Maintenance value and the corresponding compensation, typically designated as “Supplemental Rent”, “Reserves”, or “End of Lease Compensation” within a lease agreement, contribute an essential element of value and liquidity within an Asset Backed Securitization (“ABS”) portfolio.

In an aircraft lease, lessors collect maintenance compensation for utilization on the individual components on each aircraft. These typically include the airframe, landing gear, auxiliary power unit (“APU”), engines, and engine life limited parts (“LLPs”). The chart above depicts a typical distribution of monthly maintenance reserves over each component, determined by cost and approximate interval of each relevant maintenance item on an A320-200.

The full article can be downloaded here:
mba Maintenance in ABS Deals Full Article