39th North American Airlines Loan/Borrow Forum Agenda Topics
Omni- OY-Stephanie & Geoffrey
1. Do all legacy airlines have separate classifications of LOAN transactions which could ultimately save other smaller airlines money if we knew about these rules, of course, understanding each component would be taken into consideration on a case by case basis levying stock levels, value, etc? i.e.—LOAN TRANSACTION= days 1 through 15
a. RENTAL TRANSACTION AGREEMENT=days 16 through 30
b. LEASE TRANSACTION=days 31 through 60 days
c. Etc, etc.
WN – No, our agreements are all the same
AF – A: 30days with the escalating value.
B: Keeping loan rate or getting into lease would depend on stock level, removal condition of the unit
TAM – We are flexible in all the cases
BA – Loan to Lease are on case by case basis. No specific terms are in place
UA – if CLP is over looked we will look into converting the lease with a 21 day min. They are to discuss the terms before loan is returned
KLM – Call us, we’ll work it out for sure
DL – Ask with in 3days,Lease approval based on stock levels- $100K- 150K is the min unit price, 21 day min loan
Airlines can always call to discuss
LH – Not included in standard but we are flexible, base by case. Please ask before and not during the loanN8-We’re small but are willing to negotiate if the subject is brought up early
Air Transport International-8C- Mark
2. In a situation where a component is still in the OEM’s current new manufacture price list, but in practicality it is not what would be purchased by an airline, and is no longer manufactured for installation on new aircraft being manufactured, what is the feeling of the lending airline to use current market price versus new manufacture price for loan charge calculations. Example, Anti Skid Control unit, new list about $190K, market $10-25K OHC.
AF- Would take NLP as a reference.
BA- We would apply MLP where components are still in OEM mfg, and only consider market pricing for out of mgf or where the market is weak. Ie B747,B737 classic. Etc.
UA- Uses New OEM replacement cost or last list price if not longer mfg. Market prices very too much.
DL- OEM CLP per contract. We do not use OH, etc.
LH- Loan and exchange based on current list price but is seems that market days to market value Sale/Purchase based on fair market value
N8- National is open to current pricing, with the understanding that if our part still has more value on our books, we can not
OAI- Will go off of OEM pricing, however everything is negotiable, especially on items that are high in price. If transaction takes place after hours we will begin negotiations on the following business day.
***All airlines review past NAALBF meeting notes for this topic***
3. Dealing regularly with Brazil-based operators, we have to ship any part with an original invoice, signed with blue ink. Any night shipment is an issue, the invoicing dpt not being at the office on night shift. How do you all deal with that? Did you implement some kind of signature delegation to AOG Export dpt?
Discussion: The airline can ship the part and then the process the invoice the following day.
4. For and exchange, do you accept Serviceable core units? If so, can the core be released by the vendor not approved by your QA, but fully approved by the authorities?
TAM- We accept it if they are approved by the authorities. Bit is very important to provide all documents to prove it
BA- No current process or tag regarding the acceptance of serviceable core units
UA- Email/Can paperwork prior to returning part so we can get approval from QA before accepting part return
KLM- If Airline is on our AUL the we can accept with a ATA10/COC prior to sending a part contact our loan desk
DL- Need 8130 & Teardown in advance, final QA/Shop has approval upon receipt. Approved FAA repair station (capabilities list)
LH- We accept, but we will test and recertify and charge it
N8- With QA approval of paperwork
WN- We do not accept U/S core units only serviceable
AA- Accept serviceable units with advance approval from 121 carriers and from those on ours Ops Spec. Must be tagged by exchanging airline or must send advance paperwork for approval
OAI- Must have all paperwork ahead of time. Our QA department will review and issue a one-time acceptance letter, if approved. If the item is not approved we will send it out for re-certification by one of our approved vendors.
Invoicing system SIS: Pains, helpful hints and how to make it easier for all airlines looking for detail information.
Only a couple of airlines are up and running this with system. It sounds like as more airlines come on board with the SIS program that this could be another group discussion at another NAALBF in the future.
5. What precautions are airlines taking to prevent or minimize losses associated with airlines that are not financially stable? Is there a certain value set that must be paid prior to any additional loans being granted?
BA- Customer put on hold- no transactions until payment is received
UA- Credit management monitors companies and notifies us if they are on hold or cash basis limit.
KLM- Outright sale full pre-payment requested. Loan would depend on days needed.
DL- Corporate credit determines what actions to take
LH-Pre Pay for specific airlines
WN- We review with A/P any outstanding invoices
AA-Handled by our Corporate Receivables. Once cash listed they must once again apply for credit, at that time they may request a deposit
OAI- Will run a credit check while setting up the airline. Our sales department also keeps track of payment trends to try to help foresee any change in financial stability.
6. If you do an exchange with an airline and that part is later determined “BER”, what should be the next step? Should the loan charges start back up until a replacement part is received?
