10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Fiscal Year Ended March 31, 2005
or
o	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

Offshore Logistics, Inc.

(Exact name of registrant as specified in its Charter)

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

Registrant’s telephone number, including area code: (713) 267-7600

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:	Name of Each Exchange on Which Registered:
Common Stock ($.01 par value)	New York Stock Exchange
Preferred Share Purchase Rights	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  YES o     NO þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  YES o     NO þ

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 o     NO þ

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934.)  YES þ     NO o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES o     NO þ

The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing price on the New York Stock Exchange, as of September 30, 2004 was $753,159,268.

The number of shares outstanding of the registrant’s Common Stock as of October 31, 2005 was 23,344,508.

DOCUMENTS INCORPORATED BY REFERENCE

None.

OFFSHORE LOGISTICS, INC.

INDEX — FORM 10-K

		Page
Introduction		1
The Internal Review		1
Restatement		1
Forward-Looking Statements		2
Risk Factors		3
PART I
Item 1.	Business	12
Item 1A.	Risk Factors	20
Item 1B.	Unresolved Staff Comments	21
Item 2.	Properties	21
Item 3.	Legal Proceedings	21
Item 4.	Submission of Matters to a Vote of Security Holders	23
PART II
Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters	24
Item 6.	Selected Financial Data	24
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 7a.	Quantitative and Qualitative Disclosures about Market Risk	55
Item 8.	Consolidated Financial Statements and Supplementary Data	55
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	106
Item 9a.	Controls and Procedures	106
PART III
Item 10.	Directors and Executive Officers of the Registrant	112
Item 11.	Executive Compensation	117
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	126
Item 13.	Certain Relationships and Related Transactions	128
Item 14.	Principal Accounting Fees and Services	128
PART IV
Item 15.	Exhibits, Financial Statement Schedules	129
Signatures		133
Employment Agreement - Richard Burman
Agreement between Pilots
Subsidiaries of the Registrant
Consent of Independent Registered Public Accounting Firm
Certification by President and CEO
Certification by CFO
Certification of CEO pursuant to 18 U.S.C. Section 1350
Certification of CFO pursuant to 18 U.S.C. Section 1350

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OFFSHORE LOGISTICS, INC.

ANNUAL REPORT (FORM 10-K)

INTRODUCTION

This Annual Report on Form 10-K is filed by Offshore Logistics, Inc., a Delaware corporation, which we refer to separately as Offshore Logistics, the Company or the registrant. We operate in two business segments — Helicopter Services and Production Management Services. During fiscal year 2005, we conducted our Helicopter Services through four business units: North American Operations, North Sea Operations, International Operations and Technical Services. We currently conduct our Helicopter Services through six business units:

North American Operations;

South and Central American Operations;

European Operations;

West African Operations;

Southeast Asian Operations; and

Other International Operations.

We use the pronouns “we,” “our” and “us” to refer collectively to Offshore Logistics and our consolidated subsidiaries and affiliates. We also own interests in other entities that we do not consolidate for financial reporting purposes, which we refer to as unconsolidated affiliates. Offshore Logistics, Bristow Aviation Holdings, Ltd. its consolidated subsidiaries and affiliates and the unconsolidated affiliates is each a separate corporation, limited liability company or other legal entity, and our use of the terms “we,” “our” and “us” does not suggest that we have abandoned their separate identities or the legal protections given to them as separate legal entities.

THE INTERNAL REVIEW

In February 2005, we voluntarily advised the staff of the United States Securities and Exchange Commission (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 a foreign country. The review of these payments, which initially focused on Foreign Corrupt Practices Act matters, was subsequently expanded to cover operations in other countries and other issues (the “Internal Review”).

The SEC then notified us that it had initiated an informal inquiry and requested that we provide certain documents on a voluntary basis. Subsequently, the SEC advised us that the inquiry had become an investigation. We have responded to the SEC’s requests for documents and are continuing to do so.

The Internal Review is complete and the accompanying financial statements reflect all known required restatements. As a follow-up to matters identified during the course of the Internal Review, Special Counsel to the Audit Committee is completing certain work, and may be called upon to undertake additional work in the future to assist in responding to inquiries from the SEC, from other governmental authorities or customers, or as follow-up to the steps being performed by Special Counsel.

RESTATEMENT

As a result of the Internal Review findings, we have restated our historical financial statements to accrue for payroll taxes, penalties and interest attributable to underreported employee payroll. In connection with this matter, our restated consolidated statements of income reflect reductions in operating income of $4.2 million and $3.2 million for fiscal years 2004 and 2003, respectively, and $4.6 million for earlier fiscal years from previously reported amounts. In addition, our consolidated statements of income reflect a reduction in operating income of $3.8 million for fiscal year 2005 from the previously announced amount. At this time, we cannot estimate what additional payments, fines and/or penalties may be required in connection with the matters identified as a result of

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the Internal Review or the SEC investigation; however, such payments, fines and/or penalties could have a material adverse effect on our business, financial condition and results of operations.

Our management has separately determined that we were not reporting reimbursements received from our customers for costs incurred on their behalf in accordance with United States generally accepted accounting principles (“GAAP”). Our customers reimburse us for certain costs incurred on their behalf, which have historically been recorded by offsetting such amounts against the related expenses. In addition, our management has determined that we did not properly record expenses related to severance benefits for certain employees of a foreign subsidiary and we did not properly record expenses related to payroll taxes incurred by one of our foreign subsidiaries. In accordance with GAAP, we have restated our historical financial statements for fiscal years 2004 and 2003 to reflect such reimbursement as an increase in revenue and a corresponding increase in expense, and we increased direct costs to reflect the severance obligation and payroll taxes in the applicable periods. With respect to customer reimbursements, operating revenues and direct costs were increased $53.4 million and $46.4 million for fiscal years 2004 and 2003, respectively, from previously reported amounts, with no impact on income from operations or net income. With respect to the severance benefits and payroll taxes, direct costs were increased by $0.5 million and $0.2 million in fiscal years 2004 and 2003, respectively. For all three items, operating revenues were increased $55.3 million and direct costs were increased by $56.3 million from the previously announced amount for fiscal year 2005.

See Note A to the “Notes to Consolidated Financial Statements” in “Item 8. Consolidated Financial Statements and Supplementary Data.”

FORWARD-LOOKING STATEMENTS

This Annual 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. 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, 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 Annual 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 Annual 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 below under the heading “Risk Factors”;

•  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 not able to re-deploy our aircraft to regions with the greater demand;

•  we do not achieve the anticipated benefit of our fleet renewal program;

•  the outcome of the SEC investigation relating to the Foreign Corrupt Practices Act and other matters, or the Internal Review has a greater than anticipated financial or business impact; and

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•  the outcome of the United States Department of Justice (“DOJ”) antitrust investigation, which is ongoing, has a greater than anticipated financial or business impact.

