Draconian aircraft leasing contracts

Why have the overseas creditors who recently repossessed four Airbus A310–300s from Air Afrique now served a claim on the airline demanding a sum of money which exceeds the total original price of the aircraft – given that Air Afrique has already returned the four young aircraft, made a pre-delivery downpayment of US$80 million (25% of the original cost) and has paid US$173 million to creditors?

The answer, says Sir Harry K. Tirvengadum, Air Afrique’s Director General, lies in the draconian clauses in the aircraft lease contract which was signed by the airline in the early 1990s. 

Addressing AFRICAN AVIATION Magazine’s recent Seventh Annual Conference, held in Grand Baie, Mauritius, Sir Harry remarked that such finance lease agreements “are written in very complicated legal jargon in which the lessee is tied by a multiplicity of knots which leaves him with absolutely no recourse whatsoever, not the slightest loophole, in case of an event of default.” 

According to Sir Harry, “there is a crying need to review aircraft lease agreements as, at present, they are too one-sided” in favour of the aircraft lessors and creditors. He contends that there is “an urgent need to restore some balance and fairness” and he urges African airlines to seek the advice of experienced lawyers and financial advisors before entering and signing aircraft lease agreements – lest they suffer a similar “trauma” as Air Afrique.