IATA Aircraft Lease Guidance

Guidance Material and Best Practices for Aircraft Leases
Representations are always made concerning the past and present only whilst warranties and covenants
relate to the future conduct of a party.
The Lessee should be wary of representations which are repeated over the course of the lease. Repeating
representations must be assessed and renegotiated, or if included in a lease, subsequently monitored during
the lease term when necessary. This is especially relevant where a repeating representation is partly or
wholly out of the Lessee’s control, such as where a representation is subject to a change in national law (e.g.
tax related). The Lessee must consider the potential for an inadvertent or technical breach which could
trigger a termination right for the Lessor.
The representations and warranties in a lease agreement are negotiated between the parties taking into
account the particular circumstances of the parties and the transaction structure, including any particular
jurisdictional issues. A typical set of representations might include some or all of the following:
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No default has occurred and is continuing
Corporate status of both parties
Power and authority to enter into lease
Valid execution of lease
Legal validity and enforceability of each parties’ obligations
Non conflict of Lessee obligations with its other obligations (i.e. Lessee creditor agreements permitting a
charge over the lease aircraft)
All necessary Lessee authorizations, consents, and registrations in order to fulfill its obligations under the
lease
No sovereign immunity
Financial accuracy of statements
Choice of governing law and submission to jurisdiction is valid and binding
2.3 Conditions Precedent
The conditions precedent (CP) to delivery under any lease agreement are those pre-conditions, whether
factual, documentary or otherwise, which must be satisfied before the relevant party is obliged to proceed
with delivery and acceptance, and the lease term commences. In most aircraft leases it is necessary for both
parties to satisfy certain conditions precedent. In the event of a failure by one party to satisfy any of the
conditions precedent, the non-defaulting party is entitled not to proceed with delivery or acceptance of the
aircraft, or alternatively may agree to proceed on the basis of the waiver or deferral of the relevant CP as
discussed below.
At delivery, certain CPs may be waived or deferred by the non-defaulting party in order to facilitate the
transfer process and avoid delay. The party which has failed to satisfy the relevant CP may propose to
convert these CPs into Lessee covenants, to be complied with in accordance within a mutually agreed time
8 4 th Edition 2017