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News Release

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Bristow Group Reports Fiscal 2009 Second Quarter Financial Results

HOUSTON, Nov. 6 /PRNewswire-FirstCall/ -- Bristow Group Inc. (NYSE: BRS) today reported financial results for the three months ended September 30, 2008, which is the Company's fiscal 2009 second quarter.

Highlights include:

For the September 2008 quarter:

  • Revenue increased 12% versus the September 2007 quarter to $291.7 million. Revenue gains occurred across all of our business units, but most significantly in our U.S. Gulf of Mexico, Europe and Southeast Asia business units. Revenue gains were driven in large part by the addition of new aircraft and improved pricing.


  • Operating income decreased 19% to $40.4 million from $49.7 million in the September 2007 quarter primarily as a result of the items discussed below.


  • Income from continuing operations decreased 16% to $28.0 million from $33.3 million in the September 2007 quarter primarily as a result of the items discussed below, but also as a result of decreased earnings from unconsolidated affiliates and an increase in net interest expense which resulted from debt offerings in November 2007 and June 2008. These items were partially offset by gains on disposal of assets and an increase in other income (expense), net which primarily related to foreign currency exchange gains driven by a strengthening U.S. dollar.


  • Diluted earnings per share decreased to $0.78 from $1.12 in the September 2007 quarter primarily as a result of the decrease in income from continuing operations and the June 2008 equity offering, which reduced diluted earnings per share in the September 2008 quarter by $0.13.


  • The largest factors affecting operating results for the September 2008 quarter were:


    • Hurricanes in the U.S. Gulf of Mexico during the September 2008 quarter, which resulted in a decrease in flight activity and an increase in costs, reducing operating income by $2.1 million, income from continuing operations by $1.5 million and diluted earnings per share by $0.04.


    • Revenue recognized in the September 2008 quarter related to contractual rate escalations and retroactive rate adjustments applicable to services performed in prior quarters in Europe, which increased operating income by $4.5 million, income from continuing operations by $3.2 million and diluted earnings per share by $0.09.


    • Decreases in operating results in Australia -- part of our Southeast Asia business unit -- which reduced operating income by $5.9 million, income from continuing operations by $4.2 million and diluted earnings per share by $0.12. Operating results in Australia were lower than expected as a result of delays in planned contracts, increased compensation costs, unscheduled line maintenance and re-positioning of aircraft.


    • As in the June 2008 quarter and as was anticipated for the September 2008 quarter, Eastern Hemisphere Centralized Operations experienced higher maintenance expense (primarily due to foreign currency movements related to the portion of our third party maintenance contracts denominated in euros and an increase in heavy maintenance activities) which reduced operating income by $2.7 million, income from continuing operations by $1.9 million and diluted earnings per share by $0.05.

  • Earnings for the September 2007 quarter benefited from the reversal of $1 million of accrued costs associated with the settlement of the U.S. Securities and Exchange Commission ("SEC") investigation, items in Nigeria, including $2.1 million of retroactive rate increases related to services rendered in a prior quarter and the reversal of $5.4 million in sales tax contingency, and $2.4 million of contractual rate escalations on services performed in prior quarters under contracts with our customers in Europe, which collectively increased operating income by $10.9 million, income from continuing operations by $7.3 million and diluted earnings per share by $0.24 in the September 2007 quarter.

For the six months ended September 30, 2008:

  • Revenue increased 17% versus the six months ended September 30, 2007 to $575.8 million. Revenue gains occurred across all of our business units, but most significantly in our U.S. Gulf of Mexico, Europe, West Africa and Southeast Asia business units. Revenue gains were driven in large part by the addition of new aircraft and improved pricing.


  • Operating income decreased 8% to $72.0 million from $78.5 million for the six months ended September 30, 2007 primarily as a result of the items discussed below.


  • Income from continuing operations decreased 8% to $50.7 million from $55.2 million for the six months ended September 30, 2007 as a result of decreased operating income and an increase in net interest expense which resulted from debt offerings in June and November 2007 and June 2008. These items were partially offset by gains on disposal of assets for the six months ended September 30, 2008 - compared to losses in the same period a year ago -- along with an increase in other income (expense), net, which primarily related to foreign currency exchange gains driven by a strengthening U.S. dollar, and an increase in earnings from unconsolidated affiliates.


  • Diluted earnings per share decreased to $1.50 from $1.87 for the six months ended September 30, 2007 primarily as a result of the decrease in income from continuing operations and the June 2008 equity offering, which reduced diluted earnings per share for the six months ended September 30, 2008 by $0.15.


