1
EXHIBIT 99.01
AIRCRAFT INFORMATION SERVICES, INC.
04 February 1997
Mr. Frank Duckstein
CMA Capital Group, Inc.
JetFleet Aircraft, L.P.
JetFleet Aircraft II, L.P.
1440 Chapin Avenue, Suite 310
Burlingame, CA 94010
Subject: AISI Report No. A7D005BVO
AISI Short Form Sight Unseen Base Value Appraisal
Fleet of Seven Selected Aircraft and Seven Engine Types
Reference: Jetfleet Fax Message, 14 January 1997
Dear Mr. Duckstein:
As requested, Aircraft Information Services, Inc. (AISI) is pleased to offer
Jetfleet Management Corporation our opinion of the sight unseen half-life base
value of your seven aircraft and the 'zero time since overhauled' base value of
your seven bare engine types as identified in Table I of this report.
1. METHODOLOGY AND DEFINITIONS
The historical standard term of reference for commercial aircraft or engine
value has been 'half-life fair market value' of an 'average' aircraft or
engine. However, 'fair market value' could mean a fair value in the given
market or a value in a hypothetical 'fair' or balanced market, and the two
definitions are not equivalent. Recently, the term 'base value' has been
created to describe the theoretical balanced market condition and to avoid the
potentially misleading term 'fair market value' which has now become synonymous
with the term 'current market value' or a 'fair' value in the actual current
market. AISI value definitions are consistent with those of the International
Society of Transport Aircraft Trading (ISTAT) of 01 January 1994; AISI is a
member of that organization and employs an ISTAT Certified Senior Aircraft
Appraiser.
AISI defines a 'base value' as that of a transaction between equally willing
and informed buyer and seller, neither under compulsion to buy or sell, for a
single unit cash transaction with no hidden value or liability, and with supply
and demand of the sale item roughly in balance. Base value are typically given
for aircraft or engines in 'new' condition, 'average half-life' condition, or
in a specifically described condition unique to a single aircraft or engine at
a specific time. An 'average' aircraft or engine is an operable airworthy
aircraft or engine in average physical condition and with average accumulated
flight hours and cycles, with clear title and, for aircraft, a standard
unrestricted certificate of airworthiness and registered in an authority which
does not represent a penalty to aircraft value or liquidity; with no damage
history and with inventory configuration and level of modification which is
normal for the aircraft or engine's intended use and age. AISI assumes average
condition unless otherwise specified in this report. 'Half-life' condition
assumes that every component or maintenance service which has a prescribed
interval that determines its service life, overhaul interval or interval
between maintenance services, is at a condition which is one- half of the total
interval. AISI defines engine 'zero time since overhaul' condition to be that
of an engine fresh from an engine heavy maintenance shop visit which overhauled
all engine modules or all engine compressor and combustor/turbine stages as
appropriate, with all life-limited components at half-life.
2
AISI defines a 'current market value' or 'fair market value' as that value
which reflects the real market conditions, whether at, above or below the base
value conditions. Definitions of aircraft or engine condition, buyer/seller
qualifications and type of transaction remain unchanged from that of base
value. Current market value takes into consideration the status of the economy
in which the aircraft or engine is used, the status of supply and demand for
the particular aircraft or engine type, the value of recent transactions and
the opinions of informed buyers and sellers. Current market value assumes that
there is no short term time constraint to buy or sell.
AISI encourages the use of base values only to consider historical trends, as a
basis for long term future value considerations, or to consider how actual
market values vary from theoretical base values. Base values are inappropriate
to determine near term values. AISI encourages the use of current market
values to consider the probable near term value of an aircraft or engine.
AISI determines an 'adjusted market value' by determining the value of known
deviations from half-life condition, which may be better or worse than
half-life condition, and to account for better or worse than average physical
condition, and the inclusion of additional equipment, or absence of standard
equipment.
Given the relatively thin used engine market and the relatively broad range of
values for transactions for an engine type, the meaning of 'base value' for
used engines is open to broad interpretation. Normally base value is derived
from historical normalized current market values with manufacturer's list price
as a start point, while current market value is deduced directly from recent
transactions. For used engines there are seldom sufficient historical
transactions to permit the same derivation of engine base values as is possible
for aircraft base values. In our opinion the used engine market is currently a
relatively hard market, and base value will be close to current market values
for most engine types.
