Every once in a while you come upon a deal that is just too good to pass up. This year JA Aero (JA’s Aircraft Sales Branch) bought a group of Diamond DA42 aircraft from one of the largest flight schools in the country, Embry Riddle Aeronautical University. Over the Summer JA refurbished these aircraft and are now offering them up for sale at a price well below their value and at less than one-third the price of new…while still providing much of the same attributes of the new aircraft. They are center stick controlled, Garmin G-1000, have fully integrated autopilot systems and look new. The main difference in these aircraft is that they have Lycoming IO-360 engines (Skyhawk engines) instead of diesel. This may be a significant to an overseas customer where jet fuel is more readily available, however, here in the states it’s a non-issue. In fact, one might argue that having an engine that is familiar to all mechanics and easily overhauled at a reasonable price is more appealing.
As a pilot myself and owner of the flight school I see allot of aircraft that are appealing. However, after flying these aircraft I have to say… They are cool!! The center stick has a very natural feel, the G1000 with the autopilot is the best thing going and the counter rotating props add a level of safety for low time pilots. Additionally, flying the aircraft single engine is a non-event… really! The aircraft climbs at 600 feet per minute on one engine and besides having one foot pushing hard it flies extremely well. Even though the aircraft is not a speedster it is very comfortable. It’s quiet, has a great view and very economical…. a great safe platform for travel throughout the Midwest and beyond.
Now, how do we take full advantage of having these aircraft? What kind of program can we build quickly before they all get sold off?
The only way to really make this work is to buy the aircraft into an LLC and sell off ownership pieces. What are the risks?
- The aircraft lose value – Not likely as there are none available elsewhere and our buyers are flight schools.
- Owners can’t get aircraft – This is always a risk. However, with multiple aircraft it is diminished.
- Liability – Taken care of through the LLC.
- Getting out – Because of value we should be able to provide a guaranteed buyout around 70% after a year.
LET”S TALK ABOUT IT!
Below is a structure that we have done with our managed jet partners. Only suggestions and not set in stone. Looking for input.
Price- $270,000 plus tax (BASED ON FRESHLY OVERHAULED ENGINES)
Shares available to 1/8th (12 1/2%) – $33,750.00
Available hours per year on 1/8th share – 50
Monthly – $200
Hourly – $150 (direct operating cost)
Revenue sharing – Yes (this will reduce owner cost both monthly and hourly by sharing revenue from rental)
Possible finance package – yes
1/8 the share – $33,750 plus tax is $36,112.50
20% down is $7,222.50
Amount financed $28,890.00 (6% x 7 years) = $422/mo.
Total monthly $622
All in cost at 50 hours – $14,964
Hourly cost – $299.28 (less revenue sharing)