Helicopter-leasing company takes off

Milestone Aviation, a helicopter-leasing company created by the founder of NetJets, is climbing higher after only 2 year

By  Steve Wartenberg

The Columbus Dispatch Friday October 12, 2012 5:55 AM

It’s always been all about the numbers for entrepreneur Richard Santulli.

And when they add up, it’s time to get to work and create a new company.

“It starts off with the math,” said Santulli, who came up with the idea of fractional-jet ownership and turned Columbus-based NetJets into an industry leader. He sold the company to Warren Buffett’s Berkshire Hathaway for $725 million in 1998, then left NetJets in August 2009.

Soon after, Santulli — who earned an undergraduate and master’s degree in applied mathematics from Brooklyn Polytechnic Institute — began tinkering with a new set of figures. Liking what he saw, he formed Milestone Aviation in August 2010 with several former NetJets executives.

“I wanted to build something else and had a bunch of young guys who wanted to build it with me,” Santulli said.

Milestone purchases helicopters and leases them to commercial operators around the world, especially those involved in offshore oil-and-gas exploration.

The company’s fleet already includes more than 60 helicopters worth about $750 million, said Daniel Rosenthal, the company’s president. Milestone has offices in the Arena District, as well as Dublin, Ireland, and in New Jersey, near Santulli’s home.

“I studied the helicopter market,” said Santulli, adding that very few manufacturers offered financing options to their customers, and financing from banks was also limited.

“And I studied the offshore market … where the exploration is today and where it is going. It’s going further and further offshore, and they need larger helicopters to get to the rigs, and these helicopters are more expensive.”

These long-range twin-engine helicopters can cost $25 million or more each.

“Milestone has clearly changed the helicopter leasing business,” said Joe Baj of Bristow, a Houston-based company that is one of the world’s largest helicopter operators, with a fleet of about 280 aircraft.

Bristow leases five large helicopters from Milestone that operate in Norway and Great Britain and are valued at about $130 million. The company is in discussions with Milestone to lease additional helicopters.

“They’re very focused on building a relationship and getting to know us,” Baj said. “They put a lot of time and effort into helping us think about our business and are more like a partner, even though we don’t have any sort of partnership agreement.”

This type of attention to detail and customer service, along with a commitment to his employees, is the Santulli way, Rosenthal said, adding this is why he jumped at the chance to work with his former boss again.

“We wanted to stay involved with Rich. We love his approach to business and life,” he said.

Early in his career, Santulli led the leasing operations of Goldman Sachs. He then founded RTS Helicopters, which at its peak leased about 200 aircraft.

He purchased Columbus-based Executive Jets in 1984, and two years later introduced the idea of fractional-aircraft ownership. The company name was changed to NetJets in 2002.

“Rich revolutionized the industry,” said Scott Liston, a longtime NetJets executive who is executive vice president of Argus International, an aviation services company.

Santulli also created a corporate culture modeled after his vision of how a successful business should be run.

“Rich knew that his employees were his family,” Liston said. “And he knew if he didn’t treat us like family, he couldn’t expect his employees to treat the customers like family.”

The Milestone family includes former NetJets executives Rosenthal,

Matthew Harris, John Burns, William Kelly and Robert Dranitzke.

“The guys working for me are all superstars,” Santulli said.

Rosenthal cited “a difference in philosophy” with new CEO David Sokol as the reason he and other top executives left soon after Santulli’s resignation. Jordan Hansell took over in April 2011, soon after Sokol resigned.

Starting a helicopter leasing company in the midst of a recession was a gamble.

“And we didn’t even realize at the time how much of a gamble it was,” Rosenthal said. “We had to raise $500 million in capital for a company that didn’t even exist. It was a huge risk.”

But, once again, Santulli’s numbers and business model worked.

“For an operator, they know their lease (with Milestone) is for X-amount of dollars a year, and this allows them to bid on a contract with enough of a margin to make money,” Santulli said, adding that his company will only lease its helicopters to companies “who have a contract to use it to make money.”

Milestone charges its customers 11 to 16 percent per year of the total purchase price of a helicopter, Rosenthal said, adding that the average lease is for about 66 months.

Milestone already has begun to turn a profit.

“We’ve had a positive cash flow for the past (nine) months,” Santulli said, but declined to give specifics.

The commercial helicopter market is growing, said an industry expert.

“And it’s being led by the offshore oil segment,” said Douglas Royce of Forecast International. “ And the oil and gas industries are well funded and have certain worker-safety requirements that encourage the use of the newer, larger helicopters.”

