What Is Negative Pledge in Aircraft Leasing?
Negative Pledge defined for aviation professionals, with its operational or commercial use, document context and related terminology.
Definition, Documents and Application
A negative pledge is a covenant restricting the borrower or lessee from granting additional security interests over specified assets without consent.
Aviation Glossary
Term: Negative Pledge
Category: Aircraft Leasing & Finance
Where the Term Appears
Negative Pledge can appear in aircraft leases, loan agreements, security documents, appraisals, insurance provisions or closing deliverables depending on the transaction. The exact legal effect comes from the executed documents, governing law and the role of each party.
How It Affects the Transaction
It protects the financier's collateral position and may cover the aircraft, engines, receivables, insurance proceeds or shares of the owning SPV.
What to Review
Read the definition together with payment mechanics, default provisions, insurance, maintenance, return conditions, security and enforcement rights. A familiar label can have a different economic effect when the drafting or calculation method changes.
Related Aviation Topics
Related ACMI World coverage includes key terms in aircraft leasing contracts, business jet leasing, aircraft acquisition financing, cross-border jet lease terms and aircraft valuation and LTV.
It protects the financier's collateral position and may cover the aircraft, engines, receivables, insurance proceeds or shares of the owning SPV.
Negative Pledge FAQ
What does Negative Pledge mean in aviation?
A negative pledge is a covenant restricting the borrower or lessee from granting additional security interests over specified assets without consent.
Why does Negative Pledge matter?
It protects the financier's collateral position and may cover the aircraft, engines, receivables, insurance proceeds or shares of the owning SPV.
Where would an aviation professional encounter Negative Pledge?
It is commonly encountered in aircraft leasing & finance documents, procedures, calculations or operating discussions where the underlying technical or commercial issue is relevant.
Does the term have the same meaning in every aircraft finance document?
No. Market terminology is useful shorthand, but the executed agreement controls. Defined terms, calculation methods, governing law and transaction structure can change the result.