Aircraft and Aircraft Engines Held for Lease or Sale

6 Months Ended

Jun. 30, 2014

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

Aircraft and Aircraft Engines Held for Lease or Sale

3.Aircraft and Aircraft Engines Held for Lease or Sale

(a)Assets Held for Lease

At June 30, 2014 and December 31, 2013, the Company’s aircraft and aircraft engines, which were on lease or held for lease, consisted of the following:   

	June 30, 2014					December 31, 2013
	Number		% of net			Number		% of net
Model	owned		book value			owned		book value
Bombardier Dash-8-300		9		21	%		9		23	%
Bombardier CRJ-700		3		18	%		-		-
Fokker 100		7		13	%		7		19	%
Bombardier Dash-8-Q400		3		15	%		3		17	%
Bombardier CRJ-705		1		10	%		1		12	%
Saab 340B Plus		6		8	%		6		8	%
Fokker 50		9		8	%		10		10	%
General Electric CF34-8E5 engine		2		4	%		3		6	%
Saab 340B		1		1	%		4		4	%
Tay 650-15 engine		1		1	%		1		1	%
General Electric CT7-9B engine		2		1	%		2		-
Saab 340A		1		-			1		-

Net book value at June 30, 2014 and December 31, 2013 excludes the Company’s Saab 340A aircraft, which is subject to a finance lease.  Net book value at December 31, 2013 also excludes the Company’s two General Electric CT7-9B engines, which were subject to finance leases at that time.

As described in Note 1, the Company recorded a $6,800,000 impairment charge on five of its Fokker 100 aircraft on June 30, 2014, which has been reflected in the carrying value of the aircraft on that date.

During the second quarter of 2014, the Company used cash of $9,000 for acquisitions related to aircraft purchased during the first quarter.  During the second quarter of 2013, the Company used cash of $2,323,000 for the purchase and capital improvement of aircraft and engines.

During the second quarter of 2014, the Company recorded a net gain of $762,500 related to the sale of three Saab 340B aircraft and a General Electric CF34-8E5 Engine.  During the second quarter of 2013, the Company recorded gains of $1,871,000 upon the sale of a Dash-8-100 aircraft and $73,300 related to the finance lease of a General Electric CB7-9B engine.

During the second quarter of 2014, the Company extended the leases for five of its assets.   During the same period, six Saab 340B Plus aircraft and two General Electric CT7-9B engines were returned by a customer when it ceased operations.

At June 30, 2014, twenty-one of the Company’s assets, comprised of six Fokker 100 aircraft, six Saab 340B Plus aircraft, three Fokker 50 aircraft, one Dash-8-300 aircraft, two General Electric CF34-8E5 engines, two General Electric CT7-9B engines and one Tay 650-15 engine, which represented 31% of the net book value of the Company’s aircraft and engines, were off lease.

As discussed in Note 8, the Company sold a Fokker 50 aircraft in July 2014.  The Company has a signed letter of intent for the lease of two Saab 340B Plus aircraft and a deposit for one of the aircraft.  The Company also has a signed lease and deposit for the lease of a Fokker 100 aircraft, as well as a signed letter of intent and deposit for the lease of a second Fokker 100 aircraft to the same customer.  The Company expects to deliver all four aircraft during the third quarter of 2014.  The Company also has a signed purchase agreement and non-refundable deposit for the sale of a Fokker 50 aircraft and expects to deliver the aircraft during the third quarter of 2014.  The Company is seeking re-lease opportunities for the other off-lease assets, other than the Tay 650-15 engine that is being held as a spare and used in connection with required maintenance on the Company’s Fokker 100 aircraft.

(b)Assets Held for Sale

Assets held for sale include two airframes.  During the three months ended June 30, 2014 and 2013, the Company received $10,500 and $171,700, respectively, from the sale of parts belonging to the two airframes.  No adjustments to the carrying value of the Company’s assets held for sale were recorded during the three months or six months ended June 30, 2014 and 2013.