AI 2 Market Report Business Jet & Turboprop Aircraft Volume 4, October 2017

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1 AI 2 Market Report Record Low Ask Prices Enticing Buyers Sales Primarily Focused on Higher Quality Aircraft 90-day Future Value etrend TM Projects Q4 Pricing Decline Welcome to the AI 2 Market Report from. This Quarterly Market Report analyzed values for every production year of every modern make/model Business Class aircraft, and our September 28, 2017 maintenance analytics covered 92 fixed-wing models and 1,818 aircraft listed for sale. Ø Overall demand improved slightly but remained below average Market demand improved from 2.90 to 2.91 during Q3. On our scale of 1.00 (lowest) to 5.00 (highest), Large Jets registered slightly lower demand at 2.79 versus 2.80 during Q2, Medium Jet demand increased to 2.97 from 2.89, Small Jet demand decreased from 2.93 to 2.90, and Turboprops remained unchanged at Ø Average Ask Price reached yet another record low Average Ask Price for tracked aircraft fell 6.0% during Q3, with all groups recording a decrease. Prices have fallen 16.7% over the past 12 months driven, in part, by trades focused on the higher value assets. Ø Ask versus final Transaction value gap worsened slightly Spread between Ask and final Transaction value for Small Jets and Turboprop remained unchanged, at 8.0% and 9.2%, respectively. Large and Medium Jet sellers did not fare as well; the former worsening 0.3% to 12.5% and the latter continuing to post the greatest / worst gap at 14.8%, an increase of 0.1%. Ø 90-Day Future Value rate of decrease expected to vary by asset group Our 90-day etrend TM projects Large Jet values will fall 24% faster during Q4 versus Q3, Medium Jets 3% slower, Small Jets 13% faster, while the rate of Turboprop value loss is expected to decrease by 18%. Primary drivers are expected to be inventory levels and seller traditional Q4 desire to sell their asset prior to year-end. Ø For sale fleet Asset Quality fell to Very Good Active trading of higher quality aircraft resulted in Asset Quality ending Q3 at just above the 12-month low figure unable to maintain an Excellent rating for the first time since January Ø Maintenance Exposure slightly better than historical average The tracked inventory fleet s accrued or embedded cost of future scheduled maintenance (Maintenance Exposure) ended Q3 incrementally lower / better than the historical average, with Large Jets registering a 2.1% increase / degradation, while all other groups experienced a reduction / improvement: Medium Jets 1.0%; Small Jets 16.4%; and, Turboprops 5.0%. Ø Maintenance Exposure to Ask Price Ratio ( ETP Ratio ) at 59.7% The fleet s ETP Ratio (Maintenance Exposure divided by Ask Price) increased 4.9 AI 2 basis points in Q3, posting the worst figure for the past 12 months. We consider any ETP Ratio over 40% to represent excessive Exposure in relation to Ask Price and a hindrance to aircraft marketability. Assets whose ETP Ratio was 40% or more during Q3 were listed for sale 31% longer (on average) than aircraft whose Ratio was below 40% (229 versus 300 Market). John B. Spoor E: jspoor@assetinsight.com Anthony Kioussis E: akioussis@assetinsight.com Barbara A. Spoor, ASA E: bspoor@assetinsight.com Craig W. Cox, ASA E: ccox@assetinsight.com Andy Krantz, ASA E: akrantz@asswetinsight.com Francisco Picornell, ASA Candidate E: fpicornell@assetinsight.com 1424 W. Church Street Sandwich Airport Sandwich, IL Tel:

