Trust Structures for Aviation Transactions

Orphan Trusts And Charitable Trusts for Aviation Finance and Leasing

For many structured finance and capital markets transactions related to aviation, the use of orphan trusts and Special Purpose Vehicles (SPVs) are well-established structures throughout many Common Law jurisdictions, including Ireland.

For Aviation Leasing and Financing transactions, Waystone can set up a Charitable Trust (which is an irrevocable trust). The shares of the SPV are vested as the property of the Charitable Trust and, while Waystone will be recognised as the legal holder of the shares of the SPV, the beneficial owner will be regarded as the charity as set out in the Charitable Trust Deed.

These types of structures for aviation transactions are known as an ‘orphan company’ whose shares are held on trust for either a charitable purpose or for a special purpose, for example, the benefit of the transaction.

Waystone, as trustee of the trust will ensure any funds remaining after the transaction has run its course and has been liquidated, go the Charitable Trust as beneficiary which, in turn, will be distributed to registered charities.

The Waystone team has many years of experience in managing transactions that are placed in orphan or charitable trusts. These transactions include CLOs, ABSs, ABCPs, lending platforms and real asset transactions.

Owner trusts – aviation alternative

Owner Trusts are used in aviation transactions as an alternative to Aircraft Owning Entities (‘AOEs’). The Trust is established to hold the title of the of the aircraft and to act as the named lessor in the aviation transaction. The beneficial owner will, unlike orphan or charitable trusts, be the arranging lessor or owner who will manage the asset and the relationship with the airline.

Waystone is authorised to act as the Trustee on these Aircraft Owner Trusts and to provide aircraft trust services throughout the lifecycle of the aircraft through its TCSP licence. If the aircraft is sold at a future date the Aircraft Owning Trust can be transferred to the new owner, saving time and costs as there is no change to the lease arrangements.

How can Waystone help?

The Waystone team has many years of experience working with lessors and lessees around the world and is experienced in all matters of aviation law and registrations. Waystone can provide all the necessary trust services to these structures and coordinate all matters as required with the relevant parties such as legal advisors, registries, lenders and other stakeholders.

To find out more trust structures for aviation transactions please contact your usual Waystone representative.