All forward-looking statements in this Annual Report are qualified by these cautionary statements and are only made as of the date of this Annual 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.

RISK FACTORS

If you hold our securities or are considering an investment in our securities, you should carefully consider the following risks, together with the other information contained in this Annual Report.

The SEC investigation, any related proceedings in other countries and the consequences of the activities identified in the Internal Review could result in civil or criminal proceedings, the imposition of fines and penalties, the commencement of third-party litigation, the incurrence of expenses, the loss of business and other adverse effects on our Company.

In October 2005, the Audit Committee reached certain conclusions with respect to findings to date from the Internal Review. The Audit Committee concluded that, over a considerable period of time, (a) improper payments were made by, and on behalf of, certain foreign affiliated entities directly or indirectly to employees of the Nigerian government, (b) improper payments were made by certain foreign affiliated entities to Nigerian employees of certain customers with whom we have contracts, (c) inadequate employee payroll declarations and, in certain instances, tax payments were made by us or our affiliated entities in certain jurisdictions, (d) inadequate valuations for customs purposes may have been declared in certain jurisdictions resulting in the underpayment of import duties, and (e) an affiliated entity in a South American country, with the assistance of our personnel and two of our other affiliated entities, engaged in transactions which appear to have assisted the South American entity in the circumvention of currency transfer restrictions and other regulations. In addition, as a result of the Internal Review, the Audit Committee and management determined that there were deficiencies in our books and records and internal controls with respect to the foregoing and certain other activities.

Based on the Audit Committee’s findings and recommendations, the Board of Directors has taken disciplinary action with respect to our personnel who it determined bore responsibility for these matters. The disciplinary actions included termination or resignation of employment (including certain members of senior management), changes of job responsibility, reductions in incentive compensation payments and reprimands. One of our affiliates has also obtained the resignation of certain of its personnel.

We have initiated remedial action, including initiating action to correct underreporting of payroll tax, disclose to certain customers inappropriate payments made to customer personnel and terminate certain agency, business and joint venture relationships. We also have taken steps to reinforce our commitment to conduct our business with integrity by creating an internal corporate compliance function, instituting a new code of business conduct (our new code of business conduct entitled “Code of Business Integrity” is available on our website, http://www.olog.com) and developing and implementing a training program for all employees. In addition to the disciplinary actions referred to above, we have also taken steps to strengthen our control environment by hiring new personnel and realigning reporting lines within the accounting function so that field accounting reports directly to the corporate accounting function instead of operations management.

Following the Audit Committee’s conclusions, we initiated the process of voluntarily advising governmental authorities in certain countries of the Audit Committee’s findings. We have not yet advised such foreign governmental authorities of the Audit Committee findings, but intend to do so. Such disclosure may result in 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 their countries. To the extent that violations of the law may have occurred in several countries in which we operate, we do not yet know whether such violations can be cured merely by the payment of fines or whether other actions may be taken against us, including requiring us to curtail our business

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operations in one or more such countries for a period of time. In the event that we curtail our business operations in any such country, we may face difficulties exporting our aircraft. As of September 30, 2005, the book values of our aircraft in Nigeria and the South American country where certain improper activities took place were approximately $79.4 million and $2.9 million, respectively.

We cannot predict the ultimate outcome of the SEC investigation, nor can we predict whether other applicable U.S. and foreign governmental authorities will initiate separate investigations. The outcome of the SEC investigation and any related legal and administrative proceedings could include the institution of administrative, civil injunctive or criminal proceedings involving us and/or current or former employees, officers and/or directors, the imposition of fines and other penalties, remedies and/or sanctions, modifications to business practices and compliance programs and/or referral to other governmental agencies for other appropriate actions. It is not possible to accurately predict at this time when matters relating to the SEC investigation will be completed, the final outcome of the SEC investigation, what if any actions may be taken by the SEC or by other governmental agencies in the U.S. or in foreign jurisdictions, or the effect that such actions may have on our consolidated financial statements. In addition, in view of the findings of the Internal Review, we expect to encounter difficulties in the future conducting business in Nigeria and a South American country, and with certain customers. It is also possible that certain of our existing contracts may be cancelled and that we may become subject to claims by third parties, possibly resulting in litigation. 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.

In connection with its conclusions regarding payroll declarations and tax payments, the Audit Committee determined on November 23, 2005, following the recommendation of our senior management, that there is a need to restate our historical consolidated financial statements for fiscal years 2000, 2001, 2002, 2003 and 2004 and for quarterly periods in fiscal year 2005. We have accrued $15.8 million for the taxes, penalties and interest attributable to underreported employee payroll. Operating income for fiscal year 2005 includes $3.8 million attributable to this accrual, and the remainder has been reported as adjustments to amounts previously reported for fiscal year 2004 and earlier. At this time, we cannot estimate what additional payments, fines, penalties and/or litigation and related expenses may be required in connection with the matters identified as a result of the Internal Review, the SEC investigation, any other regulatory investigation that may be instituted or third-party litigation; however, such payments, fines, penalties and/or expenses could have a material adverse effect on our business, financial condition and results of operations.

As we continue to respond to the SEC investigation and other governmental authorities and take other actions relating to improper activities that have been identified in connection with the Internal Review, there can be no assurance that additional restatements will not be required or that the historical financial statements included in this Annual Report will not change or require amendment. In addition, new issues may be identified that may impact our financial statements and the scope of the restatements described in this Annual Report and lead us to take other remedial actions or otherwise adversely impact our Company.

The disclosure and remediation of activities identified in the Internal Review could result in the loss of business relationships and adversely affect our business.

As a result of the disclosure and remediation of a number of activities identified in the Internal Review, we expect to 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 may be significantly impacted.

We have commenced actions to disclose activities in Nigeria identified in the Internal Review to affected customers, and one or more of these customers may seek to cancel their contracts with us. One of such customers already has commenced its own investigation. Among other things, we have been advised that such customer intends to exercise its rights to audit a specific contract, as well as to review its other relations with us. Although we have no indication as to what the final outcome of the audit and review will be, it is possible that such customer may seek to cancel one or more existing contracts if it believes that they were improperly obtained or that we breached any of their terms. Since our customers in Nigeria are affiliates of major international petroleum companies, with whom we do business throughout the world, any actions which are taken by certain customers could have a material

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adverse effect on our business, financial position and results of operations, and these customers may preclude us from bidding on future business with them either locally or on a worldwide basis. In addition, applicable governmental authorities may preclude us from bidding on contracts to provide services in the countries where improper activities took place.

In connection with the Internal Review, we also have terminated our business relationship with certain agents and have taken actions to terminate business relationships with other agents. One of the terminated agents has commenced litigation against two of our foreign affiliated entities claiming damages of $16.3 million for breach of contract. We may be required to indemnify certain of our agents to the extent that regulatory authorities seek to hold them responsible in connection with activities identified in the Internal Review.

