8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) August 9, 2006

PHI, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Louisiana

(State of Other Jurisdiction of Incorporation)

0-9827	72-0395707
(Commission File Number)	(IRS Employer Identification No.)
2001 SE Evangeline Thruway, Lafayette, LA	70508
(Address of Principal Executive Offices)	(Zip Code)

(800) 235-2452

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

     On August 9, 2006, PHI, Inc. issued a press release announcing its second quarter and six-month 2006 earnings. The press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

     (a) Financial Statements of Business Acquired.

          None.

     (b) Pro Forma Financial Information.

          None.

     (c) Exhibits

Exhibit No.	Description
99.1	Press Release of PHI, Inc. dated August 9, 2006 announcing earnings for second quarter 2006.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PHI, Inc.
Date: August 10, 2006	By:	/s/ Michael J. McCann
		Name:	Michael J. McCann
		Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of PHI, Inc. dated August 9, 2006, announcing earnings for second quarter 2006.

EX-99.1

Exhibit 99.1

	News Release
CONTACT:	Michael J. McCann
	CFO and Treasurer
	(337) 235-2452

FOR IMMEDIATE RELEASE

PHI, INC. ANNOUNCES RESULTS
FOR THE SECOND QUARTER ENDED JUNE 30, 2006

     LAFAYETTE, LA — August 9, 2006 — PHI, Inc. (“PHI”) today reported a net loss of $2.8 million ($0.19 per diluted share) on operating revenues of $107.2 million for the quarter ended June 30, 2006. For the same period of 2005, the Company reported net earnings of $2.0 million ($0.31 per diluted share) on operating revenues of $86.8 million. As a result of the early redemption and refinancing of our 9 3/8% Senior Notes with 7 1/8% Senior Notes, we recorded a pretax charge of $12.8 million in the current quarter. The refinancing will result in an annualized reduction in interest expense of $4.5 million in future periods. We also recorded a loss on the sale of six light aircraft ($1.4 million), and we expect to sell an additional five to six light aircraft in the near future, but we expect the remaining sales to result in a net gain. Earnings for the quarter ended June 30, 2005, included an insurance premium credit of $0.3 million related to favorable loss experience, and a credit of $3.0 million for the six months ended June 30, 2005 for the same reason.

For the six months ended June 30, 2006, there was a net loss of $0.5 million ($0.04 per diluted share) on operating revenues of $208.5 million. This compares to net earnings of $2.3 million ($0.40 per diluted share) on operating revenues of $161.0 million for the same six-month period in 2005.

Operating revenues increased for the quarter and the six months ended June 30, 2006, compared to the same periods in 2005. The increases resulted from increased customer demand, due to increased exploration and production activity by our customers in the Gulf of Mexico, and additional flight hours in the Air Medical segment. Operating revenues for the three months ended June 30, 2006 were $107.2 million compared to $86.8 million for the three months ended June 30, 2005, an increase of $20.4 million. For the six months ended June 30, 2006, operating revenues were $208.5 million compared to $161.0 million for the same period in 2005, an increase of $47.5 million.

Total flight hours were 77,367 for the six months ended June 30, 2006 compared to 69,547 for six months ended June 30, 2005. The number of aircraft in service at June 30, 2006 was 234 compared to 230 at June 30, 2005.

We have been in contract negotiations since 2004 with the OPEIU (Office and Professional Employees International Union), which is the union representing our domestic pilot work force, regarding the renewal of the collective bargaining agreement covering our domestic pilots. On July 28, 2006, the National Mediation Board released the Company and the OPEIU from the

mediation process. As a result, a 30-day “cooling off” period commenced and expires August 28, 2006. Following the cooling off period, the Company is free to do whatever is reasonably necessary to continue operations, and the union is free to engage in job actions, including work stoppages or a general strike. Although the outcome of these negotiations cannot be predicted, it is management’s intent to continue operations while working toward an acceptable renewed collective bargaining agreement.

     Certain statements in this release constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “forecast,” “anticipate,” “estimate,” “project,” “intend,” “expect,” “should,” “believe,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which could cause the Company’s actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. The above factors are more fully discussed in the Company’s SEC filings.