2 Large Jets Future Value Trend ( etrend TM ) and Current Market Demand Ø etrend TM information is designed to provide a general view of how aircraft prices are currently trending, and the effect this is likely to have on average transaction values 90 days hence. Ø Current Market Demand for each Make/Model represents an objective view based on that Make/Model s Average Market and the percentage of that Model s fleet listed for sale. During this past quarter, demand decreased slightly to 2.79 from 2.80, on our scale ranging from 1.00 (weak demand) to 5.00 (strong demand). etrend TM Current etrend TM Current Aircraft Make/Model 90-day Value Trend Market Aircraft Make/Model 90-day Value Trend Market Average Gain/(Loss) Demand Average Gain/(Loss) Demand Bombardier Dassault Challenger 600 ($24,500) «««Falcon 2000DX ($311,000) «««Challenger 601-1A ($35,500) «Falcon 2000EX EASy ($254,500) «««Challenger 601-3A ($51,000) ««Falcon 2000LX ($506,000) «««Challenger 601-3R ($30,000) ««««Falcon 2000LXS ($281,500) «««Challenger 604 ($294,500) «««Falcon 2000S ($448,500) «««Challenger 605 ($504,500) «««Embraer Challenger 650 ($515,500) «««Embraer Legacy 600 ($673,500) «««Challenger 850 ($39,000) «Embraer Legacy 650 ($739,500) ««Global 5000 ($278,000) «««Linneage 1000 ($1,095,000) ««Global 6000 ($661,000) «««LInneage 1000E ($1,785,000) «««Global Express ($438,000) «««Gulfstream Global Express XRS ($657,000) «««Gulfstream G300 ($211,000) «««Dassault Gulfstream G350 ($550,500) «««Falcon 7X ($813,500) «««Gulfstream G400 ($201,500) «««Falcon 900A ($210,500) ««Gulfstream G450 ($80,000) «««Falcon 900B ($166,500) «««Gulfstream G500 ($591,500) «««Falcon 900C ($254,000) «««Gulfstream G550 ($1,491,000) «««Falcon 900DX ($182,500) «««Gulfstream G650 ($1,562,150) «««Falcon 900EX ($325,652) «««Gulfstream G650ER ($847,500) «««Falcon 900EX EASy ($546,500) ««Gulfstream G-III ($22,000) ««Falcon 900LX ($658,500) «««Gulfstream G-IV ($71,000) «««Falcon 2000 ($320,500) «««Gulfstream G-IVSP ($64,000) «««Gulfstream G-V ($116,000) «««Excludes new production aircraft entering service during 2016 & 2017 Used Aircraft Ask Price vs. Transaction Price Spread Market Overview Large Jets Average Variance * 14% 12% 10% 8% Large Jets 12.5% Ø Sellers should note that Ask Price and final Transaction Value differential increased / worsened by 0.3%, and is now only slightly better than the group s worst figure of the decade Ø At 2.79 current Market Demand remains below average on our scale of 1.0 to 5.0 Ø The Quarter over Quarter average 90-Day Value etrend TM forecasts prices will fall nearly 24% faster during Q4, compared to Q % Transaction Year * Average Variance based on a Sample Set comparing the Ask Price against the Transaction Price Page 2 of 14

3 Large Jets Asset Quality Rating Scale to $3.50 $3.25 Maintenance Exposure* $ $ $2.75 Asset Quality Rating Key Very Outstanding Excellent Good Good Average or to to to to Greater Below Average Less than Maintenance Exposure - Reference Points 12-month Figures Historical Figures $ Millions $ Millions Worst Average Best Worst Best $3.33 $3.21 $2.82 $3.76 $2.58 * The accrued cost of future scheduled maintenance Average Ask Price Maintenance Exposure to Ask Price Ratio ("ETP Ratio") $15 $14 60% 50% 52.8% $13 $12 40% $11 $ % Ask Price - Reference Points Importance of the ETP Ratio 12-month Figures $ Millions Historical Figures $ Millions - As the ETP Ratio decreases, the aircraft's "value" increases (in relation to its Ask Price) Highest Average Lowest Highest Lowest - Aircraft whose ETP Ratio is above 40% are burdened, $14.27 $12.88 $11.58 $16.61 $11.58 on average, with excessive Maintenance Exposure Source: Amstat ( Maintenance Exposure to Ask Price Ratio ("ETP Ratio") & Market Model ETP Ratio Market Model ETP Ratio Market Model ETP Ratio Market Boeing Dassault Embraer Boeing BBJ 6.8% 317 F900LX 5.7% 374 Embraer Legacy % 371 Bombardier F2000LX 11.0% 192 Gulfstream CL % 271 F900EX EASy 13.0% 121 G % 245 Global XRS 34.6% 304 Falcon2000EX Easy 20.6% 16 G % 174 Global % 244 F900DX 21.5% 158 G % 148 CL % 251 F900B 31.8% 160 GV 42.3% 118 Global Express 95.0% 466 F900EX 30.1% 266 GIV-SP 66.0% 232 CL-601-3R 105.8% 464 Falcon % 190 GIV-SP (MSG3) 81.4% 292 CL-601-3A 191.7% 149 GIV 106.4% 351 CL-601-1A 197.9% 158 Ask Price and Market source: Amstat ( Page 3 of 14

