Structuring Aircraft Acquisition Transactions: Purchase, Lease, and Financing Alternatives
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Thursday, August 25, 2022
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course 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 significant clauses in the deal documents.
Mr. Givray has devoted his legal work to aviation: the acquisition, divestiture, and merger of aviation businesses; the formation and deployment of aviation joint ventures; the leasing and financing of helicopters and fixed-wing aircraft; the development, certification, manufacture, sale, maintenance, repair, and overhaul of aviation products; aviation bankruptcy strategies (offensive and defensive); and aviation litigation, in the U.S. and abroad. He also serves as general counsel of The NORDAM Group LLC, headquartered in Tulsa, Oklahoma (2,000 stakeholders; facilities in the U.S., Mexico, Wales, and England; and locations in France and Singapore).
Ms. Maguire’s practice focuses on the aviation industry, where she counsels clients in complex commercial transactions and general corporate matters.
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). Still, 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 the 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 significant title, registration, regulatory, and other deal points, as well as clauses to consider when documenting the transaction for acquiring a U.S. or foreign aircraft.
- Secured loan structure
- Operating or "true lease"
- Finance lease structures
- Advantages and disadvantages of each structure for purchaser/borrower/lessee
- Clauses that the acquirer must "get right" in each structure
- Key steps to take at the FAA, International Registry, and foreign aviation authorities
- Insurance and maintenance requirements to consider
- Considerations when acquiring aircraft from outside the U.S.
The panel will review these and other noteworthy issues:
- How do secured loans, operating leases, and financing leases favor and disfavor the acquirer of an airplane?
- How should critical clauses in deal documents be drafted when acquiring an aircraft?
- What legal due diligence should be conducted when purchasing or financing an aircraft?
- What additional rules apply when acquiring an aircraft from a source outside of the U.S.?
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