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These excerpts taken from the AYR 10-K filed Mar 2, 2009. Maintenance
Payments
Typically, under an operating lease, the lessee is required to
make payments for heavy maintenance, overhaul or replacement of
certain high-value components of the aircraft. These maintenance
payments are based on hours or cycles of utilization or on
calendar time, depending upon the component, and are required to
be made monthly in arrears or at the end of the lease term.
Whether to permit a lessee to make maintenance payments at the
end of the lease term, rather than requiring such payments to be
made monthly, depends on a variety of factors, including the
creditworthiness of the lessee, the level of security deposit
which may be provided by the lessee and market conditions at the
time we enter into the lease. If a lessee is making monthly
maintenance payments, we would typically be obligated to use the
funds paid by the lessee during the lease term to reimburse the
lessee for costs they incur for heavy maintenance, overhaul or
replacement of certain high-value components, usually shortly
following completion of the relevant work.
We record maintenance payments paid by the lessee as accrued
maintenance liabilities in recognition of our contractual
commitment to refund such receipts as discussed above. In these
contracts, we do not recognize such maintenance payments as
revenue during the lease. Reimbursements to the lessee upon the
receipt of evidence of qualifying maintenance work are charged
against the existing accrued maintenance liability. We defer
income recognition of all maintenance reserve payments collected
until the end of the lease, when we are able to determine the
amount by which reserve payments received exceed costs to be
incurred by the current lessee in performing scheduled
maintenance.
In addition, many of our leases contain provisions which may
require us to pay a portion of costs for heavy maintenance,
overhaul or replacement of certain high-value components in
excess of the amounts paid to us by the lessee. We estimate the
amount of our liability for such costs, typically for the first
major maintenance event for the airframe, engines, landing gear
and auxiliary power units,
Table of Contents
expected to be paid to the lessee based on assumed utilization
of the related aircraft by the lessee, the anticipated amount of
the maintenance event cost and estimated amounts the lessee is
responsible to pay. This estimated maintenance liability is
recognized as a reduction of lease revenue on a straight-line
basis as lease incentives over the life of the lease.
Maintenance Payments Typically, under an operating lease, the lessee is required to make payments for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft. These maintenance payments are based on hours or cycles of utilization or on calendar time, depending upon the component, and are required to be made monthly in arrears or at the end of the lease term. Whether to permit a lessee to make maintenance payments at the end of the lease term, rather than requiring such payments to be made monthly, depends on a variety of factors, including the creditworthiness of the lessee, the level of security deposit which may be provided by the lessee and market conditions at the time we enter into the lease. If a lessee is making monthly maintenance payments, we would typically be obligated to use the funds paid by the lessee during the lease term to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components, usually shortly following completion of the relevant work. We record maintenance payments paid by the lessee as accrued maintenance liabilities in recognition of our contractual commitment to refund such receipts as discussed above. In these contracts, we do not recognize such maintenance payments as revenue during the lease. Reimbursements to the lessee upon the receipt of evidence of qualifying maintenance work are charged against the existing accrued maintenance liability. We defer income recognition of all maintenance reserve payments collected until the end of the lease, when we are able to determine the amount by which reserve payments received exceed costs to be incurred by the current lessee in performing scheduled maintenance. In addition, many of our leases contain provisions which may require us to pay a portion of costs for heavy maintenance, overhaul or replacement of certain high-value components in excess of the amounts paid to us by the lessee. We estimate the amount of our liability for such costs, typically for the first major maintenance event for the airframe, engines, landing gear and auxiliary power units,
Table of Contentsexpected to be paid to the lessee based on assumed utilization of the related aircraft by the lessee, the anticipated amount of the maintenance event cost and estimated amounts the lessee is responsible to pay. This estimated maintenance liability is recognized as a reduction of lease revenue on a straight-line basis as lease incentives over the life of the lease. Maintenance
Payments
Typically, under an operating lease, the lessee is required to
make payments for heavy maintenance, overhaul or replacement of
certain high-value components of the aircraft. These maintenance
payments are based on hours or cycles of utilization or on
calendar time, depending upon the component, and are required to
be made monthly in arrears or at the end of the lease term.