PHI provides helicopter transportation and related services to a broad range of customers including the oil and gas industry, air medical industry and also provides third-party maintenance services to select customers. PHI Common Stock is traded on The Nasdaq National Market System (symbols PHII and PHIIK).

# # #

PHI, Inc. released the following earnings figures for the second quarter and six months ended June 30, 2006.

	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Operating revenues	$	107,157		$	86,783		$	208,529		$	161,022
Gain (loss) on disposition of property and equipment, net		(1,392	)		(186	)		(1,162	)		460
Other		2,497			198			3,417			293
		108,262			86,795			210,784			161,775
Expenses:
Direct expenses		89,211			72,896			176,267			136,931
Selling, general and administrative expenses		6,724			5,472			13,409			10,701
Interest expense		4,129			5,159			9,202			10,276
Loss on debt restructuring		12,790			—			12,790			—
		112,854			83,527			211,668			157,908
Earnings (loss) before income taxes		(4,592	)		3,268			(884	)		3,867
Income taxes		(1,837	)		1,307			(354	)		1,547
Net earnings (loss)	$	(2,755	)	$	1,961		$	(530	)	$	2,320
Weighted average shares outstanding:
Basic		14,579			6,158			12,512			5,773
Diluted		14,579			6,246			12,512			5,858
Net earnings (loss) per share
Basic	$	(0.19	)	$	0.32		$	(0.04	)	$	0.40
Diluted	$	(0.19	)	$	0.31		$	(0.04	)	$	0.40

# # #

Summarized financial information concerning the Company’s reportable operating segments for the quarter and six months ended June 30, 2006 and 2005 is as follows:

	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
	(Thousands of dollars)						(Thousands of dollars)
Segment operating revenues
Domestic Oil and Gas	$	66,409		$	51,573		$	127,872		$	96,440
Air Medical		33,596			28,300			64,307			49,084
International		5,573			5,781			13,221			12,799
Technical Services		1,579			1,129			3,129			2,699
Total operating revenues		107,157			86,783			208,529			161,022
Segment direct expenses
Domestic Oil and Gas		53,094			42,496			102,900			79,345
Air Medical		30,758			25,773			62,377			47,097
International		4,165			3,806			8,611			8,466
Technical Services		1,194			821			2,379			2,023
Total direct expenses		89,211			72,896			176,267			136,931
Segment selling, general and administrative expenses
Domestic Oil and Gas		198			202			540			448
Air Medical		1,807			1,538			3,645			2,904
International		17			19			61			63
Technical Services		49			2			57			5
Total selling, general and administrative expenses		2,071			1,761			4,303			3,420
Total direct and selling, general and administrative expenses		91,282			74,657			180,570			140,351
Net segment profit (loss)
Domestic Oil and Gas		13,117			8,875			24,432			16,647
Air Medical		1,031			989			(1,715	)		(917	)
International		1,391			1,956			4,549			4,270
Technical Services		336			306			693			671
Total		15,875			12,126			27,959			20,671
Other, net		1,105			12			2,255			753
Unallocated selling, general and administrative costs		(4,653	)		(3,711	)		(9,106	)		(7,281	)
Interest expense		(4,129	)		(5,159	)		(9,202	)		(10,276	)
Loss on debt restructuring		(12,790	)		—			(12,790	)		—
Earnings (loss) before income taxes	$	(4,592	)	$	3,268		$	(884	)	$	3,867

###

Operating Statistics

The following tables present certain non-financial operational statistics for the quarter and six months ended June 30, 2006 and 2005:

	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2006		2005		2006		2005
Flight hours:
Domestic Oil and Gas		29,151		28,090		55,243		50,396
Air Medical		7,725		6,944		14,880		11,573
International		3,047		3,706		7,244		7,578
Total		39,923		38,740		77,367		69,547
Air Medical Transports		5,311		4,323		10,133		7,469

	June 30,
	2006		2005
Aircraft operated at period end:
Domestic Oil and Gas		151		158
Air Medical		67		56
International		16		16
Total		234		230

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