  • The largest factors affecting operating results for the six months ended September 30, 2008 were:


    • Hurricanes in the U.S. Gulf of Mexico during the September 2008 quarter, which resulted in a decrease in flight activity and an increase in costs, reducing operating income by $2.1 million, income from continuing operations by $1.5 million and diluted earnings per share by $0.05.


    • Revenue recognized during the six months ended September 30, 2008 related to contractual rate escalations and retroactive rate adjustments applicable to services performed in prior periods in Europe of $2.9 million and Russia -- part of our Other International business unit -- of $1.2 million, which increased operating income by $4.1 million, income from continuing operations by $2.9 million and diluted earnings per share by $0.09.


    • Decreases in operating results in Australia, part of our Southeast Asia business unit -- which reduced operating income by $8.5 million -- income from continuing operations by $6.1 million and diluted earnings per share by $0.18. Operating results in Australia were lower than expected as a result of delays in planned contracts, increased compensation costs, unscheduled line maintenance and re-positioning of aircraft.


    • Higher maintenance expense in Eastern Hemisphere Centralized Operations (primarily due to foreign currency movements related to the portion of our third party maintenance contracts denominated in euros and an increase in heavy maintenance activities) which reduced operating income by $9.6 million, income from continuing operations by $6.9 million and diluted earnings per share by $0.20.


    • The restructuring of our ownership interests in affiliates in Mexico -- part of our Latin America business unit -- which resulted in several changes effective April 1, 2008, which increased operating income by $0.8 million, income from continuing operations by $3.7 million and diluted earnings per share by $0.11.

  • Financial results for the six months ended September 30, 2007 included a reversal of accrued costs of $1 million associated with the settlement of the SEC investigation, the reversal of $5.4 million in sales tax contingency in Nigeria and $1.9 million of contractual rate escalations on services performed in prior periods under contracts with our customers in Europe, which collectively increased operating income by $8.3 million, income from continuing operations by $5.5 million and diluted earnings per share by $0.18.

Sale of Certain Single-Engine Aircraft

As previously announced, on October 30, 2008, we closed the sale of 53 single-engine aircraft and related assets operating in the U.S. Gulf of Mexico for approximately $65 million, 20% of which was received at closing, with the remainder to be paid to us from escrow as the titles to the aircraft are processed by the U.S. Federal Aviation Administration. The sale is expected to result in a pre-tax gain of approximately $40 million, or $0.72 per diluted share after tax, in the December 2008 quarter.

Acquisition of Additional Interest in Norsk Helikopter

Also as previously announced, on October 31, 2008, we acquired the remaining interest in Norsk Helikopter AS, our affiliate in Norway of which we previously owned 49%. Our partner in Norsk received approximately $5.1 in cash and all of Lufttransport AS, an air ambulance subsidiary of Norsk. We now own 100% of Norsk and will consolidate this entity effective October 31, 2008, including approximately $22 million in debt. Norsk, excluding Lufttransport, generated $133.9 million of revenue, $4.8 million of operating income and $3.1 million of net income for the year ended December 31, 2007. Our Europe operations for our fiscal year ended March 31, 2008 generated $13.5 million in revenue from leasing aircraft to Norsk, which will be eliminated in consolidation in future periods.

Capital and Liquidity

  • At September 30, 2008 we continued to have a strong balance sheet, which allows us the financial flexibility to take advantage of growth opportunities:
    • $1.2 billion in stockholders' investment and $730.9 million of indebtedness
    • $399.1 million in cash and $100 million undrawn revolving credit facility
    • Aircraft purchase commitments totaled $379.9 million for 42 aircraft, with options totaling $806.3 million for 47 aircraft
  • During the six months ended September 30, 2008, we generated strong cash flows, including:
  • $55.5 million of cash from operating activities
  • $62.2 million of EBITDA
  • $336.6 million in net proceeds from the sale of convertible senior notes and common stock
  • We used $278.5 million for capital expenditures -- primarily for aircraft

CEO Remarks

"We are pleased with our continued growth, which was driven by the addition of new aircraft and improved pricing. Excluding the previously disclosed impact of the worse than usual hurricane season in the U.S. Gulf of Mexico and the increased Eastern Hemisphere maintenance costs, our consolidated operating results were in line with our expectations with better than expected results in Europe being offset by lower than expected results in Australia. Some of these items are not expected to recur (e.g. extent of hurricanes and portion of costs in Australia), and we have taken actions to address and mitigate the portion of the costs expected to continue," said William E. Chiles, President and Chief Executive Officer of Bristow Group Inc.

