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.”

 

Corporate Jet Investor – “William Kelly, Milestone Aviation”

Feb 21, 2011 – International Corporate Jet & Helicopter Finance 2011:  William Kelly is Milestone Aviation Group Limited’s chief executive officer. Bill is an executive with a wealth of experience in global companies and brings a proven track record in leading a European private aviation enterprise.

Prior to co-founding Milestone, Bill was the chief executive officer of NetJets Europe, responsible for the largest private aviation company on the European continent. Bill previously spent six years at NetJets Europe in other key organisational roles, including stints as chief operating officer and chief financial officer. As COO, he had accountability for flight operations, aircraft maintenance, scheduling, logistics and owner services. In these roles, he was instrumental in the rapid growth and turn to profitability of NetJets Europe, which owned and operated more than 150 private jets at its peak.

Bill began his career with KPMG in 1989 and is an ACA (member of the Institute of Chartered Accountants in Ireland) as well as a FCA (Fellow in the Institute). In 1994, he joined Procter & Gamble, working in several finance-related roles around the world in various industry sectors, ultimately achieving the title of chief financial officer of the company’s North America Fine Fragrances Division. He was actively involved in the restructuring of the North American business from a standalone 300-person business to a seven-person distributor model. Prior to arriving at NetJets Europe, Bill also was a senior member of the finance team at a mobile Internet subsidiary of Deutsche Telekom Germany.

Bill obtained his LLB Honours Degree in Law from Trinity College in Dublin, Ireland.

 

Flight Global – “Milestone aims to bring financing aid to helicopter and private jet operators”

23 Aug 2010 by Kate Sarsfield – Niche finance company Milestone Aviation is hoping to secure a first customer within the coming weeks to kick off its bid to “democratise the under-served helicopter and private jet markets”.

“Until now small to medium-size operators – particularly in the helicopter industry – could not vie for lucrative contracts because they were unable to raise the necessary finance from banks to buy new aircraft to support it,” says Milestone managing director Robert Dranitzke, a former chief operating officer with NetJets Europe.

He says this problem is particularly acute in the offshore emergency medical services and search and rescue markets. Here, small players are often barred from entry and the big companies “can’t afford to take the next step” to purchase additional helicopters as banks – which have been squeezed by the credit crisis – are no longer willing to lend the money.

Milestone’s senior management team includes other former NetJets executives including Bill Kelly, NetJets Europe and now Milestone chief executive, and Richard Santulli, NetJets founder and now chairman of the Milestone board.

“Starting a new business when I see a marketplace opportunity is what I love to do,” says Santulli. “Today, many good helicopter operators worldwide cannot get access to capital despite a demand for their services. At Milestone, we believe the quality of an operator should be defined by more than just its balance sheet.”

Milestone’s plan is to acquire new aircraft and then lease them to operators. “Utility helicopters like the ones configured for offshore or EMS operations have strong residual values and are an attractive long-term investment for us,” says Dranitzke, who expects the utility helicopter market to account for around 80% of Milestone’s business within five years.

However, he adds: “The risk profile for private jets on the other hand is much greater for Milestone. This market is unstable and the values are always going up and down.

“Therefore we are interested in purchasing [more profitable and secure] nearly new large and super midsize business jets, ideally for public companies, private corporations and high-net-worth individuals and customers looking for an interim solution while they await a future delivery. But we will sell the assets in around three to five years when this market is stable again.”

Dranitzke says Dublin, Ireland-based Milestone has raised enough capital to “compete globally and put us in a position where we do not have to say ‘no’ to a potential deal. Within the next three to 12 months we will tap the debt market with a view to rising around $500-$600 million.”