The helicopter leasing business barely existed five years ago, but significant investment has helped sell out production for some machines until 2016. Operators are eager to secure more capacity and lower capital costs as they expand in other areas such as providing search and rescue services for governments.
Milestone was founded in 2010 by Richard Santulli, an aviation industry veteran who also started business-jet operator NetJets Inc. With backing from the Jordan Co. and others, it amassed a $2.8 billion fleet of helicopters and placed orders valued at around $3 billion. Mr. Santulli will become chairman of the helicopter leasing business within GE Capital Aviation Services, or Gecas, and become a GE corporate officer.
“There will be more interest in the sector, in what we are doing, simply because GE stepped in,” said Michael Platt, chief executive of Lease Corporation International Aviation Ltd., another Ireland-based aviation company that leases aircraft and helicopters. KKR Financial Holdings LLC this year also invested $100 million in LCI’s helicopter arm that has commitments in place to grow its fleet to 90 helicopters.
Other entrants to the helicopter leasing business include Waypoint Holdings Ltd., backed by funds linked to Michael Dell and Soros Fund Management LLC, and Lobo Leasing Ltd., which is backed by Blackstone Group BX -0.95% LP. Babcock International Group BAB.LN +0.87% PLC in May bought Avincis SA, one of the world’s largest commercial helicopter operators, for $1.5 billion.
The lessors’ growth has spurred demand for the big four helicopter makers— Airbus Group EADSY -0.18% NV, the Sikorsky Aircraft arm of United Technologies Corp.UTX -0.63% , Finmeccanica FNC.MI -0.58% SpA’s AgustaWestland, and Textron Inc.TXT -2.74% ’s Bell Helicopters as they introduce new models to satisfy demand for more modern and safer commercial rotorcraft that often have to fly long distances over water to ferry oil workers to rigs.
The proposed Milestone deal, which is expected to close next year, comes as industry experts worry that growth in the airliner leasing business may stall. Cheap interest rates have funneled billions of dollars in new capital from private-equity funds and banks in China and Japan, depressing rental rates on some models as leasing firms compete for business.
Another attraction of the business model used by Bristow and other operators is that two-third of their revenues come from fixed monthly fees paid by big oil exploration and service companies such as Total SA FP.FR -0.76% . The companies are paid whether they fly or not, and pass on fuel costs to their clients, making them more stable than commercial passenger airlines.