party except that LESSOR will return to LESSEE the Security Deposit in
accordance  with  Article  5.1.3 and any prepaid  Rent.  If neither  party gives
notice of termination  within such ten (10) Business Days, both parties lose all
right to terminate under this Article 3.6 unless  otherwise agreed in writing by
the parties.

<PAGE>

         ARTICLE 4            LEASE TERM

     4.1 LEASE TERM.  The term of leasing of the Aircraft  will  commence on the
Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM").

     4.2 "EXPIRATION DATE".  "EXPIRATION DATE" means the date on which LESSEE is
required to redeliver the Aircraft to LESSOR in the  condition  required by this
Lease on the last day of the Lease Term.

     4.3  "TERMINATION  DATE".  This Lease may in fact  terminate  on any of the
dates set forth below:

     (a the Expiration  Date,  provided LESSEE returns the Aircraft to LESSOR on
the Expiration Date in the condition required by Article 23; or

     (b a date earlier than the Expiration Date, if:

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

     (ii cancellation of this Lease occurs pursuant to Article 3.6;

     (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in
accordance with Article 18.3; or

     (iv an Event of Default  occurs  and LESSOR  repossesses  the  Aircraft  or
otherwise terminates this Lease pursuant to Article 25.3.

     (c a date later than the Expiration Date, if:

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

     (ii an Event of Default  occurs  and LESSOR  repossesses  the  Aircraft  or
otherwise terminates this Lease pursuant to Article 25.3.

     The "TERMINATION  DATE" is the date on which this Lease terminates  because
one of the above has occurred.

<PAGE>

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

     5.1 SECURITY DEPOSIT.

     5.1.1 (CONFIDENTIAL MATERIAL OMITTED)

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

     5.1.3 Upon  termination of this Lease in accordance  with Article 4.3 other
than if an Event of Default has occurred and is  continuing,  LESSOR will return
to LESSEE the amount of the Security  Deposit then held by LESSOR (so long as no
default by LESSEE  exists under any other  agreement  between  LESSEE and LESSOR
relating to aircraft,  engines or aircraft  equipment or the extension of credit
by LESSOR to LESSEE),  without interest,  less an amount determined by LESSOR to
be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy
any unperformed obligations of LESSEE under this Lease, including the correction
of any  discrepancies  from the required  condition of the Aircraft on return of
the Aircraft.

     5.2  TRANSACTION  FEE. Within two (2) Business Days after execution of this
Lease, LESSEE will pay LESSOR a nonrefundable  transaction fee
(CONFIDENTIAL MATERIAL OMITTED)

     5.3 RENT.

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

     (a The following amounts for the following years of the Lease Term:

<PAGE>

        LEASE PERIOD                               MONTHLY RENTAL AMOUNT*
        ------------                               ---------------------

        (CONFIDENTIAL MATERIAL OMITTED)

        *The above base rent is  expressed in January 1999
        U.S.  dollars and will  increase in the  following
        amounts   for   the    following    periods   (the
        "MANUFACTURER'S ESCALATION RATE"):

        PERIOD                              ESCALATION FACTOR
        ------------                               ---------------------

        (CONFIDENTIAL MATERIAL OMITTED)

                       Any  increases  to the above  base Rent  during the Lease
                       Term will be calculated immediately prior to Delivery.

5.3.2           The first  payment  of Rent  during  the Lease Term will be paid
                prior to the Scheduled Delivery Date. Each subsequent payment of
                Rent will be due monthly  thereafter  no later than the same day
                of the month as the Delivery  Date of the Aircraft  except that,
                if such day is not a Business  Day,  the Rent will be due on the
                immediately  preceding Business Day. If Delivery occurred on the
                29th,  30th or 31st of the month and in any given  month  during
                the Lease Term there is no such corresponding date, Rent will be
                payable on the last Business Day of such month.

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

                       (CONFIDENTIAL MATERIAL OMITTED)

<PAGE>

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

5.5 DEFAULT  INTEREST.  If LESSOR's  Bank does not receive the Rent or any other
amount on or before the  specific  date when due,  LESSOR  will  suffer loss and
damage the exact  nature  and amount of which are  difficult  or  impossible  to
ascertain.  LESSEE  will pay  LESSOR  as  supplemental  Rent  (by way of  agreed
compensation  and not as a  penalty)  interest  on any due  and  unpaid  amounts
payable by LESSEE under this Lease.  Interest  will be calculated at a per annum
rate  (based on a 360 day year)  which is equal to three  percent  (3%) plus the
Prime Rate in effect on the date on which the amount was  originally due for the
period from the date the amount  originally  was due through the date the amount
actually is received at LESSOR's Bank or, in the case of LESSOR's performance of
LESSEE's obligations  hereunder,  from the date of payment by LESSOR through the
date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will
accrue on a day-to-day basis and be compounded monthly.

5.6 NO  DEDUCTIONS  OR  WITHHOLDINGS.  All  payments by LESSEE under this Lease,
including the Security Deposit,  Transaction Fee, Rent, Default Interest,  fees,
indemnities  or any other item,  will be made in full  without any  deduction or
withholding  whether in respect of set-off,  counterclaim,  duties, or Taxes (as
defined in Article 15) imposed in the State of Registration or any  jurisdiction
from which such  payments are made unless LESSEE is prohibited by Law from doing
so, in which event  LESSEE  will gross up the  payment  amount such that the net
payment received by LESSOR after any deduction or withholding equals the amounts
called for under this Lease. LESSEE's requirement to pay the amounts required by
this Article 5.6 is subject to the exceptions provided in Article 15.2.

     5.7 VALUE ADDED TAXES.  The Rent and other amounts  payable by LESSEE under
this Lease are exclusive of any value added tax, turnover tax
or similar tax or duty.

     5.8 NET LEASE.

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

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

<PAGE>

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

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

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

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

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

     5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and
remedies in the event of LESSOR's  breach of its warranty of quiet enjoyment set
forth in Article  21.2 or to limit  LESSEE's  rights and remedies to pursue in a
court of law any claim it may have against LESSOR or any other Person.

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

<PAGE>

     5.10  CONSIDERATION FOR RENT AND OTHER AMOUNTS.  The amount of the Rent and
other  payments  contained  herein are in  consideration  of LESSEE's  waiver of
warranties and indemnities set forth in Articles 8 and 16, respectively, and the
other provisions of this Lease.

<PAGE>

        ARTICLE 6            INVOLVEMENT WITH AIRCRAFT MANUFACTURER

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

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

6.3 PROCUREMENT OF BFE.  LESSEE's and LESSOR's  technical  representatives  will
meet and determine which of LESSEE or LESSOR will provide specific items of BFE.
Such BFE  will  then be  provided  to  Manufacturer  by  LESSEE  or  LESSOR,  as
applicable, within the time frames required by Manufacturer.

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

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

<PAGE>

6.6 AIRCRAFT AT  DELIVERY.  At  Delivery,  the Aircraft  will be as set forth in
Exhibit A, as such  description may be modified by any change requests agreed to
among LESSEE,  LESSOR and Manufacturer  (which will be reflected in amendment(s)
to this  Lease).  In the event of any  discrepancies,  LESSEE  and  LESSOR  will
cooperate  in good  faith  with one  another  and with  Manufacturer  and Engine
manufacturer,  as  applicable,  in  order to  arrive  at a  mutually  acceptable
resolution of any such discrepancies.

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

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

<PAGE>

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

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

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

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

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

     7.1.2 At least three (3) days prior to the Scheduled  Delivery Date, LESSEE
will have delivered to LESSOR a Certificate of Insurance and Brokers'  Letter of
Undertaking  in the form and substance of Exhibits C and D,  respectively,  from
LESSEE's  insurance brokers  evidencing  insurance of the Aircraft in accordance
with this Lease from the Delivery Date.

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

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

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

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

     7.1.4  Prior to the  Scheduled  Delivery  Date,  LESSEE will pay LESSOR the
first monthly installment of Rent in accordance with Article 5.3.2.

<PAGE>

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

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

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

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

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

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

     (c)  none of the  Creditor  Agreements  contains  terms  which  provide  or
contemplate  that any  Creditor  will obtain any right,  title or interest in an
Engine which is installed on another aircraft (or, if this is not the case, such
certificate will identify the parties,  the aircraft and the Creditor Agreements
for which this statement is untrue).

     7.2.4  LESSEE's  counsel will deliver  opinions  confirming the matters set
forth in the opinion of counsel  described in Article 7.1 and advising  that all
filing and other requirements have been met or concurrently are being met.

     7.2.5 If any Creditor Agreement provides or contemplates that such Creditor
will obtain any right, title or interest in an Engine which is installed on such
Creditor's  aircraft,  LESSEE  will  deliver  to LESSOR an  engines  cooperation
agreement in form and substance acceptable to LESSOR which is executed by LESSEE
and LESSEE's Creditors (as defined therein).

<PAGE>

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

     7.3 POST-DELIVERY REQUIREMENTS.

     7.3.1 Promptly after Delivery, LESSEE will do each of the following:

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

     (b) provide  LESSOR with a follow-up  opinion of counsel  advising that the
Aircraft has been registered in the State of Registration and that all necessary
filings have been made.

<PAGE>

        ARTICLE 8            DISCLAIMERS

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

8.1 "AS IS,  WHERE IS".  LESSEE  AGREES THAT IT IS LEASING THE  AIRCRAFT "AS IS,
WHERE IS". LESSEE  UNCONDITIONALLY  ACKNOWLEDGES  AND AGREES THAT NEITHER LESSOR
NOR ANY OF ITS OFFICERS,  DIRECTORS,  EMPLOYEES OR REPRESENTATIVES  HAVE MADE OR
WILL BE DEEMED TO HAVE MADE ANY TERM,  CONDITION,  REPRESENTATION,  WARRANTY  OR
COVENANT  EXPRESS OR IMPLIED  (WHETHER  STATUTORY  OR  OTHERWISE)  AS TO (a) THE
CAPACITY,  AGE,  AIRWORTHINESS,  VALUE, QUALITY,  DURABILITY,  CONFORMITY TO THE
PROVISIONS OF THIS LEASE,  DESCRIPTION,  CONDITION (WHETHER OF THE AIRCRAFT, ANY
ENGINE, ANY PART THEREOF OR THE AIRCRAFT  DOCUMENTATION),  DESIGN,  WORKMANSHIP,
MATERIALS,   MANUFACTURE,    CONSTRUCTION,    OPERATION,   DESCRIPTION,   STATE,
MERCHANTABILITY,   PERFORMANCE,  FITNESS  FOR  ANY  PARTICULAR  USE  OR  PURPOSE
(INCLUDING  THE ABILITY TO OPERATE OR REGISTER  THE AIRCRAFT OR USE THE AIRCRAFT
DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY
PART  THEREOF,  OR THE  ABSENCE  OF  LATENT  OR OTHER  DEFECTS,  WHETHER  OR NOT
DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b)
THE ABSENCE OF ANY  INFRINGEMENT  OF ANY PATENT,  TRADEMARK,  COPYRIGHT OR OTHER
INTELLECTUAL  PROPERTY  RIGHTS,  (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE,  COURSE OF  DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN
ARTICLE 21.1, ANY OTHER  REPRESENTATION  OR WARRANTY,  EXPRESS OR IMPLIED,  WITH
RESPECT TO THE AIRCRAFT OR ANY PART THEREOF,  ALL OF WHICH ARE HEREBY  EXPRESSLY
EXCLUDED AND EXTINGUISHED.

<PAGE>

8.2 WAIVER OF WARRANTY OF DESCRIPTION.  IN  CONSIDERATION OF (a) LESSEE'S RIGHTS
HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S  ASSIGNMENT  TO LESSEE OF ANY
EXISTING AND ASSIGNABLE  WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER,
LESSEE  HEREBY  AGREES THAT ITS  ACCEPTANCE  OF THE AIRCRAFT AT DELIVERY AND ITS
EXECUTION  AND DELIVERY OF THE ESTOPPEL AND  ACCEPTANCE  CERTIFICATE  CONSTITUTE
LESSEE'S  WAIVER OF THE  WARRANTY  OF  DESCRIPTION,  ANY CLAIMS  LESSEE MAY HAVE
AGAINST  LESSOR  BASED UPON THE  FAILURE OF THE  AIRCRAFT  TO CONFORM  WITH SUCH
DESCRIPTION  AND ANY AND ALL  RIGHTS  IT MAY HAVE TO THE  REMEDIES  SET FORTH IN
SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA  COMMERCIAL  CODE. EVEN IF AT ANY
TIME THE FAILURE OF THE  AIRCRAFT TO CONFORM TO SUCH  DESCRIPTION  SUBSTANTIALLY
IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE
AIRCRAFT BASED ON A REASONABLE  ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED
AND IT WAS NOT  SEASONABLY  CURED OR (ii) LESSEE  ACCEPTED THE AIRCRAFT  WITHOUT
DISCOVERING  THE  NONCONFORMITY  BUT  LESSEE'S  ACCEPTANCE  OF THE  AIRCRAFT WAS
REASONABLY  INDUCED  EITHER  BY  LESSOR'S  ASSURANCES  OR BY THE  DIFFICULTY  OF
DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE,  LESSEE AGREES NOT TO LOOK TO LESSOR
FOR DAMAGES OR RELIEF  ARISING OUT OF THE FAILURE OF THE  AIRCRAFT TO CONFORM TO
SUCH DESCRIPTION.

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

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

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

<PAGE>

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

     8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be
deemed to be a waiver by LESSEE of any rights it may have against  Manufacturer,
the Engine manufacturer or any other Person.

<PAGE>

         ARTICLE 9            MANUFACTURERS' AND VENDORS' WARRANTIES

     9.1  WARRANTIES.  As set forth in Article  7.2.6,  at Delivery  LESSOR will
assign  to  LESSEE  for the  duration  of the  Lease  Term  the  benefit  of all
warranties  and  indemnities  given to LESSOR  by  Manufacturer  and the  Engine
manufacturer.  Effective on the Delivery Date, all other vendor  warranties with
respect to the Aircraft are hereby assigned by LESSOR to LESSEE.

     9.2  REASSIGNMENT.  On the  Termination  Date,  the benefit of any warranty
assigned  by LESSOR to LESSEE  pursuant  to  Article  7.2.6  will be  reassigned
automatically to LESSOR or its designee.

<PAGE>

         ARTICLE 10           OPERATION OF AIRCRAFT

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

     10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all
use of the Aircraft will be in accordance  with  applicable Laws of the State of
Registration and of any country,  state,  territory or municipality into or over
which LESSEE may operate.  LESSEE will not employ,  suffer or cause the Aircraft
to be used in any business  which is forbidden by Law or in any manner which may
render it liable to condemnation,  destruction,  seizure, or confiscation by any
authority.  LESSEE will not permit the Aircraft to fly to any airport or country
if so doing would  cause  LESSEE to be in  violation  of any Law  applicable  to
LESSEE or the Aircraft.  The foregoing provisions in this Article 10.2 shall not
prohibit any  violation of Law (a) during a good-faith  contest of the validity,
application,  or alleged  violation  thereof in any reasonable manner so long as
there  is no  material  danger  of  sale,  forfeiture,  or loss of the  Aircraft
(however,  this good faith  exception shall not apply in the case of a mandatory
grounding  order,  the good faith  contest  of which  does not permit  LESSEE to
operate the Aircraft during such contest),  and which does not extend beyond the
end of the Lease Term if the pendency of such contest would adversely affect the
Aircraft or the remarketing  thereof in any material respect;  and (b) for minor
or non-recurring  violations (with the  understanding  that minor violations may
cease to be minor if  recurring)  that  LESSEE is  diligently  trying to rectify
which  do  not  render  the  Aircraft  liable  to  any  risk  of   condemnation,
destruction, seizure, or confiscation by any Government Entity.

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

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

<PAGE>

     10.5 FLIGHT CHARGES.

     10.5.1  LESSEE will pay promptly when due all enroute  navigation  charges,
navigation  service  charges and all other charges payable by LESSEE for the use
of or for services  provided at any airport,  whether in respect of the Aircraft
or any other aircraft of LESSEE,  and will indemnify and hold LESSOR harmless in
respect  of the same.  This  indemnity  will  continue  in full force and effect
notwithstanding  the  termination or expiration of the Lease Term for any reason
or the return of the Aircraft.

     10.5.2 If  requested by LESSOR,  LESSEE will provide  LESSOR with a list of
the  airports  to which  LESSEE  regularly  operates  the  Aircraft or its other
aircraft.  LESSEE hereby authorizes Eurocontrol or another aviation authority or
airport or  creditor  claiming  rights on the  Aircraft to confirm the status of
LESSEE's  payments to such creditor for the Aircraft and its other aircraft,  as
and when requested by LESSOR.

<PAGE>

         ARTICLE 11           SUBLEASES

     11.1 NO SUBLEASE  WITHOUT LESSOR CONSENT.  LESSEE WILL NOT SUBLEASE OR PART
WITH POSSESSION OF THE AIRCRAFT  (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME
WITHOUT THE PRIOR WRITTEN  CONSENT OF LESSOR (NOT TO BE  UNREASONABLY  WITHHELD)
AND IN ACCORDANCE  WITH SUCH  REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN
WRITING  BETWEEN LESSOR AND LESSEE.  The wet leasing of the Aircraft  during the
Lease Term (in which  LESSEE  and its crews  retain  operational  control of the
Aircraft) will not be considered a sublease of the Aircraft.

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

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

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

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

<PAGE>

         ARTICLE 12           MAINTENANCE AND USE OF AIRCRAFT

12.1            GENERAL OBLIGATION.

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

     12.1.2  LESSEE will  maintain and repair the Engines in the same manner and
in  the  equivalent  time  frame  to its  other  engines  and  LESSEE  will  not
discriminate   against  any  of  the  Engines  in  respect  of  the  repair  and
maintenance.

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

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

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

     (b) incorporation in the Aircraft of all Airworthiness Directives;

<PAGE>

     (c) incorporation in the Aircraft of all service bulletins of Manufacturer,
the Engine manufacturer and other vendors which LESSEE schedules to adopt within
the Lease  Term for the rest of its Boeing  737-800  aircraft  fleet.  It is the
intent of the parties that the Aircraft will not be discriminated  from the rest
of  LESSEE's  fleet  in  service  bulletin   compliance   (including  method  of
compliance) or other maintenance  matters.  LESSEE will not discriminate against
the Engines with  respect to Overhaul  build  standards  and  life-limited  part
replacements;

     (d)  incorporation  in  the  Maintenance  Program  for  the  Aircraft  of a
corrosion prevention and control program;

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

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

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

12.3            REPLACEMENT OF PARTS.

<PAGE>

     12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts
which may from time to time become worn out, lost,  stolen,  destroyed,  seized,
confiscated, damaged beyond repair or rendered unfit or beyond economical repair
(BER) for any reason.  In the ordinary course of maintenance,  service,  repair,
overhaul or testing,  LESSEE may remove any Part provided  that LESSEE  replaces
such Part as promptly as practicable. All replacement Parts will (a) be free and
clear  of all  Security  Interests  (except  Permitted  Liens)  of any  kind  or
description,  (b) be in airworthy  condition and of at least  equivalent  model,
service bulletin and  modification  status and have a value and utility at least
equal to the Parts replaced,  assuming such replaced Parts were in the condition
and repair  required to be maintained by the terms hereof and (c) have a current
"serviceable  tag" of the  manufacturer or maintenance  facility  providing such
items to LESSEE,  indicating that such Parts are new, serviceable or Overhauled.
So long as a substitution meets the requirements of the Maintenance  Program and
Aviation Authority, LESSEE may substitute for any Part a part that does not meet
the  requirements  of the  foregoing  sentence  if a  complying  Part  cannot be
procured or installed  within the  available  groundtime  of the Aircraft and as
soon as practicable the noncomplying part is removed and replaced by a complying
Part.

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

12.4            REMOVAL OF ENGINES.

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

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

     (a) the insurance requirements set forth in Article 17 and Exhibit C are in
place;

     (b) LESSEE ensures that the identification plates referred to in Article 14
are not  removed  from any  Engine  upon such  Engine  being  detached  from the
Aircraft; and

<PAGE>

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

     12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not
to be unreasonably withheld,  LESSEE may subject the Engines and Parts to normal
interchange  or pooling  agreements  with  responsible  commercial  air carriers
customary  in the airline  industry  and entered  into by LESSEE in the ordinary
course of its business with respect to its Boeing  737-800 fleet  generally,  so
long as (a) in the case of pooling  of an Engine,  such  Engine is  returned  to
LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c)
all other  terms of this  Lease  continue  to be  observed  with  respect to the
Engines or Parts,  including  but not limited to Articles 8, 10, 12, 13, 14, 15,
16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the
performance of all of its obligations hereunder.

     12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the
Aircraft may be installed on another  airframe in LESSEE's  fleet which utilizes
engines of the same type as the Engine only if one of the  situations  described
in this Article 12.6 exists:

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

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

     12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other
Security  Interests  except  Permitted  Liens)  which by its terms  expressly or
effectively  states that such Creditor and its  successors  and assigns will not
acquire  any right,  title or  interest  in any Engine by reason of such  Engine
being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to
an Engine is in fact impaired under any such Creditor Agreement, such impairment
will be a Total Loss of such  Engine  and the  provisions  of Article  18.5 will
apply. To the extent another Creditor Agreement  contains such provisions,  then
LESSOR hereby agrees for the benefit of the Creditor of such Creditor  Agreement
that  neither  LESSOR nor its  successors  or assigns  will acquire or claim any
right,  title or interest in any engine in which LESSEE or another  Creditor has
an interest as a result of such engine being installed on the Airframe.

<PAGE>

12.7            MODIFICATIONS.

     12.7.1 No  modification,  alteration,  addition or removal to the  Aircraft
("MODIFICATION")  expected  to cost  over Five  Hundred  Thousand  U.S.  Dollars
(US$500,000)   or  deviation  from  the  Aircraft's   original  type  design  or
configuration  will be made without the prior written  consent of LESSOR,  which
consent  will  not be  unreasonably  withheld.  "Modifications"  do not  include
Airworthiness  Directives or Manufacturer's  recommended service bulletins,  for
which LESSOR's consent is not required.

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

     12.7.3  Notwithstanding  any other provision of this Lease, no Modification
will be made  which has the  effect of  decreasing  the  utility or value of the
Aircraft.

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

     12.7.5 Unless otherwise agreed by LESSOR in writing,  all  non-severable or
structural Modifications will forthwith become a part of the Aircraft and LESSEE
relinquishes  to LESSOR all rights and title  thereto.  However,  all  severable
Modifications  will remain the property of LESSEE or the third-party  owner and,
at LESSOR's  request and LESSEE's cost,  will be removed from the Aircraft prior
to return of the Aircraft,  with LESSEE  restoring the Aircraft to the condition
it was in prior to the  Modification.  Notwithstanding  the  foregoing,  no such
removal will be permitted without LESSOR's permission after the occurrence of an
Event of Default  hereunder and  immediately  upon the occurrence of an Event of
Default  hereunder,  without the  requirement of any further act or notice,  all
right, title and interest in such Modifications will immediately vest in LESSOR.

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

<PAGE>

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

     12.9 REPORTING REQUIREMENTS.

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

     12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR
with a Technical Evaluation Report for the Aircraft in the form and substance of
Exhibit L, as revised.

     12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR
with  a copy  of or  information  regarding  the  Maintenance  Program  for  the
Aircraft, as requested by LESSOR.

     12.11 LESSOR  RIGHTS TO INSPECT  AIRCRAFT.  On  reasonable  notice,  LESSOR
and/or its authorized agents or  representatives  will have the right to inspect
the Aircraft and Aircraft  Documentation.  LESSOR agrees that such requests will
be coordinated with LESSEE so as to cause the minimum  practical  disturbance to
LESSEE's  operation or its personnel.  LESSEE agrees to cooperate with LESSOR in
making the  Aircraft  and Aircraft  Documentation  available to such  authorized
technical teams. No such inspection  shall include opening panels,  bays, or the
like (although  LESSOR may observe those that are then open),  or  disassembling
any  item.  LESSOR  will have no duty to make any such  inspection  and will not
incur  any  liability  or  obligation  by  reason  of  (and  LESSEE's  indemnity
obligations  pursuant to Article 16 will apply  notwithstanding)  not making any
such  inspection  or by reason of any  reports it receives or any reviews it may
make of the Aircraft records.

<PAGE>

         ARTICLE 13           TITLE AND REGISTRATION

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

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

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

     13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request
from time to time,  LESSEE will furnish to LESSOR an opinion of counsel or other
evidence  reasonably  satisfactory  to LESSOR of the  registrations  and filings
required hereunder.

<PAGE>

         ARTICLE 14           IDENTIFICATION PLATES

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

     14.1 AIRFRAME IDENTIFICATION PLATES.

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

      Size:          No smaller than 4" x 6".

      Legend:        "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE
                     FINANCE CORPORATION.

                     MANUFACTURER'S SERIAL NO:    28246

                     OWNER'S ADDRESS:

                     INTERNATIONAL   LEASE  FINANCE  CORPORATION
                     1999  Avenue of the  Stars,  39th Floor Los
                     Angeles,  California 90067 United States of
                     America

                     Fax:     (310) 788-1990"

     14.2 ENGINE IDENTIFICATION PLATES.

      Location:      The legend on the plate must be visible.

      Size:          No smaller than 2" x 6".

                     "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE
                     FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA."

         ARTICLE 15           TAXES

<PAGE>

     15.1 GENERAL  OBLIGATION  OF LESSEE.  Except as set forth in Article  15.2,
LESSEE  agrees to pay  promptly  when due, and to  indemnify  and hold  harmless
LESSOR on a full indemnity basis from, all license and registration fees and all
taxes,  fees,  levies,  imposts,  duties,  charges or withholdings of any nature
whatsoever (including without limitation any value added,  franchise,  transfer,
sales, gross receipts,  use, business,  occupation,  excise,  personal property,
real  property,  stamp or other tax) together with any  assessments,  penalties,
fines,  additions  to tax or  interest  thereon,  however  or  wherever  imposed
(whether  imposed  upon  LESSEE,  LESSOR,  on all or part of the  Aircraft,  the
Engines or otherwise), by any Government Entity or taxing authority in the U.S.,
any  State  thereof,  or any  foreign  country  or by any  international  taxing
authority,  upon or with  respect  to,  based  upon  or  measured  by any of the
following (collectively, "TAXES"):

     (a) the Aircraft, the Engines or any Parts.

     (b) the use,  operation  or  maintenance  of the  Aircraft  or  carriage of
passengers or freight during the Lease Term.

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

     (d) the return of the Aircraft to LESSOR or other use or disposition of the
Aircraft by LESSEE.

     15.2 EXCEPTIONS TO INDEMNITY.  The indemnity  provided in Article 15.1 does
not extend to any of the following Taxes:

     (a) Imposed by the U.S.  (including  without limitation any taxes collected
by withholding) or any state or local government or governmental  subdivision or
state  or local  taxing  authority  in the U.S.  (including  any  possession  or
territory  of the  U.S.)  or by any  foreign  government,  taxing  authority  or
governmental  subdivision  of a foreign  country which are based on, or measured
by, the receipts,  gross or net income, capital, net worth,  franchises,  excess
profits, or conduct of business (including minimum taxes,  withholding taxes and
taxes on or measured by any items of tax  preference)  of LESSOR,  except to the
extent that such Tax would not have been imposed on or payable by LESSOR but for
the  location,  use,  registration  or  operation  of the  Aircraft  or any part
thereof,  or any place of business or any activity of LESSEE in the jurisdiction
imposing such Tax.

<PAGE>

     (b) Imposed as a result of LESSOR's transfer,  mortgage,  pledge, financing
or other  disposition  by  LESSOR  of all or a portion  of its  interest  in the
Aircraft or this Lease except a transfer or sale  resulting  from an exercise of
remedies  pursuant to Article 25.3 hereunder or in connection with a termination
of the Lease pursuant to Article 18 hereof.

     (c)  Attributable  to the period prior to the Delivery Date or after return
of the Aircraft to LESSOR in accordance with this Lease.

     (d) Attributable to LESSOR's gross negligence, willful misconduct or breach
of this Lease.

     15.3  AFTER-TAX  BASIS.  The amount  which  LESSEE is  required to pay with
respect  to any  Taxes  indemnified  against  under  Article  15.1 is an  amount
sufficient to restore LESSOR on an after-tax  basis to the same position  LESSOR
would have been in had such Taxes not been incurred.

<PAGE>

     15.4  CLAIMS AND  CONTESTS.  If a written  claim is  received by LESSOR for
Taxes,  which claim, if sustained,  would require the payment of an indemnity by
LESSEE  pursuant to this Article 15,  LESSOR  shall notify  LESSEE of such claim
within thirty (30) days after its receipt, provided that failure to provide such
notice  within thirty (30) days will not relieve  LESSEE of any  indemnification
obligation  pursuant to this Article 15 if such failure does not preclude LESSEE
from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR
pursuant to this Article 15 shall be made  directly to LESSOR within thirty (30)
days of written  demand by LESSOR to LESSEE.  If requested by LESSEE in writing,
LESSOR shall upon receipt of indemnity reasonably  satisfactory to it and at the
expense  of  LESSEE  (including,   without  limitation,  all  reasonable  costs,
expenses,  legal and accountants' fees, and disbursements,  penalties,  interest
incurred in contesting  such claim,  and additions to tax) in good faith, in the
name of LESSOR  or, if  requested  by  LESSEE,  in the name of LESSEE (or permit
LESSEE,  if desired by LESSEE,  to contest in the name of LESSEE) if permissible
under  applicable  laws, the validity,  applicability or amount of such Taxes by
(i) resisting payment thereof if practicable only if adequate reserves have been
made for such Taxes or, if  required,  an adequate  bond has been  posted,  (ii)
paying the same under protest,  if protest shall be necessary and proper,  (iii)
if payment shall be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings,  and (iv) taking such other
action as is  reasonably  requested  by LESSEE from time to time  including  not
paying such Taxes only if adequate reserves have been made for such Taxes or, if
required, an adequate bond has been posted. LESSOR shall determine the method of
any contest and (in good faith  consultation  with  LESSEE)  control the conduct
thereof.  Notwithstanding  anything  contained in this Article 15.4, LESSOR will
not  be  required  to  contest,  or  to  continue  to  contest,   the  validity,
applicability  or amount of any Tax (or  portion  thereof)  (x) if such  contest
would result in any material risk of criminal  penalties or any material risk of
sale,  forfeiture  or loss of the  Aircraft,  (y) if an  Event  of  Default  has
occurred and is  continuing,  or (z) in the case of a contest of a Tax reflected
on a return of LESSOR with other taxes of LESSOR that are not indemnified by the
LESSEE  hereunder,  if LESSEE shall not have furnished an opinion of independent
tax counsel selected by the LESSEE, and reasonably  satisfactory to LESSOR, that
a reasonable  basis exists for such contest.  If LESSOR shall obtain a refund of
all or any part of such Taxes for which an indemnity was paid by LESSEE,  LESSOR
shall pay LESSEE the amount of such refund; PROVIDED,  HOWEVER, that such amount
shall not be payable  before such time as LESSEE shall have made all payments or
indemnities  to LESSOR  then due under  this  Article  15 and under the Lease or
while an Event of Default shall have occurred and be continuing.  If in addition
to such  refund  LESSOR  shall  receive an amount  representing  interest on the
amount of such refund,  LESSEE shall be paid that  proportion  of such  interest
which is fairly  attributable to Taxes paid with an indemnity  payment by LESSEE
prior to the receipt of such refund or interest and increased by any taxes saved
by reason of the  deductibility  of such payment by LESSOR.  LESSEE shall not be
deemed to be in default under any of the  indemnification  provisions under this
Article 15 so long as it or LESSOR shall  diligently  prosecute such contest and
LESSEE has indemnified LESSOR to LESSOR's reasonable  satisfaction.  In case any
report or return is required to be made with respect to any obligation of LESSEE
under this Article 15.4 or arising out of this Article 15.4,  LESSEE will either
timely make such report or return in such manner as will show the  ownership  of
the Aircraft in LESSOR,  and will as soon as possible send a copy of such report
or return to LESSOR,  or will notify LESSOR of such  requirement and prepare and
deliver such report or return to LESSOR in such manner as shall be  satisfactory
to LESSOR.

     15.5 REFUNDS.  Upon receipt by LESSOR of a refund of all or any part of any
Taxes  (including  any deductions or  withholdings  referred to in Article 15.1)
which  LESSEE has paid,  LESSOR  will pay to LESSEE the net amount of such Taxes
refunded.

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

<PAGE>

         ARTICLE 16           INDEMNITIES

     16.1 GENERAL INDEMNITY.  Except as set forth in Article 16.2, LESSEE agrees
to indemnify and hold harmless  LESSOR and its officers,  directors,  employees,
agents  and   shareholders   (individually   an  "INDEMNITEE"  and  collectively
"INDEMNITEES")  from  any and all  liabilities,  obligations,  losses,  damages,
penalties,  claims, actions, suits, costs, disbursements and expenses (including
legal fees, costs and related expenses) of every kind and nature, whether or not
any of the transactions contemplated by this Lease are consummated (collectively
"EXPENSES"),  which  are  imposed  on,  incurred  by  or  asserted  against  any
Indemnitee  and which are in any way relating to, based on or arising out of any
of the following:

     (a) this Lease or any transactions contemplated hereby;

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

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

     (d) any non-compliance by LESSEE with any term of this Lease or the falsity
or inaccuracy of any representation or warranty of LESSEE set forth herein;

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

<PAGE>

     (f) as a  consequence  of any Default in payment by LESSEE of any sum to be
paid by LESSEE  when due under this Lease or any other  Default by LESSEE in the
due and punctual performance of its obligations under this Lease.

     The  foregoing  indemnity  by LESSEE is  intended  to include and cover any
Expense  to which an  Indemnitee  may be  subject  (in  contract,  tort,  strict
liability or under any other  theory)  regardless of the  negligence,  active or
passive or any other type, of such Indemnitee,  so long as such Expense does not
fall within any of the exceptions listed in Article 16.2.

     16.2  EXCEPTIONS  TO GENERAL  INDEMNITIES.  The  indemnity  provided for in
Article  16.1 will not  extend  to  Expenses  of any  Indemnitee  to the  extent
resulting from or arising out of any of the following:

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

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

     (c) Expenses  representing  Taxes, it being  acknowledged that the terms of
Article 15 apply exclusively to LESSEE's  indemnity  obligations with respect to
Taxes;

     (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment
pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances);

     (e) Expenses  which arise in connection  with the transfer by LESSOR of any
interest in the Aircraft or this Lease,  except for any  transfer in  connection
with any Event of Default or a Total Loss of the Aircraft or an Engine.

     (f)  Expenses  which  are  solely  attributable  to the  representation  or
warranty of LESSOR contained in or made pursuant to any Operative Document being
untrue;

     (g) Expenses which are solely related to the failure of such Indemnitees to
perform or observe  any  agreement,  covenant,  or  condition  on its part to be
performed or observed in any Operative Document;

<PAGE>

     (h)  Expenses  which are solely an ordinary  and usual  internal  customary
operating expense; or

     (i) Expenses which are solely related to a breach of Article 21.1.6, or

     (j) Expenses which are solely related to a LESSOR's Lien.

     16.3 AFTER-TAX  BASIS. The amount which LESSEE will be required to pay with
respect to any Expense  indemnified against under Article 16.1 will be an amount
sufficient  to  restore  the  Indemnitee,  on an  after-tax  basis,  to the same
position such Indemnitee would have been in had such Expense not been incurred.

     16.4  TIMING  OF  PAYMENT.  It is the  intent  of  the  parties  that  each
Indemnitee will have the right to indemnification for Expenses hereunder as soon
as a claim is made and as soon as an  Expense is  incurred,  whether or not such
claim is meritorious and whether or not liability is established (but subject to
Articles 16.2 and 16.8).  LESSEE will pay an Indemnitee for Expenses pursuant to
this Article 16 within ten (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  (but not  before  payment is due from such
Indemnitee).

     16.5  SUBROGATION.  Upon the payment in full of any  indemnity  pursuant to
this  Article  16 by  LESSEE,  LESSEE  will be  subrogated  to any  right of the
Indemnitee in respect of the matter against which such indemnity has been made.

     16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one
to the other of any liability of which such party has knowledge for which LESSEE
is, or may be,  liable under Article 16.1;  provided,  however,  that failure to
give such notice will not terminate any of the rights of Indemnitees  under this
Article 16 except to the extent that LESSEE has been  materially  prejudiced  by
the failure to provide such notice.

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

     16.8 DEFENSE OF CLAIMS.

<PAGE>

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

     (b) Unless LESSOR agrees in writing  otherwise,  no settlement of any claim
hereunder  may require  LESSOR to agree to any remedy  apart from the payment of
money damages (for which such payment of money damages  LESSEE will in any event
indemnify the Indemnitees).

     (c) In no event  shall any  Indemnitee  enter  into a  settlement  or other
compromise  with respect to any Expense  without  LESSEE's prior written consent
(which shall not be  unreasonably  withheld or delayed),  unless such Indemnitee
waives  its right to be  indemnified  with  respect to such  Expense  under this
Article 16.

     (d) To the extent that any Expense  indemnified by LESSEE  hereunder may be
covered by insurance maintained by LESSEE, at LESSEE's expense,  each Indemnitee
agrees  to  cooperate  with the  insurers  in the  exercise  of their  rights to
investigate, defend, or compromise that Expense as may be required to retain the
benefits of the insurance for that Expense.

     (e) If an Indemnitee is not a party to this Lease,  LESSEE may require that
Indemnitee to agree in writing to the terms of this Article 16 before making any
payment to such Indemnitee under this Article 16.

     16.9 SURVIVAL OF OBLIGATION.  Notwithstanding anything in this Lease to the
contrary,  the provisions of this Article 16 will survive the  Termination  Date
and  continue in full force and effect  notwithstanding  any breach by LESSOR or
LESSEE of the terms of this Lease,  the termination of the lease of the Aircraft
to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease.

<PAGE>

         ARTICLE 17           INSURANCE

     17.1  CATEGORIES  OF  INSURANCE.  Throughout  the Lease  Term and until the
Termination  Date LESSEE will,  at its own expense,  effect and maintain in full
force and effect the types of  insurance  and  amounts of  insurance  (including
deductibles)  described in Exhibit C through such brokers and with such insurers
favorably regarded in the airline industry.

     17.2 INSURANCE FOR INDEMNITIES.  The insurance  referred to in Article 17.1
will in each case include and insure (to the extent of the risks  covered by the
policies) the  indemnity  provisions of Article 16 and LESSEE will maintain such
insurance  of the  indemnities  for a  minimum  of two (2) years  following  the
Termination Date.

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

     17.4 RENEWAL.  Not less than two (2) Business Days before the expiration or
termination date of any insurance required hereunder, LESSEE will provide LESSOR
with fax confirmation from LESSEE's insurance brokers that renewed  certificates
of  insurance  evidencing  the  renewal or  replacement  of such  insurance  and
complying  with  Exhibit C will be issued on the  termination  date of the prior
certificate.  Within seven (7) days after such renewal,  LESSEE will furnish its
brokers' certificates of insurance to LESSOR.

