Aircraft Lease Agreements – Total Loss

In a lease contract many terms and definitions are noted to avoid contention or dispute such as what a Total Loss means:

The term “Total Loss” as an example can in a lease be defined as an example, we will quote text from a “lease” and under it, we explain its intent.

“The actual or constructive total loss of the Aircraft (including any damage to the Aircraft or requisition for use or hire which results in an insurance settlement on the basis of a total loss).

This statement refers to a situation where the aircraft is considered a total loss either through actual destruction or circumstances making it unusable (like severe damage or government commandeering). If the insurance company settles the claim by treating the aircraft as a complete loss, it’s recognized as such.

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Aircraft Repairs – considerations and review at lease return

The process of aircraft damage assessment at the end of a lease involves several key steps to ensure the aircraft is returned in the condition agreed upon in the lease terms. Here is a summary based on the text provided and additional industry practices:

Initial Damage Identification: The first step involves a thorough inspection to identify any visible damage, such as impacts or dents. This could be conducted during a standard walk-around check.

Utilizing Damage Documentation: Essential documents like the Aircraft “Dent and Buckle” are used to locate and assess damage. This documentation helps in determining whether the damage is already known or if it’s a new issue.

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Aircraft Lease Transition Return Condition Considerations

In aircraft lease transitions, various lease return conditions must be considered for engines, auxiliary power units (APUs), parts, landing gear, airframe components, interiors, cargo compartments, and aircraft documents. Here is an explanation of a few typical example lease return conditions to illustrate (note the figures used are examples only):

Engines:

Each Engine and module must have at least 4,500 Flight Hours or 3,000 Cycles (whichever is more limiting) life remaining to its next shop visit.

Several checks and inspections are performed, including borescope inspections, power assurance runs, and bleed value scheduling checks and any defects exceeding the Manufacturer’s allowable limits must be corrected by the lessee; also important is when damage reduces the inspection intervals or has repeat maintenance due as a result.

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