Aviation Working Group Novation Agreement

With the maturity of the aeronautical leasing sector, trade and financing of aircraft portfolios subject to existing leases are more frequent. Growth in portfolio sales has led airlines, backers and financiers to spend more time and expenses negotiating and renegotiating lease terms and recording the change of ownership associated with these transactions. The GATS platform, managed by Fexco, will be fully digital and will use the use of electronic signatures and electronic distribution of documents. While GATS was created for aircraft leasing, there are measures to protect the rights of plautern, investors and airlines. The GATS proposes to strengthen the principle that the contractual obligations of a leasing tenant cannot be increased by the trade in aeronautical equipment. The GATS allows this to be done by making effective both the transfer of economic interests and the creation of a security interest in an GATS trust fund, without changing the contractual provisions of the lease. With the agreement and agreement of all parties, technical changes can be made through a notification mechanism. All requirements agreed in the lease that must be met prior to the transfer of an interest in aviation equipment held in an GATS trust fund can be added to the GATS platform. The GATS system does not permit the transfer of the economic interest of such a GATS trust fund, unless each of the agreed terms has been identified by the lessor. It is proposed that the GATS system officially expire in broadcast time at the end of March 2020, and recent activities have already taken place. At the end of 2019, SMBC Aviation Capital was the first aircraft leasing company to sign a GATS lease agreement and also indicated that it intended to continue to implement this process in the future. The support of GATS by the key players in the sector and the commitment of AWG members will be crucial to success. When airlines accept and accept the GATS platform in new leasing contracts, it should reduce disruptions related to air trade and leasing innovations.

The GATS can be seen as the beginning of the industry digitization process, followed by other projects expected from AWG. The use of trusts allows the economic and actual beneficiary of the aircraft or aeronautical equipment to be transferred from the existing effective beneficiary to a new effective beneficiary, without prejudice to contractual rights, remedies and protections agreed in the underlying lease agreement between the lessor and the airline taker. The professional agent holds the legal right to the aircraft, both before and after the transfer, so that there is no new cause or assignment of the lease because of the transfer of the right of benefits. The GATS aims to simplify and facilitate the trade in aviation equipment (including leased aircraft) by streamlining and standardizing the current innovation process. The AWG core materials for the GATS contain a bidding provision that can be included in the leases and that will assist future innovations in the addition of the AGCS system. This provision, which can be amended, includes the protection of leasing, a “no plus-plus obligation” clause and allows for prior requirements.

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