     17.5  ASSIGNMENT OF RIGHTS BY LESSOR.  If LESSOR  assigns all or any of its
rights under this Lease as permitted by this Lease or otherwise  disposes of any
interest in the Aircraft to any other Person, LESSEE will, upon request, procure
that (to the extent of the assignment or disposition)  such Person  hereunder be
added as loss payee and/or additional assured in the policies effected hereunder
and enjoy the same rights and insurance  enjoyed by LESSOR under such  policies.
To the extent of its retained interest or as provided in Article 24.2.1,  LESSOR
will nevertheless continue to be covered by such policies.

     17.6  DEDUCTIBLES.  If there is a material  adverse change in the financial
condition of LESSEE which LESSOR  reasonably  believes will not enable LESSEE to
pay the  deductible  upon the occurrence of a partial loss of the Aircraft or an
Engine,  then  LESSOR  may  require  LESSEE  at  LESSEE's  expense  to lower its
deductibles on the insurance  maintained hereunder to a level which is available
on commercially reasonable terms in the insurance market.

<PAGE>

     17.7  OTHER  INSURANCE.  LESSOR  may from  time to time by notice to LESSEE
require  LESSEE at  LESSEE's  expense  to effect  such other  insurance  or such
variations  to the terms of the  existing  insurance as may then be customary in
the airline  industry  for  aircraft of the same type as the Aircraft and at the
time commonly available in the insurance market.

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

     17.9  CURRENCY.  All proceeds of  insurance  pursuant to this Lease will be
payable in Dollars except as may be otherwise agreed by LESSOR.

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

     17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain  insurance
in compliance  with this Article 17, LESSOR will be entitled but not bound to do
any of the  following  (without  prejudice to any other rights which it may have
under this Lease by reason of such failure):

     (a) to pay any premiums due or to effect or maintain  substitute  insurance
or otherwise remedy such failure in any reasonable  manner (and LESSEE will upon
demand reimburse LESSOR in full for any amount so expended in that  connection);
or

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

     17.12 LIMIT ON HULL IN FAVOR OF LESSEE.  LESSEE may carry hull all risks or
hull war and allied  perils on the Aircraft in excess of the Agreed Value (which
Agreed  Value is payable to LESSOR)  only to the extent  such  excess  insurance
which  would be  payable  to LESSEE in the event of a Total Loss does not exceed
fifteen  percent  (15%) of the  Agreed  Value and only to the  extent  that such
additional  insurance will not prejudice the insurances  required  herein or the
recovery by LESSOR  thereunder.  LESSEE agrees that it will not create or permit
to exist any liens or encumbrances over the insurances, or its interest therein,
except as constituted by this Lease.

     17.13 MARKETPLACE LIMITATIONS.  The insurance required by this Lease may be
subject  to  any  limitations  generally  prevailing  in the  airline  insurance
marketplace at the time (e.g., AVN67B).

<PAGE>

         ARTICLE 18           LOSS, DAMAGE AND REQUISITION

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

     18.1 DEFINITIONS. In this Article 18:

     "AGREED  VALUE"  (CONFIDENTIAL  MATERIAL  OMITTED)  The Agreed Value is set
forth in March  2001 U.S.  Dollars  and will be  increased  in  accordance  with
Manufacturer's  announced  escalation  rate from  March 1, 2001 to the  Delivery
Date. On each annual renewal date of LESSEE's insurance policy commencing on the
renewal date following the first anniversary of the Lease Term, the Agreed Value
will decrease by two percent (2.0%) of the then-existing Agreed Value.

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

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

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

     (b) actual, constructive,  compromised,  arranged or agreed total loss (the
earlier of the date on which the loss is agreed or  compromised  by the insurers
or thirty  (30) days after the date of notice to  LESSEE's  brokers or  insurers
claiming such total loss);

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

     (d)  sequestration,  detention,  seizure or any similar event for more than
one hundred  eighty  (180)  consecutive  days (the  earlier of the date on which
insurers  make payment on the basis of a total loss or the date of expiration of
such period);

     (e) requisition for use for more than one hundred eighty (180)  consecutive
days,  except as set forth in Article 18.8 (the earlier of the date on which the
insurers  make payment on the basis of a total loss or the date of expiration of
such period);

<PAGE>

     (f) in the case of an Engine,  the event  described in Article  12.6.3 (the
date on which the same takes effect);

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

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

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

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

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

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

     (b) the date which falls sixty (60) days after the Total Loss Date,

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

     (a) the Agreed Value and

     (b) all other amounts then due and payable under this Lease,

     less an amount equal to the Net Total Loss  Proceeds  received by LESSOR by
such date.

     18.3.3  LESSOR  will  apply the Net Total  Loss  Proceeds  and any  amounts
received from LESSEE pursuant to Article 18.3.2 as follows:

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

<PAGE>

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

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

     18.3.4  Upon  receipt by LESSOR of all monies  payable by LESSEE in Article
18.3,  provided  no Default  has  occurred  and is  continuing,  this Lease will
terminate except for LESSEE's  obligations  under Articles 10.5, 15 and 16 which
survive the Termination Date and the Security Deposit will be returned to LESSEE
in accordance with Article 5.3.1.

     FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO
LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN
IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES.

     18.4 SURVIVING ENGINE(S).  If a Total Loss of the Airframe occurs and there
has not been a Total Loss of an Engine or Engines,  then provided no Default has
occurred and is  continuing,  at the request of LESSEE  (subject to agreement of
relevant  insurers)  and on receipt of all  monies  due under  Article  18.3 and
payment by LESSEE of all airport,  navigation and other charges on the Aircraft,
LESSOR will  transfer  all of its right,  title and  interest  in the  surviving
Engine(s) to LESSEE,  but without any  responsibility,  condition or warranty on
the part of LESSOR other than as to freedom from any LESSOR's Lien.

     18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME.

     18.5.1 Upon a Total Loss of any Engine not  installed  on the Airframe or a
Total Loss of an Engine  installed on the Airframe not involving a Total Loss of
the Airframe,  LESSEE will replace such Engine as soon as reasonably possible by
duly  conveying  to LESSOR  title to  another  engine  (a) free and clear of all
Security  Interests (except Permitted Liens) of any kind or description,  (b) in
airworthy  condition  and of the same or improved  model,  service  bulletin and
modification  status and having a value and utility at least equal to the Engine
which sustained the Total Loss, and (c) not older (by reference to serial number
or  manufacture  date)  than  three (3) years  older  than the oldest of the two
Engines  delivered by LESSOR to LESSEE with the  Aircraft on the Delivery  Date.
Such replacement engine will be an Engine as defined herein and the Engine which
sustained such Total Loss will cease to be an Engine.

<PAGE>

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

     18.6 OTHER LOSS OR DAMAGE.

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

     18.6.2 In the event of any loss or damage to the Aircraft or Airframe which
does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or
damage to an Engine  which  does not  constitute  a Total  Loss of such  Engine,
LESSEE will at its sole cost and expense  fully repair the Aircraft or Engine in
order  that the  Aircraft  or Engine is placed  in an  airworthy  condition  and
substantially  the same  condition  as it was prior to such loss or damage.  All
repairs will be performed in accordance  with sound airline  procedures.  LESSEE
will notify  LESSOR  forthwith of any loss,  theft or damage to the Aircraft for
which the cost of repairs is estimated to exceed Seven  Hundred  Fifty  Thousand
U.S. Dollars (US$750,000),  together with LESSEE's proposal for carrying out the
repair.  In the event that LESSOR  does not agree with  LESSEE's  proposals  for
repair,  LESSOR will so notify  LESSEE  within two (2)  Business  Days after its
receipt of such proposal.  LESSEE and LESSOR will then consult with Manufacturer
and  LESSEE  and  LESSOR  agree  to  accept  as  conclusive,  and be  bound  by,
Manufacturer's  directions or recommendations as to the manner in which to carry
out  such   repairs.   If   Manufacturer   declines   to  give   directions   or
recommendations,  LESSEE  will  carry out the  repairs  in  accordance  with the
directions of LESSOR.

     18.6.3 To the extent  that  LESSOR has  received  insurance  proceeds  from
LESSEE's  insurers  with respect to any loss or damage,  LESSOR will (subject to
LESSOR's  right to deduct  therefrom  any amounts then due and payable by LESSEE
under this Lease and submission by LESSEE of reasonable documentation confirming
the completion of the repairs in accordance with the requirements of this Lease)
pay to LESSEE insurance proceeds received by LESSOR as and when such repair work
is performed on the Aircraft.

<PAGE>

     18.7 COPY OF INSURANCE  POLICY.  Promptly after LESSOR's request  following
the  occurrence  of a partial  loss or Total Loss of the  Aircraft or an Engine,
LESSEE will provide LESSOR with a copy of LESSEE's insurance policy.

     18.8  GOVERNMENT  REQUISITION.  If the Aircraft,  Airframe or any Engine is
requisitioned  for use by any  Government  Entity,  LESSEE will promptly  notify
LESSOR of such requisition.  All of LESSEE's obligations hereunder will continue
as if such  requisition  had not  occurred.  Except if a Default  or an Event of
Default has  occurred  and is  continuing,  all  payments  received by LESSOR or
LESSEE from such Government Entity will be paid over to or retained by LESSEE.

     18.9  CONVEYANCE TO LESSEE.  Upon  compliance by LESSEE with the applicable
terms of Article  18.3 or 18.5,  LESSOR will  transfer to LESSEE the Airframe or
Engine(s), as applicable, with respect to which such Total Loss.

<PAGE>

     ARTICLE 19 CRAF PROGRAM

     19.1 DEDICATION TO CRAF. LESSEE may transfer  possession of the Airframe or
any Engine to the United  States of  America  or any  instrumentality  or agency
thereof  as part of the Civil  Reserve  Air Fleet  Program  authorized  under 10
U.S.C. ss. 9511 ET SEQ. (or any substantially  similar program) ("CRAF PROGRAM")
for a  period  which  includes  (collectively,  the  "CRAF  PROGRAM  REQUISITION
PERIOD") the entire period of  requisition  under the CRAF Program.  If the CRAF
Program  Requisition  Period extends beyond the Expiration Date provided by this
Lease,  then the Lease will be deemed to continue  for six (6) months  after the
end of the CRAF Program Requisition Period at a monthly rental rate equal to the
monthly rental rate during the Lease Term. If such extension  extends beyond the
Lease Term,  then LESSEE will provide LESSOR with written notice of the proposed
redelivery  by the earlier of six (6) months  prior to the  proposed  redelivery
date or five (5)  Business  Days after the date of receipt of the actual  notice
given to LESSEE by the government prior to the government's  redelivery date and
LESSEE will return the Aircraft to LESSOR in the  condition  required by Article
23 on LESSEE's proposed redelivery date set forth in such notice.

     19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the
event of the  requisition  for use of the Aircraft under CRAF  activation by the
U.S.  Government.  All of LESSEE's obligations under this Lease will continue to
the same extent as if such requisition had not occurred.

     19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine
(but  not the  Airframe)  by the U.S.  Government  in  connection  with the CRAF
Program,  LESSEE will replace such Engine by complying with the terms of Article
18.5 hereof.

     19.4  GOVERNMENT  INDEMNIFICATION.  Any  provisions  of this  Lease  to the
contrary  notwithstanding,  if there is a  requisition  for use of the  Aircraft
pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's
insurances  described in Exhibit C may be  supplemented  by insurances  provided
under Title XIII of the Act, and/or U.S. Government indemnification (which Title
XIII  insurances  and  indemnification  will be in  amounts  not less than those
established  in  Exhibit  C);  provided,   however,   that  LESSEE  will  remain
responsible for full compliance with all the provisions of this Lease, including
Articles  14 and 16,  to the  extent  Title  XIII  and/or  the  U.S.  Government
indemnification do not satisfy LESSEE's obligations under this Lease.

<PAGE>

19.5 NO GEOGRAPHIC  LIMITS.  If there is a  requisition  for use of the Aircraft
pursuant to the CRAF Program and/or CRAF activation, there will be no limitation
on the  geographic  area in which the Aircraft may be operated so long as, taken
as  a  whole,   LESSEE's   insurance,   the  Title  XIII  insurance  and/or  the
indemnification  provided  by the  U.S.  Government  fully  cover  (without  any
     geographic exclusions) LESSEE's Exhibit C insurance requirements.

     19.6 NOTICE OF DEFAULT.  If an Event of Default occurs under this Lease and
LESSOR  elects to pursue its remedies  under Article  25.3(e) to terminate  this
Lease and repossess the Aircraft,  LESSOR will so notify the U.S.  Government by
sending a written communication as follows:

         Headquarters Air Mobility Command
         AMC Contracting Office -- XOKA
         Scott Air Force Base, Illinois  62225-5007

     19.7 RECEIPT OF PAYMENTS.  Subject to the following sentence,  all payments
received by LESSOR or LESSEE from such Government  Entity in connection with the
requisition  of the  Aircraft  under  the CRAF  Program  will be paid over to or
retained by LESSEE.  If a Default has occurred and is  continuing,  all payments
received by LESSEE or LESSOR from such Government  Entity in connection with the
requisition  of the  Aircraft  under the CRAF  Program  may be used by LESSOR to
satisfy any obligations owing by LESSEE.

<PAGE>

     ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE

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

     20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly
existing  and in good  standing  under the Laws of Indiana  (or, on the Delivery
Date, the state of its incorporation).  It has the corporate power and authority
to carry on its business as presently  conducted and to perform its  obligations
hereunder.

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

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

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

<PAGE>

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

     20.1.6 LICENSES.  LESSEE holds all licenses,  certificates and permits from
applicable  Government Entities in the U.S. for the conduct of its business as a
certificated air carrier and performance of its obligations under this Lease.

     20.1.7 NO SUITS.  There are no  suits,  arbitrations  or other  proceedings
pending or threatened before any court or  administrative  agency against LESSEE
which are  reasonably  likely  to be  determined  adversely  and,  if  adversely
determined,  would have a material  adverse  effect on the  business,  assets or
condition  (financial  or  otherwise)  of LESSEE or its ability to perform under
this Lease,  except as described in the filings  provided to LESSOR  pursuant to
Article 22.

     20.1.8 GENERAL OBLIGATIONS.  The obligations of LESSEE under this Lease are
direct, general and unconditional obligations of LESSEE and rank or will rank at
least PARI PASSU with all other present and future unsecured and  unsubordinated
obligations (including contingent  obligations) of LESSEE, with the exception of
such  obligations as are  mandatorily  preferred by law and not by reason of any
encumbrance.

     20.1.9 NO SOVEREIGN IMMUNITY.  LESSEE, under the Laws of the U.S. or of any
other  jurisdiction  affecting LESSEE, is subject to private  commercial law and
suit.  Neither  LESSEE nor its  properties  or assets is entitled  to  sovereign
immunity under any such Laws. LESSEE's performance of its obligations  hereunder
constitute commercial acts done for commercial purposes.

     20.1.10 TAX  RETURNS.  All  necessary  federal and state income tax returns
have been delivered by LESSEE to all relevant  taxation  authorities in the U.S.
or any state  thereof  and LESSEE is not in default in the  payment of any taxes
due and payable as shown on any such  returns or on any  assessment  received by
LESSEE.

     20.1.11 NO  MATERIAL  ADVERSE  EFFECT.  LESSEE is not in default  under any
agreement  to which it is a party or by which it may be bound which would have a
material adverse effect on its business, assets or condition.

<PAGE>

     20.1.12  NO DEFAULT  UNDER THIS  LEASE.  At the time of  execution  of this
Lease,  no Default has occurred and is continuing  and the financial  statements
provided to LESSOR pursuant to Article 22 fairly present the financial condition
of LESSEE.

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

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

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

     20.2.3  INFORMATION  ABOUT  SUITS.  LESSEE will  promptly  give to LESSOR a
notice in writing of any suit,  arbitration or proceeding  against LESSEE before
any court, administrative agency or Government Entity which is reasonably likely
to be  determined  adversely  and, if  adversely  determined,  would  materially
adversely  affect  LESSEE's  financial  condition,  affairs,  operations  or its
ability to perform under this Lease.

     20.2.4 MERGER OF LESSEE.

     (a) LESSEE shall not consolidate  with or merge into any other Person under
circumstances  in which  LESSEE is not the  surviving  corporation,  or  convey,
transfer,  or lease in one or more  transactions all or substantially all of its
assets to any other Person, unless:

     (i) such Person is organized, existing, and in good standing under the Laws
of the U.S.,  any state of the U.S.,  or the  District of  Columbia,  and,  upon
consummation of such transaction, such Person will be a U.S. Air Carrier;

<PAGE>

     (ii) such Person executes and delivers to LESSOR a duly authorized,  legal,
valid, binding and enforceable  agreement,  reasonably  satisfactory in form and
substance to LESSOR,  containing  an effective  assumption by such Person of the
due and punctual  performance  and  observance of each  covenant,  agreement and
condition in the Operative Documents to be performed or observed by LESSEE;

     (iii) such Person makes such filings and  recordings  with the FAA pursuant
to the Act as shall be necessary to evidence such consolidation or merger;

     (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably  satisfactory
to LESSOR to the effect that such  consolidation  or merger has satisfied at the
closing of such consolidation or merger items (i), (ii) and (iii) above;

     (v) immediately  after giving effect to such  consolidation  or merger,  no
Default or Event of Default exists;

     (vi) unless LESSOR otherwise  consents,  immediately after giving effect to
such consolidation or merger,  such Person will have a tangible net worth of not
less  than  sixty-five   percent  (65%)  of  the  LESSEE's  tangible  net  worth
immediately prior to such merger; and

     (vii)  upon such  merger  becoming  effective,  LESSOR  will enjoy the same
degree of protection  under ss. 1110 of the Bankruptcy  Code with respect to the
Aircraft as LESSOR enjoyed prior to such merger.

     (b) Upon any such  consolidation  or merger of LESSEE with or into,  or the
conveyance,  transfer,  or lease by  LESSEE of all or  substantially  all of its
assets to, any Person in accordance with this Article  20.2.4,  such Person will
succeed to, and be  substituted  for, and may exercise every right and power of,
LESSEE under the Operative  Documents with the same effect as if such Person had
been named as  "LESSEE"  therein.  No such  consolidation,  merger,  conveyance,
transfer, or lease shall have the effect of releasing LESSEE or such Person from
any of LESSEE's obligations,  liabilities, covenants, or undertakings under this
Lease.

     20.2.5  RESTRICTION  ON  RELINQUISHMENT  OF  POSSESSION.  LESSEE  will not,
without the prior consent of LESSOR, deliver,  transfer or relinquish possession
of the Aircraft except in accordance with Articles 11 and 12.

<PAGE>

     20.2.6 NO SECURITY INTERESTS.  LESSEE will not create or agree to or permit
to arise any Security  Interest (other than Permitted  Liens) on or with respect
to the Aircraft,  title thereto or any interest therein.  LESSEE will forthwith,
at its own  expense,  take all action as may be necessary to discharge or remove
any such Security Interest if it exists at any time. LESSEE will within five (5)
Business  Days  after  becoming  aware of the  existence  of any  such  Security
Interest give written notice thereof to LESSOR.

     20.2.7 REPRESENTATIONS TO OTHER PARTIES.  LESSEE will not represent or hold
out LESSOR as carrying  goods or  passengers  on the Aircraft or as being in any
way connected or associated with any operation of the Aircraft.

<PAGE>

     ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR

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

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

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

     21.1.3 BINDING. This Lease and the other Operative Documents have been duly
authorized,   executed  and   delivered  by  LESSOR  and  represent  the  valid,
enforceable and binding  obligations of LESSOR except as  enforceability  may be
limited  by  bankruptcy,  insolvency,  reorganization  or other  Laws of general
application affecting the enforcement of creditors' rights.

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

     21.1.5  TITLE TO AIRCRAFT.  On the Delivery  Date LESSOR will have good and
valid title to the Aircraft.

     21.1.6  CITIZENSHIP.  LESSOR is a "citizen of the United States" within the
meaning of 49 U.S. Code 40102(a)(15).

<PAGE>

     21.1.7  INVESTMENT  BY LESSOR.  LESSOR is  acquiring  its  interest  in the
Aircraft for its own account from its corporate  funds,  for  investment and not
with  a  view  to  any  resale  or  distribution   thereof  that  would  require
registration under the Securities Act of 1933; PROVIDED,  HOWEVER,  that subject
to the transfer restrictions in Article 24.2, its disposition of its interest in
the Aircraft shall at all times be within its control.

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

<PAGE>

     ARTICLE 22 FINANCIAL AND RELATED INFORMATION

     LESSEE agrees to furnish each of the following to LESSOR:

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

     (b) within one hundred  twenty (120) days after the end of each fiscal year
of LESSEE, the audited consolidated  financial  statements  (including a balance
sheet and profit and loss  statement)  prepared  as of the close of such  fiscal
year in accordance  with generally  accepted  accounting  principles in the U.S.
LESSEE's  chief  financial  officer  will also provide a  certificate  of LESSEE
stating that, to such  officer's  knowledge,  no Default exists under this Lease
(or if, to such officer's knowledge, a Default does exist, identifying it);

     (c) promptly after distribution, all reports and financial statements which
Amtran,  Inc.  sends  or  makes  generally  available  to  its  stockholders  or
creditors; and

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

<PAGE>

     ARTICLE 23 RETURN OF AIRCRAFT

     23.1 DATE OF RETURN.  LESSEE is obligated to return the  Aircraft,  Engines
Parts and Aircraft  Documentation  to LESSOR on the  Expiration  Date,  unless a
Total Loss of the Aircraft  occurred prior to the Expiration Date and this Lease
was  terminated  early in accordance  with Article 18.3. If LESSEE is in Default
hereunder  by failing to return the  Aircraft  on the  Expiration  Date or if an
Event of Default occurs prior to the Expiration Date and LESSOR  repossesses the
Aircraft,  the return requirements set forth in this Article 23 nonetheless must
be met on the date the Aircraft is actually returned to LESSOR or repossessed by
LESSOR.

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

     23.3  RETURN  LOCATION.  LESSEE at its expense  will  return the  Aircraft,
Engines,   Parts  and   Aircraft   Documentation   to  LESSOR  at   Indianapolis
International Airport, Indianapolis,  Indiana or to such other airport as may be
mutually agreed to by LESSEE and LESSOR.

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

     23.5 AIRCRAFT INSPECTION.

<PAGE>

     23.5.1 During the maintenance  checks  performed  immediately  prior to the
proposed redelivery and at the actual return of the Aircraft,  LESSOR and/or its
representatives  will have an opportunity  to conduct a full systems  functional
and  operational  inspection  of the  Aircraft  (and other  types of  reasonable
inspections  based upon the Aircraft type, age, use and other known factors with
respect to the  Aircraft) and a full  inspection  of the Aircraft  Documentation
(including records and manuals),  all to LESSOR's  satisfaction.  The inspection
will occur  during the Return  Check when the panels,  bays or the like are open
and certain Parts are disassembled.  LESSOR may inspect such opened panels, bays
or the like and the  disassembled  Parts so long as LESSOR  does not disrupt the
Return  Check or cause such Return Check to be extended  beyond the  anticipated
completion date of such Return Check. Any deficiencies  from the Aircraft return
condition  requirements set forth in this Article 23 will be corrected by LESSEE
at its cost prior to the acceptance flight described in Article 23.5.2.

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

     23.5.3 To the  extent  that the ground  inspection  and  acceptance  flight
extend beyond the  Expiration  Date,  the Lease Term will be deemed to have been
automatically  extended  and the  obligations  of  LESSEE  hereunder  (including
Article  23.11.3)  will  continue on a  day-to-day  basis until the  Aircraft is
accepted  by LESSOR  executing  the  Return  Acceptance  Receipt  in the form of
Exhibit I.

     23.6 CERTIFICATE OF AIRWORTHINESS MATTERS.

     23.6.1 The Aircraft  will possess a current  Certificate  of  Airworthiness
issued by the Aviation Authority (although this Certificate of Airworthiness may
later be substituted by the Export Certificate of Airworthiness or equivalent if
requested by LESSOR pursuant to Article  23.10).  The Aircraft at return must be
in the condition  required in order to meet the requirements of a U.S.  Standard
Certificate of Airworthiness  for transport  category aircraft issued by the FAA
in  accordance  with  FAR  Part 21 and,  in  addition,  to  meet  the  operating
requirements of FAR Part 121.

<PAGE>

     23.6.2  LESSEE at its cost will  demonstrate  that the  Aircraft  meets the
requirements for issuance of the U.S. Standard  Certificate of Airworthiness for
transport  category aircraft specified in Article 23.6.1 by delivering to LESSOR
an actual U.S. Standard  Certificate of Airworthiness.  If there is a dispute in
regards to the  condition of the Aircraft or the  Aircraft  Documentation,  then
LESSEE will provide  LESSOR with a letter  acceptable to LESSOR signed by an FAA
Designated  Airworthiness  Representative  (DAR) or another Person acceptable to
LESSOR  stating  that the DAR or such  Person has  inspected  the  Aircraft  and
Aircraft  Documentation  (including  records and manuals) and has found that the
Aircraft meets the requirements for issuance of a U.S.  Standard  Certificate of
Airworthiness  for transport  category  aircraft in accordance  with FAR Part 21
and, in addition, meets the operating requirements of FAR Part 121.

     23.6.3 If the Aircraft is to be  registered  in a country other than in the
U.S.  after  return from  LESSEE,  LESSOR may in its sole  discretion  waive the
requirements  of Article  23.6.2 and instead  require that LESSEE at its expense
(to the extent  such  expense is no greater  than that which  LESSEE  would have
incurred  pursuant to Articles 23.6.1 and 23.6.2,  with any additional  expenses
being  for  LESSOR's  account)  put the  Aircraft  in a  condition  to meet  the
requirements  for issuance of a  Certificate  of  Airworthiness  of the Aviation
Authority of the next country of register.

     23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN.

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

     23.7.2  Aircraft  Documentation  (including  records and manuals) will have
been  maintained  in an  up-to-date  status,  in  accordance  with the rules and
regulations  of the Aviation  Authority and the FAA and this Lease and in a form
necessary in order to meet the  requirements of Article 23.6.2.  The records and
historical documents set forth in Attachment 1 of Exhibit I will be in English.

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

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

<PAGE>

     23.7.5 The  Aircraft  interior  (including  cabin and windows) and exterior
will be clean and all  compartments  will be reasonably free of foreign objects,
dirt, grease,  fluids, stains, grime, cracks, tears and rips (with the exception
of  normal  wear and tear) and  ready to be  placed  into  immediate  commercial
airline operations.

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

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

     23.7.8 The Aircraft will be returned with  LESSOR's  Engines  installed and
with the same  equipment  as at Delivery,  subject  only to those  replacements,
additions  and  Modifications  permitted  under this  Lease.  LESSEE will inform
LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft
and the proposed  replacement  engines  that LESSEE  wants to provide  LESSOR in
place of the Engines. LESSEE will provide LESSOR with whatever data, records and
information  that LESSOR  reasonably  requests in order to evaluate the proposed
replacement  engines. In the event that LESSEE is unable to return either of the
Engines in the conditions required by this Article 23, then LESSEE may provide a
replacement  engine (a  "REPLACEMENT  ENGINE") for such Engine to LESSOR by duly
conveying  to  LESSOR as owner  hereunder  title to  another  engine of the same
manufacturer  and of the same or an improved  model as the Engine being replaced
and suitable for  installation  and use on the  Aircraft,  which engine shall be
free and clear of all  Security  Interests,  and shall be no more than three (3)
years older by  reference to serial  number than the replaced  Engine and have a
modification  status,  value and utility at least equal to the Engine which such
Replacement  Engine is replacing on the Aircraft assuming that such Engine which
such Replacement Engine is replacing was then of the value, utility,  condition,
and  airworthiness  required to be maintained  by the terms of this Lease.  Such
Replacement Engine,  after approval and acceptance by LESSOR, shall be deemed an
"Engine" as defined  herein for all purposes  hereunder.  LESSEE  agrees to take
such  action as LESSOR may  reasonably  request  in order that such  Replacement
Engine shall be duly and properly  titled in the name of LESSOR.  Prior to or at
the time of any such conveyance, LESSEE, at its own expense, will promptly:

<PAGE>

     (a) furnish  LESSOR  with a warranty  bill of sale,  in form and  substance
satisfactory to LESSOR, with respect to such Replacement Engine,

     (b) furnish LESSOR with such evidence of title to such  Replacement  Engine
as reasonably requested by LESSOR, and

     (c) furnish  LESSOR with an opinion of LESSEE's  counsel to the effect that
title to such Replacement Engine has been duly conveyed to LESSOR free and clear
of all Security Interests of any kind or nature and that such exchange qualifies
for tax free treatment under the Internal Revenue Code of 1986, as amended.

     Upon full compliance with this Article, LESSOR shall transfer to LESSEE all
of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to
the Engine  being  replaced  by such  Replacement  Engine,  without  recourse or
warranty,  express or implied,  except that LESSOR has good and marketable title
to such Engine and such Engine shall be free and clear of LESSOR's Liens.

     23.7.9 All  Airworthiness  Directives which are issued prior to the date of
return of the Aircraft  and require  compliance  (either by means of  repetitive
inspections,  modifications  or  terminating  action)  prior  to  return  of the
Aircraft to LESSOR or within one (1) year after the  Termination  Date will have
been  complied  with on the Aircraft on a  terminating  action basis at LESSEE's
cost.  Airworthiness  Directives which do not have a terminating  action will be
accomplished  at the highest level of inspection or modification  possible.  If,
after using best  efforts,  LESSEE is unable to acquire the  material,  parts or
components necessary to accomplish such Airworthiness Directive, LESSEE will pay
to LESSOR upon return of the Aircraft the  estimated  cost of  terminating  such
Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by
LESSEE and  LESSOR,  LESSEE  and  LESSOR  will each  obtain an  estimate  from a
reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR)
and the estimated cost will be the average of the two estimates.

     23.7.10 The Aircraft  will be in compliance  with the Corrosion  Prevention
and Control Program (CPCP) specified in LESSEE's Maintenance Program.

<PAGE>

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

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

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

     23.7.14  The  Aircraft  will be free of any leaks and any damage  resulting
therefrom.  All  repairs  will  have  been  performed  on a  permanent  basis in
accordance with the applicable manufacturer's instructions.

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

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

<PAGE>

     23.8.1 Have performed,  and completed,  by an FAA-approved  repair station,
all  maintenance  tasks  specified in LESSEE's  Maintenance  Program and the MPD
which (a) are  necessary  to clear the  Aircraft of all such tasks for  eighteen
(18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from
the date of return of the  Aircraft,  and (b) are  required to be  performed  at
lesser intervals than eighteen (18) months, five thousand (5,000) hours or three
thousand (3,000) cycles (all such work  collectively  referred to as the "RETURN
CHECK").  If a maintenance task is specific to LESSEE's  Maintenance Program and
not required or  recommended to be performed by the MPD, then LESSEE will not be
required  to  perform  such  maintenance  task so long as the  Return  Check  is
performed in such a manner that clears the Aircraft of all maintenance  tasks in
accordance  with the  requirements  of the  preceding  sentence.  As part of the
Return Check, all non-routine  tasks generated as a result of the performance of
the work  included  in the  Return  Check and any other  discrepancies  revealed
during  the Return  Check  must also be  performed  in  accordance  with the FAA
approved  procedures.  LESSEE  will also weigh the  Aircraft.  LESSEE  agrees to
perform  during the Return  Check any other work  reasonably  required by LESSOR
(and not  otherwise  required  under this Lease) and LESSOR will,  promptly upon
receipt of an invoice  from LESSEE,  reimburse  LESSEE for such work at LESSEE's
preferred customer rates.

     23.8.2 Have the  Aircraft  in  compliance  with  Corrosion  Prevention  and
Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program.

     23.8.3 Remove LESSEE's exterior markings,  including all exterior paint, by
stripping (or, at LESSOR's option,  pneumatically  scuff/sanding) the paint from
the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish,
prepare  (including  application of alodine or another corrosion  inhibitor) and
prime the surfaces to be painted,  all in  accordance  with  Manufacturer's  and
paint  manufacturer's  recommendations.  LESSEE will then repaint the  fuselage,
empennage,  wings and Engine cowlings in the colors and logo specified by LESSOR
; PROVIDED,  HOWEVER, that LESSEE will be responsible for only paying the amount
that it  would  cost to strip  or  scuff/sand  (whichever  is  performed  on the
Aircraft at return) and properly paint the Aircraft in LESSEE's  colors and logo
and LESSOR will be responsible  for the excess cost to paint the Aircraft in the
next lessee's  colors and logo.  Such painting  will be  accomplished  in such a
manner  as  to  result  in  a  uniformly  smooth  and  cosmetically   acceptable
aerodynamic surface. All external placards,  signs and markings will be properly
attached, free from damage, clean and legible.

     23.8.4 Clean the exterior and interior of the Aircraft.

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

     23.8.6 In accordance with Article 23.7.7,  permanently repair damage to the
Aircraft that exceeds Manufacturer's limits and replace any non-flush structural
patch repairs installed on the Aircraft with flush-type  repairs, so long as the
Manufacturer or the  Manufacturer's  Structural Repair Manual permits flush-type
repairs on the portion of the Aircraft  where the non-flush  structural  repairs
were made.

<PAGE>

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

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

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

     23.8.10  LESSEE will  provide  evidence to LESSOR's  satisfaction  that the
Engine historical and technical records, borescope inspection,  trend monitoring
and other checks  specified in Article 23.8.9 do not reveal any condition  which
would cause the Engines or any module to be  unserviceable,  beyond  serviceable
limits or serviceable with an increased frequency of inspection or with calendar
time, flight hour or flight cycle restrictions  under the Engine  manufacturer's
maintenance manual. LESSEE will correct any discrepancies in accordance with the
guidelines  set out by the Engine  manufacturer  which may be discovered  during
such inspection.

     23.8.11 In the event the Engine historical and technical records, borescope
inspection, trend monitoring and other checks specified in Article 23.8.9 result
in a dispute regarding the conformity of an Engine with the requirements of this
Article 23, LESSEE and LESSOR will consult with Engine  manufacturer  and follow
Engine manufacturer's recommendations (including the accomplishment of an Engine
test cell operational  check) with regard to determining if such Engine complies
with  the  requirements  of  this  Article  23  and  the  manner  in  which  any
discrepancies from the requirements of this Article 23 will be rectified.

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

<PAGE>

(CONFIDENTIAL MATERIAL OMITTED)

     23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at
its cost  will  (a)  provide  an  Export  Certificate  of  Airworthiness  or its
equivalent  from the State of  Registration so that the Aircraft can be exported
to the  country  designated  by LESSOR,  (b) assist with  deregistration  of the
Aircraft from the register of aircraft in the State of Registration,  (c) assist
with arranging for prompt  confirmation of such deregistration to be sent by the
registry in the State of Registration  to the next country of  registration  and
(d) perform any other acts reasonably  required by LESSOR in connection with the
foregoing.  If any  Aircraft  work which  LESSEE is not  otherwise  required  to
perform hereunder,  including  engineering,  is required in order to obtain such
Export  Certificate of  Airworthiness,  LESSEE will perform such work and LESSOR
will reimburse LESSEE for such work at LESSEE's preferred customer rates.

     23.11 LESSEE'S  CONTINUING  OBLIGATIONS.  In the event that LESSEE does not
return  the  Aircraft  to LESSOR  on the  Expiration  Date and in the  condition
required by this Article 23 for any reason  (whether or not the reason is within
LESSEE's control):

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

<PAGE>

     23.11.2 Until such return,  the Agreed Value will be an amount equal to the
Agreed  Value on the day the  Aircraft  should  have  been  returned  to  LESSOR
pursuant to this Lease.

     23.11.3  LESSEE  will  fully  indemnify  LESSOR  on demand  for all  losses
(including consequential damages), liabilities,  actions, proceedings, costs and
expenses thereby suffered or incurred by LESSOR and, in addition,  if a delay in
return of the Aircraft was due to reasons within  LESSEE's  reasonable  control,
then until such time as the Aircraft is  redelivered  to LESSOR and put into the
condition  required by this Article 23,  instead of paying the Rent specified in
Article  5.3,  LESSEE  will pay twice  the  amount of Rent for each day from the
scheduled  Expiration Date until the Termination  Date (the monthly Rent payable
under Article  5.3.1 will be prorated  based on the actual number of days in the
applicable month). Payment will be made upon presentation of LESSOR's invoice.

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

     23.12 AIRPORT AND NAVIGATION CHARGES.  LESSEE will ensure that at return of
the Aircraft any and all airport,  navigation  and other charges which give rise
or may if unpaid  give rise to any lien,  right of  detention,  right of sale or
other  Security  Interest in relation to the  Aircraft,  Engine or any Part have
been paid and discharged in full and will at LESSOR's  request produce  evidence
thereof satisfactory to LESSOR.

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

<PAGE>

     23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements
set forth in Articles 16 and 17,  respectively,  will apply to  Indemnitees  and
LESSOR's  representatives  during return of the  Aircraft,  including the ground
inspection  and  acceptance  flight.  With  respect  to the  acceptance  flight,
LESSOR's representatives will receive the same protections as LESSOR on LESSEE's
Aviation and Airline General Third Party Liability Insurance.

<PAGE>

     ARTICLE 24 ASSIGNMENT

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

     24.2 SALE OR ASSIGNMENT BY LESSOR.

     24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any
time and without LESSEE's consent sell, assign or transfer its rights,  interest
and  obligations  hereunder  or with  respect to the  Aircraft  to a third party
("LESSOR'S ASSIGNEE"), but only if:

     (a)  LESSOR's  Assignee  has full  power,  authority,  and  legal  right to
execute,  deliver,  and perform the  obligations  of LESSOR under the  Operative
Documents  and  provides  reasonably  satisfactory  evidence  of such  power and
authority to LESSEE;

     (b) LESSOR's  Assignee  enters into one or more legal,  valid,  binding and
enforceable  agreements effective to confirm that LESSOR's Assignee agrees to be
bound by all the terms of, and to undertake all of the obligations arising after
such  transfer  of LESSOR in,  the  Operative  Documents,  and in which it makes
representations  and warranties  substantially the same as those in Article 21.1
of this Lease;

     (c) upon such  transfer  LESSEE  shall not be  obligated to pay any greater
amount or incur any  greater  obligation  (other  than  indemnifying  additional
indemnitees,  insuring additional insureds and other minor ministerial  matters)
than that which it would have been  obliged to pay or incur under the  Operative
Documents if no transfer or assignment  had taken place,  and upon such transfer
the terms and  conditions of the Operative  Documents  insofar as they relate to
the rights and obligations of LESSEE are not altered;

<PAGE>

     (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of
counsel  reasonably  satisfactory to LESSEE to the effect that such agreement or
agreements  referred to in clause (2) and, if applicable,  clause (6) are legal,
binding,  and enforceable in accordance with its or their terms,  subject to the
typical exceptions.