AISI defines a BARE ENGINE as an engine without accessories, but complete with
all air, hydraulic and electrical lines which are not directly part of
accessories. For turboprop engines, a bare engine includes the gas generator
and power or gearbox sections but not the propellor.
AISI defines a BASIC QEC engine as the bare engine plus all accessories,
connecting lines and engine mounts but not including engine inlet cowl, fan
cowl or thrust reverser.
AISI defines a FULL QEC engine as a basic QEC engine plus inlet cowl, fan cowl
and thrust reverser. There will be some variation in full QEC inventory from
engine type to type, and from position to position.
2. VALUATION
The aircraft half-life base values and bare engine zero time since overhaul
base values are presented below in Table I subject to the assumptions,
definitions and disclaimers herein.
3
Table I
================================================================================
AIRCRAFT/ S/N DATE OF CONFIGURATION AIRCRAFT ENGINE ZERO
ENGINE MANUFACTURE HALF LIFE TIME SINCE
TYPE BASE VALUE OVERHAUL
1997 MUSD BASE VALUE
1997 MUSD
- --------------------------------------------------------------------------------------------------------
DHC-7-103 11 1979 Combi 3.10 -
- --------------------------------------------------------------------------------------------------------
DHC-7-102 44 1981 Passenger 2.25 -
- --------------------------------------------------------------------------------------------------------
DHC-7-102 57 1981 Passenger 2.25 -
- --------------------------------------------------------------------------------------------------------
DHC-7-103 72 1982 Combi 3.10 -
- --------------------------------------------------------------------------------------------------------
DHC-6-300 666 1980 Passenger 1.00 -
- --------------------------------------------------------------------------------------------------------
Metro III AC576 1983 Passenger 0.98 -
- --------------------------------------------------------------------------------------------------------
Metro II TC370 1980 Passenger 0.63 -
- --------------------------------------------------------------------------------------------------------
PT6A-28 - - Bare - 0.22
- --------------------------------------------------------------------------------------------------------
PT6A-41 - - Bare - 0.32
- --------------------------------------------------------------------------------------------------------
PT6A-42 - - Bare - 0.33
- --------------------------------------------------------------------------------------------------------
PT6A-45R - - Bare - 0.31
- --------------------------------------------------------------------------------------------------------
PT6A-50 - - Bare - 0.35
- --------------------------------------------------------------------------------------------------------
PT6A-65R - - Bare - 0.38
- --------------------------------------------------------------------------------------------------------
A250-C30P - - Bare - 0.30
================================================================================
This report is offered as a fair and impartial assessment of subject aircraft
and engines based on data supplied by others, with no physical inspection or
verification by AISI. AISI has no past, present nor contemplated future
interest in subject aircraft and engines. This report is an opinion and is for
the sole use of the client/addressee and AISI shall not be liable to any party
for damages arising out of reliance or alleged reliance on it, or for any
parties action or failure to act as a result of reliance or alleged reliance on
this report.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
/s/ Fred E. Bearden
Fred E. Bearden
President
4
EXHIBIT 99.01
AIRCRAFT INFORMATION SERVICES, INC.
04 February 1997
Mr. Frank Duckstein
CMA Capital Group, Inc.
JetFleet Aircraft, L.P.
JetFleet Aircraft II, L.P.
1440 Chapin Avenue, Suite 310
Burlingame, CA 94010
Subject: AISI Report No. A7D008BVO
AISI Short Form Sight Unseen Base Value Appraisal
Fleet of Seven Selected Aircraft and Seven Engine Types
Reference: Jetfleet Fax Message, 14 January 1997
Dear Mr. Duckstein:
As requested, Aircraft Information Services, Inc. (AISI) is pleased to offer
Jetfleet Management Corporation our opinion of the sight unseen half-life
current market value of your seven aircraft and the 'zero time since
overhauled' current market value of your seven bare engine types as identified
in Table I of this report.
1. METHODOLOGY AND DEFINITIONS
The historical standard term of reference for commercial aircraft or engine
value has been 'half-life fair market value' of an 'average' aircraft or
engine. However, 'fair market value' could mean a fair value in the given
market or a value in a hypothetical 'fair' or balanced market, and the two
definitions are not equivalent. Recently, the term 'base value' has been
created to describe the theoretical balanced market condition and to avoid the
potentially misleading term 'fair market value' which has now become synonymous
with the term 'current market value' or a 'fair' value in the actual current
market. AISI value definitions are consistent with those of the International
Society of Transport Aircraft Trading (ISTAT) of 01 January 1994; AISI is a
member of that organization and employs an ISTAT Certified Senior Aircraft
Appraiser.
