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Fixed Income Research – Investment Grade / High Yield Corporates North America

Industry

Douglas Runte, CFA +1 (1)212 761 1472 Douglas.Runte@morganstanley.com

Jeremy Falk +1 (1)212 761 0839 Jeremy.Falk@morganstanley.com

Airlines June 19, 2005

Monthly Update

Aircraft Market Update • Passenger aircraft market remains strong, lease rates up A small increase in the number of parked aircraft in March 2005 from February 2005, but more detailed analysis shows a continued strengthening in the market for recent generation aircraft types, with resulting improvement in lease rates and values.

• Few recent aircraft parked, low availability of many types The “skyline” of parked aircraft segmented by age shows few newer aircraft parked and many parked older aircraft destined for scrapping. Approximately 2.1% of the aircraft less than 11 years old are parked versus 50% of the aircraft more than 20 years old.

• Demand for widebodies strong, airlines searching for lift There are almost no widebody aircraft such as the 767, 777 or A330 available. With delivery slots for the 787 filled through 2010 and the A350 not available until late2010, airlines benefiting from large increases in intercontinental traffic and already high load factors face a challenge meeting demand over the next few years. The resulting increase in lease rates and values is striking.

• Market for newer narrowbody aircraft continues to improve The number of parked 737 Next Generation aircraft remains infinitesimal and the number of parked A320s continues to decline. Strong growth by low-cost carriers worldwide is leading the increase in demand for narrowbodies. With few of the newest aircraft available, airlines are turning to older models.

• A new airline/aircraft quiz!

First five correct responses get a model plane!

The 100-130 seat market has been a notoriously difficult space for an aircraft model. Bombardier has chosen to enter this space with its new C-Series aircraft proposal. Identify which of the eight listed aircraft types seating 100-140 seats sold 300+ planes.

Morgan Stanley does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Customers of Morgan Stanley in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at www.morganstanley.com/equityresearch or can call 800-624-2063 to request a copy of this research.

Please see analyst certification and other important disclosures starting on page 37.


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Aircraft Market Update Douglas Runté, CFA (212) 761-1472 Jeremy Falk (212) 761 8378 Aircraft Market Overview

The number of parked passenger aircraft rose slightly in March 2005 from the previous month, while the number of parked freighter aircraft decreased by a very small number (Exhibit 6). The number of parked passenger aircraft increased by just under 3.0% in March 2005, while the number of parked freighter aircraft fell by 0.7%. Although the increase in parked passenger aircraft in March 2005 is material, we note that the number of parked aircraft has declined in 11 of the past 14 months. In addition, the number of parked aircraft continues to be concentrated in several deeply out of favor, out of production aircraft types, and much of the increase in March 2005 was driven by increases in parked aircraft in these types. As a result, we believe that the aircraft market continues to strengthen, an assessment supported by objective data, as well as by a large body of anecdotal evidence that we have gathered. In fact, we believe that the market has transitioned from “glut” to “shortage” for many aircraft types over the last two years, contributing to improvements in values and, especially, lease rates.

The market for passenger aircraft continues to strengthen, with the market for large freighters also showing considerable strength. There is a shortage of newer passenger aircraft types, with resulting improvements in lease rates and values. The number of parked passenger aircraft in aggregate is approximately 5% below the peak experienced in early 2003, seemingly indicating a relatively modest improvement in the aircraft market and relatively little change in the user/provider negotiating dynamic. However, the average age of these parked aircraft continues to climb and is increasingly concentrated in out of production aircraft types that are increasingly uneconomic in an environment of high fuel prices. In addition, the number of parked passenger aircraft as a percentage of the in-service fleet has declined sharply. New mainline aircraft additions averaging 640 planes over the last four years, plus RJ deliveries averaging approximately 300 aircraft per year, have increased the western-built passenger fleet to 16,011 aircraft

in March 2005, from 14,655 in January 2003. With the large increase in fleet relative to a slight decrease in parked passenger aircraft, the percentage of the fleet parked has fallen from over 12% at the peak in 2003 to 10.9% currently.

The “skyline” of parked aircraft by age shows the vastly different market for different aircraft ages and types. There are few newer aircraft parked, while the number of older aircraft parked is high. The number of parked newer passenger aircraft remains low, both in nominal terms and as a percentage of the parked fleet (Exhibit 9). We believe that an analysis of the “skyline” of the age of the parked fleet is critical to an understanding of the strength of the aircraft market, with relatively new aircraft (i.e., those less than 11 years old) in particularly strong demand, and older aircraft (i.e., those more than 20 years old) at the far end of the skyline in surplus. Aircraft types such as the 727, 737-200 and the oldest widebodies will be scrapped rather than returned to service, we believe. For younger aircraft, it is more and more a seller’s market, with airlines worldwide confronted by rising traffic, high load factors and few manufacturers’ slots in 2005 and 2006. Of the fleet of 8,346 western-built passenger aircraft less than 11 years old, approximately 2.1% are parked, a similar number to last month. We believe that a large number of these aircraft are likely in transition from one operator to another, decreasing the number of available aircraft. For aircraft older than 20 years, over 50% of the fleet of 774 aircraft are currently parked, with most destined for scrapping, we believe.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 3

Narrowbody Passenger Market Overview

The number of parked narrowbody passenger aircraft increased from 1,310 in February 2005 to 1,351 in March 2005. The increase was driven almost entirely by older generation aircraft, with the number of parked recent generation aircraft remaining almost constant and actually declining as a percent of the operable fleet (Exhibit 14).

The number of parked recent generation narrowbodies remained constant in March 2005, while the number of parked older narrowbodies increased sharply. Only 2% of recent generation narrowbodies were parked in March 2005. The number of parked recent generation narrowbody passenger aircraft increased from 166 in February 2005 to 167 in March 2005. In contrast, the number of parked older narrowbody aircraft increased from 1,144 to 1,184, an increase of 3.5%. As a percentage of the fleet, approximately 2% of recent generation passenger narrowbodies are parked, compared to 21% of older narrowbodies.

United (737-500s) and US Airways (737-300s and 737-400s) are unlikely to dampen the market significantly, we believe.

The market for A320 family passenger aircraft continues to improve, with only 1.6% parked. Somewhat concerning, however, are Airbus’ plans to dramatically increase A320 production levels in 2006. The number of parked A320 family passenger aircraft (e.g., A318, A319, A320 and A321) remained relatively constant between February 2005 and March 2005. In March 2005, 38 A320 family passenger aircraft were parked, a decrease from 40 in February 2005, with the percentage of parked fleet falling from 1.7% to 1.6%. Airbus has announced that it will increase production rates of its narrowbody family to 30 aircraft per month in 2006 from an average of 20 per month in the last 12 months. While this planned increase bears monitoring and causes us some concern, demand for the aircraft type (except the troubled A318) is strong and should be able to soak up the increased production without damaging the recovering market, we believe.

The 737 NG remains in short supply and lease rates have almost returned to pre-9/11 levels. Few 737 NGs are available and most production slots have been filled, so many airlines are turning to the 737 Classic; 0.7% of 737 NGs are parked versus 5% of Classics.

The number of parked MD-80s climbed to 13%. The aircraft has lost favor among most operators in North America and Europe, but the durable MD aircraft is finding a home in the developing world, with the number of operators up sharply.

The 737 Next Generation continues to stand in a class of its own, with 12 out of 1,566 aircraft parked in March 2005. While this is a sharp increase from the six 737 NGs parked in February 2005, it is still less than 1% of the total fleet. The 737 NG continues to be our favorite narrowbody aircraft and we reiterate its “top of the charts” Morgan Stanley Aircraft GPA of “A+” (Exhibit 24). Demand for 737 NGs is so strong relative to minimal availability (all 737 NG production slots in 2005 and most in 2006 are spoken for) that many operators are being forced to look at the somewhat compatible 737 Classic as alternative lift. While the number of parked 737 Classics increased from 78 to 86 between February and March 2005, we expect this number to decrease over the remainder of the year (particularly for the -300 version of the Classic). For financiers, the outlook for the 737 Classic and Next Generation is good, with lease rates and values likely to continue climbing over the remainder of year, we believe. Expected reductions in operating 737 aircraft by

The market for MD-80s continues to weaken if parked aircraft is any indication of market health. The number of parked MD-80s increased from 135 (or 12% of the fleet) in February 2005 to 153 (or 13% of the fleet) in March 2005. The MD-80 continues to fall from favor in North America (except at Delta and American) and Western Europe due to its relatively high fuel consumption, advanced age in many cases and relatively high noise levels. While the number of operating MD-80 aircraft in North America and Western Europe has fallen sharply over the last five years, the aircraft is finding a home among smaller operators in other parts of the world where the famous MD durability is of great value and noise is less of a concern. While in Europe the number of operating MD-80s has declined from 334 to 263, in Asia, Africa and Latin America, the number of in-service MD-80s has increased from 163 to 187. Reflecting the dispersion of the fleet, the number of MD-80 operators has increased from 60 to 99 since 2000.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


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Widebody Passenger Market

The number of parked widebody passenger aircraft increased from 392 aircraft in February 2005 to 399 in March 2005, an increase of 1.7% (Exhibit 11). The number of parked recent generation widebodies increased from 181 to 187 from February 2005 to March 2005 (or 7% of the fleet), while the number of parked older generation aircraft climbed from 211 to 212 (or 31% of the fleet). In total, approximately 12% of the widebody passenger fleet was parked in March 2005, approximately the same as in February 2005.

Demand for intercontinental-capable lift continues to exceed available supply, driving up lease rates and values. With the 787 unavailable until 2008 (and sold out through 2010) and the A350 unavailable until 2010, airlines face a real challenge in finding intercontinental lift, since few want to order the “old” with the “new” so tantalizingly close.

the earliest, we feel increasingly confident in the outlook for lease rates and (to a lesser extent) values of the 767 and A330 through the middle of the next decade. In addition, particularly in the absence of suitable widebodies, more airlines may choose to follow the path of Continental in the United States and move higher-gross-weight ETOPs versions of the 757 into intercontinental travel. While the 757 does not offer the range of the 767-300ER (and certainly not the A330-200 or -300), it is capable of serving most trans-Atlantic routes. However, narrowbodies are generally viewed with disdain for long-haul travel in Asia (Singapore and Cathay, for example, operate no narrowbodies at all), so the barriers to this strategy in Asia are higher. Hence, the challenge for airlines that plan to grow their international travel and have not yet taken delivery slots for the 787 or A350 creates an opportunity for financiers with availability of mid-sized widebody lift over the next five to seven years. Exhibit 1

Boeing 767 / A330 Passenger Aircraft (January 2005) Aircraft Type

The continued growth of intercontinental and other longhaul travel (see Morgan Stanley Airline Traffic Report, June 14, 2005) has increased demand for mid-size widebodies such as the 767 and A330. The number of parked 767300ERs has fallen from six aircraft in February 2005 to four aircraft in March 2005, representing 0.7% of the fleet. For the A330, the 767-300ER’s more modern and capable Airbus competitor, the number of parked aircraft remained constant at six, or 1.8% of the A330 passenger fleet. For the larger 777, the number of parked aircraft remains exceptionally low at five aircraft, representing 1% of the passenger fleet of 500 aircraft. For the A340, a long range widebody we do not favor, the number of parked aircraft is three out of 286, or 1% of the fleet.

In-Service

Stored

Total

On Order

% Stored

63 5 0 7 0

185 599 37 172 153

2 13 0 105 78

34.1 0.8 0.0 4.1 0.0

767-200/-200ER 122 767-300/-300ER 594 767-400ER 37 A330-200 165 A330-300 153 Source: Morgan Stanley, Airclaims Exhibit 2

Boeing 767 / A330 Passenger Aircraft (February 2005) Aircraft Type

In-Service

Stored

Total

On Order

% Stored

62 6 0 6 0

184 600 37 173 154

2 13 1 106 85

33.7 1.0 0.0 3.5 0.0

767-200/-200ER 122 767-300/-300ER 594 767-400ER 37 A330-200 167 A330-300 154 Source: Morgan Stanley, Airclaims Exhibit 3

Boeing 767 / A330 Passenger Aircraft (March 2005)

Airlines face a difficult decision in meeting their needs for mid-size intercontinental aircraft. With both manufacturers offering a new mid-sized aircraft – the 787 for Boeing and the A350 for Airbus – that are each proclaimed to be at least 20% more efficient than the aircraft they replace, few airlines are eager to order existing-generation aircraft such as the 767 and A330. The number of 767 orders now stands at 16, while the newer A330 family has 185 aircraft on order, and some of these orders may be converted to A350s, we believe. With the 787 currently sold out through nearly the end of 2010 and the Airbus A350 not available until mid-2010 at

Aircraft Type

In-Service

Stored

Total

On Order

% Stored

63 4 0 6 0

182 600 37 176 155

2 8 0 101 84

34.6 0.7 0.0 3.5 0.0

767-200/-200ER 119 767-300/-300ER 596 767-400ER 37 A330-200 170 A330-300 155 Source: Morgan Stanley, Airclaims

Deliveries and Retirements

From mid-February 2005 to mid-March 2005, there were 70 western-built passenger jets delivered and placed into service, of which 55 were mainline aircraft and 15 regional jet aircraft (i.e., those with less than 100 seats). This represents an overall decrease from the previous period,

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


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with mainline aircraft deliveries 5 higher and regional deliveries 19 lower. Exhibit 4

Passenger Aircraft Deliveries: (02/14/04-3/14/05) Aircraft Type

Deliveries

Airbus A319-100 Airbus A320-200 Airbus A321-210 Airbus A330-200 Airbus A330-300 Airbus A340-600 Boeing 717-200 Boeing 737-700 Boeing 737-800 Boeing 767-300ER Boeing 777-300 Boeing 777-300ER CRJ 200 CRJ 900 Embraer 170 ERJ-135 ERJ-145 Source: Morgan Stanley, Airclaims