     (e) the  transfer  shall  relate to  LESSOR's  entire  interest as owner or
lessor;

     (f) LESSOR's  Assignee is a citizen of the United States under 49 U.S. Code
ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or
any  other  provision  that  may  restrict  LESSEE's  use  or  operation  of the
Aircraft), or shall use a voting powers trust or similar arrangement in order to
hold an interest in the Aircraft such that the Aircraft can be registered in the
U.S.  (without  considering FAR ss.47.9 or any other provision that may restrict
LESSEE's use or operation of the Aircraft);

     (g)  LESSOR's  Assignee  is a single  Person and is either (i) a  Permitted
Institution,  or  (ii)  or an  affiliate  of a  Permitted  Institution,  if such
affiliate's  obligations  under the Operative  Documents are  guaranteed by such
Permitted  Institution  pursuant to a written  guaranty,  in form and  substance
reasonably satisfactory to LESSEE; and

     (h)  LESSOR  shall  give  written  notice to LESSEE at least  five (5) days
before  any such  transfer,  specifying  the name and  address  of the  proposed
LESSOR's  Assignee,  and  providing  reasonably  satisfactory  evidence that the
proposed  LESSOR's   Assignee  meets  the  requirements   described  in  Article
24.2.1(g)(i) or (ii).

     For a period of two (2) years after such sale or assignment and at LESSEE's
cost,  LESSEE will  continue to name LESSOR as an  additional  insured under the
Aviation and Airline General Third Party Liability  Insurance  required pursuant
to Article 17 and Exhibit C.

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

<PAGE>

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

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

     24.5 PROTECTIONS.

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

     24.5.2  Wherever the term "LESSOR" is used in this Lease in relation to any
of the provisions relating to disclaimer, title and registration,  indemnity and
insurance contained in Articles 8, 13, 16 and 17, respectively,  or with respect
to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee
and LESSOR's  Lender,  if  applicable.  For avoidance of doubt,  in the event of
LESSOR's  sale or  financing  of the  Aircraft,  the  disclaimer  and  indemnity
provisions  contained in Articles 8 and 16 will continue to be applicable  after
the sale or assignment to International  Lease Finance  Corporation,  as well as
being applicable to LESSOR's Assignee and LESSOR's Lender.

<PAGE>

     ARTICLE 25 DEFAULT OF LESSEE

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

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

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

     (b)  LESSEE  fails to make a Rent or other  payment  due  hereunder  in the
manner and by the date  provided  herein and fails to make such  payment  within
five (5) Business Days after its receipt of notice that such payment is due;

     (c) LESSEE  fails to obtain or maintain the  insurance  required by Article
17;

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

     (e)  LESSEE  fails to  observe  or  perform  any of its  other  obligations
hereunder  and fails to cure the same  within  thirty  (30) days  after  written
notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty
(60) days to cure such failure so long as it uses diligent efforts to do so;

     (f) any  representation  or warranty of LESSEE  herein  proves to have been
untrue in any material respect when made; provided,  that, if the effect of such
falsity  is  curable,  LESSEE  shall  have  thirty  (30) days  after  LESSEE has
knowledge that the representation or warranty is untrue;

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

     (h) LESSEE abandons the Aircraft or Engines;

     (i) LESSEE or an  approved  sublessee  no longer has  unencumbered  control
(other than Permitted Liens) or possession of the Aircraft or Engines, except as
otherwise permitted by this Lease;

<PAGE>

                (j) LESSEE temporarily or permanently  discontinues  business or
                (except as  permitted  by  Article  20.2.4)  sells or  otherwise
     disposes of all or substantially all of its assets;

     (k) a material adverse change occurs in the financial condition of LESSEE;

     (l) LESSEE no longer  possesses  the  licenses,  certificates  and  permits
required  for the conduct of its business as a  certificated  air carrier in the
U.S.;

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

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

     (o) any order,  judgment  or decree is  entered  by any court of  competent
jurisdiction appointing a receiver,  trustee or liquidator of LESSEE or at least
half  of its  property,  or if at  least  half  of  LESSEE's  property  is to be
sequestered.  If instituted by or done with the consent of LESSEE, the same will
be an immediate Event of Default. If instituted by another Person, the same will
be an Event of Default if not dismissed, stayed, remedied or relinquished within
sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such
proceeding  will become an immediate Event of Default if such stay is removed or
terminates and the proceeding is not dismissed,  remedied or  relinquished  when
such stay is removed or terminates.

     (p)  any  indebtedness  for  borrowed  moneys  or a  guarantee  or  similar
obligation  owed by  LESSEE  with an unpaid  balance  of  CONFIDENTIAL  MATERIAL
OMITTED is  declared  due before its stated  maturity or LESSEE is in default of
payment  obligations  CONFIDENTIAL  MATERIAL  OMITTED  under any other  purchase
agreement,  lease,  conditional  sale agreement or other  agreement  pursuant to
which LESSEE has possession of any aircraft;

<PAGE>

     (q)  Eurocontrol  has  notified  LESSOR  that there are unpaid  Eurocontrol
charges due from LESSEE  (unless such charges are being  contested in good faith
and by  appropriate  proceedings,  an adequate  bond has been  provided and such
proceedings  do not involve any danger of the detention,  interference  with the
use or  operation,  sale,  forfeiture  or loss of the Aircraft) and such charges
remain  outstanding  for  a  period  of  thirty  (30)  days  from  the  date  of
Eurocontrol's  notice to LESSOR  provided that such thirty (30) day grace period
will not apply if there is a danger of detention,  interference  with the use or
operation, sale, forfeiture or loss of the Aircraft; or

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

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

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

     (b) require  that  LESSEE  immediately  move the  Aircraft to an airport or
other location designated by LESSOR;

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

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

     (e) terminate this Lease by taking possession of the Aircraft or by serving
notice  requiring  LESSEE  to return  the  Aircraft  to  LESSOR at the  location
specified by LESSOR.  If LESSOR takes  possession of the Aircraft,  it may enter
upon LESSEE's  premises where the Aircraft is located  without  liability.  Upon
repossession  of the  Aircraft,  LESSOR will then be entitled to sell,  lease or
otherwise  deal with the  Aircraft as if this Lease had never been made.  LESSOR
will be entitled to the full benefit of its bargain with LESSEE; or

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

<PAGE>

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

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

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

     (b) any losses  suffered by LESSOR  because of LESSOR's  inability to place
the Aircraft on lease with another  lessee or to otherwise  utilize the Aircraft
on  financial  terms as  favorable  to LESSOR as the terms  hereof or, if LESSOR
elects  to  dispose  of the  Aircraft,  the funds  arising  from a sale or other
disposition  of the  Aircraft  are not as  profitable  to LESSOR as leasing  the
Aircraft in accordance with the terms hereof would have been (and LESSOR will be
entitled to accelerate  any and all Rent which would have been due from the date
of LESSOR's  recovery or  repossession  of the Aircraft  through the  Expiration
Date);

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

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

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

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

<PAGE>

     (g) any other loss, damage, expense, cost or liability which LESSOR suffers
or incurs as a result of the Event of Default and/or  termination of this Lease,
including an amount  sufficient  to fully  compensate  LESSOR for any loss of or
damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default.

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

     25.7 PRESENT VALUE OF PAYMENTS.  In calculating LESSOR's damages hereunder,
upon an Event of Default  all Rent and other  amounts  which would have been due
hereunder  during the Lease Term if an Event of Default had not occurred will be
calculated on a present value basis using a discounting rate of six percent (6%)
per  annum  discounted  to the  earlier  of the  date on  which  LESSOR  obtains
possession of the Aircraft or LESSEE makes an effective tender thereof.

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

<PAGE>

     ARTICLE 26 NOTICES

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

     26.2 NOTICE INFORMATION. Notices will be sent:

If                        to LESSOR:  INTERNATIONAL  LEASE  FINANCE  CORPORATION
                          1999  Avenue of the  Stars,  39th  Floor Los  Angeles,
                          California 90067, U.S.A.

                         Attention:       Legal Department

                          Fax:             310-788-1990
                          Telephone:       310-788-1999

If to LESSEE:             AMERICAN TRANS AIR, INC.
                          7337 West Washington Street
                          Indianapolis International Airport
                          Indianapolis, Indiana 46231
                          United States of America

                          Attention:       Ken Wolff
                                           Executive Vice President
                                           and Chief Financial Officer
                          Fax:             317-240-7091
                          Telephone:       317-247-4000

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

<PAGE>

     ARTICLE 27 GOVERNING LAW AND JURISDICTION

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

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

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

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

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

<PAGE>

     ARTICLE 28 MISCELLANEOUS

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

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

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

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

     28.5 USURY LAWS. The parties intend to contract in strict  compliance  with
the usury Laws of the State of  California  and, to the extent  applicable,  the
U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE
will not be obligated to pay Default Interest or other interest in excess of the
maximum non-usurious interest rate, as in effect from time to time, which may by
applicable Law be charged,  contracted for,  reserved,  received or collected by
LESSOR in connection with the Operative Documents.  During any period of time in
which the then-applicable highest lawful rate is lower than the Default Interest
rate,  Default  Interest will accrue and be payable at such highest lawful rate;
however,  if at later times such highest lawful rate is greater than the Default
Interest rate, then LESSEE will pay Default  Interest at the highest lawful rate
until the Default Interest which is paid by LESSEE equals the amount of interest
that would have been payable in  accordance  with the interest rate set forth in
Article 5.5.

     28.6 DELEGATION BY LESSOR.  LESSOR may delegate to any Person(s) all or any
of the  rights,  powers or  discretion  vested in it by this  Lease and any such
delegation  may be made upon such terms and conditions as LESSOR in its absolute
discretion thinks fit.

<PAGE>

     28.7   CONFIDENTIALITY.   The  Operative   Documents  and  all   non-public
information  obtained by either party about the other are  confidential  and are
between  LESSOR and LESSEE  only and will not be  disclosed  by a party to third
parties (other than to such party's auditors or legal advisors or as required in
connection with any filings of this Lease in accordance with Article 13) without
the prior  written  consent of the other party.  If  disclosure is required as a
result of applicable  Law,  LESSEE and LESSOR will cooperate with one another to
obtain  confidential  treatment as to the  commercial  terms and other  material
provisions of this Lease.

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

<PAGE>

     IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed
by their respective officers as of September 5, 2000.

INTERNATIONAL LEASE FINANCE CORPORATION                AMERICAN TRANS AIR, INC.

By:                                                          By:

Its:                                                         Its:

<PAGE>

         EXHIBIT A            AIRCRAFT DESCRIPTION

Aircraft Manufacturer and Model:                          Boeing 737-800

Specification:

Seating Configuration:

Manufacturer's Serial Number:                             28246

Registration Mark:                                        ____

Engine Manufacturer and Model:                            CFM56-7B-27

Engine Serial Numbers:                                    _______ and ________

Engine Thrust Rating:                                     27,300 pounds

Maximum Gross Takeoff Weight:                             160,000 pounds

<PAGE>

        EXHIBIT B            AGENCY AGREEMENT

                               (Limited Authority)

                       Relating to Boeing 737-800 Aircraft

     THIS  AGENCY  AGREEMENT  ("AGREEMENT")  is  made  and  entered  into  as of
____________________.

         BETWEEN:

     AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal
place of business is at 7337 West Washington Street,  Indianapolis International
Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and

     INTERNATIONAL LEASE FINANCE CORPORATION,  a California  corporation,  whose
address and  principal  place of  business is at 1999 Avenue of the Stars,  39th
Floor, Los Angeles, California 90067, U.S.A. ("BUYER").

         RECITAL

     The Boeing  Company  ("MANUFACTURER")  and Buyer have entered into Purchase
Agreement  1830,  dated as of June 27, 1995 (such  purchase  agreement as may be
amended in accordance with the provisions thereof is hereinafter  referred to as
the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and
sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has
agreed to lease one (1) of such aircraft  bearing  manufacturer's  serial number
28246 (the  "AIRCRAFT")  to the Agent  pursuant to an Aircraft  Lease  Agreement
between Buyer and Agent dated as of September 5, 2000 (the "LEASE").

     The Agent is engaged in business as a commercial air carrier and intends to
lease the Aircraft from Buyer,  and Buyer is desirous of utilizing the expertise
of the Agent as Buyer's  agent in all  matters to which the  Purchase  Agreement
relates with respect to the Aircraft  except  certain items as indicated  below,
and the Agent, as Buyer's agent, is willing to make such expertise  available to
Buyer.

     Accordingly, the parties agree as follows:

<PAGE>

     1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with
authority to perform the following,  on behalf of Buyer, as the Agent may in its
discretion determine to be necessary or desirable:

     (a) monitor Manufacturer's production, testing and delivery of the Aircraft
in accordance with the Purchase Agreement and

     (b) do all such other things permitted by the Purchase Agreement related to
the  technical  and  engineering  aspects of  Manufacturer's  production  of the
Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on
any defect that occurs  during  manufacture  that is considered  significant  in
nature by Buyer as measured by the criteria set forth below.  Buyer  retains the
sole authority to perform on any defect meeting such criteria.

     (i)  Deviations  from the drawing  configuration  that could affect  future
modifications, maintenance, repair or overhaul of the Aircraft;

     (ii) Defects that are obvious appearance items;

     (iii) Rework that requires  stress  concurrence  to satisfy  Manufacturer's
Material Review Board (MRB) requirements;

     (iv) A high  quantity of defects  normally  considered  minor on a singular
basis;

     (v)  Major  rework  requiring   extensive  repair  or  modification,   E.G.
replacement of ---- skin panels, extensive use of oversize fasteners,  repair of
damaged areas and significant structural modifications;

     (vi) Rework that affects the aerodynamic  drag coefficient of the Aircraft;
or

     (vii) Rework that involves areas known to be sensitive to Buyer.

     2.  Notwithstanding  anything in the  provisions of paragraph 1, nothing in
this Agreement will confer authority upon or otherwise permit the Agent:

     (a) to exercise any power of termination under the Purchase Agreement or

<PAGE>

     (b) to make any  payments due from Buyer to  Manufacturer  or to receive on
behalf of Buyer any payments due from Manufacturer under the Purchase Agreement,
or to alter any of the terms and  conditions  of the  Purchase  Agreement or the
Detail Specifications of the Aircraft.

     3. Buyer will not revoke the  appointment  of and  authority  granted under
this  Agreement to the Agent unless a termination  of the Purchase  Agreement or
Lease has  occurred  with  respect  to the  Aircraft  or the Agent has failed to
perform  a  material  obligation  under  this  Agreement.  Notice  of  any  such
revocation  will be provided in accordance  with the provisions of Article 14 of
the Purchase Agreement and given to both Manufacturer and the Agent.

     4.  Manufacturer  acknowledges the appointment of the Agent for the purpose
set forth  hereunder and  Manufacturer  and Buyer agree that due  performance by
Manufacturer  or  Agent of an  obligation  under  the  Purchase  Agreement  will
constitute due satisfaction of such obligation by such party and Buyer agrees to
be bound by the acts of the Agent.

     5. Buyer and Agent  agree to identify  the  technical  organization  and/or
person(s) with the limited  authority to act for Agent during  production of the
Aircraft.  Buyer will, if possible,  provide such identification to Manufacturer
in writing,  along with office space requirements for Agent, if required,  prior
to or at the time of Manufacturer's acknowledgment of this Agreement.

     6. Nothing in this  Agreement  will subject  Manufacturer  to any liability
under the  Purchase  Agreement  which it would not  otherwise  be subject to, or
modify  Manufacturer's  rights  thereunder,  or require  Manufacturer  to divest
itself of title to or  possession  of  Aircraft or any other  property  which is
subject to the Purchase Agreement until payment therefor and delivery thereof in
accordance with the Purchase Agreement.

     7. None of the parties hereto will be entitled to assign to any third party
any of their rights under this Agreement.

     8. The Agent will not  delegate to any third party the  performance  of the
obligations imposed on it by this Agreement or appoint a sub-agent.

     9.   References  to   Manufacturer  in  this  Agreement  will  include  any
wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its
rights and obligations  under the Purchase  Agreement  pursuant to the terms and
conditions thereof.

     10. This Agreement will be governed by the laws of the State of California;
however,  the Purchase  Agreement shall remain governed by the laws of the State
of Washington.

<PAGE>

     This  Agreement has been  executed by the parties  hereto as of the day and
year first above written.

INTERNATIONAL LEASE FINANCE CORPORATION                AMERICAN TRANS AIR, INC.

By:                                                    By:

Its:                                                   Its:

The Boeing Company  acknowledges  the appointment of AMERICAN TRANS AIR, INC. as
agent of  International  Lease Finance  Corporation in connection with the above
referenced Aircraft as set forth in this Agreement.

THE BOEING COMPANY

By:

Its:

<PAGE>

         EXHIBIT C            CERTIFICATE OF INSURANCE

[Refer to Aircraft Lease  Agreement dated as of September 5, 2000 between LESSEE
and LESSOR (the "Lease").  If applicable,  insurance  certificates from both the
insurers and reinsurers will be provided. If there is a LESSOR's Lender, include
references to it where appropriate after references to LESSOR.]

To:      INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR")
                                                   ------
         1999 Avenue of the Stars, 39th Floor
         Los Angeles, California 90067
         United States

Re:      AMERICAN TRANS AIR, INC. ("LESSEE")

         Boeing 737-800
         Manufacturer's Serial No.:                        28246
         Registration Mark:                                ____ (the "AIRCRAFT")

         The  following   security  has  subscribed  to  the  insurance   and/or
reinsurance policies:

         [LIST COMPANIES & PERCENTAGES]

         THIS IS TO CERTIFY THAT, as Insurance  Brokers,  we have effected Fleet
Insurance  in respect of aircraft  owned or operated  by LESSEE  (including  the
Aircraft), and that insurance in respect of the Aircraft is as specified below.

                             AIRCRAFT HULL ALL RISKS

COVERING:

     All  risks of  physical  loss or  damage  to the  Aircraft  from any  cause
(subject  only to the  exclusions  as specified  below),  for an Agreed Value of
Aircraft in the amount of [list amount  calculated  in  accordance  with Article
18.1]

DEDUCTIBLES:

     (CONFIDENTIAL  MATERIAL OMITTED) each and every loss (or such lesser amount
as generally  applicable to the rest of LESSEE's 737-800 fleet).  Not applicable
to Total Loss/Constructive Total Loss or Arranged Total Loss

<PAGE>

GEOGRAPHICAL COVERAGE:

     Worldwide [subject to customary exclusions]

               AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY

COVERING:

     Aircraft  Third Party,  Passenger,  Baggage,  Cargo and Mail  Liability and
Airline General Third Party Liability  (including  Premises,  Hangarkeepers  and
Products  Liability)  for combined  single limit of not less than  (CONFIDENTIAL
MATERIAL  OMITTED) (or such higher amount as LESSEE may carry generally on other
737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate
in relation to Products  Liability),  extended to cover LESSEE's liability under
the Lease to the extent of the risks  covered by the  policy  including  war and
allied perils under Extended Coverage  Endorsement as per AVN 52 subject only to
exclusions as specified below

GEOGRAPHICAL LIMITS:

     Worldwide [subject to customary exclusions]

                      HULL WAR AND ALLIED PERILS COVERING:

     Hull  War  Risks  as  per  LSW555.B,  but  including  (a)  confiscation  or
requisition  (including  by State of  Registration  and state  where  airline is
domiciled),  (b)  hijacking or other  unlawful  seizure or wrongful  exercise of
control of the Aircraft or crew in flight (including any attempt at such seizure
or control) and including "All Risks"  Continuation  Clause and Extortion  Risks
(including  expenses)  and covering  claims  excluded from Hull All Risks Policy
while Aircraft outside  Assured's control by reason of perils insured under this
policy, for an Agreed Value of Aircraft in the amount of [list amount calculated
in accordance with Article 18.1]

DEDUCTIBLE:

         No deductible

<PAGE>

GEOGRAPHICAL LIMITS:

         Worldwide

                       AIRCRAFT SPARES ALL RISKS INSURANCE

COVERING:

         All risks of  physical  loss or damage to  Aircraft  Parts or spares or
         Engines at all times  when  removed  from the  Aircraft  from  whatever
         cause,  subject only to the exclusions  specified below,  including the
         risks set down in AVN 48B other  than  paragraphs  (a) and (b)  thereof
         (but including paragraph (a) in respect of transit risks) for limits of
         not less than:

         CONFIDENTIAL MATERIAL OMITTED

         and covering:

                With  respect  to  an  Engine,  an  agreed  value  (CONFIDENTIAL
                MATERIAL   OMITTED)  or,  with  LESSOR's  written   concurrence,
                replacement cost

                With respect to Parts, replacement cost

DEDUCTIBLE:

         (CONFIDENTIAL MATERIAL OMITTED)

GEOGRAPHICAL COVERAGE:

         Worldwide

                       INSURANCE REQUIRED BY MANUFACTURER

         LESSEE will carry the insurance  required by Manufacturer in connection
with LESSOR's  assignment of  Manufacturer's  warranties and product  support to
LESSEE

<PAGE>

                              CONTRACTUAL INDEMNITY

         To the  extent  of  the  risks  covered  by the  policies,  LESSEE  has
insurance  coverage for the indemnities  agreed to by LESSEE pursuant to Article
16 of the Lease, subject to AVN67B or equivalent

                        PERIOD OF COVERAGE (ALL POLICIES)

         From the Delivery Date of Aircraft to [END OF POLICY PERIOD]

         It is further  certified  that LESSOR has an interest in respect of the
Aircraft under the Lease.  Accordingly,  with respect to losses occurring during
the period from the  Effective  Date until the expiry of the  Insurance or until
the expiry or agreed termination of the Lease or until the obligations under the
Lease are terminated by any action of the Insured or LESSOR and in consideration
of the  Additional  Premium it is confirmed  that the Insurance  afforded by the
Policy is in full force and effect and it is further  agreed that the  following
provisions are specifically endorsed to the Policy.

           1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS)
 AND AIRCRAFT SPARES INSURANCES

                (a) In respect of any claim on the Aircraft that becomes payable
         on the basis of a Total Loss,  payment of any  settlement  will be made
         to, or to the order of LESSOR  as sole  loss  payee,  up to the  Agreed
         Value.  With  respect to  repairable  damage to an  Aircraft or Engine,
         LESSOR will receive all  insurance  proceeds in excess of  CONFIDENTIAL
         MATERIAL  OMITTED provided that upon receipt by the insurance broker of
         written  notice of a material  default on the part of LESSEE (and until
         notice that it has been cured),  all insurance proceeds which otherwise
         would be payable to LESSEE will be made directly to LESSOR.  In respect
         of any other  claim,  payment of any  settlement  (net of any  relevant
         policy  deductible)  will  be  made  with  such  party(ies)  as  may be
         necessary  to  repair  the  Aircraft  unless   otherwise  agreed  after
         consultation  between the Insurers and the Insured and, where necessary
         under the terms of the Lease,  LESSOR.  Such payments will only be made
         provided  they  are  in  compliance   with  all  applicable   laws  and
         regulations.

                (b)    Insurers agree on a 50/50 settlement in terms of AVS 103.

                (c)  Insurers  have no right to replace the  Aircraft on a Total
         Loss (arranged, constructive or otherwise).

<PAGE>

                (d) Insurers confirm that under the insurance  policies,  if the
         Insured  installs  an engine  owned by a third  party on the  Aircraft,
         either  (i) the hull  insurance  will  automatically  increase  to such
         higher  amount  as is  necessary  in order  to  satisfy  both  LESSOR's
         requirement  to receive the Agreed  Value in the event of a Total Loss,
         Constructive  Total Loss or Arranged Total Loss and the amount required
         by the third party engine owner, or (ii) separate additional  insurance
         on  such  engine  will  attach  in  order  to  satisfy  separately  the
         requirements of the Insured to such third party engine owner.

         2.     UNDER THE LEGAL LIABILITY INSURANCE

                (a) Subject to the provisions of this Endorsement, the Insurance
         will  operate in all  respects as if a separate  Policy had been issued
         covering  each party insured  hereunder,  but this  provision  will not
         operate to include any claim  arising  howsoever  in respect of loss or
         damage to the Aircraft  insured  under the Hull or Spares  Insurance of
         the  Insured.  Notwithstanding  the  foregoing  the total  liability of
         Insurers in respect of any and all Insureds  will not exceed the limits
         of liability stated in the Policy.

                (b) The Insurance provided hereunder will be primary and without
         right of  contribution  from any other insurance which may be available
         to LESSOR.

         3.     UNDER ALL INSURANCES

                (a) LESSOR,  its  successors  and assigns,  and (with respect to
         Aviation and Airline General Third Party Liability only) its directors,
         officers and employees for their respective  rights and interests,  are
         included as Additional Insureds.

                (b) The cover  afforded  to LESSOR by the  Policy in  accordance
         with this  Endorsement  will not be  invalidated by any act or omission
         (including misrepresentation and non-disclosure) of any other person or
         party which  results in a breach of any term,  condition or warranty of
         the Policy.

                (c) LESSOR will have no responsibility  for premium and insurers
         will waive any right of set-off or  counterclaim  against LESSOR except
         in respect of outstanding premium in respect of the Aircraft,  provided
         that Insurer may only set-off for premiums  against the proceeds of the
         hull  insurance for  outstanding  premiums in connection  with hull all
         risks and hull war and allied perils insurance.

<PAGE>

                (d) Upon payment of any loss or claim to or on behalf of LESSOR,
         Insurers will to the extent and in respect of such payment be thereupon
         subrogated  to all legal  and  equitable  rights of LESSOR  indemnified
         hereby (but not against LESSOR). Insurers will not exercise such rights
         without  the  consent  of those  indemnified,  such  consent  not to be
         unreasonably  withheld.  At the expense of Insurers  LESSOR will do all
         things  reasonably  necessary to assist the  Insurers to exercise  said
         rights.

                (e) Except in  respect  of any  provision  for  Cancellation  or
         Automatic  Termination  specified  in the  Policy  or  any  endorsement
         thereof,  cover provided by this  Endorsement  may only be cancelled or
         materially  altered in a manner  adverse to LESSOR by the giving of not
         less than thirty (30) days notice in writing to LESSOR.  Notice will be
         deemed to commence  from the date such notice is given by the Insurers.
         Such notice will NOT,  however,  be given at normal  expiry date of the
         Policy or any endorsement.

         4.     EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS
 OF THIS CERTIFICATE

                (a)    LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS,
         CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION
         PROVISIONS THEREOF.

                (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN
         THE LEASE WHICH PURPORT TO SERVE AS AN  ENDORSEMENT OR AMENDMENT TO THE
         POLICY.

         SUBJECT (save as  specifically  stated in this  Certificate)  to policy
terms, conditions, limitations and exclusions.

                                    Yours faithfully,
                                    [BROKERS]

<PAGE>

         EXHIBIT D            BROKERS' LETTER OF UNDERTAKING

To:             INTERNATIONAL LEASE FINANCE CORPORATION
                1999 Avenue of the Stars, 39th Floor
                Los Angeles, California 90067
                United States

Date:                                                             Our Ref:

Re:       AMERICAN TRANS AIR, INC. ("LESSEE")
                                     ------
          Boeing 737-800
          Manufacturer's Serial No.:                       ____
          Registration Mark:                               ____ (the "AIRCRAFT")

Dear Sirs:

         We confirm that insurance has been effected for the account of [LESSEE]
(the "OPERATOR")  covering all aircraft owned or operated by them, including the
above-referenced  aircraft (the "Aircraft").  [Also confirm, if applicable,  the
amount of any hull all risks or hull war and allied perils on the Aircraft which
LESSEE is carrying in excess of the Agreed Value (which excess  insurance  would
be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of
the Agreed Value.]

         Pursuant  to   instructions   received   from  the   Operator   and  in
consideration of your approving the arrangement of the Operator's "Fleet Policy"
(under which the above-referenced  Aircraft is insured) through the intermediary
of ourselves  as Brokers in  connection  with the  insurance  (the  "INSURANCE")
mentioned  in our  Certificate  of  Insurance  (Reference  No. [ ] dated [ ] and
attached hereto), we undertake as follows:

         1. In  relation  to the Hull and War  Risks  Insurance  to hold to your
order the insurance  Slips or Contracts and any Policies  which may be issued or
any policies  substituted  (with your consent) therefor (but only insofar as the
same  relate to the  Aircraft  only) and the  benefit  of the Hull and War Risks
Insurance  thereunder,  but  subject to our  requirements  to operate  the Fleet
Policy insofar as it relates to any other aircraft insured thereunder.

         2.     To advise you of any of the following:

<PAGE>

                (a) If any insurer  cancels or gives notice of  cancellation  of
         any of the  Insurance at least thirty (30) days (or such lesser  period
         as may be available in the case of War and Allied  Perils)  before such
         cancellation is to take effect in respect of the Aircraft.

                (b)  Of  any  act  or  omission  or  of  any  event   (including
         non-payment  of premium) of which we have knowledge or are notified and
         which might invalidate or render  unenforceable in whole or in part any
         of the Insurance, insofar as the same relate to the Aircraft.

                (c) If we do not receive instructions to renew all or any of the
         Insurance at least thirty (30) days prior to their expiration.

                (d) If any of the  Insurance  are not  renewed on the same terms
         (save as to premium and period of cover and as you might otherwise have
         notified  us to be  acceptable  to you)  seven (7) days prior to expiry
         thereof.

         The above undertakings are given subject to our continuing  appointment
for the time being as Insurance Brokers to the Operator.

         We also undertake to advise you if we cease to be Insurance  Brokers to
the Operator.

                                                Yours faithfully,

<PAGE>

         EXHIBIT E            ESTOPPEL AND ACCEPTANCE CERTIFICATE

     AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws
of Indiana does hereby represent, acknowledge, warrant and agree as follows:

     1. LESSEE and  INTERNATIONAL  LEASE FINANCE  CORPORATION,  as LESSOR,  have
entered  into  an  Aircraft  Lease  Agreement  dated  as of  September  5,  2000
(hereinafter referred to as the "LEASE"). Words used herein with capital letters
and not otherwise defined will have the meanings set forth in the Lease.

     2.  LESSEE has this ____ day of  __________,  ____  (Time:  __________)  at
____________________ received from LESSOR possession of:

     (a) One (1) Boeing 737-800  aircraft bearing  Manufacturer's  serial number
____ and U.S.  registration mark ____, together with two (2) CFM56-7B-27 engines
bearing  manufacturer's  serial numbers  _______ and ________ (each of which has
750 or more rated take-off horsepower), all in airworthy condition.

     (b) All Aircraft Documentation,  including the usual and customary manuals,
logbooks,  flight  records and  historical  information  regarding the Aircraft,
Engines and Parts.

     3. All of the  foregoing  has been  delivered  and accepted on the date set
forth  above to  LESSEE's  full  satisfaction  and  pursuant  to the  terms  and
provisions of the Lease.

     4. The Agreed Value of the Aircraft is US$_______________.

     5. The  amount of fuel on board at  Delivery  is  __________  (circle  one)
pounds/kilos (________ gallons).

     6. The Aircraft,  Engines, Parts and Aircraft Documentation as described in
the Lease  have  been  fully  examined  by LESSEE  and have been  received  in a
condition fully  satisfactory to LESSEE and in full conformity with the Lease in
every respect.

     7. The Lease is in full force and  effect,  LESSEE has no claims,  offsets,
deductions or set-off of any kind or nature in connection with the Lease, except
for any claims against LESSOR set forth on the attached List of Discrepancies.

<PAGE>

     8.  LESSOR's  Lender  may  rely  upon  all of  the  foregoing  in  granting
substantial financial accommodations to LESSOR and LESSEE understands and agrees
that any funds being  advanced by LESSOR's  Lender will be made in reliance upon
the foregoing.

     9. LESSEE has obtained all required permits,  authorizations,  licenses and
fees of the State of Registration or any Government  Entity thereof necessary in
order for LESSEE to operate the Aircraft as permitted by the terms of the Lease.

                              Dated on the date set forth above

                                                AMERICAN TRANS AIR, INC.

                                                By:

                                                Title:

ATTACHMENTS:
1.       List of Aircraft Documentation
2.       List of Loose Equipment
3.       List of Discrepancies

<PAGE>

               ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE

                         LIST OF AIRCRAFT DOCUMENTATION

                                     MANUALS

1.       FAA Approved Flight Manual
2.       Airplane Flight Operation Manual
3.       Aircraft Recover Manual
4.       Quick Reference Handbook (QRH)
5.       Weight and Balance Manual
6.       Aircraft Fueling Manual
7.       Aircraft Maintenance Manual (MM)
8.       Aircraft Maintenance Manual Supplement
9.       Ramp Maintenance Manual (RMM)
10.      Cargo Loading Manual
11.      Fault Reporting Manual (FRM)
12.      Fault Isolation Manual (FIM)
13.      Illustrated Parts Catalog (IPC)
14.      Life Limited Parts Manual
15.      Structural Repair Manual (SRM)
16.      Master Minimum Equipment List
17.      Wiring Diagram Manual (WD)
18.      Wiring Practices Manual
19.      System Schematics Manual
20.      B.I.T.E. Manual
21.      Non-Destructive Test Manual
22.      Corrosion Prevention Manual
23.      Component Maintenance Manual
24.      APU Log Book
25.      Engine Maintenance Manual
26.      Engine Log Book
27.      Engine Illustrated Parts Catalog
28.      Engine Data Submittal Book
29.      Engine Overhaul Manual
30.      Power Plant Build-up Manual

<PAGE>

                    AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS

 1.  Copies of original Certificates delivered by Boeing:
     a.  Airworthiness Certificate for Export
     b.  Radio installation conformity certificate
     c.  Noise limitation certificate
 2.  Copies of original Documents delivered by Boeing:
     a.  Airworthiness Directive Compliance list
     b.  Aircraft inspection report
     c.  Aircraft Readiness Log
     d.  Weighing report
 3.  Copies of current Certificates:
     a.  Airworthiness Certificate
     b.  Noise limitation
     c.  Radio license
     d.  Interior material burn certificates
     e.  Certificate of Export
     f.  Aircraft deregistration confirmation
     e.  Aircraft Registration
 4.  Letters signed and stamped by Quality Assurance:
     a.  Current aircraft hours and cycles
     b.  Current engines hours and cycles
     c.  Accident and Incident report
     d.  Summary of Maintenance Program
     e.  AD compliance during the lease term
 5.  Aircraft log books and Aircraft readiness log.
 6.  Aircraft Hard Time (HT) inspection status.
 7.  One year forecast for HT inspection.
 8.  Aircraft Modification status, including service bulletins.
 9.  Last weighing report prior to redelivery.
10.  AD compliance report with original signoffs.
11.  Routine and non-routine job cards of the last "C" and "D" checks.
12.  Past year pilots and maintenance discrepancies.
13.  Major and Minor structural repairs with applicable approvals.
14.  Compass Swing report of the last three years.
15.  Cabin Configuration drawing (LOPA).
16.  Emergency equipment location drawing.
17.  Last X-RAYs

                             ENGINES RECORDS

 1.  Last test cell run reports.

<PAGE>

 2.  Life Limited Parts status and traceability.
 3.  AD compliance report with original signoffs.
 4.  Engine Modification/service bulletin/inspection report and applicableforms.
 5.  Last heavy maintenance records for each module.
 6.  Engine log books.
 7.  Engine removal history.
 8.  Past year trend monitoring reports.
 9.  Historical borescope reports.
10.  Engine component report.

                               APU RECORDS

 1.  APU status (FH, FC, limits).
 2.  Life limited Part status and traceability.
 3.  AD compliance with original signoffs.
 4.  Modification status.
 5.  Last heavy maintenance documents.
 6.  APU log books.
 7.  Last test cell report.

                            COMPONENT RECORDS

 1.  Aircraft component inventory.
 2.  Hard time component inventory.
 3.  All serviceable tags.
 4.  Landing Gear status with last overhaul and life limited Part status.
 5.  AD compliance with original signoffs.
 6.  Modification status.

<PAGE>

               ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE

                             LIST OF LOOSE EQUIPMENT

<PAGE>

               ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE

                              LIST OF DISCREPANCIES

<PAGE>

         EXHIBIT F            OPINION OF COUNSEL

     TO BE GIVEN BY  INDEPENDENT  OUTSIDE  COUNSEL  OF LESSEE  OR OTHER  LAWYERS
ACCEPTABLE TO LESSOR

To:             International Lease Finance Corporation
                1999 Avenue of the Stars, 39th Floor
                Los Angeles, California 90067
                United States

Gentlemen:

         This  opinion is furnished to you pursuant to Article 7 of the Aircraft
Lease  Agreement  dated as of September 5, 2000 (the "LEASE")  between  AMERICAN
TRANS  AIR,  INC.   ("LESSEE")  and  INTERNATIONAL   LEASE  FINANCE  CORPORATION
("LESSOR").  Defined  terms in this  opinion  are used  herein as defined in the
Lease.

         I have acted as counsel for LESSEE in connection with the  preparation,
execution and delivery of the Lease.

     In that connection I have examined:

     (a) The Lease and Estoppel and Acceptance Certificate;

     (b) The charter of LESSEE and all amendments  thereto (the "CHARTER");  and

     (c) Such other documents,  agreements and  instruments,  and such treaties,
laws, rules, regulations,  decrees and the like, as I have deemed necessary as a
basis for the opinions hereinafter expressed.

     [ (d) All of the agreements and any amendments  thereto  between LESSEE and
all other  lessors and lenders of LESSEE  covering  other  aircraft  operated by
LESSEE on which the Engines can be installed.]

         Based upon the  foregoing  and having  regard for legal  considerations
which I deem relevant, I am of the opinion that:

<PAGE>

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

     2.  No  authorization,   approval,   consent,   license  or  order  of,  or
registration  with,  or the giving of notice to the  Aviation  Authority  or any
other  regulatory  body or authority  is required  for the valid  authorization,
execution, delivery and performance by LESSEE of the Lease.

     3. The Lease and the Estoppel  and  Acceptance  Certificate  have each been
duly  authorized,  executed and delivered by LESSEE.  Each such  instrument is a
valid, enforceable and binding obligation of LESSEE except as enforceability may
be limited by bankruptcy,  insolvency,  reorganization  or other Laws of general
application affecting the enforcement of creditors' rights.

     4. The execution and delivery of the Lease and the Estoppel and  Acceptance
Certificate, the consummation by LESSEE of the transactions contemplated therein
and compliance by LESSEE with the terms and provisions thereof do not contravene
any Law  applicable  to  LESSEE,  or result in any breach of or  constitute  any
default under or result in the creation of any lien,  charge or encumbrance upon
any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of
trust,  conditional  sales contract,  bank loan or credit  agreement,  corporate
charter,  by-law or other  agreement or instrument to which LESSEE is a party or
by which LESSEE or its properties or assets is bound.

     5. Except for any filing or recording  that may be required  with the [NAME
OF  AIRCRAFT   REGISTER]  and  except  for  [DESCRIBE   SUCH  OTHER  FILINGS  OR
RECORDINGS], no filing or recording of any instrument or document (including the
filing of any financial  statement)  is necessary  under the laws of the U.S. in
order for the Lease to constitute a valid and perfected lease of record relating
to the Aircraft,  it being understood that such counsel  expresses no opinion as
to the nature of LESSOR's title to the Aircraft on the Delivery Date.

