Acquiring a first-of-type corporate jet

This fast-growing company identified the need to acquire a small jet to service their need for air travel between far-flung regional centres. The principal examined various options and executed a purchase agreement at an overseas air show just prior to the global financial crisis.

The company subsequently approached us to address issues that had become apparent to them including the need for this aircraft to undergo certification as the ‘first of type’ for the Australian regulator. It also transpired that the manufacturer was not obliged to provide after-sales maintenance for the aircraft before enforcing the delivery provisions of the contract.

In consultation with the client, we developed a strategy to address these issues with the manufacturer on the basis that their failure to cooperate could result in a cancellation of the purchase agreement including forfeiture of the deposit. This was an unpalatable option for the manufacturer as they were experiencing a massive drop in sales and an increase in order cancellations due to the GFC.

Within a matter of weeks the manufacturer had achieved first-of-type certification with CASA, they had significantly improved the acceptance provisions for aircraft delivery and had undertaken not to enforce delivery until their negotiations for after-sales maintenance in Australia were completed.

All critical areas of exposure to the client were eliminated and delivery of the aircraft is scheduled to occur in accordance with the original expectations.