4 Medium Jets Future Value Trend ( etrend TM ) and Current Market Demand Ø etrend TM information is designed to provide a general view of how aircraft prices are currently trending, and the effect this is likely to have on average transaction values 90 days hence. Ø Current Market Demand for each Make/Model represents an objective view based on that Make/Model s Average Market and the percentage of that Model s fleet listed for sale. During this past quarter, demand increased to 2.97 from 2.89, on our scale ranging from 1.00 (weak demand) to 5.00 (strong demand). etrend TM Current etrend TM Current Aircraft Make/Model 90-day Value Trend Market Aircraft Make/Model 90-day Value Trend Market Average Gain/(Loss) Demand Average Gain/(Loss) Demand Bombardier Embraer Challenger 300 ($676,000) «««Embraer 500 ($346,000) «««Challenger 350 ($256,500) «««Dassault Lear 40 $17,500 «««Falcon 50 ($25,000) «««Lear 40XR ($86,717) «««Falcon 50EX ($199,500) «««Lear 45 ($18,000) «««Gulfstream Lear 45XR ($134,500) «««Gulfstream G100 ($34,000) «««Lear 55 ($12,500) «««Gulfstream G150 ($149,500) «««Lear 60 ($48,000) «««Gulfstream G200 ($309,000) «««Lear 60SE ($64,000) «««Gulfstream G280 ($458,000) «««Lear 60XR ($479,000) «««Hawker Beechcraft Lear 70 ($112,000) «««Hawker 700A ($3,000) ««Lear 75 ($204,500) «««Hawker 750 ($246,500) «««Hawker 800A ($24,500) «««Citation Excel ($30,500) «««Hawker 800XP ($218,000) «««Citation Latitude ($436,000) «««Hawker 800XPi ($189,000) «««Citation Sovereign ($165,000) «««Hawker 850XP ($97,500) «««Citation Sovereign + ($542,500) «««Hawker 900XP ($136,500) «««Citation X ($144,500) «««Hawker 1000 ($63,500) «««Citation X+ ($1,143,000) «««Hawker 4000 ($329,000) «««Citation XLS+ ($238,000) «««Citaiton XLS ($138,000) «««Excludes new production aircraft entering service during 2016 & 2017 Used Aircraft Ask Price vs. Transaction Price Spread Market Overview Medium Jets Average Variance * 16% 14% 12% 10% 8% Medium Jets 14.8% Ø While only 0.1% worse than last quarter, the 14.8% differential between Ask Price and final Transaction Value remains the worst / highest among the four groups Ø Current Market Demand improved to near average at 2.97, on our scale of 1.0 to 5.0 Ø The Quarter over Quarter average 90-Day Value etrend TM forecasts prices will fall 3% slower during Q4, compared to Q Transaction Year * Average Variance based on a Sample Set comparing the Ask Price against the Transaction Price Page 4 of 14

5 Medium Jets Asset Quality Rating Scale to Maintenance Exposure* $ $1.30 $ $1.20 $1.10 Asset Quality Rating Key Very Outstanding Excellent Good Good Average or to to to to Greater Below Average Less than Maintenance Exposure - Reference Points 12-month Figures Historical Figures $ Millions $ Millions Worst Average Best Worst Best $1.29 $1.25 $1.22 $1.70 $0.85 * The accrued cost of future scheduled maintenance $3.50 Average Ask Price Maintenance Exposure to Ask Price Ratio ("ETP Ratio") 63.5% 60% $ % 50% $3.00 $ % 40% $ % Ask Price - Reference Points Importance of the ETP Ratio 12-month Figures $ Millions Historical Figures $ Millions - As the ETP Ratio decreases, the aircraft's "value" increases (in relation to its Ask Price) Highest Average Lowest Highest Lowest - Aircraft whose ETP Ratio is above 40% are burdened, $3.26 $3.09 $2.95 $4.80 $2.95 on average, with excessive Maintenance Exposure Source: Amstat ( Maintenance Exposure to Ask Price Ratio ("ETP Ratio") & Market Model ETP Ratio Market Model ETP