Finance.qxp_Finance 27/10/2021 09:38 Page 1
FINANCE
Tips to Prepare Your Jet for End of Lease What is involved in returning a business airplane at the end of a lease term? What should a well-managed end-of-lease return look like, and where do the added costs occur? Gerrard Cowan speaks to a selection of experts…
A
s business jet leases near the end of their terms, lessees must meet a huge range of demands, from technical, to legal, to financial. Operators must consider the potential requirements as early as possible, according to industry experts, right back to the initial signing of the lease. The process is highly technical, warns David M. Hernandez, Business Aviation and Regulation SubPractice Chair at Vedder Price, a US law firm. It requires a high degree of planning, with lessees sometimes facing bills for hundreds of thousands of dollars, due to a host of unexpected factors. “Sometimes people think they’re just going to return [the jet],” Hernandez says. “But it’s not just a matter of cleaning an aircraft and filling it with gas. There are a lot of steps to perform.” First, and most importantly, lessees must negotiate the most favourable return conditions when they negotiate and enter the lease, according to Hernandez. This should be guided by expert advice. Then, six-to-nine months prior to the lease termination, lessees must thoroughly review the return 56 Vol 25 Issue 11 2021 AVBUYER MAGAZINE
conditions or Return Addendum with their flight department, management company, maintenance personnel and legal counsel, to ensure they are fully aware of all necessary requirements. There is then a range of other important steps to take. Lessees must determine the applicable notice requirements and timing obligations, for example. They must determine the relevant timing of the return inspection, or related return conditions, assessing whether to repair potential discrepancies or address potential disputes around wear and tear gray areas. They must also ensure they take the aircraft out of commission for the period of the return inspection, and determine which parties are responsible for the transportation, return and storage costs if a problem arises with the return. Other questions include whether there are obligations for the lessee to make the aircraft available for prospective buyers or other lessees, or otherwise cooperate in marketing the aircraft. It doesn’t stop there. Lessees must determine what return inspections, Airworthiness Directives (ADs) and Service Bulletins (SBs) are required, and how much www.AVBUYER.com