13 7 1 2 2 4 1 7 14 1 2 1 3 2 1 2 7

Exhibit 5

Passenger Aircraft Scrapped (02/14/05-03/14/05) Variant

Tail Number

Build Year

Owner

Last Operator

Years in Storage Prior to Scrapping

Classification

Airbus A300 B4-220 (P&W) Airbus A300 B4-220 (P&W) Airbus A310 320 (P&W) Boeing 747 200B (P&W) Boeing 747 SP (P&W) MD-80 83 (MDC) Airbus A300 B4-220 (P&W) Source: Airclaims

B-18582 B-18583 N443RR N611FF N747KV N789BV B-18582

1982 1982 1987 1972 1976 1989 1982

Undisclosed Undisclosed AeroTurbine Inc Fleet Capital Leasing Jet Aero Holdings Airplanes IAL Finance Ltd Undisclosed

Undisclosed Undisclosed AeroTurbine Inc Fleet Capital Leasing Jet Aero Holdings GECAS Undisclosed

5.51 5.51 2.25 4.42 6.04 2.1 5.51

Widebody Widebody Widebody Widebody Widebody Narrowbody Narrowbody

Aircraft Type

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


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Exhibit 6

Exhibit 7

Parked Aircraft: Western-Built Jets Month

Passenger

January 2000 January 2001 January 2002 January 2003 October 2003 January 2004 February 2004 March 2004 April 2004 May 2004 June 2004 July 2004 August 2004 September 2004 October 2004 November 2004 December 2004 January 2005 February 2005 March 2005

Stored Passenger Aircraft (Western Built)

Freighter Combination

876 879 1,758 1,720 1,817 1,802 1,798 1,794 1,782 1,773 1,691 1,671 1,598 1,600 1,603 1,664 1,721 1,704 1,702 1,750

135 177 325 306 292 278 270 269 288 288 290 297 304 294 290 280 274 278 283 281

Total

1,123 1,155 2,174 2,128 2,226 2,189 2,180 2,177 2,175 2,167 2,085 2,072 2,010 2,006 2,005 2,059 2,121 2,101 2,104 2,137

112 99 91 102 117 109 112 114 105 106 104 104 108 112 112 115 126 119 119 106

# of Aircraft 2,000

Long-Term Storage

Temporarily Stored

1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Mar-01

Sep-01

Mar-02

Sep-02

Mar-03

Sep-03

Mar-04

Sep-04

Source: BACK Aviation, Bloomberg

Note: Total number includes combination aircraft. Source: Morgan Stanley, Airclaims Exhibit 8

Exhibit 9

Passenger Aircraft: Retirements and Deliveries

Passenger Aircraft: Parked Fleet Age Distribution

# of Aircraft 340 300

Widebody Retirements

Widebody Deliveries

# of Aircraft

Narrowbody Retirements

Narrowbody Deliveries

500

Widebody Net Additions

Narrowbody Net Additions

Narrowbody

Widebody

450

260

400 220

350

43

180

153

300

79

140

250

100

62

200

60

45 326

150

20

240

(20)

100

5

(60)

50

80

78

0-5

6-10

12

190

267

170

0

(100) 3Q01

1Q02

3Q02

Source: Morgan Stanley, Airclaims

1Q03

3Q03

1Q04

3Q04

1Q05

11-15

16-20

21-25

26-30

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.

31+

Mar-05


Page 7

Exhibit 10

Exhibit 11

Parked Aircraft: Narrowbody Passenger Aircraft Recent Generation* Scraps

Date

Net Parked

Parked Aircraft: Widebody Passenger Aircraft

Total Parked Fleet Chng

Scraps

Net Parked

Recent Generation* Chng

05/02 0 211 (7) 11 1,356 06/02 0 204 (7) 13 1,326 07/02 0 198 (6) 4 1,305 08/02 0 185 (13) 11 1,290 09/02 0 185 0 7 1,336 10/02 0 181 (4) 9 1,336 11/02 0 196 15 9 1,339 12/02 0 188 (8) 12 1,297 01/03 0 193 5 4 1,333 02/03 0 187 (6) 15 1,337 03/03 0 186 (1) 6 1,338 04/03 0 195 9 12 1,382 05/03 0 189 (6) 8 1,391 06/03 0 184 (5) 18 1,370 07/03 0 167 (17) 10 1,329 08/03 0 165 (2) 12 1,316 09/03 0 164 (1) 6 1,317 10/03 0 156 (8) 6 1,332 11/03 0 184 28 8 1,331 12/03 0 167 (17) 10 1,287 01/04 0 172 5 7 1,311 02/04 0 180 8 2 1,321 03/04 0 202 22 4 1,325 0 188 (14) 6 1,322 04/04 0 181 (7) 16 1,314 05/04 1 151 (30) 9 1,256 06/04 0 130 (21) 12 1,230 07/04 0 112 (18) 12 1,178 08/04 1 151 39 5 1,256 09/04 1 108 (43) 8 1,210 10/04 0 163 55 7 1,288 11/04 0 195 32 7 1,318 12/04 0 172 (23) 3 1,301 01/05 02/05 0 166 (6) 10 1,310 03/05 0 167 1 2 1,351 *Recent Generation aircraft include all in-production aircraft and 757s Source: Morgan Stanley, Airclaims

41 (30) (21) (15) 46 0 3 (42) 36 4 1 44 9 (21) (41) (13) 1 15 (1) (44) 24 10 4 (3) (8) (58) (26) (52) 78 (46) 78 30 (17) 9 41

Date

Scraps

Net Parked

Total Parked Fleet Chng

Scraps

Exhibit 12

Exhibit 13

Parked Narrowbody Passenger Aircraft

Parked Widebody Passenger Aircraft

20.0%

Recent Generation Older Generation % of Fleet

1,400

Chng

(36) (19) (9) (3) 18 (5) 5 (9) (9) 20 20 46 13 (7) (3) (10) 1 17 8 3 (3) (14) (8) (9) (1) (19) (13) (13) 0 1 (1) 11 (22) (11) 7

# of Aircraft

# of Aircraft

1,600

Net Parked

05/02 1 191 (7) 33 417 06/02 3 175 (16) 8 398 07/02 3 165 (10) 5 389 08/02 2 161 (4) 4 386 09/02 1 172 11 4 404 10/02 1 174 2 7 399 11/02 2 179 5 7 404 12/02 4 171 (8) 8 395 01/03 1 171 0 10 386 02/03 1 182 11 4 406 03/03 3 197 15 5 426 04/03 0 235 38 2 472 05/03 3 233 (2) 3 485 06/03 2 217 (16) 4 478 07/03 2 221 4 6 475 08/03 7 211 (10) 10 465 09/03 0 212 1 4 466 10/03 0 223 11 1 483 11/03 1 227 4 1 491 12/03 0 233 6 0 494 01/04 0 232 (1) 8 491 02/04 0 219 (13) 4 477 03/04 3 217 (2) 8 469 04/04 0 214 (3) 1 460 05/04 0 212 (2) 0 459 06/04 0 207 (5) 0 440 07/04 0 199 (8) 1 427 08/04 2 189 (10) 2 414 09/04 4 188 (1) 4 414 10/04 0 185 (3) 1 415 11/04 0 192 7 1 414 12/04 2 200 8 2 425 01/05 4 186 (14) 4 403 02/05 1 181 (5) 1 392 03/05 2 187 6 5 399 *Recent Generation aircraft include all in-production aircraft and 757s Source: Morgan Stanley, Airclaims

600

18.0% 16.0%

20.0%

Recent Generation Older Generation % of Fleet

18.0%

500

16.0%

1,200 14.0% 1,000

12.0%

800

10.0%

14.0%

400

12.0% 10.0%

300

8.0%

8.0%

600

6.0%

200

6.0%

400 4.0% 200

4.0%

100

2.0%

2.0%

0

0.0% Nov-02

Mar-03

Jul-03

Nov-03

Source: Morgan Stanley, Airclaims

Mar-04

Jul-04

Nov-04

Mar-05

0 Nov-02

0.0% Mar-03

Jul-03

Nov-03

Mar-04

Jul-04

Nov-04

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.

Mar-05


Page 8

Exhibit 14

Parked Aircraft: Western-Built Passenger Narrowbodies Aircraft Type

February 2005 Parked Fleet

Airbus A319 Airbus A320 Airbus A321 DC-9 MD-80 Boeing 717 Boeing 727 Boeing 737 (JT8D) Boeing 737 (CFMI) Boeing 737 (NG) Boeing 757 Fokker 100 CRJ-100/200 Embraer ERJ-145 Embraer ERJ-140 Embraer ERJ-135 Other Total Recent Generation Total Old Generation Grand Total

0 34 6 156 135 0 287 233 78 6 28 73 22 15 0 0 237 166 1,144 1,310

% Parked

645 1,343 323 428 1,151 139 469 717 1,886 1,547 902 264 979 614 74 112 1,090 7,070 5,613 12,683

0 3 2 36 12 0 61 33 4 0 3 28 2 2 0 0 22 2 20 10

Parked

March 2005 Fleet

1 30 7 151 153 0 285 233 86 12 31 82 18 16 0 0 246 167 1,184 1,351

Change

% Parked

658 1,350 324 424 1,151 139 464 711 1,884 1,566 901 264 983 621 74 113 1,094 7,125 5,596 12,721

Parked

0 2 2 36 13 0 61 33 5 1 3 31 2 3 0 0 22 2 21 11

In

Recent

Fleet Production?

1 (4) 1 (5) 18 0 (2) 0 8 6 3 9 (4) 1 0 0 9 1 40 41

13 7 1 (4) 0 0 (5) (6) (2) 19 (1) 0 4 7 0 1 4 55 (17) 38

Y Y Y N N Y N N N Y N N Y Y Y Y NM

Generation?

Y Y Y N N Y N N N Y Y N Y Y Y Y NM

Source: Morgan Stanley, Airclaims Exhibit 15

Western-Built Passenger Narrowbodies: Stored Aircraft # of Aircraft 1,500 1,350 1,200 1,050 900 750 600 450 300 150 0

% Stored 20%

Recent Generation Old Generation % of Fleet

18% 15% 13% 10% 8% 5% 3% 0%

1Q01

3Q01

1Q02

3Q02

1Q03

3Q03

1Q04

3Q04

1Q05

Source: Morgan Stanley, Airclaims Exhibit 16

Western-Built Passenger Narrowbodies: Operating Status % Stored

# of Aircraft 15,000

20%

Stored In Service % of Fleet

13,500 12,000

18% 16%

10,500

14%

9,000

12%

7,500

10%

6,000

8%

4,500

6%

3,000

4%

1,500

2%

0

0% 1989 1988

1991 1990

1991

1992

1995 1993

1994

1997 1995

1996

1997

1999 1998

1999

2001

2003 2002

2003

2005

2000

2001

157

269

302

715

733

737

612

428

346

335

324

557

570

1,306

1,322

1,331

1,318

1,351

In Service

5,289

5,468

5,790

5,891

6,288

6,521

6,804

7,111

7,383

7,717

8,236

8,696

9,418

9,517

10,146

10,511

11,268

11,370

% of Fleet

2.9%

4.7%

5.0%

10.8%

10.4%

10.2%

8.3%

5.7%

4.5%

4.2%

3.8%

6.0%

5.7%

12.1%

11.5%

11.2%

10.5%

10.6%

Stored

1989

1993

2004

2005

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 9

Exhibit 17

Parked Aircraft: Western-Built Passenger Widebodies February 2005 % Parked Parked Fleet

Aircraft Type

Airbus A300 Airbus A310 Airbus A330 Airbus A340 DC-10 MD-11 Boeing 747 Boeing 767 Boeing 777 Lockheed L-1011 TriStar Total Recent Generation Total Old Generation Grand Total Source: Morgan Stanley, Airclaims

March 2005 Fleet

Parked

Change

% Parked

In

Parked

Fleet

27 27 6 2 61 30 99 68 6 66

255 155 327 282 113 75 692 821 498 93

11 17 2 1 54 40 14 8 1 71

29 28 6 3 62 29 107 66 5 64

255 155 331 286 112 74 691 820 500 92

11 18 2 1 55 39 15 8 1 70

2 1 0 1 1 (1) 8 (2) (1) (2)

0 0 4 4 (1) (1) (1) (1) 2 (1)

181 211 392

2,620 691 3,311

7 31 12

187 212 399

2,628 688 3,316

7 31 12

6 1 7

8 (3) 5

Recent

Production? Generation?