Ratio Market Model ETP Ratio Market Bombardier Gulfstream Learjet 60XR 23.0% 298 Citation XLS 26.6% 156 G % 288 Challenger % 147 Citation XLS (MSG3) 27.1% 179 G % 144 Learjet 45XR 30.1% 631 Citation Excel 560XL 36.0% 155 Hawker Learjet % 584 Citation X (MSG3) 58.6% 439 Hawker 900XP 24.1% 185 Learjet 45 w/apu 49.0% 537 Citation VI 101.7% 88 Hawker 850XP 40.9% 188 Learjet % 338 Dassault Hawker 400XP 43.7% 177 Learjet % 505 Falcon 50EX 33.7% 310 Hawker Beechjet 400A 56.6% 197 Learjet 55C 147.6% 429 Falcon % 124 Hawker 800XP 61.4% 258 Falcon % 356 Hawker Beechjet % 230 Citation XLS+ (MSG3) 9.0% 183 Hawker 1000A 92.0% 611 Citation Sovereign % 138 Hawker 800A 135.0% 240 Ask Price and Market source: Amstat ( Page 5 of 14

6 Small Jets Future Value Trend ( etrend TM ) and Current Market Demand Ø etrend TM information is designed to provide a general view of how aircraft prices are currently trending, and the effect this is likely to have on average transaction values 90 days hence. Ø Current Market Demand for each Make/Model represents an objective view based on that Make/Model s Average Market and the percentage of that Model s fleet listed for sale. During this past quarter, demand decreased slightly to 2.90 from 2.93, on our scale ranging from 1.00 (weak demand) to 5.00 (strong demand). etrend TM Current etrend TM Current Aircraft Make/Model 90-day Value Trend Market Aircraft Make/Model 90-day Value Trend Market Average Gain/(Loss) Demand Average Gain/(Loss) Demand Beechcraft Premier 1A ($117,500) «««Citation CJ4 ($128,000) «««Premier I ($14,500) «««Citation Encore + ($45,500) ««Bombardier Citation Encore ($47,500) «««Lear 31A ($26,000) ««Citation M2 ($49,500) «««Lear 35 ($1,500) ««Citation Mustang ($37,000) «««Lear 35A ($21,000) «««Citation Ultra ($8,500) «««Lear 36 ($7,000) «««Citation II ($26,500) «««Lear 36A ($7,500) «««Citation III 650 ($7,000) «««Citation V ($69,500) «««Citation Bravo ($30,500) «««Citation VII ($27,000) «««Citation CJ1 ($24,000) «««Eclipse Citation CJ1+ ($35,500) «««Eclipse 500 ($20,500) ««Citation CJ2 ($88,500) «««Embraer Citation CJ2+ ($163,500) «««Embraer Phenom 100 ($129,500) «««Citation CJ3 ($275,000) «««Embraer Phenom 100E ($137,500) ««««Citation CJ3+ ($249,500) «««Embraer Phenom 300 ($189,500) «««Nextant Nextant XTi ($75,000) «««Excludes new production aircraft entering service during 2016 & 2017 Used Aircraft Ask Price vs. Transaction Price Spread Market Overview Small Jets Average Variance * 9% 8% 7% 6% 5% Small Jets 7.9% Ø Ask Price and final Transaction Value differential continues to be the best / lowest among the four groups and has now improved to the 2015 level. Ø Market Demand remained below average, falling to 2.90 from 2.93, on our scale of 1.0 to 5.0 Ø The Quarter over Quarter average 90-Day Value etrend TM forecasts prices will fall 13% faster during Q4, compared to Q Transaction Year * Average Variance based on a Sample Set comparing the Ask Price against the Transaction Price Page 6 of 14

7 Small Jets Asset Quality Rating Scale to $0.80 $0.75 $0.70 $0.65 Maintenance Exposure* $ $0.60 Asset Quality Rating Key Very Outstanding Excellent Good Good Average or to to to to Greater Below Average Less than Maintenance Exposure - Reference Points 12-month Figures Historical Figures $ Millions $ Millions Worst Average Best Worst Best $0.75 $0.67 $0.64 $1.07 $0.57 * The accrued cost of future scheduled maintenance Average Ask Price Maintenance Exposure to Ask Price Ratio ("ETP Ratio") $2.2 70% 60% 67.9% $2.0 $ % 40% $1.8 30% Ask Price - Reference Points 12-month Figures Historical Figures $ Millions $ Millions Highest Average Lowest Highest Lowest $2.18 $2.03 $1.87 $2.21 $1.70 Source: Amstat ( Importance of the ETP Ratio - As the ETP Ratio decreases, the