A&P financial health

brien23

brien23

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Brien
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For all you A&P mechanics and those who think you want to get into the trade, there is a significant danger to your financial health. Following passage of the 1999 General Aviation Revitalization Act AND changes to federal bankruptcy laws, General Aviation Mechanics in particular are now at extreme risk of losing everything in a lawsuit. NO longer are the manufacturers the deep pocket in any litigation, YOU are! And if you are not currently carrying a personal liability policy with at least 2 million in smooth coverage, you can lose your home, savings and any liquid assets in a jury trial, in addition to having your wages attached to satisfy a very large jury award.
Liability insurance starts at about 5k a year and goes above 30K if you are a self employed mechanic, hard to pay for when wages for A&P's start at 18 dollars per hour and rarely go above 30. And don't forget to purchase tail end insurance to protect you for those years after you get out. Most small aircraft businesses don't even begin to carry enough insurance to cover your assets, and even fewer carry tail end insurance.
I cannot afford to buy enough coverage to protect my assets at my wages so I've decided to get out for good. I will not risk my retirement savings to some careless pilot and bleeding heart jury. With 30+ years in the trade, it's now just not worth the risk.
 
brien23 said:
For all you A&P mechanics and those who think you want to get into the trade, there is a significant danger to your financial health. Following passage of the 1999 General Aviation Revitalization Act AND changes to federal bankruptcy laws, General Aviation Mechanics in particular are now at extreme risk of losing everything in a lawsuit. NO longer are the manufacturers the deep pocket in any litigation, YOU are! And if you are not currently carrying a personal liability policy with at least 2 million in smooth coverage, you can lose your home, savings and any liquid assets in a jury trial, in addition to having your wages attached to satisfy a very large jury award.
Liability insurance starts at about 5k a year and goes above 30K if you are a self employed mechanic, hard to pay for when wages for A&P's start at 18 dollars per hour and rarely go above 30. And don't forget to purchase tail end insurance to protect you for those years after you get out. Most small aircraft businesses don't even begin to carry enough insurance to cover your assets, and even fewer carry tail end insurance.
I cannot afford to buy enough coverage to protect my assets at my wages so I've decided to get out for good. I will not risk my retirement savings to some careless pilot and bleeding heart jury. With 30+ years in the trade, it's now just not worth the risk.
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Self employed A&P only charges $18-30 per hour?

Most shop rates I have seen are $60-120 per hour.
 
Attorneys go for the $$$s. Most shops I work with are too small- and forget about the guys operating out of their hangar.

The big shops charge a pile of dough and are very strict on what gets done for CYA. (Example: changing out good looking bonanza wing bolts on age per SB.) You comply or go somewhere else. It's the big shops that would be targets. (Unless someone is outright careless.)

I'm new to this gig, but figured this part out pretty quickly when shopping arround for someplace to work on the old bo. (And again when I was pricing the MX on a baron.)
 
Where can I find an A&P for $18/hr ?
 
JoseCuervo said:
Self employed A&P only charges $18-30 per hour?

Most shop rates I have seen are $60-120 per hour.
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I don't know any independent A&P that charges less than $50 per hour.
 
alfadog said:
I don't know any independent A&P that charges less than $50 per hour.
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Just how much do you pay for a annual on a C-172 the flat rate calls for 15 man hours of labor for the inspection only. This does not including fixing anything or oil change or other consumables.
 
JoseCuervo said:
Self employed A&P only charges $18-30 per hour?

Most shop rates I have seen are $60-120 per hour.
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Hourly rate into the pocket is 18-30. overhead includes equipment, hangar (rent or own), liability insurance, medical insurance, etc.
 
brien23 said:
Just how much do you pay for a annual on a C-172 the flat rate calls for 15 man hours of labor for the inspection only. This does not including fixing anything or oil change or other consumables.
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15 hours X $50 is $750 for an annual on 172.

Sounds reasonable, wouldn't you think?

2 annuals per week is $150k per year. $5k in liability insurance seems reasonable.
 
murphey said:
Hourly rate into the pocket is 18-30. overhead includes equipment, hangar (rent or own), liability insurance, medical insurance, etc.
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Now you are mixing things that aren't in the OP.

That is the purpose of the "shop rate" as it covers all the overhead, labor, insurance, etc.
 
brien23 said:
Just how much do you pay for a annual on a C-172 the flat rate calls for 15 man hours of labor for the inspection only. This does not including fixing anything or oil change or other consumables.
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$1500 for 20hrs. But there are always some of the 'while we are here' items on top of that.

The point is that liability insurance has to go out of the $65-110 shop rate, not the $18 the tech sees on his paycheck. For round numbers, at $6500 premium the A&P works 2 1/2 weeks per year for free just to cover insurance.

