The challenges with Maintenance Reserve (MR) and End of Lease (EOL) compensation cash flows.
One of the biggest challenges lessors and airlines face today is managing Maintenance Reserve (MR) and End of Lease (EOL) compensation cash flows. Due to the multi-million-dollar costs involved, failure to accurately predict future cash flows can ultimately have a major impact on the success of a business and value of the leased aircraft(s).
Yet within the aircraft leasing industry there is a lack of confidence in the current prediction models. While current platforms can provide maintenance event costs and intervals for airframe, landing gear and auxiliary power units, they cannot provide the same for the engine, which can be the most expensive part of the plane.
To make accurate predictions on the cost and interval of engine repairs, software solutions need to analyse the four operating conditions: the geographical region of operation, flight hour to flight cycle ratio, 1st run or mature run engine, and Derate if applicable. Yet there are currently no software solutions which do so. Only some operating conditions are considered, meaning asset managers make assumptions on the others.
These limitations can have huge consequences as operating conditions can vary greatly, with different factors potentially having a significant impact on the life expectancy of the engine. If operating condition predictions are even slightly out, cash flow predictions can be way off, leaving lessors and airlines potentially exposed or even out of pocket at the lease end. Consequently, lessors and airlines devise workarounds by running their own spreadsheets or have to hold back funds to cover any unforeseen expenses that could amount to millions of dollars.
Reduce risk and protect the value of your leased asset with FLYdocs
Launching April this year at MRO Americas, FLYdocs has designed and developed an Asset Management Platform to provide unrivalled accuracy in MR and EOL cash flow projections.
The FLYdocs Asset Management Platform considers all the operating conditions and can therefore predict the cost and interval of repairs with a much higher degree of accuracy. This is particularly useful for users of EOL compensation schemes where the costs are settled at the end of the lease.
With its web-based platform, FLYdocs removes the need to put additional capital aside for a financial buffer, meaning lessors and airlines can reduce their financial risk and run their business more effectively.
Make informed decisions on-the-go with the mobile-optimised dashboards
The platform records utilisation, current MR and EOL rates, rate escalation process, manages MR claims and tracks MR funds, while providing information on the cost and interval of maintenance repairs.
These costs will be drawn down from the MR funds which will continually keep adjusting.
Using interactive dashboards optimised for viewing on mobile devices, the platform shows users what their cash flow forecast is going to be each month across their asset portfolio.
A range of complex reports, charts and tables using data from the platform can be produced in just a few taps or clicks of the mouse.
The mobile device optimised platform allows you to quickly see a snapshot of your business, regardless of your location.
For an exclusive first look at the new platform, please visit the FLYdocs stand at MRO Americas on Booth 2425.