Helicopter lessor Milestone Aviation Group (Booth 4916) has purchased three Leonardo AW139s and is leasing them back to French helicopter services provider Héli-Union, boosting Milestone’s AW139 fleet to more than 80. The transaction includes four additional leases: two Airbus H225s; an additional AW139; and a lease extension for another AW139.
Milestone CEO Pat Sheedy pronounced his company “delighted to expand our relationship” with the French operator, with which it’s been working for more than two years. Héli-Union’s AW139s will be used to support drilling programs, exploration, and production campaigns for oil and gas customers in countries including Angola, Gabon, and Myanmar, while the H225s will support drilling operations in Namibia.
Low oil and gas prices and oversupply of aircraft have depressed the rotorcraft market since the middle of the last decade, leading to recent bankruptcies of high-profile helicopter lessors. Sheedy credited Dublin-based Milestone’s scale; the backing of parent company, GE Capital Aviation Services; and ability to analyze massive amounts of data for getting through the downturn.
“We are seeing a positive demand outlook,” Sheedy told AIN. “There are still structural issues within the space, which will put a cap on how quickly we can recover and how quickly capital will come back into the space.”
The primary concern, he said, is the standard lease agreement. “When we purchase a new aircraft, we make a 25- to 30-year bet on that aircraft. We lease that to our operators who make a six- to eight-year bet on the lease,” but “an end-user can cancel the contract within 60 days,” Sheedy said. “That risk-reward equation just does not add up. And I think there was going to be a need to change that if capital is going to continue to come into this space.”
If changes aren’t made, he said, “I think over the next number of years, if end-users want to start bringing in new products, and new technology, the capital won't be there unless there is a change in how they are contracting with their counterparties.”