AIN: Success Begets Success for Milestone Aviation Group

by  Rob Finfrock

February 25, 2014, 3:45 AM

“We are very bullish on the rotorcraft market, and on the future,” said Milestone Aviation Group managing director Robert Dranitzke. The company placed an exclamation point on that statement on the show’s opening day, as Milestone announced its fleet has grown to 143 helicopters valued at over $2.2 billion since the company’s founding in August 2010 and it placed eight new orders for Sikorsky S-92 medium-lift helicopters, which increased the company’s total of firm orders and options for the type to 37 aircraft worth $1.2 billion. The leasing company also holds more than $3 billion in firm orders and options from rotorcraft manufacturers AgustaWestland, Airbus Helicopters and Sikorsky.

Today the company also holds $450 million in unsecured borrowing capacity, against a total revolving credit line of $800 million, thanks to what Dranitzke terms increased confidence from lenders.

“We’ve spent the past three and a half years educating financiers about the attractiveness of the rotorcraft segment,” he added. “Helicopters remain a relatively niche market for lenders, but as they have taken the time to learn more about the industry, banks are further encouraged to work directly with operators [to secure financing.]”

Dranitzke also noted Milestone’s ability to build a relatively large and diverse order portfolio–representing operators from the oil industry, EMS, law enforcement, and many other segments–has further encouraged investment in the rotorcraft segment. Most of Milestone’s 26 operating partners have signed multiple contracts with the company.

“From the beginning, Milestone set out to support any company that relies on working helicopters,” he said. “Whether we’re talking about EMS, search and rescue, pipeline surveillance, these are all great businesses in and of their own right, and Milestone is happy to support them any way we can. Banks often won’t do a deal for a single helicopter, but a large order shows strength,” Dranitzke concluded. “We’ve been successful thanks to the confidence of our financiers and partners.”

Vertical: Surpassing Expectations

By: Elan Head

It has been an incredible few years for Milestone Aviation Group.

Since Milestone launched in August 2010, the helicopter leasing company has grown to become one of the industry’s biggest players. How big? At Heli-Expo 2014 in Anaheim, Calif., the company is announcing that it now has more than 143 aircraft valued at over US$2.2 billion in its fleet. That’s in addition to firm and option orders with AgustaWestland, Airbus Helicopters, and Sikorsky Aircraft Corp., delivering over the next five years, for more than 130 helicopters valued at over $3 billion at list prices. With 26 operating partners — including such industry leaders as Bristow Group and CHC Helicopter — Milestone now has helicopters working in more than 20 countries on six continents. Not a bad record for 42 months in business.

“Our size, order book, and relationships are unparalleled in the industry,” Milestone president Daniel Rosenthal told Vertical in the run-up to Heli-Expo. “We had a lot of expectations at the beginning, but our success has surpassed even our expectations.”

Last year was a particularly active one for the company, which executed 10 new financing facilities also totaling $2.2 billion. These facilities tapped multiple markets, including bank lending, life insurance companies and the Export-Import Bank of the United States. Highlights included the first Ex-Im backed bond for the helicopter market, a $600 million secured revolver, a $200 million unsecured revolver, a $80 million PDP facility and a $575 million private placement with an investment-grade corporate rating from Kroll. All told, the company now has more than 40 financing partners.

“We have ample access to capital to support our business plan and our customers,” Rosenthal said. “Because of our size, we are able to offer choices to our customers . . . and we are able to offer flexibility.”

Milestone is the creation of Richard Santulli, who is widely known as the founder and former chair and CEO of the fractional private jet ownership company NetJets. Drawing on his previous experience in helicopter leasing (as the head of RTS helicopters in the ’80s), Santulli brought to Milestone the same visionary approach and emphasis on customer relationships that characterized NetJets — what Rosenthal described as “the Richard Santulli school of doing business.”

“We look for customers who are devoted to long-term partnerships,” Rosenthal explained, adding that when Milestone begins a relationship with a customer, “there’s no one better” at meeting that customer’s needs. “I think the market understands the different approach we take to our customers,” he said.

Beyond its commitment to customer service, however, Milestone knows its market. The company’s rise to prominence has coincided with an increase in deepwater oil-and-gas drilling, which has driven demand for larger helicopters, such as the Sikorsky S-92 and Eurocopter EC225, that can carry more passengers farther offshore. Such helicopters are expensive, however, and even operators with hundreds of millions of dollars in turnover each year are coming to appreciate the flexibility that comes with leasing rather than buying.

“A lease can extend their balance sheet and allow them to bid on tenders they otherwise might not bid on,” Rosenthal said, noting that Milestone’s growing order book allows it to offer customers near-term delivery positions for aircraft that are in high demand. While the company has made some significant placements in the search-and-rescue and emergency medical services markets — and has identified other opportunities for diversification in the future — Rosenthal said he expects oil-and-gas to remain Milestone’s primary market as the company continues to grow.

And it does expect to grow. According to Rosenthal, the percentage of helicopters that are leased is still relatively small when compared to the percentage of leased assets in other capital-intensive industries, such as rail transportation. That suggests that the helicopter leasing market is far from tapped out. However, “we want to grow intelligently,” he said, emphasizing once again Milestone’s focus on sustainable, long-term partnerships. As for the recent entry into the market of other helicopter leasing companies, Rosenthal said that Milestone doesn’t see them as a major threat. “We view ourselves as being in a very different position [than other leasing companies],” he said, suggesting that, if anything, the new entrants have “brought more attention to the helicopter leasing space.”

Milestone’s growth has been so rapid that it is still feeling out the implications of its new position of influence (after all, the owner of the world’s largest fleet of S-92 helicopters will inevitably have some sway in the industry as a whole). While Milestone has been relatively quiet on industry issues thus far, Rosenthal said the company acknowledges that “growth has given us a seat at the table,” and is working behind the scenes to better understand operators’ needs with respect to technology and safety.

“We care very deeply about the helicopter industry,” he said, “and we want to participate in the dialogue about where the industry goes in the future.”


AIN: Leasing Spurs Helo Sales

by Thierry Dubois and Mark Huber

February 1, 2014, 1:05 AM

The rarefied deepwater oil and gas market has spawned new players and big deals in the helicopter operating leasing market, but to date these transactions have largely been confined to medium and large helicopters. What will be the impact of leasing on the industry as a whole, especially for smaller operators with light helicopters in the non-oil-and-gas segments, and will it ever become as predominant as it is for airlines, where approximately one-third of the fleet is leased?

