Structuring Aircraft Acquisition Transactions: Purchase, Lease and Financing Alternatives for Aircraft Operators and their Counsel

Recording of a 90-minute premium CLE webinar with Q&A


Conducted on Thursday, December 12, 2019

Recorded event now available

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Program Materials

This CLE webinar will examine the purchase, lease, and financing structures available for acquiring aircraft. The panel will examine specific structures involving purchase contracts, security agreements and leasing options. The panel will also discuss underlying concerns for buyers/lessees/borrowers and their counsel at each step of the acquisition process through the closing, including title transfer, registration, and major clauses in the deal documents where legal advice is needed by clients who are acquiring an aircraft for the first time or just adding to their fleets.

Description

An aircraft can be acquired by a secured loan, an operating lease, a financing lease, or variations of these methods. Counsel advising the acquirer should have a thorough understanding of the structuring options available, their documentation, and the advantages and disadvantages of each.

A secured loan allows the purchaser-borrower to take immediate title to the aircraft (and lease it to a different operator), but it is typically full recourse to the purchaser-borrower. Provisions customary to secured loan transactions will restrict the owner's ability to operate its business and incur further debt. In contrast, operating lessees have greater flexibility in managing their fleet because they can increase their lift capacity only as and when needed by just signing an operating lease and returning the aircraft when no longer needed.

In a finance lease structure, the parties structure the lease so that rent payments return all or substantially all of the acquisition price. The risks and rewards incident to aircraft ownership transfer to the financing lessee and the lessee has the right or obligation to purchase the aircraft at the end of the lease term. A leveraged lease is similar to a finance lease except that the financer provides the financing lessee with loans to cover a portion of the acquisition cost of the aircraft.

Listen as our authoritative panel discusses these and other alternatives to acquiring an aircraft. The panel will also review the major title, registration, regulatory and other deal points, together with the major clauses to consider when documenting the transaction for acquiring a U.S. or foreign aircraft.

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Outline

  1. Secured loan structure
  2. Operating or "true lease"
  3. Finance lease structures
  4. Advantages and Disadvantages of each structure for purchaser/borrower/lessee
  5. Clauses that the acquirer must "get right" in each structure
  6. Key steps to take at the FAA, International Registry, and foreign aviation authorities
  7. Insurance & Maintenance requirements to consider
  8. Considerations when acquiring aircraft from outside the U.S.

Benefits

The panel will review these and other noteworthy issues:

  • How does a secured loan, operating lease, and financing lease favor and disfavor the acquirer of an airplane?
  • How should key clauses in deal documents be drafted when acquiring an aircraft?
  • What legal due diligence should be conducted when purchasing or financing aircraft?
  • What additional rules apply when acquiring an aircraft from a source outside of the U.S.?

Faculty

Givray, Albert
Albert Givray

Partner
Davis Graham & Stubbs

Mr. Givray has devoted his legal work to aviation: the acquisition, divestiture, and merger of aviation businesses; the...  |  Read More

Turner Budd-Toni
Toni Turner Budd

Of Counsel
Davis Graham & Stubbs

Ms. Turner Budd joined the Intellectual Property, Aviation, and Finance & Acquisitions Groups at Davis Graham &...  |  Read More

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