AIRPLANES LTD - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
Form 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number 33-99970

AIRPLANES LIMITED AIRPLANES U.S. TRUST
(Exact Name of Registrants as specified in memorandum of association or trust agreement)
JERSEY, CHANNEL ISLANDS DELAWARE
(State or other jurisdiction of incorporation or organization)
7359 13-3521640
(SIC Code) (I.R.S. Employer Identification No.)
AIRPLANES LIMITED AIRPLANES U.S. TRUST
22 GRENVILLE STREET, ST. HELIER 1100 NORTH MARKET STREET,
JERSEY, JE4 8PX RODNEY SQUARE NORTH
CHANNEL ISLANDS WILMINGTON, DELAWARE 19890-0001
(011 44 1534 609 000) (1-302-651-1000)

(Addresses and telephone numbers, including area codes, of Registrants'
principal executive offices)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT
None

(Title of class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 126-2)
Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 or Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Aggregate market value of registrant's common stock held by non-affiliates:
$Nil.

Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.

2

PART I

ITEM 1. BUSINESS

INTRODUCTION

Airplanes Limited ("AIRPLANES LIMITED") is a limited liability company
formed under the laws of Jersey, Channel Islands. Airplanes U.S. Trust
("AIRPLANES TRUST") is a Delaware business trust. "AIRPLANES GROUP" refers to
Airplanes Limited and Airplanes Trust, and in this report, we use "WE," "US" and
"OUR" to refer to Airplanes Group and its subsidiaries and Airplanes Pass
Through Trust. We are in the business of leasing aircraft to aircraft operators
around the world. At March 31, 2003, we owned 179 aircraft (the "AIRCRAFT"), 158
of which were on lease to 55 lessees in 31 countries. Our website contains
limited information and is found at http://www.airplanes-group.com/index.html.
Our website contains links to the SEC's website on which you can obtain
electronic copies of our periodic and current reports filed electronically with
the SEC free of charge.

On March 28, 1996, we established eight separate pass through trusts to
issue and sell $4,048 million in aggregate principal amount of subclass A-1,
A-2, A-3, A-4 and A-5 and class B, C and D pass through certificates in an
underwritten offering. We used the proceeds from this offering, together with
the proceeds from the sale of the class E notes of Airplanes Limited and
Airplanes Trust to GPA Group plc (now known as debis AirFinance Ireland plc), to
acquire a portfolio of 229 aircraft from GPA Group and its subsidiaries. We use
the rental payments that we receive from leasing the aircraft to pay interest
and principal on this debt. On March 16, 1998, we established four additional
pass through trusts to issue and sell $2,437 million in aggregate principal
amount of subclass A-6, A-7 and A-8 and class B certificates in connection with
the refinancing of our subclass A-1, A-2 and A-3 and class B certificates. On
November 20, 1998, General Electric Capital Corporation ("GE CAPITAL") acquired
a majority of the class E notes from GPA Group (then known as AerFi Group and
now known as debis AirFinance Ireland) and its subsidiaries. On that date, a
subsidiary of AerFi Group also granted GE Capital an option to acquire the
residual interest in Airplanes Trust. See below at "Airplanes Trust" for more
information about the option. The subclass A-5 certificates were fully repaid as
of May 15, 1998. We established a new pass through trust on March 15, 2001 to
issue and sell $750 million in aggregate principal amount of subclass A-9
certificates which rank equally in right of payment with our outstanding
subclass A-6 and A-8 certificates. We used the proceeds from this offering to
refinance our subclass A-4 and A-7 certificates and the corresponding subclass
A-4 and A-7 notes.

AIRPLANES PASS THROUGH TRUST

"AIRPLANES PASS THROUGH TRUST" and the "TRUST" refer to all the pass
through trusts created under the Airplanes Pass Through Trust Agreement dated
March 28, 1996, as supplemented (the "TRUST AGREEMENT") among Airplanes Limited,
Airplanes Trust and Bankers Trust Company (now known as Deutsche Bank Trust
Company Americas), as trustee (the "TRUSTEE"), except where it is clear that
this term means only a particular pass through trust. The certificates issued by
each pass through trust each represent a fractional undivided beneficial
interest in two corresponding classes or subclasses of notes issued and
cross-guaranteed by Airplanes Limited and Airplanes Trust pursuant to indentures
dated as of March 28, 1996 (as amended or supplemented, the "INDENTURES") they
entered into with Bankers Trust Company (now known as Deutsche Bank Trust
Company Americas), as trustee (the "INDENTURE TRUSTEE"), and held by that trust.
The two corresponding classes of notes and guarantees held by each trust are the
principal sources of payment for the class or subclass of certificates issued by
that trust.

AIRPLANES LIMITED

Airplanes Limited is a special purpose limited liability company formed on
November 3, 1995 under the laws of Jersey, Channel Islands. Its sole purposes
are to (a) acquire, own, manage, maintain, lease, re-lease, modify and sell
(subject to restrictions under its indenture) the aircraft, (b) finance and
refinance these activities, including guaranteeing the obligations of its
subsidiaries and of Airplanes Trust, (c) manage its interest rate and currency
risks, and (d) engage in other activities related to the aircraft and their
financing.

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Airplanes Limited's principal assets are the intercompany loans it has
advanced to its subsidiaries and 95% of the capital stock of Airplanes Holdings
Limited. As of March 31, 2003, Airplanes Holdings owned a total of 165 aircraft
directly and through its aircraft-owning subsidiaries, and owned a number of
aircraft-leasing subsidiaries which lease aircraft from the aircraft-owning
subsidiaries and sublease them to lessees. The remaining 5% of the capital stock
of Airplanes Holdings is owned by GECAS. See below "Risk Factors -- Risks
Relating to Tax" for a discussion of the tax benefits of this 5% ownership by
GECAS and the risk of losing these benefits. Airplanes Limited has no ownership
or leasehold interests in any real property.

For information on the capital stock of Airplanes Limited, including a
discussion of annual dividends, see "Item 5. Market for Registrants' Common
Equity and Related Shareholder Matters."

Airplanes Limited has a board of directors, which is currently composed of
five directors. See "Item 10. Directors And Executive Officers Of The
Registrants -- Directors and Controlling Trustees" for details on these
directors. Airplanes Limited does not have any employees or executive management
of its own and relies solely on service providers to service, lease and re-lease
aircraft and perform other executive and administrative responsibilities. For a
description of the services provided by the service providers, see "Item 10.
Directors and Executive Officers of the Registrants -- The Servicer" and "-- The
Administrative Agent and Cash Manager."

We have taken steps to structure Airplanes Limited and its acquisition of
the aircraft-owning and aircraft-leasing subsidiaries from GPA Group (now known
as debis AirFinance Ireland) in 1996 to ensure that its assets would not be
consolidated with the assets of debis AirFinance Ireland and would not otherwise
become available to its creditors in any bankruptcy or insolvency proceeding
involving debis AirFinance Ireland or any of its affiliates. For a description
of the risks if these steps are not effective, see below "Risk Factors -- Risks
Relating to Bankruptcy."

AIRPLANES TRUST

Airplanes Trust is a Delaware statutory business trust formed in November
1995. Its sole purposes are to (a) acquire, own, manage, maintain, lease,
re-lease, modify and sell (subject to restrictions under its indenture) the
aircraft, (b) finance and refinance these activities, including guaranteeing the
obligations of its subsidiaries and of Airplanes Limited, (c) manage its
interest rate and currency risks and (d) engage in other activities related to
the aircraft and their financing.

Airplanes Trust's principal assets are the intercompany loans it has
advanced to its subsidiaries and 100% of the capital stock of AeroUSA, which as
of March 31, 2003, owned 14 aircraft. The shares of AeroUSA and AeroUSA 3 are
held by separate voting trusts with First Security Bank of Utah, acting as
trustee, in order to satisfy the U.S. Federal Aviation Administration
regulations regarding the U.S. citizenship of the owners of U.S.-registered
aircraft. Airplanes Trust has no ownership or leasehold interests in any real
property.

debis AirFinance, Inc., a wholly-owned subsidiary of debis AirFinance
Ireland, holds the residual ownership interest in all of the property of
Airplanes Trust. In connection with the sale of the class E notes to GE Capital
by GPA Group (now known as debis AirFinance Ireland) and its subsidiaries in
1998, GPA, Inc. (now known as debis AirFinance, Inc.) granted an option to GE
Capital for it to purchase this residual ownership interest in Airplanes Trust
for $1.00. If GE Capital does not exercise this option before its expiry date,
which is 30 days after notice of the dissolution of the trust, the option will
become void. Upon repayment in full of all of the indebtedness of Airplanes
Trust and the dissolution of Airplanes Trust, legal title to the AeroUSA shares
and other property of Airplanes Trust will revert to debis AirFinance, Inc. or
GE Capital, if GE Capital has exercised its option.

Airplanes Trust has five controlling trustees, who are the same individuals
as those who currently serve as directors of Airplanes Limited, and a Delaware
trustee, Wilmington Trust Company. For information on its management, see "Item
10. Directors and Executive Officers of the Registrants." Airplanes Trust does
not have any employees or executive officers of its own and relies solely on
service providers to service, lease and re-lease the aircraft and perform other
executive and administrative responsibilities. For a description of these
services, see "Item 10. Directors and Executive Officers of the Registrants --
The Servicer" and "-- The Administrative Agent and Cash Manager."
4

We have taken steps to structure Airplanes Trust and its acquisition of the
aircraft-owning and aircraft-leasing subsidiaries from GPA Group (now known as
debis AirFinance Ireland) in 1996 to ensure that its assets would not be
consolidated with the assets of debis AirFinance Ireland and would not otherwise
become available to its creditors in any bankruptcy or insolvency proceeding
involving debis AirFinance Ireland or any of its affiliates. For a description
of the risks if these steps are not effective, see below "Risk Factors -- Risks
Relating to Bankruptcy."

RISK FACTORS

The following summarizes various risks and uncertainties which may
materially affect the ability of Airplanes Limited and Airplanes Trust to pay
interest, principal or any premium on the notes and hence our ability to pay
interest, principal or any premium on our certificates in full at or before
their respective final maturity dates. We first describe how the difficulties
currently facing the airline industry have adversely affected our cash flows and
the effect these reduced cash flows has had and is likely to have on our ability
to make payments on the certificates. We then describe other risks which may
further adversely affect our ability to make these payments. These risks and
uncertainties are not the only ones relevant to the certificates, the notes and
guarantees, the trust or Airplanes Group.

This Form 10-K contains forward-looking statements that involve risks and
uncertainties. In most cases, you can identify these forward-looking statements
by terms such as "may," "should," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "potential," "continue" or similar terms that relate to
the future or express uncertainty. Our actual results could differ materially
from those anticipated in these forward-looking statements. In evaluating these
statements, you should specifically consider various factors, including the
risks outlined below, that may impact our results of operations.

RISKS RELATING TO PAYMENT ON THE NOTES AND CERTIFICATES

OUR REDUCED CASH FLOWS ADVERSELY AFFECT JUNIOR NOTEHOLDERS AND
CERTIFICATEHOLDERS.

Administrative and lease expenses and certain other payments in the
ordinary course of business are senior to the notes in priority of payment and
are therefore payable before any payments are made on the notes (and thus the
corresponding certificates).

Additionally, minimum principal amounts on the class A and class B notes
are payable before interest on the class C and class D notes, and principal
adjustment amount on the class A notes is payable before scheduled principal
payments on the class C and class D notes. Since the appraised value of our
aircraft has declined at a rate faster than that originally assumed in the base
case assumptions in our original prospectus dated March 28, 1996 (the "1996 BASE
CASE"), we have been required to pay principal adjustment amount on the class A
notes to the extent of available funds with a consequential deferral of
scheduled principal payments on the class C and class D notes.

To the extent that we have sufficient available funds, we are required to
pay a minimum principal amount on the class A notes in order to maintain certain
loan to initial appraised value ratios. At the June 16, 2003 payment date we
were ahead of the required class A minimum principal payment schedule to the
extent of $23.8 million. Accordingly, no payments are currently due in respect
of the minimum principal amount on the class A notes. However, our overall cash
performance since September 11, 2001 has been significantly weaker than was
assumed in the base case assumptions in our offering memorandum dated March 15,
2001 (the "2001 BASE CASE"), the reasons for which are discussed in "Item 7.
Management's Discussions and Analysis of Financial Condition and Results of
Operations -- Recent Developments." We have not had sufficient cashflows to pay
class A principal adjustment amounts in full and, on both the May 15, and June
16, 2003 payment dates, we did not have sufficient cashflows to pay any class A
principal adjustment amount. We expect we may not resume payment of class A
principal adjustment amount in the future. Therefore, in time, we will no longer
be ahead of
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the required class A minimum principal payment schedule. We expect this to occur
in the third quarter of 2003, following which we will have to recommence
payments of minimum principal on the class A notes to the extent of available
cashflows. Since minimum principal on the class A notes ranks ahead of interest
and minimum principal on the class B notes and interest on the class C and class
D notes in the order of priority, and, given our expected cash performance we
expect that, in addition to our current inability to pay scheduled principal on
the class C and D notes, our cash flows will be inadequate to pay interest and
minimum principal on the class B notes and interest on the class C and D notes
beginning in the final quarter of 2003.

While our actual results may differ from our current expectations, as
further explained in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Recent Developments", such differences as
may arise are only likely to affect the timing of when we may cease to pay
interest and minimum principal on the class B notes and interest on the class C
and D notes.

In the event that cash flows are inadequate to pay interest and minimum
principal on the class B notes and interest on the class C and D notes, it is
likely to be a long period of time before we will be able to resume making any
payments on these notes. If we fail to pay interest when due, as is currently
projected to be the case with respect to the class B, C and D notes beginning in
the final quarter of 2003, interest will accrue on the unpaid interest. In these
circumstances, since interest (and minimum principal) on the class A notes is
payable prior to payment of interest and minimum/scheduled principal on the
class B, C and D notes (and all other amounts of principal on the class B, C and
D notes), available cash flows will be used first to service interest and, to
the extent possible, minimum principal on the class A notes. To the extent that
cash is available at any subsequent time to make payments ranking below class A
minimum principal, cash flows will first be used to pay interest on the class B
notes, which would then include all the accrued interest from the period when no
payments were made on these notes. Thus the likelihood of remaining cash flows
over the life of Airplanes Group being sufficient to resume any payments of
class B principal or any payments of interest or principal on the class C and,
ultimately, the class D notes is even further diminished. Thus, we may be unable
to repay in full principal on some or all of these classes of notes by their
final maturity date. In addition, to the extent that we are able to resume
making payments on these notes, payments will be made according to the priority
of payments, commencing with the then most senior class and only making payments
on more junior classes to the extent of available cash flows. The more junior
the class of notes is in the order of priority, the greater the risk that we may
be unable to repay in full principal on that class of notes by its final
maturity date. A failure to make payments on a class of notes will result in
failure to make payments on the corresponding class of certificates.

This vulnerability of the various classes of notes has been reflected in
actions taken by the rating agencies which reevaluated several structured
aircraft financings in the last twelve months.

Set out in the table below are the current ratings of our certificates:-

Standard & Poor's has also placed each class and subclass of our
certificates on negative outlook.

Given the continuing difficulties in the aircraft industry and their impact
on the factors which determine our revenues, there can be no assurance that the
rating agencies will not further downgrade any class of our certificates.

The ratings of the certificates address the likelihood of the timely
payment of interest and the ultimate payment of principal and premium, if any,
on the certificates. A rating is not a recommendation to buy, sell or
6

hold certificates because ratings do not comment as to market price or
suitability for a particular investor. A rating may be subject to revision,
suspension or withdrawal at any time by the assigning rating agency.

SUBORDINATION PROVISIONS RESTRICT THE RIGHTS OF JUNIOR NOTEHOLDERS AND
CERTIFICATE HOLDERS.

In general, the rights and remedies with respect to a note event of default
are exercisable only by the trustee of and the holders of the most senior class
of notes outstanding, and then only to the extent that there is an event of
default with respect to that senior class of notes. For example, a failure to
make a required payment on a class of notes is a default only with respect to
that class of notes and the corresponding certificates. Accordingly, if an event
of default occurs with respect to a class of notes which is not the most senior
class outstanding, the holders of that class of notes (and thus, the
corresponding certificates) will not be permitted to enforce their rights until
all amounts owing under any more senior class of notes outstanding and certain
other amounts have been paid in full. The class A notes are the most senior
class of notes currently outstanding.

CERTIFICATEHOLDERS HAVE NO SECURITY INTEREST IN THE AIRCRAFT OR THE LEASES TO
SECURE OUR REPAYMENT OF THE CERTIFICATES.

None of the certificateholders, the trustee or the security trustee has any
security interest, mortgage, charge or similar interest in any aircraft in our
portfolio or in the related leases. If the trust defaults on payments to
certificateholders on the certificates, neither the certificateholders nor
anybody acting on their behalf can sell the aircraft or exercise other remedies
with respect to the aircraft or the leases to repay the principal and interest,
which they would have been able to do if they had held a security interest in
the aircraft or the leases. Airplanes Limited and Airplanes Trust have, however,
pledged to the security trustee, as security for the notes and their other
obligations, one-third of the ordinary share capital of each of AeroUSA,
Airplanes Holdings and their subsidiaries, cash balances in the accounts and
investments made with our cash balances.

THE TRUST HAS LIMITED SOURCES OF INCOME FROM WHICH TO REPAY THE CERTIFICATES.

The trust is a pass through trust. The principal assets of the trust are
the notes and guarantees, and its only sources of payment on the certificates
are payments by Airplanes Limited and Airplanes Trust on those notes and
guarantees, including proceeds from any disposition of them. If Airplanes
Limited and Airplanes Trust do not make payments on the notes and guarantees to
the trust, the trust has no other funds to make payments to certificateholders
on the certificates. The certificates and notes are not guaranteed by the
trustee, the security trustee, the indenture trustee, the servicer, the
administrative agent, the cash manager or any of their affiliates, and
certificateholders cannot look to them or anyone else to repay them if the trust
defaults in payment on the certificates.

AIRPLANES LIMITED AND AIRPLANES TRUST HAVE LIMITED SOURCES OF INCOME FROM WHICH
TO REPAY THE NOTES AND GUARANTEES.

The principal assets of Airplanes Limited and Airplanes Trust are shares of
their direct subsidiaries and intercompany loans to their direct and indirect
subsidiaries. Airplanes Limited and Airplanes Trust do not directly own any of
the aircraft and are dependent on payments and distributions from their
subsidiaries for their cash flow. If their subsidiaries do not make principal or
interest payments to Airplanes Limited and Airplanes Trust on the intercompany
loans, or if their subsidiaries do not make any distributions to them, Airplanes
Limited and Airplanes Trust would have less cash available to make payments to
the trust on the notes or guarantees. Also, if withholding or other taxes are
imposed on payments or distributions to Airplanes Limited and Airplanes Trust,
or if other significant tax liabilities arise, Airplanes Limited and Airplanes
Trust would have less cash available to make payments to the trust. In these
circumstances, the trust would have less cash available to make payments to
certificateholders on the certificates.

7

AIRPLANES LIMITED AND AIRPLANES TRUST HAVE OTHER CLAIMS THAT RANK SENIOR TO THE
NOTES AND GUARANTEES.

Airplanes Limited and Airplanes Trust have guaranteed a significant number
of their respective subsidiaries' obligations to lessees. Payments on these
guarantees will be treated as lease expenses and will rank ahead of other
payment obligations of Airplanes Limited and Airplanes Trust.

CLAIMS ON OUR SUBSIDIARIES ARE EFFECTIVELY SENIOR TO THE CLAIMS OF
CERTIFICATEHOLDERS ON AIRPLANES LIMITED AND AIRPLANES TRUST, AND OUR
SUBSIDIARIES MAY HAVE MATERIAL CONTINGENT LIABILITIES UNKNOWN TO US.

Any claims on the subsidiaries of Airplanes Limited and Airplanes Trust are
effectively senior to the notes and guarantees because the subsidiaries would
generally have to make payments on those claims before making payments or
distributions to Airplanes Limited and Airplanes Trust. These claims include any
payment obligations to lessees and other contingent liabilities, such as
liabilities to third parties from operating and leasing the aircraft. There may
also be liabilities of this type that arose before we acquired our subsidiaries
from GPA Group (now known as debis AirFinance Ireland) in 1996 of which we are
not aware. If the subsidiaries are called upon to pay any of these contingent
liabilities, we would have less cash available to make payments to
certificateholders.

THE NOTES AND CERTIFICATES ARE SUBJECT TO EARLY REFINANCING OR REDEMPTION WHICH
MAY REDUCE THE YIELD ON CERTIFICATEHOLDERS' INVESTMENT IN THE CERTIFICATES.

We are permitted to refinance or redeem the notes and the corresponding
certificates at the applicable redemption price at our option on any payment
date. We are also permitted to redeem the notes and corresponding certificates
at par upon the occurrence of specified adverse tax events affecting Airplanes
Group. Available funds from the sale of aircraft and other available collections
will also be used to repay the certificates under the priority of payments
provided in the indentures. If we were able to effect any refinancing or early
redemption of the certificates, the yield on certificateholders' investment in
the certificates could be adversely affected.

THERE IS NO PUBLIC MARKET FOR THE CERTIFICATES.

The certificates have a limited trading market which may harm
certificateholders' ability to sell them or depress the price at which
certificateholders sell them. The certificates are listed only on the Luxembourg
Stock Exchange. No one has an obligation to make a market in the certificates.
We do not intend to seek approval for quotation through any automated quotation
system. Future trading prices for the certificates depend on many factors,
including general economic conditions, our financial condition, performance and
prospects and the market's then current perception of the commercial aircraft
industry and the operating lease business generally.

RISKS RELATING TO AIRPLANES GROUP AND THIRD PARTIES

WE HAVE A HISTORY OF INCURRING NET LOSSES IN OUR OPERATIONS.

Airplanes Group has incurred net losses since its inception and expects to
continue to incur substantial and increasing net losses. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" for a further discussion of these net losses.

WE HAVE NO MANAGEMENT RESOURCES AND DEPEND ON SERVICE PROVIDERS TO OPERATE OUR
BUSINESS AND COLLECT OUR REVENUES.

We have no employees or executive management resources of our own and rely
solely on the servicer, administrative agent, cash manager and other service
providers for all aircraft servicing, leasing, re-leasing, sales and other
executive and administrative functions relating to our portfolio. If these
service providers do not perform their contractual obligations to us, our
operations and cash flow may suffer, thereby adversely affecting
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the timing of payments on, and ultimate repayment of, the certificates. We may
find it difficult to recover damages for any of these third parties' poor
performance pursuant to their contracts and may not be able to terminate these
contracts by ourselves. In particular, our rights to terminate the servicing
agreement are very limited. We cannot guarantee that we will continue our
arrangements with the existing service providers or that they will continue
their relationship with us until the certificates are paid in full. If a service
provider resigns or if we terminate any service provider, we may be unable to
find a suitable replacement that we can engage on suitable terms, which would
harm our operations and impede our cash flow. The appointment of replacement
service providers may also cause the rating agencies to lower or withdraw the
ratings on the certificates. You should refer to "Item 10. Directors and
Executive Officers of the Registrants" for more detailed information on the
responsibilities we have delegated to the service providers.

THE SERVICER WILL NOT BE LIABLE TO US FOR LOSSES WE INCUR IN CONNECTION WITH ITS
PERFORMANCE OF THE SERVICES.

The servicer will not be liable to us for losses we incur in connection
with its performance of the services, except where a court has finally
adjudicated that the losses have been directly caused by the servicer's willful
misconduct or gross negligence. In addition, we have agreed to indemnify the
servicer on an after-tax basis for a broad range of losses in connection with
its performance of the services. Any such indemnification payments would rank
senior to payments on the notes and certificates, which would further reduce
funds available to make payments on the notes and certificates.

WE DEPEND ON SWAP COUNTERPARTIES IN MANAGING INTEREST RATE RISKS. IF OUR SWAP
COUNTERPARTIES DEFAULT, OR IF WE ARE UNABLE TO FIND SUITABLE SWAP
COUNTERPARTIES, THERE MAY BE A MISMATCH BETWEEN OUR FIXED AND FLOATING RATE
ASSETS AND LIABILITIES WHICH COULD REDUCE OUR CASH FLOW.

We manage interest rate risks arising from any mismatch between fixed and
floating rate lease rental payments and fixed and floating rate interest
obligations through swaps and other derivative instruments. This strategy for
managing interest rate risks is dependent upon our ability to enter into
interest rate swaps with eligible counterparties and on the counterparties
fulfilling their contractual obligations. If a counterparty defaults or if we
are unable to find eligible counterparties willing to enter into interest rate
swaps with us because of our financial condition, a mismatch between our fixed
and floating rate interest obligations and fixed and floating rate lease
receipts may arise, which could further harm our cash flow and adversely affect
our ability to make payments on the notes and certificates.

As further discussed under "Item 7A. Quantitative and Qualitative
Disclosures about Market Risks - Interest Rate Risk and Management" we have
reviewed and modified our hedging policy with the approval of the rating
agencies and will not enter into any further hedges of the class B notes and
certificates as we anticipate ceasing payments of interest on these notes and
certificates in the final quarter of 2003. We believe it prudent to continue to
hedge our interest rate exposure in respect of the class A notes and
certificates as the mix of fixed and floating rental receipts does not correlate
to the floating payments due on the class A notes and certificates. We also
expect that by the end of 2003, our cashflows will be insufficient to enable any
funds to be allocated to the "Second Collection Account Top-up" in the priority
of payments. Therefore, we are no longer including this cash balance in our
hedging calculations from the end of 2003.

Our indentures require that any counterparty with whom we enter into a swap
have at least a short-term unsecured debt rating of A-1+ from Standard & Poor's
and a long-term unsecured debt rating of A1 from Moody's. It has proven
increasingly difficult to find counterparties meeting these requirements and
therefore, as further described under "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Recent
Developments", the board of directors of Airplanes Limited and the controlling
trustees of Airplanes Trust have resolved to undertake a consent solicitation
seeking, among other things, to amend the indentures so as to reduce the
required rating for a swap counterparty to a short-term unsecured debt rating of
at least A-1 from Standard & Poor's and a long-term unsecured debt rating of at
least A2 from Moody's or otherwise as approved by the Board with the prior
agreement of the rating agencies. If the consent solicitation is

9

successful we believe that the amendment to the indentures will help us to find
eligible counterparties willing to enter into interest rate swaps to hedge our
interest rate exposure in respect of the class A notes and certificates.

GECAS, THE SERVICER, MAY HAVE CONFLICTS OF INTEREST IN MANAGING OUR PORTFOLIO AS
A RESULT OF ITS OTHER AIRCRAFT MANAGEMENT ACTIVITIES.

In addition to acting as the servicer for Airplanes Group, GECAS manages a
large portfolio of aircraft owned by its affiliates, including the GE group of
companies, and third parties, including other securitization vehicles such as
Lease Investment Flight Trust and Aircraft Finance Trust. GECAS also arranges
aircraft or engine financings and other lease transactions and GE Capital, an
affiliate of GECAS, is the owner of the class E notes. GECAS may therefore face
conflicts of interest in managing and marketing our portfolio for re-lease or
sale. The aircraft it manages for itself or others may compete with our aircraft
when they are being marketed for re-lease or sale. These conflicts will arise as
decisions affecting some aircraft that GECAS is managing or that GECAS or one of
its affiliates owns may be adverse to other aircraft also managed by GECAS. The
servicing agreement provides that the standard of care applicable in cases where
such conflicts arise requires that GECAS not discriminate between aircraft on an
unreasonable basis. For a fuller description of the standard of care, see "Item
10. Directors and Executive Officers of the Registrants -- The Servicer -- The
Servicing Agreement." While GECAS has agreed to perform the services for us with
reasonable care and diligence at all times, GECAS may give preference to its
affiliates and other third parties under the terms of its other marketing and
servicing arrangements. In addition, GECAS is not obliged to inform us of any
conflicts of interest of which it is aware. If, as a result of a conflict of
interest, GECAS makes a decision potentially adverse to us, it could have a
material adverse effect on the servicing of our aircraft, which may cause
additional reduction in our cash flow, thereby potentially adversely affecting
the timing or amounts of payments on the notes and certificates. See "Item 10.
Directors and Executive Officers of the Registrants -- The Servicer" for more
information on the activities of the servicer.

THE ADMINISTRATIVE AGENT AND CASH MANAGER MAY HAVE CONFLICTS OF INTEREST BECAUSE
OF THEIR PARENT COMPANIES' OTHER AIRCRAFT MANAGEMENT ACTIVITIES AND OWNERSHIP
INTERESTS.

debis AirFinance B.V. and debis AirFinance Ireland, parent companies of the
administrative agent and the cash manager, manage a large portfolio of aircraft
owned by themselves, their affiliates and third parties. debis AirFinance
Ireland also acts as the servicer for AerCo Limited, a securitization vehicle
similar to Airplanes Group, and currently holds substantially all of the class
D-2, E-1 and E-2 notes issued by AerCo. Subsidiaries of debis AirFinance Ireland
also act as administrative agent and cash manager for AerCo. As a result, the
administrative agent and the cash manager of Airplanes Group may from time to
time have conflicts of interest in performing their obligations to Airplanes
Group. While the roles of the administrative agent and the cash manager are more
limited than those of the servicer, any conflicts of interest that they cannot
resolve could have an adverse impact on Airplanes Group and on our ability to
make payments on the notes and certificates.

OUR LEGAL COUNSEL MAY HAVE CONFLICTS OF INTEREST IN NEGOTIATING SOME OF OUR
AGREEMENTS BECAUSE THEY ALSO REPRESENT PARTIES WITH WHICH WE DEAL.

Airplanes Group and debis AirFinance Ireland are represented by the same
Jersey, Irish and United States legal counsel, and we anticipate that this
multiple representation will continue. Our legal counsel may face conflicts of
interest when negotiating agreements between Airplanes Group and debis
AirFinance Ireland. If a significant dispute does arise in the future between
Airplanes Group and debis AirFinance Ireland or any of their respective
affiliates, we anticipate that we will retain separate counsel to represent us.

10

RISKS RELATING TO THE AIRCRAFT

THE COMMERCIAL AIRCRAFT MARKET IS CYCLICAL. DECREASED DEMAND FOR OR EXCESS
SUPPLY OF AIRCRAFT CAN DEPRESS AIRCRAFT VALUES AND LEASE RATES, WHICH MAY CAUSE
US TO BE UNABLE TO RE-LEASE OR SELL AIRCRAFT ON FAVORABLE TERMS AND CAN DECREASE
CASH AVAILABLE TO MAKE PAYMENTS ON THE NOTES AND CERTIFICATES.

The market for commercial jet aircraft is cyclical and can produce sharp
increases or decreases in aircraft values and lease rates depending on the level
of supply or demand. During the past two years, there has been a general
downturn in the world economic climate, with a consequential negative impact on
the commercial aviation industry. The effects of this downturn were exacerbated
by the terrorist attacks of September 11, 2001, the military action of the U.S.
and its allies in Afghanistan, the terrorist attack in Bali, the war in Iraq,
the recent terrorist attack in Saudi Arabia and the outbreak of Severe Acute
Respiratory Syndrome (SARS). The threat of terrorist attacks and concerns
regarding SARS continue to deter air travel. The drop in passenger demand has
led to reductions in flight schedules and a consequent oversupply of aircraft
(including aircraft available for lease), as well as severe financial
difficulties for many airlines. Over the past two years, we have experienced
increased aircraft downtime, steeper than expected declines in lease rates,
additional lease restructurings, unanticipated redeliveries of aircraft with
associated costs, and a fall in the realizable value for aircraft (particularly
older technology models) in open market sales.

Airlines increasingly prefer jet aircraft to turboprop aircraft, and new
generation Stage 3 aircraft to older Stage 3 aircraft (which make up a
significant proportion of our portfolio), and so the markets for these types of
aircraft remain unfavorable in terms of both aircraft values and lease rates.

The conditions in the aircraft market depend upon, among other things, the
business cycle for the lessees and buyers, as well as general economic
conditions worldwide or in specific regions. The condition of the market at the
time when any of our aircraft are being marketed for re-lease or sale will
affect our ability to re-lease or sell those aircraft on satisfactory terms.
Unsatisfactory market conditions, such as those we are currently experiencing,
mean that the lease rates and, where applicable, sales proceeds that we obtain
are unfavorable and less than those assumed in the 2001 Base Case, resulting in
decreased cash flows available to make payments on the notes and certificates.
We cannot predict when, if at all for certain aircraft types, the market will
recover.

THE AIRCRAFT VALUES AND LEASE RATES FOR AIRCRAFT MAY FLUCTUATE SIGNIFICANTLY
BECAUSE OF FACTORS OUTSIDE OUR CONTROL AND AFFECT OUR CASH FLOW.

Decreases in aircraft values or lease rates cause a decrease in our cash
flows. Depending on market conditions, we may be unable to re-lease or sell
aircraft on terms that will allow us to make payments on the notes and
certificates. Aircraft values and lease rates depend on various factors that are
outside our control, including:

- general economic conditions affecting lessee operations as discussed
above, including passenger demand and the cost of fuel and other
expenses;

- the supply of and demand for used aircraft;

- manufacturer production levels and prices for new aircraft;

- interest rates, currency exchange rates and credit availability;

- retirement and obsolescence of aircraft models;

- re-introduction into service of aircraft previously in storage;

- governmental regulations; and

- lack of capacity in the aircraft traffic control system.

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Additional factors outside our control that may lead to sharp increases or
decreases in aircraft values or lease rates for specific aircraft include:

- manufacturer production levels and competition between aircraft
manufacturers, such as the current competition between The Boeing
Company and Airbus Industrie, which has led to an increased supply of
new aircraft at lower prices;

- manufacturers merging or leaving the aircraft industry, such as the
merger between Boeing and McDonnell Douglas and the bankruptcy of Fokker
N.V., which has led to the termination of production of MD and Fokker
aircraft and a resulting decrease in the values and lease rates for our
MD and Fokker aircraft;

- the maintenance and operating history of the aircraft;

- the number of operators using a particular type of aircraft (which may
be reduced by bankruptcy or industry consolidation) and the supply of
that type of aircraft;

- legal or regulatory requirements that prevent re-leasing or selling that
type of aircraft;

- the discovery of manufacturing defects in an aircraft model; and

- new regulatory requirements relating to an aircraft model.

THE CONCENTRATION OF AIRCRAFT TYPES IN OUR PORTFOLIO COULD MAGNIFY THE IMPACT OF
DECLINES IN LEASE RATES OR AIRCRAFT VALUES AND ADVERSELY AFFECT OUR CASH FLOW.

As of March 31, 2003, each of the B737-400, MD-83 and A320-200 models of
aircraft comprised more than 10% of our portfolio by appraised value as of
January 31, 2003 and, in addition, each of the B737-300, B737-500, B767-300ER,
DC8, MD-11 and F-100 models of aircraft comprised more than 5% of our portfolio
by appraised value as of January 31, 2003. Furthermore, at March 31, 2003,
widebody aircraft comprised more than 15%, and turboprop aircraft comprised more
than 5% of our portfolio by appraised value as of January 31, 2003. The
concentration on particular models or types of aircraft magnifies the adverse
impact to our cash flow of a decline in lease rates or aircraft values for these
models or types of aircraft and of specific governmental or technical
regulations imposed on those aircraft types. In this connection, we have seen
(x) decreasing popularity of the turboprop aircraft, the cessation of production
of MD-83s and MD-11s, the reduction in demand for B767s including in particular
B767s powered by Pratt & Whitney engines, and the bankruptcy of Fokker, (y)
noise regulations restricting the use of Stage 2 aircraft which, as of March 31,
2003, accounted for approximately 3% of our portfolio by appraised value as of
January 31, 2003, and (z) Airworthiness Directives ("ADS") with respect to the
MD-80s, MD-11s and B737s, all as described more fully below in "-- The Aircraft,
Related Leases and Collateral." These events have caused, and are likely to
continue to cause, our overall lease rates and the aircraft values to
significantly decrease and may cause us to incur significant costs which would
further reduce our cash flow. Given the current oversupply of aircraft,
particularly newer types, the market for some of our older types of aircraft
such as MD-80s and F-100s may never recover to previous levels.

