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April 28, 2005

Mr. Rufus Decker, Accounting Branch Chief

U. S. Securities and Exchange Commission

Washington, D. C. 20549 0510

Re:  Form 10 K for the
fiscal year ended December 31, 2004, File No. 1 15369

Dear Mr. Decker:

We are in receipt of your letter dated April 7, 2005.  The deadline to respond to your letter was
extended in a phone conversation with Meagan Caldwell to April 28, 2005.

The Company acknowledges that:

•                  The
Company is responsible for the adequacy and accuracy of the disclosure in their
filings;

•                  Staff
comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and

•                  The
Company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.

Item 1.
Business

Aircraft Equipment Leasing, page 3

2.                                 Please
expand your disclosure to discuss the dependence of your business upon a single
customer, or a few customers, the loss of any one or more of which would have a
material adverse effect on your business.
Refer to Item 101(c)(vii) of Regulation S-K.

Response:

As disclosed on page 5, “as of December 31, 2004 the Company
had 43 lessees of commercial aircraft engines, aircraft and other
aircraft-related equipment in 26 countries”.
At this time, the Company does not believe it is dependent on a single
customer or a few customers the loss of which would have a material adverse
effect on the Company’s revenues.

The Company will include a comment about customer dependence similar to
the above in future filings and will continue to monitor its customer base for
additional disclosures when necessary.

Item 5.
Market for Registrant’s Common Equity and Related Stockholders Matters, page 8

3.                                 Please expand your disclosure to include
information relating to your dividend policy and your ability to pay such
dividends, including any restrictions on paying dividends imposed on you by
your debtors.  Refer to Item 201(c) of
Regulation S-K.

Response:

As
disclosed on page 8 under Item 5, “During the years ended December 31,
2004 and 2003 the Company did not pay cash dividends to Company stockholders”.  In addition to the foregoing disclosure
future filings will also make the following comments:

The
Company has not made any dividend payments since its inception as all available
cash has been utilized for the business.
The Company has no intention of paying dividends in the foreseeable
future.  In addition, certain of the
Company’s debt facilities contain negative covenants which prohibit the Company
from paying any dividends or making distributions of any kind with respect to
its capital stock.

Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations

Liquidity and Capital Resources, page 14

4.                                 Please expand your disclosure to discuss the
effects your restricted cash has and will likely have on your current and
future liquidity.

Response:

At
December 31, 2004 the Company had $46 million in cash which is described
on the face of the balance sheet as “restricted”.  The cash is collected from lessees for their
use of the engine and is intended to cover the cost of shop visits and the “using
up” of parts which have limited lives and will need to be replaced at regular
intervals.  As discussed in Note 1(k),
this cash is restricted in connection with certain debt facilities as to its
use.  When the leased engines pledged to
these facilities are repaired or parts replaced, the cash is used to cover
these costs.  The collection of the cash
occurs monthly and the use of this cash occurs from time to time throughout the
year.  This procedure has been in place
for many years and has not impacted the Company’s liquidity.  As a consequence, the Company does not
believe that the restricted cash has any material effect on current or future
liquidity since it is not available for general corporate purposes.  In the future, the Company’s disclosure
regarding its restricted cash will include the following:

As
discussed in Note 1(k), the Company’s restricted cash balances represent
amounts required to be held in designated accounts by some of the Company’s
lenders.  Under these facilities, cash
paid by lessees for maintenance reserves and security deposits is required to
be held and used only for engine maintenance and repair and the return or
application of security deposits, as the case may be.  See Note 1(f) for a further discussion
of the accounting for maintenance reserves.

5.                                 Please expand your disclosure to include the
amount you expect to invest in equipment in 2005 and how you anticipate funding
these investments.

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Response:

As
disclosed on page 15, the Company has capital commitments to purchase
approximately $18.2 million of equipment during 2005 which will be funded out
of cashflows from operations and borrowings on its revolving credit
facility.  It expects that it may
purchase additional equipment during 2005 if there are opportunities to lease
such equipment at desirable rates and terms, and provided the Company can
obtain sufficient financing.  As
disclosed on page 14, the Company funds the purchase of such equipment
through borrowings and cashflows from operations.