This bodes well for Milestone, whose goal is $2 billion in assets by its fifth anniversary, Rosenthal said, adding that the company is ahead of schedule.

He and Santulli are confident their gamble has paid off and their numbers will work for the long term.

“The key is developing relationships and partnerships with the major helicopter operators around the world,” Santulli said. “We’re going to grow our business and control a significant portion of the helicopters being used for offshore oil.”

swartenberg@dispatch.com

@stevewartenberg

 

Milestone Media Contacts:

Eric Berman or Nathan Riggs

of Kekst and Company

+1 (212) 521-4894 / +1 (212) 521-4804

Wall Street Journal – “Big Order Shows Recovery”

The founder of NetJets placed one of the largest-ever orders for commercial helicopters, as the industry rebounds thanks to work from the oil and gas industry and the privatization of coastguard services.

Milestone Aviation ordered 19 Sikorsky helicopters with a list price of $682 million. Above, a Sikorsky S-92 helicopter seen on an oil rig.

By Doug Cameron

The founder of NetJets has placed one of the largest-ever orders for commercial helicopters, as the industry rebounds, thanks to work from the oil and gas industry and the privatization of coastguard services by governments overseas.

Milestone Aviation Group Ltd.— a company started by Richard Santulli two years ago after leaving NetJets, a corporate jet specialist he sold to Berkshire Hathaway Inc. in 1998—has ordered 19 more Sikorsky helicopters, adding to an existing order for three. The 22 have a total list price of $682 million including options. Milestone plans to lease the aircraft to big offshore operators such as Houston-based Bristow Group Inc., which fly workers and supplies to and from oil platforms in the North Sea, Gulf of Mexico and off the coasts of Brazil and West Africa.

Orders from Milestone and LCI Aviation, a London-based leasing company, have helped the commercial helicopter sector recover from the severe slump that started in 2008 as oil exploration slackened.

The big four global manufacturers are pressing ahead with plans for new aircraft: Sikorsky’s main rivals—AgustaWestland, Eurocopter and the Bell unit of Textron Inc.—are developing larger new helicopters with more speed and range to reach oil platforms hundreds of miles offshore.

Bob Kokorda, vice president of sales and marketing at Sikorsky, a unit of United Technologies Corp., said the faster speeds achieved by the new generation of twin-engine medium and heavy helicopters allows them to access far-flung oil facilities. Sikorsky builds 94 helicopters a year, and is looking to increase production.

Milestone already had three of the 19-seat Sikorsky S-92s on order and has leased 53 aircraft to 20 operators. Earlier this year, it agreed to buy 16 Eurocopter EC225s, a deal worth $480 million at list prices. Eurocopter is a unit of European Aeronautics, Defence and Space Co.

“We go where the oil is,” said Mr. Santulli in a recent interview. He said the company aims to have $1.1 billion in assets by the end of the year, with another $700 million in the pipeline. He started the company with $500 million from two private equity houses—the Jordan Company and Nautic Partners—and plans to seek more, having also recently raised $400 million in debt from a group of banks.

Operators such as Bristow, Vancouver-based CHC Helicopters and Inaer-Bond are contracted by oil and gas companies to service exploration and production rigs, but the sector remains fragmented with mixed credit quality, driving more to look at renting rather than buying aircraft.

That has been a boon for start-ups like Milestone and London-based LCI, an established commercial jet lessor, which moved into helicopters earlier this year with a $400 million order placed with AgustaWestland, a unit of Finmeccanica SpA.

While the oil and gas business is cyclical, a new market has emerged to provide search and rescue services previously performed by military or government agencies, notably in Europe.

The most closely watched is the result of final bids due in the fall for the U.K. government’s 10-year contract worth up to $5 billion to provide search and rescue services, with Bristow, CHC and Inaer-Bond all vying for the deal. Inaer-Bond was formed last year when funds associated with Investindustrial and KKR Financial Holdings LLC bought U.K.-based Bond Aviation Group Ltd. and merged it with their existing helicopter assets.

Mr. Santulli said the search and rescue market wasn’t even factored into his business plan when he started Milestone. It is only seen generating 10% of revenue in the $4 billion-a year global commercial helicopter market, but would represent a stable revenue stream for operators. The U.K. is expected to announce the winner of its contract early next year.

Business Air News – “Capital and creativity leads Bristow to opt for leasing”

Bristow is to acquire five large helicopters for North Sea operations by means of leasing agreements with Milestone Aviation Group.

