Aviation Recovery: On a Wing and a Prayer

Aviation assets are strictly governed, highly technical and extremely complicated to value. When working on a restructuring assignment involving corporate or private aviation assets, it is critical to partner with a valuation agent who specializes in aviation and can answer the following questions to ensure recovery and maximise realisation:

• How do you differentiate between half-life and full life valuations?
• What is the difference between rotable, repairable and expendable aircraft spares?
• When do the Release to Service and Airworthiness Certificates expire?
• Where do you find important information about the aircraft?
• Why is airworthiness of the aircraft impacted by the EASA or FAA?

Although aircraft valuation, recovery and disposal may seem similar to standard asset valuations, they are fundamentally different. Aircraft valuation is a complex process requiring a deep understanding of the dynamics of the aircraft’s status. From engine and airframe maintenance records, aircraft technical logs, component status, CAA licenses, regulations and market dynamics, a lack of understanding in aircraft valuation could prove very costly and you may be in possession of an asset that is worthless or has minimal value.

Aircraft Valuation

How is aircraft valued? It may seem straightforward, but opinions vary widely. Pricing comparisons for the aircraft can be found in aviation magazines listing new models, various aviation websites which list similar models, or the aircraft blue book. Alternatively, the valuer could assess each aircraft component individually to obtain a monetary value on the equipment.

In addition to the considerations above, the following factors can have a significant impact on value and should be taken into account:

• Is the aircraft store in a hangar or left outside?
• Are there any potential liens?
• Who has maintained the aircraft and are the service logs in order?
• Is the aircraft used for flying school, charter, private or cargo?
• When was it last flown?
• Where is the documentation held such as flight log book and airworthiness certificate?

Like most assets, an aircraft’s value ultimately depends on what someone is willing to pay within a reasonable timeframe. However, to stand the best chance of maximising realisations, the combination of markets knowledge, speed and full awareness of sector compliance is critical.

Aircraft Recovery & Realisation

If the aircraft is flying from main airports or airfields the tracing process can be relatively straightforward. However, aircraft such as helicopters that fly from private sites can be more complicated. While tracing helicopters from private sites may take longer, they can usually be traced using control tower flight path information.

Once located, the process to recover the asset is often difficult and requires specialist expertise. Retention of title claims and liens are usually significant due to the need for full identification and traceability of component parts. The next question is: can they be flown, or do they need to first be serviced or disassembled and transported by a specialist team? The recovery route will depend on whether the technical logs and document folder are up to date and can be located.

Once recovered the sale process can take many routes depending on the type of aircraft, the time in which to sell, the number of aircraft and their location. Every case is different, and the valuation report should include the recommended exit strategy, such as private treaty, online auction or live auction, and provide a detailed exit cost breakdown within the specified period.

Having the right specialist for aviation asset advice is critical. Without it, costs can escalate, values can be rendered worthless, and recovery may be left on a wing and a prayer.