IATA Aircraft Lease Guidance

Recommendations

Info

Annex XI: DefinitionsAs most of the definitions are being described throughout this document, only a shortlist is provided in thisAnnex with a special focus on aircraft leases and the various forms of aircraft leases. By doing so the user ofthis document is able to understand the difference between aircraft leases from a financial perspective andput in a technical perspective.LeaseOperating LeaseCapital or Finance LeaseWet LeaseDry LeaseA legal document outlining the terms under which one party agrees to rentproperty from another party. A lease guarantees the Lessee (the renter) useof an asset and guarantees the Lessor (the property owner) regularpayments from the Lessee for a specified number of months or years. Boththe Lessee and the Lessor must uphold the terms of the contract for thelease to remain valid.A contract that allows for the use of an asset, but does not convey rights ofownership of the asset. An operating lease is not capitalized; it is accountedfor as a rental expense in what is known as “off balance sheet financing.”For the Lessor, the asset being leased is accounted for as an asset and isdepreciated as such. Operating leases have tax incentives and do not resultin assets or liabilities being recorded on the Lessee's balance sheet, whichcan improve the Lessee's financial ratios.A lease considered to have the economic characteristics of asset ownership.A capital lease would be considered a purchased asset for accountingpurposes. A lease falls into this category if any of the following requirementsare met: The life of the lease is 75% or greater of the assets useful life; Thelease contains a purchase agreement for less than market value; The Lesseegains ownership at the end of the lease period; The present value of leasepayments is greater than 90% of the asset’s market value.A lease where the Lessor provides an Aircraft with Crew, Maintenance andInsurance also known as ACMI. The aircraft is operated under the AOC ofthe LessorA lease where the Lessee provides crew, maintenance and insurance. Theaircraft is operated on the AOC of the Lessee.The accounting treatment of an aircraft lease depends on many parameters. We highly recommend that foryour own specific case you consult the appropriate accounting experts in your company and jurisdiction. Fordetailed definitions that can be used in contracts and financial accounting standards please consult theInternational Financial Reporting Standards 23 (IFRS) and the Financial Accounting Standards Board 24 (FASB).23www.ifrs.org24www.fasb.org4 th Edition 2017 132
AcknowledgementsIATA:Chris MarkouGeraldine CrosElentinus MargeirssonSGI:Joost GroenenboomRemko BruinsmaMarc Beechcroft-KayOthers:Thanos PascalisTiymor Kalimatoneworld Engineering & Maintenance Lease GroupAWGIATA would like to thank the airlines, leasing companies, manufacturers and industry experts who reviewedthis document, and provided valuable comments.4 th Edition 2017 133
Page 1 and 2:
Guidance Material and BestPractices
Page 3 and 4:
Table of ContentsList of Figures ..
Page 5 and 6:
Table of Contents4.4 Engine Power b
Page 7 and 8:
Table of ContentsAnnex X: LLP Back-
Page 9 and 10:
List of FiguresFigure 1. Document S
Page 11 and 12:
List of TablesTable 1. Different Ty
Page 13 and 14:
AbbreviationsACACMIADAIRAMCAMMAMOCA
Page 15 and 16:
AbbreviationsIPCLDNDLLPLOCLOILOPALR
Page 17 and 18:
ScopeIATA’s ‘Guidance Material
Page 19 and 20:
IntroductionIATA recommends a proce
Page 21 and 22:
Section 1—Background1Background2P
Page 23 and 24:
Backgrounddetermined period. As a r
Page 25 and 26:
Backgroundthe repair is within SRM
Page 27 and 28:
Pre-Deliveryin certain circumstance
Page 29 and 30:
Pre-Deliverylimit, however it will
Page 31 and 32:
Pre-DeliveryThe net lease is often
Page 33 and 34:
Pre-Delivery●●Fixed costFlexibl
Page 35 and 36:
Pre-Deliveryreserves rates depends
Page 37 and 38:
Pre-DeliveryAs of July 2015, sixty-
Page 39 and 40:
Deliveryredelivery conditions of th
Page 41 and 42:
DeliveryOther items, such as wheels
Page 43 and 44:
Deliverymodification and without an
Page 45 and 46:
Deliveryand registration process in
Page 47 and 48:
Deliveryimportant, as the continuou
Page 49 and 50:
Delivery3.2.6 InspectionDuring the
Page 51 and 52:
DeliveryooooGear TSN / CSN at Overh
Page 53 and 54:
Deliveryminimum standards set by IC
Page 55 and 56:
Deliveryimporting states recognize
Page 57 and 58:
DeliveryIn Europe, under EASA rules
Page 59 and 60:
Deliveryspecial procedures, phraseo
Page 61 and 62:
Deliveryprogram, which effectively
Page 63 and 64:
Section 4—Operations1Background2P
Page 65 and 66:
OperationsFor maintenance reserve c
Page 67 and 68:
OperationsIt is advisable to the Le
Page 69 and 70:
Operations4.2.7 Other Important EoD
Page 71 and 72:
Operations●●●Reduced flexibil
Page 73 and 74:
Operationspractices; for example th
Page 75 and 76:
Operations4.5 Engine SubstitutionIf
Page 77 and 78:
RedeliveryA specific example of one
Page 79 and 80:
Redelivery●Project plan issued -
Page 81 and 82:
RedeliveryoLessor or Lessor represe
Page 83 and 84:
Redeliveryincludes a “redelivery
Page 85 and 86:
Redeliverythe redelivery of the Air
Page 87 and 88:
Redeliveryrecovery plan. Lessee Pro
Page 89 and 90:
Redeliveryrepresentatives fails to
Page 91 and 92:
Redelivery4. Remediesa) If Lessee f
Page 93 and 94:
References in AnnexesAnnex V Struct
Page 95 and 96:
Annex I: Example Physical Inspectio
Page 97 and 98:
Annex I: Example Physical Inspectio
Page 99 and 100:
Annex II: Typical Redelivery Record
Page 101 and 102: Annex II: Typical Redelivery Record
Page 103 and 104: Annex II: Typical Redelivery Record
Page 105 and 106: Annex III: Typical Index of Deliver
Page 107 and 108: Annex IV: Engine Documentation Chec
Page 109 and 110: Annex V: Structural Repair File Gui
Page 117 and 118: Annex VI: Modifications Guidelinesd
Page 119 and 120: Annex VI: Modifications Guidelineso
Page 121 and 122: Annex VII: Aircraft Maintenance Pro
Page 127 and 128: Annex VIII: Airworthiness Directive
Page 135 and 136: Annex IX: Components GuidelinesAirc
Page 137 and 138: Annex IX: Components GuidelinesFAA
Page 139 and 140: Annex IX: Components GuidelinesOper
Page 141 and 142: Annex X: LLP Back-to-Birth Guidelin
Page 151: Annex X: LLP Back-to-Birth Guidelin
Page 155: www.iata.org/publishingcustserv@iat
show all

IATA Aircraft Lease Guidance

Create successful ePaper yourself

Delete template?

Save as template?