Q + A with Brian Humphries, Milestone Aviation Group Advisory Board Member

January 9, 2012

We sat down with advisory board member Brian Humphries who currently serves as the President and Chairman of the European Business Aviation Association (EBAA) and Chairman of the British Helicopter Association. His past titles include CEO of Shell Aircraft International and Chairman of the International Business Aviation Council.

We asked Mr. Humphries about the current state of the helicopter industry and where he believes it is headed:

Q: What is your evaluation of the current helicopter market?


A:
Like most industries, the civil market for rotor wing aircraft was greatly affected by the world recession. Corporate VIP outfitted aircraft took a considerable hit while bad credits and reduced cash flow reduced spending on new utility outfitted machines. Although we saw a decline, the rotor wing market was kept afloat by increased spending in the paramilitary sector coupled with sustainable growth in offshore oil and gas exploration. “Recession proof” industries like emergency medical services were sustained while civil aircraft sales for police departments and search and rescue efforts declined due to scale backs in government spending. We saw the effect of the global recession but overall, I believe the market is steady today.

Q: What is your prediction on the market forecast for the next five years?

A: I see promising growth in the next five years due to manufacturer innovation and development as well as an overall increase in demand. As manufacturers continue to innovate and provide safer, more technologically advanced aircraft, the need to replace older machines will increase. We see this with Sikorsky and the development of the S-76 with the D model and with Eurocopter and its new EC-175.  Both manufacturers claim increased performance and safety measures in comparison to the models’ predecessors. Clients will demand higher safety standards as they come available and helicopter operators will respond accordingly.

Oil companies have announced new projects in the coming years for offshore oil exploration in emerging markets and continued growth in current areas of exploration which will amount to increased demand for heavy offshore configured machines. The demand for paramilitary and civil helicopters will continue to grow, particularly in booming economies with growing populations such as China and India, as well as the continued need for EMS/SAR aircraft.

Q: What has been the greatest challenge for helicopter operators in today’s market?

A: It is the same challenge they have always faced; barrier to entry. Operators must find and secure aircraft to bid on and execute contracts. With most utility helicopters ranging from $1 – 30 million, operators often find it challenging to secure financing in order to stay competitive. Some turn to traditional debt financing that requires money down and is often restrictive on aircraft registration. Others attempt to own all of their aircraft, making it essential to turn over their fleets in order to purchase new machines. The barrier to bidding on and executing a contract is the cost of the machine. The solution lies in the financing.

Q: How do you believe the “Milestone Solution” is affecting the marketplace?

A: Milestone brings a creative financing solution to the table with what I believe to be its three most important offerings; 100% financing, the ability to finance aircraft registered anywhere in the world and contingent pricing. Milestone’s dry operating lease structures give operators the ability to bid on contracts worldwide without an upfront financial commitment. Milestone has found a way to eliminate the “barrier” by easing the financing burden on operators coupled with conveniences such as marrying up lease commencements and term lengths with underlying contracts, sale-leasebacks on existing assets and assuming progress payments on new deliveries. It is a new and unique offering to the helicopter market and we have seen it in action. Milestone’s portfolio consists of both large and small operators with fleets ranging from 3 to 490 aircraft. They are helping operators grow and become more profitable regardless of their size.

AIN – “Milestone Inks Deal with Eurocopter”

Helicopter and business aircraft leasing firm Milestone Aviation announced at the Air Medical Transport Conference yesterday that it would purchase five new Eurocopter EC130B4 helicopters. The order is valued at $17 million, with deliveries slated for the second half of next year. Milestone said it will offer these aircraft for lease to “high-quality operators.” To this end, Milestone and American Eurocopter have formed an arrangement under which “the American Eurocopter sales team will work on the front end to identify leads and assist with closing Milestone leases on these helicopters.” American Eurocopter president and CEO Marc Paganini said Milestone “brings a new option to the table for our clients by providing 100-percent financing and flexible leasing solutions” for customers. According to Milestone chairman Richard Santulli, his company chose the EC130 because it is “widely used in the emergency medical service and tour industries,” a segment where he sees a “clear-cut business opportunity.” Since launching in August last year, Milestone has leased more than two dozen helicopters and private jets valued at more than $240 million. The company has signed commitments that will push that total to more than $300 million by year-end.

