Aircraft Financing and Leasing: A Plain-Language Primer Aircraft are costly, and most operators do not buy them with cash. They lease or finance them, which creates a chain of contracts between lenders, lessors, and operators. This short primer explains the main ideas in plain words for readers who are new to the subject. Buying, Leasing, or Financing An operator can buy an aircraft outright, borrow money to buy it, or lease it from a company that owns it. Each choice allocates risk differently. A lessor keeps ownership and the operator pays rent, while a borrower owns the aircraft and owes a debt to the lender. What a Lease Covers A lease sets out the rent, the length of the term, the condition in which the aircraft must be returned, and who pays for maintenance and insurance. It also says what happens if the operator misses a payment. Clear wording on these points prevents costly disputes at the end of the term. Assignment of a Lease Sometimes a lease is transferred from the original lessee to another party. Baroudi & Associates lists assisting one of the world's largest aircraft financing companies with the assignment of an aircraft lease to a third party beneficiary, and advising on the operating agreement of the aircraft. Transfers like this need careful drafting so that each party's duties stay clear. Financing a Purchase When a business aviation company buys an aircraft, a lender usually takes security over it. The firm also lists advising a leading US aviation finance company on financing an aircraft purchased by a local business aviation company. Lenders and borrowers both need to understand what happens if the loan is not repaid. Points to Check Before Signing Use this list when you review a lease or finance agreement: - Who owns the aircraft, and who holds security? - What are the payment dates and amounts? - What condition must the aircraft be in when returned? - Who pays for maintenance and insurance? - What events count as a default? - Which law governs and where are disputes heard? Insurance and Claims Insurance is a central part of any aircraft deal. The firm states that its aviation work includes aircraft financing, litigation, aviation insurance matters, and cargo claims. Lenders and lessors usually require insurance and want to be named on the policy. Where to Ask People who need an Aviation Law Firm Beirut Lebanon can contact Baroudi & Associates at the Achrafieh 5585 Building, P. Gemayel Avenue, Beirut, or on +961 1 428777/8. The firm describes its clientele as airline companies, aviation financing corporations, underwriters, and ground handling operators. A Final Note This primer is general information and does not replace advice from a qualified lawyer. Every transaction is different, so seek advice on the contracts you are asked to sign.