GE Weighs Helicopter Leasing as Plane Competition Rises

General Electric Co.’s aircraft leasing division, the world’s largest, agreed to buy Milestone Aviation Group for $1.78 billion to add helicopters to its portfolio of rental assets.

The deal will add 168 helicopters valued at $2.8 billion, GE Capital Aviation Services said today in a statement. Counting orders and options, the lessor has plans for $3 billion in new craft. Milestone Aviation is based in Dublin and was founded in 2010 by Richard Santulli, who built the NetJets luxury-aircraft leasing unit owned by Warren Buffett’s Berkshire Hathaway Inc.

Chief Executive Officer Jeffrey Immelt is reshaping GE to increase its concentration on industrial businesses while scaling back from retail financial services. The Fairfield, Connecticut-based company could benefit from a push into helicopter leasing because its engines are used by makers of the aircraft, Norm Liu, CEO of Gecas, said in February.

“GE is steadily narrowing the focus of GE Capital,” Nicholas Heymann, an analyst at William Blair & Co., said in a phone interview. “Gecas, energy financial services, commercial lending and leasing are the cores. And consumer and real estate are being wound down.”

Milestone’s clients include operators in offshore oil and gas, search-and-rescue, emergency medical services and mining, according to the statement.

GE slipped 1.3 percent to close at $23.95 in New York. The shares have declined 15 percent this year.

Berkshire Deal

Santulli pioneered the fractional-ownership of aircraft, in which individuals and companies buy shares of a private plane’s flying time in lieu of purchasing the jet. He sold Executive Jet to Berkshire in 1998 for $725 million. It was later renamed NetJets.

Buffett frequently praised the company’s service and its leader. In a 2008 letter to Berkshire shareholders, he said Santulli was among the most dogged managers he had met.

“If you were to pick someone to join you in a foxhole, you couldn’t do better than Rich,” Buffett wrote. “No matter what the obstacles, he just doesn’t stop.”

When NetJets began to suffer losses during the financial crisis, Buffett replaced him as CEO. Santulli formed Milestone with other former NetJets executives in 2010.

GE, the world’s largest diesel locomotive and jet engine maker, plans to complete its spinoff of Synchrony Financial, the North American credit-card unit, next year. Immelt already reached a deal to sell the company’s appliances unit and has exited some real estate holdings and a stake in NBCUniversal to focus on higher-margin industrial operations.

Sherin’s View

“The Milestone acquisition is a great fit for GE –- it combines Gecas’ global reach and 45-plus years in leasing commercial jets with a fast-growing helicopter financing platform,” GE Capital CEO Keith Sherin said in the statement.

Santulli will be chairman of the helicopter business, which will still operate as Milestone Aviation Group, and become an officer of GE, according to the statement. The deal is expected to be completed in 2015, GE said.

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