William E Chiles, Bristow Group president and ceo, says: “The terms of these agreements, with Milestone covering 100% of the acquisition cost of the aircraft, meet our commercial needs to better manage our financial performance.

“What’s more, Milestone brought capital, creativity and commitment to the transaction process. We look forward to building a broader relationship with the Milestone team in the future.”

The companies completed operating leases in December for two Eurocopter EC225s deliverable in mid-2012 and anticipate closing the leases for three 2011 Sikorsky S-92 helicopters later this quarter. The total value of the five aircraft is in the range of $125 to $135 million.

This agreement with Bristow Group marks the largest for Milestone since its launch in August 2010. The company currently has an asset portfolio representing more than $500 million in financing commitments and now holds leases with three of the four largest helicopter operators in the world.

Richard Santulli, Milestone chairman, says: “We are delighted to enter into a financing relationship with Bristow, which operates the world’s largest fleet of commercial helicopters for the offshore oil and gas industry.”

AIN TV piece featuring Milestone

Milestone Aviation Group appear on AIN TV, click here to view video

Aviation Finance – “Milestone orders 16 helicopters from Eurocopter, and leases 5 helicopters to Bristow Group”

February 13th 2012 – Milestone Aviation Group has ordered 16 EC225 aircraft, the latest-generation member of Eurocopter’s Super Puma/Cougar family, valued at $480 million. The helicopters will be delivered over five years, starting in 2013. The lessor also announced it has agreed to lease five helicopters, two Eurocopter EC-225s and three Sikorsky S-92s, to Bristow Group, making it the lessor’s largest agreement since its launch in August 2010.

Since launching in August 2010, Milestone has provided over US $500 million in finance to operators around the world including Bristow, CHC and Inaer. The partnership between Eurocopter and Milestone is seen as a major development as it ‘removes the capital hurdle related with ownership’ according to Eurocopter’s President and CEO, Lutz Bertling and will allow more operators to introduce the helicopter into their fleets.

Richard Santulli, Chairman of Milestone Aviation Group, said, “This historic order enables Milestone to provide our customers with the best aircraft and product options available. The EC225 has a great pedigree and a reputation for providing leadership in safety and high reliability in demanding operating conditions. I leased all of the original Super Pumas, the EC225’s predecessor, delivered in North America in the 1980s with my old company RTS Helicopters, so this deal signals the resumption of a very important partnership.”

“The EC225 is a remarkable aircraft and we are excited to be able to offer it to abroader audience of potential operators through our partnership with Milestone,” said Lutz Bertling, Eurocopter’s President and CEO. “By removing the capital hurdle associated with ownership we are hopeful that we can introduce the EC225 to more operators around the world.”

Eurocopter’s EC225 offers superior speed, range, payload, optimal safety and reliability. Deployed worldwide for civil and military search and rescue, as well as off-shore and passenger transport missions, it is the latest-generation member of the Super Puma/Cougar family, which has logged more than four million flight hours in operations around the globe.

The EC225 is perfectly adapted to missions in severe weather, as it is designed to meet the highest safety standard levels with system redundancy, a highly capable automatic flight control system, and the capability for full deicing – which allows flight in all known icing conditions.

When configured for offshore crew change operations in support of oil and gas producers, the EC225 can be rapidly converted for search and rescue operations.

“We are honoured that Eurocopter has shown this trust in Milestone by partnering on the EC225”, said William Kelly, Milestone’s CEO. “We look forward to working closely with our partners as we place these helicopters with high-quality operators around the world providing mission critical services in the oil and gas industry, parapublic services, mining and search and rescue”

Bristow leases

Milestone Aviation Group and Bristow Group announced its lewase agreements at the HAI Heli-Expo. they completed operating leases in December 2011 for two Eurocopter EC-225s deliverable in mid-2012 and anticipate closing the leases for three 2011 Sikorsky S-92 helicopters later this quarter. All five helicopters are expected to operate in the North Sea. The total value of the five aircraft is in the range of $125 to $135 million.

Richard Santulli, Milestone Chairman, said, “We are delighted to enter into a financing relationship with Bristow, which operates the world’s largest fleet of commercial helicopters for the offshore oil and gas industry. Our level of commitment combined with the reputation of this world-class operator truly makes this a landmark deal for Milestone.”

