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AYR » Topics » If lessees are unable to fund their maintenance requirements on our aircraft, our cash flow and our ability to meet our debt obligations or to pay dividends on our common shares could be adversely affected.These excerpts taken from the AYR 10-K filed Mar 2, 2009. If
lessees are unable to fund their maintenance requirements on our
aircraft, our cash flow and our ability to meet our debt
obligations or to pay dividends on our common shares could be
adversely affected.
The standards of maintenance observed by the various lessees and
the condition of the aircraft at the time of sale or lease may
affect the future values and rental rates for our aircraft.
Under our leases, the relevant lessee is generally responsible
for maintaining the aircraft and complying with all governmental
requirements applicable to the lessee and the aircraft,
including, without limitation, operational, maintenance, and
registration requirements and airworthiness directives (although
in certain cases we have agreed to share the cost of complying
with certain airworthiness directives). Failure of a lessee to
perform required maintenance with respect to an aircraft during
the
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term of a lease could result in a decrease in value of such
aircraft, an inability to lease the aircraft at favorable rates
or at all, or a potential grounding of such aircraft, and will
likely require us to incur maintenance and modification costs
upon the expiration or earlier termination of the applicable
lease, which could be substantial, to restore such aircraft to
an acceptable condition prior to sale or re-leasing.
Certain of our leases provide that the lessee is required to
make periodic payments to us during the lease term in order to
provide cash reserves for the payment of maintenance tied to the
usage of the aircraft. In these leases there is an associated
liability for us to reimburse the lessee for such scheduled
maintenance performed on the related aircraft, based on formulas
tied to the extent of any of the lessee’s maintenance
reserve payments. In some cases, we are obligated, and in the
future may incur additional obligations pursuant to the terms of
the leases, to contribute to the cost of maintenance work
performed by the lessee in addition to maintenance reserve
payments.
Our operational cash flow and available liquidity may not be
sufficient to fund our maintenance requirements, particularly as
our aircraft age. Actual rental and maintenance payments by
lessees and other cash that we receive may be significantly less
than projected as a result of numerous factors, including
defaults by lessees and our potential inability to obtain
satisfactory maintenance terms in leases. Certain of our leases
do not provide for any periodic maintenance reserve payments to
be made by lessees to us in respect of their maintenance
obligations, and it is possible that future leases will not
contain such requirements. Typically, these lessees are required
to make payments at the end of the lease term.
Even if we are entitled to maintenance payments, they may not
cover the entire expense of the scheduled maintenance they are
intended to fund. In addition, maintenance payments typically
cover only certain scheduled maintenance requirements and do not
cover all required maintenance and all scheduled maintenance.
Furthermore, lessees may not meet their maintenance payment
obligations or perform required scheduled maintenance. Any
significant variations in such factors may materially adversely
affect our business and particularly our cash position, which
would make it difficult for us to meet our debt obligations or
to pay dividends on our common shares.
