Due Diligence in Aircraft Financing and Leasing
Expert-defined terms from the Executive Certificate in Aircraft Financing and Leasing course at Greenwich School of Business and Finance. Free to read, free to share, paired with a professional course.
Aircraft is a general term that refers to any machine that is capable of flig… #
In the context of aircraft financing and leasing, this term is used to describe the asset being financed or leased. Related terms include aviation, airline, and aerospace.
Aircraft appraisal is the process of determining the value of an aircraft, which… #
This process involves an examination of the aircraft's condition, configuration, and maintenance history, as well as an analysis of market trends and comparable sales data. Related terms include valuation, assessment, and inspection.
Aircraft certification refers to the process by which an aircraft is deemed airw… #
This process involves a series of inspections, tests, and evaluations to ensure that the aircraft meets strict safety and performance standards. Related terms include airworthiness, compliance, and regulation.
Aircraft financing is the process of obtaining funding for the purchase or lease… #
This can involve a variety of financing options, including loans, leases, and other forms of debt or equity financing. Related terms include leasing, borrowing, and investment.
Aircraft inspection is the process of examining an aircraft to determine its con… #
This process is typically performed by a qualified inspector and may involve a visual examination of the aircraft's exterior and interior, as well as an analysis of its maintenance records and other documentation. Related terms include examination, survey, and audit.
Aircraft leasing is the process of renting an aircraft from a lessor for a speci… #
This can provide a more flexible and cost-effective alternative to purchasing an aircraft outright. Related terms include rental, charter, and lease agreement.
Aircraft maintenance refers to the routine checks, repairs, and upgrades that ar… #
This can include tasks such as scheduled maintenance, repairs, and overhauls. Related terms include repair, overhaul, and refurbishment.
Aircraft operator is a person or organization that is responsible for the operat… #
This can include tasks such as flight planning, crew management, and maintenance scheduling. Related terms include airline, carrier, and flight department.
Aircraft registration is the process of registering an aircraft with a regulator… #
This process involves providing documentation and information about the aircraft, including its make, model, and serial number, as well as the name and address of its owner. Related terms include certification, licensing, and title.
Aircraft valuation is the process of determining the value of an aircraft, which… #
This process involves an analysis of market trends, comparable sales data, and other factors that can affect the value of the aircraft. Related terms include appraisal, assessment, and pricing.
Airworthiness refers to the condition of an aircraft in terms of its safety and… #
This can include factors such as the aircraft's design, construction, and maintenance, as well as its compliance with regulatory requirements. Related terms include certification, compliance, and safety.
Asset #
based financing is a type of financing that is secured by a specific asset, such as an aircraft. This can provide a more flexible and cost-effective alternative to traditional forms of financing, such as loans or bonds. Related terms include secured financing, collateral, and leveraging.
Aviation insurance is a type of insurance that is designed to protect against ri… #
Related terms include aircraft insurance, hull insurance, and liability insurance.
Capital lease is a type of lease that is treated as a capital asset for accounti… #
This can provide a more flexible and cost-effective alternative to traditional forms of financing, such as loans or equity investments. Related terms include finance lease, leaseback, and operating lease.
Certificate of airworthiness is a document that is issued by a regulatory author… #
Related terms include airworthiness certificate, compliance certificate, and registration certificate.
Compliance refers to the process of ensuring that an aircraft meets all applicab… #
Related terms include certification, airworthiness, and regulation.
Default refers to the failure of a borrower or lessee to meet their obligations… #
This can result in penalties, fines, and other consequences, including the repossession of the aircraft. Related terms include delinquency, foreclosure, and insolvency.
Depreciation refers to the decrease in value of an aircraft over time, due to fa… #
Related terms include amortization, devaluation, and writes-off.
Due diligence is the process of conducting a thorough review and analysis of an… #
In the context of aircraft financing and leasing, due diligence can involve a review of the aircraft's maintenance records, operational history, and market value, as well as an analysis of the lessee's or borrower's creditworthiness and financial condition.