In a South American country where certain improper activities took place, we are negotiating to terminate our ownership interest in the joint venture that provides us with the local ownership content necessary to meet local regulatory requirements for operating in that country. During fiscal year 2005, we derived approximately $9.9 million of leasing and other revenues, of which $3.2 million was paid by us to a third party for the use of the aircraft, and approximately $0.3 million of dividend income from this joint venture. Without a joint venture partner, we will be unable to maintain an operating license and our future activities in that country may be limited to leasing our aircraft to unrelated operating companies. Our joint venture partners and agents are typically influential members of the local business community and instrumental in aiding us in obtaining contracts and managing our affairs in the local country. As a result of terminating these relationships, our ability to continue conducting business in these countries where the improper activities took place may be negatively affected. We may not be successful in our negotiations to terminate our ownership interest in the joint venture, and the outcome of such negotiations may negatively affect our ability to continue leasing our aircraft to the joint venture or other unrelated operating companies or conducting other business in that country, to export our aircraft or to recover our investment in the joint venture.

We expect to incur higher costs and lower profit margins as a result of the remediation of activities identified in the Internal Review.

Many of the improper actions identified in the Internal Review resulted in decreasing the costs incurred by us in performing our services. The remedial actions we are taking will result in an increase in these costs and, if we cannot raise our prices simultaneously and to the same extent of our increased costs, our operating income will decrease.

The demand for our services is substantially dependent on the level of offshore oil and gas exploration, development and production activity.

We provide helicopter services to companies engaged in offshore oil and gas exploration, development and production activities. As a result, demand for our services, as well as our revenue and our profitability, are substantially dependent on the worldwide levels of activity in offshore oil and gas exploration, development and production. These activity levels are principally affected by trends in, and expectations regarding, oil and gas prices, as well as the capital expenditure budgets of oil and gas companies. We cannot predict future exploration, development and production activity or oil and gas price movements. Historically, the prices for oil and gas and activity levels have been volatile and are subject to factors beyond our control, such as:

•  the supply of and demand for oil and gas and market expectations for such supply and demand;

•  actions of the Organization of Petroleum Exporting Countries (“OPEC”) and other oil producing countries to control prices or change production levels;

•  general economic conditions, both worldwide and in particular regions;

•  governmental regulation;

•  the price and availability of alternative fuels;

•  weather conditions, including the impact of hurricanes and other weather-related phenomena;

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•  advances in exploration, development and production technology;

•  the policies of various governments regarding exploration and development of their oil and gas reserves; and

•  the worldwide political environment, including the war in Iraq, uncertainty or instability resulting from an escalation or additional outbreak of armed hostilities or other crises in the Middle East or the other geographic areas in which we operate, or further acts of terrorism in the United States or elsewhere.

Our industry is highly competitive and cyclical, with intense price competition.

Our industry has historically been cyclical and is affected by the volatility of oil and gas price levels. There have been periods of high demand for our services, followed by periods of low demand for our services. Changes in commodity prices can have a dramatic effect on demand for our services, and periods of low activity intensify price competition in the industry and often result in our aircraft being idle for long periods of time.

The implementation by our customers of cost-saving measures could reduce the demand for our services.

Oil and gas companies are continually seeking to implement measures aimed at greater cost savings. As part of these measures, these companies are attempting to improve cost efficiencies with respect to helicopter transportation services. For example, these companies may reduce staffing levels on both old and new installations by using new technology to permit unmanned installations and may reduce the frequency of transportation of employees by increasing the length of shifts offshore. In addition, these companies could initiate their own helicopter or other alternative transportation methods. The continued implementation of these kinds of measures could reduce the demand for helicopter transportation services and have a material adverse effect on our business, financial condition and results of operations.

We are highly dependent upon the level of activity in North America and the North Sea.

Approximately 55% of our fiscal year 2005 operating revenue was derived from helicopter services provided to customers operating in North America and the North Sea. North America and the North Sea are mature exploration and production regions that have experienced substantial seismic survey and exploration activity for many years. Hurricanes Katrina and Rita have resulted in, or may result in, the plugging and abandonment of many wells in the U.S. Gulf of Mexico. Because a large number of oil and gas prospects in these regions have already been drilled, additional prospects of sufficient size and quality could be more difficult to identify. In addition, the U.S. government’s exercise of authority under the Outer Continental Shelf Lands Act, as amended, to restrict the availability of offshore oil and gas leases could adversely impact exploration and production activity in the U.S. Gulf of Mexico. If activity in oil and gas exploration, development and production in either North America or the North Sea materially declines, our business, financial condition and results of operations could be materially and adversely affected. We cannot predict the levels of activity in these areas.

Our future growth depends on the level of international oil and gas activity and our ability to operate outside of North America and the North Sea.

Our future growth will depend significantly on our ability to expand into international markets outside of North America and the North Sea. Expansion of our business depends on the level of offshore oil and gas exploration, development and production activity and our ability to operate in these regions.

Expansion of our business outside of North America and the North Sea may be adversely affected by:

•  local regulations restricting foreign ownership of helicopter operators;

•  requirements to award contracts to local operators; and

•  the number and location of new drilling concessions granted by foreign sovereigns.

We can predict neither the level of activity in these areas nor the restrictions or requirements that may be imposed in the countries in which we operate. If we are unable to continue to operate or retain contracts in operations outside of North America and the North Sea, our future business, financial condition and results of

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operations may be adversely affected, and our operations outside of North America and the North Sea may not grow. Our operations in Nigeria and South America are likely to be negatively affected by actions that we are taking as a result of the activities identified in the Internal Review, as discussed above under “— The disclosure and remediation of activities identified in the Internal Review could result in the loss of business relationships and adversely affect our business.”

In order to grow our business, we may require additional capital in the future, which may not be available to us.

Our business is capital intensive and, to the extent we do not generate sufficient cash from operations, we need to raise additional funds through public or private debt or equity financings to execute our growth strategy. Adequate sources of capital funding may not be available when needed, or may not be available on favorable terms. In addition, the SEC investigation, any related proceedings in other countries and the consequences of the activities identified in the Internal Review could adversely affect our ability to raise additional funds. If we raise additional funds by issuing equity securities, dilution to the holdings of existing stockholders may result. If funding is insufficient at any time in the future, we may be unable to acquire additional aircraft, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.

Our operations outside of North America and the North Sea are subject to additional risks.

Approximately 33% of our fiscal year 2005 operating revenue was attributable to helicopter services provided to oil and gas customers operating outside of North America and the North Sea. Operations in most of these areas are subject to various risks inherent in conducting business in international locations, including:

•  political, social and economic instability, including risks of war, general strikes and civil disturbances;

•  governmental actions that restrict payments or the movement of funds or result in the deprivation of contract rights;

•  the taking of property without fair compensation; and

•  the lack of well-developed legal systems in some countries which could make it difficult for us to enforce our contractual rights.