Where this breaks down is if someone only wants to wrench on the side or in semi-retirement. When I looked, there were some insurers that based their rate on gross receipts, bit they still had a minimum premium that made part time work unattractive.
 
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JoseCuervo said:
15 hours X $50 is $750 for an annual on 172.

Sounds reasonable, wouldn't you think?

2 annuals per week is $150k per year. $5k in liability insurance seems reasonable.
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This is the reason I get nervous anytime an employee hears or calculates gross sales. You have to subtract more taxes (you pay half of what appears on the 1040), consumables, professionals like tax accountants, etc. then there is the hard reality this is likely a seasonal job in many areas. Subtract out 20-30% of the gross sales on that one alone.

Doesn't look like an easy gig to me...
 
brian];1961787 said:
This is the reason I get nervous anytime an employee hears or calculates gross sales. You have to subtract more taxes (you pay half of what appears on the 1040), consumables, professionals like tax accountants, etc. then there is the hard reality this is likely a seasonal job in many areas. Subtract out 20-30% of the gross sales on that one alone.



Doesn't look like an easy gig to me...
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You don't pay "half" on taxes of what goes "on a 1040".


You pay taxes AFTER you subtract out your costs of generating that revenue. Items like insurance, rent, utilities, consumables, professional fees all serve to reduce the taxes you pay.


If it is "seasonal" that is a conscious choice made by the mechanic as a lifestyle decision, not an economic decision.

There are plenty of shops that have 3-4 month backlogs, or longer. At high shop rates.
 
alfadog said:
I don't know any independent A&P that charges less than $50 per hour.
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He is talking starting starting wages at the FBO.
I charge $50. and the owners *****. SO I cut my customer list to those who don't.
 
Tom-D said:
He is talking starting starting wages at the FBO.

I charge $50. and the owners *****. SO I cut my customer list to those who don't.
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And the starting wages at the FBO would not require any sotmg of liability insurance expense to be taken out.


And, likely, your wife pays the gal that cuts her hair more than a $50 shop rate...
 
I know a few guys who have decided to give it up for the same reasons but really it's no different than deciding to quit flying because of the possibility that might crash and die. I've been doing this for quite a number of years and I don't know of any mechanic who has been sued and financially ruined. I do know some people who have crashed and died flying their airplanes however.

So it comes down to your personal risk tolerance. If it's keeping you awake at night then obviously you should give it up.

On the lighter side as an A&P mechanic I have to ask: What's an "asset" :dunno:
 
JoseCuervo said:
2 annuals per week is $150k per year. $5k in liability insurance seems reasonable.
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Don't know a single A&P-IA that is doing 2 annuals per week.

more like 1 per month.

An A&P with no IA is finding it difficult to find any work. other than in the FBO.
 
Tom-D said:
Don't know a single A&P-IA that is doing 2 annuals per week.



more like 1 per month.



An A&P with no IA is finding it difficult to find any work. other than in the FBO.
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Annualized the math for you.... It is a common technique when discussing wages and revenues. Normalizes it to something anyone can understand.


And, my IA/ AP are booked up, they need a month's notice for most stuff, can deal with small urgent stuff quicker. Just a mom/pop shop/shed on a dirt strip.
 
JoseCuervo said:
Annualized the math for you.... It is a common technique when discussing wages and revenues. Normalizes it to something anyone can understand.


And, my IA/ AP are booked up, they need a month's notice for most stuff, can deal with small urgent stuff quicker. Just a mom/pop shop/shed on a dirt strip.
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Normalized the math okay, but you should double check your arithmetic.
 
2000 billable hours at $75 would be 150k.

Just like in the automotive repair world, I know I have received 2hr bills for 30min of work and 2hr bills for 8hrs of knuckle-busting misery. So I dont know how many billable hours an A&P can reasonably put on the books in a year. If it's only 1500hrs (30/week) and insurance is 5k for a 1FTE tech, insurance cost would run about 4.4% of the labor charges. That doesn't sound excessive.

I do know that good IAs are not hurting for work and that none of the owners of those shops is starving. They all own nice planes, trucks, RVs and in one case a helo. Their taxable income may be low as all their toys are business assets, but as business opportunities go in aviation, a well run maintenance shop is certainly more likely to succeed than a charter company or flight school.
 
JoseCuervo said:
Annualized the math for you.... It is a common technique when discussing wages and revenues. Normalizes it to something anyone can understand.


And, my IA/ AP are booked up, they need a month's notice for most stuff, can deal with small urgent stuff quicker. Just a mom/pop shop/shed on a dirt strip.
Click to expand...

Mom & Pop shop? they make their own business, a bit different situation than working freelanced.
 
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