"Over the past three years we have raised approximately $1.1 billion of capital in a mix of debt and equity through public and private financings. We expect that our September 30, 2008 cash balance of $399 million will be sufficient to satisfy our remaining aircraft purchase commitments of $380 million, 61% of which are payable after March 31, 2009.

"The cash we expect to generate from future operations, along with the sales of aircraft and the $100 million borrowing capacity under our revolving credit facility, should provide us with additional uncommitted liquidity. We remain disciplined in our capital program. In addition, we are taking proactive measures to protect the Company's liquidity during this period of disruption in the financial markets, including seeking secure investments for our cash and monitoring the ability of our business counterparties to fulfill their obligations to us.

"We remain in close contact with our customers to understand their plans for future operating expenditures, which are the primary source of our revenue, as well as their capital expenditures, which fund a smaller portion of our income. At this time, we have not experienced a decline in customer demand for our services. Most of our pending business is production based and therefore less likely to be curtailed as a result of lower oil and gas prices. We expect the aircraft on order and the available uncommitted liquidity to allow us deliver on our growth plans."

CONFERENCE CALL

Management will conduct a conference call starting at 10:00 a.m. EST (9:00 a.m. CST) on Thursday, November 6, 2008, to review financial results for the fiscal 2009 second quarter ended September 30, 2008. The conference call can be accessed as follows:

Via Webcast:

  • Visit Bristow Group's investor relations Web page at http://www.bristowgroup.com
  • Live: Click on the link for "Q2 2009 Bristow Group Inc. Earnings Conference Call"
  • Replay: A replay via webcast will be available approximately one hour after the call's completion

Via Telephone within the U.S.:

  • Live: Dial toll free (800) 218-0204
  • Replay: A telephone replay will be available through Thursday, November 20, by dialing toll free (800) 405-2236, passcode: 11121266#

Via Telephone outside the U.S.:

  • Live: Dial (303) 262-2163
  • Replay: A telephone replay will be available through Thursday, November 20, by dialing (303) 590-3000, passcode: 11121266#

ABOUT BRISTOW GROUP INC.

Bristow Group Inc. is the leading provider of helicopter services to the worldwide offshore energy industry based on the number of aircraft operated. Through its subsidiaries, affiliates and joint ventures, the Company has major transportation operations in most of the major offshore oil and gas producing regions of the world, including in the North Sea, the U.S. Gulf of Mexico, Nigeria and Australia. For more information, visit the Company's website at http://www.bristowgroup.com.

FORWARD-LOOKING STATEMENTS DISCLOSURE

Statements contained in this news release that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. These forward-looking statements include statements regarding customer demand, future operations, future liquidity, ability to satisfy commitments, supply of helicopters and growth plans and opportunities. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2008 and the annual report on Form 10-K for the fiscal year ended March 31, 2008. Bristow Group Inc. disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events or otherwise.

     Linda McNeill, Investor Relations
     (713) 267-7622

                          (financial tables follow)



                     BRISTOW GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
                   (In thousands, except per share amounts)
                                 (Unaudited)

                                      Three Months Ended   Six Months Ended
                                         September 30,       September 30,
                                     ------------------- -------------------
                                        2007      2008      2007      2008
    Gross revenue:                   --------- --------- --------- ---------
      Operating revenue from
       non-affiliates                 $219,858  $248,526  $419,767  $489,660
      Operating revenue from
       affiliates                       13,858    18,430    24,955    35,700
      Reimbursable revenue from
       non-affiliates                   23,594    23,208    42,636    47,579
      Reimbursable revenue from
       affiliates                        2,498     1,524     3,601     2,872
                                     --------- --------- --------- ---------
                                       259,808   291,688   490,959   575,811
                                     --------- --------- --------- ---------
    Operating expense:
      Direct cost                      152,624   188,393   305,712   375,366
      Reimbursable expense              24,098    24,681    44,243    50,748
      Depreciation and amortization     12,351    15,485    23,682    30,440
      General and administrative        20,260    25,984    38,645    53,190
      Loss (gain) on disposal of
       assets                              757    (3,302)      173    (5,967)
                                     --------- --------- --------- ---------
                                       210,090   251,241   412,455   503,777
                                     --------- --------- --------- ---------
      Operating income                  49,718    40,447    78,504    72,034


