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.”

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

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.”

By Kate Sarsfield

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Corporate Jet Investor – “Milestone Aviation to lease four EC145s to Pegaso”

Milestone Aviation Group has announced the lease to Transportes Aereos Pegaso of four Eurocopter EC145 helicopters. Pegaso will use the four helicopters to serve its new long-term contract with the Mexican Comision Federal de Electricidad.

The transaction represents Milestone’s first with Pegaso and its first acquisition of new Eurocopter helicopters. The announcement coincides with Eurocopter’s delivery of the third and fourth machines from its manufacturing facility in Donauworth, Germany.

A customer of Eurocopter for more than 30 years, Pegaso recently won a multi-year services contract with the Mexican Comision Federal de Electricidad for eight new EC145 helicopters. The announcement today covers the first four helicopter deliveries, with a total list price of more than $28 million.

Richard Santulli, Milestone chairman, said, “We are delighted to celebrate our partnership with a first-class operator in Pegaso, as well as our first transaction with Eurocopter, the world’s largest civil helicopter manufacturer. Milestone’s hallmark is doing business creatively and quickly with high-quality operators around the world. This deal is a textbook example of how we do business, taking only six weeks from initial discussions to closing on the helicopters.”

Enrique Zepeda Navarro, director ejecutivo of Pegaso, said, “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. Fortunately Milestone could act quickly and deliver 100% lease financing on the first four helicopters, which will help us secure superior debt financing terms on the four remaining machines.”

Dieter John, Eurocopter chief financial officer said, “We are pleased to see this first transaction with Milestone come to fruition and believe this type of financing is becoming more important in the way we do business with our traditional commercial partners and for the development of new opportunities in the future. We are already looking forward to other transactions.”

Bill Kelly, Milestone chief executive oficer said, “The EC145 is a great aircraft and a valuable addition to Pegaso’s fleet and Milestone’s portfolio. The deal is our first with Eurocopter and we are excited to start working with this great company. We hope it is the first of many transactions between our two businesses.”

Since launching in August 2010, Milestone has leased over two dozen helicopters and private jets valued at more than $200 million.

Author/source: Terry Spruce

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Vertical Daily News – “Milestone Leases Four New EC-145 Helicopters to Pegaso”

DUBLIN, IRELAND and MEXICO, D.F. —(Marketwire – September 8, 2011)— Milestone Aviation Group, the first global finance company focused exclusively on the helicopter and private jet markets, announced today the lease to Transportes Aereos Pegaso (Pegaso) of four new Eurocopter EC-145 helicopters. Pegaso, a leading Mexican air transport company and longstanding Eurocopter customer, will use the four helicopters to serve its new long-term contract
with the Mexican Comisión Federal de Electricidad.

The transaction represents Milestone’s first with Pegaso and its first acquisition of new Eurocopter helicopters. The announcement coincides with Eurocopter’s delivery of the third and fourth machines from its manufacturing facility in Donauworth, Germany. A customer of Eurocopter for more than 30 years, Pegaso recently won a multi-year services contract with the Mexican Comisión Federal de Electricidad for eight new EC-145 helicopters. The announcement today covers the first four helicopter deliveries, with a total list price of more than $28 million.

Richard Santulli, Milestone’s Chairman, said, “We are delighted to celebrate our partnership with a first-class operator in Pegaso, as well as our first transaction with Eurocopter, the world’s largest civil helicopter manufacturer. Milestone’s hallmark is doing business creatively and quickly with high-quality operators around the world. This deal is a textbook example of how we do business, taking only six weeks from initial discussions to closing on the helicopters.”

Enrique Zepeda Navarro, Director Ejecutivo of Pegaso, said, “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. Fortunately Milestone could act quickly and deliver 100% lease financing on the first four helicopters, which will help us secure superior debt financing terms on the four remaining machines.”

Dieter John, Eurocopter’s CFO, said, “We are pleased to see this first transaction with Milestone come to fruition and believe this type of financing is becoming more important in the way we do business with our traditional commercial partners and for the development of new opportunities in the future. We are already looking forward to other transactions.”

Bill Kelly, Milestone’s CEO, said, “The EC-145 is a great aircraft and a valuable addition to Pegaso’s fleet and Milestone’s portfolio. The deal is our first with Eurocopter and we are excited to start working with this great company. We hope it is the first of many transactions between our two businesses.”

Since launching in August 2010, Milestone has leased over two dozen helicopters and private jets valued at more than $200 million. The company has signed commitments that will push that total to over $300 million by the end of the year.

