This image cannot currently be displayed. Redelivery Management and Technical Aspects of Leases Oisín Murray - Head of Technical and Asset Management
Agenda Ag ¤ Le Lease Agreement Technical Considerations ¤ Ma Maintenance Overv rview ¤ Ma Maintenance Rese serv rves ¤ Ma Maintenance Rese serv rves s Port rtability ¤ Re Redelivery Management ¤ Te Technical Records This image cannot
Le Lease Agreement Considerations Wh What you are paying for ¤ De Define Specification ¤ De Define Configuration Ma Maintenance provisions $45MM Aircraft $43MM Aircraft ¤ Le Lessee is approved by local CAA ¤ Le Lessee MRO’ O’s are FAA/EASA approved ¤ No No P PMA pa parts or D DER r repa pairs ¤ Le Lessor annual inspection rights ¤ Wo Workscopes iaw OEM recommendations ¤ Le Lessor approval required for major repairs ¤ Le Lessor representation during repairs requiring MR drawdown This image cannot
Le Lease Agreement Considerations Re Redelivery Conditions ¤ FA FAA/EASA compliant ¤ De Defined Redelivery process ¤ En Engine substitution rights ¤ Br Bridge maintenance to to OEM standard or next lessee requirements ¤ Mi Minimum condition for component conditions ¤ LLP LLP Back to Birth ¤ De Detailed list and format for technical documents ¤ No Non I n Inc ncide dent nt/Accide dent nt statement nt, PMA and nd DER r repa pair s statement nts ¤ Ma Maintenance Compensation mechanisms Current Redelivery Conditions are the next Lessee’s Delivery Conditions This image cannot
Ma Maintenance Overv rview ¤ Ai Aircraft Maintenance is heavily regulated by < The Manufacturer < The Manufacturer’s Aviation Authority < The Operator’s Local Aviation Authority ¤ Ma Manufacture rers rs pro roduce Ma Maintenance Planning Document (MP MPD) which advises Opera rators rs and Au Authorities the recommended practices and intervals when maintaining an aircraft ¤ Lo Local Aviation Authority Approval is required for an Operator’s Approved Maintenance Pr Program (AMP) P) ¤ Op Operators AMP’s can follow exactly the OE OEM’s MPD or can be customised to accommodate specific local regulatory requirements sp ¤ Re Requests to customise an AMP beyond Local Authority regulatory requirements must be made to to th the Local Auth thority ty and must t be supporte ted by substa tanti tiati ting reliability ty data ta ¤ Ma Maintenance pra ractices and interv rvals have evolved due to the use of newer r technologies, gr greater availability of reliability data, better analysis of that data and with a focus on costs wh while at the same time increasing safety ¤ Le Less requirement for Hard Time inspections and more On Condition monitoring versus previous pr us pr practice | 152 This image cannot
Le Lessee Maintenance Responsibilities ¤ Du During the lease term the lessee is responsible for all maintenance performed on the aircraft ¤ In Includes Airframe Daily (A) Checks, C-ch check cks and Heavy Maintenance ce (D) ch check cks and Engine, APU and LG Overhauls AP ¤ Le Lessees source and contract with the Maintenance providers ¤ Le Lessees ensure that chosen maintenance providers are suitably qualified often time with su superior qualifications s needed for Lesso ssor reimbursa sable maintenance eve vents ¤ Co Commitment to keeping the aircraft airworthy and maintaining the records i) in English and ii) in ii) in accordance wit ith their ir Avia iatio ion Authorit ity approvals ls ¤ Le Lessee is not allowed to undertake any modifications that would materially devalue the ai aircraf aft ¤ Le Lessee provides monthly update on the aircraft utilisation and maintenance status and ma makes the aircraft available for inspection by the lessor at least once a year ¤ Re Redeliver the aircraft from its next C-ch check ck bridged to the OEM’s MPD. All co components ca capable of operating for at least a C-ch check ck interval before next maintenance ce | 153 This image cannot
Lessor Maintenance Responsibilities Le ¤ Du During the lease term if the lessee pays the lessor maintenance reserves then the lessor is obliged to to reimburse lessee for such qualifying mainte tenance. The lease agreement t clearly identi tifies < What events a lessee can claim reimbursement for < What as a minimum needs to be performed during each event to qualify for reimbursement < Lessors right in advance to review and approve the workscope being proposed < Lessors right to oversee the maintenance being performed < The maximum amount available to lessee for such maintenance < Lessor contribution amounts above the lessee paid maintenance reserves if applicable < What is not reimbursable during a qualifying maintenance event (FOD, QEC, Transportation, inbound engine tests) ¤ Le Lessor monitors the monthly utilisation reports to < Accurately invoice monthly maintenance reserves < Ensure that aircraft and engines continue to operate and are not grounded for an unknown reason < Better track the maintenance status and forecast upcoming maintenance events ¤ Le Lessors or its agents perform physical and record inspections to < Validate the maintenance status of the aircraft < Ensure records are being kept at a suitable standard < Identify for lessor and lessee potential issues during redelivery process | 154 This image cannot
Ma Maintenance Reserv rves ¤ Ma Maintenance Reserves a are p payments based on the u utilisation of the aircraft made by by the he lessee to the he lessor to pr provision n for the he co cost of signi nifica cant nt fut utur ure aircr craft ma maintenance events. ¤ Th They are normally paid monthly in arrears and are component specific covering < Airframe Heavy Checks < Engine Overhaul < APU Overhaul < Landing Gear Overhaul ¤ Wh Why collect Maintenance Reserves < Security to protect asset value and maintain lessor exposure < Means to monitor lessee contract compliance < Positively influence maintenance workscope | 155 This image cannot
Maintenance Reserv Ma rves ¤ Maintenance Reserve Alternatives < Cash Maintenance Reserves < Letter of Credit < Lease end adjustments < Half life adjustments ¤ Maintenance Reserve rates are calculated by dividing the predicted event cost by the event interval. We customise for variations in < Flight profiles < Operating environment < Aircraft age ¤ Annual Escalation < Normal range 2.5% - 3.5% for Airframe, Landing Gear and APU < Engine Overhaul and LLP should be higher (OEM annual escalation) | 156 This image cannot
Ma Maintenance Event Interv rvals ¤ Ai Aircraft Maintenance Intervals vary little between Narrow Body and Wide Body aircraft A320 Maintenance Intervals (Months) B737 Maintenance Intervals (Months) 160 160 140 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 8Y 10Y 12Y Eng PR Eng LLP LG OH APU OH 6Y 12Y Eng PR Eng LLP LG OH APU OH A330 Maintenance Intervals (Months) B787-8 Maintenance Intervals (Months) 160 160 140 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 3Y 12Y Eng PR Eng LLP LG OH APU OH 6Y 12Y Eng PR Eng LLP LG OH APU OH | 157 This image cannot
Maintenance Event Costs Ma ¤ Ai Aircraft Maintenance Costs vary significantly between Narrow Body and Wide Body Bo A320 Maintenance Costs (US$ K) B737 Maintenance Costs (US$ K) 3,000 2,500 2,000 1,500 1,000 500 0 8Y 10Y 12Y Eng PR Eng LLP LG OH APU OH A330 Maintenance Costs (US$ K) B787-8 Maintenance Costs (US$ K) 8,000 9000 7,000 8000 7000 6,000 6000 5,000 5000 4,000 4000 3,000 3000 2000 2,000 1000 1,000 0 0 3Y 12Y Eng PR Eng LLP LG OH APU OH 6Y 12Y Eng PR Eng LLP LG OH APU OH | 158 This image cannot
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