Rose Lereece, a Boeing director, says security structure is crucial in obtaining aircraft lease.

Ms Lereece made the assertion at the Airline Economics Growth Frontiers Global in Dublin, Ireland, on Wednesday.

The Airline Economics Growth Frontiers Global event commenced on January 12 to 15.

The director described the security structure as a ‘Stand-by Letter of Credit’ serving as security provided by a commercial bank and covered by a confirming bank and an insurer.

According to her, SBLC provides a short-term guarantee (immediate and irrevocable) that allows the lender or lessor to cash in an amount of six to 36 months of payments.

Mr Lereece said the payments were envisioned to include both rentals and maintenance reserves. She listed SBLC Security features as immediate availability and irrevocable funds, U.S. dollar settlement, and further security in confirming and/or third-party insurance.

She said that others were more entities that implied more security and fees, giving lessor or lender the ability to cure and continue or severe and repossess.

“Collateteralisation by the airline of a fraction of the agreed SBLC value may be required by the commercial banks,“ she added.

According to her, an airline pays commercial banks a single rate that embeds all fees, including insurance where applicable, while commercial banks pay a lessor in case of an issue.

The director explained that commercial banks obtained SBLC insurance support from the confirming bank while the confirming bank obtained SBLC insurance support from the provider.

She further explained that the insurer provided insurance for the confirming bank or the commercial bank.

Moor Ibekwe, Boeing sales director (Africa Region Commercial Airplanes), said the value of the SBLC, measured in payments due, could be six to 36 months for both rental and maintenance reserves.

(NAN)