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NOTES TO EDITOR:

About Milestone Aviation Group

Milestone Aviation Group is the first global aircraft leasing company exclusively focused on helicopters and private jets. Milestone’s global aircraft leasing platform addresses the liquidity needs of a transforming marketplace through 100% operating lease financing. Further information is available at www.milestoneaviation.com.

About Eurocopter

Established in 1992, the Franco-German-Spanish Eurocopter Group is a division of EADS, a world leader in aerospace, defense and related services. The Eurocopter Group employs approximately 17,500 people. In 2010, Eurocopter confirmed its position as the world’s number one helicopter manufacturer in the civil and parapublic market with a turnover of 4.8 billion Euros, orders for 346 new helicopters and a 49 percent market share in the civil and parapublic sectors. Overall, the Group’s helicopters account for 33 percent of the total worldwide civil and parapublic fleet. Eurocopter’s strong worldwide presence is ensured by its 30 subsidiaries and participations on five continents, along with a dense network of distributors, certified agents and maintenance centers. There are currently 11,200 Eurocopter helicopters in service and some 2,900 customers in 147 countries. Eurocopter offers the largest civil and military helicopter range in the world.

About Transportes Aereos Pegaso

Pegaso is a privately held company founded in 1981. In 2004, Transportes Aereos Pegaso became the first Mexican aviation company to earn the ISO 9001:2000 certification for quality management. Currently, Pegaso performs more than 42,000 flight operations every year and employs 60 full-time pilots. The company has four bases in Mexico and operates primarily in offshore oil and gas and electricity commission transport for both state-run and private entities.

AIN Online – “Mexican Operator Leases EC145s from Milestone”

Leasing group Milestone Aviation announced today its first deal involving Eurocopter aircraft through an agreement to place four new EC145s with Mexican operator Transportes Aereos Pegaso. The helicopters, which have just been delivered from Eurocopter’s factory in Donauworth, Germany, will be used for a support contract that Pegaso has with Mexican government utility group Comisión Federal de Electricidad.

The Mexico City-based enterprise has been a Eurocopter operator for more than 30 years. Its new contract calls for the use of eight new EC145s in total.

The lease deal for the first four of these helicopters is valued at $28 million. “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 Pegaso executive director Enrique Zepeda.

“Fortunately Milestone could act quickly and deliver 100-percent lease financing on the first four helicopters, which will help us secure superior debt financing terms on the four remaining machines. Milestone chairman Richard Santulli said his team closed the deal within six weeks of initial discussions.

The Dublin, Ireland-based company, which handles leases for both helicopters and business jets, has now leased more than two dozen aircraft in deals worth more than $200 million and further commitments will take this total beyond $300 million by year-end.

By Charles Alcock

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BART International – “A New Force in Aircraft Financing”

BART International – Issue: July – August – By Jack Carroll

Started by NetJets founder, Richard Santulli, less than a year ago and bolstered by a $500 million capital infusion, Dublin-based Milestone Aviation Group is well on its way to becoming a major force in both helicopter and business jet financing. What’s their strategy?  How will they compete with the big, established lenders?  What are their points of difference? And why Dublin? Senior Writer, Jack Carroll, chatted with Dubliner and Milestone Aviation Group’s CEO, Bill Kelly, to give BART’s  readers the answers and update the progress of this feisty new contender in the highly competitive aircraft financing field. So let’s get into it then with the full story from our highly reputable “inside source.”

BART:  Considering the global economic condition, why did you pick this particular time to start an aircraft financing business?

Kelly: The short answer would be that there are plenty of opportunities out there for us right now; the key to that being our specialization in helicopters.  Let’s start with our business model. We have two distinct parts of our business: Private jets and helicopters. On the business jet side, our primary focus is pre-owned jets, one to five years old. Sure, we’ll handle new ones under the right conditions, but our ‘hitting zone’ is pre-owned. If we can buy them at the right price, we can lease to an operator for a few years. So at the end of the lease period we should be able to sell the aircraft for a reasonable price and profit.

I should mention that if you are waiting for delivery of an aircraft that might be a few years away, say a Gulfstream G650, we are more than willing to provide an interim solution by leasing you a jet of your choice.

BART: I’ve heard it said over and over that it’s extremely difficult right now to get financing for a pre-owned jet. And also–as one Business Aviation guru reported, there’s even “A dearth of financing for new small to midsize jets.” What’s your opinion?

Kelly:  When I was CEO at NetJets Europe, people were trying to finance shares; not even a whole aircraft. And the private banks would lend you money only if you put up an equal amount on a pre-owned jet, but they’d much prefer you buy a new one, of course.  We can help the situation by financing both used and new aircraft. Generally, we’re talking with people in companies who are trying to free up working capital. They’d like to get equity out to realign their resources; pay down some of their debt or use the funds in other parts of their business.

