Vertical: Surpassing Expectations

By: Elan Head
2/25/2014

It has been an incredible few years for Milestone Aviation Group.

Since Milestone launched in August 2010, the helicopter leasing company has grown to become one of the industry’s biggest players. How big? At Heli-Expo 2014 in Anaheim, Calif., the company is announcing that it now has more than 143 aircraft valued at over US$2.2 billion in its fleet. That’s in addition to firm and option orders with AgustaWestland, Airbus Helicopters, and Sikorsky Aircraft Corp., delivering over the next five years, for more than 130 helicopters valued at over $3 billion at list prices. With 26 operating partners — including such industry leaders as Bristow Group and CHC Helicopter — Milestone now has helicopters working in more than 20 countries on six continents. Not a bad record for 42 months in business.

“Our size, order book, and relationships are unparalleled in the industry,” Milestone president Daniel Rosenthal told Vertical in the run-up to Heli-Expo. “We had a lot of expectations at the beginning, but our success has surpassed even our expectations.”

Last year was a particularly active one for the company, which executed 10 new financing facilities also totaling $2.2 billion. These facilities tapped multiple markets, including bank lending, life insurance companies and the Export-Import Bank of the United States. Highlights included the first Ex-Im backed bond for the helicopter market, a $600 million secured revolver, a $200 million unsecured revolver, a $80 million PDP facility and a $575 million private placement with an investment-grade corporate rating from Kroll. All told, the company now has more than 40 financing partners.

“We have ample access to capital to support our business plan and our customers,” Rosenthal said. “Because of our size, we are able to offer choices to our customers . . . and we are able to offer flexibility.”

Milestone is the creation of Richard Santulli, who is widely known as the founder and former chair and CEO of the fractional private jet ownership company NetJets. Drawing on his previous experience in helicopter leasing (as the head of RTS helicopters in the ’80s), Santulli brought to Milestone the same visionary approach and emphasis on customer relationships that characterized NetJets — what Rosenthal described as “the Richard Santulli school of doing business.”

“We look for customers who are devoted to long-term partnerships,” Rosenthal explained, adding that when Milestone begins a relationship with a customer, “there’s no one better” at meeting that customer’s needs. “I think the market understands the different approach we take to our customers,” he said.

Beyond its commitment to customer service, however, Milestone knows its market. The company’s rise to prominence has coincided with an increase in deepwater oil-and-gas drilling, which has driven demand for larger helicopters, such as the Sikorsky S-92 and Eurocopter EC225, that can carry more passengers farther offshore. Such helicopters are expensive, however, and even operators with hundreds of millions of dollars in turnover each year are coming to appreciate the flexibility that comes with leasing rather than buying.

“A lease can extend their balance sheet and allow them to bid on tenders they otherwise might not bid on,” Rosenthal said, noting that Milestone’s growing order book allows it to offer customers near-term delivery positions for aircraft that are in high demand. While the company has made some significant placements in the search-and-rescue and emergency medical services markets — and has identified other opportunities for diversification in the future — Rosenthal said he expects oil-and-gas to remain Milestone’s primary market as the company continues to grow.

And it does expect to grow. According to Rosenthal, the percentage of helicopters that are leased is still relatively small when compared to the percentage of leased assets in other capital-intensive industries, such as rail transportation. That suggests that the helicopter leasing market is far from tapped out. However, “we want to grow intelligently,” he said, emphasizing once again Milestone’s focus on sustainable, long-term partnerships. As for the recent entry into the market of other helicopter leasing companies, Rosenthal said that Milestone doesn’t see them as a major threat. “We view ourselves as being in a very different position [than other leasing companies],” he said, suggesting that, if anything, the new entrants have “brought more attention to the helicopter leasing space.”

Milestone’s growth has been so rapid that it is still feeling out the implications of its new position of influence (after all, the owner of the world’s largest fleet of S-92 helicopters will inevitably have some sway in the industry as a whole). While Milestone has been relatively quiet on industry issues thus far, Rosenthal said the company acknowledges that “growth has given us a seat at the table,” and is working behind the scenes to better understand operators’ needs with respect to technology and safety.

“We care very deeply about the helicopter industry,” he said, “and we want to participate in the dialogue about where the industry goes in the future.”