By Chad Trautvetter
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Corporate Jet Investor – “Milestone Aviation Group acquires five EC130B4 helicopters”

American Eurocopter and Milestone Aviation Group announced at the Air Medical Transport Conference in St Louis, the sale to Milestone of five new Eurocopter EC130B4 helicopters. The order is valued at $17 million. Deliveries will take place in the second half of 2012.

“Our sales team worked very closely with Milestone to pull this together and we are pleased to make this announcement,” said Marc Paganini, president and chief executive officer of American Eurocopter. “Milestone brings a new option to the table for our clients by providing 100% financing and flexible leasing solutions that will help our customers get into the best helicopters in the business.”

“We are delighted to acquire the popular EC130, a widely used model in the emergency medical service and tour industries, and strengthen our relationship with Eurocopter,” said Richard Santulli, chairman of Milestone. “There is a clear-cut business opportunity to serve high-quality operators in these sectors and this announcement demonstrates our commitment to meet their needs.”

Since launching in August 2010, Milestone has leased over two dozen helicopters and private jets valued at more than $240 million. The company has signed commitments that will push that total to over $300 million by the end of the year.

By Terry Spruce

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AIN – “Milestone To Finance $80M of CHC’s Helicopters”

CHC Helicopter and aircraft leasing firm Milestone Aviation Group announced an $80 million contract today for sale-leaseback of five heavy helicopters for transporting offshore oil and gas workers in the UK, Denmark and Falklands. The deal includes the sale-leaseback of two Sikorsky S-92s and three Eurocopter AS332L2s. The first part of the transaction valued at more than $50 million has closed, with another $30 million expected to close within the next two months.

By Chad Trautvetter

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Rotorhub – “Helitech 2011: Milestone and CHC sign financing agreement”

September 29, 2011 – CHC Helicopter has signed an $80 million sale-leaseback agreement with Milestone Aviation Group, in a development described by the two companies as the commencement of a ‘significant new financing relationship’.

The arrangement covers the sale-leaseback of five aircraft, two Sikorsky S92s and three Eurocopter AS332L2s, which are currently serving oil and gas contracts in Denmark, the UK and the Falklands.

Speaking to Shephard, Milestone CEO Bill Kelly said the agreement, which was Milestone’s largest to date, was a significant development for the fledging company.

‘We are very excited to be partnering with such a great company as CHC and closing the deal pushes us out to $250 million worth of deals signed to date with another $150 to $200 million worth of letters of intent pending,’ Kelly said.

‘We are now partnering with companies around the world – from larger companies, like CHC, to a number of smaller operators – and this is really proof that our business model of providing 100% financing is really appealing for them.’

The two companies have already settled the first part of the transaction, which is valued at $50 million, and expect to close the remainder within the next two months.

The first aircraft leasing company focusing solely on helicopters and private jets, Milestone launched in 2010 with the strategy of addressing the liquidity needs of an under-pressure market through 100% operating lease financing.

The company has since leased more than two dozen helicopters and private jets, with the CHC agreement expected to push the value of the deals to more than $300 million by the end of 2011.

While Kelly noted that the company did not expect to close all the agreements associated with the current letters of intent, he was bullish about future opportunities, especially in fast-growing markets such as Brazil and India.

‘We have been operating for less than a year now and were slightly surprised that we managed to break into a company like CHC so early but they have some sophisticated owners who like to have a range of options in how they finance their operations. Given the success we have seen to date, that is certainly something that has echoed throughout the marketplace.’

In a statement William Amelio, CHC’s president and chief executive officer, said Milestone’s entry into the helicopter-leasing sector was a positive development for the industry.