AF- We’d give 10 days to receive another core unit (U/S) or charge exchange fee again until a sale is worked out
TAM: Does not accept U/S parts
BA- Offer to provide replacement with option to convert to purchase
UA- We don’t accept U/S RIK
KLM- Loan will end when received, if BER we’ll provide options to the airline
DL- We take serviceable units only- If we do get one that is BER, loan charges would start back up from when the shop advises the unit is U/S
LH- We offer options
WN- No, we invoice for a new unit @ market price
AA- We usually give them a week to 10 days to get us and exchange and if not received with in that time frame and no communication, we would re-start loan charges
OAI- Does not re-open the loan. We will allow a replacement within 10 days or outright purchase at market value
7. Has any airline ever added a late payment charge if the invoice is not paid within the net terms?
AF- We’d chase the customer, but not charge for late paperwork
TAM- No our 1st step is to contact the airline
BA- No late fees
UA- Accounts receivable function.
DL- Corporate bill handles this
OAI- Has not, we will not hesitate to put them on credit hold and change their terms to payment up front
8. Does any other airline have an issue with parts being returned dirty, protective caps missing, etc? Do you send it out for bench check?
The airlines follow the QA policy for return parts requirements. If there is a inspection rejection then it would be sent out for bench check.
9. What is the grace period to ask to convert a loan to a lease?
TAM- We are flexible
BA- 3-5 days (excluding weekend)
UA- Will review on case by case basis if we ask ASAP and before part is returned.
DL- 3 business days
N8- We are very flexible
WN- Yes (bench check)
AA- 3 business days
OAI- 3 business days
10. For those airlines that have stock in PVG (China), are you able to loan/sale part from that particular gateway? If so, do you get charge from China customs at the time that you are loaning and/or selling the part to the other airline? Does your airline eat the charges or forward to the borrowing/purchasing airline?
KLM- Stock available in PUG on certain items available for loan to 3rd parties.
11. What should be the response time after a CTS or Exchange is requested?
AF- 48 hrs (M-F)
TAM- AOG case: with in 30 min. Routine request 1 day.
UA- 24 to 48 hrs (M-F). It may take a bit longer if they are awaiting response from other departments.
KLM- Depending on exchange unit but with in 1 week
DL- 48 hrs (M-F)
WN-48 hrs (M-F)
AA- 1-2 days
OAI-48 hrs (M-F)
12. We ask because some airlines are not replying in what we consider to be a timely manner (ex: 1 or 2 weeks, or not at all). Also would the number of days be work days or do the weekend/holidays count? We do not work weekends/holidays but some airline Reps have said they have to keep up with their items at all times.
OAI- Yes, OAI is on call 24/7/365
AF- 5% per year with a 25% cap.
TAM- Based in the last price provide by OEM.
UA- At least respond to email with in 24 hrs to let them know we are working on it.
KLM-Working days but we will reply always ( Did not leave # of days in notes turned in)
WN- Week days, we backdate to the date the actual request was made
13. I want to know how the unit price would be calculated on parts that have not been manufactured in years.
For example: If something was last produced 10 years ago and last known OEM CLP at that time was $50k, what markup would be used to calculate current list price? Would something like 5% per year be agreeable which would make new list price $75K ($50k plus 50% markup for the 5% per year times 10 years)?
The idea from Dan (UPS) was to get a few of the people from the NAALBF to form a sub committee to tackle this issue, that seems to come update ever NAALBF conf.
14. Are other airlines having issues with Cathy Pacific/HAECO invoices? We borrow the part from KLM but the invoices we are receiving are payable to HAECO. This is creating an issue with overdue invoices. How are other airlines handling this issue?
BA- Yes. Still working on resolution.
15. How can small airlines participate with larger airlines with loan borrow programs?
16. Are there ways for small airlines to become vested by larger airlines to assist with participation?
All airlines have advised to contact them one on one to set up agreement
17. What tag is required by each airline for the return of a part? Airline Serviceable Part Tag or 8130 tag?
AF- QA requirement for 8130.
TAM- Always an 8130 required.
UA- Need 8130
DL- Requires Used BP tag with all hrs/cyc and removal information and sign off.
LH-Dual Release: EASA and FAA
WN- Either tag
AA- Signed Serviceable parts tag
AA has new internal tag will other airline accept on loaned parts? We did not have much information at the time of the question. We have since found that this is a non-issue. The internal tag is to help our stores personnel and will just be an over-tag of our 8130
18. Announcement from AA
AA will be lowering their standard loan rates. Check with us for details.
19. What’s the policy on loaning tooling to an airline which is AOG on it, is everyone capable of it, and against which rates?
AF- Depends on the location and type of tooling. Most of the time, tooling mangers are reluctant to let go but sometimes is negotiable.
DL- We lent tools via AOG but that is handled by a different department so we are unsure of rates and availability
LH- Not via AOG Desk
WN- We do not currently charge rates for loaned tooling as long as it is returned within 24 hours and tooling is only loaned “on the field”
OAI- Has just started loaning tooling. The same processes will apply that are in place now for parts