Definitions

AVITAS’s value definitions used for the AVITAS Online Aircraft and Engine Value Systems conform to those of the International Society of Transport Aircraft Trading (“ISTAT”), adopted in January 1994 and updated in February 2023, and are summarized as follows:

Base Value is the Appraiser’s opinion of the value of an aircraft (or other aviation-related asset) in a stable market with a reasonable balance of supply and demand. The Base Value of a tangible asset typically assumes its physical condition is average for an asset of its type and age, and its maintenance status is as described. Base Value assumes that the value for an unencumbered single-unit transaction valued for the asset’s highest and best use (as defined by the Appraiser), that the parties to the potential sale would be willing, able, prudent and knowledgeable, and under no unusual pressure for a prompt sale, and that the transaction would be negotiated in an open and unrestricted market on an arm’s-length basis, for cash or equivalent consideration, and given the adequate amount of time for effective exposure to prospective buyers.

Future Base Value is the Appraiser’s forecast of future asset value(s) setting forth Base Value(s) as defined above.

Market Value or Fair Market Value (or Current Market Value or Current Fair Market Value, if the value pertains to the time of the analysis) is the Appraiser’s opinion of the most likely trading price that may be generated for an aircraft (or other aviation-related asset) under the market circumstances perceived to exist at the time in question. Market Value assumes that the value is for an unencumbered single-unit transaction valued for the asset’s highest and best use (as defined by the Appraiser), that the parties to the potential sale would be willing, able, prudent, and knowledgeable, and under no unusual pressure for a prompt sale, and that the transaction would be negotiated in an open and unrestricted market on an arm’s length basis, for cash or equivalent consideration, and given an adequate amount of time for effective exposure to prospective buyers.

Future Market Value (not an ISTAT defined term) is the Appraiser’s forecast of future asset value(s) setting forth Market Value(s) as defined above.

Soft Market Value is the Appraiser’s opinion of the most likely trading price that may be generated for an aircraft (or other aviation-related asset) in a market characterized by supply exceeding demand. Soft Market Value assumes that the value is for a single-unit transaction valued for the asset’s highest and best use (as defined by the Appraiser), that the parties to the potential sale transaction would be willing, able, prudent, and knowledgeable, and under no unusual pressure for a prompt sale, and that the transaction would be negotiated in an open and unrestricted market on an arm’s-length basis, for cash or equivalent consideration, and given an adequate amount of time for effective exposure to prospective buyers.

Distressed Transaction Value is the Appraiser’s opinion of the price at which an aircraft (or other aviation-related asset) could be sold when the seller is under duress to sell (e.g., an artificially limited marketing time period), a liquidation, commercial restrictions, legal complications, or other such factors that materially reduce the bargaining leverage of the seller and give prospective buyers a significant advantage that can translate into an actual trading price materially below Market Value. Apart from the preceding, Distressed Transaction Value assumes that the value is for a single-unit transaction valued for the asset’s highest and best use (as defined by the Appraiser), that the parties to the potential sale would be able, prudent and knowledgeable, and negotiating (or bidding, in the case of auction) at arm’s-length, for cash or equivalent consideration, under the market conditions that are perceived to exist at the time.

Full-Life Adjusted Base Value indicates the Base Value adjusted for a hypothetical Full-Life maintenance status condition based on the overhaul costs for major components, an engine performance restoration, and the manufacturer list price of the life-limited parts (LLPs), but still assuming the same market conditions and transaction circumstances as described above.

Full-Life Adjusted Market Value indicates the Market Value adjusted for a hypothetical Full-Life maintenance status condition based on the overhaul costs for major components, an engine performance restoration, and the manufacturer list price of the life-limited parts (LLPs), but still assuming the same market conditions and transaction circumstances as described above.

Base Lease Rate (not an ISTAT defined term) is the Appraiser’s opinion of the most likely monthly operating lease rate that may be generated in an open, unrestricted, stable market environment with a reasonable balance of supply and demand. It assumes a term with duration typical for the engine type with the engine returned in the same condition as at delivery. Actual rental rates can vary dramatically depending on the duration of the lease, the lessee’s credit, tax considerations, return provisions and residual value assumptions.

Future Base Lease Rate (not an ISTAT defined term) is the Appraiser’s forecast of future engine lease rates setting forth Base Lease Rate(s) as defined above.

Market Lease Rate (not an ISTAT defined term) is the Appraiser’s opinion of the most likely monthly operating lease rate that may be generated under market conditions that are perceived to exist at the time in question. It assumes a term with duration typical for the engine type with the engine returned in the same condition as at delivery. Actual rental rates can vary dramatically depending on the duration of the lease, the lessee’s credit, tax considerations, return provisions and residual value assumptions.

Lease – Encumbered Value (“LEV”) (formerly Securitized Value) is the Appraiser’s opinion of value of an aircraft (or other aviation-related asset) under lease, its associated expected cash flows and Residual Value.

Single-Unit Sale while not set forth in the value definitions above, our value opinions for the asset assume a single-unit transaction wherein the asset would be sold by itself, not part of a wholesale lot or a large portfolio of assets that would be sold en masse in a transaction where some “volume discount” might typically apply.

Highest and Best Use is the reasonably probable and legal use of the asset that results in its highest value, regardless of its current use.

Typical (not an ISTAT defined term) is the Appraiser’s opinion of an aircraft value when there is little to no difference between the various vintages. Typical values are encountered towards the end of an asset’s economic life and are characterized by substantial volatility.

Half-life/Half-Time (historically also known as Mid-life/Mid-time) describes a maintenance status where all scheduled maintenance events are at mid-point of their scheduled or estimated interval (50% time remaining) and all life-limited components are at the mid-point of their assigned lives. Half-life/Half-time rarely reflects the actual maintenance condition of the asset. It is largely used to normalize values of assets in differing maintenance condition.

Full-life/Full-time describes a maintenance status where all scheduled maintenance events are at zero-time (100% time remaining) and all life-limited components have their full lives remaining. Full-life/Full-time may not reflect the actual maintenance condition of the asset and may be a combination of the metal value and contracted cash value up to a Full-life/Full-time status.