Airlines who have leased aircraft would have significant rental payment obligations to lessors which they may not be able to keep up with whilst their fleet is grounded. If lessees cannot fulfil their payment obligations under their lease agreements, this would in turn make it difficult for leasing companies to fulfil their financial commitments to their investors and financiers.

The growing concerns faced by airlines and leasing companies in the light of this pandemic have raised interesting issues as to whether the existing law and the “standard” terms and conditions in a typical aircraft lease agreement addresses the rights of the parties in unexpected situations and more particularly, which party is better protected. In this article, we will examine the general legal position and the relevant clauses in a market-standard aircraft lease agreement to consider whether leasing companies have an unfettered right to demand for the lease rentals to be paid or to terminate their lease agreements due to defaults by the lessee or whether a lessee can claim indulgences under the lease agreement for circumstances which are beyond their control.

To read more; please visit: http://www.taypartners.com.my/en/index.php/covid-19-20200430