It is ultimately beneficial for both the Lessor & Lessee for the redelivery to run as smoothly and efficiently as possible – for this to happen it requires a significant level of engagement by the operator (lessee).
There should be adequate cross-referencing to schedules and appendices which detail the expected return condition of the engines and aircraft component parts on the aircraft’s return.
A competent operator will fully understand the potential lease return challenges and be equipped to focus on both contingency planning and risk management.
A High Level of competency is required to be able to fully interpret lease agreement technical covenants as well as the various operating standards, whether it is EU-OPS or FAR 121.
Special attention should be paid to any covenants which relate to qualifying (Using Maintenance Reserve (MR) Funds) – Maintenance events as well as condition and certification of the airframe and various components at redelivery.
Note – Any omission concerning technical covenants can lead to both expense and future difficulty.
Additional comment – It is during the redelivery documentation review that we find such terminology as “reasonable wear and tear”, clearly it is inadequate to use such phrases and whilst ambiguity has no place in the drafting of lease return conditions at least with sufficient time we can review, clarify and agree on the interpretation.
Lease Delivery Initiation
Some 24 months prior to the redelivery of the aircraft the lessor should “kick-off” the process by confirming that the lease will, in fact, be terminated by the operator.
However, independently the operator should also be initiating its process of preparation by taking a holistic view of the lease return conditions including Engine Performance and carrying out a review of the major component return conditions.
A good leasing company will be focused on protecting the technical integrity of the asset, providing good customer relations, and supporting where possible a degree of flexibility.
Lease Return 15 Months out to 12 Months Out
Forward Planning is both the byword and a key to a successful transition. Recognising that aircraft transitions can become a significant drain on technical manpower the operator should risk assess its exposure to ensure adequate technical cover and if necessary to outsource key support.
Around the 1 year plus timeframe, the operator should perform a detailed analysis of all the return conditions. This is the time to identify any potential issues or possible problems, note the flexibility of mitigations at this point is significantly easier than during the actual re-delivery process.
Any technical or commercial issues can be evaluated by the appropriate options chosen.
Such challenges may include aircraft specifications regulatory jurisdiction, operator capability to meet the return conditions, plus cost and timing issues.
Lease Return 12 Months out to 9 Months Out
As we move to the final year it is necessary (if the end of lease work has to be outsourced) to identify the MRO which will perform the final check and lease return applicable maintenance tasks.
The redelivery process is a very lengthy and indeed complicated process in which both the lessor and the operator should work together to ensure delivery of the asset in accordance with the lease.
Effective communication is essential, and the process can be improved by sharing data with the Lessor to ensure everyone “is on the same page”.
Lease Return 10 Months out to 8 Months Out
A basic plan should now be available which shows all major milestones in the redelivery process.
Note – This basic plan must be agreed with the lessor.
Lease Return 9 Months out to 6 Months Out
It is important to carry out surveys of key areas (Cabin & Cargo) to ensure if the material has to be ordered – the extended lead times can be accommodated.
Whilst general wear and tear is potentially allowed within the cabin and cargo bay area, such a term “general wear and tear” is very subjective. So again clarification is required and rectification included in the “detailed plan”.
Lease Return 6 Months out to 5 Months Out
At around this time, the operator should begin to prepare the redelivery aircraft records.
These can be prepared in either hardcopy folders or digital format (if acceptable to the Lessor).
The records will prioritise all critical records.
Any due corrective actions will be also be identified as well as a potential resolution agreed.
The lessee should also review the necessary modifications and repairs to determine its acceptability at the return. (EASA/FAA compliant or locally approved etc.)
At this time it is necessary for the operator to clearly define the technical work scope for the required redelivery maintenance input.
Note regarding the future Lessor
An opportunity may exist for the current lessee to incorporate changes and modifications required by the future lessee, such activity is chargeable and can potentially “win back” some funds.
Lease Return 6 Months out to 4 Months Out
Perform preliminary engine and APU borescope inspection, this permits the operator sufficient time to respond to adverse findings.
Note – Regarding Engine/APU Borescope inspections, it is worthwhile to invite the lessors’ representatives to have the opportunity to witness the inspections.
Lease Return 4 Months out to 3 Months Out
All historical aircraft records must now be presented to the lessor for an advanced review.
The operator should now enter into detail discussion with the MRO the workscope and details of the returned check (work scope, standards etc.).
Lease Return 2 Months Out
- The lessor should have completed the review of the provided aircraft records
- Perform an Engine high power assurance run (or Part Power Assurance if agreed with the Lessor)
- Carry out Acceptance / Test Flight
- Complete other Commercial and Contractual Obligations I.A.W the contract
- Complete Final lease payments plus any adjustment
- Complete Final Technical Aircraft return data package.
- De-register the aircraft if needed / Obtain Export C of A (If required)
Aircraft returns and Lessor signs the aircraft acceptance certificate.
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