aircraft's "value" increases (in relation to its Ask Price) - Aircraft whose ETP Ratio is above 40% are burdened, on average, with excessive Maintenance Exposure Maintenance Exposure to Ask Price Ratio ("ETP Ratio") & Market Model ETP Ratio Market Model ETP Ratio Market Model ETP Ratio Market Beechcraft Premier 1A 44.5% 226 Citation CJ3 13.5% 188 Citation Bravo 57.3% 248 Premier % 165 Citation CJ2+ 525A 16.3% 161 Citation V % 161 Bombardier Citation Encore 25.2% 133 Citation II 98.9% 267 Learjet % 487 Citation CJ2 25.4% 189 Citation ISP 126.1% 408 Learjet 35A 175.5% 563 Citation Mustang % 294 Embraer Citation CJ % 212 Phenom % 283 Citation CJ4 525C 7.1% 108 Citation V Ultra 50.0% 255 Phenom % 270 Ask Price and Market source: Amstat ( Page 7 of 14

8 Turboprops Future Value Trend ( etrend TM ) and Current Market Demand Ø etrend TM information is designed to provide a general view of how aircraft prices are currently trending, and the effect this is likely to have on average transaction values 90 days hence. Ø Current Market Demand for each Make/Model represents an objective view based on that Make/Model s Average Market and the percentage of that Model s fleet listed for sale. During this past quarter, demand remained steady at 3.15, on our scale ranging from 1.00 (weak demand) to 5.00 (strong demand). Aircraft Make/Model etrend TM 90-day Value Trend Average Gain/(Loss) Current Market Demand 208 Caravan (2001+) ($16,500) «««208 Caravan (2008+) ($63,000) «««208B Grand Caravan (2001+) ($20,000) «««208B Grand Caravan (2008+) ($32,000) «««Beech King Air 350 ( ) ($14,000) «««King Air 350i ($252,000) ««««Piaggio Piaggio Avanti P180 II ($88,500) ««Pilatus Pilatus PC and 45 ($22,000) «««Pilatus PC ($1,000) ««««Pilatus PC-12-47E NG ($29,500) ««««Socata Socata 700A TBM ($21,000) «««Socata 700B TBM ($8,000) «««Socata Pack TBM 850 ($34,000) «««Excludes new production aircraft entering service during 2016 & 2017 Used Aircraft Ask Price vs. Transaction Price Spread Market Overview Turboprops Average Variance * 11% 9% 7% 5% Turboprops 9.2% Ø Ask Price and final Transaction Value differential remained unchanged, and the best figure generated by Turboprop since 2013 Ø Market Demand remains above average at 3.15 on our scale of 1.0 to 5.0 Ø The Quarter over Quarter average 90-Day Value etrend TM forecasts prices will fall over 18% slower during Q4, compared to Q % Transaction Year * Average Variance based on a Sample Set comparing the Ask Price against the Transaction Price Page 8 of 14

9 Turboprops Asset Quality Rating Scale to Maintenance Exposure* $0.60 $ $ $0.50 Asset Quality Rating Key Very Outstanding Excellent Good Good Average or to to to to Greater Below Average Less than Maintenance Exposure - Reference Points 12-month Figures Historical Figures $ Millions $ Millions Worst Average Best Worst Best $0.61 $0.58 $0.55 $0.70 $0.44 * The accrued cost of future scheduled maintenance $1.60 Average Ask Price Maintenance Exposure to Ask Price Ratio ("ETP Ratio") 60% $ % 49.1% $ % $ % Ask Price - Reference Points Importance of the ETP Ratio 12-month Figures Historical Figures - As the ETP Ratio decreases, the aircraft's "value" increases $ Millions $ Millions (in relation to its Ask Price) Highest Average Lowest Highest Lowest - Aircraft whose ETP Ratio is above 40% are burdened, $1.58 $1.56 $1.53 $1.97 $1.46 on average, with excessive Maintenance Exposure Maintenance Exposure to Ask Price Ratio ("ETP Ratio") & Market Model ETP Ratio Market Model ETP Ratio Market Model ETP Ratio Market Beechcraft Beechcraft Pilatus KingAir Pre % 112 Beech B-1900C 96.6% 526 Pilatus PC % 99 KingAir B Post % 330 KingAir C % 645 Piper KingAir Post % 259 Piaggio Piper Meridian 25.8% 133 KingAir B Pre % 219 Piaggio P-180 II 51.0% 194 KingAir % 201 Piaggio P % 167 Ask Price and Market source: Amstat ( Page 9 of 14

