LOI might or might not include the engine makers. Usually, those are signed long before financing and other details are firming up. There is no deposit, but it obligates the buyer to not shop around for some time frame and the seller to hold slots for a short time.
The MOU is a step further. More details are hashed out and there is more committed to by both parties. But to hold slots, money (refundable usually) will trade hands. Both LOIs and MOUs expire, so a purchase contract must be signed or the process starts over (although airframers will happily extend if they like the terms).
There are firm orders with no pre-payments. But no one likes those sales...
Firm order- a deposit is put down, with conditions allowing the buyer to back out. If the buyer backs out there are penalties. However, if the planes are late, the deposits are refunded. There is also a payment schedule for deliveries (not everything is paid at the end). When deliveries may be delayed, inflation adjustment terms, and when the supplier or buyer may delay without penalty. Firm orders can include put options. For example, Boeing recently forced Delta to buy additional 737-900ERs per the contract. A firm order is a signed contract. Perhaps not all the details written out, but there is enough of an outline.
Options are production slots held for a small to zero cost further in the future. Options usually must be firmed 2 to 3 years before the delivery date. They are firmed by making progress payments and committing to deliveries. For example, EK just negotiated 60 options with their qty 40 787-10 purchase. They will have dates they must commit/pay buy for a delivery on a certain month. However, there is more flexibility. If Airline A's delivery will bump B, Boeing will be allowed to smooth the slots. For example, Airline B's contract might allow for a 1 month bump with a $100,000 penalty. If Airline A excercises options, they might be told there is a 2 month delay unless they pay $250,000 extra.
There are so many terms in a contract it is mind boggling. The option expiration depends on 1) how good the options are (lower prices have firmer expiration terms).
There really are no standards on options. They all very. For your average order: Every purchase contract delivery dates usually allow for a 1 month slip with no penalty, 2 or 3 months with a trivial penalty, and then a pretty low maximum penalty. There might even be terms (puts) to force early delivery, but at a discount. There will be terms if the airline supplied equipment is late, but an average order might not have any airline supplied stuff (or it might, it really varies).
So the after airline might say buy 20 aircraft. They want the aircraft early, let us say:
Year 1: 6
Year 2: 7
Year 3: 7
Year 4: 7 options, 18 month lead (all options)
Year 5: 7 options
Year 6: 6 options
But near term slots are valuable, so since this isn't a 'bend over backward' order
Year 1: 4
Year 2: 5
Year 3: 5
Year 4: 5
Year 5: 1 (makes twenty) with 4 options that must be exercised in year 2
Year 6: 5 options (must be exercised in year 3)
Year 7: 5 options (must be exercised in year 4)
Year 8: 9 options (because the buyer won't be willing to go past 8 years typically)
Now, less popular models will have shorter option exercise time frames. 18 months being the shortest (the time for long lead parts).
For example, right now if you wanted an A330 or a 77W/777F, you would be front loading and the options lead time would be shorter.
The more money an airline is willing to pay, the earlier the deliveries (and some of the money goes to pay penalties for delayed airlines).
I'll use the G650 as an example.
4 years ago, if you wanted to buy several G650s (we'll use 20 again). you would have had to wait 3 years and the deliveries would have been split over 3 years.
Today, if you wanted to buy twenty G650s, you would receive a few next year (there are customers willing to delay deliveries or transfer orders), perhaps 10 in 2019, and the rest in 2020 at a lower price per aircraft.
But if you wanted a Global 7000, the first delivery would be in 2021 and you would have to take deliveries even later for the bulk.
Take Allegiants order of A320CEOs. CFM was holding unsold slots for the CEOs. So Allegiant was 'wined and dined'. So they get a dozen A320s with short lead times, but Allegiant had to pick overhead bin, Lavatories, and seats based on price/availability (no Zodiac?). But they were able to get the colors they wanted (skipping most options to save money and get stuff in time). No options as these are end of line airframes.
The options almost never have to be exercised at once. See my timelines above. Once an option is exercised, a delivery slot is assigned. However, with the provision that the slot can slip with penalties paid. Now options can be stretched out further, but there will be provisions that these expire when the line is closed. An airframer must give customers a few months notice if the line is slowed. Usually, the airframer will discount the option closing price to avoid slowing a line...
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