Maintenance Reserve Funds – Exclusions, when they do not pay out

The maintenance reserve funds we have considered to date and seen how they can help the lessor protect the asset; we have also reviewed some of the considerations that they will be aimed at covering.

Of course, the fund is to perform maintenance and once the maintenance is performed then the fund can release money for this. Essentially the fund is an insurance policy for the lessor of sorts; but the money ultimately is for maintenance, once it is performed then the fund can be in part drawn down for this based on the accomplished maintenance.

Needless to say what and how the found can be drawn down needs to be reviewed with careful consideration. What the fund is for you can review in the last post, so we need it to be available to pay out for this (calendar-based maintenance, scheduled maintenance etc).

Aircraft operate in an ever-changing environment and are subject to many risks such as weather, ground handling, operation not according to operator practices, or many other examples. Additionally, an operator might want to perform modification work to the aircraft for their own purposes.

So what might we not want to release maintenance reserve funds for; the below list might offer some examples for consideration:

Damage from foreign object debris (FOD) we would not want to pay out for.

Modifications made to the interior or aircraft systems.

Service Bulletin (SB) accomplishment or Airworthiness Directive (AD) accomplishment – you might have a cost-sharing agreement in place for AD accomplishment as all future operators will benefit from this mandatory work.

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

Any accidental damage or improper operation we would not want to pay for.

Remember that the operator will also have insurance in place and that might cover also some of the above.

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