Restructuring Lessees Add To Inspection Burden
Depending on the type and depth of exposure, investors in aircraft and engine assets have been affected differently by the pandemic.
Among the unluckiest are shareholders of London-listed DP Aircraft I, which leases two widebodies each to Thai Airways and Norwegian.
Both airlines are under forms of administration and restructuring, as a result of which the latter is opting to reject all of its widebody aircraft, including the 787-8s leased from DP.
“As at the year end NAS [Norwegian] were in full breach of the lease agreements and the board had concluded that NAS had no intention to continue the lease, with the lease termination discussions commencing,“ noted DP Aircraft I chairman Jon Bridel.
In the months surrounding effective lease termination, DP made considerable efforts to ensure the two aircraft were kept in flight-ready condition in order to give them the best possible re-marketing chances.
These included three on-site inspections between July and August 2020 and an onsite presence for most of each week after Norwegian entered examinserhsip in November.
Furthermore, it set up a line of action to bring back the aircraft in flight-ready condition. This included the relocation and reinstallation of the titled engines to the respective aircraft.
In February 2021, though, lenders for those two aircraft enforced their securities and took control of the assets, which they are now seeking to sell.
The situation with the two Thai Airways 787s is marginally better, with DP recently having reached an agreement with its lenders regarding new lease arrangements with the flag carrier, which has signed a letter of intent to pay rents based on utilization until the end of 2022, and then pay a lower lease rate thereafter.
Nonetheless, DP has been obliged to perform repeated inspections to ensure aircraft are kept in the appropriate condition.
The current roadmap is that both aircraft will be brought back to flight-ready condition by Thai Airways, pursuant which they will be ferried to Don Muang in Bangkok to undergo heavy maintenance checks in May and June 2021.