MESSAGE FROM THE CHAIRMAN

DEAR  STAKEHOLDERS,

On behalf of the Board of Directors of ALAFCO Aviation Lease and Finance company, it gives me great pleasure to present to you our Annual Report for the financial year ended on 30 September 2009, a period of growth and consolidation, amidst the global turmoil.

ALAFCO has remained resilient and made solid headway into the highly competitive aircraft leasing sector despite the turbulence wrought by the global economic crisis. This was achieved by emphasizing capacity building through the optimization of our business and with a keen eye on cost restraint. It is also testimony of the commitment shown by our highly-motivated employees. As a result, ALAFCO has emerged as not only a repu­table player, but also a consistent performer in the global aviation leasing sector, with a total of 35 aircraft, 26 owned and 9 managed, as at 30 September 2009.

Continuing with our vision to become one of the leading players in the global aircraft leasing market, we made further strides to expand our fleet to 100 aircraft within the next decade. For the first time, ALAFCO’s net carrying value of fixed assets surpassed the US$1billion mark and the total assets reaching US$1.4 billion. This was achieved fol­lowing the acquisition of 12 new aircraft, namely 10 A320-200 and 2 B737-900ER, in the current financial year. Of these newly acquired aircraft, three were sold at a good profit, bringing the net addition for the year to 9 aircraft. Recent acquisitions have also lowered the average age of owned aircraft in our fleet to a very healthy 4.7 years.

For the next financial year, our plans involve the acquisition of another 16 aircraft, namely 15 A320-200 and 1 B737-800. The planned sale of an aircraft in the next financial year will bring the tally of aircraft in our fleet to 53, consisting of 41 owned aircraft. In 2009, we successfully secured total financing facilities of US$460 million from reputable global and domestic financial institutions, which in itself was no mean feat given the turmoil in global financial markets in the past year. Equally noteworthy is that we have already received preliminary approvals for US$625 million worth of financing for the 16 aircraft scheduled for delivery in the next financial year.

During the year, the Company was successful in extending the lease of one A320-200 with China Eastern Airlines (CEA) for another six years and for one B737-800 with CEA (Wuhan) for another three years. ALAFCO also signed a lease with Ethiopian Airlines for three years for one B737-800, earlier leased to CEAW.

In terms of human resources, we have plans to recruit additional management staff in the next financial year to provide the nec­essary support for our growing aircraft portfolio. The above initiatives and measures have geared the Company towards moving up the ranks of world lessors to take its rightful place in the global aircraft leasing industry.

Despite the global meltdown, ALAFCO managed to grow its profit respectably by 1.3% y-o-y to KD10.2million (USD35.6million) for the year ended 30 September 2009. This was driven by the net addition of nine aircraft during the financial year, which saw operating lease income growing by 8.3% y-o-y to KD26.3million (USD91.8million).

Our financial results reflect our prudent management style which has enabled us to steadily expand and diversify by exploiting new opportunities during these trying times. Furthermore, it is proof that we have the key success factors necessary to withstand challenges in the external environment. Ultimately, it is our clients and shareholders who have made us what we are today. A passion for excellence is what spurs us to relentlessly pursue our growth objectives even as we strive for innovative ways to en­hance the service we provide. We further look forward to support from our shareholders as we journey to even greater heights in 2010. Our confidence in the future is affirmed by the strength of our faith in Allah, our business model and proof that our success is not constrained by resources or lack of opportunities, during these challenging times.

Respectfully,

Ahmad A. Alzabin

Chairman & CEO