10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 10-Q

R	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2009
	OR
£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from          to

Commission File Number 001-31617

Bristow Group Inc.

(Exact name of registrant as specified in its charter)

Delaware	72-0679819
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification Number)
2000 W.  Sam Houston Pkwy. S.,	77042
Suite 1700	(Zip Code)
Houston, Texas
(Address of principal executive offices)

Registrant’s telephone number, including area code:

(713) 267-7600

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes R     No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer R	Accelerated filer £	Non-accelerated filer £	Smaller reporting company £
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

£  Yes      R  No

Indicate the number shares outstanding of each of the issuer’s classes of Common Stock, as of July 31, 2009.

29,359,662 shares of Common Stock, $.01 par value

BRISTOW GROUP INC.

INDEX — FORM 10-Q

		Page
PART I
Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46
Item 4.	Controls and Procedures	46
PART II
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities	47
Item 4.	Submission of Matters to a Vote of Security Holders	47
Item 6.	Exhibits	48
Signatures                                                                                                                                    & #160;		49

PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements.

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(2008 As Adjusted - - Notes 1 and 4)

		Three Months Ended June 30,
			2008			2009
		(Unaudited) (In thousands, except per share amounts)
Gross revenue:
	Operating revenue from non-affiliates	$	241,134		$	248,891
	Operating revenue from affiliates		17,270			14,602
	Reimbursable revenue from non-affiliates		24,371			25,853
	Reimbursable revenue from affiliates		1,348			1,106
			284,123			290,452
Operating expense:
	Direct cost		186,973			180,677
	Reimbursable expense		26,067			26,657
	Depreciation and amortization		14,955			18,186
	General and administrative		27,206			28,802
			255,201			254,322
Gain on disposal of assets			2,665			6,009
Earnings from unconsolidated affiliates, net of losses			7,723			2,633
Operating income			39,310			44,772
Interest income			1,447			222
Interest expense			(8,602	)		(10,012	)
Other income (expense), net			1,692			(1,481	)
	Income before provision for income taxes		33,847			33,501
Provision for income taxes			(10,564	)		(9,510	)
	Net income		23,283			23,991
	Net income attributable to noncontrolling interests		(703	)		(268	)
	Net income attributable to Bristow		22,580			23,723
	Preferred stock dividends		(3,162	)		(3,162	)
	Net income available to common stockholders	$	19,418		$	20,561
Earnings per common share:
	Basic	$	0.78		$	0.71
	Diluted	$	0.72		$	0.66

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(March 31 As Adjusted - Notes 1 and 4)

			March 31,			June 30,
			2009			2009
						(Unaudited)
			(In thousands)
ASSETS
Current assets:
	Cash and cash equivalents		$	300,969		$	138,295
	Accounts receivable from non-affiliates, net of allowance for doubtful accounts of $0.6 million			194,030			208,481
	Accounts receivable from affiliates, net of allowance for doubtful accounts of $3.4 million			22,644			23,580
	Inventories			165,438			184,190
	Prepaid expenses and other assets			20,226			58,856
		Total current assets		703,307			613,402
Investment in unconsolidated affiliates				20,265			199,734
Property and equipment – at cost:
	Land and buildings			68,961			75,277
	Aircraft and equipment			1,823,011			1,877,295
				1,891,972			1,952,572
	Less – Accumulated depreciation and amortization			(350,515	)		(378,846	)
				1,541,457			1,573,726
Goodwill				44,654			46,808
Other assets				24,888			24,409
			$	2,334,571		$	2,458,079
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
	Accounts payable		$	44,892		$	61,490
	Accrued wages, benefits and related taxes			39,939			28,996
	Income taxes payable			—			551
	Other accrued taxes			3,357			2,654
	Deferred revenues			17,593			18,872
	Accrued maintenance and repairs			10,317			10,934
	Accrued interest			6,434			8,608
	Deposits on assets held for sale			—			23,764
	Other accrued liabilities			20,164			21,545
	Deferred taxes			6,195			11,042
	Short-term borrowings and current maturities of long-term debt			8,948			8,953
		Total current liabilities		157,839			197,409
Long-term debt, less current maturities				714,965			714,553
Accrued pension liabilities				81,380			96,384
Other liabilities and deferred credits				16,741			18,061
Deferred taxes				127,266			133,138
Commitments and contingencies (Note 7)
Stockholders’ investment:
	5.50% mandatory convertible preferred stock, $.01 par value, authorized and outstanding 4,600,000 shares; entitled in liquidation to $230 million; net of offering costs of $7.4 million			222,554			222,554
	Common stock, $.01 par value, authorized 90,000,000 shares; outstanding: 29,111,436 as of March 31 and 29,336,770  as of June 30 (exclusive of 1,281,050 treasury shares)			291			293
	Additional paid-in capital			436,296			439,712
	Retained earnings			718,493			739,054
	Noncontrolling interests			11,200			11,811
	Accumulated other comprehensive loss			(152,454	)		(114,890	)
				1,236,380			1,298,534
			$	2,334,571		$	2,458,079

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(2008 As Adjusted - - Notes 1 and 4)

		Three Months Ended June  30,
		2008			2009
		(Unaudited)
		(In thousands)
Cash flows from operating activities:
	Net income	$	23,283		$	23,991
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
	Depreciation and amortization		14,955			18,186
	Deferred income taxes		3,342			2,810
	Discount amortization on long-term debt		114			725
	Gain on asset dispositions		(2,665	)		(6,009	)
	Gain on Heliservicio investment sale		(1,438	)		—
	Stock-based compensation expense		1,884			3,607
	Equity in earnings from unconsolidated affiliates below dividends received		6,161			1,078
	Tax benefit related to stock-based compensation		(231	)		(26	)
Increase (decrease) in cash resulting from changes in:
	Accounts receivable		997			9,866
	Inventories		911			(6,336	)
	Prepaid expenses and other assets		(3,628	)		(7,958	)
	Accounts payable		1,188			6,081
	Accrued liabilities		(13,069	)		(13,127	)
	Other liabilities and deferred credits		(2,160	)		2,092
Net cash provided by operating activities			29,644			34,980
Cash flows from investing activities:
	Capital expenditures		(130,818	)		(86,040	)
	Deposits on assets held for sale		—			23,764
	Proceeds from asset dispositions		7,406			40,364
	Acquisitions, net of cash received		356			(178,638	)
Net cash used in investing activities			(123,056	)		(200,550	)
Cash flows from financing activities:
	Proceeds from borrowings		115,000			—
	Debt issuance costs		(3,304	)		—
	Repayment of debt and debt redemption premiums		(1,597	)		(1,404	)
	Partial prepayment of put/call obligation		(41	)		(19	)
	Preferred Stock dividends paid		(3,162	)		(3,162	)
	Issuance of common stock		225,117			346
	Tax benefit related to stock-based compensation		231			26
Net cash provided by (used in) financing activities			332,244			(4,213	)
Effect of exchange rate changes on cash and cash equivalents			(1,450	)		7,109
Net increase (decrease) in cash and cash equivalents			237,382			(162,674	)
Cash and cash equivalents at beginning of period			290,050			300,969
Cash and cash equivalents at end of period		$	527,432		$	138,295
Supplemental disclosure of cash flow information:
Cash paid during the period for:
	Interest	$	7,529		$	9,180
	Income taxes	$	12,240		$	4,265
Non-cash investing activities:
	Contribution of note receivable and aircraft to RLR	$	(6,551	)	$	—
	Aircraft received for investment in Heliservicio	$	2,410		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1 — BASIS OF PRESENTATION, CONSOLIDATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements include the accounts of Bristow Group Inc. and its consolidated entities (“Bristow Group,” the “Company,” “we,” “us,” or “our”) after elimination of all significant intercompany accounts and transactions.  Our fiscal year ends March 31, and we refer to fiscal years based on the end of such period.  Therefore, the fiscal year ending March 31, 2010 is referred to as fiscal year 2010.  Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the information contained in the following notes to condensed consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and related notes thereto contained in our fiscal year 2009 Annual Report (the “fiscal year 2009 Financial Statements”).  Operating results for the interim period presented are not necessarily indicative of the results that may be expected for the entire fiscal year.

The condensed consolidated financial statements included herein are unaudited; however, they include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair presentation of the consolidated financial position of the Company as of June 30, 2009, the consolidated results of operations for the three months ended June 30, 2008 and 2009, and the consolidated cash flows for the three months ended June 30, 2008 and 2009.

The following changes in presentation have been reflected in the condensed consolidated statements of income:

·   Gain on disposal of assets which was previously included within operating expense has been reclassified to be included as a separate line below operating expense, but still within operating income.  We believe that this presentation is preferable as our disposals of assets typically result in gains, which would reduce operating expense and not provide a clear presentation of our costs incurred to generate our revenue.

·   Earnings from unconsolidated affiliates which were previously excluded from operating income have been reclassified to be included within operating income.   We believe that this presentation is preferable as the operations of our unconsolidated affiliates are integral to our operations as these entities are involved in aircraft operations similar to ours in markets where governmental regulations limit foreign ownership of aircraft companies or where conditions favor entering into joint venture arrangement with local partners.

Amounts presented for the three months ended June 30, 2008 have been restated to conform to current period presentation.

We have evaluated subsequent events through the timing of filing these condensed consolidated financial statements with the SEC on August 5, 2009.

5

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Foreign Currency

See “Foreign Currency” in Note 1 to the fiscal year 2009 Financial Statements for a discussion of the related accounting policies.  Other income (expense), net, in our condensed consolidated statements of income for the three months ended June 30, 2008 and 2009, includes $0.4 million and $1.5 million, respectively, in foreign currency transaction losses.

The following table presents applicable exchange rates for the indicated periods:

	Three Months Ended June 30,
	2008	2009
One British pound sterling into U.S. dollars
High	2.00	1.66
Average	1.97	1.55
Low	1.94	1.44
At period-end	1.99	1.65
One euro into U.S. dollars
High	1.60	1.43
Average	1.56	1.36
Low	1.53	1.29
At period-end	1.58	1.40
One Australian dollar into U.S. dollars
High	0.96	0.82
Average	0.94	0.76
Low	0.90	0.69
At period-end	0.96	0.81

________

Source:  Bank of England

We estimate that the deterioration of these currencies and other currencies versus the U.S. dollar compared to the average exchange rates for the three months ended June 30, 2008 had the following unfavorable impact on our results of operations, net of the effect of the derivative contracts discussed in Note 6 (in thousands):

	Three Months Ended June 30, 2009
Revenue	$	(34,963	)
Operating expense		32,424
Earnings from unconsolidated affiliates		(472	)
Non-operating expense		(1,866	)
Income before provision for income taxes		(4,877	)
Provision for income taxes		1,384
Net income	$	(3,493	)

6

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards “(SFAS”) No. 141R, “Business Combinations.”  This pronouncement establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired in the business combination or a gain from a bargain purchase, and also establishes disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business combination.  SFAS No. 141R became effective for business combinations entered into after April 1, 2009 and thereafter.  We applied the provision of SFAS No. 141R to our acquisition of a 42.5% interest in Líder Aviação Holding S.A. (“Líder”) to the extent it applies to the acquisitions of interests in equity method joint ventures.  See Note 2 for further details on the Líder acquisition.

On April 1, 2009, we adopted SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51.”  This standard establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  SFAS No. 160 has changed the accounting and reporting for minority interests by re-characterizing them as noncontrolling interests and classifying them as a component of stockholders’ investment in our condensed consolidated balance sheet and requires net income attributable to both the parent and the noncontrolling interests to be disclosed separately on the face of the condensed consolidated statement of income.  The presentation and disclosure requirements of SFAS No. 160 require retrospective application to all prior periods presented.  SFAS No. 160 also requires enhanced disclosures to clearly distinguish between our interests and the interests of noncontrolling owners.  Upon adoption of SFAS No. 160, we have presented the noncontrolling interest as stockholders’ investment on our condensed consolidated balance sheets as of March 31 and June 30, 2009 and presented net income attributable to noncontrolling interests separately on our condensed consolidated statements of income for the three months ended June 30, 2008 and 2009.  Prior year amounts were previously included in mezzanine stockholders’ investment and minority interest expense on our consolidated balance sheets and consolidated statements of income, respectively.  The effect as of March 31, 2009 of the adoption of SFAS No. 160 was a reduction in the reported noncontrolling interest in mezzanine equity of $11.2 million, which was subsequently reclassified as a component of stockholders’ investment.  No changes in the ownership interests of these subsidiaries occurred during the three months ended June 30, 2009.

On April 1, 2009, we adopted No. 161, “Disclosures about Derivative and Hedging Instruments — An Amendment of FASB Statement No. 133.”  This standard requires enhanced disclosures about an entity’s derivative and hedging activities, but does not impact the accounting for such activities.  See Note 6 for further discussion and disclosures.

On April 1, 2009, we adopted FASB Staff Position (“FSP”) Accounting Principles Board (“APB”) 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion.”  This FSP requires entities with cash settled convertibles to bifurcate the securities into a debt component and an equity component and accrete the debt component to par over the expected life of the convertible.  This FSP must be applied retrospectively to all instruments.  In June 2008, we issued 3% Convertible Senior Notes due 2038 (the “3% Convertible Senior Notes”) which are subject to this FSP.  See Note 5 to the fiscal year 2009 Annual Report for further discussion of the 3% Convertible Senior Notes.  Effective April 1, 2009, we applied the provisions of this FSP, on a retrospective basis, to our consolidated financial statements.  The impact of this FSP is provided in Note 4.

In April 2009 the FASB issued FSP SFAS No. 107-1 and APB No. 28-1, "Interim Disclosures about Fair Value of Financial Instruments."  This FSP increases the frequency of fair value disclosures required by SFAS No. 107, "Disclosures about Fair Value of Financial Instruments" from annual only to quarterly reporting periods.  The requirements of this FSP are effective for financial statements issued for interim and annual periods ending after June 15, 2009.  The provisions of this FSP have been applied to our consolidated financial statements as of June 30, 2009.  The impact of this FSP is provided in Note 5.

In June 2009 the FASB issued SFAS No. 165, "Subsequent Events," which requires entities to disclose the date through which they have evaluated subsequent events and whether the date corresponds with the release of their financial statements.  The requirements of SFAS No. 165 are effective for the interim and annual periods ending after June 15, 2009.  We adopted this as of June 30, 2009.

NOTE 2 — ACQUISITION

On May 26, 2009, we acquired a 42.5% interest in Líder, the largest provider of helicopter and executive aviation services in Brazil, for $179.6 million including transaction costs incurred in fiscal years 2009 and 2010.  The acquisition was accounted for under the equity method of accounting.  In connection with this transaction, Líder purchased one large and four medium aircraft from us for $55.0 million, resulting in a net cash outlay of $124.6 million.  For the next five years, Bristow has the right to provide 100% of Líder’s helicopter lease requirements as well as the right to lease 50% of Líder’s total medium and large helicopter requirements that it would otherwise fulfill through purchase or finance lease.

7

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Additionally, the terms of the purchase agreement include incremental earn-out payments of $8.5 million for each of the next three years and a cumulative earn-out payment up to an additional $27.6 million based on the achievements of growth targets over the next three years.  If fully earned, these payments would total up to $53.1 million.  In connection with the acquisition of our interest in Líder, we entered into a shareholders’ agreement that defines certain rights held by shareholders of Líder. Pursuant to the shareholders’ agreement, we are entitled to appoint one of the five members of Líder’s board of directors and our approval is required for certain actions. The shareholders’ agreement also includes provisions relating to the transfer of Líder shares, including provisions that restrict the sale by us of our Líder shares for three years, provides us with a right of first refusal on certain secondary sales and a tag along right for transfers of shares and requires our consent for an initial public offering by Líder in specified circumstances.

NOTE 3 — PROPERTY AND EQUIPMENT

During the three months ended June 30, 2009, we received proceeds of $40.4 million from the disposal of eight aircraft and certain other equipment, resulting in a net gain of $6.0 million.  Additionally during the three months ended June 30, 2009, we received $23.8 million of deposits for aircraft held for sale, which we classified in deposits on assets held for sale as of June 30, 2009 in our condensed consolidated balance sheet.  As of March 31 and June 30, 2009, respectively, we had 10 and 12 aircraft held for sale totaling $4.4 million and $28.9 million, which were classified in prepaid expenses and other assets in our condensed consolidated balance sheets.

Additionally, during the three months ended June 30, 2009, we made final payments in connection with the delivery of two small, four medium, three large and one fixed wing aircraft, and made progress payments on the construction of new aircraft to be delivered in future periods in conjunction with our aircraft commitments (see Note 7) for a total of $69.5 million.  Also, during the three months ended June 30, 2009, we spent $10.1 million to upgrade aircraft within our existing fleet and to customize new aircraft delivered for our operations and $6.4 million for additions to land and buildings.

NOTE 4 — DEBT

Debt as of March 31 and June 30, 2009 consisted of the following:

	March 31, 2009			June 30, 2009
	(In thousands)
7 ½% Senior Notes due 2017, including $0.5 million of unamortized premium	$	350,537		$	350,521
6 ⅛% Senior Notes due 2013		230,000			230,000
3% Convertible Senior Notes due 2038, including $21.9 million and $21.2 million of unamortized discount, respectively		93,067			93,792
Bristow Norway Debt		18,348			18,228
RLR Note		17,215			16,941
Term loans		14,382			13,806
Other debt		364			218
Total debt		723,913			723,506
Less short-term borrowings and current maturities of long-term debt		(8,948	)		(8,953	)
Total long-term debt	$	714,965		$	714,553

8

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

In June 2008, we completed the sale of $115.0 million of 3% Convertible Senior Notes.  The notes are convertible, under certain circumstances, using a net share settlement process, into a combination of cash and our common stock.  In general, upon conversion of a note, the holder will receive cash equal to the principal amount of the note and common stock to the extent of the note’s conversion value in excess of such principal amount.  The following table sets forth the stock price and additional shares by which the applicable conversion rate will be increased upon conversion, subject to the terms discussed above.

Market Value of Common Stock	Number of Shares of Common Stock Issued for Each $1,000 principal amount of 3% Senior Convertible Notes	Total Number of Common Stock Issued for 3% Senior Convertible Notes
$46.87 or less	21.3356	2,453,594
Between $46.87 and $169.99	12.9308 to 21.3344	1,487,032 to 2,453,593
$170.00 and above	12.9307	1,487,031

The notes will mature on June 15, 2038 and may not be redeemed by us prior to June 15, 2015, after which they may be redeemed at 100% of principal amount plus accrued and unpaid interest.  Holders of the 3% Convertible Senior Notes may require us to repurchase any or all of their 3% Convertible Senior Notes for cash on June 15, 2015, 2020, 2025, 2030 and 2035, or in the event of a fundamental change, as defined in the indenture for the 3% Convertible Senior Notes (including the delisting of our common stock and certain change of control transactions), at a price equal to 100% of the principal amount plus accrued and unpaid interest.  If a holder elects to convert its notes in connection with certain fundamental changes occurring prior to June 15, 2015, we will increase the applicable conversion rate by a specified number of additional shares of common stock.

Prior to April 1, 2009, we accounted for the embedded conversion option in 3% Convertible Senior Notes following the recognition and measurement principles under APB Opinion No. 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants” and Emerging Issues Task Force (“EITF”) No. 90-19, “Convertible Bonds with Issuer Option to Settle for Cash upon Conversion.” Under this authoritative guidance, separate accounting for an embedded conversion option was not required when the conversion spread feature did not qualify to be accounted for as a derivative instrument.

As discussed in Note 1, effective April 1, 2009, we adopted FSP APB No. 14-1.  This FSP requires that convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) be accounted for with a liability component based on the fair value of a similar nonconvertible debt instrument and an equity component based on the excess of the initial proceeds from the convertible debt instrument over the liability component.  Such excess represents proceeds related to the conversion option and is recorded as accumulated paid in capital.  The liability is recorded at a discount, which is then amortized as additional non-cash interest expense over the convertible debt instrument’s remaining life.  Additionally, this FSP requires our bifurcation of the debt issuance costs into a component of debt and equity.  Our adoption of this FSP has been applied retrospectively to all past periods presented for our 3% Convertible Senior Notes issued in June 2008 which are subject to this FSP.

Under the provisions of this FSP, the following assumptions were made for our 3% Convertible Senior Notes upon adoption:

Date of issue	June 2008
Expected maturity date	June 2015
Remaining life	7 years
Effective interest rate	6.9%
Tax rate over term of debt	35%

9

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

The effect of the adoption of FSP APB No. 14-1 on our consolidated balance sheet as of March 31, 2009 was as follows (in thousands):

	As Previously Reported		Effect of Change			As Currently Reported
Other assets	$	25,590	$	(702	)	$	24,888
Total debt		745,846		(21,933	)		723,913
Deferred income tax liability		119,589		7,677			127,266
Additional paid-in capital		421,391		14,905			436,296
Retained earnings		719,844		(1,351	)		718,493

The following information is presented for comparative purposes and illustrates the effect of FSP APB No. 14-1 on our 3% Convertible Senior Notes.  The balances of the liability and equity components as of each period presented are as follows (in thousands):

	March 31, 2009			June 30, 2009
Equity component- net carrying value	$	14,905		$	14,905
Liability component:
Face amount due at maturity	$	115,000		$	115,000
Unamortized discount		(21,933	)		(21,208	)
Liability component – net carrying value	$	93,067		$	93,792

The effect of the adoption of FSP APB No. 14-1 on our condensed consolidated statement of income for the three months ended June 30, 2008 was as follows (in thousands, except per share amounts):

	As Previously Reported		Effect of Change			As Currently Reported
Interest expense	$	8,493	$	109		$	8,602
Income tax expense		10,604		(40	)		10,564
Net income attributable to Bristow		22,649		(69	)		22,580
Diluted earnings per share		0.72		—			0.72

The remaining debt discount is being amortized into interest expense over the expected remaining life of the convertible debt instruments using the effective interest rate.  The effective interest rate for both the three months ending June 30, 2008 and 2009 was 6.9%.  Interest expense related to the 3% Convertible Senior Notes for the three months ended June 30, 2008 and 2009 was as follows (in thousands):

	Three Months Ended June 30,
	2008		2009
Contractual coupon interest	$	134	$	863
Amortization of debt discount		114		725
Total interest expense	$	248	$	1,588

10

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

NOTE 5 — FAIR VALUE DISCLOSURES

Effective April 1, 2009, we adopted the provisions of SFAS No. 157, “Fair Value Measurements,” relating to our nonfinancial assets and liabilities measured on a nonrecurring basis which primarily consist of goodwill, intangible assets and other long-lived assets and assets acquired and liabilities assumed in a business combination. During the three months ended June 30, 2009, there were no triggering events that required fair value measurements of our nonfinancial assets and liabilities.

Assets and liabilities subject to fair value are categorized into one of three different levels depending on the observability of the inputs employed in the measurement, as follows:

·   Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

·   Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

·   Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following table summarizes the financial instruments we held as of June 30, 2009 which are valued at fair value (in thousands):

		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Balance as of June 30, 2009
Derivative financial instrument asset	$	—	$	1,011		$	—	$	1,011
Rabbi trust investments		3,021		—			—		3,021
Total assetsTotal assets	$	3,021	$	1,011		$	—	$	4,032
Derivative financial instrument liability		—		(1,079	)		—		(1,079	)
Net assets (liabilities)	$	3,021	$	(68	)	$	—	$	2,953

The methods and assumptions used to estimate the fair values of the derivative financial instrument assets and liabilities in the table above include the mark-to-market statements from the counterparties, which can be validated using modeling techniques that include market inputs such as publicly available forward market rates, and is designated as Level 2 within the valuation hierarchy.  The rabbi trust investments consist of money market and mutual funds whose fair value is based on quoted prices in active markets for identical assets, and are designated as Level 1 within the valuation hierarchy.  The rabbi trust investments relate to our non-qualified deferred compensation plan for our senior executives as discussed in Note 9 to the fiscal year 2009 Financial Statements.

The fair value of our financial instruments has been estimated in accordance with SFAS No. 157.  The estimated fair value of our total debt as of June 30, 2009 was $683.6 million based on quoted market prices for the publicly listed 7 ½% Senior Notes due 2017, 6 ⅛% Senior Notes due 2013 and 3% Convertible Senior Notes and the carrying value for our other debt, which approximates fair value.  The fair values of our cash and cash equivalents, accounts receivable and accounts payable approximate their carrying value due to the short-term nature of these instruments.

