Redelivery Management and Technical Aspects of … · Redelivery Management and Technical Aspects...

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RedeliveryManagementandTechnicalAspectsofLeases

OisínMurray- HeadofTechnicalandAssetManagement

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¤ LeaseAgreementTechnicalConsiderations¤ MaintenanceOverview

¤ Maintenance Reserves¤ Maintenance ReservesPortability¤ RedeliveryManagement

¤ TechnicalRecords

Agenda

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LeaseAgreementConsiderationsWhatyouarepayingfor¤ DefineSpecification

¤ DefineConfiguration

Maintenanceprovisions¤ LesseeisapprovedbylocalCAA

¤ LesseeMRO’sareFAA/EASAapproved

¤ NoPMApartsorDERrepairs

¤ Lessorannualinspectionrights

¤ WorkscopesiawOEMrecommendations

¤ Lessorapprovalrequiredformajorrepairs

¤ LessorrepresentationduringrepairsrequiringMRdrawdown

$43MMAircraft$45MMAircraft

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LeaseAgreementConsiderationsRedeliveryConditions¤ FAA/EASAcompliant

¤ DefinedRedeliveryprocess

¤ Enginesubstitutionrights

¤ BridgemaintenancetotoOEMstandardornextlesseerequirements

¤ Minimumconditionforcomponentconditions

¤ LLPBacktoBirth

¤ Detailedlistandformatfortechnicaldocuments

¤ NonIncident/Accidentstatement,PMAandDERrepairstatements

¤ MaintenanceCompensationmechanisms

CurrentRedeliveryConditionsarethenextLessee’sDeliveryConditions

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MaintenanceOverview¤ AircraftMaintenance isheavilyregulatedby

<TheManufacturer<TheManufacturer’sAviationAuthority<TheOperator’sLocalAviationAuthority

¤ ManufacturersproduceMaintenancePlanning Document(MPD)whichadvisesOperatorsandAuthoritiestherecommendedpracticesandintervalswhenmaintaininganaircraft

¤ LocalAviationAuthorityApprovalisrequiredforanOperator’sApprovedMaintenanceProgram(AMP)

¤ OperatorsAMP’scanfollowexactlytheOEM’sMPDorcanbecustomisedtoaccommodatespecificlocalregulatory requirements

¤ RequeststocustomiseanAMPbeyondLocalAuthorityregulatoryrequirementsmustbemadetotheLocalAuthorityandmustbesupportedbysubstantiating reliabilitydata

¤ Maintenancepracticesand intervalshaveevolvedduetotheuseofnewertechnologies,greateravailabilityofreliabilitydata,betteranalysisofthatdataandwithafocusoncostswhileatthesametimeincreasingsafety

¤ LessrequirementforHardTimeinspectionsandmoreOnConditionmonitoringversuspreviouspractice

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LesseeMaintenanceResponsibilities¤ Duringtheleasetermthelessee isresponsibleforallmaintenanceperformedontheaircraft

¤ IncludesAirframeDaily(A)Checks,C-checksandHeavyMaintenance(D)checksandEngine,APUandLGOverhauls

¤ Lessees sourceandcontractwiththeMaintenanceproviders

¤ Lessees ensurethatchosenmaintenanceprovidersaresuitablyqualifiedoftentimewithsuperiorqualificationsneededforLessorreimbursablemaintenanceevents

¤ Commitmenttokeepingtheaircraftairworthyandmaintainingtherecordsi)inEnglishandii)inaccordancewiththeirAviationAuthorityapprovals

¤ Lessee isnotallowedtoundertakeanymodificationsthatwouldmateriallydevaluetheaircraft

¤ Lesseeprovidesmonthlyupdateontheaircraftutilisationandmaintenancestatusandmakestheaircraftavailableforinspectionbythelessoratleastonceayear

¤ RedelivertheaircraftfromitsnextC-checkbridgedtotheOEM’sMPD.AllcomponentscapableofoperatingforatleastaC-check intervalbeforenextmaintenance | 153