The worldwide credit crunch and the trend for more deepwater energy exploration have created an environment for expansion of the leasing market, and new players–and some smart money–have entered the fray. These new rotorcraft leasing companies–Milestone Aviation, Waypoint Leasing, LCI Aviation, Lobo Leasing and Macquarie Rotorcraft Leasing among them–are promoting operating lease (an arrangement under which the lessor retains ownership of the helicopter), as opposed to financial lease, and are thus opening new possibilities for the operators to expand their fleets. Money has rapidly flowed into, and aggressive aircraft orders have been placed by, these new leasing entities: Milestone Aviation, as of September 30, had acquired more than 115 helicopters valued at over US$ 1.7 billion. It had closed leases with 25 operators in over 20 countries on six continents. It had raised $541 million of equity and $2.4 billion in committed debt financing.

Milestone Aviation has placed significant orders–mainly for medium twins–with AgustaWestland, Eurocopter and Sikorsky. Milestone is now talking to Bell, according to managing director Robert Dranitzke. LCI placed an order for $400 million worth of AgustaWestland helicopters in 2012.

Waypoint Leasing, capitalized with $375 million, made its first transaction in April with CHC and has placed a major order for several models of new AgustaWestland helicopters. Last fall, it announced that it had closed on a five-year $335 million (U.S.) revolving credit facility. Financial institutions involved include Credit Suisse, Goldman Sachs and Union Bank.

Milestone was founded by NetJets creator Richard Santulli; Waypoint is backed by funds–hundreds of millions of dollars–from personal computer impresario Michael Dell and global investor George Soros; Macquarie is run by former Sikorsky CEO Jeff Pino. Perhaps reflecting past loyalty, Macquarie has already placed orders for new Sikorsky S-92s and S-76s.

Revenue Stream for Operators

The smart money and minds are jumping into rotorcraft leasing for one simple reason: Often leasing is more lucrative than operating. Sometimes, even the operators know this. In September 2012, Bristow Group, one of the world’s largest OGP helicopter companies–it owns and/or operates 350 aircraft and its affiliates operate another 127–bought a $250 million minority stake in Canada’s Cougar Helicopters. The deal included the purchase of Cougar’s eight S-92s, which Bristow promptly leased back to Cougar and have been the source of revenue growth, according to Bristow’s latest quarterly report.

Bristow is playing both sides of the leasing coin, buying and leasing helicopters to others while leasing helicopters for its own operations. Indeed, leasing has become an integral part of its business strategy over the last several years. In its form 8-K filed with the Securities and Exchange Commission in May 2012 Bristow specifically targeted operating leases as a strategy for “lowering the cost and amount of capital needed to grow.” Twenty-two percent of Bristow’s fleet, worth approximately $750 million, is leased and that percentage may grow; the company’s goal is to boost the total share of its leased fleet to 30 to 35 percent, according to its most recent financial filings.

The strategy appears to be paying off: Bristow’s share price has increased from $48 to a high of $84 over the last 12 months and the company was able to fuel growth with an amazing $340 million worth of new capital expenditures over the first six months of the year, while at the same time boosting its overall cash position and improving liquidity.

However, leasing is not cheap. Many lessors now require lessees to protect the value of assets by enrolling them in hourly maintenance plans with engine, avionics and airframe manufacturers; these are either add-on costs or part of the base lease rate.

“Lessors recognize the costs to operate the helicopters, especially the engines and major components. To protect their asset value, one thing lessors like to have is a guaranteed maintenance program. It could be Power by the Hour on the engines, or in some cases tip-to-tail coverage,” said David Wyndham, president of aircraft consultancy Conklin and de Decker.

For operators like Bristow, which need to buy ever more expensive helicopters to meet customer demand, leasing has become an integral part of their business strategy.

The leasing companies can make large fleet purchases at a discount, further increasing their margins, while the OEMs can better predict demand in fluctuating markets–up or down. At last year’s Heli-Expo, Milestone’s Santulli cautioned OEMs against over-expanding production during boom times, counsel that meshes with lessors’ strategy of monopolizing production-line capacity during economic upswings. Milestone is partnering with Eurocopter on marketing its helicopter portfolio and offering customers the OEM’s parts-by-the-hour program.

How the Boom Began

Banks have long offered financial lease services for helicopters. At the end of the lease period, the lessee–usually the operator–becomes the owner. Therefore, in the operator’s accounting books, the helicopter has to appear as an asset.

What new players are offering is operating lease. In that instance, the lessor retains ownership of the helicopter. The operator buys a service, which appears in its results. “This is a major difference in accounting, as the helicopter no longer appears as an asset,” Fabrice Arfi, Eurocopter’s head of business development, explained.

“For an operator, having helicopters on financial lease tends to have a negative impact on the balance sheet, reducing the capacity to get into debt and thus impeding growth,” Arfi said. Operators are eagerly expecting a way to improve their balance sheets. This is the need the new leasing players are meeting. “Some companies, even those with access to plenty of capital, understand the benefit of having a portion of their fleet [typically 20 to 40 percent] off balance sheet; this frees capital for other aspects of their business,” Dranitzke said.

From the operator’s perspective, there is also the benefit of shifting the asset residual value risk to the lessor. “In addition, an operating lease generally allows matching the lease term with the underlying customer contractor length,” said Andrea Cicero, CFO of the Avincis group (better known under its Bond and Inaer brands). The cash-flow factor is important, too. “We start charging lease fees when the operating contract starts; this is different from buying a helicopter, where you typically have to put up a minimum of 15 to 25 percent of the aircraft’s capital value (the bank providing the rest) and start paying financial costs before you have an aircraft that generates revenue,” Dranitzke noted.

Leasing can provide tax advantages to lessees as well. Lease costs can be amortized and deducted over the term of the lease and “leasehold improvements,” which could include engines, avionics and interior refurbishments, can be deducted up to 50 percent within the first year of placing the asset into service–an important consideration when leasing a used or incomplete “green” helicopter. The cost of other improvements can be recovered over longer periods. Additional fixed costs associated with the lease can also be deducted.

By equipping operators to show they have aircraft available for the contract, the new leasing companies are enabling deals with oil companies that otherwise would not have happened. According to Bob Kokorda, Sikorsky’s v-p for sales, in the past, when a bank told an operator “You cannot take on more debt,” the operator had to pull out of competing for a contract.