     6. LESSEE holds all  licenses,  certificates  and permits  from  applicable
governmental  authorities in the U.S.  necessary for the conduct of its business
as a  certificated  air carrier and  performance  of its  obligations  under the
Lease.

     7. To my knowledge, there are no suits or proceedings pending or threatened
against  LESSEE before any Government  Entity against or affecting  LESSEE which
are reasonably likely to be adversely  determined and, if adversely  determined,
would have a material  adverse effect on the financial  condition or business of
LESSEE or its ability to perform  under the Lease,  except as  described  in the
filings provided to LESSOR pursuant to Article 22.

<PAGE>

     8. The  obligations  of LESSEE  under the Lease  are  direct,  general  and
unconditional  obligations  of LESSEE  and rank or will rank at least PARI PASSU
with all other  present  and future  unsecured  and  unsubordinated  obligations
(including  contingent  obligations)  of  LESSEE,  with  the  exception  of such
obligations as are mandatorily preferred by law.

     9.  LESSEE,  under  the  laws  of the  U.S.  or of any  other  jurisdiction
affecting LESSEE, is subject to private  commercial law and suit. Neither LESSEE
nor its  properties  or assets have the right of immunity from suit or execution
on the grounds of  sovereignty  in such  jurisdictions  and the  performance  by
LESSEE of its obligations  under the Lease  constitute  commercial acts done for
commercial purposes.

     10.  There is no  applicable  usury or interest  limitation  Law in Indiana
which may restrict the recovery of payments in accordance with the Lease.

     11.  LESSOR will not violate any Law or become liable to any tax in Indiana
or the U.S. by reason of entering into or performing its  obligations  under the
Lease and it is not  necessary  to  establish  a place of business in Indiana in
order to enforce any provisions of the Lease.

                                                Very truly yours,

<PAGE>

        EXHIBIT G            ASSIGNMENT OF RIGHTS (AIRFRAME)

                                                                  [DATE]

Boeing Commercial Airplane Group
P.O. Box 3707
Seattle, Washington 98124-2207
Attention:      Vice President-Contracts
                Mail Code 21-34

Subject:  Full Assignment of Rights and  Obligations - International  Lease
Finance  Corporation  as Lessor and AMERICAN  TRANS AIR, INC. as Lessee of Model
Boeing 737-800 aircraft bearing manufacturer's serial number 28246

Ladies and Gentlemen:

         In connection with International  Lease Finance  Corporation's lease to
AMERICAN TRANS AIR, INC.  ("Lessee") of a Boeing  aircraft (more fully described
below), reference is made to the following documents:

         A.  Purchase  Agreement  1830,  dated as of June 27, 1995,  between The
Boeing Company ("Boeing") and International Lease Finance  Corporation  ("ILFC")
(the  "Boeing  Agreement")  under which ILFC  purchased a certain  Boeing  Model
737-800 aircraft bearing manufacturer's serial number 28246 (the "Aircraft").

     B. Aircraft  Lease  Agreement  (the  "Lease") for the Aircraft  dated as of
September 5, 2000 between ILFC and Lessee.

         Capitalized  terms used herein  without  definition  will have the same
meaning as in the Boeing Agreement.

         In connection  with ILFC's lease of the Aircraft under the Lease,  ILFC
is  transferring  to Lessee certain rights of ILFC related to the Aircraft under
the Boeing  Agreement.  To accomplish this transfer of rights,  as authorized by
the provisions of the Boeing Agreement:

<PAGE>

         1. Lessee  acknowledges  that it has received  copies of the  following
specific  provisions  of the Boeing  Agreement  applicable  to the  Aircraft and
agrees to be bound by and comply with all the terms, conditions, and limitations
contained in such provisions,  including  without  limitation the disclaimer and
release, exclusion of liabilities, indemnity and insurance provisions thereof:

     Boeing Agreement
         Article 6 - Excusable Delay
         6.1    General

         Article 10 - Assignment, Resale or Lease
         10.1   Assignment
         10.3   Sale by Buyer after Delivery
         10.4   Lease by Buyer after Delivery
         10.5   No Increase in Boeing Liability
         10.6   Exculpatory or Indemnity Clause in Post-delivery Sale or Lease

         Article 12 - Product Assurance;  Disclaimer and Release;  Exclusion of
         Liabilities;  Customer Support;  Indemnification and Insurance
         (in its entirety)

         Article 14 - Contractual Notices and Requests

         Article 15 - Miscellaneous
         15.4          Governing Law

     Exhibit B - Product Assurance Document
            Part A             Boeing Warrant
            Part B             Warranty Repairs and Modifications by Buyer
            Part C             Boeing Service Life Policy
            Part D             Boeing Indemnity Against Patent Infringement
            Part D-1           Boeing Indemnity Against Copyright Infringement
            Part E             Supplier Warranties and Patent Indemnities
            Part G             Boeing Interface Commitment
            Part H             General

     Exhibit C-1 - Customer Support Document
            Part B             Boeing Customer Support Services
            Part D             Technical Data and Documents
            Part E             Buyer's Indemnification of Boeing and Insurance
            Part F             Alleviation or Cessation of Performance

     Exhibit E - Buyer Furnished Equipment Provisions Document
            Paragraph 8        Indemnification of Boeing
            Paragraph 9        Patent Indemnity
            Paragraph 10       Definitions

     Letter Agreement No. 1830-3 - Seller Purchased Equipment
            Paragraph 6        Buyer's Indemnification of Boeing

         2. Lessee  recognizes  that Boeing's  obligation  to provide  training,
support and services to Lessee pursuant to Exhibit C of the Boeing  Agreement is
conditioned  on the receipt by Boeing of evidence of  compliance  by Lessee with
the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in
such other form as may be satisfactory to Boeing,  prior to the  commencement of
such training, support and services.

         3. ILFC reserves to itself all rights, claims and interests it may have
under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will
remain  responsible  to Boeing for any amounts with respect to the Aircraft owed
to Boeing under the Boeing Agreement prior to the effective date of this letter,
including  any amounts owed by ILFC to Boeing  under the  specific  articles and
paragraphs  of the Boeing  Agreement  referenced in paragraph 1 above based upon
events or incidents  relating to the Aircraft  occurring  prior to the effective
date of this letter.

         4. ILFC  hereby  assigns to Lessee the sole  authority  to  exercise in
Lessee's  name all rights and powers of ILFC with respect to the Aircraft  under
the specific  portions of the Boeing Agreement  referenced in paragraph 1 above.
Such  authorization will continue until Boeing receives from ILFC written notice
that the Lease has been  cancelled or  terminated,  addressed  to Boeing's  Vice
President,  Contracts, P.O. Box 3707, MC 21-34, Seattle,  Washington 98124-2207,
U.S.A.  Until  Boeing  receives  such  notice,  Boeing  will be entitled to deal
exclusively with Lessee with respect to the Aircraft under the specific portions
of the Boeing Agreement referenced in paragraph 1 above and, with respect to the
rights,  powers,  duties  or  obligations  under  such  portions  of the  Boeing
Agreement,  any and all actions  taken by Lessee or  agreements  entered into by
Lessee during the period prior to Boeing's  receipt of such notice will be final
and binding on ILFC.

         5. Lessee  hereby  accepts the  authorization  set forth in paragraph 4
above and agrees to be bound by and to comply with all the terms, conditions and
limitations  of the portion of the Boeing  Agreement  referenced  in paragraph 1
above.

<PAGE>

         6. This  Assignment  may be signed by the  parties  hereto in  separate
counterparts,  each of which when executed and  delivered  shall be an original,
but all  such  counterparts  shall  together  constitute  but  one and the  same
instrument.

         7. This Assignment shall be governed by, and construed in accordance
with,the laws of the State of Washington, including all matters of construction,
validity and performance.

         We  request  that  Boeing,  upon  receipt of this  letter,  acknowledge
receipt  thereof  and the  transfer  of rights set forth  above by  signing  the
acknowledgment   and  forwarding  one  copy  of  this  letter  to  each  of  the
undersigned.

         IN WITNESS  WHEREOF,  the parties  hereto  have caused this  Assignment
Agreement to be duly executed as of the dates written below.

INTERNATIONAL LEASE FINANCE             AMERICAN TRANS AIR, INC., as Lessee
CORPORATION, as Lessor and Buyer

By:                                     By:

Its:                                    Its:

                 BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT

Receipt of the above letter is  acknowledged  and transfer of certain  rights as
described  above under the Boeing  Agreement is confirmed,  effective as of this
date.

                                                THE BOEING COMPANY

                                                By:

                                                Its:

                                                Date:

<PAGE>

         EXHIBIT H            ASSIGNMENT OF RIGHTS (ENGINES)

[DATE]

CFM INTERNATIONAL, INC.
1 Neumann Way, F-17
Cincinnati, Ohio  45215

Attention:      Commercial Contracts -
                Warranty Assignment Administrator

Dear Warranty Assignment Administrator:

         Reference is hereby made to that Consent to Assignment made as of April
29, 1988 (the "CONSENT TO ASSIGNMENT"),  by and between CFM INTERNATIONAL,  INC.
("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC").  Terms defined in
the  Consent  to  Assignment  are used  herein  with the same  meaning as in the
Consent to Assignment.

         As of ________________ ___, ______, ILFC has assigned all of its rights
and interest in, to and under the Engine  Warranties to AMERICAN TRANS AIR, INC.
("ASSIGNEE")  in  connection  with its  lease to  Assignee  of a Boeing  737-800
aircraft (the "AIRCRAFT")  together with two (2) CFMI Model CFM56-7B-27  engines
bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of
the date each such Engine was delivered to Assignee.  Such  assignment  shall be
effective  from  such  date  until  ILFC  notifies  CFMI that the Lease has been
cancelled or terminated.

         The Assignee has accepted such  assignment and all the  limitations and
liabilities  pertaining to the Engine  Warranties as stated in the provisions of
the GTA listed in Schedule 2 to the Consent to Assignment.

<PAGE>

         A copy of the aforesaid assignment is attached hereto.

                                         Very truly yours,
                                         INTERNATIONAL LEASE FINANCE CORPORATION

                                             By:

                                             Title:

cc:      Ruben M. Cabrera
         Director, Commercial Contracts

<PAGE>

                            ASSIGNMENT OF WARRANTIES

[DATE]

     In  consideration  of AMERICAN  TRANS AIR,  INC.  ("LESSEE")  leasing  from
International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft
together  with two (2) CFMI Model  CFM56-7B-27  engines  bearing  manufacturer's
serial numbers _______ and ________, it is hereby agreed as follows:

     1. ILFC hereby  assigns and  transfers  to Lessee all of ILFC's  respective
rights and interest in and to and in and under the Engine  Warranties  set forth
in and  subject  to the  limitations  and  liabilities  set  forth in  Exhibit B
Warranty, Section X (the "ENGINE WARRANTIES") of CFM International,  Inc. - ILFC
General  Terms  Agreement  No.  6-3987 dated 22 June 1984 (the "GTA") during the
term of such leases so long as Lessee is not in default thereunder.

     2. Lessee hereby accepts such assignment  including all the limitations and
liabilities  pertaining to said Engine Warranties as stated in the provisions of
Exhibit B Warranty, Section X of the GTA.

     3. This Agreement shall be binding upon and inure to the benefit of each of
the parties  hereto and their  respective  successors  and assigns to the extent
permitted by the GTA and hereunder.

     4. This Agreement shall be governed by and construed in accordance with the
laws of the State of California.

     5. This  Agreement may be executed in any number of  counterparts,  each of
which when executed and delivered is an original but all of which taken together
constitute one and the same  instrument and any party may execute this Agreement
by signing any counterpart.

<PAGE>

     IN WITNESS  WHEREOF,  the authorized  representative  of the parties hereto
have executed this Agreement as of the day and year first above written.

For and on  behalf  of                              For and on behalf  of
INTERNATIONAL  LEASE  FINANCE                       AMERICAN TRANS AIR, INC.
CORPORATION

By:                                                 By:

Its:                                                Its:

<PAGE>

         EXHIBIT I            RETURN ACCEPTANCE RECEIPT

Date:    _________________ ___, ____

     1. AMERICAN TRANS AIR,  INC., as LESSEE,  and  INTERNATIONAL  LEASE FINANCE
CORPORATION,  as LESSOR,  have entered into an Aircraft Lease Agreement dated as
of September 5, 2000 (the "LEASE").  Words used herein with capital  letters and
not otherwise defined will have the meanings set forth in the Lease.

     2.  LESSOR has this ____ day of  __________,  ____  (Time:  __________)  at
____________________ received from LESSEE possession of:

     (a) One (1) Boeing 737-800  Aircraft bearing  Manufacturer's  serial number
____,  together with two (2) CFM56-7B-27 engines bearing  manufacturer's  serial
numbers _______ and ________,  and all Parts attached  thereto and thereon in an
airworthy condition and

     (b) All Aircraft Documentation,  including the usual and customary manuals,
logbooks,  flight  records and  historical  information  regarding the Aircraft,
Engines and Parts, as listed in the Document Receipt attached hereto.

     3. The  Airframe,  Engines  and Parts  had the  following  hours/cycles  at
return:

     (a) AIRFRAME:

      Total hours: _______________               Total Landings: _______________

<PAGE>

     (b) ENGINES:

     POSITION    SERIAL NO.    TOTAL HOURS     TOTAL CYCLES     HRS/CYCLES SINCE
                                                                LAST SHOP VISIT

                                                      Time Remaining to Next
                                                    LIFE LIMITED PART REMOVAL
       PART NAME                                  HOURS                 CYCLES
                                 MSN

                                 MSN

      (c)    APU:    MSN __________

                 Total hours:    __________

                 ______ hours/ ______ cycles since last Overhaul

                 ______ hours/ ______ cycles remaining on APU life-limited Parts

      (d)    LANDING GEARS:

POSITION       SERIAL NO.      Total           Hrs/Cycles since     Date of last
                             HRS/CYCLES         LAST OVERHAUL         OVERHAUL

Nose

Right Main

Left Main

     (e) FUEL ON BOARD AT  RETURN:  ______  (circle  one)  pounds/kilos  (______
gallons)

     4. Other  technical  information  regarding the Aircraft and its components
are  correctly  set forth on the  Technical  Evaluation  Report  (in the form of
Exhibit L) attached hereto.

     5. The above  specified  aircraft,  engines  and  documentation  are hereby
accepted by LESSOR subject to correction by LESSEE (or  procurement by LESSEE at
LESSEE's cost) as soon as reasonably possible of the discrepancies  specified in
Attachment 2 hereto.

<PAGE>

         6. Subject to the following  paragraph,  the leasing of the Aircraft by
LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to
LESSEE's continuing  obligations under the Lease including,  without limitation,
paragraph 6 above and Articles 10.5, 15 and 16.

     7. LESSEE  represents  and  warrants  that during the term of the Lease all
maintenance and repairs to the Airframe and Engines were performed in accordance
with the requirements  contained in the Lease.  LESSEE further confirms that all
of its obligations  under the Lease whether accruing prior to the date hereof or
which survive the  termination  of the Lease by their terms and accrue after the
date  hereof,  will remain in full force and effect  until all such  obligations
have been satisfactorily completed.

     8. This Return  Acceptance  Supplement  is executed  and  delivered  by the
parties in [place].

         IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Return
Acceptance  Receipt to be executed in their respective  corporate names by their
duly authorized representatives as of the day and year first above written.

INTERNATIONAL LEASE FINANCE CORPORATION               AMERICAN TRANS AIR, INC.

By:                                                   By:

Its:                                                  Its:

ATTACHMENTS:
1.       List of Aircraft Documentation
2.       List of Loose Equipment
3.       List of Discrepancies
4.       Engine Maximum Power Assurance Test Conditions and Results
5.       Dent and Damage Chart
6.       Form of No Accident/Incident Letter
7.       Technical Evaluation Report (in the form of Exhibit L)

<PAGE>

                    ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT

                         LIST OF AIRCRAFT DOCUMENTATION

         [The (a) manuals and (b) Aircraft records and historical  documents set
forth below are to be returned  with the Aircraft in a current,  up-to-date  and
correct status]

                                     MANUALS

1.       FAA Approved Flight Manual
2.       Airplane Flight Operation Manual
3.       Aircraft Recover Manual
4.       Quick Reference Handbook (QRH)
5.       Weight and Balance Manual
6.       Aircraft Fueling Manual
7.       Aircraft Maintenance Manual (MM)
8.       Aircraft Maintenance Manual Supplement
9.       Ramp Maintenance Manual (RMM)
10.      Cargo Loading Manual
11.      Fault Reporting Manual (FRM)
12.      Fault Isolation Manual (FIM)
13.      Illustrated Parts Catalog (IPC)
14.      Life Limited Parts Manual
15.      Structural Repair Manual (SRM)
16.      Master Minimum Equipment List
17.      Wiring Diagram Manual (WD)
18.      Wiring Practices Manual
19.      System Schematics Manual
20.      B.I.T.E. Manual
21.      Non-Destructive Test Manual
22.      Corrosion Prevention Manual
23.      Component Maintenance Manual
24.      APU Log Book
25.      Engine Maintenance Manual
26.      Engine Log Book
27.      Engine Illustrated Parts Catalog
28.      Engine Data Submittal Book
29.      Engine Overhaul Manual
30.      Power Plant Build-up Manual

<PAGE>

                    AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS

 1. Copies of original Certificates delivered by Boeing:
    a.  Airworthiness Certificate for Export
    b.  Radio installation conformity certificate
    c.  Noise limitation certificate
 2. Copies of original Documents delivered by Boeing:
    a.  Airworthiness Directive Compliance list
    b.  Aircraft inspection report
    c.  Aircraft Readiness Log
    d.  Weighing report
 3. Copies of current Certificates:
    a.  Airworthiness Certificate
    b.  Noise limitation
    c.  Radio license
    d.  Interior material burn certificates
    e.  Certificate of Export
    f.  Aircraft deregistration confirmation
    e.  Aircraft Registration
 4. Letters signed and stamped by Quality Assurance:
    a.  Current aircraft hours and cycles
    b.  Current engines hours and cycles
    c.  Accident and Incident report
    d.  Summary of Maintenance Program
    e.  AD compliance during the lease term
 5. Aircraft log books and Aircraft readiness log.
 6. Aircraft Hard Time (HT) inspection status.
 7. One year forecast for HT inspection.
 8. Aircraft Modification status, including service bulletins.
 9. Last weighing report prior to redelivery.
10. AD compliance report with original signoffs.
11. Routine and non-routine job cards of the last "C" and "D" checks.
12. Past year pilots and maintenance discrepancies.
13. Major and Minor structural repairs with applicable approvals.
14. Compass Swing report of the last three years.
15. Cabin Configuration drawing (LOPA).
16. Emergency equipment location drawing.
17. Last X-RAYs

                                 ENGINES RECORDS

 1. Last test cell run reports.

<PAGE>

 2. Life Limited Parts status and traceability.
 3. AD compliance report with original signoffs.
 4. Engine Modification/service bulletin/inspection report and applicable forms.
 5. Last heavy maintenance records for each module.
 6. Engine log books.
 7. Engine removal history.
 8. Past year trend monitoring reports.
 9. Historical borescope reports.
10. Engine component report.

                                   APU RECORDS

 1. APU status (FH, FC, limits).
 2. Life limited Part status and traceability.
 3. AD compliance with original signoffs.
 4. Modification status.
 5. Last heavy maintenance documents.
 6. APU log books.
 7. Last test cell report.

                           COMPONENT RECORDS

 1. Aircraft component inventory.
 2. Hard time component inventory.
 3. All serviceable tags.
 4. Landing Gear status with last overhaul and life limited Part status.
 5. AD compliance with original signoffs.
 6. Modification status.

<PAGE>

                    ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT

                             LIST OF LOOSE EQUIPMENT

<PAGE>

                    ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT

                              LIST OF DISCREPANCIES

<PAGE>

                    ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT

           ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS

<PAGE>

                    ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT

                              DENT AND DAMAGE CHART

<PAGE>

                    ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT

                       FORM OF NO ACCIDENT/INCIDENT LETTER

<PAGE>

       EXHIBIT J            MONTHLY REPORT

                              (SEE FOLLOWING SHEET)

<PAGE>

                 MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT
                                                                 Page 1 of 2
Report Due Date:

To:      INTERNATIONAL LEASE FINANCE CORPORATION         Fax:   (310) 788-1990
         1999 Avenue of the Stars, 39th Floor
         Los Angeles, California 90067, United States
         Attn:  Finance Department

From:        AMERICAN TRANS AIR, INC.
Contact:                                                 Fax:

AIRCRAFT TYPE:            BOEING 737-800
ENGINE TYPE:               CFM56-7B-27       REGISTRATION:          ____
SERIAL NUMBER:                 ____          MONTH OF:

NOTE:    PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS.

  Aircraft Total Time Since New As Of Last Month:        Hours:         Min:

  Aircraft Total Time Since New:                         Hours:         Min:

  Aircraft Total Cycles Since New:                       Cycles:

  Airframe Hours Flown During Month:                     Hours:         Min:

  Airframe Cycles/Landings During Month:                 Cycles:

  Time Remaining to "D" or Heavy Maintenance Check:

                              HOURS OR                 US$ PER
                            CYCLES FLOWN               HOUR OR
                           DURING MONTH (AS           CYCLE (AS
                             APPLICABLE)          X   APPLICABLE)  =    RESERVES

TOTAL AIRFRAME:                 HRS:                    X                =

TOTAL LANDING GEAR:             HRS:                    X                =

TOTAL APU:                      HRS:                    X                =

ORIGINAL ENGINE SERIAL
NUMBER:                         Hrs:          Min:      x                =

                                Cycles(for Engine
                                LLP Reserves):          x                =

ORIGINAL ENGINE SERIAL
NUMBER:                         Hrs:          Min:      x                =

                                Cycles (for Engine
                                LLP Reserves):          x                =

ORIGINAL ENGINE SERIAL
NUMBER:                         Hrs:          Min:      x                =

                                Cycles (for LLP         x                =
                                Reserves):
ORIGINAL ENGINE SERIAL
NUMBER:                         Hrs:          Min:      x                =

                                Cycles (for Engine
                                LLP Reserves):          x                =

TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH:                            US$

<PAGE>

Monthly Aircraft Utilization and Status Report
From:    AMERICAN TRANS AIR, INC.                                PAGE 2 OF 2

ENGINE SERIAL NUMBER:                              ENGINE SERIAL NUMBER:

ORIGINAL POSITION:                                 ORIGINAL POSITION:

ACTUAL LOCATION:                                   ACTUAL LOCATION:

CURRENT THRUST RATING:                             CURRENT THRUST RATING:

                           HOURS:/MIN:                               HOURS:/MIN:

Total Time Since New As Of                           Total Time Since New As Of
Last Month:                                          Last Month:

Total Time Since New:                                Total Time Since New:

Total Cycles Since New:                              Total Cycles Since New:

Hours Flown During Month:                            Hours Flown During Month:

Cycles During Month:                                 Cycles During Month:

     IMPORTANT:  IF  ILFC-OWNED  ENGINE  IS  REMOVED  OR  INSTALLED  ON  ANOTHER
AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM.

<PAGE>

         EXHIBIT K            AIRCRAFT DOCUMENTATION

                                AIRCRAFT RECORDS

 1.   Copies of original Certificates delivered by Boeing:
      a.  Airworthiness Certificate for Export
      b.  Radio installation conformity certificate
      c.  Noise limitation certificate
 2.   Copies of original Documents delivered by Boeing:
      a.  Airworthiness Directive Compliance list
      b.  Aircraft inspection report
      c.  Aircraft Readiness Log
      d.  Weighing report
 3.   Copies of current Certificates:
      a.  Airworthiness Certificate
      b.  Noise limitation
      c.  Radio license
      d.  Interior material burn certificates
      e.  Certificate of Export
      f.  Aircraft deregistration confirmation
      e.  Aircraft Registration
 4.   Letters signed and stamped by Quality Assurance:
      a.  Current aircraft hours and cycles
      b.  Current engines hours and cycles
      c.  Accident and Incident report
      d.  Summary of Maintenance Program
      e.  AD compliance during the lease term
 5.   Aircraft log books and Aircraft readiness log.
 6.   Aircraft Hard Time (HT) inspection status.
 7.   One year forecast for HT inspection.
 8.   Aircraft Modification status, including service bulletins.
 9.   Last weighing report prior to redelivery.
10.   AD compliance report with original signoffs.
11.   Routine and non-routine job cards of the last "C" and "D" checks.
12.   Past year pilots and maintenance discrepancies.
13.   Major and Minor structural repairs with applicable approvals.
14.   Compass Swing report of the last three years.
15.   Cabin Configuration drawing (LOPA).
16.   Emergency equipment location drawing.
17.   Last X-RAYs

<PAGE>

                                 ENGINES RECORDS

 1. Last test cell run reports.
 2. Life Limited Parts status and traceability.
 3. AD compliance report with original signoffs.
 4. Engine Modification/service bulletin/inspection report and applicable forms.
 5. Last heavy maintenance records for each module.
 6. Engine log books.
 7. Engine removal history.
 8. Past year trend monitoring reports.
 9. Historical borescope reports.
10. Engine component report.

                                   APU RECORDS

 1. APU status (FH, FC, limits).
 2. Life limited Part status and traceability.
 3. AD compliance with original signoffs.
 4. Modification status.
 5. Last heavy maintenance documents.
 6. APU log books.
 7. Last test cell report.

                                COMPONENT RECORDS

 1. Aircraft component inventory.
 2. Hard time component inventory.
 3. All serviceable tags.
 4. Landing Gear status with last overhaul and life limited Part status.
 5. AD compliance with original signoffs.
 6. Modification status.

<PAGE>

        EXHIBIT L            TECHNICAL EVALUATION REPORT

                             (SEE FOLLOWING SHEETS)AIRCRAFT LEASE AGREEMENT

                          Dated as of September 5, 2000

                                     BETWEEN

                            AMERICAN TRANS AIR, INC.

                                    as LESSEE

                                       and

                     INTERNATIONAL LEASE FINANCE CORPORATION

                                    as LESSOR

 -------------------------------------------------------------------------------
 Aircraft Make and Model:                New Boeing 737-800
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Aircraft Manufacturer's Serial Number:  28247
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Aircraft Registration Mark:             Per Estoppel and Acceptance Certificate
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Make and Model of Engines:              CFM56-7B-27
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Serial Numbers of Engines:              Per Estoppel and Acceptance Certificate
 -------------------------------------------------------------------------------

                       NEW BOEING 737-800 AIRCRAFT NO. 9

<PAGE>

                                TABLE OF CONTENTS

ARTICLE 1       SUMMARY OF TRANSACTION.........................................2
      1.1       Description of Aircraft........................................2
      1.2       Scheduled Delivery Date and Location...........................2
      1.3       Lease Term.....................................................2
      1.4       Security Deposit...............................................2
      1.5       Transaction Fee................................................2
      1.6       Rent During Lease Term.........................................2
      1.7       Country of Aircraft Registration...............................4
      1.8       Maintenance Program............................................4
      1.9       Agreed Value of Aircraft.......................................4
      1.10      LESSOR's Bank Account..........................................4

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

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

ARTICLE 4       LEASE TERM....................................................12
      4.1       Lease Term....................................................12
      4.2       "Expiration Date".............................................12
      4.3       "Termination Date"............................................12

ARTICLE 5       SECURITY DEPOSIT, TRANSACTION FEE, RENT AND OTHER
                PAYMENTS......................................................13
      5.1       Security Deposit..............................................13
      5.2       Transaction Fee...............................................14
      5.3       Rent..........................................................14
      5.4       LESSOR's Bank Account.........................................15
      5.5       Default Interest..............................................16
      5.6       No Deductions or Withholdings.................................16
      5.7       Value Added Taxes.............................................16
      5.8       Net Lease.....................................................17
      5.9       LESSOR Performance of LESSEE Obligation.......................18
      5.10      Consideration for Rent and other Amounts......................18

ARTICLE 6       INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................19
      6.1       LESSEE Selection of Aircraft..................................19
      6.2       Agency Agreement..............................................19
      6.3       Procurement of BFE............................................19
      6.4       Assignment of Training........................................19
      6.5       LESSEE Inspection of Aircraft.................................19
      6.6       Aircraft at Delivery..........................................19
      6.7       Delivery of the Aircraft to LESSEE............................20
      6.8       LESSEE Acceptance of Aircraft.................................20

ARTICLE 7       PRE-DELIVERY, DELIVERY AND POST-DELIVERY
                DOCUMENTARY AND OTHER REQUIREMENTS............................21
      7.1       Pre-Delivery Requirements.....................................21
      7.2       Delivery Requirements.........................................22
      7.3       Post-Delivery Requirements....................................23

ARTICLE 8       DISCLAIMERS...................................................24
      8.1       "As Is, Where Is".............................................24
      8.2       Waiver of Warranty of Description.............................24
      8.3       LESSEE Waiver.................................................25
      8.4       Conclusive Proof..............................................25
      8.5       No LESSOR Liability for Losses................................25
      8.6       No Liability to Repair or Replace.............................25
      8.7       No Waiver.....................................................26

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

ARTICLE 10      OPERATION OF AIRCRAFT.........................................28
      10.1      Costs of Operation............................................28
      10.2      Compliance with Laws..........................................28
      10.3      Training......................................................28
      10.4      No Violation of Insurance Policies............................28
      10.5      Flight Charges................................................29

ARTICLE 11      SUBLEASES.....................................................30
      11.1      No Sublease without LESSOR Consent............................30
      11.2      LESSOR Costs..................................................30
      11.3      Any Approved Sublease.........................................30
      11.4      Assignment of Sublease........................................30
      11.5      Continued Responsibility of LESSEE............................30

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

ARTICLE 13      TITLE AND REGISTRATION........................................37
      13.1      Title to the Aircraft During Lease Term.......................37
      13.2      Registration of Aircraft......................................37
      13.3      Filing of this Lease..........................................37
      13.4      Evidence of Registration and Filings..........................37

ARTICLE 14      IDENTIFICATION PLATES.........................................38
      14.1      Airframe Identification Plates................................38
      14.2      Engine Identification Plates..................................38

ARTICLE 15      TAXES.........................................................39
      15.1      General Obligation of LESSEE..................................39
      15.2      Exceptions to Indemnity.......................................39
      15.3      After-Tax Basis...............................................40
      15.4      Claims and Contests...........................................40
      15.5      Refunds.......................................................41
      15.6      Cooperation in Filing Tax Returns.............................41

ARTICLE 16      INDEMNITIES...................................................42
      16.1      General Indemnity.............................................42
      16.2      Exceptions to General Indemnities.............................43
      16.3      After-Tax Basis...............................................44
      16.4      Timing of Payment.............................................44
      16.5      Subrogation...................................................44
      16.6      Notice........................................................44
      16.7      Refunds.......................................................44
      16.8      Defense of Claims.............................................45
      16.9      Survival of Obligation........................................45

ARTICLE 17      INSURANCE.....................................................46
      17.1      Categories of Insurance.......................................46
      17.2      Insurance for Indemnities.....................................46
      17.3      Insurance required by Manufacturer............................46
      17.4      Renewal.......................................................46
      17.5      Assignment of Rights by LESSOR................................46
      17.6      Deductibles...................................................46
      17.7      Other Insurance...............................................47
      17.8      Information...................................................47
      17.9      Currency......................................................47
      17.10     Grounding of Aircraft.........................................47
      17.11     Failure to Insure.............................................47
      17.12     Limit on Hull in favor of LESSEE..............................47
      17.13     Marketplace Limitations.......................................48

ARTICLE 18      LOSS, DAMAGE AND REQUISITION..................................49
      18.1      Definitions...................................................49
      18.2      Notice of Total Loss..........................................50
      18.3      Total Loss of Aircraft or Airframe............................50
      18.4      Surviving Engine(s)...........................................51
      18.5      Total Loss of Engine and not Airframe.........................51
      18.6      Other Loss or Damage..........................................52
      18.7      Copy of Insurance Policy......................................53
      18.8      Government Requisition........................................53
      18.9      Conveyance to LESSEE..........................................53

ARTICLE 19      CRAF PROGRAM..................................................54
      19.1      Dedication to CRAF............................................54
      19.2      Notice to LESSOR..............................................54
      19.3      Requisition of Engine.........................................54
      19.4      Government Indemnification....................................54
      19.5      No Geographic Limits..........................................54
      19.6      Notice of Default.............................................55
      19.7      Receipt of Payments...........................................55

ARTICLE 20      REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........56
      20.1      Representations and Warranties................................56
      20.2      Covenants.....................................................58

ARTICLE 21      REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........61
      21.1      Representations and Warranties................................61
      21.2      Covenant of Quiet Enjoyment...................................62

ARTICLE 22      FINANCIAL AND RELATED INFORMATION.............................63

ARTICLE 23      RETURN OF AIRCRAFT............................................64
      23.1      Date of Return................................................64
      23.2      Technical Report..............................................64
      23.3      Return Location...............................................64
      23.4      Full Aircraft Documentation Review............................64
      23.5      Aircraft Inspection...........................................64
      23.6      Certificate of Airworthiness Matters..........................65
      23.7      General Condition of Aircraft at Return.......................66
      23.8      Checks Prior to Return........................................69
      23.9      Part Lives....................................................72
      23.10     Export and Deregistration of Aircraft.........................74
      23.11     LESSEE's Continuing Obligations...............................75
      23.12     Airport and Navigation Charges................................75
      23.13     Return Acceptance Certificate.................................76
      23.14     Indemnities and Insurance.....................................76

ARTICLE 24      ASSIGNMENT....................................................77
      24.1      No Assignment by LESSEE.......................................77
      24.2      Sale or Assignment by LESSOR..................................77
      24.3      LESSOR's Lender...............................................79
      24.4      LESSEE Cooperation............................................79
      24.5      Protections...................................................79

ARTICLE 25      DEFAULT OF LESSEE.............................................80
      25.1      LESSEE Notice to LESSOR.......................................80
      25.2      Events of Default.............................................80
      25.3      LESSOR's General Rights.......................................82
      25.4      Deregistration and Export of Aircraft.........................83
      25.5      LESSEE Liability for Damages..................................83
      25.6      Waiver of Default.............................................84
      25.7      Present Value of Payments.....................................84
      25.8      Use of "Termination Date".....................................84

ARTICLE 26      NOTICES.......................................................85
      26.1      Manner of Sending Notices.....................................85
      26.2      Notice Information............................................85

ARTICLE 27      GOVERNING LAW AND JURISDICTION................................86
      27.1      California Law................................................86
      27.2      Non-Exclusive Jurisdiction in California......................86
      27.3      Service of Process............................................86
      27.4      Prevailing Party in Dispute...................................86
      27.5      Waiver........................................................86

ARTICLE 28      MISCELLANEOUS.................................................87
      28.1      Press Releases................................................87
      28.2      LESSOR Performance for LESSEE.................................87
      28.3      LESSOR's Payment Obligations..................................87
      28.4      Application of Payments.......................................87
      28.5      Usury Laws....................................................87
      28.6      Delegation by LESSOR..........................................87
      28.7      Confidentiality...............................................88
      28.8      Rights of Parties.............................................88
      28.9      Further Assurances............................................88
      28.10     Use of Word "including".......................................88
      28.11     Headings......................................................88
      28.12     Invalidity of any Provision...................................88
      28.13     Negotiation...................................................88
      28.14     Time is of the Essence........................................89
      28.15     Amendments in Writing.........................................89
      28.16     Counterparts..................................................89
      28.17     Delivery of Documents by Fax..................................89
      28.18     Entire Agreement..............................................89

EXHIBIT A       AIRCRAFT DESCRIPTION..........................................91

EXHIBIT B       AGENCY AGREEMENT..............................................92

EXHIBIT C       CERTIFICATE OF INSURANCE......................................96

EXHIBIT D       BROKERS' LETTER OF UNDERTAKING...............................102

EXHIBIT E       ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................104

EXHIBIT F       OPINION OF COUNSEL...........................................111

EXHIBIT G       ASSIGNMENT OF RIGHTS (AIRFRAME)..............................114

EXHIBIT H       ASSIGNMENT OF RIGHTS (ENGINES)...............................119

EXHIBIT I       RETURN ACCEPTANCE RECEIPT....................................123

EXHIBIT J       MONTHLY REPORT...............................................134

EXHIBIT K       AIRCRAFT DOCUMENTATION.......................................138

EXHIBIT L       TECHNICAL EVALUATION REPORT..................................140

<PAGE>

                            AIRCRAFT LEASE AGREEMENT

     THIS AIRCRAFT  LEASE  AGREEMENT is made and entered into as of September 5,
2000.

         BETWEEN:

     AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal
place of business is at 7337 West Washington Street,  Indianapolis International
Airport, Indianapolis, Indiana 46231, United States of America ("LESSEE") and

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

     The subject matter of this Lease is one (1) new Boeing 737-800 aircraft. In
consideration  of and  subject to the  mutual  covenants,  terms and  conditions
contained  in this  Lease,  LESSOR  hereby  agrees to lease to LESSEE and LESSEE
hereby agrees to lease from LESSOR the aircraft and the parties further agree as
follows:

<PAGE>

         ARTICLE 1             SUMMARY OF TRANSACTION

     The  information  in this  Article 1 is a summary of the lease  transaction
between  LESSEE and LESSOR.  It is set forth for the  convenience of the parties
only and will not be deemed in any way to amend,  detract  from or simplify  the
other provisions of this Lease.

     1.1 DESCRIPTION OF AIRCRAFT

     One new Boeing 737-800 aircraft

     1.2 SCHEDULED DELIVERY DATE AND LOCATION

     In the month of (CONFIDENTIAL MATERIAL OMITTED) at Seattle, Washington

     1.3 LEASE TERM

     15 years

     1.4 SECURITY DEPOSIT

     (CONFIDENTIAL MATERIAL OMITTED)

     1.5 TRANSACTION FEE

     (CONFIDENTIAL MATERIAL OMITTED)

     1.6 RENT DURING LEASE TERM

     Payable monthly in advance and equal to the sum of:

     (a The following amounts for the following years of the Lease Term:

            LEASE PERIOD                       MONTHLY RENTAL AMOUNT*

            (CONFIDENTIAL MATERIAL OMITTED)

     *The above base rent is  expressed  in January  1999  U.S.Dollars  and will
increase in the following amounts for the following periods:

            PERIOD                             ESCALATION FACTOR

            (CONFIDENTIAL MATERIAL OMITTED)

<PAGE>

     1.7 COUNTRY OF AIRCRAFT REGISTRATION

     U.S.

     1.8 MAINTENANCE PROGRAM

     LESSEE's Maintenance Program

     1.9 AGREED VALUE OF AIRCRAFT

     (CONFIDENTIAL MATERIAL OMITTED) The Agreed Value is expressed in March 2001
U.S.  Dollars and will  increase in  accordance  with  Manufacturer's  announced
escalation  rate from March 1, 2001 to the Delivery Date. On each annual renewal
date of LESSEE's  insurance policy  commencing on the renewal date following the
first  anniversary  of the Lease  Term,  the Agreed  Value will  decrease by two
percent (2.0%) of the then existing Agreed Value.