NOTE 6 — DERIVATIVES

As discussed in Note 1, effective April 1, 2009 we adopted SFAS No. 161.  This standard requires enhanced disclosure of derivatives and hedging activities on: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities,” and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows.

11

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

The designation of a derivative instrument as a hedge and its ability to meet the SFAS No. 133 hedge accounting criteria determines how the change in fair value of the derivative instrument will be reflected in the condensed consolidated financial statements.  A derivative qualifies for hedge accounting if, at inception, the derivative is expected to be highly effective in offsetting the hedge’s underlying cash flows or fair value and the documentation standards of SFAS No. 133 are fulfilled at the time we enter into the derivative contract.  A hedge is designated as a cash flow hedge, fair value hedge, or a net investment in foreign operations hedge based on the exposure being hedged.  The asset or liability value of the derivative will change in tandem with its fair value.  Changes in fair value, for the effective portion of qualifying hedges, are recorded in accumulated other comprehensive loss.  The derivative’s gain or loss is released from accumulated other comprehensive loss to match the timing of the effect on earnings of the hedge’s underlying cash flows.

We review the effectiveness of our hedging instruments on a quarterly basis.  We recognize current period hedge ineffectiveness immediately in earnings, and we discontinue hedge accounting for any hedge that we no longer consider to be highly effective.  Changes in fair value for derivatives not designated as hedges or those not qualifying for hedge accounting are recognized in current period earnings.  Upon termination of cash flow hedges, we release gains and losses from accumulated other comprehensive loss based on the timing of the underlying cash flows, unless the termination results from the failure of the intended transaction to occur in the expected timeframe.  Such an untimely occurrence requires us to immediately recognize in earnings gains and losses previously recorded in accumulated other comprehensive loss.

None of our derivative instruments contain credit-risk-related contingent features.  Counterparties to our derivative contracts are high credit quality financial institutions.

We entered into forward contracts in fiscal year 2009 and the first quarter of fiscal year 2010 to mitigate our exposure to exchange rate fluctuations on our euro-denominated aircraft purchase commitments, which have been designated as cash flow hedges for accounting purposes.  We had five open contracts as of June 30, 2009, which had rates ranging from 1.35 U.S. dollars per euro to 1.54 U.S. dollars per euro.  These contracts had an underlying nominal value of between €11,229,225 and €13,217,175, for a total of €60,393,300, with the first contract expiring in July 2009 and the last in January 2010.  As of June 30, 2009, the fair value of these contracts was an asset of $1.0 million and a liability of $1.1 million.  As of June 30, 2009, an unrecognized loss of $0.05 million, net of tax, on these contracts is included as a component of accumulated other comprehensive loss.  We had eight open contracts as of March 31, 2009, which had rates ranging from 1.30 U.S. dollars per euro to 1.54 U.S. dollars per euro.  These contracts had an underlying nominal value of between €614,625 and €13,217,175, for a total of €86,894,175, with the first contract expiring in April 2009 and the last in January 2010.  As of March 31, 2009, the fair value of these contracts was a liability of $8.5 million.  As of March 31, 2009, an unrecognized loss of $5.5 million, net of tax, on these contracts is included as a component of accumulated other comprehensive loss.  The derivative asset is included in prepaid expenses and other assets and the derivative liabilities are included in other accrued liabilities in our condensed consolidated balance sheets.  No gains or losses relating to hedges are recognized in our condensed consolidated statements of income for the three months ended June 30, 2008 or 2009.

12

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

NOTE 7 — COMMITMENTS AND CONTINGENCIES

Aircraft Purchase Contracts — As of June 30, 2009, we had 17 aircraft on order and options to acquire an additional 47 aircraft.  Although a similar number of our existing aircraft may be sold during the same period, the additional aircraft on order are expected to provide incremental fleet capacity in terms of potential revenue and operating margin.

	Nine  Months Ending			Fiscal Year Ending March 31,
	March 31, 2010			2011			2012		2013		2014		Total
Commitments as of June 30, 2009:
Number of aircraft:
Small		1			—			—		—		—		1
Medium		4			3			—		—		—		7
Large		9	(1)		—			—		—		—		9
		14	(2)		3	(3)		—		—		—		17
Related expenditures (in thousands) (4)	$	157,846		$	11,547		$	—	$	—	$	—	$	169,393
Options as of June 30, 2009:
Number of aircraft:
Small		1			—			—		—		—		1
Medium		—			—			3		9		15		27
Large		—			—			10		5		4		19
		1			—			13		14		19		47
Related expenditures (in thousands) (4)	$	4,340		$	—		$	268,142	$	231,993	$	320,963	$	825,438

_________

(1)	Subsequent to June 30, 2009, we entered into an agreement to extend the delivery date to fiscal year 2011 for two large aircraft with commitments totaling $40.9 million.  This agreement allows us to cancel these orders without a termination fee through January 30, 2010 and February 28, 2010.  These aircraft were previously scheduled to be delivered in fiscal year 2010.
(2)	No signed customer contracts are currently in place for 13 of these 14 aircraft.
(3)	No signed customer contracts are currently in place for these three aircraft.
(4)	Includes progress payments on aircraft scheduled to be delivered in future periods.

The following chart presents an analysis of our aircraft orders and options during the three months ended June 30, 2009:

	Orders			Options
Beginning of quarter		24			47
Aircraft delivered		(10	)		—
Aircraft ordered		3			—
End of quarter		17			47

As was the case in prior years, we periodically order aircraft for which we have no options.

Employee Agreements — Certain of our employees are represented by collective bargaining agreements and/or unions.  These agreements generally include annual escalations of up to 6%.  Periodically, certain groups of our employees who are not covered by a collective bargaining agreement consider entering into such an agreement.

As a result of recently enacted legislation in Australia, effective July 1, 2009, the workforce in Australia may be represented by either a union or workers’ counsel.

13

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

In March 2009, we announced that in response to the recent worldwide economic downturn we were freezing management salaries and reviewing staffing levels and compensation structures to properly position the Company to meet changing market conditions while maintaining operational safety. We are in consultations with U.K. union representatives and employees in our Europe and EH Centralized Operations business units regarding staffing reductions in fiscal year 2010.  Similar actions are occurring in other business units as part of an overall plan to reduce our work force by 5% to 10%.

Effective April 30, 2009, an Executive Officer departed the Company.  In connection with the Executive Officer departure, we extended the expiration date of this Executive Officer’s options to purchase common stock to November 17, 2009.

During the three months ended June 30, 2009, we recognized $4.2 million in compensation expense (inclusive of the expenses recorded for the acceleration of unvested stock options and restricted stock) related to the work force reductions that have occurred to date and the separation between the Company and the Executive Officer.

Internal Review — In February 2005, we voluntarily advised the staff of the SEC that the Audit Committee of our board of directors had engaged special outside counsel to undertake a review of certain payments made by two of our affiliated entities in Nigeria.  The review of these payments, which initially focused on Foreign Corrupt Practices Act matters, was subsequently expanded by the Audit Committee to cover operations in other countries and other issues (the “Internal Review”).  As a result of the findings of the Internal Review (which was completed in late 2005), our quarter ended December 31, 2004 and prior financial statements were restated.  We also provided the SEC with documentation resulting from the Internal Review which eventually resulted in a formal SEC investigation.  In September 2007, we consented to the issuance of an administrative cease-and-desist order by the SEC, in final settlement of the SEC investigation.  The SEC did not impose any fine or other monetary sanction upon the Company.  Without admitting or denying the SEC’s findings, we consented to be ordered not to engage in future violations of certain provisions of the federal securities laws involving improper foreign payments, internal controls and books and records.  For further information on the restatements, see our Annual Report on Form 10-K for the fiscal year ended March 31, 2005.

Following the settlement with the SEC regarding improper payments made by foreign affiliates of the Company in Nigeria, outside counsel to the Company was contacted by the U.S. Department of Justice (the “DOJ”) and was asked to provide certain information regarding the Internal Review.  We have entered into an agreement with the DOJ that tolls the statute of limitations relating to these matters until the end of December 2009.  We intend to continue to be responsive to the DOJ’s requests.  At this time, it is not possible to predict what the outcome of the DOJ’s investigation into these matters will be for the Company.

As a result of the disclosure and remediation of a number of activities identified in the Internal Review, we may encounter difficulties conducting business in certain foreign countries and retaining and attracting additional business with certain customers.  We cannot predict the extent of these difficulties; however, our ability to continue conducting business in these countries and with these customers and through agents may be significantly impacted.  We could still face legal and administrative proceedings, the institution of administrative, civil injunctive or criminal proceedings involving us and/or current or former employees, officers and/or directors who are within the jurisdictions of such authorities, the imposition of fines and other penalties, remedies and/or sanctions, including precluding us from participating in business operations in such countries.  It is also possible that we may become subject to claims by third parties, possibly resulting in litigation.

In November 2005, two of our consolidated foreign affiliates were named in a lawsuit filed with the High Court of Lagos State, Nigeria by Mr. Benneth Osita Onwubalili and his affiliated company, Kensit Nigeria Limited, which allegedly acted as agents of our affiliates in Nigeria.  The claimants allege that an agreement between the parties was terminated without justification and seek damages of $16.3 million.  We responded to this claim in early 2006.  There has been minimal activity on this claim since then.  We may face further legal action of this type in the future.  The matters identified in the Internal Review and their effects could have a material adverse effect on our business, financial condition and results of operations.

14

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

As we continue to operate our compliance program, other situations involving foreign operations, similar to those matters disclosed to the SEC in February 2005 and described above, could arise that warrant further investigation and subsequent disclosures.  As a result, new issues may be identified that may impact our financial statements and lead us to take other remedial actions or otherwise adversely impact us.

During prior years, we have incurred a total of $13.6 million in professional fees related to the Internal Review and related matters.  We incurred no legal or other professional fees in connection with the Internal Review during the three months ended June 30, 2008 and 2009.  During the three months ended June 30, 2008 and 2009, we incurred approximately $0.1 million and $0.3 million, respectively, in legal and professional fees in connection with the DOJ investigation relating to the Internal Review.

Document Subpoena Relating to DOJ Antitrust Investigation — In June 2005, one of our subsidiaries received a document subpoena from the Antitrust Division of the DOJ.  The subpoena related to a grand jury investigation of potential antitrust violations among providers of helicopter transportation services in the U.S. Gulf of Mexico.  The subpoena focused on activities during the period from January 1, 2000 to June 13, 2005.  We believe we have submitted to the DOJ substantially all documents responsive to the subpoena.  We have had discussions with the DOJ and provided documents related to our operations in the U.S. as well as internationally.  We intend to continue to provide additional information as required by the DOJ in connection with the investigation.  There is no assurance that, after review of any information furnished by us or by third parties, the DOJ will not ultimately conclude that violations of U.S. antitrust laws have occurred.  The period of time necessary to resolve the DOJ antitrust investigation is uncertain, and this matter could require significant management and financial resources that could otherwise be devoted to the operation of our business.

The outcome of the DOJ antitrust investigation and any related legal proceedings in other countries could include civil injunctive or criminal proceedings involving us and/or our current or former employees, officers and/or directors, the imposition of fines and other penalties, remedies and/or sanctions, including potential disbarments, and referrals to other governmental agencies.  In addition, in cases where anti-competitive conduct is found by the government, there is greater likelihood for civil litigation to be brought by third parties seeking recovery.  Any such civil litigation could have serious consequences for our Company, including the costs of the litigation and potential orders to pay restitution or other damages or penalties, including potentially treble damages, to any parties that were determined to be injured as a result of any impermissible anti-competitive conduct.  Any of these adverse consequences could have a material adverse effect on our business, financial condition and results of operations.  The DOJ antitrust investigation, any related proceedings in other countries and any third-party litigation, as well as any negative outcome that may result from the investigation, proceedings or litigation, could also negatively impact our relationships with customers and our ability to generate revenue.

In connection with this matter, we incurred a total of $5.2 million in prior years in legal and professional fees.  We incurred no legal or other professional fees during the three months ended June 30, 2008 and 2009; however, significant expenditures may continue to be incurred in the future.

Civil Class Action Lawsuit – On June 12, 2009, Superior Offshore International, Inc. v. Bristow Group Inc., et al, Case No. 1:09-cv-00438, was filed in the U.S. District Court for the District of Delaware.  The purported class action complaint, which also names other providers of offshore helicopter services in the Gulf of Mexico as defendants, alleges violations of Section 1 of the Sherman Act.  Among other things, the complaint alleges that the defendants unlawfully conspired to raise and maintain the price of offshore helicopter services between January 1, 2001 and December 31, 2005.  The plaintiff seeks to represent a purported class of direct purchasers of offshore helicopter services and is asking for, among other things, unspecified treble monetary damages and injunctive relief.  The Company intends to defend against this lawsuit vigorously.  As this lawsuit is in its initial stage, we are currently unable to determine whether it could have a material affect on our business, financial condition and results of operations.

15

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Environmental Contingencies — The U.S. Environmental Protection Agency, also referred to as the EPA, has in the past notified us that we are a potential responsible party, or PRP, at four former waste disposal facilities that are on the National Priorities List of contaminated sites.  Under the federal Comprehensive Environmental Response, Compensation, and Liability Act, also known as the Superfund law, persons who are identified as PRPs may be subject to strict, joint and several liability for the costs of cleaning up environmental contamination resulting from releases of hazardous substances at National Priorities List sites.  We were identified by the EPA as a PRP at the Western Sand and Gravel Superfund site in Rhode Island in 1984, at the Sheridan Disposal Services Superfund site in Waller County, Texas, in 1989, at the Gulf Coast Vacuum Services Superfund site near Abbeville, Louisiana, in 1989, and at the Operating Industries, Inc. Superfund site in Monterey Park, California, in 2003.  We have not received any correspondence from the EPA with respect to the Western Sand and Gravel Superfund site since February 1991, nor with respect to the Sheridan Disposal Services Superfund site since 1989.  Remedial activities at the Gulf Coast Vacuum Services Superfund site were completed in September 1999 and the site was removed from the National Priorities List in July 2001.

The EPA has offered to submit a settlement offer to us in return for which we would be recognized as a de minimis party in regard to the Operating Industries Superfund site, but we have not yet received this settlement proposal.  Although we have not obtained a formal release of liability from the EPA with respect to any of these sites, we believe that our potential liability in connection with these sites is not likely to have a material adverse effect on our business, financial condition or results of operations.

Guarantees —We have guaranteed the repayment of up to £10 million ($16.5 million) of the debt of FBS Limited, an unconsolidated affiliate.  See discussion of this commitment in Note 3 to our fiscal year 2009 Financial Statements.  Additionally, we provided an indemnity agreement to Afianzadora Sofimex, S.A. to support issuance of surety bonds on behalf of Heliservicio Campeche S.A. de C.V. (“Heliservicio”), another unconsolidated affiliate, from time to time.  As of June 30, 2009, surety bonds with an aggregate value of 373 million Mexican pesos ($28.3 million) and surety bonds denominated in U.S. dollars with an aggregate value of $1.2 million were outstanding.  Furthermore, we have received a counter-guarantee from our partner in Heliservicio, for 76% ($22.4 million) of the surety bonds outstanding.

The following table summarizes our commitments under these guarantees, before the benefit of the counter-guarantee, as of June 30, 2009 (in thousands):

Amount of Commitment Expiration Per Period
Total		Remainder of Fiscal Year 2010		Fiscal Years 2011-2012		Fiscal Years 2013-2014		Fiscal Year 2015 and Thereafter
$	45,941	$	239	$	22,249	$	23,453	$	—

Other Matters — Although infrequent, aircraft accidents have occurred in the past, and the related losses and liability claims have been covered by insurance subject to a deductible.  We are a defendant in certain claims and litigation arising out of operations in the normal course of business.  In the opinion of management, uninsured losses, if any, will not be material to our financial position, results of operations or cash flows.

NOTE 8 — TAXES

Our effective income tax rates were 31.2% and 28.4% for the three months ended June 30, 2008 and 2009, respectively.  During the three months ended June 30, 2008 and 2009, we accrued tax contingency related items totaling $0.2 million and $1.3 million, respectively.  Our effective tax rate was also impacted by the permanent reinvestment outside the U.S. of foreign earnings, upon which no U.S. tax has been provided, and by the amount of our foreign source income and our ability to realize foreign tax credits.

As of June 30, 2009, there were $6.4 million of unrecognized tax benefits, all of which would have an impact on our effective tax rate, if recognized.  For the three months ended June 30, 2008 and 2009, we accrued interest and penalties of $0.1 million and $0.2 million, respectively, in connection with uncertain tax positions.

16

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

NOTE 9 — EMPLOYEE BENEFIT PLANS

Pension Plans

The following table provides a detail of the components of net periodic pension cost:

	Three Months Ended June 30,
	2008			2009
	(In thousands)
Service cost for benefits earned during the period	$	72		$	55
Interest cost on pension benefit obligation		7,715			5,836
Expected return on assets		(6,969	)		(4,574	)
Amortization of unrecognized losses		1,283			1,086
Net periodic pension cost	$	2,101		$	2,403

We pre-funded our contributions of $14.3 million to our U.K. staff pension plan for the fiscal year ending March 31, 2010 in March 2009.  The current estimate of our cash contributions to our U.K. expatriate and Norwegian pension plans for fiscal year 2010 is $7.4 million, $1.3 million of which was paid during the three months ended June 30, 2009.

Incentive Compensation

We have a number of incentive and stock option plans which are described in Note 9 to our fiscal year 2009 Financial Statements.

For the three months ended June 30, 2008 and 2009, total stock-based compensation expense, which includes stock options, restricted stock units and restricted stock, totaled $1.9 million and $3.6 million, respectively.  Stock-based compensation expense has been allocated to our various business units.

During the three months ended June 30, 2009, 288,788 stock options were granted at an average exercise price of $32.90 per share.  The key input variables used in valuing these options under the Black Scholes model were: risk-free interest rate of 2.56%; dividend yield of zero; stock price volatility of 52.2%; and expected option lives of 6 years.  Also during the three months ended June 30, 2009, we awarded 187,115 shares of restricted stock at an average grant date fair value of $32.90 per share.

No compensation expense was recorded related to the performance cash awards during the three months ended June 30, 2008 or 2009.

17

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

NOTE 10 — STOCKHOLDERS’ EQUITY AND EARNINGS PER SHARE

Basic earnings per common share was computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during the period.  Diluted earnings per common share for the three months ended June 30, 2008 and 2009 excluded options to purchase 508,763 and 298,442 shares, respectively, at weighted average exercise prices of $45.15 and $44.59, respectively, 117,590 and 365,244 restricted stock units, respectively, at weighted average prices of $46.92 and $37.06, respectively, and zero and 55,428 restricted stock awards, respectively, at weighted average prices of zero and $32.90, respectively, which were outstanding during the period but were anti-dilutive.  The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended June 30,
	2008		2009
Net income available to common stockholders (in thousands):
Income available to common stockholders – basic	$	19,418	$	20,561
Preferred Stock dividends		3,162		3,162
Interest expense on assumed conversion of 3% Convertible Senior Notes, net of tax (1)		—		—
Income available to common stockholders – diluted	$	22,580	$	23,723
Shares:
Weighted average number of common shares outstanding – basic		24,848,223		29,133,400
Assumed conversion of Preferred Stock outstanding during the period (2)		6,522,800		6,522,800
Assumed conversion of 3% Convertible Senior Notes outstanding during the period (1)		—		—
Net effect of dilutive stock options and restricted stock units and restricted stock awards based on the treasury stock method		181,002		125,670
Weighted average number of common shares outstanding – diluted		31,552,025		35,781,870
Basic earnings per common share	$	0.78	$	0.71
Diluted earnings per common share	$	0.72	$	0.66

_________

(1)

Diluted earnings per common share for each of the three months ended June 30, 2008 and 2009 excludes approximately 1.5 million potentially dilutive shares initially issuable upon the conversion of our 3% Convertible Senior Notes.  The 3% Convertible Senior Notes will be convertible, under certain circumstances, using a net share settlement process, into a combination of cash and our common stock.  The initial base conversion price of the notes is approximately $77.34 (subject to adjustment in certain circumstances), based on the initial base conversion rate of 12.9307 shares of common stock per $1,000 principal amount of convertible notes.  In general, upon conversion of a note, the holder will receive cash equal to the principal amount of the note and common stock to the extent of the note's conversion value in excess of such principal amount.  In addition, if at the time of conversion the applicable price of Bristow's common stock exceeds the base conversion price, holders will receive up to an additional 8.4049 shares of Bristow common stock per $1,000 principal amount of notes, as determined pursuant to a specified formula.  Such shares did not impact our calculation of diluted earnings per share for the three months ended June 30, 2008 or 2009 as our stock price did not meet or exceed $77.34 per share.

(2)

Diluted earnings per common share included weighted average shares resulting from the assumed conversion of our preferred stock at the conversion rate that results in the most dilution:  1.4180 shares of common stock for each share of preferred stock.  If the average of the closing price per share of our common stock on each of the 20 consecutive trading days ending on the third day immediately preceding the mandatory conversion date of September 15, 2009 is greater than $35.26 per share, then the preferred stock will convert into fewer shares than assumed for diluted earnings per common share.  If such average is $43.19 per share or more, then the preferred stock will convert into 1,197,840 fewer shares than assumed for diluted earnings per common share.  For further details, see Note 10 in our fiscal year 2009 Financial Statements.

18

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

NOTE 11 — SEGMENT INFORMATION

We conduct our business in one segment: Helicopter Services.  The Helicopter Services segment’s operations are conducted through three divisions:  Western Hemisphere, Eastern Hemisphere and Global Training, and ten business units within those divisions.  Western Hemisphere and Eastern Hemisphere operate through nine of the business units:  U.S. Gulf of Mexico, Arctic, Latin America and Western Hemisphere (“WH”) Centralized Operations within the Western Hemisphere, and Europe, West Africa, Australia, Other International and Eastern Hemisphere (“EH”) Centralized Operations within the Eastern Hemisphere.  Our WH and EH Centralized Operations business units are comprised of our technical services business and other non-flight services business (e.g., provision of maintenance and supply chain parts and services to other Western and Eastern Hemisphere business units) and division level expenses.  Bristow Academy is the only business unit within our Global Training division.

Beginning on April 1, 2009, there is no longer a Southeast Asia business unit.  Australia is now a separate business unit and Malaysia, China and Vietnam are now included in the Other International business unit.  Amounts presented below for the three months ended June 30, 2008 and as of March 31, 2009 have been restated to conform to current period presentation.

Additionally, we previously recorded certain cost reimbursement intercompany transactions between the EH Centralized Operations business unit and other business units as intrasegment revenue.  We have reclassified these cost reimbursements from revenue to a reduction in expense.  Amounts presented below for the three months ended June 30, 2008 have been restated to conform to current period presentation.

As discussed in Note 1, earnings from unconsolidated affiliates which were previously excluded from operating income have been reclassified to be included within operating income and have been allocated to our business units herein.  Amounts presented below for the three months ended June 30, 2008 have been restated to conform to current period presentation.

The tables that follow show reportable segment information for the three months ended June 30, 2008 and 2009, reconciled to consolidated totals, and prepared on the same basis as our condensed consolidated financial statements.