For example, there has been continuing unrest in Nigeria, where we derived 14% of our fiscal year 2005 operating revenue. While this unrest has not adversely affected our International Operations, any future unrest in Nigeria or our other operating regions could adversely affect our business, financial condition and results of operations. We cannot predict whether any of these events will occur in the future in Nigeria or elsewhere.

Foreign exchange risks and controls may affect our financial position and results of operations.

Through our operations outside the U.S., we are exposed to currency fluctuations and exchange rate risks. The majority of both our revenue and expenses from our North Sea Operations is denominated in British pounds sterling. Our foreign exchange rate risk is even greater when our revenue is denominated in a currency different from that associated with the corresponding expenses. In addition, some of our contracts provide for payment in currencies other than British pounds sterling or U.S. dollars. We attempt to minimize our exposure to foreign exchange rate risk by contracting the majority of our services, other than in our North Sea Operations, in U.S. dollars. As a result, a strong U.S. dollar may increase the local cost of our services that are provided under U.S. dollar-denominated contracts, which may reduce the demand for our services in foreign countries. Generally, we do not enter into hedging transactions to protect against foreign exchange risks related to our operating revenue.

Because we maintain our financial statements in U.S. dollars, we are vulnerable to fluctuations in the exchange rate between the U.S. dollar and foreign currencies, such as the British pound sterling. In preparing our financial statements, we must convert all non-U.S. dollar currencies to U.S. dollars. The effect of foreign currency translation is reflected in a component of stockholders’ investment, while foreign currency transaction gains or losses are credited or charged to income and reflected in other income (expense). In the past three fiscal years, our

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stockholders’ investment has increased by $66.2 million as a result of translation adjustments. Changes in exchange rates could cause significant changes in our financial position and results of operations in the future.

We operate in countries with foreign exchange controls. These controls may limit our ability to repatriate funds from our International Operations and unconsolidated affiliates or otherwise convert local currencies into U.S. dollars. These limitations could adversely affect our ability to access cash from these operations.

We operate in many international areas through entities that we do not control.

We conduct many of our international operations through entities in which we have a minority investment or through strategic alliances with foreign partners. For example, we have acquired interests in, and in some cases have lease and service agreements with, entities that operate aircraft in Egypt, Mexico and Norway, and, as indicated above, we are negotiating to terminate our ownership interest in a joint venture in a South American country. We derive significant amounts of lease revenue, service revenue and dividend income from these entities. In fiscal year 2005, we derived approximately $3.4 million of dividend income from our unconsolidated affiliates, of which approximately $0.3 million was derived from the joint venture in such South American country. More significantly, we received approximately $46.6 million of revenues in fiscal year 2005 from the provision of aircraft and other services to unconsolidated affiliates, of which approximately $9.9 million was derived from the joint venture in such South American country. Because we do not own a majority or maintain voting control of these entities, we do not have the ability to control their policies, management or affairs. The interests of persons who control these entities or partners may differ from ours, and may cause such entities to take actions that are not in our best interest. If we are unable to maintain our relationships with our partners in these entities, we could lose our ability to operate in these areas, potentially causing a material adverse affect on our business and results of operations.

Helicopter operations involve risks that may not be covered by our insurance or may increase our operating costs.

The operation of helicopters inherently involves a degree of risk. Hazards such as harsh weather and marine conditions, mechanical failures, crashes and collisions are inherent in our business and may result in personal injury, loss of life, damage to property and equipment and suspension or reduction of operations. Our aircraft have been involved in accidents in the past, some of which have included loss of life and property damage. We may experience similar accidents in the future. In addition, our Production Management Services are subject to the normal risks associated with working on oil and gas production facilities. These risks include injury to or death of personnel and damage to or loss of property.

We attempt to protect ourselves against these losses and damage by carrying insurance, including hull and liability, general liability, workers’ compensation, and property and casualty insurance. Our insurance coverage is subject to deductibles and maximum coverage amounts, and we do not carry insurance against all types of losses, including business interruption. We cannot assure you that our existing coverage will be sufficient to protect against all losses, that we will be able to maintain our existing coverage in the future or that the premiums will not increase substantially. In addition, future terrorist activity, accidents or other events could increase our insurance premiums. The loss of our liability insurance coverage, inadequate coverage from our liability insurance or substantial increases in future premiums could materially adversely affect our business, financial condition and results of operations.

We are subject to government regulation that limits foreign ownership of aircraft companies.

United States.  We are subject to regulations pursuant to the Federal Aviation Act of 1958, as amended, and other statutes. Under the Federal Aviation Act, it is unlawful to operate certain aircraft for hire within the U.S. unless such aircraft are registered with the Federal Aviation Administration (“FAA”) and the operator of such aircraft has been issued an operating certificate by the FAA. As a general rule, an aircraft may be registered under the Federal Aviation Act only if the aircraft is owned or controlled by one or more citizens of the United States. In addition, an operating certificate may be granted only to a citizen of the United States. For purposes of these requirements, a corporation is deemed to be a citizen of the United States only if, among other things, at least 75% of its voting interests are owned or controlled by U.S. citizens. If persons other than U.S. citizens should come to own or control

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more than 25% of the voting interests in us, we have been advised that our aircraft may be subject to deregistration under the Federal Aviation Act, and we may lose the privilege of operating within the United States. Deregistration of our aircraft or loss of our operating license for any reason, including foreign ownership in excess of the permitted levels, would materially adversely affect our ability to conduct our North American Operations. Our organizational documents currently provide for the automatic suspension of voting rights of shares of our Common Stock owned or controlled by a non-U.S. citizen and our right to redeem those shares, to the extent necessary to comply with these requirements. As of September 30, 2005, approximately 6.2% of our outstanding Common Stock was held by persons with foreign addresses. Because a substantial portion of our Common Stock is publicly traded, our foreign ownership may fluctuate on each trading day. In addition, these foreign ownership limitations restricting our ability to issue or sell our Common Stock to non-U.S. citizens may hurt our ability to raise equity or acquire assets or businesses for Common Stock in the future.

United Kingdom.  We are subject to the Civil Aviation Act 1982, other U.K. and European statutes and regulations made thereunder. We carry persons and property in our helicopters pursuant to an operating license issued by the Civil Aviation Authority (“CAA”).

Under the European Council Regulation 2407/92, U.K. license holders must be in possession of a valid air operator’s certificate and must operate aircraft registered in the U.K. or obtain CAA approval for their use. The holder of an operating license must meet the ownership and control requirements of Council Regulation 2407/92. This means that the entity that operates under the license must be owned directly or through majority ownership, and must at all times be effectively controlled, by United Kingdom or European Union nationals. We own 49% of the Common Stock of our U.K. operating affiliate, Bristow Aviation Holdings, Ltd., or Bristow, and have put/call arrangements with the other two stockholders that allow us to acquire ownership of the remaining Common Stock from these stockholders. If we were to purchase any Bristow shares pursuant to this arrangement, we would be required to find a qualified European owner to acquire those shares in order for Bristow to retain its CAA operating license. Revocation of the CAA operating license for any reason would have a material adverse effect on our North Sea Operations.