     1.10 LESSOR'S BANK ACCOUNT

          (Confidential Material Omitted)

<PAGE>

         ARTICLE 2             DEFINITIONS

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

     2.1 GENERAL DEFINITIONS.

                "ACT" means the Federal  Aviation  Act of 1958,  as amended from
time to time, or any successor act thereto.

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

                "AIRCRAFT  DOCUMENTATION"  means  all  (a) log  books,  Aircraft
records,  manuals and other documents  provided to LESSEE in connection with the
Aircraft,  (b) documents  listed in Exhibits E and K and (c) any other documents
required  to be  maintained  during  the Lease Term by the  Aviation  Authority,
LESSEE's Maintenance Program and this Lease.

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

                "AIRWORTHINESS  DIRECTIVES"  or "ADS"  means  all  airworthiness
directives (or equivalent) of the FAA and the Aviation  Authority  applicable to
the Aircraft.

                "APU" means the auxiliary power unit of the Aircraft.

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

<PAGE>

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

                "BANKRUPTCY  CODE" means The  Bankruptcy  Reform Act of 1978 (11
U.S.C. ss.ss.  101-1330),  as amended or supplemented from time to time, and any
successor statute, and all of the rules and regulations issued or promulgated in
connection therewith.

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

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

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

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

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

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

<PAGE>

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

                "DELIVERY DATE" means the date on which Delivery takes place.

                "DOLLARS" and "$" means the lawful currency of the U.S.

                "ENGINE"  means (a) each of the engines  listed on the  Estoppel
and Acceptance Certificate; or (b) any replacement engine acquired by LESSOR and
leased to LESSEE  pursuant to Article 18.5  following a Total Loss of an Engine;
including  in each  case all Parts  installed  in or on any of such  engines  at
Delivery (or substituted,  renewed or replacement  Parts in accordance with this
Lease) so long as title  thereto  is or remains  vested in LESSOR in  accordance
with the terms of Article 12.3.

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

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

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

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

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

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

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

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

<PAGE>

                "LESSOR'S LIEN" means any Security  Interest  created by LESSOR,
or arising from a claim against LESSOR completely unrelated to this Lease or the
other Operative Documents.

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

                "MANUFACTURER" means The Boeing Company, a Delaware corporation.

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

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

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

                "PERMITTED   INSTITUTION"   means  any  Person   (other  than  a
commercial air carrier, a commercial aircraft operator, a freight forwarder,  or
an affiliate of any of the foregoing),  with either:  (a) a combined capital and
surplus or net worth of at least; or (b) have a credit rating on the majority of
its  unsecured  debt  which is at  least  equal  to BBB or its  equivalent  from
Standard and Poor's Rating Group, a division of The McGraw-Hill Companies,  Inc.
or Moody's Investors Service, Inc.

<PAGE>

                "PERMITTED   LIEN"  means  (a)  LESSOR's  Liens;   (b)  Security
Interests  arising in the ordinary course of LESSEE's  business for Taxes either
not yet due and payable or, if due and payable, being contested in good faith in
accordance  with  Article  15.4;  (c)  materialmen's,   mechanics',   workmen's,
repairmen's, employees' liens or similar Security Interests arising by operation
of Law after the Delivery Date in the ordinary  course of LESSEE's  business for
amounts  which are  either not yet due or are being  contested  in good faith by
appropriate proceedings (and for which adequate reserves have been made or, when
required  in  order  to  pursue  such  proceedings,  an  adequate  bond has been
provided)  so long as such  proceedings  do not involve any  material  danger of
sale,  forfeiture  or loss of the  Aircraft;  (d) the  rights of LESSOR  and any
LESSOR's  Lender  and the  rights  of  LESSEE  under  this  Lease  and the other
Operative  Documents;  (e) the rights of others under agreements or arrangements
to the extent  permitted by Articles 10 and 11.5; and (f) any Security  Interest
against  which LESSEE causes to be provided a bond in such amount and under such
terms and conditions as are reasonably satisfactory to LESSOR.

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

                "PRIME  RATE"  means  the  rate of  interest  from  time to time
announced  by Bank  of  America  Illinois  in  Chicago,  Illinois  as its  prime
commercial lending rate.

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

                "STATE OF REGISTRATION"  means the U.S. or such other country or
state of registration of the Aircraft as LESSOR may, in its absolute discretion,
approve in writing.

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

                "U.S.  AIR CARRIER"  means any U.S. air carrier who is a Citizen
of the U.S. holding an air carrier operating certificate issued by the Secretary
of  Transportation  pursuant to chapter 447 of the Act for  aircraft  capable of
carrying 10 or more  individuals or 6000 pounds or more of cargo, and as to whom
there is in force an air carrier  operating  certificate  issued pursuant to FAR
Part 121,  or who may operate as an air carrier by  certification  or  otherwise
under any successor or substitute provisions therefor or in the absence thereof.

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

                       TERMS                         ARTICLE

       Agreed Value                                  18.1
       CRAF Program                                  19.1
       CRAF Program Requisition                      19.1
       Period
       Default Interest                              5.5
       Delivery Location                             3.1
       Expenses                                      16.1
       Expiration Date                               4.3
       Indemnities                                   16.1
       Lease Term                                    4.1
       LESSEE Customization                          5.3.1
       Costs
       LESSOR's Assignee                             24.2.1
       LESSOR's Bank                                 5.4
       LESSOR's Lender                               24.3
       Manufacturer's Escalation                     5.3.1
       Rate
       Modifications                                 12.7.2
       Net Total Loss Proceeds                       18.1
       Operative Documents                           20.1.3
       Rent                                          5.3.1
       Return Check                                  23.8.1
       Scheduled Delivery Date                       3.2
       Security Deposit                              5.1.1
       Taxes                                         15.1
       Termination Date                              4.3
       Total Loss                                    18.1
       Total Loss Date                               18.1
       Total Loss Proceeds                           18.1
       Transaction Fee                               5.2

<PAGE>

         ARTICLE 3            PLACE AND DATE OF DELIVERY

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

     3.2 SCHEDULED DELIVERY DATE. As of the date of this Lease,  delivery of the
Aircraft  from  Manufacturer  to  LESSOR is  scheduled  to occur in the month of
(CONFIDENTIAL  MATERIAL  OMITTED).  LESSOR  will not  agree to  reschedule  such
delivery without LESSEE's prior written consent.  LESSOR will notify LESSEE from
time to time and in a timely  manner of the exact date on which  LESSOR  expects
such delivery to take place (the "SCHEDULED DELIVERY DATE").

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

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

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

3.6  CANCELLATION  FOR  DELAY.  Promptly  after  LESSOR  becomes  aware  that in
Manufacturer's  opinion  a  delay  will  cause  Delivery  to be  delayed  beyond
(CONFIDENTIAL  MATERIAL  OMITTED)  LESSOR will notify LESSEE.  By written notice
given  within ten (10)  Business  Days  after  LESSEE's  receipt of such  LESSOR
notice,  either party may by written  notice to the other party  terminate  this
Lease and this Lease will  terminate on the date of receipt of such  notice.  In
the event of such termination,  neither party will have any further liability to
the other party except that LESSOR will return to LESSEE the Security Deposit in
accordance  with  Article  5.1.3 and any prepaid  Rent.  If neither  party gives
notice of termination  within such ten (10) Business Days, both parties lose all
right to terminate under this Article 3.6 unless  otherwise agreed in writing by
the parties.

<PAGE>

         ARTICLE 4            LEASE TERM

     4.1 LEASE TERM.  The term of leasing of the Aircraft  will  commence on the
Delivery Date and continue for a term of fifteen (15) years ("LEASE TERM").

     4.2 "EXPIRATION DATE".  "EXPIRATION DATE" means the date on which LESSEE is
required to redeliver the Aircraft to LESSOR in the  condition  required by this
Lease on the last day of the Lease Term.

     4.3  "TERMINATION  DATE".  This Lease may in fact  terminate  on any of the
dates set forth below:

     (a the Expiration  Date,  provided LESSEE returns the Aircraft to LESSOR on
the Expiration Date in the condition required by Article 23; or

     (b a date earlier than the Expiration Date, if:

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

     (ii cancellation of this Lease occurs pursuant to Article 3.6;

     (iii there is a Total Loss of the Aircraft and payment is made to LESSOR in
accordance with Article 18.3; or

     (iv an Event of Default  occurs  and LESSOR  repossesses  the  Aircraft  or
otherwise terminates this Lease pursuant to Article 25.3.

     (c a date later than the Expiration Date, if:

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

     (ii an Event of Default  occurs  and LESSOR  repossesses  the  Aircraft  or
otherwise terminates this Lease pursuant to Article 25.3.

     The "TERMINATION  DATE" is the date on which this Lease terminates  because
one of the above has occurred.

<PAGE>

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

     5.1 SECURITY DEPOSIT.

     5.1.1 (CONFIDENTIAL MATERIAL OMITTED)

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

     5.1.3 Upon  termination of this Lease in accordance  with Article 4.3 other
than if an Event of Default has occurred and is  continuing,  LESSOR will return
to LESSEE the amount of the Security  Deposit then held by LESSOR (so long as no
default by LESSEE  exists under any other  agreement  between  LESSEE and LESSOR
relating to aircraft,  engines or aircraft  equipment or the extension of credit
by LESSOR to LESSEE),  without interest,  less an amount determined by LESSOR to
be a reasonable estimate of the costs, if any, which LESSOR will incur to remedy
any unperformed obligations of LESSEE under this Lease, including the correction
of any  discrepancies  from the required  condition of the Aircraft on return of
the Aircraft.

     5.2  TRANSACTION  FEE. Within two (2) Business Days after execution of this
Lease, LESSEE will pay LESSOR a nonrefundable  transaction fee
(CONFIDENTIAL MATERIAL OMITTED)

     5.3 RENT.

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

     (a The following amounts for the following years of the Lease Term:

<PAGE>

        LEASE PERIOD                               MONTHLY RENTAL AMOUNT*
        ------------                               ---------------------

        (CONFIDENTIAL MATERIAL OMITTED)

        *The above base rent is  expressed in January 1999
        U.S.  dollars and will  increase in the  following
        amounts   for   the    following    periods   (the
        "MANUFACTURER'S ESCALATION RATE"):

        PERIOD                              ESCALATION FACTOR
        ------------                               ---------------------

        (CONFIDENTIAL MATERIAL OMITTED)

                       Any  increases  to the above  base Rent  during the Lease
                       Term will be calculated immediately prior to Delivery.

5.3.2           The first  payment  of Rent  during  the Lease Term will be paid
                prior to the Scheduled Delivery Date. Each subsequent payment of
                Rent will be due monthly  thereafter  no later than the same day
                of the month as the Delivery  Date of the Aircraft  except that,
                if such day is not a Business  Day,  the Rent will be due on the
                immediately  preceding Business Day. If Delivery occurred on the
                29th,  30th or 31st of the month and in any given  month  during
                the Lease Term there is no such corresponding date, Rent will be
                payable on the last Business Day of such month.

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

                       (CONFIDENTIAL MATERIAL OMITTED)

<PAGE>

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

5.5 DEFAULT  INTEREST.  If LESSOR's  Bank does not receive the Rent or any other
amount on or before the  specific  date when due,  LESSOR  will  suffer loss and
damage the exact  nature  and amount of which are  difficult  or  impossible  to
ascertain.  LESSEE  will pay  LESSOR  as  supplemental  Rent  (by way of  agreed
compensation  and not as a  penalty)  interest  on any due  and  unpaid  amounts
payable by LESSEE under this Lease.  Interest  will be calculated at a per annum
rate  (based on a 360 day year)  which is equal to three  percent  (3%) plus the
Prime Rate in effect on the date on which the amount was  originally due for the
period from the date the amount  originally  was due through the date the amount
actually is received at LESSOR's Bank or, in the case of LESSOR's performance of
LESSEE's obligations  hereunder,  from the date of payment by LESSOR through the
date of LESSEE's repayment to LESSOR ("DEFAULT INTEREST"). Default Interest will
accrue on a day-to-day basis and be compounded monthly.

5.6 NO  DEDUCTIONS  OR  WITHHOLDINGS.  All  payments by LESSEE under this Lease,
including the Security Deposit,  Transaction Fee, Rent, Default Interest,  fees,
indemnities  or any other item,  will be made in full  without any  deduction or
withholding  whether in respect of set-off,  counterclaim,  duties, or Taxes (as
defined in Article 15) imposed in the State of Registration or any  jurisdiction
from which such  payments are made unless LESSEE is prohibited by Law from doing
so, in which event  LESSEE  will gross up the  payment  amount such that the net
payment received by LESSOR after any deduction or withholding equals the amounts
called for under this Lease. LESSEE's requirement to pay the amounts required by
this Article 5.6 is subject to the exceptions provided in Article 15.2.

     5.7 VALUE ADDED TAXES.  The Rent and other amounts  payable by LESSEE under
this Lease are exclusive of any value added tax, turnover tax
or similar tax or duty.

     5.8 NET LEASE.

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

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

<PAGE>

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

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

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

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

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

     5.8.2 Nothing in Article 5.8 will be construed to limit LESSEE's rights and
remedies in the event of LESSOR's  breach of its warranty of quiet enjoyment set
forth in Article  21.2 or to limit  LESSEE's  rights and remedies to pursue in a
court of law any claim it may have against LESSOR or any other Person.

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

<PAGE>

     5.10  CONSIDERATION FOR RENT AND OTHER AMOUNTS.  The amount of the Rent and
other  payments  contained  herein are in  consideration  of LESSEE's  waiver of
warranties and indemnities set forth in Articles 8 and 16, respectively, and the
other provisions of this Lease.

<PAGE>

        ARTICLE 6            INVOLVEMENT WITH AIRCRAFT MANUFACTURER

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

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

6.3 PROCUREMENT OF BFE.  LESSEE's and LESSOR's  technical  representatives  will
meet and determine which of LESSEE or LESSOR will provide specific items of BFE.
Such BFE  will  then be  provided  to  Manufacturer  by  LESSEE  or  LESSOR,  as
applicable, within the time frames required by Manufacturer.

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

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

<PAGE>

6.6 AIRCRAFT AT  DELIVERY.  At  Delivery,  the Aircraft  will be as set forth in
Exhibit A, as such  description may be modified by any change requests agreed to
among LESSEE,  LESSOR and Manufacturer  (which will be reflected in amendment(s)
to this  Lease).  In the event of any  discrepancies,  LESSEE  and  LESSOR  will
cooperate  in good  faith  with one  another  and with  Manufacturer  and Engine
manufacturer,  as  applicable,  in  order to  arrive  at a  mutually  acceptable
resolution of any such discrepancies.

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

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

<PAGE>

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

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

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

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

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

     7.1.2 At least three (3) days prior to the Scheduled  Delivery Date, LESSEE
will have delivered to LESSOR a Certificate of Insurance and Brokers'  Letter of
Undertaking  in the form and substance of Exhibits C and D,  respectively,  from
LESSEE's  insurance brokers  evidencing  insurance of the Aircraft in accordance
with this Lease from the Delivery Date.

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

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

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

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

     7.1.4  Prior to the  Scheduled  Delivery  Date,  LESSEE will pay LESSOR the
first monthly installment of Rent in accordance with Article 5.3.2.

<PAGE>

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

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

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

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

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

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

     (c)  none of the  Creditor  Agreements  contains  terms  which  provide  or
contemplate  that any  Creditor  will obtain any right,  title or interest in an
Engine which is installed on another aircraft (or, if this is not the case, such
certificate will identify the parties,  the aircraft and the Creditor Agreements
for which this statement is untrue).

     7.2.4  LESSEE's  counsel will deliver  opinions  confirming the matters set
forth in the opinion of counsel  described in Article 7.1 and advising  that all
filing and other requirements have been met or concurrently are being met.

     7.2.5 If any Creditor Agreement provides or contemplates that such Creditor
will obtain any right, title or interest in an Engine which is installed on such
Creditor's  aircraft,  LESSEE  will  deliver  to LESSOR an  engines  cooperation
agreement in form and substance acceptable to LESSOR which is executed by LESSEE
and LESSEE's Creditors (as defined therein).

<PAGE>

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

     7.3 POST-DELIVERY REQUIREMENTS.

     7.3.1 Promptly after Delivery, LESSEE will do each of the following:

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

     (b) provide  LESSOR with a follow-up  opinion of counsel  advising that the
Aircraft has been registered in the State of Registration and that all necessary
filings have been made.

<PAGE>

        ARTICLE 8            DISCLAIMERS

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

8.1 "AS IS,  WHERE IS".  LESSEE  AGREES THAT IT IS LEASING THE  AIRCRAFT "AS IS,
WHERE IS". LESSEE  UNCONDITIONALLY  ACKNOWLEDGES  AND AGREES THAT NEITHER LESSOR
NOR ANY OF ITS OFFICERS,  DIRECTORS,  EMPLOYEES OR REPRESENTATIVES  HAVE MADE OR
WILL BE DEEMED TO HAVE MADE ANY TERM,  CONDITION,  REPRESENTATION,  WARRANTY  OR
COVENANT  EXPRESS OR IMPLIED  (WHETHER  STATUTORY  OR  OTHERWISE)  AS TO (a) THE
CAPACITY,  AGE,  AIRWORTHINESS,  VALUE, QUALITY,  DURABILITY,  CONFORMITY TO THE
PROVISIONS OF THIS LEASE,  DESCRIPTION,  CONDITION (WHETHER OF THE AIRCRAFT, ANY
ENGINE, ANY PART THEREOF OR THE AIRCRAFT  DOCUMENTATION),  DESIGN,  WORKMANSHIP,
MATERIALS,   MANUFACTURE,    CONSTRUCTION,    OPERATION,   DESCRIPTION,   STATE,
MERCHANTABILITY,   PERFORMANCE,  FITNESS  FOR  ANY  PARTICULAR  USE  OR  PURPOSE
(INCLUDING  THE ABILITY TO OPERATE OR REGISTER  THE AIRCRAFT OR USE THE AIRCRAFT
DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY
PART  THEREOF,  OR THE  ABSENCE  OF  LATENT  OR OTHER  DEFECTS,  WHETHER  OR NOT
DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b)
THE ABSENCE OF ANY  INFRINGEMENT  OF ANY PATENT,  TRADEMARK,  COPYRIGHT OR OTHER
INTELLECTUAL  PROPERTY  RIGHTS,  (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE,  COURSE OF  DEALING OR USAGE OF TRADE OR (d) EXCEPT AS SET FORTH IN
ARTICLE 21.1, ANY OTHER  REPRESENTATION  OR WARRANTY,  EXPRESS OR IMPLIED,  WITH
RESPECT TO THE AIRCRAFT OR ANY PART THEREOF,  ALL OF WHICH ARE HEREBY  EXPRESSLY
EXCLUDED AND EXTINGUISHED.

<PAGE>

8.2 WAIVER OF WARRANTY OF DESCRIPTION.  IN  CONSIDERATION OF (a) LESSEE'S RIGHTS
HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S  ASSIGNMENT  TO LESSEE OF ANY
EXISTING AND ASSIGNABLE  WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER,
LESSEE  HEREBY  AGREES THAT ITS  ACCEPTANCE  OF THE AIRCRAFT AT DELIVERY AND ITS
EXECUTION  AND DELIVERY OF THE ESTOPPEL AND  ACCEPTANCE  CERTIFICATE  CONSTITUTE
LESSEE'S  WAIVER OF THE  WARRANTY  OF  DESCRIPTION,  ANY CLAIMS  LESSEE MAY HAVE
AGAINST  LESSOR  BASED UPON THE  FAILURE OF THE  AIRCRAFT  TO CONFORM  WITH SUCH
DESCRIPTION  AND ANY AND ALL  RIGHTS  IT MAY HAVE TO THE  REMEDIES  SET FORTH IN
SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA  COMMERCIAL  CODE. EVEN IF AT ANY
TIME THE FAILURE OF THE  AIRCRAFT TO CONFORM TO SUCH  DESCRIPTION  SUBSTANTIALLY
IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE
AIRCRAFT BASED ON A REASONABLE  ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED
AND IT WAS NOT  SEASONABLY  CURED OR (ii) LESSEE  ACCEPTED THE AIRCRAFT  WITHOUT
DISCOVERING  THE  NONCONFORMITY  BUT  LESSEE'S  ACCEPTANCE  OF THE  AIRCRAFT WAS
REASONABLY  INDUCED  EITHER  BY  LESSOR'S  ASSURANCES  OR BY THE  DIFFICULTY  OF
DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE,  LESSEE AGREES NOT TO LOOK TO LESSOR
FOR DAMAGES OR RELIEF  ARISING OUT OF THE FAILURE OF THE  AIRCRAFT TO CONFORM TO
SUCH DESCRIPTION.

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

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

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

<PAGE>

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

     8.7 NO WAIVER. Nothing in this Article 8 or elsewhere in this Lease will be
deemed to be a waiver by LESSEE of any rights it may have against  Manufacturer,
the Engine manufacturer or any other Person.

<PAGE>

         ARTICLE 9            MANUFACTURERS' AND VENDORS' WARRANTIES

     9.1  WARRANTIES.  As set forth in Article  7.2.6,  at Delivery  LESSOR will
assign  to  LESSEE  for the  duration  of the  Lease  Term  the  benefit  of all
warranties  and  indemnities  given to LESSOR  by  Manufacturer  and the  Engine
manufacturer.  Effective on the Delivery Date, all other vendor  warranties with
respect to the Aircraft are hereby assigned by LESSOR to LESSEE.

     9.2  REASSIGNMENT.  On the  Termination  Date,  the benefit of any warranty
assigned  by LESSOR to LESSEE  pursuant  to  Article  7.2.6  will be  reassigned
automatically to LESSOR or its designee.

<PAGE>

         ARTICLE 10           OPERATION OF AIRCRAFT

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

     10.2 COMPLIANCE WITH LAWS. LESSEE agrees throughout the Lease Term that all
use of the Aircraft will be in accordance  with  applicable Laws of the State of
Registration and of any country,  state,  territory or municipality into or over
which LESSEE may operate.  LESSEE will not employ,  suffer or cause the Aircraft
to be used in any business  which is forbidden by Law or in any manner which may
render it liable to condemnation,  destruction,  seizure, or confiscation by any
authority.  LESSEE will not permit the Aircraft to fly to any airport or country
if so doing would  cause  LESSEE to be in  violation  of any Law  applicable  to
LESSEE or the Aircraft.  The foregoing provisions in this Article 10.2 shall not
prohibit any  violation of Law (a) during a good-faith  contest of the validity,
application,  or alleged  violation  thereof in any reasonable manner so long as
there  is no  material  danger  of  sale,  forfeiture,  or loss of the  Aircraft
(however,  this good faith  exception shall not apply in the case of a mandatory
grounding  order,  the good faith  contest  of which  does not permit  LESSEE to
operate the Aircraft during such contest),  and which does not extend beyond the
end of the Lease Term if the pendency of such contest would adversely affect the
Aircraft or the remarketing  thereof in any material respect;  and (b) for minor
or non-recurring  violations (with the  understanding  that minor violations may
cease to be minor if  recurring)  that  LESSEE is  diligently  trying to rectify
which  do  not  render  the  Aircraft  liable  to  any  risk  of   condemnation,
destruction, seizure, or confiscation by any Government Entity.

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

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

<PAGE>

     10.5 FLIGHT CHARGES.

     10.5.1  LESSEE will pay promptly when due all enroute  navigation  charges,
navigation  service  charges and all other charges payable by LESSEE for the use
of or for services  provided at any airport,  whether in respect of the Aircraft
or any other aircraft of LESSEE,  and will indemnify and hold LESSOR harmless in
respect  of the same.  This  indemnity  will  continue  in full force and effect
notwithstanding  the  termination or expiration of the Lease Term for any reason
or the return of the Aircraft.

     10.5.2 If  requested by LESSOR,  LESSEE will provide  LESSOR with a list of
the  airports  to which  LESSEE  regularly  operates  the  Aircraft or its other
aircraft.  LESSEE hereby authorizes Eurocontrol or another aviation authority or
airport or  creditor  claiming  rights on the  Aircraft to confirm the status of
LESSEE's  payments to such creditor for the Aircraft and its other aircraft,  as
and when requested by LESSOR.

<PAGE>

         ARTICLE 11           SUBLEASES

     11.1 NO SUBLEASE  WITHOUT LESSOR CONSENT.  LESSEE WILL NOT SUBLEASE OR PART
WITH POSSESSION OF THE AIRCRAFT  (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME
WITHOUT THE PRIOR WRITTEN  CONSENT OF LESSOR (NOT TO BE  UNREASONABLY  WITHHELD)
AND IN ACCORDANCE  WITH SUCH  REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN
WRITING  BETWEEN LESSOR AND LESSEE.  The wet leasing of the Aircraft  during the
Lease Term (in which  LESSEE  and its crews  retain  operational  control of the
Aircraft) will not be considered a sublease of the Aircraft.

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

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

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

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

<PAGE>

         ARTICLE 12           MAINTENANCE AND USE OF AIRCRAFT

12.1            GENERAL OBLIGATION.

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

     12.1.2  LESSEE will  maintain and repair the Engines in the same manner and
in  the  equivalent  time  frame  to its  other  engines  and  LESSEE  will  not
discriminate   against  any  of  the  Engines  in  respect  of  the  repair  and
maintenance.

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

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

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

     (b) incorporation in the Aircraft of all Airworthiness Directives;

<PAGE>

     (c) incorporation in the Aircraft of all service bulletins of Manufacturer,
the Engine manufacturer and other vendors which LESSEE schedules to adopt within
the Lease  Term for the rest of its Boeing  737-800  aircraft  fleet.  It is the
intent of the parties that the Aircraft will not be discriminated  from the rest
of  LESSEE's  fleet  in  service  bulletin   compliance   (including  method  of
compliance) or other maintenance  matters.  LESSEE will not discriminate against
the Engines with  respect to Overhaul  build  standards  and  life-limited  part
replacements;

     (d)  incorporation  in  the  Maintenance  Program  for  the  Aircraft  of a
corrosion prevention and control program;

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

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

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

12.3            REPLACEMENT OF PARTS.

<PAGE>

     12.3.1 LESSEE, at its own cost and expense, will promptly replace all Parts
which may from time to time become worn out, lost,  stolen,  destroyed,  seized,
confiscated, damaged beyond repair or rendered unfit or beyond economical repair
(BER) for any reason.  In the ordinary course of maintenance,  service,  repair,
overhaul or testing,  LESSEE may remove any Part provided  that LESSEE  replaces
such Part as promptly as practicable. All replacement Parts will (a) be free and
clear  of all  Security  Interests  (except  Permitted  Liens)  of any  kind  or
description,  (b) be in airworthy  condition and of at least  equivalent  model,
service bulletin and  modification  status and have a value and utility at least
equal to the Parts replaced,  assuming such replaced Parts were in the condition
and repair  required to be maintained by the terms hereof and (c) have a current
"serviceable  tag" of the  manufacturer or maintenance  facility  providing such
items to LESSEE,  indicating that such Parts are new, serviceable or Overhauled.
So long as a substitution meets the requirements of the Maintenance  Program and
Aviation Authority, LESSEE may substitute for any Part a part that does not meet
the  requirements  of the  foregoing  sentence  if a  complying  Part  cannot be
procured or installed  within the  available  groundtime  of the Aircraft and as
soon as practicable the noncomplying part is removed and replaced by a complying
Part.

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

12.4            REMOVAL OF ENGINES.

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

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

     (a) the insurance requirements set forth in Article 17 and Exhibit C are in
place;

     (b) LESSEE ensures that the identification plates referred to in Article 14
are not  removed  from any  Engine  upon such  Engine  being  detached  from the
Aircraft; and

<PAGE>

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

     12.5 POOLING OF ENGINES AND PARTS. With LESSOR's prior written consent, not
to be unreasonably withheld,  LESSEE may subject the Engines and Parts to normal
interchange  or pooling  agreements  with  responsible  commercial  air carriers
customary  in the airline  industry  and entered  into by LESSEE in the ordinary
course of its business with respect to its Boeing  737-800 fleet  generally,  so
long as (a) in the case of pooling  of an Engine,  such  Engine is  returned  to
LESSEE within two (2) months, (b) no transfer of title to the Engine occurs, (c)
all other  terms of this  Lease  continue  to be  observed  with  respect to the
Engines or Parts,  including  but not limited to Articles 8, 10, 12, 13, 14, 15,
16, 17 and 18 and (d) LESSEE continues to be fully responsible to LESSOR for the
performance of all of its obligations hereunder.

     12.6 INSTALLATION OF ENGINES ON OTHER AIRCRAFT. Any Engine removed from the
Aircraft may be installed on another  airframe in LESSEE's  fleet which utilizes
engines of the same type as the Engine only if one of the  situations  described
in this Article 12.6 exists:

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

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

     12.6.3 Such other aircraft is subject to a Creditor Agreement (but no other
Security  Interests  except  Permitted  Liens)  which by its terms  expressly or
effectively  states that such Creditor and its  successors  and assigns will not
acquire  any right,  title or  interest  in any Engine by reason of such  Engine
being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to
an Engine is in fact impaired under any such Creditor Agreement, such impairment
will be a Total Loss of such  Engine  and the  provisions  of Article  18.5 will
apply. To the extent another Creditor Agreement  contains such provisions,  then
LESSOR hereby agrees for the benefit of the Creditor of such Creditor  Agreement
that  neither  LESSOR nor its  successors  or assigns  will acquire or claim any
right,  title or interest in any engine in which LESSEE or another  Creditor has
an interest as a result of such engine being installed on the Airframe.

<PAGE>

12.7            MODIFICATIONS.

     12.7.1 No  modification,  alteration,  addition or removal to the  Aircraft
("MODIFICATION")  expected  to cost  over Five  Hundred  Thousand  U.S.  Dollars
(US$500,000)   or  deviation  from  the  Aircraft's   original  type  design  or
configuration  will be made without the prior written  consent of LESSOR,  which
consent  will  not be  unreasonably  withheld.  "Modifications"  do not  include
Airworthiness  Directives or Manufacturer's  recommended service bulletins,  for
which LESSOR's consent is not required.

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

     12.7.3  Notwithstanding  any other provision of this Lease, no Modification
will be made  which has the  effect of  decreasing  the  utility or value of the
Aircraft.

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

     12.7.5 Unless otherwise agreed by LESSOR in writing,  all  non-severable or
structural Modifications will forthwith become a part of the Aircraft and LESSEE
relinquishes  to LESSOR all rights and title  thereto.  However,  all  severable
Modifications  will remain the property of LESSEE or the third-party  owner and,
at LESSOR's  request and LESSEE's cost,  will be removed from the Aircraft prior
to return of the Aircraft,  with LESSEE  restoring the Aircraft to the condition
it was in prior to the  Modification.  Notwithstanding  the  foregoing,  no such
removal will be permitted without LESSOR's permission after the occurrence of an
Event of Default  hereunder and  immediately  upon the occurrence of an Event of
Default  hereunder,  without the  requirement of any further act or notice,  all
right, title and interest in such Modifications will immediately vest in LESSOR.

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

<PAGE>

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

     12.9 REPORTING REQUIREMENTS.

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

     12.9.2 On each anniversary of the Delivery Date, LESSEE will provide LESSOR
with a Technical Evaluation Report for the Aircraft in the form and substance of
Exhibit L, as revised.

     12.10 INFORMATION REGARDING MAINTENANCE PROGRAM. LESSEE will provide LESSOR
with  a copy  of or  information  regarding  the  Maintenance  Program  for  the
Aircraft, as requested by LESSOR.

     12.11 LESSOR  RIGHTS TO INSPECT  AIRCRAFT.  On  reasonable  notice,  LESSOR
and/or its authorized agents or  representatives  will have the right to inspect
the Aircraft and Aircraft  Documentation.  LESSOR agrees that such requests will
be coordinated with LESSEE so as to cause the minimum  practical  disturbance to
LESSEE's  operation or its personnel.  LESSEE agrees to cooperate with LESSOR in
making the  Aircraft  and Aircraft  Documentation  available to such  authorized
technical teams. No such inspection  shall include opening panels,  bays, or the
like (although  LESSOR may observe those that are then open),  or  disassembling
any  item.  LESSOR  will have no duty to make any such  inspection  and will not
incur  any  liability  or  obligation  by  reason  of  (and  LESSEE's  indemnity
obligations  pursuant to Article 16 will apply  notwithstanding)  not making any
such  inspection  or by reason of any  reports it receives or any reviews it may
make of the Aircraft records.

<PAGE>

         ARTICLE 13           TITLE AND REGISTRATION

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

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

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

     13.4 EVIDENCE OF REGISTRATION AND FILINGS. As LESSOR may reasonably request
from time to time,  LESSEE will furnish to LESSOR an opinion of counsel or other
evidence  reasonably  satisfactory  to LESSOR of the  registrations  and filings
required hereunder.

<PAGE>

         ARTICLE 14           IDENTIFICATION PLATES

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

     14.1 AIRFRAME IDENTIFICATION PLATES.

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

      Size:          No smaller than 4" x 6".

      Legend:        "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE
                     FINANCE CORPORATION.

                     MANUFACTURER'S SERIAL NO:    28247

                     OWNER'S ADDRESS:

                     INTERNATIONAL   LEASE  FINANCE  CORPORATION
                     1999  Avenue of the  Stars,  39th Floor Los
                     Angeles,  California 90067 United States of
                     America

                     Fax:     (310) 788-1990"

     14.2 ENGINE IDENTIFICATION PLATES.

      Location:      The legend on the plate must be visible.

      Size:          No smaller than 2" x 6".

                     "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE
                     FINANCE CORPORATION, LOS ANGELES, CALIFORNIA, USA."

         ARTICLE 15           TAXES

<PAGE>

     15.1 GENERAL  OBLIGATION  OF LESSEE.  Except as set forth in Article  15.2,
LESSEE  agrees to pay  promptly  when due, and to  indemnify  and hold  harmless
LESSOR on a full indemnity basis from, all license and registration fees and all
taxes,  fees,  levies,  imposts,  duties,  charges or withholdings of any nature
whatsoever (including without limitation any value added,  franchise,  transfer,
sales, gross receipts,  use, business,  occupation,  excise,  personal property,
real  property,  stamp or other tax) together with any  assessments,  penalties,
fines,  additions  to tax or  interest  thereon,  however  or  wherever  imposed
(whether  imposed  upon  LESSEE,  LESSOR,  on all or part of the  Aircraft,  the
Engines or otherwise), by any Government Entity or taxing authority in the U.S.,
any  State  thereof,  or any  foreign  country  or by any  international  taxing
authority,  upon or with  respect  to,  based  upon  or  measured  by any of the
following (collectively, "TAXES"):

     (a) the Aircraft, the Engines or any Parts.

     (b) the use,  operation  or  maintenance  of the  Aircraft  or  carriage of
passengers or freight during the Lease Term.

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

     (d) the return of the Aircraft to LESSOR or other use or disposition of the
Aircraft by LESSEE.

     15.2 EXCEPTIONS TO INDEMNITY.  The indemnity  provided in Article 15.1 does
not extend to any of the following Taxes:

     (a) Imposed by the U.S.  (including  without limitation any taxes collected
by withholding) or any state or local government or governmental  subdivision or
state  or local  taxing  authority  in the U.S.  (including  any  possession  or
territory  of the  U.S.)  or by any  foreign  government,  taxing  authority  or
governmental  subdivision  of a foreign  country which are based on, or measured
by, the receipts,  gross or net income, capital, net worth,  franchises,  excess
profits, or conduct of business (including minimum taxes,  withholding taxes and
taxes on or measured by any items of tax  preference)  of LESSOR,  except to the
extent that such Tax would not have been imposed on or payable by LESSOR but for
the  location,  use,  registration  or  operation  of the  Aircraft  or any part
thereof,  or any place of business or any activity of LESSEE in the jurisdiction
imposing such Tax.

<PAGE>

     (b) Imposed as a result of LESSOR's transfer,  mortgage,  pledge, financing
or other  disposition  by  LESSOR  of all or a portion  of its  interest  in the
Aircraft or this Lease except a transfer or sale  resulting  from an exercise of
remedies  pursuant to Article 25.3 hereunder or in connection with a termination
of the Lease pursuant to Article 18 hereof.

     (c)  Attributable  to the period prior to the Delivery Date or after return
of the Aircraft to LESSOR in accordance with this Lease.

     (d) Attributable to LESSOR's gross negligence, willful misconduct or breach
of this Lease.

     15.3  AFTER-TAX  BASIS.  The amount  which  LESSEE is  required to pay with
respect  to any  Taxes  indemnified  against  under  Article  15.1 is an  amount
sufficient to restore LESSOR on an after-tax  basis to the same position  LESSOR
would have been in had such Taxes not been incurred.

<PAGE>

     15.4  CLAIMS AND  CONTESTS.  If a written  claim is  received by LESSOR for
Taxes,  which claim, if sustained,  would require the payment of an indemnity by
LESSEE  pursuant to this Article 15,  LESSOR  shall notify  LESSEE of such claim
within thirty (30) days after its receipt, provided that failure to provide such
notice  within thirty (30) days will not relieve  LESSEE of any  indemnification
obligation  pursuant to this Article 15 if such failure does not preclude LESSEE
from exercising its contest rights hereunder. Payments due from LESSEE to LESSOR
pursuant to this Article 15 shall be made  directly to LESSOR within thirty (30)
days of written  demand by LESSOR to LESSEE.  If requested by LESSEE in writing,
LESSOR shall upon receipt of indemnity reasonably  satisfactory to it and at the
expense  of  LESSEE  (including,   without  limitation,  all  reasonable  costs,
expenses,  legal and accountants' fees, and disbursements,  penalties,  interest
incurred in contesting  such claim,  and additions to tax) in good faith, in the
name of LESSOR  or, if  requested  by  LESSEE,  in the name of LESSEE (or permit
LESSEE,  if desired by LESSEE,  to contest in the name of LESSEE) if permissible
under  applicable  laws, the validity,  applicability or amount of such Taxes by
(i) resisting payment thereof if practicable only if adequate reserves have been
made for such Taxes or, if  required,  an adequate  bond has been  posted,  (ii)
paying the same under protest,  if protest shall be necessary and proper,  (iii)
if payment shall be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings,  and (iv) taking such other
action as is  reasonably  requested  by LESSEE from time to time  including  not
paying such Taxes only if adequate reserves have been made for such Taxes or, if
required, an adequate bond has been posted. LESSOR shall determine the method of
any contest and (in good faith  consultation  with  LESSEE)  control the conduct
thereof.  Notwithstanding  anything  contained in this Article 15.4, LESSOR will
not  be  required  to  contest,  or  to  continue  to  contest,   the  validity,
applicability  or amount of any Tax (or  portion  thereof)  (x) if such  contest
would result in any material risk of criminal  penalties or any material risk of
sale,  forfeiture  or loss of the  Aircraft,  (y) if an  Event  of  Default  has
occurred and is  continuing,  or (z) in the case of a contest of a Tax reflected
on a return of LESSOR with other taxes of LESSOR that are not indemnified by the
LESSEE  hereunder,  if LESSEE shall not have furnished an opinion of independent
tax counsel selected by the LESSEE, and reasonably  satisfactory to LESSOR, that
a reasonable  basis exists for such contest.  If LESSOR shall obtain a refund of
all or any part of such Taxes for which an indemnity was paid by LESSEE,  LESSOR
shall pay LESSEE the amount of such refund; PROVIDED,  HOWEVER, that such amount
shall not be payable  before such time as LESSEE shall have made all payments or
indemnities  to LESSOR  then due under  this  Article  15 and under the Lease or
while an Event of Default shall have occurred and be continuing.  If in addition
to such  refund  LESSOR  shall  receive an amount  representing  interest on the
amount of such refund,  LESSEE shall be paid that  proportion  of such  interest
which is fairly  attributable to Taxes paid with an indemnity  payment by LESSEE
prior to the receipt of such refund or interest and increased by any taxes saved
by reason of the  deductibility  of such payment by LESSOR.  LESSEE shall not be
deemed to be in default under any of the  indemnification  provisions under this
Article 15 so long as it or LESSOR shall  diligently  prosecute such contest and
LESSEE has indemnified LESSOR to LESSOR's reasonable  satisfaction.  In case any
report or return is required to be made with respect to any obligation of LESSEE
under this Article 15.4 or arising out of this Article 15.4,  LESSEE will either
timely make such report or return in such manner as will show the  ownership  of
the Aircraft in LESSOR,  and will as soon as possible send a copy of such report
or return to LESSOR,  or will notify LESSOR of such  requirement and prepare and
deliver such report or return to LESSOR in such manner as shall be  satisfactory
to LESSOR.