	Three Months Ended June 30,
	2008		2009
	(In thousands)
Segment gross revenue from external customers:
U.S. Gulf of Mexico	$	61,509	$	45,411
Arctic		4,243		4,395
Latin America		20,206		19,559
WH Centralized Operations		1,858		766
Europe		95,286		114,415
West Africa		43,300		54,817
Australia		33,113		28,163
Other International		16,258		13,327
EH Centralized Operations		2,167		2,304
Bristow Academy		6,151		7,293
Corporate		32		2
Total segment gross revenue	$	284,123	$	290,452

19

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

	Three Months Ended June 30,
	2008		2009
	(In thousands)
Intrasegment gross revenue:
U.S. Gulf of Mexico	$	—	$	50
Arctic		—		—
Latin America		—		—
WH Centralized Operations		402		719
Europe		144		628
West Africa		—		—
Australia		—		—
Other International		530		108
EH Centralized Operations		148		1,355
Bristow Academy		—		—
Total intrasegment gross revenue	$	1,224	$	2,860

Consolidated gross revenue reconciliation:
U.S. Gulf of Mexico	$	61,509		$	45,461
Arctic		4,243			4,395
Latin America		20,206			19,559
WH Centralized Operations		2,260			1,485
Europe		95,430			115,043
West Africa		43,300			54,817
Australia		33,113			28,163
Other International		16,788			13,435
EH Centralized Operations		2,315			3,659
Bristow Academy		6,151			7,293
Intrasegment eliminations		(1,224	)		(2,860	)
Corporate		32			2
Total consolidated gross revenue	$	284,123		$	290,452

Consolidated operating income (loss) reconciliation:
U.S. Gulf of Mexico	$	7,989		$	6,240
Arctic		519			605
Latin America		9,701			4,779
WH Centralized Operations		(676	)		(3,209	)
Europe		19,466			18,778
West Africa		6,516			14,238
Australia		2,145			6,175
Other International		3,298			3,287
EH Centralized Operations		(5,422	)		(2,893	)
Bristow Academy		546			931
Gain on disposal of assets		2,665			6,009
Corporate		(7,437	)		(10,168	)
Total consolidated operating income (1)	$	39,310		$	44,772

20

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

	March 31,		June 30,
	2009		2009
	(In thousands)
Identifiable assets:
U.S. Gulf of Mexico	$	345,522	$	363,451
Arctic		15,584		17,298
Latin America		214,490		382,999
WH Centralized Operations		12,480		12,177
Europe		683,191		779,763
West Africa		269,618		293,951
Australia		175,031		208,672
Other International		110,429		103,522
EH Centralized Operations		30,241		22,453
Bristow Academy		37,961		37,966
Corporate (2)		440,024		235,827
Total identifiable assets	$	2,334,571	$	2,458,079

__________

(1) Operating income includes depreciation and amortization expense in the following amounts for the periods presented:

	Three Months Ended June 30,
	2008		2009
	(In thousands)
U.S. Gulf of Mexico	$	2,957	$	3,167
Arctic		224		191
Latin America		1,930		2,546
WH Centralized Operations		124		307
Europe		4,879		6,598
West Africa		2,053		2,039
Australia		1,172		1,566
Other International		966		876
EH Centralized Operations		150		179
Bristow Academy		411		631
Corporate		89		86
Consolidated total	$	14,955	$	18,186

(2) Includes $230.1 million and $191.6 million of construction in progress within property and equipment on our condensed consolidated balance sheets as of March 31 and June 30, 2009, respectively, which primarily represents progress payments on aircraft to be delivered in future periods.

NOTE 12 — COMPREHENSIVE INCOME

Comprehensive income is as follows:

	Three Months Ended June 30,
	2008			2009
	(In thousands)
Net income	$	23,283		$	23,991
Other comprehensive income (loss):
Currency translation adjustments (1)		3,503			42,130
Income tax effect attributable to pension liability adjustment as a result of internal reorganization(2)		(9,371	)		—
Unrealized loss on cash flow hedges (net of income tax effect of $0.3 million and $2.5 million, respectively)		(578	)		(4,566	)
Comprehensive income	$	16,837		$	61,555

21

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

________

(1)

During the three months ended June 30, 2009, the U.S. dollar weakened against the British pound sterling, resulting in translation gains recorded as a component of stockholders’ investment as of June 30, 2009.

(2)

On April 1, 2008, we completed an internal reorganization that restructured our holdings in Bristow Aviation Holdings Limited (“Bristow Aviation”) in an effort to simplify our legal entity structure and reduce administrative costs associated with our ownership in Bristow Aviation.  In late March 2008, we completed part of this overall restructuring that resulted in the release of $3.5 million of previously provided U.S. deferred tax on the assets subject to the restructuring.  The additional transactions completed on April 1, 2008 resulted in a charge to other comprehensive income as a result of a reduction of $9.4 million in deferred tax assets associated with our net pension liability; however, these transactions did not result in a material impact on net income.

NOTE 13 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

In connection with the sale of the 7 ½% Senior Notes due 2017, the 6 ⅛% Senior Notes due 2013 and the 3% Convertible Senior Notes, the Guarantor Subsidiaries jointly, severally and unconditionally guaranteed the payment obligations under these notes.  The following supplemental financial information sets forth, on a consolidating basis, the balance sheet, statement of income and cash flow information for Bristow Group Inc. (“Parent Company Only”), for the Guarantor Subsidiaries and for our other subsidiaries (the “Non-Guarantor Subsidiaries”).  We have not presented separate financial statements and other disclosures concerning the Guarantor Subsidiaries because management has determined that such information is not material to investors.

The supplemental condensed consolidating financial information has been prepared pursuant to the rules and regulations for condensed financial information and does not include all disclosures included in annual financial statements, although we believe that the disclosures made are adequate to make the information presented not misleading.  The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenue and expense.

The allocation of the consolidated income tax provision was made using the with and without allocation method.

22

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Income

Three Months Ended June 30, 2008

	Parent							Non-
	Company			Guarantor				Guarantor
	Only			Subsidiaries				Subsidiaries			Eliminations				Consolidated
							(In thousands)
Revenue:
Gross revenue	$	31			$	89,232		$	194,860			$	—		$	284,123
Intercompany revenue		—				5,473			4,432				(9,905	)		—
		31				94,705			199,292				(9,905	)		284,123
Operating expense:
Direct cost		40				59,453			153,547				—			213,040
Intercompany expenses		—				4,485			5,420				(9,905	)		—
Depreciation and amortization		67				5,712			9,176				—			14,955
General and administrative		7,153				4,331			15,722				—			27,206
		7,260				73,981			183,865				(9,905	)		255,201
Gain on disposal of assets		—				1,963			702				—			2,665
Earnings from unconsolidated affiliates, net		49,123				3,454			4,269				(49,123	)		7,723
Operating income		41,894				26,141			20,398				(49,123	)		39,310
Interest income		20,935				65			451				(20,004	)		1,447
Interest expense		(8,852	)			—			(19,754	)			20,004			(8,602	)
Other income (expense), net		4,680				(25	)		(2,963	)			—			1,692
Income before provision for income taxes		58,657				26,181			(1,868	)			(49,123	)		33,847
Allocation of consolidated income taxes		(36,034	)			(3,873	)		29,343				—			(10,564	)
Net income		22,623				22,308			27,475				(49,123	)		23,283
Net income attributable to noncontrolling interests		(43	)			—			(660	)			—			(703	)
Net income attributable to Bristow	$	22,580			$	22,308		$	26,815			$	(49,123	)	$	22,580

23

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Income

Three Months Ended June 30, 2009

	Parent							Non-
	Company			Guarantor				Guarantor
	Only			Subsidiaries				Subsidiaries			Eliminations				Consolidated
							(In thousands)
Revenue:
Gross revenue	$	—			$	72,092		$	218,360			$	—		$	290,452
Intercompany revenue		—				7,893			3,349				(11,242	)		—
		—				79,985			221,709				(11,242	)		290,452
Operating expense:
Direct cost		(82	)			46,436			160,980				—			207,334
Intercompany expenses		7				3,654			7,581				(11,242	)		—
Depreciation and amortization		179				6,801			11,206				—			18,186
General and administrative		12,814				3,232			12,756				—			28,802
		12,918				60,123			192,523				(11,242	)		254,322
Gain on disposal of assets		—				—			6,009				—			6,009
Earnings from unconsolidated affiliates, net		17,141				—			3,341				(17,849	)		2,633
Operating income		4,223				19,862			38,536				(17,849	)		44,772
Interest income		30,433				12			145				(30,368	)		222
Interest expense		(10,287	)			—			(30,093	)			30,368			(10,012	)
Other income (expense), net		(238	)			(538	)		(705	)			—			(1,481	)
Income before provision for income taxes		24,131				19,336			7,883				(17,849	)		33,501
Allocation of consolidated income taxes		(304	)			(2,901	)		(6,305	)			—			(9,510	)
Net income		23,827				16,435			1,578				(17,849	)		23,991
Net income attributable to noncontrolling interests		(104	)			—			(164	)			—			(268	)
Net income attributable to Bristow	$	23,723			$	16,435		$	1,414			$	(17,849	)	$	23,723

24

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

 Supplemental Condensed Consolidating Balance Sheet

As of March 31, 2009

	Parent								Non-
	Company			Guarantor					Guarantor
	Only			Subsidiaries					Subsidiaries			Elimination				Consolidated
								(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	226,691			$	5,445			$	68,833			$	—		$	300,969
Accounts receivable		11,931				67,047				172,974				(35,278	)		216,674
Inventories		—				82,422				83,016				—			165,438
Prepaid expenses and other		1,000				6,200				30,676				(17,650	)		20,226
Total current assets		239,622				161,114				355,499				(52,928	)		703,307
Intercompany investment		924,815				62,990				251,960				(1,239,765	)		—
Investment in unconsolidated affiliates		1,631				150				18,484				—			20,265
Intercompany notes receivable		835,439				—				(8,709	)			(826,730	)		—
Property and equipment – at cost:
Land and buildings		212				48,770				19,979				—			68,961
Aircraft and equipment		7,280				768,709				1,047,022				—			1,823,011
		7,492				817,479				1,067,001				—			1,891,972
Less:  Accumulated depreciation and amortization		(1,511	)			(129,675	)			(219,329	)			—			(350,515	)
		5,981				687,804				847,672				—			1,541,457
Goodwill		—				4,486				40,168				—			44,654
Other assets		113,735				1,151				186,726				(276,724	)		24,888
	$	2,121,223			$	917,695			$	1,691,800			$	(2,396,147	)	$	2,334,571
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	938			$	20,772			$	50,230			$	(27,048	)	$	44,892
Accrued liabilities		11,458				22,703				90,594				(26,951	)		97,804
Deferred taxes		(1,575	)			—				7,770				—			6,195
Short-term borrowings and current maturities of long-term debt		3,040				—				5,908				—			8,948
Total current liabilities		13,861				43,475				154,502				(53,999	)		157,839
Long-term debt, less current maturities		670,565				—				44,400				—			714,965
Intercompany notes payable		—				355,150				572,148				(927,298	)		—
Accrued pension liabilities		—				—				81,380				—			81,380
Other liabilities and deferred credits		3,340				8,567				181,964				(177,130	)		16,741
Deferred taxes		97,503				6,299				23,464				—			127,266
Stockholders’ investment:
Preferred stock		222,554				—				—				—			222,554
Common stock		291				4,996				9,646				(14,642	)		291
Additional paid-in-capital		436,296				17,906				542,992				(560,898	)		436,296
Retained earnings		718,493				481,302				12,860				(494,162	)		718,493
Noncontrolling interests		7,107				—				4,093				—			11,200
Accumulated other comprehensive income (loss)		(48,787	)			—				64,351				(168,018	)		(152,454	)
		1,335,954				504,204				633,942				(1,237,720	)		1,236,380
	$	2,121,223			$	917,695			$	1,691,800			$	(2,396,147	)	$	2,334,571

25

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Balance Sheet

As of June 30, 2009

	Parent							Non-
	Company			Guarantor				Guarantor
	Only			Subsidiaries				Subsidiaries			Eliminations			Consolidated
							(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	62,275			$	2,214		$	73,806		$	—		$	138,295
Accounts receivable		10,232				59,333			179,831			(17,335	)		232,061
Inventories		—				85,289			98,901			—			184,190
Prepaid expenses and other		851				30,517			34,915			(7,427	)		58,856
Total current assets		73,358				177,353			387,453			(24,762	)		613,402
Intercompany investment		953,071				62,721			251,672			(1,267,464	)		—
Investment in unconsolidated affiliates		—				844			198,890			—			199,734
Intercompany notes receivable		1,067,838				—			(201,398	)		(866,440	)		—
Property and equipment – at cost:
Land and buildings		212				50,234			24,831			—			75,277
Aircraft and equipment		8,156				737,231			1,131,908			—			1,877,295
		8,368				787,465			1,156,739			—			1,952,572
Less:  Accumulated depreciation and amortization		(1,648	)			(134,764	)		(242,434	)		—			(378,846	)
		6,720				652,701			914,305			—			1,573,726
Goodwill		—				4,486			42,322			—			46,808
Other assets		113,462				1,149			186,928			(277,130	)		24,409
	$	2,214,449			$	899,254		$	1,780,172		$	(2,435,796	)	$	2,458,079
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	2,857			$	11,650		$	53,979		$	(6,996	)	$	61,490
Accrued liabilities		12,845				47,465			73,380			(17,766	)		115,924
Deferred taxes		(1,712	)			—			12,754			—			11,042
Short-term borrowings and current maturities of long-term debt		3,091				—			5,862			—			8,953
Total current liabilities		17,081				59,115			145,975			(24,762	)		197,409
Long-term debt, less current maturities		671,223				—			43,330			—			714,553
Intercompany notes payable		—				304,254			662,186			(966,440	)		—
Accrued pension liabilities		—				—			96,384			—			96,384
Other liabilities and deferred credits		3,709				8,507			182,975			(177,130	)		18,061
Deferred taxes		100,419				6,604			26,115			—			133,138
Stockholders’ investment:
5.50% mandatory convertible preferred stock		222,554				—			—			—			222,554
Common stock		293				4,996			32,863			(37,859	)		293
Additional paid-in-capital		439,712				18,041			552,968			(571,009	)		439,712
Retained earnings		739,054				497,737			5,524			(503,261	)		739,054
Noncontrolling interests		7,411				—			4,400			—			11,811
Accumulated other comprehensive income (loss)		12,993				—			27,452			(155,335	)		(114,890	)
		1,422,017				520,774			623,207			(1,267,464	)		1,298,534
	$	2,214,449			$	899,254		$	1,780,172		$	(2,435,796	)	$	2,458,079

26

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

 Supplemental Condensed Consolidating Statement of Cash Flows

Three Months Ended June 30, 2008

	Parent							Non-
	Company			Guarantor				Guarantor
	Only			Subsidiaries				Subsidiaries			Eliminations			Consolidated
							(In thousands)
Net cash provided by (used in) operating activities	$	(12,270	)	$	17,713			$	25,958		$	(1,757	)	$	29,644
Cash flows from investing activities:
Capital expenditures		(1,069	)		(87,744	)			(42,005	)		—			(130,818	)
Proceeds from asset dispositions		—			3,230				4,176			—			7,406
Acquisition, net of cash received		—			356				—			—			356
Net cash used in investing activities		(1,069	)		(84,158	)			(37,829	)		—			(123,056	)
Cash flows from financing activities:
Proceeds from borrowings		115,000			—				—			—			115,000
Debt issuance costs		(3,304	)		—				—			—			(3,304	)
Repayment of debt and debt redemption premiums		(575	)		—				(1,022)			—			(1,597	)
Increases (decreases) in cash related to intercompany  advances and debt		(75,949	)		66,084				8,783			1,082			—
Partial prepayment of put/call obligation		(41	)		—				—			—			(41	)
Preferred Stock dividends paid		(3,162	)		—				—			—			(3,162	)
Issuance of common stock		225,117			—				—			—			225,117
Tax benefit related to stock-based compensation		231			—				—			—			231
Net cash provided by financing activities		257,317			66,084				7,761			1,082			332,244
Effect of exchange rate changes on cash and cash equivalents		(248	)		—				(1,202	)		—			(1,450	)
Net increase (decrease) in cash and cash equivalents		243,730			(361	)			(5,312	)		(675	)		237,382
Cash and cash equivalents at beginning of period		226,494			361				63,195			—			290,050
Cash and cash equivalents at end of period	$	470,224		$	—			$	57,883		$	(675	)	$	527,432

27

BRISTOW GROUP INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Cash Flows

Three Months Ended June 30, 2009

	Parent						Non-
	Company			Guarantor			Guarantor
	Only			Subsidiaries			Subsidiaries			Eliminations		Consolidated
						(In thousands)
Net cash provided by (used in) operating activities	$	(26,247	)	$	27,483		$	33,744		$	—	$	34,980
Cash flows from investing activities:
Capital expenditures		(876	)		(1,524	)		(83,640	)		—		(86,040	)
Deposits on assets held for sale		—			23,764			—			—		23,764
Proceeds from asset dispositions		—			—			40,364			—		40,364
Acquisition, net of cash received		—			—			(178,638	)		—		(178,638	)
Net cash used in investing activities		(876	)		22,240			(221,914	)		—		(200,550	)
Cash flows from financing activities:
Repayment of debt and debt redemption premiums		(575	)		—			(829)			—		(1,404	)
Increases (decreases) in cash related to intercompany advances and debt		(141,681	)		(52,954	)		194,635			—		—
Dividends paid		8,750			—			(8,750	)		—		—
Partial prepayment of put/call obligation		(19	)		—			—			—		(19	)
Preferred Stock dividends paid		(3,162	)		—			—			—		(3,162	)
Issuance of common stock		346			—			—			—		346
Tax benefit related to stock-based compensation		26			—			—			—		26
Net cash provided by (used in) financing activities		(136,315	)		(52,954	)		185,056					(4,213	)
Effect of exchange rate changes on cash and cash equivalents		(978	)		—			8,087			—		7,109
Net increase (decrease) in cash and cash equivalents		(164,416	)		(3,231	)		4,973			—		(162,674	)
Cash and cash equivalents at beginning of period		226,691			5,445			68,833			—		300,969
Cash and cash equivalents at end of period	$	62,275		$	2,214		$	73,806		$	—	$	138,295

28

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Bristow Group Inc.:

We have reviewed the condensed consolidated balance sheet of Bristow Group Inc. and subsidiaries (the Company) as of June 30, 2009 and the related condensed consolidated statements of income for the three-month periods ended June 30, 2008 and 2009, and the related condensed consolidated statements of cash flows for the three-month periods ended June 30, 2008 and 2009.  These condensed consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States).  A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole.  Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of March 31, 2009, and the related consolidated statements of income, stockholders’ investment, and cash flows for the year then ended (not presented herein); and in our report dated May 21, 2009 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2009 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ KPMG LLP

Houston, Texas

August 5, 2009

29

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes thereto as well as our Annual Report on Form 10-K for the fiscal year ended March 31, 2009 (the “fiscal year 2009 Annual Report”) and the MD&A contained therein.  In the discussion that follows, the terms “Comparable Quarter” and “Current Quarter” refer to the three months ended June 30, 2008 and 2009, respectively.  Our fiscal year ends March 31, and we refer to fiscal years based on the end of such period.  Therefore, the fiscal year ending March 31, 2010 is referred to as “fiscal year 2010.”

Forward-Looking Statements

This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”).  Forward-looking statements are statements about our future business, strategy, operations, capabilities and results; financial projections; plans and objectives of our management; expected actions by us and by third parties, including our customers, vendors, competitors and regulators; and other matters.  Some of the forward-looking statements can be identified by the use of words such as “believes”, “belief”, “expects”, “plans”, “anticipates”, “intends”, “projects”, “estimates”, “may”, “might”, “would”, “could” or other similar words; however, all statements in this Quarterly Report, other than statements of historical fact or historical financial results are forward-looking statements.

Our forward-looking statements reflect our views and assumptions on the date we are filing this Quarterly Report regarding future events and operating performance.  We believe that they are reasonable, but they involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements.  Accordingly, you should not put undue reliance on any forward-looking statements.  Factors that could cause our forward-looking statements to be incorrect and actual events or our actual results to differ from those that are anticipated include all of the following:

·   the risks and uncertainties described under “Item 1A. Risk Factors” in the fiscal year 2009 Annual Report;

·   the level of activity in the oil and natural gas industry is lower than anticipated;

·   production-related activities become more sensitive to variances in commodity prices;

·   the major oil companies do not continue to expand internationally;

·   market conditions are weaker than anticipated;

·   we are unable to acquire additional aircraft due to limited availability or unable to exercise aircraft purchase options;

·   we are unable to obtain financing or we are unable to draw on our credit facilities;

·   we are not able to re-deploy our aircraft to regions with greater demand;

·   we do not achieve the anticipated benefit of our fleet renewal and growth strategy;

·   the outcome of the U.S. Department of Justice (“DOJ”) investigation relating to the Internal Review, which is ongoing, has a greater than anticipated financial or business impact; and

·   the outcome of the DOJ antitrust investigation, which is ongoing, has a greater than anticipated financial or business impact.

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All forward-looking statements in this Quarterly Report are qualified by these cautionary statements and are only made as of the date of this Quarterly Report.  We do not undertake any obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Executive Overview

This Executive Overview only includes what management considers to be the most important information and analysis for evaluating our financial condition and operating performance.  It provides the context for the discussion and analysis of the financial statements which follows and does not disclose every item impacting our financial condition and operating performance.

General

We are a leading provider of helicopter services to the worldwide offshore energy industry and one of two helicopter service providers to the offshore energy industry with global operations.  We have significant operations in most major offshore oil and gas producing regions of the world, including the North Sea, the U.S. Gulf of Mexico, Nigeria, Australia and Latin America, and we generated 80% of our revenue from international operations during the Current Quarter.  We have a long history in the helicopter services industry, with our two principal legacy companies, Bristow Helicopters Ltd. and Offshore Logistics, Inc., having been founded in 1955 and 1969, respectively.

We conduct our business in one segment:  Helicopter Services.  The Helicopter Services segment’s operations are conducted through three divisions, Western Hemisphere, Eastern Hemisphere and Global Training, and through ten business units within those divisions:

·   Western Hemisphere

−   U.S. Gulf of Mexico

−   Arctic

−   Latin America

−   Western Hemisphere (“WH”) Centralized Operations

·   Eastern Hemisphere

−   Europe

−   West Africa

−   Australia

−   Other International

−   Eastern Hemisphere (“EH”) Centralized Operations

·   Global Training

−   Bristow Academy

  We provide helicopter services to a broad base of major integrated, national and independent oil and gas companies.  Customers charter our helicopters to transport personnel between onshore bases and offshore platforms, drilling rigs and installations.  A majority of our helicopter revenue is attributable to oil and gas production activities, which have historically provided a more stable source of revenue than exploration and development related activities.  As of June 30, 2009, we operated 385 aircraft (including 344 owned aircraft, 35 leased aircraft and 6 aircraft operated for one of our customers; 12 of the owned aircraft are held for sale) and our unconsolidated affiliates operated 180 aircraft and managed 16 aircraft in addition to those aircraft leased from us.  Our Global Training division is approved to provide helicopter flight training to the commercial pilot and flight instructor level by both the U.S. Federal Aviation Administration (“FAA”) and the European Joint Aviation Authority.  Bristow Academy, which forms the central core of our Global Training division, operates 76 aircraft (including 57 owned and 19 leased aircraft) and employs 190 people, including 88 flight instructors.  The Global Training division supports, coordinates, standardizes, and in the case of the Bristow Academy schools, directly manages our flight training activities.

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The chart below presents (1) the number of helicopters in our fleet and their distribution among the business units of our Helicopter Services segment as of June 30, 2009; (2) the number of helicopters which we had on order or under option as of June 30, 2009; and (3) the percentage of gross revenue which each of our business units provided during the Current Quarter.  For additional information regarding our commitments and options to acquire aircraft, see Note 7 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

	Percentage of Current Quarter Revenue		Aircraft in Consolidated Fleet
			Helicopters
			Small	Medium	Large	Training	Fixed   Wing	Total (1)	Unconsolidated Affiliates (2)	Total
U.S. Gulf of Mexico	16	%	60	26	7	—	—	93	—	93
Arctic	1	%	13	2	—	—	1	16	—	16
Latin America	7	%	5	35	2	—	—	42	92	134
WH Centralized Operations	1	%	—	—	—	—	—	—	—	—
Europe	39	%	—	12	41	—	—	53	—	53
West Africa	19	%	12	32	5	—	5	54	—	54
Australia	10	%	2	9	15	—	—	26	—	26
Other International	4	%	—	15	10	—	—	25	41	66
EH Centralized Operations	1	%	—	—	—	—	—	—	63	63
Bristow Academy	2	%	—	—	—	75	1	76	—	76
Total	100	%	92	131	80	75	7	385	196	581
Aircraft not currently in fleet: (3)
On order			1	7	9	—	—	17
Under option			1	27	19	—	—	47

_________

(1)	Includes twelve aircraft held for sale.
(2)	The 180 aircraft operated and 16 aircraft managed by our unconsolidated affiliates are in addition to those aircraft leased from us.
(3)	This table does not reflect aircraft which our unconsolidated affiliates may have on order or under option.