International Operations.  Certain of our International Operations are subject to restrictions on foreign ownership. Because of this, these operations are conducted primarily through unconsolidated affiliates in which local citizens own interests or pursuant to arrangements through which we operate assets or conduct operations under contracts with local entities. If changes in local regulations further limit foreign ownership or otherwise restrict our ability to conduct operations or operate assets under contracts with local entities, we may not be permitted to continue operating in these regions.

We cannot assure you that there will be no changes in aviation laws, regulations or administrative requirements or the interpretations thereof, that could restrict or prohibit our ability to operate in certain regions. Any such restriction or prohibition on our ability to operate may materially adversely affect our business, financial condition and results of operations.

Our failure to attract and retain qualified personnel could have an adverse effect on us.

Our ability to attract and retain qualified pilots, mechanics and other highly-trained personnel is an important factor in determining our future success. For example, many of our customers require pilots with very high levels of flight experience. The market for these experienced and highly-trained personnel is competitive and will become more competitive if oil and gas industry activity levels increase. Accordingly, we cannot assure you that we will be successful in our efforts to attract and retain such personnel. In addition, some of our pilots, mechanics and other personnel, as well as those of our competitors, are members of the U.S. or U.K. Military Reserves who have been, or could be, called to active duty. If significant numbers of such personnel are called to active duty, it would reduce the supply of such workers and likely increase our labor costs. As a result of the disclosure and remediation of activities identified in the Internal Review, we may have difficulty attracting and retaining qualified personnel, and we may incur increased expenses.

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We face substantial competition in both of our business segments.

The helicopter business is highly competitive. Chartering of helicopters is usually done on the basis of competitive bidding among those providers having the necessary equipment, experience and resources. Factors that affect competition in our industry include price, reliability, safety, reputation, availability, equipment and quality of service. In addition, many of our customers have the capability to perform their own helicopter operations should they elect to do so, which has a limiting effect on our rates.

Our competitors may not face the same regulatory requirements that we face and may not be required to incur the same costs to comply with those requirements and otherwise operate their businesses.

In our North American Operations, we face competition from a number of providers, including one U.S. competitor with a comparable number of helicopters servicing the Gulf of Mexico. We have two significant competitors in the North Sea. In our International Operations, we also face significant competition. In addition, foreign regulations may also require the awarding of contracts to local operators.

The production management services business is also highly competitive. There are a number of competitors that maintain a presence throughout the U.S. Gulf of Mexico. In addition, there are many smaller operators that compete with us on a local basis or for single projects or jobs. Contracts for our Production Management Services are generally for terms of a year or less and could be awarded to our competitors upon expiration. Many of our customers are also able to perform their own production management services, should they choose to do so.

As a result of significant competition, we must continue to provide safe and efficient service or we will lose market share, which could materially adversely affect our business, financial condition and results of operations. The loss of a significant number of our customers or termination of a significant number of our contracts could materially adversely affect our business, financial condition and results of operations.

We depend on a small number of large oil and gas industry customers for a significant portion of our revenues.

We derive a significant amount of our revenue from a small number of major and independent oil and gas companies. Our loss of one of these significant customers, if not offset by sales to new or other existing customers, could materially adversely affect our business, financial condition and results of operations. See “Item 1. Business — Customers and Contracts.” The results of the Internal Review may impact our ability to retain some or all of the business we have with certain of these customers. See “— The disclosure and remediation of activities identified in the Internal Review could result in the loss of business relationships and adversely affect our business.”

Our operations are subject to weather-related and seasonal fluctuations.

Generally, our operations can be impaired by harsh weather conditions. Poor visibility, high wind and heavy precipitation can affect the operation of helicopters and result in a reduced number of flight hours. A significant portion of our operating revenue is dependent on actual flight hours, and a substantial portion of our direct cost is fixed. Thus, prolonged periods of harsh weather can materially and adversely affect our business, financial condition and results of operations.

In the Gulf of Mexico, the months of December through March have more days of harsh weather conditions than the other months of the year. Heavy fog during those months often limits visibility. In addition, in the Gulf of Mexico, June through November is tropical storm and hurricane season. When a tropical storm or hurricane is about to enter or begins developing in the Gulf of Mexico, flight activity may increase because of evacuations of offshore workers. However, during a tropical storm or hurricane, we are unable to operate in the area of the storm. In addition, as a significant portion of our facilities are located along the coast of the U.S. Gulf of Mexico, tropical storms and hurricanes may cause substantial damage to our property there, including helicopters. For example, during the summer and fall of 2005, Hurricanes Katrina and Rita caused damage to several Louisiana facilities. See “Item 1. Business — Helicopter Services-North American Operations.” Additionally, we incur costs in evacuating our aircraft, personnel and equipment prior to tropical storms and hurricanes.

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The fall and winter months have fewer hours of daylight, particularly in the North Sea. While some of our aircraft are equipped to fly at night, we generally do not do so. In addition, drilling activity in the North Sea is lower during the winter months than the rest of the year. Anticipation of harsh weather during this period causes many oil companies to limit activity during the winter months. Consequently, flight hours are generally lower during these periods, typically resulting in a reduction in operating revenue during those months. Accordingly, our reduced ability to operate in harsh weather conditions and darkness may adversely affect our business, financial condition and results of operations.

Environmental regulations and liabilities may increase our costs and adversely affect us.

All of our operations are subject to local environmental laws and regulations that impose limitations on the discharge of pollutants into the environment and establish standards for the treatment, storage, recycling and disposal of toxic and hazardous wastes. The nature of the business of operating and maintaining helicopters requires that we use, store and dispose of materials that are subject to environmental regulation. Liabilities associated with environmental matters could have a material adverse impact on our business, financial condition and results of operations. For additional information see “Item 3. Legal Proceedings.”

The DOJ investigation could result in criminal proceedings and the imposition of fines and penalties.

On June 15, 2005, we issued a press release stating that one of our subsidiaries had received a document subpoena from the Antitrust Division of the DOJ. The subpoena relates to a grand jury investigation of potential antitrust violations among providers of helicopter transportation services in the U.S. Gulf of Mexico.

While we intend to comply with requests for information from the DOJ in connection with this investigation, we cannot predict the ultimate outcome of the DOJ investigation. The outcome of the DOJ investigation and any related legal proceedings could include civil injunctive or criminal proceedings, the imposition of fines and other penalties, remedies and/or sanctions, referral to other governmental agencies and/or the payment of damages in civil litigation, any of which could have a material adverse effect on our business, financial condition and results of operations.