AISI defines a 'base value' as that of a transaction between equally willing
and informed buyer and seller, neither under compulsion to buy or sell, for a
single unit cash transaction with no hidden value or liability, and with supply
and demand of the sale item roughly in balance. Base values are typically
given for aircraft or engines in 'new' condition, 'average half-life'
condition, or in a specifically described condition unique to a single aircraft
or engine at a specific time. An 'average' aircraft or engine is an operable
airworthy aircraft or engine in average physical condition and with average
accumulated flight hours and cycles, with clear title and, for aircraft, a
standard unrestricted certificate of airworthiness and registered in an
authority which does not represent a penalty to aircraft value or liquidity;
with no damage history and with inventory configuration and level of
modification which is normal for the aircraft or engine's intended use and age.
AISI assumes average condition unless otherwise specified in this report.
'Half-life' condition assumes that every component or maintenance service which
has a prescribed interval that determines its service life, overhaul interval
or interval between maintenance services, is at a condition which is one- half
of the total interval. AISI defines engine 'zero time since overhaul'
condition to be that of an engine fresh from an engine heavy maintenance shop
visit which overhauled all engine modules or all engine compressor and
combustor/turbine stages as appropriate, with all life-limited components at
half-life.
5
AISI defines a 'current market value' or 'fair market value' as that value
which reflects the real market conditions, whether at, above or below the base
value conditions. Definitions of aircraft or engine condition, buyer/seller
qualifications and type of transaction remain unchanged from that of base
value. Current market value takes into consideration the status of the economy
in which the aircraft or engine is used, the status of supply and demand for
the particular aircraft or engine type, the value of recent transactions and
the opinions of informed buyers and sellers. Current market value assumes that
there is no short term time constraint to buy or sell.
AISI encourages the use of base values only to consider historical trends, as a
basis for long term future value considerations, or to consider how actual
market values vary from theoretical base values. Base values are inappropriate
to determine near term values. AISI encourages the use of current market
values to consider the probable near term value of an aircraft or engine.
AISI determines an 'adjusted market value' by determining the value of known
deviations from half-life condition, which may be better or worse than
half-life condition, and to account for better or worse than average physical
condition, and the inclusion of additional equipment, or absence of standard
equipment.
Given the relatively thin used engine market and the relatively broad range of
values for transactions for an engine type, the meaning of 'base value' for
used engines is open to broad interpretation. Normally base value is derived
from historical normalized current market values with manufacturer's list price
as a start point, while current market value is deduced directly from recent
transactions. For used engines there are seldom sufficient historical
transactions to permit the same derivation of engine base values as is possible
for aircraft base values. In our opinion the used engine market is currently a
relatively hard market, and base value will be close to current market values
for most engine types.
AISI defines a BARE ENGINE as an engine without accessories, but complete with
all air, hydraulic and electrical lines which are not directly part of
accessories. For turboprop engines, a bare engine includes the gas generator
and power or gearbox sections but not the propellor.
AISI defines a BASIC QEC engine as the bare engine plus all accessories,
connecting lines and engine mounts but not including engine inlet cowl, fan
cowl or thrust reverser.
AISI defines a FULL QEC engine as a basic QEC engine plus inlet cowl, fan cowl
and thrust reverser. There will be some variation in full QEC inventory from
engine type to type, and from position to position.
2. VALUATION
The aircraft half-life base values and bare engine zero time since overhaul
base values are presented below in Table I subject to the assumptions,
definitions and disclaimers herein.
