A Preliminary Review of an Engine Shop Visit Maintenance Reserves Claim and Identification: Aircraft Leasing Assignment, UCD

Instructions

Part I requires a preliminary review of an engine shop visit maintenance reserves claim and identification of the total reimbursement amount the lessee is entitled to receive from the lessor, including a potential contribution related to the time the engine was operated before delivery to the current lessee. The student is expected to draft a statement to the lessee acknowledging the receipt of the claim, indicating the preliminary qualifying amount and requesting any further information as may be required. Subsequently, a review of the required redelivery conditions indicates a further maintenance event is necessary. A short internal report should be written to assess the current work scope and to consider the possible effects a change to the Engine Performance Restoration release life would have.

Requirements: In Part I, the student will deliver

(i) an individual statement to the lessee to confirm the lessor maintenance contribution amount, including a list of all the information pending to complete the review with any further lessor comments. All support calculations in Excel format.

Following a review of the redelivery conditions the student will create

(ii) an internal report summarising the work scope performed at current maintenance event including a comparative analysis to clarify the impact if the Engine Performance Restoration release life had been altered.

Part II involves a commercial and technical analysis and forecast to outline the maintenance requirements and modifications needed to meet current lessee’s redelivery conditions and those of the next lessee’s proposed delivery conditions based on information provided.

Requirements: For Part II, the student will analyse and evaluate a proposed aircraft lease opportunity. Substantiation of your major maintenance event forecasts must be made based on maintenance schedules and cost estimates, the utilisation profiles of both operators and their delivery/redelivery conditions must be considered. The (iii) final report will be for your SVP Marketing.

PART I – ENGINE MAINTENANCE CLAIM – ADDITIONAL RESOURCES

Engine Maintenance Claim

An aircraft in your portfolio has not shown signs of increased engine deterioration; however, the operator has removed the engine for accomplishment of a performance restoration and LLP replacement of the Low Pressure Turbine (LPT) module in accordance with manufacturer’s guidelines. As required by the lease, the operator has notified you that they intend to send the engine to a shop and that the workscope being undertaken will entitle them to claim from the maintenance reserve fund. On behalf of the lessor, you advise the operator that this may not qualify for reimbursement as per the lease agreement and request to keep you notified on the progress of the shop visit. Despite timely emails to the operator requesting an update, you do not hear any news for 6 months.

Following 6 months, the operator submits an invoice for maintenance contribution to the value of $1,600,620 including VAT and handing costs. The operator also provides verification that this is the actual cost of the shop visit as billed by the engine shop.

i. Based upon the “Given Information” and “Lease Extracts”, carry out an initial assessment of the actual amounts owed by the Lessor (the “Lessor Maintenance Contribution”), if any, and provide your supporting calculations in excel format. Note that you may not have all the required information to make a final determination. Following this, summarise your findings to the lessee in response to their claim outlining the actual amount you determine to be owed by the lessor, any concerns and questions you may have in order to finalise the assessment.

ii. Following a review of the lease redelivery conditions, you discover a requirement for the operator to perform an Engine Performance Restoration event on the core modules immediately prior to the lease expiry date. You review the current utilisation and forecast that the engine will operate a total of 27,000 flight hours during the entire lease term. Based on these findings, compose a short report summarising the reasons why the work scope performed at current shop visit was/or was not the most cost efficient. If the minimum contractual Engine Performance Restoration release life had increased from 5,000 Flight Cycles to 6,000 Flight Cycles, would it have had an impact on the workscope performed?

PART II – AIRCRAFT CONDITION REVIEW AND

ANALYSIS – ADDITIONAL RESOURCES

An aircraft in your portfolio is currently on lease to “ExcellAir” and has a contractual lease expiry date of 15 January 2021. Your SVP Marketing has engaged with a new Lessee “SupAir” which is interested in leasing the aircraft. Your leasing company has received an official Request for Proposal from SupAir and you have been requested by the SVP Marketing to assist in the preparation of a report on the required maintenance to be performed by the Lessor post return of the aircraft from ExcellAir.

Utilising the “Data Package” and Request for Proposal from SupAir, prepare a report outlining the gaps between the expected condition of the aircraft at return from ExcellAir and the condition requested by SupAir.

The report should include a detailed review of:

a) Major events expected to be performed at redelivery by ExcellAir.
b) Major events expected to be completed prior to delivery to SupAir.
c) Major events and modifications required to be completed by the lessor to fulfil the requirements specified within the Request for Proposal.
d) Where possible, indicate the cost of each event and / or modification and identify the parties liable to cover these costs.

To enable you to perform this analysis, a comprehensive Data Package is available that provides the Request for Proposal, Redelivery Conditions (Lease Agreement extract, Lessor Management System export), Aircraft Technical Specification and the Lessor’s Handbook.