Banks are scrupulously cautious and require a lot of buyer documentation and their own due diligence to ensure the aircraft’s value, so borrowers do not want this part of the purchase to knock them off a great deal. A reputable aviation transaction attorney and acquisition consultant can assist with pre-purchase finance agreements and inspections to calm a lender’s nerves about the value.

Lenders look to assist with financing for the most well maintained aircraft, and shrug their shoulders at anything more than 20 years old. Because of elevated supply levels, five to 10-year-old planes are the most attractive, unless the buyer wants a special airplane, can put more money down, and have a shorter loan term to help protect the lender’s outlay of money.

“Our firm helps buyers navigate the difficulty of finding a bank, accounting for escrows, and even planning for years down the road should you want to sell or lease the aircraft you buy today,” said Stewart Lapayowker, aviation attorney.

Loan commitments and closing can easily take a month or more, and patience is key with the whole process. Lenders are hawks, and take a hard look at the prospective borrower. Missed payments, overextension of credit, defaults, and level of financing on current airplanes are examined thoroughly. Lenders have been hit hard and want to make sure clients can afford two or more airplanes or could realistically sell one if that is the objective after closing on the new one.

With investment grade businesses and high-net worth buyers, it comes down to what’s the better use of their capital. If the $6 million purchase price is financed at a low percentage, which is often tax deductible, it might be more attractive to finance and use $6 million of liquid assets on other investments. The norm is 15 percent down with three to five year loan schedules, and sometimes clients can go down to 10 percent depending on the credit profile. A lot of lenders want the borrower to have enough money to cover damages the aircraft manufacturer might be entitled to if the borrower defaults. Or, some clients prefer to go with lease financing that offers greater flexibility than normal borrowing, and has five to seven year loan terms.

Banks will have varying stances on the most worthy borrowers. Some banks want only existing customers or soon-to-be ultra high-net worth clients. But if the bank has already given out other margin loans, boat or real estate loans, or for certain clients membership in a bank loan syndicate, banks are wary about lending them more money and increasing their risk. That’s when you’ll want to turn to aircraft financial institutions to see what they have to offer since they specialize in accommodating new buyers every day.

With delays and maximum scrutiny, many buyers have gone the cash route, and have accounted for close to 75 percent of all transactions in 2010. “Many clients use liquidity margin accounts to close a deal quickly,” Lapayowker said. “We can then help them assess whether it is smart to finance long term.”

href=”http://www.businessaviationcounsel.com”>aviation attorney and aviation transaction lawyer, focusing on airplane and jet transactions. To learn more, visit Businessaviationcounsel.com.

“In this economy, it’s all about knowing when and how to expand your flight operations,” said Stewart Lapayowker, aviation lawyer. “A good attorney can help you see the pros and cons of the different ownership styles.”

A study from NEXA Capital Partners that was released in late 2010 showed that small and medium businesses that used business airplanes outperformed their competition. A total of 385 businesses from the S&P Small Cap 600 were surveyed and in every single category they benefited from using planes as tools to increase: financial performance and shareholder value; boost customer satisfaction, retention and referrals; improve productivity and minimize the impact of the recession; and access more remote destinations not serviced by commercial airlines. The study shows that during the last five years, business aviation users had an earned net income at a pace of 219 percent over nonusers. Most compellingly, business aviation users earned $3.19 for every dollar earned by a nonuser.

Back in 2009, NEXA surveyed big businesses and found similar results on business aviation users surpassing nonusers on all business metrics. All these facts demonstrate that even in a down economy, business aviation is a crucial part of making any business successful. A business can still be fiscally conservative and make long-term plans that include planes, and an aviation attorney can make the purchase, financing, and management of corporate aircraft a smart, calculated decision.

After a buying team is chosen, an attorney can help with negotiations, creating and executing legal documents as well as purchase agreements, leases, and charter management agreements. From there, a lawyer will assist with the registration with the Federal Aviation Administration and International Registry and provide advice on stateside and international operation of the airplane. Many companies have their tax advisors work with an attorney to go over federal and state taxes, ownership structures, and tax-deferred exchanges. A business’ insurance agents also are a critical factor and will work with a lawyer to control and limit exposure to risk in an economic and efficient policy.