Since
the Company has no firm plans or commitments, other than those already
disclosed, the Company believes that there is no further disclosure required to
be made for the 2004 Annual Report on Form 10-K.  However, going forward, if the Company has
firm plans for capital expenditures and the financing is available at the
balance sheet date, appropriate disclosure will be made.

6.                                 You have disclosed on page 12 that you
currently benefit from the Extraterritorial Income Exclusion regulations, which
significantly reduce your effective tax rate. You further disclose that this
benefit is being phased out due to recent legislation. Please expand your
disclosure to discuss the likely impact this will have on your liquidity and
results of operations.

Response:

The
phase out of the Extraterritorial Income Exclusion regulations will not affect
the Company’s liquidity as it has significant net operating losses as disclosed
in Note 6 and more fully discussed in the response to comment 15 in this
letter.  Therefore, the Company does not
expect to pay federal income taxes for the foreseeable future.  As disclosed on page 19, the Company
expects that its effective tax rate will increase over the coming years due to
the loss of this benefit; however, it is not possible to quantify the impact on
future years tax rates since it is based in part on the Company’s future
profitability.  The impact of the benefit
on the Company’s current tax rate is disclosed in Note 6 of the Consolidated
Financial Statements.  When the Company
is able to quantify the impact of the phase-out, it will make appropriate
disclosures in future filings.

7.                                 Please revise your table of contractual cash
obligations to include estimated interest payments of your debt.  Because the table is aimed at increasing
transparency of cash flow, we believe these payments should be included in the
table. Please also disclose any assumptions you made to derive these amounts.

Response:

The
Company’s historical interest expense has been separately disclosed and has
been relatively constant over the last three (3) years.  The Company believes this trend will continue
as long as its outstanding debt remains relatively constant.

However,
the Company will include a table as shown below along with explanatory
information as to how the amounts were derived as appropriate in future
filings.  The table as shown includes the
estimated interest payments on the Company’s debt as of December 31, 2004.

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  Payment due by period

  (in thousands)

  Total

  Less

  than 1

  year

  1-3 Years

  3-5 Years

  More

  than 5

  Years

  Long-Term
  Debt Obligations

  $

  369,840

  $

  37,839

  $

  147,286

  $

  179,553

  $

  5,162

  Interest
  Payments under Long-Term Debt

  62,892

  18,452

  30,672

  13,329

  439

  Operating
  Lease Obligations

  441

  441

  —

  —

  —

  Purchase
  Obligations

  18,174

  18,174

  —

  —

  —

  Total

  $

  451,347

  $

  74,906

  $

  177,958

  $

  192,882

  $

  5,601

The
Company has estimated the interest payments due under long-term debt by
applying the interest rates applicable at December 31, 2004 to the
remaining debt, adjusted for the estimated debt repayments identified in the
table above.  Actual interest payments
made will vary due to changes in the rates for one-month LIBOR and commercial
paper as applicable.  The interest
estimate excludes the effect of any hedges in place at the balance sheet date.

Related Party and Similar
Transactions, page 17

8.                                 You disclosed that avioserv purchased one
engine from you during the year ended December 31, 2004. Please expand
your disclosure here and in your notes to the financial statements to include
the gain or loss recorded related to this transaction.

Response:

The
sale of the engine to avioserv resulted in a gain of $260,000.  This amount is less than 1% of revenue and
not considered material.  However, the
Company will disclose the gain both in Item 7 and in the Notes to Consolidated
Financial Statements in its future filings.

9.                                 You disclosed that Aloha recently filed for
reorganization under Chapter 11 of the Bankruptcy Code and that you expect
their obligations under the guarantees to be discharged.  Please expand your disclosure here and in
your notes to the financial statements to discuss the following:

•                  any amounts written off, including the period
in which it was recorded and the line item it was recorded in your statements
of income and

•                  any remaining balances recorded on your
balance sheet.

Please include in your explanation support for your
accounting treatment, if applicable.