Some believe the 2008-2009 financial crisis helped spawn the new lessors. “With the credit crisis, other lessors such as us looked at the world differently,” Ed Washecka, Waypoint’s CEO, told AIN. Moreover, the industry has undergone changes in company management. Traditionally, the operators’ bosses were mostly pilots. This began to change in the early 2000s, when more MBA graduates took the helm. They learned the helicopter industry’s culture, Arfi said, and did not want to disrupt the way their companies were run…until the 2008 crisis. Then, they felt free to institute new fleet management methods, Arfi believes.

Now, less than four years after pioneer Milestone Aviation started with the new model, operating lease agreements account for large numbers of helicopters. For example, Avincis has 24 aircraft under such terms. “We expect this number to increase to approximately 100 aircraft over the coming years,” Avincis’ Cicero added. According to Sikorsky’s Kokorda, Milestone owns about 50 S-92s, a combination of the ones it ordered directly from Sikorsky and the ones it bought from operators under leaseback agreements.

Skepticism Downstream

Will other segments of the industry take advantage of operating lease services? Not all operators are convinced yet. Christophe Rosset, president of SAF Hélicoptères, an EMS/aerial-work specialist in France, told AIN that his company has chosen not to lease. “This industry is very capital intensive; when you have finished paying for a helicopter, you begin earning money or you can sell the helicopter for a good price,” he explained.

Likewise, Air Methods CEO Aaron Todd told AIN at the start of the recent leasing boom that his company could attract capital for new helicopter acquisitions more cost effectively from the capital markets, as opposed to partnering with leasing companies. Air Methods is the largest helicopter EMS operator in the U.S., with 31 percent of market share and more than 400 aircraft operating in 42 states. It has grown in recent years through the acquisition of competitor companies and has embarked on an aggressive strategy of paying off aircraft leases that came with those transactions, spending more than $110 million in lease buyouts last year. The company says this strategy will reduce interest and depreciation expense.

From the lessors’ perspective, the offshore oil-and-gas industry was the low-hanging fruit. Nevertheless, Eurocopter’s Arfi is convinced other segments of the industry will come round to the idea sooner or later. “Aerial-work operators are not finance experts yet but it’s just a matter of time,” Arfi said. Meanwhile, lessors will have to get out of their comfort zone and educate segments other than oil-and-gas. This may be the strategy for survival in an increasingly crowded market.

Milestone’s Dranitzke said he would be happy to work with firefighting, pipeline surveillance and search-and-rescue specialists, providing the operator has a contract for using the helicopter. After oil and gas, EMS could be the next segment but the aircraft are smaller and less complex (and thus less expensive) and the fleets are smaller, according to Kokorda. Most attractive for lessors will be those EMS operators that fly relatively large helicopters on long-range missions such as hospital transfers, he said.

Leasing to EMS would translate into orders for smaller aircraft. “There is a market for lighter aircraft; [in fact] we have a letter of intent for Eurocopter EC145s,” Waypoint’s Washecka said. He noted, however, that his company’s portfolio of light singles and twins is unlikely to grow large. It’s just as much work to lease an AStar as a Super Puma, he explained, but the light single is 15 times cheaper, making it more difficult to justify the time.

On October 30, Kroll Bond Rating Agency assigned a rating of BBB, with a stable outlook, to Milestone. On the positive side, Kroll Bond mentioned the “significant advantage over newer entrants” the company has in terms of scale and senior management relationships with helicopter operators and manufacturers. However, while helicopters are an asset class with strong residual value, Milestone has a “somewhat high level of asset encumbrance,” in Kroll Bond’s view. The rating also reflects the “limited income and cash flow associated with Milestone’s short operating history.”

Early in January, Milestone announced that it had completed the private placement of US$ 575 million of senior secured notes, which Kroll Bond rated “BBB+.”

The commercial helicopter leasing industry is still in its infancy, the agency said, but this doesn’t seem to have dissuaded Milestone’s institutional backers. To date, Milestone has attracted the financial support of global banking heavy-hitters such as Lloyds, Barclays and Lombard, the asset finance division of the Royal Bank of Scotland; and the U.S. Export-Import bank is backing the sale of $187 million worth of Sikorsky S-92s to the lessor.

Expanding leasing downstream to light helicopters may in time drive sales to smaller operators, if they can meet lessor covenants, maintenance and other asset protection requirements. However, the parapublic markets might be more ripe for the taking, at least indirectly, as governments outsource traditional helicopter missions to private contractors such as Bristow, which recently landed a SAR contract in the UK, and the growing list of U.S. civil operators serving the U.S. Department of Defense.

Peter Bull Joins Milestone Aviation Group Advisory Board

Peter_BullMilestone Aviation Group, the global leader in helicopter leasing, announced today that Peter Bull, the highly-regarded industry veteran and risk and asset management expert, has joined the Group’s Advisory Board.  MORE >>

Business First of Columbus: Milestone Aviation hits new high with $600M credit line

Business First of Columbus

Evan Weese

22 August 2013

After just three years, Milestone Aviation Group is soaring in the helicopter leasing business.

Co-founded and led by former NetJets Inc. CEO Richard Santulli and with its U.S. operations based in Columbus, the young company is expanding at a rapid pace, most recently closing on what it called the biggest debt facility for a helicopter lessor.

Dublin, Ireland-based Milestone got its start with a $500 million private placement in August 2010, a year after Santulli stepped down from NetJets, the Columbus-based fractional jet ownership company he founded. Milestone buys new and used helicopters and leases them to a range of clients, including oil and gas producers, search-and-rescue agencies and medical services providers.

The company, which runs an office in Colts Neck, N.J., has seven employees at its Arena District office.

Milestone has made strides to establish itself in the industry, but none was more important than this month’s closing of a $600 million revolving line of credit. The five-year financing is a rarity for a company three years old, said President Daniel Rosenthal.

The debt facility includes a revolving accordion feature that could expand the borrowing capacity up to $750 million, the company said.

“It will change the way we do business and reinforces the financial strength as a company,” Rosenthal said. “It allows us to be more aggressive about pursuing deals.”

Milestone since 2010 has acquired more than 100 aircraft valued at more than $1.5 billion. It also has future helicopter orders and secured options valued at $2.2 billion. It has leased to 22 operators in more than 20 nations.

In its niche, Milestone aims to move quickly when a customer needs aircraft, said Rosenthal, formerly executive vice president at NetJets.

Offshore drillers have proven to be major clients. While aircraft makes up 3 percent to 4 percent of an oil rig’s production budget, “the other 97 percent is worthless without the asset,” Rosenthal said.

“That’s where leasing has become more attractive,” he said of the industry.