“Advising clients on how to maximize the benefits and decrease liabilities when buying a plane, setting up a flight department, and managing the operations is key,” said Lapayowker, whose law firm in Fort Lauderdale, Fla., focuses on private and corporate aviation transactions worldwide, from the United States, South America, the European Union, Asia and the Middle East. “There are so many legal, regulatory, tax, operational, and financial considerations to be well versed in.”

Stewart H. Lapayowker, P.A. is an
aviation attorney and aviation transaction lawyer, focusing on airplane and jet transactions.
To learn more, visit Businessaviationcounsel.com.

These days, lines seem longer than ever at the airport security gate. And when it comes to flying on public flights, there are also lengthy flight delays and rerouting to worry about it.

As a business, sometimes it makes more sense to purchase or lease a private jet if sending numerous employees on regular business trips is the norm. It can bring fewer headaches, greater flexibility with flying schedules, greater confidentiality and the ability to use a wider variety of airports.

Some things to consider:

-Get a good consultant. An experienced aircraft broker or consultant should have a thorough understanding of what types of aircraft are currently on the market and offer advice on what prices are fair and reasonable. Additionally, they should be able to discuss which types are best suited for one’s particular purposes. For example, the operating cost per hour of an aircraft varies dramatically depending on the size and model.

An experienced broker or consultant will be able to monitor the pre-purchase inspection component of the sale to make sure that one’s best interests are being represented. Without a broker or consultant present certain repairs may be deemed recommended as opposed to mandatory.

-The costs. The price of incorporating an aircraft into a company’s business does not end with the purchase. It is vital to budget for the cost of operating and maintaining the aircraft. This includes storage fees, monthly subscription services such as GPS approach-plate and weather information, sales and use tax requirements, fuel and its price volatility, regular maintenance costs, and reserves for possible repairs.

-Financing options. Same as with any other major purchase, acquiring an aircraft usually involves securing a loan. The financing of an airplane, whether for business or personal needs, is a complicated process, with many different options and lending terms to consider.

Most fixed rate loans for airplanes range anywhere from 10 to 25 years, though shorter loan periods can also be found. And as with other loans, there are fixed rate and adjustable rate options.

If considering the purchase of a private aircraft for business purposes, it is important to speak with an experienced attorney and financial expert to discuss the various options and financial considerations.

Stewart H. Lapayowker, P.A. is an aviation attorney and aviation transaction lawyer, focusing on airplane and jet transactions. To learn more, visit Businessaviationcounsel.com.

After all, why pay for keeping an airplane in a hangar and all the other associated costs when it is not being used all the time?

Fractional Jet Ownership provides the same advantages of outright ownership – private aviation, convenience of when and where the plane is available – but with less hands-on management by the owner.

How Does It Work?

The Fractional Jet Ownership model, which has been around since the 1980s, is based on a time share-like approach. Clients purchase ownership in a jet by buying an undivided interest in a plane that is based on the value of the plane. The clients are guaranteed a certain amount of flying hours on the plane depending on the particular deal that is negotiated.

The company offering the Fractional Jet Ownership Model has an entire fleet of planes and can provide an aircraft for a client with anywhere from 4 to 48 hours’ notice. Clients often pay a management fee for the service that covers maintenance and other matters, and are assessed a usage fee for the hours that they are actually utilizing the airplane.

For businesses that need a private jet and that do not have the need for several hundred hours of usage or the headache of maintaining their own flight department, the fractional model can save time and management headaches. No longer do they have to worry about storage and maintenance, employee issues or the purchasing of an entire plane.

The number of interests in any particular aircraft can vary but can be as small as 1/16. Purchasers may be committed to retaining these shares for two to 5 years. Once that period is over, the purchaser may even be able to lease or sell the share, including back to the company for the fair market value at that particular point in time.

Again, the lack of overhead has made Fractional Jet Ownership a popular option for businesses who have the need to fly in a business aircraft but without the associated headaches.

If considering The Fractional Jet Ownership Model, it is prudent to contact several different providers and find out what arrangement is best for one’s particular situation.

Stewart H. Lapayowker, P.A. is an aviation attorney and aviation transaction lawyer, focusing on airplane and jet transactions. To learn more, visit Businessaviationcounsel.com.

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.

Stewart H. Lapayowker, P.A. is an aviation attorney and aviation transaction lawyer, focusing on airplane and jet transactions. To learn more, visit Businessaviationcounsel.com.