William E. Chiles, Bristow Group President and Chief Executive Officer, said, “The terms of these agreements, with Milestone covering 100% of the acquisition cost of the aircraft, meet our commercial needs to better manage our financial performance. What’s more, Milestone brought capital, creativity and commitment to the transaction process. We look forward to building a broader relationship with the Milestone team in the future.”

According to Milestone helicopter operators are utilizing operating leases more frequently to diversify their capital structure, take advantage of the low capital requirements, improve cash flow, reduce risk and increase operational flexibility. The lessor has positioned itself to structure and execute lease transactions that meet the diverse needs of operators worldwide and also provide capital to operators during periods when alternative sources are limited or unavailable due to market constraints.

This agreement with Bristow Group marks the largest for Milestone Aviation Group since its launch in August 2010. The company currently has an asset portfolio representing more than $500 million in financing commitments and now holds leases with three of the four largest global helicopter operators in the world.

 

AIN – “Milestone, Turbomeca Collaborate on Helo Mx Program”

February 14, 2012, 3:25 PM – Helicopter engine manufacturer Turbomeca and aircraft leasing firm Milestone Aviation Group yesterday at Heli-Expo 2012 inked a partnership on a fixed-hourly-cost maintenance program for Milestone customers flying Turbomeca-powered helicopters.

“Through the Global Support Partnership, Turbomeca and Milestone are jointly developing new engine support solutions and services for Milestone’s lease customers around the world,” the companies said. The first support program to be developed is the Milestone Support by the Hour program, which will provide “added value and other ancillary benefits to Milestone’s customers.” Turbomeca will manage this global support partnership using its worldwide network of support sites and numerous affiliate maintenance centers. “We are excited to announce this strategically important collaboration with Milestone,” said Turbomeca chairman and CEO Olivier Andries. “Milestone presents a new opportunity for us to expand our customer base.”

Milestone chairman Richard Santulli said the partnership “will help a large segment of our customers to control their operating costs.” He added that the announcement “is only the beginning.” Milestone COO Matthew Harris told AIN that his company intends to “provide more solutions” with Turbomeca, as well as additional OEMs and suppliers, “to continue to look for ways to add value for our customers.”

by CHAD TRAUTVETTER

Corporate Jet Investor – “Milestone announces leasing transaction with Bristow Group”

13th February, 2012 – Milestone Aviation Group has announced at Heli-Expo that it has reached agreement with Bristow Group to lease five large helicopters.

The companies completed operating leases in December 2011 for two Eurocopter EC225s deliverable in mid-2012 and anticipates closing the leases for three 2011 Sikorsky S-92 helicopters later this quarter. All five helicopters are expected to operate in the North Sea. The total value of the five aircraft is in the range of $125 to $135 million.

Richard Santulli, Milestone chairman said “We are delighted to enter into a financing relationship with Bristow, which operates the world’s largest fleet of commercial helicopters for the offshore oil and gas industry. Our level of commitment combined with the reputation of this world-class operator truly makes this a landmark deal for Milestone.”

William E. Chiles, Bristow Group president and chief executive officer said “The terms of these agreements, with Milestone covering 100% of the acquisition cost of the aircraft, meet our commercial needs to better manage our financial performance. What’s more, Milestone brought capital, creativity and commitment to the transaction process. We look forward to building a broader relationship with the Milestone team in the future.”

 

AIN – “Milestone’s financing model brings new capital for industry”

February 13, 2012, 11:30 PM – Milestone Aviation Group (Booth No 7010), a helicopter financing company, made a splash at Heli-Expo this year, announcing a $480 million deal with Eurocopter (Booth No. 1917) for 16 EC225s, a contract with Sikorsky Aircraft (Booth No. 6148) for three S-92s (terms not disclosed), and a $125-135 million leasing agreement with major operator Bristow Group for five large helicopters.

Milestone chairman Richard Santulli is used to catching the aviation industry’s attention. His previous job was as founder and CEO of NetJets, which developed the fractional ownership model for business jets. Milestone has provided $500 million in financing for helicopters since opening its doors in 2010.

Santulli said Milestone’s model is different from that of the leasing companies that have been a staple of the airline world for years. “They buy 50 airplanes. That’s all they do,” he told AIN. “Our business is developing partnerships and relationships with operators. Our major paradigm is to provide financial capital to good operators.”

Milestone can offer either lease arrangements or 100 percent financing for helicopter purchases, and works with large operators seeking more flexibility in deploying capital or small operators without the capital to grow. The only requirement is that the helicopters be used in revenue-generating missions rather than executive transport.