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PART I

Item 1.   Business

OVERVIEW

We are a leading provider of helicopter transportation services to the worldwide offshore oil and gas industry with major operations in the U.S. Gulf of Mexico and the North Sea. We also have operations, both directly and indirectly, in all of the other major offshore oil and gas producing regions of the world, including Australia, Brazil, China, Mexico, Nigeria, Russia and Trinidad. As of March 31, 2005, we operated 320 aircraft, and our unconsolidated affiliates operated an additional 113 aircraft throughout the world. As of September 30, 2005, we operated 331 aircraft, and our unconsolidated affiliates operated an additional 140 aircraft throughout the world. We also provide production management services for oil and gas production facilities in the U.S. Gulf of Mexico.

We operate our business in two segments: Helicopter Services and Production Management Services. During fiscal year 2005, we conducted our Helicopter Services through four business units:

•  North American Operations;

•  North Sea Operations;

•  International Operations; and

•  Technical Services.

We currently conduct our Helicopter Services through six business units:

•  North American Operations;

•  South and Central American Operations;

•  European Operations;

•  West African Operations;

•  Southeast Asian Operations; and

•  Other International Operations.

For additional information about our two segments, see Note K in our “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report. For a description of certain risks affecting our business and operations, see “Risk Factors” included elsewhere in this Annual Report.

We are a Delaware corporation incorporated in 1969. On August 22, 2005, we moved our corporate headquarters from Lafayette, Louisiana to Houston, Texas. Our executive offices are now located at 2000 W. Sam Houston Parkway South, Suite 1700, Houston, Texas 77042. Our telephone number is (713) 267-7600.

Our Internet website address is http://www.olog.com. We make our website content available for information purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference in this Annual Report. All of our periodic report filings with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 for fiscal periods ending on or after December 15, 2002 are made available, free of charge, through our website, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and any amendments to these reports. These reports are available through our website as soon as reasonably practicable after we electronically file or furnish such material to the SEC. In addition, the public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, D.C. 20549 or on their Internet website located at http://www.sec.gov. The public may obtain information on the operation of the Public Reference Room and the SEC’s Internet website by calling the SEC at 1-800-SEC-0330.

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HELICOPTER SERVICES

Our customers charter our helicopters to transport personnel and time-sensitive equipment from onshore bases to offshore drilling rigs, platforms and other installations. We classify our helicopter fleet into three categories: small, medium and large. Small helicopters hold four to six passengers and are better suited for support of production management activities and for daytime flights and shorter routes. With more than 4,000 active production facilities, many of which are unable to accommodate medium or large helicopters, the U.S. Gulf of Mexico is a significant market for helicopters of this type. Medium helicopters hold up to 13 passengers and are the most versatile part of our fleet. Generally, they are equipped to fly in a variety of different operating conditions and are capable of flying longer distances and carrying larger payloads than small helicopters. Similarly, large helicopters, which can hold up to 25 passengers, are generally equipped to fly in a variety of conditions including harsh weather conditions, carry larger payloads and fly longer distances. Medium and large helicopters are most commonly used for crew changes on large offshore production facilities and drilling rigs. With their ability to carry greater payloads, travel greater distances and move at higher speeds, medium and large helicopters are preferred in international markets, where the offshore facilities tend to be larger, the drilling locations tend to be more remote and the onshore infrastructure tends to be more limited. As a result of the greater distances offshore, demand for medium and large helicopters is also driven by drilling, development and production activity levels in deepwater throughout the world.

We are able to deploy our aircraft to the regions with the greatest demand, subject to the satisfaction of local governmental regulations. There are also additional markets for helicopter services beyond the oil and gas industry, including search and rescue services. Markets which we do not serve include emergency medical transportation, agricultural and forestry support and general aviation activities. The existence of these alternative markets enables us to better manage our helicopter fleet by providing both a source of additional aircraft during times of high demand in the oil and gas industry and potential purchasers for our excess aircraft during times of reduced demand in the oil and gas industry.

The composition of our fleet as of March 31 and September 30, 2005, and some of the characteristics of the individual types of aircraft we own or lease are as follows:

	Number
	September 30,		March 31,		Passenger		Speed
Type	2005		2005		Capacity		(MPH)		Engine
Small Helicopters
Bell 206L Series		81		77		6		125	Turbine
Bell 206B Jet Ranger		26		28		4		115	Turbine
Bell 407		38		35		6		130	Turbine
Bo-105		2		2		4		125	Twin Turbine
EC 120		10		10		4		118	Turbine
Medium Helicopters
Bell 212		20		20		12		115	Twin Turbine
Bell 412		27		25		13		140	Twin Turbine
Sikorsky S-76		51		49		12		160	Twin Turbine
Large Helicopters
AS332L Super Puma		33		33		18		160	Twin Turbine
Bell 214ST		6		6		18		150	Twin Turbine
Sikorsky S-61		17		18		18		135	Twin Turbine
Sikorsky S-92		1		1		19		190	Twin Turbine
Mil 8		7		7		20		156	Twin Turbine
EC 225		2		—		25		173	Twin Turbine
Other (includes fixed wing)		10		9
Total		331		320

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We owned 315 of the 320 aircraft that we operated as of March 31, 2005. We held the remaining five aircraft under operating leases. We owned 327 of the 331 aircraft that we operated on September 30, 2005, with the remaining four aircraft held under operating leases.

The following table shows the distribution of our small, medium and large aircraft among our business units as of March 31, 2005 and September 30, 2005:

	North American				North Sea				International
	Operations				Operations				Operations				Total
Type	September 30		March 31		September 30		March 31		September 30		March 31		September 30		March 31
Small		141		135		1		1		25		22		167		158
Medium		27		25		7		7		64		62		98		94
Large		6		6		39		37		21		25		66		68
Total		174		166		47		45		110		109		331		320

The following table sets forth the number of our aircraft operated as of the dates indicated:

	As of
	September 30,		As of March 31
	2005		2005		2004		2003
North American Operations		174		166		172		178
North Sea Operations		47		45		53		57
International Operations		110		109		101		97
Technical Services		—		—		6		3
Total		331		320		332		335
Additional aircraft operated by unconsolidated affiliates		140		113		96		91

Fleet Update

During fiscal year 2003, we initiated a fleet renewal program. In December 2002, we entered into a contract with Sikorsky Aircraft Corporation, a major helicopter manufacturer, to acquire 15 new medium-sized helicopters, which are our most versatile aircraft. Six of the 15 initial aircraft were delivered in fiscal year 2004. Four of the 15 initial aircraft were delivered in fiscal year 2005. Two of the 15 initial aircraft were delivered in the first half of fiscal year 2006, and one is expected to be delivered in the fourth quarter of fiscal year 2006. The remaining two of the 15 initial aircraft are expected to be delivered in early fiscal year 2007. In June 2005, we amended the initial contract to acquire 32 additional medium-sized helicopters as part of our ongoing fleet renewal program. The first helicopter under the amended contract is due to be delivered early in fiscal year 2007, and a total of 17 additional aircraft are to be delivered in fiscal years 2007 and 2008. The remaining helicopters are slated for delivery between fiscal years 2009 and 2013. The agreement allows us to trade in one previously purchased Sikorsky aircraft for each new aircraft purchased. The agreement also gives us the option to purchase up to 24 additional aircraft with deliveries through fiscal year 2013, provided we exercise the options by an annual deadline. Thereafter, the option aircraft are subject to availability. As of September 30, 2005, the options with respect to six of the aircraft are now subject to availability.