     15.5 REFUNDS.  Upon receipt by LESSOR of a refund of all or any part of any
Taxes  (including  any deductions or  withholdings  referred to in Article 15.1)
which  LESSEE has paid,  LESSOR  will pay to LESSEE the net amount of such Taxes
refunded.

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

<PAGE>

         ARTICLE 16           INDEMNITIES

     16.1 GENERAL INDEMNITY.  Except as set forth in Article 16.2, LESSEE agrees
to indemnify and hold harmless  LESSOR and its officers,  directors,  employees,
agents  and   shareholders   (individually   an  "INDEMNITEE"  and  collectively
"INDEMNITEES")  from  any and all  liabilities,  obligations,  losses,  damages,
penalties,  claims, actions, suits, costs, disbursements and expenses (including
legal fees, costs and related expenses) of every kind and nature, whether or not
any of the transactions contemplated by this Lease are consummated (collectively
"EXPENSES"),  which  are  imposed  on,  incurred  by  or  asserted  against  any
Indemnitee  and which are in any way relating to, based on or arising out of any
of the following:

     (a) this Lease or any transactions contemplated hereby;

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

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

     (d) any non-compliance by LESSEE with any term of this Lease or the falsity
or inaccuracy of any representation or warranty of LESSEE set forth herein;

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

<PAGE>

     (f) as a  consequence  of any Default in payment by LESSEE of any sum to be
paid by LESSEE  when due under this Lease or any other  Default by LESSEE in the
due and punctual performance of its obligations under this Lease.

     The  foregoing  indemnity  by LESSEE is  intended  to include and cover any
Expense  to which an  Indemnitee  may be  subject  (in  contract,  tort,  strict
liability or under any other  theory)  regardless of the  negligence,  active or
passive or any other type, of such Indemnitee,  so long as such Expense does not
fall within any of the exceptions listed in Article 16.2.

     16.2  EXCEPTIONS  TO GENERAL  INDEMNITIES.  The  indemnity  provided for in
Article  16.1 will not  extend  to  Expenses  of any  Indemnitee  to the  extent
resulting from or arising out of any of the following:

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

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

     (c) Expenses  representing  Taxes, it being  acknowledged that the terms of
Article 15 apply exclusively to LESSEE's  indemnity  obligations with respect to
Taxes;

     (d) Expenses due to the breach by LESSOR of its covenant of quiet enjoyment
pursuant to Article 21.2 (except to the extent covered by LESSEE's insurances);

     (e) Expenses  which arise in connection  with the transfer by LESSOR of any
interest in the Aircraft or this Lease,  except for any  transfer in  connection
with any Event of Default or a Total Loss of the Aircraft or an Engine.

     (f)  Expenses  which  are  solely  attributable  to the  representation  or
warranty of LESSOR contained in or made pursuant to any Operative Document being
untrue;

     (g) Expenses which are solely related to the failure of such Indemnitees to
perform or observe  any  agreement,  covenant,  or  condition  on its part to be
performed or observed in any Operative Document;

<PAGE>

     (h)  Expenses  which are solely an ordinary  and usual  internal  customary
operating expense; or

     (i) Expenses which are solely related to a breach of Article 21.1.6, or

     (j) Expenses which are solely related to a LESSOR's Lien.

     16.3 AFTER-TAX  BASIS. The amount which LESSEE will be required to pay with
respect to any Expense  indemnified against under Article 16.1 will be an amount
sufficient  to  restore  the  Indemnitee,  on an  after-tax  basis,  to the same
position such Indemnitee would have been in had such Expense not been incurred.

     16.4  TIMING  OF  PAYMENT.  It is the  intent  of  the  parties  that  each
Indemnitee will have the right to indemnification for Expenses hereunder as soon
as a claim is made and as soon as an  Expense is  incurred,  whether or not such
claim is meritorious and whether or not liability is established (but subject to
Articles 16.2 and 16.8).  LESSEE will pay an Indemnitee for Expenses pursuant to
this Article 16 within ten (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  (but not  before  payment is due from such
Indemnitee).

     16.5  SUBROGATION.  Upon the payment in full of any  indemnity  pursuant to
this  Article  16 by  LESSEE,  LESSEE  will be  subrogated  to any  right of the
Indemnitee in respect of the matter against which such indemnity has been made.

     16.6 NOTICE. Each Indemnitee and LESSEE will give prompt written notice one
to the other of any liability of which such party has knowledge for which LESSEE
is, or may be,  liable under Article 16.1;  provided,  however,  that failure to
give such notice will not terminate any of the rights of Indemnitees  under this
Article 16 except to the extent that LESSEE has been  materially  prejudiced  by
the failure to provide such notice.

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

     16.8 DEFENSE OF CLAIMS.

<PAGE>

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

     (b) Unless LESSOR agrees in writing  otherwise,  no settlement of any claim
hereunder  may require  LESSOR to agree to any remedy  apart from the payment of
money damages (for which such payment of money damages  LESSEE will in any event
indemnify the Indemnitees).

     (c) In no event  shall any  Indemnitee  enter  into a  settlement  or other
compromise  with respect to any Expense  without  LESSEE's prior written consent
(which shall not be  unreasonably  withheld or delayed),  unless such Indemnitee
waives  its right to be  indemnified  with  respect to such  Expense  under this
Article 16.

     (d) To the extent that any Expense  indemnified by LESSEE  hereunder may be
covered by insurance maintained by LESSEE, at LESSEE's expense,  each Indemnitee
agrees  to  cooperate  with the  insurers  in the  exercise  of their  rights to
investigate, defend, or compromise that Expense as may be required to retain the
benefits of the insurance for that Expense.

     (e) If an Indemnitee is not a party to this Lease,  LESSEE may require that
Indemnitee to agree in writing to the terms of this Article 16 before making any
payment to such Indemnitee under this Article 16.

     16.9 SURVIVAL OF OBLIGATION.  Notwithstanding anything in this Lease to the
contrary,  the provisions of this Article 16 will survive the  Termination  Date
and  continue in full force and effect  notwithstanding  any breach by LESSOR or
LESSEE of the terms of this Lease,  the termination of the lease of the Aircraft
to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease.

<PAGE>

         ARTICLE 17           INSURANCE

     17.1  CATEGORIES  OF  INSURANCE.  Throughout  the Lease  Term and until the
Termination  Date LESSEE will,  at its own expense,  effect and maintain in full
force and effect the types of  insurance  and  amounts of  insurance  (including
deductibles)  described in Exhibit C through such brokers and with such insurers
favorably regarded in the airline industry.

     17.2 INSURANCE FOR INDEMNITIES.  The insurance  referred to in Article 17.1
will in each case include and insure (to the extent of the risks  covered by the
policies) the  indemnity  provisions of Article 16 and LESSEE will maintain such
insurance  of the  indemnities  for a  minimum  of two (2) years  following  the
Termination Date.

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

     17.4 RENEWAL.  Not less than two (2) Business Days before the expiration or
termination date of any insurance required hereunder, LESSEE will provide LESSOR
with fax confirmation from LESSEE's insurance brokers that renewed  certificates
of  insurance  evidencing  the  renewal or  replacement  of such  insurance  and
complying  with  Exhibit C will be issued on the  termination  date of the prior
certificate.  Within seven (7) days after such renewal,  LESSEE will furnish its
brokers' certificates of insurance to LESSOR.

     17.5  ASSIGNMENT OF RIGHTS BY LESSOR.  If LESSOR  assigns all or any of its
rights under this Lease as permitted by this Lease or otherwise  disposes of any
interest in the Aircraft to any other Person, LESSEE will, upon request, procure
that (to the extent of the assignment or disposition)  such Person  hereunder be
added as loss payee and/or additional assured in the policies effected hereunder
and enjoy the same rights and insurance  enjoyed by LESSOR under such  policies.
To the extent of its retained interest or as provided in Article 24.2.1,  LESSOR
will nevertheless continue to be covered by such policies.

     17.6  DEDUCTIBLES.  If there is a material  adverse change in the financial
condition of LESSEE which LESSOR  reasonably  believes will not enable LESSEE to
pay the  deductible  upon the occurrence of a partial loss of the Aircraft or an
Engine,  then  LESSOR  may  require  LESSEE  at  LESSEE's  expense  to lower its
deductibles on the insurance  maintained hereunder to a level which is available
on commercially reasonable terms in the insurance market.

<PAGE>

     17.7  OTHER  INSURANCE.  LESSOR  may from  time to time by notice to LESSEE
require  LESSEE at  LESSEE's  expense  to effect  such other  insurance  or such
variations  to the terms of the  existing  insurance as may then be customary in
the airline  industry  for  aircraft of the same type as the Aircraft and at the
time commonly available in the insurance market.

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

     17.9  CURRENCY.  All proceeds of  insurance  pursuant to this Lease will be
payable in Dollars except as may be otherwise agreed by LESSOR.

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

     17.11 FAILURE TO INSURE. If at any time LESSEE fails to maintain  insurance
in compliance  with this Article 17, LESSOR will be entitled but not bound to do
any of the  following  (without  prejudice to any other rights which it may have
under this Lease by reason of such failure):

     (a) to pay any premiums due or to effect or maintain  substitute  insurance
or otherwise remedy such failure in any reasonable  manner (and LESSEE will upon
demand reimburse LESSOR in full for any amount so expended in that  connection);
or

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

     17.12 LIMIT ON HULL IN FAVOR OF LESSEE.  LESSEE may carry hull all risks or
hull war and allied  perils on the Aircraft in excess of the Agreed Value (which
Agreed  Value is payable to LESSOR)  only to the extent  such  excess  insurance
which  would be  payable  to LESSEE in the event of a Total Loss does not exceed
fifteen  percent  (15%) of the  Agreed  Value and only to the  extent  that such
additional  insurance will not prejudice the insurances  required  herein or the
recovery by LESSOR  thereunder.  LESSEE agrees that it will not create or permit
to exist any liens or encumbrances over the insurances, or its interest therein,
except as constituted by this Lease.

     17.13 MARKETPLACE LIMITATIONS.  The insurance required by this Lease may be
subject  to  any  limitations  generally  prevailing  in the  airline  insurance
marketplace at the time (e.g., AVN67B).

<PAGE>

         ARTICLE 18           LOSS, DAMAGE AND REQUISITION

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

     18.1 DEFINITIONS. In this Article 18:

     "AGREED  VALUE"  (CONFIDENTIAL  MATERIAL  OMITTED)  The Agreed Value is set
forth in March  2001 U.S.  Dollars  and will be  increased  in  accordance  with
Manufacturer's  announced  escalation  rate from  March 1, 2001 to the  Delivery
Date. On each annual renewal date of LESSEE's insurance policy commencing on the
renewal date following the first anniversary of the Lease Term, the Agreed Value
will decrease by two percent (2.0%) of the then-existing Agreed Value.

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

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

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

     (b) actual, constructive,  compromised,  arranged or agreed total loss (the
earlier of the date on which the loss is agreed or  compromised  by the insurers
or thirty  (30) days after the date of notice to  LESSEE's  brokers or  insurers
claiming such total loss);

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

     (d)  sequestration,  detention,  seizure or any similar event for more than
one hundred  eighty  (180)  consecutive  days (the  earlier of the date on which
insurers  make payment on the basis of a total loss or the date of expiration of
such period);

     (e) requisition for use for more than one hundred eighty (180)  consecutive
days,  except as set forth in Article 18.8 (the earlier of the date on which the
insurers  make payment on the basis of a total loss or the date of expiration of
such period);

<PAGE>

     (f) in the case of an Engine,  the event  described in Article  12.6.3 (the
date on which the same takes effect);

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

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

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

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

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

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

     (b) the date which falls sixty (60) days after the Total Loss Date,

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

     (a) the Agreed Value and

     (b) all other amounts then due and payable under this Lease,

     less an amount equal to the Net Total Loss  Proceeds  received by LESSOR by
such date.

     18.3.3  LESSOR  will  apply the Net Total  Loss  Proceeds  and any  amounts
received from LESSEE pursuant to Article 18.3.2 as follows:

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

<PAGE>

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

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

     18.3.4  Upon  receipt by LESSOR of all monies  payable by LESSEE in Article
18.3,  provided  no Default  has  occurred  and is  continuing,  this Lease will
terminate except for LESSEE's  obligations  under Articles 10.5, 15 and 16 which
survive the Termination Date and the Security Deposit will be returned to LESSEE
in accordance with Article 5.3.1.

     FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO
LESSOR PURSUANT TO THIS ARTICLE 18.3 IF A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN
IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES.

     18.4 SURVIVING ENGINE(S).  If a Total Loss of the Airframe occurs and there
has not been a Total Loss of an Engine or Engines,  then provided no Default has
occurred and is  continuing,  at the request of LESSEE  (subject to agreement of
relevant  insurers)  and on receipt of all  monies  due under  Article  18.3 and
payment by LESSEE of all airport,  navigation and other charges on the Aircraft,
LESSOR will  transfer  all of its right,  title and  interest  in the  surviving
Engine(s) to LESSEE,  but without any  responsibility,  condition or warranty on
the part of LESSOR other than as to freedom from any LESSOR's Lien.

     18.5 TOTAL LOSS OF ENGINE AND NOT AIRFRAME.

     18.5.1 Upon a Total Loss of any Engine not  installed  on the Airframe or a
Total Loss of an Engine  installed on the Airframe not involving a Total Loss of
the Airframe,  LESSEE will replace such Engine as soon as reasonably possible by
duly  conveying  to LESSOR  title to  another  engine  (a) free and clear of all
Security  Interests (except Permitted Liens) of any kind or description,  (b) in
airworthy  condition  and of the same or improved  model,  service  bulletin and
modification  status and having a value and utility at least equal to the Engine
which sustained the Total Loss, and (c) not older (by reference to serial number
or  manufacture  date)  than  three (3) years  older  than the oldest of the two
Engines  delivered by LESSOR to LESSEE with the  Aircraft on the Delivery  Date.
Such replacement engine will be an Engine as defined herein and the Engine which
sustained such Total Loss will cease to be an Engine.

<PAGE>

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

     18.6 OTHER LOSS OR DAMAGE.

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

     18.6.2 In the event of any loss or damage to the Aircraft or Airframe which
does not constitute a Total Loss of the Aircraft or the Airframe, or any loss or
damage to an Engine  which  does not  constitute  a Total  Loss of such  Engine,
LESSEE will at its sole cost and expense  fully repair the Aircraft or Engine in
order  that the  Aircraft  or Engine is placed  in an  airworthy  condition  and
substantially  the same  condition  as it was prior to such loss or damage.  All
repairs will be performed in accordance  with sound airline  procedures.  LESSEE
will notify  LESSOR  forthwith of any loss,  theft or damage to the Aircraft for
which the cost of repairs is estimated to exceed Seven  Hundred  Fifty  Thousand
U.S. Dollars (US$750,000),  together with LESSEE's proposal for carrying out the
repair.  In the event that LESSOR  does not agree with  LESSEE's  proposals  for
repair,  LESSOR will so notify  LESSEE  within two (2)  Business  Days after its
receipt of such proposal.  LESSEE and LESSOR will then consult with Manufacturer
and  LESSEE  and  LESSOR  agree  to  accept  as  conclusive,  and be  bound  by,
Manufacturer's  directions or recommendations as to the manner in which to carry
out  such   repairs.   If   Manufacturer   declines   to  give   directions   or
recommendations,  LESSEE  will  carry out the  repairs  in  accordance  with the
directions of LESSOR.

     18.6.3 To the extent  that  LESSOR has  received  insurance  proceeds  from
LESSEE's  insurers  with respect to any loss or damage,  LESSOR will (subject to
LESSOR's  right to deduct  therefrom  any amounts then due and payable by LESSEE
under this Lease and submission by LESSEE of reasonable documentation confirming
the completion of the repairs in accordance with the requirements of this Lease)
pay to LESSEE insurance proceeds received by LESSOR as and when such repair work
is performed on the Aircraft.

<PAGE>

     18.7 COPY OF INSURANCE  POLICY.  Promptly after LESSOR's request  following
the  occurrence  of a partial  loss or Total Loss of the  Aircraft or an Engine,
LESSEE will provide LESSOR with a copy of LESSEE's insurance policy.

     18.8  GOVERNMENT  REQUISITION.  If the Aircraft,  Airframe or any Engine is
requisitioned  for use by any  Government  Entity,  LESSEE will promptly  notify
LESSOR of such requisition.  All of LESSEE's obligations hereunder will continue
as if such  requisition  had not  occurred.  Except if a Default  or an Event of
Default has  occurred  and is  continuing,  all  payments  received by LESSOR or
LESSEE from such Government Entity will be paid over to or retained by LESSEE.

     18.9  CONVEYANCE TO LESSEE.  Upon  compliance by LESSEE with the applicable
terms of Article  18.3 or 18.5,  LESSOR will  transfer to LESSEE the Airframe or
Engine(s), as applicable, with respect to which such Total Loss.

<PAGE>

     ARTICLE 19 CRAF PROGRAM

     19.1 DEDICATION TO CRAF. LESSEE may transfer  possession of the Airframe or
any Engine to the United  States of  America  or any  instrumentality  or agency
thereof  as part of the Civil  Reserve  Air Fleet  Program  authorized  under 10
U.S.C. ss. 9511 ET SEQ. (or any substantially  similar program) ("CRAF PROGRAM")
for a  period  which  includes  (collectively,  the  "CRAF  PROGRAM  REQUISITION
PERIOD") the entire period of  requisition  under the CRAF Program.  If the CRAF
Program  Requisition  Period extends beyond the Expiration Date provided by this
Lease,  then the Lease will be deemed to continue  for six (6) months  after the
end of the CRAF Program Requisition Period at a monthly rental rate equal to the
monthly rental rate during the Lease Term. If such extension  extends beyond the
Lease Term,  then LESSEE will provide LESSOR with written notice of the proposed
redelivery  by the earlier of six (6) months  prior to the  proposed  redelivery
date or five (5)  Business  Days after the date of receipt of the actual  notice
given to LESSEE by the government prior to the government's  redelivery date and
LESSEE will return the Aircraft to LESSOR in the  condition  required by Article
23 on LESSEE's proposed redelivery date set forth in such notice.

     19.2 NOTICE TO LESSOR. LESSEE will promptly notify LESSOR in writing in the
event of the  requisition  for use of the Aircraft under CRAF  activation by the
U.S.  Government.  All of LESSEE's obligations under this Lease will continue to
the same extent as if such requisition had not occurred.

     19.3 REQUISITION OF ENGINE. If there is a requisition for use of any Engine
(but  not the  Airframe)  by the U.S.  Government  in  connection  with the CRAF
Program,  LESSEE will replace such Engine by complying with the terms of Article
18.5 hereof.

     19.4  GOVERNMENT  INDEMNIFICATION.  Any  provisions  of this  Lease  to the
contrary  notwithstanding,  if there is a  requisition  for use of the  Aircraft
pursuant to the CRAF Program and/or CRAF activation, LESSOR agrees that LESSEE's
insurances  described in Exhibit C may be  supplemented  by insurances  provided
under Title XIII of the Act, and/or U.S. Government indemnification (which Title
XIII  insurances  and  indemnification  will be in  amounts  not less than those
established  in  Exhibit  C);  provided,   however,   that  LESSEE  will  remain
responsible for full compliance with all the provisions of this Lease, including
Articles  14 and 16,  to the  extent  Title  XIII  and/or  the  U.S.  Government
indemnification do not satisfy LESSEE's obligations under this Lease.

<PAGE>

19.5 NO GEOGRAPHIC  LIMITS.  If there is a  requisition  for use of the Aircraft
pursuant to the CRAF Program and/or CRAF activation, there will be no limitation
on the  geographic  area in which the Aircraft may be operated so long as, taken
as  a  whole,   LESSEE's   insurance,   the  Title  XIII  insurance  and/or  the
indemnification  provided  by the  U.S.  Government  fully  cover  (without  any
     geographic exclusions) LESSEE's Exhibit C insurance requirements.

     19.6 NOTICE OF DEFAULT.  If an Event of Default occurs under this Lease and
LESSOR  elects to pursue its remedies  under Article  25.3(e) to terminate  this
Lease and repossess the Aircraft,  LESSOR will so notify the U.S.  Government by
sending a written communication as follows:

         Headquarters Air Mobility Command
         AMC Contracting Office -- XOKA
         Scott Air Force Base, Illinois  62225-5007

     19.7 RECEIPT OF PAYMENTS.  Subject to the following sentence,  all payments
received by LESSOR or LESSEE from such Government  Entity in connection with the
requisition  of the  Aircraft  under  the CRAF  Program  will be paid over to or
retained by LESSEE.  If a Default has occurred and is  continuing,  all payments
received by LESSEE or LESSOR from such Government  Entity in connection with the
requisition  of the  Aircraft  under the CRAF  Program  may be used by LESSOR to
satisfy any obligations owing by LESSEE.

<PAGE>

     ARTICLE 20 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE

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

     20.1.1 CORPORATE STATUS. LESSEE is a corporation duly incorporated, validly
existing  and in good  standing  under the Laws of Indiana  (or, on the Delivery
Date, the state of its incorporation).  It has the corporate power and authority
to carry on its business as presently  conducted and to perform its  obligations
hereunder.

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

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

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

<PAGE>

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

     20.1.6 LICENSES.  LESSEE holds all licenses,  certificates and permits from
applicable  Government Entities in the U.S. for the conduct of its business as a
certificated air carrier and performance of its obligations under this Lease.

     20.1.7 NO SUITS.  There are no  suits,  arbitrations  or other  proceedings
pending or threatened before any court or  administrative  agency against LESSEE
which are  reasonably  likely  to be  determined  adversely  and,  if  adversely
determined,  would have a material  adverse  effect on the  business,  assets or
condition  (financial  or  otherwise)  of LESSEE or its ability to perform under
this Lease,  except as described in the filings  provided to LESSOR  pursuant to
Article 22.

     20.1.8 GENERAL OBLIGATIONS.  The obligations of LESSEE under this Lease are
direct, general and unconditional obligations of LESSEE and rank or will rank at
least PARI PASSU with all other present and future unsecured and  unsubordinated
obligations (including contingent  obligations) of LESSEE, with the exception of
such  obligations as are  mandatorily  preferred by law and not by reason of any
encumbrance.

     20.1.9 NO SOVEREIGN IMMUNITY.  LESSEE, under the Laws of the U.S. or of any
other  jurisdiction  affecting LESSEE, is subject to private  commercial law and
suit.  Neither  LESSEE nor its  properties  or assets is entitled  to  sovereign
immunity under any such Laws. LESSEE's performance of its obligations  hereunder
constitute commercial acts done for commercial purposes.

     20.1.10 TAX  RETURNS.  All  necessary  federal and state income tax returns
have been delivered by LESSEE to all relevant  taxation  authorities in the U.S.
or any state  thereof  and LESSEE is not in default in the  payment of any taxes
due and payable as shown on any such  returns or on any  assessment  received by
LESSEE.

     20.1.11 NO  MATERIAL  ADVERSE  EFFECT.  LESSEE is not in default  under any
agreement  to which it is a party or by which it may be bound which would have a
material adverse effect on its business, assets or condition.

<PAGE>

     20.1.12  NO DEFAULT  UNDER THIS  LEASE.  At the time of  execution  of this
Lease,  no Default has occurred and is continuing  and the financial  statements
provided to LESSOR pursuant to Article 22 fairly present the financial condition
of LESSEE.

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

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

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

     20.2.3  INFORMATION  ABOUT  SUITS.  LESSEE will  promptly  give to LESSOR a
notice in writing of any suit,  arbitration or proceeding  against LESSEE before
any court, administrative agency or Government Entity which is reasonably likely
to be  determined  adversely  and, if  adversely  determined,  would  materially
adversely  affect  LESSEE's  financial  condition,  affairs,  operations  or its
ability to perform under this Lease.

     20.2.4 MERGER OF LESSEE.

     (a) LESSEE shall not consolidate  with or merge into any other Person under
circumstances  in which  LESSEE is not the  surviving  corporation,  or  convey,
transfer,  or lease in one or more  transactions all or substantially all of its
assets to any other Person, unless:

     (i) such Person is organized, existing, and in good standing under the Laws
of the U.S.,  any state of the U.S.,  or the  District of  Columbia,  and,  upon
consummation of such transaction, such Person will be a U.S. Air Carrier;

<PAGE>

     (ii) such Person executes and delivers to LESSOR a duly authorized,  legal,
valid, binding and enforceable  agreement,  reasonably  satisfactory in form and
substance to LESSOR,  containing  an effective  assumption by such Person of the
due and punctual  performance  and  observance of each  covenant,  agreement and
condition in the Operative Documents to be performed or observed by LESSEE;

     (iii) such Person makes such filings and  recordings  with the FAA pursuant
to the Act as shall be necessary to evidence such consolidation or merger;

     (iv) LESSEE furnishes LESSOR an opinion of counsel reasonably  satisfactory
to LESSOR to the effect that such  consolidation  or merger has satisfied at the
closing of such consolidation or merger items (i), (ii) and (iii) above;

     (v) immediately  after giving effect to such  consolidation  or merger,  no
Default or Event of Default exists;

     (vi) unless LESSOR otherwise  consents,  immediately after giving effect to
such consolidation or merger,  such Person will have a tangible net worth of not
less  than  sixty-five   percent  (65%)  of  the  LESSEE's  tangible  net  worth
immediately prior to such merger; and

     (vii)  upon such  merger  becoming  effective,  LESSOR  will enjoy the same
degree of protection  under ss. 1110 of the Bankruptcy  Code with respect to the
Aircraft as LESSOR enjoyed prior to such merger.

     (b) Upon any such  consolidation  or merger of LESSEE with or into,  or the
conveyance,  transfer,  or lease by  LESSEE of all or  substantially  all of its
assets to, any Person in accordance with this Article  20.2.4,  such Person will
succeed to, and be  substituted  for, and may exercise every right and power of,
LESSEE under the Operative  Documents with the same effect as if such Person had
been named as  "LESSEE"  therein.  No such  consolidation,  merger,  conveyance,
transfer, or lease shall have the effect of releasing LESSEE or such Person from
any of LESSEE's obligations,  liabilities, covenants, or undertakings under this
Lease.

     20.2.5  RESTRICTION  ON  RELINQUISHMENT  OF  POSSESSION.  LESSEE  will not,
without the prior consent of LESSOR, deliver,  transfer or relinquish possession
of the Aircraft except in accordance with Articles 11 and 12.

<PAGE>

     20.2.6 NO SECURITY INTERESTS.  LESSEE will not create or agree to or permit
to arise any Security  Interest (other than Permitted  Liens) on or with respect
to the Aircraft,  title thereto or any interest therein.  LESSEE will forthwith,
at its own  expense,  take all action as may be necessary to discharge or remove
any such Security Interest if it exists at any time. LESSEE will within five (5)
Business  Days  after  becoming  aware of the  existence  of any  such  Security
Interest give written notice thereof to LESSOR.

     20.2.7 REPRESENTATIONS TO OTHER PARTIES.  LESSEE will not represent or hold
out LESSOR as carrying  goods or  passengers  on the Aircraft or as being in any
way connected or associated with any operation of the Aircraft.

<PAGE>

     ARTICLE 21 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR

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

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

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

     21.1.3 BINDING. This Lease and the other Operative Documents have been duly
authorized,   executed  and   delivered  by  LESSOR  and  represent  the  valid,
enforceable and binding  obligations of LESSOR except as  enforceability  may be
limited  by  bankruptcy,  insolvency,  reorganization  or other  Laws of general
application affecting the enforcement of creditors' rights.

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

     21.1.5  TITLE TO AIRCRAFT.  On the Delivery  Date LESSOR will have good and
valid title to the Aircraft.

     21.1.6  CITIZENSHIP.  LESSOR is a "citizen of the United States" within the
meaning of 49 U.S. Code 40102(a)(15).

<PAGE>

     21.1.7  INVESTMENT  BY LESSOR.  LESSOR is  acquiring  its  interest  in the
Aircraft for its own account from its corporate  funds,  for  investment and not
with  a  view  to  any  resale  or  distribution   thereof  that  would  require
registration under the Securities Act of 1933; PROVIDED,  HOWEVER,  that subject
to the transfer restrictions in Article 24.2, its disposition of its interest in
the Aircraft shall at all times be within its control.

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

<PAGE>

     ARTICLE 22 FINANCIAL AND RELATED INFORMATION

     LESSEE agrees to furnish each of the following to LESSOR:

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

     (b) within one hundred  twenty (120) days after the end of each fiscal year
of LESSEE, the audited consolidated  financial  statements  (including a balance
sheet and profit and loss  statement)  prepared  as of the close of such  fiscal
year in accordance  with generally  accepted  accounting  principles in the U.S.
LESSEE's  chief  financial  officer  will also provide a  certificate  of LESSEE
stating that, to such  officer's  knowledge,  no Default exists under this Lease
(or if, to such officer's knowledge, a Default does exist, identifying it);

     (c) promptly after distribution, all reports and financial statements which
Amtran,  Inc.  sends  or  makes  generally  available  to  its  stockholders  or
creditors; and

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

<PAGE>

     ARTICLE 23 RETURN OF AIRCRAFT

     23.1 DATE OF RETURN.  LESSEE is obligated to return the  Aircraft,  Engines
Parts and Aircraft  Documentation  to LESSOR on the  Expiration  Date,  unless a
Total Loss of the Aircraft  occurred prior to the Expiration Date and this Lease
was  terminated  early in accordance  with Article 18.3. If LESSEE is in Default
hereunder  by failing to return the  Aircraft  on the  Expiration  Date or if an
Event of Default occurs prior to the Expiration Date and LESSOR  repossesses the
Aircraft,  the return requirements set forth in this Article 23 nonetheless must
be met on the date the Aircraft is actually returned to LESSOR or repossessed by
LESSOR.

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

     23.3  RETURN  LOCATION.  LESSEE at its expense  will  return the  Aircraft,
Engines,   Parts  and   Aircraft   Documentation   to  LESSOR  at   Indianapolis
International Airport, Indianapolis,  Indiana or to such other airport as may be
mutually agreed to by LESSEE and LESSOR.

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

     23.5 AIRCRAFT INSPECTION.

<PAGE>

     23.5.1 During the maintenance  checks  performed  immediately  prior to the
proposed redelivery and at the actual return of the Aircraft,  LESSOR and/or its
representatives  will have an opportunity  to conduct a full systems  functional
and  operational  inspection  of the  Aircraft  (and other  types of  reasonable
inspections  based upon the Aircraft type, age, use and other known factors with
respect to the  Aircraft) and a full  inspection  of the Aircraft  Documentation
(including records and manuals),  all to LESSOR's  satisfaction.  The inspection
will occur  during the Return  Check when the panels,  bays or the like are open
and certain Parts are disassembled.  LESSOR may inspect such opened panels, bays
or the like and the  disassembled  Parts so long as LESSOR  does not disrupt the
Return  Check or cause such Return Check to be extended  beyond the  anticipated
completion date of such Return Check. Any deficiencies  from the Aircraft return
condition  requirements set forth in this Article 23 will be corrected by LESSEE
at its cost prior to the acceptance flight described in Article 23.5.2.

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

     23.5.3 To the  extent  that the ground  inspection  and  acceptance  flight
extend beyond the  Expiration  Date,  the Lease Term will be deemed to have been
automatically  extended  and the  obligations  of  LESSEE  hereunder  (including
Article  23.11.3)  will  continue on a  day-to-day  basis until the  Aircraft is
accepted  by LESSOR  executing  the  Return  Acceptance  Receipt  in the form of
Exhibit I.

     23.6 CERTIFICATE OF AIRWORTHINESS MATTERS.

     23.6.1 The Aircraft  will possess a current  Certificate  of  Airworthiness
issued by the Aviation Authority (although this Certificate of Airworthiness may
later be substituted by the Export Certificate of Airworthiness or equivalent if
requested by LESSOR pursuant to Article  23.10).  The Aircraft at return must be
in the condition  required in order to meet the requirements of a U.S.  Standard
Certificate of Airworthiness  for transport  category aircraft issued by the FAA
in  accordance  with  FAR  Part 21 and,  in  addition,  to  meet  the  operating
requirements of FAR Part 121.

<PAGE>

     23.6.2  LESSEE at its cost will  demonstrate  that the  Aircraft  meets the
requirements for issuance of the U.S. Standard  Certificate of Airworthiness for
transport  category aircraft specified in Article 23.6.1 by delivering to LESSOR
an actual U.S. Standard  Certificate of Airworthiness.  If there is a dispute in
regards to the  condition of the Aircraft or the  Aircraft  Documentation,  then
LESSEE will provide  LESSOR with a letter  acceptable to LESSOR signed by an FAA
Designated  Airworthiness  Representative  (DAR) or another Person acceptable to
LESSOR  stating  that the DAR or such  Person has  inspected  the  Aircraft  and
Aircraft  Documentation  (including  records and manuals) and has found that the
Aircraft meets the requirements for issuance of a U.S.  Standard  Certificate of
Airworthiness  for transport  category  aircraft in accordance  with FAR Part 21
and, in addition, meets the operating requirements of FAR Part 121.

     23.6.3 If the Aircraft is to be  registered  in a country other than in the
U.S.  after  return from  LESSEE,  LESSOR may in its sole  discretion  waive the
requirements  of Article  23.6.2 and instead  require that LESSEE at its expense
(to the extent  such  expense is no greater  than that which  LESSEE  would have
incurred  pursuant to Articles 23.6.1 and 23.6.2,  with any additional  expenses
being  for  LESSOR's  account)  put the  Aircraft  in a  condition  to meet  the
requirements  for issuance of a  Certificate  of  Airworthiness  of the Aviation
Authority of the next country of register.

     23.7 GENERAL CONDITION OF AIRCRAFT AT RETURN.

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

     23.7.2  Aircraft  Documentation  (including  records and manuals) will have
been  maintained  in an  up-to-date  status,  in  accordance  with the rules and
regulations  of the Aviation  Authority and the FAA and this Lease and in a form
necessary in order to meet the  requirements of Article 23.6.2.  The records and
historical documents set forth in Attachment 1 of Exhibit I will be in English.

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

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

<PAGE>

     23.7.5 The  Aircraft  interior  (including  cabin and windows) and exterior
will be clean and all  compartments  will be reasonably free of foreign objects,
dirt, grease,  fluids, stains, grime, cracks, tears and rips (with the exception
of  normal  wear and tear) and  ready to be  placed  into  immediate  commercial
airline operations.

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

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

     23.7.8 The Aircraft will be returned with  LESSOR's  Engines  installed and
with the same  equipment  as at Delivery,  subject  only to those  replacements,
additions  and  Modifications  permitted  under this  Lease.  LESSEE will inform
LESSOR of whether LESSEE will be able to redeliver the Engines with the Aircraft
and the proposed  replacement  engines  that LESSEE  wants to provide  LESSOR in
place of the Engines. LESSEE will provide LESSOR with whatever data, records and
information  that LESSOR  reasonably  requests in order to evaluate the proposed
replacement  engines. In the event that LESSEE is unable to return either of the
Engines in the conditions required by this Article 23, then LESSEE may provide a
replacement  engine (a  "REPLACEMENT  ENGINE") for such Engine to LESSOR by duly
conveying  to  LESSOR as owner  hereunder  title to  another  engine of the same
manufacturer  and of the same or an improved  model as the Engine being replaced
and suitable for  installation  and use on the  Aircraft,  which engine shall be
free and clear of all  Security  Interests,  and shall be no more than three (3)
years older by  reference to serial  number than the replaced  Engine and have a
modification  status,  value and utility at least equal to the Engine which such
Replacement  Engine is replacing on the Aircraft assuming that such Engine which
such Replacement Engine is replacing was then of the value, utility,  condition,
and  airworthiness  required to be maintained  by the terms of this Lease.  Such
Replacement Engine,  after approval and acceptance by LESSOR, shall be deemed an
"Engine" as defined  herein for all purposes  hereunder.  LESSEE  agrees to take
such  action as LESSOR may  reasonably  request  in order that such  Replacement
Engine shall be duly and properly  titled in the name of LESSOR.  Prior to or at
the time of any such conveyance, LESSEE, at its own expense, will promptly:

<PAGE>

     (a) furnish  LESSOR  with a warranty  bill of sale,  in form and  substance
satisfactory to LESSOR, with respect to such Replacement Engine,

     (b) furnish LESSOR with such evidence of title to such  Replacement  Engine
as reasonably requested by LESSOR, and

     (c) furnish  LESSOR with an opinion of LESSEE's  counsel to the effect that
title to such Replacement Engine has been duly conveyed to LESSOR free and clear
of all Security Interests of any kind or nature and that such exchange qualifies
for tax free treatment under the Internal Revenue Code of 1986, as amended.

     Upon full compliance with this Article, LESSOR shall transfer to LESSEE all
of LESSOR's right, title and interest, on an "AS-IS", "WHERE-IS" basis in and to
the Engine  being  replaced  by such  Replacement  Engine,  without  recourse or
warranty,  express or implied,  except that LESSOR has good and marketable title
to such Engine and such Engine shall be free and clear of LESSOR's Liens.