6
Table I
================================================================================
AIRCRAFT/ S/N DATE OF CONFIGURATION AIRCRAFT ENGINE ZERO
ENGINE MANUFACTURE HALF LIFE TIME SINCE OVERHAUL
TYPE CURRENT CURRENT MARKET
MARKET VALUE
VALUE 1997 1997 MUSD
MUSD
- ------------------------------------------------------------------------------------------------------------
DHC-7-103 11 1979 Combi 1.86 -
- ------------------------------------------------------------------------------------------------------------
DHC-7-102 44 1981 Passenger 1.35 -
- ------------------------------------------------------------------------------------------------------------
DHC-7-102 57 1981 Passenger 1.35 -
- ------------------------------------------------------------------------------------------------------------
DHC-7-103 72 1982 Combi 1.92 -
- ------------------------------------------------------------------------------------------------------------
DHC-6-300 666 1980 Passenger 0.95 -
- ------------------------------------------------------------------------------------------------------------
Metro III AC576 1983 Passenger 0.83 -
- ------------------------------------------------------------------------------------------------------------
Metro II TC370 1980 Passenger 0.44 -
- ------------------------------------------------------------------------------------------------------------
PT6A-28 - - Bare - 0.20
- ------------------------------------------------------------------------------------------------------------
PT6A-41 - - Bare - 0.29
- ------------------------------------------------------------------------------------------------------------
PT6A-42 - - Bare - 0.30
- ------------------------------------------------------------------------------------------------------------
PT6A-45R - - Bare - 0.29
- ------------------------------------------------------------------------------------------------------------
PT6A-50 - - Bare - 0.33
- ------------------------------------------------------------------------------------------------------------
PT6A-65R - - Bare - 0.34
- ------------------------------------------------------------------------------------------------------------
A250-C30P - - Bare - 0.27
============================================================================================================
This report is offered as a fair and impartial assessment of subject aircraft
and engines based on data supplied by others, with no physical inspection or
verification by AISI. AISI has no past, present nor contemplated future
interest in subject aircraft and engines. This report is an opinion and is for
the sole use of the client/addressee and AISI shall not be liable to any party
for damages arising out of reliance or alleged reliance on it, or for any
parties action or failure to act as a result of reliance or alleged reliance on
this report.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
/s/ Fred E. Bearden
Fred E. Bearden
President
7
EXHIBIT 99.01
AIRCRAFT INFORMATION SERVICES, INC.
30 May 1997
Mr. Marc Anderson
CMA Capital Group, Inc., General Partner
JetFleet Aircraft, L.P.
JetFleet Aircraft II, L.P.
Subject: AISI Report No. A7D057BVO - B
AISI Short Form Sight Unseen Current Market
and Orderly Liquidation Value
Appraisal - Fleet of Seven Selected Aircraft and Twenty-five Engine
Reference: Fax Message, 14 January 1997; Telephone Message 20 May 1997
Dear Mr. Anderson:
As requested, Aircraft Information Services, Inc. (AISI) is pleased to offer
our opinion of the sight unseen half-life current market value and orderly
liquidation value of your seven aircraft and the 'zero time since overhauled'
current market value and orderly liquidation value of your twenty-five bare
engines as identified in Table I of this report.
1. METHODOLOGY AND DEFINITIONS
The historical standard term of reference for commercial aircraft or engine
value has been 'half-life fair market value' of an 'average' aircraft or
engine. However, 'fair market value' could mean a fair value in the given
market or a value in a hypothetical 'fair' or balanced market, and the two
definitions are not equivalent. Recently, the term 'base value' has been
created to describe the theoretical balanced market condition and to avoid the
potentially misleading term 'fair market value' which has now become synonymous
with the term 'current market value' or a 'fair' value in the actual current
market. AISI value definitions are consistent with those of the International
Society of Transport Aircraft Trading (ISTAT) of 01 January 1994; AISI is a
member of that organization and employs an ISTAT Certified Senior Aircraft
Appraiser.
AISI defines a 'base value' as that of a transaction between equally willing
and informed buyer and seller, neither under compulsion to buy or sell, for a
single unit cash transaction with no hidden value or liability, and with supply
and demand of the sale item roughly in balance. Base value are typically given
for aircraft or engines in 'new' condition, 'average half-life' condition, or
in a specifically described condition unique to a single aircraft or engine at
a specific time. An 'average' aircraft or engine is an operable airworthy
aircraft or engine in average physical condition and with average accumulated
flight hours and cycles, with clear title and, for aircraft, a standard
unrestricted certificate of airworthiness and registered in an authority which
does not represent a penalty to aircraft value or liquidity; with no damage
history and with inventory configuration and level of modification which is
normal for the aircraft or engine's intended use and age. AISI assumes average
condition unless otherwise specified in this report. 'Half-life' condition
assumes that every component or maintenance service which has a prescribed
interval that determines its service life, overhaul interval or interval
between maintenance services, is at a condition which is one-half of the total
interval. AISI defines engine 'zero time since overhaul' condition to be that
of an engine fresh from an engine heavy maintenance shop visit which overhauled
all engine modules
8
or all engine compressor and combustor/turbine stages as appropriate,
with all life-limited components at half-life.