BART:  What are your plans on the helicopter side?

Kelly:  The helicopter industry has been impacted by the global recession, of course, but not nearly to the extent of business jet aircraft. Our core business is dealing with working helicopters; that is oil and gas, EMS, search and rescue, firefighting, utilities, and the list goes on. Most of these areas have shown considerable strength throughout the downturn. For instance, the five major oil companies expect to invest in the neighborhood of $120 billion in exploration during the next few years. The offshore oil and gas business has always been closely linked with helicopters. You know, once an oil rig goes into production, it has to keep going. Which means transporting parts and people back and forth on helicopters. They are simply essential in many industries. I have to say that in general we’re not very interested in executive or VIP helicopters, though we’d never turn down the right deal.

We just think the helicopter side of our business is much more robust than the business jet side.

BART:  Tell us how a typical private jet lease-back transaction might work with the proviso that the company has a good balance sheet and credit rating, solid customers and a good reputation.

Kelly: Our preferred deal would be on pre-owned rather than new aircraft, but either way it’s very simple. Someone comes to us and say something  like, “I have a Falcon 7X picked out that will be delivered in November this year and I’d like a three, five or seven-year lease. What will you charge me?

How much is the security deposit? Is there a down payment? How quickly can you commit? Do you make installment payments directly to the OEM? The short answer is, “It all depends.” And it all depends on our rather thorough vetting process.

In any event, we can offer 100 percent financing and there’s no down payment. All it would take is a minimal security deposit and away you go. Then we start making installment payments to the OEM.

BART: What are your advantages over the big banks or lenders, such as CIT Aerospace, GE Capital, Chase Leasing and the ‘usual suspects.?’

Kelly: As you mentioned, it’s obvious they don’t think much of pre-owned jets and are just  not comfortable with helicopters. So there’s not  much opportunity for a company or individual to get financing in those areas. For example, I attended a business aircraft conference in London recently where an executive from a major Swiss bank said, ’Yes, we’re interested in private jets; new rather than pre-owned. And the buyer would have to be an exceptional customer of ours. But we’re not interested in the helicopter market at all.’ To me, that leaves us a rather large niche in which we’re very happy to play. Again, we’ll offer 100 percent financing, where the others will not. Plus banks and other lenders will usually want a ten to twenty percent deposit and even more on helicopters. I think a lot of lenders tend to get squeamish in the helicopter sector of the aviation world.

If you want to finance a helicopter in the US, Canada or Norway, it’s no problem. But if you want to do it in India, Nigeria, Indonesia or other places, the majority of banks simply don’t know much about those markets; especially as it pertains to helicopters. Actually, they tend to avoid helicopters, which are greatly misunderstood and not supported by the banks at all.

BART: What advantages do you have in the commercial helicopter market?

Kelly: About 85 percent of private jet operators in Europe have five or less aircraft. These are the small guys. The same holds true for helicopters. While there are a few large operators, such as Bristow, CHC and Inaer, the rest are mostly small to midsize companies; say from a couple  to forty or so helicopters. From what we’ve seen, many of these companies are great operators, in business for a long time, who have great contracts, but they don’t have the strong financial backing that large operators enjoy. They have excellent relations with their customers, but to grow they need alternative financing sources. And that’s where we come in. We’re happy to support them in any country where they can find new business.

BART: I understand your Chairman, Richard Santulli, has extensive helicopter leasing experience that pre-dates his creation of the original fractional ownership concept, NetJets. Please elaborate on this.

Kelly: When Richard left Goldman Sachs, he took his helicopter leasing business with him, as they made it clear they wanted nothing to do with helicopters. It was a niche market and just  too small. So Richard expanded his business into RTS Leasing, which went from zero to 193 helicopters in just six years.

You see, he understood that when you evaluate small operators, you do it on more than a balance sheet. You evaluate them on their safety culture, how well they operate the business, how well they maintain their assets, train their pilots, and so on. If they are capable, proven operators, we tend to feel better about them and have more confidence. We understand they’re dependent on their contracts and dependent on our assets–the leased helicopters- to in turn satisfy their customer and the terms of those contracts.  So basically, we’re looking for a certain level of comfort in all our transactions. Finance is just part of the picture. Operations are equally important and we’ll work with many operators whose finances may not be the best.

I think one of our big advantages is that we’re able to move fast and make quick decisions. People really appreciate that. We’ve had quite a few operators tell us that when they’re working with a bank they go through what has been called “Credit Committee Hell” – and not without reason.

