Jetrader - September/October 2008 - 10

that they will reap what they sow. The airlines should build as many bridges with the leasing and alternate ﬁnance worlds as possible. Just for the record, the best airlines do. J: Where would you like to see the industry improve? TM: Those of us in the aviation world like to think of ourselves as superior to those in the shipping world, but I can buy a $200 million gascarrying vessel in an afternoon and sell it or charter it that same evening and bank the proﬁts. There are multiple jurisdictions in shipping, registration issues, classiﬁcation societies and often the same banks we know in the aviation world, but we move at a snail’s pace in aviation. In an age when airlines try so hard to save costs, it should not take six weeks to agree the deﬁnition of “Aircraft” or three weeks to agree on an NDA with a manufacturer. We owe it to the future of our industry to streamline the process. Ultimately, costs are borne by the airlines, which are ﬁghting a daily battle for survival. My happiest day in this industry will be when we as an organization push for standard documentation. We have it in shipping, why not in aviation? By the way, before the lawyers respond, I have one of those membership cards, too. We have faced problems with manufacturers when buying contracts for new aircraft from airlines prior to physical delivery. I agree wholeheartedly that it wouldn’t be helpful to our industry for airlines or speculators to start trading slots on a wholesale basis—although I suspect that we are on the brink when a startup airline with limited means can have an order book of 100 aircraft. Manufacturers should acknowledge that circumstances change, and if the change of ownership is legitimate and not part of a slot-trading exercise, they should accommodate leasing companies. I have even suggested that manufacturers charge a premium to novate, thereby adding to their bottom lines. Cooperation will give conﬁdence to the buyer’s bankers and to the leasing company itself who can then have a direct communication with the manufacturer. We can all get around the rules with spurious legal structures, but there are always risks, and such structures are a needless expense. The call options operated by manufacturers, whilst legitimate in terms of controlling speculation, appear to me to have become too inﬂexible and attitudes too entrenched. They are, in my opinion, an attempt to have your cake and eat it. Manufacturers need leasing companies/banks and the beneﬁts they bring and should cooperate with their allies in the leasing/ ﬁnance world. The backers of leasing companies can and do take their money elsewhere if life becomes too complicated or risks outweigh rewards. J: Where do you think a lessor’s priorities ought to be? TM: Leasing companies should always aim for a fair result. If you create sufﬁcient goodwill at the end of negotiations, you can generally weather any future issues that may arise. My Japanese colleagues used to talk about some honor being left on the table—a doctrine I subscribe to. There must be respect between the parties in every transaction. It is that respect that takes precedence over all the paperwork that is created. Every agreement has potential shortfalls but where there is honesty and goodwill all problems can be overcome. The industry must acknowledge that the growth of leasing will bring some changes. Lessors trade their assets and airlines, and banks, registries and manufacturers must take greater cognizance of this fact. One often hears of airlines complaining about assets being traded, but this is a natural and increasingly common occurrence. The airline should not deny the leasing company a living, and the leasing company should manage the situation with the airline and, where possible, agree upon a formula for selling at the time of entering into the lease. An airline scores points with me if it is efﬁcient and cooperative—especially if we save tens of thousands in legal fees. Airlines should not forget that the party being obstructed will become the new owner, and I for one, respect those professionals on the other side who act efﬁciently and expeditiously. Airlines also view novations as an opportunity to reopen negotiations, which does nothing to endear them to the seller who, more often than not, pays for the changes by having to discount its price. Lessors remember such matters when negotiating in the future. Thankfully, our lessees are generally very professional, which is why if I receive a request that is not part of our lease during some point in the lease term, I am happy to discuss an accommodation. Airlines are our most precious assets, but they should realize 10 The ofﬁcial publication of the International Society of Transport Aircraft Trading

Jetrader - September/October 2008

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