THE ACTUAL MARKET VALUE OF THE AIRCRAFT MAY BE LESS THAN THE APPRAISED VALUE AND
PROCEEDS FROM DISPOSITIONS OF THE AIRCRAFT MAY BE INADEQUATE TO MAKE PAYMENTS ON
THE NOTES AND CERTIFICATES.

The appraised values of the aircraft are determined based on the assumption
that there is an "open, unrestricted stable market environment with a reasonable
balance of supply and demand" and take into account long-term trends, including
current expectations of particular models becoming obsolete more quickly, as a
result of airlines switching to different models or manufacturers ceasing
production, and expected declines in lease rates. Appraised values for an
aircraft do not necessarily reflect the market value for the aircraft at a
specific time and you should not rely on appraised values as an indication of
the price that we could obtain if we sold an aircraft. The aircraft market is
cyclical and there may be imbalances of supply and demand at any one time,
especially for specific aircraft types. At the high point in the industry cycle,
the current market value of some
12

aircraft may be at or above their appraised values while the current market
value of others may be significantly less than their appraised values. At a low
point in the industry cycle such as we are experiencing currently, the current
market value of most aircraft types is likely to be less, or in many cases, much
less, than appraised values and neither market value nor appraised value should
be relied upon as a measure of realizable value. If we sell an aircraft to repay
the notes, the proceeds may be significantly less than its appraised value. In
that case we would have less cash to make payments on the notes to pass through
to the certificateholders. Market values may also be affected adversely by poor
market lease rates for aircraft at any given time.

SOME OF OUR LESSEES MAY EXERCISE PURCHASE OPTIONS AT PRICES THAT ARE LESS THAN
THE PROPORTIONATE SHARE OF THE UNPAID PRINCIPAL OF THE NOTES AND CERTIFICATES
ALLOCABLE TO THE RELEVANT AIRCRAFT THEREBY REDUCING CASH AVAILABLE TO US TO MAKE
PAYMENTS ON THE NOTES AND CERTIFICATES.

As of March 31, 2003, five lessees had options to purchase a total of 8
aircraft, representing 3.44% of our portfolio by appraised value as of January
31, 2003. It is likely that the purchase prices will be less than the
proportionate share of the unpaid principal of the notes and certificates
allocable to the aircraft being purchased. If those options are exercised, there
could be additional reductions in the amount, or a delay in the timing, of
payments on the notes and certificates.

WE MAY BE UNABLE TO REPOSSESS, RE-LEASE OR SELL THE AIRCRAFT IF THE LESSEES DO
NOT DISCHARGE LIENS ON THE AIRCRAFT, WHICH WOULD REDUCE CASH AVAILABLE TO US TO
MAKE PAYMENTS ON THE NOTES AND CERTIFICATES.

Liens which secure the payment of airport taxes, customs duties, air
navigation charges, landing charges, crew wages, repairer's charges or salvage
may attach to the aircraft in the normal course of operations. The sums which
these liens secure may be substantial and could exceed the value of the
aircraft. In some jurisdictions, a holder of aircraft liens may have the right
to detain, sell or cause the forfeiture of the aircraft. While our lessees are
generally required to discharge all liens arising during the term of their
leases, their failure to discharge any liens may impair our ability to
repossess, re-lease or sell the aircraft if the lessee defaults, which could
have an adverse effect on our cash flow.

OUR LESSEES MAY FAIL TO MAINTAIN REGISTRATION OF OUR AIRCRAFT, WHICH MAY AFFECT
THEIR ABILITY TO MAKE PAYMENTS TO US AND REDUCE OUR CASH AVAILABLE TO MAKE
PAYMENTS ON THE NOTES AND CERTIFICATES.

All aircraft in operation must be duly registered with an appropriate
aviation authority. If any lessee fails to maintain a valid registration of an
aircraft, the lessee operator or, in some cases, the owner or lessor may be
subject to penalties which may result in a lien being placed on the aircraft.
Loss of registration could also have other adverse effects, including grounding
of the aircraft and loss of insurance, which may prevent the aircraft from
generating cash flow and have an adverse effect on our ability to make payments
on the notes and certificates.

THE AVAILABILITY OF NEW, MORE TECHNOLOGICALLY ADVANCED AIRCRAFT MAY IMPAIR OUR
ABILITY TO RE-LEASE OR SELL AIRCRAFT AND REDUCE OUR CASH AVAILABLE TO MAKE
PAYMENTS ON THE NOTES AND CERTIFICATES.

The availability of newer, more technologically advanced aircraft could
adversely affect our ability to re-lease or sell our aircraft because lessees
and buyers of used aircraft tend to favor these newer, more technologically
advanced models. Within the last two years demand for some older narrowbody
Stage 3 aircraft, which make up a significant proportion of our portfolio, has
been adversely affected by the availability of new generation narrowbody Stage 3
aircraft. Although this risk is common to all aircraft lessors, it is
particularly significant for us because we have a comparatively older portfolio
and will need to re-lease all of our aircraft at least once before the final
maturity date of the certificates. Our ability to manage these technological
risks through modifications to aircraft and sales of aircraft is limited by the
significant costs of modifications and by the restrictions imposed on
modifications to and sale of aircraft under the indentures.
13

In addition, in light of the age of our fleet, should the current
oversupply of aircraft continue in the longer term, certain of our aircraft may
become obsolete earlier than the useful life expectancies assumed in the 2001
Base Case and/or we may be unable to realize the residual values assumed in the
2001 Base Case at the end of the useful lives of certain of our aircraft.

INCREASED REGULATION OF THE AIRCRAFT INDUSTRY MAY CAUSE US TO INCUR MORE
EXPENSES OR MAY IMPAIR OUR ABILITY TO RE-LEASE OR SELL AIRCRAFT AND REDUCE OUR
CASH AVAILABLE TO MAKE PAYMENTS ON THE NOTES AND CERTIFICATES.

The aircraft industry is heavily regulated and aviation authorities may
adopt additional regulations in jurisdictions where our aircraft are registered
or operate. In particular, governmental regulations, especially in North America
and Europe, impose increasingly strict noise and emissions levels and enhanced
safety and security requirements for aircraft, such as fire safety insulation,
traffic collision avoidance systems and emergency locator transmitters. We may
have to incur significant costs in order to comply with additional regulations.
In addition, because our portfolio is composed of a significant number of older
aircraft and we have a heavy concentration of some types of aircraft,
increasingly stringent noise or emissions regulations that disproportionately
affect older aircraft or particular types of aircraft, could have a significant
adverse impact on our results. We could incur significant costs in order to
comply with these regulations and aircraft that fail to comply with noise or
emissions regulations could be prohibited from flying into some jurisdictions,
which would adversely affect their values and lease rates. We will also incur
significant costs in connection with other U.S. Federal Aviation Administration
("FAA") regulations. For example, it will cost an estimated $13.3 million to
comply with the MD-11 and MD-80 fire safety regulations, $4.5 million of which
has been incurred to date in relation to ten aircraft.

RISKS RELATING TO THE LEASES AND CASH FLOWS FROM LEASE PAYMENTS

THE RENTAL PAYMENTS AND SALE PROCEEDS FROM THE AIRCRAFT MAY NOT BE ADEQUATE TO
SUPPORT THE REQUIRED PAYMENTS ON THE NOTES AND CERTIFICATES.

Our primary sources of cash flow are payments under the leases and proceeds
from the sale of aircraft. This cash flow is affected by our ability to manage
maintenance and other costs, collect payments under the leases and maintain a
constant stream of cash flows by re-leasing aircraft upon lease expiration or
termination and by selling aircraft on favorable terms. It is also dependent on
factors outside our control, such as performance by the lessees and the service
providers, exercise by lessees of any purchase or early termination options, and
external economic factors such as those discussed above under "Risk Factors --
Risks Relating to the Aircraft." It is therefore likely that we will not have
enough funds from these rental payments and sale proceeds to make payments in
full on the notes and certificates.

We have already executed a substantial number of rental restructurings,
typically involving the rescheduling of rental payments over a specified period
and/or the reduction of current rentals usually in return for extensions of the
relevant leases. These arrangements sometimes include forgiveness of amounts in
respect of rental arrears. While the servicer attempts to limit concessions, the
current worldwide commercial aircraft market is characterized not only by a
large number of weak lessees, but also by overcapacity of available aircraft in
almost every aircraft category and restructuring of leases is often the only way
to keep our aircraft in use and earning revenues. Reduced rentals as a result of
restructurings have already adversely affected and will continue to adversely
affect our ability to make payments on the notes and certificates.

The appraised value of our portfolio has declined at a rate greater than
that originally expected in our 1996 Base Case and our overall cash performance
has been weaker than was assumed in the 2001 Base Case. These factors, which
were exacerbated by the events of September 11, 2001 and the subsequent and
continuing political and economic fallout have led to the downgrading of all of
the certificates. If these conditions continue, cash flow available to make
payments on the notes and certificates will be reduced with the potential
consequences described above under "-- Risks Relating to Payment on the Notes
and Certificates."

14

OUR OPERATIONAL AND FINANCIAL RESTRICTIONS MAY AFFECT OUR ABILITY TO COMPETE AND
MAINTAIN THE CASH FLOW TO REPAY THE NOTES AND CERTIFICATES.

The indentures and constitutive documents of Airplanes Limited and
Airplanes Trust impose restrictions on how we operate our business. These
restrictions may limit our ability to compete against other lessors who are not
subject to similar restrictions or who have greater financial resources than we
do. For example, we are not permitted to grant concessionary rental rates to
airlines in return for equity investments in the airlines. Additionally, we
cannot sell aircraft at prices below a specified target price except in limited
circumstances and in limited aggregate amounts, which may restrict our ability
to sell aircraft to generate cash flow. For example, the current market value of
our MD-11s is below the specified target sales price, which prevents us from
selling these aircraft in compliance with the indenture requirements. See "The
Aircraft, Related Leases and Collateral -- The Lessees -- Commercial
Opportunities for our MD-11 Aircraft" below for more information on our MD-11
aircraft. There are also restrictions on potential lessees and limits on leasing
to lessees in particular geographic regions. Many competing aircraft lessors do
not operate under similar restrictions or have a stronger financial position or
other strengths and therefore have a competitive advantage over us when
negotiating leases and sales. These restrictions could adversely affect the
amount and timing of cash flows and payments on the notes and certificates.

As further discussed under "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Recent Developments", we have
resolved to undertake a consent solicitation seeking to amend the indentures to
permit sales below note target price where the board of directors of Airplanes
Limited or the controlling trustees of Airplanes Trust, as applicable have
unanimously confirmed that such a sale is in the best interests of Airplanes
Group and the noteholders and certain other conditions are met.

Whilst we expect that such an amendment of the indentures should help us
generate cash sales proceeds for aircraft that have little, if any, economic
future and enable us to eliminate expenditures on storage, insurance and
maintenance for those aircraft, any such sales will not yield proceeds which are
equivalent to a proportionate amount of the notes and certificates.

WE MAY NOT BE ABLE TO GENERATE SUFFICIENT FUNDS TO REPAY THE NOTES AND
CERTIFICATES IF WE CANNOT RE-LEASE AIRCRAFT QUICKLY AND ON FAVORABLE TERMS.

We may not be able to re-lease the aircraft upon expiration or termination
of the leases without incurring significant downtime. If we cannot quickly
re-lease the aircraft, or if we cannot obtain favourable rates and lease terms
for the aircraft, our cash flow could be negatively affected. Our ability to
re-lease aircraft at acceptable lease rates and terms may suffer because of a
number of factors, including:

- economic conditions affecting the airline industry;

- the supply of competing aircraft and demand for particular aircraft
types;

- increased bargaining power of lessees as they join global alliances with
other airlines;

- reduced number of potential lessees as airlines consolidate or file for
bankruptcy;

- competition from other lessors; and

- restrictions on our flexibility imposed by the indentures.

For the reasons discussed above and in "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Recent
Developments" the airline industry is suffering some of the worst times in
aviation history. Our cashflows are suffering as a result of an oversupply of
aircraft for lease, increased aircraft downtime and an overall decline in lease
rates. We cannot predict when, if at all for certain aircraft types, the market
will recover to previous levels.

15

The following table shows the number and type of aircraft as of March 31,
2003 that we must re-lease during the next five years. The table assumes that
(1) no lease terminates early, (2) there are no sales of aircraft and (3)
existing letters of intent will result in leases. Additional aircraft may need
to be re-leased if they become available through early terminations, if letters
of intent do not result in leases or if new leases are for short terms.

AIRPLANES GROUP EXPECTED LEASE PLACEMENT REQUIREMENT AS OF MARCH 31, 2003

Our longest lease is scheduled to expire in November 2012. Therefore we
will be required to re-lease all of our aircraft at least once before the final
maturity date for the certificates. We currently expect that the majority of our
fleet will prove difficult to re-lease because of the factors noted above
particularly turboprop aircraft, older widebody aircraft, Stage 2 aircraft and
some older Stage 3 narrowbody aircraft. If we cannot on a timely basis re-lease
the aircraft that are coming off lease or can only re-lease them at lease rates
lower than the lease rates assumed in our 2001 Base Case, cash flow available to
make payments on the notes and certificates will be reduced with the potential
consequences described above under "-- Risks Relating to Payment on the Notes
and Certificates." There are currently 41 aircraft which are scheduled to come
off lease within a year from March 31, 2003. Our forecasts assume that future
lease rates for many of these aircraft will be significantly lower than
currently contracted rates.

WE MAY NOT BE ABLE TO OBTAIN REQUIRED LICENSES, CONSENTS AND APPROVALS, AND
CONSEQUENTLY OUR CASH FLOW MAY BE REDUCED.

A number of lessees require specific licenses, consents or approvals for
different aspects of the lease. These include consents from governmental or
regulatory authorities to make payments under the leases and to the import,
re-export or de-registration of the aircraft. If we cannot obtain the required
governmental licenses,
16

consents and approvals, if these requirements are increased by subsequent
changes in applicable law or administrative practice, or if the licenses,
consents or approvals are withdrawn, we may be unable to re-lease or sell our
aircraft. In that case, our cash flow would be further reduced thereby adversely
affecting our ability to make payments on the notes and certificates.

LESSEES MAY NOT PERFORM REQUIRED AIRCRAFT MAINTENANCE, CAUSING THE AIRCRAFT
VALUES AND LEASE RATES TO DECLINE AND THEREBY REDUCING OUR CASH FLOW.

The standard of maintenance observed by our lessees and the condition of
the aircraft at the time of lease or sale may also affect the aircraft values
and lease rates on our aircraft. If a lessee fails to perform required or
recommended maintenance on an aircraft during the term of the lease or does not
comply with all applicable governmental requirements, the aircraft could be
grounded and we may incur substantial costs to restore the aircraft to an
acceptable maintenance condition before its re-lease or sale. Also, an
increasing number of lessees no longer provide any cash maintenance reserves. If
the lessees do not perform their maintenance obligations in any month, or if the
maintenance costs for any month exceed the maintenance payments made by the
lessees or are more than our maintenance reserves, we will have to fund these
maintenance costs out of cash flow from the leases for that month. As a result,
our cash flow may be volatile from month to month and it may harm our ability to
make payments on the notes and certificates after paying significant maintenance
costs, especially as the aircraft age.

OUR AIRCRAFT INSURANCE MAY NOT BE AVAILABLE OR MAY NOT BE ADEQUATE TO COVER THE
LOSSES OR LIABILITIES WE INCUR, REDUCING CASH OTHERWISE AVAILABLE TO MAKE
PAYMENTS ON THE NOTES AND CERTIFICATES.

Our lessees are required under the leases to maintain property and
liability insurance covering their operation of the aircraft and to indemnify us
against any damages. Although we believe that the required levels of insurance
are prudent and reasonable in the context of industry experience and practice,
we cannot guarantee that losses and liabilities from one or more aviation
accidents and other catastrophic events will not exceed the insurance coverage
limits. If the proceeds of insurance held by the lessees or contingent policies
held by us do not cover the losses or liabilities we incur, or if our lessees
default in fulfilling their insurance or indemnification obligations, we would
have to cover these losses or liabilities which would reduce cash flow available
to make payments on the notes and certificates.

The effects of the events of September 11, 2001, have included, amongst
other things, increased insurance premiums required by the insurance markets. In
particular, airlines worldwide continue to experience difficulties in
maintaining war insurance cover and some other types of insurance cover in the
amounts required under their leases with us and other lessors. These insurance
issues have been mitigated in certain jurisdictions by a number of temporary
government schemes and the emergence of a limited available insurance market,
however, failure by a lessee to obtain adequate insurance cover as required
under its lease could result in the relevant aircraft being grounded. This would
likely reduce our cash flows if, as a result, aircraft were returned early
and/or we do not receive rental payments from lessees which are affected by such
developments.

OUR HEDGING POLICY MAY NOT ADEQUATELY MANAGE OUR INTEREST RATE RISKS, INCLUDING
THE ASSOCIATED LESSEE CREDIT RISKS, AND WE MAY NOT BE ABLE TO PURCHASE AN
ADEQUATE PORTFOLIO OF SWAPTIONS IF REQUIRED TO MITIGATE OUR INTEREST RATE RISKS,
INCLUDING THE ASSOCIATED LESSEE CREDIT RISKS. IN THIS CASE, THERE COULD BE A
MISMATCH BETWEEN OUR FIXED AND FLOATING RATE ASSETS AND LIABILITIES WHICH COULD
REDUCE OUR CASH FLOW.

We manage our interest rate risks, including the associated lessee credit
risks, through the use of swaps and, as necessary, swaptions which we enter into
with third parties. However, our hedging policy may not adequately manage these
risks. Following consultation with the rating agencies in the year ended March
31, 2002, it is not currently proposed to purchase any further swaptions
primarily due to the low interest rate environment and our current cash flow
performance. If we do resume hedging through swaptions, we may have insufficient
cash flow available to purchase the total amount of any swaptions required. In
light of our current financial condition and
17

our current or future ratings, we may also be unable to find counterparties
willing to enter into swaps with us. If our hedging policy does not adequately
manage our interest rate risks, including the associated lessee credit risks, we
cannot find swap counterparties or we do not have sufficient cash flow to
purchase the total amount of any swaptions required, a mismatch between our
fixed and floating rate interest obligations and fixed and floating rate lease
receipts may arise, which could harm our cash flow and adversely affect our
ability to make payments on the notes and certificates.

See "Item 7A. Quantitative and Qualitative Disclosures about Market Risks
- -- Interest Rate Risk and Management" for a discussion of changes we have made
to our hedging policy.

WITHHOLDING TAXES MAY BE IMPOSED ON LEASE RENTALS, INCREASING OUR COSTS AND
REDUCING OUR CASH FLOW.

We have tried to structure our leases so that either withholding taxes do
not apply to lease payments or, if withholding taxes do apply, the lessees are
obliged to pay corresponding additional amounts so that we always receive the
full lease payment. However, if withholding taxes must be paid and we cannot
recover additional amounts from the lessees, that would further reduce funds
available to make payments on the notes and certificates.

RISK OF LESSEE DEFAULT

LESSEES IN WEAK FINANCIAL CONDITION COULD FAIL TO MAKE LEASE PAYMENTS, CAUSING
OUR REVENUES TO FALL BELOW THE LEVEL REQUIRED TO MAKE PAYMENTS ON THE NOTES AND
CERTIFICATES.

There is a significant risk that lessees in weak financial condition may
default on their obligations under the leases. If lessees do not make rent and
maintenance payments or are significantly in arrears, we will have less cash
flow available to make payments on the notes and certificates. The ability of
each lessee to perform its obligations under its lease depends primarily on its
financial condition, which may be affected by many factors beyond its control,
including competition, fare levels, passenger demand, currency exchange rates,
operating costs (including fuel and labor costs), cost and availability of
financing, and environmental and other governmental regulation. Because a
substantial portion of business and, especially, leisure airline travel is
discretionary, the general economic conditions of the geographic regions where
our lessees operate also affects their ability to meet their lease obligations.
Since the majority of our leases require lease payments in U.S. dollars, any
weakness in the local currency in which a lessee operates against the U.S.
dollar could also adversely affect its ability to pay us.

The prolonged downturn in the airline industry has resulted in a number of
airlines experiencing severe financial difficulties. Two major European carriers
(Sabena and Swissair) have since filed for bankruptcy, two major US carriers (US
Airways and United) have filed for bankruptcy and two of our lessees (one
Canadian and one Colombian) together representing 14.84% of our portfolio by
appraised value as of January 31, 2003, have also filed for bankruptcy. Other
major European and American carriers continue to announce large losses. We have
agreed to rental holidays, rental restructurings, the early return of aircraft
and similar measures for a number of lessees. You should expect that some of our
current or future lessees will continue to be in a weak financial position, and
a sizeable proportion of our lessees will continue to be in significant arrears
on their rental or maintenance payments at any particular time.

The current level of defaults and arrears may not even be representative of
future defaults and arrears, and defaults and arrears may increase if the
airline industry faces continued difficulties. Some regions where our lessees
are based, such as Asia or Latin America, may be more susceptible than others to
economic downturns. See "-- The Aircraft, Related Leases and Collateral -- The
Lessees" below for a more detailed discussion of the regional concentrations of
our lessees and economic conditions which may impact their financial condition
and ability to perform their obligations to us. Whatever the cause, any
financial weakness on the part of our lessees may result in reduced cash flows
available to us to make payments on the notes and certificates.

18

WE MAY NOT BE ABLE TO TERMINATE LEASES OR REPOSSESS AIRCRAFT WHEN A LESSEE
DEFAULTS, CAUSING US TO INCUR UNEXPECTED REPOSSESSION COSTS THAT REDUCE OUR CASH
FLOW.

If there is an event of default under a lease, we have the right to
terminate the lease and repossess the aircraft. However, it may be difficult,
expensive and time-consuming for us to enforce our rights in some circumstances,
especially if the lessee contests the termination or is bankrupt or under court
protection. Delays resulting from proceedings to repossess an aircraft add to
the period when the aircraft is not generating cash flow for us. In addition, we
may incur significant costs in trying to repossess an aircraft and in performing
maintenance and other work necessary to make the aircraft available for re-lease
or sale, including retrieval or reconstruction of aircraft records. We may also
incur swap breakage costs. Our efforts to repossess an aircraft following a
lessee's default may also be limited by the laws of the local jurisdiction which
may delay or prevent repossession. If we do terminate a lease and repossess the
aircraft, we may be unable to re-lease the aircraft promptly and/or at a
satisfactory lease rate. All of this may adversely affect the cash flow
available to make payments on the notes and certificates.

RISKS RELATING TO TAX

OWNING THE CERTIFICATES MAY HAVE TAX CONSEQUENCES FOR CERTIFICATEHOLDERS AND MAY
REDUCE CERTIFICATEHOLDERS' INCOME.

Ownership of the certificates may subject certificateholders to withholding
of income taxes in the United States, Jersey or other jurisdictions in which
Airplanes Group, its aircraft-owning and aircraft-leasing subsidiaries and the
lessees are organized, reside or operate. The tax consequences of the purchase
of the certificates depend to some extent upon certificateholders' individual
circumstances.

PRE-1998 AEROUSA LOSSES MAY NOT BE AVAILABLE TO OFFSET FUTURE TAXABLE INCOME OF
AEROUSA, AS A RESULT OF WHICH AEROUSA MAY HAVE TO PAY ADDITIONAL U.S. FEDERAL
INCOME TAX AND HAVE LESS CASH FLOW TO PAY AIRPLANES TRUST WHICH WILL HAVE LESS
CASH TO MAKE PAYMENTS ON THE NOTES AND CERTIFICATES.

AeroUSA had net operating loss carryforwards for U.S. federal income tax
purposes when GE Capital acquired all of the class E notes on November 20, 1998.
As a result of that acquisition, AeroUSA's pre-1998 net operating loss
carryforwards may only be utilized to offset up to $452,000 of taxable income
per year and possibly to offset certain "built in" gains (which existed at the
time of the acquisition) on aircraft sold prior to November 20, 2003. To the
extent that the pre-1998 net operating loss carryforwards are not available to
offset taxable income of AeroUSA in future years, AeroUSA will be required to
pay additional U.S. federal income tax which will reduce the amount available to
pay to Airplanes Trust and which will have a negative impact on the cash flow of
Airplanes Trust available to make payments on the notes and certificates.

AEROUSA MAY INCUR ADDITIONAL TAX LIABILITIES AS A RESULT OF FILING CONSOLIDATED
TAX RETURNS WITH GENERAL ELECTRIC COMPANY ("GE") OR DEBIS AIRFINANCE, INC. THERE
WILL BE A NEGATIVE IMPACT ON THE CASH FLOW OF AIRPLANES GROUP IF AEROUSA INCURS
ANY SUCH LIABILITIES.

AeroUSA and its wholly owned subsidiary, AeroUSA 3 Inc. (together, the
"AEROUSA GROUP"), filed U.S. federal consolidated tax returns and certain state
and local tax returns with GPA, Inc. (now known as debis AirFinance, Inc.) and
its subsidiaries (together, the "DEBIS AIRFINANCE U.S. TAX GROUP") through
November 20, 1998. Since November 20, 1998, the AeroUSA group has filed U.S.
federal consolidated tax returns and certain state and local tax returns with GE
and its subsidiaries (together, the "GE U.S. TAX GROUP"). As members of the
consolidated tax groups, the AeroUSA group is jointly and severally liable for
the applicable U.S. federal or state and local tax liabilities of the debis
AirFinance U.S. tax group for the period through November 20, 1998 and of the GE
U.S. tax group for the period since November 20, 1998. There are ongoing U.S.
federal, state and local tax audits with respect to taxes previously reported by
the debis AirFinance U.S. tax group.

19

GE, AeroUSA and Airplanes Trust have entered into a tax sharing agreement
pursuant to which GE has agreed to indemnify members of the AeroUSA group
against any U.S. federal, state or local tax liabilities of any member of the GE
U.S. tax group (other than an AeroUSA group member) which are imposed on the
AeroUSA group that are related to any tax period or portion of a tax period
beginning after November 20, 1998 and are tax liabilities that the AeroUSA group
would not have incurred if they were not members of the GE U.S. tax group.
Furthermore, under this tax sharing agreement, (1) AeroUSA has agreed to pay GE
(in cash if a payment is then due by the GE U.S. tax group to a tax authority,
otherwise in the form of subordinated non-interest bearing notes) its share of
tax liabilities based on the amount of tax liabilities that the AeroUSA group
would have incurred if it were not included in the GE U.S. tax group and (2) GE
has agreed to pay AeroUSA, at the time such tax savings are realized, an amount
equal to any tax savings by any member of the GE U.S. tax group (other than a
member of the AeroUSA group) for any tax period after November 20, 1998 as a
result of any tax asset generated by the AeroUSA group. Similar provisions
contained in a tax sharing agreement between GPA Group (now known as debis
AirFinance Ireland), GPA, Inc. (now known as debis AirFinance, Inc.), AeroUSA
and Airplanes Trust which terminated on November 20, 1998 remain applicable in
respect of tax periods ending on or before November 20, 1998.

The receipt by Airplanes Trust or AeroUSA of any amounts from GE, debis
AirFinance Ireland or debis AirFinance, Inc., as applicable, pursuant to the tax
sharing agreements will depend upon the financial condition and liquidity of GE,
debis AirFinance Ireland or debis AirFinance, Inc., as applicable, at the time
any claim is made. To the extent any tax claims are successfully made against
the AeroUSA group and those amounts are not indemnified by GE, debis AirFinance
Ireland or debis AirFinance, Inc. under the relevant tax sharing agreements,
those claims will have a negative impact on the cash flow available to Airplanes
Group to make payments on the notes and certificates. In addition, because the
notes and certificates are not secured directly or indirectly by the aircraft or
the leases, substantially all of the assets of the AeroUSA group, including the
aircraft, would be available for attachment and satisfaction of any of those
claims.

AIRPLANES LIMITED, AIRPLANES HOLDINGS AND AIRPLANES HOLDINGS' NON-U.S.
SUBSIDIARIES MAY BE SUBJECT TO U.S. FEDERAL INCOME TAX AS A RESULT OF ACTIONS OF
THE SERVICER OR ADMINISTRATIVE AGENT OR, IN THE CASE OF AIRPLANES HOLDINGS AND
ITS IRISH TAX RESIDENT AIRCRAFT OWNING SUBSIDIARIES, BECAUSE THEY MAY NOT
BENEFIT FROM THE U.S.-IRISH TAX TREATY, WHICH WOULD NEGATIVELY AFFECT THEIR CASH
FLOW.

Whether Airplanes Limited, Airplanes Holdings and Airplanes Holdings'
non-U.S. subsidiaries will be subject to U.S. federal income tax may depend on
the manner in which the activities of the servicer and administrative agent are
performed, and in the case of Airplanes Holdings and its Irish tax resident
aircraft owning subsidiaries, will depend on qualification for the benefits of
the income tax treaty between the United States and Ireland (the "TREATY").

Prior to GE Capital's acquisition of the class E notes, Airplanes Holdings
and its Irish tax resident aircraft owning subsidiaries qualified for treaty
benefits by virtue of a ruling obtained by AerFi Group (now known as debis
AirFinance Ireland) from the U.S. competent authority, which applied to AerFi
Group and its qualified affiliates. Following the acquisition of the class E
notes by GE Capital, Airplanes Holdings and its Irish tax resident aircraft
owning subsidiaries ceased to be affiliates of AerFi Group. Airplanes Holdings
applied for its own ruling on similar grounds to those on which the AerFi Group
ruling was based. On October 20, 2001, the ruling by the U.S. competent
authority was granted to Airplanes Holdings and its Irish tax resident aircraft
owning subsidiaries. There can be no assurance that the activities of the
servicer or the administrative agent will not subject Airplanes Limited,
Airplanes Holdings and Airplanes Holdings' non-U.S. subsidiaries to U.S. federal
income tax on some or all of their income in the future.

In the event that Airplanes Limited, Airplanes Holdings or Airplanes
Holdings' non-U.S. subsidiaries are subject to U.S. federal income tax on some
or all of their income, the cash flow available to make payments on the notes
and certificates would be reduced.

20

THE OPERATIONS OF AIRPLANES LIMITED, AIRPLANES TRUST AND AEROUSA MAY BECOME
SUBJECT TO IRISH CORPORATE TAXES WHICH WOULD REDUCE THEIR CASH FLOWS.

Airplanes Limited, Airplanes Trust and AeroUSA do not intend to be treated
as doing business in Ireland and, therefore, do not expect to be subject to
Irish corporate tax. However, if their operations differ from those intended,
they could become subject to Irish taxes.

WE WILL NOT PAY ANY ADDITIONAL AMOUNTS TO MAKE UP FOR ANY WITHHOLDING TAX THAT
MAY APPLY AND REDUCE THE AMOUNTS CERTIFICATEHOLDERS RECEIVE.

We will not make any additional payments to certificateholders for any
withholding or deduction required by applicable law on payments on either the
notes or the certificates. We will use reasonable efforts to avoid the
application of withholding taxes or other deductions. If withholding taxes
cannot be avoided, however, we have the right to redeem the notes and
certificates. If we do not redeem them, which is likely given our current
financial condition, we will reduce the net amount of interest that is passed
through to certificateholders by the amount of any withholding or deduction.

WE MAY LOSE IRISH CORPORATE TAX BENEFITS WHICH WOULD REDUCE OUR CASH FLOW AND
IMPAIR OUR ABILITY TO REPAY THE NOTES AND CERTIFICATES.

Airplanes Limited owns 95% of the capital stock of Airplanes Holdings and
GECAS owns the remaining 5%. The 5% shareholding by GECAS is intended to entitle
Airplanes Holdings and some of its Irish tax-resident subsidiaries to continue
to be eligible for a reduced rate of corporate tax and other corporate tax
benefits for Shannon, Ireland certified companies, including a preferential 10%
corporate tax rate. If GECAS reduces or relocates its operations for any reason
so that it fails to maintain, among other things, specified employment levels in
Ireland, or if GECAS resigns or its appointment is terminated in accordance with
the terms of the servicing agreement, then Airplanes Holdings and those other
companies (a) may become subject to Irish corporate taxation at general Irish
statutory rates, which are currently 12.5% for 2003 and subsequent years, and
(b) may lose the ability to deduct interest payments to Airplanes Limited from
their income in calculating their liability to Irish tax. The loss of these tax
benefits would likely have a materially adverse effect on Airplanes Limited's
ability to make payments on its notes and guarantees.

Upon the scheduled termination of the preferential 10% tax rate on December
31, 2005, Airplanes Holdings and its Irish tax resident subsidiaries will become
subject to Irish corporate tax on their net trading income, which would include
leasing income, at a 12.5% tax rate as provided for in the Irish Finance Act of
1999. There can be no assurance that this tax rate will not be changed in the
future.

RISKS RELATING TO BANKRUPTCY

OUR ASSETS MAY BE CONSOLIDATED WITH THOSE OF DEBIS AIRFINANCE IRELAND OR ITS
SUBSIDIARIES IF THEY BECOME BANKRUPT OR INSOLVENT, LEAVING FEWER ASSETS
AVAILABLE TO REPAY THE CERTIFICATES.

We have taken steps to structure Airplanes Group and our transactions,
especially the 1996 transaction whereby we acquired our portfolio of aircraft
from GPA Group (now known as debis AirFinance Ireland), to ensure that our
assets would not be consolidated with the assets of debis AirFinance Ireland and
would not become available to debis AirFinance Ireland's creditors in any
bankruptcy or insolvency proceeding involving debis AirFinance Ireland or any of
its affiliates. If debis AirFinance Ireland or any of its subsidiaries becomes
bankrupt or insolvent, there is a legal risk that a court or other authority
could decide that these steps were not effective to insulate our assets from
debis AirFinance Ireland's assets or that debis AirFinance Ireland's transfer of
aircraft to us in 1996 was improper. As a result, the aircraft and our other
assets could become available to repay debis AirFinance Ireland's creditors and
we could lose all of our rights in the aircraft and our other assets. If that
happens, we would have less cash flow available to make payments on the notes
and certificates.

21

THE AIRCRAFT, RELATED LEASES AND COLLATERAL

OVERVIEW

As of March 31, 2003, our portfolio comprised a total of 179 aircraft, of
which 158 aircraft were on lease to 55 lessees in 31 countries and 21 aircraft
were off-lease. At March 31, 2003, two of these off-lease aircraft were subject
to letters of intent for lease and one was subject to a lease contract. As of
the date of this Form 10-K, one of the aircraft subject to letter of intent for
lease had delivered to the lessee and one letter of intent for lease had expired
without going to contract but this aircraft has since become subject to a new
letter of intent for lease, and the aircraft subject to a lease contract had
delivered to the lessee. Three of the eighteen unplaced off-lease aircraft had
become subject to letters of intent for lease, one had become subject to a lease
contract, two aircraft had become subject to a contract for sale, one aircraft
had been sold and the remaining eleven aircraft were available for marketing.
Since March 31, 2003, a further five aircraft have become off-lease and are
available for marketing. As of March 31, 2003, the weighted average remaining
contracted lease term of our portfolio (by appraised value as of January 31,
2003 and without giving effect to purchase options or extension options) was 24
months. Our longest lease is scheduled to expire in November 2012. Therefore we
will be required to re-lease all of our aircraft at least once before the final
maturity date of the certificates. See "Risk Factors -- Risks Relating to the
Leases and Cash Flows for Lease Payments" for a description of the risks
certificateholders could face if aircraft are not re-leased.

APPRAISALS

Under the indentures, we are required, at least once each year and in any
case no later than March 1 of each year, to deliver to the indenture trustee
appraisals of the value of each of the aircraft in our portfolio from at least
three independent appraisers. This value (the "APPRAISED VALUE") for each
aircraft is the value for that aircraft at normal utilization rates in an open,
unrestricted and stable market, adjusted to take account of the reported
maintenance standard of that aircraft, except for the aircraft that are subject
to finance leases, which are valued at their lease receivable book values. The
appraisals are not based on physical inspection of the aircraft and do not take
into account the value of the leases, maintenance reserves or security deposits.

For the appraisals as of January 31, 2003, we obtained independent
appraisals from three independent appraisers and calculated the appraised value
of each aircraft by taking the average of the three appraisals. On this basis,
the average appraised value for our portfolio of 179 aircraft was approximately
$2,422.9 million as of January 31, 2003, as compared to $2,772.7 million for the
same 179 aircraft based on appraisals as of January 31, 2002.

