Properly managing an aircraft acquisition process, structuring the ownership and operating of the aircraft from accounting, tax and FAA regulatory perspectives, negotiating purchase documentation, and properly registering the aircraft are critical to success of the transaction.
Negotiated the purchase of one of the first Boeing Business Jets and Bombardier Global Express aircraft, and the first operational Eurocopter EC 155B VIP-configured helicopter delivered in the United States.
Representing an aircraft owner in connection with arrangements for having its aircraft appear in the MGM major motion picture James Bond 007 Casino Royale starring Daniel Craig.
Represented aircraft owner in connection with the simultaneous fleet transition involving the acquisition and trade in of 12 business aircraft.
The Aircraft Acquisition Process
The acquisition process is typically comprised of the following steps, many of which occur simultaneously:
- Identification of the aircraft. Identifying the aircraft that best fits the needs of the client typically begins with engaging someone with extensive knowledge and experience with many types of aircraft and market prices.
- Letter of Intent. After the type of aircraft is selected and several targets identified, a Letter of Intent or “Offer to Purchase” will be drafted, and the buyer’s agent will arrange for a visual inspection and demonstration flight of the aircraft.
- Aircraft Purchase Agreement. If the client decides that they would like to purchase the aircraft after the visual inspection, a comprehensive Aircraft Purchase Agreement will be drafted to memorialize the terms of the purchase. The duration of negotiations of an Aircraft Purchase Agreement is dependent upon the sophistication of the parties and whether counsel to the parties is experienced with aircraft transactions.
- Pre-purchase Inspection. After the Aircraft Purchase Agreement is executed, the aircraft will typically enter a pre-purchase inspection at an authorized inspection facility.
- Inspection Report. After the completion of the inspection, the inspection facility will generate a report detailing the items that are not airworthy or discrepant than the agreed-upon delivery conditions (“discrepancies”).
- Technical Acceptance. After the inspection report is received, the buyer will then issue its “technical acceptance” subject to the repair of discrepancies by the seller, or, in some instances, reject the aircraft.
- Closing. After correction of the discrepancies the transaction will be ready to close. It is important that by that time, all legal, registration, financing, and other applicable documents are ready for execution and should be placed with the escrow agent.
Properly managing an aircraft acquisition process, structuring the ownership and operating of the aircraft accounting, taking into account tax and FAA regulatory perspectives, negotiating purchase documentation, and properly registering the aircraft are critical to success of the transaction. Experienced aviation professionals will have the ability to foresee potential issues and address them early in the process, thereby facilitating a smooth transaction.
KEEPING YOU ON COURSE
We are experienced in working with tax, legal and financial advisors of companies of all sizes in addition to family offices, to implement appropriate operating structures and planning objectives. For first time business aircraft buyers, we can quickly assemble a team of experienced industry professionals and others to assist the client with business, technical and other aspects of an aircraft purchase and ongoing aircraft management under Parts 91 and/or 135 of the Federal Aviation Regulations.
THE RIGHT TEAM. THE RIGHT DEAL.
The return on investment that a business airplane provides for a company goes directly to its bottom line, which can only be a good thing.
- Stewart Lapayowker