     23.7.9 All  Airworthiness  Directives which are issued prior to the date of
return of the Aircraft  and require  compliance  (either by means of  repetitive
inspections,  modifications  or  terminating  action)  prior  to  return  of the
Aircraft to LESSOR or within one (1) year after the  Termination  Date will have
been  complied  with on the Aircraft on a  terminating  action basis at LESSEE's
cost.  Airworthiness  Directives which do not have a terminating  action will be
accomplished  at the highest level of inspection or modification  possible.  If,
after using best  efforts,  LESSEE is unable to acquire the  material,  parts or
components necessary to accomplish such Airworthiness Directive, LESSEE will pay
to LESSOR upon return of the Aircraft the  estimated  cost of  terminating  such
Airworthiness Directive. If the estimated cost cannot be mutually agreed upon by
LESSEE and  LESSOR,  LESSEE  and  LESSOR  will each  obtain an  estimate  from a
reputable FAA-approved maintenance facility (unaffiliated with LESSEE or LESSOR)
and the estimated cost will be the average of the two estimates.

     23.7.10 The Aircraft  will be in compliance  with the Corrosion  Prevention
and Control Program (CPCP) specified in LESSEE's Maintenance Program.

<PAGE>

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

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

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

     23.7.14  The  Aircraft  will be free of any leaks and any damage  resulting
therefrom.  All  repairs  will  have  been  performed  on a  permanent  basis in
accordance with the applicable manufacturer's instructions.

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

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

<PAGE>

     23.8.1 Have performed,  and completed,  by an FAA-approved  repair station,
all  maintenance  tasks  specified in LESSEE's  Maintenance  Program and the MPD
which (a) are  necessary  to clear the  Aircraft of all such tasks for  eighteen
(18) months, five thousand (5,000) hours, and three thousand (3,000) cycles from
the date of return of the  Aircraft,  and (b) are  required to be  performed  at
lesser intervals than eighteen (18) months, five thousand (5,000) hours or three
thousand (3,000) cycles (all such work  collectively  referred to as the "RETURN
CHECK").  If a maintenance task is specific to LESSEE's  Maintenance Program and
not required or  recommended to be performed by the MPD, then LESSEE will not be
required  to  perform  such  maintenance  task so long as the  Return  Check  is
performed in such a manner that clears the Aircraft of all maintenance  tasks in
accordance  with the  requirements  of the  preceding  sentence.  As part of the
Return Check, all non-routine  tasks generated as a result of the performance of
the work  included  in the  Return  Check and any other  discrepancies  revealed
during  the Return  Check  must also be  performed  in  accordance  with the FAA
approved  procedures.  LESSEE  will also weigh the  Aircraft.  LESSEE  agrees to
perform  during the Return  Check any other work  reasonably  required by LESSOR
(and not  otherwise  required  under this Lease) and LESSOR will,  promptly upon
receipt of an invoice  from LESSEE,  reimburse  LESSEE for such work at LESSEE's
preferred customer rates.

     23.8.2 Have the  Aircraft  in  compliance  with  Corrosion  Prevention  and
Control Program (CPCP) as specified in the MPD and LESSEE's Maintenance Program.

     23.8.3 Remove LESSEE's exterior markings,  including all exterior paint, by
stripping (or, at LESSOR's option,  pneumatically  scuff/sanding) the paint from
the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish,
prepare  (including  application of alodine or another corrosion  inhibitor) and
prime the surfaces to be painted,  all in  accordance  with  Manufacturer's  and
paint  manufacturer's  recommendations.  LESSEE will then repaint the  fuselage,
empennage,  wings and Engine cowlings in the colors and logo specified by LESSOR
; PROVIDED,  HOWEVER, that LESSEE will be responsible for only paying the amount
that it  would  cost to strip  or  scuff/sand  (whichever  is  performed  on the
Aircraft at return) and properly paint the Aircraft in LESSEE's  colors and logo
and LESSOR will be responsible  for the excess cost to paint the Aircraft in the
next lessee's  colors and logo.  Such painting  will be  accomplished  in such a
manner  as  to  result  in  a  uniformly  smooth  and  cosmetically   acceptable
aerodynamic surface. All external placards,  signs and markings will be properly
attached, free from damage, clean and legible.

     23.8.4 Clean the exterior and interior of the Aircraft.

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

     23.8.6 In accordance with Article 23.7.7,  permanently repair damage to the
Aircraft that exceeds Manufacturer's limits and replace any non-flush structural
patch repairs installed on the Aircraft with flush-type  repairs, so long as the
Manufacturer or the  Manufacturer's  Structural Repair Manual permits flush-type
repairs on the portion of the Aircraft  where the non-flush  structural  repairs
were made.

<PAGE>

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

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

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

     23.8.10  LESSEE will  provide  evidence to LESSOR's  satisfaction  that the
Engine historical and technical records, borescope inspection,  trend monitoring
and other checks  specified in Article 23.8.9 do not reveal any condition  which
would cause the Engines or any module to be  unserviceable,  beyond  serviceable
limits or serviceable with an increased frequency of inspection or with calendar
time, flight hour or flight cycle restrictions  under the Engine  manufacturer's
maintenance manual. LESSEE will correct any discrepancies in accordance with the
guidelines  set out by the Engine  manufacturer  which may be discovered  during
such inspection.

     23.8.11 In the event the Engine historical and technical records, borescope
inspection, trend monitoring and other checks specified in Article 23.8.9 result
in a dispute regarding the conformity of an Engine with the requirements of this
Article 23, LESSEE and LESSOR will consult with Engine  manufacturer  and follow
Engine manufacturer's recommendations (including the accomplishment of an Engine
test cell operational  check) with regard to determining if such Engine complies
with  the  requirements  of  this  Article  23  and  the  manner  in  which  any
discrepancies from the requirements of this Article 23 will be rectified.

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

<PAGE>

(CONFIDENTIAL MATERIAL OMITTED)

     23.10 EXPORT AND DEREGISTRATION OF AIRCRAFT. At LESSOR's request, LESSEE at
its cost  will  (a)  provide  an  Export  Certificate  of  Airworthiness  or its
equivalent  from the State of  Registration so that the Aircraft can be exported
to the  country  designated  by LESSOR,  (b) assist with  deregistration  of the
Aircraft from the register of aircraft in the State of Registration,  (c) assist
with arranging for prompt  confirmation of such deregistration to be sent by the
registry in the State of Registration  to the next country of  registration  and
(d) perform any other acts reasonably  required by LESSOR in connection with the
foregoing.  If any  Aircraft  work which  LESSEE is not  otherwise  required  to
perform hereunder,  including  engineering,  is required in order to obtain such
Export  Certificate of  Airworthiness,  LESSEE will perform such work and LESSOR
will reimburse LESSEE for such work at LESSEE's preferred customer rates.

     23.11 LESSEE'S  CONTINUING  OBLIGATIONS.  In the event that LESSEE does not
return  the  Aircraft  to LESSOR  on the  Expiration  Date and in the  condition
required by this Article 23 for any reason  (whether or not the reason is within
LESSEE's control):

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

<PAGE>

     23.11.2 Until such return,  the Agreed Value will be an amount equal to the
Agreed  Value on the day the  Aircraft  should  have  been  returned  to  LESSOR
pursuant to this Lease.

     23.11.3  LESSEE  will  fully  indemnify  LESSOR  on demand  for all  losses
(including consequential damages), liabilities,  actions, proceedings, costs and
expenses thereby suffered or incurred by LESSOR and, in addition,  if a delay in
return of the Aircraft was due to reasons within  LESSEE's  reasonable  control,
then until such time as the Aircraft is  redelivered  to LESSOR and put into the
condition  required by this Article 23,  instead of paying the Rent specified in
Article  5.3,  LESSEE  will pay twice  the  amount of Rent for each day from the
scheduled  Expiration Date until the Termination  Date (the monthly Rent payable
under Article  5.3.1 will be prorated  based on the actual number of days in the
applicable month). Payment will be made upon presentation of LESSOR's invoice.

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

     23.12 AIRPORT AND NAVIGATION CHARGES.  LESSEE will ensure that at return of
the Aircraft any and all airport,  navigation  and other charges which give rise
or may if unpaid  give rise to any lien,  right of  detention,  right of sale or
other  Security  Interest in relation to the  Aircraft,  Engine or any Part have
been paid and discharged in full and will at LESSOR's  request produce  evidence
thereof satisfactory to LESSOR.

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

<PAGE>

     23.14 INDEMNITIES AND INSURANCE. The indemnities and insurance requirements
set forth in Articles 16 and 17,  respectively,  will apply to  Indemnitees  and
LESSOR's  representatives  during return of the  Aircraft,  including the ground
inspection  and  acceptance  flight.  With  respect  to the  acceptance  flight,
LESSOR's representatives will receive the same protections as LESSOR on LESSEE's
Aviation and Airline General Third Party Liability Insurance.

<PAGE>

     ARTICLE 24 ASSIGNMENT

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

     24.2 SALE OR ASSIGNMENT BY LESSOR.

     24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any
time and without LESSEE's consent sell, assign or transfer its rights,  interest
and  obligations  hereunder  or with  respect to the  Aircraft  to a third party
("LESSOR'S ASSIGNEE"), but only if:

     (a)  LESSOR's  Assignee  has full  power,  authority,  and  legal  right to
execute,  deliver,  and perform the  obligations  of LESSOR under the  Operative
Documents  and  provides  reasonably  satisfactory  evidence  of such  power and
authority to LESSEE;

     (b) LESSOR's  Assignee  enters into one or more legal,  valid,  binding and
enforceable  agreements effective to confirm that LESSOR's Assignee agrees to be
bound by all the terms of, and to undertake all of the obligations arising after
such  transfer  of LESSOR in,  the  Operative  Documents,  and in which it makes
representations  and warranties  substantially the same as those in Article 21.1
of this Lease;

     (c) upon such  transfer  LESSEE  shall not be  obligated to pay any greater
amount or incur any  greater  obligation  (other  than  indemnifying  additional
indemnitees,  insuring additional insureds and other minor ministerial  matters)
than that which it would have been  obliged to pay or incur under the  Operative
Documents if no transfer or assignment  had taken place,  and upon such transfer
the terms and  conditions of the Operative  Documents  insofar as they relate to
the rights and obligations of LESSEE are not altered;

<PAGE>

     (d) LESSOR shall cause LESSOR's Assignee to deliver to LESSEE an opinion of
counsel  reasonably  satisfactory to LESSEE to the effect that such agreement or
agreements  referred to in clause (2) and, if applicable,  clause (6) are legal,
binding,  and enforceable in accordance with its or their terms,  subject to the
typical exceptions.

     (e) the  transfer  shall  relate to  LESSOR's  entire  interest as owner or
lessor;

     (f) LESSOR's  Assignee is a citizen of the United States under 49 U.S. Code
ss.40102(a)(15) (such status to be determined without considering FAR ss.47.9 or
any  other  provision  that  may  restrict  LESSEE's  use  or  operation  of the
Aircraft), or shall use a voting powers trust or similar arrangement in order to
hold an interest in the Aircraft such that the Aircraft can be registered in the
U.S.  (without  considering FAR ss.47.9 or any other provision that may restrict
LESSEE's use or operation of the Aircraft);

     (g)  LESSOR's  Assignee  is a single  Person and is either (i) a  Permitted
Institution,  or  (ii)  or an  affiliate  of a  Permitted  Institution,  if such
affiliate's  obligations  under the Operative  Documents are  guaranteed by such
Permitted  Institution  pursuant to a written  guaranty,  in form and  substance
reasonably satisfactory to LESSEE; and

     (h)  LESSOR  shall  give  written  notice to LESSEE at least  five (5) days
before  any such  transfer,  specifying  the name and  address  of the  proposed
LESSOR's  Assignee,  and  providing  reasonably  satisfactory  evidence that the
proposed  LESSOR's   Assignee  meets  the  requirements   described  in  Article
24.2.1(g)(i) or (ii).

     For a period of two (2) years after such sale or assignment and at LESSEE's
cost,  LESSEE will  continue to name LESSOR as an  additional  insured under the
Aviation and Airline General Third Party Liability  Insurance  required pursuant
to Article 17 and Exhibit C.

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

<PAGE>

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

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

     24.5 PROTECTIONS.

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

     24.5.2  Wherever the term "LESSOR" is used in this Lease in relation to any
of the provisions relating to disclaimer, title and registration,  indemnity and
insurance contained in Articles 8, 13, 16 and 17, respectively,  or with respect
to Article 20.2.7, the term "LESSOR" will be deemed to include LESSOR's Assignee
and LESSOR's  Lender,  if  applicable.  For avoidance of doubt,  in the event of
LESSOR's  sale or  financing  of the  Aircraft,  the  disclaimer  and  indemnity
provisions  contained in Articles 8 and 16 will continue to be applicable  after
the sale or assignment to International  Lease Finance  Corporation,  as well as
being applicable to LESSOR's Assignee and LESSOR's Lender.

<PAGE>

     ARTICLE 25 DEFAULT OF LESSEE

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

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

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

     (b)  LESSEE  fails to make a Rent or other  payment  due  hereunder  in the
manner and by the date  provided  herein and fails to make such  payment  within
five (5) Business Days after its receipt of notice that such payment is due;

     (c) LESSEE  fails to obtain or maintain the  insurance  required by Article
17;

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

     (e)  LESSEE  fails to  observe  or  perform  any of its  other  obligations
hereunder  and fails to cure the same  within  thirty  (30) days  after  written
notice thereof to LESSEE; provided, that LESSEE will have up to a total of sixty
(60) days to cure such failure so long as it uses diligent efforts to do so;

     (f) any  representation  or warranty of LESSEE  herein  proves to have been
untrue in any material respect when made; provided,  that, if the effect of such
falsity  is  curable,  LESSEE  shall  have  thirty  (30) days  after  LESSEE has
knowledge that the representation or warranty is untrue;

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

     (h) LESSEE abandons the Aircraft or Engines;

     (i) LESSEE or an  approved  sublessee  no longer has  unencumbered  control
(other than Permitted Liens) or possession of the Aircraft or Engines, except as
otherwise permitted by this Lease;

<PAGE>

                (j) LESSEE temporarily or permanently  discontinues  business or
                (except as  permitted  by  Article  20.2.4)  sells or  otherwise
     disposes of all or substantially all of its assets;

     (k) a material adverse change occurs in the financial condition of LESSEE;

     (l) LESSEE no longer  possesses  the  licenses,  certificates  and  permits
required  for the conduct of its business as a  certificated  air carrier in the
U.S.;

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

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

     (o) any order,  judgment  or decree is  entered  by any court of  competent
jurisdiction appointing a receiver,  trustee or liquidator of LESSEE or at least
half  of its  property,  or if at  least  half  of  LESSEE's  property  is to be
sequestered.  If instituted by or done with the consent of LESSEE, the same will
be an immediate Event of Default. If instituted by another Person, the same will
be an Event of Default if not dismissed, stayed, remedied or relinquished within
sixty (60) days; PROVIDED, HOWEVER, that if such proceeding is stayed, then such
proceeding  will become an immediate Event of Default if such stay is removed or
terminates and the proceeding is not dismissed,  remedied or  relinquished  when
such stay is removed or terminates.

     (p)  any  indebtedness  for  borrowed  moneys  or a  guarantee  or  similar
obligation  owed by  LESSEE  with an unpaid  balance  of  CONFIDENTIAL  MATERIAL
OMITTED is  declared  due before its stated  maturity or LESSEE is in default of
payment  obligations  CONFIDENTIAL  MATERIAL  OMITTED  under any other  purchase
agreement,  lease,  conditional  sale agreement or other  agreement  pursuant to
which LESSEE has possession of any aircraft;

<PAGE>

     (q)  Eurocontrol  has  notified  LESSOR  that there are unpaid  Eurocontrol
charges due from LESSEE  (unless such charges are being  contested in good faith
and by  appropriate  proceedings,  an adequate  bond has been  provided and such
proceedings  do not involve any danger of the detention,  interference  with the
use or  operation,  sale,  forfeiture  or loss of the Aircraft) and such charges
remain  outstanding  for  a  period  of  thirty  (30)  days  from  the  date  of
Eurocontrol's  notice to LESSOR  provided that such thirty (30) day grace period
will not apply if there is a danger of detention,  interference  with the use or
operation, sale, forfeiture or loss of the Aircraft; or

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

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

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

     (b) require  that  LESSEE  immediately  move the  Aircraft to an airport or
other location designated by LESSOR;

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

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

     (e) terminate this Lease by taking possession of the Aircraft or by serving
notice  requiring  LESSEE  to return  the  Aircraft  to  LESSOR at the  location
specified by LESSOR.  If LESSOR takes  possession of the Aircraft,  it may enter
upon LESSEE's  premises where the Aircraft is located  without  liability.  Upon
repossession  of the  Aircraft,  LESSOR will then be entitled to sell,  lease or
otherwise  deal with the  Aircraft as if this Lease had never been made.  LESSOR
will be entitled to the full benefit of its bargain with LESSEE; or

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

<PAGE>

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

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

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

     (b) any losses  suffered by LESSOR  because of LESSOR's  inability to place
the Aircraft on lease with another  lessee or to otherwise  utilize the Aircraft
on  financial  terms as  favorable  to LESSOR as the terms  hereof or, if LESSOR
elects  to  dispose  of the  Aircraft,  the funds  arising  from a sale or other
disposition  of the  Aircraft  are not as  profitable  to LESSOR as leasing  the
Aircraft in accordance with the terms hereof would have been (and LESSOR will be
entitled to accelerate  any and all Rent which would have been due from the date
of LESSOR's  recovery or  repossession  of the Aircraft  through the  Expiration
Date);

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

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

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

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

<PAGE>

     (g) any other loss, damage, expense, cost or liability which LESSOR suffers
or incurs as a result of the Event of Default and/or  termination of this Lease,
including an amount  sufficient  to fully  compensate  LESSOR for any loss of or
damage to LESSOR's residual interest in the Aircraft caused by LESSEE's default.

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

     25.7 PRESENT VALUE OF PAYMENTS.  In calculating LESSOR's damages hereunder,
upon an Event of Default  all Rent and other  amounts  which would have been due
hereunder  during the Lease Term if an Event of Default had not occurred will be
calculated on a present value basis using a discounting rate of six percent (6%)
per  annum  discounted  to the  earlier  of the  date on  which  LESSOR  obtains
possession of the Aircraft or LESSEE makes an effective tender thereof.

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

<PAGE>

     ARTICLE 26 NOTICES

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

     26.2 NOTICE INFORMATION. Notices will be sent:

If                        to LESSOR:  INTERNATIONAL  LEASE  FINANCE  CORPORATION
                          1999  Avenue of the  Stars,  39th  Floor Los  Angeles,
                          California 90067, U.S.A.

                         Attention:       Legal Department

                          Fax:             310-788-1990
                          Telephone:       310-788-1999

If to LESSEE:             AMERICAN TRANS AIR, INC.
                          7337 West Washington Street
                          Indianapolis International Airport
                          Indianapolis, Indiana 46231
                          United States of America

                          Attention:       Ken Wolff
                                           Executive Vice President
                                           and Chief Financial Officer
                          Fax:             317-240-7091
                          Telephone:       317-247-4000

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

<PAGE>

     ARTICLE 27 GOVERNING LAW AND JURISDICTION

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

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

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

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

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

<PAGE>

     ARTICLE 28 MISCELLANEOUS

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

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

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

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

     28.5 USURY LAWS. The parties intend to contract in strict  compliance  with
the usury Laws of the State of  California  and, to the extent  applicable,  the
U.S. Notwithstanding anything to the contrary in the Operative Documents, LESSEE
will not be obligated to pay Default Interest or other interest in excess of the
maximum non-usurious interest rate, as in effect from time to time, which may by
applicable Law be charged,  contracted for,  reserved,  received or collected by
LESSOR in connection with the Operative Documents.  During any period of time in
which the then-applicable highest lawful rate is lower than the Default Interest
rate,  Default  Interest will accrue and be payable at such highest lawful rate;
however,  if at later times such highest lawful rate is greater than the Default
Interest rate, then LESSEE will pay Default  Interest at the highest lawful rate
until the Default Interest which is paid by LESSEE equals the amount of interest
that would have been payable in  accordance  with the interest rate set forth in
Article 5.5.

     28.6 DELEGATION BY LESSOR.  LESSOR may delegate to any Person(s) all or any
of the  rights,  powers or  discretion  vested in it by this  Lease and any such
delegation  may be made upon such terms and conditions as LESSOR in its absolute
discretion thinks fit.

<PAGE>

     28.7   CONFIDENTIALITY.   The  Operative   Documents  and  all   non-public
information  obtained by either party about the other are  confidential  and are
between  LESSOR and LESSEE  only and will not be  disclosed  by a party to third
parties (other than to such party's auditors or legal advisors or as required in
connection with any filings of this Lease in accordance with Article 13) without
the prior  written  consent of the other party.  If  disclosure is required as a
result of applicable  Law,  LESSEE and LESSOR will cooperate with one another to
obtain  confidential  treatment as to the  commercial  terms and other  material
provisions of this Lease.

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

<PAGE>

     IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed
by their respective officers as of September 5, 2000.

INTERNATIONAL LEASE FINANCE CORPORATION                AMERICAN TRANS AIR, INC.

By:                                                          By:

Its:                                                         Its:

<PAGE>

         EXHIBIT A            AIRCRAFT DESCRIPTION

Aircraft Manufacturer and Model:                          Boeing 737-800

Specification:

Seating Configuration:

Manufacturer's Serial Number:                             28247

Registration Mark:                                        ____

Engine Manufacturer and Model:                            CFM56-7B-27

Engine Serial Numbers:                                    _______ and ________

Engine Thrust Rating:                                     27,300 pounds

Maximum Gross Takeoff Weight:                             160,000 pounds

<PAGE>

        EXHIBIT B            AGENCY AGREEMENT

                               (Limited Authority)

                       Relating to Boeing 737-800 Aircraft

     THIS  AGENCY  AGREEMENT  ("AGREEMENT")  is  made  and  entered  into  as of
____________________.

         BETWEEN:

     AMERICAN TRANS AIR, INC., a Indiana corporation whose address and principal
place of business is at 7337 West Washington Street,  Indianapolis International
Airport, Indianapolis, Indiana 46231, United States of America ("AGENT") and

     INTERNATIONAL LEASE FINANCE CORPORATION,  a California  corporation,  whose
address and  principal  place of  business is at 1999 Avenue of the Stars,  39th
Floor, Los Angeles, California 90067, U.S.A. ("BUYER").

         RECITAL

     The Boeing  Company  ("MANUFACTURER")  and Buyer have entered into Purchase
Agreement  1830,  dated as of June 27, 1995 (such  purchase  agreement as may be
amended in accordance with the provisions thereof is hereinafter  referred to as
the "PURCHASE AGREEMENT") under which Manufacturer has agreed to manufacture and
sell and Buyer has agreed to purchase certain Boeing 737-800 aircraft. Buyer has
agreed to lease one (1) of such aircraft  bearing  manufacturer's  serial number
28247 (the  "AIRCRAFT")  to the Agent  pursuant to an Aircraft  Lease  Agreement
between Buyer and Agent dated as of September 5, 2000 (the "LEASE").

     The Agent is engaged in business as a commercial air carrier and intends to
lease the Aircraft from Buyer,  and Buyer is desirous of utilizing the expertise
of the Agent as Buyer's  agent in all  matters to which the  Purchase  Agreement
relates with respect to the Aircraft  except  certain items as indicated  below,
and the Agent, as Buyer's agent, is willing to make such expertise  available to
Buyer.

     Accordingly, the parties agree as follows:

<PAGE>

     1. Buyer hereby appoints the Agent as Buyer's sole and exclusive agent with
authority to perform the following,  on behalf of Buyer, as the Agent may in its
discretion determine to be necessary or desirable:

     (a) monitor Manufacturer's production, testing and delivery of the Aircraft
in accordance with the Purchase Agreement and

     (b) do all such other things permitted by the Purchase Agreement related to
the  technical  and  engineering  aspects of  Manufacturer's  production  of the
Aircraft, except Buyer limits Agent's authority to perform on behalf of Buyer on
any defect that occurs  during  manufacture  that is considered  significant  in
nature by Buyer as measured by the criteria set forth below.  Buyer  retains the
sole authority to perform on any defect meeting such criteria.

     (i)  Deviations  from the drawing  configuration  that could affect  future
modifications, maintenance, repair or overhaul of the Aircraft;

     (ii) Defects that are obvious appearance items;

     (iii) Rework that requires  stress  concurrence  to satisfy  Manufacturer's
Material Review Board (MRB) requirements;

     (iv) A high  quantity of defects  normally  considered  minor on a singular
basis;

     (v)  Major  rework  requiring   extensive  repair  or  modification,   E.G.
replacement of ---- skin panels, extensive use of oversize fasteners,  repair of
damaged areas and significant structural modifications;

     (vi) Rework that affects the aerodynamic  drag coefficient of the Aircraft;
or

     (vii) Rework that involves areas known to be sensitive to Buyer.

     2.  Notwithstanding  anything in the  provisions of paragraph 1, nothing in
this Agreement will confer authority upon or otherwise permit the Agent:

     (a) to exercise any power of termination under the Purchase Agreement or

<PAGE>

     (b) to make any  payments due from Buyer to  Manufacturer  or to receive on
behalf of Buyer any payments due from Manufacturer under the Purchase Agreement,
or to alter any of the terms and  conditions  of the  Purchase  Agreement or the
Detail Specifications of the Aircraft.

     3. Buyer will not revoke the  appointment  of and  authority  granted under
this  Agreement to the Agent unless a termination  of the Purchase  Agreement or
Lease has  occurred  with  respect  to the  Aircraft  or the Agent has failed to
perform  a  material  obligation  under  this  Agreement.  Notice  of  any  such
revocation  will be provided in accordance  with the provisions of Article 14 of
the Purchase Agreement and given to both Manufacturer and the Agent.

     4.  Manufacturer  acknowledges the appointment of the Agent for the purpose
set forth  hereunder and  Manufacturer  and Buyer agree that due  performance by
Manufacturer  or  Agent of an  obligation  under  the  Purchase  Agreement  will
constitute due satisfaction of such obligation by such party and Buyer agrees to
be bound by the acts of the Agent.

     5. Buyer and Agent  agree to identify  the  technical  organization  and/or
person(s) with the limited  authority to act for Agent during  production of the
Aircraft.  Buyer will, if possible,  provide such identification to Manufacturer
in writing,  along with office space requirements for Agent, if required,  prior
to or at the time of Manufacturer's acknowledgment of this Agreement.

     6. Nothing in this  Agreement  will subject  Manufacturer  to any liability
under the  Purchase  Agreement  which it would not  otherwise  be subject to, or
modify  Manufacturer's  rights  thereunder,  or require  Manufacturer  to divest
itself of title to or  possession  of  Aircraft or any other  property  which is
subject to the Purchase Agreement until payment therefor and delivery thereof in
accordance with the Purchase Agreement.

     7. None of the parties hereto will be entitled to assign to any third party
any of their rights under this Agreement.

     8. The Agent will not  delegate to any third party the  performance  of the
obligations imposed on it by this Agreement or appoint a sub-agent.

     9.   References  to   Manufacturer  in  this  Agreement  will  include  any
wholly-owned subsidiary of Manufacturer to which Manufacturer assigns any of its
rights and obligations  under the Purchase  Agreement  pursuant to the terms and
conditions thereof.

     10. This Agreement will be governed by the laws of the State of California;
however,  the Purchase  Agreement shall remain governed by the laws of the State
of Washington.

<PAGE>

     This  Agreement has been  executed by the parties  hereto as of the day and
year first above written.

INTERNATIONAL LEASE FINANCE CORPORATION                AMERICAN TRANS AIR, INC.

By:                                                    By:

Its:                                                   Its:

The Boeing Company  acknowledges  the appointment of AMERICAN TRANS AIR, INC. as
agent of  International  Lease Finance  Corporation in connection with the above
referenced Aircraft as set forth in this Agreement.

THE BOEING COMPANY

By:

Its:

<PAGE>

         EXHIBIT C            CERTIFICATE OF INSURANCE

[Refer to Aircraft Lease  Agreement dated as of September 5, 2000 between LESSEE
and LESSOR (the "Lease").  If applicable,  insurance  certificates from both the
insurers and reinsurers will be provided. If there is a LESSOR's Lender, include
references to it where appropriate after references to LESSOR.]

To:      INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR")
                                                   ------
         1999 Avenue of the Stars, 39th Floor
         Los Angeles, California 90067
         United States

Re:      AMERICAN TRANS AIR, INC. ("LESSEE")

         Boeing 737-800
         Manufacturer's Serial No.:                        28247
         Registration Mark:                                ____ (the "AIRCRAFT")

         The  following   security  has  subscribed  to  the  insurance   and/or
reinsurance policies:

         [LIST COMPANIES & PERCENTAGES]

         THIS IS TO CERTIFY THAT, as Insurance  Brokers,  we have effected Fleet
Insurance  in respect of aircraft  owned or operated  by LESSEE  (including  the
Aircraft), and that insurance in respect of the Aircraft is as specified below.

                             AIRCRAFT HULL ALL RISKS

COVERING:

     All  risks of  physical  loss or  damage  to the  Aircraft  from any  cause
(subject  only to the  exclusions  as specified  below),  for an Agreed Value of
Aircraft in the amount of [list amount  calculated  in  accordance  with Article
18.1]

DEDUCTIBLES:

     (CONFIDENTIAL  MATERIAL OMITTED) each and every loss (or such lesser amount
as generally  applicable to the rest of LESSEE's 737-800 fleet).  Not applicable
to Total Loss/Constructive Total Loss or Arranged Total Loss

<PAGE>

GEOGRAPHICAL COVERAGE:

     Worldwide [subject to customary exclusions]

               AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY

COVERING:

     Aircraft  Third Party,  Passenger,  Baggage,  Cargo and Mail  Liability and
Airline General Third Party Liability  (including  Premises,  Hangarkeepers  and
Products  Liability)  for combined  single limit of not less than  (CONFIDENTIAL
MATERIAL  OMITTED) (or such higher amount as LESSEE may carry generally on other
737-800 aircraft in its fleet) any one accident/occurrence (but in the aggregate
in relation to Products  Liability),  extended to cover LESSEE's liability under
the Lease to the extent of the risks  covered by the  policy  including  war and
allied perils under Extended Coverage  Endorsement as per AVN 52 subject only to
exclusions as specified below

GEOGRAPHICAL LIMITS:

     Worldwide [subject to customary exclusions]

                      HULL WAR AND ALLIED PERILS COVERING:

     Hull  War  Risks  as  per  LSW555.B,  but  including  (a)  confiscation  or
requisition  (including  by State of  Registration  and state  where  airline is
domiciled),  (b)  hijacking or other  unlawful  seizure or wrongful  exercise of
control of the Aircraft or crew in flight (including any attempt at such seizure
or control) and including "All Risks"  Continuation  Clause and Extortion  Risks
(including  expenses)  and covering  claims  excluded from Hull All Risks Policy
while Aircraft outside  Assured's control by reason of perils insured under this
policy, for an Agreed Value of Aircraft in the amount of [list amount calculated
in accordance with Article 18.1]

DEDUCTIBLE:

         No deductible

<PAGE>

GEOGRAPHICAL LIMITS:

         Worldwide

                       AIRCRAFT SPARES ALL RISKS INSURANCE

COVERING:

         All risks of  physical  loss or damage to  Aircraft  Parts or spares or
         Engines at all times  when  removed  from the  Aircraft  from  whatever
         cause,  subject only to the exclusions  specified below,  including the
         risks set down in AVN 48B other  than  paragraphs  (a) and (b)  thereof
         (but including paragraph (a) in respect of transit risks) for limits of
         not less than:

         CONFIDENTIAL MATERIAL OMITTED

         and covering:

                With  respect  to  an  Engine,  an  agreed  value  (CONFIDENTIAL
                MATERIAL   OMITTED)  or,  with  LESSOR's  written   concurrence,
                replacement cost

                With respect to Parts, replacement cost

DEDUCTIBLE:

         (CONFIDENTIAL MATERIAL OMITTED)

GEOGRAPHICAL COVERAGE:

         Worldwide

                       INSURANCE REQUIRED BY MANUFACTURER

         LESSEE will carry the insurance  required by Manufacturer in connection
with LESSOR's  assignment of  Manufacturer's  warranties and product  support to
LESSEE

<PAGE>

                              CONTRACTUAL INDEMNITY

         To the  extent  of  the  risks  covered  by the  policies,  LESSEE  has
insurance  coverage for the indemnities  agreed to by LESSEE pursuant to Article
16 of the Lease, subject to AVN67B or equivalent

                        PERIOD OF COVERAGE (ALL POLICIES)

         From the Delivery Date of Aircraft to [END OF POLICY PERIOD]

         It is further  certified  that LESSOR has an interest in respect of the
Aircraft under the Lease.  Accordingly,  with respect to losses occurring during
the period from the  Effective  Date until the expiry of the  Insurance or until
the expiry or agreed termination of the Lease or until the obligations under the
Lease are terminated by any action of the Insured or LESSOR and in consideration
of the  Additional  Premium it is confirmed  that the Insurance  afforded by the
Policy is in full force and effect and it is further  agreed that the  following
provisions are specifically endorsed to the Policy.

           1. UNDER THE HULL (ALL RISKS AND HULL WAR AND ALLIED RISKS)
 AND AIRCRAFT SPARES INSURANCES

                (a) In respect of any claim on the Aircraft that becomes payable
         on the basis of a Total Loss,  payment of any  settlement  will be made
         to, or to the order of LESSOR  as sole  loss  payee,  up to the  Agreed
         Value.  With  respect to  repairable  damage to an  Aircraft or Engine,
         LESSOR will receive all  insurance  proceeds in excess of  CONFIDENTIAL
         MATERIAL  OMITTED provided that upon receipt by the insurance broker of
         written  notice of a material  default on the part of LESSEE (and until
         notice that it has been cured),  all insurance proceeds which otherwise
         would be payable to LESSEE will be made directly to LESSOR.  In respect
         of any other  claim,  payment of any  settlement  (net of any  relevant
         policy  deductible)  will  be  made  with  such  party(ies)  as  may be
         necessary  to  repair  the  Aircraft  unless   otherwise  agreed  after
         consultation  between the Insurers and the Insured and, where necessary
         under the terms of the Lease,  LESSOR.  Such payments will only be made
         provided  they  are  in  compliance   with  all  applicable   laws  and
         regulations.

                (b)    Insurers agree on a 50/50 settlement in terms of AVS 103.

                (c)  Insurers  have no right to replace the  Aircraft on a Total
         Loss (arranged, constructive or otherwise).

<PAGE>

                (d) Insurers confirm that under the insurance  policies,  if the
         Insured  installs  an engine  owned by a third  party on the  Aircraft,
         either  (i) the hull  insurance  will  automatically  increase  to such
         higher  amount  as is  necessary  in order  to  satisfy  both  LESSOR's
         requirement  to receive the Agreed  Value in the event of a Total Loss,
         Constructive  Total Loss or Arranged Total Loss and the amount required
         by the third party engine owner, or (ii) separate additional  insurance
         on  such  engine  will  attach  in  order  to  satisfy  separately  the
         requirements of the Insured to such third party engine owner.

         2.     UNDER THE LEGAL LIABILITY INSURANCE

                (a) Subject to the provisions of this Endorsement, the Insurance
         will  operate in all  respects as if a separate  Policy had been issued
         covering  each party insured  hereunder,  but this  provision  will not
         operate to include any claim  arising  howsoever  in respect of loss or
         damage to the Aircraft  insured  under the Hull or Spares  Insurance of
         the  Insured.  Notwithstanding  the  foregoing  the total  liability of
         Insurers in respect of any and all Insureds  will not exceed the limits
         of liability stated in the Policy.

                (b) The Insurance provided hereunder will be primary and without
         right of  contribution  from any other insurance which may be available
         to LESSOR.

         3.     UNDER ALL INSURANCES

                (a) LESSOR,  its  successors  and assigns,  and (with respect to
         Aviation and Airline General Third Party Liability only) its directors,
         officers and employees for their respective  rights and interests,  are
         included as Additional Insureds.

                (b) The cover  afforded  to LESSOR by the  Policy in  accordance
         with this  Endorsement  will not be  invalidated by any act or omission
         (including misrepresentation and non-disclosure) of any other person or
         party which  results in a breach of any term,  condition or warranty of
         the Policy.

                (c) LESSOR will have no responsibility  for premium and insurers
         will waive any right of set-off or  counterclaim  against LESSOR except
         in respect of outstanding premium in respect of the Aircraft,  provided
         that Insurer may only set-off for premiums  against the proceeds of the
         hull  insurance for  outstanding  premiums in connection  with hull all
         risks and hull war and allied perils insurance.

<PAGE>

                (d) Upon payment of any loss or claim to or on behalf of LESSOR,
         Insurers will to the extent and in respect of such payment be thereupon
         subrogated  to all legal  and  equitable  rights of LESSOR  indemnified
         hereby (but not against LESSOR). Insurers will not exercise such rights
         without  the  consent  of those  indemnified,  such  consent  not to be
         unreasonably  withheld.  At the expense of Insurers  LESSOR will do all
         things  reasonably  necessary to assist the  Insurers to exercise  said
         rights.

                (e) Except in  respect  of any  provision  for  Cancellation  or
         Automatic  Termination  specified  in the  Policy  or  any  endorsement
         thereof,  cover provided by this  Endorsement  may only be cancelled or
         materially  altered in a manner  adverse to LESSOR by the giving of not
         less than thirty (30) days notice in writing to LESSOR.  Notice will be
         deemed to commence  from the date such notice is given by the Insurers.
         Such notice will NOT,  however,  be given at normal  expiry date of the
         Policy or any endorsement.

         4.     EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS
 OF THIS CERTIFICATE

                (a)    LESSOR IS COVERED BY THE POLICY SUBJECT TO ALL TERMS,
         CONDITIONS, LIMITATIONS,WARRANTIES, EXCLUSIONS AND CANCELLATION
         PROVISIONS THEREOF.

                (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN
         THE LEASE WHICH PURPORT TO SERVE AS AN  ENDORSEMENT OR AMENDMENT TO THE
         POLICY.

         SUBJECT (save as  specifically  stated in this  Certificate)  to policy
terms, conditions, limitations and exclusions.

                                    Yours faithfully,
                                    [BROKERS]

<PAGE>

         EXHIBIT D            BROKERS' LETTER OF UNDERTAKING

To:             INTERNATIONAL LEASE FINANCE CORPORATION
                1999 Avenue of the Stars, 39th Floor
                Los Angeles, California 90067
                United States

Date:                                                             Our Ref:

Re:       AMERICAN TRANS AIR, INC. ("LESSEE")
                                     ------
          Boeing 737-800
          Manufacturer's Serial No.:                       ____
          Registration Mark:                               ____ (the "AIRCRAFT")

Dear Sirs:

         We confirm that insurance has been effected for the account of [LESSEE]
(the "OPERATOR")  covering all aircraft owned or operated by them, including the
above-referenced  aircraft (the "Aircraft").  [Also confirm, if applicable,  the
amount of any hull all risks or hull war and allied perils on the Aircraft which
LESSEE is carrying in excess of the Agreed Value (which excess  insurance  would
be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of
the Agreed Value.]

