Buying aircrafts for our company
Ø A Pre-purchase inspection: (very important step)
A pre-buy inspection on an aircraft is your chance to research and investigate every aspect of your potential investment. The pre buy should include a thorough inspection of the mechanical as well as cosmetic condition of the aircraft. In addition, the legal status of the aircraft needs to be looked at. This includes ensuring that the FAA records on the aircraft are up to date. An often overlooked step of the pre-buy is investigating which STC’s are legally installed on the aircraft. This video discusses what to do if STC paperwork is missing.
Ø Find out about:
- Aircraft value
- Typical add-on equipment
- Performance and specs
- Engine data
STEPS FOR BUYING AN AIRCRAFT:
Decide on the Right Aircraft
Thorough research is the first step toward narrowing our search. However, once we find an aircraft we like, make sure that we see it in person, get maintenance records, and know as much as we can about the pedigree, as we can find out.
Letter of Intent
Once we decide ywe’re ready to move forward with an offer, we’ll need to write a letter of intent that includes significant details of the proposed sale. Think of the LOI as a roadmap of the contract to be written and an outline of the transaction. If we want our LOI to be taken seriously, especially in markets that have few pre-owned aircraft available for sale, then we should open an escrow account. Having escrow clear title and hold funds is always a smart idea, plus we want someone making sure that title is lien-free, and sometimes it’s not, and sometimes it’s a real nightmare. So go ahead and open the account and send that LOI with a fully refundable deposit.
Finalize the Purchase Agreement
If the letter of intent and its terms are accepted, then we are ready for phase two.
We will also work with our legal counsel to finalize our purchase agreement. Purchase Agreements confirm the deposit amount, price of the aircraft, and other general sale terms like a pre-purchase inspection. The pre-purchase inspection or pre-buy is left to negotiations by the parties. Sometimes its an annual, or a set of recommended checks by an MRO. Other times, it can be a logbook and records review, or if it is “as is, where is,” then you are accepting the aircraft in its current condition. Do not be afraid to ask for a higher cap to fix discrepancies, as many sellers will limit or attempt to limit this amount. We will also want to check those engines, and if not on an engine maintenance program, we should do power runs, borescopes, and soap tests before we commit to acceptance.
Arrange an Inspection Before Purchase
This inspection process is an important step to identify any shortcomings of the aircraft. If the report reveals there are reasons why a plane isn’t “airworthy,” this could create room for negotiating repairs or a reduced price.
Technical Acceptance
Once we work out how repairs will be covered, a technical acceptance document is signed. At this time, the deposit becomes nonrefundable. There is no going back now, this is a scary moment, but if we trust our hired consultants, we are going to be flying our aircraft in no time.
Closing and Delivery
These final phases come with more details to work out, but it’s mostly the process during which a title is transferred to us, the purchase is officially closed and insured, and the plane is delivered to us. Since we are using a trusted escrow company, we won’t have much to deal with, but we need to read everything and prepare for the inevitable delay. Don’t push to close, and never agree to close until everything per that contract has been completed. If we want to avoid litigation in the future, take the time now to review everything and make sure we are not getting distracted by the emotions and excitement of a plane.
Anuja Malkar
Managing Director
Athrill Airlines Inc. USA
managingdirector@
Shruti Shetty [MBA HR]
CEO
CEO
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