Aircraft Leasing and Protection of the Asset

In aircraft leasing there is a lot of importance on protection of the asset; the asset value is at the core of any financial consideration and an aircraft lease is not any different. The lessor is looking after the aircraft and engines as an asset and as such there will be multiple considerations that are not directly related to airworthiness such as not allowing lessees to use the aircraft a security for loans and also about ownership responsibilities and obligations.

We can consider one example about not relinquishing the ownership of the aircraft during a lease with the following example from a lease:

“Lessee will not, without the prior written consent of Lessor, deliver, transfer or relinquish possession of the Aircraft except for approved maintenance and repair or approved subleasing. Lessee will not do, and will use all reasonable endeavours to prevent, any act which could reasonably be expected to result in the Aircraft or any of its Engines being arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory or other claim (save as to any Lessor Lien) or otherwise taken from the possession of Lessee and, if such arrest, confiscation, seizure, taking, impounding, forfeiture or detention occurs, Lessee will give Lessor and Security Trustee written notice thereof as soon as reasonably practicable and will make reasonable efforts to procure the prompt release of the Aircraft and each of the Engines (save in the case of any enforcement or attempted enforcement of a Lessor Lien).”

It is an example of how the lease considered the aircraft asset value and displays protection of this via the lessee obligations and potential committed expenses and obligations for breach of such conditions.

The aircraft lease is a document not only defining technical requirements and conditions, but also for expected and required conditions of operation and ownership throughout the lease.

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