IATA Aircraft Lease Guidance

Pre-Delivery
reserves rates depends on negotiations between the lessor and the lessee; the better the parties are informed
and have defined their expectations the faster they will get into an agreement.
Figure 5 indicates a typical saw-tooth pattern of decreasing maintenance utility and increased cost exposure,
reflecting relative maintenance intervals and event costs over time. The maintenance cost exposure in
respect of any future maintenance event and, therefore the maintenance reserve balance in respect of any
item of equipment or qualifying event will peak at the point of lowest maintenance utility (i.e. just prior to shop
visit or replacement).
Figure 5.
Maintenance Reserves vs Maintenance Events
There are a number of mechanisms commonly used in operating leases to address maintenance cost
exposures, and these are largely driven by Lessee credit considerations. Some of the more common
maintenance cost mechanisms are described below.
2.5.5 Maintenance Reserve Deposit
A maintenance reserve deposit is an initial maintenance reserve payment into an (escrow) account, to cover
the average maintenance exposure over a specific period. This amount is usually based on an average of
maintenance cost over a certain period and may not always fully cover the Lessor’s exposure. Therefore, the
maintenance reserve deposit is very much subject to commercial negotiations. The Lessee may negotiate
additional benefits, such as reimbursement of interest.
2.5.6 End of Lease Compensation
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