This paper presents an observer-based baseline flight control law designing approach with passive fault tolerant control (PFTC) capability for aircraft which suffers from vertical tail damage. Considering vertical tail damage to a certain extent, an observer-based control scheme is synthesized into traditional baseline control framework. The baseline control law is designed based on the observation states from the observer, which can enable the flight system robustness to response to mild impairment and be against partial sensor failures. Linear matrix inequality (LMI) technique and Lyapunov theory are used to solve the baseline control gain matrices. Finally, the simulation results of lateral-directional Boering-747 model suffering from vertical tail damage and sensor failures is presented to indicate the effectiveness of proposed control law designing method.