Maintaining an Asset Value

An aircraft along with many of its components / parts are highly valuable assets as such there is an interest in maintaining that value as best as we can during the life of that aircraft and or component / parts.

To accommodate this requirement a lessor when leasing an aircraft to a lessee will want to ensure that the lessee maintains the asset value on their behalf during that specific lease period.
This is why a “lease agreement” is such an important document; the lease agreement is not driven by Airworthiness requirements, but rather by requirements to maintain asset value.

As such a Lease contract we can consider to be broken into several key areas:

Ongoing maintenance covenants where a  lessee’s obligation regarding qualifying maintenance events, along with specific minimums on the condition and certification of the airframe, engines, and various components during the lease term are stated; it is here we will outline the required maintenance of the aircraft upon return to the lessor.

Redelivery conditions will cover the requirements to be met for all aspects associated with the aircraft lease and these are very important during the lease review. You should be fully aware of the conditions and requirements that should be met and as we noted before, remembering the lease agreement is aimed as maintaining asset value and not driven by regulatory requirements. It is possible to have all your records and data to be compliant for a CAMO review, but not for a lease return.

Maintenance reserves – an additional charge aimed to cover the maintenance cost accrued over time. An additional charge is paid for maintenance charges accrued through use and when maintenance is due these funds can be used.

Note – maintenance reserves can also be referred to as supplemental rent and are aimed at limiting lessor’s risk in a lease; for example, if an aircraft is re possessed close to a C check which is high cost.

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