Aircraft Buyer Questions (Part 4): Setting Timelines

Concluding his series, René Armas Maes discusses setting timelines for an aircraft purchase, from understanding market conditions, to arranging financing, negotiating the purchase contract, executing a Pre-Purchase Inspection, and taking delivery...

René Armas Maes  |  25th April 2022
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René Armas Maes
René Armas Maes

René Armas Maes, Vice President, Commercial, Jet Link International LLC, is an international...

Tips for buying a private jet for the first time


With an almost non-existent market for newer, low-time pre-owned business jets currently, an increasing number of buyers have been turning to the OEMs to order factory-new jets, which, in turn, has created a growing backlog of orders that has extended the waiting time to receive a new aircraft.

Buyers seeking to purchase a new jet from a manufacturer will need to work potentially two-to-four years ahead of when they expect to take delivery.

Of course, just because the listed inventory of pre-owned business jets is extremely low (less than 4%, according to AMSTAT data at the time of writing), and is well picked over, doesn’t mean to say finding a lower-time, newer model is an impossibility. But several such transactions take place off-market, meaning additional time should be allowed to source the right aircraft from an owner who is willing to sell, and inevitably a premium price will need to be paid.

Nevertheless, a well-maintained older aircraft with acceptably low times on its engines could be worth upgrading with a cabin and flight deck refurbishment, given that many of these models, though also commanding premiums on the market currently, are selling at well below their new prices.

Arranging Financing

In many cases, buyers opt to finance their aircraft acquisition. If financing is the route you plan to take, then you’ll need to understand the process, and allow for this within your pre-purchase timeline.

Typically, an aircraft financing application starts with an assessment of the buyer’s financial situation, and identifying the subject aircraft to obtain pre-approval with the lender. This should happen before you begin your search for the specific aircraft you wish to buy.

The bank will require you to provide an approximate aircraft purchase timeline, along with the aircraft type and model, year of manufacture, and amount of money you wish to borrow.

Having received pre-approval, potential aircraft buyers can then explore what is affordable to them in terms of aircraft financing, and only then will the buyer be able to decide whether a brand-new, or a pre-owned, jet offers the best return on investment.

For either approach, the ultimate goal is to buy the ideal business aircraft, at an appropriate price, under the right financial model, based on your current and forward-looking financial situation. This requires preparation and time.

It’s also important to get an early understanding of which financial mechanism(s) can be used to finance your aircraft purchase. There are several choices, including:

  • Cash
  • Down-payment
  • Debt financing
  • Lessor financing
  • Non-bank financial institutions
  • Financing via Export Credit Agencies (loans and structured financial leases for brand-new aircraft)
  • OEM financing (directly or indirectly through a financial partner)
  • Aviation focused lenders, and
  • Aircraft brokers.

You can read more about many of the above avenues in Buying an Aircraft: The Available Financing SourcesHaving considered each of the options, and assessing your financial situation, you should be able to determine the best financing structure(s) for your acquisition needs, as well as the amount to be financed.

Next, gather all of the documentation required to submit a pre-loan application. This is likely to include tax returns, business and personal financial statements containing personal net-worth information, and various other items.

You should expect the process and due diligence of a typical business aircraft loan to take between one and three weeks, depending on whether the evaluation is for a single entity with no business affiliates, or a holding company with subsidiaries.

The overall process of arranging aircraft financing could take anywhere between two and six weeks. The key is to plan accordingly, setting up a timeline with a buffer of at least one additional business week to help avoid any purchase-related stress.

Starting the aircraft financing process early is key. Having financing in place before you need it will certainly assist in expediting a closing, especially in a hot market like today. Failure to do so could cause unnecessary hiccups and stress or, worse, you could end-up losing the aircraft to another bidder.

Aircraft Purchase Agreement

Having identified the suitable aircraft on (or off) the market, an interested buyer will need to get an aircraft purchase agreement in place.

The Letter of Intent (LOI) is a necessary part of the buyer making an offer for, and detailing the terms under which they wish to buy, the aircraft, and should at the very least include:

  • Offer price;
  • State the requirement for an inspection (including the extent and location of the inspection);
  • Preferred date for conclusion of the acquisition.

If the LOI is accepted, buyers will then need to arrange for a refundable deposit, to be held in escrow, as agreed with the seller – thereby showing genuine intention to see the deal through.

Between the Letter of Intent and the contract stage, there is likely to be at least some negotiation between the buyer’s representatives and seller’s representatives.

Purchase price and the terms for acceptance of the aircraft are likely to be central issues for negotiation, so build space into your timeline for a deal to be forged that’s acceptable to both parties.

Pre-Purchase Inspection

Buyers of pre-owned aircraft will need to undertake a pre-purchase inspection, which requires a visit to a specified maintenance facility to ascertain if there are any potential issues that will impact the aircraft sale, or if the price should be revisited.

The inspection should be scheduled at a different maintenance shop than where the aircraft has been maintained and repaired in the past. And you’d be well advised to hire an appraiser to thoroughly review the aircraft’s logbooks and maintenance records to firmly establish its pedigree.

Any missing records, major repairs, or aircraft damage history need to be carefully reviewed. Has the aircraft undergone modifications? Would anything in the records show an unresolved airworthiness issue? How much time is left until the next major inspection, and what is the likely cost of that inspection?

The answers will all be in the logbooks and maintenance records. Allowing the time for a thorough review of these will be worth its weight in gold.

An experienced advisor should be present, in person, to represent you while the pre-purchase inspection is carried out, and while ground and flight tests are carried out, since squawks may be identified that require resolution prior to the transaction’s completion.

Finally, when conducting an assessment on the equipment of the aircraft, consider future regulatory requirements as they can be costly to comply with. And verify via a search of the aircraft’s title, prior to closing, that there are no liens attached to the aircraft.

Once the inspection is done (this can take from a few days up to a few weeks, depending on the scope of the inspection, aircraft, MRO center, and availability of personnel), you are clear to conclude the transaction, assuming the pre-purchase inspection didn’t reveal any deal-breakers, and no disputes have arisen over who will pay to fix the issues found.

In Summary...

From start to finish, the process of buying a business jet can take several months (depending on the variables discussed here). Necessary due diligence takes time, and should be expected when buying a pre-owned aircraft.

There are other aspects to establishing the timeline for your aircraft purchase beyond the scope of this article – including obtaining proof of insurance, clearing legal and tax hurdles, plus title transfer. These elements will all require additional time. And training for your flight crew in the make/model of aircraft you’re buying should be arranged simultaneously, in advance of the completion date.

Ultimately, the process of buying a pre-owned aircraft can take between three and nine months, depending on many of the variables discussed above, and as covered under the preceding articles in this series.

When it comes to establishing the timeline of your aircraft acquisition, as the saying goes, “It’s better three hours too soon than a minute too late”. It’s better to overestimate the time needed for each stage of your acquisition process than to underestimate.

Without allowing market conditions to pressure you, be generous in your timeline. You’ll be far less likely to experience buyer’s regret that way...

Don't miss the other articles in this series:


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René Armas Maes

René Armas Maes

Editor, Buyer Strategy & Finance

René Armas Maes, Vice President, Commercial, Jet Link International LLC, is an international aviation consultant and experienced C-Level professional. He has built a successful track record for developing and delivering Business Aviation strategies for Fortune 500 companies, Venture Capital firms, and HNWIs.

René is a regular columnist for Bloomberg (financial), America Economia (business) and a speaker at aviation conferences worldwide.


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