The appraised value of each aircraft in our portfolio by each of the three
independent appraisers as of January 31, 2003 can be found in "Airplanes Group
Portfolio Analysis" below. The aggregate appraised values calculated by each of
the three independent appraisers for our portfolio, calculated by adding up the
appraised value by that appraiser of each aircraft in our portfolio, are as
follows:

You should not rely on the appraised value as a measure of the realizable
value of any aircraft. See "Risk Factors -- Risks Relating to the Aircraft" for
a discussion of the risks associated with the appraised value.

22

PORTFOLIO INFORMATION

The tables set forth below summarize important information about our
portfolio. For a more detailed analysis of the aircraft, see "--Airplanes Group
Portfolio Analysis" below.

As of March 31, 2003, 97.47% of the aircraft in our portfolio by appraised
value as of January 31, 2003 held or were capable of holding a noise certificate
issued under Chapter 3 of Volume 1, Part II of Annex 16 of the Chicago
Convention or have been shown to comply with the Stage 3 noise levels set out in
Section 36.5 of Appendix C of Part 36 of the United States Federal Aviation
Regulations (assuming for this purpose that turboprop aircraft are Stage 3
aircraft). We refer to this as being "STAGE 3" compliant and call these aircraft
"STAGE 3 AIRCRAFT."

The remaining 2.53% of the aircraft by appraised value as of January 31,
2003 held or were capable of holding a noise certificate issued under Chapter 2
of the Chicago Convention or have been shown to comply with the Stage 2 noise
levels set out in Section 36.5 of Appendix C of Part 36 of the United States
Federal Aviation Regulations but do not comply with the requirements for a Stage
3 aircraft. We refer to this as being "STAGE 2" compliant and call these
aircraft "STAGE 2 AIRCRAFT." Most jurisdictions have adopted these U.S.
classifications, which consider Stage 2 aircraft that have been hushkitted to be
Stage 3 aircraft. For purposes of the table below, Stage 2 aircraft that have
been hushkitted are considered to be Stage 3 aircraft and referred to as "STAGE
3HK."

The following table lists the aircraft by type and number as of March 31,
2003 and the percentage of our portfolio they represent by appraised value as of
January 31, 2003. For the purpose of this table, turboprop aircraft are
considered to be Stage 3 aircraft.

23

The following table sets forth the exposure of our portfolio by lessee as
of March 31, 2003 according to the number of aircraft and the appraised value as
of January 31, 2003.

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

(1) Total number of lessees = 55

(2) As of March 31, 2003, two of the twenty one off-lease aircraft were subject
to letters of intent for lease to new lessees and one aircraft was subject
to a lease contract. As of the date of this Form 10-K, one aircraft subject
to a letter of intent for lease at March 31, had been delivered to the
lessee, one letter of intent had expired without going to contract but this
aircraft has since become subject to a new letter of intent for lease, and
the aircraft subject to a lease contract has delivered to the lessee. Three
of the eighteen unplaced off-lease aircraft had become subject to letters
of intent for lease, one had become subject to a lease contract, two
aircraft had become subject to a contract for sale, one aircraft had been
sold and eleven aircraft were available for marketing. Since March 31,
2003, a further five aircraft have become off-lease, and were available for
marketing.

24

The following table sets forth the exposure of our portfolio by country of
domicile of lessees as of March 31, 2003 according to the number of aircraft and
the appraised value of the portfolio as of January 31, 2003.

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

(1) Total number of countries = 31

(2) As of March 31, 2003, two of the twenty one off-lease aircraft were subject
to letters of intent for lease to lessees in Canada and Kenya and one
aircraft was subject to a lease contract to a lessee in the United Kingdom.
As of the date of this Form 10-K, one of the aircraft subject to a letter
of intent for lease had been delivered to the lessee in Canada, the letter
of intent for lease to the lessee in Kenya expired without going to
contract but this aircraft has since become subject to a letter of intent
for lease to a lessee in Portugal, and the aircraft subject to the lease
contract had delivered to the lessee in the United Kingdom. Three of the
eighteen unplaced off-lease aircraft had become subject to letters of
intent for lease, one in Brazil and two in Cameroon, one aircraft had
become subject to a lease contract to a lessee in the Slovak Republic, two
aircraft had become subject to a contract for sale, one aircraft had been
sold and eleven aircraft were available for marketing. Since March 31,
2003, a further five aircraft have become off-lease and were available for
marketing.

25

The following table sets forth the exposure of our portfolio by regions in
which lessees are domiciled as of March 31, 2003 according to the number of
aircraft and the appraised value of our portfolio as of January 31, 2003.

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

(1) As of March 31, 2003, two of the twenty one off-lease aircraft were subject
to letters of intent for lease to lessees in North America and Africa and
one aircraft was subject to a lease contract to a lessee in Europe. As of
the date of this Form 10-K, one of the aircraft subject to a letter of
intent for lease had been delivered to the lessee in North America, the
letter of intent for lease to the lessee in Africa expired without going to
contract but this aircraft has since become subject to a letter of intent
for lease in Europe, and the aircraft subject to the lease contract had
delivered to the lessee in Europe. Three of the eighteen unplaced off-lease
aircraft had become subject to letters of intent for lease, one in Latin
America and two in Africa, one aircraft had become subject to a lease
contract to a lessee in Europe, two aircraft had become subject to a
contract for sale, one aircraft had been sold and eleven aircraft were
available for marketing. Since March 31, 2003, a further five aircraft have
become off-lease and were available for marketing.

The following table sets forth the exposure of the portfolio by year of
aircraft manufacture or conversion to freighter as of March 31, 2003 according
to the number of aircraft and the appraised value of the aircraft as of January
31, 2003. See note 2 to "Airplanes Group Portfolio Analysis" below for the
original manufacture dates for the aircraft that were converted into freighters.

26

The following table sets forth the exposure of the portfolio by seat
category as of March 31, 2003 according to the number of aircraft and the
appraised value of the portfolio as of January 31, 2003.

27

AIRPLANES GROUP PORTFOLIO ANALYSIS
AT MARCH 31, 2003

31

- ---------------
Note:

(1) For the aircraft listed below, the table above reflects the date of
conversion to a freighter configuration. The following table sets forth the
date of original manufacture for those aircraft.

(2) As of March 31, 2003, two of the off-lease aircraft (MSN 49943/25411) were
subject to letters of intent for lease to lessees in Canada and Kenya and
one aircraft (MSN 26151) was subject to a lease contract. As of the date of
this Form 10-K, one of the aircraft subject to the letters of intent for
lease at March 31, had been delivered to the lessee in Canada while the
other letter of intent expired without going to contract but this aircraft
has since become subject to a new letter of intent for lease and the
aircraft subject to the lease contract had delivered to the lessee. Of the
eighteen unplaced off-lease aircraft, three aircraft had become subject to a
letters of intent for lease, one in Brazil and one in Cameroon, one aircraft
had become subject to a lease contract to a lessee in the Slovak Republic,
two aircraft had become subject to a contract for sale, one aircraft had
been sold and eleven aircraft were available for marketing. Since March 31,
2003, a further five aircraft had become off-lease, and were available for
marketing.

32

THE LEASES

Most of the leases are operating leases under which we generally retain the
benefit, and bear the risk, of the residual value of the aircraft at the end of
the lease. As of March 31, 2003, 158 aircraft were on lease and twenty one
aircraft were off-lease. As of March 31, 2003, two of these off-lease aircraft
were subject to letters of intent for lease and one was subject to a lease
contract. The remaining eighteen unplaced aircraft represented 5.71% of our
portfolio by appraised value as of January 31, 2003. As of the date of this Form
10-K, one of the aircraft subject to the letter of intent for lease had been
delivered to the lessee and the other letter of intent expired without going to
contract, one of the eighteen unplaced off-lease aircraft had become subject to
a letter of intent for lease, two aircraft had become subject to a letter of
intent for sale, one aircraft had been sold and fourteen aircraft were available
for marketing. Since March 31, 2003, a further four aircraft had become
off-lease, and were available for marketing. All leases are managed by the
servicer according to the servicing agreement.

Although the lease documentation is fairly standardized in many respects,
significant variations do exist as a result of negotiation with each lessee.

Under a majority of our leases, the lessee is responsible, either directly
or through indemnification of the lessor, for all operating expenses, including
maintenance, operating, overhaul, fuel, crews, airport and navigation charges,
taxes, licenses, consents and approvals, aircraft registration and hull and
liability insurance. In addition, the lessees must remove all liens on the
aircraft except liens that are permitted by the lease.

Each of our current leases requires the lessee to make periodic rental
payments during the term of the lease. Some of the leases also require the
lessee to pay periodic amounts as maintenance reserves or to deliver letters of
credit or guarantees for this purpose. Almost all the leases require the lessees
to make payments to us without set-off or counterclaim, and most of them include
an obligation for the lessee to gross-up payments under the lease if the lease
payments are subject to withholding or other taxes. The leases also generally
contain indemnification of the lessor for tax liabilities such as value added
tax and stamp duty tax, but not income tax.

Each lease also contains provisions which specify our rights and remedies
if the lessee defaults in making payments or performing its other obligations
under the lease. These remedies include terminating the lease and repossessing
the aircraft. However, any default by a lessee may lead to reduction of payments
under the leases and cause us to incur significant repossession and other costs,
including breakage costs under swaps. If there is an event of default due to a
lessee's bankruptcy, we may also face delays in asserting our rights if the
relevant jurisdiction imposes a mandatory waiting period between default and
repossession.

The following is a summary of the principal terms of the leases as of March
31, 2003, with reference to appraised values as of January 31, 2003.

LEASE TERM................. As of March 31, 2003, the weighted average
remaining contracted lease term of the aircraft
(weighted by appraised value as of January 31, 2003
and without giving effect to purchase options,
early terminations or extensions) was 24 months.
The longest lease was scheduled to expire in
November 2012.

RENTALS.................... As of March 31, 2003, rent under 143 of the leases,
representing 79.72% by appraised value of our
portfolio as of January 31, 2003, was payable
monthly in advance, and rent under 15 of the
leases, representing 10.72% by appraised value of
our portfolio as of January 31, 2003, was payable
monthly in arrears.

These rental payments are calculated based on a
floating rate or a fixed rate or may change from
one to the other over the course of the lease. The
rent under all of the leases is currently payable
in U.S. dollars, although in the future, rent on
some new leases may be payable in euros. Some
rental payments are based on the number of flight
hours an aircraft is operated or may vary depending
on the time of year during which the aircraft is
operating.

EXTENSION OPTIONS.......... Some of the leases contain an extension option
pursuant to which, depending on the negotiations
with the lessee at the time of signing of the
lease, either we or the lessee could extend the
term of the lease at either the
33

existing lease rate or at the future market rate.
As of March 31, 2003, 14 of the leases representing
13.57% of our portfolio by appraised value as of
January 31, 2003, included an extension option.

EARLY TERMINATION
OPTIONS.................... Some of the leases contain an early termination
option pursuant to which the lessee may terminate
the lease before the scheduled expiration date if
specified conditions are met. As of March 31, 2003,
31 of the leases representing 17.88% of our
portfolio by appraised value as of January 31, 2003
include an early termination option. Assuming that
all these options are exercised for the earliest
possible termination, the weighted average
remaining lease term of our portfolio would be 26
months.

PURCHASE OPTIONS........... As of March 31, 2003, five lessees had outstanding
options to purchase a total of eight aircraft,
representing 3.44% of our portfolio by appraised
value as of January 31, 2003. The latest date on
which a purchase option could be exercised is
November 4, 2006 for a purchase of a B767-200ER.

SECURITY DEPOSITS.......... As of March 31, 2003, lessees under 142 of the
leases representing 82.8% of our portfolio by
appraised value as of January 31, 2003 have
provided security for their obligations. As of
March 31, 2003, we had $30 million in cash security
deposits in respect of 108 aircraft representing
60.32% of our portfolio by appraised value as of
January 31, 2003, and $95 million in letters of
credit in respect of 50 aircraft representing
35.90% of our portfolio by appraised value as of
January 31, 2003.

GUARANTEES................. In 45 of the leases, we have received guarantees of
the lessee's performance obligations under the
lease. These guarantees were issued by the lessee's
parent company or shareholders.

MAINTENANCE................ The leases contain detailed provisions specifying
maintenance standards and aircraft redelivery
conditions generally to be met at the lessees'
expense. During the term of each lease, we require
the lessee to maintain the aircraft in accordance
with an agreed maintenance program designed to
ensure that the aircraft meets applicable
airworthiness and other regulatory requirements.
Lessees must provide monthly maintenance reserves
under approximately 118 of the leases. Under the
balance of the leases, the lessee or the lessor may
be required to make certain adjustment payments to
one another if at redelivery the aircraft or
specified items do not meet the required standards
under the lease. Heavy maintenance on significant
components of an aircraft, such as the airframe and
the engines, is generally required to be performed
on a cycle of several years and the cost of this
maintenance may be material in relation to the
value of the aircraft, with the overhaul of a
single component often exceeding $1 million.
Pursuant to the leases, if and when an aircraft is
transferred from one lessee to another between
maintenance overhauls, the transferring lessee is
generally required to pay for that portion of the
succeeding overhaul that can be attributed to its
use of the aircraft under its lease.

Depending on the credit of the lessee and other
factors, we may require that the lessee pay cash
maintenance reserves (82 leases as of March 31,
2003, representing 50.99% of our portfolio by
appraised value as of January 31, 2003) or provide
a combination of maintenance reserves and letters
of credit or guarantees (17 leases as of March 31,
2003, representing 10.79% of our portfolio by
appraised value as of January 31, 2003). If the
lessee pays maintenance reserves, we will have to
reimburse it for maintenance it actually performs
on the aircraft. Our obligation to reim-

34

burse maintenance is classified as an expense and
therefore ranks senior to any payments on the notes
and certificates.

If the lessee is not required to pay maintenance
reserves or provide letters of credit or
guarantees, we have to rely on the lessee's credit
and its ability to maintain the aircraft during the
lease term and return it in good condition or make
any maintenance payments required at the end of the
lease. If maintenance is required on the aircraft
but not performed, or the lessee fails to pay, we
have to fund this maintenance ourselves. As of
March 31, 2003, we recorded approximately $275
million of maintenance reserves liability.

Maintenance payments by lessees will depend upon
numerous factors including the financial condition
of the lessee and the ability of Airplanes Group to
obtain satisfactory maintenance terms in leases. An
increasing number of leases do not provide for any
maintenance payments to be made by lessees as
security for their maintenance obligations. Any
significant variations in these factors may
materially adversely affect the ability of
Airplanes Group to make payments of interest,
principal and premium, if any, on the notes and
certificates.

REDELIVERY CONDITIONS...... At least 90% of the leases provide for the aircraft
to be redelivered in a specified condition upon
expiration of the lease and/or stipulate the
payments to be made by the lessee to us or, in some
cases, by us to the lessee, to reflect the extent
to which the actual redelivery condition of the
aircraft falls below or exceeds the redelivery
condition specified in the lease.

INSURANCE.................. The lessees bear responsibility through an
operational indemnity to carry insurance for
liabilities arising out of the operation of the
aircraft. The indemnity includes liabilities for
death or injury to persons and damage to property
that ordinarily would attach to the operator of the
aircraft. The lessees are also required to carry
comprehensive liability insurance and hull
insurance, and any further insurance that is
customary in the commercial aircraft industry, and
to indemnify us against all liabilities, including
where the liability to us as owner and lessor
attaches by law. We are required under the leases
to be named as an additional insured on hull and
liability policies. Most of the leases also require
the lessee to maintain the liability insurance for
a specified period between one and three years
after termination of that lease. Under the
servicing agreement, the servicer is required to
monitor the lessees' performance of obligations
with respect to the insurance provisions of the
applicable leases. We also carry contingent hull
and liability insurance consistent with industry
practice which acts as a backup for Airplanes
Group's interests in instances where a lessee's
policy lapses or when the insurable loss is in
excess of the lessee's coverage. The amount of the
contingent liability policies may not be the same
as the insurance required under the lease. The
amount of war third party contingent insurance and
other types of cover are subject to a number of
limitations imposed by the aviation insurance
industry particularly following the terrorist
attacks of September 11, 2001.

Most insurance certificates contain a breach of
warranty endorsement so that an additional insured
party remains protected even if the lessee violates
any of the terms, conditions or warranties of the
insurance policies, provided that the additional
insured party has not caused, contributed to or
knowingly condoned the breach.

35

THIRD PARTY LIABILITY
INSURANCE................ The minimum third party liability limits under the
leases range from $250 million in respect of
turboprop aircraft to $750 million in respect of
widebody aircraft. In some cases, the lessee
carries more insurance than the minimum specified
in the lease. We also have in place our own
contingent liability coverage to cover any
liability in excess of the lessee's coverage or any
liability resulting from a lapse for any reason of
a lessee's coverage. Following the terrorist
attacks of September 11, 2001, the aviation
insurance markets applied a $50 million limit on
war third party (non-passenger) liability
insurance. We require lessees to either buy
additional insurance in the commercial markets or
obtain equivalent protection under applicable
governmental schemes. These insurance issues have
been mitigated in certain jurisdictions by a number
of temporary government schemes and the emergence
of limited available insurance markets, however,
failure by a lessee to obtain adequate insurance
cover as required under its lease could result in
the relevant aircraft being grounded. This would
likely reduce our cash flows if as a result
aircraft were returned early and/or we do not
receive rental payments from lessees which are
affected by such developments.

AIRCRAFT PROPERTY
INSURANCE.................. In all cases, the sum of the stipulated loss value
and our own additional coverage in place is at
least equal to the appraised value of the aircraft.
Permitted deductibles, which generally apply only
in the case of a partial loss, range from $50,000
for turboprop aircraft to $1 million for widebody
aircraft. Following insurance market developments
in the aftermath of the terrorist attacks of
September 11, 2001, the insurance market, on
January 1, 2002, ceased offering cover for
Confiscation by the State of Registration (as
required under the majority of leases). Such cover
is becoming available again, but at increased
costs, with imposed conditions and only for certain
jurisdictions. Such cover may become generally
available in the future. However, the lack of
general availability of cover for Confiscation by
the State of Registration risk means that this
requirement may not be currently satisfied under
all of the leases.

POLITICAL RISK INSURANCE... With respect to some leases, we may arrange
separate political risk repossession insurance for
our own benefit, covering (a) confiscation,
nationalization and requisition of title of the
relevant aircraft by the government of the country
of registration and denegation and deprivation of
legal title and rights, and (b) the failure of the
authorities in that country to allow
de-registration and export of the aircraft, subject
to the conditions of the policies.

SUBLEASES AND WET LEASES... Under most of our current leases, the lessee may
sublease the aircraft without our consent if
specified conditions are met. Under most of our
current leases, the lessee may also "WET LEASE" the
aircraft (leasing the aircraft to another airline
with a crew and services provided by the lessee)
without our consent so long as the lessee does not
part with operational control of the aircraft.
Where there is a sublease or a wet lease, the
lessee remains fully liable to us for all its
payment and performance obligations under the lease
and we have no contractual relationship with the
sublessee or the wet lessee. Leases with new
lessees are based on a pro forma lease that
includes restrictions on subleases and wet leases
into specified prohibited countries.

36

COMPLIANCE WITH GOVERNMENTAL AND TECHNICAL REGULATION

In addition to the general requirements regarding maintenance of the
aircraft, aviation authorities from time to time issue ADs requiring the
operators of aircraft to take particular maintenance actions or make particular
modifications with respect to all aircraft of a particular type. Manufacturer
recommendations may also be issued. To the extent that a lessee fails to perform
ADs that are required to maintain its certificate of airworthiness or other
manufacturer requirements in respect of an aircraft (or if the aircraft is not
currently subject to a lease), Airplanes Group may have to bear or share (if the
lease requires it) the cost of compliance. Other governmental regulations
relating to noise and emissions levels may be imposed not only by the
jurisdictions in which the aircraft are registered, including as part of the
airworthiness requirements, but also in other jurisdictions where the aircraft
operate. A number of jurisdictions including the United States have adopted, or
are in the process of adopting, noise regulations which ultimately will require
all aircraft to comply with the most restrictive currently applicable standards.
Some of the jurisdictions that impose these regulations restrict the future
operation of aircraft that do not meet Stage 3 noise requirements and prohibit
the operation of those aircraft in those jurisdictions. As 2.82% of our
portfolio by appraised value as of January 31, 2003 did not meet the Stage 3
requirements as of March 31, 2003, these regulations may adversely affect
Airplanes Group because our non-compliant aircraft will not be able to operate
in those jurisdictions and we may incur substantial costs to comply with the
Stage 3 requirements.

Moreover new ADs or noise or emissions reduction requirements may be
adopted in the future and these could result in significant costs to Airplanes
Group or adversely affect the value of, or our ability to re-lease, Stage 2 or
Stage 3 aircraft. In particular, certain organizations and jurisdictions are
currently considering "STAGE 4" requirements which would tighten noise and
emissions certification requirements for newly manufactured aircraft. If these
more restrictive requirements are adopted or applied to existing aircraft types,
it could result in significant costs to Airplanes Group or adversely affect the
value of, or our ability to re-lease, aircraft in our portfolio.

Volume 2 of Annex 16 of the Chicago Convention also contains standards and
recommendations regarding limitations on vented fuel and smoke and gaseous
emissions for aircraft. While a number of countries have adopted regulations
implementing these recommendations, these regulations generally have been
prospective in nature, requiring only that newly manufactured engines meet
particular standards after a particular date. To the extent that these
regulations require modifications to the engines owned by Airplanes Group, they
would be treated similarly to ADs under the leases.

Aviation authorities in Europe and North America have adopted regulations
requiring the installation of traffic collision avoidance systems, automatic
emergency locator transmitters and various other systems. Depending on whether
the costs of complying with these regulations are borne by us or the lessees,
installation of these systems could result in significant cash capital
expenditures by Airplanes Group in the future. In addition to the ADs discussed
below, we currently expect that the FAA and other aviation authorities may issue
further ADs to improve security on aircraft.

One new requirement is the installation of enhanced Ground Proximity
Warning System ("GPWS") in all aircraft by 2005, which has been mandated by the
FAA and the European Joint Airworthiness Authorities. GPWS is an avionics system
which detects an aircraft's proximity to the earth. The enhanced version enables
the system to correlate the aircraft's current position with a database of
obstructions in the horizontal plane (high mountain peaks, buildings, antennae
etc). All new generation Airbus and Boeing aircraft have GPWS and require only a
software upgrade. For the majority of our aircraft, installation of GPWS will
require the full modification, some of which we expect will be completed under
cost sharing arrangements with lessees. The estimated cost to implement this
modification is $120,000 per aircraft. To the extent that compliance with this
or any further such ADs is not the responsibility of lessees under their leases,
or if the aircraft are not on lease, we may incur significant costs, which could
impact adversely our results of operations.

The FAA issued an AD concerning insulation for the purpose of increasing
fire safety on MD-80 and MD-11 aircraft. At March 31, 2003, 29 aircraft
representing 19.37% of the portfolio by appraised value as of January 31, 2003,
were MD-11s and MD-80s. We will incur significant costs in ensuring these
aircraft comply with these standards. It is estimated that the necessary
modification of the 29 aircraft will cost approximately $13.3 million.
37

To date, we have completed the modification of ten aircraft at a cost of $4.5
million. We expect to complete the modification of a further thirteen aircraft
by March 31, 2004 at an estimated cost of approximately $6.0 million and to
modify the remaining six aircraft by December 31, 2005 at an estimated cost of
$2.8 million.

The FAA has issued an AD mandating the modification of affected lap joints
on Boeing 737 aircraft when an aircraft has completed 50,000 cycles. The
estimated cost to implement those modifications for each aircraft is
approximately $230,000. Based on the current cycles completed to date, our 58
Boeing 737 aircraft, representing 34.99% of our portfolio by appraised value at
January 31, 2003, are not likely to require these modifications prior to 2007.
However, after that date we will incur significant costs in ensuring our Boeing
737 aircraft comply with these standards, which could impact adversely our
results of operations.

The FAA has issued an AD affecting all Boeing 737 aircraft, mandating the
installation of a new rudder power control unit and changes to adjacent systems
in order to rectify an unsafe condition which has led to a jammed or restricted
control of the rudder in the past. The average cost per aircraft of these
modifications is expected to be approximately $184,000 and is to be completed
before November 2008. If the costs are not the responsibility of some or all
lessees under their leases, or if the aircraft are not on lease, we could incur
significant costs in ensuring that our 58 Boeing 737 aircraft comply with these
modifications, which could impact adversely our results of operations.

In light of the events of September 11, 2001, the FAA has issued Special
Federal Aviation Regulation Amendments mandating the installation of ballistic
and blunt impact resistance flight doors allowing for controlled cockpit access
as well as emergency ingress and egress to and from the cockpit before April
2003. Other aviation authorities are expected to mandate similar requirements
before November 2003. The estimated cost varies across aircraft type depending
on the current door configuration but averaging approximately $40,000. There may
be further requirements in this area relating to transponder upgrades and on
board video surveillance systems in the near future. As regulations currently
stand the majority of aircraft will be modified by the lessee with no cost to
us. However such requirements may increase remarketing costs for aircraft
currently off-lease or which are returned to us over the next twelve months.

THE LESSEES

As of March 31, 2003, 158 of our aircraft were on lease to 55 lessees in 31
countries throughout the world. See "-- Portfolio Information" for the countries
and regions where our lessees reside.

A number of our lessees are in a relatively weak financial position. As of
March 31, 2003, amounts outstanding for a period greater than 30 days in respect
of rental payments, maintenance reserves and other miscellaneous amounts due
under the leases (net of amounts in respect of default interest and cash in
transit) amounted to $9 million in respect of 12 lessees (who leased a combined
total of 42 aircraft representing 25.33% of our portfolio by appraised value as
of that date) and $5.8 million in respect of six former lessees. Of the total
$14.8 million, $5.4 million was in arrears for a period between 30 and 60 days,
$2.9 million was in arrears for a period between 60 and 90 days and $6.5 million
was in arrears for a period greater than 90 days. Some of these lessees have
consistently been significantly in arrears in their respective rental payments
and many are known to be currently experiencing financial difficulties including
two lessees, representing 14.84% of our portfolio by appraised value as of
January 31, 2003 which have filed for bankruptcy protection in the U.S. in
recent months.

As of March 31, 2003, in addition to the $14.8 million in respect of
payments past due more than 30 days, we had agreed to allow five lessees to
defer rent, maintenance and miscellaneous payments totaling $17.7 million for
periods ranging from nineteen months for one lessee in respect of $0.1 million
and up to 58 months for one lessee in respect of $7.3 million. Restructurings
have typically involved delaying rental payments for certain periods and/or the
reduction of current rentals usually in exchange for extensions of the relevant
leases. In addition, some restructurings have involved forgiveness of amounts of
past due rent, voluntary terminations of leases prior to lease expiration, the
replacement of aircraft with less expensive aircraft and the arrangement of
subleases from the lessee to another aircraft operator. In other cases, it has
been necessary to repossess aircraft from lessees which have defaulted and
re-lease the aircraft to other lessees. While the servicer attempts to limit
concessions, the current international commercial aircraft market is
characterized not only by a large number of weak lessees, but also by
overcapacity of available aircraft in every aircraft category and restructuring
of leases is
38

often the only way to keep our aircraft in use and earning revenues. The
servicer is still pursuing negotiations with some lessees and we expect further
restructurings to be agreed with a consequent adverse effect on operating
revenues.

In addition to difficulties which have affected lessees in a given region,
individual lessees have experienced periodic difficulties in meeting their
maintenance obligations under the related leases. The difficulties have arisen
from, among other things, the failure of the lessee to have in place a
sufficiently well established maintenance program, adverse climate and other
environmental conditions in the locations where the related aircraft is operated
or financial and labor difficulties experienced by the relevant lessee. A
continuous failure by a lessee to meet its maintenance obligations under the
relevant lease could result in a grounding of the aircraft, cause us to incur
substantial costs in restoring the aircraft to an acceptable maintenance
condition before we can re-lease or sell it and adversely affect the value of
the aircraft.

The following is a discussion of the lessees experiencing difficulty by
region in which they are located.

LATIN AMERICA

At March 31, 2003, lessees with respect to 22.03% of the aircraft by
appraised value as of January 31, 2003 operated in Latin America, principally
Brazil, Mexico and Colombia. The prospects for lessee operations in these
countries depend in part on the general level of political stability and
economic activity and policies in those countries. Future developments in the
political systems or economies of these countries or the implementation of
future governmental policies in these countries may materially affect these
lessees' operations.

Economic volatility may increase in these and other emerging markets in the
aftermath of the current global slowdown and the events of September 11, 2001,
which may cause further difficulties for our lessees.

Brazil. The instability in the Brazilian economy experienced in recent
years means that lessees may be unable to generate sufficient revenues in
Brazilian currency to pay rental payments in U.S. dollars under the leases. At
March 31, 2003, Airplanes Group leased 11 aircraft representing 8.50% of our
portfolio by appraised value as of January 31, 2003 to operators in Brazil.
Accordingly, any future deterioration in the Latin American economies,
especially Brazil, could lead to a material decrease in Airplanes Group's
leasing revenues and an increase in default related costs.

At March 31, 2003, we had eight F-100 aircraft, representing 2.56% of our
portfolio by appraised value as of January 31, 2003, on lease to a Brazilian
lessee that was party to a restructuring agreement with us which was signed in
2000 in respect of the leases for six F-100 aircraft. Under the 2000
restructuring agreement, all arrears were to be paid with interest by December
31, 2002. The lessee also signed an agreement which provides for rental
deferrals of 35% to 50% for the period to December 2002, with repayment before
the expiry of the current leases in 2007 and 2008. The lessee has recently
grounded a significant portion of its F-100 fleet but has to date continued to
meet its obligations to us. The servicer is currently discussing a further
potential restructuring of the lessee's obligations which may involve the early
return of some aircraft.

A Brazilian lessee of three MD-11 aircraft, representing 5.94% of our
portfolio by appraised value as of January 31, 2003, due to trading
difficulties, is currently in arrears. A restructuring agreement was signed with
the lessee in 2002, providing for the payment of arrears through the utilization
of security deposits without any further changes to the lease terms. The
servicer is currently having further discussions with the lessee regarding its
current arrears and has agreed to the early return of these aircraft during the
current year.

During the year ended March 31, 2003, a Brazilian lessee of three B737-500
aircraft, representing 2.10% of our portfolio by appraised value at January 31,
2003 was in arrears. The lessee had previously entered into a restructuring of
the obligations under its leases, under which the lessee was granted a deferral
of 50% of rentals for the six month period to March 2002 with repayment to
commence in March 2003 over a thirty six month period. The servicer agreed to
the early return of the aircraft prior to March 31, 2003, and is currently
pursuing all outstanding amounts.

In addition, in 1999, we entered into a restructuring agreement with
Transbrasil, a former lessee, under which it repaid a restructured amount of
approximately $1.9 million over 12 months. At March 31, 2003, and
39

March 31, 2002 Transbrasil was in arrears and the servicer is currently in
negotiations with the airline regarding repayment. An accounting provision has
been made against our receivables for the excess of the arrears over the cash
security held.

See "Item 3. Legal Proceedings" for details of legal proceedings involving
a Brazilian airline.

Colombia. Colombia has recently suffered economically as a result of the
deterioration in the value of the Colombian peso and the resulting negative
impact on the Colombian economy. As of March 31, 2003, we leased eleven
aircraft, representing 6.89% of our portfolio by appraised value as of January
31, 2003, to three Colombian lessees. Because of the continued weakness in the
value of the Colombian peso, as well as general deterioration in the Colombian
economy, these lessees may be unable to generate sufficient revenues in
Colombian pesos to pay the U.S. dollar denominated rental payments under the
leases.

In particular, as of March 31, 2003, we leased six aircraft, representing
5.01% of our portfolio by appraised value as of January 31, 2003, to one of our
three Colombian lessees. On June 27, 2001, the servicer signed a restructuring
agreement with the lessee including lease extensions, rental reductions and
deferrals. The lessee is currently in arrears and the servicer had previously
agreed to a 50% deferral of rentals for three months to be repaid over six
months from January 2003. However, the lessee is currently in discussions with
the servicer regarding its arrears and a further lease restructuring with rental
reductions combined with lease extensions being a potential outcome. The lessee
filed for Chapter 11 bankruptcy protection in the US and following the expiry of
its 60 day bankruptcy protection period recommenced making payments of amounts
falling due.

Mexico. During the year ended March 31, 2003, one Mexican lessee of eight
F-100 aircraft representing 2.75% of our portfolio by appraised value as of
January 31, 2003 has contracted to extend the leases for an average period of 24
months from current expiry with a reduction in rentals of approximately 41% with
effect from October 2001.

A second Mexican lessee leased eight aircraft at March 31, 2003
representing 1.58% of our portfolio by appraised value as of January 31, 2003.
On October 31, 2002, another aircraft formerly leased by this lessee, a DC9-32
operated by the lessee, skidded off a runway following a landing during heavy
rain. There were no fatalities. The insurers deemed the aircraft a constructive
total loss and the insurance proceeds were received during March 2003.

NORTH AMERICA

As of March 31, 2003, we had 13 aircraft, representing 10.42% of our
portfolio by appraised value as of January 31, 2003, on lease to six U.S.
lessees, and nine aircraft, representing 6.13% of our portfolio by appraised
value as of January 31, 2003, on lease to two Canadian lessees. The commercial
aircraft industry in North America is highly sensitive to general economic
conditions. Since air travel is largely discretionary, the industry has suffered
severe financial difficulties during economic downturns. Over the last several
years, the majority of the major North American passenger airlines have entered
into plans of reorganization or sought protection through bankruptcy, insolvency
or other similar proceedings and several major U.S. airlines have ceased
operations. The general downturn in the economy combined with the effects of
September 11, 2001, subsequent terrorist and military activities and the
outbreak of SARS together with the continued reduction in passenger numbers and
flight schedules has left many U.S. airlines in a weakened financial condition.

At March 31, 2003, we leased eight aircraft, representing 9.83% of our
portfolio by appraised value as of January 31, 2003 to one Canadian lessee. This
lessee has filed for Chapter 11 bankruptcy and is currently making no payments
under its leases.

On August 13, 2001, a U.S. lessee of three DC8-71F freighter aircraft,
representing 1.40% of our portfolio by appraised value as of January 31, 2003
announced that it was suspending flight operations as a result of safety
concerns in respect of the lessee. The lessee continued to meet its obligations
under the leases. In the year ended March 31, 2003, the servicer, following
discussions with the lessee agreed to the early return of the three aircraft,
with the lessee paying compensation for lost rentals and redelivery conditions.
Two of the aircraft are currently being remarketed and one has been re-leased.
The original leases were scheduled to expire between December 2003 and July
2004.
40

During the three month period ended December 31, 2002, the servicer has
lodged a claim with the courts in connection with the receivables balance from a
U.S. former lessee of two B737-200A aircraft, representing 0.29% of our
portfolio by appraised value at January 31, 2003.

On August 11, 2002 one former lessee of one aircraft representing 0.17% of
our portfolio by appraised value as of January 31, 2003 filed for protection
from its creditors. The aircraft was subsequently redelivered and the servicer
has filed a claim with the courts for all amounts due.

Since March 31, 2003 one lessee of one aircraft representing 0.81% of our
portfolio by appraised value as of January 31, 2003 has been experiencing
trading difficulties and has been in discussion with the servicer regarding a
potential restructuring of the lease terms which is likely to result in a lease
extension and rental reduction.

ASIA & FAR EAST

As of March 31, 2003, 31 aircraft representing 16.08% of our portfolio by
appraised value as of January 31, 2003 were on lease to 13 lessees in this
region. The commercial aircraft industry in Asia was adversely affected by the
severe economic and financial difficulties experienced in the region during 1998
and 1999. Since 1999, there has been some stabilization and recovery in the
economies of this region. On October 12, 2002, Bali was the location of a
terrorist attack. A decline in tourism in this area may adversely affect demand
for aircraft in the region.

In the final quarter of the year ended March 31, 2003, this region in
particular, was subject to the outbreak of SARS. This has led to widespread
disruption in travel within and from outside the region. Airlines have suffered
substantial cutbacks in the number of passengers travelling and seen the
cancellation of flights. These factors may adversely affect the ability of
lessees to make payments under their leases.

