Accurate forecasting of future values and lease rates is critical for an investor's assessment of a transaction's potential profitability and their portfolio's overall risk/return profile.

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, simulation and our decades of experience.

The system is basically a virtual model of the future commercial aircraft market, and it has been designed with a view towards assisting asset-backed investors with planning for the future based on realistic market-driven assumptions.

Our fvDynamics system and simulation routines have taken into account re-engined, updated versions of A320's and B737's since 2005, and, as it was clear to us in 2007 that a wobbly banking system was bad for the aircraft market too, our forecast accuracy has been second to none.

At the request of a well-respected aircraft investor, we've sent several fvDynamics forecasts from 7 years ago so they could independently check them against their own current view of the market.

The results were as follows:

        Aircraft Type        Forecast Error

        A320-200                    +10%

        B737-800 Winglets        +10%

        A321-200                     +10%

        A330-200                        0%

        A330-300                        0%

        B777-300ER                     0%

So, based on their best information about current market values (for aircraft types which they own themselves), we were only 10% high for the narrowbodies, and right on for the widebody aircraft.  We wonder how some other firm's forecasts would compare to this standard of performance.


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

---   Lease Rate Forecasts over 10 years.

---   Scenario-based, logical parameters.

---   The simulation quantifies our analytical
       experience related to the market
       dynamics of aircraft asset risk.

Lessor Trading 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,
        which allows custom "what-if" analysis.

---   The result includes the balance sheet, cash
        flow statement and IRR, all as a function
        of the timing of aircraft sales, and summed
        over any portfolio.


International Aviation Advisors, Inc.
Mr. William Loh, Managing Director

Telephone:  (1 407) 542-3286
Mobile:  (1 407) 534-7173

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