Interview Transcript

Can we walk through the relationship dynamics with the airline, if an airline goes bankrupt, and how the lessor relationship and the repossession of the plane actually works?

A lot of that depends on the parties. Unfortunately, I’ve had to deal with several struggling airlines. Most of them didn’t go bankrupt, luckily, but they reacted in different ways. When an airline just closes the doors, won’t talk to you, shuts the records in a room and makes it very difficult, then it’s very painful for everybody. Lawyers get involved and it becomes quite difficult.

I’ve been lucky enough to work with some airlines, though, that were very accommodating, to the degree that they could be. Nok Air, for example. They were struggling and, luckily enough, they helped me take the aircraft out and get everything repositioned back. Eventually, we renegotiated everything and were able to get them back up and running. That was a credit to both GECAS, my company at the time, and Nok Air management, working together and being able to restructure something.

But we’ve had others that just shut down and I’ve had to sit in the lobby of hotels, waiting for the CEO to come out, just to try to catch him, because he won’t return calls and emails. Those, typically, don’t go so well. It’s unfortunate when it goes like that, because it’s frustrating for everybody.

Are the lessors protected through the security or collateral that they have on these planes?

Typically, if you’ve got a few months deposit, you tend to find that you burn through that pretty quickly, if it’s contested like that. If it’s not, in the case of Nok Air, where they flew the planes out for us and stuff, that was much easier. If they’re grounding the aircraft, shutting the records up, won’t respond to emails, they get some lawyer involved that probably doesn’t have anything to do with aviation law, those bills rack up, pretty quick. You’ve got parking fees, sometimes you’ve got fuel charges. We had one customer that was, unbeknown to us, several months behind on payments for engine reserves, powered by the hour. Those bills rack up really quickly and you just try to minimize as much as you can and move on.

Whether or not you finally go back and try to get them through lawsuits, I don’t see those as being terribly successful; occasionally, but not most of the time.

But the lessor is not liable for those maintenance fees and fees on the engines or the plane?

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