N N Y Y N N Y Y Y N

N N Y Y N N Y Y Y N

Exhibit 18

Western-Built Passenger Widebodies: Stored Aircraft # of Aircraft

% Stored 20% 18% 15% 13% 10% 8% 5% 3% 0% 1Q05

Recent Generation Old Generation % of Fleet

500 400 300 200 100 0 1Q01

3Q01

1Q02

3Q02

1Q03

3Q03

1Q04

3Q04

Source: Morgan Stanley, Airclaims Exhibit 19

Western-Built Passenger Widebodies: Operating Status # o f A irc ra ft 5 ,0 0 0

% S to re d 20%

S to re d In S e rv ic e % o f F le e t

4 ,5 0 0 4 ,0 0 0

18% 16%

3 ,5 0 0

14%

3 ,0 0 0

12%

2 ,5 0 0 2 ,0 0 0 1 ,5 0 0

10% 8% 6%

1 ,0 0 0 500

4% 2%

0

0% 1989 1988

1991 1989

1990

1993 1991

1992

1995 1993

1994

1997 1995

1996

1999

1997

1998

1999

2001 2000

2001

2003 2002

2003

2005 2004

2005

28

25

62

131

158

214

239

215

219

238

279

318

312

454

398

491

422

399

In S e rv ic e

1 ,7 1 1

1 ,8 2 8

1 ,9 3 6

2 ,0 3 7

2 ,1 8 3

2 ,2 8 9

2 ,3 5 8

2 ,4 5 8

2 ,5 3 9

2 ,6 3 9

2 ,6 9 6

2 ,7 6 7

2 ,8 4 3

2 ,7 4 9

2 ,8 2 3

2 ,7 6 8

2 ,8 9 1

2 ,9 1 7

% o f F le e t

1 .6 %

1 .3 %

3 .1 %

6 .0 %

6 .7 %

8 .5 %

9 .2 %

8 .0 %

7 .9 %

8 .3 %

9 .4 %

1 0 .3 %

9 .9 %

1 4 .2 %

1 2 .4 %

1 5 .1 %

1 2 .7 %

1 2 .0 %

S to re d

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 10

Exhibit 20

Passenger Aircraft Parked (02/14/05-03/14/05) Aircraft Type

Airbus A300 Airbus A310 Airbus A320 Airbus A320 Airbus A321 Airbus A321 Airbus A330 Airbus A340 Avro Avro Avro BAE 146 BAE 146 Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (JT8D) Boeing 737 (JT8D) Boeing 737 (JT8D) Boeing 737 (NG) Boeing 737 (NG) Boeing 747 Boeing 747 Boeing 747 Boeing 747 Boeing 747 Boeing 747 Boeing 757 Boeing 757 Boeing 757 Boeing 767 Boeing 767 CRJ DC-10 DC-10 DC-10 Fokker 100 Fokker 100 Fokker 100 Source: Airclaims

Variant

Tail Number

600R (GE) 300 (GE) 210 (CFM) 230 (IAE) 130 (IAE) 230 (IAE) 240 (RR) 310 (CFM) RJ70 RJ70 RJ70 200 200 300 300 300 300 300 300 300 300 300 300 300 300 300 300 500 500 500 500 500 200 200 200 Advanced 800 800 Winglets 200B (GE) 200B (RR) 200B (RR) 200B (RR) 200B (RR) 400 (GE) 200 (P&W) 200 (P&W) 200 (RR) 200 (P&W) 200ER (GE) 200ER 10 30 40I

EP-IBD F-OGQT CS-TQA N721LF N751LF G-MIDA G-MDBD ZS-SXD YL-BAK YL-BAL YL-BAN C-FBAE C-GRNZ EC-IFV G-IGOH N318UA N321UA N362UA N363UA N389UA N390UA N391UA N392UA SX-BBT N307FL G-EZYH G-EZYI EI-CDE N916UA N917UA N920UA LV-BAR EI-COB N HP-1322CMP PH-HZL VH-VOF TF-ARO TF-ATD TF-ARG TF-ABP TF-ABA JA8916 N755MX N764MX N262SR N620UA N326MR N674BR 3D-MRR PK-GIA N660VV C-GKZC C-GKZB C-GKZF

Build Year

Owner

Last Operator

1993 Iran Air 1991 Airbus Financial Services 2001 SALE (Ireland) 1996 ILFC Ireland 1996 ILFC 1998 ILFC 1999 MyTravel Airways 2004 South African Airways 1993 Trident Aviation Leasing 1993 Trident Aviation Leasing 1993 Trident Aviation Leasing 1987 Jet Acceptance 1988 Connecticut Bank and Trust NA 1986 RPK Capital Management Group LLC 1988 NBB Bray 1988 Pacific Enterprises 1988 AT&T Credit 1989 Colonial Pacific Leasing 1989 Colonial Pacific Leasing 1990 MarCap 1990 MarCap 1990 Pacifi AirFinance 1990 Pacifi AirFinance 1991 TIFD FSC Brazil 1998 Rainier Aircraft Investment Notes III 1998 easyJet 1998 easyJet 1991 ILFC 1991 United Airlines 1991 United Airlines 1991 United Airlines 1993 A320 Aircraft Leasing II 1980 Ryanair 1980 Structures Unlimited 1981 COPA Airlines 2001 Transavia Airlines 2001 Boullioun Aircraft Holding 1985 Boeing Aircraft Holding Co 1980 Air Atlanta Icelandic 1980 Mido 1980 Air Atlanta Icelandic 1981 Air Atlanta Icelandic 1999 Uranus Leasing 1991 GECAS 1994 ILFC 1994 Sunrock Aircraft 1983 United Airlines 1985 General Electric Capital 2001 Windy City Holdings 1979 Executive Aerospace 1976 Garuda Indonesia 1975 Vivaldi Overseas 1991 Jetsgo 1991 Jetsgo 1991 Jetsgo

Olympic Airlines Aeroflot Russian Airlines Air Luxor Pacific Airlines Monarch Airlines bmi Iberia American Airlines airBaltic airBaltic airBaltic Air Canada Jazz Air Canada Jazz Hola Airlines easyJet United Airlines United Airlines United Airlines United Airlines United Airlines United Airlines United Airlines United Airlines Aegean Airlines Frontier Airlines easyJet easyJet Aer Lingus United Airlines United Airlines United Airlines Air France Ryanair Canjet Airlines COPA Airlines Air Berlin Virgin Blue Airlines Air Atlanta Icelandic Air Atlanta Icelandic Air Atlanta Europe Air Atlanta Icelandic Air Atlanta Icelandic Japan Airlines Mexicana Mexicana Phuket Airlines United Airlines Air New Zealand Independence Air Executive Aerospace Garuda Indonesia Japan Airlines Jetsgo Jetsgo Jetsgo

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 11

Exhibit 20

Passenger Aircraft Parked (02/14/05-03/14/05 – continued) Aircraft Type

Fokker 100 Fokker 100 Fokker 100 Fokker 100 Fokker 100 Fokker 100 Fokker 100 Fokker 100 Fokker F.28 Fokker F.28 Fokker F.28 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80

Variant

Tail Number

Build Year

Owner

Last Operator

4000 4000 4000 82 (MDC) 82 (MDC) 82 (MDC) 82 (MDC) 83 (MDC) 83 (MDC) 83 (MDC) 83 (MDC) 83 (MDC) 83 (MDC) 83 (MDC) 83 (MDC) 83 (MDC) 83 (MDC) 83 (MDC)

C-GKZS C-GKZK C-GKZD C-GKZJ C-GKZV C-GKZA C-GKZU C-GKZP EP-ASE EP-PAT XY-AGA LZ-LDD C-GKLJ C-GKLC C-GKLR C-FKLI C-GKLE C-GKLK C-FKLT C-FKLO C-FKLY C-FKLZ C-GKLN C-GKLQ C-FRYA C-FRYH

1991 1991 1992 1992 1992 1992 1992 1992 1978 1981 1985 1986 1994 1995 1995 1990 1991 1992 1994 1994 1994 1994 1996 1996 1996 1996

Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Iran Aseman Airlines Iran Aseman Airlines Myanma Airways Bulgarian Air Charter Boeing Aircraft Holding Co Boeing Aircraft Holding Co Boeing Aircraft Holding Co Airplanes Group Airplanes Group Boeing Capital & Mitsui & (USA) Tokyo Lease Company Crocus Tokyo Lease Company Daffodil Virgo ORIX Altair Boeing Aircraft Holding Co Boeing Aircraft Holding Co Gie Gromi Bail ORIX Carina

Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Iran Aseman Airlines Iran Aseman Airlines Myanma Airways Eurofly Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo Jetsgo

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 12

Exhibit 21

Passenger Aircraft Returned to Service (02/14/05-03/14/05) Aircraft Type

Airbus A300 Airbus A310 Airbus A310 Airbus A320 Airbus A320 Airbus A320 Airbus A320 Airbus A320 Airbus A320 Airbus A320 Airbus A320 Airbus A330 Boeing 727 Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (CFMI) Boeing 737 (JT8D) Boeing 737 (JT8D) Boeing 737 (JT8D) Boeing 737 (JT8D) Boeing 737 (JT8D) Boeing 737 (JT8D) Boeing 737 (JT8D) Boeing 737 (NG) Boeing 757 Boeing 767 Boeing 767 Boeing 767 Boeing 767 Boeing 777 CRJ CRJ CRJ DC-9 DC-9 Fokker 100 Fokker 100 Fokker 100 L-1011 TriStar Source: Airclaims

Variant

Tail Number

Build Year

B4-220 (P&W) 300 (GE) 320 (P&W) 210 (CFM) 210 (CFM) 210 (CFM) 210 (CFM) 210 (CFM) 230 (IAE) 230 (IAE) 230 (IAE) 200 (GE) 200 300 300 400 400 400 500 500 200 200 200 200 200 200 Advanced 200 Advanced 800 Winglets 200 (RR) 200EM (P&W) 200ER (GE) 300ER (GE) 300ER (P&W) 200ER (P&W) 701ER 701ER 701ER 32 51

B-18582 F-OHCZ N443RR CS-TQE F-GJVU N446AN D-AKNY OE-LBN G-BVYA G-BVYC F-WQUO EI-DIR N706AA EI-DJK 9M-AEA EC-GRX EC-GUO N401LF ZS-PKV N948UA N182AW N721WN N722WN N266AU N239TA N660YT LV-ZTE N303TZ N520AT C-FVNM SE-RBV G-OOBK TF-FIC N790UA N171MD N177MD N175MD ZS-OLN N676MC F-WLLE F-WLLJ N891US 9Q-CVN

1982 1988 1987 1991 1993 1993 1996 1997 1992 1993 1997 1999 1981 1989 1990 1988 1992 1998 1991 1992 1981 1981 1981 1982 1987 1982 1985 2001 1998 1982 1988 1995 1990 1997 2004 2004 2004 1968 1975 1991 1991 1991 1980

200

Owner

Last Operator

Undisclosed Bank / Broker / Lessor China Airlines GE Capital Aircraft Leasing Aeroflot Russian Airlines AeroTurbine AeroTurbine AFT Trust - Sub 1 China Airlines Galut Verwaltungs Iran Air MSA V AWAS ILFC Egyptair Austrian Austrian Gustav Leasing IV Afriqiyah Airways Gustav Leasing V Lufthansa SPC Aubela China Airlines Calliope Northwest Airlines Aviation Capital Group Laker Airways (Bahamas) Triton Aviation Ireland Air Malta GOAL Verwaltungsgesellschaft GOAL Aircraft Leasing CIT Aerospace Futura International Airways ILFC ILFC ILFC ILFC FINOVA Capital FINOVA Capital N948UA LLC United Airlines Pacific Lighting Leasing Co America West Airlines M.K. Aviation SA Southwest Airlines M.K. Aviation SA Southwest Airlines Jetran International Jetran International ART 23789 LLC Pegasus Aviation Interlease Management COPA Airlines Triton Aviation Services LLC Austral General Electric Capital ATA Airlines Undisclosed Bank / Broker / Lessor ATA Airlines Nippon Credit Bank Air Canada Kebnekaise Finance Bv ILFC General Electric Capital First Choice Airways Icelandair BTM Capital UAL 2000-2 EETC Portfolio UAL 2000-2 EETC Portfolio AFS Investments 68 LLC GECAS AFS Investments 68 LLC GECAS AFS Investments 68 LLC GECAS Million Air Charter Million Air Charter Northwest Airlines Northwest Airlines Aer debis AirFinance BV Aer debis AirFinance BV Retirement System of Alabama Retirement System of Alabama Airlift Congo Air France

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 13

Parked EETC Aircraft

Continental: Continental’s number of parked EETC aircraft continues to increase as the company retires its MD-80 family aircraft from service. Continental has recently overtaken United Airlines with the most EETC aircraft parked, at 11. Northwest: Two previously parked Avro RJ-85 aircraft in the 1999-3 EETC have been returned to service. United: United Airlines has nine EETC aircraft parked, although this number has decreased in recent months and we expect it to decrease further as rejected aircraft are ultimately transferred to other airlines. As of March 2005, United had parked five 747-400s from two EETC issues, and four 777-200ERs from three EETC issues.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 14

Exhibit 22

Stored EETC Aircraft (as of 03/14/05) Airline

EETC Issue

American Atlas America West

No stored EETC Aircraft No stored EETC Aircraft No stored EETC Aircraft 1997-2

Aircraft Stored (Reg. Number)

Total EETC Aircraft

% of EETC Aircraft Stored

118 12 54

0.0% 0.0% 0.0%

212

5.2%

137 29 129 104 103

0.0% 0.0% 0.0% 0.0% 9.7%

Goodyear, Arizona Goodyear, Arizona Goodyear, Arizona Goodyear, Arizona Goodyear, Arizona Goodyear, Arizona Mojave, California Mojave, California Goodyear, Arizona Goodyear, Arizona Tucson, Arizona (adding winglets) Goodyear, Arizona Goodyear, Arizona Goodyear, Arizona Goodyear, Arizona Goodyear, Arizona Goodyear, Arizona Victorville, California Victorville, California Victorville, California Goodyear, Arizona

NA NA NA 4 MD-80s (N15820,N12811,N18833, Continental N10834) 1998-2 6 MD-80s (N10834, N34838, N57837, N72829, N76823, N72830) 1998-3 1 757-200 (N67134) Delta No stored EETC aircraft NA Southwest No stored EETC Aircraft NA Northwest No stored EETC Aircraft NA US Airways No stored EETC Aircraft NA United JETS 1994-A 1 737-300 (N393UA) JETS 1995-A 1 747-400s (N190UA) 2 737-300s (N394UA, N397UA) 3 737-500s (N901UA, N908UA, N909UA) JETS 1995-B 2 747-400s (N185UA, N192UA) 1 737-300 (N395UA) Source: Morgan Stanley, Airclaims, Company Documents

