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June 28, 2004

Alcoa Sells Initial Cargo Conversion Prototype To Babcock & Brown Aircraft Management LLC

PITTSBURGH--(BUSINESS WIRE)--June 28, 2004--Alcoa (NYSE:AA) announced today that it has signed an agreement with Babcock & Brown Aircraft Management LLC (BBAM) for the conversion and sale of the initial prototype of its 14Plus Boeing 757 passenger to cargo conversion. Alcoa said the BBAM agreement includes options for six additional passenger-to-freighter conversions. In 2003, Alcoa formed a partnership with Structural Integrity Engineering to engineer, manufacture, certify, install and support Boeing 757-200 ASF cargo conversions.

"All the resources are now in place to create the most affordable, cost-efficient and reliable freighter for owner-operators around the world," according to Gary Batey, president of Alcoa-SIE Cargo Conversions (ASCC). "Our 14Plus conversion package offers a simpler design that allows us to retain more of the aircraft's original structure and systems. We believe that this approach will significantly reduce costs and accelerate our conversion time."

A key element in creating Alcoa's conversion resource base was the selection of Cascade Aerospace of Abbotsford, Canada, as ASCC's modification center of excellence. "Cascade's exceptional people and facilities, their modification experience and reputation for quality services give us the confidence that the newly-inducted 757-200 will be fully converted and have an FAA Supplemental Type Certificate (STC) by May, 2005," Batey added.

"The combination of Alcoa's support and strength and Cascade's 34 years in aircraft modification and certification creates an integrated, capable, long-term team," according to David Schellenberg, Cascade's President.

Another critical factor in the launch of ASCC focused on finding the right partner to supply the initial prototype aircraft. "We were confident that BBAM had the resources and market knowledge to support the induction of the initial 757, not to mention to deliver additional aircraft to ASCC in the future," Batey noted.

MSN 24235 will be the first aircraft converted by ASCC. "The 757-200 has been a work horse as a passenger aircraft and we believe it will be the preferred intermediate-sized freighter going forward," said BBAM's Managing Director Steve Zissis. "This conversion program will bring added value to the 757-200 by extending its useful economic life."

When converted to a dedicated freighter, the twin-engine 757-200ASF features a basic takeoff weight of 220,000 to 250,000 pounds with approximately 6,600 cubic feet of cargo space on its main deck. The ASCC conversion package will accommodate 14.5 pallets on its main deck with additional freight carried in the lower holds located fore and aft of the wing. It will retain existing jump seats and also offer the opportunity to add four additional seats off the flight deck. With a maximum load, the 757-200 freighter will have a range of approximately 3,000 nautical miles.

Through its two-person crew and the fuel economy of its two high-bypass engines, the B757-200 offers significant operational savings over many older freight-carrying aircraft. In addition, the FAA has granted a common type rating which enables pilots to fly the 757 and 767 with minimal additional training. This allows operators to grow from the narrow body into a medium wide body capability with minimal cost and effort.

Cascade Aerospace Inc. is one of the top MRO providers in North America. A privately-owned company, Cascade's family of 500 people specialize in the maintenance, repair, overhaul and modification of narrow-body transport aircraft, including all models of the Boeing 737 and 757. The Abbottsford, British Columbia, company operates a modern, eight-bay facility and provides services to Southwest and other North American airlines.

Structural Integrity Engineering (SIE) was formed in 1981 to provide engineering, project development and technical consulting services to the aviation industry. SIE specializes in projects related to aircraft and aircraft component design, analysis and certification and has received 23 STCs.

BBAM is a wholly-owned subsidiary of Babcock & Brown specializing in commercial aircraft leasing and asset management. BBAM's aircraft portfolio currently stands at 140 aircraft on lease to 50 airlines located in Europe, North America, Asia, the Middle East and Central America. BBAM's portfolio is made up of Boeing 737 Classics and NGs, Airbus A319s, 320s and 321s, Boeing 757s, 767s, 747s and 777s. It is valued at approximately US $3.4 billion.

Alcoa is the world's leading producer and operator of primary aluminum, fabricated aluminum and alumina facilities, and is active in all aspects of the industry. Alcoa's aerospace product portfolio includes aluminum sheet, plate, extrusions and castings and as well as fastening systems and propulsion products. The company has 120,000 employees worldwide and operates in 41 countries.