«Summer 2010

Preparing for an Aircraft Transaction’s “Moment of Truth”

prebuy_inspections

Airframe Team Lead Dale Taylor, Project Manager Gary Dunn and John Link, maintenance consultant, going over the pre-buy checklist for the Falcon 2000 pre-purchase evaluation.

When buying or selling an aircraft, nothing can be more stressful than the "moment of truth"–that point in the transaction where the buyer and seller are presented with the aircraft squawk list and it is time for them to negotiate and finalize. Partnering with a service provider who knows how to clearly present its findings and communicate well with all parties involved can allow the key players to breathe a bit easier.

"Pre-purchase evaluations are complex, there’s no way around it," says Tim Klenke, an Airframe Service Sales Representative with Duncan Aviation. "Stress can be tempered somewhat, though, when the pre-buy evaluation occurs at a facility with a good reputation, excellent communication and integrity."

During a thorough pre-purchase evaluation, an aircraft is carefully scrutinized. Buyers and sellers negotiate. Brokers and attorneys push and pull the schedule. And service centers pore over the aircraft and answer questions for all involved.

"The objective of a pre-purchase evaluation is to help finalize a buying decision by identifying issues that may affect the purchase price," Tim says. While meeting this goal, all participants want to limit their liability and reduce their risk. They have different timetables in mind. The seller wants the aircraft sold quickly with little additional expense. The buyer wants a complete assessment to validate the selling price and reduce the risk of unexpected repairs.
An evaluation conducted by Duncan Aviation includes a look at an aircraft’s past, its present and its future.

The Past

A thorough evaluation includes a detailed look into the aircraft’s maintenance history and paperwork. Duncan Aviation’s in-house records and research department handles logbook research, as well as Tracker, a maintenance tracking program available to operators who would like assistance keeping their aircraft paperwork current and organized.

"OUR DEDICATED LOGBOOK RESEARCHERS ARE SKILLED WITH RESEARCHING AND PULLING TOGETHER THIS DOCUMENTATION; THEY KNOW WHAT TO LOOK FOR TO PIECE TOGETHER A COMPLETE PICTURE."

Jeff Davis, Records and Research Team Leader, says researching an aircraft’s history can be time-consuming and challenging. "Some of the larger airframes can come in with eight or 10 boxes of paperwork to sort through and organize. Our dedicated logbook researchers are skilled with researching and pulling together this documentation; they know what to look for to piece together a complete picture."

Full airframe and engine logbook research for pre-buy evaluations includes the following: history research for Airworthiness Directives (ADs), Service Bulletins (SBs) and life-limited components; research of Department of Transportation (DOT) and Federal Aviation Regulation (FAR) requirements, manufacturer and Approved Aircraft Inspection Programs (AAIP), repair/alteration history, 8130 tags, fire blocking/8110 paperwork; and a Blue Ribbon FAA package.

"Organized and complete records indicate that the aircraft has most likely been handled in the same manner," Jeff says. "Likewise, haphazard paperwork sends a flag that the aircraft probably needs to be examined a bit more thoroughly."

The Present

The second phase of the evaluation is a physical look at the aircraft. The format for this depends on a variety of factors. A customized evaluation can be developed or an upcoming inspection can be performed.

Whether the physical evaluation is done using an inspection or a custom guide, it will include engine power checks, a borescope survey of inner engine areas and a visual outer examination of the engines. Electrical evaluations of lighting, communication and navigation systems are performed. And an airframe evaluation including windshield, structural and corrosion checks of problematic areas is completed along with visual inspection of the structures, controls and system componentry. All of the areas should be inspected with special attention to any known problem or high maintenance area for that make and model of aircraft.

The Future

The third part of an evaluation examines the projected future expense for the aircraft. This will look at whether major inspections will be due in the coming months or if required avionics modifications are on the horizon. This area is especially important because there may be major maintenance or modification requirements coming that will be expensive or require that the aircraft have significant downtime.

"We take the maintenance status reports and sit down with customers to go over these future requirements," Project Manager Gary Dunn explains. "We provide cost and downtime estimates where needed to give buyers and sellers an excellent idea of the near-term cost of ownership of that aircraft."

Meeting the Goal

"DUNCAN AVIATION PERFORMS DOZENS OF PRE-PURCHASE EVALUATIONS AND IS ON TRACK TO PERFORM MORE THAN 50 OF THEM THIS YEAR."

In a typical year, Duncan Aviation performs dozens of pre-purchase evaluations and is on track to perform more than 50 of them this year. The reason so many operators choose Duncan Aviation for their pre-buy lies in our approach to this moment of truth.

"Duncan Aviation has one clear goal when we perform a pre-purchase evaluation," Gary says. "That is to provide a thorough and fair evaluation of the aircraft and to communicate all findings clearly and respectfully. Then we get out of the way and allow the buyer and seller to discuss and determine what the evaluation results mean to their transaction terms."

Excellent communication between Duncan Aviation, the buyer, the seller, the brokers and the legal counsel makes the whole process go much easier.

"Communication with the customers is critical," Gary says. "They need to know what is going on and we need to be certain that everyone has access to the same information." Duncan Aviation’s myDuncan system provides a unique communication advantage.

myDuncan is a web-based tool that enables customers to view and manage their projects anytime, from anywhere in the world. With a computer and an internet connection, item approvals, action histories, updates and open issues can be communicated in real-time, avoiding delays with fax machines, e-mails, voicemails and even time zones.

John Link, a maintenance consultant, recently worked with Duncan Aviation on the pre-purchase evaluation of a Falcon 2000.

"I have found myDuncan to be very helpful," John says. "It allows me to closely monitor the project even when I am not able to be on-site at all times. I can maintain complete communication with the Project Manager at all times. I always feel up-to-date with hour-to-hour, as well as day-to-day, progress."

When looking for a facility for the Falcon pre-buy, John says the buyer definitely wanted a Dassault Authorized Service Center to look at it. He encouraged the potential buyer to look at Duncan Aviation based on his experience with another pre-buy two years ago.

"I was here in 2008 with a 2000EX prebuy that was extremely well-managed," John continues. "It was completed on time and on budget and was an overall great experience. . . .
so much so that I was really looking forward to coming back. I’m glad to see that nothing has changed."

What should you ask when choosing a facility for your pre-purchase evaluation?

Pre-purchase events and aircraft purchases are uncharted territory for many operators. There are a lot of people involved, lots of choices to make and usually some surprises along the way. When choosing the facility to help you on your way, here are some of the things you might want to think about.

Reputation. What is the facility’s reputation in the industry. Are they known for integrity and honesty in its former business dealings?

Experience. How many pre-buy evaluations does the company perform and how many inspections does it perform on the make and model of aircraft you’re buying? A company with more experience will know the “hot spots” for a particular aircraft.

Post pre-buy work. Will you want modification or paint work completed after the transaction is finalized? A facility with the ability to paint aircraft and provide interior and avionics upgrades can help save downtime and make new ownership easier.

Export/Import Capabilities. Does the service provider have the ability to provide Import and Export services if needed?

Communication. How will the facility communicate information to the parties involved in the transaction? What format will the final evaluation report be in?

In This Issue: Summer 2010