In connection with our fleet renewal program, in March 2003, we also entered into a contract with Bell Helicopter Textron Canada Ltd., or Bell Helicopter, a major helicopter manufacturer, to acquire 14 new small helicopters. Two of these aircraft were delivered in fiscal year 2004, seven were delivered in fiscal year 2005, four were delivered subsequent to March 31, 2005, and the final helicopter under this agreement is expected to be delivered in the third quarter of fiscal year 2006.

In January 2004, we entered into a purchase agreement with Eurocopter for two new large aircraft to be delivered in calendar year 2005. In connection with this purchase agreement, Eurocopter has found a purchaser for four of our used large aircraft. The proceeds from the sale of the four used aircraft and some surplus spares will principally fund the purchase of the two new aircraft. We took delivery of both of these aircraft during the second quarter of fiscal year 2006.

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Subsequent to March 31, 2005, we entered into agreements with Eurocopter for the purchase of four large aircraft, all of which are expected to be delivered in the third quarter of fiscal year 2007, and for the purchase of four medium aircraft, three of which are expected to be delivered in the second half of fiscal year 2007 and one of which is expected to be delivered in the first quarter of fiscal year 2008. In addition, we entered into an agreement with Bell Helicopter for the purchase of six medium aircraft to be delivered in fiscal year 2006, two of which were delivered in the first half of fiscal year 2006. We also purchased five small used aircraft that were delivered in the first and second quarters of fiscal year 2006.

Also subsequent to March 31, 2005, we entered into an agreement regarding the purchase of three large aircraft to be utilized and owned by our unconsolidated Norwegian affiliate, Norsk Helikopter AS. We agreed to fund the purchase of one aircraft, and Norsk Helikopter AS and the other equity owner in that entity each agreed to fund the purchase of one of the two other aircraft. One is expected to be delivered in the third quarter of fiscal year 2006 and the remaining two are expected to be delivered in fiscal year 2007.

During fiscal year 2006, we expect to take delivery of 21 new aircraft, of which ten are small aircraft, nine are medium aircraft and two are large aircraft. As of September 30, 2005 we had taken delivery of nine small aircraft, four medium aircraft and two large aircraft.

North American Operations

As of March 31, 2005, we conducted our North American Helicopter Services primarily from 12 operating facilities along the U.S. Gulf of Mexico, with additional operations in Alaska. As of March 31, 2005, we operated 150 aircraft in the U.S. Gulf of Mexico and 16 aircraft in Alaska. We are the second largest supplier of helicopter services in the U.S. Gulf of Mexico and a major supplier in Alaska, where we fly the entire length of the Alyeska pipeline. The U.S. Gulf of Mexico is a major offshore oil and gas producing region with approximately 4,000 production platforms. These platforms are typically unmanned and are serviced by our small aircraft. Subsequent to March 31, 2005, Hurricane Katrina caused a total loss of our Venice, Louisiana shorebase facility, and Hurricane Rita severely damaged our Creole, Louisiana base and flooded our Intracoastal City, Louisiana base. At this time, we are in the process of evaluating what actions will be taken with regard to the Venice and Creole bases, and we currently expect that we will reestablish these bases. We intend to repair the damage at the Intracoastal City base as well as the minor damage at our other facilities. We expect to record a $0.3 million net gain ($2.9 million in anticipated insurance recoveries offset by $2.6 million of involuntary conversion losses) related to property damage to these facilities.

North Sea Operations

We are the second largest provider of helicopter services in the North Sea, where there are harsh weather conditions and geographically concentrated offshore facilities. The facilities in the North Sea are large and require frequent crew change flight services. We deploy the majority of our large aircraft in this region. In addition to our oil and gas helicopter services, we are the sole civil supplier of search and rescue services to Her Majesty’s Coast Guard in the U.K. As of March 31, 2005, we operated 45 aircraft in the North Sea. We also have an ownership interest in and lease aircraft to an unconsolidated affiliate in Norway for use in its North Sea operations.

International Operations

We provide helicopter services to all of the major offshore oil and gas producing regions of the world outside of North America and the North Sea. Our International Operations are conducted in a variety of different locales, where we deploy small, medium and large aircraft in response to the market requirements and local operating conditions. As of March 31, 2005, our international fleet was composed of 109 aircraft in 12 different countries. Of these aircraft, we operated 34 helicopters in Central and South America (eight in Brazil, two in Colombia, 15 in Mexico and nine in Trinidad), 40 aircraft in Nigeria, ten aircraft in Australia, ten aircraft in Russia and 15 aircraft elsewhere in the world.

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Technical Services

Our Technical Services business unit provides helicopter repair and overhaul services from facilities located in Tucson, Arizona, New Iberia, Louisiana, and Redhill, England. In November 2004, we sold certain contracts within the United Kingdom Technical Services business unit to an existing joint venture. Additionally, we began downsizing the remaining operations of technical services in the United Kingdom by ceasing to perform certain types of third-party work that had generated poor financial results during the previous two years. The remaining services include engine overhauls, engineering and design services, technical manpower support and transmission testing. While a portion of this work is performed on our own aircraft, some of these services are performed for third parties. Our Technical Services business unit also provides engineering and administrative support to the 59 aircraft operated by FBS Limited (“FBS”), FB Heliservices Limited (“FBH”) and FB Leasing Limited (“FBL”) for training the British military.

PRODUCTION MANAGEMENT SERVICES

We are a leading independent contract operator of oil and gas production facilities in the U.S. Gulf of Mexico. As of March 31, 2005, we managed or had personnel assigned to 305 production facilities in the U.S. Gulf of Mexico. Our customers are typically independent oil and gas companies who hire us to monitor and maintain their offshore production facilities and provide other services for certain onshore facilities. When servicing offshore oil and gas production facilities, our employees normally live on the facility in seven-day rotations. Our services include furnishing personnel, engineering services, production operating services, paramedic services and providing transportation of personnel and supplies between onshore bases and offshore facilities. This provides us additional opportunities to use our Helicopter Transportation Services. We also handle regulatory and production reporting for some of our customers.

The production management business depends primarily on production activity levels in the offshore U.S. oil and gas industry. Since 90% of our production management costs consist of labor and contracted transportation services, we are able to scale our operations to changing market conditions.

CUSTOMERS AND CONTRACTS

Helicopter Services

The principal customers for our Helicopter Services are national and international oil and gas companies. During fiscal years 2005, 2004 and 2003, Shell Oil Company accounted for 11%, 11% and 15%, respectively, of our operating revenue, excluding revenues associated with reimbursements for costs incurred on behalf of customers. No other customer accounted for 10% or more of our operating revenue during those fiscal years. During fiscal year 2005, our top ten customers accounted for 48% of our operating revenue, excluding revenues associated with reimbursements for costs incurred on behalf of customers.

