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October 28, 2014

Why GE Is Taking An Interest in Helicopters

By Jim Probasco for Benzinga

“In general, the helicopter market is underdeveloped with the exception of a few locales and very specific industries,” Bernie Burns, co-founder and President of B2 Aviation told Benzinga Thursday.

Burns was reacting to news that General Electric Company's (NYSE: GE) aircraft leasing unit said it planned to buy helicopter leasing company Milestone Aviation Group for $1.78 billion.

Traditional Customers

According to Burns, the oil and gas industry as well as the surveying industry have used helicopters for decades.

Because of that, Burns said, the growth potential for GE's acquisition would closely correlate with the overall growth of those industries themselves.

Replacing Aging Fleets

“I can, however, foresee a large percentage of revenue coming from the replacement of aging fleets that are currently providing lift in those industries,” Burns said.

He added, “This will always be a solid business.”

Passenger Transport Potential

“The real upside, in my opinion,” Burns said, “is on the passenger transport end.”

Thanks to a density of ultra-high net worth individuals needing to get to destinations within 300 miles, Burns explained, the New York metro area has a robust and well-developed helicopter passenger transport market.

According to Burns, “It is a simple equation that can be applied to many other markets worldwide.”
Chicago

Burns noted that other parts of the country were just now becoming familiar with the economic boost helicopters could bring.

“For example,” he said, “Chicago has never been on the map in terms of helicopter service due to politics and lack of infrastructure.”

According to Burns all that would change in the very near future.

B2 Aviation To Enter The Game

“We [B2 Aviation] are currently working with a partner who is building a heliport in Chicago. We will align to offer VIP transport to our clients through on demand charter.”

B2’s partner, Burns said, currently operates an aircraft in Milestone Aviation's inventory. The company, which he did not name, was planning to expand with other EC135 aircraft, according to Burns.
Related: What's The Big Secret About Gulfstream Aerospace's New P42 Jet?

Other Players

In addition to GE, whose engines power a number of helicopters, other companies that stand to gain if and when helicopter use becomes more widespread include leasing companies like Houston-based Bristow Group Inc, Waypoint Holdings Ltd. and Lobo Leasing Ltd., according to the Wall Street Journal.

Among those involved in the manufacture of helicopters are Airbus Group N V, the Sikorsky segment of United Technologies Corporation and Textron Inc., maker of Bell helicopters.

At the time of this writing, Jim Probasco had no position in any mentioned securities.  
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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