Exhibit 23

Stored EETC Aircraft Details Airline

EETC Issue

Aircraft Type

Registration Number

Vintage

Date Stored

Continental

1997-2 1997-2 1997-2 1997-2 1998-2 1998-2 1998-2 1998-2 1998-2 1998-2 1998-3 JETS 1994-A JETS 1995-A

MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 MD-80 757-200 737-300 737-300 737-300 737-500 737-500 737-500 747-400 747-400 747-400 737-300

N15820 N12811 N18833 N10834 N34838 N10834 N72829 N57837 N72830 N76823 N67134 N393UA N394UA N397UA N901UA N908UA N909UA N190UA N185UA N192UA N395UA

1986 1985 1987 1987 1987 1987 1987 1987 1987 1986 1998 1990 1990 1990 1990 1990 1990 1993 1992 1993 1990

May 2003 April 2003 April 2003 June 2004 December 2003 June 2004 October 2001 October 2001 March 2004 May 2003 November 2004 January 2005 January 2005 January 2005 January 2005 January 2005 January 2005 September 2002 March 2002 April 2003 January 2005

United

JETS 1995-B

Storage Location

Source: Morgan Stanley, Airclaims, Company Documents

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 15

Morgan Stanley Aircraft Report Card Exhibit 24

Aircraft Report Card: Select EETC and Other Passenger Aircraft Grade

Type

Number of Operable Aircraft

Additional Aircraft on Order Operators

% in Storage

Comment

A+ A+ A A B+ B+ ↓ B+ B B BB- ↓ BBBBBC+ C+ C+ C+ C+ ↓ C+ C+ C+ C/CC/CC/CC/CC/CC/CD/F D/F

737-700 621 353 62 0.0% The orders keep rolling in. Somewhat concentrated owner base relative to -800 737-800 824 399 94 0.8% The best selling version of the 737 NG. Loved by low-cost operators A319 658 357 75 0.2% Excellent aircraft with good backlog, but narrower customer base than its sibling A320 1,323 516 157 2.4% Huge customer base, but increased production rate and aggressive pricing a concern A321 316 91 60 2.5% Introduced relatively recently, but building a good book A330-200 170 101 58 3.4% A great airplane with great range, but three engine types diffuse popularity. 777-200ER 347 62 39 0.9% Our favorite widebody. A great plane that is loved by all (except Airbus) 737-300 975 0 113 5.3% No longer in production, but huge installed base and commonality with NG 777-300ER 11 92 10 0.0% Great combination of range and capacity. We expect this to be a winner CRJ-200 692 65 31 0.6% Good aircraft with a growing family, but concentrated, largely US ownership A330-300 155 83 30 0.0% Good combination of range and capacity, but A330-200 growing more popular 737-400 465 0 72 0.9% No longer in production, but large installed base and commonality with NG 737-500 351 0 49 8.4% A small 737 that has a niche, but lack of orders for new version is bad sign 767-300ER 493 8 79 0.6% The best, by far, of the 767 family. Good combination of range and capacity 777-300 56 8 8 0.0% Good aircraft, but being supplanted by the 777-300ER ERJ-145 612 55 33 2.5% Good aircraft, but smaller cabin and range than the CRJ 737-600 56 8 9 0.0% Few orders, maybe because of Boeing’s focus on 717. 100-seat market is tough 737-900 46 9 7 0.0% Not many orders and lack of extra exit door limits passenger capacity relative to size 747-400 416 11 35 5.2% A rapidly shrinking backlog and fading prospects. Good freighter conversion 757-200 816 2 89 3.5% A good, low-cost aircraft, albeit dated. Production will halt in 2004 757-300 55 0 7 0.0% A new extension of the aging 757 family that was unsuccessful, but good economics 767-200ER 80 2 30 23.8% Long range and nice 2x3x2 seating. But very small capacity. A niche aircraft 777-200 81 8 11 3.6% Early model has been supplanted by 777-200ER. United has most of them MD-11 44 0 12 40.5% Good freighter conversion prospects. This is not an L1011 717-200 140 15 9 0.0% Passengers love it, but airlines don’t order it. Limited range a bit of a problem 767-200 31 0 11 49.2% An aircraft that has passed its time 767-300 103 0 9 1.0% Supplanted by the 767-300ER 767-400ER 37 1 3 0.0% Great capacity, but limited range. Only two customers. Trumped by the A330 Avro RJ85 81 0 8 2.4% Four-engined 100-seater has unique capabilities, but few airlines need them MD-80 994 0 95 13.2% A workhorse aircraft, but concentrated ownership and Stage 4 noise concerns F100 180 0 49 31.8% Parked aircraft soon to climb towards 50% J-41 65 0 12 33.0% A problem aircraft; parked aircraft likely to increase further Note: Arrows indicate the direction of possible GPA change in the next 12-18 months. Source: Morgan Stanley, Airclaims

Comment: After placing the aircraft under review, we have downgraded the CRJ-200 one notch to “B-” from “B”. The increasing financial travails of Independence Air and the growing popularity of 70-seaters relative to the satiated market for 50-seaters has led to this downward adjustment. We also lower the rating of the 737-900 by one notch from “B-” to “C+”. The 737-900 has generated few orders and we do not see this changing over the life of the aircraft. The possibility of a longerrange -900X with additional passenger capacity will further diminish the prospects for the original 737-900, if it is launched. We also remove our ratings of the A319 and A320 from our version of negative outlook. The sharp decline in parked aircraft over the last 12 months has led to the stable outlook.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 16

Exhibit 25

American Current Fleet (March 14, 2005) March 14, 2005

Aircraft Type and Variant

A300-600R (GE) MD-80 (P&W) 737-800 (CFM) 757-200 (P&W, RR) 767-200 (GE) 767-200ER (GE) 767-300ER (GE, P&W) 777-200ER (RR) Fokker 100 Total

In Service

34 336 77 143 0 16 58 45 0 709

Change since 02/05

0 0 0 0 0 0 0 0 0 0

Stored

Change since 02/05

0 27 0 0 9 3 0 0 6 45

0 0 0 0 0 0 0 0 (5) (5)

December 31, 2004

Current Total

Change since 02/05

On Order

Average Age

Age Range

34 363 77 143 9 19 58 45 6 754

0 0 0 0 0 0 0 0 (5) (5)

0 0 47 0 0 0 0 9 0 56

15 17 5 10 22 19 11 4 13 13

13-17 6-24 4-7 4-16 21-23 18-21 2-17 2-7 12-14

Owned

Leased

MWD Aircraft GPA

10 167 67 87 8 5 45 45 NA 434

24 195 10 56 0 12 13 0 NA 310

2.00 2.00 4.30 2.30 2.00 2.30 2.70 3.30 0.00 2.41

Source: Morgan Stanley, Airclaims

Changes since last month: In March 2005 American removed five previously stored Fokker 100 aircraft from its fleet.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.

MWD Aircraft Triage

C B A B B B B A C


Page 17

Exhibit 26

Continental Current Fleet (March 14, 2005) In Aircraft Type and Variant Service DC-10 (CF) 0 MD-80 (P&W) 0 737-300 (CFMI) 51 737-500 (CFMI) 63 737 (NG)-700 (CFM) 36 737 (NG)-800 (CFM) 83 737 (NG)-900 (CFM) 12 757-200 (RR) 40 757-300 (RR) 9 767-200ER (GE) 10 767-400ER (GE) 16 777-200ER (GE) 17 787-8 (GE) 0 Total 337 Source: Morgan Stanley, Airclaims

March 14, 2005 Change Change Change since since Current since On Average Age 02/05 Stored 02/05 Total 02/05 Order Age Range 0 1 0 1 0 0 27 27-27 0 31 (1) 31 (1) 0 19 18-24 1 0 (1) 51 0 0 18 17-20 0 0 0 63 0 0 9 7-12 0 0 0 36 0 15 6 6-8 1 0 0 83 1 29 4 3-7 0 0 0 12 0 3 3 3-4 0 0 0 40 0 0 8 5-11 0 0 0 9 0 0 2 1-4 0 0 0 10 0 0 4 4-5 0 0 0 16 0 0 3 3-5 (1) 1 1 18 0 0 5 3-7 0 0 0 0 0 0 0 0-0 1 33 (1) 370 0 47 9

December 31, 2004 Owned NA 16 11 22 17 18 8 28 9 9 16 10 NA 164

Leased NA 11 39 41 16 38 4 12 0 1 0 8 NA 170

MWD MWD Aircraft Aircraft GPA Triage 1.00 NA 2.00 C 3.00 B 2.70 B 4.30 B 4.30 A 2.30 A 2.30 A 2.30 B 2.30 B 2.00 B 3.30 B NA NA 3.11

Changes since last month: Continental moved one 737 Classic from storage into service, took delivery of one 737-800 and stored one 777-200ER during March 2005.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 18

Exhibit 27

Delta Current Fleet (March 14, 2005) March 14, 2005

Aircraft Type and Variant

MD-11 (P&W) MD-80 (P&W) MD-90 (P&W) 737-200 (JT8D) 737-300 (CFMI) 737-800 (CFMI) 757-200 (P&W) 767-200 (GE) 767-300 (GE, P&W) 767-300ER (GE, P&W) 767-400ER (GE) 777-200ER (RR) Lockheed L-1011 TriStar-1 Total

In Service

Change since 02/05

Stored

0 120 16 47 26 71 121 15 28 59 21 8 0 532

0 0 0 (1) 0 0 0 0 0 0 0 0 0 (1)

4 0 0 5 0 0 0 0 0 0 0 0 2 11

Change since 02/05

0 0 0 1 0 0 0 0 0 0 0 0 0 1

Current Total

4 120 16 52 26 71 121 15 28 59 21 8 2 543

December 31, 2004

Change since 02/05

0 0 0 0 0 0 0 0 0 0 0 0 0 0

On Order

Average Age

Age Range

0 0 0 0 0 56 0 0 0 0 0 5 0 61

13 15 9 20 18 4 14 22 15 9 4 5 23 12

12-14 12-19 9-12 18-23 14-21 3-7 7-21 21-24 6-19 4-15 3-6 3-6 23-23

Owned

Leased

MWD Aircraft GPA

4 63 16 12 0 71 77 15 4 50 21 8 NA 307

0 57 0 40 26 0 44 0 24 9 0 0 NA 198

2.00 2.00 2.00 1.00 3.00 4.30 2.30 2.00 2.30 2.70 2.00 3.30 0.00 2.42

MWD Aircraft Triage

C B B C C A B C B B B B NM

Source: Morgan Stanley, Airclaims

Changes since last month: Delta continued to phase out the 737-200, one of four fleet types the company has targeted for eventual elimination, as it removed another one of these aircraft from its operating fleet in March 2005. Other fleet types that we expect to be removed over the next four years are the 737-300 (counted as two fleet types by Delta) and the 767-200.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 19

Exhibit 28

Northwest Current Fleet (March 14, 2005) March 14, 2005

Aircraft Type and Variant

In Service

A319-110 (CFM) A320-210 (CFM) A330-320 (P&W) DC-10 (CF) DC-9 (P&W) 727-200 (P&W) 747-200 (P&W) 747-300 (P&W) 747-400 (P&W) 757-200 (P&W) 757-300 (P&W) Total

72 78 8 20 146 0 17 0 16 51 16 424

Change since 02/05

0 0 0 0 0 0 0 0 0 0 0 0

Stored

0 0 0 2 20 9 12 2 0 5 0 50

Change since 02/05

0 0 0 0 0 0 0 0 0 0 0 0

Current Total

72 78 8 22 166 9 29 2 16 56 16 474

December 31, 2004 Change since 02/05

0 0 0 0 0 0 0 0 0 0 0 0

On Order

Average Age

Age Range

9 2 20 0 0 0 0 0 0 0 0 31

3 10 1 24 34 27 6 22 11 14 2 19

1-6 2-16 1-2 17-33 25-39 25-30 19-30 22-23 3-17 3-20 2-3

Owned

Leased

MWD Aircraft GPA

92 53 21 14 161 NA 9 NA 4 31 16 401

12 43 0 8 5 NA 9 NA 12 25 0 114

4.00 4.00 2.70 1.00 1.00 1.00 1.50 1.50 2.30 2.30 2.30 2.25

Source: Morgan Stanley, Airclaims

Changes since last month: Northwest made no changes to its operating fleet in March 2005.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.

