Buying a Share in an Aircraft Partnership: What to Check

Buying a share in an aircraft partnership usually starts with one division problem: what the whole airplane would sell for, divided by the number of shares. Then you add your slice of the reserve fund, subtract your slice of any loan, and adjust for whatever the logbooks tell you. That gets you a fair opening number. Whether the share is worth buying at all depends on things that never show up in the price: the agreement, the other partners, and how you get out.

There's no official formula for this. What follows is the approach that comes up again and again when owners compare notes on forums like Pilots of America, turned into a checklist.

1. How much is an aircraft partnership share worth?

Take a four-way partnership in a Cessna 182. Comparable 182s with similar time and equipment are listing around $120,000, so a quarter share starts at $30,000. The partnership holds $8,000 in its reserve account and still owes $10,000 on a note against the airplane.

• Airplane value per share: $120,000 / 4 = $30,000.
• Reserve fund per share: $8,000 / 4 = $2,000. Forum consensus is that cash in the reserve counts close to dollar for dollar, because it's money you won't have to put in later.
• Loan per share: $10,000 / 4 = $2,500. If the debt stays with the partnership, you're inheriting a quarter of it, so it comes off the price.
• Starting number: $30,000 + $2,000 - $2,500 = $29,500.

Now adjust. If the engine is at 1,700 hours on a 2,000-hour TBO and that $8,000 reserve is the whole overhaul fund, you're buying a quarter of an overhaul bill that's mostly unfunded. If the annual is due next month and the last one turned up corrosion, price that in too. Some owners also point out that a share in a long-running group trades more like any other market: the best data point is what the last share actually sold for, and how long it sat before someone bought it.

Before you get attached to the airplane, check that a share beats renting at the hours you really fly. The buy-in is only the start. A quarter of the hangar, insurance and annual arrives every month whether you fly or not.

2. What to ask for before buying a share in an aircraft partnership

A serious seller and a well-run group will hand these over without fuss. If they can't, find out why before you go further.

1. Airframe, engine, and prop logbooks, complete, plus any 337s. You want damage history, time since overhaul, and AD compliance.
2. The squawk history. Open items, deferred items, and how long things sat before they got fixed.
3. The partnership or operating agreement, the whole thing, including any amendments.
4. The last 12 months of statements: what each partner was charged, what went into reserves, and whether anyone has been paying late.
5. Scheduling history. How many hours each partner flew and how often the airplane was free on the days you'd want it.
6. Insurance: the hull value, the deductible, and who's covered as a named pilot.
7. Loan documents, if there's a note, and what happens if a partner stops paying their share of it.

The statements and the scheduling history are the two people forget. A share in a busy airplane where one partner books every weekend is worth less to you than the arithmetic says.

3. Do you need a pre-buy for a partnership share?

Owners split on this. Some skip a formal pre-buy, fly the airplane a couple of times, talk to the mechanic who does the annuals, and lean on a healthy reserve account. Others treat it like any aircraft purchase. One forum poster put it plainly: you have two due diligence projects, not one, because you're buying into an entity as well as an airplane.

If the share costs more than a few thousand dollars, pay an independent A&P to go through the logs at a minimum, and hold the seller to the same records package a buyer's inspector would want on a whole-airplane sale. It's cheap next to the price, and it's much easier to raise a problem before you're a partner than after.

The title side isn't optional. Look up the N-number on the FAA's Aircraft Inquiry site at registry.faa.gov/aircraftinquiry to confirm who the registered owner is, and use the same site's Request for Aircraft Records page to order the aircraft's registry file. A title search from an aviation title company will turn up recorded liens. If the airplane is owned by an LLC, check the company too: its standing with the state, its debts, and whether anyone has sued it.

4. Read the exit before you read the price

You'll leave this partnership someday. Move, lose a medical, buy your own airplane. The agreement decides what that costs you, so read it as the person who's leaving.

• Who can you sell to? Do the other partners have to approve a buyer, and do they get first crack at your share?
• How is a departing share valued: appraisal, a formula, or an agreed value the group updates each year?
• What happens to your slice of the reserve fund when you leave?
• How are fixed costs and hourly costs split, and can the rate change without a vote?
• How do big decisions get made? An avionics upgrade or an early overhaul on a majority vote can land a five-figure capital call on you.
• What happens if a partner stops paying?

If the agreement is silent on most of this, that's not a dealbreaker, but it is a reason to ask for changes before you sign, and to have an aviation attorney read it. Our post on leaving a partnership covers what a good buyout clause settles.