The importance of the Asset Manager in aircraft recovery

In order to protect their asset, it can sometimes become necessary for an aircraft owner to initiate a recovery plan to get their aircraft back safely into their own custody. Mark McCloy of aviation specialist adjusting company McLarens Aviation discusses some of the items to be considered when putting a recovery plan together.

Many people would have seen the American TV programme about aircraft repossessions where a larger than life character flies into an airport, leaps out of his private jet, cigar in mouth, corrals his target aircraft, and flies off into the sunset, job done. Great for a TV audience, but it bears little relation to the realities of recovery of commercial aircraft where either there has been a default on payments or the Airline has ceased trading.

Asset managers will maintain oversight of their client’s assets and will be vigilant in not only ensuring that the lease conditions are being met, but that the lessee remains a viable business. Decline in record keeping, reduced aircraft use and loss of key personnel can be indicators that all things are not well. Ultimately, default or loss of an Air Operators Certificate will result in a lessor’s need to recover their asset.

To enable the asset to remain of value, the aircraft and engine records are of utmost importance. Hostile recoveries can result in records being salted away to be used in negotiations, or removed by dissatisfied staff as retribution. Location and recovery can be extremely difficult. Fortunately being met by armed individuals with an interest in retaining the documents is rare, but it has happened.

Aircraft are leased as a unit of airframe plus engines. Purchase finances may result in the airframe and engines being owned by different entities. Usually engines that were delivered on lease have to be refitted on redelivery. It is not unusual during repossessions to find the airframe has no engines fitted or that the originals are in a workshop or fitted to another aircraft at a different location.

Another consideration is that repair agencies will be understandably reluctant to part with a serviceable engine if their bills have not been paid. The logistics of engine recovery and refit can be a challenge.

Struggling operators will endeavour to maintain a serviceable aircraft whilst attempting to minimise maintenance costs. Using equipment from parked aircraft reduces the amount spent on spare parts. It also renders the robbed aircraft (an aviation phrase for taking parts from one aircraft to service another) a ‘Christmas tree’; covered in coloured labels, very pretty, but ultimately unflyable.

Airports, ground handlers and other stakeholders will all seek to recover monies owed and liens placed on assets can seriously hamper recovery efforts. Whilst breaking into an airport to access the aircraft or record store would work for the A Team, it is more likely that asset managers attempting the same would
not be looked on kindly by the local constabulary. That’s not to say that such actions have not been successfully undertaken on occasions.

Assessment of the condition of the aircraft, its records and location will enable an evaluation of the cost of recovery in terms of returning the aircraft to a flyable condition, with all documented assets installed. Asset Managers need to consider the cost to return the aircraft to a condition to be able to place it back on lease if they are to fully advise their client of the options available to them.

Should the economics be favourable, a recovery plan needs to be drawn up by the Asset Manager and then reviewed, revised, revisited, re-drawn and reviewed again. Lessors must allow their Asset Managers enough time to prepare and execute the plans.

The Asset Manager will identify the key stakeholders with whom to negotiate, and with whose cooperation the chances of recovery can be greatly enhanced. Talks can be protracted and subject to the peculiarities of culture and politics. Ultimately the aircraft owners need to be prepared to spend some large sums of money to recover their asset.

Finally there is the matter of aircraft extraction using qualified and approved crew, engineers, flight plans and a fuel supply. Ideally the records leave with the aircraft, if they do not, some reconstruction of documents and history can be required. That, however is another subject in its own right.

We thank Mark McCloy of MacLarens Aviation for this article.