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)