Lessee Checks – Aircraft Lease returns.

Lessee Checks – Aircraft Lease returns.
Before an aircraft is leased to an airline there must be many checks carried out. Some of these checks will ensure that the airline has the ability to pay the lease costs and also that there are not any issues that might suggest there being any issue. These kinds of checks are commonly called “due diligence” where a view is taken to protect the asset with some basic checks.

So, what might be considered when reviewing a new partner to lease to, or increasing asset placement with an existing lessee?
We would look at the credit rating of airline and the existing fleet, age, renewals, or any orders.
Is there any evidence of late or non-payment of rent or maintenance reserves; what about failure to pay suppliers or MRO.
We would want to know of any management issues within the company and about the relationships with lessors and consider the return history of aircraft.
As we have seen recently there must be specific attention paid to consider the country risk. Is it a stable environment, any recent political, economic, or regulatory changes.
There are of course many other considerations, but it is important to consider that there is a formal process to lease an aircraft and the lease companies will always look to protect the asset and asset value. A part of this protection is the checks and due diligence to consider their risk with any specific lease agreement.
Reclaiming an aircraft during a lease is possible, but it is expensive and can be problematic and have many repercussions also.
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