Milestone in July secured a $300 million credit facility to acquire and lease helicopters valued at $400 million to Houston-based Bristow Group, which provides the aircraft to offshore energy companies.

A former Goldman Sachs principal, Santulli formed NetJets in 1984 when he bought Executive Jet, which got its start in Columbus in 1964. NetJets was acquired in 1998 by Berkshire Hathaway Inc.

Santulli was not available for comment.

The company stayed close to its Columbus roots by partnering with Huntington Bank for financing, as well as for advice on debt, interest rates, foreign exchange and depository needs. Huntington played a big part in the $600 million financing deal, though it would not disclose specifics.

For Huntington, financing the unique, high-cost industry is not viewed as an excessive risk, said Michael DiCecco, chief commercial officer and head of the equipment finance division for Huntington.

“It’s not higher risk,” he said. “In fact, we believe specializing (in specific industries) is a de-risking strategy more than a risk-attraction play.”

Rotorhub: Milestone announces new $300 million credit facility


30 July 2013

Milestone Aviation Group has announced that it has secured a new $300 million credit facility that will enable the company to acquire and lease helicopters valued at US$400 million to affiliates of Bristow Group. The assets include the Sikorsky S-92, Eurocopter EC225 and AgustaWestland AW189 and AW139 aircraft.

Lloyds Bank acting through its Corporate Asset Finance division was the mandated lead arranger and facility agent while Lombard, the dedicated asset finance arm of The Royal Bank of Scotland Group, and Barclays Bank served as original lenders for the credit facility.

Richard Santulli, chairman and CEO, Milestone, said: ’We are delighted to have closed this innovative, single lessee transaction with Lloyds, Barclays and Lombard. We structured this transaction with Bristow and worked together to bring it to completion. The proceeds will allow us to continue to support Bristow and grow this important relationship while diversifying our sources of capital.’

Milestone’s capital strategy is focused on developing diverse sources of funding to conservatively grow its business and best meet the needs of the helicopter community. The company has over $500 million in equity capital and has raised $1.8 billion in debt commitments from leading banks in North America, Europe and Asia as well as insurance companies and the US capital markets.

The news of the credit facility follows the announcement that the company is supporting the growth of helicopter services provider, Blueway Offshore Norge, by financing the delivery of a Eurocopter EC225 to the company for change missions to offshore oil and gas platforms in the North Sea.

Milestone leases EC225 helicopters to a number of operators throughout Australia, Brazil, Denmark, Norway and the UK.

AIN: Milestone Inks $300M Credit Facility for Bristow Deal

by  Chad Trautvetter

Aviation International News

July 30, 2013

Milestone Aviation Group, the helicopter leasing firm headed by NetJets founder Richard Santulli, closed a new $300 million credit facility yesterday. The company will use these proceeds to acquire and lease helicopters–including Sikorsky S-92s, Eurocopter EC225s and AgustaWestland AW189s and AW139s–valued at $400 million to affiliates of Bristow Group. The credit facility is the largest ever for a helicopter lessor, the company said.

“We are delighted to have closed this single lessee transaction,” said Milestone chairman and CEO Richard Santulli. “The proceeds will allow us to continue to support Bristow and expand this important relationship while diversifying our sources of capital.”

In other news, Milestone financed the delivery of a Eurocopter EC225 to Blueway Offshore Norge, a subsidiary of Blueway. The Norwegian-registered helicopter will be used for crew-change missions to offshore oil and gas platforms in the North Sea. This European delivery is the first since the aircraft was cleared for a full return to flight, it said.

To date, the company has 10 EC225s in its fleet portfolio, with these aircraft currently on lease to four operators. Milestone also has 30 EC225s worth $850 million on order, and these aircraft are scheduled to be delivered over the next five years, starting later this year.

Corporate Jet Investor: A textbook example, an inside look at the first helicopter export credit bond

Jun 19, 2013

Sophie Segal

Corporate Jet Investor 

Milestone launched the largest helicopter export credit financing ever in 2013. It was a transaction of many firsts: Milestone’s first export credit guaranteed deal; the US Export-Import Bank’s first bond secured by helicopters; and, Deutsche Bank’s first Ex-Im guaranteed bond issuance.

But the deal took patience and determination. After three years of meeting with US Export-Import Bank (often at Corporate Jet Investor conferences), the Dublin-based helicopter lessor mandated Deutsche Bank in the last quarter of 2012 to raise an Ex-Im guaranteed bond for nine Sikorsky S-92s.

The $187.4 million helicopter deal, which launched on May 22, raised cheap, long-term funding for aircraft acquisitions. “In this era, to secure 12-year financing at such a low cost provides confidence to our investors and provides good stability to Milestone as we continue to grow our overall strategy,” says Daniel Rosenthal, president, Milestone Aviation Group.

Twelve-year funding is rare in the helicopter market, and the capital markets option allowed Milestone to achieve attractive terms. (Before the bond, the lessor was using a commercial bridge facility from Deutsche Bank to fund deliveries, which began in November 2012.)

“We want to blend low cost financing with long term maturity financing,” says Daniel Rosenthal, president, Milestone Aviation Group. “Ex-Im provides us with both.”

Milestone is the first company to issue an Ex-Im bond that is secured by helicopters. The fact that helicopters are less familiar to bond investors than commercial aircraft made this transaction slightly more complicated said a banker working on the deal. But it did not impact the end result. The deal was two-times over subscribed and priced at mid-swaps +51bps with a coupon of 1.87%. This is easily Milestone’s lowest cost of debt.

The Ex-Im capital markets option was created as an alternative type of capital when bank debt dried up in 2009 during the financial crisis. A guaranteed bond allowed purchasers of US manufactured aircraft to reach a deeper investor base in the US capital markets who would buy US government risk. Since Emirates’s inaugural issuance in October 2009 there have been over 70 Ex-Im bonds issued for a diverse group of commercial airlines.

“This is not a transaction that happens overnight. It was the product of working with Ex-Im Bank for three years,” says Rosenthal. Milestone management started working with Ex-Im Bank just after establishing the company in August 2010.

“We had been in discussions for a long time,” says Kathleen Flanagan, senior loan officer, Ex-Im Bank. “Usually we would require three years of audited financial statements, but we made an exception in this case because of the industry experience of the principals involved.”

Flanagan is keen to emphasize that this was an exception. This deal was the product of a dedicated effort to establish a relationship between the bank and lessor.