AISI defines a 'current market value' or 'fair market value' as that value
which reflects the real market conditions, whether at, above or below the base
value conditions. Definitions of aircraft or engine condition, buyer/seller
qualifications and type of transaction remain unchanged from that of base
value. Current market value takes into consideration the status of the economy
in which the aircraft or engine is used, the status of supply and demand for
the particular aircraft or engine type, the value of recent transactions and
the opinions of informed buyers and sellers. Current market value assumes that
there is no short term time constraint to buy or sell.
AISI encourages the use of base values only to consider historical trends, as a
basis for long term future value considerations, or to consider how actual
market values vary from theoretical base values. Base values are inappropriate
to determine near term values. AISI encourages the use of current market
values to consider the probable near term value of an aircraft or engine.
AISI determines an 'adjusted market value' by determining the value of known
deviations from half-life condition, which may be better or worse than
half-life condition, and to account for better or worse than average physical
condition, and the inclusion of additional equipment, or absence of standard
equipment.
AISI's opinion of the liquidation value of commercial aircraft or engines
depends on many variable, most of which are not readily forecast. Among these
are; general economic condition, time to liquidate, specific demand, surplus
and competition for an aircraft or engine type, and aircraft or engine
condition. The two primary factors determining liquidation are the current
market value and time to market, assuming average market condition, demand and
competition. AISI assumes a current market value allows more than one year as
the time to market (no time constraint). 'Orderly' liquidation allows between
six months and one year to market and liquidation allows less than six months
to market.
Given the relatively thin used engine market and the relatively broad range of
values for transactions for an engine type, the meaning of 'base value' for
used engines is open to broad interpretation. Normally base value is derived
from historical normalized current market values with manufacturer's list price
as a start point, while current market value is deduced directly from recent
transactions. For used engines there are seldom sufficient historical
transactions to permit the same derivation of engine base values as is possible
for aircraft base values. In our opinion the used engine market is currently a
relatively hard market, and base value will be close to current market values
for most engine types.
AISI defines a BARE ENGINE as an engine without accessories, but complete with
all air, hydraulic and electrical lines which are not directly part of
accessories. For turboprop engines, a BARE ENGINE includes the gas generator
and power or gearbox sections but not the propeller.
AISI defines a BASIC QEC engine as the bare engine plus all accessories,
connecting lines and engine mounts but not including engine inlet cowl, fan
cowl or thrust reverser.
AISI defines a FULL QEC engine as a basic QEC engine plus inlet cowl, fan cowl
and thrust reverser. There will be some variation in full QEC inventory from
engine type to type, and from position to position.
2. VALUATION
The aircraft half-life current market values and orderely liquidation values as
well as bare engine zero time since overhaul current market values and orderly
liquidation values are presented below
9
in Table I subject to the assumptions, definitions and disclaimers herein.
