Aircraft Sale And Leaseback Agreement

“How is he, where is it.” In the case of an autonomous sale of a used aircraft, the seller makes standard organizational assurances and guarantees that at its conclusion, he transfers to the buyer a good property free of pledge rights other than those created by the buyer. Where the seller is an airline and the sale is not part of a sale-sale, it is sometimes possible to obtain several assurances from the seller regarding the condition of the aircraft that a seller who is a leasing company would not give – for example, that the airline`s seller has maintained the aircraft in accordance with its maintenance program approved by the airworthiness authority. In exchange for the seller`s limited assurances, the buyer has the right to perform a regular “pre-buy” inspection of the aircraft, including its technical records. Such inspections could include full video-endoscope inspections of engines, maximum engine power assurance operations, and demonstration flight. The buyer may obtain the existing certificate of airworthiness of the aircraft and, if the aircraft is re-registered in another country, a newly issued export certificate of airworthiness, issued by the airworthiness authority of the existing country of registration. The buyer can therefore confirm that the aircraft is fit to fly at the time of inspection and delivery. However, there is generally no guarantee that the aircraft will remain fit to fly for a new operating cycle after closure. However, if the aircraft is re-leased to the seller, even for a short period of time, the buyer enjoys the benefit of a full set of leased return conditions, including that the aircraft is in maintenance condition, is maintained in accordance with the approved maintenance program and is fit to fly. Therefore, the seller of the airline bears the persistent operational risk of the aircraft and undertakes to repair it at the end of the lease agreement, even if the specific condition that led to the aircraft being fit to fly or not to operate is due to conditions that developed at the time of the closing of the sale and that, otherwise, would have been risks for the buyer in the event of a sale without leaseback. For this reason, it is better for a buyer to structure a transaction to transfer a type of aircraft from an airline as a sale-lease rather than selling or selling in advance with immediate deliveries or deliveries over time. IndiGo uses both aspects as a central element of its fleet strategy.

The massive volume of orders allows it to acquire aircraft at a very competitive cost (consider it this way: if customers buy in large quantities, they can negotiate at good prices). When negotiating the sales contract, it is important to consider two things: (1) The sale is immediately followed by a lease to the seller; and (2) Although leasing is generally structured as a true leasing for tax, accounting and legal purposes, sale and lease is financing in favour of the airline for which the ownership, operation and maintenance of the aircraft does not change at the time of conclusion. . . .