Aircraft and Aircraft Engines Held for Lease or Sale

9 Months Ended

Sep. 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 September 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:

	September 30, 2014					December 31, 2013
	Number		% of net			Number		% of net
Model	owned		book value			owned		book value
Bombardier Dash-8-300		8		20	%		9		23	%
Bombardier CRJ-700		3		19	%		-		-
Bombardier Dash-8-Q400		3		16	%		3		17	%
ATR 42-600		1		11	%		-		-
Bombardier CRJ-705		1		11	%		1		12	%
Saab 340B Plus		6		7	%		6		8	%
Fokker 50		6		6	%		10		10	%
Fokker 100		2		3	%		7		19	%
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		-

Assets subject to finance leases are not included in the net book value of assets held for lease.  Therefore, the Company’s single Saab 340A aircraft, which is subject to a finance lease, is not included in the net book value calculations as of September 30, 2014 and December 31, 2013, and the Company’s two General Electric CT7-9B engines, which were subject to finance leases, are not included in the net book value calculation as of December 31, 2013.

During the third quarter ended September 30, 2014, the Company recorded an impairment charge of $2,906,400 on its two Fokker 100 aircraft that are held for lease based on appraised values.

During the third quarters of 2014 and 2013, the Company used cash of $15,020,600 and $2,545,400 for the purchase and capital improvement of aircraft and engines.

During the third quarter of 2014, the Company recorded net gains totaling $1,809,400 related to the sale of two Fokker 50 and one Bombardier Dash-8-300 aircraft. During the third quarter of 2013, the Company recorded gains of $1,985,200 upon the sale of a deHavilland DHC-6 aircraft and a Fokker 50 aircraft.

During the third quarter of 2014, the Company extended the leases for three of its assets and re-leased a Fokker 100 aircraft and a Saab 340B Plus aircraft that were off lease on June 30, 2014.

At September 30, 2014, eleven of the Company’s assets that were off lease, representing 14% of the net book value of the Company’s aircraft and engines, were held for lease and were comprised of one Fokker 100 aircraft, five Saab 340B Plus aircraft, two General Electric CF34-8E5 engines, two General Electric CT7-9B engines and one Tay 650-15 engine.

As discussed in Note 8, in October 2014, the Company sold a Saab 340A aircraft and a Saab 340B aircraft and delivered a Fokker 100 aircraft to the same customer that took delivery of another Fokker 100 aircraft in the third quarter of 2014.  The Company has a signed letter of intent and deposit for the lease of a Saab 340B Plus aircraft and expects to deliver the aircraft in November 2014.  The Company is seeking re-lease opportunities for its other off-lease assets that are held for lease, 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 Saab 340B airframes as well as five Fokker 100 aircraft and a Fokker 50 aircraft.

During the three months ended September 30, 2014 and 2013, the Company received $48,100 and $73,600, respectively, from the sale of parts belonging to the two airframes, which proceeds reduced their carrying value.

As discussed in Note 1, during the second quarter of 2014, the Company recorded a $6,800,000 impairment charge related to five Fokker 100 aircraft.  During the third quarter, the Company recorded an additional impairment charge of $8,478,900 related to these aircraft, as well as a $333,400 impairment charge related to a Fokker 50 aircraft, which are recorded at their estimated realizable value net of disposal costs.  At September 30, 2014, these aircraft were reclassified as held for sale on the Company's balance sheet.