End of lease return check – additional work requests from the lessor

During an end of lease return check there might well be additional work requests from the lessor.

When an aircraft is leased to a lessee from the lessor it is provided in a certain configuration and to a standard. Ultimately this scenario is replicated at the lease hand back when the aircraft is returned.

The lessor is interested in maintaining the asset value and always having a marketable asset, in many cases one aircraft will be transitioned from one lessee directly to another.

In such a scenario it might be that the new lessee has some work they wanted carried out prior to delivery. This puts the lessor now in an interesting position as they are obliged with the lease return conditions as per the lease agreement to the existing lessee, then they must meet the new requirements for the next lessee.

The lessor of course does not want to be co ordinating maintenance checks and having aircraft not being actively leased, so for this reason there is commonly a clause in the agreement that allows the lessor to request works to be carried out during lease return maintenance inputs at lessors own expense, and also at lessors risk with regards to if their work request delays the hand back then then the lessee is not responsible for this.

Typically, we might see wording in the lease along the following lines “During the work performed just prior to Return of the Aircraft as required, Lessee agrees to perform any additional work requested by Lessor which Lessee can reasonably accommodate into its schedule without prejudice to the Expiry Date and Lessor shall reimburse Lessee for the additional costs (without a profit factor) together with any applicable sales or value added Taxes. In the event of a delay caused by such additional work performed at the request of Lessor, Lessee shall not be required to pay Rent during the period of such delay.”

You can see here how the obligation is open to interpretation and scope, but the lessor agrees the expense and risk is owned by them with regards to the task(s). During end of lease checks such work requests should be clearly defined and agreed, also implications of defects arising from the work undertaken; it can be important should it become an issue that the hand back might become delayed due to additional works request.

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