‘Global capabilities, creativity and the ability to provide significant amounts of capital make them an important financial partner for CHC,’ Amelio said.

Corporate Jet Investor – “Milestone signs $80 million deal with CHC Helicopter”

Sep 29, 2011 by Alasdair Whyte – Milestone Aviation Group has signed a five helicopter sale and leaseback with CHC Helicopter worth $80 million.

The specialist helicopter leasing company is buying two Sikorsky S92s and three Eurocopter AS332L2s serving oil and gas contracts in Denmark, the United Kingdom and the Falkland Islands. The first part of the transaction worth $50 million has closed, with another $30 million expected to close within the next two months. CHC is already operating the aircraft.

“It’s great to have a company like Milestone come into the helicopter-leasing space,” said William Amelio, CHC’s president and chief executive officer. “Global capabilities, creativity and the ability to provide significant amounts of capital make them an important financial partner for CHC.”

The deal is significant for Milestone as it again demonstrate how the world’s largest operators are interested in operating leasing. Milestone has also closed similar transactions with KKR owned Inaer, a Spanish operator, and Lineas Air Taxi in Brazil.

“CHC is one of the pre-eminent helicopter operators in the world and, as such, we are proud to have entered into this partnership,” said Richard Santulli, Milestone chairman.

Milestone has financed one business jet and over 20 helicopters worth $240 million. The company has already signed another $60 million in commitments for deals that will close in 2011.

The helicopter leasing company is now sourcing a significant debt facility to leverage its equity.

 

Rotorhub – “Helitech 2011: Milestone and CHC sign financing agreement”

29 September 2011 – by the Shephard News Team – CHC Helicopter has signed an $80 million sale-leaseback agreement with Milestone Aviation Group, in a development described by the two companies as the commencement of a ‘significant new financing relationship’.

The arrangement covers the sale-leaseback of five aircraft, two Sikorsky S92s and three Eurocopter AS332L2s, which are currently serving oil and gas contracts in Denmark, the UK and the Falklands.

Speaking to Shephard, Milestone CEO Bill Kelly said the agreement, which was Milestone’s largest to date, was a significant development for the fledging company.

‘We are very excited to be partnering with such a great company as CHC and closing the deal pushes us out to $250 million worth of deals signed to date with another $150 to $200 million worth of letters of intent pending,’ Kelly said.

‘We are now partnering with companies around the world – from larger companies, like CHC, to a number of smaller operators – and this is really proof that our business model of providing 100% financing is really appealing for them.’

The two companies have already settled the first part of the transaction, which is valued at $50 million, and expect to close the remainder within the next two months.

The first aircraft leasing company focusing solely on helicopters and private jets, Milestone launched in 2010 with the strategy of addressing the liquidity needs of an under-pressure market through 100% operating lease financing.

The company has since leased more than two dozen helicopters and private jets, with the CHC agreement expected to push the value of the deals to more than $300 million by the end of 2011.

While Kelly noted that the company did not expect to close all the agreements associated with the current letters of intent, he was bullish about future opportunities, especially in fast-growing markets such as Brazil and India.

‘We have been operating for less than a year now and were slightly surprised that we managed to break into a company like CHC so early but they have some sophisticated owners who like to have a range of options in how they finance their operations. Given the success we have seen to date, that is certainly something that has echoed throughout the marketplace.’

In a statement William Amelio, CHC’s president and chief executive officer, said Milestone’s entry into the helicopter-leasing sector was a positive development for the industry.

‘Global capabilities, creativity and the ability to provide significant amounts of capital make them an important financial partner for CHC,’ Amelio said.

Flight International – “Rotary Rebound”

The European civil helicopter market has experienced rapid growth over the past decade, as the acceptance of these versatile machines has gathered pace in a plethora of institutions and industries, from air ambulance providers to VIP ­operators.

According to Flightglobal’s HeliCas database, the installed base of helicopters on the continent has climbed from 5,620 in 2001 to nearly 8,750 last month – representing the largest market outside North America. The rapid growth of the European civil helicopter sector is a reflection of the industry’s phenomenal transformation worldwide.