MWD Aircraft Triage

A A A C B C C C B B B


Page 20

Exhibit 29

US Airways Current Fleet (March 14, 2005) March 14, 2005

Aircraft Type and Variant

A319-110 (CFM) A320-210 (CFM) A321-210 (CFM) A330-220 (P&W) A330-320 (P&W) 737 (CFMI)-300 737 (CFMI)-400 737 (JT8D)-200 757-200 (RR) 767-200ER (GE) Fokker 100 Total Source: Morgan Stanley, Airclaims

In Service

Change since 02/05

65 24 28 0 9 67 45 0 31 10 0 279

(1) 0 0 0 0 0 0 0 0 0 0 (1)

Stored

Change since 02/05

0 0 0 0 0 1 0 0 0 0 4 5

0 0 0 0 0 0 0 0 0 0 (1) (1)

December 31, 2004

Current Total

Change since 02/05

On Order

Average Age

Age Range

65 24 28 0 9 68 45 0 31 10 4 284

(1) 0 0 0 0 0 0 0 0 0 (1) (2)

0 6 13 10 0 0 0 0 0 0 0 29

5 5 3 NA 4 18 15 NA 14 16 14 11

4-6 4-6 2-4 NA 3-4 15-20 13-16 NA 9-22 11-17 12-15

Owned

Leased

MWD Aircraft GPA

15 11 20 NA 9 7 3 NA 0 4 NA 69

51 13 8 NA 0 61 42 NA 31 6 NA 212

4.00 4.00 3.30 3.30 2.70 3.00 2.70 1.00 2.30 2.30 0.00 3.14

MWD Aircraft Triage

A A A NA B B B C B C C

Changes since last month: US Airways removed one A319 from its operating fleet and disposed of a single Fokker 100 in March. We will have further information on the company’s fleet plan in the near future when it files its plan of reorganization.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 21

Exhibit 30

UAL Current Fleet (March 14, 2005) December 31, 2004

March 14, 2005

Aircraft Type and Variant

A319-130 (CFMI) A320-230 (IAE) A320-230 (IAE) - Ted 727-200 (P&W) 737-300 (CFMI) 737-500 (CFMI) 737-200 (JT8D) 747-400 (P&W) 757-200 (P&W) 767-200 (P&W) 767-200ERM (P&W) 767-300ER (P&W) 777-200 (P&W) 777-200ER (P&W) Total Source: Morgan Stanley, Airclaims

In Service

Change since 02/05

55 50 47 0 66 30 0 31 97 2 0 37 19 33 467

0 1 (1) 0 (9) (3) 0 0 0 (2) 0 0 0 0 (14)

Stored

Change since 02/05

0 0 0 1 19 14 4 7 0 6 8 0 1 0 60

0 0 0 (8) 8 (4) (2) 0 0 0 0 0 (1) 0 (7)

Current Total

Change since 02/05

On Order

Average Age

Age Range

55 50 47 1 85 44 4 38 97 8 8 37 20 33 527

0 1 (1) (8) (1) (7) (2) 0 0 (2) 0 0 (1) 0 (21)

23 19 0 0 0 0 0 0 0 0 0 0 0 1 43

5 9 5 27 16 13 26 10 13 22 23 10 8 6 11

3-8 5-12 3-8 27-27 15-19 12-15 26-27 5-16 7-16 22-24 23-24 4-14 5-11 3-9

Owned

Leased

33 42 27 NA 11 30 NA 20 44

22 55 12 NA 75 8 NA 11 53

4

0

17 36

20 16

264

272

MWD Aircraft GPA

MWD Aircraft Triage

4.00 4.00 4.00 1.00 3.00 2.70 1.00 2.30 2.30 2.00 2.30 2.70 2.30 3.30 3.01

A A A C B B C B B C NM B B A

Changes since last month: United continued to phase out 737 Classics from its operating fleet, storing four and disposing of eight more in March. United also stored two 767-200s, bringing its in-service fleet for this particular aircraft type to just two.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 22

Concentration Index

There are a number of indicators that we look toward in assessing the relative marketability and relative value of an aircraft type. Among the most important of these indicators are number of aircraft in service, number of operators and number of aircraft in backlog. We use these three metrics, along with many other quantitative and qualitative assessments, to generate our MS Aircraft GPA. In addition to these metrics, we believe that concentration of operators is a very useful statistic to evaluate. We have analyzed all major aircraft types in EETCs, both by broad type (i.e., irrespective of engines) and subtype (i.e., by engine type), to determine the relative amount of concentration. Our thesis is simply that a wide dispersion of operators of an aircraft type best provides for more potential users of an aircraft if the aircraft needs to be repossessed or is threatened with repossession. Theoretically, it is possible that any carrier will add any aircraft type for the right price, though the move toward simpler and more homogeneous aircraft fleets, with all the resulting benefits, makes it less likely that an operator would add a new aircraft type to its fleet.

To calculate concentration, we use a measure that is commonly used in antitrust issues to assess competition – the Herfindahl-Hirschman Index (HHI). The index is calculated by squaring the market share of the various participants and then summing these squares. A low HHI score indicates less concentration, while a high HHI score indicates greater concentration. The HHI score increases as both the number of firms in the market decreases and the disparity in size between those firms increases. At one extreme, an aircraft model with many operators each having a very small number of aircraft would have an HHI approaching zero; at the other extreme, an aircraft model with only one operator would have an HHI score of 10,000 (i.e., 1002). In our study, the least concentrated aircraft, the A320, has an HHI score of 300; while the most concentrated aircraft, the 767-400ER, has an HHI score of 5,100. The bulk of EETC aircraft types fall in the range of 500-1,000. One aircraft type in our study, the 757-300 with Pratt & Whitney engines, did in fact score a perfect (or inverse perfect) score of 10,000. With the end of the 757 program, this “perfect” score will remain intact. In antitrust issues, the Department of Justice generally considers an HHI score of 1,000-1,800 as moderately concentrated; while an HHI score in excess of 1,800 is considered concentrated.

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 23

Exhibit 31

Exhibit 33

HHI Concentration Index (Sorted by Aircraft Type) Aircraft Type

HHI Concentration Index: Aircraft and Engine Type

MWD Aircraft GPA

HHI Concentration Index

4.00 4.00 3.30 2.70 2.00 3.00 2.70 4.30 4.30 2.30 2.30 3.00 2.30 2.30 2.30 2.70 2.00 2.30 3.30 2.00 2.70

700 300 400 900 3,500 600 800 1,000 500 2,700 600 900 700 2,000 700 400 5,100 1,400 800 2,500 1,600

A319 A320 A321 A330-300 B717-200 B737-300 B737-500 B737-700 B737-800 B737-900 B747-400 B747-400F B757-200 B757-300 B767-200ER B767-300ER B767-400ER B777-200 B777-200ER Avro RJ85 ERJ-145 Source: Morgan Stanley, Airclaims Exhibit 32

HHI Concentration Index: Best to Worst Aircraft Type

MWD Aircraft GPA

HHI Concentration Index

4.00 2.70 3.30 4.30 2.30 3.00 2.30 4.00 2.30 2.70 3.30 2.70 3.00 4.30 2.00 2.30 2.70 2.30 2.00 2.30 2.00

300 400 400 500 600 600 700 700 700 800 800 900 900 1,000 1,400 1,400 1,600 2,000 2,500 2,700 3,500

A320 B767-300ER A321 B737-800 B747-400 B737-300 B757-200 A319 B767-200ER B737-500 B777-200ER A330-300 B747-400F B737-700 MD-80 B777-200 ERJ-145 B757-300 Avro RJ85 B737-900 B717-200 Source: Morgan Stanley, Airclaims

Aircraft Type

MWD Aircraft GPA

HHI Concentration Index

4.0

700 1,000 2,100 300 500 700 400 900 600 900 3,500 2,400 3,500 600 800 1,000 500 2,700 600 900 1,600 3,700 900 1,400 4,300 5,100 700 2,100 900 2,000 10,000 2,400 700 1,600 1,100 400 700 1,000 5,200 5,100 1,400 3,600 2,500 3,800 800 1,600 4,200 2,300 2,500 1,600 1,400

A319 A319 (CFM) A319 (IAE) A320 A320 (CFM) A320 (IAE) A321 A321 (CFM) A321 (IAE) A330-300 A330-300 (GE) A330-300 (RR) B717-200 (RR) B737-300 (CFM) B737-500 (CFM) B737-700 (CFM) B737-800 (CFM) B737-900 (CFM) B747-400 B747-400 (GE) B747-400 (P&W) B747-400 (RR) B747-400F B747-400F (GE) B747-400F (P&W) B747-400F (RR) B757-200 B757-200 (P&W) B757-200 (RR) B757-300 B757-300 (P&W) B757-300 (RR) B767-200ER B767-200ER (GE) B767-200ER (P&W) B767-300ER B767-300ER (GE) B767-300ER (P&W) B767-300ER (RR) B767-400ER (GE) B777-200 B777-200 (GE) B777-200 (P&W) B777-200 (RR) B777-200ER B777-200ER (GE) B777-200ER (P&W) B777-200ER (RR) Avro RJ85 (Honeywell) ERJ-145 (GE) MD-80 (P&W)

4.0

3.3

2.7

2.0 3.0 2.7 4.3 4.3 2.3 2.3

3.0

2.3

2.3

2.3

2.7

2.0 2.3

3.3

2.0 2.7 2.0

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 24

Exhibit 34

A319 (Introduced in 1996) # of Aircraft

% Stored

750

20%

Stored In Service % Stored

675

18%

600

16%

525

14%

450

12%

375

10%

300

8%

225

6%

150

4%

75

2%

0

0%

1989 1995

1991 1996

1993 1997

1995

1998

1997

1999

1999

2000

2001

2001 2002

2003

2003

2004

2005

MWD Aircraft GPA: 4.0 Aircraft in Service: 658 Stored (Mar/Feb/Jan): 1 (0.2%)/0 (0.0%)/2 (0.3%) Undelivered Backlog: 357 # Avail. on Speednews (Mar): 1 (1 sale/lease, 0 wetlease) # of Operators: 75 Engine Types (# of Operators, % of Fleet): CFM (44, 58.7%) IAE (31, 41.3%) HHI Concentration: 700 (1,000 CFM; 2,100 IAE) EETC Transactions: AWA 1998-1, 1999-1, 2000-1, 2001-1; NWAC 1999-2, 2000-1, 2001-1, 2001-2, 2002-1; U 1998-1, 1999-1, 2000-2, 2000-3; UAL 2000-2, 2001-1

2005

Stored

0

0

0

0

0

2

22

11

15

1

In Service

0

20

66

118

206

318

407

481

530

628

658

% Stored

0.0%

0.0%

0.0%

0.0%

0.0%

0.6%

5.1%

2.2%

2.8%

0.2%

0.2%

1

Comment: The A319 is an excellent aircraft type with bright prospects, in our opinion, which for many years had no parked aircraft at all. A large order from easyJet and subsequent orders from other LCCs worldwide strengthens the aircraft’s position as a type appropriate for low-cost carriers, but the reported price applies pressure to residual values.

Source: Morgan Stanley, Airclaims Exhibit 35

A320 (Introduced in 1987) # of Aircraft 1400

% Stored 20% Stored In Service % Stored

1260

18%

1120

16%

980

14%

840

12%

700

10%

560

8%

420

6%

280

4%

140

2%

0

0% 1989

1991

1993

1995

1997

1999

2001

2003

2005

MWD Aircraft GPA: 4.0 Aircraft in Service: 1,323 Stored (Mar/Feb/Jan): 32 (2.4%)/36 (2.7%)/37 (2.8%) Undelivered Backlog: 516 # Avail. on Speednews (Mar): 17 (7 sale/lease, 10 wetlease) # of Operators: 157 Engine Types (# of Operators, % of Fleet): CFM (99, 63.1%) IAE (58, 36.9%)

HHI Concentration Index: 300 (500 CFM; 700 IAE) EETC Transactions: AWA 1996-1, 1997-1, 1998-1, 1999-1, 2000-1, 2001-1; JBLU 2004-1; NWAC 1999-2, 2001-2; U 19981, 1999-1, 2000-2, 2000-3; UAL 1997-1, 2000-1, 2000-2, 2001-1

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Stored In Service % Stored

0

0

14

19

10

6

12

15

2

8

2

4

8

11

31

4

19

61

113

240

354

418

463

510

542

605

682

779

875

972

41

53

43

32

1,078 1,173 1,283 1,323

0.0% 0.0% 18.7% 14.4% 4.0% 1.7% 2.8% 3.1% 0.4% 1.5% 0.3% 0.6% 1.0% 1.2% 3.1% 3.7% 4.3% 3.2% 2.4%

Comment: A superb aircraft with a bright future, in our view. Bankruptcies after 9/11 increased availability of A320s in the market, but parked aircraft are being placed. Older models with V2500A1 engines are less desirable. Older models, in general, are showing the largest amount of storage. The number of parked A320s has fallen sharply in 2005.

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 25

Exhibit 36

A321 (Introduced in 1993) # of Aircraft 500

% Stored 20%

Stored In Service % Stored

450

18%

400

16%

350

14%

300

12%

250

10%

200

8%

150

6%

100

4%

50

2%

0

MWD Aircraft GPA: 3.3 Aircraft in Service: 316 Stored (Mar/Feb/Jan): 8 (2.5%)/7 (2.2%)/6 (1.9%) Undelivered Backlog: 91 # Avail. on Speednews (Mar): 5 (5 sale/lease, 0 wetlease) # of Operators: 60 Engine Types (# of Operators, % of Fleet): CFM (28, 46.7%) IAE (32, 53.3%) HHI Concentration: 400 (900 CFM; 600 IAE) EETC Transactions: U 2000-3, 2001-1

0% 1989

1991

1993

1995

1997

1999

2001

2003

2005

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

0

0

1

1

0

2

0

0

21

9

20

6

8

Stored In Service

2

18

39

54

77

109

144

172

200

247

268

315

316

% Stored

0.0%

0.0%

2.5%

1.8%

0.0%

1.8%

0.0%

0.0%

9.5%

3.5%

6.9%

1.9%

2.5%

Comment: The largest version of the A320 family of aircraft. While it lacks the range and capacity of the 757, we believe this is a formidable competitor to both the 757 and the 737-900, given its commonality with other members of the A320 family.