Response:

As
disclosed on page 17 and Note 12, the Company leases five aircraft to
IslandAir.  Four of the leases are
guaranteed by Aloha, IslandAir’s former parent.
The five leases are still performing and, as of December 31, 2004,
the lessee was current on all its obligations.
As a result, there are no

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amounts
included in “Operating lease related receivable” and no provision has been made
for any loss.  The Company continues to
monitor the situation, as it does for all lessees, and, should the situation
change, will make appropriate disclosure in its future filings both in Item 7
and in the Notes to Consolidated Financial Statements.

Item 9A. Controls and
Procedures, page 20

10.                           Please disclose whether there have been any
changes in your internal controls and procedures during the most recent
quarter.  See Item 308 of Regulation S-K.

Response:

The
Company disclosed in the second paragraph of this item that there had been no
significant changes in internal controls since the period of the last
evaluation.  Therefore, the Company does
not believe any additional disclosure is necessary.

Financial Statements

Report of Independent Registered Public Accountants, page 30

11.                           Your auditor’s report does not appear to
comply with PCAOB Standard No. 1.
Your auditor’s report indicates that they conducted their audit in
accordance with “auditing standards of the Public Company Accounting Board
(United States)” rather than in accordance with “the standards of the Public
Company Accounting Oversight Board (United States).” Please amend your filing
by obtaining from your auditors a revised opinion, since there is a distinction
between the two references. Refer to PCAOB Standard No. 1, Exhibit 2.

Response:

The
Company has received an amended KPMG report (copy attached) with the wording
change as follows:

We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.  We believe our audits
provide a reasonable basis for our opinion.

Consolidated Statements
of Income, page 32

12.                           You have recorded $4.1 million relating to a
net gain on debt prepayment as revenue.
You disclosed on page 12 that this gain was attributable to
prepaying a revolving credit facility at a discount and recording this based on
the guidance under SFAS 145.  Please tell
us the facts and circumstances that lead you to determine that is transaction
should be recorded as revenue rather than net interest and finance costs. If
after considering the above, you now believe that it

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represents net interest and
finance costs, revise your statements of income and all related disclosures
accordingly.  Please also ensure that you
include that describes the restatement.

Response:

By
way of background, equipment leasing companies make money by buying equipment
on a leveraged basis and leasing at rates high enough to create a gross
operating margin.  The operating margin
is equal to revenues less interest expense.
The Company buys, finances and leases a specific niche product, aircraft
engines.  The Company believes its
revenues are the sum of its leasing revenues, gains or losses on sales of the
engines or other aviation equipment other income and gain or loss on the
refinancing of debt facilities.

FAS
145 was effective for fiscal years beginning after May 15, 2002, with
early application encouraged.  The
application of FAS 145 meant that the provisions of Opinion 30 should be
applied to extinguishments of debt.  As a
result, “applying the provisions of Opinion 30 will distinguish transactions
that are part of an entity’s recurring operations from those that are unusual
or infrequent or that meet the criteria for classification as an extraordinary
item” (1)Opinion 30 indicates that a transaction that does not meet both
criteria (unusual and infrequent) shall be reported as a separate component of
income from continuing operations.

In
the years from 1995 through 2004, the Company had four debt
extinguishments.  During the same period,
the Company had a number of debt facilities ranging from a low of eight (8) during
2004 to a high of thirteen (13) during 1997.
As a result, the extinguishment of debt, usually for profit, is a
recurring part of the Company’s business.

In
2002, the provider of the revolving credit facility decided to dispose of its
portfolio of aviation-related loans to a competitor of the Company.  However, a clause in the agreement with the
Company prevented the lender from selling this loan to a competitor.  As a result, the lender offered to accept
early repayment of the debt at a significant discount to its carrying value.
The gain on the extinguishment in 2002 was classified as revenue as opposed to
an offset to net interest and finance costs because the primary purpose of prepaying
it was to take advantage of the reduction in the leased-asset financing amount
offered to induce the Company to prepay.
In other cases, lenders have wished to divest themselves of aviation
–related loans and similar inducements have been offered.  The extinguishment of debt was not primarily
undertaken to manage interest rate risk and