The Importance of a Letter of Intent When Purchasing a Corporate Aircraft

By: Lapayowker Jet Counsel

April 11, 2010

When purchasing a corporate aircraft, there are several important steps that must be taken after a buying team has been established. First among these important steps is the creation of a Letter of Intent (LOI). The buyer and seller should work closely together to negotiate and sign the LOI for the aircraft’s purchase.

While a LOI is a small document, it is essential because it helps guide the transaction. Without a LOI, the parties will lack the appropriate direction to move forward with the purchase and may have differing expectations. Furthermore, they may get bogged down in the Aircraft Purchase Agreement (APA) details, and this might delay the transaction or even prevent it from occurring at all.

A Letter of Intent should cover the following:

• Contain a description of exactly what is being purchased. This should include the make, model, any serial numbers, status of maintenance, and the condition of the aircraft.

• Set the purchase price of the aircraft.

• Establish what kind of deposit is necessary for the aircraft purchase, who will hold this deposit, and what the terms will be if it is forfeited. Also, it’s important to outline who will pay the agent’s escrow fees.

• Lay out the pre-purchase aircraft inspection that includes the allocation of costs and acceptance criteria. Be sure to include details about the location of the inspection facility, the scope of the inspection, including information about test flights, timing, and who pays for the inspection and the actual movement of the aircraft to the inspection facility. In addition, you will also need to establish the parties’ rights and obligations in the event of a successful or unsuccessful inspection.

• Agree to negotiate and enter into a definitive purchase agreement within a specified amount of time.

Crafting a letter of intention is an inexpensive option that will save both buyer and seller a great amount of time. A good letter of intent will make the aircraft purchase go smoothly with as little conflict as possible.

Lapayowker Jet Counsel, P.A.. is an aviation attorney and aviation transaction lawyer, focusing on airplane and jet transactions. To learn more, visit