Source: Morgan Stanley, Airclaims Exhibit 37

A330-300 (Introduced in 1992) # of Aircraft 200

% Stored 20%

Stored In Service % Stored

180

18%

160

16%

140

14%

120

12%

100

10%

80

8%

60

6%

40

4%

20

2%

0

0% 1989

Stored

1991

1993

1995

1997

1999

2001

2003

2005

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

0

0

0

1

3

0

1

0

0

4

1

0

0

2005

MWD Aircraft GPA: 2.7 Aircraft in Service: 155 Stored (Mar/Feb/Jan): 0 (0.0%)/0 (0.0%)/0 (0.0%) Undelivered Backlog: 83 # Avail. on Speednews (Mar): 3 (1 sale/lease, 2 wetlease) # of Operators: 30 Engine Types (# of Operators, % of Fleet): GE (8, 26.7%) P&W (10, 33.3%) RR (10, 33.3%) HHI Concentration: 900 (3,500 GE; 1,900 P&W; 2,400 RR) EETC Transactions: NWAC 2002-1; U 1999-1, 2000-1, 2001-1

0

In Service

2

4

12

41

48

64

74

79

94

109

118

150

150

155

% Stored

0.0%

0.0%

0.0%

2.4%

5.9%

0.0%

1.3%

0.0%

0.0%

3.5%

0.8%

0.0%

0.0%

0.0%

Comment: A larger version of the A330-200 that may not be as popular over the long term. Small installed base in the US, but popular elsewhere. Large number of parked aircraft in 2001 and 2002, caused by the bankruptcies of Sabena and Swissair. Both US Airways and Northwest have recently converted A330-300 orders to the smaller A330-200. A new A350 model is going to hurt values.

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 26

Exhibit 38

B717-200 (Introduced in 1998) # of Aircraft 200 180

% Stored 20%

Stored In Service % Stored

18%

160

16%

140

14%

120

12%

100

10%

80

8%

60

6%

40

4%

20

2%

0

0% 1989

1991

1998

1999

0

Stored

1993

1995

1997

2000

0

2001

2

1999

2001

2002

0

2003

2003

10

2005

2004

1

2005

0

0

In Service

3

13

46

84

92

124

135

140

% Stored

0.0%

0.0%

4.2%

0.0%

9.8%

0.8%

0.0%

0.0%

MWD Aircraft GPA: 2.0 Aircraft in Service: 140 Stored (Mar/Feb/Jan): 0 (0.0%)/0 (0.0%)/0 (0.0%) Undelivered Backlog: 15 # Avail. on Speednews (Mar): 0 (0 sale/lease, 0 wetlease) # of Operators: 9 Engine Types (# of Operators, % of Fleet): RR (9, 100.0%) HHI Concentration: 3,500 EETC Transactions: AAI 1999-1

Comment: We believe this is a very good aircraft, technically, but it never caught on. Customers like the interior, but airlines did not order the plane. As a result, the production of the type was cancelled, with remaining deliveries in 2005. Incredibly concentrated ownership base, with AirTran operating nearly 60% of all 717s ever produced. The 100-130-seat market is the graveyard for aircraft types. Perhaps Bombardier’s C-Series will prove more successful. But probably not.

Source: Morgan Stanley, Airclaims Exhibit 39

B737-300 (Introduced in 1984) # of Aircraft 1,200 1,080

% Stored 20%

Stored In Service % Stored

18%

960

16%

840

14%

720

12%

600

10%

480

8%

360

6%

240

4%

120

2% 0%

0 1989 1984

1991

1985

1986

1987

1993 1988

1989

1990

1995 1991

1992

1997 1993

1994

1995

1999 1996

1997

2001

1998

1999

2000

2003 2001

2002

2003

2005 2004

2005

Stored

0

0

1

3

0

0

1

15

38

10

16

13

5

7

8

36

18

74

65

54

39

In Service

7

90

209

344

488

577

642

696

727

810

856

911

956

1,016

1,068

1,067

1,049

992

995

992

996

975

% Stored

0.0%

0.0%

0.5%

0.9%

0.0%

0.0%

0.2%

2.1%

5.0%

1.2%

1.8%

1.4%

0.5%

0.7%

0.7%

3.3%

1.7%

6.9%

6.1%

5.2%

3.8%

5.3%

55

MWD Aircraft GPA: 3.0 Aircraft in Service: 975 Stored (Mar/Feb/Jan): 55 (5.3%)/46 (4.4%)/38 (3.7%) Undelivered Backlog: 0 # Avail. on Speednews (Mar): 37 (30 sale/lease, 7 wetlease) # of Operators: 113 Engine Types (# of Operators, % of Fleet): CFM (113, 100.0%) HHI Concentration: 600 EETC Transactions: CAL 1997-2, 1998-2; UAL 1997-1

Comment: This venerable 737 Classic member is as close to ubiquitous as any airplane can get, reflected by its large number of operators and low HHI score. Supplanted by the 737 NG, this aircraft still has a long future, in our opinion. Older models are being converted to freighters.

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 27

Exhibit 40

B737-500 (Introduced in 1990) # of Aircraft 500

% Stored 20%

Stored In Service % Stored

450

18%

400

16%

350

14%

300

12%

250

10%

200

8%

150

6%

100

4%

50

2%

0

0% 1989

1991

1993

1995

1997

1999

2001

2003

2005

Comment: The smallest version of the 737 Classic family (the -400 is larger than the -300, but the -500 is smaller than the 300). Surprisingly popular, in part due to the lack of a popular new 100-seater. Engineering troubles with the engine of the similarly sized A318 and the aircraft’s heavy weight and minimal sales of the 737-600 have supported values here.

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Stored

0

0

0

0

0

2

0

0

0

2

6

12

6

13

25

32

In Service

44

134

213

242

277

299

319

353

383

385

381

375

380

370

358

351

% Stored

MWD Aircraft GPA: 2.7 Aircraft in Service: 351 Stored (Mar/Feb/Jan): 32 (8.4%)/24 (6.3%)/24 (6.3%) Undelivered Backlog: 0 # Avail. on Speednews (Mar): 10 (10 sale/lease, 0 wetlease) # of Operators: 49 Engine Types (# of Operators, % of Fleet): CFM (49, 100.0%) HHI Concentration: 800 EETC Transactions: CAL 1996-1, 1996-2, 1997-1, 1997-4, 1998-1, 2001-2

0.0% 0.0% 0.0% 0.0% 0.0% 0.7% 0.0% 0.0% 0.0% 0.5% 1.6% 3.1% 1.6% 3.4% 6.5% 8.4%

Source: Morgan Stanley, Airclaims Exhibit 41

B737-700 (Introduced in 1997) # of Aircraft 700

% Stored 20%

Stored In Service % Stored

18%

600

16% 500

14% 12%

400

10% 300

8% 6%

200

4% 100

2% 0%

0 1989

1991

1993

1995

1997

1999

2001

2003

MWD Aircraft GPA: 4.3 Aircraft in Service: 621 Stored (Mar/Feb/Jan): 0 (0.0%)/0 (0.0%)/0 (0.0%) Undelivered Backlog: 353 # Avail. on Speednews (Mar): 0 (0 sale/lease, 0 wetlease) # of Operators: 62 Engine Types (# of Operators, % of Fleet): CFM (62, 100.0%) HHI Concentration: 1,000 EETC Transactions: CAL 1997-1, 1997-4, 1998-1, 1998-3, 1999-1, 1999-2, 2001-2; LUV 2001-1

2005

1997

1998

1999

2000

2001

2002

2003

2004

Stored

0

2

2

7

22

11

0

3

2005 0

In Service

3

86

182

255

328

412

489

597

621

% Stored

0.0%

2.3%

1.1%

2.7%

6.3%

2.6%

0.0%

0.5%

0.0%

Comment: A terrific aircraft, in our opinion, which is popular with low-cost and network carriers alike. Somewhat concentrated ownership base, with Southwest representing 30% of all deliveries of the 737-700 to date. Southwest’s Acategory credit rating offsets this concentration risk, in our opinion.

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 28

Exhibit 42

B737-800 (Introduced in 1998) # of Aircraft 1,000

% Stored 20%

Stored In Service % Stored

900

18%

800

16%

700

14%

600

12%

500

10%

400

8%

300

6%

200

4%

100

2%

0

0% 1989

Stored

1991

1993

1995

1997

1999

2001

2003

MWD Aircraft GPA: 4.3 Aircraft in Service: 824 Stored (Mar/Feb/Jan): 7 (0.8%)/7 (0.8%)/6 (0.7%) Undelivered Backlog: 399 # Avail. on Speednews (Mar): 9 (1 sale/lease, 8 wetlease) # of Operators: 94 Engine Types (# of Operators, % of Fleet): CFM (94, 100.0%) HHI Concentration: 500 EETC Transactions: AMR 2003-1; CAL 1997-1, 1997-4, 1998-1, 1998-3, 1999-1, 1999-2, 2001-2; LUV 2001-1

2005

1998

1999

2000

2001

2002

2003

2004

2005

0

1

1

1

0

2

1

7

In Service

65

197

382

550

677

736

820

824

% Stored

0.0%

0.5%

0.3%

0.2%

0.0%

0.3%

0.1%

0.8%

Comment: The combination of extended range and increased passenger capacity makes this such a successful aircraft. More diverse customer and operator base than the 737-700. In recent months, lease rates of the 737-800 have held up better than the lease rates of its competitor, the A320, based on anecdotal evidence. Its operational success helped push the 757 into cancellation.

Source: Morgan Stanley, Airclaims Exhibit 43

B737-900 (Introduced in 2001) # of Aircraft 100 90

% Stored 20%

Stored In Service % Stored

18%

80

16%

70

14%

60

12%

50

10%

40

8%

30

6%

20

4%

10

2%

0

0% 1989

1991 2001

1993

1995

2002

1997 2003

1999

2001 2004

2003

2005

2005

Stored

0

0

0

0

0

In Service

21

29

39

45

46

% Stored

0.0%

0.0%

0.0%

0.0%

0.0%

MWD Aircraft GPA: 2.7 Aircraft in Service: 46 Stored (Mar/Feb/Jan): 0 (0.0%)/0 (0.0%)/0 (0.0%) Undelivered Backlog: 9 # Avail. on Speednews (Mar): 0 (0 sale/lease, 0 wetlease) # of Operators: 7 Engine Types (# of Operators, % of Fleet): CFM (7, 100.0%) HHI Concentration: 2,700 EETC Transactions: CAL 2000-2, 2001-1, 2001-2

Comment: The stretched member of the 737 Next Generation family that has not achieved popularity. The lack of an additional exit door gives it the same certificated capacity (189 passengers) as a 737-800, although it holds more passengers in a standard two-class configuration. Boeing will launch a 900X version, which could hold more passengers, offer longer range, and would meet with more success than this version.

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 29

Exhibit 44

B747-400 (Introduced in 1989) # of Aircraft 500

% Stored 20%

Stored In Service % Stored

18%

400

16% 14%

300

12% 10%

200

8% 6%

100

4% 2%

0

0% 1989

1991

1993

1995

1997

1999

2001

2003

2005

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 0

0

0

2

4

3

1

1

0

4

2

0

14

17

27

21

23

34

89

138

190

236

268

288

306

337

380

419

426

417

419

407

417

416

Stored In Service % Stored

MWD Aircraft GPA: 2.3 Aircraft in Service: 416 Stored (Mar/Feb/Jan): 23 (5.2%)/21 (4.8%)/21 (4.8%) Undelivered Backlog: 11 # Avail. on Speednews (Mar): 8 (8 sale/lease, 0 wetlease) # of Operators: 35 Engine Types (# of Operators, % of Fleet): GE (20, 57.1%) P&W (12, 34.3%) RR (5, 14.3%) HHI Concentration: 600 (900 GE; 1,600 P&W; 3,700 RR) EETC Transactions: NWAC 1996-1, 1999-1, 2001-1; UAL 1997-1, 2001-1, 2000-2, 2001-1

Comment: Long the “Queen of the Skies”, the 747 is showing its age and has waned in popularity as a passenger aircraft, although freighter demand remains good. The order backlog has shrunk and new derivatives have failed to attract a large following. Oldest versions of the -400 are now being slotted for conversion into freighters by Asian airlines. A decision on a possible stretched 747 Advanced will be announced in 2005.

0.0% 0.0% 0.0% 1.0% 1.7% 1.1% 0.3% 0.3% 0.0% 1.0% 0.5% 0.0% 3.2% 3.9% 6.2% 4.8% 5.2%

Source: Morgan Stanley, Airclaims Exhibit 45

B747-400F (Introduced in 1993) # of Aircraft 250

% Stored 20%

Stored In Service % Stored

225

18%

200

16%

175

14%

150

12%

125

10%

100

8%

75

6%

50

4%

25

2% 0%

0 1989

1991

1993

1995

1996

1995 1997

1997

1998

1999

1999 2000

2001

2001 2002

2003 2003

2004

2005

1993

1994

Stored

0

0

0

0

0

0

0

1

1

2

2

0

0

In Service

2

6

11

14

18

26

36

50

62

76

81

102

2005 104

% Stored

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

2.0%

1.6%

2.6%

2.4%

0.0%

0.0%

MWD Aircraft GPA: 3.0 Aircraft in Service: 104 Stored (Mar/Feb/Jan): 0 (0.0%)/0 (0.0%)/0 (0.0%) Undelivered Backlog: 18 # Avail. on Speednews (Mar): 0 (0 sale/lease, 0 wetlease) # of Operators: 18 Engine Types (# of Operators, % of Fleet): GE (12, 66.7%) P&W (4, 22.2%) RR (2, 11.1%) HHI Concentration: 900 (400 GE; 4,300 P&W; 5,100 RR) EETC Transactions: CGO 1998-1, 1999-1, 2000-1

Comment: The 747-400F is the largest production commercial freighter in the world, a status it will retain until late in the decade when the A380 freighter enters service. In many ways, the 747-400F has almost eclipsed the 747-400 passenger aircraft. The availability of cheap 747-400 passenger aircraft for conversion may cause some challenges for future 747-400F sales, although the purpose-built 747-400F should be inherently more capable than a converted aircraft.