During the recession there are a lot of industries suffering significant hits. A turboprop manufacturer in Idaho was just getting its business underway during the same time frame when the recession hit the hardest, giving short shrift to his dreams and plans – temporarily. The business owner, Paul Schaller, snatched victory from the jaws of defeat and niche marketed his turboprop planes for missionary and humanitarian outfits requiring access to dangerous and remote regions. His company name: Quest.
“While this might sound nice and like a worthwhile cause, this also happens to be a burgeoning $300 million market that hasn’t really gone very far since the early 1960s. This particular plane, a ten-seater $1.45 million Kodiak, is certified by the Federal Aviation Administration (FAA). Since that happened, Schaller’s deliveries have blossomed from virtually zilch to over 27, with customers standing in line,” recounted Stewart H. Lapayowker, Esq., an aviation transaction lawyer who focuses his practice on aircraft transactions in Fort Lauderdale, Florida.

Who would argue that using a plane for rescue work is a luxury? Not a lot of people and its usefulness has proved itself over and over. It’s not just the fact that the plane and the business of saving people are in demand, it’s also that this industry employs others. “In other words, it provides jobs in many areas of the business aviation industry. Odd that people seem to think this kind of work and using a plane to get to places is acceptable, when other companies who do the same thing – but do work related tasks – is out of line and unjustified,” Lapayowker commented.

Consider the fact that this small company is now making three Kodiaks a month and has back orders for 120 planes on the books. Quest expects to makes close to $60 million next year. “Part of that revenue will go back into the local community; part will go to the government. In other words, business aviation turboprop planes are more than pulling their own weight when it comes to contributing to the economy,” added Lapayowker.

“This is a heartwarming story with a moral attached to it and that moral happens to be that despite an aircraft industry that is having trouble during the recession, it is possible to make a comeback. Business aviation is the lifeblood of the country, no matter what form it takes – turboprop aircraft or business jets. They all have value that contributes to the economy of this country,” said Lapayowker.

Stewart H. Lapayowker, P.A. is an aviation transaction lawyer focusing on airplane and jet transactions. To learn more, visit Businessaviationcounsel.com.

In a world that loves to pounce on excesses, it isn’t hard to find hundreds of people tsk-tsking over the use of corporate jets for private purposes. It happens. However, just because there are some companies or executives that do abuse an asset, does not mean that all companies and executives do it. In fact, the exact opposite is usually the case. It’s just that it makes good grist for the publicity mills to be able to point out instances where corporate big shots pulled a big blunder and used company jets to do their “thing,” while taxpayers footed the bill.

“Fortunately, as bad as a story like that might seem, there is a nugget of reality and truth in it, and that is using business aviation to run a company is not only smart, it means the organization is well managed. For those having trouble with that concept, consider the thousands of miles some companies need to put on to make and maintain a profit. While the profit does go to the company, it also goes to the coffers of the nation, keeping trade open across the nation. In other words, business aviation means the country’s economy is thriving thanks to the mobility and flexibility of using planes to do business,” explained Stewart H. Lapayowker, Esq., an aviation transaction lawyer who handles airplane jet transactions in Fort Lauderdale, Florida.

Business flights are a reality in the world today, and if they weren’t, America would not be what it is capable of becoming now and in the future, thanks to the capacity of planes to make vital connections viable. “Whether it’s getting to a distant office on the other side of the country to handle a production problem, sending sales teams for training on a new avionics model, or getting a critically ill person to the nearest high tech medical facility, business aviation is crucial to America’s well-being,” added Lapayowker.

If a business executive had to make four stops in one day, each involving a meeting and resolution of shipping glitches that were holding up the uninterrupted flow of goods to the four destinations, would that executive take a commercial airline to those locations? If one location was New Mexico, one in Washington, one in Maine and one in Montana, and they were all within a two day time frame, that executive could not efficiently take commercial airline flights to all of those places. Logistically, it would be a nightmare.

Using a corporate jet would deal with the geographic issues and make those meetings doable. In the process there would be a business resolution that would allow the company to continue to flourish. One trip, working on the aircraft, holding meetings and doing deals, makes financial sense. “Travel time involved is kept to a minimum using business aviation. Put another way, 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 in business,” said Lapayowker.

Stewart H. Lapayowker, P.A. is an aviation transaction lawyer focusing on airplane and jet transactions. To learn more, visit Businessaviationcounsel.com.