This report is offered as a fair and impartial assessment of subject aircraft
and engines based on data supplied by others, with no physical inspection or
verification by AISI. AISI has no past, present nor contemplated future
interest in subject aircraft and engines. This report is an opinion and is for
the sole use of the client/addressee and AISI shall not be liable to any party
for damages arising out of reliance or alleged reliance on it, or for any
parties action or failure to act as a result of reliance or alleged reliance on
this report.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
/s/ Fred E. Bearden
Fred E. Bearden
President
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
/s/ Fred E. Bearden
Fred E. Bearden
President
10
TABLE I -- ORDERLY LIQUIDATION
==============================================================================================================
CURRENT TOTAL
AIRCRAFT/ S/N DATE OF CONFIGURATION QUANTITY CURRENT MARKET VALUE
ENGINE MANUFACTURE MARKET VALUE 1997
TYPE VALUE ENGINE MUSD
HALF ZERO TIME
LIFE SINCE
1997 OVERHAUL
MUSD MUSD
- ---------------------------------------------------------------------------------------------------------------
DHC-7-103 11 1979 Combi 1 1.86 _ 1.86
- ---------------------------------------------------------------------------------------------------------------
DHC-7-102 44 1981 Passenger 1 1.35 _ 1.35
- ---------------------------------------------------------------------------------------------------------------
DHC-7-102 57 1981 Passenger 1 1.35 _ 1.35
- ---------------------------------------------------------------------------------------------------------------
DHC-7-103 72 1982 Combi 1 1.92 _ 1.92
- ---------------------------------------------------------------------------------------------------------------
DHC-6-300 666 1980 Passenger 1 0.95 _ 0.95
- ---------------------------------------------------------------------------------------------------------------
Metro III AC576 1983 Passenger 1 0.83 _ 0.83
- ---------------------------------------------------------------------------------------------------------------
Metro II TC370 1980 Passenger 1 0.44 _ 0.44
- ---------------------------------------------------------------------------------------------------------------
PT6A-28 - - Bare 2 _ 0.20 0.40
- ---------------------------------------------------------------------------------------------------------------
PT6A-41 - - Bare 13 _ 0.29 3.77
- ---------------------------------------------------------------------------------------------------------------
PT6A-42 - - Bare 4 _ 0.30 1.20
- ---------------------------------------------------------------------------------------------------------------
PT6A-45R - - Bare 1 _ 0.29 0.29
- ---------------------------------------------------------------------------------------------------------------
PT6A-50 - - Bare 1 _ 0.33 0.33
- ---------------------------------------------------------------------------------------------------------------
PT6A-65R - - Bare 2 _ 0.34 0.68
- ---------------------------------------------------------------------------------------------------------------
A250-C30P - - Bare 2 _ 0.27 0.54
- ---------------------------------------------------------------------------------------------------------------
TOTAL 15.91
===============================
============================================================
ORDERLY ORDERLY ORDERLY
AIRCRAFT/ LIQUIDATION LIQUIDATION LIQUIDATION
ENGINE HALF VALUE TOTAL
TYPE VALUE ENGINE VALUE
LIVE ZERO TME 1997
1997 SINCE MUSD
MUSD OVERHAUL
1997 MUSD
- ------------------------------------------------------------
DHC-7-103 1.40 _ 1.40
- ------------------------------------------------------------
DHC-7-102 1.01 _ 1.01
- ------------------------------------------------------------
DHC-7-102 1.01 _ 1.01
- ------------------------------------------------------------
DHC-7-103 1.44 _ 1.44
- ------------------------------------------------------------
DHC-6-300 0.71 _ 0.71
- ------------------------------------------------------------
Metro III 0.62 _ 0.62
- ------------------------------------------------------------
Metro II 0.33 _ 0.33
- ------------------------------------------------------------
PT6A-28 _ 0.15 0.30
- ------------------------------------------------------------
PT6A-41 _ 0.22 2.83
- ------------------------------------------------------------
PT6A-42 _ 0.23 0.90
- ------------------------------------------------------------
PT6A-45R _ 0.22 0.22
- ------------------------------------------------------------
PT6A-50 _ 0.25 0.25
- ------------------------------------------------------------
PT6A-65R _ 0.51 0.51
- ------------------------------------------------------------
A250-C30P _ 0.41 0.41
- ------------------------------------------------------------
TOTAL 11.94
============================================================
11
EXHIBIT 99.01
AIRCRAFT INFORMATION SERVICES, INC.
30 May 1997
Mr. Marc Anderson
CMA Capital Group, Inc., General Partner
JetFleet Aircraft, L.P.
JetFleet Aircraft II, L.P.
Subject: AISI Report No. A7D057BVO - A
AISI Short Form Sight Unseen Current Market and Liquidation Value
Appraisal - Fleet of Seven Selected Aircraft and Twenty-five Engine
Reference: Fax Message, 14 January 1997; Telephone Message 20 May 1997
Dear Mr. Anderson:
As requested, Aircraft Information Services, Inc. (AISI) is pleased to offer
our opinion of the sight unseen half-life current market value and liquidation
value of your seven aircraft and the 'zero time since overhauled' current
market value and liquidation value of your twenty-five bare engines as
identified in Table I of this report.