“What is different about Milestone is the size of the order and its experience in the bond market,” says Flanagan. “A bond deal was an attractive option as opposed to individual ‘plain vanilla’ loans because of the volume of aircraft and the relatively short interval over which they are being delivered. The fact that Milestone had issued a bond previously was also a factor.”

After receiving approval from Ex-Im Bank to proceed with the bond, Deutsche Bank – the mandated arranger – was left to execute the deal. While these bonds typically have a regular pool of investors, Milestone’s deal expanded the investor base, attracting two new accounts as well as a large order from an investor who had not purchased Ex-Im bonds for a long time.

One complication was that investors do not know helicopters as well as fixed-wing aircraft because it is a smaller market. Also, there was a perception that helicopters are more prone to accidents, so while the bond is guaranteed, investors need to get comfortable with the technology to understand the investment risks. Bondholders were not concerned about principal risk because Ex-Im guarantees the bond, but they did have concerns about the ‘make whole’ clause in the event of an accident. The fact that it was a new asset class that investors were learning about meant that the company and bankers had to spend time and effort to educate the investor base according to the banker working on the transactions.

Diversity of lessees was key to create a strong product. The nine-aircraft deal includes five customers based in Brazil, Norway and the United Kingdom.


Timing mattered too. Milestone was scheduled to go to market in May, but given the option to delay a couple of weeks if necessary. “If Milestone had gone to market a week later, the pricing would have been about 20bps higher,” says the banker.

Milestone should be thrilled with its 1.86% coupon, particularly given the dearth of long-term capital available for helicopters. And while it is unlikely that this structure will be replicated for a vast number of clients due to the small nature of the market and that there are only a few companies with large equipment orders, Rosenthal says that Milestone will definitely consider a repeat transaction.

“This is a textbook example of how the Ex-Im process should work,” says Rosenthal. “It wasn’t easy and it wasn’t quick, but it was thoughtful and thorough.”

Vertical Magazine: Making Waves

Making Waves – Article from Vertical Magazine

2013-06-11 by Oliver Johnson of

Something akin to a revolution is taking place in the helicopter industry. And it isn’t a particularly subtle one. Just a few short months ago, at Helicopter Association International’s Heli-Expo 2013 in Las Vegas, Nev., the helicopter leasing business had a very public coming of age. The big headlines at the show were not made by new product unveilings, but enormous blockbuster deals. And standing toe to toe with perennial industry heavyweight Bristow Group in announcing these deals was Milestone Aviation Group, a leasing company that hasn’t even completed its third year in business — yet already has a leasing fleet valued at over $1.3 billion US, and has orders and options for additional aircraft worth another $2.2 billion.

Rotorcraft leasing is hardly a new concept — Calgary, Alta.-based Eagle Copters Ltd. has, for example, been doing so for the past 30 years — but Milestone is undoubtedly leading the charge of a host of ambitious new companies, including Lease Corporation International Helicopters (LCIH) and Waypoint Leasing Ltd., that have been launched in the firm belief that investment in rotary-wing aircraft is the next big thing in aviation finance. Why now? What is it that makes the helicopter industry suddenly so appealing to financiers? And what benefits, if any, are operators likely to see from this sudden rush for their business?

“It’s a really interesting market,” said Usman Ahmed, an aviation analyst with consultancy firm IBA Group Ltd. “There were lots of banks who were in to helicopter financing before the recession, but they were not really interested in anything below $15 or $20 million. . . . I think the reason you are seeing suddenly an influx of lessors coming into the market is that they’ve realised just how liquid the helicopter is in terms of its value retention.” In stark contrast to the fixed-wing market, where aircraft such as a Boeing 737 or Airbus A320 may be worth just 50 to 60 percent of their purchase cost after 10 years, Ahmed said helicopters generally maintain, at the very least, 70 to 80 percent of their value over the same time frame. For financiers, this makes them a relatively lowrisk asset and market in which to invest. Add to this a new wave of technologically- advanced — and expensive — medium to heavy helicopters entering a booming oil-and-gas transport sector that’s providing high demand, allied with an upcoming replacement cycle for older offshore models, and it adds up to an enticing package for many financiers.

The New Colossus

Since its launch in 2010, Milestone has been appearing with growing frequency in industry headlines for the size of its orders and contracts with operators. At Heli-Expo 2013, it announced an astonishing batch of orders with Eurocopter and Sikorksy that included 14 EC225s, five EC175s, 23 S-92s and seven S-76Ds. Launched with $500 million of equity seed, it’s headed by Richard Santulli, the founder and former chairman and CEO of NetJets, the ground-breaking fractional private jet ownership company. However, Santulli’s history with the rotorcraft industry stretches back almost 30 years — he founded another helicopter leasing company, RTS Helicopters in the early 1980s, and ran equipment leasing for Goldman Sachs.

“I guess I have an affinity and fondness for the space,” said Santulli of his return to the rotorcraft industry in an interview with Vertical. “It really is the fact that [helicopters] hold their value much better [than fixed-wing aircraft]. They don’t go through cycles. If you go back 30 or 40 years, those that work on producing revenue, hold their values.” And it’s those “revenue-producing” helicopters — rather than VIP or corporate aircraft — with whom Milestone wants to do business. “We won’t do VIPs, executive transport. We don’t have any interest in that. From day one we’ve said that we will do helicopters that earn a living, that earn revenue,” said Santulli. “A company or individual can wake up that day and say I want to sell that asset.” Whereas a revenuegenerating helicopter “really is the lifeblood of a company,” — meaning that the operator is very unlikely to risk losing it by not make a lease payment.

While Milestone has lease arrangements with operators working in helicopter emergency medical services (HEM S), the bulk of the company’s business is in the offshore transportation sector, where the operating giants have been quick to partner with it. When Milestone and Bristow announced the signing of an operating lease for five aircraft valued at $125 to $135 million in February 2012, Bristow CFO Jonathan Baliff said it reflected a new fleet strategy for the operator. “We are reducing the number of aircraft owned by Bristow in favor of a mixed fleet of owned and leased aircraft,” he said. “This, combined with selling off our older model aircraft, will enable us to accelerate the shift to the latest technology aircraft preferred by our clients.”

Santulli said that when Milestone’s founders were raising the capital for the company, a lot of potential private equity investors thought that they would never do business with the big operators. “We said that eventually we would,” said Santulli. “Did it happen sooner than we thought? Maybe. But the two biggest players in the space account for almost 50 percent of the business — CHC and Bristow. So if you’re not doing business with them, you’re not going to be a very big company.”