“For decades, the civil helicopter market was the second smallest aviation segment, just above the equally stagnant trainer aircraft market,” says Teal Group aerospace analyst Richard Aboulafia. “Turbine-powered civil helicopter deliveries averaged just $2 billion annually [in 2011 dollars] between 1988 and 2005, with very few signs of any growth.” In 2006, however, deliveries rose to 573 helicopters, worth a record $3.3 billion. Delivery records continued to be smashed in 2007 and 2008, when the tally hit a high of 859 shipments worth $5.4 billion.

ECONOMIC IMPACT

The world economic downturn inevitably had an impact on this market, Aboulafia concedes.

Deliveries fell 13.8% by value in 2008-2010, and 2011 looks set to fall another 5%. However, demand has stabilised, and growth looks set to resume next year.

Market leader Eurocopter mirrors Aboulaifia’s observations: “The downturn hit the industry hard,” says vice president of marketing Dominique Maudet, executive vice president global business and services for Europe’s largest provider, Eurocopter. “The level of bookings dropped off significantly in 2008, and by 2010 they were 70% lower than the previous year.”

Maudet says the sales of its single-engine products – notably the EC120 Colibi – were hit hard, as traditional buyers such as owner flyers and corporations could no longer afford or justify their continued use.

“The VIP/owner flyer sector is the part of the market most impacted by the downturn particularly in Western Europe. Helicopters tend to be one of the first things to go when an economic crisis hits,” Maudet says.

This view is echoed by Robert Garavaglia, senior vice president of marketing for Europe’s second-largest helicopter provider, AgustaWestland. “The corporate VIP market has declined because it is tied to the overall health of the stock market,” he says.

The turmoil of the past three years has picked off the weakest players and shrunk the market, but “what remains is solid,” he added. “Wealthy people will always be around. As with the business jet sector, the top end of the helicopter [market] – the VIP market – has not been as impacted as the lighter end, and the VVIP AW139 medium twin remains a popular choice.”

Aboulafia agrees: “While helicopters have a much narrower customer base [than business jets], due to their shorter range and slower speed, that customer base is better able than ever to afford new models.”

It is Europe’s emerging markets – particularly Russia and the Commonwealth of Independent States – who are leading the sales surge for VIP helicopters, says Garavaglia.

This is thanks to a groundswell of wealthy individuals, a booming economy and a demand for Western helicopter models. Capitalising on this growth market, AgustaWestland has already established a second production line for the AW139 in Russia, and recently sold 20 of the types to Russian operator UTAir.

The country has fewer than 2,000 helicopters, and only half of these are in flyable condition, Aboulafia says. “The mature markets in Western Europe have been far more exposed to the financial markets than the CIS, but demand will recover in time,” he adds.

OFFSHORE RESILIENCE

While the tally of corporate and VIP customers has dwindled, this decline has been offset by a sustained demand for helicopters from other market sectors.

The surge in offshore oil and gas exploration in particular has triggered a hugely lucrative helicopter support business, which the airframers are keen to exploit.

“Exploration and extraction is getting more expensive, as operators look to more distant oil fields and mine sites to meet growing raw material needs,” says Teals Aboulafia. “Rotorcraft play a key and irreplaceable role in exploiting these remote sources.”

Demand for helicopters to deliver public sector services – law enforcement, emergency services, firefighting and border patrol – has also remained strong across Europe. “Helicopters are the single most survivable and robust part of the transportation infrastructure,” Aboulafia says. “They are essential for disaster relief, medical evacuation and community recovery.”

Garavaglia believes the use of helicopters for public sector services has become the norm across Europe. “Helicopters have become a social contract between a government and its citizens. They have become part of the mainstream and an integral, indispensable part of the community,” he says.

As the European Union grows, other countries will expect the same standard of service for its citizens, opening up more opportunities, Garavaglia added.

Vittorio Morassi, chairman of the new European Helicopter Association, says the widespread use of public service helicopters has boosted the profile of the industry in Europe.