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¤ Duringtheleasetermifthelesseepaysthelessormaintenance reservesthenthelessorisobligedtoreimburselesseeforsuchqualifyingmaintenance. Theleaseagreement clearlyidentifies<Whateventsalesseecanclaimreimbursementfor<Whatasaminimumneedstobeperformedduringeacheventtoqualifyforreimbursement< Lessorsrightinadvancetoreviewandapprovetheworkscopebeingproposed< Lessorsrighttooverseethemaintenancebeingperformed< Themaximumamountavailabletolesseeforsuchmaintenance< Lessorcontributionamountsabovethelesseepaidmaintenance reservesifapplicable<Whatisnotreimbursableduringaqualifyingmaintenanceevent(FOD,QEC,Transportation,inboundenginetests)

¤ Lessormonitorsthemonthlyutilisationreportsto< Accuratelyinvoicemonthlymaintenancereserves< Ensurethataircraftandenginescontinuetooperateandarenotgroundedforanunknownreason

< Bettertrackthemaintenancestatusandforecastupcomingmaintenanceevents

¤ Lessorsoritsagentsperformphysicalandrecordinspectionsto< Validatethemaintenance statusoftheaircraft< Ensurerecordsarebeingkeptatasuitablestandard< Identifyforlessorandlesseepotentialissuesduringredeliveryprocess | 154

LessorMaintenanceResponsibilities

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MaintenanceReserves¤ MaintenanceReservesarepaymentsbasedontheutilisationoftheaircraftmadebythelesseetothelessortoprovisionforthecostofsignificantfutureaircraftmaintenanceevents.

¤ Theyarenormallypaidmonthlyinarrearsandarecomponentspecificcovering<AirframeHeavyChecks<EngineOverhaul<APUOverhaul<LandingGearOverhaul

¤ WhycollectMaintenanceReserves<Securitytoprotectassetvalueandmaintainlessorexposure<Meanstomonitorlesseecontractcompliance<Positivelyinfluencemaintenanceworkscope

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MaintenanceReserves¤ MaintenanceReserveAlternatives

<CashMaintenanceReserves<LetterofCredit<Leaseendadjustments<Halflifeadjustments

¤ MaintenanceReserveratesarecalculatedbydividingthepredictedeventcostbytheeventinterval.Wecustomiseforvariationsin<Flightprofiles<Operatingenvironment<Aircraftage

¤ AnnualEscalation<Normalrange2.5%- 3.5%forAirframe,LandingGearandAPU<EngineOverhaulandLLPshouldbehigher(OEMannualescalation)

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A330 MaintenanceIntervals(Months) B787-8MaintenanceIntervals(Months)

MaintenanceEventIntervals

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0

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3Y 12Y EngPR EngLLP LGOH APUOH

A320MaintenanceIntervals(Months) B737MaintenanceIntervals(Months)

0

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8Y 10Y 12Y EngPR EngLLP LGOH APUOH

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¤ AircraftMaintenanceIntervalsvarylittlebetweenNarrowBodyandWideBodyaircraft

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A330 MaintenanceCosts (US$K) B787-8MaintenanceCosts (US$K)

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0100020003000400050006000700080009000


A320MaintenanceCosts (US$K) B737MaintenanceCosts (US$K)

0

500

1,000

1,500

2,000

2,500

3,000

8Y 10Y 12Y EngPR EngLLP LGOH APUOH

0

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¤ AircraftMaintenanceCostsvarysignificantlybetweenNarrowBodyandWideBody

MaintenanceEventCosts

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A330 MonthlyMaintenanceReserves(US$)

MaintenanceReserveMonthlyCashFlows

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A320MonthlyMaintenanceReserves(US$) ¤ Costsarevalidatedby< Reviewofclaimslessorhashadtodate< CrosscheckwithOEMadvisories< Reviewofreservesrateswhenlookingat

leaseportfoliopurchases

¤ Ratesaresubjecttoannualreviewandescalation

¤ EngineOverhaulandLLPgenerallycountforbetween75%and80%ofmonthlyMaintenanceReserves