10 Aircraft analyzed maintenance analytics Following is a list of the aircraft models researched to produce this Market Report s maintenance analytics: Large Jets Medium Jets Small Jets Turboprops Beechcraft-Hawker: Beechjet 400 Premier 1 King Air C90 Beechjet 400A Premier 1A King Air B-200 Hawker 400XP King Air 300 Hawker 800A; 800XP King Air 350 Hawker 850XP B-1900C Hawker 900XP Hawker 1000A Boeing: BBJ Bombardier: CL-601-1A; 3A; -3R; -SE Challenger 300 Learjet 31 CL-604 Learjet 45; 45 w/apu Learjet 35A CL-605 Learjet 45XR Global 5000 Learjet 55-55A Global Express Learjet 55C Global XRS Learjet 60 Learjet 60XR : Citation Excel Citation CJ1+ Citation Sovereign Citation CJ2 Citation VI Citation CJ3 Citation X (MSG3) Citation CJ4 Citation XLS; XLS (MSG3) Citation Bravo Citation XLS+ (MSG3) Citation Encore Citation I-SP Citation II Citation Mustang Citation V; Citation V Ultra Dassault Falcon Jet: F2000 Falcon 20-5 F2000EX; F2000EX Easy Falcon 50 F2000DX; F2000LX Falcon 50EX F900; F900B; F900C F900EX; F900EX Easy F900DX; F900LX Embraer: Legacy 600 Phenom 100 Phenom 300 Gulfstream: G-IV G-100 GIV-SP & GIV-SP (MSG3) G-150 GV G-200 G350 G450 G550 Piaggio: P-180; P180 II Pilatus: PC-12 Piper: Malibu Meridian Page 10 of 14

11 Analysis Methodology Maintenance Analytics has developed a proprietary Asset Grading System Process TM (AGSP) that objectively evaluates assets relative to their Optimal Maintenance Condition and provides an easy- to-understand, uniform, yet robust, set of data that can be acted upon, on a timely basis, to protect and/or enhance an asset s financial performance. The AGSP is based on patented algorithms analyzing current age, the hours and cycles on an aircraft s Major Sectors airframe, engine(s), propeller(s), APU, paint, and interior as well as the cost to repair or replace parts with no defined life. The AGSP derives an index (the Asset Insight Index ) providing an objective measure of an aircraft s current maintenance status and its related Financial Exposure going forward that is, the financial liability accrued with respect to future scheduled maintenance events. The Asset Insight Index is comprised of three factors that evaluate two aspects of an aircraft s maintenance, its Asset Quality Rating and its Maintenance Exposure Value. The Asset Quality Rating is computed by averaging the aircraft s Maintenance Rating and Financial Rating, while the Maintenance Exposure Value measures an aircraft s accrued / consumed financial liability with respect to future scheduled maintenance events, presenting such information in financial terms. Asset Quality Rating and the Factors Comprising the "Asset Insight Index" u Asset Quality Rating The Asset Quality Rating allows any aircraft s maintenance status to be directly compared to any other aircraft s maintenance status, by virtue of the Asset Insight standardized scale. The Asset Quality Rating is computed by averaging the aircraft s Maintenance Rating ( ATC Score ) and Financial Rating ( ATFC Score ) explained in the following two sections and is based on a scale ranging from to , the latter reflecting a newly produced aircraft (see scale below) Poor Asset Quality Below average asset quality due to upcoming scheduled maintenance Most aircraft will Score within this range, representing good asset quality Very good asset quality (usually associated with recent production aircraft) Exceptional asset quality (typical of new, or nearly new, production aircraft) Maintenance Rating Asset Technical Condition Score ( ATC Score ) The Asset Technical Condition Score ( ATC Score ) utilizes the Asset Grading System Process (Patent Pending) developed by Asset Insight, Inc. to objectively evaluate and grade an aircraft's maintenance status, on a standardized scale, relative to its Optimal Maintenance Condition (achieved on the day it came off the production line), utilizing the aircraft's (standard/typical) Scheduled Maintenance Program. The ATC Score is based on a scale ranging from to , the latter reflecting a newly produced aircraft (see scale below). Page 11 of 14