Our Strategy

Our goal is to advance our position as a leading helicopter services provider to the offshore energy industry.  We intend to employ the following strategies to achieve this goal:

·   Grow our business.  We plan to continue to grow our business globally and increase our revenue and profitability, subject to managing through cyclical downturns in the energy industry.  We have a footprint in most major oil and gas producing regions of the world, and we expect to have the opportunity to expand and deepen our presence in many of these markets.  We anticipate this growth will result primarily from the deployment of new aircraft into markets where we expect they will be most profitably employed, as well as by executing opportunistic acquisitions and investments.  Through our relationships with our existing customers, we are aware of future business opportunities in the markets we currently serve that would allow us to grow through fleet additions.  Our acquisition-related growth may include increasing our role and participation with existing unconsolidated affiliates or investing in new companies, and may include increasing our position in existing markets or expanding into new markets.

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·   Be the preferred provider of helicopter services.  We position our business as the preferred provider of helicopter services by maintaining strong relationships with our customers and providing safe and high-quality service.  We focus on maintaining relationships with our customers’ field operations and corporate management.  We believe that this focus helps us better anticipate customer needs and provide our customers with the right aircraft in the right place at the right time, which in turn allows us to better manage our existing fleet and capital investment program.  We also leverage our close relationships with our customers to establish mutually beneficial operating practices and safety standards worldwide.  By applying standard operating and safety practices across our global operations, we are able to provide our customers with consistent, high-quality service in each of their areas of operation.  By better understanding our customers’ needs and by virtue of our global operations and safety standards, we have effectively competed against other helicopter service providers based on aircraft availability, customer service, safety and reliability, and not just price.

·   Integrate our global operations.  We are an integrated global operator, and we intend to continue to identify and implement further opportunities to integrate our global organization.  We have integrated our operations among previously independently managed businesses, created a global flight and maintenance standards group, improved our global asset allocation and made other changes in our corporate and field operations.

Market Outlook

Our core business is providing helicopter services to the worldwide oil and gas industry.  Our customers’ operating expenditures in the production sector are the principal source of our revenue, while their exploration and development capital expenditures provide a lesser portion of our revenue.  Our customers typically base their capital expenditure budgets on their long-term commodity price expectations and not exclusively on the current spot price.  Commodity prices fell substantially in the second half of 2008.  Most of our oil company customers have reduced capital spending plans, including in many cases deferral of projects, typically by 12 to 18 months.

As a result of lower commodity prices and the lack of liquidity in the credit markets, we have seen a reduction in demand for exploration-based flying and a shift to lower cost aircraft in certain of our markets.  In addition, a number of our customers reassessed their short to medium term plans resulting in a reduction in activity in comparison to prior year levels.  Although our small independent oil company customers are not the largest portion of our business, they are more vulnerable to commodity price shifts and the global financial crisis discussed below.  In several cases, such customers have slowed their payments for our services, and in one case, a small customer went into receivership. We have held pricing firm on existing contracts and continue to work with our clients to improve the efficiency of their operations.  Our global operations and critical mass of helicopters provide us with diversity of geographic and customer focus to help mitigate risks associated with single markets or customers.

Although some of the global demand for our services has softened, the fundamental long-term challenge for our industry is the limitation on supply of new aircraft and the need to retire many of the older aircraft in the industry’s fleet.  Currently manufacturers have some availability for aircraft.  However, we expect constraints on supply of new aircraft to resume.  There has been a softening in the aftermarket for sales of our older aircraft, reflecting fewer buyers with available capital, and sale prices have also declined, but to a lesser extent.  We continue to expect to grow our business through the delivery of aircraft on order and potentially through acquisitions and investments, subject to managing through cyclical downturns in the energy industry.

Over the past three years, we have raised approximately $1.0 billion of capital in a mix of debt and equity with both public and private financings.  During this same period we have spent $1.1 billion on capital expenditures to grow our business.  We expect that our cash on deposit as of June 30, 2009 of $138.3 million, cash flow from operations and aircraft sales as well as the $100 million borrowing capacity under our revolving credit facility will be sufficient to satisfy our future capital commitments, including our remaining aircraft purchase commitments of $169.4 million as of June 30, 2009.  We plan to continue to be disciplined in our capital commitment program.  Therefore, we do not foresee an immediate need to raise capital through new financings.  See “Items 1A. Risk Factors” in Part II of our fiscal year 2009 Annual Report for a discussion of some of the risks associated with the continuing financial and credit crisis and worldwide economic downturn.

In order to manage our business more prudently during this period, we are taking the following actions:

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·   Capital expenditures are being carefully evaluated and prioritized;

·   Management salaries have been frozen; and

·   We are in consultations with U.K. union representatives and employees in our Europe and EH Centralized Operations business units regarding staffing reductions in fiscal year 2010.  Similar actions are occurring in other business units as part of an overall plan to reduce our work force by 5% to 10% to meet changing market conditions while maintaining operational safety.

Results of Operations

The following table presents our operating results and other income statement information for the applicable periods:

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(Unaudited) (In thousands, except per share amounts, percentages and flight hours)
Gross revenue:
Operating revenue	$	258,404		$	263,493		$	5,089		2.0		%
Reimbursable revenue		25,719			26,959			1,240		4.8		%
Total gross revenue		284,123			290,452			6,329		2.2		%
Operating expense:
Direct cost		186,973			180,677			6,296		3.4		%
Reimbursable expense		26,067			26,657			(590	)	(2.3	)	%
Depreciation and amortization		14,955			18,186			(3,231	)	(21.6	)	%
General and administrative		27,206			28,802			(1,596	)	(5.9	)	%
		255,201			254,322			879		0.3		%
Gain on disposal of assets (1)		2,665			6,009			3,344		125.5		%
Earnings from unconsolidated affiliates, net of losses (1)		7,723			2,633			(5,090	)	(65.9	)	%
Operating income		39,310			44,772			5,462		13.9		%
Interest income (expense), net		(7,155	)		(9,790	)		(2,635	)	(36.8	)	%
Other income (expense), net		1,692			(1,481	)		(3,173	)	(187.5	)	%
Income before provision for income taxes		33,847			33,501			(346	)	(1.0	)	%
Provision for income taxes		(10,564	)		(9,510	)		1,054		10.0		%
Net income		23,283			23,991			708		3.0		%
Net income attributable to noncontrolling interests		(703	)		(268	)		435		61.9		%
Net income attributable to Bristow	$	22,580		$	23,723		$	1,143		5.1		%
Diluted earnings per common share	$	0.72		$	0.66		$	(0.06	)	(8.3	)	%
Operating margin (2)		13.8	%		15.4	%		1.6	%	11.6		%
Flight hours (3)		75,454			60,533			(14,921	)	(19.8	)	%

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________

(1)	Gain on disposal of assets which was previously included within operating expense has been reclassified in this Quarterly Report to be included as a separate line below operating expense, but still within operating income.  Earnings from unconsolidated affiliates which were previously included in non-operating income have been reclassified in this Quarterly Report to be included within operating income.  Amounts presented for the Comparable Quarter have been restated to conform to Current Quarter presentation.  See Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report for further discussion of these changes in presentation.
(2)	Operating margin is calculated as operating income divided by gross revenue.
(3)	Excludes flight hours from Bristow Academy and unconsolidated affiliates.

Current Quarter Compared to Comparable Quarter

The increase in gross revenue is primarily due to our October 31, 2008 acquisition of the 51% interest in Bristow Norway that we did not previously own, increases in rates charged to customers and the addition of over 30 new aircraft, the majority of which are medium and large aircraft which earn higher rates.  The acquisition of Bristow Norway increased revenue by $31.6 million from the Comparable Quarter to the Current Quarter.  These increases were partially offset by decreases in revenue in the U.S. Gulf of Mexico as a result of the sale of 53 small aircraft and related inventory, spare parts, and offshore fuel equipment operating in the U.S. Gulf of Mexico (the “GOM Asset Sale”), the impact on revenue for our Europe and Australia business units of exchange rate changes as the U.S. dollar was stronger in the Current Quarter versus the Comparable Quarter and a decrease in fuel costs rebilled to our customers.

Operating expense decreased primarily due to a reduction in operating costs in the U.S. Gulf of Mexico resulting from the GOM Asset Sale, a decrease in global fuel costs and the impact of exchange rate changes, offset primarily by the addition of $29.3 million in expense from Bristow Norway and increases in depreciation expense resulting from the addition of new aircraft and in general and administrative expense resulting primarily from the separation between the Company and an Executive Officer that resulted in $3.1 million of additional compensation expense during the Current Quarter.

Operating income was also impacted by an increase in the gain on disposal of assets of $3.3 million and a $5.1 million decrease in earnings from unconsolidated affiliates.  While the Current Quarter includes earnings from our recent investment in Líder Aviação Holding S.A. (“Líder”) of $1.3 million, this was more than offset by decreased earnings from Rotorwing Leasing Resources, L.L.C. (“RLR”) and Bristow Norway.  See further discussion of Líder and RLR included in “– Business Unit Operating Results – Latin America” and further discussion of Bristow Norway in “– Business Unit Operating Results – Europe.”

Despite the 13.9% increase in operating income, net income increased only slightly as a result of lower other income (expense), net and an increase in net interest expense.  Diluted earnings per share was reduced as a result of the issuance of 4,996,900 shares of common stock in our June 2008 equity offering.

Business Unit Operating Results

The following discussion sets forth certain operating information for the ten business units comprising our Helicopter Services segment.  Intercompany lease revenue and expense are eliminated from our segment reporting, and depreciation expense of aircraft is presented in the segment that operates the aircraft.

Beginning on April 1, 2009, there is no longer a Southeast Asia business unit.  Australia is now a separate business unit and Malaysia, China and Vietnam are now included in the Other International business unit.  Amounts presented below for the Comparable Quarter have been restated to conform to Current Quarter presentation.

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Additionally, we previously recorded certain cost reimbursement intercompany transactions between the EH Centralized Operations business unit and other business units as intrasegment revenue.  We have reclassified these cost reimbursements from revenue to a reduction in expense.  Amounts presented below for the Comparable Quarter have been restated to conform to Current Quarter presentation.

As discussed in Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report, earnings from unconsolidated affiliates which were previously included in non-operating income have been reclassified to be included within operating income and have been allocated to our business units herein.  Amounts presented below for the three months ended June 30, 2008 have been restated to conform to current period presentation.

Current Quarter Compared to Comparable Quarter

Set forth below is a discussion of operations of our business units.  Our consolidated results are discussed under “Results of Operations” above.

U.S. Gulf of Mexico

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages and flight hours)
Gross revenue	$	61,509		$	45,461		$	(16,048	)	(26.1	)%
Operating expense	$	53,520		$	39,221		$	14,299		26.7	%
Operating margin		13.0	%		13.7	%		0.7	%	5.4	%
Flight hours		37,639			20,421			(17,218	)	(45.7	)%

The decrease in flight hours, gross revenue and operating expense and the increase in operating margin is primarily due to the GOM Asset Sale.  The GOM Asset Sale resulted in a decrease in revenue and flight hours of $11.5 million and 13,800, respectively.  Additionally, both revenue and operating expense decreased as a result of a decrease in fuel costs, which are generally recovered from our customers.  Salaries, maintenance and other overhead costs also decreased as a result of the reduction in number of aircraft supported due to the GOM Asset Sale.  The GOM Asset Sale resulted in improved operating margin as it contributed, along with the addition of new large aircraft to this market, to a favorable shift in the mix of aircraft type utilized towards more medium and large aircraft, which earn higher rates.

Arctic

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages and flight hours)
Gross revenue	$	4,243		$	4,395		$	152		3.6	%
Operating expense	$	3,724		$	3,790		$	(66	)	(1.8	)%
Operating margin		12.2	%		13.8	%		1.6	%	13.1	%
Flight hours		2,437			2,348			(89	)	(3.7	)%

Operating results for Arctic were mostly unchanged compared to the Comparable Quarter and seasonally higher than the three months ended March 31, 2009.  There have been no significant changes in contracts or operating expenses since the Comparable Quarter.

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Latin America

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages and flight hours)
Gross revenue	$	20,206		$	19,559		$	(647	)		(3.2	)	%
Operating expense	$	13,731		$	15,572		$	(1,841	)		(13.4	)	%
Earnings from unconsolidated affiliates	$	3,226		$	792		$	(2,434	)		(75.4	)	%
Operating margin		48.0	%		24.4	%		(23.6	)	%	(49.2	)	%
Flight hours		8,539			8,586			47			0.6		%

Gross revenue for Latin America decreased primarily due to a decrease in flight hours in Trinidad driven by lower demand by three major customers in that market offset slightly by additional contracts in Mexico and increased activity in Brazil.  During the Comparable Quarter, we restructured our ownership interests in certain joint ventures which resulted in several changes effective April 1, 2008, including the consolidation of RLR, return to the accrual basis of accounting for revenue recognition with Heliservicio Campeche S.A. de C.V. (“Heliservicio”) and application of the equity method of accounting to our investment in Heliservicio.  Collectively these transactions are referred to as the Mexico Reorganization.

Operating expense for Latin America increased primarily due to increased activity in Mexico and Brazil offset by a decrease in operating expense for Trinidad as a result of decreased activity in that market.  Additionally, we recorded an impairment charge of $0.4 million during the Current Quarter for an aircraft that is held for sale as of June 30, 2009.  Although revenue in Trinidad has decreased significantly, we are still incurring some fixed operating costs which contributed to the decreased operating margin for this business unit compared to the Comparable Quarter.  The asset impairment charge in the Current Quarter, the Mexico Reorganization (which resulted in additional $0.8 million of operating income during the Comparable Quarter) and a decrease in earnings from unconsolidated affiliates also contributed to the decreased operating margin.

Earnings from unconsolidated affiliates decreased primarily due to the collection of past due receivables of RLR resulting in $3.6 million of additional equity earnings during the Comparable Quarter compared to equity losses of $0.5 million from our investment in Heliservicio in the Current Quarter, which were partially offset by the addition of $1.3 million of earnings in the Current Quarter from our investment in Líder acquired on May 26, 2009.

WH Centralized Operations

	Three Months Ended June 30,
	2008			2009			Unfavorable
	(In thousands, except percentages)
Gross revenue	$	2,260		$	1,485		$	(775	)	(34.3	)%
Operating expense		2,936			4,694			(1,758	)	(59.9	)%
Operating loss	$	(676	)	$	(3,209	)	$	(2,533	)	(374.7	)%

Our WH Centralized Operations business unit is comprised of our technical services business, other non-flight services business (e.g., provision of maintenance and supply chain parts and services to these other Western Hemisphere business units) and division level expenses.  Operating expense reflects costs associated with other non-flight services net of the related charges to the other Western Hemisphere business units.

Gross revenue for WH Centralized Operations, which consists entirely of technical services revenue, decreased as a result of a reduction in part sales.

Operating expense for WH Centralized Operations increased primarily due to lower recovery of maintenance expense from our other Western Hemisphere business units as a result of reduced flight activity.

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Europe

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages and flight hours)
Gross revenue	$	95,430		$	115,043		$	19,613			20.6		%
Operating expense	$	77,954		$	96,297		$	(18,343	)		(23.5	)	%
Earnings from unconsolidated affiliates	$	1,990		$	32		$	(1,958	)		*
Operating margin		20.4	%		16.3	%		(4.1	)	%	(20.1	)	%
Flight hours		10,306			14,855			4,549			44.1		%

________

* not meaningful

Gross revenue and flight hours for Europe increased primarily as a result of the consolidation of Bristow Norway effective October 31, 2008 ($31.6 million and 4,064 hours, respectively) and new contracts in the North Sea offset primarily by the unfavorable impact of exchange rate changes as the U.S. dollar was stronger in the Current Quarter versus the Comparable Quarter.

Operating expense for Europe increased primarily due to the consolidation of Bristow Norway ($29.3 million).  These increases in operating expense were offset primarily by the impact of exchange rate changes.  Additionally, during the Comparable Quarter we recorded $1.9 million of equity earnings from Bristow Norway as it was an equity method investment prior to our October 31, 2008 acquisition of the 51% interest that we did not previously own.  As a result of the consolidation of Bristow Norway, which earned a lower operating margin than the remainder of the Europe business unit, and the related decrease in earnings from unconsolidated affiliates, operating margin for Europe decreased compared to the Comparable Quarter.

We are continuing to integrate Bristow Norway into our Europe business unit, including administrative and operating activities.  The future operating results and operating margins for Europe, including Bristow Norway, are expected to improve from this integration.

West Africa

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages and flight hours)
Gross revenue	$	43,300		$	54,817		$	11,517			26.6		%
Operating expense	$	36,784		$	40,579		$	(3,795	)		(10.3	)	%
Operating margin		15.0	%		26.0	%		11.0		%	73.3		%
Flight hours		9,598			8,950			(648	)		(6.8	)	%

Gross revenue for West Africa increased primarily as a result of one new contract and rate escalations under existing contracts offset slightly by a decrease in flight hours as a result of civil unrest.

The increase in operating expense was primarily a result of increases in salaries and benefits, freight, training and travel and meals, partially offset by a favorable impact of exchange rate changes as the U.S. dollar was stronger versus the Nigerian Naira and the British pound sterling in the Current Quarter versus the Comparable Quarter.  Operating margin for West Africa increased primarily as a result of the favorable impact on operating expense of exchange rate changes, the new contract and increases in rates under existing contracts.

We experience periodic disruption to our operations related to civil unrest and violence.  These factors have made and are expected to continue to make our operating results from Nigeria unpredictable.

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Australia

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages and flight hours)
Gross revenue	$	33,113		$	28,163		$	(4,950	)	(14.9	)%
Operating expense	$	30,968		$	21,988		$	8,980		29.0	%
Operating margin		6.5	%		21.9	%		15.4	%	236.9	%
Flight hours		4,040			2,880			(1,160	)	(28.7	)%

Gross revenue for Australia decreased primarily due to a decrease in flight hours as a result fewer aircraft under contract since the Comparable Quarter and due to the weakening of the Australian dollar versus the U.S. dollar in the Current Quarter compared to the Comparable Quarter.

Operating expense decreased primarily due to decreased activity resulting in a decrease in salaries and benefits, maintenance expense, fuel, travel and training expenses and the impact of changes in exchange rates.  Operating expense was also decreased as a result of the reversal of costs previously accrued in fiscal year 2009 for tax items as favorable rulings were obtained from the tax authorities in these matters during the Current Quarter.  Additionally, compensation costs for the Comparable Quarter included adjustments to employee tax and leave accruals related to prior periods totaling $1.3 million.  Excluding the adjustments to employee tax and leave accruals related to prior periods, operating margin for the Comparable Quarter would have been 15.0%.

Other International

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages and flight hours)
Gross revenue	$	16,788		$	13,435		$	(3,353	)	(20.0	)%
Operating expense	$	13,550		$	10,163		$	3,387		25.0	%
Earnings from unconsolidated affiliates	$	60		$	15		$	(45	)	(75.0	)%
Operating margin		19.6	%		24.5	%		4.9	%	25.0	%
Flight hours		2,895			2,493			(402	)	(13.9	)%

Gross revenue for Other International decreased primarily due to a decrease in revenue in Russia (the Comparable Quarter included $1.2 million in escalation charges to a customer) and Mauritania and Egypt (due to ending of short-term contracts) and the impact of exchange rate changes partially offset by increases in revenue in Libya and Ghana (due to new contracts).

Operating expense decreased primarily due to a reduction in lease and landing costs in Russia, a reduction in costs in Mauritania and Egypt (due to ending of short-term contracts) and the impact of exchange rate changes.  These decreases were partially offset by increase in costs in Libya and Ghana (due to new contracts).  The decrease in operating expense in these markets resulted in the increase in operating margin for Other International.

EH Centralized Operations

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages)
Gross revenue	$	2,315		$	3,659		$	1,344		58.1	%
Operating expense		10,236			8,346			1,890		18.5	%
Earnings from unconsolidated affiliates		2,499			1,794			(705	)	(28.2	)%
Operating loss	$	(5,422	)	$	(2,893	)	$	2,529		46.6	%

39

Our EH Centralized Operations business unit is comprised of our technical services business, other non-flight services business (e.g., provision of maintenance and supply chain parts and services to other Eastern Hemisphere business units) and division level expenses.  Operating expense reflects costs associated with other non-flight services net of the related charge to the other Eastern Hemisphere business units.

Gross revenue for EH Centralized Operations increased as a result of an increase in spare part and workorder sales.

Operating expense decreased primarily due to an increase in maintenance and overhead allocations to other business units as well as less exposure to the impact of changes in foreign exchange rates as the result of allocating these foreign exchange exposures to the other business units, a charge taken in the Comparable Quarter to reduce the carrying value of obsolete inventory and unusually high heavy maintenance expense incurred in the Comparable Quarter.

Earnings from unconsolidated affiliates decreased due to the stronger U.S. dollar during the Current Quarter compared to the Comparable Quarter.

Bristow Academy

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages)
Gross revenue	$	6,151		$	7,293		$	1,142		18.6	%
Operating expense	$	5,605		$	6,362		$	(757	)	(13.5	)%
Operating margin		8.9	%		12.8	%		3.9	%	43.8	%

Gross revenue for Bristow Academy increased as a result of increased military training and the acquisition of additional training aircraft.

Operating expense increased primarily due to increased business volume as well as costs of operating additional aircraft.  The operating margin improved due to the fact that the military training contracts yield a higher margin of return.  During the Current Quarter, approximately 50 pilots graduated from Bristow Academy; we hired 1 graduate as an instructor at Bristow Academy and 3 graduates as pilots (mostly former instructors) into our other business units.

Corporate

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages)
Gross revenue	$	32		$	2		$	(30	)	(93.8	)%
Operating expense		7,417			10,170			(2,753	)	(37.1	)%
Losses from unconsolidated affiliates		(52	)		—			52		100.0	%
Operating loss	$	(7,437	)	$	(10,168	)	$	(2,731	)	(36.7	)%

Corporate operating expense primarily represents costs of our corporate office and other general and administrative costs not allocated to our business units.  Corporate operating expense increased primarily due to the separation between the Company and an Executive Officer during April 2009, which was partially offset by a decrease in professional fees.

40

Interest Expense, Net

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages)
Interest income	$	1,447		$	222		$	(1,225	)	(84.7	)%
Interest expense		(10,857	)		(11,399	)		(542	)	(5.0	)%
Amortization of debt discount		(114	)		(725	)		(611	)	*
Amortization of debt fees		(413	)		(496	)		(83	)	(20.1	)%
Capitalized interest		2,782			2,608			(174	)	6.3	%
Interest expense, net	$	(7,155	)	$	(9,790	)	$	(2,635	)	(36.8	)%

________

* not meaningful

Interest income decreased as a result of our shift in cash from higher yielding investments to lower yielding, U.S. government investments in response to the condition of global financial markets.  Interest expense increased primarily as a result of additional interest expense of $0.7 million associated with the 3% Convertible Senior Notes issued in June 2008, which also resulted in the additional amortization of debt discount.  We retroactively adopted Financial Accounting Standards Board Staff Position APB No. 14-1 as discussed in Note 4 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Other Income (Expense), Net

	Three Months Ended June 30,
	2008			2009			(Unfavorable)
	(In thousands, except percentages)
Foreign currency losses	$	(367	)	$	(1,481	)	$	(1,114	)	(303.5	)%
Other		2,059			—			(2,059	)	(100.0	)%
Total	$	1,692		$	(1,481	)	$	(3,173	)	(187.5	)%

The increase in foreign currency losses primarily resulted from the revaluation of intercompany loans denominated in currencies other than the functional currencies of certain subsidiaries as certain exchange rates shifted during the Current Quarter.  During the Comparable Quarter, we realized $1.4 million in gains from the Mexico Reorganization, which represented the majority of other income in that period.