The oil and gas industry is playing a large role in Milestone’s growth. When petroleum companies put out tenders or solicitations, operators bidding on the work must include the serial number of any helicopter they intend to use to provide the service. If the operator doesn’t have the lift capacity in its fleet, it may not have the wherewithal to put down a deposit for a delivery position for the helicopter – or take the risk of not getting the contract. But Milestone does.

Milestone will place the order for the needed helicopter, and finance the transaction, if the bidding company gets the contract. If the operator doesn’t get the contract, Milestone is happy to take possession of the aircraft for its leasing business.

“These very good operators around the world can now bid on tenders,” Santulli explained.

CEO William Kelly added, “A lot of the oil and gas companies like that. It gives them other people to compete [for the contract].” For Santulli, the move to Milestone from NetJets has been something of a homecoming. “I started in helicopters. In 1980 I started RTS helicopters.” (Santulli’s initials.) And he brought many of his NetJets colleagues with him, which he said gives the company an unparalleled ability to size up all facets of a potential client’s operation.

As for what it’s like to start Milestone after the huge success of NetJets, Santulli said, “We’re delighted with where we are. To build something again is a nice thing.”

By JAMES WYNBRANDT

Corporate Jet Investor – “Turbomeca and Milestone create partnership”

Feb 14, 2012 by Terry Spruce – Helicopter engine manufacturer Turbomeca (Safran group) and the Milestone Aviation Group announced at Heli-Expo the beginning of an expansive partnership between the two companies.

Through the Global Support Partnership, Turbomeca and Milestone are jointly developing new engine support solutions and services for Milestone’s lease customers around the world. The first support program to be developed is the unique Milestone Support by the Hour (SBH) program, which will provide added value and other ancillary benefits to Milestone’s customers.

“We are excited to announce this strategically important collaboration with Milestone,” said Olivier Andries, chairman and chief executive of Turbomeca. “Milestone presents a new opportunity for us to expand our customer base through their market leading global lease portfolio of Turbomeca-powered helicopters.”

“This partnership will help a large segment of our customers to control their operating costs,” said Richard Santulli, chairman of Milestone Aviation Group. “The Turbomeca team has proven to be very creative in working with us to develop new support solutions and services. Today’s announcement is only the beginning.”

Rotorhub: Heli-Expo 2012: “Market recovery reflected in helicopter sales”

14 February 2012 – 23:19 by Tony Skinner in Dallas, US

The note of optimism sounded by the various heads of the OEMs about the recovery of the commercial helicopter during Heli-Expo had a ring of reality following the raft of contracts announced during the exhibition.

AgustaWestland, Eurocopter and Sikorsky all signed double-digit contracts for helicopters at the medium to heavy segment, while a number of operators signed for light and intermediate types.

Bond Aviation Group was one company that burnt through the corporate chequebook, coming to a framework agreement with AgustaWestland for 15 helicopters (comprising ten firm orders and five options), including AW169, AW139 and AW189 aircraft, and signing the largest single contract for the Sikorsky S-92, purchasing 16 of the aircraft.

AgustaWestland also announced that Gulf Helicopters of Qatar had signed a preliminary sale contract for 15 AW189 helicopters for offshore transport missions.

Strong sales of the AW139 also continued with the signing of contracts for four additional examples of the medium twin in Japan through its distributor Mitsui Bussan Aerospace. Two of the AW139s will be designated for the civil market and two will be operated by the Japan National Police Agency.

Further, AgustaWestland announced the first sale of a GrandNew light twin helicopter for corporate/VIP transport in the Japanese market following a contract with Kaigai Aviotech Corporation.

Eurocopter also made some significant advances in sales of its larger types, announcing the sale of 16 EC225s to Milestone Aviation Group under a €362 million (US $480 million) contract and ten EC175s to Noordzee Helikopters Vlaanderen (NHV).

In addition, Eurocopter saw sales of one AS350 B3e to Air Greenland, two EC130 B4s to Corail Hélicoptères, one EC145 T2 to HTM Helicopter Travel Munich and four EC145 T2 helicopters to Scandinavian Air Ambulance.

Sikorsky’s announcement of its contract with Bond for 16 S-92s was made alongside news it had sold three of the aircraft to Brazilian helicopter operator Líder Aviação and three to Milestone.

Noticeably, the one major OEM that did not issue a regular stream of contract announcements, Bell Helicopter, arguably created the biggest stir and main talking point of the exhibition with its unveiling of the 525 Relentless Super Medium Transport early in the show.