12 v Financial Rating Asset Technical Financial Condition Score ( ATFC Score ) The Asset Technical Financial Condition Score ( ATFC Score ) evaluates and grades the Aircraft's financial rating relative to its Optimal Maintenance Condition based on the Aircraft's ATC Score (see Maintenance Rating above). The ATFC Score is based on a scale from to , the latter reflecting a newly produced aircraft (see scale below). To score each aircraft make/model, the average cost for completing each maintenance event comprising the ATC Maintenance Program is determined. Having compiled the aircraft's maintenance history, the time (calendar, flight hours or cycles) accumulated toward each individual scheduled/anticipated maintenance event is used to determine the aircraft's ATFC Score. The Financial Rating (ATFC Score) differs from the Maintenance Rating (ATC Score). While the ATC Score evaluates and grades an aircraft's maintenance status relative to its Optimal Maintenance Condition, the ATFC Score grades an aircraft's financial condition relative to its Optimal Maintenance Condition, meaning the ATFC Score is weighted by the estimated cost to complete each maintenance event. Accordingly, the Maintenance Rating is likely to differ from the Financial Rating. For example, if an aircraft had only two maintenance components, and if one component was three-quarters of the way toward its overhaul while the second was one-quarter of the way toward its overhaul, their combined ATC Score would be 5.000, based on the following calculation: (75% + 25%) / 2 X Perfect Score (10.000) = However, if the first of these components has an overhaul cost of $1,000, while the second has an overhaul cost of $10,000, their combined ATFC Score would be (see below). Remaining Useful Life Overhaul Cost Remaining Financial Value Component #1 75% $1,000 $750 Component #2 25% $10,000 $2,500 $11,000 $3,250 ATFC Score Calculation Methodology Aircraft s Financial Ratio ($3,250 / $11,000) X Perfect Score (10.000) = Maintenance Exposure Asset Technical Financial Exposure Value ( ATFE Value ) The Asset Technical Financial Exposure Value ( ATFE Value ) measures the aircraft s financial exposure based on its maintenance condition the liability accrued / consumed with respect to future scheduled maintenance events and presents this information in financial terms, as follows: Page 12 of 14

13 To derive an aircraft's ATFE Value, the estimated cost for completing each event comprising the ATC Maintenance Program has been established. Having compiled an aircraft's maintenance history, the time (flight hours, landings/cycles, and/or calendar period) accumulated toward each individual scheduled/anticipated maintenance event is used to compute the dollar liability accrued toward that event, with the ATFE Value representing the total accrued liability toward future maintenance events. Used Aircraft Ask Price vs. Transactional Price Spread Detailed analytics are used to determine the ask price of an aircraft and its bid/ask spreads, including, but not limited to, items such as market supply, demand, saturation, aircraft age, competition, utility, damage, economics, financing, trade, exclusivity, compulsion to sell, buyer / seller market strength, etc. Future Value Trend ( etrend TM ) and Current Market Demand etrend TM information is displayed by