Aviation Finance and Leasing 2025

AUSTRIA Trends and Developments Contributed by: Martin R. Geiger, GHP Attorneys at Law

Overview Austria continues to position itself as a reliable and strategically situated jurisdiction in the aviation finance and leasing space, offering a stable legal environment, strong adherence to EU regulatory frameworks, and a well-functioning aircraft registration regime. While the jurisdiction may not be a traditional hub for lessor headquarters, it is increasingly relevant in the Europe - an market, particularly for operators based in Central and Eastern Europe (CEE) and international lessors seeking secure and efficient platforms within the EU legal sphere. In 2025, key developments in aviation finance and leasing in Austria have been shaped by environmental imperatives, advances in digital technologies, growing market preference for flexible leasing structures, and ongoing refinements to insolvency and enforcement mechanisms. The following analysis highlights these evolving trends through a legal and transactional lens, relevant to in-house counsel, lessors, banks, and cross-border legal practitioners. Environmental Imperatives and Aviation Finance Structures As with other EU Member States, Austria is under mounting regulatory and political pressure to align with the European Green Deal and the Fit for 55 legislative package. In the aviation context, this translates into intensified scrutiny of emissions, fleet modernisation initiatives, and the financing of sustainable aircraft. Legal structuring of ESG-linked transactions Sustainability-linked finance is no longer peripheral – it is fast becoming a key element in aviation transaction structuring. In Austria, we are witnessing increased deployment of sustainability-linked loans (SLLs), green leases, and hybrid instruments that integrate environmental performance into core covenants. Such structures are being applied both to lessees operating within Austria and to aircraft acquisitions where the asset is registered or based in Austrian territory. From a legal perspective, structuring ESG-linked transactions presents particular challenges: • The choice of ESG metrics must be specific, measurable, and verifiable. Common benchmarks

include carbon emissions per block hour, SAF uptake, and ground service electrification. • Reporting obligations are now often incorporated as a condition precedent and maintained through - out the loan term via compliance certificates. • Legal advisers must ensure that margin ratchets or default clauses linked to ESG compliance do not trigger unintended consequences or enforcement rights that could undermine the commercial integ - rity of the transaction. Additionally, the Austrian banking regulator (FMA) has begun applying green finance classification principles in its oversight functions, creating pressure for avia - tion lenders to demonstrate that their sustainability credentials are not merely symbolic. This underscores the importance of legal certainty and enforceability in ESG-linked finance documentation. Leasing Preferences and Contractual Innovation The prevailing preference for operating leases over finance leases has become entrenched in Austria. Airlines and operators facing tight margins, high fuel costs, and continued post-COVID caution are lean - ing heavily on short- to medium-term operating lease structures to maintain fleet flexibility and reduce capi - tal exposure. Market adaptation and contract design Operating leases in Austria are increasingly tailored with innovative clauses, including: • power-by-the-hour (PBH) mechanisms for seasonal or ACMI operators; • return condition flexibility, allowing for off-season extensions or early terminations; and • maintenance reserve “pay-as-you-go” systems, replacing fixed contributions with actualised expenditure models. These provisions require detailed legal drafting to address complex scenarios such as part-out situa - tions, end-of-lease compensation, or disputes over wear-and-tear. Because Austrian law is not rooted in common law precedent, precision in contract con - struction is essential to avoid ambiguities that could be exploited in the event of dispute.

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