1. METHODOLOGY AND DEFINITIONS
The historical standard term of reference for commercial aircraft or engine
value has been 'half-life fair market value' of an 'average' aircraft or
engine. However, 'fair market value' could mean a fair value in the given
market or a value in a hypothetical 'fair' or balanced market, and the two
definitions are not equivalent. Recently, the term 'base value' has been
created to describe the theoretical balanced market condition and to avoid the
potentially misleading term 'fair market value' which has now become synonymous
with the term 'current market value' or a 'fair' value in the actual current
market. AISI value definitions are consistent with those of the International
Society of Transport Aircraft Trading (ISTAT) of 01 January 1994; AISI is a
member of that organization and employs an ISTAT Certified Senior Aircraft
Appraiser.
AISI defines a 'base value' as that of a transaction between equally willing
and informed buyer and seller, neither under compulsion to buy or sell, for a
single unit cash transaction with no hidden value or liability, and with supply
and demand of the sale item roughly in balance. Base value are typically given
for aircraft or engines in 'new' condition, 'average half-life' condition, or
in a specifically described condition unique to a single aircraft or engine at
a specific time. An 'average' aircraft or engine is an operable airworthy
aircraft or engine in average physical condition and with average accumulated
flight hours and cycles, with clear title and, for aircraft, a standard
unrestricted certificate of airworthiness and registered in an authority which
does not represent a penalty to aircraft value or liquidity; with no damage
history and with inventory configuration and level of modification which is
normal for the aircraft or engine's intended use and age. AISI assumes average
condition unless otherwise specified in this report. 'Half-life' condition
assumes that every component or maintenance service which has a prescribed
interval that determines its service life, overhaul interval or interval
between maintenance services, is at a condition which is one- half of the total
interval. AISI defines engine 'zero time since overhaul' condition to be that
of an engine fresh from an engine heavy maintenance shop visit which overhauled
all engine modules or all engine compressor and combustor/turbine stages as
appropriate, with all life-limited
12
components at half-life.
AISI defines a 'current market value' or 'fair market value' as that value
which reflects the real market conditions, whether at, above or below the base
value conditions. Definitions of aircraft or engine condition, buyer/seller
qualifications and type of transaction remain unchanged from that of base
value. Current market value takes into consideration the status of the economy
in which the aircraft or engine is used, the status of supply and demand for
the particular aircraft or engine type, the value of recent transactions and
the opinions of informed buyers and sellers. Current market value assumes that
there is no short term time constraint to buy or sell.
AISI encourages the use of base values only to consider historical trends, as a
basis for long term future value considerations, or to consider how actual
market values vary from theoretical base values. Base values are inappropriate
to determine near term values. AISI encourages the use of current market
values to consider the probable near term value of an aircraft or engine.
AISI determines an 'adjusted market value' by determining the value of known
deviations from half-life condition, which may be better or worse than
half-life condition, and to account for better or worse than average physical
condition, and the inclusion of additional equipment, or absence of standard
equipment.
AISI's opinion of the liquidation value of commercial aircraft or engines
depends on many variable, most of which are not readily forecast. Among these
are; general economic condition, time to liquidate, specific demand, surplus
and competition for an aircraft or engine type, and aircraft or engine
condition. The two primary factors determining liquidation are the current
market value and time to market, assuming average market condition, demand and
competition. AISI assumes a current market value allows more than one year as
the time to market (no time constraint). 'Orderly' liquidation allows between
six months and one year to market and liquidation allows less than six months
to market.
Given the relatively thin used engine market and the relatively broad range of
values for transactions for an engine type, the meaning of 'base value' for
used engines is open to broad interpretation. Normally base value is derived
from historical normalized current market values with manufacturer's list price
as a start point, while current market value is deduced directly from recent
transactions. For used engines there are seldom sufficient historical
transactions to permit the same derivation of engine base values as is possible
for aircraft base values. In our opinion the used engine market is currently
a relatively hard market, and base value will be close to current market values
for most engine types.
AISI defines a BARE ENGINE as an engine without accessories, but complete with
all air, hydraulic and electrical lines which are not directly part of
accessories. For turboprop engines, a BARE ENGINE includes the gas generator
and power or gearbox sections but not the propeller.
AISI defines a BASIC QEC engine as the bare engine plus all accessories,
connecting lines and engine mounts but not including engine inlet cowl, fan
cowl or thrust reverser.
AISI defines a FULL QEC engine as a basic QEC engine plus inlet cowl, fan cowl
and thrust reverser. There will be some variation in full QEC inventory from
engine type to type, and from position to position.