Different Models 

Perhaps one of the longest-standing major lessor in the industry, Eagle Copters has been leasing helicopters for the last 30 years. The company has a diverse range of activities that also includes maintenance, repair and overhaul support; product development (such as the Eagle Single and the much anticipated 407HP — an STC program that re-engines the Bell 407 with a Honeywell HTS 900); completions; and aircraft sales. According to Spyke Whiting, vice president of sales and marketing at Eagle, the growth of the leasing side of the business has been very organic, and was begun by company founder Mel O’Reilly “with nothing more than a gut feeling,” with aircraft added to the fleet as the company’s capital allowed. Today, the company has more than 70 helicopters — primarily Bell medium-lift aircraft — out on lease, including what Whiting believes is one of the largest fleets of Bell 205s still in existence.

“We may not be what’s considered a typical finance company, but we sure do lease a lot,” said Whiting. “We compare to them, we just happen to have somewhat different helicopters that make up the lease portfolio.” Although many of the leased aircraft are working in utility operations, Whiting said the company doesn’t box itself in to a particular market segment. “The other big part of our business is buying and selling helicopters, and it gives us a unique opportunity to cross multiple platforms,” he said. “Not only do we have the capability to configure the helicopter, we also have a pretty good idea of where the market is for that particular piece of equipment.”

The Eagle lease fleet is being continually grown and updated — any helicopter added to the portfolio right now is either larger or newer, said Whiting, with the company looking at a range of platforms. “We are known primarily for our Bell specialty,” he said, “but as other manufacturers introduce the helicopters people want, you’ve got to be able to move with that – so we are considering diversification as a growth opportunity.”

Era Group Inc., parent company of renowned offshore operator Era Helicopters LL C, joined the leasing industry with the launch of Era Leasing LL C in 2005. According to Era CEO Sten Gustafson, the move into leasing offered many advantages, allowing the operator to take full advantage of the flexibility of helicopters by tapping into different markets. “These things are very expensive, so to generate a sufficient return, you’re always focused on making sure that an aircraft works as much as it possibly can and is generating revenue,” he said. “From our perspective, our primary business is servicing the oil-and-gas sector, but having the leasing angle allows us to have access to a much broader market for helicopters — without all the cost and infrastructure.”

While Era doesn’t currently lease any helicopters to Bristow, it does lease to CHC, and is happy to lease to companies that may be deemed competition, said Gustafson — although this would be in areas Era doesn’t operate in. This provides the company with access to places like the North Sea, West Africa and Australia, offering the benefits, albeit indirectly, of these working in these markets. And while fleet leases may be more desirable for many leasing companies, Gustafson said that for Era, sending aircraft out in ones or twos was “more of our sweet spot.”

Currently, of Era’s total fleet of 175 helicopters, around 40 are out on lease. There is no “leasing fleet” per se — when an aircraft finishes a contract (whether operated by Era or a lessee), the company will simply assign it where it will generate the highest return. That could be on another Era contract, out to a lessee for work in HEM S or searchand- rescue (SAR), for example, or it could even be sold — an option that is particularly viable in the rotorcraft industry, with the extremely high value retention of the aircraft. “We have sold a lot of aircraft and, on average, we have sold at a very meaningful premium to book value,” said Gustafson. “We have made over $25 million of profit above where we bought the aircraft. It’s a pretty unique asset that can do that.”

In terms of future growth opportunities, Era will be looking to further explore what it deems untapped leasing markets. “I think we probably haven’t really fully accessed all the different potential areas into which we could lease helicopters,” said Gustafson. “We’re going to really explore opportunities outside the traditional oil-and-gas sector, get out the map if you will, and say, ‘Here are all the potential uses for a helicopter, are there people that we can lease them to in those areas?’ And really make a very targeted effort.”

New Entrants 

Lease Corporation International (LCI) has been leasing aircraft to the fixed wing market since 2004, but launched a subsidiary, Lease Corporation International Helicopters (LCIH), in 2011. “The operating leasing of helicopters is a pretty new concept and we were able to get in on the ground floor,” said Mike Platt, CEO of LCI. “With few other competitors, there’s a real opportunity for us being here in the early days — we see lots of opportunity for growth.”

In particular, Platt said the company liked the underlying user base for the offshore fleet, with oil and gas companies offering very strong credit — as compared to fixed-wing airlines that are dependent on the changeable appetites of the public. “Oil companies don’t tend to come and go, and as long as the operators are doing their job I think it’s a good and stable place to be.”

LCIH currently has about $400 million of helicopters on order with AgustaWestland, including AW139s, AW169s and AW189s. In April 2013, it made its first delivery (an AW139 to Bond Offshore Helicopters in Aberdeen, Scotland), and while the supply of medium-to-heavy helicopters to the oiland- gas transport and SAR sectors is certainly LCIH’s initial focus, Platt said the company would also be looking at the HEM S and law enforcement sectors, with orders for smaller helicopters considered, dependent on demand.

The latest major entrant into the helicopter financing market is Waypoint Leasing Ltd., which is headed by Ed Washecka, the former CEO of Era Group. Washecka oversaw the launch of Era’s leasing business, and was keen to enter the market with his own company following his departure from Era in 2011. At Heli-Expo 2013, the fledgling company signed a deal with AgustaWestland for four aircraft (GrandNew, AW139, AW169, and AW189 helicopters), and then in early May, Waypoint announced that it had secured $375 million of equity growth capital from three major investors (MSD Capital, Soros Fund Management and Cartesian Capital Group), allowing it to build business.

“Now that we have the capital backing, we are certainly interested in speaking to OEM s, but our focus is going to be providing capital to operators by doing sale-leasebacks with their existing fleet, or by supporting their new deliveries that they’ve already ordered,” said Washecka. He said MSD and Soros had the capacity to commit more capital once the initial $375 million was invested. “These firms are all very long-term focused, and I think that’s very good for our business — and I think that’s good for the industry.”

For Waypoint, diversity is the key, said Washecka. “We’re not going to focus on one sector, one manufacturer, [or] one part of the world.” Like the other major financial leasing companies, Waypoint will steer clear of leasing to corporate or VIP customers, but every other sector will be explored. “I would like avoid being too concentrated in oil-and-gas,” said Washecka. “I think oil-and-gas is a great market . . . but the fact is, I’d prefer the diversity of having some contracts through search and rescue, others that are EM S, and I think the challenge will be that there’s a lot of growth opportunity in oil-and-gas, so how do we make sure that we don’t get too concentrated? That will be the challenge.”

