Aircraft and Aircraft Engines Held for Lease or Sale

9 Months Ended

Sep. 30, 2013

Aircraft and Aircraft Engines Held for Lease or Sale [Abstract]

Aircraft and Aircraft Engines Held for Lease or Sale

2.Aircraft and Aircraft Engines Held for Lease or Sale

(a)Assets Held for Lease

At September 30, 2013 and December 31, 2012, the Company’s aircraft and aircraft engines, which were on lease or held for lease, consisted of the following:   

	September 30, 2013					December 31, 2012
	Number		% of net			Number		% of net
Model	owned		book value			owned		book value
Bombardier Dash-8-300		9		26	%		9		25	%
Fokker 100		7		22	%		7		22	%
Bombardier Dash-8-Q400		3		19	%		3		19	%
Fokker 50		11		12	%		13		14	%
Saab 340B Plus		6		9	%		4		6	%
General Electric CF34-8E5 engine		3		7	%		3		7	%
Saab 340B		4		4	%		5		5	%
Tay 650-15 engine		2		1	%		-		-
General Electric CT7-9B engine		2		-			1		-
Saab 340A		1		-			1		-
deHavilland DHC-8-100		-		-			1		1	%
deHavilland DHC-6		-		-			1		1	%

Net book value excludes the Company’s Saab 340A aircraft and the two General Electric CT7-9B engines, which are subject to finance leases.

During the third quarter of 2013, the Company purchased a Saab 340B Plus aircraft on lease to an existing customer, with a lease term expiring in the second quarter of 2018.  During the third quarter of 2013, the Company used cash of $2,545,400 for the purchase and capital improvement of aircraft.

During the quarter ended September 30, 2013, the Company sold a Fokker 50 aircraft and a deHavilland DHC-6 aircraft and recorded gains of $523,400 and $1,461,800, respectively.

During the third quarter of 2013, the Company leased two of its Saab 340B aircraft to a new customer, each with a term of 48 months, and re-leased a General Electric CF34-8E5 engine to a previous customer under a short-term lease.  The Company also extended the lease for another General Electric CF34-8E5 engine on lease to the same customer.  Both of these engines were returned to the Company in the fourth quarter of 2013.

In August 2013, the lessee of three of the Company’s Fokker 100 aircraft was declared bankrupt and the lessee returned the aircraft to the Company. In connection with the bankruptcy, the Company recorded a bad debt expense of $357,600.

At September 30, 2013, fourteen of the Company’s assets, comprised of four Fokker 50 aircraft, one Saab 340B aircraft, seven Fokker 100 aircraft and two Tay 650-15 engines, which represented 27% of the net book value of the Company’s aircraft and engines, were off lease.  One of the Fokker 100 aircraft was delivered to a new lessee in October 2013 for a lease term expiring in November 2016.  The Company is seeking re-lease opportunities for the other off-lease assets, other than the two Tay 650-15 engines that are being held as spares and used in connection with required maintenance on the Company’s Fokker 100 aircraft.

 (b)Assets Held for Sale

Assets held for sale are carried at their estimated fair values, less costs to sell.  At September 30, 2013, such assets consisted of two Saab 340B airframes and one General Electric CT7-9B engine. The various components of the airframes are in the process of being sold pursuant to consignment agreements executed with a maintenance vendor.  During the third quarter of 2013, the Company realized $73,600 of proceeds from sales of airframe parts.  The Company is seeking sales opportunities for the engine.  No adjustments to the carrying value of the Company’s assets held for sale were recorded during the three months or nine months ended September 30, 2013 and 2012.