Managing the Acquisition of a Portfolio of 7 Aircraft for a Returning Client
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Overview
A Middle Eastern aircraft investor, a long-term customer of ACC Aviation, identified a portfolio of seven 737 Classics they wished to acquire. The aircraft, of various vintages between 1997 and 1999, were being sold by Canadian North, an entity with which ACC Aviation has previously transacted.
Challenge
Our investor client required full project management of the transaction, encompassing pricing and negotiation of the Letter of Intent (LOI), performance of the pre-purchase inspection, negotiation of the Sale and Purchase Agreement, technical and delivery acceptance, closing, and management of the ferry flight of the aircraft to their future base of operations.
With the aircraft still in operation, our client sought our advice on structuring the transaction to ensure that the final purchase price at closing would account for the changes in technical status occurring from LOI signature through to delivery.
Our solution
This comprehensive transaction showcased a significant range of ACC Aviation’s service capabilities, including aircraft valuation, deal structuring, technical services, transaction project management, and advisory.
Throughout this project, our client engaged us to support them with various aspects:
- Initial Price Agreement: We conducted a desktop valuation of each aircraft in the portfolio based on their latest technical specifications, serving as input for negotiation of the final offer price.
- Letter of Intent Negotiations: We proposed a price adjustment mechanism in the Letter of Intent to ensure a fair acquisition price based on the technical condition at closing.
- Pre-Purchase Inspections: We performed comprehensive physical and technical records inspections of each aircraft, despite logistical challenges due to separate locations of technical records.
- Sale and Purchase Agreement Negotiations: Our focus here was on closing mechanics and other terms not covered in the Letter of Intent.
- Closing: Our technical representatives performed final technical inspections of each aircraft to validate their status, and we coordinated with the seller and ferry flight provider for smooth departure and execution of closing documentation in international airspace.
Each aircraft transaction presented unique challenges, requiring adaptive problem-solving and strategic decision-making. In the case of the first aircraft delivery, initial records indicated it was equipped with an 8.33 spacing radio, necessary for European airspace navigation. However, during the initial ferry, it became apparent that the aircraft lacked an active 8.33 spacing radio, despite certification. This unexpected discrepancy required swift adjustment. Collaborating closely with our aircraft ferry partners, we opted to alter the intended route, flying west instead of east to avoid European airspace. While adding complexity, this decision ensured compliance and safety standards were met.
Client outcomes
This assignment showcases ACC Aviation’s extensive aircraft transaction and asset management capabilities. To date, we’ve successfully delivered 3 out of the 7 aircraft and anticipate completing the remaining deliveries in Q2 and Q3 of this year. This marks the fourth transaction project we’ve undertaken with this client, underscoring their ongoing reliance on ACC Aviation to manage their trading portfolio.
Key achievements
Experience counts.
Our achievements prove it.
- Successfully delivered 3 out of 7 aircraft in a complex multi-aircraft transaction.
- Implemented a price adjustment mechanism in the LOI to ensure fair acquisition pricing.
- Navigated logistical challenges and ensured compliance by adjusting ferry routes, maintaining safety and operational standards.
