Equivalent to 'Alternative A' under the Cape Town Convention, it gives an insolvent company 60 days to pay any dues on leased aircraft or engines. Failing that, it must return the assets to the lessor.
Minister for Transport, Tourism and Sport Leo Varadkar, explained: "This measure will provide greater certainty to investors in the event of default and it is hoped that the change will also facilitate the issuance of enhanced trust equipment certificates, a form of security used in aircraft finance, in Ireland to bolster Ireland's position as a user-friendly and leading jurisdiction for aircraft finance and leasing."
Dómhnal Slattery, CEO of Irish leasing company Avolon, backed the move, saying it would give Irish companies “greater and more cost-effective” access to international capital.
Slattery said: "It is a change which we and others in the industry have advocated for and one which will strengthen Ireland's position as the world's leading centre of aviation finance."
Backing this, Howard Millar, Ryanair’s CFO, said: “We welcome the Government’s decision to amend current legislation to comply with the Cape Town Convention governing airline insolvency rules. This amendment will broaden the sources of financing available for Irish-based airlines and leasing companies, to further strengthen Ireland’s aviation industry, and will also assist Ryanair, Europe’s largest airline, to finance our recent order for a further 175 aircraft for delivery between 2014-2018.”
Tied in with the new legislation and Shannon's restructuring, the government will form a new entity, Shannon Group. The group will own both Shannon Airport and its surrounding 'Shannon Free Zone', a 2.43km2 international business park which gives its business residents tax incentives.
The move follows Shannon Airport's independence, which it took from the Dublin Airport Authority (DAA) last year.
The Irish Government also cleared a finance act this year, which provides capital for the construction and repair of buildings at all Irish airports, including their MRO centres.