During the year to March 31, 2000, a rescheduling agreement was signed with
a Philippine lessee which committed to pay its outstanding arrears of $2.7
million over the 36 months to September 2002. As of the date of this Form 10-K,
the lessee has repaid its obligations in full.

EUROPE (EXCLUDING CIS)

As of March 31, 2003, 50 aircraft representing 33.02% of our portfolio by
appraised value as of January 31, 2003 were on lease to 18 lessees in this
region. The commercial aircraft industry in European countries, as in the rest
of the world generally, is highly sensitive to general economic conditions.
Because a substantial portion of airline travel (business and especially
leisure) is discretionary, the industry has tended to suffer severe financial
difficulties during economic downturns. Accordingly, the financial prospects for
European lessees can be expected to depend largely on the level of economic
activity in Europe generally and in the specific countries in which these
lessees operate. The current downturn, as exacerbated by the events of September
11, 2001 and the subsequent and continuing economic and political fallout, or
any future recession or other worsening of economic conditions in one or more of
these countries, may have a material adverse effect on the ability of European
lessees to meet their financial and other obligations under the leases. In
addition, commercial airlines in Europe face, and can be expected to continue to
face, increased competitive pressures, in part as a result of the continuing
deregulation of the airline industry by the EU. There can be no assurance that
competitive pressures resulting from such deregulation will not have a material
adverse impact on the operations of our European lessees.

Turkey. One Turkish lessee of one A300 aircraft, representing 0.33% of our
portfolio by appraised value as of January 31, 2003, repaid in full a deferral
of outstanding obligations during the year ended March 31, 2003.

Spain. As of March 31, 2003, one Spanish lessee, representing 3.07% of our
portfolio by appraised value at January 31, 2003, had signed a restructuring of
its payment obligations under its leases with us. The servicer is currently in
discussions with the lessee regarding a further restructuring of its
obligations, which may result in reduced rentals in return for lease extensions.

France. At March 31, 2003 one aircraft representing 0.55% of our portfolio
by appraised value as of January 31, 2003 had been returned from a French
lessee. This lessee had grounded its fleet following the non renewal of its
operators licence. The lease which was due to expire in March 2003 has been
terminated.
41

OTHER

Kazakhstan. One lessee of two B737-200A aircraft in Kazakhstan,
representing 0.19% of our portfolio by appraised value as of January 31, 2003,
has repaid in full all amounts agreed under its 2002 restructuring agreement.

PURCHASE OPTIONS

As of March 31, 2003, five lessees with respect to 8 aircraft, representing
3.44% of our portfolio by appraised value as of January 31, 2003, held options
to purchase aircraft at various dates between 2003 and 2006 at prices generally
at or above their estimated appraised value at the exercise date. There is a
risk that the purchase prices may be less than the proportionate share of the
unpaid principal of the notes and certificates allocable to the aircraft being
purchased. If those options are exercised, there could be additional reductions
in the amount, or a delay in the timing, of payments on the notes and
certificates.

COMMERCIAL OPPORTUNITIES FOR CERTAIN TYPES OF OUR AIRCRAFT

The market for certain aircraft models is currently very weak and is
expected to remain so. For example, we currently lease three MD-11 aircraft,
representing 5.94% of our fleet by appraised value as of January 31, 2003, to a
Latin American lessee. The leases are due to expire between March and December
2004. However, due to difficult trading conditions for the current lessee which
is in arrears, it has been agreed with the lessee that the aircraft will return
in 2003. We are examining all possibilities in respect of the remarketing of the
MD-11 aircraft including sale or conversion to freighter aircraft. The current
market value of these aircraft and the cost of conversion (which would involve
substantial cash expenditure by us) means it is highly unlikely that we would be
able to sell or convert these aircraft in a manner which would meet the
indenture requirements as outlined below in "-- Aircraft Sales". Likewise, we
are examining all opportunities for our DC8-71F aircraft, some of which are
currently non revenue-earning. The current market value of these aircraft is
such that it is highly unlikely that we would be able to sell or scrap the
aircraft at prices which would meet the indenture requirements as outlined below
in "-- Aircraft Sales". Thus we may have no choice but to keep these aircraft on
the ground (and incur the costs of storage, maintenance and insurance).

AIRCRAFT SALES

Based on the recommendations of the servicer and the administrative agent,
the board of directors of Airplanes Limited and the controlling trustees of
Airplanes Trust have identified a number of aircraft types for potential sale so
long as the terms of a proposed sale for a particular aircraft are commercially
advantageous to Airplanes Group and the sale complies with the requirements of
the indentures. The aircraft types which have been identified for potential sale
are B737-200, B727-200, DC-9, A300 and turboprop aircraft. At March 31, 2003,
there was a total of 52 aircraft of these aircraft types in our portfolio
representing 8.49% of our portfolio by appraised value as of January 31, 2003.
Since June 1999, we have sold nineteen aircraft of these aircraft types for an
aggregate of $43 million (including sales proceeds and capital lease bullet
payments), which has been applied in accordance with the priority of payments
provided under the indentures. Since March 31, 2002, two DC9-51 aircraft, three
B737-200A aircraft and one DC8-71F aircraft have been sold and one DC9-32
aircraft was subject to a constructive total loss. In addition, three aircraft
have become subject to full payout finance leases, where title will transfer to
the relevant lessee at the end of the current leases.

Our indentures restrict our ability to sell aircraft. Sales of an aircraft
are generally permitted only if the sales proceeds are at least equal to 105% of
the aggregate outstanding class A to D principal allocable to that aircraft by
reference to the most recent appraised value (the "note target price"). Where
note target price cannot be achieved, sales are subject to, among other
conditions, a $50 million annual limit and a $500 million overall limit
(determined in each case by reference to the appraised value of the aircraft to
be sold at the original acquisition of the portfolio in 1996). As a result of
the market price for aircraft declining at a rate greater than the decrease in
outstanding principal of the class A to D notes due to the factors discussed in
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Recent Developments", it is increasingly difficult to achieve
sales of aircraft at or above note target price. Our ability to generate sales
of aircraft at or
42

above note target price will further decline as we fall behind our 2001 Base
Case assumptions as to our principal repayments and this indenture restriction
will likely present a real impediment to the ability of the servicer to maximize
future cash flow from the portfolio. For example it may be in the best economic
interests of Airplanes Group to sell a specific aircraft if a suitable
opportunity is available rather than lease it or have it non-revenue earning
(and requiring outlay for storage, maintenance and insurance), yet the
indentures may prohibit this. As the annual limitation on aircraft sales is by
reference to the appraised value of the aircraft at the initial acquisition by
us, few aircraft can be sold below note target price in any year.

As further discussed under "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Recent Developments", the board
of directors of Airplanes Limited and the controlling trustees of Airplanes
Trust have resolved to undertake a consent solicitation seeking, among other
things, to amend the indentures to permit sales of aircraft below note target
price where the board of directors of Airplanes Limited or the controlling
trustees of Airplanes Trust, as applicable have unanimously confirmed that such
a sale is in the best interests of Airplanes Group and the noteholders and
certain other conditions are met.

ITEM 2. PROPERTIES

Airplanes Group has no ownership or leasehold interest in any real
property.

Airplanes Limited's registered and principal office is located at 22
Grenville Street, St. Helier, Jersey, JE4 8PX, Channel Islands and its telephone
number is 011-44-1534-609000.

Airplanes Trust's principal office is located at 1100 North Market Street,
Rodney Square North, Wilmington, Delaware 19890-0001, care of Wilmington Trust
Company and its telephone number is 1-302-651-1000.

For a description of Airplanes Group's interest in other property, see
"Item 1. Business -- The Aircraft, Related Leases and Collateral."

ITEM 3. LEGAL PROCEEDINGS

Following the default by the Brazilian airline VASP under its leases, GPA
Group (now known as debis AirFinance Ireland) sought and obtained in November
1992 a preliminary injunction for repossession of 13 aircraft and three engines,
and subsequently repossessed these aircraft and engines. Airplanes Group
acquired seven of these aircraft from GPA Group in March 1996, four of which
remain in our portfolio, representing 1.98% of our portfolio by appraised value
as of January 31, 2003. In December 1996, the High Court in Sao Paolo, Brazil,
found in favor of VASP on appeal and granted it the right to the return of the
aircraft and engines or the right to seek damages against debis AirFinance
Ireland. debis AirFinance Ireland challenged this decision and in January 2000,
the High Court granted a stay of the 1996 judgment while it considered debis
AirFinance Ireland's rescission action. In April 2002, the High Court found in
favour of debis AirFinance Ireland's recission action and overturned the 1996
judgement in favour of VASP. VASP has actively pursued appeals to this decision.
debis AirFinance Ireland will continue to actively pursue all available courses
of action, including defending appeals to superior courts which may seek to
overturn the High Court decision of April 2002. A risk of repossession would
only arise if VASP were successful on appeal in seeking repossession of the
aircraft and the aircraft were located in Brazil. Although none of our lessees
which lease any of the relevant aircraft is based in Brazil, some of them may
operate those aircraft into Brazil from time to time.

AeroUSA and AeroUSA 3 have in the past filed U.S. federal consolidated tax
returns and certain state and local tax returns with debis AirFinance, Inc.
(then known as AerFi, Inc.) and its subsidiaries. There are ongoing tax audits
by certain state and local tax authorities with respect to tax returns
previously reported by debis AirFinance, Inc. and its subsidiaries. debis
AirFinance believes that none of these audits will have a material adverse
impact upon the liquidity, results of operations or the financial condition of
AeroUSA.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

None.

43

PART II

ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Airplanes Limited has an authorized share capital of 10,000 ordinary
shares, with $1 par value per share. 30 ordinary shares of Airplanes Limited
have been issued and are outstanding. The ordinary shares of Airplanes Limited
are not listed on any national exchange or traded in any established market.
These shares are held by Juris Limited and Lively Limited, each a Jersey limited
liability company, as bare nominees for the benefit of the following three
"CHARITABLE TRUSTS":

Under its articles of association, Airplanes Limited pays an annual fixed
cumulative preferential dividend of $4,500 (the "ANNUAL DIVIDEND AMOUNT") to the
holders of its capital stock, but only when it has distributable profits which
may lawfully be paid as dividends and provided that no event of default has
occurred and is continuing.

Mourant & Co. Trustees Limited, as trustee of each of the three charitable
trusts, has agreed pursuant to a shareholders' agreement with Airplanes Limited
and the indenture trustee not to transfer any part of the capital stock of
Airplanes Limited without the prior written approval of the indenture trustee
and all the directors of Airplanes Limited, unless the transferee is a trustee
of a substantially identical charitable trust and enters into a substantially
identical shareholders' agreement.

ITEM 6. SELECTED COMBINED FINANCIAL DATA

The selected combined financial data set out below for each of the years in
the five year period ended March 31, 2003 have been extracted or derived from
the financial statements of Airplanes Group, which have been audited by KPMG,
independent chartered accountants. These financial statements have been prepared
in accordance with generally accepted accounting principles in the United
States.

The selected combined financial data set forth below combine the operating
results, assets, liabilities and cash flows of Airplanes Limited and Airplanes
Trust. The separate balance sheets, statements of operations, statements of
comprehensive income/(loss), statements of changes in shareholders' deficit/net
liabilities and statements of cash flows, and notes thereto, of Airplanes
Limited and Airplanes Trust are contained in the financial statements included
in "Item 16. Exhibits, Financial Statement Schedules and Reports on Form 8-K."

44

The directors of Airplanes Limited and the controlling trustees of Airplanes
Trust believe that a combined presentation is most appropriate because:

- the assets of Airplanes Limited and Airplanes Trust are managed on the
basis of one combined aircraft fleet, and

- each of Airplanes Limited and Airplanes Trust has fully and
unconditionally guaranteed the performance of the other under their
respective notes.

You should note that the notes and the guarantees comprise obligations of two
different legal entities owning different assets. However, the notes and
guarantees have been structured in the indentures to ensure that no payments are
made on a junior class of notes or guarantees of Airplanes Trust before all
amounts due and payable on a more senior class of notes or guarantees of
Airplanes Limited have been paid, and no payments are made on a junior class of
notes or guarantees of Airplanes Limited before all amounts due and payable on a
more senior class of notes or guarantees of Airplanes Trust have been paid.

Aircraft assets are stated on the "predecessor cost basis," that is,
reflecting debis AirFinance Ireland's historical cost less accumulated
depreciation and impairment provisions. The difference between the predecessor
cost basis and the amount of Airplanes Group's indebtedness is a significant
component of total shareholders' deficit in the combined balance sheet data. The
statements below are presented without provisions for loss making leases as
further detailed in the notes to the financial statements at note 4.

COMBINED STATEMENT OF OPERATIONS DATA(1)

COMBINED BALANCE SHEET DATA(1)

45

COMBINED STATEMENT OF CASH FLOW DATA(1)

OTHER DATA(1)

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

(1) The financial statements of Airplanes Group are stated in U.S. dollars
which is the principal operating currency of Airplanes Group and the
aviation industry.

(2) Revenues include maintenance reserve receipts. See Note 14 to the financial
statements.

(3) Net interest expense is significantly higher than cash paid in respect of
interest in all periods reflecting the high interest rate accruing on the
class E notes (20% adjusted for inflation) relative to the lower amount of
cash interest payable on the class E notes for so long as the other classes
of notes remain outstanding. Net interest expense is stated after crediting
interest income of $14 million in 1999, $13 million in 2000, $14 million in
2001, $6 million in 2002, and $3 million in 2003. In the year ended March
31, 2002 Net interest expense includes an adjustment of US$(5) million in
relation to the effect of change in accounting principle on the adoption of
SFAS 133.

(4) Deficiency of combined earnings after combined fixed charges represents the
amount by which Airplanes Group's loss before income taxes and fixed
charges exceeded fixed charges. Fixed charges consists of interest expense.
Because our fixed charges exceeded earnings for all periods presented, a
ratio of earnings to fixed charges is not presented.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

INTRODUCTION

The following discussion and analysis is based primarily on the combined
operating results of Airplanes Limited and Airplanes Trust and not on their
results reported as individual entities. You should note that the notes and the
guarantees comprise obligations of two different legal entities owning different
assets. The directors and the controlling trustees believe that a combined
discussion is the most appropriate basis of presentation because:

- Airplanes Limited and Airplanes Trust are not intended to be regarded as
separate businesses but rather on the basis of one combined aircraft
fleet, and

- each of Airplanes Limited and Airplanes Trust has fully and
unconditionally guaranteed the performance of the other under their
respective notes.

The notes and guarantees have been structured in the indentures to ensure that
no payments are made on a junior class of notes of Airplanes Trust or Airplanes
Limited, as the case may be, before all amounts due and payable on

46

a more senior class of notes of Airplanes Limited or Airplanes Trust,
respectively, have been paid pursuant to the terms of the more senior classes of
notes or the guarantees of these notes.

Substantially all of Airplanes Group's future business is expected to
consist of aircraft operating lease activities. Airplanes Group may also engage
in aircraft sales subject to specified limitations and guidelines. Airplanes
Group's revenues and operating cash flows are determined by a number of
significant factors, including:

- trading conditions in the civil aviation industry and, in particular,
the market for aircraft on operating leases,

- the mix, relative age and popularity of the various aircraft types in
our portfolio, and

- Airplanes Group's financial resources and liquidity position relative to
its competitors who may possess substantially greater financial
resources.

Except to the extent that the strength of the U.S. dollar against some
local currencies may adversely affect the ability of some of our lessees who
operate in those currencies to pay us, the effect of changes in currency rates
on Airplanes Group is minimal because Airplanes Group conducts its business
almost entirely in U.S. dollars.

RECENT DEVELOPMENTS

OVERVIEW

We have continued to suffer from a difficult business environment. In
addition to the downturn in the general economic climate which had already
begun, the commercial aircraft industry was one of the industries most severely
impacted by the terrorist attacks of September 11, 2001. The subsequent military
action in Afghanistan, the terrorist attack in Bali and the war in Iraq have all
combined to further impact the industry. The recent terrorist attack in Saudi
Arabia and the threat of further attacks continues to deter air travel. The
Asia-Pacific region which had shown the most resilience in the face of all these
events has now been affected by the outbreak of the Severe Acute Respiratory
Syndrome (SARS) virus. Travel to many parts of South East Asia has been
radically curtailed. The resulting reduction in overall passenger numbers and
consequential reduction in flight schedules by airlines has caused a decline in
demand for aircraft. Some carriers (including two major European carriers,
Sabena and Swissair, and two major US carriers, United Airlines and US Airways,
and two of our lessees, one Canadian and one Colombian, together representing
14.84% of our portfolio by appraised value as of January 31, 2003) have filed
for bankruptcy, whilst others, including many of our lessees, have suffered
large losses and continue to face severe financial difficulties. Oversupply of
aircraft (including freighter aircraft), has resulted in increased aircraft
downtime, aircraft being parked, a fall in market value of aircraft (especially
older technology and less fuel-efficient aircraft or models no longer in
production) and lower lease rates throughout the industry. The continued
production of new aircraft contributes to the weakening of the lease and sales
market for used aircraft and the low interest rate environment also adversely
affects lease rates. We have ourselves experienced increased time between
redelivery and re-leasing of aircraft as well as a decline in lease rates upon
re-leasing or extensions of leases. As discussed in more detail below, we have
had to restructure a large number of leases, resulting in rental reductions,
holidays, deferrals and the early return of aircraft. We have also experienced a
decline in both the market values and the appraised values of our aircraft, with
the market value of certain of our aircraft types such as the MD80s and the
F100s likely being permanently impaired. Oil prices have been volatile although
may stabilise following the end of the war in Iraq.

RESTRUCTURINGS

We have already agreed a substantial number of rental restructurings with
our lessees, typically involving the rescheduling of rental payments over a
specified period and/or the reduction of current rentals usually in return for
extensions of the relevant leases. These arrangements can also include
forgiveness of amounts in respect of rental arrears. While the servicer attempts
to limit concessions, the current worldwide commercial aircraft market is
characterized not only by a large number of weak lessees, but also by
overcapacity of available aircraft in almost every aircraft category and
restructuring of leases is often the only way to keep our aircraft in use and
47

earning revenues. The servicer is still pursuing negotiations with certain
lessees and we expect further restructurings to be agreed with a consequential
adverse effect on lease rates and revenues. Given some of the fixed periods of
reduced rentals we have had to negotiate with our lessees, even if there is a
recovery in the near term in aircraft lease rates generally we would not be able
to benefit immediately from the recovery.

AIRCRAFT APPRAISED VALUES

There has been a decline of 12.66% in the appraised value of our fleet in
the year to January 31, 2003, which is $170 million greater than the decline
assumed in our 2001 Base Case assumptions. The appraised values are based upon
the value of the aircraft at normal utilization rates in an open, unrestricted
and stable market, and take into account long-term trends, including current
expectations of particular models becoming obsolete more quickly, as a result of
airlines switching to different models, or lease values for aircraft declining
more rapidly than previous predictions. As a theoretical value, the appraised
value is not indicative of market value and thus there is no guarantee that we
would obtain the appraised value upon sale of any aircraft, since we might sell
at a low point in the business cycle, and since appraised values are
forward-looking. If the current oversupply of aircraft continues longer term,
given the age of our fleet, certain of our aircraft may become obsolete
significantly earlier than the useful life expectancy assumed in the 2001 Base
Case assumptions, which would negatively impact appraised values further.

PERFORMANCE

For the reasons outlined above we have not been able to meet either the
1996 Base Case or the 2001 Base Case assumptions. In light of lease
restructurings and a weak leasing market generally, we are generating revenues
at significantly lower levels than we had expected and at levels which we expect
will be inadequate to pay minimum principal and interest on the class B notes
and interest on the class C and D notes beginning in the final quarter of 2003.

Specifically, as a result of the greater than expected decline in value of
the aircraft in our portfolio, we have been required to pay class A principal
adjustment amount to the extent that we have had available cash flows in order
to maintain certain loan to initial appraised value ratios. We have paid class A
principal adjustment amount in April and May 1998 and from February 1999 to
April 2003. Since class A principal adjustment amount ranks ahead of scheduled
principal payments on the class C and D notes, we were unable to make certain
scheduled principal payments on the class C and D notes between April 1999 and
March 2000, and, since April 2000, we have not paid any scheduled principal on
the class C and D notes or paid any minimum interest on the class E notes.

At the June 16, 2003 payment date we were ahead of the required class A
minimum principal payment schedule to the extent of $23.8 million. Accordingly,
no payments are currently due in respect of the minimum principal amount on the
class A notes. However, our overall cash performance since September 11, 2001,
has been significantly weaker than was assumed in the 2001 Base Case, the
reasons for which are discussed above. We have not had sufficient cashflows to
pay class A principal adjustment amounts in full and on both the May 15, and
June 16, 2003 payment dates, we did not have sufficient cashflows to pay any
class A principal adjustment amount. We expect we may not resume payment of
class A principal adjustment amount in the future. Therefore, in time, we will
no longer be ahead of the required class A minimum principal payment schedule.
We expect this to occur in the third quarter of 2003, following which we will
have to recommence payments of minimum principal on the class A notes to the
extent of available cashflows. Since minimum principal on the class A notes
ranks ahead of interest and minimum principal on the class B notes and interest
on the class C and class D notes in the order of priority, and, given our
expected cash performance we expect that, in addition to our current inability
to pay scheduled principal on the class C and D notes, our cash flows will be
inadequate to pay interest and minimum principal on the class B notes and
interest on the class C and D notes beginning in the final quarter of 2003.

While our actual results may differ from our current expectations, such
differences as may arise are only likely to affect the timing of when we may
cease to pay interest and minimum principal on the class B notes and interest on
the class C and D notes.
48

In the event that cash flows are inadequate to pay interest and minimum
principal on the class B notes and interest on the class C and D notes, it is
likely to be a long period of time before we will be able to resume making any
payments on these notes. If we fail to pay interest when due, as is currently
projected to be the case with respect to the class B, C and D notes beginning in
the final quarter of 2003, interest will accrue on the unpaid interest. In these
circumstances, since interest (and minimum principal) on the class A notes is
payable prior to payment of interest and minimum/scheduled principal on the
class B, C and D notes (and all other amounts of principal on the class B, C and
D notes), available cash flows will be used first to service interest and, to
the extent possible, minimum principal on the class A notes. To the extent that
cash is available at any subsequent time to make payments ranking below class A
minimum principal, cash flows will first be used to pay interest on the class B
notes, which would then include all the accrued interest from the period when no
payments were made on these notes. Thus the likelihood of remaining cash flows
over the life of Airplanes Group being sufficient to resume any payments of
class B principal or any payments of interest or principal on the class C and,
ultimately, the class D notes is even further diminished. Thus, we may be unable
to repay in full principal on some or all of these classes of notes by their
final maturity date. In addition, to the extent that we are able to resume
making payments on these notes, payments will be made according to the priority
of payments, commencing with the then most senior class and only making payments
on more junior classes to the extent of available cash flows. The more junior
the class of notes is in the order of priority, the greater the risk that we may
be unable to repay in full principal on that class of notes by its final
maturity date. A failure to make payments on a class of notes will result in
failure to make payments on the corresponding class of certificates.

In general, the rights and remedies with respect to a note event of default
are exercisable only by the trustee of and the holders of the most senior class
of notes outstanding, and then only to the extent that there is an event of
default with respect to that senior class of notes. For example, a failure to
make a required payment on a class of notes is a default only with respect to
that class of notes and the corresponding certificates. Accordingly, if an event
of default occurs with respect to a class of notes which is not the most senior
class outstanding, the holders of that class of notes (and thus, the
corresponding certificates) will not be permitted to enforce their rights until
all amounts owing under any more senior class of notes outstanding and certain
other amounts have been paid in full. The class A notes are the most senior
class of notes currently outstanding.

IMPAIRMENT

We have reviewed our fleet for impairment in accordance with Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long Lived Assets ("SFAS 144"). Under SFAS 144, Airplanes Group's
policy is to evaluate for impairment when an asset's carrying value is greater
than its net undiscounted expected future cash flows. The amount of the
impairment charge is the difference between the asset's carrying value and its
fair market value. We have determined that the estimated net future cash flows
to be generated by certain of our aircraft, in particular our MD-11 aircraft
will be less than their carrying value. These aircraft have been written down to
their fair value, as estimated based on the expected net discounted future cash
flows to be generated by the aircraft over their estimated remaining useful
lives. The impairment provision of $76 million in the year to March 31, 2003
relates primarily to these aircraft and reflects poor perceived future lease
prospects for these aircraft.

49

RATINGS

Set out in the table below are the current ratings of our certificates:-

The estimates of useful lives and residual values are reviewed at least
annually.

IMPAIRMENT:

Aircraft are periodically reviewed for impairment in accordance with SFAS
144. An impairment loss is evaluated when the undiscounted expected future cash
flows of the aircraft are less than its carrying value and the loss is measured
as the excess of the carrying value over the fair value. The fair value of the
aircraft is generally based on independent appraisals of the aircraft.

Under the indentures, Airplanes Group is required to obtain appraisals at
least once each year and in any case no later than March 1 of each year from at
least three independent appraisers. The appraisals assume, among other things,
that the aircraft are utilized normally in an open, unrestricted and stable
market. Short term fluctuations in the market place are disregarded and it is
assumed that there is no necessity either to dispose of a significant number of
aircraft simultaneously or to dispose of aircraft quickly.

The impairment loss is determined based on the estimated discounted future
cash flows of an aircraft. The appraised values are determined based on the
assumption that there is an "open unrestricted stable market environment with a
reasonable balance of supply and demand." Since this assumption may not be
appropriate to certain aircraft, estimated discounted cash flows are used as a
more accurate indication of fair value. The estimated discounted future cash
flows assume, among other things, market rates at the end of the existing lease
term, other lease costs, downtime and weighted average cost of capital.

RESULTS OF OPERATIONS -- YEAR ENDED MARCH 31, 2003 COMPARED WITH YEAR ENDED
MARCH 31, 2002.

Airplanes Group's results for the year ended March 31, 2003 reflected a
continuation of the apparent difficult trading conditions for the aviation
industry. Continued difficult trading conditions gave rise to the requirement
for impairment provisions in the year ended March 31, 2003 and in the year ended
March 31, 2002 and to lessees seeking a variety of rental restructurings
including rental reductions and deferrals. These factors will continue to have a
significant adverse impact in future periods, although various factors,
including the timing of receipts and expenditures and non-recurring items, can
result in short term swings in any particular reporting period.

Airplanes Group generated $91 million in cash from operations in the year
ended March 31, 2003 compared to $120 million in the year ended March 31, 2002.
The decrease in cash generated from operations is primarily
52

attributable to a reduction in lease revenues caused by an increased level of
lease restructurings and, to a lesser extent, greater aircraft downtime and
reduced rentals as a result of aircraft sales in previous periods. There were
seven aircraft sales in the year ended March 31, 2003, compared to the year
ended March 31, 2002 when there were two sales. There was a net loss after
taxation for the year ended March 31, 2003 of $692 million (Airplanes Limited:
$636 million; Airplanes Trust: $56 million) compared to a net loss after
taxation for the year ended March 31, 2002 of $695 million (Airplanes Limited:
$623 million; Airplanes Trust: $72 million). Excluding accrued but unpaid class
E note interest, the decrease in the net loss for the period of $119 million was
primarily attributable to an aircraft impairment provision of $292 million
(Airplanes Limited: $245 million; Airplanes Trust: $47 million) in the year
ended March 31, 2002, as compared to a provision of $76 million (Airplanes
Limited: $74 million; Airplanes Trust: $2 million) in the year ended March 31,
2003 and a reduction in revenue due primarily to rental restructurings in the
year ended March 31, 2003.

LEASING REVENUES

Leasing revenues (which include maintenance reserve receipts from certain
of our lessees) for the year ended March 31, 2003 were $358 million (Airplanes
Limited: $337 million; Airplanes Trust: $21 million) compared with $410 million
(Airplanes Limited: $382 million; Airplanes Trust: $28 million) for the year
ended March 31, 2002. The decrease was primarily attributable to a number of
lease restructurings including rental reductions, the number of aircraft
off-lease and to the reduction in the number of aircraft on lease as a
consequence of aircraft sales in previous periods. At March 31, 2003, we had 158
of our 179 aircraft on lease (Airplanes Limited: 147 aircraft; Airplanes Trust:
11 aircraft) compared to 180 of our 186 aircraft on lease (Airplanes Limited:
168 aircraft; Airplanes Trust: 12 aircraft) at March 31, 2002.

IMPAIRMENT PROVISIONS

Aircraft carrying values are periodically assessed for impairment in
accordance with SFAS 144. The statement requires an assessment for impairment
when an asset's carrying value is greater than its fair value as measured by net
undiscounted expected future cash flows. Impairments are measured by the excess
of carrying value over fair value. Following consideration of the estimated
future cash flows to be generated by our aircraft, a SFAS 144 assessment
resulted in the requirement for an impairment provision of $76 million
(Airplanes Limited: $74 million; Airplanes Trust: $2 million) in the year ended
March 31, 2003 as compared with $292 million (Airplanes Limited: $245 million;
Airplanes Trust: $47 million) for the year ended March 31, 2002.

DEPRECIATION AND AMORTIZATION

The charge for depreciation and amortization in the year ended March 31,
2003 amounted to $140 million (Airplanes Limited: $132 million; Airplanes Trust:
$8 million) as compared with $159 million (Airplanes Limited: $146 million;
Airplanes Trust: $13 million) for the year ended March 31, 2002. The reduction
in the charge resulted primarily from the reduced depreciable value of the fleet
following the impairment provisions made in the year ended March 31, 2002 and,
to a lesser extent, aircraft sales in previous periods.

AIRCRAFT SALES

Aircraft sales revenues of $14 million (Airplanes Limited: $14 million,
Airplanes Trust: $Nil) in respect of the sale of three B737-200A aircraft, two
DC9-51 aircraft, one DC8-71F aircraft and insurance proceeds in relation to one
DC9-32 aircraft which was deemed a constructive total loss were received in the
year ended March 31, 2003. The net book value of the aircraft sold was $15
million (Airplanes Limited: $15 million; Airplanes Trust: $Nil). Sales revenues
of $5 million (Airplanes Limited: $5 million; Airplanes Trust; $Nil) in respect
of the sale of three B737-200A aircraft and one DC9-51 aircraft were received in
the year ended March 31, 2002. The net book value of the aircraft sold was $2
million (Airplanes Limited: $2 million; Airplanes Trust: $Nil).

53

NET INTEREST EXPENSE

Net interest expense was $725 million (Airplanes Limited: $660 million;
Airplanes Trust: $65 million), of which $181 million related to interest on the
class A to D notes and interest rate swaps and $544 million related to interest
on the class E notes, in the year ended March 31, 2003 compared to $614 million
(Airplanes Limited: $559 million; Airplanes Trust: $55 million), of which $186
million related to interest on the class A to D notes and $428 million related
to interest on the class E notes, in the year ended March 31, 2002. The increase
in the amount of interest charged was primarily due to interest on accrued but
unpaid class E note interest of $116 million and a net credit of $9 million in
the year ended March 31, 2002 relating to the sale of our swaption portfolio
partially offset by lower average debt and interest rates in the year ended
March 31, 2003.

The weighted average interest rate on the class A to D notes (taking into
account the interest rate swaps entered into by Airplanes Group and the class E
minimum interest amount, but excluding the class E supplemental interest amount
and the remainder of the class E adjusted interest) during the year ended March
31, 2003 was 6.77% and the average debt in respect of the class A to D notes
outstanding during the period was $2,674 million. The class E notes together
with the accrued but unpaid class E note interest, accrue interest at a rate of
20% per annum, as adjusted (by reference to the U.S. consumer price index,
effective March 28, 1996) to the current level of 23.4%.

The weighted average interest rate on the class A to D notes (on the same
basis as above) during the year to March 31, 2002 was 7.18% and the average debt
in respect of the class A to D notes outstanding during the period was $2,797
million.

The difference for the year ended March 31, 2003 between Airplanes Group's
net interest expense of $725 million (Airplanes Limited: $660 million; Airplanes
Trust: $65 million) and cash paid in respect of interest of $179 million
(Airplanes Limited: $162 million; Airplanes Trust: $17 million) is substantially
accounted for by the fact that interest on the class E notes is accrued but
unpaid.

Net interest expense is stated after deducting interest income earned
during the relevant period. In the year ended March 31, 2003, Airplanes Group
earned interest income (including lessee default interest) of $3 million
(Airplanes Limited: $3 million; Airplanes Trust: $Nil million) compared with $6
million in the year ended March 31, 2002 (Airplanes Limited: $6 million;
Airplanes Trust: $Nil).

BAD DEBT PROVISIONS

Airplanes Group's practice is to provide specifically for any amounts due
but unpaid by lessees based primarily on the amount due in excess of security
held and also taking into account the financial strength and condition of a
lessee and the economic conditions existing in the lessee's operating
environment. While a number of Airplanes Group's lessees failed to meet their
contractual obligations in the year ended March 31, 2003, resulting in the
requirement for additional provisions in respect of bad and doubtful debts in
respect of these lessees, the credit exposure with regard to certain other
carriers improved in the period. Overall, there was a net charge in respect of
bad and doubtful debts in the year ended March 31, 2003 of $6 million (Airplanes
Limited: $5 million; Airplanes Trust: $1 million) compared with an overall net
charge of $3 million for the year ended March 31, 2002 (Airplanes Limited: $2
million; Airplanes Trust: $1 million).

OTHER LEASE COSTS

Other lease costs, comprising mainly a transfer to the provision for
maintenance and aircraft related technical expenditure associated with
remarketing the aircraft, in the year ended March 31, 2003 amounted to $77
million (Airplanes Limited: $73 million; Airplanes Trust: $4 million) compared
with other lease costs of $73 million (Airplanes Limited: $70 million; Airplanes
Trust: $3 million) in the year ended March 31, 2002.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the year ended March 31,
2003 amounted to $33 million (Airplanes Limited: $31 million; Airplanes Trust:
$2 million) as compared to the year ended March 31, 2002 of $36 million
(Airplanes Limited: $33 million; Airplanes Trust: $3 million).
54

The most significant element of selling, general and administrative
expenses is the aircraft servicing fees paid to GECAS as servicer. Substantially
all of these amounts represent asset based fees calculated as an annual
percentage of agreed values of aircraft under management pursuant to a servicing
agreement. Selling, general and administrative expenses in the year ended March
31, 2003 include $24 million (Airplanes Limited: $23 million; Airplanes Trust:
$1 million) relating to servicing fees consistent with $24 million (Airplanes
Limited: $22 million; Airplanes Trust: $2 million) in the year ended March 31,
2002.

A further significant element of Airplanes Group's actual selling, general
and administrative expenses reported in the year ended March 31, 2003 was $6
million (Airplanes Limited: $5 million; Airplanes Trust: $1 million) in respect
of administrative agency and cash management fees payable to subsidiaries of
debis AirFinance Ireland, compared with the charge of $10 million (Airplanes
Limited: $9 million; Airplanes Trust: $1 million) for the year ended March 31,
2002.

OPERATING LOSS

The operating loss for the year ended March 31, 2003 was $700 million
(Airplanes Limited: $639 million; Airplanes Trust: $61 million) compared with an
operating loss of $764 million for the year ended March 31, 2002 (Airplanes
Limited: $670 million; Airplanes Trust: $94 million). Airplanes Limited and
Airplanes Trust are expected to continue to report substantial losses in the
future.

TAXES

There was a tax benefit of $8 million (Airplanes Limited: $3 million,
Airplanes Trust $5 million) in the year ended March 31, 2003, as compared with a
tax benefit of $64 million (Airplanes Limited: $42 million, Airplanes Trust: $22
million) for the year ended March 31, 2002.

NET LOSS

The net loss after taxation for the year ended March 31, 2003 was $692
million (Airplanes Limited: $636 million; Airplanes Trust: $56 million) compared
with a net loss after taxation for the year ended March 31, 2002 of $695 million
(Airplanes Limited: $623 million; Airplanes Trust: $72 million), including an
adjustment of $5 million (Airplanes Limited: $5 million; Airplanes Trust: $Nil)
for the cumulative effect in relation to the adoption of SFAS 133.

RESULTS OF OPERATIONS -- YEAR ENDED MARCH 31, 2002 COMPARED WITH YEAR ENDED
MARCH 31, 2001.

