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Friday, September 27, 2013

AgustaWestland and Milestone Forge a New Finance Model

By Peter Donaldson

Announced at Helitech International 2013, the multi-aircraft, multi-year framework agreement between AgustaWestland and Milestone Aviation Group is a further indication of the industry’s acceptance of 100 percent lease finance as a business model and of the young finance company’s strengthening position of trust as a reseller for OEMs. Rotor & Wing caught up with Milestone’s managing director, Robert Thor Dranitzke, at the show, where he said that the agreement involves numbers of aircraft “in the dozens” and outlined the philosophy that has taken the company from start-up to $1.5 billion in lease financing and 100 plus helicopters placed with more than 20 operators in 23 countries in three years.

 

AW189 at the AgustaWestland stand at Helitech. Photo courtesy of Reed Exhibitions

 

Milestone’s focus is entirely on rotorcraft and its business model began as a conservative one. “We finance what we call working helicopters,” noted Dranitzke. “So long as there is a contract behind the machine, we are happy to come in and finance it.”

However, as the framework agreement with AgustaWestland indicates, the company is prepared to take anticipatory positions – options and firm orders – on in-demand helicopter types to enable operators to react more quickly to contract opportunities. “As we have become more comfortable and got a better understanding of the market and what our customers require, we have felt more comfortable taking bigger positions,” said Dranitzke, “but it is still much the smaller portion of our business.”

To protect the value of its assets, Milestone usually insists on power-by-the-hour maintenance contracts, but not always. “If you are selling availability as opposed to utilization,” he explained, “it might not make sense. But in the vast majority of cases we require tip-to-tail PBH because it gives us comfort.”

Related: Financing News

 

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