All posts tagged 'AIRCRAFT'

Closing Aircraft Purchase/Sale Transactions

 

Aircraft Purchase/Sale Transactions

As we get to the end of the year, many aircraft purchasers and sellers are trying to get their deals closed. Whether for tax or other reasons, year end is a busy time for aircraft transactions. Many transactions are closed using escrow agents located in Oklahoma City, Oklahoma (home of the FAA Aircraft Registry). If you have never been involved in an aircraft transaction, you may wonder what happens at an aircraft closing.

In a typical (if such a thing exists) aircraft closing, here are the steps an escrow agent takes to help aircraft sellers and purchasers close a transaction once all of the necessary funds and documents are in escrow:

  • The escrow agent will pay off any liens, mortgages, security interests or other interests held by third parties against the aircraft ("Liens");

  • The escrow agent will disburse to the seller the purchase price, plus any unpaid amounts due from purchaser to seller for flight costs associated with moving the aircraft to the inspection facility or the delivery location, and less one-half of the escrow agent's fee;

  • Once the seller confirms receipt of the funds, the escrow agent (a) dates and files with the FAA releases of any Liens the FAA Aircraft Bill of Sale (FAA Form 8050-2), the Aircraft Registration Application (FAA Form 8050-1) and statement in support (for example, if the purchaser is a limited liability company); and (b) dates and releases the Warranty Bill of Sale and Assignment of Warranties and Other Rights (if applicable) out of escrow to purchaser;

  • Purchaser executes and delivers the delivery receipt to the seller which confirms the aircraft is in the delivery condition and is accepted by the purchaser;

  • If the aircraft is subject to the Capetown Convention, the escrow agent, as purchaser’s professional user entity, registers the sale of the aircraft to the purchaser with the International Registry; and

  • The escrow agent, as the seller’s professional user entity, discharges any registration by seller with the International Registry of any international interest or prospective international interest registered with respect to the aircraft, and consents to the registration of the sale of the aircraft to the purchaser.

The seller and purchaser usually intend that each of these actions is interdependent with each of the others, but that upon completion they are considered to have occurred simultaneously. When all of these steps are completed, the seller delivers physical possession of the aircraft to the purchaser at the closing location.

This closing process may occur via a telephone call with all of the interested parties on the line, or simply after each of the interested parties has provided authorization (usually via e-mail) for the escrow agent to perform these steps and close the transaction. And, of course, depending upon the transaction, these steps may vary. But this is generally how the process occurs.

If you ever have questions or need assistance with an aircraft transaction or closing, I would be happy to help. And in the meantime, Happy New Year.

Greg can be reached at:

Greg Reigel
Shackelford, Bowen, McKinley & Norton, LLP
9201 N. Central Expressway, 4th Floor, Dallas, Texas 75231
Direct: (214) 780-1482 - Fax: (214) 780-1401
E-mail:  greigel@shackelford.law
Website:  www.shackelford.law

Retail Owners: BUY, SELL or HOLD?

As an inventorying-dealer, we are often asked by aircraft owners “Does it pay to make a move now?

The truth is, whenever you buy or sell an asset, there are unavoidable costs associated. Selling a home can be one of the best examples of an expensive transaction with often little monetary value gain. Moving costs, furniture damage, endless time spent cleaning/showing the home, agent commissions often eat up your anticipated fortune. 


An aircraft transaction however, has an overwhelming amount of justified reasons to invest. Whether for business or for personal use, aircraft as we all know are time machines which can also bring value to an owner’s employees, their families, the employee morale at a distant store or a face-to-face meeting with a vendor about an issue.  I would even argue the efficiencies a properly advised owner can create during a transaction can make for large gains in monetary value at times. No, I’m not suggesting you go buy a Falcon 10 and wait for the market to rise, however there ARE opportunities in this current active market, to make smart financial gains in your aviation transaction both for the short-term & long.


Whether it means you are a new private pilot moving up from your first 172 to a faster Cirrus, or whether you are a large corporation looking to sell your Citation XL and get into a large-cabin Falcon, I believe this is a good time to move! With pre-owned aircraft inventories shrinking daily & firming prices, we are already at pre-2008 inventory levels again and first-time buyers are entering the market which we haven’t seen in a decade. Only a couple years ago, we would commonly advise clients the selling would be the tough part, but the buying is easy. Now that is almost opposite in some late-model jet markets where buyers are waiting patiently for months at asking price while the seller tries to locate their new aircraft.


