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Minimise the inherent risks and liabilities, identity aviation requirements
The aviation industry is greatly affected by the continually changing economic climate. The often technical and complex issues, as well as the myriad of liabilities surrounding it, can make financing aircraft a potentially expensive minefield.
Despite the risks involved, aviation finance is a potentially lucrative venture. With the correct financing and security structures, in conjunction with effective tax planning, many of these liabilities can be identified and accounted for.
This course, organised in association with course director Kenneth Gray, aims to provide an understanding of the key issues involved in aviation finance in order to identify and minimise the inherent risks and liabilities. The course utilises a variety of lectures and workshops to analyse the key legal, regulatory and documentary issues involved in aviation finance.
About the course
Topics covered include:
- Common financing tools
- Legal documentation
- Different types of leases and similar instruments
- Ownership rights
- Analysis of some specific events of default
- Residual value guarantees
- Pre-delivery payment financing
Introduction to Aircraft Finance
- What makes it so different?
Who are the different players in the market?
- Financial institutions
- Operating lessors
- Scheduled and charter airlines
- Insurance companies
Introduction to Common Financing Tools
- Secured Loans
- Operating and Finance Leases
- Residual Value Guarantees
- Securitisation Products
- Tax Leases
- Export Credits
Overview of the Basic Legal Documentation
- Purchase Agreement
- Loan, Lease, Mortgage
- Assignment of Lease
- Assignment of Insurances
Ownership, Different types of leases and similar instruments
- How do you decide what type of lease you want?
- Operating leases and finance leases
- Hire purchase agreements
- Sale and leasebacks
- Tax Leases
Overview of the Contents of a Lease
- Why the different clauses are there and what they seek to achieve?
- Covenants and Conditions Precedent
- Examination of those that are specific to aircraft finance transaction
- Maintenance, Operations and Return Condition
- Why might a lessee want to sub-lease an aircraft?
- What concerns might a bank have if a lessee requests the right to sub-lease an aircraft
- How can these be reconciled?
Insurances: The Contractual Provisions
- What is a contract of insurance?
- The rights of a creditor relating to a contract of insurance
Insurances: The Policy
- A practical review of the actual contents of an insurance policy, its terms and their impact and consideration of how the policy and the insurance clauses have been affected by world events.
- Mortgages and other types of security
- Aircraft Mortgages
- A comparison of different jurisdiction and international conventions
- Taking security over the aircraft, its engines and constituent parts
- Other Liens
- Compared to rights of mortgagee
- Compared to rights of a mortgagee
- Worked example on the rights of owners & mortgages on an airline’s default
The Cape Town Convention
- Why they are done
- Spcs: different kinds and when they are used
- Insolvency Proofing
- What they are
- Double Tax Treaties
- Solving potential problems
- Legal strategy
- Dealing with issues arising from a multiplicity of jurisdictions
- Legal opinions: what really matters
Structuring a Tax Lease
- What is a tax lease?
- What are the parties’ objectives and how can they be achieved?
- Introduction to a common defeasance structure
- What are the concerns of the finance parties and how can they best be addressed?
- Combining the requirements of parties to a transaction: how to structure a deal so that everyone’s concerns are dealt with.
Residual Value Guarantees
- What they are
- How they interact with the lease documents
- Structuring a synthetic operating lease
Workshop: Matching the requirements of a residual value guarantor with those of a lender.
- What are export credit agencies, what support do they give and what are their requirements in aircraft finance transactions?
- How can export credit facilities be combined with other structures – tax leases
Workshop: What issues arise when taking security over a purchase agreement?
Pre-Delivery Payment Facilities
- How to structure a PDP facility
- What security is available for Lenders to a PDP facility?
- What products are available on the market
- What are the concerns of an airline?
- EETCs: what they are and how they are structured
- How they can be combined with other structures
- ECA wraps
- Lease portfolio securitisations
Workshop: Identifying and solving problems in complicated aircraft finance transactions.