Before helicopters became mainstream, he argues, they were regarded as a rich man’s toy, and the preserve of the privileged few. “They have been increasingly deployed in recent years to support local communities in a law enforcement, EMS [emergency medical services], search and rescue and firefighting roles, and their profile has risen tremendously,” he says.

Despite their widespread acceptance, Morrassi believes the public service helicopter budgets of many European countries will be cut, as austerity measures being introduced by governments begin to bite.

“With the sovereign debt crisis affecting an increasing number of European nations – Spain, Portugal, Greece, Ireland and Italy for example – there will be more austerity in public spending. Helicopter budgets will inevitably be cut and services reduced and/or centralised,” says Morassi.

Garavalglia agrees, but believes these measures will be short-lived. “There might be some short-term readjustment”, he says, but helicopters have shown their effectiveness and value and have become indispensable.

LENDING FREEZE

While the demand in certain sectors remains strong, the financial crisis across has placed a stranglehold on bank lending across Europe.

This unwillingness to loan is affecting helicopter sales, as many operators cannot finance fleet expansion or renewal.

“Finance is tight for the banks, as they are heavily exposed to sovereign debt,” says Robert Dranitzke, managing director of helicopter finance company Milestone Aviation.

The Dublin-based company was set up a year ago to exploit a niche in the helicopter finance market, and to date has secured more than $200 million in operating lease finance.

“Many banks have a lending allocation for each market sector, and they have reached their limit with the helicopter finance. They are not even prepared to lend money to a good operator with good contracts,” he says.

Milestone offers two finance options: it will buy the helicopter and lease it to the operator, or it will purchase the asset from the operator – who no longer wants the machine on their books – and then lease it back.

“We have done two dozen deals to date – four of these with European operators,” Dranitzke says. “Helicopters are a good investment as they hold their value, particularly models at the top end of the range.”

Milestone is choosy, however, about the type and operational role of the helicopter it is prepared to finance. “The VIP/corporate market is not for us, the asset is volatile to stock market fluctuations. When it drops the helicopter is often the first thing to go,” he says.

Instead, Milestone’s focus is on the offshore and public service providers, which Dranitzke says come hand-in-hand with stable, long-term contracts. “The heavy end of the market is strong – notably the EC225 and Sikorsky S92, which are popular offshore machines, along with the AW139 medium twin,” he says.

Although Europe only accounts for a sixth of Milestone’s business to date, Dranitzke is confident the region will flourish over the next few years. “We are a new concept in Europe, where operators have a tradition of owning their aircraft. However, we have had a positive reception from this market, and are very bullish about our prospects here,” he says.

AIRCRAFT DEVELOPMENT

Despite the economic uncertainty, Europe remains a hugely attractive market for helicopter airframers, who are all seeking to carve a larger slice of the civil rotorcraft cake.

Eurocopter and AgustaWestland have already secured more than 60% of the market between them, and look set to retain their dominant position over the next decade, Teal’s Aboulafia predicts.

There is no secret to their success, he suggests: “Both primes are willing to spend more on developing [and acquiring] new products and creating a comprehensive product range.”

Over the past 14 years, Eurocopter has consistently updated its product line with the EC series, starting with the EC120 and including the EC130, 135, 145, and 155.

The next step will be the EC 175, a joint venture with Aviation Industries of China II/Harbin Aircraft, which will compete with the AW139 when it enters service next year.

AgustaWestland “has long relied on its A109 family for the bulk of its civil market presence”, Aboulafia says. The product line has been expanded to a wide variety of variants, incorporating greater range and engine power.

The single-engine version – the AW119 Koala – is now available with more power, as the 119 Ke (Koala enhanced). The baseline 109 is now available as the larger 109 Grand, updated as the Grand New in 2010, with a new avionics package.

Aboulafia adds: “The company will capitalise on the success of its AW139 with the proposed AW169 – a light twin positioned between the Grand and the 139, and set to compete with the EC 235 Dauphin when it enters service in around 4 years.