Taxes

	Three Months Ended June 30,						Favorable
	2008			2009			(Unfavorable)
	(In thousands, except percentages)
Effective tax rate		31.2	%		28.4	%		2.8	%	9.0	%
Net foreign tax on non-U.S. earnings	$	2,003		$	5,933		$	(3,930	)	(196.2	)%
Foreign earnings indefinitely reinvested abroad		(4,152	)		(10,894	)		6,742		162.4	%
Change in valuation allowance for foreign tax credit utilization		—			954			(954	)	(100.0	)%
Expense from change in tax contingency		188			1,276			(1,088	)	*

________

* not meaningful

Our effective tax rate was reduced by the permanent reinvestment outside the U.S. of foreign earnings, upon which no U.S. tax has been provided, and by the amount of our foreign source income and our ability to realize foreign tax credits.

41

Liquidity and Capital Resources

Financial Condition and Sources of Liquidity

See “Market Outlook” included elsewhere in this Quarterly Report for further discussion.

Cash and cash equivalents were $301.0 million and $138.3 million as of March 31 and June 30, 2009, respectively.  Working capital as of March 31 and June 30, 2009 was $545.5 million and $416.0 million, respectively.  The decrease in cash and cash equivalents and working capital was primarily a result of the $178.6 million in cash paid (including transaction costs incurred in fiscal year 2010) to acquire the 42.5% interest in Líder as discussed in Note 2 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Cash Flows

Operating Activities

Net cash flows provided by operating activities totaled $35.0 million during the Current Quarter compared to $29.6 million during the Comparable Quarter.  Changes in non-cash working capital used $11.5 million in cash flows from operating activities for the Current Quarter compared to $13.6 million in the Comparable Quarter.

Investing Activities

Cash flows used in investing activities were $200.6 million and $123.1 million for the Current Quarter and Comparable Quarter, respectively.  Cash was used for capital expenditures as follows:

		Three Months Ended                  June 30,
		2008		2009
Number of aircraft delivered:
Small		—		2
Medium		3		4
Large		2		3
Fixed wing		—		1
Training		2		—
Total aircraft		7		10
Capital expenditures (in thousands):
Aircraft and related equipment	$	123,434	$	79,622
Other		7,384		6,418
Total capital expenditures	$	130,818	$	86,040

Included in the capital expenditures aircraft and related equipment in the table above are final payments in connection with the delivery of aircraft and progress payments on the construction of new aircraft to be delivered in future periods in conjunction with our aircraft commitments (discussed in additional detail in Note 7 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report) of $69.5 million and an additional $10.1 million to upgrade aircraft within our existing aircraft fleet and to customize new aircraft delivered for our operations during the Current Quarter.  Also, during the Current Quarter, we acquired a 42.5% investment in Líder for $178.6 million.

Included in the capital expenditures aircraft and related equipment in the table above are final payments in connection with the delivery of aircraft and progress payments on the construction of new aircraft to be delivered in future periods of $113.0 million and $10.4 million to upgrade aircraft within our existing aircraft fleet and to customize new aircraft delivered for our operations during the Comparable Quarter.

42

During the Current Quarter we received proceeds of $40.4 million primarily from the disposal of eight aircraft and certain other equipment, which together resulted in a net gain of $6.0 million.  Additionally during the Current Quarter we received $23.8 million of deposits for aircraft held for sale.  During the Comparable Quarter, we received proceeds from the disposal of five aircraft and certain other equipment, which together resulted in a net gain of $2.7 million.

Due to the significant investment in aircraft made in both the Current Quarter and Comparable Quarter, net capital expenditures exceeded cash flow from operations, and we expect this will continue to be the case through the end of fiscal year 2010.  Also in fiscal year 2010, we expect to invest approximately $40 million in various infrastructure enhancements, including aircraft facilities, training centers and technology.  Through June 30, 2009, we had incurred $6.4 million towards these projects.

Financing Activities

Cash flows used in financing activities was $4.2 million during the Current Quarter compared to $332.2 million provided by financing activities during the Comparable Quarter.  During the Current Quarter, cash was used for the payment of preferred stock dividends of $3.2 million and repayment of debt totaling $1.4 million and cash was provided by issuance of common stock upon exercise of stock options of $0.3 million.  During the Comparable Quarter, cash was provided by our issuance of the 3% Convertible Senior Notes resulting in net proceeds of $111.7 million, by our issuance of 4,996,900 shares of common stock in a public offering and private placement in June 2008 resulting in net proceeds of $224.2 million and by our receipt of proceeds of $0.9 million from the exercise of options to acquire shares of our common stock by our employees.  Additionally, during the Comparable Quarter, cash was used for the payment of preferred stock dividends of $3.2 million and the repayment of debt totaling $1.6 million.

Future Cash Requirements

Contractual Obligations, Commercial Commitments and Off Balance Sheet Arrangements

We have various contractual obligations which are recorded as liabilities in our condensed consolidated balance sheet.  Other items, such as certain purchase commitments, interest payments and other executory contracts are not recognized as liabilities in our condensed consolidated balance sheet but are included in the table below.  For example, we are contractually committed to make certain minimum lease payments for the use of property and equipment under operating lease agreements.

43

The following tables summarize our significant contractual obligations and other commercial commitments on an undiscounted basis as of June 30, 2009 and the future periods in which such obligations are expected to be settled in cash.  In addition, the table reflects the timing of principal and interest payments on outstanding borrowings.  Additional details regarding these obligations are provided in Note 7 in the “Notes to Consolidated Financial Statements” included in the fiscal year 2009 Annual Report and in Note 7 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report:

	Payments Due by Period
			Nine Months Ending		Fiscal Year Ending March 31,
	Total		March 31, 2010		2011		2012 – 2013		2014 and beyond			Other
	(In thousands)
Contractual obligations:
Long-term debt and short-term borrowings:
Principal (1)	$	744,193	$	4,561	$	16,170	$	8,741	$	714,721	$	—
Interest		389,623		37,450		45,566		90,159		216,448		—
Aircraft operating leases (2)		70,113		7,009		6,879		9,441		46,784		—
Other operating leases  (3)		47,786		4,557		5,675		9,706		27,848		—
Pension obligations (4)		200,242		6,049		24,029		48,946		121,218		—
Aircraft purchase obligations  (5)		169,393		157,846		11,547		—		—		—
Other purchase obligations (6)		32,047		32,047		—		—		—		—
Tax reserves (7)		6,424		—		—		—		—		6,424
Total contractual cash obligations	$	1,659,821	$	249,519	$	109,866	$	166,993	$	1,127,019	$	6,424
Other commercial commitments:
Debt guarantees (8)	$	16,468	$	—	$	—	$	16,468	$	—	$	—
Other guarantees (9)		29,473		239		4,818		2,192		22,224		—
Letters of credit		1,396		1,157		239		—		—		—
Contingent consideration (10)		53,125		8,500		8,500		36,125		—		—
Other commitments (11)		101,751		17,644		18,883		19,224		46,000		—
Total commercial commitments	$	202,213	$	27,540	$	32,440	$	74,009	$	68,224	$	—

_________

(1)	Excludes unamortized premium on the 7½% Senior Notes of $0.5 million and unamortized discount on the 3% Senior Convertible Notes of $21.2 million.
(2)	Primarily represents separate operating leases for nine aircraft with a subsidiary of General Electric Capital Corporation with terms of fifteen years expiring in August 2023.
(3)	Represents minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year.
(4)	Represents expected funding for pension benefits in future periods.  These amounts are undiscounted and are based on the expectation that both the U.K. and Norway pension plans will be fully funded in approximately ten years.  As of June 30, 2009, we had recorded on our condensed consolidated balance sheet a $96.4 million pension liability associated with these obligations.  Also, the timing of the funding is dependent on actuarial valuations and resulting negotiations with the plan trustees.
(5)	Subsequent to June 30, 2009, we entered into an agreement to extend the delivery date to fiscal year 2011 for two large aircraft with commitments totaling $40.9 million.  This agreement allows us to cancel these orders without a termination fee through January 30, 2010 and February 28, 2010.  These aircraft were previously scheduled to be delivered in fiscal year 2010.  For further details on our aircraft purchase obligations, see Note 7 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

44

(6)	Other purchase obligations primarily represent unfilled purchase orders for aircraft parts and commitments associated with upgrading facilities at our bases.
(7)	Represents gross unrecognized tax benefits (see discussion in Note 7 in the “Notes to Consolidated Financial Statements” included in the fiscal year 2009 Annual Report) that may result in cash payments being made to certain tax authorities.  We are not able to reasonably estimate in which future periods this amount will ultimately be settled and paid.
(8)	We have guaranteed the repayment of up to £10 million ($16.5 million) of the debt of FBS, an unconsolidated affiliate.  This amount is not included in the “Contractual Obligations” section of the table above.
(9)	Relates to an indemnity agreement between us and Afianzadora Sofimex, S.A. to support issuance of surety bonds on behalf of Heliservicio from time to time.  As of June 30, 2009, surety bonds denominated in Mexican pesos with an aggregate value of 373 million Mexican pesos ($28.3 million) were outstanding and surety bonds denominated in U.S. dollars with an aggregate value of $1.2 million were outstanding.  Furthermore, we have received a counter-guarantee from our partner in Heliservicio, for 76% ($22.4 million) of the surety bonds outstanding.
(10)	The Líder purchase agreement includes incremental and cumulative earn-out payments based upon the achievement of growth targets over the next three years.  See Note 2 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report for discussion of the Líder acquisition.
(11)	In connection with the Bristow Norway acquisition (see “Part I.  Item I.  Business — Overview” included in the fiscal year 2009 Annual Report), we granted the former partner in this joint venture an option that if exercised would require us to acquire up to five aircraft from them at fair value upon the expiration of the lease terms for such aircraft.  Two of these aircraft are not currently operated by Bristow Norway, but our former partner has agreed to purchase the aircraft and lease the aircraft to Bristow Norway for an initial period of five years, with three one-year options for extension, as soon as practicable.  The existing three aircraft leases expire in December 2009, June 2010 and August 2011.

We do not expect the guarantees shown in the table above to become obligations that we will have to fund.

Capital Commitments

We have commitments and options to make capital expenditures over the next five fiscal years to purchase additional aircraft, including aircraft associated with the commitments reflected in the table above.  Although a similar number of our existing aircraft may be sold during the same period, the additional aircraft on order are expected to provide incremental fleet capacity in terms of revenue and operating margin.  See Note 7 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report for a detail of the number of aircraft under commitments and the number of aircraft under options expected to be delivered in the current and subsequent five fiscal years by aircraft size along with the related expenditures, and for a rollforward of aircraft commitments and options for the Current Quarter.

Other Obligations

Preferred Stock — If declared, dividends on the 4,600,000 shares of preferred stock would be $3.2 million on September 15, 2009, which is the last payment date for dividends on the preferred stock as it will convert to common stock on that date.  For a further discussion of the terms and conditions of the preferred stock, see Note 10 in the “Notes to Consolidated Financial Statements” included in the fiscal year 2009 Annual Report.

Critical Accounting Policies and Estimates

See Item 7.  “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in the fiscal year 2009 Annual Report for a discussion of our critical accounting policies.  There have been no material changes to our critical accounting policies and estimates provided in the fiscal year 2009 Annual Report.

45

Recent Accounting Pronouncements

See Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report for discussion of recent accounting pronouncements.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

We may be exposed to certain market risks arising from the use of financial instruments in the ordinary course of business.  This risk arises primarily as a result of potential changes in the fair market value of financial instruments that would result from adverse fluctuations in foreign currency exchange rates, credit risk, and interest rates as discussed in “Item 7A.  Quantitative and Qualitative Disclosures About Market Risk” in the fiscal year 2009 Annual Report and Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of June 30, 2009, we carried out an evaluation, under the supervision of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2009 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act was (i) accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control Over Financial Reporting

There were no changes during the three months ended June 30, 2009 in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.  Legal Proceedings.

On June 12, 2009, Superior Offshore International, Inc. v. Bristow Group Inc., et al, Case No. 1:09-cv-00438, was filed in the U.S. District Court for the District of Delaware.  The purported class action complaint, which also names other providers of offshore helicopter services in the Gulf of Mexico as defendants, alleges violations of Section 1 of the Sherman Act.  Among other things, the complaint alleges that the defendants unlawfully conspired to raise and maintain the price of offshore helicopter services between January 1, 2001 and December 31, 2005.  The plaintiff seeks to represent a purported class of direct purchasers of offshore helicopter services and is asking for, among other things, unspecified treble monetary damages and injunctive relief.  The Company intends to defend against this lawsuit vigorously.  As this lawsuit is in its initial stage, we are currently unable to determine whether it could have a material affect on our business, financial condition and results of operations.

We have certain other actions or claims pending that have been discussed and previously reported in Part I. Item 3.  “Legal Proceedings” in the fiscal year 2009 Annual Report.  Developments in these previously reported matters are described in Note 7 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

46

Item 1A.  Risk Factors.

There have been no material changes during the three months ended June 30, 2009 in our “Risk Factors” as discussed in our fiscal year 2009 Annual Report on Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities.

Period (1)	Total Number of Shares Purchased (2)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program
April 1, 2009 − April 30, 2009		10,872	$	22.76		—	$	—

________

(1)  No shares were purchased during the periods from May 1 − June 30, 2009.

(2)  The total number of shares purchased in the period consists of shares withheld by us in satisfaction of withholding taxes due upon the vesting of restricted stock units and awards granted to an employee under our 2004 and 2007 Stock Incentive Plans.

Item 4. Submission of Matters to a Vote of Security Holders.

The annual meeting of stockholders was held on August 5, 2009.  Matters voted on at the meeting consisted of:

1.   For the election of directors, all nominees were approved.  The results were as follows:

Nominee	For	Withheld
Thomas N. Amonett	27,543,590	375,468
Stephen J. Cannon	27,637,669	281,389
Jonathan H. Cartwright	27,343,807	575,251
William E. Chiles	27,625,613	293,445
Michael A. Flick	27,636,994	282,064
Thomas C. Knudson	27,633,770	285,288
Ken C. Tamblyn	27,635,325	283,733
William P. Wyatt	24,569,358	3,349,700

2.   Proposal to approve and ratify the selection of KPMG LLP as the Company’s independent auditors for the fiscal year ending March 31, 2010.  The results were as follows:

For	Against	Abstain	Broker No-Vote
27,849,163	64,781	5,114	—

47

Item 6. Exhibits.

The following exhibits are filed as part of this Quarterly Report:

Exhibit Number	Description of Exhibit
10.1*+	Líder Aviação Holding S.A. Shareholders Agreement dated May 26, 2009.
10.2†	Form of Stock Option Award Letter (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 10, 2009).
10.3†	Form of Restricted Stock Award Letter (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 10, 2009).
10.4†	Form of Performance Cash Award Letter (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated June 10, 2009).
10.5†	Bristow Group Inc. Fiscal Year 2010 Annual Incentive Compensation Plan (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated June 10, 2009).
15.1*	Letter from KPMG LLP dated August 5, 2009, regarding unaudited interim information.
31.1**	Rule 13a-14(a) Certification by Chief Executive Officer of Registrant.
31.2**	Rule 13a-14(a) Certification by Chief Financial Officer of Registrant.
32.1**	Certification of Chief Executive Officer of registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

____________

* Filed herewith.

**	Furnished herewith.
†	Compensatory plan or arrangement.
+	Confidential information has been omitted from this exhibit and filed separately with the SEC pursuant to a confidential treatment request under Rule 24(b)-2.

48

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 thereunto duly authorized.

BRISTOW GROUP INC.

By: /s/ Elizabeth D. Brumley                                                                

Elizabeth D. Brumley

Vice President, Finance and Chief Financial Officer

By: /s/ Brian J. Allman

Brian J. Allman

Chief Accounting Officer and Corporate Controller

August 5, 2009

49

Index to Exhibits

Exhibit Number	Description of Exhibit
10.1*+	Líder Aviação Holding S.A. Shareholders Agreement dated May 26, 2009.
10.2†	Form of Stock Option Award Letter (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 10, 2009).
10.3†	Form of Restricted Stock Award Letter (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 10, 2009).
10.4†	Form of Performance Cash Award Letter (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated June 10, 2009).
10.5†	Bristow Group Inc. Fiscal Year 2010 Annual Incentive Compensation Plan (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated June 10, 2009).
15.1*	Letter from KPMG LLP dated August 5, 2009, regarding unaudited interim information.
31.1**	Rule 13a-14(a) Certification by Chief Executive Officer of Registrant.
31.2**	Rule 13a-14(a) Certification by Chief Financial Officer of Registrant.
32.1**	Certification of Chief Executive Officer of registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

____________

* Filed herewith.

**	Furnished herewith.
†	Compensatory plan or arrangement.
+	Confidential information has been omitted from this exhibit and filed separately with the SEC pursuant to a confidential treatment request under Rule 24(b)-2.

EX-10.1

EXHIBIT 10.1

CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS EXHIBIT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  ASTERICKS DENOTE OMISSIONS.

SHAREHOLDERS AGREEMENT

among

José Afonso Assumpção

Eduardo de Pereira Vaz

Rotorbrás Comércio e Indústria de Helicópteros Ltda.

APEL - Aero Participações e Empreendimentos Ltda.

BL Participações Ltda

and, as Intervening Party,

Líder Aviação Holding S.A.

Dated as of May 26, 2009

Table of Contents
		Page
ARTICLE I - DEFINITIONS		2
1.1	Definitions	2
1.2	Terms Generally	7
1.3	Headings	7
1.4	Severability	7
1.5	Ordinary Course of Business	7
1.6	Currency Matters	7
1.7	Governing Language	7
ARTICLE II – CORPORATE STRUCTURE		8
2.1	Corporate Status of the Company	8
2.2	Capital	8
2.3	Voting Rights	8
2.4	Organizational Documents	8
ARTICLE III – GOVERNANCE		8
3.1	Corporate Governance Policies	8
3.2	Board	8
3.3	Officers	11
3.4	Access to Properties, Records	12
3.5	Insurance	12
3.6	Operational Synergies	12
3.7	Reports, Financial Statements and Annual Auditing	12
3.8	Helicopter Leasing	13
ARTICLE IV – SHARHOLDERS’ MEETINGS		14
4.1	Shareholders’ Meetings	14
4.2	Actions Subject to Investor Approval	14
ARTICLE V – RESTRICTIONS, RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFERS OF SHARES		15
5.1	General Restictions	15
5.2	Right of First Refusal	17
5.3	Tag-Along Right	19
5.4	Legal Requirements	19
ARTICLE VI – QUALIFIED INITIAL PUBLIC OFFERING		19
6.1	Primary Offering	19
6.2	Secondary Offering	19
6.3	Costs	19
6.4	Legal Requirements	19
ARTICLE VII – REMEDIES		20
7.1	Indemnification	20
7.2	Specific Performance	20
ARTICLE VIII – GOVERNANCE LAW; DISPUTE RESOLUTION		20
8.1	Governing Law	20
8.2	Dispute Resolution - Arbitration	20
8.3	Exceptional Court Jurisdiction	21

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ARTICLE IX – MISCELLANEOUS		21
9.1	FCPA	21
9.2	Further Assurances	23
9.3	Entire Agreement; Certain Conflicts	23
9.4	Notices	23
9.5	Waiver; Amendment	26
9.6	Binding Effect	26
9.7	Assignment	26
9.8	No Benefit to Others	26
9.9	Term and Termination	26
9.10	Survival	26
9.11	Expenses	26
9.12	Confidential Information	27
9.13	Non-Competition	27
9.14	Specific Performance	27
9.15	Filing; Registration	27

Schedules

Schedule A – By-Laws

Schedule B - Corporate Structure

Schedule C – Transactions

Schedule D – Strategic Plan

Schedule E – Manager’s Duties

Schedule F – Competitors

Schedule G – Investor Observer Affidavit

Schedule H – English translation of the Shareholders Agreement

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SHAREHOLDERS AGREEMENT

This Shareholders Agreement (“Shareholders Agreement”) is executed on May, 12, 2009 by and among,

(i)   José Afonso Assumpção, a Brazilian citizen, married, aeronaut, bearer of the I.D. card no. 67.551, issued by Ministério da Aeronáutica, and enrolled with the Individual Taxpayers’ Registry (“CPF/MF”) under No. 000.307.596-68, with address at Avenida Santa Rosa, 123, in the city of Belo Horizonte, State of Minas Gerais, Brazil (“JAA”);

(ii)   Eduardo de Pereira Vaz, a Brazilian citizen, married, entrepreneur, bearer of the I.D. card no. M-749.531, issued by SSP/MG, and enrolled with the CPF/MF under No. 408.854.026-34, with address at Avenida Santa Rosa, 123, in the city of Belo Horizonte, State of Minas Gerais, Brazil (“EPV”);

(iii)   Rotorbrás Comércio e Indústria de Helicópteros Ltda., a company organized under the laws of the Federative Republic of Brazil, with head offices at Av. Santa Rosa, 123, in the city of Belo Horizonte, State of Minas Gerais, Brazil, enrolled with the CNPJ/MF under No. 18.364.885/0001-73 (“Rotorbrás” and together with JAA and EPV,the “Controlling Shareholders”);

(iv)   APEL - Aero Participações e Empreendimentos Ltda., a company organized under the laws of the Federative Republic of Brazil, enrolled with the CNPJ/MF under No. 16.535.452/0001-08, with head offices at Avenida Santa Rosa, 123, Bloco B, in the city of Belo Horizonte, State of Minas Gerais, Brazil (“Apel”);

(v)   BL Participações Ltda., a company organized under the laws of the Federative Republic of Brazil, enrolled with the CNPJ/MF under No. 10.466.532/0001-72, with head offices at Rua da Candelária, 79, COB 01 - Parte, in the city of Rio de Janeiro, State of Rio de Janeiro, Brazil (“Investor”)

and, as Intervening Party,

(vi)   Líder Aviação Holding S.A., a company organized under the laws of the Federative Republic of Brazil, with head offices at Avenida Santa Rosa, 123, 2º andar, bloco A, in the city of Belo Horizonte, State of Minas Gerais, Brazil, enrolled with the CNPJ/MF under no. 04.169.411/0001-66 (“Company”).

All above mentioned parties are hereinafter referred to, collectively, as the “Parties”, and, individually, as a “Party”.

RECITALS

WHEREAS pursuant to the terms of a certain Share Subscription and Purchase Agreement of even date herewith (“Share Subscription and Purchase Agreement”), the Company’s issued and outstanding Equity Securities as of the date hereof is composed of Common Shares and Preferred Shares, at no par value, distributed among the Controlling Shareholders and the Investor as disclosed in Schedule B attached hereto;

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WHEREAS the Controlling Shareholders, Apel and Investor (by virtue of its ownership interest in the Company through Investor’s ownership of Apel) wish to specify the terms of their agreement as to matters relating to their relationship as direct or indirect Shareholders of the Company;

NOW, THEREFORE, the Parties have agreed to enter into this Shareholders Agreement to be governed by the following terms and conditions:

ARTICLE I - DEFINITIONS

1.1Definitions.  As used in this Agreement, the following terms shall have the following respective meanings:

“Adjusted Debt” (a) means without duplication (i) all indebtedness of the Company Group for borrowed money, (ii) the net present value of all leases discounted at Prime Rate plus three percent (3%) per annum, whether operating or capital leases but excluding leases of aircraft from Investor and its Affiliates and leases related to managed aircraft, (iii) all obligations of the Company Group evidenced by bonds, notes, debentures or other similar arrangements, and (iv) all debt, whether or not of the type described in clauses (i) through (iii) above, exclusively to the extent secured by a lien on the property of any of the Company Group, (b) reduced by the amount of aircraft in inventory under “floorplan” finance, and (c) excluding any contract or agreement relating to aircraft acquisition that is cancellable (with or without deposit forfeiture) or deferrable without limit.

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with such first Person.

“Agreement” means this Shareholders Agreement, together with all Schedules hereto, as amended, modified or supplemented from time to time in accordance with its terms.

“ANAC” has the meaning set forth in Section 3.2(a) below.

“Apel” has the meaning set forth in the Preamble hereto.

“Bank” has the meaning set forth in Section 9.1(e) below.

“Board of Directors” means the board of directors (Conselho de Administração) of the Company.

“Board of Officers” means the board of executive officers (Diretoria) of the Company.