Airplanes Group's results for the year ended March 31, 2002 reflected a
continuation of the already apparent difficult trading conditions in the
aviation industry. The events of September 11, 2001 as discussed above at
"Recent Developments," exacerbated an already difficult situation and have had a
marked impact on the results for the year to March 31, 2002 in particular giving
rise to a decline in the fair value of the aircraft and the resulting
requirement for impairment provisions and to lessees seeking a variety of rental
restructurings including rental reductions and deferrals. These factors are
expected to have a continuing significant impact on Airplanes Group's results in
future periods.

Overall, Airplanes Group generated $120 million in cash from operations in
the year to March 31, 2002 compared to $105 million in the year ended March 31,
2001. The increase in cash generated from operations in the year ended March 31,
2002 is primarily attributable to net maintenance inflows, lower LIBOR rates on
the notes and a reduction in other lease costs. This was offset to some extent
by an increased level of lease restructurings, greater aircraft downtime, lower
interest rates on floating rate leases and a reduction in the number of aircraft
on lease as a result of previous aircraft sales. There was a net loss after
taxation for the year ended March 31, 2002 of $695 million (Airplanes Limited:
$623 million; Airplanes Trust: $72 million) compared to a net loss after
taxation for the year ended March 31, 2001 of $333 million (Airplanes Limited:
$316 million; Airplanes Trust: $17 million). The increase in the net loss for
the period was primarily attributable to impairment provisions, a decrease in
lease revenue, and additional interest being charged on accrued but unpaid class
E note interest.
55

LEASING REVENUES

Leasing revenues (which include maintenance reserve receipts which
Airplanes Group receives from certain of its lessees) for the year ended March
31, 2002 were $410 million (Airplanes Limited: $382 million; Airplanes Trust:
$28 million) compared with $471 million (Airplanes Limited: $432 million;
Airplanes Trust: $39 million) for the year ended March 31, 2001. The decrease in
2002 was primarily attributable to a reduction in lease revenues due to an
increased level of lease restructurings, greater aircraft downtime and, to a
lesser extent, lower interest rates on floating rate leases, a greater number of
off-lease aircraft during the year ended March 31, 2002 and the reduction in the
number of aircraft on lease in the year ended March 31, 2002 as a consequence of
previous aircraft sales. At March 31, 2002, Airplanes Group had 180 of its 186
aircraft on lease (Airplanes Limited: 168 aircraft; Airplanes Trust: 12
aircraft) compared to 187 of its 193 aircraft on lease (Airplanes Limited: 171
aircraft; Airplanes Trust: 16 aircraft) at March 31, 2001.

IMPAIRMENT PROVISION

Aircraft carrying values are periodically assessed for impairment in
accordance with SFAS 144. The statement requires the recognition of an
impairment when an assets carrying value is greater than its net undiscounted
expected future cash flows. Following receipt of the January 2002 appraised
values (see "Item 1 -- Business -- The Aircraft, Related Leases and Collateral
- -- Appraisals") and consideration of the estimated future cash flows to be
generated by our aircraft, an SFAS 144 assessment resulted in the requirement
for an impairment provision of $292 million (Airplanes Limited: $245 million;
Airplanes Trust: $47 million) in the year ended March 31, 2002.

DEPRECIATION AND AMORTIZATION

The charge for depreciation and amortization in the year ended March 31,
2002 amounted to $159 million (Airplanes Limited: $146 million; Airplanes Trust:
$13 million) compared with $170 million (Airplanes Limited: $154 million;
Airplanes Trust: $16 million) for the year ended March 31, 2001. The reduced
charge in the year ended March 31, 2002, resulted from the reduced depreciable
value of the fleet following the impairment provision created in the quarter
ended December 31, 2001.

AIRCRAFT SALES

Sales revenues of $5 million (Airplanes Limited: $5 million; Airplanes
Trust; $Nil) in respect of the sale of three B737-200A aircraft and one DC9-51
aircraft were received in the year ended March 31, 2002. The net book value of
the aircraft sold was $2 million (Airplanes Limited: $2 million, Airplanes Trust
$Nil) in the year ended March 31, 2002. Sales revenues of $21 million (Airplanes
Limited: $8 million, Airplanes Trust: $13 million) in respect of the sale of the
airframe from an A300 aircraft, the sale of four engines from two A300 aircraft,
the airframes of which had been sold separately and the sale of one B737-200A
aircraft were received in the year ended March 31, 2001. The net book value of
the aircraft sold was $14 million (Airplanes Limited: $4 million, Airplanes
Trust: $10 million) in the year ended March 31, 2001.

NET INTEREST EXPENSE

Net interest expense was $614 million (Airplanes Limited: $559 million;
Airplanes Trust: $55 million) in the year ended March 31, 2002 compared to $536
million (Airplanes Limited: $487 million; Airplanes Trust: $49 million) in the
year ended March 31, 2001. The increase in the amount of interest charged was
primarily due to additional interest charged on accrued but unpaid class E note
interest of $101 million offset by lower average debt and interest rates and a
gain on the sale of swaptions of $9 million in the year ended March 31, 2002.

The weighted average interest rate on the class A, B, C and D notes (taking
into account the interest rate swaps entered into by Airplanes Group and the
class E minimum interest amount but excluding the class E supplemental interest
amount and the remainder of the class E adjusted interest) during the year ended
March 31, 2002 was 7.18% and the average debt in respect of the class A, B, C
and D notes outstanding during the year was $2,797 million. The class E notes
accrue interest at a rate of 20% per annum (as adjusted by reference to the U.S.
consumer price index, effective March 28, 1996). The weighted average interest
rate on the class A, B, C
56

and D notes (also taking into account the interest rate swaps entered into by
Airplanes Group and the class E minimum interest amount but excluding the class
E supplemental interest amount and the remainder of the class E adjusted
interest) during the year ended March 31, 2001 was 7.669% and the average debt
in respect of the class A, B, C and D notes outstanding during the year was
$2,984 million.

The difference for the year ended March 31, 2002 in Airplanes Group's net
interest expense of $614 million (Airplanes Limited: $559 million; Airplanes
Trust: $55 million) and cash paid in respect of interest of $186 million
(Airplanes Limited: $169 million; Airplanes Trust: $17 million) is substantially
accounted for by the fact that interest on the class E notes is accrued but
unpaid.

Net interest expense is stated after deducting interest income earned
during the relevant year. In the year ended March 31, 2002, Airplanes Group
earned interest income (including lessee default interest) of $6 million
(Airplanes Limited: $6 million; Airplanes Trust: $Nil) compared with $14 million
in the year ended March 31, 2001 (Airplanes Limited: $14 million; Airplanes
Trust: $Nil).

BAD DEBT PROVISIONS

Airplanes Group's practice is to provide specifically for any amounts due
but unpaid by lessees based primarily on the amount due in excess of security
held and also taking into account the financial strength and condition of a
lessee and the economic conditions existing in the lessee's operating
environment. While a number of Airplanes Group's lessees failed to meet their
contractual obligations in the year ended March 31, 2002, resulting in the
requirement for additional provisions in respect of bad and doubtful debts in
respect of these lessees, the credit exposure with regard to certain other
carriers improved in the year. Overall, there was a net charge of $3 million in
respect of bad and doubtful debts (Airplanes Limited: $2 million; Airplanes
Trust: $1 million) in the year ended March 31, 2002, compared with a net charge
of $7 million for the year ended March 31, 2001 (Airplanes Limited: $5 million;
Airplanes Trust: $2 million). The net charge in the year ended March 31, 2002
was primarily as a result of provisions required in respect of two Colombian
lessees, one Brazilian lessee and one U.S. lessee.

LOSS-MAKING LEASE PROVISIONS

Prior to the fourth quarter of the year ended March 31, 2002, we deemed
lease agreements to be "loss making" in circumstances where the contracted
rental payments were insufficient to cover the depreciation and allocated
interest attributable to the aircraft plus certain direct costs, such as legal
fees and registration costs, attributable to that lease over its term. For these
purposes, interest was allocated to individual aircraft based on the weighted
average interest cost of the principal balance of the notes and the class E
notes (excluding, in the case of the class E notes, the element of interest
which is payable only in the event that the principal amount of all the notes is
repaid). We determined that this provision for loss making leases and related
reserve was not appropriate under authoritative accounting literature and we
therefore eliminated such provision. All prior periods presented in our
financial statements were restated to reflect this change.

OTHER LEASE COSTS

Other lease costs, comprising mainly a transfer to the provision for
maintenance and aircraft related technical expenditure associated with
remarketing the aircraft, in the year ended March 31, 2002 amounted to $73
million (Airplanes Limited: $70 million; Airplanes Trust: $3 million) compared
to other lease costs of $83 million (Airplanes Limited: $81 million; Airplanes
Trust: $2 million) in the year ended March 31, 2001. The decrease in other lease
costs arises due to a lower number of new leases entered into during the year
and an increased number of lease extensions, resulting in lower transition
costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the year ended March 31,
2002 amounted to $36 million (Airplanes Limited: $33 million; Airplanes Trust:
$3 million). This is a comparable expense to that incurred in the year ended
March 31, 2001 of $35 million (Airplanes Limited: $33 million; Airplanes Trust:
$2 million).

57

The most significant element of selling, general and administrative
expenses is the aircraft servicing fees paid to GECAS. Substantially all of
these amounts represent asset based fees calculated as an annual percentage of
agreed values of aircraft under management pursuant to a servicing agreement.
Selling, general and administrative expenses in the year ended March 31, 2002
and the year ended March 31, 2001 include $24 million (Airplanes Limited: $22
million; Airplanes Trust: $2 million) relating to GECAS servicing fees.

A further significant element of Airplanes Group's actual selling, general
and administrative expenses reported in the year ended March 31, 2002 is $10
million (Airplanes Limited: $9 million; Airplanes Trust: $1 million) in respect
of administrative agency and cash management fees payable to subsidiaries of
debis AirFinance Ireland, similar to the charge of $9 million for the year ended
March 31, 2001.

OPERATING LOSS

The operating loss for the year ended March 31, 2002 was $764 million
(Airplanes Limited: $670 million; Airplanes Trust: $94 million) compared with an
operating loss of $353 million for the year ended March 31, 2001 (Airplanes
Limited: $324 million; Airplanes Trust: $29 million). Airplanes Limited and
Airplanes Trust are expected to continue to report substantial losses in the
future.

TAXES

There was a tax benefit of $64 million (Airplanes Limited: $42 million;
Airplanes Trust: $22 million) in the year ended March 31, 2002, as compared with
a tax benefit of $20 million (Airplanes Limited: $8 million, Airplanes Trust:
$12 million) for the year ended March 31, 2001. This benefit arose from the
reversal of timing differences in deferred tax (see note 18 to the financial
statements).

NET LOSS

The net loss after taxation for the year ended March 31, 2002 was $695
million (Airplanes Limited: $623 million; Airplanes Trust: $72 million) compared
with a net loss after taxation for the year ended March 31, 2001 of $333 million
(Airplanes Limited: $316 million; Airplanes Trust: $17 million). The principal
change in the year ended March 31, 2002 is the inclusion of an impairment
provision of $292 million.

FINANCIAL RESOURCES AND LIQUIDITY

Our primary source of liquidity is rental payments made by lessees under
the leases. Our principal uses of cash rental payments are expenses related to
the aircraft and their servicing, corporate expenses and the payment of
interest, principal and any premium on indebtedness. See "-- Indebtedness" for
more information regarding our outstanding debt.

Airplanes Group's cash balances at March 31, 2003 amounted to $141 million
(Airplanes Limited: $135 million; Airplanes Trust: $6 million) compared to cash
balances at March 31, 2002 of $142 million (Airplanes Limited: $136 million;
Airplanes Trust: $6 million).

Under the terms of Airplanes Group's indebtedness, we are required to
maintain cash balances, which we refer to as the "LIQUIDITY RESERVE AMOUNT,"
equal to (1) the amount of security deposits ($30 million at March 31, 2003) and
(2) a maintenance reserve. See "-- The Accounts -- Liquidity Reserve Amount" for
circumstances under which these amounts may be increased or decreased. The terms
of Airplanes Group's indebtedness restrict the use of this cash so that it is
generally not available to service debt. The liquidity reserve amount has been
determined largely based on an analysis of historical experience, assumptions
regarding Airplanes Group's future performance and the frequency and cost of
certain contingencies in respect of the aircraft. It is intended to provide
liquidity for meeting the cost of maintenance obligations and non-maintenance,
aircraft-related contingencies such as removing liens, complying with ADs and
repossessing and re-leasing aircraft.

In analyzing the future impact of costs, assumptions have been made
regarding their frequency and amount based on historical experience. There can
be no assurance, however, that historical experience will prove to be relevant
or that actual cash received by Airplanes Group will not be significantly less
than that assumed. Any
58

significant adverse variation, such as we are experiencing, may materially
adversely affect our ability to make payments of interest and principal on the
notes and certificates.

During future years, we may have to incur unusually high cash expenditures
for the purpose of airframe and engine overhauls and complying with new
regulatory requirements for aircraft operating in Europe and North America.
Depending on their level and timing, these payments could further adversely
affect our ability to make certain principal payments on the notes since
aircraft expenses rank ahead of payments on the notes and certificates.

OPERATING ACTIVITIES

Operating cash flows depend on many factors including the performance of
lessees and Airplanes Group's ability to re-lease aircraft, the average cost of
the notes, the efficacy of Airplanes Group's interest rate hedging policies, the
ability of Airplanes Group's swap providers to perform under the terms of their
swap and similar obligations and maintenance cash flows which, although expected
to be neutral over time, may not balance in any given year.

Net cash provided by operating activities in the year ended March 31, 2003
amounted to $91 million (Airplanes Limited: $81 million; Airplanes Trust: $10
million) compared with $120 million in the year ended March 31, 2002 (Airplanes
Limited: $134 million; Airplanes Trust: $(14) million). This includes cash paid
in respect of interest of $179 million in the year ended March 31, 2003
(Airplanes Limited: $162 million; Airplanes Trust: $17 million) compared with
the $186 million in the year ended March 31, 2002 (Airplanes Limited: $169
million; Airplanes Trust: $17 million). The decrease in net cash provided by
operating activities in the year ended March 31, 2003 is primarily attributable
to an increased level of lease restructurings, greater aircraft downtime, lower
interest rates on floating rate leases and a reduction in the number of aircraft
on lease as a result of previous aircraft sales. This was offset to some extent
by net maintenance inflows, lower LIBOR rates on the notes and a reduction in
other lease costs.

There was a reduction in the amount of cash paid as interest during the
year ended March 31, 2003 of $7 million, as a result of lower average debt and a
lower average interest rate.

INVESTING AND FINANCING ACTIVITIES

Cash flows from investing activities in the year ended March 31, 2003
reflect the cash provided by capital and sales type leases which was $4 million
(Airplanes Limited: $4 million; Airplanes Trust: $Nil) compared to $7 million
(Airplanes Limited: $7 million; Airplanes Trust: $Nil) in the year ended March
31, 2002. In the year ended March 31, 2003, Airplanes Group also received net
sales proceeds of $14 million (Airplanes Limited: $14 million; Airplanes Trust:
$Nil) compared to $5 million (Airplanes Limited: $5 million; Airplanes Trust:
$Nil) in the year ended March 31, 2002.

Cash flows from financing activities in the year ended March 31, 2003
reflect the repayment of $108 million of principal on the subclass A-6 notes and
class B notes by Airplanes Group (Airplanes Limited: $98 million; Airplanes
Trust: $10 million) compared with $184 million of principal repaid on the
subclass A-6 and class B by Airplanes Group (Airplanes Limited: $168 million;
Airplanes Trust: $16 million) in the year ended March 31, 2002. The decrease in
principal repayments in the year ended March 31, 2003 as compared to the year
ended March 31, 2002, is due to an decrease in cash provided by operating
activities as discussed above.

59

INDEBTEDNESS

Airplanes Group's outstanding indebtedness consisted of class A, B, C, D
and E notes in the amount of $3,209 million (Airplanes Limited: $2,924 million;
Airplanes Trust: $285 million) at March 31, 2003 and $3,314 million (Airplanes
Limited: $3,019 million; Airplanes Trust: $295 million) at March 31, 2002.
Airplanes Group had $591 million of class E notes outstanding at March 31, 2003
and 2002. The terms of each subclass of notes, including the outstanding
principal amount as of March 15, 2003, and estimated fair market value as of
March 31, 2003, are as follows:

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

(1) Airplanes Group was due to refinance the subclass A-8 certificates and
notes on March 15, 2003. Given market conditions and the impact these
conditions have had on our performance as compared to the 2001 Base Case, a
refinancing at that time was not economically viable. Step-up interest has
therefore accrued on the subclass A-8 certificates and notes since March
15, 2003. However, due to insufficient cash flows and the low priority of
step-up interest in the priority of payments, no step-up interest has been
paid.

Prior to March 15, 2003, on each payment date the priority of the principal
amounts outstanding in respect of the various subclasses of class A
certificates and notes was subclass A-6, subclass A-9 and subclass A-8 in
that order. Because there was no refinancing of the subclass A-8 notes by
March 15, 2003, the priority of the principal amounts outstanding in
respect of the various subclasses of class A certificates and notes is now,
subclass A-6, subclass A-8 and subclass A-9 in that order.

(2) The subclass A-9 certificates were issued on March 15, 2001.

(3) The annual interest rate on the class E notes is adjusted by reference to
changes in the U.S. Consumer Price Index since March 28, 1996. As of March
31, 2003, the annual interest rate on the class E notes was 23.90%. Except
for the class E minimum interest amount and supplemental interest amount,
payable at 1% and 10% per annum respectively, no principal or interest is
payable on the class E notes until the more senior classes of notes have
all been paid in full. As of March 31, 2003, the accrued and unpaid class E
minimum interest amount and supplemental interest amount was $2,041
million.

(4) Although the estimated fair values of the class A to D notes outstanding
have been determined by reference to prices as at March 31, 2003 provided
by an independent third party, these fair values do not reflect the market
value of these notes at a specific time and should not be relied upon as a
measure of the value that could be realized by a noteholder upon sale.

NEW PRONOUNCEMENTS

In August 2001, the FASB issued SFAS Statement No. 143, Accounting for
Asset Retirement Obligations. This statement addresses financial accounting and
reporting obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 requires
Airplanes Group to record the fair value of an asset retirement obligation as a
liability in the period in which the entity incurs a legal obligation associated
with the retirement of a tangible long-lived asset. SFAS No. 143 also requires
Airplanes Group to record the contra to the initial obligation as an increase to
the carrying amount of the related long-lived asset and to depreciate that cost
over the remaining useful life of the asset. The liability is adjusted at the
end of each period to reflect the passage of time and changes in the estimated
future cash flows underlying the initial fair value
60

measurement. No accrual has been made for asset retirement cost as Airplanes
Group is currently unable to determine the timing or amount of any such costs.

On April 30, 2003, the FASB issued SFAS Statement No. 149, Amendment of
Statement 133 on Derivative Instruments and Hedging Activities, which amends
FASB Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities, to address (1) decisions reached by the Derivatives Implementation
Group, (2) developments in other FASB projects that address financial
instruments, and (3) implementation issues related to the definition of a
derivative. Statement 149 has multiple effective date provisions depending on
the nature of the amendment to Statement 133, and Airplanes Group is currently
considering its potential effect on future financial statements.

On May 15, 2003, the FASB issued SFAS Statement No. 150, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity. Statement 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. Statement 150 is effective for all financial instruments entered
into or modified after May 31, 2003. For unmodified financial instruments
existing at May 31, 2003, Statement 150 is effective at the beginning of the
first interim period beginning after June 15, 2003, except for mandatorily
redeemable financial instruments of nonpublic entities. As Airplanes Group does
not currently have any equity instruments outstanding, the new standard is not
expected to have any effect on future financial statements.

COMPARISON OF ACTUAL CASH FLOWS VERSUS THE 2001 BASE CASE FOR THE FOUR MONTH
PERIOD FROM JANUARY 10, 2003 TO MAY 15, 2003.

The discussion and analysis which follows is based on the results of
Airplanes Limited and Airplanes Trust and their subsidiaries as a single entity
(collectively "AIRPLANES GROUP").

THE FINANCIAL INFORMATION SET FORTH BELOW WAS NOT PREPARED IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OF THE UNITED STATES. THIS
INFORMATION MUST BE READ IN CONJUNCTION WITH AIRPLANES GROUP'S MOST RECENT
FINANCIAL INFORMATION PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES OF THE UNITED STATES. FOR THIS YOU SHOULD REFER TO PAGES F-1 TO F-27
OF THIS REPORT ON FORM 10-K.

For the purposes of this report, the "FOUR MONTH PERIOD" comprises
information from the monthly cash reports as filed at the Securities and
Exchange Commission as Forms 8-K for the relevant months ended February 18,
2003, March 17, 2003, April 15, 2003 and May 15, 2003. The financial data in
these reports includes cash receipts from January 10, 2003 (first day of the
Calculation Period for the February 2003 report) up to May 9, 2003 (last day of
the Calculation Period for the May 2003 report). Page 69 presents the cumulative
cash flow information from March 2001 to the May 2003 payment date. This report,
however, limits its commentary to the Four Month Period.

THE 2001 BASE CASE CONTAINED ASSUMPTIONS IN RESPECT OF AIRPLANES GROUP'S
FUTURE CASH FLOWS AND EXPENSES. SINCE THESE ASSUMPTIONS WERE DEVELOPED, GLOBAL
ECONOMIC CONDITIONS, AND PARTICULARLY CONDITIONS IN THE COMMERCIAL AVIATION
INDUSTRY, HAVE WORSENED SIGNIFICANTLY, PARTICULARLY SINCE SEPTEMBER 11, 2001, AS
DISCUSSED ABOVE UNDER "-- RECENT DEVELOPMENTS". ACCORDINGLY THE PERFORMANCE OF
AIRPLANES GROUP HAS BEEN AND WE EXPECT IT TO CONTINUE TO BE WORSE THAN THE 2001
BASE CASE, WITH PARTICULAR REFERENCE TO THOSE ASSUMPTIONS RELATING TO AIRCRAFT
RE-LEASE RATES, AIRCRAFT VALUES, AIRCRAFT DOWNTIME AND LESSEE DEFAULTS.

THE FOLLOWING IS A DISCUSSION OF THE TOTAL CASH COLLECTIONS, TOTAL CASH
EXPENSES, INTEREST PAYMENTS AND PRINCIPAL PAYMENTS IN THE FOUR MONTH PERIOD AND
SHOULD BE READ IN CONJUNCTION WITH THE ANALYSIS ON PAGE 68.

CASH COLLECTIONS

"TOTAL CASH COLLECTIONS" include Net Lease Rental, Interest Earned,
Aircraft Sales, Net Maintenance and Other Receipts (each as defined below). In
the Four Month Period, Airplanes Group generated approximately $87.0 million in
Total Cash Collections, $53.0 million less than the 2001 Base Case. This
difference is due to a combination of the factors set out below (the numbers in
square brackets below refer to the line item number shown on page 67).
61

[2] RENEGOTIATED LEASES

"RENEGOTIATED LEASES" is a measure of the loss in rental revenue caused by
a lessee negotiating a reduction in the lease rental, in the period to the
original contracted expiry date of the lease prior to the renegotiation of the
terms of that lease. In the Four Month Period, the amount of revenue loss
attributed to Renegotiated Leases was $5.5 million, as compared to $Nil assumed
in the 2001 Base Case. This related primarily to renegotiations with four Latin
American lessees, four European lessees, one North American lessee and three
Asian lessees representing 29 aircraft in total on lease to these lessees at
March 31, 2003 and 21.54% of our portfolio by appraised value at January 31,
2003.

For details of current lessee restructurings please refer to "Item 1.
Business -- The Aircraft, Related Leases and Collateral -- The Lessees".

[3] RENTAL RESET -- RELEASING EVENTS WHERE NEW LEASE RATE DEVIATED FROM THE
2001 BASE CASE

"RENTAL RESETS" is a measure of the difference in rental revenue when new
lease rates are different from those assumed in the 2001 Base Case, including
lease rate adjustments for changes in interest rates on floating rate leases and
lease rates achieved where revenues are dependent on aircraft usage. The loss of
rental revenue as a result of Rental Resets amounted to $30.4 million in the
Four Month Period, as compared to $Nil assumed in the 2001 Base Case. This
reflects current market conditions where an oversupply of aircraft has resulted
in lower lease rates upon re-leasing or extension of leases than assumed in the
2001 Base Case.

[4] LEASE RENTALS -- AIRCRAFT SALES

"LEASE RENTALS -- AIRCRAFT SALES" represents rental revenue foregone in
respect of aircraft sold prior to their assumed sale date in the 2001 Base Case,
net of rental revenue received in respect of aircraft remaining on lease after
their assumed sale date in the 2001 Base Case. In the 2001 Base Case, all
aircraft are assumed to be sold either at the end of their useful economic life
or, where an aircraft was subject to a lease with the lease expiry date falling
after the end of its useful economic life, on the contracted lease expiry date.
Since March 2001, three DC9-51 aircraft, one DC9-32 aircraft, one DC8-71F
aircraft, two B727-200A aircraft and two B737-200A aircraft have been sold prior
to their assumed sale date in the 2001 Base Case, resulting in a negative
variance of $2.3 million in lease rentals compared to the 2001 Base Case in the
Four Month Period. Lease rentals totalling $0.8 million were received in the
Four Month Period in respect of four DC9-32 aircraft which have remained on
lease after their assumed sale date in the 2001 Base Case.

[5] CONTRACTED LEASE RENTALS

"CONTRACTED LEASE RENTALS" represents the current contracted lease rental
rollout which is equal to the 2001 Base Case Lease Rentals less adjustments for
Renegotiated Leases, Rental Resets and Lease Rentals -- Aircraft Sales. For the
Four Month Period, Contracted Lease Rentals were $100.5 million, which was $37.4
million less than assumed in the 2001 Base Case. The difference is due to losses
from Renegotiated Leases, Rental Resets and Lease Rentals -- Aircraft Sales as
discussed above.

[6] MOVEMENT IN CURRENT ARREARS BALANCE

"CURRENT ARREARS" is the total Contracted Lease Rentals outstanding from
current lessees at a given date but excluding any amounts classified as Bad
Debts. There was a net increase of $9.9 million in the Current Arrears balance
over the Four Month Period, as compared to $Nil assumed in the 2001 Base Case.

NET STRESS-RELATED COSTS

"NET STRESS-RELATED COSTS" is a combination of all the factors which can
cause actual lease rentals to vary from the Contracted Lease Rentals. The 2001
Base Case assumed net stress-related costs equal to 6.0% of the 2001 Base Case
Lease Rentals in the Four Month Period. For the Four Month Period, Net
Stress-Related Costs incurred amounted to a net cash outflow of $16.2 million
(11.7% of Lease Rentals) compared to $8.3 million
62

outflow assumed in the 2001 Base Case, a variance of $7.9 million that is due to
the five factors described in items [8] to [12] below.

[8] BAD DEBTS

"BAD DEBTS" are arrears owed by lessees which have defaulted and which are
deemed irrecoverable. Bad Debts were $1.6 million (1.2% of Lease Rentals) for
the Four Month Period, $0.2 million more than the 2001 Base Case assumption of
$1.4 million (1.0% of Lease Rentals).

[9] DEFERRED ARREARS BALANCE

"DEFERRED ARREARS BALANCE" refers to current arrears that have been
capitalized and restructured into a deferred balance. In the Four Month Period,
Airplanes Group received payments totaling $0.1 million in accordance with these
restructurings. Payments assumed to be received in accordance with
restructurings included in the 2001 Base Case were $Nil for the Four Month
Period.

[10] AIRCRAFT ON GROUND ("AOG")

"AOG" is defined as the 2001 Base Case Lease Rentals lost when an aircraft
is off-lease or deemed non-revenue earning. Airplanes Group had thirty-one
aircraft AOG at various times during the Four Month Period and at March 31,
2003, twenty-one aircraft were AOG, two of which were subject to letters of
intent for lease to new lessees and one of which was subject to a lease
contract. In the Four Month Period, the 2001 Base Case Lease Rentals loss
attributed to AOG was $14.9 million (10.8% of Lease Rentals), as compared to
$5.8 million (4.2% of Lease Rentals) assumed under the 2001 Base Case.

[11] OTHER LEASING INCOME

"OTHER LEASING INCOME" consists of miscellaneous income received in
connection with a lease other than contracted rentals, maintenance receipts and
security deposits, such as early termination payments or default interest. In
the Four Month Period, Other Leasing Income amounted to $0.2 million, as
compared to $Nil assumed under the 2001 Base Case.

[12] REPOSSESSION COSTS

"REPOSSESSION COSTS" cover legal and aircraft technical costs incurred as a
result of repossessing an aircraft. In the Four Month Period, Repossession Costs
amounted to $Nil, as compared to $1.1 million assumed under the 2001 Base Case.

[14] NET LEASE RENTAL

"NET LEASE RENTAL" is Contracted Lease Rentals less any movement in Current
Arrears balance and Net Stress-Related Costs. In the Four Month Period, Net
Lease Rental amounted to $74.4 million, $55.2 million less than that assumed in
the 2001 Base Case. The variance was attributable to the combined effect of the
factors outlined in items [2] to [4] and in items [6] to [12] above.

[15] INTEREST EARNED

"INTEREST EARNED" relates to interest received on cash balances held in the
Collection and Expense Accounts. Cash held in the Collection Account consists of
the cash liquidity reserve amount of $80 million plus the security deposit
amount, in addition to the intra-month cash balances for all the rentals and
maintenance payments collected prior to the monthly payment date. The Expense
Account contains cash set aside to pay for expenses which are expected to be
payable over the next month. In the Four Month Period, Interest Earned amounted
to $0.6 million, $1.6 million less than that assumed in the 2001 Base Case. The
difference is due to a lower average reinvestment rate than assumed in the 2001
Base Case. The average actual reinvestment rate for the Four Month Period was
1.2% (excluding a $5 million guaranteed investment contract) as compared to the
5.2% assumed in the 2001 Base Case.
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[16] AIRCRAFT SALES

Aircraft sales proceeds totalling $5.5 million were received in the Four
Month Period in respect of the sale of one B727-200A aircraft, one DC9-51
aircraft and insurance proceeds received in respect of one DC9-32 aircraft which
was involved in a landing incident on October 31, 2002, this aircraft having
been deemed a constructive total loss by the insurers. Aircraft sales proceeds
for the Four Month Period also included the receipt of an upfront deposit in
respect of the conditional sale at a future date of one B737-200A aircraft. In
the 2001 Base Case, aircraft sales proceeds totaling $8.2 million are assumed to
be received in the Four Month Period in respect of the assumed sale of one
DC9-32 aircraft, which remains on lease, and two B727-200A aircraft, one of
which was sold in the Four Month Period, the other having been sold in August
2001. In the 2001 Base Case all aircraft are assumed to be sold either at the
end of their useful economic life or, where an aircraft was subject to a lease
with the lease expiry date falling after the end of its useful economic life, on
the contracted lease expiry date.

[17] NET MAINTENANCE

"NET MAINTENANCE" refers to maintenance reserve revenue received less any
maintenance reimbursements paid to lessees. In the Four Month Period, positive
net maintenance cash flows of $6.5 million were received. The 2001 Base Case
makes no assumptions for Net Maintenance as it assumes that, over time,
maintenance revenue will equal maintenance expenditure. However, it is unlikely
that in any particular reporting period, maintenance revenue will exactly equal
maintenance expenses.

CASH EXPENSES

"TOTAL CASH EXPENSES" include Aircraft Operating Expenses and Selling,
General and Administrative ("SG&A") Expenses. In the Four Month Period, Total
Cash Expenses were $20.2 million compared to $22.7 million assumed in the 2001
Base Case, a positive variance of $2.5 million. A number of offsetting factors
discussed below have given rise to this.

"AIRCRAFT OPERATING EXPENSES" includes all operational costs related to the
leasing of aircraft including costs of insurance, re-leasing and other overhead
costs.

[20] RE-LEASING AND OTHER OVERHEAD COSTS

"RE-LEASING AND OTHER OVERHEAD COSTS" consist of miscellaneous re-delivery
and leasing costs associated with re-leasing events, costs of insurance and
other lessee-related overhead costs. In the Four Month Period, these costs
amounted to $7.5 million (or 5.4% of Lease Rentals) compared to $6.9 million (or
5.0% of Lease Rentals) assumed in the 2001 Base Case.

"SG&A EXPENSES" relate to fees paid to the servicer and to other service
providers.

[21] AIRCRAFT SERVICER FEES

"AIRCRAFT SERVICER FEES" are defined as amounts paid to the servicer in
accordance with the terms of the servicing agreement. In the Four Month Period,
the total Aircraft Servicer Fees paid were $8.8 million, $0.9 million more than
that assumed in the 2001 Base Case.

Aircraft Servicer Fees consist of:

The Retainer Fee is a fixed amount per month per aircraft and changes only
as aircraft are sold.

64

[23] OTHER SERVICER FEES AND OTHER OVERHEADS

"OTHER SERVICER FEES AND OTHER OVERHEADS" relate to fees and expenses paid
to other service providers including the administrative agent, the cash manager,
financial advisers, legal advisers and accountants and to the
directors/controlling trustees. In the Four Month Period, Other Servicer Fees
and Other Overheads amounted to $3.9 million, $0.7 million more than an assumed
expense of $3.2 million in the 2001 Base Case.

[23A] OTHER SG&A EXPENSES

"OTHER SG&A EXPENSES" refer to assumed costs of $4.7 million included in
the 2001 Base Case in respect of the refinancing of Airplanes Group's $700
million subclass A-8 notes on their expected final payment date of March 15,
2003, which was assumed in the 2001 Base Case. As the refinancing of these notes
did not proceed as scheduled (refer to item 30 below), actual refinancing costs
incurred were $Nil.

[29A] SHORTFALL IN LIQUIDITY RESERVE

Airplanes Group is required to maintain a cash balance in the collection
account under the indentures, subject to available cash flows, in an amount
equal to the sum of:

- the maintenance reserve amount ($80 million); and

- a security deposit reserve amount.

Under the schedule of required payment priorities applicable to Airplanes
Group, this cash balance is retained at point (iii) First Collection Account
Top-up (maintenance reserve amount -- $60 million) and at point (x) Second
Collection Account Top-up (maintenance reserve amount -- $20 million plus
security deposit reserve amount).

"SHORTFALL IN LIQUIDITY RESERVE" relates to any reduction in the balance of
funds on deposit in the collection account below the liquidity reserve amount as
a result of Airplanes Group not having sufficient balance of funds after payment
of expenses and all required payments on the notes which rank prior to the
liquidity reserve amount under the schedule of required payment priorities
applicable to Airplanes Group. On the May 15, 2003 payment date, there was a
shortfall in the liquidity reserve amount of $2.1 million.

[30] INTEREST PAYMENTS

In the Four Month Period, interest payments to the holders of the class A,
B, C and D notes amounted to $35.3 million which is $22.9 million lower than
assumed in the 2001 Base Case. The variance reflects a lower than expected level
of average interest rates on the floating rate class A and B notes, the impact
of which was partly offset by a higher principal balance outstanding on the
subclass A-6 notes than assumed in the 2001 Base Case. The 2001 Base Case
assumed LIBOR to be 5.2% whereas the average monthly LIBOR rate in the Four
Month Period was 1.3%.

In the Four Month Period, there was a continued suspension of payments of
the class E minimum interest amount of 1% (refer to item 33 below). No payments
of class E minimum interest were anticipated in the 2001 Base Case.

Airplanes Group's $700 million subclass A-8 notes had an expected final
payment date of March 15, 2003. Given current market conditions and the impact
these conditions have had on our performance, we believed that such a
refinancing at that time was not economically viable and therefore it did not
proceed as scheduled. In accordance with the terms of the subclass A-8 notes,
step-up interest of 0.5% per annum has begun to accrue on these notes from March
17, 2003 (the first business day following the expected final payment date) and
will continue to accrue until they are repaid in full or refinanced. Under the
schedule of required payment priorities applicable to Airplanes Group, step-up
interest is payable after payment of expenses, interest, minimum principal and
scheduled principal on the class A, B, C and D notes and any aircraft
modification payments. To the extent that step-up interest is not paid, it will
accrue in accordance with the terms of the subclass A-8 notes. Available cash
flows were not sufficient to allow payment of step-up interest on the April 15,
2003 and May 15, 2003 (as well as June 16, 2003) payment dates and this is
expected to continue to be the case. Total step-up interest

65

(including interest accrued on unpaid step-up interest) accrued and unpaid on
the subclass A-8 notes at May 15, 2003 was $0.6 million.

