Dear friends and customers,

It is with a great deal of sadness that I write this letter to inform you that Howard Hawkins, our Operations Manager for the past several years,  passed away on March 30, 2008 after a short illness. He will be missed by all of us for his leadership, knowledge of the aircraft industry, and the many contributions he made to the company and to each of our lives. We also extend our deepest sympathy to his family and loved ones. We will all miss him.

Unfortunately, the loss of Howard has necessitated that we review our business plans for ongoing operations at Pacific Aerosystem, Inc. (PAI). After a careful review of current business conditions in the industry, and the options available to us at Pacific Aerosystem, the Board of Directors has determined that the time has come for us to cease operations and close the business. This has been a very difficult decision, but we feel it is necessary and will do everything possible to treat our employees, customers and suppliers with the respect and dignity they deserve, and to minimize the impact of our closing on each of you.

Our plan is to wrap up ongoing operations in San Diego by June 1, 2008. This will be a voluntary closing, but it will necessitate that we cancel all unfilled customer orders for new aircraft (parts orders are still being processed), and refund customer deposits we have received against those orders. We will also be recommending to Iniziative Industriali Italiane (3I) that they make Hansen Air Group in Atlanta their distributor in the United States, and either provide customer support through them or directly to each customer. Chuck Anclien, our Tech Support A&P/IA has also agreed to continue answering questions and providing parts as long as his supplies last. We will be providing additional information, procedures and contact numbers as soon as they are available.

Sincerely,

Edward V. Dempsey, President

Pacific Aerosystem, Inc.