“The best illustration of AgustaWestland’s determination to grow its product line is its June 2011 acquisition of the entire Bell/Agusta 609 tiltrotor programme. It will be brought to market by 2015, although its market standing remains highly uncertain.”

Sikorsky also has a strong presence in the medium and heavy sectors, with its S-76 and S-92 respectively, and hopes to secure its position with the introduction next year of its S-76D.

Bell has seen its share of the European market fall from around 30% to 14% of new aircraft sales over the past thirteen years, and is now fighting back.

The Textron-owned company appointed senior Eurocopter executive Patrick Moulay to head up its commercial operation in Europe last month, hoping to drive sales of its renewed and revived product line.

“Bell hasn’t done that well in Europe because it hasn’t had the right products,” Moulay admits. “The 427 light twin was not certificated for instrument flight rules [IFR] operations, so sales were limited to VIP [owner flyer segment],” He explains.

The more lucrative sectors, such as law enforcements and EMS, were out of Bell’s reach, he added.

Moulay is confident its IFR approved 429 – an all new replacement to the 427 – will reverse Bell’s fortunes in the region, despite Eurocopter’s dominance of this segment with its EC135.

“We are writing a new chapter,” he says. “The 429 is the right aircraft at the right time. We have already delivered seven of the types in Europe, and sold two aircraft in late August.

“Many EMS operators have fleets that are up to 20 years old, and they are looking at the 429 as a replacement aircraft. This is going to be the next big thing.”

Bell is also planning to take on the AW139, EC225 and S76 medium twins, with a new enhanced 412, the 412EPI.

Although he remains tight-lipped on the aircraft specifications and planned entry into service, Moulay says the aircraft will have new engines, a glass cockpit and full authority digital engine control, and will be targeted at the onshore utility market.

Not to be outdone in the single helicopter segment, Bell has also launched its 47GX. The aircraft is an upgraded version of the Model 407 – of which Bell has sold around 1,000 – and will enter service in Europe early next year.

“Europe is going to grow for Bell,” Moulay says. “We are investing heavily in our Prague facility to bring full in-house capability to our customers.

“With our with our new product line we hope to secure 20% of new sales to the civil and para public market within three years. There is a will and commitment from the company to come back to Europe.”

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Vertical- Milestone Creates Ripples

Milestone Aviation Group plans to ensure that the big splash it has made in its first year will continue to be positively felt for many years to come.

At the Paris Air Show in June, Sikorsky Aircraft Corp. announced an agreement to sell one S-92 and two S-76 C++ helicopters to Milestone Aviation Group, a global finance company headquartered in Dublin, Ireland (with additional operations in Colts Neck, N.J., and Columbus, Ohio). The agreement came just six months after Milestone purchased five S-76 C++s from Sikorsky in December 2010.

These would be major acquisitions for any company, but are particularly impressive for one that has only been in business for a year — Milestone opened its doors in August 2010 (see p.15, Vertical, Oct-Nov 2010). In making the announcement at Paris, Carey Bond, president of Sikorsky Global Helicopters (the civil helicopter unit of Sikorsky Aircraft Corp.), remarked, “In a very short time, Milestone Aviation has become an important and highly valued customer.”

Milestone entered the market with a promise to provide capital to high-quality helicopter operators, and it’s putting its money where its mouth is. Milestone has already leased more than two dozen helicopters and private jets valued at over $200 million US, and has signed commitments that will push that total above $300 million by the end of 2011. With $500 million in capital behind it, it has deep pockets to draw on, and its focus on the helicopter industry is unique among major lenders.

Milestone founder Richard Santulli is best known as the founder and former chair and chief executive officer of NetJets. Santulli brought key members of his NetJets management team with him to Milestone, including Milestone CEO Bill Kelly, the former CEO of NetJets Europe. Although Milestone is offering some financing for private jets, its primary focus is on the helicopter industry, which Santulli said is poorly understood by many lenders. “I think we fill a huge void in the market,” Santulli told Vertical at Heli-Expo 2011 in March. (Santulli is no stranger to helicopter leasing: in the 1980s, he created RTS Helicopters, which at its peak was the world’s largest helicopter lessor with almost 200 machines.)

