Trials and Tribulations of forming a partnership

[Code90]

I'm curious to hear other's experience with forming a partnership for owning a plane. We have recently been going through it. We have a group of 3 like minded pilots, have formed an LLC, gotten a EIN, opened bank accounts, arranged a hanger, formed an operating agreement, and shopped for a plane. It has been a long road, but we are nearing the end. I'm interested to hear how long it took others to do the same thing and what interesting experiences you had. We are about 5 months in so far.

 

[Jeff Oslick]

It's been close to 10 years for me, so some of the memory is fuzzy, but several months sounds about right. The key element is really getting to know the partners (loose non-legal usage) well before pulling the trigger. We had one of the three get cold feet at the last minute, so we let him bail out and I bought it with one other guy, and recruited a new "3rd partner") within 6 weeks of closing on the plane. All three partners remain, though we're negotiating to bring on a 4th now.

 

[JHW]

Bought my 1st plane in a 3 way partnership. I was a 20 year old college student. Partner 1 was a 40 something businessman. Partner 2 was a retired fellow in his 70's. Life was good, we got along well and our schedules never conflicted. Then partner 1 got divorced and partner2 and i got a new partner. We'll call her mrs B. Mrs B saw the pa32 as a symbol of all that had gone wrong with her life. She decided we should pay for the sins of partner 1.

Partner 2 and i decided to part out the plane to get out from under her. She threatened legal action. Partner 2 told her he had just been diagnosed with cancer and her temper tantrum was the least of his worries. She came after me next, i told her i had been looking for an excuse to move back to south africa that this seemed as good a time as any. That was my only dabbling with partnerships. I learned it is far better to have a cheaper plane you own outright than an expensive one you have to share.

 

[DrMack]

We are a 4-partner LLC on an immaculate 2007 Diamond DA40XL. It took us three years to find our fourth and finally put the deal together. We range in age from 45 to 60. We are low timers, 250-400, but are all instrument rated. We hired a good aviation lawyer. Our LLC articles include one that automatically dissolves the LLC after three years and the airplane is to be sold unless there is unanimous consent to continue. We each paid cash for our share so there is no lien nor finance expense. We pay $400/mo. into a fixed cost reserve to cover hangar, insurance and calendar based maintenance. In addition, we pay $30/tach-hr for variable costs. We've been through two annuals and a 1000 hr inspection with no major problems. Our TBO reserve is nearing the cost of an overhauled engine so we anticipate that very soon we'll be back to $300/mo for fixed costs. We each pay for our own fuel and oil. Scheduling priority is rotated each week (Tue-Mon), where the priority pilot for each week has right of first refusal for scheduling. When it is not your week, just check with the priority pilot to see if it's available. In two years I've only had one schedule conflict. We use ShareZen for scheduling and tracking scheduled maintenance. It is a lot more airplane than any of us could afford on our own. We are all having the time of our lives.

Good luck! Hope you are as fortunate as we are with our group.

 

[tinerj]

Our four partnership works great.

1. Monthly membership $80.00 to pay for hangar, condition inspection, insurance, periodic maintenance (mostly oil changes.)
2. Engine fund that stays with the plane ($5.00 a tach hr.)
3. Special assessment when we as a group decide to add something to the plane, and when the monthly membership cannot pay all of the items that need corrected that are found during the condition inspection.

Each of the members have a different flying routine; one is a dawn patrol guy, another partner who generally cannot fly except on the week-end, one that is not a morning person and can't get to the airport until later in the day, and another who is very flexible about flying time. Seldom any conflicts.

Pilots top off the fuel after each flight at the individual pilot's expense; oil is added if needed before each flight and is charged to the monthly fee, not to individual pilots. We fly 200 hours total each year, and about equally (50 hrs) for each partner.

We set up an LLC, got the checking account for monthly membership, and a saving account for the engine fund.

We did agree to designate only one person who talks to the mechanic and schedules work and what we want done. We also designated only one person who writes checks and pays the bills (not the same person who talks to the mechanic.)

We're five years into this partnership, and it is working fine. Cost each partner about $3000.00 a year. Very reasonable.