Whether to permit a lessee to make maintenance payments at the
end of the lease term, rather than requiring such payments to be
made monthly, depends on a variety of factors, including the
creditworthiness of the lessee, the level of security deposit
which may be provided by the lessee and market conditions at the
time we enter into the lease. If a lessee is making monthly
maintenance payments, we would typically be obligated to use the
funds paid by the lessee during the lease term to reimburse the
lessee for costs they incur for heavy maintenance, overhaul or
replacement of certain high-value components, usually shortly
following completion of the relevant work.
We record maintenance payments paid by the lessee as accrued
maintenance liabilities in recognition of our contractual
commitment to refund such receipts. In these contracts, we do
not recognize such maintenance payments as revenue during the
lease. Reimbursements to the lessee upon the receipt of evidence
of qualifying maintenance work are charged against the existing
accrued maintenance liability. We defer income recognition of
all maintenance reserve payments collected until the end of the
lease, when we are able to determine the amount by which reserve
payments received exceed costs to be incurred by the current
lessee in performing scheduled maintenance.
In addition, many of our leases contain provisions which may
require us to pay a portion of costs for heavy maintenance,
overhaul or replacement of certain high-value components in
excess of the amounts paid to us by the lessee. We estimate the
amount of our liability for such costs paid to the lessee based
on assumed utilization of the related aircraft by the lessee,
the anticipated amount of the maintenance event cost and
estimated amounts the lessee is responsible to pay. This
estimated maintenance liability is recognized as a reduction of
lease revenue on a straight-line basis as lease incentives over
the life of the lease.
Maintenance Payments Typically, under an operating lease, the lessee is required to make payments for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft. These maintenance payments are based on hours or cycles of utilization or on calendar time, depending upon the component, and are required to be made monthly in arrears or at the end of the lease term. Whether to permit a lessee to make maintenance payments at the end of the lease term, rather than requiring such payments to be made monthly, depends on a variety of factors, including the creditworthiness of the lessee, the level of security deposit which may be provided by the lessee and market conditions at the time we enter into the lease. If a lessee is making monthly maintenance payments, we would typically be obligated to use the funds paid by the lessee during the lease term to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components, usually shortly following completion of the relevant work. We record maintenance payments paid by the lessee as accrued maintenance liabilities in recognition of our contractual commitment to refund such receipts. In these contracts, we do not recognize such maintenance payments as revenue during the lease. Reimbursements to the lessee upon the receipt of evidence of qualifying maintenance work are charged against the existing accrued maintenance liability. We defer income recognition of all maintenance reserve payments collected until the end of the lease, when we are able to determine the amount by which reserve payments received exceed costs to be incurred by the current lessee in performing scheduled maintenance. In addition, many of our leases contain provisions which may require us to pay a portion of costs for heavy maintenance, overhaul or replacement of certain high-value components in excess of the amounts paid to us by the lessee. We estimate the amount of our liability for such costs paid to the lessee based on assumed utilization of the related aircraft by the lessee, the anticipated amount of the maintenance event cost and estimated amounts the lessee is responsible to pay. This estimated maintenance liability is recognized as a reduction of lease revenue on a straight-line basis as lease incentives over the life of the lease. This excerpt taken from the AYR 8-K filed Sep 26, 2007. Maintenance Payments Under all of our leases, the lessee is required to make payments for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft. These maintenance payments are based on hours or cycles of utilization or on calendar time, depending upon the component, and are required to be made monthly in arrears or at the end of the lease term. Whether to permit a lessee to make maintenance payments at the end of the lease term, rather than requiring such payments to be made monthly, will depend on a variety of factors, including the creditworthiness of the lessee, the level of security deposit which may be provided by the lessee and market conditions at the time. If a lessee is making monthly maintenance payments, we would typically be obligated to use the funds paid by the lessee during the lease term to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components, usually shortly following completion of the relevant work. We record maintenance payments paid by the lessee as maintenance payments in recognition of our contractual commitment to refund such receipts. In these contracts, we do not recognize such maintenance payments as revenue during the lease. Reimbursements to the lessee upon the receipt of evidence of qualifying maintenance work are charged against the existing maintenance payments. We defer income recognition of all maintenance payments collected until such time as we can reasonably estimate the amount
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by which reserve payments received exceed costs to be incurred by the current lessee or subsequent lessees in performing scheduled maintenance. | EXCERPTS ON THIS PAGE:
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