[31] SWAP AND SWAPTION CASHFLOWS

Airplanes Group's net swap payments during the Four Month Period were $16.9
million higher than the $2.1 million assumed in the 2001 Base Case due to lower
than anticipated interest rates.

[33] PRINCIPAL PAYMENTS

In the twenty-six month period from March 10, 2001 to May 15, 2003, total
principal payments amounted to $295.9 million, (comprising $254.9 million on the
class A notes and $41.0 million on the class B notes), $99.3 million less than
assumed in the 2001 Base Case. The breakdown of the $99.3 million variance is
set out on page 69. In the Four Month Period, total principal payments amounted
to $17.1 million, (comprising $10.6 million on the class A notes and $6.5
million on the class B notes), $39.9 million less than assumed in the 2001 Base
Case. The breakdown of the $39.9 million variance is set out on page 68.

Applying the declining value assumptions in the 1996 Base Case to the
original March 1996 fleet appraisals and adjusting for aircraft sales, the total
appraised value of the aircraft was assumed to be $2,996.1 million at May 15,
2003. Our portfolio is appraised annually and the most recent appraisal was
obtained on January 31, 2003 and valued the current portfolio at $2,421.4
million. Applying the declining value assumptions to this appraisal, the total
appraised value was $2,372.6 million at May 15, 2003.

As a consequence of the cumulative excess decline in appraised values
experienced since March 1996, combined with overall cash performance in that
period, Airplanes Group's available cash flows, after payment of expenses,
interest and class A and B minimum principal amounts, have been redirected in
accordance with the priority of payments to pay class A principal adjustment
amount throughout the twenty-six month period since the 2001 refinancing. Class
A principal adjustment amount is intended to accelerate the principal
amortization schedule of the class A notes when the appraised value of the
aircraft declines at a greater rate than the decline in appraised values assumed
in the 1996 Base Case by reference to certain loan to current appraised value
ratios. Since the principal adjustment amount on the class A notes ranks ahead
of the scheduled principal payments on the class C and D notes, and since
available cash flows were not sufficient to pay all of the class A principal
adjustment amount, scheduled principal payments on the class C and D notes have
been deferred on each payment date during the twenty-six month period. Total
deferrals of class C and class D scheduled principal amounts amounted to $57.2
million and $33.4 million respectively as of May 15, 2003. The class A principal
adjustment amount outstanding was $311.6 million as of May 15, 2003.

There has been a decline of 12.66% in the appraised value of our fleet in
the year to January 31, 2003, which is $170 million greater than the decline
assumed in our 2001 Base Case assumptions. The appraised values are based upon
the value of the aircraft at normal utilization rates in an open, unrestricted
and stable market, and take into account long-term trends, including current
expectations of particular models becoming obsolete more quickly, as a result of
airlines switching to different models, manufacturers ceasing production or
lease values for aircraft declining more rapidly than previous predictions. As a
theoretical value, the appraised value is not indicative of market value and
thus there is no guarantee that we would obtain the appraised value upon sale of
any aircraft, since we might sell at a low point in the business cycle, and
since appraised values are forward-looking. If the current oversupply of
aircraft continues longer term, given the age of our fleet, certain of our
aircraft may become obsolete significantly earlier than the useful life
expectancy assumed in the 2001 Base Case assumptions, which would negatively
impact appraised values further.

OTHER ISSUES

For a discussion of our current expectations as to our future ability to
make payments on our notes and certificates in light of our weaker than expected
performance as well as a discussion of rating actions on the certificates, see
"-- Recent Developments -- Performance".

66

67

AIRPLANES GROUP CASH FLOW PERFORMANCE FOR THE PERIOD FROM
JANUARY 10, 2003 TO MAY 15, 2003 (4 MONTHS)
COMPARISON OF ACTUAL CASH FLOWS VERSUS 2001 BASE CASE CASH FLOWS

68

AIRPLANES GROUP CASH FLOW PERFORMANCE FOR THE PERIOD FROM MARCH 10, 2001
TO MAY 15, 2003 (26 MONTHS)
COMPARISON OF ACTUAL CASH FLOWS VERSUS 2001 BASE CASE CASH FLOWS

- ---------------
[1] "INTEREST COVERAGE RATIO" is equal to Net Cash Collections (excluding
interest and swap payments) expressed as a ratio of the interest payable on
each subclass of notes plus the interest and minimum principal payments
payable on each subclass of notes that rank senior in priority of payment to
the relevant subclass of notes.

[2] "DEBT COVERAGE RATIO" is equal to Net Cash Collections (excluding interest
and swap payments) expressed as a ratio of the interest and
minimum/scheduled principal payments payable on each subclass of notes plus
the interest and minimum/scheduled principal payments payable on each
subclass of notes that ranks equally with or senior to the relevant subclass
of notes in the priority of payments. In respect of the class A notes,
principal adjustment amount payments have been excluded as they are a
function of aircraft values. Debt Coverage Ratios have not been provided for
the class C and D notes as no scheduled principal amounts have been paid on
these notes in the period since March 2001.

[3] "ADJUSTED PORTFOLIO VALUE" represents the base value of each aircraft in the
portfolio as determined by the most recent appraisal multiplied by the
depreciation factor at payment date divided by the depreciation factor as of
the relevant appraisal date.

[4] "TOTAL ASSET VALUE" is equal to total expected/adjusted portfolio value plus
liquidity reserve amount minus lessee security deposits.

70

THE ACCOUNTS

The indentures and the security trust agreement provide that substantially
all of Airplanes Group's cash inflows and outflows occur through the rental
accounts, collection account, lessee funded account and expense account which
the cash manager, acting on behalf of the security trustee, has established and
maintains at a bank having:

- a long-term unsecured debt rating of not less than AA, or the
equivalent, by the rating agencies, or

- a certificate of deposit rating of A-1+ by Standard & Poor's, P-1 by
Moody's and F1 by Fitch,

except that, where required by the terms of the relevant leases, some rental
accounts may be established at banks having ratings of less than AA, or the
equivalent, by the rating agencies or a certificate of deposit rating of less
than A-1+ by Standard & Poor's, P-1 by Moody's and F1 by Fitch.

Except where local legal or regulatory reasons do not permit, all of these
accounts are held in the names of the security trustee, who has sole dominion
and control over the accounts, including the sole power to direct withdrawals
from or transfers among the accounts. Subject to conditions set forth in the
cash management agreement, the security trustee has delegated its authority over
the accounts to the cash manager but the security trustee is not responsible for
the acts or omissions of the cash manager.

For so long as any notes remain outstanding, funds on deposit in the
accounts will be invested and reinvested at Airplanes Group's written direction
(which direction has been delegated to the cash manager pursuant to the cash
management agreement) in one or more permitted account investments, maturing, in
the case of the collection account and expense account, such that sufficient
funds shall be available to make required payments on the first succeeding
scheduled interest payment date on the notes after those investments are made.
Investment and reinvestment of funds in the lessee funded account must be made
in a manner and with maturities that conform to the requirements of the related
leases. Investment earnings on funds deposited in any account, net of losses and
investment expenses, will (to the extent permitted by the terms of the related
leases in the case of funds in the lessee funded account) be deposited in the
collection account and treated as collections.

RENTAL ACCOUNTS

The lessees make all payments under the leases directly into the applicable
rental accounts. Pursuant to the cash management agreement, the cash manager
transfers, or causes to be transferred, all funds deposited into the rental
accounts into the collection account as collections within one business day of
receipt thereof (other than certain limited amounts, if any, required to be left
on deposit for local legal or regulatory reasons).

THE COLLECTION ACCOUNT

All of the following "COLLECTIONS" received by Airplanes Group have to be
deposited in the collection account:

- rental payments,

- payments under any letter of credit, letter of comfort, letter of
guarantee or other assurance in respect of a lessee's obligations under
a lease,

- the liquidity reserve amount,

- amounts received in respect of claims for damages or in respect of any
breach of contract for any nonpayment (including any amounts received
from any Airplanes Group subsidiary, whether by way of distribution,
dividend, repayment of a loan or otherwise and any proceeds received in
connection with a lessee's restructuring),

- net proceeds of any aircraft sale or amounts received under purchase
options and other agreements,

- proceeds of any insurance payments in respect of any aircraft or any
indemnification proceeds,

- amounts transferred from the lessee funded account to the collection
account,
71

- net payments to Airplanes Group under any swap agreement,

- investment income on all amounts on deposit in the accounts (in each
case to the extent consistent with the terms of applicable related
leases), and

- any other amounts received by any member of Airplanes Group, except
specified funds required to be segregated from Airplanes Group's other
funds, applied in connection with a redemption, received in connection
with a refinancing issue of notes and required to be paid over to any
third party.

Collections on deposit in the collection account are calculated by the cash
manager on the fourth business day immediately preceding each interest payment
date. On each payment date, the cash manager will transfer from the collection
account to the expense account the portion of Airplanes Group expenses that are
due and payable or are anticipated to become due and payable over the next
interest accrual period on the notes (the "REQUIRED EXPENSE AMOUNT") and that
have not been paid directly by the cash manager to expense payees. The cash
manager may also transfer other amounts into the expense account for
unanticipated expenses falling due and payable within that interest accrual
period. If there are available funds in accordance with "-- The Notes and
Guarantees -- Priority of Payments" on any payment date, the cash manager will
also transfer amounts in respect of expenses and costs that are not regular,
monthly recurring expenses but are anticipated to become due and payable in any
future interest accrual period ("PERMITTED ACCRUALS") to the expense account.
Amounts received in respect of segregated security deposits and maintenance
reserves are transferred directly into the lessee funded account.

LIQUIDITY RESERVE AMOUNT

Airplanes Group is required to maintain a cash balance in the collection
account under the indentures in an amount equal to the sum of:

- the maintenance reserve amount ($60 million for purposes of the "First
Collection Account Top-up" plus an additional $20 million for purposes
of the "Second Collection Account Top-up" as of March 15, 2003, as
further described below), and

- a security deposit reserve amount (equal to approximately $30.3 million
as of March 15, 2003).

The required maintenance reserve amount may be increased or decreased from
time to time by an action of the board of directors of Airplanes Limited or the
controlling trustees of Airplanes Trust in light of significant changes in,
among other things, the condition of the aircraft, the terms and conditions of
future leases, the financial condition of the lessees or prevailing industry
conditions. Any reduction is subject to confirmation in advance in writing from
the rating agencies that the proposed reduction in the liquidity reserve amount
will not result in a lowering or withdrawal of their ratings of any class of
certificates.

On March 8, 2001, the board of directors of Airplanes Limited and the
controlling trustees of Airplanes Trust approved a reduction of the maintenance
reserve amount required to be retained by Airplanes Group in the collection
account from $80 million to $60 million as of March 15, 2001 for purposes of the
"First Collection Account Top-up" (but not for the "Second Collection Account
Top-up") according to the priority of payments provided in the indentures.

The reduction of the maintenance reserve amount for purposes of the "First
Collection Account Top-up" allows an additional amount of up to $20 million to
be applied, if required, to pay the minimum hedge payments, class A minimum
principal, class B interest, class B minimum principal, class C interest and
class D interest on any payment date after March 15, 2001. This additional $20
million amount, however, is still required to be retained by Airplanes Group in
the collection account for purposes of the "Second Collection Account Top-up."
This reduction of the maintenance reserve amount did not cause the rating
agencies to lower or withdraw the ratings of any class or subclass of
certificates.

If the balance of funds on deposit in the collection account falls below
the liquidity reserve amount at any time (including as a result of our
determination that the liquidity reserve amount should be increased, as required
by the applicable rating agencies or otherwise), we may continue to make all
payments, including required payments on the notes and the guarantees, which
rank prior to or equally with payments of accrued but unpaid
72

interest on the class D notes and any permitted accruals so long as the balance
of funds in the collection account does not fall below the amount required to be
retained for the purpose of the "First Collection Account Top-up" in the
priority of payments (currently $60 million). Even if the balance of funds in
the collection account falls below the amount required to be retained for the
purpose of the "First Collection Account Top-up" in the priority of payments, we
may continue to make all payments, including required payments on the notes and
the guarantees, of (a) all accrued but unpaid interest and, on the final
maturity date, principal of the class or subclass of the most senior class of
notes then outstanding to avoid a note event of default and (b) payments under
our swap agreements.

The indentures provide that if the aggregate outstanding principal balance
of the notes is less than or equal to the liquidity reserve amount, the balance
of funds in the collection account will be distributed in accordance with the
priority of payments established for the notes.

On the June 16, 2003 payment date, the amount retained for the purpose of
the "Second Collection Account Top-up" in the priority of payments was
$3,939,054 short of the full amount required to be retained at that point if
sufficient cashflows were available after payment of all scheduled amounts
ranking prior to the "Second Collection Account Top-up" in the priority of
payments. Given our expected cashflows, we expect that by the end of 2003, our
cashflows will be insufficient to enable any funds to be allocated to the
"Second Collection Account Top-up" in the priority of payments.

THE LESSEE FUNDED ACCOUNT

Some leases require that certain lessee security deposits and supplemental
rent payments to provide for maintenance reserves be segregated from other
Airplanes Group funds. These security deposits and maintenance reserves are held
in the "LESSEE FUNDED ACCOUNT" and are accounted for (and, if required by any
lease, segregated) on a per lease basis.

Funds on deposit in the lessee funded account are used to make specified
maintenance payments, security deposit repayments and other specified or
permitted payments and will not be used to make payments in respect of the notes
or the certificates at any time, including after a note event of default. In
some circumstances where lessees relinquish their rights to receive certain
maintenance and security deposit payments upon the expiration of a lease,
surplus funds may be transferred from the lessee funded account to the
collection account.

THE EXPENSE ACCOUNT

On each payment date, the cash manager withdraws the required expense
amount from the collection account to pay the expenses. To the extent that the
required expense amount has not been paid directly to expense payees, it is
deposited into the expense account. Further withdrawals of cash from the
collection account by the cash manager to satisfy expenses due and payable prior
to the next payment date that were not previously anticipated are also deposited
in the expense account. If funds on deposit in the collection account are less
than the required expense amount on any payment date, we will be unable to pay
the required expense amount in full, which may lead to a default under our
various service agreements or other contracts under which the expenses arise.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

INTEREST RATE SENSITIVITY

Airplanes Group's principal market risk exposure is to changes in interest
rates. This exposure arises from the notes (as illustrated in the table above at
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Indebtedness") and the derivative instruments used by Airplanes
Group to manage interest rate risk.

INTEREST RATE RISK AND MANAGEMENT

The leasing revenues of Airplanes Group are generated primarily from lease
rental payments which are based on either a fixed or floating rate, or a
combination of the two. In the case of floating rate leases, an element
73

of the rental varies in line with changes in LIBOR, generally six-month LIBOR.
See "Item 1. Business -- The Aircraft, Related Leases and Collateral -- The
Leases" for more information regarding the terms of our leases. As of March 31,
2003, leases representing approximately 97% of our portfolio by appraised value
as of January 31, 2003 provided for fixed rate rental payments and approximately
3% provided for floating rate payments.

In general, an interest rate exposure arises to the extent that Airplanes
Group's fixed and floating interest obligations in respect of the class A, B, C
and D notes do not correlate to the mix of fixed and floating rental payments
for different rental periods. This interest rate exposure can be managed through
the use of interest rate swaps and other derivative instruments. The class A and
class B notes bear floating rates of interest and the class C and class D notes
bear fixed rates of interest. The mix of fixed and floating rental payments
contains a higher percentage of fixed rate payments than the percentage of fixed
rate interest payments on the notes, including as a result of the fact that the
reset periods on floating rental payments are generally longer than the monthly
reset periods on the floating rate notes. In order to correlate the contracted
fixed and floating rental payments to the fixed and floating interest payments
on the notes, Airplanes Group enters into interest rate swaps.

Under the swaps, Airplanes Group pays fixed amounts and receives floating
amounts on a monthly basis. The swaps amortize having regard to a number of
factors, including the expected pay down schedule of the class A and B notes,
the expiry dates of the leases under which lessees are contracted to make fixed
rate rental payments and the LIBOR reset dates under the floating rate leases.
At least every three months, and in practice more frequently, the administrative
agent seeks to enter into additional swaps or sell at market value or unwind
part or all of the swaps and any future swaps in order to rebalance the fixed
and floating mix of interest obligations and the fixed and floating mix of
rental payments.

We have reviewed and modified our hedging policy with the approval of the
rating agencies and will not enter into any further hedges of the class B notes
and certificates as we anticipate ceasing payments of interest on these notes
and certificates in the final quarter of 2003. We believe it prudent to continue
to hedge our interest rate exposure in respect of the class A notes and
certificates as the mix of fixed and floating rental receipts does not correlate
to the floating payments due on the class A notes and certificates. We also
expect that by the end of 2003, our cashflows will be insufficient to enable any
funds to be allocated to the "Second Collection Account Top-up" in the priority
of payments. Therefore, we are no longer including this cash balance in our
hedging calculations from the end of 2003.

As of March 31, 2003, Airplanes Group had unamortized swaps with an
aggregate notional principal balance of $1,710 million. The aggregate notional
principal balance of these swaps reduce by their terms to an aggregate notional
principal balance of $700 million by March 31, 2005, to an aggregate notional
principal balance of $405 million by March 31, 2006 and to an aggregate notional
principal balance of $235 million by March 31, 2007. None of the swaps has a
maturity date extending beyond December 17, 2007. The aggregate fair market
value of the portfolio of 49 swaps as of March 31, 2003 was estimated at $(82)
million (that is, the swaps were "out-of-the-money," meaning that if the swaps
were sold then, a loss of $82 million would result) as detailed below:

AIRPLANES GROUP SWAP BOOK AT MARCH 31, 2003

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

(1) While some of the above swaps have a fixed notional amount, many amortize
over the period to the final maturity date.

(2) Under all swaps, Airplanes Group receives floating rate payments at one
month LIBOR, reset monthly on an actual/360 adjusted basis.

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(3) The initial amounts for swaps number 28, 30, 33, 36, 38, 41, 43, 44, 45,
46, 48 and 49 are $15 million, $15 million, $15 million, $30 million, $10
million, $30 million, $10 million, $65 million, $20 million, $60 million,
$95 million and $75 million respectively.

Additional interest rate exposure will arise to the extent that lessees
owing fixed rate rental payments default and interest rates have declined
between the contract date of the lease and the date of default. This exposure
can be managed through the purchase of swaptions. If Airplanes Group purchases
swaptions, these, if exercised, will allow Airplanes Group to enter into
interest rate swap transactions under which it would pay floating amounts and
receive fixed amounts. These swaptions could be exercised in the event of
defaults by lessees owing fixed rate rental payments in circumstances where
interest rates had declined since the contract date of such leases. Following
consultation with the rating agencies in the year ended March 31, 2002, it is
not currently proposed to purchase any swaptions due primarily to the low
interest rate environment and our current cash flow performance.

Because not all lessees making fixed rate rental payments are expected to
default and not all lessee defaults are expected to occur following a decline in
interest rates, if Airplanes Group were to decide to purchase swaptions, it
would purchase swaptions in a notional amount less than the full extent of the
exposure associated with the lessees making fixed rate rental payments. This
notional amount (the "TARGET HEDGE") will be varied from time to time to
reflect, among other things, changes in the mix of payments bases under future
leases and in the prevailing level of interest rates.

The payment of the premium for any of these swaptions may be made at two
points in the priority of payments under the indentures. Fifty percent of any
swaption premium in any month is a "MINIMUM HEDGE PAYMENT" and is paid fourth in
Airplanes Group's order of priority of payments. The other 50% of the premium is
expended as a "SUPPLEMENTAL HEDGE PAYMENT" and is paid seventeenth in Airplanes
Group's order of priority of payments.

If there are not sufficient amounts available for distribution and a
supplemental hedge payment would not be made in any month, then Airplanes Group
would reduce the aggregate notional amount of the swaptions bought in that month
to reflect the amount that can be bought for the premium payable as a minimum
hedge payment. As a result of the outstanding class A principal adjustment
amount, no supplemental hedge payments can be made until there are sufficient
cash flows in any given month to satisfy all obligations ranking senior to the
supplemental hedge payment under the terms of the notes.

If at any time there are outstanding swaptions the administrative agent may
also from time to time sell at market value or unwind part or all of the
swaption portfolio, for example, to reflect any decreases in the target hedge.
In the period from March 28, 1996 to March 31, 2002, Airplanes Group purchased
swaptions for interest rate swaps with an aggregate notional principal balance
of $659 million and sold swaptions with an aggregate notional principal balance
of $589 million and swaptions with an aggregate notional principal of $70
million matured. The net aggregate notional principal balance of swaptions at
March 31, 2003 therefore amounted to $Nil.

Through the use of swaps, swaptions and other interest rate hedging
products, Airplanes Group seeks to manage its exposure to adverse changes in
interest rates based on regular reviews of its interest rate risk. There can be
no assurance, however, that Airplanes Group's interest rate risk management
strategies will be effective in this regard. In particular, because of our
current financial condition, we may have difficulty finding counterparties. Some
of our counterparties have also ceased to be eligible counterparties because
they have been downgraded.

The directors of Airplanes Limited and the controlling trustees of
Airplanes Trust are responsible for reviewing and approving the overall interest
rate management policies and transaction authority limits. Specific hedging
contracts are approved by officers of the administrative agent acting within the
overall policies and limits. Counterparty risk is monitored on an ongoing basis.
Counterparties are subject to the prior approval of the directors of Airplanes
Limited and the controlling trustees of Airplanes Trust. Airplanes Group's
counterparties consist of the affiliates of major U.S. and European financial
institutions who have credit ratings, or provide collateralization arrangements,
which are consistent with maintaining the ratings of the class A certificates.

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On April 1, 2001 we adopted Statement of Financial Accounting Standards
(SFAS) 133, "Accounting for Derivative Instruments and Certain Hedging
Activities" and SFAS 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities, an amendment of SFAS 133." As a result, all
derivatives are now recognized on the balance sheet at their fair value. All
derivatives are designated as either a hedge of the fair value of a recognized
asset or liability or of an unrecognized firm commitment ("fair value" hedge), a
hedge of a forecasted transaction or of the variability of cash flows to be
received or paid related to a recognized asset or liability ("cash flow" hedge),
a foreign-currency fair-value or cash-flow hedge ("foreign currency" hedge) or a
"held for trading" instrument.

As noted above, we have a detailed hedging policy, which has been approved
by the board of directors of Airplanes Limited and controlling trustees of
Airplanes Trust and the rating agencies. As part of this hedging policy we have
formally documented all relationships between hedging instruments and hedged
items as well as our risk-management objective and strategy for undertaking
various hedge transactions.

This process includes linking all derivatives that are designated as cash
flow hedges to specific liabilities on the balance sheet. We formally assess,
both at the hedge's inception and on an ongoing basis, whether the derivatives
that are used in hedging transactions are highly effective in offsetting changes
in cash flows of hedged items.

Changes in the fair value of a derivative that is highly effective and that
is designated and qualifies as a cash flow hedge are included in the item "Net
change in cash flow hedges" in "other comprehensive income" (OCI), until
earnings are affected by the variability in cash flows of the designated hedged
item.

Hedge accounting is discontinued prospectively when it is determined that
the derivative is no longer highly effective in offsetting changes in the cash
flows of the hedged item, the derivative expires or is sold, terminated, or
exercised, or it is determined that designation of the derivative as a hedging
instrument is no longer appropriate. In all situations in which hedge accounting
is discontinued, the derivative will continue to be carried at its fair value on
the balance sheet, and any changes in its fair value will be recognized in
earnings. In all situations where derivatives are designated as trading
instruments, they are carried at fair value on the balance sheet and any changes
in fair value are recognized in earnings.

The opening effect as at April 1, 2001 of the adoption of SFAS 133 was
$(38) million in other comprehensive income (i.e. if the swaps were sold then, a
loss of $38 million would have resulted) and $5 million in earnings (being the
deferred gain on early termination of interest and related derivatives). The net
change in the value of cash flow hedges for the year ended March 31, 2003 was a
decrease of $42 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The response to this item is submitted as a separate section of this
report. See "Item 16. Exhibits, Financial Statement Schedules and Reports on
Form 8-K."

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

DIRECTORS AND CONTROLLING TRUSTEES

The Directors and the Controlling Trustees of Airplanes Limited and
Airplanes Trust, respectively, their respective ages and principal activities
are as follows:

Richard Cavanagh is the President and Chief Executive Officer of The
Conference Board, Inc., a global business research and membership enterprise
based in New York City. Before taking up his current position in 1995, he served
for eight years as Executive Dean of the Kennedy School of Government at Harvard
University. Before that, he was a partner at McKinsey & Company, Inc., an
international management consulting firm. During his 17 years with McKinsey, he
took a two-year public service leave and held senior positions in The White
House Office of Management & Budget. He co-authored the management book The
Winning Performance. Mr. Cavanagh also serves as a director of Aircraft Finance
Trust (another aircraft securitization vehicle), the BlackRock Mutual Fund
family, Arch Chemicals (formerly Olin), The Fremont Group (formerly Bechtel
Investments) and The Guardian Life Insurance Company.

Roy Dantzic qualified as a chartered accountant in 1968 and started his
career with Coopers & Lybrand. Between 1970 and 1980, he engaged in corporate
advisory work, principally as a director of Samuel Montagu. In 1980, Mr. Dantzic
was appointed by the British Government as the finance director of British
National Oil Corporation and he served in this capacity until 1984. Between 1985
and 1989, he was a director of the corporate broking division of Wood McKenzie.
In 1989 he joined the board of directors of Stanhope Properties and served as
its finance director from 1992 until the company was acquired in 1995. Mr.
Dantzic is a non-executive director of Second Site Property Holdings Ltd.,
having recently retired after seven years as its managing director. Mr. Dantzic
has also become a non-executive director of Development Securities plc.

Hugh Jenkins has spent over 20 years in senior investment management
positions. He served as Director-General of Investments for the pension plans of
the National Coal Board from 1973-1985, a director of Heron International, N.V.
from 1985-1986, Group Investment director of Allied Dunbar Insurance Plc from
1986-1989, and an executive director of the Prudential Corporation plc and
Chairman/Chief Executive of its investment management subsidiary from 1989 to
December 1995. He is currently the Chairman of Development Securities plc and a
non-executive director of Johnson Matthey plc, Gartmore European Investment
Trust plc and Development Securities (Investments) plc. Mr. Jenkins is also an
Advisory Director of London Economics Ltd.

William McCann, a chartered accountant, was the Managing Partner of Craig
Gardner/Price Waterhouse in the Republic of Ireland from 1987 to 1995. From 1991
to 1995 he was a member of the Price Waterhouse World Board. He was a director
of the Central Bank of Ireland from 1993 to 1998. Mr. McCann was a member of the
Electricity Supply Board, Ireland from 1986 to 2001 and Chairman from 1996 to
2001. Mr. McCann is currently Deputy Chairperson of the Irish Takeover Panel. He
is also a director of Canada Life Assurance (Ireland) Limited and Readymix plc
and is Chairman or a director of a number of other companies. He is a Board
Member of the University College Dublin Graduate School of Business.

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Brian Hayden qualified as a mechanical engineer in 1970 and started his
career with Aer Lingus. He worked in various management positions within Aer
Lingus during the next 19 years. In 1989, he moved to GPA Group (now known as
debis AirFinance Ireland) to head the technical division as Senior Vice
President -- Technical. In 1993, he joined GECAS and is presently an Executive
Vice President with responsibility for technical management of the GECAS-owned
and managed fleet. He is a director of GECAS and a former director of Irish
Helicopters.

Neither Airplanes Limited nor Airplanes Trust has any employees or
executive management. The board of directors of Airplanes Limited and the
controlling trustees of Airplanes Trust rely on the servicer, the administrative
agent, the cash manager and the other service providers for all servicing,
executive and administrative functions. See "Item 1. Business -- Risk Factors --
Risks Relating to Airplanes Group and Third Parties" for a description of the
risks involved in relying on service providers to operate our business. The
directors and controlling trustees of Airplanes Limited and Airplanes Trust, as
well as other individuals, serve as directors of various of our subsidiaries.

THE SERVICER

GECAS provides various aircraft-related services to us as servicer under
the servicing agreement. On November 20, 1998, GECAS' affiliate, GE Capital,
acquired the class E notes previously held by GPA Group (now known as debis
AirFinance Ireland) and its subsidiaries. As the holder of the majority of the
class E notes, GE Capital has the right to appoint one director to the board of
Airplanes Limited and one controlling trustee of Airplanes Trust. GECAS also
holds 5% of the ordinary share capital of Airplanes Holdings, and its affiliate,
GE Capital, has an option to acquire the residual interest in Airplanes Trust
from debis AirFinance, Inc.

GECAS is a global commercial aviation financial services company that
offers a broad range of aircraft financial products and provides management,
marketing and technical support services to airlines, aircraft owners, lenders
and investors and various of its affiliates, including the GE Group, and other
third parties, including Aircraft Finance Trust, Lease Investment Flight Trust
and Airplanes Group. As of March 31, 2003, GECAS and its affiliates managed a
portfolio consisting of 1,480 aircraft on lease to more than 180 lessees in 63
countries throughout the world. As of March 31, 2003, GECAS has also committed
to purchase a total of 260 new aircraft from manufacturers, deliverable through
December 2007.

GECAS and its affiliates offer such financial products as finance leases
(including both direct financing and leveraged leases), operating leases and
other structured finance products (including aircraft securitization vehicles).
Its management services include collecting rental payments, arranging and
monitoring aircraft maintenance performed by others, limited technical
inspection of aircraft, arranging and monitoring insurance, arranging for
aircraft valuations, registration and de-registration, monitoring compliance
with leases, enforcement of lease provisions against lessees, confirming
compliance with applicable ADs and facilitating delivery and redelivery of
aircraft. GECAS also arrange sales of aircraft to third parties. GECAS, its
affiliate, GE Capital, or any of its other affiliates may acquire debt or
beneficial interests in other securitization vehicles that own a portfolio of
aircraft assets.

GECAS is headquartered in Shannon, Ireland where it had 91 employees as of
March 31, 2003. GE Capital Aviation Services, Inc., of which GECAS is a
subsidiary, has a further 135 employees worldwide and has operations in
Stamford, Connecticut; Shannon, Ireland; Miami, Florida and a number of other
locations.

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The table below sets forth the different aircraft comprising the GECAS
managed portfolio as of March 31, 2003 by manufacturer and by whether the
aircraft are owned and managed by affiliates of GE Capital or managed for third
parties or Airplanes Group.

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

(1) The third parties include Lease Investment Flight Trust and Aircraft
Finance Trust. Certain aircraft included in the Other Managed Third Parties
fleet are owned by joint ventures or pursuant to other arrangements in
which unaffiliated parties have interests.

(2) For purposes of this table, seven B737 aircraft which GE Capital leases to
debis AirFinance Ireland and which are subleased to the operating lessee,
have been included in the GE Capital fleet.

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(3) Turboprop and Stage 3 hushkitted aircraft have been classified as Stage 3
compliant.

THE SERVICING AGREEMENT

GECAS provides services with respect to all of the aircraft in our
portfolio pursuant to the servicing agreement. The servicing agreement provides
that the servicer will act in accordance with applicable law and with our
directions in performing the aircraft services described below. In addition, the
servicer has agreed to perform its services in accordance with the following
"GECAS SERVICES STANDARD" and "GECAS CONFLICTS STANDARD":

- GECAS must use reasonable care and diligence at all times in the
performance of the services.

- If a conflict of interest arises regarding GECAS's management, servicing
or marketing of (a) any two aircraft in our portfolio or (b) any
aircraft in our portfolio and any other aircraft managed by GECAS, GECAS
will perform its services in good faith. If the two aircraft or the
aircraft in our portfolio and the other aircraft managed by GECAS are
substantially similar in terms of objectively identifiable
characteristics that are relevant for the particular services to be
performed, GECAS will not discriminate among the aircraft or between any
of the aircraft in our portfolio and any other aircraft managed by GECAS
on an unreasonable basis. GECAS is not obliged to inform us of any
conflicts of interest.

The servicer does not have any fiduciary duty or other implied duties to us
or any other person, including any certificateholders, and its obligations will
be limited to the express terms of the servicing agreement. GECAS will not be
liable to us for any of our losses arising out of, in connection with or related
to, GECAS's management of our portfolio, except where those losses are finally
adjudicated to have resulted directly from GECAS's gross negligence or wilful
misconduct. The servicer is not obliged to take any action that it believes is
reasonably likely to violate any applicable law with respect to GECAS or its
affiliates, violate any established written policies of GE related to legal,
ethical and social matters in business practices, or lead to an investigation by
any governmental authority. In addition, the servicer does not assume any
liability or accountability for (a) the terms and conditions of the notes, (b)
the ability of Airplanes Limited or Airplanes Trust to comply with the terms and
conditions of the notes or the guarantees and (c) the structuring or
implementation of any aspect of the various transactions contemplated by this
report.

Airplanes Limited, Airplanes Trust, Airplanes Holdings and AeroUSA have
agreed to indemnify the servicer and its affiliates on an after-tax basis for
any of its losses arising out of, in connection with or related to its
performance of the services, except where those losses are finally adjudicated
to have resulted directly from GECAS's gross negligence or wilful misconduct in
respect of its obligation to apply the GECAS services standard or GECAS
conflicts standard in respect of its performance of the services.

AIRCRAFT SERVICES

The main categories of the services that are provided by the servicer are:

- lease marketing, including re-marketing, lease negotiation and
execution;

- aircraft management, including lease rent collection, ensuring aircraft
maintenance, insurance monitoring and procurement, contract compliance
by, and enforcement against, lessees, and accepting delivery and
re-delivery of aircraft;

- aircraft sales as we direct;

- monitoring of maintenance reporting, and provision of records and
information about the aircraft;

- arranging valuations and monitoring regulatory developments;

- commercially reasonable assistance in complying with covenants relating
to the aircraft under the indentures;

- assistance in connection with public or private offerings of
certificates;

- legal and other professional services in the ordinary course of the
operating lease business; and

- periodic reporting of operational information relating to the aircraft.
81

The servicer has also agreed to give us and our agents access to
information and its personnel for monitoring purposes, and to separate its own
funds from our funds.

OPERATING GUIDELINES

Under the servicing agreement, GECAS is entitled to exercise the authority
necessary to give it a practicable and working autonomy in performing the
services. Airplanes Holdings, acting on behalf of Airplanes Group through the
administrative agent, has established monitoring and control procedures to
enable the servicer to properly manage our business and assets.

All transactions the servicer enters into on our behalf must be at arm's
length and on fair market value terms unless we agree otherwise. Some
transactions or matters involving the aircraft require the prior written
approval of Airplanes Holdings. These include:

- sales of aircraft unless required by a lease;

- entering into any leases, renewals or extensions on terms that do not
comply with the operating covenants under the indentures;

- terminating any lease or leases to any single lessee with respect to
aircraft having an aggregate depreciated net book value in excess of
$200 million;

- entering into any contract for the modification or maintenance of
aircraft where the costs to be incurred (a) exceed the greater of (1)
the estimated aggregate cost of a heavy maintenance check for a similar
aircraft and (2) available maintenance reserves or other collateral
under the related lease, or (b) are outside the ordinary course of our
business;

- issuing any guarantee for us, or otherwise pledging our credit, other
than with respect to trade payables in the ordinary course of business;
and

- any transaction with GE Capital or any of its affiliates not
contemplated in the servicing agreement.

BUDGET

Airplanes Holdings adopts an annual budget each year with respect to the
aircraft. The servicer has agreed to use reasonable commercial efforts to
attempt to achieve the budget each year.