“BR GAAP” means, in respect of any Person, Brazilian generally accepted accounting principles, consistently applied, and, if adopted by the Company in the future, IFRS, consistently applied for accounting purposes.

“Brazil” means the Federative Republic of Brazil.

“Brazilian Civil Procedure Code” means the Brazilian Law no. 5.869, of January 11, 1973, as amended from time to time.

“Brazilian Corporate Law” means the Brazilian Law no. 6.404, of December 15, 1976, as amended from time to time.

“Business” means any business related to air transportation services and sales of aircraft, products and aviation services related to air navigation.

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“Business Day” means any day in which banks are open for business in the cities of Belo Horizonte and São Paulo, Brazil.

“CEO” means the elected Chief Executive Officer (Diretor Presidente) of the Company.

“Closing” means the closing of the transaction corresponding to the issuance, subscription, sale, purchase and payment of the Shares purchased pursuant to the Share Subscription and Purchase Agreement.

“Closing Date” means the date of Closing provided for in the Share Subscription and Purchase Agreement.

“Common Shares” means all of the voting shares of the Company owned by the Shareholders.

“Company” has the meaning set forth in the Preamble to this Agreement.

“Company FCPA Group” has the meaning set forth in Section 9.1(a) below.

“Company Group” means the Company and each Subsidiary thereof.

“Competitor” means the Persons described on Schedule F to this Agreement.

“Control” (including the terms “Controls”, “Controlled by” and “under common Control with”) means, with respect to any Person or group of Persons (“Controlling Person(s)”), (a) the ownership of more than fifty percent (50%) of the common shares of such Person, (b) the ability, whether through the ownership of voting securities of another Person (“Controlled Person”), by contract or otherwise, to directly or indirectly (i) elect the majority of the Board of Directors or other similar managing body of such Controlled Person, or (ii) direct the management policies of such Controlled Person, or (c) the ownership of rights (whether through agreement or otherwise) that entitle the Controlling Person to have the majority of the votes in such Controlled Person’s general meetings.

“Controlling Shareholders” has the meaning set forth in the Preamble to this Agreement.

“Corte” has the meaning set forth in Section 8.2(a) below.

“Director” means each of the members of the Company’s Board of Directors.

“Dispute” has the meaning set forth in Section 8.2 below.

“EBITDAR” means income from continuing operations before financial income/expense plus depreciation, amortization and rentals (excluding rentals with Investor registered in the financial statements), derived from the audited consolidated financial statements of the Company prepared in accordance with BR GAAP.

“Eligible Accounting Firm” has the meaning set forth in Section 3.2(g)(ii) below.

“EPV” has the meaning set forth in the Preamble to this Agreement.

“Equity Securities” means, with respect to any Person, common shares (ações ordinárias), preferred shares (ações preferenciais), and any other equity securities of such Person, however described and whether voting or non-voting, including securities convertible or exchangeable into shares, and options, warrants (bônus de subscrição), preemptive rights, equity participation rights or other rights to acquire, subscribe for or receive any equity securities of such Person, or any other securities the yield on which is determined in whole or in part by reference to earnings, revenues or other financial performance of such Person.  Unless the context otherwise requires, references to Equity Securities without stating a specific issuer shall be deemed to refer to Equity Securities of the Company or any of its Subsidiaries.

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“Exempt Transferee” has the meaning set forth in Section 5.1(c) below.

“FCPA” means the United States Foreign Corrupt Practices Act.

“FCPA Group” has the meaning set forth in Section 9.1(a) below.

“Final Documents” means this Agreement, the Share Subscription and Purchase Agreement, and any other documents entered into in connection with the foregoing.

“First Refusal Commitment” has the meaning set forth in Section 5.2(c) below.

“First Refusal Shareholder” has the meaning set forth in Section 5.2(b) below.

“Fiscal Year” means the year beginning on January 1st and ending on December 31st of each year.

“Governmental Authority” means any nation or government (in the federal, state, municipal or any other political subdivision); any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions or pertaining to government, including any government authority, agency, department, board, commission or instrumentality in Brazil or, if relevant or appropriate, in any other country with jurisdiction over the Company or any of its Subsidiaries; any court, tribunal or arbitrators; and any stock exchanges or organized over-the-counter markets having jurisdiction over the Company or any of its Subsidiaries.

“Helicopter Blue Book” means the Aircraft Bluebook - Price Digest, published by AC-U-KWIK line of aviation resources.

“IFRS” means, in respect of any Person, the International Financial Reporting Standards adopted by the International Accounting Standards Board, consistently applied.

“Investor” has the meaning set forth in the Preamble to this Agreement.

“Investor Approval” has the meaning set forth in Section 4.2 below.

“Investor FCPA Group” has the meaning set forth in Section 9.1(a) below.

“Investor Observer” has the meaning set forth in Section 3.2(a) below.

“JAA” has the meaning set forth in the Preamble to this Agreement.

“Law” means all applicable provisions of all (i) constitutions, treaties, statutes, laws, codes, rules, regulations, ordinances, approvals or orders of any Governmental Authority, and (ii) orders, decisions, injunction, judgments, awards and decrees of or agreements with any Governmental Authority by which the assets or properties of any Persons are bound.

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“Lease Right of First Refusal” has the meaning set forth in Section 3.8(a) below.

“Lien” means any mortgage, pledge, deed of trust, right of others, claim, security interest, encumbrance, burden, title defect, title retention agreement, lease, sublease, license, right of survivorship (usufruto), easement (servidão), covenant, condition, encroachment (esbulho possessório), voting trust agreement, interest, option, right of first offer, negotiation or refusal, proxy voting, lien, charge or other restrictions or limitations of any nature whatsoever, including but not limited to such Liens as may arise under any Law or contract.

“Losses” means any losses, damages, liabilities, obligations, claims, defaults, fees, penalties or related costs or expenses, including reasonable court costs and attorneys’ and accountants’ fees and disbursements to the extent effectively incurred.

“Manager” has the meaning set forth in Section 3.3 (c) below.

“Net Debt” means Adjusted Debt (as defined above) minus cash, cash equivalents, marketable securities and the net acquisition cost of any aircraft in inventory, for a period of twelve (12) months or less, free and clear of any debt or encumbrance, such aircraft being limited to an aggregate amount of USD$ 15,000,000.

“New Helicopters” has the meaning set forth in Section 3.8(b) below.

“Offer Notice” has the meaning set forth in Section 5.2(b) below.

“Offer Period” has the meaning set forth in Section 5.2(b) below.

“Offered Shares” has the meaning set forth in Section 5.2(a) below.

“Officer” has the meaning set forth in Section 3.3(a) below.

“Organizational Documents” means, as to any entity, the documents pursuant to which such entity was organized and the agreements governing the entity’s ongoing operations.  In the case of the Company, “Organizational Documents” means the Company’s by-laws (Estatuto Social), as amended from time to time.

“Original Offer” has the meaning set forth in Section 5.2(a) below.

“Party” or “Parties” has the meaning set forth in the Preamble to this Agreement.

“Percentage Interest” means the percentage of Shares held directly or indirectly by a Shareholder at any relevant time.

“Permitted Transferee” has the meaning set forth in Section 5.1(b) below.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization, governmental or regulatory body or subdivision thereof, or any other entity.

“Preferred Shares” means all of the preferred shares (ações preferenciais) issued by the Company.

“Prime Rate” means the rate reported by the Wall Street Journal’s bank survey.

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“Producer Price Index” means the Producer Price Index (PPI), table 5, Aerospace products and parts manufacturing, industry code 3364, prepared by the Bureau of Labor Statistics of the United States Department of Labor.

“Prohibited Group” has the meaning set forth in Section 9.1(a) below.

“Prohibited Payment” has the meaning set forth in Section 9.1(a) below.

“Prohibited Purposes” has the meaning set forth in Section 9.1(a) below.

“PTAX Exchange Rate” means, as of any date, the average of the purchase and sale rates for U.S. Dollars published by the Central Bank of Brazil for the business day immediately preceding such date through the Central Bank of Brazil data system (SISBACEN) denominated rate PTAX 800.

“Qualified Initial Public Offering” has the meaning set forth in Section 6.1 of this Agreement.

“Real”, “Reais” and “R$” mean the lawful currency of Brazil.

“Related Parties” means, with respect to any Party, (i) any Affiliate of such Party, (ii) any entity in which such a Party is, directly or indirectly, the owner or the beneficial owner of ten percent (10%) or more of the voting or total interest, (iii) any trust or other estate in which such a Party has a substantial beneficial ownership or for which such a Party serves as trustee or in a similar fiduciary capacity, (iv) a spouse, parent, grandparent, descendant or sibling of such party, and (vi) any other Person Controlled by the Affiliates of such Party.

“Related Party Transaction” means any transaction between the Company, on one side, and any Related Party, on the other side, or entered into by the Company for the benefit of a Related Party.

“Representatives” means, as to any Person, its accountants, counsel, consultants (including actuarial and industry consultants), directors, officers, employees, agents and other advisors or representatives.

“Right of First Refusal” has the meaning set forth in Section 5.2(a) below.

“Rotorbrás” has the meaning set forth in the Preamble of this Agreement.

“Secondary Offering” has the meaning set forth in Section 6.2 below.

“Selling Shareholder” has the meaning set forth in Section 5.2(a) below.

“Shareholder” means any Person holding Shares and Party to this Agreement, which for purposes of this Agreement shall include the Investor based on its indirect ownership of Shares through its ownership of Apel.

“Share Subscription and Purchase Agreement” has the meaning set forth in the Recitals above.

“Shares” means all Common Shares and Preferred Shares issued by the Company.

“Strategic Plan” has the meaning set forth in Section 3.2 (g) (viii) below.

“Subject Price” has the meaning set forth in Section 5.2(a) below.

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“Subsidiary” means any Person of which the Company and Investor directly or indirectly holds fifty percent (50%) or more of the outstanding share capital (each a “Subsidiary” and collectively “Subsidiaries”).

“Transfer” (including the terms “Transfer”, “Transferring” and “Transferred”) means any direct or indirect transfer, sale, assignment (including assignment of pre-emptive rights), exchange (through the transfer of Equity Securities or otherwise), donation or other disposition of any kind, voluntary or involuntary, contingent or non-contingent, including any direct or indirect transfer, sale, assignment, exchange, donation or other disposition of any kind that results from the foreclosure of any pledge, mortgage, grant of security interest or lien, or in connection with any merger, consolidation, spin-off, reorganization, amalgamation, issuance of Equity Securities or other transactions having a similar effect.

“U.S.” or “United States” means the United States of America.

“US$” or “U.S. Dollar” means the lawful currency of the United States.

“US GAAP” means, in respect of any Person, U.S. generally accepted accounting principles adopted by Investor, consistently applied.

1.2Terms Generally.  The words “hereby”, “herein”, “hereof”, “hereunder” and words of similar import refer to this Agreement as a whole (including any Schedules hereto) and not merely to the specific article, section, paragraph or clause in which such word appears.  All references herein to Articles, Sections and Schedules shall be deemed references to Articles and Sections of, and Schedules to, this Agreement unless the context shall otherwise require.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The definitions given for terms in this Article I and elsewhere in this Agreement shall apply equally to both the singular and plural forms of the terms defined.

1.3Headings.  The section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.

1.4Severability.  Each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement shall be prohibited by or invalid under applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

1.5Ordinary Course of Business.  A reference to an action by a Person in the “ordinary course of business” (or the business of a Person “conducted in the ordinary course”) will be deemed to have been taken by such Person only if such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person, and such action is not required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority).

1.6Currency Matters.  Except as otherwise expressly provided herein, all Reais amounts to be translated to U.S. Dollars under this Agreement, and all U.S. Dollar amounts to be translated to Reais under this Agreement, shall be translated at the PTAX Exchange Rate.

1.7Governing Language.  This Agreement is executed in the Portuguese language, which shall be the only version to prevail and to be adopted for any purpose of interpretation or otherwise.  For greater convenience only, the Parties have agreed on one single translation of this Agreement into English, which is attached hereto as Schedule H.

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ARTICLE II - CORPORATE STRUCTURE

2.1Corporate Status of the Company.  The Company is a “sociedade por ações” under the laws of Brazil.  The Company is a pure holding company and observes its corporate purpose set forth in its By-laws a copy of which is attached as Schedule A.

2.2Capital.  The total capital stock of the Company consist of 298,306,060 Shares, being 149,153,030 Common Shares and 149,153,030 Preferred Shares.  The ownership interest of each Shareholder is specified in Schedule B to this Agreement.  All of the Company’s Shares at any time owned directly or indirectly by the Parties hereto, whether currently existing or issued in the future, are and will be subject to the provisions of this Agreement regardless of any amendments.

2.3Voting Rights.  Each Common Share of the Company shall be entitled to one (1) vote at any general meeting of the Shareholders.

2.4Organizational Documents.  The Parties agree to maintain the Organizational Documents of the Company consistent with the provisions of this Agreement.  In the event of any discrepancy between this Agreement and the Organizational Documents, the provisions of this Agreement shall always prevail.

ARTICLE III - GOVERNANCE

3.1Corporate Governance Policies.  The Shareholders shall use their voting rights to implement and follow strict corporate governance policies in accordance with the applicable Law.  The Company shall be managed by a Board of Directors and a Board of Officers.  The members of the Board of Directors and Board of Officers of the Company shall ensure that the Company complies with all applicable Law, regulations and best business practices, which shall be monitored and evaluated on a regular basis by the Board of Directors and Board of Officers (as applicable).

3.2Board.

(a)Members.  The Board of Directorsshall consist of five (05) Directors, appointed and elected as follows:  (i) the Controlling Shareholders shall have the right to appoint four (04) Directors, one (01) of which will be the Chairman and one (01) of which will be the Vice-Chairman of the Board of Directors; and (ii) Investor shall have the right to appoint one (01) Director.  The Directors shall be appointed at the general Shareholders meeting.  Each Shareholder will exercise its rights as a holder of Shares to cause the Board of Directors to be composed of and to act in accordance with this Article 3.2.  The Investor shall also have the right to appoint two (02) individuals to actively participate in all meetings of the Board, as observers, with no right to vote (“Investor Observers”). The Investor Observers will take office upon execution of an affidavit in the form of Schedule G hereto. The right of Investor and the Controlling Shareholders to appoint its Directors (and the right of Investor to appoint the Investor Observers) as described above shall automatically terminate as to such Party should such Party’s Percentage Interest in the Company fall below twenty (20%) of the Company’s total issued and outstanding capital.  If, at any time the Law grants the Investor any statutory right to appoint one (1) member of the Board of Directors, such statutory right shall automatically be combined (but not added) with the Investor’s right to appoint its Directors as provided in this Section 3.2(a) and, therefore, the Investor shall continue to have the right to appoint one (01) Director.  Under no circumstances shall the Investor appoint more than one (01) Director, whether as a result of this Agreement or the Law or both.  In case the Director appointed by Investor is a foreigner and/or a nonresident duly approved by Agência Nacional de Aviação Civil (“ANAC”), the Investor’s right to appoint the Investor Observers shall be automatically reduced from two (02) Investor Observers to one (01) Investor Observer.  The Investor Observers shall have access to and receive all information and reports, and shall otherwise have access to the members of the Board of Officers, facilities, books, records and other information of the Company Group, on the same basis and in accordance with the same procedures applicable to the Directors.

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(b)Term in Office; Removal; Vacancies.Each Director shall be elected at a general meeting of Shareholders of the Company and shall hold office for a term of two (02) years.  The Controlling Shareholders and Investor shall have the exclusive right to remove their respective designees and to fill in any vacancy caused by the removal, resignation or death of their respective designees.

(c)Transfer of Shares to Directors.  In order to comply with the provisions of the Brazilian Corporate Law, each Shareholder shall transfer one (01) Common Share to each of their respective designees, who is not a Shareholder, on a fiduciary basis and shall cause such designee to enter into an agreement providing for the transfer of such share back to the transferring Shareholder in the event such designee ceases to be a Director, for any reason.

(d)Meetings; Agendas.  The Board of Directors shall meet regularly quarterly.  Additional Board of Directors’ meetings may be convened at any time by the Chairman of the Board of Directors or by the written request of any Director.  The meetings of the Board of Directors shall be held at the Company’s headquarters in the city of Belo Horizonte, State of Minas Gerais, Brazil.  At least ten (10) days in advance of any Board of Directors’ meeting, a written notice, together with an agenda with respect thereof, shall be given to all Directors and the Investor Observers, unless otherwise unanimously agreed by all of the Directors.  No resolution of the Board of Directors may be passed or discussed in respect of any matter not included in the agenda for that meeting, unless otherwise unanimously agreed by all of the Directors present at the meeting.  The Company shall endeavor to make available to the Board of Directors and the Investor Observers, prior to such meeting, any background material on the items contained in the agenda, if available prior to the date of the meeting.  All meetings of the Board of Directors and any resolutions adopted at such meetings shall be recorded in the appropriate Board of Directors’ meetings minute book and, to the extent required by applicable Law, the respective minutes shall be filed with the appropriate Commercial Registry.  Each Party (and in the case of the Investor Observers, solely the Investor) shall bear the costs and expenses reasonably incurred by their respective Directors and the Investor Observers attending such quarterly Board of Directors’ meetings.

(e)Quorum for Holding a Meeting.  (i)A quorum to hold a duly called Board of Directors’ meeting shall consist of a simple majority of the Directors then in office (present in person, by power of attorney to any other Director, or through any telecommunication means by which all Board of Directors’ members can hear each other and participate in the discussions, such as telephone or video conference), provided that the Director appointed by Investor and one (01) Director appointed by the Controlling Shareholders are present; (ii) If a quorum is not present within one (1) hour of the time specified for a meeting of the Board of Directors, then such meeting shall be cancelled and a new Board meeting shall be called to be held on the date following ten (10) days after the date of such cancelled Board of Directors’ meeting in order to discuss and vote the same matters that were originally included in the notice of such cancelled meeting (“New Board Meeting”); (iii) If a quorum is not present within one (01) hour of the time specified for the New Board Meeting then such meeting shall be held with any number of Directors that are present at such New Board Meeting, except that no discussion or vote shall take place with respect to any matter that is not included in the relevant notice of the New Board Meeting or relates to any of the matters set forth in Section 3.2 (g) below.

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(f)Voting.  Except as otherwise specified in this Agreement and in the Organizational Documents, or as may be required by Law, all decisions by the Board of Directors shall be taken upon the affirmative vote of the majority of the members present in any specific meeting.  Each member shall have one (1) vote in all meetings of the Board of Directors.  The Chairman of the Board of Directors shall not have the casting vote.

(g)Matters Subject to Approval by Investor’s Director.  Any decision by any of the Company Group on the matters indicated below shall always require the approval of the Board of Directors of the Company and the affirmative vote of the Director appointed by Investor as long as Investor holds at least twenty percent (20%) of the issued and outstanding Shares of the Company:

(i)   the filing, by the Company, for bankruptcy or in- or out-of-court recovery procedures;

(ii)   the appointing or removing of the external auditors of the Company or any Subsidiary, except if the chosen new external auditor is one of the “big four” independent auditing firms (“Eligible Accounting Firm”);

(iii)   the entering into any Related Party Transaction of a value which, when aggregated with all other Related Party Transactions over a twelve-month period, exceeds fifty thousand U.S. Dollars (US$50,000.00), except any transactions within the Company Group; provided that such approval by the Director appointed by the Investor shall not be required for any existing transaction listed on the attached Schedule C;

(iv)   any decision regarding a merger (including a merger of shares), spin-off or amalgamation involving the Company or any of its Subsidiaries other than any of such transactions involving solely the Company and any of its Subsidiaries or the Investor’s Brazilian holding company that will hold the Investor’s Shares;

(v)   any decision to sell all or substantially all of the assets of the Company or any of its Subsidiaries to any Person, other than to any Subsidiaries of the Company;

(vi)   any decision to approve any dividend or distribution by any of the Company Group except for dividends required by Brazilian Corporate Law;

(vii)   any decision to dissolve the Company’s Subsidiaries;

(viii)   any decision to enter or exit lines of Business of the Company Group beyond those currently conducted by the Company Group; or any decision to modify the business strategy of the Company as set forth in Schedule D (“Strategic Plan”);

(ix)   any decision to incur capital expenditures the result of which could be inconsistent with the Strategic Plan;

(x)   any decision the result of which would be to increase to a number greater than three (3) or to reduce to a number less than one (1), the leverage ratio of the Company (Net Debt/EBITDAR) as of the end of each calendar quarter of any applicable calendar year;

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(xi)   any investment or transaction that a U.S. Person is restricted from making under regulations of the U.S. Office of Foreign Assets Control implementing the U.S. embargos against certain countries or similar U.S. Law;

(xii)   any decision to dispose of any helicopters valued in excess of three million U.S. Dollars (US$ 3,000,000.00), which shall be annually adjusted by the Producer Price Index; and

(xiii)   any decision to sell or otherwise issue Shares to any non-Brazilian person or non- Brazilian Controlled entity that would cause the Company’s foreign ownership to exceed the limitations on the holding of common Shares then required by Brazilian Law.

(h)Chairman of the Board of Directors.  The Chairman of the Board of Directors shall be appointed by the Controlling Shareholders.  The Board of Directors shall be presided by the Chairman and in the absence of the Chairman, by the Vice-Chairman or by another member of the Board of Directors nominated by the Controlling Shareholders.

3.3Officers.

(a)Appointment.  The day-to-day business and affairs of the Company shall be managed by the Board of Officers, consisting of three (3) members (each an “Officer”), being one (1) CEO, one (1) Chief Operating Officer (Diretor Vice-Presidente) and one (1) Chief Financial and Shareholders Relations Officer (Diretor Financeiro e de Relações com Acionistas), whose duties, obligations and rights are set forth in the Organizational Documents and under the applicable Law.  The Officers and candidates to fill in Officer positions shall be individuals resident in Brazil, professionally qualified to carry on their duties as Officers and shall enjoy a good reputation.  The Officers shall be elected for a two (02) year term and may be removed by the majority vote of the Board of Directors.

(b)Performance of Board of Officers’ Members.  The Board of Officers shall establish objective performance criteria for each Officer of the Board of Officers and review such criteria periodically in order to adequately evaluate the Officers’ performance.  Such performance standards may permit bonuses, profit sharing and stock option incentive plans if approved by the Board of Directors.

(c)Manager.  Investor shall have the right to appoint an individual (“Manager”), and any replacement thereof, who shall be an employee of the Company or of one of its Subsidiaries and participate in all meetings of the Board of Officers but not as an officer.  The duties of the Manager shall be as described in Schedule E.  The Manager shall be appointed by Investor and shall report to the CEO of the Company and may be dismissed by such CEO at any time, whether for cause or without cause (in this case solely for justified business reasons).  Compensation of the Manager shall be in line with the other Officers of the Company Group reporting to the CEO or the COO (Diretor Superintendente).  If the Manager is a non-Brazilian resident, the Company shall be responsible for supporting his working visa application and for taking all actions that may be reasonable required to obtain such working visa for the Manager.  The Company shall, at no cost to the Company, also endeavor its best efforts to assist the Manager to find suitable living in the city where he or she will be based.

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3.4Access to Properties, Records.  During the term of this Agreement, each Party (as well as its Representatives) shall be afforded access, which shall be coordinated in advance with the Company and which shall not disrupt the general course of the Company Group’s operation, at such Party’s sole expense, during normal business hours and subject to the Company Group’s normal security procedures, to the facilities, properties, books, records, personnel and files of the Company Group, as may be necessary from time to time for purposes reasonably related to such Party’s investment in the Company Group and this Agreement, including the right of Investor to audit the Company Group, in regard to implementation of best operational, engineering, safety and management practices and the right of each Party to review and audit the books and records of the Company Group, including, but not limited to, the profit and loss statements, balance sheets and other financial and tax records of the Company and its Subsidiaries, by the Eligible Accounting Firm elected through the Company Group for any such calendar year or, at the option and expense of the Party requesting any such audit, by the independent auditors of such Party.  Any independent auditor appointed by the Parties shall work with the proper communication and coordination with the Officers of the Company Group.

