Aircraft Leasing & Maintenance Reserves

Aircraft Leasing & Maintenance Reserves

Maintenance Reserves are monthly payments made by the airline to the lessor. The payments are often referred to as “Supplemental Rent” and belong to the lessor.

The accumulation of the funds is used to cover the costs of scheduled major maintenance events on Airframe, Landing Gear, Engines and APU.

On certain lease contracts the Lessor will agree to collect these vast sums of money from the Lessee (Airline) and when a maintenance event is completed the Airline will then submit a claim form along with the supporting documentation and in turn the funds will be paid out to cover the cost of maintenance/overhaul.

The most common maintenance cost elements consist of:

1.Labour and Material Costs – labour and material costs are the basic level at which maintenance cost data is collected and analysed.

2.Routine and Non-Routine Costs – Routine maintenance costs comprise of the labour and material associated with performing the scheduled maintenance tasks outlined in the airline’s Approved Maintenance Program (AMP).

3.Calendar Based Costs – are the costs that do not vary according to aircraft usage. They are typically determined as annual costs and allocated on an hourly basis to the aircraft according to the number of hours flown.

The largest calendar-based cost is those associated with the aircraft heavy structural checks and landing gear overhauls.

Certain exclusions from reimbursement of maintenance reserves will be agreed in the lease, for example:

Ø Any repair overhaul or inspection caused by Foreign Object Damage (FOD).

Work performed for:

Ø Airworthiness Directives (ADs),

Ø Manufacturer’s Service Bulletins (SBs)

Ø Service Information Letters (SILs).

Ø Cabin and Systems Modifications.

Ø Repair of damage from accidental cause, improper operation, improper maintenance, misuse, or abuse.

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