¤ OEMFlightHourAgreementseliminatetheEngineOverhaulcashcomponentfrommonthlymaintenancereservecashflowscollectedbylessor

¤ LesseeMaintenanceReserveclaimsnormallytrailcompletionoftheworkbetweenthreetosixmonthsasMRO’sareslowtoissuecompletefinalinvoices

MaintenanceEvents Intervallimit EventCost Rate MonthlyAirframeStructuralInspections 72months 900,000.00$ 12,500.00$ $12,500.00AirframeStructuralInspections 144months 900,000.00$ 6,250.00$ $6,250.00

LandingGearOverhaul 120months 350,000.00$ 2,916.67$ $2,916.67APUOverhaul 8,000hours 350,000.00$ 43.75$ $10,937.50EngineOverhaul 18,000hours 2,300,000.00$ 127.78$ $63,888.89

EngineLLPReplacement 20,000cycles 2,500,000.00$ 125.00$ $62,500.00

Total $158,993.06

MaintenanceEvents Intervallimit EventCost Rate MonthlyAirframe6Y 72months 1,800,000.00$ 25,000.00$ 25,000.00$Airframe12Y 144months 1,650,000.00$ 11,458.33$ 11,458.33$

LandingGearOverhaul 120months 1,000,000.00$ 8,333.33$ 8,333.33$APUOverhaul 15,000hours 750,000.00$ 50.00$ 16,666.67$EngineOverhaul 20000hours 7,000,000.00$ 350.00$ 233,333.33$

EngineLLPReplacement 15000cycles 6,883,950.00$ 458.93$ 61,190.67$

Total 355,982.33$

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A330 Maintenance ReservesCashFlows(US$)

A330MaintenanceReserveCashFlows

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¤ MaintenanceReservebalancesforWideBodyaircraftcanbewellabove$25MM

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ManagingMaintenanceReservesBestPractices¤ Clearlydefinequalifyingmaintenance¤ Lessorapprovalforreimbursableworkscopes¤ Modularapproachtoenginereimbursement¤ Lessorattendanceatrepairfacilitiesduringmaintenance¤ Goodcommunicationtoforecasttimingofmaintenance andreimbursement¤ Annualreviewofrates¤ Aircraftspecificaccountsandcomponentspecificsub-accounts¤ Noco-minglingevenacrosssamelesseefleet¤ Annualreviewofaccountswithreconciliationasneeded

Endoflifeassets¤ RetainMaintenanceReserves inlieuofReturnConditions.¤ EngineandComponentexchanges¤ Flytoexpiration

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OEMMaintenanceAgreementsOEM’shaveenteredmaintenancemarketaggressively.Theseagreementsoffer:¤ Fixedpricemaintenance¤ Longtermagreement¤ Peaceofmind¤ Residualvalueprotections

Agreementscanbe¤ Termbased¤ Eventbased¤ Cradletograve¤ Paidmonthly¤ Paidatmaintenanceevent

OEMagreementsinclude¤ GE/CFMI:OnPoint¤ Honeywell:MCA¤ RollsRoyce– TotalCare/OPERA¤ IAE:FlightHourAgreement(FHA)

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MaintenanceReservePortability¤ Lessorpreferenceistocollectcash:

• Influencemaintenanceworkscope• Usetooffsetoutstandingdebts• Maintainlessorexposureatdealoriginationlevels• Easilyassignreservesfornextlessee

¤ Complexitywhere“PowerbytheHour”Agreementsareineffect:• Qualifyingmaintenancedefinitionandratesmaydiffertolease• Increaseinlessorexposure• Inabilitytooffsetdelinquency• CreditaccruedtendstobeengineandMROspecific• Administrativeburdenwhenassigningcreditduetomultipleparties• NotallPBHagreementsareequal