2. VALUATION
The aircraft half-life current market values and liquidation values as well as
bare engine zero time since overhaul current market values and liquidation
values are presented below in Table I subject to the assumptions, definitions
and disclaimers herein.
13
This report is offered as a fair and impartial assessment of subject aircraft
and engines based on data supplied by others, with no physical inspection or
verification by AISI. AISI has no past, present nor contemplated future
interest in subject aircraft and engines. This report is an opinion and is for
the sole use of the client/addressee and AISI shall not be liable to any party
for damages arising out of reliance or alleged reliance on it, or for any
parties action or failure to act as a result of reliance or alleged reliance on
this report.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
/s/ Fred E. Bearden
Fred E. Bearden
President
14
TABLE I - LIQUIDATION
===================================================================================
AIRCRAFT/ S/N DATE OF CONFIGURATION QUAN- CURRENT
ENGINE MANUFACTURE TITY MARKET
TYPE VALUE
HALF LIFE
1997
MUSD
- -----------------------------------------------------------------------------------
DHC-7-103 11 1979 Combi 1 1.86
- -----------------------------------------------------------------------------------
DHC-7-102 44 1981 Passenger 1 1.35
- -----------------------------------------------------------------------------------
DHC-7-102 57 1981 Passenger 1 1.35
- -----------------------------------------------------------------------------------
DHC-7-103 72 1982 Combi 1 1.92
- -----------------------------------------------------------------------------------
DHC-6-300 666 1980 Passenger 1 0.95
- -----------------------------------------------------------------------------------
Metro III AC576 1983 Passenger 1 0.83
- -----------------------------------------------------------------------------------
Metro II TC370 1980 Passenger 1 0.44
- -----------------------------------------------------------------------------------
PT6A-28 - - Bare 2 _
- -----------------------------------------------------------------------------------
PT6A-41 - - Bare 13 _
- -----------------------------------------------------------------------------------
PT6A-42 - - Bare 4 _
- -----------------------------------------------------------------------------------
PT6A-45R - - Bare 1 _
- -----------------------------------------------------------------------------------
PT6A-50 - - Bare 1 _
- -----------------------------------------------------------------------------------
PT6A-65R - - Bare 2 _
- -----------------------------------------------------------------------------------
A250-C30P - - Bare 2 _
===================================================================================
================================================================================================
AIRCRAFT/ CURRENT TOTAL LIQUIDATION LIQUIDATION LIQUIDATION
ENGINE MARKET VALUE HALF VALUE VALUE TOTAL
TYPE VALUE 1997 LIVE ENGINE VALUE
ENGINE MUSD 1997 MUSD ZERO TIME 1997
ZERO TIME SINCE MUSD
SINCE OVERHAUL
OVERHAUL 1997 MUSD
MUSD
- ------------------------------------------------------------------------------------------------
DHC-7-103 _ 1.86 1.21 _ 1.21
- ------------------------------------------------------------------------------------------------
DHC-7-102 _ 1.35 0.88 _ 0.88
- ------------------------------------------------------------------------------------------------
DHC-7-102 _ 1.35 0.88 _ 0.88
- ------------------------------------------------------------------------------------------------
DHC-7-103 _ 1.92 1.25 _ 1.25
- ------------------------------------------------------------------------------------------------
DHC-6-300 _ 0.95 0.62 _ 0.62
- ------------------------------------------------------------------------------------------------
Metro III _ 0.83 0.54 _ 0.54
- ------------------------------------------------------------------------------------------------
Metro II _ 0.44 0.29 _ 0.29
- ------------------------------------------------------------------------------------------------
PT6A-28 0.20 0.40 _ 0.13 0.26
- ------------------------------------------------------------------------------------------------
PT6A-41 0.29 3.77 _ 0.19 2.45
- ------------------------------------------------------------------------------------------------
PT6A-42 0.30 1.20 _ 0.20 0.78
- ------------------------------------------------------------------------------------------------
PT6A-45R 0.29 0.29 _ 0.19 0.19
- ------------------------------------------------------------------------------------------------
PT6A-50 0.33 0.33 _ 0.21 0.21
- ------------------------------------------------------------------------------------------------
PT6A-65R 0.34 0.68 _ 0.22 0.44
- ------------------------------------------------------------------------------------------------
A250-C30P 0.27 0.54 _ 0.18 0.35
- ------------------------------------------------------------------------------------------------
TOTAL 15.91 10.35
===================================================================================