Globalization and the continued expansion of free market economies in much of the developing world have led to increased demand for air travel. Between 1990 and 2005, global passenger traffic measured in Revenue Passenger Miles \\\\\\\\\\\\\\\"RPM\\\\\\\\\\\\\\\": an RPM represents one fare-paying passenger transported one mile, and is the most common measure of air travel demand) increased by nearly 115%, or 5.2% per year, according to The Airline Monitor (January 2006). The Airline Monitor forecasts that air traffic will continue to grow an average 5.2% per year through 2025.

Demand for air travel and freight is driven primarily by economic growth and competitive pricing. Aviation industry profitability has traditionally shown a strong correlation to gross domestic product growth, indicating that global and regional economic performance is a principal driver of air travel and air freight demand, and thus of aircraft demand.

Over the past five years, a series of events, including the September 11, 2001 terrorist attacks in the United States, global economic recession, military actions in the Middle East, health concerns, surging fuel costs and several natural disasters have affected the demand for air travel and cargo capacity in different parts of the world. Despite these challenges, the global economy has expanded rapidly since 2002, driving sustained growth in worldwide air transportation demand. Freight traffic has shown strong growth due to the recovery in the global economy and the continuing growth of international trade. As a result of these positive trends, IATA\\\\\\\'s September 2006 forecast predicts airline industry operating profit to reach $9.8 billion in 2006 and $11.7 billion in 2007.

Strong economic growth over the last few years has been accompanied by increased competition among airlines and greater penetration of LCCs in the U.S., Europe and several emerging markets, which have exerted downward pressure on airfares and made air travel more affordable. Today, air travel is rapidly becoming a more accessible alternative to land transportation for a growing proportion of the world\\\\\\\'s population, especially in high-growth emerging markets.

The Company leases most of its aircraft to airlines under operating leases. Under an operating lease, the lessee is responsible for the maintenance and servicing of the equipment during the lease term and the lessor receives the benefit, and assumes the risk, of the residual value of the equipment at the end of the lease.

The Company’s contract lease terms generally range from 12 months to 120 months. In periods of strong aircraft demand, the Company seeks to enter into medium and long-term leases to lock-in the generally higher market lease rates during those periods, while, in periods of low aircraft demand it seeks to enter into short-term leases to mitigate the effects of the generally lower market lease rates during those periods.

Upon expiration of an operating lease, the Company extends the lease term, takes redelivery of the aircraft, remarkets and re-leases it to new lessees, sells the aircraft, or transfers the aircraft to its disassembly business for sale of its parts. Typically, the Company re-leases its leased aircraft well in advance of the expiration of the then current lease and deliver the aircraft to a new lessee in less than two months following redelivery by the prior lessee.

During the period in which an aircraft is in between leases, the Company typically performs routine inspections and the maintenance necessary to place the aircraft in the required condition for delivery and, in some cases, make modifications requested by the next lessee.

Cost of goods sold increased by $125.7 million, or 218.2%, to $183.3 million in the nine months ended September 30, 2006 from $57.6 million in the nine months ended September 30, 2005

Other operating expenses increased by $7.2 million, or 19.2%, to $44.7 million in the nine months ended September 30, 2006 from $37.5 million in the nine months ended September 30, 2005.

Selling, general and administrative expenses increased by $36.1 million, or 118.4%, to $66.6 million in the nine months ended September 30, 2006 from $30.5 million in the nine months ended September 30, 2005.

Net income increased by $48.5 million, or 85.7%, to $105.1 million in the nine months ended September 30, 2006 from $56.6 million in the nine months ended September 30, 2005.