The Aviation Finance & Leasing 2019 guide provides expert legal commentary on key issues for businesses. The guide covers the important developments in the most significant jurisdictions.
Last Updated: July 29, 2019
I read the aviation finance sector in 2019 as a story of radical opposites – the sort of “best of times, worst of times” scenario aptly symbolised by a famous opening paragraph of a 160-year-old Dickens novel. Although “the winter of despair” is not yet upon us, I suspect that it is coming soon. It is on the tip of what may be a barely visible, yet potentially enormous, iceberg of distress in the wider aviation industry that the launch of this practice guide is most timely.
It has long been my view that the best attorneys are the ones who live in the blank white spaces in between the lines and at the edges of contracts. That is particularly true in the aviation finance sector, where an especially symbiotic relationship exists between the demands of commerce and law in getting deals through, every day and everywhere. In their proper place along this continuum – a place definitely not at the most marginal end – such attorneys would, in an ideal world (for them, at least), demand a king’s ransom in fees in exchange for their sage guidance. Alas, various factors, including self-commoditisation (among other things), have led to the diminution of the authority of law as a subject matter in the aviation finance sector. Compounding this is the tsunami of institutional capital and liquidity that has flooded a marketplace bustling with bright-eyed and yield-chasing newcomers who have not yet experienced the distinct displeasure of a depressed aviation finance market (and who are at risk of confusing a bull market for brilliance). Nonetheless, this is a sector where deal and distress experience remains the best – and, possibly, the only – teacher. Such experience is to an aviation finance attorney what pure Damascus steel is to a sword. Nothing will adequately substitute.
Even the newest aviation finance attorney quickly concludes that his or her craft is inherently international. Still, while transnational law such as the Cape Town Convention is thriving, domestic law is inescapable. Moreover, one of the most important jobs that we have as aviation finance attorneys is to identify sector trends and anticipate future legal ramifications, both domestically and internationally. Yet, staying abreast of happenings pertinent to the sector against the backdrop of a VUCA (volatile, uncertain, complex and ambiguous) state of global affairs could itself be an all-consuming affair. Recent happenings relevant to the practice of aviation finance range from several well-contained airline bankruptcies, to the robust availability of asset-backed capital markets financings by airlines or lessors, to sizable aircraft portfolio sales, to industry-wide novation fatigue, to lessor consolidation, to major investments by American and other private equity firms in lessors, to OEM consolidation, to the Boeing 737-Max 8 tragedies and ensuing calamities.
Of the many Gordian Knots encountered by an aviation finance attorney today, I believe the ability readily to survey the landscape relevant to him or her under different bodies of law should not be one of them. I felt underwhelmed by the resources available to the aviation finance attorney and non-attorney communities in this regard. So, with resolve born of the decision that I would help in some small way to make aviation finance great again, I set out with Chambers and Partners to try to capture comprehensively and present usefully thousands of elements of cross-border and domestic law and practice into a single source.
The first step was to come up with 140 probing questions covering every relevant angle I could think of material to aviation finance, which for the purposes of this guide consists of aircraft and engine purchase, sale, lease and debt finance. I began by simply indulging in some mid-career (not quite yet mid-life) retrospection. I have, thus far, served as lead counsel on more than USD13 billion dollars of aviation finance transactions, in addition to a healthy dose of repossession/enforcement, restructuring and dispute matters. There were many iterations of the master questionnaire, and I hope that there will be many more as this guide evolves in the years to come. These questions were confidently and masterfully taken on by leading and highly experienced aviation finance attorneys from around the world who coalesced to make this guide possible.
I was far from alone on this mission. Most obviously, there are the attorneys from different law firms who took a significant amount of time out of their thriving legal practices to respond to the questions in a manner that only confirms their place in the upper echelons of the profession. There are also, of course, the truly excellent – and exceedingly patient – Chambers and Partners staff who led this project superbly.
I would like to thank Luca Denora, Eugene Yeung, Sharon Nourani and Jason Greenberg for their contribution to the introduction. In addition, David Power (ORIX Aviation), Dr Donal Hanley (IATA & McGill University), Neil Liebenberg (CALC) and Kathleen Oliver (Avolon) also contributed significantly to the production of this guide.
I hope that you not only find this practice guide to be helpful, but also to be the best of its kind to date. To that end, and in the spirit of semper ad meliora, I welcome and encourage feedback and suggestions from readers for future iterations of this guide.