What should you do? Get the advice of a trusted and seasoned professional. If you aren’t already working with a broker or dealer, I recommend starting your search for one at National Aircraft Resale Association From there you’ll have the freedom to rely on your broker’s market intel, along with your good business sense which likely allowed for you to buy an aircraft in the first place. Good hunting and God Bless.


Chris is the Vice President of Meisner Aircraft who has served companies both small and large for over 30 years.  They have built their reputation of providing good sound business advice for clients around the world.  Whether it was a customer purchasing their first single engine aircraft or the larger flight department who needed a company with the experience and expertise to handle a complicated transaction process.  Family owned and operated they have successfully been involved in over $900 million in aircraft sales.  

The Importance of Accident Investigation

This semester I am taking a class that is required for my major called "Aviation Safety Programs." I did not know much about this class before the first day, besides that we would be learning how to be safer and more cautious pilots in our flight operations. Now that the first week of classes has come and gone, I am looking forward to this class more than most of my others. The basic setup of this class is that we will be reading and watching videos about aircraft accidents and analyzing what went wrong. We then write 250-500 words a week about a factor of the accident that stuck out to us. A large percentage of our final grade is calculated from a presentation that we each give about an accident that is randomly assigned to us.

This may sound grim, but it is so important to sit down and work through exactly what caused a deadly accident to happen so that you can avoid the same mistakes in the future. Whether it is pilot error, instrument malfunction, or an accident caused by ATC, knowing how to understand and avoid the same fate is paramount to creating safer skies.

For example, the first accident that we investigated was Colgan Air flight 3407. As 40+ aviation students anxiously watched the projector screen, we were shown a video that recreated the accident with a 3D model of the aircraft and instruments visualizing what the black box had recorded. Additionally, this video had real audio from ATC communicating with the copilot shortly before the accident. It was disturbing to hear, as it made the accident seem so much more real.

After watching the video, we opened discussion to what we believed went wrong. Was it icing? Was it the captain who had previously failed stall awareness training? Was it the first officer who had been working so much between flying and being a waitress that she was deliriously tired? It is important to consider all of these factors and logically work through why this was a bad decision/scenario. We then read the NTSB report and discussed how they came to their conclusions.

This is the infamous accident that lead to the House Transportation and Infrastructure Committee introducing the "Airline Safety and Pilot Training Improvement Act of 2009." Many things changed in the world of professional aviation after this law was passed. Regulations governing pilot training became much more strict. Additionally, the hour requirements for a pilot to earn their ATP rating changed from 250 to 1500. Although both pilots had several thousands of hours of training, the distraught families of the victims who pushed for these updates to regulations simply wanted to try and ensure something like this never happened again.

As you can see, the aftermath of this accident was colossal. It had a huge impact on the aviation industry as a whole, the effects of which aviation students will witness firsthand for years to come. Had the NTSB reported that the cause of the accident was icing with minimal other factors, perhaps the outcome would have been different. However, we cannot be sure of this. The important thing to gather from this is that the entire accident could have been avoided if the pilots had stopped the sequence of bad events from early on.

The "Decide" model is often used to evaluate in-flight emergencies. Having a prior knowledge of events that have lead to accidents can assist with logical thinking when evaluating impeding danger.

Each accident starts as a chain of events. Imagine dominos in a line. When you knock down one, others start following after quite quickly. One of the things we will be doing in my class is identifying which moments leading up to the accidents are dominos. We will analyze where it starts, what makes it worse, and what the ultimate result is. I think that this is fascinating, and it is extremely important for all pilots to examine aircraft accident reports to become better informed and prepared in case they recognize something that could be a domino.

I want to encourage every pilot out there, whether it is their profession or they fly for fun, to begin paying attention to accident reports. It can be difficult, as most pilots have an "it won’t happen to me," attitude, but doing so will help make flying safer for yourself and everyone around you.

Help Build the "One Week Wonder" at Airventure!

At the Zenith Builders in September, Charlie Becker (Director of Communities & Homebuilt Community Manager) spoke about the return of the One Week Wonder! project to AirVenture (Oshkosh) next year. Photo © Sabastien Heintz

EAA’s unique building project is focused on building a Zenith CH 750 kit aircraft during the seven days of EAA AirVenture 2014, beginning on July 28 and continuing through completion or the event’s final day on August 3. The goal is to completely construct, inspect, and taxi test the aircraft by the end of the weeklong event.

