Helicopter-leasing company takes off

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

By  Steve Wartenberg

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Milestone family includes former NetJets executives Rosenthal,

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

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

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

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

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

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

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

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

Milestone already has begun to turn a profit.

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

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

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

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

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

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




Milestone Media Contacts:

Eric Berman or Nathan Riggs

of Kekst and Company

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