¤ Endoflife• Abilitytoconvertcredittocash

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RedeliveryandTransitionManagement

CommenceFinalRecords

review

Aircraftexitsserviceand

startsRedeliveryCheck

RedeliveryTechnicalAcceptance

PreliminaryLesseemeetingandBudgetPreparation

DeregisterandExport

Aircrafttonewlessee’sjurisdiction

PreliminaryAircraft

PhysicalandRecords

inspection

Review ofkeyredelivery

documentsandidentifying

potentialissuesFinalPhysicalreviewcommences,next

lesseemodificationsincorporatedifapplicable

¤ LeaseReturnsandTransitionsareacrossfunctionandresourceintensiveprocess.TheTransactionManagementDepartmentandtheTechnicalDepartmentsaremostinvolved

Review ofLease returnrequirementsandforecastupcoming

maintenance

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Leaseterminateswithlessee

Leasecommenceswithnextlessee

12months 9months 60Days 30Days 0Days +0Days

DeliveryTechnicalAcceptance

+0Days

WorkwithAviationAuthoritiesforboththeExportingand

Importingjurisdictions

Review ofkeyredelivery

documentsandidentifying

potentialissues

NextlesseeAuthorityandCAMOrepson

site

10Days

Nextoperatorsauthorityandlessor

airworthinessrepresentativereviewaircraftconditionandrecordstofacilitateimporttonextjurisdiction

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AircraftInspectionandDocumentReview¤ DuringRedeliveryLessorhastherightto

< Physicallyinspecttheaircraft< Physicallyinspecttechnicaldocuments< Observetheongoingredeliverymaintenancebeingperformed

¤ AircraftPhysicalInspection< PerformNosetoTailinspection, internallyandexternallylookingforphysicaldamageorexcessivewear< Ensureaircrafthasataminimuminstalledallcontractedequipment< Participateinredeliverydemonstrationflight< PerformEngineandAPUborescopeinspections< Confirmaircraftisphysicallyairworthyandmeetsspecifiedleasereturnconditions

¤ AircraftRecordsInspection< Confirmaircraftspecificationmatchesthecontractualspecification(Thrust,MTOW)< Reviewmaintenancehistoricalrecordstoconfirmlevelsofpreviously performedwork< Crosscheckaircraftphysicalconditionwithdocumentedphysicalcondition< Confirmaircraftconformstoregulatoryandairworthinessrequirements< Ensuredocumentspackagehasallthatisneededandispresentedinamannertofacilitateaircrafttransfertoforeign

jurisdiction

RedeliveryRisksaremanybutrigorousPhysicalandRecordsInspections shouldhelpminimisiepotentialissues.Oftentimesthebiggestimpedimenttotimelytransitioncanbeinexperiencedcounterparties

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Redelivery Cost Management¤ LeaseEndCoststendtohaveapredictablefixedcostelementassociatedwitheffectingtheredeliveryandavariablecost

associatedwithtransitioningtheaircrafttothenextuser

¤ RedeliverycostsareusuallyafunctionofthesizeoftheaircraftwithWideBodyaircraftcostingmorethanNarrowBodyaircraft,estimatedcostsare:< NarrowBody- $225K< WideBody- $300K

¤ TransitionCostsvarydependingon< Sizeoftheaircraft< Ageoftheaircraft< Aircraftconfiguration< NextLesseejurisdiction< NextLesseemodificationrequirements< LocationofMROperformingmodifications< Timebetweenredeliveryfromreturninglesseeanddeliverytonextlessee< Storageperiodduringtransition

¤ TransitionCostswithnomodificationsrequired< NarrowBody- $100K< WideBody- $150K

¤ Transitionwithlargeamountofmodificationsrequiredcanhaveverysignificantcosts

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OisínMurrayHeadofTechnicalandAssetManagement

技术总监

CDBAviationLeaseFinance

[email protected]: +85237962673Mob:+8529229 0920

Redelivery Management and Technical Aspects of … · Redelivery Management and Technical Aspects...

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