Milestone Aviation Group (Booth No. 4042), a global finance company focused on providing leasing of high-value helicopters and private jets, announced at Heli-Expo 2011 that it has closed $141 million in transactions for 27 new and used helicopters since the company was launched in last August. In addition, it currently holds letters of intent for an additional $64 million in aircraft, bringing the total of firm and expected business to $205 million. The company expects to close a transaction on its first business jet, a Gulfstream G450, this week, founder and chairman Richard Santulli told AIN here at Heli-Expo 2011 yesterday.
The company is providing leases to helicopter operators in Mexico, the U.S., India, Canada, Europe, and Brazil, including Aeroservicios Especializados of Mexico; CareFlite, Grand Prairie, Texas; Global Vectra, India; Helijet International, Vancouver, B.C.; Inaer of Europe; and Omni Taxi Aereo of Brazil. These operators use helicopters in a range of industries, such as offshore oil and gas, EMS and government contract transport.
After leaving his position with the NetJets fractional ownership company last August, a company he also founded, Santulli said he had no idea what he planned to do next. However, before starting NetJets, he had been head of the Goldman Sachs leasing group and founder of the highly successful RTS Helicopters, a leasing company, so he knows the aircraft leasing business well. “I have leasing in my DNA. I really have a passion for it,” Santulli told AIN. “I knew there weren’t any companies focusing specifically on leasing helicopters, so I saw an opportunity.”
Fellow founders were CEO William Kelly and managing director Robert Dranitzke, and both former senior executives with NetJets Europe. In fact, all seven members of the Milestone management team are former NetJets people. The company is headquartered in Ireland and has a U.S. office in Columbus, Ohio. Santulli works from his home in New Jersey, but travels a lot. He owns a share of a NetJets Falcon 2000, which he bought for his personal use while he was with the company.
Milestone provides dry leases in which it carries 100 percent of the financing and residual value risk on the new and pre-owned aircraft it buys. “We want to avoid people having to go through credit committee hell,” Kelly said, referring to what can be a torturous process for getting leases approved. “There is just a small group of people involved and we make quick decisions.”
The new firm’s main area of focus is what Kelly called “working-class helicopters,” meaning aircraft involved in activities such as offshore support and logging. He said that helicopters involved in fields like these hold their value well. Milestone expects 70 percent of its business to be outside the U.S., with a strong focus on Africa and Asia.
For helicopter operators, Milestone’s pitch is that leasing equipment reduces risk and conserves working capital, as well as offers tax advantages and improves cash flow. “It also eliminates end-of-useful-life hassles, and these days even finding financing to cover 20 percent of the purchase prices can be tough so leases can ease strapped balance sheets,” he explained.
While raising launch capital for Milestone, Santulli visited the First Reserve private equity group, which owns CHC Helicopters. Back in 1993, Santulli had bought some Eurocopter Super Pumas for CHC at $5.5 million apiece. The aircraft are still in service and First Reserve now values them at between $6.5 and $7 million.
“There are very few dry lessors like us in the helicopter sector, and the manufacturers don’t provide much financing,” Kelly said. “We’re not into the VIP market because that fluctuates a lot, but the working-class helicopters are in demand all the time and all around the world.”
Milestone Aviation is backed by $500 million in capital from the Jordan Company and Nautic Partners private equity groups. The company is expected to raise further equity next year and in the next five or six years wants to lift the value of its portfolio to between $4 billion and $5 billion.
Milestone also intends to be active in leasing fixed-wing aircraft. These could account for around 20 percent of its portfolio and will mainly consist of private jets aged between one and five years in the class of the Bombardier Challenger 300 and larger.