SERVICING FEES

Airplanes Limited, Airplanes Holdings and AeroUSA pay an annual
index-linked fee to the servicer, payable monthly in arrears for the period each
aircraft is under management. For the year to March 31, 2003, this fee was 0.56%
of the agreed book value of each aircraft, payable monthly in arrears for the
period of time that aircraft is under GECAS's management. The servicer is
entitled to additional incentive fees based on annual cash flow generated by
leases in excess of targets and sales of aircraft, with a minimum fee of $1.5
million annually. The servicer is also entitled to additional fees in connection
with the services required to be provided by GECAS in respect of any offerings
and sales by us of certificates. Airplanes Limited, Airplanes Holdings and
AeroUSA also pay expenses incurred or approved by the servicer on our behalf,
including aircraft maintenance costs and insurance, outside professional
advisory fees and other out of pocket expenses, which may be a significant
component of our overhead costs. In the year ended March 31, 2003, aircraft
maintenance reserve expenses were $36.7 million. Other expenses, including
servicer fees, outside professional advisory fees, insurance and other out of
pocket expenses amounted to $33.3 million for the same period.

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TERM AND TERMINATION

The initial term of the servicing agreement expires on the earlier of March
28, 2014 and the payment in full of all amounts outstanding under the notes.
Each party has the right to terminate under specified circumstances. The
servicer has the right to terminate the servicing agreement if any of the
following occur:

- Airplanes Limited, Airplanes Trust, Airplanes Holdings and/or AeroUSA
fail to pay when due any servicing fees or other amounts owed to the
servicer after appropriate notice;

- Airplanes Limited, Airplanes Trust, Airplanes Holdings and/or AeroUSA
fail to perform or observe or violate in any material respect any
material term, covenant, condition or agreement under the servicing
agreement;

- any of Airplanes Limited, Airplanes Trust, Airplanes Holdings, AeroUSA
or their respective subsidiaries or affiliates has made a false or
misleading representation or warranty in the servicing agreement or any
related document that is reasonably likely to have a material adverse
effect on the servicer or on its rights and obligations under the
servicing agreement;

- an involuntary proceeding under applicable bankruptcy, insolvency,
receivership or similar law against Airplanes Limited, Airplanes Trust,
Airplanes Holdings, AeroUSA or any of their significant subsidiaries
continues for 75 days or if any of these entities goes into liquidation
or suffers a receiver or mortgagee to take possession of all or
substantially all of our or its assets, or if any of these entities
commences a voluntary proceeding under bankruptcy, insolvency,
receivership or similar law or makes a general assignment for the
benefit of their creditors;

- Airplanes Limited, Airplanes Trust, AeroUSA, Airplanes Holdings and
their respective subsidiaries and affiliates no longer own any aircraft;

- the indentures cease to be in full force and effect; or

- any guarantee in favor of the servicer by any of Airplanes Limited,
Airplanes Trust, AeroUSA, Airplanes Holdings and their respective
subsidiaries and affiliates ceases to be legal, valid and binding.

Airplanes Holdings, on behalf of itself, AeroUSA and Airplanes Limited, has
the right to terminate the servicing agreement if any of the follow occur:

- the servicer ceases to be at least 75% owned, directly or indirectly, by
GE or GE Capital;

- the servicer fails in any material respect to perform any material
services required by the servicing agreement in accordance with the
GECAS services standard or the GECAS conflicts standard, and this
failure has a material adverse effect on Airplanes Group as a whole; or

- an involuntary proceeding under bankruptcy, insolvency, receivership or
similar law against GE, GE Capital or the servicer continues undismissed
for 75 days or any of those entities goes into liquidation or suffers a
receiver or mortgagee to take possession of all or substantially all of
its assets, or if GE, GE Capital or the servicer commences a voluntary
proceeding under bankruptcy, insolvency, receivership or similar law or
makes a general assignment for the benefit of its creditors.

Airplanes Limited, AeroUSA and Airplanes Holdings also have the right to
terminate the servicing agreement upon six months' written notice to the
servicer if:

- the servicer fails to perform any of its specified tax related
undertakings to preserve the Shannon tax benefits as described below;
and

- as a result, we experience a material adverse tax event as defined in
the servicing agreement.

The servicer may resign if it determines that directions given, or services
required, would, if carried out:

- be unlawful under applicable law;

- violate GE policy as written and in effect for GE and its controlled
subsidiaries at that time;

83

- be likely to lead to an investigation by any governmental authority;

- expose the servicer to liabilities for which, in the servicer's good
faith opinion, it is not adequately indemnified; or

- place the servicer in a conflict of interest so that, in the servicer's
good faith opinion, it could not continue to perform its obligations
under the servicing agreement according to its terms.

Generally, the servicer may only resign, and the parties may only terminate
the servicing agreement, if a replacement servicer has been appointed and the
rating agencies have confirmed that the current ratings of any certificates will
not be lowered or withdrawn.

TAX STATUS

Because GECAS owns 5% of the outstanding issued ordinary share capital of
Airplanes Holdings and it maintains particular employment levels in Shannon,
Ireland, Airplanes Holdings and its Irish tax-resident subsidiaries enjoy
reduced rates of corporation tax, and improved entitlements to capital
allowances. In addition, these Shannon tax benefits include the right to pay
interest in various circumstances without paying Irish withholding tax, and to
deduct payments of interest in calculating corporate tax liability. While we
expect Airplanes Holdings and our Irish tax resident subsidiaries to continue to
benefit from their status as Shannon certified companies until the scheduled
termination of the preferential tax regime on December 31, 2005, we cannot
guarantee that the management of the aircraft by the servicer will not expose
Airplanes Holdings or the Irish tax resident companies to tax liabilities
outside Ireland. The servicing agreement sets out various tax-related
undertakings of the servicer to maintain a favorable tax treatment in Ireland
for Airplanes Holdings and its Irish tax resident subsidiaries. These include:

- maintaining minimum levels of employment in Ireland if required for
Airplanes Holdings or its Irish tax resident subsidiaries to maintain
their Shannon licences and tax certification;

- holding meetings of the board of directors of the servicer in Shannon at
least quarterly, and only occasionally outside Shannon;

- holding meetings of the servicer's transaction approval committee in
Shannon at least monthly and only occasionally outside Ireland;

- a majority of the committee members must be employees of the servicer;

- generally signing aircraft-related contracts in Ireland or outside of
Ireland pursuant to a limited power of attorney;

- compensating any of the servicer's affiliates for services provided
outside Ireland in respect of the aircraft only to the extent those
services are provided by express agreement;

- ensuring the managing director of the servicer is an officer and
employee based in Shannon; and

- maintaining no offices outside Shannon.

If the servicer breaches a tax-related undertaking as a result of its gross
negligence or wilful misconduct and we experience a material tax event, our sole
remedy is to terminate the servicing agreement after notice. The servicer has
the right for any good faith commercial reason to modify the tax-related
undertakings, which could lead to a loss of favorable tax treatment for
Airplanes Holdings and its Irish tax resident subsidiaries.

ASSIGNMENT OF SERVICING AGREEMENT

None of the servicer, Airplanes Limited, Airplanes Holdings or AeroUSA can
assign their rights and obligations under the servicing agreement without the
other parties' consent. However, the servicer may delegate a portion, but not
all, of its duties to GE Capital or GE or any 75% or more owned subsidiary of GE
Capital or GE.

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PRIORITY OF PAYMENT OF SERVICING FEES AND REIMBURSABLE EXPENSES

The fees and expenses of the servicer rank senior in priority of payment to
all payments of interest, principal and any premium on the notes.

The obligations of Airplanes Limited, Airplanes Holdings and AeroUSA under
the servicing agreement have been guaranteed by each other, Airplanes Trust and
their respective subsidiaries and affiliates.

GECAS's address is GE Capital Aviation Services Limited, Aviation House,
Shannon, Ireland and its telephone number is +353-61-706500.

THE ADMINISTRATIVE AGENT AND CASH MANAGER

DEBIS AIRFINANCE IRELAND

Subsidiaries of debis AirFinance Ireland serve as our administrative agent
and cash manager. debis AirFinance Ireland is a wholly-owned indirect subsidiary
of debis AirFinance B.V., a major participant in the global commercial aviation
industry. debis AirFinance B.V., directly and through debis AirFinance Ireland
and other subsidiaries, also owns and manages aircraft, both for its own account
and for third parties, including AerCo, another aircraft securitization vehicle.
At March 31, 2003, debis AirFinance B.V. directly had 90 aircraft in its
portfolio which were on lease to 30 lessees in 21 countries and, through debis
AirFinance Ireland, had 114 aircraft in its portfolio which were on lease to 52
lessees in 20 countries. debis AirFinance Ireland is also the holder of
substantially all of the subclass D-2, E-1 and E-2 notes of AerCo and acts as
servicer for AerCo's portfolio of aircraft. Subsidiaries of debis AirFinance
Ireland also act as administrative agent and cash manager to AerCo. Other
subsidiaries of debis AirFinance Ireland act as administrative agent and cash
manager to GPA-ATR Limited, a turboprop aircraft joint venture company in which
debis AirFinance Jetprop Limited holds 50% of the share capital.

GPA Group (now known as debis AirFinance Ireland), directly or indirectly
owned all of the aircraft, the aircraft-owning and aircraft-leasing subsidiaries
that we acquired in March 1996. We have taken steps to structure Airplanes Group
and the acquisition from debis AirFinance Ireland in 1996 to ensure that our
assets would not be consolidated with the assets of debis AirFinance Ireland and
would not otherwise become available to their creditors in any bankruptcy or
insolvency proceeding involving debis AirFinance Ireland or any of its
affiliates. See "Item 1. Business -- Risk Factors -- Risks Relating to
Bankruptcy."

At March 31, 2003, debis AirFinance B.V. employed 119 people worldwide,
with 21 employees in Shannon, Ireland, where debis AirFinance Ireland is
located. debis AirFinance B.V. has its headquarters in Amsterdam, the
Netherlands and also has an office with 10 employees in Fort Lauderdale,
Florida.

ADMINISTRATIVE AGENT

debis AirFinance Financial Services (Ireland) Limited, as administrative
agent, is responsible for providing administrative and accounting services to
the directors and controlling trustees. Its duties include:

- monitoring the performance of the servicer;

- liaising with rating agencies;

- maintaining accounting ledgers (although we retain responsibility for
all discretionary decisions and judgments relating to the preparation
and maintenance of ledgers and accounts, and we retain responsibility
for, and prepare, our financial statements);

- preparing and presenting annual budgets to us for approval;

- authorizing payment of various expenses;

- coordinating any amendments to the transaction documents other than the
leases;

- supervising outside counsel and coordinating legal advice;

85

- preparing and coordinating reports to investors and the SEC and managing
investor relations with the assistance of outside counsel and auditors,
if appropriate;

- preparing, or coordinating the preparation of, all required tax returns
for our approval and filing;

- maintaining, or monitoring the maintenance of, our books and records
that are not maintained by our company secretary or the Delaware
trustee;

- preparing agendas and any required papers for meetings of the governing
bodies of Airplanes Group entities;

- assisting us in (i) developing and implementing our interest rate
management policy and developing financial models, cash flow projections
and forecasts, and (ii) making aircraft lease, sale and capital
investment decisions;

- advising us as to the appropriate levels of the liquidity reserve
amount; and

- assisting us in the refinancing of all or a portion of the notes and
certificates.

We may also ask the administrative agent to provide additional services. We
pay the administrative agent an annual fee, which has been renegotiated during
the year ended March 31, 2003, of $3.52 million, payable monthly in arrears, and
an additional annual fee of approximately $1.25 million, which varies according
to the number of aircraft owned. These fees will be index-linked with effect
from April 1, 2003. We reimburse the administrative agent for expenses incurred
on our behalf and indemnify the administrative agent for any liability it
incurs, other than through its own deceit, fraud, wilful default or gross
negligence.

The administrative agent may resign upon 60 days' written notice in defined
circumstances. We may remove the administrative agent upon 180 days' written
notice with or without cause. However, the resignation or removal of the
administrative agent will not become effective until a successor administrative
agent has been appointed with the consent of the servicer and has accepted
appointment as the successor administrative agent under the administrative
agency agreement.

CASH MANAGER

debis AirFinance Cash Manager Limited, as cash manager, provides cash
management and related services to us, including establishing and administering
our accounts, providing information about our accounts and investing the funds
held by us in the collection account and the lessee funded account in prescribed
investments ("PERMITTED ACCOUNT INVESTMENTS") on permitted terms. These accounts
(but not the rental accounts) are maintained in the name of the security
trustee. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- The Accounts" for a more detailed
description of our accounts.

The cash manager calculates monthly payments and makes other calculations
required under the cash management agreement based on data it receives from the
servicer. The cash manager also provides the trustee with the information
required for the monthly reports to the certificateholders. It is the
responsibility of the cash manager to ensure that the proceeds from the lease or
sale of our assets are deposited in the collection account. Upon the occurrence
of a note event of default, the cash manager will distribute funds in the manner
set forth in the indentures.

We pay the cash manager an annual fee of $0.9 million, which will be
index-linked with effect from April 1, 2003, and indemnify the cash manager
against any loss or liability it incurs, other than through its own deceit,
fraud, willful default or gross negligence, or simple negligence in the handling
of funds.

The cash manager may resign upon 30 days' written notice so long as a
replacement cash manager has been appointed. We may remove the cash manager at
any time upon 180 days' written notice with or without cause.

86

COMPANY SECRETARY

Mourant & Co. Secretaries Limited, as company secretary for Airplanes
Limited, provides secretarial services for, and maintains the books and records,
including minute books and stock transfer records, of Airplanes Limited.

DELAWARE TRUSTEE

Wilmington Trust Company, as the Delaware Trustee for Airplanes Trust,
maintains the books and records, including minute books and trust certificate
records, of Airplanes Trust.

ITEM 11. EXECUTIVE COMPENSATION

All directors of Airplanes Limited and controlling trustees of Airplanes
Trust are compensated for travel and other expenses incurred in the performance
of their duties. Each independent director and independent controlling trustee
is paid an index-linked annual fee, currently $86,127, for their services in
both capacities. The chairman of Airplanes Limited and Airplanes Trust also
receives an additional index-linked annual fee, currently $57,418, for his
services in that capacity. On July 1, 2000, the independent directors and
independent controlling trustees were paid a one-off amount by Airplanes Limited
and Airplanes Trust equal to the amount they would have received had their fees
been index-linked from April 1, 1996, taking account of inflation from April 1,
1996 to April 1, 1999. The fees were adjusted for inflation on April 1, 2002 for
the period to March 31, 2005 by reference to the increase in the US CPI from
April 1, 1999 to March 31, 2002. The aggregate fees paid to the independent
directors and independent controlling trustees by Airplanes Trust and Airplanes
Limited may not exceed $550,000 in any year. In addition, Mr. Dantzic, Mr.
Jenkins and Mr. McCann each receive annual amounts, currently $7,500, $2,500 and
$7,500, respectively, for their services as directors of Airplanes Holdings and
some of its subsidiaries. Mr. Dantzic, Mr. Jenkins and Mr. McCann are also
entitled to receive an additional $1,000 in respect of each board meeting of
these companies which they attend, subject to a maximum payment of $5,000
annually for each of them. Mr. Cavanagh and Mr. Dantzic are also each entitled
to receive an aggregate of $2,500 annually from AeroUSA and AeroUSA 3 for their
services as directors of these companies and are also entitled to receive an
additional $1,000 in respect of each board meeting of these companies which they
attend, subject to a maximum payment of $5,000 annually. The directors and
controlling trustees are reimbursed for travel and other expenses, and premiums
for directors' and officers' insurance are paid on their behalf. Neither the
director nor the controlling trustee appointed by the holder of a majority in
aggregate principal amount of the class E notes receives remuneration from
Airplanes Limited or Airplanes Trust for his services, except reimbursement of
travel and other expenses and payment of premiums for directors' and officers'
insurance.

The directors and the controlling trustees do not receive any additional
cash or non-cash compensation from Airplanes Limited or Airplanes Trust (either
in the form of stock options, stock appreciation rights or pursuant to any
long-term incentive plan, benefit or actuarial plan or any other similar
arrangements of any kind) as salary or bonus for their services as directors or
controlling trustees. None of the directors or controlling trustees currently
has an employment contract with either Airplanes Limited or Airplanes Trust or
serves as a member of a compensation committee of either Airplanes Limited or
Airplanes Trust. The compensation of the directors of Airplanes Limited is set
forth in the Articles of Association of Airplanes Limited and that of the
controlling trustees is set forth in the Airplanes Trust Agreement. None of the
directors or controlling trustees has any beneficial ownership in any of the
equity securities of Airplanes Limited, Airplanes Trust or any of their
subsidiaries.

None of the directors, controlling trustees or any member of their
families, or any person owning five percent or more of Airplanes Limited's
capital stock, has been party to any transaction, or is party to any currently
proposed transaction, with Airplanes Limited, Airplanes Trust or any of their
subsidiaries. No director or controlling trustee or any member of his family, or
any corporation, organization or trust in which that director or controlling
trustee is an executive officer, partner, trustee or has a beneficial interest,
has been indebted in any amount to Airplanes Limited or Airplanes Trust.

87

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Not applicable.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Airplanes Group has had and currently maintains various relationships with
GE Capital and GECAS. First, GECAS acts as servicer for Airplanes Group.
Secondly, GECAS is the holder of 5% of the ordinary share capital of Airplanes
Holdings. Thirdly, Mr Hayden, an employee of GECAS, is a director of Airplanes
Limited and a controlling trustee of Airplanes Trust. Fourthly, GE Capital holds
the majority of the Airplanes Group class E notes and has an option over the
residual interest in Airplanes Trust.

Airplanes Group has had and currently maintains various relationships with
debis AirFinance Ireland plc, formerly known as AerFi Group plc which was
previously known as GPA Group plc. First, debis AirFinance Ireland acted as
promoter in establishing the entities that comprise Airplanes Group. Secondly,
Airplanes Group purchased substantially all of its assets from debis AirFinance
Ireland . See "Item 1. Business -- Introduction." Third, debis AirFinance
Ireland was the holder of 5% of the ordinary share capital of Airplanes Holdings
until November 20, 1998. Fourth, debis AirFinance, Inc., a subsidiary of debis
AirFinance Ireland, holds the residual interest in Airplanes Trust (subject to
an option granted over such interest in favour of GE Capital as described
above). Fifth, subsidiaries of debis AirFinance Ireland act as the
Administrative Agent and Cash Manager for Airplanes Group. See "Item 10.
Directors and Executive Officers of the Registrants -- Corporate Management." In
addition, on November 20, 1998, GE Capital acquired the Airplanes Group class E
notes previously held by debis AirFinance Ireland.

ITEM 14. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Chairman of the Board of Directors of Airplanes Limited and Chairman of
the Controlling Trustees of Airplanes U.S. Trust, acting on the recommendation
of the Board of Directors of Airplanes Limited and the Controlling Trustees of
Airplanes U.S. Trust, after evaluating the effectiveness of Airplanes Group's
"disclosure controls and procedures" (as defined in Exchange Act Rules 13a-14(c)
and 15-d-14(c)) as of a date (the "Evaluation Date") within 90 days of the
filing date of this Annual Report, has concluded that as of the Evaluation Date,
Airplanes Group's disclosure controls and procedures were adequate and designed
to ensure that material information relating to Airplanes Group would be made
known to the Board of Directors and Controlling Trustees.

CHANGES IN INTERNAL CONTROLS

There were no significant changes in Airplanes Group's internal controls
or, to the knowledge of the Chairman of the Board of Directors of Airplanes
Limited and Chairman of the Controlling Trustees of Airplanes U.S. Trust, in
other factors that could significantly affect Airplanes Group's internal
controls subsequent to the Evaluation Date.

ITEM 15. PRINCIPAL ACCOUNTANT'S FEES AND SERVICES

88

Audit-Related Fees in the table above for the year ended March 31, 2003 and
2002 relate to quarterly reviews, review of our annual report on Form 10-K and
work for compliance with Sarbanes Oxley and Audit Committee work.

Tax Fees in the table above for the year ended March 31, 2003 and 2002
relate to tax filings in the U.S., Ireland, special advice as to Shannon issues
and other international tax filings.

All Other Fees in the table above for the year ended March 31, 2003 and
2002 relate to tax advice, accounting advice and statutory filings for our
subsidiaries.

AUDIT COMMITTEES

Audit committees of Airplanes Limited and Airplanes Trust were established
in August 2000, consisting of their four independent directors or controlling
trustees, respectively. In light of the Sarbanes-Oxley Act of 2002, we have
adopted revised terms of reference for a single audit committee acting for
Airplanes Group, consisting of three independent directors/controlling trustees
since the financial statements combine the operating results, assets,
liabilities and cash flows of Airplanes Limited and Airplanes US Trust. The
duties of the audit committee include the following:

- to retain, oversee and terminate the independent auditors of Airplanes
Group, including, the approval of all audit and engagement fees and
terms;

- to discuss and agree with the external auditor before the audit
commences the nature, staffing and scope of the audit;

- to pre-approve all permissible non-audit services performed by the
external auditors. (Audit services include the statutory audit of group
and subsidiary companies, the review of 10-K filings and other related
work). Pre-approval is delegated to any member to cater for matters
arising between meetings, however, the full Committee shall approve at
the next scheduled meeting;

- to review from time to time the cost effectiveness of the audit and the
independence and objectivity of the external auditor;

- to review submissions to the boards in relation to any audited accounts,
focusing particularly on:

-- critical accounting policies and practices and any changes in
accounting policies and practice;

-- all alternative treatments of financial information presented that
have been or are to be discussed with the boards;

-- any unadjusted audit differences;

-- the going concern assumption;

-- compliance with accounting standards (and in particular accounting
standards adopted in the financial year for the first time);

-- compliance with legal requirements;

- to review, on behalf of the boards, Airplanes Group's system of internal
and disclosure controls and procedures (including financial, operational
compliance and risk management, and whether there are any significant
deficiencies in the design or operation of such controls and procedures,
material weaknesses and any fraud involving any persons with a
significant role in such controls and procedures) and make
recommendations to the boards;

89

- to review the statement proposed to be included in each filing required
to be made with the US Securities and Exchange Commission on the review
of the system of internal and disclosure controls and procedures
(including financial, operational compliance and risk management, and
whether there are any significant deficiencies in the design or
operation of such controls and procedures, material weaknesses and any
fraud involving any persons with a significant role in such controls and
procedures) prior to endorsement by the boards;

- to consider other matters as defined by the boards;

- to report on all of the above matters to the boards.

90

PART IV

ITEM 16. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) and (2). Financial Statements: the response to this portion of Item
16 is submitted as a separate section of this report beginning on page F-1.

* Incorporated by reference to the Registration Statement on Form S-1
(File No. 33-99978), previously filed with the Commission on December
1, 1995, and Amendments No. 1 through 5 thereto.

** Incorporated by reference to the Report on Form 10-Q for the quarterly
period ended December 31, 1996, previously filed with the Commission.

*** Incorporated by reference to the Registration Statement on Form S-1
(File No. 33-99978), previously filed with the Commission on December
30, 1997, and Amendments No. 1 through 3, thereto.

**** Incorporated by reference to the Report on Form 10-Q for the quarterly
period ended June 30, 2000, previously filed with the Commission.

***** Incorporated by reference to the Registration Statement on Form S-4
(File No. 33-58608), previously filed with the Commission on April 10,
2001 and Amendment No. 1 thereto.

****** Incorporated by reference to the Report on Form 10-K for the annual
period ended March 31, 2002, previously filed with the Commission.

(b) Reports on Form 8-K: filed on January 13, 2003, February 13, 2003 and
March 13, 2003 (relating to the monthly report to holders of the Certificates);
filed on February 13, 2003 (containing a press release in respect of annual
aircraft appraisals).

(d) Not applicable.

93

AIRPLANES GROUP

INDEX TO FINANCIAL STATEMENTS

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of Airplanes Limited
and the Controlling Trustees of Airplanes U.S. Trust

We have audited the accompanying balance sheets of Airplanes Limited and
Airplanes U.S. Trust ("Airplanes Group") as of March 31, 2003 and 2002, and the
related statements of operations, changes in shareholders' deficit/net
liabilities, comprehensive income/(loss) and cash flows for each of the years in
the three year period ended March 31, 2003. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in the United States. These standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

As described more fully in notes 9 and 11 to the financial statements, the
economic downturn as exacerbated by the September 11, 2001 terrorist attacks on
the United States has had a significant adverse effect on the aircraft industry
in general and on Airplanes Group which has resulted in reductions in aircraft
values and lease rates. These conditions have affected Airplanes Group's ability
to make scheduled principal and interest payments on the various classes of
notes.

In our opinion the financial statements referred to above present fairly,
in all material respects, the financial position of Airplanes Group as at March
31, 2003 and 2002, and the results of its operations and cash flows for each of
the years in the three year period ended March 31, 2003, in conformity with
generally accepted accounting principles in the United States.

As discussed in note 4(f) to the financial statements, in the fourth
quarter of 2002, Airplanes Group determined that the provision for loss making
leases was not appropriate under authoritative accounting literature and
eliminated the provision that had been established in prior years and maintained
through charges to earnings. Airplanes Group determined it appropriate to
eliminate such provisions retroactively and, as a result, prior period financial
statements have been restated from those previously presented.

KPMG
Chartered Accountants
Dublin, Ireland
June 10, 2003

F-2

AIRPLANES GROUP

BALANCE SHEETS

Commitments and Contingent Liabilities (Notes 19 and 20)

The accompanying notes are an integral part of the financial statements.
F-3

AIRPLANES GROUP

STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of the financial statements.
F-4

AIRPLANES GROUP

STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

The accompanying notes are an integral part of the financial statements.
F-5

AIRPLANES GROUP

STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT/NET LIABILITIES
YEARS ENDED MARCH 31, 2001, 2002 AND 2003

The accompanying notes are an integral part of the unaudited condensed financial
statements
F-6

AIRPLANES GROUP

STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of the financial statements.
F-7

AIRPLANES GROUP

NOTES TO THE FINANCIAL STATEMENTS

1. SECURITIZATION TRANSACTION

On March 28, 1996 (the "closing date") debis AirFinance Ireland plc (then
known as GPA Group plc) and its subsidiary undertakings ("debis") re-financed on
a long term basis certain indebtedness due to commercial banks and other senior
secured debt. The re-financing was effected through a major aircraft
securitization transaction (the "Transaction").

Under the terms of the Transaction, a combination ("Airplanes Group")
comprising Airplanes Limited, a special purpose company formed under the laws of
Jersey, Channel Islands ("Airplanes Limited") and Airplanes U.S. Trust, a trust
formed under the laws of Delaware ("Airplanes Trust") together acquired directly
or indirectly from debis a portfolio of 229 commercial aircraft (collectively
the "aircraft") and related leases (the "leases"). The Transaction was effected
by transferring existing subsidiaries of debis that owned the aircraft to
Airplanes Limited and Airplanes Trust, respectively. References to Airplanes
Group in these notes to the financial statements may relate to Airplanes Limited
and Airplanes Trust on a combined or individual basis as applicable.

Simultaneously with such transfers, Airplanes Group issued notes of $4,048
million in aggregate principal amount in four classes: class A, class B, class C
and class D ("notes") with approximately 91% of the principal amount of notes in
each class being issued by Airplanes Limited and 9% approximately by Airplanes
Trust. Airplanes Group also issued class E notes ranking after the notes and
these were taken up by debis as part consideration for the transfer of the
aircraft and certain related lease receivables. Airplanes Limited and Airplanes
Trust have each fully and unconditionally guaranteed each others' obligations
under the relevant notes.

On March 16, 1998 Airplanes Group successfully completed a refinancing of
$2,437 million related to class A and class B notes.

On November 20, 1998 debis (then known as AerFi Group plc) transferred its
holding of class E notes to GE Capital Corporation ("GE Capital").

On March 15, 2001 Airplanes Group successfully completed a refinancing of
$750 million related to Class A Notes.

2. BASIS OF PREPARATION

The accompanying financial statements of Airplanes Limited, Airplanes Trust
and the combined balance sheets, statements of operations, statements of
comprehensive income/(loss), statements of changes in shareholders' deficit/net
liabilities and statements of cash flows of Airplanes Group (together the
"Financial Statements") have been prepared on a going concern basis in
accordance with the accounting policies set out in Note 4 and in conformity with
United States of America generally accepted accounting principles.

The financial statements separately consolidate the financial statements of
Airplanes Limited and all of its subsidiary undertakings and the financial
statements of Airplanes Trust and all of its subsidiary undertakings.

3. RELATIONSHIP WITH GE CAPITAL AVIATION SERVICES LIMITED ("GECAS") AND DEBIS
AND MANAGEMENT ARRANGEMENTS

GECAS provides, in consideration for management fees, certain management
services to Airplanes Group pursuant to a servicing agreement entered into by
GECAS with certain members of Airplanes Group and their subsidiaries. Under
certain circumstances GECAS may resign from the performance of its duties in
relation to the management of all the aircraft generally or, the management of
one or more aircraft individually, provided in either case that a replacement
has been appointed to manage the aircraft. In addition, Airplanes Group will,
under certain circumstances, have the right to terminate the servicing
agreement.

As a holder of the majority of the class E notes, GE Capital has the right
to appoint one director to the board of Airplanes Limited and one of the
controlling trustees of Airplanes Trust. Airplanes Limited has a board of
F-8

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

3. RELATIONSHIP WITH GE CAPITAL AVIATION SERVICES LIMITED ("GECAS") AND DEBIS
AND MANAGEMENT ARRANGEMENTS -- (CONTINUED)

directors of five directors, including the director appointed by the holders of
the class E notes. The controlling trustees of Airplanes Trust are the same
individuals.

Certain cash management and administrative services are being provided by
debis subsidiaries to Airplanes Group, pursuant to a cash management agreement
and administrative agency agreement entered into by such debis subsidiaries with
Airplanes Group.

In the year to March 31, 2003, fees of $23.9 million and $5.7 million
(2002: $23.5 million and $9.9 million) were charged by GECAS and debis
respectively.

Although Airplanes Group's portfolio will at all times be held in two
different entities, Airplanes Limited and Airplanes Trust, Airplanes Group is
managed and the note covenants structured on the basis of a single economic
entity owning a single aircraft portfolio.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Airplanes Group's accounting policies conform with United States generally
accepted accounting principles. The following paragraphs describe the main
accounting policies followed in these financial statements.

(a) Revenue Recognition

Revenue from aircraft on operating leases is recognised as income as it
accrues over the term of the leases. Unearned revenue from capital and sales
type leases is amortised and included in income.

(b) Aircraft

Aircraft, including engines, are stated at cost less accumulated
depreciation and, where considered necessary, impairment provisions.

Aircraft carrying values are periodically assessed for impairment in
accordance with Statement of Financial Accounting Standard ("SFAS") 144
"Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 144
requires an evaluation for the recognition of an impairment loss for an asset
held for use when the estimate of un-discounted future cashflows expected to be
generated by the asset is less than its carrying amount. Measurement of
impairment loss is to be recognised based on the fair value of the asset. Fair
market values reflects the underlying economic value of the aircraft, including
engines, in normal market conditions (where supply and demand are in reasonable
equilibrium) and assumes adequate time for a sale and a willing buyer and
seller. Short term fluctuations in the market place are disregarded and it is
assumed that there is no necessity either to dispose of a significant number of
aircraft simultaneously or to dispose of aircraft quickly. The fair market value
of the assets is based on independent valuations of the aircraft in the fleet
and management estimates of discounted future cash flows. SFAS 144 also requires
that long-lived assets to be disposed of, be reported at the lower of the
carrying amount or fair value less estimated disposal costs.

Cost comprises the invoiced cost net of manufacturers' discounts.
Depreciation is calculated on a straight line basis. The estimates of useful
lives and residual values are reviewed periodically. The current estimates for
residual values are generally 15% of cost, and for useful lives are as follows:

F-9

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

(c) Net Investment in Capital and Sales Type Leases

The amounts due from lessees under capital leases, where the entire cost of
the asset is recovered, are shown in the balance sheet at the net amount
receivable under these leases. The related finance revenue is recognised as
income over the period of the lease in proportion to the amounts outstanding.

(d) Provision for Maintenance

In most lease contracts the lessee has the obligation for maintenance costs
on airframes and engines and in many lease contracts the lessee makes a full or
partial prepayment, calculated at an hourly rate, from which maintenance
expenditures for major checks are disbursed. The undisbursed portion of these
prepayments are included in the provision for maintenance which may from time to
time include prepayments made by current lessees and prior lessees. At the time
an aircraft is re-leased to a new lessee, an assessment is made of the expected
maintenance reserve requirement and any excess reserve is then released through
the Statement of Operations.

Maintenance provisions also include the directors' estimate of maintenance
costs which are Airplanes Group's primary responsibility and certain amounts in
respect of the risk of lessees defaulting on obligations, which could result in
Airplanes Group incurring maintenance costs which are the lessee's primary
responsibility.

(e) Allowance for doubtful debts

Allowances are made for doubtful debts where it is considered that there is
a significant risk of non recovery.

The assessment of risk of non recovery is primarily based on the extent to
which amounts outstanding exceed the expected value of security held together
with an assessment of the financial strength and condition of a lessee and the
economic conditions existing in the lessee's operating environment.

(f) Provision for Loss Making Leases

Prior to the fourth quarter of fiscal year 2002, Airplanes Group maintained
a provision for loss making leases. A lease was deemed to be loss making in
circumstances where the contracted rental payments were insufficient to cover
the depreciation and allocated interest cost attributable to the relevant
aircraft, together with direct costs such as legal fees and other costs
attributable to the lease over its term. During the fourth quarter of 2002,
Airplanes Group determined that the provision for loss making leases was not
appropriate under authoritative accounting literature and, therefore, eliminated
the provision for loss making leases and related reserve. All prior periods
presented in the accompanying financial statements have been restated to reflect
this change.

This change resulted in an increase/(decrease) in net loss for the years
ended March 31, 2001 of $(17) million (Airplanes Limited: $(17) million;
Airplanes Trust: $Nil), and decreased net liabilities as of April 1, 2000 by $31
million (Airplanes Limited: $31 million; Airplanes Trust: $Nil).

(g) Taxation

Income taxes are accounted for under the asset and liability method.
Deferred income tax assets and liabilities are recognised for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred income tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred income tax assets and
liabilities of a change in tax rates is recognised in the period that includes
the enactment date.

F-10

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

Income tax is provided based on the results for the year. Airplanes
Limited's underlying taxable entities in Ireland are subject to Irish Corporate
Income Tax on approved trading operations at a rate of 10% until December 31,
2005 and thereafter, at a rate of 12.5%. Airplanes Trust's underlying taxable
entities in the U.S. are subject to U.S. Federal and State taxes on their
trading operations.

(h) Concentrations of Credit Risk

Financial instruments which potentially subject Airplanes Group to
significant concentrations of credit risk consist primarily of trade accounts
receivable and interest rate swaps. Details of Airplanes Group's interest rate
swaps are set out at (i) below.

Credit risk with respect to trade accounts receivable is generally
diversified due to the number of lessees comprising Airplanes Group's customer
base and the different geographic areas in which they operate. At March 31,
2003, Airplanes Group owned 179 aircraft, 158 of which were on lease to 55
lessees in 31 countries, with 21 aircraft off-lease. The geographic
concentrations of leasing revenues is set out in Note 14.

Many of Airplanes Group's lessees are in a relatively weak financial
position because of the difficult economic conditions in the civil aviation
industry as a whole, as exacerbated by the continuing economic and political
fallout of the terrorist attacks of September 11, 2001, and because, in general,
weakly capitalised airlines are more likely to seek operating leases.

The exposure of Airplanes Group's aircraft to particular countries and
customers is managed partly through concentration limits provided for under the
terms of the notes and through obtaining security from lessees by way of
deposits, letters of credit and guarantees. Airplanes Group will continue to
manage its exposure to particular countries, regions and lessees through
concentration limits. In the normal course of its business Airplanes Group has
reached agreements with certain of its lessees to restructure their leases and
defer certain receivable balances. Details of accounts receivable, deferred
balances and provision for bad and doubtful debts are set out in Note 6.

A Canadian lessee of eight Airplanes Group aircraft has recently filed for
protection under the Companies Creditors Arrangement Act (Canada) and declared a
moratorium over payments under its leases. Following an extension of its initial
period of bankruptcy, the lessee has not resumed making any payments to
Airplanes Group.

Colombia has recently suffered economically as a result of the
deterioration in the value of the Colombian peso and the resulting negative
impact on the Colombian economy. As of March 31, 2003 Airplanes Group leased
eleven aircraft to three lessees in Colombia. In particular, at March 31, 2003,
Airplanes Group leased six aircraft to one Colombian lessee which had been in
arrears. The lessee had previously agreed with the servicer, a 50% deferral of
rentals for three months to be repaid over six months from January 2003.
However, the lessee is currently in discussions with the servicer regarding
further lease restructuring with rental reductions combined with lease
extensions being a potential outcome. The lessee filed for chapter 11 bankruptcy
protection in the US and following the expiry of its 60 day bankruptcy
protection period recommenced making payments of amounts falling due.

