Milestone’s fleet includes Airbus Helicopters EC225s (example shown here), AgustaWestland AW139s and Sikorsky S-92s. Airbus Helicopters Photo
The $1.775-billion acquisition of Milestone Aviation Group by GE Capital Aviation Services (GECAS) represents a win-win for both companies, according to its CEOs.
Richard Santulli, chairman and CEO of Milestone Aviation Group, summed up the potential from the pairing in numbers, stating that Milestone has a staff of close to 40 people “compared to GECAS, which has more than 500 people, including at international locales where Milestone is looking to expand.”
At Milestone, he continued, there are five salesmen. “At GECAS, they have eight times that in offices all over the world, so it gives us a tremendous global reach.” Santulli also pointed to the capital backing of a large organization like GECAS, a unit of GE Capital, which is the leasing and financing arm of General Electric, the U.S. industrial giant.
“The chemistry, the whole logic just made sense,” said GECAS president and CEO Norman C.T. Liu. He explained that the company is always on the lookout for “new logical market extensions, and we saw helicopters as attractive, both because the aircraft has good residual value characteristics and because it serves many different end markets in multiple industries — from oil-and-gas, to medical and mining, to various government search-and-rescue contracts.”
Liu also pointed to the worldwide presence of GECAS partnering with a “market-leading team” like Milestone. “While they currently have aircraft in different countries,” he said, “GECAS has a much larger global platform that they can fit into. We also offer lending products that would be in addition to Milestone’s leasing.”
Milestone’s fleet under contract stands at around 170 helicopters worth more than $2.8 billion, as well as a forward order and option book totaling more than $3 billion. The company offers services with a variety of helicopters, and will incorporate additional variants into its fleet as they come online, including the AgustaWestland AW139, AW169 and AW189 family, Airbus Helicopters EC225 and EC175, and Sikorsky S-92 and S-76D.
Milestone has helped Bristow with financing for the U.K. search-and-rescue (SAR) contract, which involves Sikorsky S-92s and AgustaWestland AW189s. Sikorsky Aircraft Photo
Santulli told Vertical that Milestone wasn’t actively seeking an acquisition, pointing to plans for an initial public offering (IPO) filed in early September with the U.S. Securities and Exchange Commission (SEC) that are now off the table because of the GECAS deal. An IPO is when a company first issues stock to the public, raising money by issuing either debt or equity.
“We weren’t looking to sell,” Santulli explained. “We were owned by private equity, which will always look for a liquidity event or to mark their book. We had filed for an IPO under the JOBS Act, and if we felt it was an appropriate time to go public, we probably would have done it. It was an avenue open to us.”
GECAS contacted Milestone in early 2014 and as both sides examined potential crossover areas, the acquisition seemed a natural fit.
Liu said that for operators, leasing represents flexibility and “a way to diversify your funding and your capital base.” Santulli added that more competition on the financing side is “always good for people getting financing, so for the operators, it’s healthy,” resulting in lower lease rates. Five years ago, he continued, it was very difficult to secure debt financing outside of the United States, so the opening up of lending “has been very helpful for not just the big guys, but all the helicopter operators around the world.”
Santulli said that Milestone’s existing staff will remain in place. The transaction is scheduled to close sometime in early 2015.
