An aircraft in your portfolio has not shown signs of increased engine deterioration; however, the operator has removed the engine for accomplishment of a performance restoration and LLP replacement of the Low Pressure Turbine (LPT) module in accordance with manufacturer's guidelines. As required by the lease, the operator has notified you that they intend to send the engine to a shop and that the workscope being undertaken will entitle them to claim from the maintenance reserve fund. On behalf of the lessor, you advise the operator that this may not qualify for reimbursement as per the lease agreement and request to keep you notified on the progress of the shop visit. Despite timely emails to the operator requesting an update, you do not hear any news for 6 months. Following 6 months, the operator submits an invoice for maintenance contribution to the value of $1,600,620 including VAT and handing costs. The operator also provides verification that this is the actual cost of the shop visit as billed by the engine shop. i) ii) Based upon the "Given Information" and "Lease Extracts", carry out an initial assessment of the actual amounts owed by the Lessor, if any, and provide your supporting calculations in excel format. Note that you may not have all the required information to make a final determination. Following this, summarise your findings to the lessee in response to their claim outlining the actual amount you determine to be owed by the lessor, any concerns and questions you may have in order to finalise the assessment. (60% - Max of 500 words) Following a review of the lease redelivery conditions, you discover a requirement for the operator to perform an Engine Performance Restoration event on the core modules immediately prior to the lease expiry date. You review the current utilisation and forecast that the engine will operate a total of 27,000 flight hours during the entire lease term. Based on these findings, compose a short report summarising the reasons why the workscope performed was (or was not) the most cost efficient. If the minimum contractual Engine Performance Restoration release life had increased from 5,000 Flight Cycles to 6,000 Flight Cycles, would it have had an impact on the workscope performed? (40% Max of 400 words) Given Information: 1. Assumptions i) ii) iii) iv) v) vi) Airworthiness Directives cost sharing is not applicable. The engine removal is not a result of maintenance mishandling or foreign object damage and is not covered by the operator's insurance. Handling fees and VAT is included in the total cost and amounts to 3% of the total ESV cost. The LPT life limited parts have been replaced with new. The remaining life limited parts have not been replaced. All engine modules have been overhauled. Module split applies to the total ESV cost. vii) viii) Annual escalation of the MRA rates is not applicable. The total cost of a new disk of LLPS at the time of the event was $3.3mm. 2. Engine Condition at Delivery Time Since New Cycles Since New Time Since Last Overhaul Fan and Booster Core LPT 27,000 EPR Maintenance Rent Rate $ 130 18,000 LLP Replacement Maintenance Rent Rate $ 145 Cycles Since Last Overhaul 27,000 0 27,000 Fan and Booster 18,000 Core LPT 0 18,000 3. Engine Condition at Release to Service Time Since New 37,500 EPR Maintenance Rent Balance $1,365,000 Cycles Since New 25,000 LLP Replacement Maintenance Rent Balance $1,015,000 4. Engine Module / Cost Split Engine Module Fan and Booster Core LPT EPR LLP LLP Life Limit (EFC) 14% 20% 30,000 68% 52% 18% 28% 20,000 25,000 Lease Extracts: Clause 1 Maintenance Rent 1.1. Lessee shall pay to Lessor Maintenance Rent with respect to each calendar month (including without limitation the last calendar month, or part thereof, of the Lease Term) on the fifteenth (15th) day following such calendar month. Maintenance Rent shall be payable with respect to each of the following maintenance activities, each a "Maintenance Rent Activity" or "MRA": i) each Engine with respect to accomplishment of an Engine Performance Restoration. 1.2. Provided no Default or Event of Default has occurred and is continuing, Lessor shall pay to Lessee, by way of contribution to the direct cost of any Maintenance Rent Activity, the amounts set forth in this section 1.2. Payment of such amounts shall be made out of the applicable MRA Maintenance Rent Balance only after the work has been completed and supporting documentation has been provided