Airplanes Group's Brazilian lessees also continue to experience significant
difficulties due to over-capacity and adverse market conditions. At March 31,
2003, 11 of Airplanes Group's aircraft were being operated by Brazilian lessees.
Restructuring arrangements have been agreed with certain of the Brazilian
lessees allowing for rescheduling of balances owing to Airplanes Group.
Receivable balances with Brazilian lessees in total were $17.7 million at March
31, 2003.

The commercial aviation industry in Asia has been adversely affected by the
severe economic and financial difficulties experienced in the region since
1998/1999 and more recently by the effects of the SARS virus which has resulted
in a significant drop in airline traffic both within and to the region. At March
31, 2003, 31 of Airplanes Group's aircraft were being operated by lessees in
this region.

F-11

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

(i) Fair Value of Financial Instruments

SFAS 107 "Disclosures about Fair Value of Financial Instruments" defines
the fair value of a financial instrument as the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than
in a forced or liquidation sale. Fair values of financial instruments have been
determined with reference to available market information and the valuation
methodologies discussed below. However, considerable management judgement is
required in interpreting market data to arrive at estimates of fair values.
Accordingly, the estimates presented herein may not be indicative of the amounts
that Airplanes Group could realise in a current market exchange.

(i) The fair value of cash, trade receivables and trade payables
approximates the carrying amount because of the nature and short
maturity of these instruments.

(ii) The fair value of the class A, B, C and D notes issued by Airplanes
Group outstanding at March 31, 2003 and 2002 was $1,571 million and
$2,102 million respectively. Although the estimated fair values of
the class A to D notes outstanding have been determined by reference
to prices as at March 31, 2003 provided by an independent third
party, these fair values do not reflect the market value of these
notes at a specific time and should not be relied upon as a measure
of the value that could be realized by a noteholder upon sale. While
the amount subscribed for the class E notes was based on the
appraised value of the aircraft at the closing date, the fair value
of these notes at March 31, 2003 cannot be determined, as it
represents the holders' residual interest in the aircraft owned by
Airplanes Group.

(iii) Airplanes Group manages its interest rate exposure through the use
of interest rate swaps ("swaps") and in the past has also used
options to enter into interest rate swaps ("swaptions"). At March
31, 2003 and 2002 Airplanes Group had entered into interest rate
swaps with an aggregate notional principal amount of $1.71 billion
and $1.87 billion respectively. Under these swap arrangements
Airplanes Group will pay fixed and receive floating amounts on a
monthly basis. The primary objective of Airplanes Group's interest
rate risk management policy is to correlate fixed and floating rate
interest payments on the notes to the mix of contracted fixed and
floating rental payments for different rental periods in its
portfolio. Since the end of the fiscal year, Airplanes Group has
reviewed and modified its hedging policy with the approval of the
rating agencies and will not enter into any further hedges of the
class B notes and certificates as Airplanes Group anticipates
ceasing payments of interest on these notes and certificates in the
final quarter of 2003. Airplanes Group believes it prudent to
continue to hedge its interest rate exposure on the class A notes
and certificates as the mix of fixed and floating rental receipts
does not correlate to the floating payments due on the class A notes
and certificates. Airplanes Group also expects that by the end of
2003, its cashflows will be insufficient to enable any funds to be
allocated to the "Second Collection Account Top-up" in the priority
of payments. Therefore, Airplanes Group is no longer including this
balance in its hedging calculations from the end of 2003. The fair
values of interest rate swaps are provided by third parties and are
calculated by discounting expected cash flows using market interest
rates over the remaining term of the relevant instrument. The fair
value of these swaps at March 31, 2003 and 2002 was an unrealised
loss of $82.3 million and an unrealised loss of $36.0 million
respectively.

Interest rate exposures which may arise in the event that lessees paying
fixed rate rentals default have in the past been managed in part through
the purchase of swaptions. At March 31, 2003 and 2002 Airplanes Group had
no swaptions in place.

Airplanes Group is exposed to losses in the event of non-performance by
counterparties to interest rate swap agreements. However, Airplanes Group does
not anticipate non-performance by these counterparties.

F-12

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

Counterparty risk is monitored on an ongoing basis. Counterparties are
subject to the prior approval of the directors of Airplanes Limited and the
controlling trustees of Airplanes Trust. Airplanes Group's counterparties at
March 31, 2003 comprise major U.S./European financial institutions.

(j) Foreign Currency Transactions

Airplanes Group's foreign currency transactions are not significant as
virtually all revenues and most costs are denominated in U.S. dollars.

(k) Derivative Instruments and Hedging Activities

For periods prior to April 1, 2001, derivative instruments entered into to
offset Airplanes Group's exposure to interest rate risk were accounted for
together with the underlying business transactions ("hedge accounting"). In the
event of an early termination of an interest rate related derivative, the gain
was deferred and recognized as an adjustment to interest expense over the
remaining term of the underlying financial instrument.

On April 1, 2001, Airplanes Group adopted SFAS 133, "Accounting for
Derivative Instruments and Certain Hedging Activities" and SFAS 138, "Accounting
for Certain Derivative Instruments and Certain Hedging Activities, an amendment
of SFAS 133." As a result, all derivatives are now recognized on the balance
sheet at their fair value. All derivatives are designated as either a hedge of
the fair value of a recognized asset or liability or of an unrecognized firm
commitment ("fair value" hedge), a hedge of a forecasted transaction or of the
variability of cash flows to be received or paid related to a recognized asset
or liability ("cash flow" hedge), a foreign-currency fair-value or cash-flow
hedge ("foreign currency" hedge) or a "held for trading" instrument. At March
31, 2002 all of Airplanes Group's interest rate swaps were designated as cash
flow hedges.

Airplanes Group has a detailed hedging policy, which has been approved by
the board of directors of Airplanes Limited and controlling trustees of
Airplanes Trust and the rating agencies. As part of this hedging policy
Airplanes Group has formally documented all relationships between hedging
instruments and hedged items as well as its risk-management objective and
strategy for undertaking various hedge transactions.

This process includes linking all derivatives that are designated as
cashflow hedges to specific liabilities on the balance sheet. Airplanes Group
formally assesses, both at the hedge's inception and on an ongoing basis,
whether the derivatives that are used in hedging transactions are highly
effective in offsetting changes in cash flows of hedged items.

Changes in the fair value of a derivative that is highly effective and that
is designated and qualifies as a cash-flow hedge are included in "Net change in
cash flow hedges" in other comprehensive income ("OCI"), until earnings are
affected by the variability in cash flows of the designated hedged item.

Hedge accounting is discontinued prospectively when it is determined that
the derivative is no longer highly effective in offsetting changes in the cash
flows of the hedged item, the derivative expires or is sold, terminated, or
exercised, or it is determined that designation of the derivative as a hedging
instrument is no longer appropriate. In all situations in which hedge accounting
is discontinued, the derivative will continue to be carried at its fair value on
the balance sheet, and any changes in its fair value will be recognized in
earnings. In all situations where derivatives are designated as trading
instruments, they are carried at fair value on the balance sheet and any changes
in fair value are recognized in earnings.

As described more fully in Note 11, Airplanes Group believes its cashflows
will be inadequate to pay interest on the class B, C and D notes in the final
quarter of 2003. Accordingly derivatives which have been documented as having a
hedging relationship with the interest payments on the class B notes and
certificates can no longer be classed as highly effective cashflow hedges, and
therefore the decrease in value of these derivatives for the year ended March
31, 2003 of $4.2 million has been recognized in earnings in accordance with SFAS
133. These derivatives will continue to be a hedge of Airplanes Group's interest
rate exposure in respect of the class B

F-13

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

notes and certificates until the date interest is expected to cease being paid.
From that date on they will be used as hedges of Airplanes Group's interest rate
exposure in respect of the class A notes and certificates. Since the end of the
fiscal year, Airplanes Group has accordingly reviewed and modified its hedging
policy with the approval of the rating agencies and will not enter into further
hedges of the class B notes and certificates.

The opening effect as at April 1, 2001 of the adoption of SFAS 133 was
$(38) million in other comprehensive income (i.e. if the swaps were sold then a
loss of $38 million would have resulted) and $5 million in earnings (being the
deferred gain on early termination of interest and related derivatives).
Airplanes Group's financial statements for the first quarter of 2002 reported
the net transition adjustment of $(33) million in other comprehensive income.
The net change in the value of cash flow hedges for the year ended March 31,
2002 was an increase of $2 million. It is anticipated that $31.6 million of net
losses included in accumulated other comprehensive loss at March 31, 2003 will
be reclassified into earnings during the year to March 31, 2004. At March 31,
2003, Airplanes Group held derivative instruments with a maximum maturity of 52
months to hedge its exposure to interest rate risk.

(l) New Pronouncements

In August 2001, the FASB issued SFAS Statement No. 143, Accounting for
Asset Retirement Obligations. This statement addresses financial accounting and
reporting obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 requires
Airplanes Group to record the fair value of an asset retirement obligation as a
liability in the period in which the entity incurs a legal obligation associated
with the retirement of a tangible long-lived asset. SFAS No. 143 also requires
Airplanes Group to record the contra to the initial obligation as an increase to
the carrying amount of the related long-lived asset and to depreciate that cost
over the remaining useful life of the asset. The liability is adjusted at the
end of each period to reflect the passage of time and changes in the estimated
future cash flows underlying the initial fair value measurement. No accrual has
been made for asset retirement cost as Airplanes Group is currently unable to
determine the timing or amount of any such costs.

On April 30, 2003, the FASB issued SFAS Statement No. 149, Amendment of
Statement 133 on Derivative Instruments and Hedging Activities, which amends
FASB Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities, to address (1) decisions reached by the Derivatives Implementation
Group, (2) developments in other FASB projects that address financial
instruments, and (3) implementation issues related to the definition of a
derivative. Statement 149 has multiple effective date provisions depending on
the nature of the amendment to Statement 133, and Airplanes Group is currently
considering its potential effect on future financial statements.

On May 15, 2003, the FASB issued SFAS Statement No. 150, Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity. Statement 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. Statement 150 is effective for all financial instruments entered
into or modified after May 31, 2003. For unmodified financial instruments
existing at May 31, 2003, Statement 150 is effective at the beginning of the
first interim period beginning after June 15, 2003, except for mandatorily
redeemable financial instruments of nonpublic entities. As Airplanes Group does
not currently have any equity instruments outstanding, the new standard is not
expected to have any effect on future financial statements.

F-14

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

5. CASH

Substantially all of the cash balances at March 31, 2003 and 2002 are held
for specific purposes under the terms of the Transaction. Included in the cash
balances at March 31, 2003 and 2002 is restricted cash of $6 million.

6. ACCOUNTS RECEIVABLE

Deferred lease receivables at March 31, 2003 represent deferrals of rent,
maintenance and miscellaneous payments due from lessees. The most significant of
these lessees are located in Colombia and Brazil where the air transport sector
is suffering from substantial over capacity and the effects of difficult
economic conditions (see Note 4(h)).

Receivables, before allowance for doubtful debts, include amounts
classified as due after one year of $17.7 million (Airplanes Limited $15.3
million and Airplanes Trust $2.4 million) at March 31, 2003 and $9.0 million
(Airplanes Limited $6.6 million and Airplanes Trust $2.4 million) at March 31,
2002.

A number of Airplanes Group's lessees are in a weak financial position. As
of March 31, 2003, amounts outstanding for a period greater than 30 days in
respect of rental payments, maintenance reserves and other miscellaneous amounts
due under the leases (net of amounts in respect of default interest and cash in
transit) amounted to $9.0 million in respect of 12 lessees (who leased a
combined total of 42 aircraft representing 25.33% of the portfolio by appraised
value as of January 31, 2003) and $5.8 million in respect of five former
lessees. Of the total $14.8 million, $5.4 million was in arrears for a period
between 30 and 60 days, $2.9 million was in arrears for a period between 60 and
90 days and $6.5 million was in arrears for a period greater than 90 days. Some
of these lessees have consistently been significantly in arrears in their
respective rental payments and many are known to be currently experiencing
financial difficulties.

As of March 31, 2003, in addition to the $14.8 million in respect of
payments past due more than 30 days, Airplanes Group had agreed to allow five
lessees to defer rent, maintenance and miscellaneous payments totaling $17.7
million for periods ranging from nineteen months for one lessee in respect of
$0.1 million and up to 58 months for one lessee in respect of $7.3 million.

F-15

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

7. AMOUNTS DUE FROM AIRPLANES LIMITED TO AIRPLANES TRUST

Included in the balance at March 31, 2002 and March 31, 2003 was $80
million payable from Airplanes Trust to Airplanes Limited in respect of aircraft
sales and purchases. The remaining balance of $138 million (2002: $143 million)
represents the net amount due to Airplanes Trust in respect of Airplanes Trust's
trading activities, including servicing of its debt obligations.

8. NET INVESTMENT IN CAPITAL AND SALES TYPE LEASES

The following are the components of the net investment in capital and sales
type leases of Airplanes Limited:

Aggregate lease rentals in respect of such capital and sales type leases
for the years ended March 31, 2001, 2002 and 2003 amounted to $10 million,
(Airplanes Limited $5 million, Airplanes Trust $5 million), $7 million
(Airplanes Limited $7 million, Airplanes Trust $Nil) and $4 million (Airplanes
Limited $4 million, Airplanes Trust $Nil) respectively.

Unearned revenue of $4 million (Airplanes Limited $4 million, Airplanes
Trust $Nil), $0.4 million (Airplanes Limited $0.4 million, Airplanes Trust $Nil)
and $0.3 million (Airplanes Limited $0.3 million, Airplanes Trust $Nil) for the
years ended March 31, 2001, 2002 and 2003, respectively, was amortised and
included in revenue.

F-16

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

9. AIRCRAFT

Eight aircraft are subject to purchase options granted to existing lessees.
The latest date on which a purchase option could be exercised is November 4,
2006.

At March 31, 2003, Airplanes Group owned 179 (2002:186) aircraft.

At March 31, 2003 21 aircraft were off-lease, two of which were subject to
letters of intent to lease and one which was subject to a lease contract. Since
March 31, 2003 one of the aircraft subject to a letter of intent to lease and
the aircraft subject to a lease contract have delivered to lessees. One letter
of intent expired without going to contract, but has since become subject to a
new letter of intent to lease.

During the last two years there was a general downturn in the world
economic environment which was exacerbated by the terrorist attacks of September
11, 2001, which continues to affect the economic climate adversely. This, along
with the effects of military action in Afghanistan, the war in Iraq and the
outbreak of SARS, has resulted in a sharp increase in the availability of
aircraft for lease, leading to significant overcapacity, increased downtime, a
decline in the lease rates, increased costs due to unanticipated redeliveries of
aircraft all of which have resulted in a decline in the value of aircraft,
particularly older technology models.

As of March 31, 2003, each of the B737-400, MD-83 and A320-200 models of
aircraft comprised more than 10% of Airplanes Group's portfolio by appraised
value as of January 31, 2003 and, in addition, each of the B737-300, B737-500,
B767-300ER, DC-8, MD-11 and F-100 models of aircraft comprised more than 5% of
Airplanes Group's portfolio by appraised value as of January 31, 2003.
Furthermore, at March 31, 2003, widebody aircraft
F-17

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

9. AIRCRAFT -- (CONTINUED)

comprised more than 15%, and turboprop aircraft comprised more than 5% of
Airplanes Group's portfolio by appraised value as of January 31, 2003.

During the years ended March 31, 2002 and March 31, 2003, Airplanes Group
evaluated all aircraft for impairment and this impairment analysis resulted in
52 and 8 aircraft, respectively, being identified with a carrying value greater
than the estimated undiscounted future cash flows for such aircraft. An
impairment loss was calculated for these aircraft based on the estimated
discounted future cash flows for each aircraft. For certain aircraft the
estimated discounted future cash flows were lower than the corresponding
independent appraised value. The appraised values were determined based on the
assumption that there is an "open unrestricted stable market environment with a
reasonable balance of supply and demand." Since this assumption is not
appropriate to certain aircraft, in respect of each aircraft estimated
discounted cash flows were used as a more accurate indication of fair value.

10. ACCRUED EXPENSES AND OTHER LIABILITIES

F-18

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

11. INDEBTEDNESS

The components of the debt are as follows:

DEBT MATURITY

The repayment terms of the class A, B, C and D notes are such that certain
principal amounts were expected to be repaid on certain dates based on certain
assumptions (each such date, the "expected final payment date") or refinanced
through the issue of new notes by specified expected final payment dates but in
any event are ultimately due for repayment on specified final maturity dates
(each such date, the "final maturity date"). The expected final payment dates,
final maturity dates, principal amount and interest rates applicable to each
class of note are set out below:

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

* the expected final payment date is based on the base case assumptions in
Airplanes Group's offering memorandum dated March 15, 2001 (the "2001 Base
Case").

Discounts on notes issues and costs arising on refinanced notes are netted
against debt on the balance sheet. These amounts are accreted to the income
statement over the expected life of the refinancing notes.

On March 15, 2001, Airplanes Group successfully completed a $750 million
refinancing of its subclass A-4 and subclass A-7 notes into new subclass A-9
notes.

The dates on which principal repayment on the notes will actually occur
will depend on the cash generated by Airplanes Group. Airplanes Group was due to
refinance the subclass A-8 notes in the capital markets on
F-19

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

11. INDEBTEDNESS -- (CONTINUED)

March 15, 2003. Given market conditions and the impact these conditions have had
on Airplanes Group's performance as compared to the 2001 Base Case, a
refinancing was not economically viable. In the absence of a refinancing of the
A-8 notes, step-up interest at a rate of 0.5% per annum became payable from
March 15, 2003. The expected final payment date for the subclass A-8 notes under
the 2001 Base Case has thus proved incorrect. Due to insufficient cashflows and
the low priority of step-up interest in the priority of payments, no step-up
interest has been paid and it is not expected to be paid in the future.

LIBOR on the class A and class B notes equates to the London interbank
offered rate for one month U.S. dollar deposits.

Interest on the class C and class D fixed rate notes is calculated on the
basis of a 360-day year, consisting of twelve 30-day months.

The class E notes accrue interest for each interest accrual period at a
rate of 20% per annum. The stated interest rate on the class E notes is adjusted
by reference to the U.S. consumer price index. Except for the class E note
minimum interest amount plus the class E note supplemental interest amount, each
of which are paid at a rate of 1% and 10% multiplied by the outstanding
principal balance of the class E notes, respectively, no interest will be
payable on the class E notes until all of the interest, principal and premium,
if any, on the notes have been repaid in full. The principal on the class E
notes will be repaid, subject to adequate funds being available, after the
interest on the class E notes.

In general the priority of the principal payments on the notes is as set
out below:

1. Specified minimum principal amounts on the class A and the class B
notes in that order.

2. Additional amounts on the class A notes in the event that the value
of the portfolio falls below specified amounts.

3. Scheduled principal repayments on the class C and class D notes in
that order.

4. Specified additional amounts on the class B notes and the class A
notes in that order.

5. Thereafter cash available to repay the principal on the notes is
applied on each payment date to repay the outstanding principal on
the class D notes, the class C notes, the class B notes and the class
A notes in that order.

Prior to March 15, 2003, on each payment date the priority of the principal
amounts outstanding in respect of the various subclasses of class A notes was
subclass A-6, subclass A-9 and subclass A-8 in that order. Because there was no
refinancing of the subclass A-8 notes by March 15, 2003, the priority of the
principal amounts outstanding in respect of the various subclasses of class A
notes is now, subclass A-6, subclass A-8 and subclass A-9 in that order.

The concentration on particular models or types of aircraft magnifies the
adverse impact to Airplanes Group's cash flow of a decline in lease rates or
aircraft values for these models or types of aircraft and of specific
governmental or technical regulations imposed on those aircraft types. In this
connection, Airplanes Group has seen (x) decreasing popularity of the turboprop
aircraft, the cessation of production of MD-83s and MD-11s, the reduction in
demand for B767s including in particular B767s powered by Pratt & Whitney
engines, and the bankruptcy of Fokker, (y) noise regulations restricting the use
of Stage 2 aircraft which, as of March 31, 2003, accounted for approximately
2.8% of Airplanes Group's portfolio by appraised value as of January 31, 2003,
and (z) Airworthiness Directives ("ADs") with respect to the MD-80s, MD-11s and
B737s. These events have caused, and are likely to continue to cause, overall
lease rates and aircraft values to significantly decrease and may cause
Airplanes Group to incur significant costs which would further reduce its cash
flow.

F-20

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

11. INDEBTEDNESS -- (CONTINUED)

Administrative and lease expenses and certain other payments in the
ordinary course of business are senior to the notes in priority of payment and
are therefore payable before any payments are made on the notes (and thus the
corresponding certificates).

To the extent that we have sufficient available funds, Airplanes Group is
required to pay a minimum principal amount on the class A notes in order to
maintain certain loan to initial appraised value ratios. At the May 15, 2003
payment date Airplanes Group was ahead of the required class A minimum principal
payment schedule to the extent of $37.6 million. Accordingly, no payments are
currently due in respect of the minimum principal amount on the class A notes.
However, Airplanes Group's overall cash performance since September 11, 2001 has
been significantly weaker than was assumed in the 2001 Base Case. Airplanes
Group has not had sufficient cash flows to pay class A principal adjustment
amounts in full and on May 15, 2003 payment dates, Airplanes Group did not have
sufficient cash flows to pay any class A principal adjustment amount. Airplanes
Group expects it may not resume payment of class A principal adjustment amount
in the future. Therefore, in time, Airplanes Group will no longer be ahead of
the required class A minimum principal payment schedule. Airplanes Group expects
this to occur in the third quarter of 2003, following which Airplanes Group will
have to recommence payments of minimum principal on the class A notes to the
extent of available cash flows. Since minimum principal on the class A notes
ranks ahead of interest and minimum principal on the class B notes and interest
on the class C and class D notes in the order of priority, and, given Airplanes
Group's expected cash performance, Airplanes Group expects that, in addition to
Airplanes Group's current inability to pay scheduled principal on the class C
and D notes, Airplanes Group's cash flows will be inadequate to pay interest and
minimum principal on the class B notes and interest on the class C and D notes
beginning in the final quarter of 2003.

While Airplanes Group's actual results may differ from its current
expectations, such differences as may arise are only likely to affect the timing
of when Airplanes Group may cease to pay interest and minimum principal on the
class B notes and interest on the class C and D notes.

In the event that cash flows are inadequate to pay interest and minimum
principal on the class B notes and interest on the class C and D notes, it is
likely to be a long period of time before Airplanes Group will be able to resume
making any payments on these notes. If Airplanes Group fails to pay interest
when due, as is currently projected to be the case with respect to the class B,
C and D notes beginning in the final quarter of 2003, interest will accrue on
the unpaid interest. In these circumstances, since interest (and minimum
principal) on the class A notes is payable prior to payment of interest and
minimum/scheduled principal on the class B, C and D notes (and all other amounts
of principal on the class B, C and D notes), available cash flows will be used
first to service interest and, to the extent possible, minimum principal on the
class A notes. To the extent that cash is available at any subsequent time to
make payments ranking below class A minimum principal, cash flows will first be
used to pay interest on the class B notes, which would then include all the
accrued interest from the period when no payments were made on these notes. Thus
the likelihood of remaining cash flows over the life of Airplanes Group being
sufficient to resume any payments of class B minimum principal or any payments
of interest or principal on the class C and, ultimately, the class D notes is
even further diminished. Thus, Airplanes Group may be unable to repay in full
principal on some or all of these classes of notes by their final maturity date.
In addition, to the extent that Airplanes Group is able to resume making
payments on these notes, payments will be made according to the priority of
payments, commencing with the then most senior class and only making payments on
more junior classes to the extent of available cash flows. The more junior the
class of notes is in the order of priority, the greater the risk that we may be
unable to repay in full principal on that class of notes by its final maturity
date. A failure to make payments on a class of notes will result in failure to
make payments on the corresponding class of certificates.

This vulnerability of the various classes of notes has been reflected in
actions taken by the rating agencies which reevaluated several structured
aircraft financings in the last twelve months.

F-21

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

11. INDEBTEDNESS -- (CONTINUED)

Set out in the table below are the current ratings of our certificates:-

The reserve for maintenance includes maintenance reserve funds received
from lessees and provisions to cover the directors' estimate of maintenance
costs where Airplanes Group has the primary obligation for maintenance.

13. SHARE CAPITAL

F-22

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

13. SHARE CAPITAL -- (CONTINUED)

The holders of the issued ordinary shares are entitled to an annual
cumulative preferential dividend of $4,500. As Airplanes Limited does not have
distributable profits this dividend has not been paid. As at March 31, 2003, the
total unpaid cumulative preferential dividend amounted to $31,500.

14. REVENUES

As of March 31, 2003 in addition to the eighteen aircraft which were off
lease and not subject to a letter of intent there were 41 aircraft which were
scheduled to come off lease within one year from March 31, 2003. It is expected
that re-lease rates for the majority of these aircraft will be lower than the
current contracted rates.

At March 31, 2003, Airplanes Group had contracted to receive the following
minimum rentals under operating leases:

Contracted rentals are based on actual rates up to the first recalculation
date, and thereafter are based on a budget LIBOR of 2.50%, and include aircraft
subject to letters of intent to lease.

Each of Airplanes Limited and Airplanes Trust operates in one business
segment, the leasing of aircraft.

For Airplanes Limited no customer accounted for more than 10% of revenue in
any of the years ended March 31, 2001, 2002 or 2003 respectively. For Airplanes
Trust: (a) one lessee accounted for more than 10% of

F-23

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

14. REVENUES -- (CONTINUED)

leasing revenue for the year ended March 31, 2001, and this lessee accounted for
34% of leasing revenue, (b) three lessees accounted for more than 10% of leasing
revenue in the year ended March 31, 2002 and individually these lessees
accounted for 34%, 10% and 11% of leasing revenue, respectively, (c) two lessees
accounted for more than 10% of leasing revenue for the year ended March 31, 2003
and individually these lessees accounted for 25% and 60% of leasing revenue
respectively.

15. NET INTEREST EXPENSE

16. OTHER LEASE COSTS

17. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

In the year ended March 31, 2003, other selling, general and administrative
expenses included an amount of $6 million (Airplanes Limited $5 million,
Airplanes Trust $1 million) payable to debis in respect of Administration and
Cash Management fees as compared to the amount of $10 million (Airplanes Limited
$9 million, Airplanes Trust $1 million) payable in the year ended March 31, 2002
and $9 million (Airplanes Limited $8 million, Airplanes Trust $1 million)
payable in the year ended March 31, 2001.

F-24

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

18. PROVISION FOR INCOME TAXES

References to Airplanes Limited and Airplanes Trust in the context of this
note refer to the underlying taxable entities of Airplanes Limited (primarily
Irish entities) and Airplanes Trust (primarily U.S. entities).

(A) AIRPLANES LIMITED

Income tax benefit of Airplanes Limited consists of the following:

Airplanes Limited's income from approved activities in Ireland is taxable
at a rate of 10% until December 31, 2005. Thereafter income from trading
activities will be taxable at a rate of 12.5%.

A reconciliation of differences between actual income tax benefit of
Airplanes Limited for 2001, 2002 and 2003 and the expected tax benefit based on
a tax rate of 12.5% is shown below:

Class E note interest is not deductible for tax purposes in Ireland.

Airplanes Limited has net operating loss carryforwards of approximately
$1,914 million as of March 31, 2003, (2002: $1,869 million) which are available
for offset against future taxable income with no restrictions to expiration.

The deferred tax assets and liabilities of Airplanes Limited are summarised
below:

F-25

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

18. PROVISION FOR INCOME TAXES -- (CONTINUED)

(B) AIRPLANES TRUST

Income tax benefit of Airplanes Trust consists of the following:

A reconciliation of differences between actual income tax benefit of
Airplanes Trust for 2001, 2002 and 2003 and the expected tax benefit based on
the U.S. federal statutory tax rate of 35% in 2001, 2002, and 2003 is shown
below:

Airplanes Trust has federal tax net operating loss carryforwards of
approximately $100.2 million as of March 31, 2003 (2002: $91.6 million) which
expire beginning in 2007 through 2021.

Deferred tax assets and liabilities of Airplanes Trust are summarised
below:

F-26

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

18. PROVISION FOR INCOME TAXES -- (CONTINUED)

Although all of the aircraft are owned by Airplanes Trust, for tax
purposes, certain of the aircraft are treated as being leased from third parties
under U.S. "safe-harbor lease" tax rules. Under existing tax laws, certain
events could reverse the cumulative effect of this tax treatment, in which case
Airplanes Trust would be required to make payments to the third parties under
the tax indemnification clauses included in the lease agreements. As of March
31, 2001, 2002 and 2003 the maximum potential exposure under these provisions
was $0.2 million, $Nil and $Nil, respectively. Airplanes Trust believes that no
events have taken place which could cause such payments to become due.

Pursuant to a tax sharing agreement between Airplanes Trust and debis,
Airplanes Trust is liable to debis for its share of the consolidated tax
liability in years subsequent to the completion of the Transaction, in which
Airplanes Trust generates taxable income. However, Airplanes Trust shall satisfy
this liability in cash only to the extent that payments due to tax authorities
from debis are attributable to Airplanes Trust's share of the consolidated tax
liability; the remainder will be paid in the form of subordinated notes.
Conversely, Airplanes Trust is entitled to be reimbursed by debis for any tax
benefits provided subsequent to the completion of the Transaction, to debis from
Airplanes Trust's tax losses. debis has also indemnified Airplanes Trust for any
tax liabilities of AeroUSA, Inc. (a subsidiary of Airplanes Trust) that relate
to tax years prior to the completion of the Transaction.

Subsequent to November 20, 1998, AeroUSA, Inc. and AeroUSA 3, Inc. now file
consolidated United States federal tax returns and certain local tax returns
with General Electric Company ("GE"), such returns are being filed on a calendar
basis. In addition, on November 20, 1998, Airplanes Trust entered into a tax
sharing agreement with GE which is substantially similar to the tax sharing
agreement between Airplanes Trust and debis which was in place prior to that
date and which terminated on November 20, 1998, except with respect to those
provisions relating to the position prior to the date on which AeroUSA, Inc. and
AeroUSA 3, Inc. were deconsolidated from debis AirFinance, Inc.

In relation to the tax year ended December 31, 2002, GE utilized $Nil of
current year losses. Accordingly there will be no cash payment to Airplanes
Group under the terms of this agreement in relation to the tax year ended
December 31, 2002.

19. COMMITMENTS

CAPITAL COMMITMENTS

Airplanes Group did not have any material contractual commitments for
capital expenditures at March 31, 2003.

20. CONTINGENT LIABILITIES

GUARANTEES

Airplanes Limited and Airplanes Trust have unconditionally guaranteed each
others' obligations under all classes of notes issued by Airplanes Trust and
Airplanes Limited, respectively, pursuant to the Transaction, details of which
are set out in Note 1.

FOREIGN TAXATION

The international character of Airplanes Group's operations gives rise to
some uncertainties with regard to the impact of taxation in certain countries.
The position is kept under continuous review and Airplanes Group provides for
all known liabilities. See note 18 for tax warranties.

F-27

NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)

21. POST BALANCE SHEET EVENTS

Since March 31, 2003, one DC9-51 aircraft has been sold and a contract for
sale has been signed for two Metro III aircraft.

Since the end of the fiscal year, Airplanes Group has reviewed and modified
its hedging policy with the approval of the rating agencies and will not enter
into further hedges of the class B notes and certificates as Airplanes Group
anticipates ceasing payments of interest beginning in the final quarter of 2003.

F-28

SIGNATURES

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

By: /s/ WILLIAM M. MCCANN
------------------------------------
Name: William M. McCann
Title: Controlling Trustee

Dated: June 30, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities indicated on June 30, 2003.

SIGNATURES

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

AIRPLANES LIMITED

By: /s/ WILLIAM M. MCCANN
------------------------------------
Name: William M. McCann
Title: Director

Dated: June 30, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities indicated on June 30, 2003.

CERTIFICATION

I, William M. McCann, the Chairman of the Board of Directors of Airplanes
Limited and Chairman of the Controlling Trustees of Airplanes U.S. Trust,
certify that:

(1) I have reviewed this annual report on Form 10-K of Airplanes Limited
and Airplanes U.S. Trust;

(2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;

(3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of Airplanes Limited and Airplanes U.S. Trust as of, and
for, the periods presented in this annual report;

(4) I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for Airplanes Limited and Airplanes U.S. Trust and I have:

(a) designed such disclosure controls and procedures to ensure that
material information relating to Airplanes Limited and Airplanes
U.S. Trust, including their consolidated subsidiaries, is made
known to the Board of Directors of Airplanes Limited and the
Controlling Trustees of Airplanes U.S. Trust by others within
those entities, particularly during the period in which this
annual report is being prepared;

(b) evaluated the effectiveness of the disclosure controls and
procedures of Airplanes Limited and Airplanes U.S. Trust as of a
date within 90 days prior to the filing date of this annual report
(the "Evaluation Date"); and

(c) presented in this annual report my conclusions about the
effectiveness of the disclosure controls and procedures based on
my evaluation as of the Evaluation Date;

(5) I have disclosed, based on my most recent evaluation, to the auditors
of Airplanes Limited and Airplanes U.S. Trust and the audit committee
of the Board of Directors of Airplanes Limited and the Controlling
Trustees of Airplanes U.S. Trust:

(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the ability of
Airplanes Limited and Airplanes U.S. Trust to record, process,
summarize and report financial data and have identified for the
auditors of Airplanes Limited and Airplanes U.S. Trust any
material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the internal
controls of Airplanes Limited and Airplanes U.S. Trust; and

(6) I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of my most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: June 30, 2003

/s/ WILLIAM M. MCCANN
- ----------------------------------------------------

W. M. McCann
Chairman of the Board of
Airplanes Limited
Chairman of the Board of
Airplanes U.S. Trust(1)

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

(1) Airplanes Limited and Airplanes U.S. Trust are special purpose vehicles that
do not employ and have not employed any individual as a chief executive
officer or chief financial officer and do not have and have not had any
employees or officers since their inception. For all executive management
functions Airplanes Limited and Airplanes U.S. Trust retain and rely upon
their third party aircraft servicer, administrative agent and cash manager.
These third party service providers are required to perform these executive
management functions in accordance with the requirements of the servicing
agreement, administrative agency agreement and cash management agreement,
respectively. With respect to the information contained in this annual
report, all information regarding the aircraft, the leases and the lessees
is provided by the servicer pursuant to the servicing agreement. The cash
manager calculates monthly payments and makes all other calculations
required by the cash management agreement. Pursuant to the administrative
agency agreement, the administrative agent uses the information provided by
the servicer and the cash manager and other information the administrative
agent acquires in the performance of its services to Airplanes Limited and
Airplanes U.S. Trust, to prepare all disclosure (including this annual
report on Form 10-K) required to be filed with the Securities and Exchange
Commission.

All members of the Board of Directors of Airplanes Limited and the
Controlling Trustees of Airplanes U.S. Trust, including the Chairman, are
non-executives.

AIRPLANES LIMITED AND AIRPLANES U.S. TRUST
INDEX TO EXHIBITS

* Incorporated by reference to the Registration Statement on Form S-1 (File
No. 33-99978), previously filed with the Commission on December 1, 1995,
and Amendments No. 1 through 5 thereto.

** Incorporated by reference to the Report on Form 10-Q for the quarterly
period ended December 31, 1996, previously filed with the Commission.

*** Incorporated by reference to the Registration Statement on Form S-1 (File
No. 33-99978), previously filed with the Commission on December 30, 1997,
and Amendments No. 1 through 3, thereto.

**** Incorporated by reference to the Report on Form 10-Q for the quarterly
period ended June 30, 2000, previously filed with the Commission.

***** Incorporated by reference to the Registration Statement on Form S-4 (File
No. 33-58608), previously filed with the Commission on April 10, 2001 and
Amendment No. 1 thereto.

****** Incorporated by reference to the Report on Form 10-K for the annual
period ended March 31, 2002, previously filed with the Commission.