    Earnings from unconsolidated
     affiliates, net of losses           4,118     1,971     7,508     9,694
    Interest income                      3,960     3,205     6,084     4,652
    Interest expense                    (6,523)   (8,404)   (9,451)  (16,897)
    Other income (expense), net            360     2,070       786     3,762
                                     --------- --------- --------- ---------
      Income from continuing
       operations before provision
       for income taxes and minority
       interest                         51,633    39,289    83,431    73,245
    Provision for income taxes         (18,294)  (10,310)  (27,733)  (20,914)
    Minority interest                       (4)     (952)     (453)   (1,655)
                                     --------- --------- --------- ---------
      Income from continuing
       operations                       33,335    28,027    55,245    50,676
    Discontinued operations:
      Income (loss) from
       discontinued operations
       before provision for income
       taxes                               962      (379)    2,119      (379)
      (Provision) benefit for income
       taxes on discontinued
       operations                         (347)      133      (742)      133
                                     --------- --------- --------- ---------
      Income (loss) from
       discontinued operations             615      (246)    1,377      (246)
                                     --------- --------- --------- ---------
      Net income                        33,950    27,781    56,622    50,430
      Preferred stock dividends         (3,163)   (3,163)   (6,325)   (6,325)
                                     --------- --------- --------- ---------
      Net income available to common
       stockholders                    $30,787   $24,618   $50,297   $44,105
                                     ========= ========= ========= =========

    Basic earnings per common share:
      Earnings from continuing
       operations                         1.27     $0.85     $2.07     $1.65
      Earnings (loss) from
       discontinued operations            0.03     (0.01)     0.06     (0.01)
                                     --------- --------- --------- ---------
      Net earnings                       $1.30     $0.84     $2.13     $1.64
                                     ========= ========= ========= =========

    Diluted earnings per common share:
      Earnings from continuing
       operations                        $1.10     $0.79     $1.83     $1.51
      Earnings (loss) from
       discontinued operations            0.02     (0.01)     0.04     (0.01)
                                     --------- --------- --------- ---------
      Net earnings                       $1.12     $0.78     $1.87     $1.50
                                     ========= ========= ========= =========

    Weighted average number of common
     shares outstanding:
        Basic                           23,731    29,085    23,635    26,941
        Diluted                         30,408    35,636    30,263    33,487



                     BRISTOW GROUP INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                                (In thousands)

                                                     March 31,  September 30,
                                                       2008         2008
                                                   ------------ ------------
                                                                 (Unaudited)
                                 ASSETS
    Current assets:
      Cash and cash equivalents                       $290,050     $399,055
      Accounts receivable from non-affiliates          204,599      192,933
      Accounts receivable from affiliates               11,316       25,462
      Inventories                                      176,239      166,958
      Prepaid expenses and other                        24,177       20,654
      Assets held for sale - U.S. Gulf of Mexico            --       21,369
                                                  ------------ ------------
          Total current assets                         706,381      826,431
    Investment in unconsolidated affiliates             52,467       33,951
    Property and equipment -- at cost:
      Land and buildings                                60,056       57,341
      Aircraft and equipment                         1,428,996    1,649,743
                                                  ------------ ------------
                                                     1,489,052    1,707,084

      Less -- Accumulated depreciation and
       amortization                                   (316,514)    (302,538)
                                                  ------------ ------------
                                                     1,172,538    1,404,546
    Goodwill                                            15,676       16,571
    Other assets                                        30,293       25,605
                                                  ------------ ------------
                                                    $1,977,355   $2,307,104
                                                  ============ ============

         LIABILITIES AND STOCKHOLDERS' INVESTMENT
    Current liabilities:
      Accounts payable                                 $49,650      $45,090
      Accrued wages, benefits and related taxes         35,523       32,290
      Income taxes payable                               5,862          229
      Other accrued taxes                                1,589        3,848
      Deferred revenues                                 15,415       14,096
      Accrued maintenance and repairs                   13,250       13,579
      Accrued interest                                   5,656        6,414
      Other accrued liabilities                         22,235       24,110
      Deferred taxes                                     9,238       11,553
      Short-term borrowings and current maturities
       of long-term debt                                 6,541        5,378
                                                  ------------ ------------
          Total current liabilities                    164,959      156,587
    Long-term debt, less current maturities            599,677      725,534
    Accrued pension liabilities                        134,156      117,566
    Other liabilities and deferred credits              14,805       15,760
    Deferred taxes                                      91,747       98,802
    Minority interest                                    4,570       11,064
    Commitments and contingencies
    Stockholders' investment:
      5.50% mandatory convertible preferred stock      222,554      222,554
      Common stock                                         239          291
      Additional paid-in capital                       186,390      416,025
      Retained earnings                                606,931      652,291
      Accumulated other comprehensive loss             (48,673)    (109,370)
                                                  ------------ ------------
                                                       967,441    1,181,791
                                                  ------------ ------------
                                                    $1,977,355   $2,307,104
                                                  ============ ============



