The fvDynamics system has been developed by IAA to provide methods which reflect known market realities in the forecasting process, and to give lenders and investors an analytically robust alternative, based on probability and simulation.  The system is basically a virtual model of the future commercial aircraft market, and is designed with a view toward helping financial institutions with the process of implementing the Basel II risk assessment and capital adequacy changes, especially the LGD (loss given default) analysis.

To quote from the Bank and International Settlement website: "The Basel II Framework is intended to promote a more forward-looking approach to capital supervision, one that encourages banks to identify the risks they may face, today and in the future, and to develop or improve their ability to manage those risks. As a result, it is intended to be more flexible and better able to evolve with advances in markets and risk management practices."


fvDynamics

---   Future Market Value Forecasts over 20 years for commercial
       aircraft, including the related probability distributions.

---   Lease Rate Forecasts over 10 years.

---   Scenario-based "what-if" logical parameters.

---   Simulation is based on a sophisticated Expert System, which quantifies
       our experience of the dynamics of the aircraft market.



Lessor Investment Return Model

---   The entire operating lease term analyzed in detail, for an unlimited
       number of aircraft.

---   PDP payments included if necessary.

---   Variables include all parameters important to a lessor's business, in terms of
       their affect on the balance sheet, cash flow and IRR.

---   Custom software level logic done in MS Excel.