A & M Aviation, Inc. - X Country Flying Club

Back-Ground Information- A & M Aircraft Sales, Inc. operating as A & M Aviation, Inc. has been in business in the Chicago area since 1976. Our rental and training airplanes started with two 1974 Cessna Skyhawks and by 1981 expanded to 17 airplanes. By 1985 our FBO/Club concept and airplanes operated at four airports with approximately 500 active pilots and 35 airplanes. Most of this airplane growth was due to our ability to lease airplanes directly from pilots who flew within our business. Presently, the flight school is centrally located in the Chicago area at the Newly constructed Clow International Airport in Bolingbrook, Illinois. A & M Aviation, Inc. presently operates approximately 20 or more airplanes exclusively and has approximately 350 pilots with a average of 75 to 100 students. Glider training is given with the Diamond Xtreme Motor-glider. Our success story above is because of our leaseback program.

About Leasebacks- Most leasebacks in simple terms, enter into a written agreement with a airport operator, usually called a FBO (Fixed Base Operator). The FBO has control over the airplane in the day to day activity while the owner schedules the airplane as any other rental customer. Agreements for doing this vary considerably from FBO to FBO and state to state. Most FBO's take from 15% to 20% of revenue as a management fee. Expense and income are collected and dispersed to the owner under different circumstances and agreements by the FBO. When considering to lease your airplane (or motor-glider), it is best to work with a established firm and ask for examples of what other airplanes are doing on their flight line. One might want to talk to other leaseback owners to. Of primary concern is what the income is in a annual basis for a given airplane, the rental rate per hour for that airplane and the number of hours per year the airplane is rented. These numbers are subtracted from the expense base to determine what the airplane can produce in revenue. The first thing that must be done with any leaseback airplane or glider is to determine the charges per hour.

Determining the rental charges per hour- Total airplane operating cost is determined by a analysis of the fixed cost and the operating cost of a given airplane divided by the number of hours of use. Each airplane varies considerably. Fixed costs are things like tie-down or hangar rent and annual insurance while operating costs are items such as gasoline, oil, routine maintenance and equipment repair such as tires and radios. The hourly cost depreciation of the engine per hour must also be determined compared to the recommended TBO (time between overhaul) that the manufacturer recommends. This is known as engine reserve and is figured in the hourly rental rate we will describe below. These costs change from time to time so the FBO needs to track these cost changes very carefully to insure that the airplane will be operated compared to the projected income and expense forecasted. The steps to do this are listed below:

First determine what the total is of all the fixed costs. Then, determine what the total is of all the operating costs for a given hours of use. I recommend using 200 to 225 hours. What you are doing here is determining what the hourly rental of the airplane should be using 200 to 225 hours as a break even point for both the fixed and operating costs calculated above. This step is important as the rental target of these hours must be met before any profit is made. Once the hourly cost/hr is determined and target hours above are met through rental, profit is determined by calculating the hours above the target hours less the operating cost of the hours. Hence the profit rises very rapidly after the fixed and operating cost target hours are met. A & M Aircraft Sales will be happy to assist you with the above.

Monthly payments as related to income hours- Since loan amounts and financing terms will vary we recommend that these amounts are not included in the model above. After you have determined what income you will actually generate in real dollars, this income can be applied to loan payments. Any interest amounts paid to the financing company will be best put back in your pocket especially with a lower amount financed. Conversely, the more dollars financed, the less profit will be realized.

Tax Advantages- Tax advantages can be realized and tax credits can be directly reduced from what you would of normally paid taxes on if the conditions of the IRS are carefully met. Each persons tax is somewhat different and we are not the experts on the tax programs. So that you can benefit from the tax credits that are available, we can recommend you to firms that we work with to insure that you meet the IRS guidelines. This is very important as the savings on this tax money can be directly applied to reduce the airplane loan amount. The amount generated here should also be used calculating the year end profit. Most people have the tax consultant or a friendly lawyer form a corporation for you that best serves your individual requirements. We recommend this and will help you get this done.

Personal advantages- Another way of looking at the factors that help with your decision to purchase and lease a airplane is the amount you spend on a yearly basis for airplane rental, or the amount you will spend getting those additional ratings. Any amounts projected here are real dollars that can be applied to the profitability of ownership.

Factors to consider when using a hourly figure- The actual determination of an hour of use for a given airplane varies from airplane to airplane. In general, the majority of airplanes use the tachometer as the instrument to track a number. While this is referred to as a hourly representation it does not compare 60 minutes as a hour. Tachometers vary with propeller speed, and some do not record at all until a higher rpm is obtained. Some FBO's use the tachometer to charge a revenue hour while most of them use a hobbs meter. Hobbs meters usually start timing when oil pressure is up or with electrical sensing. Some are on a air switch and others on a gear switch. I mention all the above as it is important when comparing hours of income to hours of operating cost to consider the dollars correctly.

Spread sheet analysis- Many companies offer spread sheets. These spread sheets may or may not take into consideration your particular tax level. Also, the hourly differences in the meters that are used to calculate hourly cost and income must be correctly utilized. Further, what spread sheets I have seen project far too many hours of revenue to make the economics look more favorable to the seller. From our experience, 600 hours of annual revenue is the higher end of revenue hours. 200/225 is the break even amount we use for analysis using the tachometer. We show and project a higher amount with the condition that the FBO can meet the projected hourly amount. In most cases 450 to 550 hours can safely be obtained for a conservative cost projection. Ask us and we will work with you to help you develop a Leaseback Cost Analysis Spreadsheets for any of the airplanes we represent. Send us a e-mail at A & M Aircraft Sales, Inc. for this information. A & M Aircraft Sales will show you how.

In conclusion- Naturally we are excited to represent the Diamond line of modern technology composite aircraft. More and more Diamond Aircraft are recognized as some of the most exciting airplanes in general aviation. These Diamond airplanes can jump-start you into the airplanes of tomorrow--today. Below are links for more information to the airplanes we offer.

THE NEW STANDARD - Click on a picture

An affordable two place trainer or a sleek new sports model - both will rent very favorably. Who would not want to fly one?

Here is what you wanted- a 4-place IFR airplane with up to date state of the art modern technology.

Here is a excellent way to increase the profitability of a airplane flight school. Teach engine out's and enhanced safety. Perfect for all the Glider clubs and soaring associations. The Xtreme is really fun to fly.

Approved Leaseback Sites

Contact us at Clow International Airport (1C5) West of Chicago Midway airport Bolingbrook, Illinois. We are 5 Miles North of I-55 at the Weber Road Exit. - Call 630 886-7778 ask for Andy. Our e-mail address is: Flyace@att.net .

A & M Aircraft Sales, Inc.

Regional Distributor for Diamond Airplanes & Motor-gliders

Leaseback your Airplane

Approved Leaseback Sites