"We want people to discover that building an airplane is not that complicated and is within the reach of just about anyone, by watching this project take shape during the week and participating in it themselves," said Charlie Becker, EAA’s manager of the organization’s homebuilt programs. "This Zenith kit will arrive at Oshkosh just as any builder would receive it. The One Week Wonder will show how today’s advanced kits and technology make aircraft building accessible and affordable, especially with the support from many EAA programs and members. It’s a fun, interactive opportunity that will show thousands of people exactly how an airplane goes together."

The One Week Wonder project will also allow EAA to showcase how a person can build their own airplane, the technical achievements along the way, and EAA support programs for aircraft builders. AirVenture attendees will be able to add their own "hands-on" moment in the construction project and sign the logbook as one of the builders.

In the One Week Wonder display area, which will be located near the EAA Welcome Center in the main crossroads of the AirVenture grounds, other displays will include the completed Zenith CH 750 built by EAA employees – including many who had never built an airplane previously. There will also be interactive displays that highlight the aircraft construction process, the variety of aircraft available for builders, and information on getting started on an aircraft project.

More details about the One Week Wonder project will be announced as they are finalized. You can also learn more about building Zeniths at Sabastien Heintz’s blog

Nellie and Abe, and the Grace They Provide

On September 21, I dropped by the Grace on Wings Family Aviation Festival and Hog Roast at the Indianapolis International Airport. Coming from the south end of the airport (which is mostly under construction and fenced off), I begin to wonder if I was lost – soon there were signs that guided me in. I found a hangar full of life and activity!

Bidders gather for the final moments of the silent auction.

The star attraction of the day seemed to be the Silent Auction. Tables and tables full of items up for grabs! Most of the hangar was filled with patrons of the hog roast – picnic tables with pulled pork and all the trim. The can’t miss vendor table near the entrance was packed with figurines of all sizes carved from olive wood grown in Bethlehem. Plus bouncy castles for the kids in the background let you know this truly was for the whole family.

The festival was to raise funds for Grace on Wings, the nation’s only charity air ambulance service. I spoke with Hal Blank, CEO and Chief Pilot, about this festival; with a turnout of over 1,100 over the course of the day, he was very pleased. "We always pray to at least break even. We’ve been doing this for seven years, and this event was one of our best! We served over 600 meals (at $10/adult, $5/child), plus the silent auction was huge. We also gave 71 free flights to kids as part of EAA Young Eagles program. But the largest success is always getting the word out about ourselves and telling about the opportunities we've had to be able to help families in need. In fact, many of our patients were there to celebrate with us Saturday!"

This little piggie was pretty much decimated by the crowd!

Grace on Wings was inspired by the need of two young Indianapolis girls who suffered from a genetic bone disorder that required regular visits to a Baltimore specialist -- more than 11 hours away by car. With the support of charitable funding, they provide transport to patients who are needing to go long distances for important treatment throughout the United States. Their two air ambulances, "Nellie" and "Abe", two customized Mitsubishi MU-2B Turboprops, were on hand outside the hangar for all to see. Both are equipped with oxygen, oxygen saturation monitors, portable ventilator, cardiac monitors, baby pods, defibrillators and more.

Blank shared the stories behind each aircraft’s name. "Nellie is named after Nell Wood, a missionary nurse who travelled the world. She was a member of the First Presbyterian Church, and they funded the original $10,000 seed money for Grace on Wings to purchase the aircraft, so it was named in her honor."

"Nellie" sitting outside the hanger for all to see.

"When Nellie needed to undergo routine maintenance, we needed to purchase a second aircraft since she was going to unable to make runs during that time. We went to Farmer’s Bank (who financed the purchase of Nellie) for additional funds, and they stepped up for us again. Since the registration of this one was 777LP, we took the LP to mean the "Lord’s Promise", so Abraham was the obvious choice. Abe served five families while Nellie was down."

How a patient would be transported in "Abe" .

Blank also explained that with the two different models come different advantages. "Nellie is a J-model, which sits lower to the ground. So loading is easier – we can use a 400-pound loading system with her. Abe, the 36A-model, is the best choice for long distance flights.

For more information on Grace on Wings and the services they provide, plus how you can participate, check them out here

End of content

No more pages to load