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Redelivery conditions: the checklist before signing a dry lease term sheet

18 September 2026 · 6 min read

A dry lease has two prices: the monthly rent, and the condition in which the aircraft must come back. The second is written into the letter of intent years before it falls due. Nine questions to settle before the term sheet is signed.

What are redelivery conditions, and why are they priced at signature?

Redelivery conditions — or return conditions — define the physical state, maintenance status and records with which the aircraft must be handed back. Their purpose is transferability: the lessor needs an aircraft the next operator can fly without major maintenance for roughly one heavy-check interval. IATA's leasing guidance notes that they are agreed before the term begins, usually as early as the LOI, and drawn from the delivery conditions. What you accept at signature is a dated liability — due when you no longer have leverage.

What check status must the airframe be returned in, and who pays for bridging?

The usual wording is “fresh from” a redelivery check, with all tasks cleared for a stated period in months, flight hours and cycles — typically one C-check interval. Two details move the cost. The standard: a check to the manufacturer's Maintenance Planning Document (MPD) obliges you to bridge the aircraft back from your own approved programme; a check to your programme leaves that bridging with the lessor or the next operator. And symmetry: an aircraft received mid-cycle and returned fresh means you finance someone else's maintenance.

What will the lessor require of the engines?

Engines are the largest maintenance cost on the aircraft. Expect a minimum time remaining to the next performance restoration — or a maximum time since the last, which is simpler to administer. A minimum number of cycles remaining on every life-limited part (LLP). At return, a full video borescope, a power assurance run and a magnetic chip detector check. And no finding that leaves an engine serviceable only under reduced inspection intervals — “on watch”. Define those acceptance limits in the lease, and ask for the right to return a substitute engine.

Maintenance reserves or end-of-lease compensation: what changes?

Two ways of paying for the same consumption. With maintenance reserves you pay monthly, per flight hour or cycle, towards defined maintenance events, and claim reimbursement when a qualifying event is performed; costs outside the agreed scope or above the balance stay with you. With end-of-lease compensation nothing is paid during the term: at return each item is measured against an agreed reference, full-life or half-life — and under half-life the payment can run either way. Which one you are offered depends largely on your credit: see what a credit committee checks for a start-up airline.

What about the landing gear and the APU?

Landing gear and APU both run on long intervals and are easily left out of a term sheet. Landing gear overhaul is calendar- and cycle-limited — in the region of ten to twelve years and 18,000 to 20,000 cycles on most types — so a six-year lease may or may not contain it; the lease should say who funds it either way. Usual wording also sets a minimum remaining life on brakes and tyres. The APU comes back either “serviceable” against manual limits, or under a hard-time limit since its last shop visit.

What records standard applies, and why do records gaps cost so much?

Because a part whose history cannot be shown has no life left to sell. Leases require records in English, complete and current: airworthiness directive status, modifications, repairs supported by approved data, component release certificates (EASA Form 1 or FAA 8130-3), and for every LLP an unbroken history back to first installation — back-to-birth traceability, evidenced by original “dirty fingerprint” documents. Regulators do not always ask for that depth; lessors do. Audit what you receive at delivery to the standard you will be held to at return — the same discipline sets the price when you sell aircraft on a fleet exit.

Configuration, paint, cabin: in what condition does the aircraft come back?

The aircraft usually comes back repainted white or in a livery the lessor designates; in the delivered configuration or an approved one; no temporary repairs, every repair supported by approved data. Airworthiness directives falling due within a set period after return are commonly to be terminated before it. The cabin is where disputes concentrate, because “fair wear and tear” is a judgement: IATA advises defining the term in the lease and relying on objective references — the MPD, or the rest of your fleet. Together, these lines decide how long the aircraft stands in the hangar on your rent.

Where is the aircraft returned, and what if redelivery is late?

A redelivery location left to the lessor's choice exposes you to an avoidable ferry flight: fix the airport, or the region, in the term sheet. The return usually involves an acceptance flight, deregistration and an export certificate of airworthiness, often to a named EASA or FAA standard. Then time: if the aircraft is not compliant on the return date, you rectify at your cost and rent keeps running, often at an increased rate. IATA notes that increases upwards of one hundred per cent are not uncommon, recommends negotiating a grace period, and starts its model return plan 24 months ahead.

How do I read all of this as one number before signing?

Convert every condition into the event it implies and the date it falls due. For each item, take the status at delivery, your planned utilisation, the projected status at return, and the cost of closing the gap to the contractual minimum. Add unrecoverable reserves, compensation in either direction, downtime on rent, and the ferry. Spread over the term, that is the monthly cost that sits beside the headline rent. On a six-year lease, the spread between well and poorly negotiated terms frequently exceeds a year of rent — negotiable only before signature.

Sources: IATA, Guidance Material and Best Practices for Aircraft Leases, 4.1 ed. (2025); S. Ackert, Redelivery Considerations in Aircraft Operating Leases, Aircraft Monitor (2014). Values quoted from them are examples, not norms.