But is there a danger that the market could soon become saturated by the sheer number of leasing companies now entering the market? “I think that’s certainly a risk,” said Washecka. “It’s a niche market where one or two well-capitalized and experienced operating lessors can succeed, but not the type of environment where numerous companies will compete and thrive.”

According to IBA aviation analyst Usman Ahmed, the liquidity of the helicopter as an asset is, in addition to its flexibility, due to the fact that there’s a relatively limited supply from the OEM s. “The only concern we have is that the more the leasing fleet grows, the asset itself may not be as liquid as it is now,” he said. “If the industry grows at an alarming rate whereby operators are simply finding lots of leased helicopters from lessors, if the production and delivery industry is not as disciplined as it is now . . . that would drive down the value of the helicopter.”

Financing your helicopter 

From an operator’s perspective, what are the benefits of acquiring an aircraft through a lease? With the huge cost of the latest and greatest technology being beyond the reach of some operators through traditional financing means, the very ability to acquire a helicopter at all may be a key reason, with the deep pockets of lessors providing access to the required capital that banks may baulk at. In addition, “there definitely is an aspect of some risk mitigation,” said Era’s Gustafson — with the asset appreciation or depreciation absorbed by the lessor rather than the lessee. “Also, if you need an aircraft quickly . . . you probably have a better ability to access an aircraft faster through a leasing company,” he said.

Chuck McGuire is managing director of aviation finance, lease, and consulting company Avstar Finance. “[Leasing] is the lowest cost of capital you will find because the depreciation and tax benefits are being kept by the financial institution and they’re giving those back to you in the form of reduced payments,” he said. He added that while the older generation of operators often think of their aircraft’s residual value as part of their retirement savings, this attitude may be changing among the next generation. “If you want to grow your business, leasing allows you to do it quickly and at lower cost. But when you go to buy the helicopter at the end, if you want to buy it, you’ll probably pay [its original purchase price]. A loan, of course, gives you the full utilization of the asset as well, plus the equity at the end — but it’s going to cost you a little bit more money in the middle.”

McGuire said there are a few key things operators should be doing before they finance a new aircraft. “If you go to any of the big OEM s, a key question to ask is: ‘Do you have any relationship lenders or lessors that you recommend we talk to?’ ” he said. “Nine times out of ten, they know the people that really understand their particular product, the value retention of that particular product compared to the others, and who really likes to [finance] that product. You’re not asking for help, you’re just asking for a little direction.”

Secondly, McGuire recommends talking to peers and friends within the industry to benefit from their experiences. “The last thing, and oftentimes the most important, is to have a candid look at yourself,” he said. “It’s amazing that each and every day the helicopter operator goes to work and he knows what his proprietary niche is, why he is better than anyone else, and why he should win the contract. Seldom do these guys ever tell this to their banks or their financial institution. They need to provide a financing package that is as well thought out as a proposal for a contract.”

Future growth 

According to IBA figures, only five percent of the world helicopter fleet is currently composed of leased aircraft — but with the current boom in leasing companies, that figure is likely to soon grow. “You will see a lot of operators will switch to the leasing option,” said Ahmed. “The smaller operators, who are operating four to five helicopters, that is the large proportion of the market — and this market is untapped, basically. There’s hardly any support from banks at the moment. So we are trying to have the banks [see that] the benefits to the banks are too good; and for operators, it gives them the flexibility of having that cash available for difficult times rather than tying it up in the asset.”

One thing is for sure: the increasingly large pool of potential lessors vying for operator business is only going to get bigger. But the extent to which the benefits of this will trickle down from the major operators to those managing smaller fleets remains to be seen.

Oliver Johnson is managing editor of Vertical Magazine. He can be reached at

Corporate Jet Investor: The New Age of Helicopter Operating Leasing

May 23, 2013

Corporate Jet Investor

By: Sophie Segal

At an investor analyst day in April, Bristow Group disclosed that it had 15 bids to lease helicopters for the take over of the UK’s Search and Rescue (SAR) operations. The contract is worth over $3 billion and includes assets totaling about $600 million. Bristow announced that it had signed a letter of intent with Milestone Aviation Group to be the primary lessor and the company is in discussions with additional lessors.

While helicopter leasing is not a new phenomenon, the last two years have seen a number of dedicated asset managers emerge. Milestone was the first to announce its helicopter leasing platform in 2010, shortly followed by LCI Aviation, which is already an established fixed-wing lessor; Waypoint, which secured a $375 million equity check last month; and, Lobo Leasing, which is keeping its strategy and the identity of its investors closely guarded.

“This is a space that was highly underdeveloped,” says Bill Wolf, president and CEO, Lobo Leasing. “The attraction of capital to the helicopter leasing space in such a short period of time is amazing.”

That is not to say that operating leasing is new to this asset class. In the 1980s Richard Santulli, founder of NetJets, bought helicopters to lease to operators. By 1986 he had built a fleet of 192 helicopters. As he moved into the fractional ownership market he sold off the helicopters to fund his new ventures, selling 190 of 192 helicopters at a price higher than the original purchased price. It is no surprise that Santulli has returned to the helicopter leasing market with his latest venture Milestone Aviation Group.

“It’s a nice return in a low risk business,” says William Kelly, CEO, Milestone. “Working helicopters have a very robust model and have not seen the same kind of volatility as has been seen with fixed-wing aircraft in recent years.”

Milestone prides itself on being the first truly global helicopter lessor, with contracts in North America, South America, South East Asia and Continental Europe. While Milestone has been in the market for over two years, LCI Aviation has been looking at entering the market since 2009, launching its platform with a $400 million order with AugutaWestland in 2012. “We’ve been looking at this space for four to five years,” says Crispin Maunder, executive chairman, LCI Aviation. “Helicopters are a much smaller segment of the aviation industry. Until recently, all leasing was being done between the operators to each other.”

This distinction between operating leases offered by banks and those offered by lessors is important and key to the new arrival of several aircraft lessors to the market.

Typically banks have only focused on local markets, taking residual value risk on when it comes to a local company’s assets.

“The customer base sees the value of non-bank operating lessors – that’s our growth opportunity,” says Ed Washecka, CEO, Waypoint Leasing. The company secured $375 million in April from three private equity funds, including George Soros’s and Michael Dell’s investment funds. Cartesian Capital, the third investor, specializes in emerging markets and will extend its expertise to the Waypoint management team as the company works with international clients.