If lessees are unable to fund their maintenance requirements on our aircraft, our cash flow and our ability to meet our debt obligations or to pay dividends on our common shares could be adversely affected. The standards of maintenance observed by the various lessees and the condition of the aircraft at the time of sale or lease may affect the future values and rental rates for our aircraft. Under our leases, the relevant lessee is generally responsible for maintaining the aircraft and complying with all governmental requirements applicable to the lessee and the aircraft, including, without limitation, operational, maintenance, and registration requirements and airworthiness directives (although in certain cases we have agreed to share the cost of complying with certain airworthiness directives). Failure of a lessee to perform required maintenance with respect to an aircraft during the
Table of Contentsterm of a lease could result in a decrease in value of such aircraft, an inability to lease the aircraft at favorable rates or at all, or a potential grounding of such aircraft, and will likely require us to incur maintenance and modification costs upon the expiration or earlier termination of the applicable lease, which could be substantial, to restore such aircraft to an acceptable condition prior to sale or re-leasing. Certain of our leases provide that the lessee is required to make periodic payments to us during the lease term in order to provide cash reserves for the payment of maintenance tied to the usage of the aircraft. In these leases there is an associated liability for us to reimburse the lessee for such scheduled maintenance performed on the related aircraft, based on formulas tied to the extent of any of the lessee’s maintenance reserve payments. In some cases, we are obligated, and in the future may incur additional obligations pursuant to the terms of the leases, to contribute to the cost of maintenance work performed by the lessee in addition to maintenance reserve payments. Our operational cash flow and available liquidity may not be sufficient to fund our maintenance requirements, particularly as our aircraft age. Actual rental and maintenance payments by lessees and other cash that we receive may be significantly less than projected as a result of numerous factors, including defaults by lessees and our potential inability to obtain satisfactory maintenance terms in leases. Certain of our leases do not provide for any periodic maintenance reserve payments to be made by lessees to us in respect of their maintenance obligations, and it is possible that future leases will not contain such requirements. Typically, these lessees are required to make payments at the end of the lease term. Even if we are entitled to maintenance payments, they may not cover the entire expense of the scheduled maintenance they are intended to fund. In addition, maintenance payments typically cover only certain scheduled maintenance requirements and do not cover all required maintenance and all scheduled maintenance. Furthermore, lessees may not meet their maintenance payment obligations or perform required scheduled maintenance. Any significant variations in such factors may materially adversely affect our business and particularly our cash position, which would make it difficult for us to meet our debt obligations or to pay dividends on our common shares. This excerpt taken from the AYR 10-Q filed Nov 17, 2008. If
lessees are unable to fund their maintenance requirements on our
aircraft, our cash flow and our ability to meet our debt
obligations or to pay dividends on our common shares could be
adversely affected.
The standards of maintenance observed by the various lessees and
the condition of the aircraft at the time of sale or lease may
affect the future values and rental rates for our aircraft.
Under our leases, the relevant lessee is generally responsible
for maintaining the aircraft and complying with all governmental
requirements applicable to the lessee and the aircraft,
including, without limitation, operational, maintenance, and
registration requirements and airworthiness directives (although
in certain cases we have agreed to share the cost of complying
with certain airworthiness directives). Failure of a lessee to
perform required maintenance with respect to an aircraft during
the term of a lease could result in a diminution in value of
such aircraft, an inability to lease the aircraft at favorable
rates or at all, or a potential grounding of such aircraft, and
will likely require us to incur maintenance and modification
costs upon the expiration or earlier termination of the
applicable lease, which could be substantial, to restore such
aircraft to an acceptable condition prior to sale or re-leasing.
Certain of our leases provide that the lessee is required to
make periodic payments to us during the lease term in order to
provide cash reserves for the payment of maintenance tied to the
usage of the aircraft. In these leases there is an associated
liability for us to reimburse the lessee for such scheduled
maintenance performed on the related aircraft, based on formulas
tied to the extent of any of the lessee’s maintenance
reserve payments. In some cases, we are obligated, and in the
future may incur additional obligations pursuant to the terms of
the leases, to contribute to the cost of maintenance work
performed by the lessee in addition to maintenance reserve
payments.
Our operational cash flow and available liquidity may not be
sufficient to fund our maintenance requirements, particularly as
our aircraft age. Actual rental and maintenance payments by
lessees and other cash that we receive may be significantly less
than projected as a result of numerous factors, including
defaults by lessees and our potential inability to obtain
satisfactory maintenance terms in leases. Certain of our leases
do not provide for any periodic maintenance reserve payments to
be made by lessees to us in respect of their maintenance
obligations, and it is possible that future leases will not
contain such requirements. Typically, these lessees are required
to make payments at the end of the lease term.
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Even if we are entitled to maintenance payments, they may not
cover the entire expense of the scheduled maintenance they are
intended to fund. In addition, maintenance payments typically
cover only certain scheduled maintenance requirements and do not
cover all required maintenance and all scheduled maintenance.
Furthermore, lessees may not meet their maintenance payment
obligations or perform required scheduled maintenance. Any
significant variations in such factors may materially adversely
affect our business and particularly our cash position, which
would make it difficult for us to meet our debt obligations or
to pay dividends on our common shares.
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