It’s when the operator has filled out endless forms, provided all his financial data, all the company’s projections for the next 25 years, and signed away the birth certificates for his first and second  born children. I realize that’s a bit sarcastic, but as a matter of routine they then make that company wait for weeks and weeks and months and months for someone, anyone, to make a decision.

At Milestone we promise you’ll get a quick decision and we prove it every day. We’ll ask a bunch of questions, review your finances and have a preliminary decision back to you in three to five days. We’ve found that in the end it helps people to know exactly where they stand.

BART:  Looking forward, how do you see helicopters positioned against  private jets by revenues?

Kelly:  We see helicopters accounting for about 80 percent of revenues and business jets at 20 percent. And we don’t expect that ratio changing to any degree. There are relatively few opportunities in Private jets, but if we invest in the right aircraft, lease them for three to five years and sell them at the right price, we should be able to make a nice return for our investors.

On the other hand, we want to own helicopters for twenty years or more. We’ll lease them to a company for up to ten years, then release them to the company or lease them to someone else.

BART: Will you speculate on aircraft, buying them before a lease is in place?

Kelly: We’ll look at any opportunities. For instance, we had a chance to buy the last five S-76C++ aircraft, so as an entrepreneurial company, we went ahead and bought the lot. We expect to place them under lease in short order  and I know we’re going  to do very well on the transaction.

We’re also having discussions with Eurocopter, Augusta Westland and Bell, looking at the possibilities of similar deals.

BART: What are your key geographic areas now and in the future?

Kelly: Where we’ve done our deals thus far are the US, Canada, Brazil, India, Portugal, Italy, France, Spain and Mexico. I expect that about half of our business will eventually be outside of North America. We see good potential in places like Indonesia, Australia and even Africa, where there are about 400 helicopters on the continent whereas German alone has roughly 6,000. So yes, Africa has huge potential, not only in oil and gas, the most obvious, but also in a wide range of other areas as well.

BART: You have a US office in Columbus, Ohio, but why have your Headquarters in Dublin, Ireland?

Kelly: More people than I can count don’t realize that about half of all the commercial aircraft leasing deals come through Dublin. Why? For openers, there’s a great tax environment; just 12.5 percent on corporate income. A company can also write an asset fully down over eight years. And further, Ireland has been very aggressive in setting up treaties worldwide. For example, no withholding or V.A.T. just about anywhere you’re operating. There’s always a way to structure a deal as easily as possible. Finally we have the world’s  best ‘back office’ financial staff here, who’ve seen it all in the world or aircraft financing. For example, accountants, lawyers, leasing and tax experts; all willing to share their expertise – for a small fee, of course! So Milestone’s headquarters couldn’t be in a better place. And since I’ve been here all my life, I’d tend to agree wholeheartedly.

Global Business Jet – “Brian Humphries to join Milestone advisory board”

July 12, 2011 – Milestone Aviation Group, the first global finance company focused exclusively on the helicopter and private jet markets, today announced that Brian Humphries has joined the company’s Advisory Board.

Mr. Humphries is a highly respected member of the global business aviation community. He started his career in the Royal Air Force and worked his way up the ranks to Air Commodore serving in a variety of appointments with both flying and engineering responsibilities, culminating in his being made a Commander of the Order of the British Empire (CBE). Mr. Humphries is currently European Business Aviation Association (EBAA) President and CEO and British Helicopter Association (BHA) Chairman. He is the former CEO of Shell Aircraft International and has previously served a three-year term as Chairman of the Montreal-based International Business Aviation Council (IBAC).

Richard Santulli, Milestone Chairman, said, “We are honoured to have someone of Brian’s calibre serving on our Advisory Board and supporting our mission. His knowledge and expertise within both the helicopter and private jet industries will greatly contribute to our success and growth.”

In agreeing to join Milestone’s Advisory Board, Mr. Humphries hopes to support the company’s stated mission of bringing much needed capital to the helicopter and private jet communities. “There are many high quality helicopter operators who cannot grow their business or modernise their fleet because they cannot raise the necessary capital. Private jet owners are also struggling to raise funds in the current environment,” said Brian Humphries. He continued, “The 100% financing offered by Milestone is a boon for the industry that will lead to increased growth for the sector.”

Since launching in August 2010, Milestone has leased two dozen helicopters and private jets valued at over $200 million. The company has signed commitments that will push that total to over $300 million by the end of the year. Mr. Humphries’s involvement with the business is expected to accelerate growth.

Bill Kelly, Milestone’s CEO, said, “Brian’s knowledge of the aviation industry and the high regard in which he is held is invaluable for our company. We look forward to working with him to support high quality operators around the world.”