Make/Model and is intended to provide a general view of how aircraft prices are currently trending and the effect this is likely to have on average transaction values 90 days hence. Current Market Demand for each Make/Model is an objective view based on that Make/Model s Average Market and the percentage of that Model s fleet listed for sale. All figures EXCLUDE new production aircraft entering service during 2016 and Ask Price vs. Asset Exposure to Ask Price Ratio ( ETP Ratio ) Graph The graph displays the relationship between each aircraft group s Asset Exposure to Ask Price Ratio (the ATFE Value divided by the Average Ask Price) and the Average Ask Price. In general, as aircraft Ask Prices rise, the Ratio should decrease all other factors being equal. However, the Ratio s relationship to Ask Price is not an absolute inverse correlation. Aircraft with a greater or lesser maintenance-related Financial Exposure, but with the same Ask Price, may replace aircraft listed for sale during any given month. Accordingly, it is possible for both the Ratio and the Ask Price lines to move in the same direction. Asset Exposure to Ask Price Ratio ( ETP Ratio ) The Asset Exposure to Ask Price Ratio ( ETP Ratio ) is calculated by dividing the aircraft s ATFE Value (the financial liability accrued with respect to future scheduled maintenance events) by its Ask Price. Accordingly, as the ETP Ratio decreases, the aircraft s value increases (in relation to its Ask Price). Aircraft whose ETP Ratio is 40% or greater are believed to have accrued an excessive level of maintenance Asset Exposure (ATFE Value) in relation to their Ask Price. ETP Ratios are only available in cases where a statistically significant sample of aircraft Ask Price and maintenance status can be derived for a specific Make / Model. Page 13 of 14

14 General Information ( provides asset evaluation and financial optimization services. The company s Asset Grading System Standard (Patent Pending), and related analyses, provides the ability to translate the asset s technical condition into easy-to-understand, actionable financial information. Asset Insight is independent of any manufacturer, appraisal firm, financial services firm, or technical services facility, enabling it to provide an unbiased view of an asset s condition with respect to its technical status and related financial exposure. The company is managed by business, technical and financial professionals with significant experience in aviation asset management. This Analysis is not intended to represent a technical evaluation of any Aircraft. Further, the reader, or any party using information contained in this Report, should recognize that this Report is limited in scope, and that discrepant conditions may exist in the analyzed aircraft that were not known by. The Asset Insight Index and its ATC Score, ATFC Score, and ATFE Value components are based upon the aircraft maintenance condition information reviewed by as of a certain date. Running an analysis on any aircraft utilizing a different date, revised maintenance data and/or utilization figures will likely generate different results. makes no representation concerning the value or condition of any aircraft. Additionally, does not warrant the accuracy of the information obtained by that has been used to produce this Report. Copyright Notice The information contained in this document may be copied for use in presentations, proposals, or other business matters related to this Aircraft, provided that no money is exchanged. Additionally, the cover sheet for all such copies shall contain the following notice in readable, bold type: The attached material is the proprietary information of P.O. Box 27740, Las Vegas, NV Telephone: Page 14 of 14