3.5Insurance.TheInvestor, the Controlling Shareholders and the Company shall cooperate to establish a process for annual renewal of the Company Group’s insurance, including deadlines for providing required information and documentation.  Prior to any of the Company Group soliciting quotes or otherwise contacting potential insurance providers regarding coverage, Investor, the Controlling Shareholders and the Company will evaluate and, subject to insurer consent, cooperate in an effort to secure volume discounts from the joint procurement of insurance for their respective fleets, other physical assets (including fixed and movable), personnel (including pilots, engineers and ground crews), and liabilities of directors and senior management personnel of the Company Group; provided, however, that no Party will be required to participate or join any other Party’s insurance policies without the agreement of the Parties.

3.6Operational Synergies.  The Investor, the Controlling Shareholders and the Company shall further cooperate with each other in connection with all operational matters of the Company and its Subsidiaries, in order to obtain economies of scale and cost reductions, including, without limitation, with respect to power-by-the-hour, aircraft acquisitions, etc.

3.7Reports, Financial Statements and Annual Auditing. After the Closing Date, the Company shall be obligated to prepare the reports and financial statements presented below, and in accordance with the terms provided below:

(a)Monthly Reports.  The Company shall prepare monthly management reports including consolidated balance sheet and income statement showing the financial position (including profits and losses) of the Company Group and deliver such reports to all Shareholders within fourteen (14) days following the end of the applicable month.  Such consolidated monthly reports shall be prepared in Portuguese, in Reais and U.S. Dollars, in accordance with BR GAAP and translated into English.  For the monthly management reports related to the periods from the Closing Date through December 31, 2009, the Company may provide the report within thirty (30) days following the end of the applicable month.

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CONFIDENTIAL MATERIALS HAVE BEEN OMITTED FROM THIS PAGE PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  ASTERICKS DENOTE OMISSIONS.

(b)Quarterly Financial Statements.  The Company shall prepare quarterly consolidated financial statements including balance sheet, income statement and cash flow of the Company Group for each of its four quarters in accordance with BR GAAP and US GAAP and deliver such financial statements to all Shareholders within twenty (20) days following the end of the applicable quarter.  The notes to the financial statements required in accordance with BR GAAP and US GAAP may be omitted.  The quarterly financial statements shall be prepared in Portuguese, in Reais and U.S. Dollars and translated into English.  For the quarters during the period from the Closing Date through December 31, 2009, the Company may provide preliminary consolidated financial statements based on a good faith estimate within twenty (20) days following the end of the applicable month, and final consolidated financial statements may be provided within thirty two (32) days following the end of the applicable quarter.  The quarterly consolidated financial statements shall only be subject to a limited review by the Eligible Accounting Firm elected by the Company for such period if Investor's independent auditing firm determines that such limited review will be required within a new term to be agreed by the Parties.  Such limited review shall be completed within thirty two (32) days following the end of the applicable quarter.

(c)Annual Financial Statements.  In addition to the annual consolidated financial statements prepared in accordance with BR GAAP for statutory purposes, the Company shall prepare annual consolidated financial statements including balance sheet, income statement, cash flow and footnotes of the Company Group in accordance with US GAAP and deliver such annual financial statements in English and U.S. Dollars, to all Shareholders within ninety (90) days following the end of each Fiscal Year.  The annual consolidated financial statements of the Company shall be duly and fully audited by the Eligible Accounting Firm elected by the Company for such year.

3.8Helicopter Leasing.

(a)Right of First Refusal.  For a period of five (5) years beginning on the Closing Date, Investor and its Affiliates shall have the right of first refusal (“Lease Right of First Refusal”) to lease to the Company Group at the rates described in Section 3.8(b):  (i) all helicopters to be leased from unaffiliated Persons on an operating or dry lease basis by the Company Group, and (ii) one-half of the fair market value, established by the Helicopter Blue Book (latest edition), for all medium and heavy helicopters which, but for Investor’s Lease Right of First Refusal under this Section 3.8(a), would have been purchased or financed leased by the Company Group.  Notwithstanding the foregoing, the Lease Right of First Refusal shall not apply to renewal of existing contracts for helicopter chartering services, which will not involve any change in the aircraft model currently performing services under such existing contracts.

(b)Rates.  In any case of helicopters leased from Investor or its Affiliates to the Company and its Affiliates the lease payment will be at market rates prevailing at the time of the lease for similarly equipped and model helicopters, but in no event shall such rates be below *** percent (***%) per month of the applicable helicopter’s fair market value for used helicopters, as defined by the latest edition of the Helicopter Blue Book, or Investor and its Affiliates’ acquisition cost for New Helicopters in offshore configuration.  For purposes hereof “New Helicopters” means any helicopter in a complete offshore configuration, which at the inception of the pertinent lease (i) has less than twelve hundred (1200) flight hours or (ii) is less than one (1) year-old from purchase from the manufacturer.  The lease term of all helicopters leased pursuant to this Section 3.8 shall be equal to the term of the corresponding contract between the Company, or the Affiliate of the Company, as applicable, and its customer.  The applicable lease rate for such lease shall be fixed at the beginning of each such lease throughout the lease term for such contract with the applicable customer.  Investor and the Company shall provide supporting documentation for the lease rates proposed by such party under this Section 3.8.

[***] CONFIDENTIAL TREATMENT REQUESTED BY BRISTOW GROUP INC.

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ARTICLE IV - SHAREHOLDERS’ MEETINGS

4.1Shareholders’ Meetings.  The Shareholders shall exercise their right to vote in every general meeting of the Company, and shall cause their Directors and/or Officers to act in such a way as to comply with the provisions hereof.

(a)Calling of Shareholders’ Meetings.  The Shareholders shall perform all acts necessary to provide that a Shareholders’ meeting (a) shall be called whenever required by applicable Law, and (b) may be called by (i) the Board of Directors, subject to the provisions of the Organizational Documents, or (ii) a shareholder or shareholders representing not less than five percent (5%) of the outstanding Common Shares of the Company, whenever the Board of Directors does not call a meeting within eight (08) Business Days after a duly justified request from a shareholder for the calling of a Shareholders’ meeting, indicating the matters proposed to be discussed, has been submitted to the Board of Directors.

(b)Notice of Shareholders’ Meetings.  Without prejudice to other applicable Law, written notice of a shareholders’ meeting shall be sent by the Company to each of the representatives of each Shareholder not less than ten (10) days prior to any Shareholders’ meeting, containing a copy of the official call notice (edital de convocação), the date, time and location for the meeting and the agenda to be addressed during the meeting, together with copies of any reports, proposals or any other information relevant to the agenda.  If the quorum required is not reached during the first call, a second meeting shall be held thereafter with not less than fifteen (15) days prior written notice sent by the Company to the Shareholders, which notice shall include the items required to be included in the notice for the first call.

(c)Voting.  Except as otherwise specified in this Agreement and in the Organizational Documents, or as may be required by Law, all decisions of the Shareholders shall be taken upon the affirmative vote of the majority of the Common Shares of the Company present at the specific Shareholders meeting.  At any general Shareholders’ meeting, a Shareholder may vote with a written proxy, which shall comply with the provisions of applicable Law.

4.2Actions Subject to Investor Approval.  Each of the Shareholders agrees and undertakes to take all actions necessary to ensure that, as long as Investor directly or indirectly holds at least twenty percent (20%) of the issued and outstanding Shares of the Company, including through its ownership of Apel, the Company shall not take (and shall not permit any of the Subsidiaries to take) any of the actions listed below unless such actions have been approved by Investor in accordance with the terms hereof (“Investor Approval”):

(a)any change to the Company’s Organizational Documents (i) regarding the Company’s corporate purpose, (ii) regarding the Company’s dividends distribution policy, or (iii) that impairs or reduces the rights of Investor;

(b)any issuance by the Company of equity (other than in connection with a Qualified Initial Public Offering pursuant to Section 6.1) or securities convertible into equity of the Company;

(c)the approval of stock option plans for employees;

(d)any redemption of securities by the Company;

(e)the Company’s winding-up or dissolution;

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(f)any decision regarding a merger (including a merger of shares), spin-off or amalgamation involving the Company or any of its Subsidiaries other than any of such transactions involving solely the Company and any of its Subsidiaries or Apel and the Investor’s Brazilian holding company that will hold the Investor’s shares of Apel.

ARTICLE V - RESTRICTIONS, RIGHTS AND OBLIGATIONS WITH RESPECT TO TRANSFERS OF SHARES

5.1General Restrictions.  Any Shareholder may undertake a Transfer of Shares then owned by such Shareholder, if, but only if, such Shareholder has complied with all applicable provisions of this Agreement.  Any Transfer carried out without the full observance of the provisions of this Agreement shall be deemed null and void ab initio, and the Company will not Transfer, and will not permit any transfer agent to give any effect in the Company’s transfer records to such attempted Transfer.  The transferee of any Equity Securities Transferred by a Shareholder in violation of this Agreement shall not be entitled to (i) any right, title and interest in or to such Equity Securities, (ii) any rights to vote, or (iii) any distributions in respect thereof.

(a)Conditions Precedent.  Except for permitted Transfer of Shares under Sections 5.1(b) and (c) below, any Transfer of Shares shall comply with the following conditions:

(i)   compliance with the Right of First Refusal provisions of Section 5.2 below;

(ii)   the Transfer of Shares shall comply with applicable provisions contained in this Agreement, in the Company’s Organizational Documents and in the applicable Law; and

(iii)   the new Shareholder shall, as a condition precedent for the validity and the effectiveness of any acquisition of Shares, adhere hereto, without any restrictions, and totally or partially replace, as the case may be, the Shareholder transferring the Shares.

(b)Permitted Transfers to Relatives and Descendants.  Notwithstanding the provisions of Section 5.1(a) above, the Controlling Shareholders may Transfer the Equity Securities of the Company among themselves or to a spouse, ancestor or descendant or among the descendants of JAA, provided that the transferor provides prior written notice of the Transfer to the other Shareholders and any such transferee(s) agrees to be bound by and adhere to, by entering into amendments thereto, the Final Documents as a Controlling Shareholder.  Upon compliance with the foregoing provisions, the transferee shall be a “Controlling Shareholder” for all purposes of the Final Documents, and the transferor shall be released from all obligations and liabilities with respect to the Equity Securities Transferred, except for such obligations and liabilities as may have accrued or arisen prior to the date of the Transfer of such Equity Securities.  Any transferee complying with the provisions of this Section 5.1(b) shall be deemed to be a “Permitted Transferee” (“Permitted Transferee”).

(c)Permitted Transfers to Affiliates.  Notwithstanding the provisions under Section 5.1(a) above, any Shareholder may, at any time, upon prior notice to the other Shareholders and to the Company, partially or totally Transfer all its Shares to an Affiliate thereof, provided, however, that (i) contemporaneously with effecting such Transfer such Affiliate becomes a party to this Agreement, (ii) the transferring Shareholder shall be obligated to reacquire forthwith the Shares so transferred in the event such Affiliate ceases to be an Affiliate of the transferring Shareholder or intends to effect a Transfer of such Shares to another Affiliate, (iii) the transferring Shareholder assumes joint liability with its Affiliates for the obligations hereunder, (iv) the transferring Shareholder shall be deemed jointly and severally liable and shall be treated as a single shareholder hereunder together with such Affiliate; (v) any Transfer to an Affiliate shall subrogate such Affiliate on any rights and obligations set forth in this Agreement, and (vi) in any case, the final ownership, voting and management structure and all the material details related to the transferee shall be fully disclosed to the other Shareholders.  An Affiliate complying with such provisions (i) to (iv) and (vi) shall be deemed to be an “Exempt Transferee” (“Exempt Transferee”).

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(d)Transfer to Competitors.  A Shareholder may not directly or indirectly Transfer its Shares to a Competitor, including through transfer of direct or indirect Control of the Shareholder.

(e)Lock-up.  Except for Transfers among the Controlling Shareholders or as permitted in accordance with Section 5.1(b) and (c) above, until the third anniversary from the Closing Date, a Shareholder shall not Transfer any Shares.  Thereafter, any Shareholder may Transfer its Shares in compliance with the other provisions of the Final Documents.

(f)Pledge.

(i)   The Shareholders shall not, at any time, create any Lien in or over the Equity Securities of the Company owned by them. The intent of the Shareholders is that no Shareholder allow such Shareholder’s Equity Securities to be put at risk of a third party acquiring beneficial ownership of any Equity Securities, except as expressly permitted by this Agreement.  Subject to the foregoing, the Shareholders also acknowledge that it is their intent that a Shareholder not be unreasonably forced to sell the Shareholder’s Shares pursuant to Section 5.1(f)(iii) and such Shareholder shall be afforded all reasonable opportunities to remove any involuntary Lien pursuant to Section 5.1(f)(iii) before such Shares may be sold to the other Shareholders.

(ii)   If, for any reason, any Shares are voluntarily pledged or otherwise voluntarily made subject to judicial constraint (such as, without limitation, penhora judicial), the Shareholder that owns such Shares shall, immediately (but in no event after forty eight (48) hours of its knowledge), notify the Company and the other Shareholders of the fact and, in this order (A) have the term of thirty (30) days to replace any such pledge or to cure any such judicial constraint; or (B) after the term provided in (A), offer, irrevocably and unconditionally, such Shares to the other Shareholders and to the Company, which will have, in this order, a period of thirty (30) days each to decide whether to acquire all, but not less than all, of such Shares.

(iii)   If, for any reason, any Shares involuntarily become subject to judicial constraint or other involuntary Lien (such as, without limitation, arresto, sequestro, penhora judicial), the Shareholder that owns such Shares shall, immediately (but in no event after forty eight (48) hours of its knowledge), notify the Company and the other Shareholders of the fact and have the term of sixty (60) days to initiate proceedings to replace any such pledge or to cure any such judicial constraint and shall thereafter diligently pursue in good faith such replacement or cure.  The Shareholder holding the Shares subject to such pledge or judicial constraint shall have no more than one (1) opportunity to replace the Shares for any asset other than the Shares.  If any such proposal of substitution of assets is rejected by the beneficiary of the pledge or applicable judicial authority, then such Shareholder shall then immediately offer cash as security in substitution of the pledged or judicially constrained Shares.  If at any time such Shareholder has not complied with the foregoing provisions of this Section 5.1(f)(iii), then such Shareholder shall have been deemed to have offered, irrevocably and unconditionally, such Shares to the other Shareholders and to the Company, which will have, in this order, a period of thirty (30) days each to decide whether to acquire all, but not less than all, of such Shares. In order for a acquiring Shareholder to acquire such Shares pursuant to this Section 5.1(f), such acquiring Shareholder must reasonably believe and shall represent to the selling Shareholder that such acquiring Shareholder reasonably believes that there is a significant risk that the Shares will be acquired by a third party pursuant to the provisions of the pledge or judicial constraint within ninety (90) days of the date of the deemed offer of the Shares by the selling Shareholder to the acquiring Shareholders.

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(iv)   The acquisition price of any Shares acquired pursuant to this Section 5.1(f) will be their market value, determined by a valuation carried by an investment bank mutually selected by the Parties, less the amount of the Lien on the Shares and less the cost of the valuation by the investment bank.  In addition, pursuant to the terms of article 666 of the Brazilian Civil Procedure Code, the acquiring Shareholder shall immediately deposit the amount of the Lien on Shares with the applicable court (depósito do preço em juízo) and request the release of the arresto, sequestro, penhora or similar act, as the case may be. The selling Shareholder, after the deposit of the amount of the Lien on the Shares is effective and after receiving the balance of the purchase price of the Shares, shall immediately sign all documents that are required or necessary to effect the Transfer of such Shares.

(v)   If the amount of the Lien surpasses the value of the Shares as determined by the investment bank mutually selected by the Parties, the selling Shareholder shall request a judicial valuation (avaliação judicial) of the Shares, for further deposit of the amount with the applicable court. If the judicial valuation of the Shares is granted and once the judicial valuation report (laudo de avaliação judicial) is ratified by the court and there are no outstanding appeals related to such ratification, the buying Shareholder shall, no later than forty eight (48) hours from the date on which is notified of the judicial valuation report ratification, make the deposit of the valuation amount with the applicable court. On such date, the selling Shareholder shall request the court to immediately release the judicial constraint. The selling Shareholder shall, after the deposit of the amount of the Lien with the applicable court is effective by the buying Shareholder,  immediately sign all documents that are required or necessary to effect the Transfer of such Shares.

(vi)   Any dispute regarding this Section 5.1(f) shall be subject to resolution pursuant to Section 8.2.

5.2Right of First Refusal.

(a)First Refusal Offer.  If, at any time, the Shareholders desire to effect a direct or indirect transfer to any Person (“Selling Shareholder”), including through a direct or indirect change in Control of the Selling Shareholder, other than to an Exempt Transferee or Permitted Transferee, of any of their Shares such Selling Shareholder (or in the case of an indirect transfer, the Affiliate that Controls the Selling Shareholder) must first receive a bona fide arm’s-length offer from such Person (“Original Offer”) setting forth (i) the number of Shares such Person offers to purchase (“Offered Shares”), (ii) the purchase price per Offered Share (“Subject Price”) and the payment terms, (iii) the name and qualification of the potential buyer, and (iv) all the other terms and conditions on which such Person is offering to purchase the Offered Shares (“Right of First Refusal”).  Exclusively in the case of a change in Control of the Selling Shareholder, as applicable, (x) the Offered Shares shall be all of the Shares owned by the Selling Shareholder and (y) the Subject Price shall be a reasonable allocation of (A) the consideration payable for direct or indirect Control of the Selling Shareholder to (B) the total number of Shares owned by the Selling Shareholder. The provisions of this Section 5.2(a) shall not apply to any transfer by EPV to JAA in connection with the existing agreement between JAA and EPV, dated January 28, 2008.

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(b)Offer Notice.  Upon receipt of an Original Offer, the Selling Shareholder shall first deliver to the other Shareholders (“First Refusal Shareholder”) and the Company, a written notice (“Offer Notice”), which shall (i) be irrevocable for a period of thirty (30) days (“Offer Period”) after receipt by the First Refusal Shareholder thereof, and (ii) include a copy of the Original Offer, as well as sufficient information regarding the Person making the Original Offer to allow the First Refusal Shareholder to evaluate such Original Offer, including sufficient information regarding the final controlling shareholders and owners of the potential buyers.  The Offer Notice shall constitute an offer to sell the Offered Shares by the Selling Shareholder to the First Refusal Shareholders, ratably in accordance with their respective ownership of Shares of the applicable type, at the Subject Price and upon the other terms and conditions set forth in the Offer Notice and as provided herein.

(c)Commitment.  The First Refusal Shareholder shall have the right, but not the obligation, during the Offer Period to provide to the Selling Shareholder and to the Company, a written, irrevocable and unconditional commitment to acquire all, but not less than all, of the Offered Shares specified in such Offer Notice, at the Subject Price and on the same terms and conditions contained in the Offer Notice (“First Refusal Commitment”).  It is understood and agreed that if one (01) of the First Refusal Shareholders does not accept the Offer Notice, the rights attributable to such First Refusal Shareholder shall be automatically transferred to the remaining First Refusal Shareholders in a manner prorated to their respective ownership interests, which may decide to accept it pursuant to the terms of this Section 5.2.

(d)Transfer of the Offered Shares.  If a First Refusal Commitment is provided, the Transfer of the Offered Shares by the Selling Shareholder to the First Refusal Shareholder shall be consummated at the Subject Price, on the same terms and conditions and within the same date set forth in the Offer Notice, provided that if additional time is required to obtain the necessary governmental authorizations and approvals, the Parties shall have an additional one hundred and twenty (120) days to consummate the Transfer.  At the closing of any such sale, (i) the First Refusal Shareholder shall remit to the Selling Shareholder, by wire transfer of immediately available funds to an account designated by the Selling Shareholder, the total consideration for the Offered Shares, (ii) the Selling Shareholder shall Transfer the Offered Shares to the First Refusal Shareholder, and (iii) the Selling Shareholder and the First Refusal Shareholder shall cause the Company to make all notations in the Company’s stock registry necessary to effect the Transfer of the Offered Shares to the First Refusal Shareholder.  Exclusively in connection with the restrictions imposed by Brazilian Law No. 7565/86 regarding the ownership of Shares of Brazilian aviation companies by foreign investors, if the First Refusal Shareholder is the Investor, the Offered Shares may be acquired by a designee of Investor, duly approved by the Controlling Shareholders, the approval of which may not be unreasonably withheld, provided, that in no event shall such designee be a Competitor or an employee or officer of any of the Company Group.

(e)Failure by First Refusal Shareholder.  If the First Refusal Shareholder fails to (i) give the First Refusal Commitment before the expiration of the Offer Period, or (ii) purchase all of the Offered Shares within the time period specified in Section 5.2(d) after having given the First Refusal Commitment, then, subject to Section 5.3 below, the Selling Shareholder may Transfer the Offered Shares to the Person that provided the Original Offer (or an Affiliate of such Person), at the Subject Price and on the same other terms and conditions set forth in the Original Offer, at any time within sixty (60) calendar days following the expiration of the Offer Period, provided that if additional time is required to obtain the necessary governmental authorizations and approvals, the Parties shall have an additional one hundred and twenty (120) days to consummate the Transfer.  If the Offered Shares are not Transferred by the Selling Shareholder during the terms indicated above, as applicable, the right of the Selling Shareholder to Transfer such Offered Shares shall expire and the obligations of this Section 5.2 shall be reinstated.

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(f)Adhesion to this Agreement.  The consummation of any Transfer of Shares in accordance with Section 5.2 shall be subject to the adhesion by the acquiring Person to this Agreement, which shall be formalized by the delivery of a letter by the acquiring Person to the Company and the other Shareholders, unconditionally accepting to be bound by the terms and conditions of this Agreement.

5.3Tag-Along Right.  In addition to the Right of First Refusal set forth in Section 5.2 above, no Shareholder shall be entitled to directly or indirectly Transfer its Shares of the Company to any Person if such Person does not offer and, if such offer is accepted by the other Shareholders, to acquire, simultaneously, all (and not less than all) of the Shares owned by the other Shareholders under the same terms, conditions, price and form of payment offered to the disposing Shareholder and contained in the terms of the Offer Notice.  For the purposes of exercising its tag-along rights contained in this Section, the remaining Shareholders shall, within thirty (30) days from its receipt of an Offer Notice, notify the disposing Shareholder of its intention to sell all of its Shares.  In this event, the disposing Shareholders will only be allowed to complete a sale that Transfers the Control to any Person if such Person acquires all, and not less than all, of the Shares owned by the remaining Shareholders.  The provisions of this Section 5.3 shall not apply to the Permitted Transfers as per Sections 5.1 (b) and (c).

5.4Legal Requirements.  All Transfers of Shares in connection with this Agreement shall fully observe, at all times, the restrictions imposed by the Law regarding the limit of voting shares held by foreign investors.

ARTICLE VI - QUALIFIED INITIAL PUBLIC OFFERING

6.1Primary Offering.  At any time after the third (3rd) anniversary of the Closing Date, Controlling Shareholders, acting together, shall have the exclusive right to cause the Company, subject to appropriate market conditions, to make a primary offering of shares (“Qualified Initial Public Offering”) so long as such offering does not cause the Company to violate the leverage parameter described in Section 3.2(g)(x) or reduce Investor´s aggregate ownership of the Company below thirty percent (30%) of the total outstanding shares of the Company after completion of such Qualified Initial Public Offering and any Secondary Offering described in Section 6.2 below.  In conjunction with such Qualified Initial Public Offering, the Controlling Shareholders, acting together shall determine in good faith, in consultation with the lead investment bank in the offering, the amount of such primary offering and whether a Secondary Offering (and the amount thereof) is in the best interest of the Company.

6.2Secondary Offering.  In the event a determination is made pursuant to Section 6.1 to include a secondary offering with a Qualified Initial Public Offering, the Controlling Shareholders and Investor shall have the right to participate as selling shareholders in such secondary offering pro rata based or their percentage interest of Shares (“Secondary Offering”).

6.3Costs.  All cost involved in the execution of a primary offering under the Qualified Initial Public Offering shall be supported by the Company.  All cost involved in the execution of a Secondary Offering shall be supported by the Selling Shareholders pro rata to their Percentage Interest in their Shares sold in the Secondary Offering.