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 30

Exhibit 46

B757-200 (Introduced in 1982) # of Aircraft 1,250

% Stored 20%

Stored In Service % Stored

1,125

18%

1,000

16%

875

14%

750

12%

625

10%

500

8%

375

6%

250

4%

125

2%

0

0% 1989 1989

1991 1990

1991

1993 1992

1993

1995 1994

1995

1997 1996

1997

1999 1998

1999

2001 2000

2001

2003 2002

2003

2005 2004

2005

2

0

27

10

11

15

2

1

4

3

7

11

51

50

46

32

In Service

235

304

350

460

524

575

620

654

685

733

785

817

806

805

799

815

816

% Stored

0.8%

0.0%

7.2%

2.1%

2.1%

2.5%

0.3%

0.2%

0.6%

0.4%

0.9%

1.3%

6.0%

5.8%

5.4%

3.8%

3.5%

Stored

MWD Aircraft GPA: 2.3 Aircraft in Service: 816 Stored (Mar/Feb/Jan): 30 (3.5%)/28 (3.3%)/28 (3.3%) Undelivered Backlog: 2 # Avail. on Speednews (Mar): 9 (8 sale/lease, 1 wetlease) # of Operators: 89 Engine Types (# of Operators, % of Fleet): P&W (24, 27.0%) RR (65, 73.0%) HHI Concentration: 700 (2,100 P&W; 900 RR) EETC Transactions: AMR 2001-2, 2002-1; ATA 1996-1, 19971, 2000-1; CAL 1996-1, 1996-2, 1997-1, 1998-1, 1998-3, 1999-2, 2000-1, 2001-2; DAL 2000-1, 2001-1, 2002-1; NWAC 1996-1, 2000-1; U 1996-1; UAL 2000-1, 2000-2

30

Comment: Production of this aircraft type ended in November 2004, but it remains an economical aircraft that should continue in service for a long time. It has been largely supplanted by the A321 and the longer-range 737 Next Generation family. Commonality with the 767 has little value to many operators. Our GPA for this aircraft was lowered from “B” to “C+” in early 2003. We believe that this aircraft will ultimately make a good narrowbody freighter, providing a floor in value for older models of this aircraft of $5-10 million. Rolls is the preferred engine, but overhaul costs are high.

Source: Morgan Stanley, Airclaims Exhibit 47

B757-300 (Introduced in 1999) # of Aircraft 100

% Stored 20%

Stored In Service % Stored

90

18%

80

16%

70

14%

60

12%

50

10%

40

8%

30

6%

20

4%

10

2%

0

0% 1989

Stored

1991

1993

1995

1997

1999

2001

2003

2005

1999

2000

2001

2002

2003

2004

2005

0

0

0

1

1

0

0

In Service

7

15

24

38

49

55

55

% Stored

0.0%

0.0%

0.0%

2.6%

2.0%

0.0%

0.0%

MWD Aircraft GPA: 2.3 Aircraft in Service: 55 Stored (Mar/Feb/Jan): 0 (0.0%)/0 (0.0%)/0 (0.0%) Undelivered Backlog: 0 # Avail. on Speednews (Mar): 2 (2 sale/lease, 0 wetlease) # of Operators: 7 Engine Types (# of Operators, % of Fleet): P&W (1, 14.3%) RR (6, 85.7%) HHI Concentration: 2,000 (10,000 P&W; 2,400 RR) EETC Transactions: CAL 2002-1; NWAC 2001-1, 2002-1

Comment: A stretched version of the venerable Boeing 757-200 that reportedly is highly economical, but garnered few orders. This program has been cancelled along with the 757-200, with the final 757-300 aircraft produced in 2004. ATA aircraft were just placed surprisingly easily and with competing bids. Maybe this plane, at least operationally, is better than we think?

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 31

Exhibit 48

B767-200ER (Introduced in 1984) # of Aircraft 200

% Stored 30%

Stored In Service % Stored

175

27% 24%

150

21% 125

18%

100

15%

75

12% 9%

50

6% 25

3%

0

0% 1989

1991

1993

1995

1997

1999

2001

2003

2005

Comment: After going into order hibernation for nearly five years, the 767-200ER received an awakening order from Continental in 1998, before returning to a near total slumber. Incredible range, but a passenger capacity not any larger than a 757. Few airlines seem to need this combination of range and spacious passenger capacity.

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Stored

0

0

0

0

0

0

0

2

0

0

1

0

1

2

2

4

3

7

6

19

27

25

In Service

5

14

30

51

63

70

95

101

104

109

108

109

108

107

107

105

108

110

111

92

81

80

% Stored

MWD Aircraft GPA: 2.3 Aircraft in Service: 80 Stored (Mar/Feb/Jan): 25 (23.8%)/25 (23.6%)/24 (22.2%) Undelivered Backlog: 2 # Avail. on Speednews (Mar): 10 (9 sale/lease, 1 wetlease) # of Operators: 30 Engine Types (# of Operators, % of Fleet): GE (15, 50.0%) P&W (15, 50.0%) HHI Concentration: 700 (1,600 GE); 1,100 P&W) EETC Transactions: CAL 2000-2, 2001-2

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.9% 0.0% 0.0% 0.9% 0.0% 0.9% 1.8% 1.8% 3.7% 2.7% 6.0% 5.1% 17.1 25.0 23.8

Source: Morgan Stanley, Airclaims Exhibit 49

B767-300ER (Introduced in 1986) # of Aircraft 700

% Stored 20%

Stored In Service % Stored

600

18% 16%

500

14% 12%

400

10% 300

8% 6%

200

4% 100

2%

0

0% 1989

1991

1993

1995

1997

1999

2001

2003

2005

MWD Aircraft GPA: 2.7 Aircraft in Service: 493 Stored (Mar/Feb/Jan): 3 (0.6%)/5 (1.0%)/4 (0.8%) Undelivered Backlog: 8 # Avail. on Speednews (Mar): 7 (2 sale/lease, 5 wetlease) # of Operators: 79 GE (34, 43.0%) P&W (42, 53.2%) RR (3, 3.8%) HHI Concentration: 400 (700 GE; 1,000 P&W; 5,200 RR) EETC Transactions: AMR 1999-1, 2002-1, 2003-1, DAL 2000-1, 2001-1, 2001-2, 2002-1; UAL 2000-1, 2001-1

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Stored In Service % Stored

0

0

0

0

0

1

1

2

3

4

4

1

4

6

1

22

22

21

6

3

1

2

26

50

83

130

186

223

249

279

319

356

396

433

463

466

487

466

489

493

0.0% 0.0% 0.0% 0.0% 0.0% 0.8% 0.5% 0.9% 1.2% 1.4% 1.2% 0.3% 1.0% 1.4% 0.2% 4.5% 4.3% 4.3% 1.2% 0.6%

Comment: A 767 shortage? Yes, at least for the -300ER version. The first 767-300ER entered service in the late 1980s and it soon became the most popular version of the 767 due to its desirable mix of range and capacity. The first 767 model entered service in 1982, and its technology is now showing its age. Boeing has launched a 767 replacement – a highly efficient conventional aircraft (the 787) rather than the far cooler-looking Sonic Cruiser. This aircraft will enter service in May 2008.

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 32

Exhibit 50

B767-400ER (Introduced in 2000) # of Aircraft 100

% Stored 20%

Stored In Service % Stored

90

18%

80

16%

70

14%

60

12%

50

10%

40

8%

30

6%

20

4%

10

2% 0%

0 1989

1991

1993

2000

1995

2001

1997

1999

2002

2001

2003

2003

2005

2004

2005

Stored

0

2

0

0

0

0

In Service

16

22

37

37

37

37

% Stored

0.0%

8.3%

0.0%

0.0%

0.0%

0.0%

MWD Aircraft GPA: 2.0 Aircraft in Service: 37 Stored (Mar/Feb/Jan): 0 (0.0%)/0 (0.0%)/0 (0.0%) Undelivered Backlog: 1 # Avail. on Speednews (Mar): 0 (0 sale/lease, 0 wetlease) # of Operators: 3 GE (3, 100.0%) HHI Concentration: 5,100 EETC Transactions: CAL 2000-1, 2000-2, 2001-1, 2001-2, 2002-1 Comment: An effort by Boeing to extend the flagging 767 line with a stretched, high-capacity version. It never caught on and is unlikely to, in our view. The stretched fuselage increased capacity but shortened range, highlighting the advantages of the A330. Continental and Delta are the only customers. Boeing has abandoned plans for a longer-range version of the aircraft, an admission of its niche status. This aircraft will be replaced by the end of the decade by Boeing’s touted 787 aircraft. We think the 767-400ER may become one of the most extreme examples of a niche aircraft since the Concorde. Having flown on it, we are impressed by its interior. We just prefer not to take residual value exposure, except at levels adjusted for the aircraft’s limited remarketability.

Source: Morgan Stanley, Airclaims Exhibit 51

B777-200 (Introduced in 1994) # of Aircraft 100

% Stored 20%

Stored In Service % Stored

90

18%

80

16%

70

14%

60

12%

50

10%

40

8%

30

6%

20

4%

10

2%

0

0% 1989 1994

1991 1995

1993 1996

1997

1995 1998

1997 1999

1999

2000

2001

2001 2002

2003 2003

2004

2005 2005

Stored

0

0

0

0

0

0

3

0

2

3

3

In Service

1

14

46

57

66

69

78

81

79

79

81

81

% Stored

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

3.7%

0.0%

2.5%

3.7%

3.6%

3.6%

3

MWD Aircraft GPA: 2.3 Aircraft in Service: 81 Stored (Mar/Feb/Jan): 3 (3.6%)/3 (3.6%)/3 (3.6%) Undelivered Backlog: 8 # Avail. on Speednews (Mar): 3 (3 sale/lease, 0 wetlease) # of Operators: 11 GE (3, 27.3%) P&W (5, 45.5%) RR (3, 27.3%) HHI Concentration: 1,400 (3,600 GE; 2,500 P&W; 3,800 RR) EETC Transactions: UAL 2000-1 Comment: The Boeing 777 is a superb widebody aircraft that has a long, successful future, in our opinion. The 777-200, as the first version of the aircraft, has been supplanted by the 777-200ER, however. The likelihood of additional orders of the non-ER is small, we believe, other than from airlines with no concerns about residual value (and there are very few of these). While lack of range limits transpacific operations, it is still a good aircraft for intra-Asian or trans-Atlantic routes.

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 33

Exhibit 52

B777-200ER (Introduced in 1997) # of Aircraft 500

% Stored 20%

Stored In Service % Stored

450

18%

400

16%

350

14%

300

12%

250

10%

200

8%

150

6%

100

4%

50

2%

0

0% 1989

1991

1997

1998

1993

1995

1997

1999

2000

2001

1999

2001

2002

2003

2003

2005

2004

2005

Stored

0

1

3

1

3

1

4

5

In Service

48

97

158

202

255

298

319

341

347

% Stored

0.0%

1.0%

1.9%

0.5%

1.2%

0.3%

1.2%

1.4%

0.9%

3

MWD Aircraft GPA: 3.3 Aircraft in Service: 347 Stored (Mar/Feb/Jan): 3 (0.9%)/3 (0.9%)/4 (1.1%) Undelivered Backlog: 62 # Avail. on Speednews (Mar): 3 (3 sale/lease, 0 wetlease) # of Operators: 39 GE (18, 46.2%) P&W (10, 25.6%) RR (8, 20.5%) HHI Concentration: 800 (1,600 GE); 4,200 P&W; 2,300 RR) EETC Transactions: AMR 1999-1, 2001-1, 2001-2, 2002-1, 2003-1; CAL 1997-4, 1998-1, 1998-3, 1999-1, 1999-2, 2001-1, 2001-2; 2002-1; DAL 2001-2; UAL 1997-1, 2000-1, 2000-2, 2001-1

Comment: Our favorite widebody aircraft. When Airbus engineers have nightmares, we imagine this is what appears to attack the A340. Only the dilutive effect of three engine types causes some residual value concerns. Love to fly it, happy to finance it (especially with GE engines). Recent lack of orders is starting to raise some concerns, however. We believe that the 787-9 may supplant this aircraft to some extent, perhaps explaining Boeing’s delay in introducing the 787-9 relative to the 787-8. Source: Morgan Stanley, Airclaims Exhibit 53

Avro RJ85 (Introduced in 1993) # of Aircraft 100

% Stored 30%

Stored In Service % Stored

90

27%

80

24%

70

21%

60

18%

50

15%

40

12%

30

9%

20

6%

10

3%

0

0% 1989 1992

1991 1993

1994

1993 1995

1995 1996

1997

1997 1998

1999

1999 2000

2001 2001

2002

2003 2003

2005

2004

2005

Stored

0

1

1

1

1

0

0

0

0

0

3

5

2

In Service

1

4

8

19

34

51

61

72

79

85

84

80

81

81

2.9%

0.0%

0.0%

0.0%

0.0%

0.0%

3.4%

5.9%

2.4%

2.4%

% Stored

0.0% 20.0% 11.1% 5.0%

2

MWD Aircraft GPA: 2.0 Aircraft in Service: 81 Stored (Mar/Feb/Jan): 2 (2.4%)/2 (2.4%)/2 (2.4%) Undelivered Backlog: 0 # Avail. on Speednews (Mar): 2 (2 sale/lease, 0 wetlease) # of Operators: 8 Honeywell (8, 100.0%) HHI Concentration: 2,500 EETC Transactions: NWAC 1997-1, 1999-3

Comment: A four-engined aircraft with unique capabilities that are not needed by many airlines. This aircraft is no longer in production. The manufacturer, BAE, abandoned plans for a successor aircraft due to lack of orders and left the commercial aircraft business entirely – historically a negative for aircraft values.

