Aircastle (AYR)

 

While we do not directly control the operation of any of our aircraft, by virtue of holding title to the aircraft directly or through a special purpose entity, in certain jurisdictions around the world aircraft lessors are held strictly liable for losses resulting from the operation of aircraft or may be held liable for those losses based on other legal theories.

 

The lessees are required under our leases to indemnify us for, and insure against, liabilities arising out of the use and operation of the aircraft, including third-party claims for death or injury to persons and damage to property for which we may be deemed liable. Lessees are also required to maintain public liability, property damage and hull all risks and hull war risks insurance on the aircraft at agreed upon levels. However, they are not generally required to maintain political risk insurance. The hull insurance is typically subject to standard market hull deductibles based on aircraft type that generally range from $0.25 million to $1.0 million. These deductibles may be higher in some leases, and lessees usually have fleet-wide deductibles for liability insurance and occurrence or fleet limits on war risk insurance. Any hull insurance proceeds in respect of such claims shall be paid first to us as lessor in the event of loss of the aircraft or, in the absence of an event of loss of the aircraft, to the lessee to effect repairs or, in the case of liability insurance, for indemnification of third-party liabilities. Subject to the terms of the applicable lease, the balance of any hull insurance proceeds after deduction for all amounts due and payable by the lessee to the lessor under such lease must be paid to the lessee.

 

Following the terrorist attacks of September 11, 2001, aviation insurers significantly reduced the amount of insurance coverage available to airlines for liability to persons other than employees or passengers for claims resulting from acts of terrorism, war or similar events. At the same time, they significantly increased the premiums for such third-party war risk and terrorism liability insurance and coverage in general. As a result, the amount of such third-party war risk and terrorism liability insurance that is commercially available at any time may be below the amount stipulated in our leases and required by the market in general.

 

Our lessees’ insurance, including any available governmental supplemental coverage, may not be sufficient to cover all types of claims that may be asserted against us. Any inadequate insurance coverage or default by lessees in fulfilling their indemnification or insurance obligations or the lack of political risk, hull, war or third-party war risk and terrorism liability insurance will reduce the proceeds that would be received by us upon an event of loss under the respective leases or upon a claim under the relevant liability insurance, which could negatively affect our business, financial condition and results of operations.

 

 

While we do not directly control the operation of any of our
aircraft, by virtue of holding title to the aircraft directly or
through a special purpose entity, in certain jurisdictions
around the world aircraft lessors are held strictly liable for
losses resulting from the operation of aircraft or may be held
liable for those losses based on other legal theories.

 

The lessees are required under our leases to indemnify us for,
and insure against, liabilities arising out of the use and
operation of the aircraft, including third-party claims for
death or injury to persons and damage to property for which we
may be deemed liable. Lessees are also required to maintain
public liability, property damage and hull all risks and hull
war risks insurance on the aircraft at agreed upon levels.
However, they are not generally required to maintain political
risk insurance. The hull insurance is typically subject to
standard market hull deductibles based on aircraft type that
generally range from $0.25 million to $1.0 million.
These deductibles may be higher in some leases, and lessees
usually have fleet-wide deductibles for liability insurance and
occurrence or fleet limits on war risk insurance. Any hull
insurance proceeds in respect of such claims shall be paid first
to us as lessor in the event of loss of the aircraft or, in the
absence of an event of loss of the aircraft, to the lessee to
effect repairs or, in the case of liability insurance, for
indemnification of third-party liabilities. Subject to the terms
of the applicable lease, the balance of any hull insurance
proceeds after deduction for all amounts due and payable by the
lessee to the lessor under such lease must be paid to the lessee.

 

Following the terrorist attacks of September 11, 2001,
aviation insurers significantly reduced the amount of insurance
coverage available to airlines for liability to persons other
than employees or passengers for claims resulting from acts of
terrorism, war or similar events. At the same time, they
significantly increased the premiums for such third-party war
risk and terrorism liability insurance and coverage in general.
As a result, the amount of such third-party war risk and
terrorism liability insurance that is commercially available at
any time may be below the amount stipulated in our leases and
required by the market in general.

 

Our lessees’ insurance, including any available
governmental supplemental coverage, may not be sufficient to
cover all types of claims that may be asserted against us. Any
inadequate insurance coverage or default by lessees in
fulfilling their indemnification or insurance obligations or the
lack of political risk, hull, war or third-party war risk and
terrorism liability insurance will reduce the proceeds that
would be received by us upon an event of loss under the
respective leases or upon a claim under the relevant liability
insurance, which could negatively affect our business, financial
condition and results of operations.

 

 

While we do not directly control the operation of any of our aircraft, by virtue of holding title to the aircraft directly or through a special purpose entity, in certain jurisdictions around the world aircraft lessors are held strictly liable for losses resulting from the operation of aircraft or may be held liable for those losses based on other legal theories.

 

The lessees are required under our leases to indemnify us for, and insure against, liabilities arising out of the use and operation of the aircraft, including third-party claims for death or injury to persons and damage to property for which we may be deemed liable. Lessees are also required to maintain public liability, property damage and hull all risks and hull war risks insurance on the aircraft at agreed upon levels. However, they are not generally required to maintain political risk insurance. The hull insurance is typically subject to standard market hull deductibles based on aircraft type that generally range from $0.25 million to $1.0 million. These deductibles may be higher in some leases, and lessees usually have fleet-wide deductibles for liability insurance and occurrence or fleet limits on war risk insurance. Any hull insurance proceeds in respect of such claims shall be paid first to us as lessor in the event of loss of the aircraft or, in the absence of an event of loss of the aircraft, to the lessee to effect repairs or, in the case of liability insurance, for indemnification of third-party liabilities. Subject to the terms of the applicable lease, the balance of any hull insurance proceeds after deduction for all amounts due and payable by the lessee to the lessor under such lease must be paid to the lessee.

 

Following the terrorist attacks of September 11, 2001, aviation insurers significantly reduced the amount of insurance coverage available to airlines for liability to persons other than employees or