The Florida business law firm Berger Singerman LLP is pleased to announce that attorney team members Daniel Lampert, Franklin Caplan, Phyllis Bean, and Iryna Ivashchuk, recently represented Southern Air Inc. (SAI) in a $700 million aircraft lease and flight services restructuring involving four Boeing 777F cargo aircraft. The deal closed on January 24, 2014.
SAI had been leasing the aircraft from its parent company, Oak Hill, and providing charter flights on an aircraft, crew, maintenance and insurance basis for DHL Express, the world’s leading international air express delivery provider, SAI and DHL, working collaboratively as befits their excellent partnership, identified opportunities to improve credit terms and operational efficiencies by substituting DHL for SAI as the direct aircraft lessee on the Boeing 777s.
“These transactions extend and broaden a reciprocally beneficial long-term partnership between Southern Air and DHL in support of DHL’s international air express network. Among many other synergies, Southern Air provides DHL with the benefits of the only US-flagged ACMI operator of 777s. Using these fuel-efficient aircraft supports DHL’s “Go-Green’ initiative,” said Franklin Caplan, a partner in Berger Singerman’s Business, Finance and Tax Team.
In order for SAI to retain necessary operational control of the aircraft, new head leases and subleases were negotiated, allocating responsibilities, costs and risks between DHL and SAI. The result involved multiple interdependent components, involving multiple parties, all closing simultaneously. These included refinancings for each aircraft as well as the new head leases, subleases and a new Flight Services Agreement between Southern Air and DHL.
“This complex deal presented unique challenges, not only because of the interesting strategy in changing the lessee and allocating maintenance obligations consistent with the Flight Services Agreement, but also because of the difficulty in reconciling numerous conflicting provisions in the multiple agreements and leases that had to be negotiated and coordinated,” said Daniel Lampert, a partner in the firm’s Business, Finance & Tax team. “The deal required a team effort to synch many moving parts together.”
