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Cobham Aerospace For photocopy or reuse requests: 1-800-772-3350 or [email protected] Communications Front Panel Programmable (FPP) of all AM/FM/ 6400 Wilkinson Drive P-25 channel information. No computer required! Prescott, AZ 86301 USA The new and powerful SCAN function monitors 1-928-708-1550 any frequency, any mode. Access Intelligence, LLC [email protected] 4 Choke Cherry Rd., 2nd Floor Rockville, Md. 20850 - USA Communication Without Limits. www.cobham.com Phone: 1-301-354-2000, Fax: 1-301-354-1809 E-mail: [email protected] OCTOBER 2012 | ROTOR & WING MAGAZINE 3 Editor’s Notebook Finding the Funding By Andrew Parker [email protected] he helicopter equivalent R&W: What is Milestone’s outlook? true now—most operators would of “if you build it, they will Santulli: We’ll just keep growing. prefer to own the asset. Any time Tcome” has got to be “if you When we first started doing debt there’s a new tender out there—not provide the funding, they will deals, we had a bunch of letters of just the renewal of a contract—that acquire.” None of the “need” for heli- intent. With the whole European means an operator has to acquire a copters that fueled year-over-year crisis, it made it tough to get a debt new piece of equipment. And a lot growth before the global economic deal done. But that’s changed now, of operators don’t have the balance slowdown in 2008 has gone away— and we’re very comfortable with our sheet, especially with the heavies, to simply the money to acquire them. position in the market. Today we actually debt finance, or put up 20 to Dublin, Ireland-based Milestone have a very large standing. 25 percent to do the debt financing. Aviation Group is offering one pos- R&W: Why the S-92? So we’ve convinced a lot of the oper- sible solution for operators. Started Santulli: We bought the EC225 also. ators by saying, “Listen, we’ll provide in August 2010 with $500 million in When we were looking at the mar- 100 percent of the financing, it’s true equity seed capital raised through a ketplace, we realized that more and you’re not going to own the asset but group of investors led by co-founder more is being done farther offshore. we’re going to give you a fixed rent and Chairman Richard Santulli, the You look at oil production around and if you can make money on the company has expanded rapidly with the world and it’s father offshore, contract, then bid it.” If you can’t, the recent finalization of a fleet pur- so you need helicopters with more you shouldn’t bid a contract anyway, chase for 19 additional Sikorsky S-92s range that can carry more people, whether you own it or not. and the closing of a series of debt like the S-92 and EC225. We look at Then also Bristow and CHC, the facilities totaling $400 million, includ- the S-92 as obviously a huge factor fact that we’ve announced deals with ing a $265-million debt facility from in the oil and gas market, but we big operators, it really showed a lot of Deutsche Bank. I had the opportunity also look at it as a very successful the other operators that, “Wait a min- to interview Santulli—who founded SAR machine. So it’s the combi- ute, if these guys are leasing, then why fixed-wing fractional ownership pro- nation of search and rescue, and shouldn’t we?” vider NetJets in the mid-1980s (and primarily oil and gas, that we love R&W: What role does the global served as Chairman and CEO until that helicopter. economy play in an operator’s deci- August 2009) after getting his start in If you look at the supply of heav- sion to lease vs. buy? the helicopter leasing business—about ies, and the supply rates, and you Santulli: Well, first off, the bank- the evolution of rotorcraft financing. look at where they’re going to be ing market has been dramatically against the demand—especially if reduced, there are not as many banks Rotor & Wing: What will the debt you assume the retirement of heli- willing to provide debt financing. facilities allow Milestone to do? copters that are 25 years or older— Secondly, I just think that it’s the fact KvÔu"cdqwv"{qwt"dwukpguu Santulli: The good news is it proves the disparity between supply and that the operators now realize that that we can get debt. I laugh, but demand is just very, very large. the equipment costs so much more the market was looking at us say- R&W: What other helicopters types than it did 10 years ago because ing, “you’re a very young company,” is Milestone interested in? they’re drilling so far offshore. And which obviously we were. A lot of the Santulli: We’re talking to everybody. in order to compete they need access banks looked at us like a commercial Eurocopter with the EC175 and to the capital, from any source they Ejcnngpikpi"vkogu"tgswktg"uwrgtkqt"cpuygtu0"CiwuvcYguvncpf"tqvqtetchv" airplane lessor, and we kept telling AgustaWestland about the AW189. can get it. All the operators we do tgfgÞpg"oqdknkv{"d{"ugvvkpi"pgy"ngxgnu"kp"nwzwt{."eqohqtv."rgthqtocpeg" them that if you’re looking at us that We’re waiting for the [Sikorsky S-76] business with, they do debt financ- way, you’re going down the wrong D model to be certified as well. ing as well, but the question is, what’s cpf"uchgv{0 road. The reality was not too many R&W: What’s the response been the appropriate balance? There is an Oczkokug"{qwt"vkog"cpf"dg"yjgtg"kv"eqwpvu0 financial analysts are actually that from operators? appropriate balance—they should NGCFKPI"VJG"HWVWTG knowledgeable about helicopters. Santulli: It’s been terrific. You know, own some helicopters, and if they The fact that we were a young start- I did this back in 1980, and really the want to grow their business, unless up, and add to that there weren’t a lot interesting thing is, most of the they have big balance sheets, they’re of helicopter-specific financiers, it operators don’t want to lease. That going to have to lease. There’s no ciwuvcyguvncpf0eqo made it very difficult to do. was true back in the ‘80s and it’s question about it. 4 ROTOR & WING MAGAZINE | OCTOBER 2012 WWW.ROTORANDWING.COM Tqvqt(Ykpi"CY38;Xkr"""3 2912:134"""38<4; KvÔu"cdqwv"{qwt"dwukpguu Ejcnngpikpi"vkogu"tgswktg"uwrgtkqt"cpuygtu0"CiwuvcYguvncpf"tqvqtetchv" tgfgÞpg"oqdknkv{"d{"ugvvkpi"pgy"ngxgnu"kp"nwzwt{."eqohqtv."rgthqtocpeg" cpf"uchgv{0 Oczkokug"{qwt"vkog"cpf"dg"yjgtg"kv"eqwpvu0 NGCFKPI"VJG"HWVWTG ciwuvcyguvncpf0eqo Tqvqt(Ykpi"CY38;Xkr"""3 2912:134"""38<4; THIS MONTH FROM Personal|Corporate Commercial Military Public Service DEPARTMENTS 10 10 Rotorcraft Report 16 People 16 Coming Events 22 Hot Products 54 Training News 57 Classified Ads 58 Ad Index (Above) Kamov Ka-27, image courtesy of Russian Helicopters.