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 34

Exhibit 54

ERJ-145 (Introduced in 1996) # of Aircraft 1,000

% Stored 20%

Stored In Service % Stored

900

18%

800

16%

700

14%

600

12%

500

10%

400

8%

300

6%

200

4%

100

2%

0

0% 1989

1991

1995 0

Stored

1993

1996

1997

0

1995

1998

0

1997

1999

2

1999

2000

0

2001

1

2001 2002

5

2003

2003

5

2005

2004

12

2005

15

16

In Service

2

6

39

93

176

287

388

477

508

598

612

% Stored

0.0%

0.0%

0.0%

2.1%

0.0%

0.3%

1.3%

1.0%

2.3%

2.4%

2.5%

MWD Aircraft GPA: 2.7 Aircraft in Service: 612 Stored (Mar/Feb/Jan): 16 (2.5%)/16 (2.6%)/13 (2.1%) Undelivered Backlog: 55 # Avail. on Speednews (Mar): 4 (4 sale/lease, 0 wetlease) # of Operators: 33 GE (33, 100.0%) HHI Concentration: 1,600 EETC Transactions: CAL 1997-3, CAL 2003-ERJ1

Comment: Hugely popular, but with an ownership base concentrated in the US. Lack of a larger sibling (Embraer chose to introduce an all-new ERJ-170/190 family instead) hurts somewhat, we believe, but this is still a popular aircraft. Recent deferrals by Continental and the lack of recent orders signal that demand for this aircraft type (and other 50-seat regional jets) has peaked.

Source: Morgan Stanley, Airclaims Exhibit 55

MD-80 (Introduced in 1979) # of Aircraft 1,250

% Stored 20%

Stored In Service % Stored

1,125

18%

1,000

16%

875

14%

750

12%

625

10%

500

8%

375

6%

250

4%

125

2%

0

0% 1989 1979

1980 0

1981 0

1982 2

1983 1

1993 1984 4

1985 3

1986 1

1995 1987

1988

0

2

1989 8

1997 1990 13

1991

1992

1999

1993

1994

1995

1996

2001 1997

1998

1999

2003 2000

2001

2002

2005 2003 117

2004 123

2005

46

10

14

14

11

19

18

11

22

29

107

110

In Service

2

6

66

99

150

191

263

351

445

561

673

807

912

1,032

1,068

1,091

1,112

1,116

1,132

1,147

1,158

1,148

1,069

1,056

1,045

1,029

994

% Stored

0.0%

0.0%

0.0%

2.0%

0.7%

2.1%

1.1%

0.3%

0.0%

0.4%

1.2%

1.6%

4.8%

1.0%

1.3%

1.3%

1.0%

1.7%

1.6%

0.9%

1.9%

2.5%

9.1%

9.4%

10.1%

10.7%

13.2%

Stored

0

1991

151

MWD Aircraft GPA: 2.0 Aircraft in Service: 994 Stored (Mar/Feb/Jan): 151 (13.2%)/137 (11.9%)/137 (11.9%) Undelivered Backlog: 0 # Avail. on Speednews (Mar): 43 (36 sale/lease, 7 wetlease) # of Operators: 95 P&W (95, 100.0%)

HHI Concentration: 1,400 EETC Transactions: AMR 2001-1; CAL 1997-2, 1998-2 Comment: This is a workhorse aircraft that had a production run through 1999, when the Long Beach line was shut down by the acquiring Boeing company. US airlines have a growing number of parked MD-80 aircraft, and non-US storage is increasing as well. Noise issues limit demand in Western Europe, but the aircraft’s solid airframe should allow it to find a home in other regions. A new, recently introduced engine nozzle could help with some noise issues. There are a growing number of these aircraft looking for a home. The demise of Jetsgo in Canada will further increase storage numbers.

Source: Morgan Stanley, Airclaims

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 35

Last Month’s Airline/Aircraft Quiz: Longest Range Question: For better and worse, newer generation aircraft offer far longer range than their predecessors. New nonstop city pairs include New York-Dubai, New York-Hong Kong, New York-Bangkok and New York-Singapore (New York seems to be a theme here), each with flights that can approach or even exceed 16 hours. In business class, this doesn’t sound so bad. In coach, we are not quite so sure. For all the dramatic length of these flights, even longer length flights are in store as a result of new aircraft types that will allow an airline to link almost any two points on the globe. What is the longest range aircraft currently in production?

Aircraft BBJ (Boeing Business Jet)

747-400 Correct Answer: 777-200LR 777-300ER A330-200 A340-500 A340-600

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 36

This Month’s Airline/Aircraft Quiz: A Death Valley for Airplanes? Question: Bombardier continues to explore the possible launch of its 110-130 seat C-Series aircraft. The aircraft would be a brand new product for Bombardier rather than a derivative, with an engine provided by Pratt & Whitney. The C-Series enters a space that has historically been a very difficult one for aircraft manufacturers for a variety of reasons. Can Bombardier be successful where others have failed? Perhaps. And there were certainly doubters when it introduced its CRJ series, a type that has now sold more than 1,000 aircraft worldwide. We bet against the C-Series, but we could be wrong. This month’s quiz: Which one of the following aircraft types seating between 100 and 140 seats (approximately) has sold more than 300 aircraft?

Fairchild Dornier 928 BAE RJX BAE RJ100 Airbus A318 Boeing 717 Boeing 737-600 .

Boeing 737-200 Fokker 100

Airlines – June 19, 2005

Please see analyst certification and other important disclosures starting on page 37.


Page 37

Analyst Certification The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report: Douglas Runte, CFA.

Important US Regulatory Disclosures on Subject Companies The information and opinions in this report were prepared by Morgan Stanley & Co. Incorporated and its affiliates (collectively, "Morgan Stanley"). As of May 31, 2005, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in this report: Continental Airlines, Gol Airlines, JetBlue Airways and Southwest Air. Within the last 12 months, Morgan Stanley managed or co-managed a public offering of securities of Continental Airlines, Gol Airlines, JetBlue Airways and Southwest Air. Within the last 12 months, Morgan Stanley has received compensation for investment banking services from Continental Airlines, Gol Airlines, JetBlue Airways, Northwest Airlines and Southwest Air. In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Continental Airlines, Gol Airlines, JetBlue Airways, Northwest Airlines and Southwest Air. Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from Continental Airlines, Gol Airlines, Northwest Airlines and Southwest Air. Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following companies covered in this report: Continental Airlines, Gol Airlines, JetBlue Airways, Northwest Airlines and Southwest Air. Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following companies covered in this report: Continental Airlines, Gol Airlines, JetBlue Airways, Northwest Airlines and Southwest Air. The research analysts, strategists, or research associates principally responsible for the preparation of this research report have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues. Morgan Stanley & Co. Incorporated makes a market in the securities of JetBlue Airways and Northwest Airlines.

Airlines – June 19, 2005


Page 38

Stock Ratings Different securities firms use a variety of rating terms as well as different rating systems to describe their recommendations. For example, Morgan Stanley uses a relative rating system including terms such as Overweight, Equal-weight or Underweight (see definitions below). A rating system using terms such as buy, hold and sell is not equivalent to our rating system. Investors should carefully read the definitions of all ratings used in each research report. In addition, since the research report contains more complete information concerning the analyst’s views, investors should carefully read the entire research report and not infer its contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor’s decision to buy or sell a stock should depend on individual circumstances (such as the investor’s existing holdings) and other considerations. Global Stock Ratings Distribution (as of May 31, 2005) Coverage Universe Stock Rating Category

Count

% of Total

Investment Banking Clients (IBC) Count

% of Total IBC

% of Rating Category

Overweight/Buy 673 36% 269 41% 40% Equal-weight/Hold 865 46% 299 45% 35% Underweight/Sell 352 19% 91 14% 26% Total 1,890 659 Data include common stock and ADRs currently assigned ratings. For disclosure purposes (in accordance with NASD and NYSE requirements), we note that Overweight, our most positive stock rating, most closely corresponds to a buy recommendation; Equal-weight and Underweight most closely correspond to neutral and sell recommendations, respectively. However, Overweight, Equal-weight, and Underweight are not the equivalent of buy, neutral, and sell but represent recommended relative weightings (see definitions below). An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Investment Banking Clients are companies from whom Morgan Stanley or an affiliate received investment banking compensation in the last 12 months.

Analyst Stock Ratings

Overweight (O). The stock’s total return is expected to exceed the average total return of the analyst’s industry (or industry team’s) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Equal-weight (E). The stock’s total return is expected to be in line with the average total return of the analyst’s industry (or industry team’s) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Underweight (U). The stock’s total return is expected to be below the average total return of the analyst’s industry (or industry team’s) coverage universe, on a risk-adjusted basis, over the next 12-18 months. More volatile (V). We estimate that this stock has more than a 25% chance of a price move (up or down) of more than 25% in a month, based on a quantitative assessment of historical data, or in the analyst’s view, it is likely to become materially more volatile over the next 1-12 months compared with the past three years. Stocks with less than one year of trading history are automatically rated as more volatile (unless otherwise noted). We note that securities that we do not currently consider "more volatile" can still perform in that manner. Unless otherwise specified, the time frame for price targets included in this report is 12 to 18 months. Ratings prior to March 18, 2002: SB=Strong Buy; OP=Outperform; N=Neutral; UP=Underperform. For definitions, please go to www.morganstanley.com/companycharts. Analyst Industry Views

Attractive (A). The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the relevant broad market benchmark named on the cover of this report. In-Line (I). The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant broad market benchmark named on the cover of this report. Cautious (C). The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant broad market benchmark named on the cover of this report.

Stock price charts and rating histories for companies discussed in this report are also available at www.morganstanley.com/companycharts. You may also request this information by writing to Morgan Stanley at 1585 Broadway, 14th Floor (Attention: Research Disclosures), New York, NY, 10036 USA.

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Stock Price, Price Target and Rating History (See Rating Definitions)

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Other Important Fixed Income Research Disclosures Morgan Stanley trades as principal in the securities/instruments (or related derivatives) that are the subject of this report. Issuer Name: Southwest Air Fixed Income Research 12-Month History Issue Type: EETCS Current Rating: Underweight (No Changes in Past 12 Months) Issue Type: Unsec Current Rating: Underweight (No Changes in Past 12 Months) Issuer Name: Delta Airlines Fixed Income Research 12-Month History Issue Type: EETCs Current Rating: Overweight --as of 06/06/2005 Previous Rating: --as of 01/31/2005 --Equal-weight Issue Type: Unsec Current Rating: Equal-weight --as of 01/31/2005 Issuer Name: Continental Airlines Fixed Income Research 12-Month History Issue Type: $ sr unsecured Current Rating: Equal-weight --as of 01/31/2005 Issue Type: EETCs Current Rating: Equal-weight --as of 01/31/2005 Credit Products Rating Distribution Table (as of June 1, 2005) Coverage Universe Rating

Count

% of Total

Investment Banking Clients (IBC) Count

% of Total IBC

% of Rating Category

155 23% 78 21% 50% Overweight 382 58% 226 61% 59% Equal-weight 127 19% 68 18% 54% Underweight 664 372 Total Coverage includes all companies that we currently rate. Investment Banking Clients are companies from whom Morgan Stanley or an affiliate received investment banking compensation in the last 12 months.

Analyst Ratings Definitions Overweight (O) Over the next 6 months, the fixed income instrument’s total return is expected to exceed the average total return of the relevant benchmark, as described in this report, on a risk adjusted basis. Equal-weight (E) Over the next 6 months, the fixed income instrument’s total return is expected to be in line with the average total return of the relevant benchmark, as described in this report, on a risk adjusted basis. Underweight (U) Over the next 6 months, the fixed income instrument’s total return is expected to be below the average total return of the relevant benchmark, as described in this report, on a risk adjusted basis. More volatile (V) The analyst anticipates that this fixed income instrument is likely to experience significant price or spread volatility in the short term.

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Other Important Disclosures This research report has been published in accordance with our conflict management policy, which is available at www.morganstanley.com/institutional/research/conflictpolicies. For a discussion, if applicable, of the valuation methods used to determine the price targets included in this summary and the risks related to achieving these targets, please refer to the latest relevant published research on these stocks. Research is available through your sales representative or on Client Link at www.morganstanley.com and other electronic systems. This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The securities discussed in this report may not be suitable for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. This report is not an offer to buy or sell any security or to participate in any trading strategy. In addition to any holdings disclosed in the section entitled "Important US Regulatory Disclosures on Subject Companies", Morgan Stanley and/or its employees not involved in the preparation of this report may have investments in securities or derivatives of securities of companies mentioned in this report, and may trade them in ways different from those discussed in this report. Derivatives may be issued by Morgan Stanley or associated persons. Morgan Stanley & Co. Incorporated and its affiliate companies do business that relates to companies covered in its research reports, including market making and specialized trading, risk arbitrage and other proprietary trading, fund management, investment services and investment banking. Morgan Stanley sells to and buys from customers the equity securities of companies covered in its research reports on a principal basis. Morgan Stanley makes every effort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. We have no obligation to tell you when opinions or information in this report change apart from when we intend to discontinue research coverage of a subject company. With the exception of information regarding Morgan Stanley, reports prepared by Morgan Stanley research personnel are based on public information. Facts and views presented in this report have not been reviewed by, and may not reflect information known to, professionals in other Morgan Stanley business areas, including investment banking personnel. Morgan Stanley research personnel conduct site visits from time to time but are prohibited from accepting payment or reimbursement by the company of travel expenses for such visits. The value of and income from your investments may vary because of changes in interest rates or foreign exchange rates, securities prices or market indexes, operational or financial conditions of companies or other factors. There may be time limitations on the exercise of options or other rights in your securities transactions. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. 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