Aviation finance—PDP financing


Produced in partnership with Norton Rose Fulbright
Practice notes

Aviation finance—PDP financing


Produced in partnership with Norton Rose Fulbright

Practice notes
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Pre-delivery payment financing (PDP financing) has developed into a commonly used financing tool for airlines and lessors. However, the increase in the number of PDP financings has led to close scrutiny by the aircraft manufacturers into the industrial and commercial issues which arise as a result of the involvement of a financier in aircraft purchase arrangements. In any PDP financing there may therefore be significant commercial issues to be negotiated, as well as sometimes complex legal issues, particularly in relation to security, to be considered.

PDP financing, and the protection available to any lender, is very different to the situation that exists under other types of aviation finance. Funding is provided while the asset itself is under construction and security cannot be obtained in the same manner as for a completed aircraft. As a result, the provisions setting out the steps that will be taken in the event of enforcement are extremely important for the manufacturer, purchaser and lender.

PDPs and purchase agreements

What are pre-delivery payments?

Pre-delivery payments (PDPs) are stage payments which are payable by the purchaser (eg

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United Kingdom
Related legal acts:
Key definition:
Delivery definition
What does Delivery mean?

Delivery is defined in the sale of goods Act 1979, s 61(1) as the 'voluntary transfer of possession from one person to another' which is the point in time when the parties can be seen to have agreed that the legal right to possession of the goods passes from the seller to the buyer. A distinction must be made between the transfer of possession/delivery and the passing of title/ownership.

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