Although the NetJets heritage automatically invokes images of VIP transport, Santulli and Kelly are specifically interested in revenue-generating helicopters rather than private ones. “We’re not interested in VIP helicopters,” said Santulli. For Milestone, the chief appeal of the helicopter industry is that its hard-working aircraft make it more resistant to economic downturns than the fickle private jet market. “The jet market is a cyclical market. Ninety-five percent of private jets are not used to earn revenue.” Of helicopter markets, he said, “Although they go through cycles, they’re not as dramatic or drastic.”

The new S-92 and S-76 C++ helicopters, which are scheduled for delivery beginning in the third quarter of this year, will fit nicely into one of Milestone’s target markets: offshore oil and gas. As the oil industry increasingly migrates to deepwater operations, experts have predicted a greater demand for heavy-twin helicopters (see p.44, Vertical, June-July 2010). Observed Santulli, “More of the oil business is going farther offshore. That’s the void we’re looking to fill.”

However, the company is not limiting itself to any particular sector or geographical area; it is willing to consider clients from all over the world. At Heli-Expo 2011, Kelly emphasized, “In a six-month period of time, we’ve done business all over the world. We’re truly global.”

Milestone is willing to offer up to 100 percent financing, although naturally it won’t lend to just anyone. The company is seeking out reliable, safety-conscious operators, and thus prospective borrowers can expect a site visit and a thorough review of their operating procedures, not just their accounting books. Yet, they still can expect a relatively swift “yes” or “no.” Said Kelly, “We won’t keep putting [operators] through ‘credit committee hell.’ ”

Although Milestone has quickly made a splash in the industry, Santulli said its focus would be on developing solid, long-term relationships with its customers, much as the management team did at NetJets. “We have a loyalty to our customers that is extremely important. We want to do all their future deals.”

By Elan Head (featured in the August/September 2011 issue of Vertical)

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Flight Global – “Milestone snaps up leasing contracts left by bank shortfall”

12 Sep 2011 by Kate Sarsfield – Business jet and helicopter finance company Milestone Aviation expects to have leased more than $300 million worth of aircraft by the end of the year, as the financial crisis and bank lending squeeze forces operators to look to alternative methods to fund aircraft procurement programmes.

Earlier this month, Milestone signed a leasing deal with Mexican air transport company Transportes Aereos Pegaso for four new Eurocopter EC-145 light twins, which will be used to support a multi-year services contract with government-owned utility company Mexican Comisión Federal de Electricidad.

The transaction is Milestone’s first with Pegaso, and its first acquisition of new Eurocopter helicopters.

“There are amazing finance opportunities right now,” Milestone managing director Robert Dranitzke said.

The Dublin, Ireland-based company – headed by former NetJets executives, including company founder and fractional ownership pioneer Richard Santulli – was set up in August 2010, to exploit a niche in finance market.

To date it has leased two dozen helicopters and private jets, valued at more than $200 million.

“We set up Milestone because we saw a gap in this sector left by banks, which cannot or will not lend to operators,” Dranitzke added. “They are not even prepared to lend money to a good operator with good contracts.

“Helicopters are a great investment as they hold their value, particularly models at the top end of the range.”

Milestone’s focus is mainly on operators with medium to long-term contracts, including offshore, public and government service providers.

Pegaso’s contract is for eight new EC-145’s, but the Mexican operator has elected to lease half of the fleet.

“For a business of our size, the smart way to acquire eight new helicopters is a blend of aircraft ownership and leasing, to strengthen our return on invested capital and allow us to pursue additional contracts,” said Enrique Zepeda Navarro, executive director of Pegaso. “Milestone delivered 100% lease financing on the first four helicopters, which will help us secure superior debt financing terms on the four remaining machines.”