         Pursuant  to   instructions   received   from  the   Operator   and  in
consideration of your approving the arrangement of the Operator's "Fleet Policy"
(under which the above-referenced  Aircraft is insured) through the intermediary
of ourselves  as Brokers in  connection  with the  insurance  (the  "INSURANCE")
mentioned  in our  Certificate  of  Insurance  (Reference  No. [ ] dated [ ] and
attached hereto), we undertake as follows:

         1. In  relation  to the Hull and War  Risks  Insurance  to hold to your
order the insurance  Slips or Contracts and any Policies  which may be issued or
any policies  substituted  (with your consent) therefor (but only insofar as the
same  relate to the  Aircraft  only) and the  benefit  of the Hull and War Risks
Insurance  thereunder,  but  subject to our  requirements  to operate  the Fleet
Policy insofar as it relates to any other aircraft insured thereunder.

         2.     To advise you of any of the following:

<PAGE>

                (a) If any insurer  cancels or gives notice of  cancellation  of
         any of the  Insurance at least thirty (30) days (or such lesser  period
         as may be available in the case of War and Allied  Perils)  before such
         cancellation is to take effect in respect of the Aircraft.

                (b)  Of  any  act  or  omission  or  of  any  event   (including
         non-payment  of premium) of which we have knowledge or are notified and
         which might invalidate or render  unenforceable in whole or in part any
         of the Insurance, insofar as the same relate to the Aircraft.

                (c) If we do not receive instructions to renew all or any of the
         Insurance at least thirty (30) days prior to their expiration.

                (d) If any of the  Insurance  are not  renewed on the same terms
         (save as to premium and period of cover and as you might otherwise have
         notified  us to be  acceptable  to you)  seven (7) days prior to expiry
         thereof.

         The above undertakings are given subject to our continuing  appointment
for the time being as Insurance Brokers to the Operator.

         We also undertake to advise you if we cease to be Insurance  Brokers to
the Operator.

                                                Yours faithfully,

<PAGE>

         EXHIBIT E            ESTOPPEL AND ACCEPTANCE CERTIFICATE

     AMERICAN TRANS AIR, INC. ("LESSEE"), a corporation organized under the laws
of Indiana does hereby represent, acknowledge, warrant and agree as follows:

     1. LESSEE and  INTERNATIONAL  LEASE FINANCE  CORPORATION,  as LESSOR,  have
entered  into  an  Aircraft  Lease  Agreement  dated  as of  September  5,  2000
(hereinafter referred to as the "LEASE"). Words used herein with capital letters
and not otherwise defined will have the meanings set forth in the Lease.

     2.  LESSEE has this ____ day of  __________,  ____  (Time:  __________)  at
____________________ received from LESSOR possession of:

     (a) One (1) Boeing 737-800  aircraft bearing  Manufacturer's  serial number
____ and U.S.  registration mark ____, together with two (2) CFM56-7B-27 engines
bearing  manufacturer's  serial numbers  _______ and ________ (each of which has
750 or more rated take-off horsepower), all in airworthy condition.

     (b) All Aircraft Documentation,  including the usual and customary manuals,
logbooks,  flight  records and  historical  information  regarding the Aircraft,
Engines and Parts.

     3. All of the  foregoing  has been  delivered  and accepted on the date set
forth  above to  LESSEE's  full  satisfaction  and  pursuant  to the  terms  and
provisions of the Lease.

     4. The Agreed Value of the Aircraft is US$_______________.

     5. The  amount of fuel on board at  Delivery  is  __________  (circle  one)
pounds/kilos (________ gallons).

     6. The Aircraft,  Engines, Parts and Aircraft Documentation as described in
the Lease  have  been  fully  examined  by LESSEE  and have been  received  in a
condition fully  satisfactory to LESSEE and in full conformity with the Lease in
every respect.

     7. The Lease is in full force and  effect,  LESSEE has no claims,  offsets,
deductions or set-off of any kind or nature in connection with the Lease, except
for any claims against LESSOR set forth on the attached List of Discrepancies.

<PAGE>

     8.  LESSOR's  Lender  may  rely  upon  all of  the  foregoing  in  granting
substantial financial accommodations to LESSOR and LESSEE understands and agrees
that any funds being  advanced by LESSOR's  Lender will be made in reliance upon
the foregoing.

     9. LESSEE has obtained all required permits,  authorizations,  licenses and
fees of the State of Registration or any Government  Entity thereof necessary in
order for LESSEE to operate the Aircraft as permitted by the terms of the Lease.

                              Dated on the date set forth above

                                                AMERICAN TRANS AIR, INC.

                                                By:

                                                Title:

ATTACHMENTS:
1.       List of Aircraft Documentation
2.       List of Loose Equipment
3.       List of Discrepancies

<PAGE>

               ATTACHMENT 1 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE

                         LIST OF AIRCRAFT DOCUMENTATION

                                     MANUALS

1.       FAA Approved Flight Manual
2.       Airplane Flight Operation Manual
3.       Aircraft Recover Manual
4.       Quick Reference Handbook (QRH)
5.       Weight and Balance Manual
6.       Aircraft Fueling Manual
7.       Aircraft Maintenance Manual (MM)
8.       Aircraft Maintenance Manual Supplement
9.       Ramp Maintenance Manual (RMM)
10.      Cargo Loading Manual
11.      Fault Reporting Manual (FRM)
12.      Fault Isolation Manual (FIM)
13.      Illustrated Parts Catalog (IPC)
14.      Life Limited Parts Manual
15.      Structural Repair Manual (SRM)
16.      Master Minimum Equipment List
17.      Wiring Diagram Manual (WD)
18.      Wiring Practices Manual
19.      System Schematics Manual
20.      B.I.T.E. Manual
21.      Non-Destructive Test Manual
22.      Corrosion Prevention Manual
23.      Component Maintenance Manual
24.      APU Log Book
25.      Engine Maintenance Manual
26.      Engine Log Book
27.      Engine Illustrated Parts Catalog
28.      Engine Data Submittal Book
29.      Engine Overhaul Manual
30.      Power Plant Build-up Manual

<PAGE>

                    AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS

 1.  Copies of original Certificates delivered by Boeing:
     a.  Airworthiness Certificate for Export
     b.  Radio installation conformity certificate
     c.  Noise limitation certificate
 2.  Copies of original Documents delivered by Boeing:
     a.  Airworthiness Directive Compliance list
     b.  Aircraft inspection report
     c.  Aircraft Readiness Log
     d.  Weighing report
 3.  Copies of current Certificates:
     a.  Airworthiness Certificate
     b.  Noise limitation
     c.  Radio license
     d.  Interior material burn certificates
     e.  Certificate of Export
     f.  Aircraft deregistration confirmation
     e.  Aircraft Registration
 4.  Letters signed and stamped by Quality Assurance:
     a.  Current aircraft hours and cycles
     b.  Current engines hours and cycles
     c.  Accident and Incident report
     d.  Summary of Maintenance Program
     e.  AD compliance during the lease term
 5.  Aircraft log books and Aircraft readiness log.
 6.  Aircraft Hard Time (HT) inspection status.
 7.  One year forecast for HT inspection.
 8.  Aircraft Modification status, including service bulletins.
 9.  Last weighing report prior to redelivery.
10.  AD compliance report with original signoffs.
11.  Routine and non-routine job cards of the last "C" and "D" checks.
12.  Past year pilots and maintenance discrepancies.
13.  Major and Minor structural repairs with applicable approvals.
14.  Compass Swing report of the last three years.
15.  Cabin Configuration drawing (LOPA).
16.  Emergency equipment location drawing.
17.  Last X-RAYs

                             ENGINES RECORDS

 1.  Last test cell run reports.

<PAGE>

 2.  Life Limited Parts status and traceability.
 3.  AD compliance report with original signoffs.
 4.  Engine Modification/service bulletin/inspection report and applicableforms.
 5.  Last heavy maintenance records for each module.
 6.  Engine log books.
 7.  Engine removal history.
 8.  Past year trend monitoring reports.
 9.  Historical borescope reports.
10.  Engine component report.

                               APU RECORDS

 1.  APU status (FH, FC, limits).
 2.  Life limited Part status and traceability.
 3.  AD compliance with original signoffs.
 4.  Modification status.
 5.  Last heavy maintenance documents.
 6.  APU log books.
 7.  Last test cell report.

                            COMPONENT RECORDS

 1.  Aircraft component inventory.
 2.  Hard time component inventory.
 3.  All serviceable tags.
 4.  Landing Gear status with last overhaul and life limited Part status.
 5.  AD compliance with original signoffs.
 6.  Modification status.

<PAGE>

               ATTACHMENT 2 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE

                             LIST OF LOOSE EQUIPMENT

<PAGE>

               ATTACHMENT 3 TO ESTOPPEL AND ACCEPTANCE CERTIFICATE

                              LIST OF DISCREPANCIES

<PAGE>

         EXHIBIT F            OPINION OF COUNSEL

     TO BE GIVEN BY  INDEPENDENT  OUTSIDE  COUNSEL  OF LESSEE  OR OTHER  LAWYERS
ACCEPTABLE TO LESSOR

To:             International Lease Finance Corporation
                1999 Avenue of the Stars, 39th Floor
                Los Angeles, California 90067
                United States

Gentlemen:

         This  opinion is furnished to you pursuant to Article 7 of the Aircraft
Lease  Agreement  dated as of September 5, 2000 (the "LEASE")  between  AMERICAN
TRANS  AIR,  INC.   ("LESSEE")  and  INTERNATIONAL   LEASE  FINANCE  CORPORATION
("LESSOR").  Defined  terms in this  opinion  are used  herein as defined in the
Lease.

         I have acted as counsel for LESSEE in connection with the  preparation,
execution and delivery of the Lease.

     In that connection I have examined:

     (a) The Lease and Estoppel and Acceptance Certificate;

     (b) The charter of LESSEE and all amendments  thereto (the "CHARTER");  and

     (c) Such other documents,  agreements and  instruments,  and such treaties,
laws, rules, regulations,  decrees and the like, as I have deemed necessary as a
basis for the opinions hereinafter expressed.

     [ (d) All of the agreements and any amendments  thereto  between LESSEE and
all other  lessors and lenders of LESSEE  covering  other  aircraft  operated by
LESSEE on which the Engines can be installed.]

         Based upon the  foregoing  and having  regard for legal  considerations
which I deem relevant, I am of the opinion that:

<PAGE>

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

     2.  No  authorization,   approval,   consent,   license  or  order  of,  or
registration  with,  or the giving of notice to the  Aviation  Authority  or any
other  regulatory  body or authority  is required  for the valid  authorization,
execution, delivery and performance by LESSEE of the Lease.

     3. The Lease and the Estoppel  and  Acceptance  Certificate  have each been
duly  authorized,  executed and delivered by LESSEE.  Each such  instrument is a
valid, enforceable and binding obligation of LESSEE except as enforceability may
be limited by bankruptcy,  insolvency,  reorganization  or other Laws of general
application affecting the enforcement of creditors' rights.

     4. The execution and delivery of the Lease and the Estoppel and  Acceptance
Certificate, the consummation by LESSEE of the transactions contemplated therein
and compliance by LESSEE with the terms and provisions thereof do not contravene
any Law  applicable  to  LESSEE,  or result in any breach of or  constitute  any
default under or result in the creation of any lien,  charge or encumbrance upon
any property of LESSEE, under any indenture, mortgage, chattel mortgage, deed of
trust,  conditional  sales contract,  bank loan or credit  agreement,  corporate
charter,  by-law or other  agreement or instrument to which LESSEE is a party or
by which LESSEE or its properties or assets is bound.

     5. Except for any filing or recording  that may be required  with the [NAME
OF  AIRCRAFT   REGISTER]  and  except  for  [DESCRIBE   SUCH  OTHER  FILINGS  OR
RECORDINGS], no filing or recording of any instrument or document (including the
filing of any financial  statement)  is necessary  under the laws of the U.S. in
order for the Lease to constitute a valid and perfected lease of record relating
to the Aircraft,  it being understood that such counsel  expresses no opinion as
to the nature of LESSOR's title to the Aircraft on the Delivery Date.

     6. LESSEE holds all  licenses,  certificates  and permits  from  applicable
governmental  authorities in the U.S.  necessary for the conduct of its business
as a  certificated  air carrier and  performance  of its  obligations  under the
Lease.

     7. To my knowledge, there are no suits or proceedings pending or threatened
against  LESSEE before any Government  Entity against or affecting  LESSEE which
are reasonably likely to be adversely  determined and, if adversely  determined,
would have a material  adverse effect on the financial  condition or business of
LESSEE or its ability to perform  under the Lease,  except as  described  in the
filings provided to LESSOR pursuant to Article 22.

<PAGE>

     8. The  obligations  of LESSEE  under the Lease  are  direct,  general  and
unconditional  obligations  of LESSEE  and rank or will rank at least PARI PASSU
with all other  present  and future  unsecured  and  unsubordinated  obligations
(including  contingent  obligations)  of  LESSEE,  with  the  exception  of such
obligations as are mandatorily preferred by law.

     9.  LESSEE,  under  the  laws  of the  U.S.  or of any  other  jurisdiction
affecting LESSEE, is subject to private  commercial law and suit. Neither LESSEE
nor its  properties  or assets have the right of immunity from suit or execution
on the grounds of  sovereignty  in such  jurisdictions  and the  performance  by
LESSEE of its obligations  under the Lease  constitute  commercial acts done for
commercial purposes.

     10.  There is no  applicable  usury or interest  limitation  Law in Indiana
which may restrict the recovery of payments in accordance with the Lease.

     11.  LESSOR will not violate any Law or become liable to any tax in Indiana
or the U.S. by reason of entering into or performing its  obligations  under the
Lease and it is not  necessary  to  establish  a place of business in Indiana in
order to enforce any provisions of the Lease.

                                                Very truly yours,

<PAGE>

        EXHIBIT G            ASSIGNMENT OF RIGHTS (AIRFRAME)

                                                                  [DATE]

Boeing Commercial Airplane Group
P.O. Box 3707
Seattle, Washington 98124-2207
Attention:      Vice President-Contracts
                Mail Code 21-34

Subject:  Full Assignment of Rights and  Obligations - International  Lease
Finance  Corporation  as Lessor and AMERICAN  TRANS AIR, INC. as Lessee of Model
Boeing 737-800 aircraft bearing manufacturer's serial number 28247

Ladies and Gentlemen:

         In connection with International  Lease Finance  Corporation's lease to
AMERICAN TRANS AIR, INC.  ("Lessee") of a Boeing  aircraft (more fully described
below), reference is made to the following documents:

         A.  Purchase  Agreement  1830,  dated as of June 27, 1995,  between The
Boeing Company ("Boeing") and International Lease Finance  Corporation  ("ILFC")
(the  "Boeing  Agreement")  under which ILFC  purchased a certain  Boeing  Model
737-800 aircraft bearing manufacturer's serial number 28247 (the "Aircraft").

     B. Aircraft  Lease  Agreement  (the  "Lease") for the Aircraft  dated as of
September 5, 2000 between ILFC and Lessee.

         Capitalized  terms used herein  without  definition  will have the same
meaning as in the Boeing Agreement.

         In connection  with ILFC's lease of the Aircraft under the Lease,  ILFC
is  transferring  to Lessee certain rights of ILFC related to the Aircraft under
the Boeing  Agreement.  To accomplish this transfer of rights,  as authorized by
the provisions of the Boeing Agreement:

<PAGE>

         1. Lessee  acknowledges  that it has received  copies of the  following
specific  provisions  of the Boeing  Agreement  applicable  to the  Aircraft and
agrees to be bound by and comply with all the terms, conditions, and limitations
contained in such provisions,  including  without  limitation the disclaimer and
release, exclusion of liabilities, indemnity and insurance provisions thereof:

     Boeing Agreement
         Article 6 - Excusable Delay
         6.1    General

         Article 10 - Assignment, Resale or Lease
         10.1   Assignment
         10.3   Sale by Buyer after Delivery
         10.4   Lease by Buyer after Delivery
         10.5   No Increase in Boeing Liability
         10.6   Exculpatory or Indemnity Clause in Post-delivery Sale or Lease

         Article 12 - Product Assurance;  Disclaimer and Release;  Exclusion of
         Liabilities;  Customer Support;  Indemnification and Insurance
         (in its entirety)

         Article 14 - Contractual Notices and Requests

         Article 15 - Miscellaneous
         15.4          Governing Law

     Exhibit B - Product Assurance Document
            Part A             Boeing Warrant
            Part B             Warranty Repairs and Modifications by Buyer
            Part C             Boeing Service Life Policy
            Part D             Boeing Indemnity Against Patent Infringement
            Part D-1           Boeing Indemnity Against Copyright Infringement
            Part E             Supplier Warranties and Patent Indemnities
            Part G             Boeing Interface Commitment
            Part H             General

     Exhibit C-1 - Customer Support Document
            Part B             Boeing Customer Support Services
            Part D             Technical Data and Documents
            Part E             Buyer's Indemnification of Boeing and Insurance
            Part F             Alleviation or Cessation of Performance

     Exhibit E - Buyer Furnished Equipment Provisions Document
            Paragraph 8        Indemnification of Boeing
            Paragraph 9        Patent Indemnity
            Paragraph 10       Definitions

     Letter Agreement No. 1830-3 - Seller Purchased Equipment
            Paragraph 6        Buyer's Indemnification of Boeing

         2. Lessee  recognizes  that Boeing's  obligation  to provide  training,
support and services to Lessee pursuant to Exhibit C of the Boeing  Agreement is
conditioned  on the receipt by Boeing of evidence of  compliance  by Lessee with
the insurance requirements set forth in paragraph 2 of Part E of Exhibit C or in
such other form as may be satisfactory to Boeing,  prior to the  commencement of
such training, support and services.

         3. ILFC reserves to itself all rights, claims and interests it may have
under the Boeing Agreement not expressly assigned to Lessee hereunder. ILFC will
remain  responsible  to Boeing for any amounts with respect to the Aircraft owed
to Boeing under the Boeing Agreement prior to the effective date of this letter,
including  any amounts owed by ILFC to Boeing  under the  specific  articles and
paragraphs  of the Boeing  Agreement  referenced in paragraph 1 above based upon
events or incidents  relating to the Aircraft  occurring  prior to the effective
date of this letter.

         4. ILFC  hereby  assigns to Lessee the sole  authority  to  exercise in
Lessee's  name all rights and powers of ILFC with respect to the Aircraft  under
the specific  portions of the Boeing Agreement  referenced in paragraph 1 above.
Such  authorization will continue until Boeing receives from ILFC written notice
that the Lease has been  cancelled or  terminated,  addressed  to Boeing's  Vice
President,  Contracts, P.O. Box 3707, MC 21-34, Seattle,  Washington 98124-2207,
U.S.A.  Until  Boeing  receives  such  notice,  Boeing  will be entitled to deal
exclusively with Lessee with respect to the Aircraft under the specific portions
of the Boeing Agreement referenced in paragraph 1 above and, with respect to the
rights,  powers,  duties  or  obligations  under  such  portions  of the  Boeing
Agreement,  any and all actions  taken by Lessee or  agreements  entered into by
Lessee during the period prior to Boeing's  receipt of such notice will be final
and binding on ILFC.

         5. Lessee  hereby  accepts the  authorization  set forth in paragraph 4
above and agrees to be bound by and to comply with all the terms, conditions and
limitations  of the portion of the Boeing  Agreement  referenced  in paragraph 1
above.

<PAGE>

         6. This  Assignment  may be signed by the  parties  hereto in  separate
counterparts,  each of which when executed and  delivered  shall be an original,
but all  such  counterparts  shall  together  constitute  but  one and the  same
instrument.

         7. This Assignment shall be governed by, and construed in accordance
with,the laws of the State of Washington, including all matters of construction,
validity and performance.

         We  request  that  Boeing,  upon  receipt of this  letter,  acknowledge
receipt  thereof  and the  transfer  of rights set forth  above by  signing  the
acknowledgment   and  forwarding  one  copy  of  this  letter  to  each  of  the
undersigned.

         IN WITNESS  WHEREOF,  the parties  hereto  have caused this  Assignment
Agreement to be duly executed as of the dates written below.

INTERNATIONAL LEASE FINANCE             AMERICAN TRANS AIR, INC., as Lessee
CORPORATION, as Lessor and Buyer

By:                                     By:

Its:                                    Its:

                 BOEING ACKNOWLEDGMENT AND CONSENT TO ASSIGNMENT

Receipt of the above letter is  acknowledged  and transfer of certain  rights as
described  above under the Boeing  Agreement is confirmed,  effective as of this
date.

                                                THE BOEING COMPANY

                                                By:

                                                Its:

                                                Date:

<PAGE>

         EXHIBIT H            ASSIGNMENT OF RIGHTS (ENGINES)

[DATE]

CFM INTERNATIONAL, INC.
1 Neumann Way, F-17
Cincinnati, Ohio  45215

Attention:      Commercial Contracts -
                Warranty Assignment Administrator

Dear Warranty Assignment Administrator:

         Reference is hereby made to that Consent to Assignment made as of April
29, 1988 (the "CONSENT TO ASSIGNMENT"),  by and between CFM INTERNATIONAL,  INC.
("CFMI") and INTERNATIONAL LEASE FINANCE CORPORATION ("ILFC").  Terms defined in
the  Consent  to  Assignment  are used  herein  with the same  meaning as in the
Consent to Assignment.

         As of ________________ ___, ______, ILFC has assigned all of its rights
and interest in, to and under the Engine  Warranties to AMERICAN TRANS AIR, INC.
("ASSIGNEE")  in  connection  with its  lease to  Assignee  of a Boeing  737-800
aircraft (the "AIRCRAFT")  together with two (2) CFMI Model CFM56-7B-27  engines
bearing Manufacturer's Serial Numbers _______ and ________ (the "ENGINES") as of
the date each such Engine was delivered to Assignee.  Such  assignment  shall be
effective  from  such  date  until  ILFC  notifies  CFMI that the Lease has been
cancelled or terminated.

         The Assignee has accepted such  assignment and all the  limitations and
liabilities  pertaining to the Engine  Warranties as stated in the provisions of
the GTA listed in Schedule 2 to the Consent to Assignment.

<PAGE>

         A copy of the aforesaid assignment is attached hereto.

                                         Very truly yours,
                                         INTERNATIONAL LEASE FINANCE CORPORATION

                                             By:

                                             Title:

cc:      Ruben M. Cabrera
         Director, Commercial Contracts

<PAGE>

                            ASSIGNMENT OF WARRANTIES

[DATE]

     In  consideration  of AMERICAN  TRANS AIR,  INC.  ("LESSEE")  leasing  from
International Lease Finance Corporation ("ILFC") one (1) Boeing 737-800 aircraft
together  with two (2) CFMI Model  CFM56-7B-27  engines  bearing  manufacturer's
serial numbers _______ and ________, it is hereby agreed as follows:

     1. ILFC hereby  assigns and  transfers  to Lessee all of ILFC's  respective
rights and interest in and to and in and under the Engine  Warranties  set forth
in and  subject  to the  limitations  and  liabilities  set  forth in  Exhibit B
Warranty, Section X (the "ENGINE WARRANTIES") of CFM International,  Inc. - ILFC
General  Terms  Agreement  No.  6-3987 dated 22 June 1984 (the "GTA") during the
term of such leases so long as Lessee is not in default thereunder.

     2. Lessee hereby accepts such assignment  including all the limitations and
liabilities  pertaining to said Engine Warranties as stated in the provisions of
Exhibit B Warranty, Section X of the GTA.

     3. This Agreement shall be binding upon and inure to the benefit of each of
the parties  hereto and their  respective  successors  and assigns to the extent
permitted by the GTA and hereunder.

     4. This Agreement shall be governed by and construed in accordance with the
laws of the State of California.

     5. This  Agreement may be executed in any number of  counterparts,  each of
which when executed and delivered is an original but all of which taken together
constitute one and the same  instrument and any party may execute this Agreement
by signing any counterpart.

<PAGE>

     IN WITNESS  WHEREOF,  the authorized  representative  of the parties hereto
have executed this Agreement as of the day and year first above written.

For and on  behalf  of                              For and on behalf  of
INTERNATIONAL  LEASE  FINANCE                       AMERICAN TRANS AIR, INC.
CORPORATION

By:                                                 By:

Its:                                                Its:

<PAGE>

         EXHIBIT I            RETURN ACCEPTANCE RECEIPT

Date:    _________________ ___, ____

     1. AMERICAN TRANS AIR,  INC., as LESSEE,  and  INTERNATIONAL  LEASE FINANCE
CORPORATION,  as LESSOR,  have entered into an Aircraft Lease Agreement dated as
of September 5, 2000 (the "LEASE").  Words used herein with capital  letters and
not otherwise defined will have the meanings set forth in the Lease.

     2.  LESSOR has this ____ day of  __________,  ____  (Time:  __________)  at
____________________ received from LESSEE possession of:

     (a) One (1) Boeing 737-800  Aircraft bearing  Manufacturer's  serial number
____,  together with two (2) CFM56-7B-27 engines bearing  manufacturer's  serial
numbers _______ and ________,  and all Parts attached  thereto and thereon in an
airworthy condition and

     (b) All Aircraft Documentation,  including the usual and customary manuals,
logbooks,  flight  records and  historical  information  regarding the Aircraft,
Engines and Parts, as listed in the Document Receipt attached hereto.

     3. The  Airframe,  Engines  and Parts  had the  following  hours/cycles  at
return:

     (a) AIRFRAME:

      Total hours: _______________               Total Landings: _______________

<PAGE>

     (b) ENGINES:

     POSITION    SERIAL NO.    TOTAL HOURS     TOTAL CYCLES     HRS/CYCLES SINCE
                                                                LAST SHOP VISIT

                                                      Time Remaining to Next
                                                    LIFE LIMITED PART REMOVAL
       PART NAME                                  HOURS                 CYCLES
                                 MSN

                                 MSN

      (c)    APU:    MSN __________

                 Total hours:    __________

                 ______ hours/ ______ cycles since last Overhaul

                 ______ hours/ ______ cycles remaining on APU life-limited Parts

      (d)    LANDING GEARS:

POSITION       SERIAL NO.      Total           Hrs/Cycles since     Date of last
                             HRS/CYCLES         LAST OVERHAUL         OVERHAUL

Nose

Right Main

Left Main

     (e) FUEL ON BOARD AT  RETURN:  ______  (circle  one)  pounds/kilos  (______
gallons)

     4. Other  technical  information  regarding the Aircraft and its components
are  correctly  set forth on the  Technical  Evaluation  Report  (in the form of
Exhibit L) attached hereto.

     5. The above  specified  aircraft,  engines  and  documentation  are hereby
accepted by LESSOR subject to correction by LESSEE (or  procurement by LESSEE at
LESSEE's cost) as soon as reasonably possible of the discrepancies  specified in
Attachment 2 hereto.

<PAGE>

         6. Subject to the following  paragraph,  the leasing of the Aircraft by
LESSOR to LESSEE pursuant to the Lease is hereby terminated without prejudice to
LESSEE's continuing  obligations under the Lease including,  without limitation,
paragraph 6 above and Articles 10.5, 15 and 16.

     7. LESSEE  represents  and  warrants  that during the term of the Lease all
maintenance and repairs to the Airframe and Engines were performed in accordance
with the requirements  contained in the Lease.  LESSEE further confirms that all
of its obligations  under the Lease whether accruing prior to the date hereof or
which survive the  termination  of the Lease by their terms and accrue after the
date  hereof,  will remain in full force and effect  until all such  obligations
have been satisfactorily completed.

     8. This Return  Acceptance  Supplement  is executed  and  delivered  by the
parties in [place].

         IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Return
Acceptance  Receipt to be executed in their respective  corporate names by their
duly authorized representatives as of the day and year first above written.

INTERNATIONAL LEASE FINANCE CORPORATION               AMERICAN TRANS AIR, INC.

By:                                                   By:

Its:                                                  Its:

ATTACHMENTS:
1.       List of Aircraft Documentation
2.       List of Loose Equipment
3.       List of Discrepancies
4.       Engine Maximum Power Assurance Test Conditions and Results
5.       Dent and Damage Chart
6.       Form of No Accident/Incident Letter
7.       Technical Evaluation Report (in the form of Exhibit L)

<PAGE>

                    ATTACHMENT 1 TO RETURN ACCEPTANCE RECEIPT

                         LIST OF AIRCRAFT DOCUMENTATION

         [The (a) manuals and (b) Aircraft records and historical  documents set
forth below are to be returned  with the Aircraft in a current,  up-to-date  and
correct status]

                                     MANUALS

1.       FAA Approved Flight Manual
2.       Airplane Flight Operation Manual
3.       Aircraft Recover Manual
4.       Quick Reference Handbook (QRH)
5.       Weight and Balance Manual
6.       Aircraft Fueling Manual
7.       Aircraft Maintenance Manual (MM)
8.       Aircraft Maintenance Manual Supplement
9.       Ramp Maintenance Manual (RMM)
10.      Cargo Loading Manual
11.      Fault Reporting Manual (FRM)
12.      Fault Isolation Manual (FIM)
13.      Illustrated Parts Catalog (IPC)
14.      Life Limited Parts Manual
15.      Structural Repair Manual (SRM)
16.      Master Minimum Equipment List
17.      Wiring Diagram Manual (WD)
18.      Wiring Practices Manual
19.      System Schematics Manual
20.      B.I.T.E. Manual
21.      Non-Destructive Test Manual
22.      Corrosion Prevention Manual
23.      Component Maintenance Manual
24.      APU Log Book
25.      Engine Maintenance Manual
26.      Engine Log Book
27.      Engine Illustrated Parts Catalog
28.      Engine Data Submittal Book
29.      Engine Overhaul Manual
30.      Power Plant Build-up Manual

<PAGE>

                    AIRCRAFT RECORDS AND HISTORICAL DOCUMENTS

 1. Copies of original Certificates delivered by Boeing:
    a.  Airworthiness Certificate for Export
    b.  Radio installation conformity certificate
    c.  Noise limitation certificate
 2. Copies of original Documents delivered by Boeing:
    a.  Airworthiness Directive Compliance list
    b.  Aircraft inspection report
    c.  Aircraft Readiness Log
    d.  Weighing report
 3. Copies of current Certificates:
    a.  Airworthiness Certificate
    b.  Noise limitation
    c.  Radio license
    d.  Interior material burn certificates
    e.  Certificate of Export
    f.  Aircraft deregistration confirmation
    e.  Aircraft Registration
 4. Letters signed and stamped by Quality Assurance:
    a.  Current aircraft hours and cycles
    b.  Current engines hours and cycles
    c.  Accident and Incident report
    d.  Summary of Maintenance Program
    e.  AD compliance during the lease term
 5. Aircraft log books and Aircraft readiness log.
 6. Aircraft Hard Time (HT) inspection status.
 7. One year forecast for HT inspection.
 8. Aircraft Modification status, including service bulletins.
 9. Last weighing report prior to redelivery.
10. AD compliance report with original signoffs.
11. Routine and non-routine job cards of the last "C" and "D" checks.
12. Past year pilots and maintenance discrepancies.
13. Major and Minor structural repairs with applicable approvals.
14. Compass Swing report of the last three years.
15. Cabin Configuration drawing (LOPA).
16. Emergency equipment location drawing.
17. Last X-RAYs

                                 ENGINES RECORDS

 1. Last test cell run reports.

<PAGE>

 2. Life Limited Parts status and traceability.
 3. AD compliance report with original signoffs.
 4. Engine Modification/service bulletin/inspection report and applicable forms.
 5. Last heavy maintenance records for each module.
 6. Engine log books.
 7. Engine removal history.
 8. Past year trend monitoring reports.
 9. Historical borescope reports.
10. Engine component report.

                                   APU RECORDS

 1. APU status (FH, FC, limits).
 2. Life limited Part status and traceability.
 3. AD compliance with original signoffs.
 4. Modification status.
 5. Last heavy maintenance documents.
 6. APU log books.
 7. Last test cell report.

                           COMPONENT RECORDS

 1. Aircraft component inventory.
 2. Hard time component inventory.
 3. All serviceable tags.
 4. Landing Gear status with last overhaul and life limited Part status.
 5. AD compliance with original signoffs.
 6. Modification status.

<PAGE>

                    ATTACHMENT 2 TO RETURN ACCEPTANCE RECEIPT

                             LIST OF LOOSE EQUIPMENT

<PAGE>

                    ATTACHMENT 3 TO RETURN ACCEPTANCE RECEIPT

                              LIST OF DISCREPANCIES

<PAGE>

                    ATTACHMENT 4 TO RETURN ACCEPTANCE RECEIPT

           ENGINE MAXIMUM POWER ASSURANCE TEST CONDITIONS AND RESULTS

<PAGE>

                    ATTACHMENT 5 TO RETURN ACCEPTANCE RECEIPT

                              DENT AND DAMAGE CHART

<PAGE>

                    ATTACHMENT 6 TO RETURN ACCEPTANCE RECEIPT

                       FORM OF NO ACCIDENT/INCIDENT LETTER

<PAGE>

       EXHIBIT J            MONTHLY REPORT

                              (SEE FOLLOWING SHEET)

<PAGE>

                 MONTHLY AIRCRAFT UTILIZATION AND STATUS REPORT
                                                                 Page 1 of 2
Report Due Date:

To:      INTERNATIONAL LEASE FINANCE CORPORATION         Fax:   (310) 788-1990
         1999 Avenue of the Stars, 39th Floor
         Los Angeles, California 90067, United States
         Attn:  Finance Department

From:        AMERICAN TRANS AIR, INC.
Contact:                                                 Fax:

AIRCRAFT TYPE:            BOEING 737-800
ENGINE TYPE:               CFM56-7B-27       REGISTRATION:          ____
SERIAL NUMBER:                 ____          MONTH OF:

NOTE:    PLEASE RECORD TIME IN HOURS AND MINUTES NOT DECIMALS.

  Aircraft Total Time Since New As Of Last Month:        Hours:         Min:

  Aircraft Total Time Since New:                         Hours:         Min:

  Aircraft Total Cycles Since New:                       Cycles:

  Airframe Hours Flown During Month:                     Hours:         Min:

  Airframe Cycles/Landings During Month:                 Cycles:

  Time Remaining to "D" or Heavy Maintenance Check:

                              HOURS OR                 US$ PER
                            CYCLES FLOWN               HOUR OR
                           DURING MONTH (AS           CYCLE (AS
                             APPLICABLE)          X   APPLICABLE)  =    RESERVES

TOTAL AIRFRAME:                 HRS:                    X                =

TOTAL LANDING GEAR:             HRS:                    X                =

TOTAL APU:                      HRS:                    X                =

ORIGINAL ENGINE SERIAL
NUMBER:                         Hrs:          Min:      x                =

                                Cycles(for Engine
                                LLP Reserves):          x                =

ORIGINAL ENGINE SERIAL
NUMBER:                         Hrs:          Min:      x                =

                                Cycles (for Engine
                                LLP Reserves):          x                =

ORIGINAL ENGINE SERIAL
NUMBER:                         Hrs:          Min:      x                =

                                Cycles (for LLP         x                =
                                Reserves):
ORIGINAL ENGINE SERIAL
NUMBER:                         Hrs:          Min:      x                =

                                Cycles (for Engine
                                LLP Reserves):          x                =

TOTAL AMOUNT OF RESERVES (US$) PAID THIS MONTH:                            US$

<PAGE>

Monthly Aircraft Utilization and Status Report
From:    AMERICAN TRANS AIR, INC.                                PAGE 2 OF 2

ENGINE SERIAL NUMBER:                              ENGINE SERIAL NUMBER:

ORIGINAL POSITION:                                 ORIGINAL POSITION:

ACTUAL LOCATION:                                   ACTUAL LOCATION:

CURRENT THRUST RATING:                             CURRENT THRUST RATING:

                           HOURS:/MIN:                               HOURS:/MIN:

Total Time Since New As Of                           Total Time Since New As Of
Last Month:                                          Last Month:

Total Time Since New:                                Total Time Since New:

Total Cycles Since New:                              Total Cycles Since New:

Hours Flown During Month:                            Hours Flown During Month:

Cycles During Month:                                 Cycles During Month:

     IMPORTANT:  IF  ILFC-OWNED  ENGINE  IS  REMOVED  OR  INSTALLED  ON  ANOTHER
AIRCRAFT, IT MUST BE REPORTED MONTHLY ON THIS FORM.

<PAGE>

         EXHIBIT K            AIRCRAFT DOCUMENTATION

                                AIRCRAFT RECORDS

 1.   Copies of original Certificates delivered by Boeing:
      a.  Airworthiness Certificate for Export
      b.  Radio installation conformity certificate
      c.  Noise limitation certificate
 2.   Copies of original Documents delivered by Boeing:
      a.  Airworthiness Directive Compliance list
      b.  Aircraft inspection report
      c.  Aircraft Readiness Log
      d.  Weighing report
 3.   Copies of current Certificates:
      a.  Airworthiness Certificate
      b.  Noise limitation
      c.  Radio license
      d.  Interior material burn certificates
      e.  Certificate of Export
      f.  Aircraft deregistration confirmation
      e.  Aircraft Registration
 4.   Letters signed and stamped by Quality Assurance:
      a.  Current aircraft hours and cycles
      b.  Current engines hours and cycles
      c.  Accident and Incident report
      d.  Summary of Maintenance Program
      e.  AD compliance during the lease term
 5.   Aircraft log books and Aircraft readiness log.
 6.   Aircraft Hard Time (HT) inspection status.
 7.   One year forecast for HT inspection.
 8.   Aircraft Modification status, including service bulletins.
 9.   Last weighing report prior to redelivery.
10.   AD compliance report with original signoffs.
11.   Routine and non-routine job cards of the last "C" and "D" checks.
12.   Past year pilots and maintenance discrepancies.
13.   Major and Minor structural repairs with applicable approvals.
14.   Compass Swing report of the last three years.
15.   Cabin Configuration drawing (LOPA).
16.   Emergency equipment location drawing.
17.   Last X-RAYs

<PAGE>

                                 ENGINES RECORDS

 1. Last test cell run reports.
 2. Life Limited Parts status and traceability.
 3. AD compliance report with original signoffs.
 4. Engine Modification/service bulletin/inspection report and applicable forms.
 5. Last heavy maintenance records for each module.
 6. Engine log books.
 7. Engine removal history.
 8. Past year trend monitoring reports.
 9. Historical borescope reports.
10. Engine component report.

                                   APU RECORDS

 1. APU status (FH, FC, limits).
 2. Life limited Part status and traceability.
 3. AD compliance with original signoffs.
 4. Modification status.
 5. Last heavy maintenance documents.
 6. APU log books.
 7. Last test cell report.

                                COMPONENT RECORDS

 1. Aircraft component inventory.
 2. Hard time component inventory.
 3. All serviceable tags.
 4. Landing Gear status with last overhaul and life limited Part status.
 5. AD compliance with original signoffs.
 6. Modification status.

<PAGE>

        EXHIBIT L            TECHNICAL EVALUATION REPORT

                             (SEE FOLLOWING SHEETS)

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