Like Milestone and Waypoint, LCI will be targeting an international client list. The company already has experience with commercial aircraft. “We see both helicopters and fixed-wing aircraft in our portfolio mix – in many ways they are complementary and have different market cycles,” says Maunder. “However, helicopters are without doubt a far more complex class of lease product and call for a lessor to have an expert and experienced team.”

About 65% of the civilian helicopter fleet works offshore. The extreme conditions in which these assets are deployed means that these helicopters require a tremendous amount of maintenance and parts replacement. However, the constant regeneration of these assets gives them a longer life than is seen in the fixed-wing market. “You have a thirty-to-forty year asset that’s pretty resilient when markets crash,” says Clark McGinn, managing director, CHC Leasing. “If you’re leasing to one of the major operators you have a highest and best use asset with a long life. That’s a great value proposition and investment.”

This is definitely the case for utilitarian helicopters. While corporate jet values dropped as much as 50% after the financial crisis according to some estimates, medium-to-heavy helicopters saw at most a 10% drop in values. And, even then, values rebounded within 12 months. This is in large part due to the fact that they serve businesses like oil and gas, search and rescue and emergency medical services that are not sensitive to consumer demand.

Milestone and LCI have already signed several deals. Milestone has over 90 helicopters already on lease to about 20 customers in jurisdictions all around the world and LCI has placed all of its 2013 deliveries and is working on 2014 orders. Both companies have placed orders for helicopters in the hundreds of millions of dollars. Waypoint, which has also signed one lease as of last month, also placed a direct order with manufacturer AugustaWestland in March. Lobo Leasing, which was originally backed by Perella Weinberg Partners, has not placed any aircraft orders and it has not announced who are their shareholders.

In addition to those lessors who have placed director orders with manufacturers, all four lessors will provide sale/leasebacks on secondary equipment, offering refinancing opportunities to operators.

Flexibility and demand

Investors are bullish about the underlying fundamentals of the industry, particularly in the oil and gas industry. They are encouraged by the trend towards deeper water drilling, which will continue to necessitate helicopter transport and result in sustained returns. And, there will be a large replacement requirement according to Kelly, who notes that 35% of the civilian helicopter fleet is over 20 years old.

In addition to attractive opportunities in the market in the long-term, the post-financial crisis climate has created a demanded for alternate sources of funding after many aggressive players scaled back lending in 2009. This new wave of lessors has come at a time when alternative sources of capital are in demand and where some operators would rather retain cash.

As a result of the economic downturn, loan-to-values have fallen, meaning that the equity check for an acquisition is much higher and rates are higher too. But leasing has other notable benefits aside from having to invest in the equity of the asset.

“Some operators would rather have more balance sheet flexibility,” says Washecka. “Or they’d rather do operating leases that match the contracts that they are getting with their end users.”

CHC Helicopters has used structured financing to lease aircraft since the early 2000s to fund its aircraft fleet. In fact, McGinn says the majority of the portfolio is leased. He acknowledges that there has been nothing like the aircraft lessors in the commercial aviation space until now. And just like CHC uses export credit, bank commercial equipment financiers and insurance companies to fund aircraft acquisitions, the company is also speaking to operating lessors. “This is just another iteration of a theme of diversification we’ve seen over the last decade,” says McGinn.

On the other hand, Bristow Group, who could not comment for this article due to a blackout period, said in an analyst meeting in April that the majority of the helicopters in its UK SAR deal would be leased. Including the UK SAR deal, the company would like to grow the total number of leased aircraft fleet from 15% to 30%. In the meeting Bristow executives said that leasing helped achieve a “very competitively low cost of capital from the lessors”. While the company is building its leasing profile, it still operates an ownership business model and will continue to maintain its own helicopters.

But it is not just the large companies that will benefit. “We thought we could enter the market and really help some small to medium sized companies to establish their fleets, as well as offer competitive solutions to bigger players,” says Kelly. Milestone has recently leased aircraft to international customers in India, Indonesia and Mexico as well as to large helicopter operators such as Bristow and CHC.

Operating leasing provides an opportunity for smaller operators, which might not have upfront capital to invest in the equity of the asset, do not have access to cheap debt to make a deal viable, or do not have the technical and asset management capabilities.

“To the extent that we (and operators) can educate the market on the benefits of leasing it will bring the cost of capital down for the whole industry, which would result in lower costs,” says Washecka.

Stable returns and low risk

One of the reasons this sector has attracted capital is because of the stable residual values. Most other hard assets depreciate in real economic terms. That degradation does not happen with helicopters, however, because of maintenance and replacement. Hence, why Santulli was able to sell so many helicopters at higher prices than for that which he purchased them.

“The residuals are certainly much higher than commercial aircraft,” says McGinn. “Helicopters are a utility workhorse, so they look like a sound investment to investors.”

The base case is that the assets will retain their value, but in the best case they will appreciate in real terms. “That’s the bet everyone is making, and it has been proven over time,” says Wolf. “What’s new to the equation is that lots of new capital is available.”

At the moment, aircraft lessors are confident that there is a demand for their services and that placing orders will not negatively impact the market by creating too much supply. “Even with a modest uptick in production that Sikorsky and Eurocopter have announced, we still have a shortage of heavy helicopters in particular,” says McGinn. “It’s all about a rational balance and I don’t see any irrationality in the market at this point.”

The helicopter lessors are only in the assent of their first cycle, so predicting the outcome of a platform sale is difficult. What an exit might look like or what kinds of returns to expect are anyone’s guess. “It is still too early to reliably gauge expected returns,” says Maunder. “But, we’re not in it to make a loss.”

Given Santulli’s 99% rate of success in making money on his helicopter investments, one can predict that the four companies above are making a good bet.

But, the utilitarian helicopter market is still small in comparison to the commercial fixed-wing in terms of number and value of aircraft delivered (about $85 million) in 2012. According to the General Aviation Manufacturers Association, some $3.36 billion of helicopters were delivered in 2012. While a lot of this value came from the 214 twin turbine helicopters that were delivered it also includes 328 piston helicopters and 502 single turbine aircraft.

These four lessors will target twin turbine helicopters as their core market. This does raise the question of whether the market is oversaturated at with four leasing platforms for a small market.

Investors agree that there might be capacity for one or two additional helicopter lessors. There are rumors of another company (not named in this article) speaking to private equity companies about raising capital to enter this market.

“We’ve always had a lot of competition in this industry,” says Kelly. “People see there are opportunities there, and success breeds competition.”

Based on the 15 bids that Bristow received for the UK SAR deal, there appears to be a lot of interest and opportunity. Lessors should expect fierce competition over the next few years, which will benefit operators.