What Is An Aircraft Lease Agreement

Assuming that the aircraft lease agreement contains a force majeure clause, it depends on whether or not such a clause can be invoked as a result of the Covid-19 pandemic if an “outbreak” is listed as a triggering event in the lease. Although the occurrence of the Covid-19 pandemic is beyond the reasonable control of the tenant, it would be rare to find a force majeure clause in a standard aircraft lease that allows the tenant to avoid lease payments in a situation where the tenant is forced to cancel its flights and ground its fleet. Rentals are often anchored at LIBOR rates. The lease rates of the A320neo and B737 MAX 8 are 20 to 30,000 dollars higher than those of their predecessors: by 2018, a B737-8 can be leased for just over $ 385,000 per month, and a duration of 12 years with good credit can be less than $ 370,000 per month for an A320neo (0.74% of its capital cost of about $ 49 million), which generates revenues of $53 million and more than $8.5 million in compensation for the end of the maintenance-free lease. and is still worth $20 million. [7] (3) For the purposes of section 91.23 {91.54} of the FAR, a lease is any agreement by a person to supply an aircraft to another person in exchange for compensation or rent, with or without crew members, that is not a conditional contract of sale under section 101 of the Federal Aviation Act 1958 (FA Act). MAC/MAE are generally broadly defined, which can give creditors a wide margin of appreciation in exercising their right to declare that an event of default has occurred. However, it is interesting to note that while most creditors generally insist on retaining the MAC/AEad clause in their agreements, creditors are reluctant to rely on the MAC/MAE clause to declare default – preferring instead to rely on certain default events. This is rightly true because a statement that a delay event has occurred would have a serious chain reaction that would trigger cross-failures in the tenant`s other agreements and possible damage to the tenant`s reputation. A creditor should therefore be very certain that a MAC/EAF event has occurred if it wishes to avail itself of this provision when declaring a default under the agreement. If a tenant is able to continue to fulfil his contractual obligations, it would be difficult for a creditor to claim that the MAC/MAE clause has been triggered. Hopefully, after this article, you will understand why airlines rent planes and how leasing companies make money, which explains the popularity of the service! For example, an airline is based in a popular summer destination such as Cancun or Ibiza. In winter, the number of passengers is low, and the airline can manage the operation and traffic of a small number of aircraft itself.

For example, Emirates, one of the world`s largest and most prestigious airlines, leased a Boeing 777-300ER to AviaAM Financial Leasing China. Airlines that can`t afford good deals with direct factory aircraft, or airlines that prefer to maintain flexibility, can lease their aircraft with an operating lease or finance lease. We looked at the lease you submitted to [identify the aircraft by manufacturer, model and N number]. We cannot approve the lease until corrections have been made to the following clauses to bring them into line with FAR § 91.23: Although it is not economically possible for an airline to operate the aircraft in the midst of the pandemic, it is not illegal for the lessee to meet its obligations under the lease of the aircraft. . . .

Posted October 15th, 2021 in Uncategorized.

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