Engine overhaul is a major maintenance task that involves the disassembly, inspe… #
This can be a complex and costly process, but it is necessary to ensure the continued safety and reliability of the aircraft. Related terms include engine repair, engine replacement, and overhaul cost.
FAA refers to the Federal Aviation Administration, which is the regulatory autho… #
Related terms include aviation authority, regulatory body, and oversight agency.
Financing lease is a type of lease that is treated as a financing arrangement fo… #
Related terms include capital lease, leaseback, and operating lease.
Flight department is a term that refers to the organizational unit responsible f… #
This can include tasks such as flight planning, crew management, and maintenance scheduling. Related terms include airline, carrier, and aircraft operator.
Flight planning refers to the process of planning and preparing for a flight, in… #
Related terms include flight operations, crew management, and dispatch planning.
Fractional ownership is a type of ownership arrangement in which multiple indivi… #
This can provide a more flexible and cost-effective alternative to traditional forms of ownership, such as sole ownership or partnership. Related terms include shared ownership, co-ownership, and timesharing.
Insolvency refers to the condition of being unable to pay debts or meet financia… #
In the context of aircraft financing and leasing, insolvency can result in the repossession of the aircraft and other penalties. Related terms include bankruptcy, default, and liquidation.
Interest rate refers to the rate at which interest is charged on a loan or other… #
In the context of aircraft financing and leasing, interest rates can have a significant impact on the overall cost of the financing arrangement. Related terms include interest payment, amortization schedule, and yield curve.
Lease agreement is a contract between a lessor and a lessee that outlines the te… #
Related terms include rental agreement, lease contract, and tenancy agreement.
Lease term refers to the length of time that a lease is in effect #
In the context of aircraft financing and leasing, lease terms can range from a few months to several years or even decades. Related terms include lease duration, lease period, and contract term.
Lessee is the party that rents an aircraft from a lessor under a lease agreement #
Related terms include tenant, renter, and user.
Lessor is the party that owns an aircraft and rents it to a lessee under a lease… #
Related terms include landlord, owner, and lessor.
Letter of intent is a document that outlines the terms and conditions of a propo… #
Related terms include letter of agreement, memorandum of understanding, and term sheet.
Maintenance reserve is a fund that is set aside to pay for the maintenance and r… #
Related terms include maintenance fund, maintenance account, and reserve account.
Operational control refers to the ability of an aircraft operator to control the… #
Related terms include operational authority, operational control, and command and control.
Operational risk refers to the risk of loss or damage resulting from the operati… #
Related terms include operational hazard, operational threat, and safety risk.
Operating lease is a type of lease that is treated as a rental arrangement for a… #
Related terms include financing lease, leaseback, and capital lease.
Ownership structure refers to the legal and financial arrangement under which an… #
Related terms include ownership model, ownership arrangement, and entity structure.
Pre #
delivery payment is a payment that is made by a buyer or lessee to a seller or lessor prior to the delivery of an aircraft. Related terms include pre-delivery deposit, pre-delivery payment, and advance payment.
Purchase agreement is a contract between a buyer and a seller that outlines the… #
Related terms include sales agreement, purchase contract, and acquisition agreement.
Repossession refers to the process of taking possession of an aircraft that is s… #
Related terms include foreclosure, seizure, and confiscation.
Residual value refers to the estimated value of an aircraft at the end of its le… #
Related terms include residual price, residual value, and salvage value.
Risk management refers to the process of identifying, assessing, and mitigating… #
Related terms include risk assessment, risk analysis, and mitigation strategy.
Security agreement is a contract between a lender and a borrower that outlines t… #
Related terms include security contract, security instrument, and loan agreement.
Tax benefit refers to the reduction in tax liability that results from the owner… #
Related terms include tax deduction, tax credit, and incentive program.
Transaction structure refers to the legal and financial arrangement under which… #
Related terms include transaction model, transaction arrangement, and deal structure.
Warranty refers to a guarantee or promise made by a manufacturer or seller regar… #
Related terms include warranty claim, warranty period, and guarantee period.
Yield refers to the return on investment that is generated by an aircraft, inclu… #
Related terms include yield curve, yield rate, and return on investment.