What information do shareholders need before buying an aircraft?

Shareholders or investors who are considering buying an aircraft for corporate or business purposes should gather comprehensive information and conduct due diligence to make informed decisions. The specific information shareholders need can vary depending on their individual goals and the nature of the business. Understand the purpose and intended use of the aircraft within the business. How will it contribute to the company’s operations and growth? A well-defined business plan should outline this. Know the budget available for aircraft acquisition and operation. Consider how the aircraft will be financed, whether through equity, debt, or a combination of both. Select an aircraft type that aligns with the company’s needs. Consider factors like passenger capacity, range, speed, and payload. Assess the aircraft’s suitability for specific missions. Determine the most appropriate ownership structure. Will the aircraft be owned directly by the company, through a separate entity, or in a joint venture with other investors? Understand the regulatory requirements associated with aircraft ownership, operation, and Part 91/135 (corporate/business) compliance. Regulatory compliance is crucial for safety and legal reasons. Estimate the ongoing operating costs, including maintenance, insurance, fuel, hangar fees, crew salaries, and other related expenses. Consider how these costs will impact the business’s financials. Review the maintenance and inspection history of the aircraft. This includes records of routine maintenance, inspections, and any major repairs. A well-documented maintenance history is essential for safety and reliability. Assess the expected depreciation of the aircraft over time and its potential resale value. This can influence the long-term financial implications of the purchase. Conduct market research to identify available aircraft, their market values, and the competitive landscape. Compare different options and sellers to find the best deal. Determine the insurance coverage needed for the aircraft, including liability and hull insurance. Understand the cost of insurance and any specific requirements for the business’s operations. Develop an aircraft usage agreement that outlines how the aircraft will be used, scheduling procedures, and responsibilities of shareholders. This agreement should address potential disputes and contingencies. Consult with legal and tax professionals to understand the legal and tax implications of aircraft ownership, including structuring the ownership, tax deductions, and liability. Consider an exit strategy for shareholders, such as buy-sell agreements, in case one or more investors wish to sell their shares in the future. This strategy should outline the process and terms of selling or transferring ownership. Conduct thorough due diligence on the aircraft and seller, which may include pre-purchase inspections, title searches, lien checks, and legal reviews. Develop a comprehensive operational plan for the aircraft, covering everything from maintenance schedules to flight crew management and aircraft scheduling. Consider environmental regulations and sustainability goals. This may involve assessing the environmental impact of the aircraft and implementing sustainable practices. Determine the qualifications and hiring process for flight crew and other personnel involved in aircraft operation. Establish an emergency response plan to address safety, medical, and security issues during aircraft operations. Identify sources for operational support, including maintenance facilities, spare parts suppliers, and aviation service providers. Develop a compliance and risk management strategy to address issues such as safety management systems, risk assessment, and regulatory adherence. This information should serve as a starting point for shareholders looking to purchase an aircraft for their business. Depending on the complexity of the operation and the industry, additional information and considerations may be necessary. Consulting with aviation experts, legal advisors, and financial professionals is often essential to ensure a well-informed decision.