Typically, most Americans figure they get things done faster because they have a car to get from point A to point B. Many of them also forget that they spend about half the day on the road getting to all the places they need to go. Don’t forget that it isn’t just going from home to work either; it’s taking the dry cleaning in, drop the kids at school, go for a hair appointment, hit the post office, the grocery store, pick up your cat at the vet and so on. That’s a small snapshot of a day in the life of an average American needing to travel a whole lot in one day to get things done.

The average American is much like the average (to not so average) business that has to travel a whole lot in one day to get things done. The major exception here, of course, is the fact that the point A to point B journey typically involves thousands of miles and may mean having to get to different countries as well. Obviously driving is out of the question. Enter the necessity of flying to do business.

Here is the problem though. Most Americans think that corporate jets are just for joyriding. Really, who could blame them for that impression given some of the stories they’ve read in the news lately, and now the rest of the business aviation industry is suffering because of it.

Not everyone or every business that uses jets to get around is doing it because they have the money to do so. This isn’t about wealth. This is about doing business in a country so vast that it is impossible to accomplish much unless one has the ability to respond quickly to various business developments.
It’s almost a no-brainer to look at the thousands of miles some companies need to navigate to understand why they need business aviation at their disposal. They fly because they need to in order to stay in operation. If they didn’t fly, they wouldn’t have a company and would not be contributing to the economy.

Think that company executives should be taking commercial airline flights? You’re right, they should when it makes sense. However, there is no sense in trying to book a commercial flight to a place where no commercial airlines fly and there is no airport. In other words, if you can’t get to where you are going commercially, then you should utilize corporate aviation.

That makes sense to those in business. It doesn’t make sense to the general public, because they have not been there and done that. So really, it’s a matter of education about the business aviation industry and why it is vital to America. Company operated aircraft are about flexibility and productivity, about making money that goes into the nation’s coffers, and about providing jobs to Americans. What more could you ask for?

Stewart H. Lapayowker, P.A. is an aviation attorney and aviation transaction lawyer, focusing on airplane and jet transactions. To learn more, visit Businessaviationcounsel.com.

Unfortunately a great many people in America think that corporate jets are the toys for the boys behind the desks of big companies. While it is true that corporate America does use planes to do business, they do not, for the most part, hip-hop from place to place just “because they can.” Business aviation is one of the cornerstones of what makes this great country prosper.

Many people aren’t aware of the fact that business aviation contributes well over $150 billion to our economy each year. This industry also gives jobs to over 1.2 million people; jobs that are stable and pay good wages. This can’t always be said about the rest of the economy. In addition, a large majority of the general aviation aircraft in service around the world are made, run, serviced, and taken care of in the US. That’s not exactly small potatoes when it comes to being a reliable, trustworthy, innovative, and critical industry that is part of the lifeblood of American commerce.

While there are some aviation companies that do manufacture their planes abroad, they bring them to the US to complete. The US has a sterling reputation for aircraft components, even aircraft completion centers, paint, engines, automation systems, electronics, and avionics. Think about the dollars this industry pumps into the economy.

Business aircraft manufacturing is a major source of good jobs in the US, the kind of employment that can continue well into the future. Interestingly enough, it is also one of the very few industries that still actively contributes to maintaining a positive trade balance. At this time in our economic development, we desperately need industries that boost our economy, providing some light at the end of the tunnel during this major recession.

Another fact that not too many people realize is that business aviation lets companies quickly and safely get tools and materials from one place to another; the kinds of materials that can’t be taken on board a commercial airline. Operating a business aircraft lets those doing business get from one destination to another, solving problems as they crop up during the course of doing trade. This increased mobility helps companies solve their problems rapidly, effectively and efficiently.

Don’t forget that any business aviation aircraft needs support crews, maintenance personnel, pilots, technicians, dispatchers, schedulers, and other critical employees to keep their planes in the air doing business. Overall, the big picture for business aviation is one of contributing to a growing economy, striving to stay current in the 21st century, contributing an enormously valuable service to the nation, and allowing commerce to flourish under some tough conditions.

Do corporate jets mean the big boys are playing at the taxpayer’s expense? The nation’s trade balance sheet shows otherwise.

Stewart H. Lapayowker, P.A. is an aviation attorney and aviation transaction lawyer, focusing on airplane and jet transactions. To learn more, visit Businessaviationcounsel.com.