6.4Legal Requirements.  The execution of a Qualified Initial Public Offering shall be subject to, at all times, the restrictions imposed by the Law regarding the limit of voting shares held by foreign investors.  The Investor hereby agrees to approve and execute all corporate documents and to approve all actions necessary to give effect to the Qualified Initial Public Offering.

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ARTICLE VII - REMEDIES

7.1Indemnification.  Each Party hereto shall indemnify the other Parties from and against any Losses incurred or sustained by such indemnified Party (or any Affiliate or Representative of such Party) as a result of (a) the breach by such Party or any of its Affiliates or Representatives of any covenant, agreement or obligation contained in this Agreement, or (b) the inaccuracy or breach of any representation or warranty of such Party contained in this Agreement.  The value of such indemnification shall be fixed by the arbitration award pursuant to the provisions contained in Section 8.2 below.

7.2Specific Performance.  Each Party hereto shall also have the right to request the specific performance (execução específica) of the obligations assumed by the other Shareholders in this Agreement, according to the provisions of Brazilian Corporate Law and in the Brazilian Civil Procedure Code (both as amended from time to time).  In this sense, the Parties acknowledge and agree that the payment of Losses shall not constitute a proper compensation for the violation of any obligation assumed by the Parties hereunder and that the specific performance of the obligations is a necessary legal remedy in supplement to the payment of Losses.

ARTICLE VIII - GOVERNING LAW; DISPUTE RESOLUTION

8.1Governing Law.  This Agreement shall be governed by, construed and enforced in accordance with the laws of Brazil.

8.2Dispute Resolution – Arbitration.

(a)The Parties agree that any and all claims, disputes, controversies and any other matter arising out of or related to the validity, scope, making, interpretation, enforceability, performance, breach of, or relating in any way to this Agreement, the Company or the relationship between the Parties created by this Agreement or the subject matter of this Agreement, including, but not limited to, arbitrability or the authority or capacity of any signatory to this Agreement (collectively, a “Dispute”), will be resolved by consultation between the Parties.  Any Dispute not resolved within thirty (30) days after the notice from a Party requesting the consultation, will be determined and resolved by submission to the Corte Española de Arbitraje (“Corte”) for binding arbitration in the city of Madrid, Spain according to the Rules of Corte, supplemented by the International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration.  The arbitration will be conducted in English.  Each Party (with the Controlling Shareholders constituting a single Party and Investor and Apel constituting a single Party for purposes of this Section 8.2) will provide and pay for translators and translated documents where necessary, the cost of translations to be awarded as part of the arbitrators’ decision.  All awards, final or interim, will be in writing with the reasons for the decision stated.  The making, validity, scope, interpretation and enforceability of this Agreement to arbitrate, including, but not limited to, who will be parties to the arbitration and what issues will be submitted to arbitration, will be determined by the arbitrators chosen in accordance with this Agreement.  Should there be a conflict between the rules and provisions of this Agreement and the arbitration rules, the provisions of this Agreement will govern.

(b)Either Party may initiate arbitration by written notice to the other Party of the intention to arbitrate and specifying the claims to be arbitrated.  The arbitration will be conducted before three (3) arbitrators.  The Investor will select one (1) arbitrator and the Controlling Shareholders will select one (1) arbitrator.  The two (2) arbitrators so selected will appoint a third (3rd) neutral arbitrator.  The arbitrators will be required to have a minimum of five (5) years experience in any of the operation, accounting, finance or legal aspects of the commercial aviation industry.  In the event any Party fails to name an arbitrator within forty-five (45) days after the receipt of a notice of intent to arbitrate, the Corte will appoint the second arbitrator who, together with the arbitrator named by the other Party, will appoint the third arbitrator. The arbitration will proceed before the three (3) arbitrators nominated and that arbitrators are empowered to make a decision binding upon the Parties.  Should the two (2) appointed arbitrators be unable to agree on the neutral arbitrator within thirty (30) days after the naming of the respondents arbitrator, the Corte will appoint the neutral arbitrator.  In the event of the incapacity of an arbitrator after appointment, which incapacity will prevent the conclusion of the proceedings within the time limits set forth below, such arbitrator will be replaced in the same manner as originally appointed.  Within thirty (30) days after the appointment of the arbitrator or arbitration panel, the arbitrators will convene a preliminary hearing in the city of Madrid, Spain to set a schedule for the proceedings.  Unless the Parties stipulate to the contrary, the final arbitration hearing will be held in the city of Madrid, Spain no later than one hundred and eighty (180) days after the notice of intent to arbitrate is served and the arbitrators will render their final decision in writing with reasons for the decision stated, no later than sixty (60) days after the final hearing is concluded.

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(c)Unless the arbitrators, upon a showing of good cause, rule otherwise, a claim of confidentiality of any answer or document will be honored and such information will not be disclosed to third parties or used for any purpose outside the arbitration without the consent of the Party claiming the privilege.  The discovery period will begin forty five (45) days after the respondents’ receipt of the notice of intent to arbitrate and will conclude ninety (90) days later.  Each Party will produce all documents relied upon to support a claim or defense, and a list of all individuals with knowledge relevant to any claim or defense within thirty (30) days after the beginning of the discovery period.  Each Party will be allowed to ask thirty (30) written interrogatories, including subparts, and to propound thirty (30) requests for production of documents or other tangible things.  The Parties may interview and discuss matters with the witnesses.  The receipt and consideration of all evidence will be within the sole discretion of the arbitrators.

(d)This Agreement shall be governed by, and construed in accordance with, the substantive Law of Brazil, which law also will apply to all issues presented to the arbitrators, including the validity, scope, interpretation and enforceability of this agreement to arbitrate.  Conflict of laws or choice of law principles that might call for the application of another law will not be applied.

(e)The arbitrators are empowered in their sole discretion to make interim awards, including injunctions to preserve the status quo, and to require the posting of security for potential awards, arbitration expenses and fees of the arbitrators.  The arbitrators are empowered to issue subpoenas for witnesses and documents.  The arbitrators are empowered to award compensatory damages, but may not award lost profits, moral, exemplary or punitive damages.  Awards shall be in U.S. Dollars, which shall be the basis for indexing the amount of the awards to Reais for any enforcement in Brazil.  The arbitrators are empowered to order specific performance.  Any and all of the decisions or orders of the arbitrators may be enforced if necessary by any court.  The arbitrators’ award and all interim awards may be confirmed and judgment entered upon the award in any court having jurisdiction over the Parties or in any jurisdiction where any of the Parties have real or personal property, each Party consenting to jurisdiction in such venues.

8.3Exceptional Court Jurisdiction.  The Parties are fully aware of all terms and effects of arbitration clause set forth herein, and irrevocably agree that any Disputes shall be solely referred to arbitration.  Without prejudice to validity of the arbitration clause, however, the Parties hereby elect the courts of the city of Belo Horizonte, state of Minas Gerais, Brazil, as the exclusive jurisdiction to ensure the enforceability of the arbitration procedures and to enforce any decision of the arbitration panel including, without limitation, the arbitral award.

ARTICLE IX - MISCELLANEOUS

9.1FCPA.

(a)Each Party hereby acknowledges that it understands that the provisions of the FCPA and other applicable Laws prohibit Investor or any Affiliate of Investor including any officer, director, employee or agent of Investor (collectively, “Investor FCPA Group)”, and including, but not limited to, the Company and its Subsidiaries or any of their respective officers, directors, employees, consultants, shareholders, agents or affiliates (collectively, “Company FCPA Group”, and with the Investor FCPA Group, “FCPA Group”) acting on behalf of Investor to offer, pay, promise to pay, or authorize the payment of money or offer, give, promise to give or authorize the giving of anything of value (hereinafter referred to collectively as the “Prohibited Payment”) to (i) any official; (ii) any political party or official thereof or any candidate for political office; or (iii) any other person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any official, to any political party or official thereof, or to any candidate for political office (“Prohibited Group”) for the purposes of (a) influencing any act or decision of such official, political party, party official or candidate in his or its official capacity or inducing such official, political party, party official or candidate to do or omit to do any act in violation of the lawful duty of such official, political party, party official or candidate; or (b) inducing such official, political party, party official, or candidate to use his or its influence with a government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality in order to assist Investor in obtaining or retaining business for or with or directing business to any person (hereinafter collectively referred to as “Prohibited Purposes”).  In connection with the Company, its Subsidiaries and this Agreement, each Party hereby represents and warrants the following:

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(i)   Such Party and its Affiliates will not, and such Party will not permit any member of the FCPA Group to, make a Prohibited Payment to any member of the Prohibited Group for the Prohibited Purposes in connection with the Company, its Subsidiaries or this Agreement;

(ii)   No member of the FCPA Group nor any affiliate of the FCPA Group is a member of the Prohibited Group or an affiliate of the Prohibited Group;

(iii)   Such Party is familiar with the provisions of the FCPA and other applicable Laws and their application to the Company, its Subsidiaries and this Agreement;

(iv)   If at any time such Party becomes aware that any member of the FCPA Group has made a Prohibited Payment to the Prohibited Group in connection with the Company, its Subsidiaries or this Agreement, such Party will immediately notify the other Party as provided in Section 9.4, in writing, including all details of such Prohibited Payment;

(v)   If at any time such Party becomes aware that either Party or any officer, director, employee, shareholder, agent or affiliate of either Party has requested, directly or indirectly, that a Party make a Prohibited Payment to the Prohibited Group in connection with the Company, its Subsidiaries, this Agreement or Investor, such Party shall immediately notify the other Party as provided in Section 9.4, in writing, including all details of such Prohibited Payment;

(vi)   Such Party will not commit any act or omission that would violate any Laws of any jurisdiction in which it performs services in connection with the Company, its Subsidiaries or this Agreement, including, but not limited to, the Laws of Brazil; and

(vii)   Such Party agrees to cause each member of the FCPA Group to fully cooperate with the other Party in connection with any inquiry or investigation intended to insure compliance by Investor, or the FCPA Group, with the FCPA and other applicable Laws.

(b)Each Party agrees to maintain accurate books and records which properly reflect and account for all of such Party’s income and expenses related to the Company, its Subsidiaries and this Agreement.  Such books and records shall be maintained at all times at such Party’s principal place of business in the city of Belo Horizonte, Brazil, in the case of the Controlling Shareholders, and in the city of Houston, Texas, in the case of Investor, and shall be available for review, copy and audit by the other Party or its representatives at such location at any time during normal business hours.

(c)Each Party agrees that the other Party and any representative of the other Party shall have the right at any time to audit the books and accounts of such Party and/or any representative of such Party to confirm that no payments have been made by such Party or any member of the FCPA Group in connection with the Company, its Subsidiaries or this Agreement that would violate the terms of this Agreement.  Each Party hereby agrees to exercise its rights under this Section 9.1 in good faith and only when it has a legitimate business purpose for such review or audit.  A Party’s right to perform such audit and examine the other Party’s books and records under this Section 9.1 shall survive the termination of this Agreement for a period of five (5) years unless, prior to the expiration of such five (5) year period, a Party notifies the other Party, in writing, that such Party has a legitimate business reason for extending such five (5) year period in which event the provisions of this Section 9.1 shall continue for the period requested by such Party in such notification to the other Party.

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(d)Notwithstanding anything herein to the contrary, Investor may immediately terminate this Agreement by written notice to the other Parties upon any breach of this Section 9.1 by any of the Company FCPA Group (other than Investor), and the Controlling Shareholders may immediately terminate this Agreement by written notice to the other Parties upon any breach of this Section 9.1 by any of the Investor FCPA Group.

9.2Further Assurances.  Each Party shall, and shall use all best efforts to, take or cause to be taken all actions, and do or cause to be done all other things necessary, proper or advisable in order to give full effect to this Agreement.  Each Shareholder shall negotiate, execute and deliver all reasonably required documents and do all other acts which may be reasonably requested by the other parties hereto to implement and carry out the terms and conditions of this Agreement.  Each Shareholder shall use its commercially reasonable efforts not to take any action or fail to take any action which would reasonably be expected to frustrate the intent and purposes of this Agreement.  In furtherance of the foregoing, each Shareholder agrees to vote or cause to be voted all Equity Securities owned by it in the Company or its Affiliates in a manner as may be required to implement and further the provisions of this Agreement.

9.3Entire Agreement; Certain Conflicts.  This Agreement (together with the other Final Documents and the Schedules hereto and thereto) sets forth the entire agreement and understanding among the Parties concerning the transactions contemplated hereby and thereby.  This Agreement supersedes all prior agreements and understandings, oral or written, between any parties or among the Parties with respect to the subject matter hereof.  Each Shareholder hereby undertakes to exercise its rights as a Shareholder always and only to the extent such exercise complies with this Agreement, and each Shareholder hereby waives any rights or obligations under the Organizational Documents that may conflict with corresponding rights or obligations under this Agreement.

9.4Notices.  Any notice, demand, request, consent, approval, declaration, delivery or other communication hereunder to be made pursuant to the provisions of this Agreement shall be sufficiently given or made if in writing and either delivered in person, by overnight courier or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

(a)If to the Company:

Líder Aviação Holding S.A.

At.:  José Afonso Assumpção / Eduardo de Pereira Vaz

Av. Santa Rosa, 123

Belo Horizonte, MG, Brazil

ZIP Code:  31270-750

Fax:  (+55 31) 3490-4554

with copies to (which shall not constitute a notice):

Machado, Meyer, Sendacz e Opice - Advogados

Av. Brigadeiro Faria Lima, 3144, 11º andar

São Paulo, SP, Brazil

ZIP Code: 01451-000

At.:  Daniel de Miranda Facó

Fax:  (+55 11) 3150-7071

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(b)If to the Controlling Shareholders:

José Afonso Assumpção

Av. Santa Rosa, 123

Belo Horizonte, MG, Brazil

ZIP Code:  31270-750

Fax:  (+55 31) 3490-4595

Eduardo de Pereira Vaz

Av. Santa Rosa, 123

Belo Horizonte, MG, Brazil

ZIP Code:  31270-750

Fax:  (+55 31) 3490-4554

Rotorbrás Comércio e Indústria de Helicópteros Ltda.

At.:  José Afonso Assumpção / Eduardo de Pereira Vaz

Av. Santa Rosa, 123

Belo Horizonte, MG, Brazil

ZIP Code:  31270-750

Fax:  (+55 31) 3490-4554

with copies to (which shall not constitute a notice):

Machado, Meyer, Sendacz e Opice Advogados

Av. Brigadeiro Faria Lima, 3144, 11º andar

São Paulo, SP, Brazil

ZIP Code: 01451-000

At.:  Daniel de Miranda Facó

Fax:  (+55 11) 3150-7733

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(c)If to Apel or Investor:

APEL/INVESTOR

Rua da Candelária, 79, COB 01 – Part

Rio de Janeiro, RJ, Brazil

ZIP Code: 20091-020

At.: Eduardo Duarte

Fax: (+55 21) 2253-4242

with copies to (which shall not constitute a notice):

Bristow Group, Inc.

2000 W. Sam Houston Parkway, Suite 1700

Houston, Texas, USA

ZIP Code: 77042

At.: Randall A. Stafford

Fax: (+1 713) 267-7620

and

Gardere Wynne Sewell LLP

1000 Louisiana, Suite 3400

Houston, Texas, USA

ZIP Code: 77002-5007

At.:  N. L. Stevens III

Fax:  (+1 713) 276-5807

or to such other address as may be substituted by notice given as herein provided.  The giving of any notice required hereunder may be waived in writing by the Party entitled to receive such notice.  Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered or upon receipt if delivered by an overnight courier service or registered mail or letter against receipt.

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9.5Waiver; Amendment.  The failure of any Party to insist upon strict performance of the provisions hereof shall not be construed as a waiver or novation of future compliance and no waiver or novation of the provisions hereof by such Party shall be deemed to have been made unless expressed in writing and signed by such Party.  Any provision of this Agreement, even if applicable to some of the Parties only, may be amended if, but only if, such amendment is in writing and signed by each of the Parties hereto.  The rights and remedies herein provided are cumulative and none is exclusive of any other, or of any rights or remedies that any Party may otherwise have at Law or in equity.  The rights and remedies of any Party based upon, arising out of or otherwise in respect of any breach of any covenant or agreement or failure to fulfill any condition, shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such breach is based may also be the subject matter of any other covenant or agreement as to which there is no breach.

9.6Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, successors, permitted assigns, executors and administrators of the Parties hereto.

9.7Assignment.This Agreement and the rights and obligations hereunder shall not be assignable or otherwise transferable by any Party without the prior written consent of the other Parties or as otherwise provided for herein, and any purported assignment or other transfer without such consent shall be void and unenforceable, provided, however, that no consent shall be required in case of an assignment by Investor to any of its Affiliates or by the Controlling Shareholders to any of their Affiliates.

9.8No Benefit to Others.  The representations, warranties, covenants and agreements contained in this Agreement are for the sole benefit of the Parties hereto and, where applicable, their respective Affiliates, and their respective successors and assigns, and they shall not be construed as conferring and are not intended to confer any rights to any other Persons.  Nothing in this Agreement shall confer any rights upon any person or entity other than the Parties and their respective heirs, successors and permitted assigns.

9.9Term and Termination.  This Agreement shall remain in force for a period of ten (10) years from the date hereof, and shall be automatically renewable for one (1) additional period of ten (10) years.  Notwithstanding the foregoing, this Agreement shall automatically terminate as to a Shareholder in the event that such Shareholder sells one hundred percent (100%) of its Shares.  Termination of this Agreement shall not affect the liability of any Party for any breach of this Agreement committed prior to the date of termination.

9.10Survival.  The confidentiality provisions of Section 9.12, the indemnification provisions of Section 7.1 and the provisions of Article VIII above, shall survive the termination of this Agreement.

9.11Expenses.  Each Party shall bear its own costs and expenses, including those of its accounting and legal advisors in connection with their due diligence review of the Company and the preparation, negotiation, execution and delivery of this Agreement and the other Final Documents, whether or not the Closing occurs.

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9.12Confidential Information.  Each of the Shareholders and their respective Representatives shall maintain the confidentiality of any information received from the Company and from the other Shareholders, including, without limitation, all data and information obtained by any of them pursuant to this Agreement and any of the transactions contemplated hereby.  Information that (a) is independently developed by the Shareholders or their Affiliates or lawfully received free of restriction from another source having the right to so furnish such information, (b) becomes generally available to the public without breach of this Agreement by the Shareholders, (c) at the time of disclosure to a Shareholder was known to such Shareholder to be free of restriction as evidenced by documentation in such Shareholder’s possession, (d) the Company or the other Shareholder, as applicable, agrees in writing is free of such restrictions, or (e) is or becomes required by Law or order from a Governmental Authority to be disclosed by a Shareholder (of which the Company or the other Shareholder, as applicable, shall receive notice and an opportunity to attempt to restrict such disclosure) shall not be deemed to be confidential information for purposes of this Agreement.  No Shareholder shall grant access without the prior consent of the Company, and the Company shall not be required to grant access, to confidential information described in this Section 9.12 to any Person who will not agree in writing prior to obtaining such access to maintain the confidentiality thereof, including, without limitation, such Shareholders’ Representatives.

9.13Non-Competition.  During the term of this Agreement Investor and its Subsidiaries, Related Parties and Affiliates shall not directly or indirectly enter into any operating lease, dry lease or finance lease, or own, manage, operate any Business in Brazil and the Controlling Shareholders and their respective Subsidiaries, Related Parties and Affiliates will not own, manage or operate any helicopter business in Brazil other than the Company Group.  In addition for three (3) years after ceasing to be a shareholder and/or officer and/or director and/or employee of the Company or after expiration of this Agreement, JAA and EPV shall not directly or indirectly engage in or own, manage, operate a Business which competes with the Company Group in Brazil.

9.14Specific Performance.  All the obligations undertaken by the Shareholders in this Agreement referring to the exercise of their rights and duties and the terms and conditions required for any transfer of shares are subject to specific performance as provided for in the Brazilian Corporate Law and the Brazilian Civil Procedure Code and in accordance with Section 7.2 hereto.

9.15Filing; Registration.  A copy of this Agreement shall be filed at the headquarters of the Company for the purposes of article 118 of the Brazilian Corporate Law.  The Company shall cause the following legend to be included in Portuguese in the relevant pages of the registered share register of the Company and in any certificates representing Shares, which are subject to this Agreement:  “The shares held by [name of shareholder] are subject to the restrictions on transfer, voting arrangements, and other provisions set forth in a Shareholders Agreement dated as of May 26, 2009, copies of which are available for inspection at the head offices of the Company.  No transfer of such shares will be made on the books of the Company, and such a transfer will be null and void, unless accompanied by evidence of compliance with the terms of such agreement.  Any transactions entered into by the Company or any shareholder in violation of the Shareholders Agreement will be null and void.”

IN WITNESS WHEREOF, the parties hereto executed this Agreement in six (6) originals of identical form and content, along with the two (2) witnesses below:

Belo Horizonte, May 26, 2009.

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Signature page 1/2 of the Shareholders Agreement of Líder Holding Aviação S.A. executed on May 26, 2009.

JOSÉ AFONSO ASSUMPÇÃO

/s/ JOSÉ AFONSO ASSUMPÇÃO

EDUARDO DE PEREIRA VAZ

/s/ EDUARDO DE PEREIRA VAZ

ROTORBRÁS COMÉRCIO E INDÚSTRIA DE HELICÓPTEROS LTDA.

By:  /s/ JOSÉ AFONSO ASSUMPÇÃO  

Name: JOSÉ AFONSO ASSUMPÇÃO

Title:  Administrador

By:   

Name:

Title:

APEL - - AERO PARTICIPAÇÕES E EMPREENDIMENTOS LTDA.

By:   /s/ Mark B. Duncan

Name:  Mark Duncan

Title:

By:  

Name:

Title:

28

Signature page 2/2 of the Shareholders Agreement of Líder Holding Aviação S.A. executed on May 26, 2009.

BL PARTICIPAÇÕES LTDA.

By: /s/ Mark B. Duncan  

Name:  Mark Duncan

Title:

By:  

Name:

Title:

LÍDER AVIAÇÃO HOLDING S.A.

By:   /s/ EDUARDO DE PEREIRA VAZ

Name:  Eduardo de Pereira Vaz

Title:  Chief Executive Officer.

Witnesses:

1. /s/ Andrea Sousa Ituassú Name: Andrea Sousa Ituassú ID No.:  M.5.971.420 2. /s/ Kelly A. PereiraAguiär Name: Kelly Aparecida Pereira Aguiär ID No.: M.6.11.990.447

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EX-15.1

EXHIBIT 15.1

Bristow Group Inc.

Houston, Texas

Re:  Registration Statements No. 333-115473, 333-121207, 333-140565 and 333-145178 on Form S-8 and Registration Statement No. 333-151519 on Form S-3

With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated August 5, 2009 related to our review of interim financial information.

Pursuant to Rule 436 under the Securities Act of 1933 (the “Act”), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.

/s/ KPMG LLP

August 5, 2009

Houston, Texas

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)

I, William E. Chiles, President and Chief Executive Officer, certify that:

1.  I have reviewed this Quarterly Report on Form 10-Q of Bristow Group Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  August 5, 2009
	/s/ William E. Chiles
	William E. Chiles President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)

I, Elizabeth D. Brumley, Vice President, Finance and Chief Financial Officer, certify that:

1.  I have reviewed this Quarterly Report on Form 10-Q of Bristow Group Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  August 5, 2009
	/s/ Elizabeth D. Brumley
	Elizabeth D. Brumley
	Vice President, Finance and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Bristow Group Inc. (the “Company”) for the period ended June 30, 2009, as filed with the Securities and Exchange Commission as of the date hereof, (the “Report”) I, William E. Chiles, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d), as appropriate, of the Securities Exchange Act of 1934, as amended; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ William E. Chiles
Name: Title: Date:	William E. Chiles   President and Chief Executive Officer August 5, 2009

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Bristow Group Inc. (the “Company”) for the period ended June 30, 2009, as filed with the Securities and Exchange Commission as of the date hereof, (the “Report”) I, Elizabeth D. Brumley, Vice President, Finance and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d), as appropriate, of the Securities Exchange Act of 1934, as amended; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Elizabeth D. Brumley
Name: Title: Date:	Elizabeth D. Brumley Vice President, Finance and Chief Financial Officer August 5, 2009