                     BRISTOW GROUP INC. AND SUBSIDIARIES
                           SELECTED OPERATING DATA
             (In thousands, except flight hours and percentages)
                                 (Unaudited)

                                       Three Months Ended   Six Months Ended
                                           September 30,       September 30,
                                       ------------------  ------------------
                                          2007      2008      2007      2008
                                       --------  --------  --------  --------
    Flight hours (excludes Bristow
     Academy and unconsolidated
     affiliates):
        U.S. Gulf of Mexico              36,621    34,891    74,489    72,530
        Arctic                            3,002     3,695     5,405     6,132
        Latin America                    10,810    10,938    22,177    20,002
        Europe                           11,494    10,265    22,315    20,571
        West Africa                       9,887     9,647    18,785    19,245
        Southeast Asia                    3,644     4,841     6,988     9,723
        Other International               2,177     1,823     4,724     3,876
                                       --------  --------  --------  --------
          Consolidated total             77,635    76,100   154,883   152,079
                                       ========  ========  ========  ========

    Gross revenue:
        U.S. Gulf of Mexico             $55,948   $62,491  $111,376  $124,000
        Arctic                            5,290     6,840     9,647    11,083
        Latin America                    16,951    19,051    32,987    39,257
        WH Centralized Operations           821     2,909     1,975     5,169
        Europe                           93,459    98,303   176,816   193,733
        West Africa                      45,799    47,010    79,082    90,310
        Southeast Asia                   23,858    33,381    46,350    70,261
        Other International              12,046    14,215    23,501    27,236
        EH Centralized Operations         5,331     8,128    12,136    16,965
        Bristow Academy                   3,228     5,572     6,247    11,723
        Intrasegment eliminations        (2,923)   (6,208)   (9,158)  (13,954)
        Corporate                            --        (4)       --        28
                                       --------  --------  --------  --------
          Consolidated total           $259,808  $291,688  $490,959  $575,811
                                       ========  ========  ========  ========

    Operating income (loss):
      U.S. Gulf of Mexico                $9,680    $8,263   $18,779   $16,252
      Arctic                              1,440     1,900     2,115     2,419
      Latin America                       4,251     4,553     7,585    11,028
      WH Centralized Operations              70       904     1,362       228
      Europe                             21,895    21,969    36,470    39,445
      West Africa                        15,492     8,024    18,289    14,540
      Southeast Asia                      5,107     1,064     9,234     5,250
      Other International                 1,781     1,578     4,046     2,775
      EH Centralized Operations          (3,247)   (4,467)   (7,526)  (12,388)
      Bristow Academy                      (391)     (159)     (482)      387
      Gain (loss) on disposal of assets    (757)    3,302      (173)    5,967
      Corporate                          (5,603)   (6,484)  (11,195)  (13,869)
                                       --------  --------  --------  --------
        Consolidated total              $49,718   $40,447   $78,504   $72,034
                                       ========  ========  ========  ========
    Operating margin:
        U.S. Gulf of Mexico               17.3%     13.2%     16.9%     13.1%
        Arctic                            27.2%     27.8%     21.9%     21.8%
        Latin America                     25.1%     23.9%     23.0%     28.1%
        Europe                            23.4%     22.3%     20.6%     20.4%
        West Africa                       33.8%     17.1%     23.1%     16.1%
        Southeast Asia                    21.4%      3.2%     19.9%      7.5%
        Other International               14.8%     11.1%     17.2%     10.2%
        Bristow Academy                  (12.1)%    (2.9)%    (7.7)%     3.3%
          Consolidated total              19.1%     13.9%     16.0%     12.5%

SOURCE: Bristow Group Inc.

CONTACT: Investor Relations, Linda McNeill of Bristow Group Inc.,
+1-713-267-7622
Website: http://www.bristowgroup.com