Our helicopter contracts are generally based on a two-tier rate structure consisting of a daily or monthly fixed fee plus additional fees for each hour flown. Generally, these contracts permit the customer to cancel the charter before the end of the contract term. We also provide services to customers on an “ad hoc” basis, which usually entails a shorter notice period and shorter duration. Our charges for ad hoc services are generally based on an hourly rate, or a daily or monthly fixed fee plus additional fees for each hour flown. Generally, our ad hoc services have a higher margin than our other helicopter contracts due to supply and demand dynamics. Our rate structure is based on fuel costs remaining at or below a predetermined threshold. Fuel costs in excess of this threshold are generally recharged to the customer.

Production Management Services

Customers of our Production Management Services are primarily independent oil and gas companies that own oil and gas production facilities in the U.S. Gulf of Mexico but outsource production management of their facilities to companies such as our own. This allows these customers to focus on the exploration for and development of additional oil and gas reserves. During the past three fiscal years, no single production management customer accounted for more

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than 10% of our operating revenue. We enter into a master service agreement with each new production management customer. When work is awarded to us, the pricing agreement included in the bid submission, which details the monthly rates for contract personnel and transportation services as well as hourly rates for services provided outside the scope of the contract, becomes a part of the master service agreement with the customer.

GOVERNMENT REGULATION

United States.  As a commercial operator of small aircraft, our U.S. operations are subject to regulations under the Federal Aviation Act of 1958, as amended, and other laws. We carry persons and property in our helicopters under an Air Taxi Certificate granted by the FAA. The FAA regulates our U.S. flight operations and, in this respect, exercises jurisdiction over personnel, aircraft, ground facilities and certain technical aspects of our operations. The National Transportation Safety Board is authorized to investigate aircraft accidents and to recommend improved safety standards. Our U.S. operations are also subject to the Federal Communications Act of 1934 because we use radio facilities in our operations.

Under the Federal Aviation Act, it is unlawful to operate certain aircraft for hire within the United States unless such aircraft are registered with the FAA and the FAA has issued an operating certificate to the operator. As a general rule, aircraft may be registered under the Federal Aviation Act only if the aircraft are owned or controlled by one or more citizens of the United States and an operating certificate may be granted only to a citizen of the United States. For purposes of these requirements, a corporation is deemed to be a citizen of the United States only if, among other things, at least 75% of its voting interests are owned or controlled by United States citizens. If persons other than United States citizens should come to own or control more than 25% of our voting interest, we have been advised that our aircraft may be subject to deregistration under the Federal Aviation Act and we may lose our ability to operate within the United States. Deregistration of our aircraft for any reason, including foreign ownership in excess of permitted levels, would materially adversely affect our ability to conduct our North American Operations. Our organizational documents currently provide for the automatic suspension of voting rights of shares of our Common Stock owned or controlled by non-U.S. citizens, and our right to redeem those shares, to the extent necessary to comply with these requirements. As of September 30, 2005, approximately 1,450,500 shares of our Common Stock were held by persons with foreign addresses. These shares represented approximately 6.2% of our total outstanding common shares as of September 30, 2005. Because a substantial portion of our Common Stock is publicly traded, our foreign ownership may fluctuate on each trading day.

United Kingdom.  Our U.K. operations are subject to the Civil Aviation Act 1982 and other U.K. and European statutes and regulations made thereunder. We carry persons and property in our helicopters pursuant to an operating license issued by the CAA. The holder of an operating license must meet the ownership and control requirements of Council Regulation 2407/92. This means that the entity that operates under the license must be owned directly or through majority ownership by European Union nationals, and must at all times be effectively controlled by them.

The CAA regulates our U.K. flight operations and exercises jurisdiction over personnel, aircraft, ground facilities and certain technical aspects of those operations. Accident investigations are carried out by an inspector from the Air Accidents Investigation Branch of the Department for Transport. The CAA often imposes improved safety standards on the basis of a report of the inspector. Under the Licensing of Air Carriers Regulations 1992, it is unlawful to operate certain aircraft for hire within the United Kingdom unless such aircraft are approved by the CAA. Changes in U.K. or European laws or regulations, administrative requirements or their interpretation may have a material adverse effect on our business or financial condition or on our ability to continue operations in these areas.

International.  Our operations in areas other than the United States and the United Kingdom are subject to local governmental regulations that may limit foreign ownership of aviation companies. Because of these local regulations, we conduct some of our operations through entities in which local citizens own a majority interest and we hold only a minority interest, or under contracts that provide for us to operate assets for the local companies or to conduct their flight operations. Changes in local laws, regulations or administrative requirements or their interpretation may have a material adverse effect on our business or financial condition or on our ability to continue operations in these areas.

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Production Management.  The Minerals Management Service Bureau of the United States Department of the Interior regulates the operations of oil and gas producers in the outer continental shelf of the Gulf of Mexico and, in this respect, exercises jurisdiction over personnel, production facilities and certain technical aspects of our operations.

COMPETITION

The helicopter transportation business is highly competitive throughout the world. We compete against several providers in almost all of our regions of operations. We have one significant competitor of comparable size in the U.S. Gulf of Mexico and two significant competitors in the North Sea. We believe that it is difficult for additional significant competitors to enter our industry because it requires considerable working capital, a complex system of onshore and offshore bases, personnel and operating experience. However, these requirements can be overcome with the appropriate level of customer support and commitment. In addition, while not the predominant practice, many of our customers in the oil and gas industry have the capability to perform their own helicopter services should they elect to do so.

Generally, customers charter helicopters on the basis of competitive bidding. In some situations, our customers may renew or extend existing contracts without employing a competitive bid process. However, customers may solicit new bids. Contracts in our North American Operations are generally renewable on an annual or shorter basis. In our North Sea and International Operations, contracts tend to be of longer duration. While price is a key determinant in the award of a contract to a successful bidder, operational experience, quality and type of equipment, customer relationship and professional reputation are also factors taken into consideration. Since many of our customers in the oil and gas industry have the capability to perform their own helicopter services, our ability to increase charter rates may be limited under certain circumstances.

The production management business is also highly competitive. There are a number of competitors that operate throughout the U.S. Gulf of Mexico. In addition, there are many smaller competitors that compete locally or for single projects or jobs. Two key elements in competing for production management contracts are personnel costs and transportation costs. In addition, the reliability of the production manager and the quality of its personnel, training programs and safety record are important competitive factors.

INDUSTRY HAZARDS AND INSURANCE

Hazards, such as harsh weather and marine conditions, mechanical failures, crashes and collisions are inherent in the offshore transportation industry and may cause losses of equipment and revenue and death or injury to personnel.

In fiscal year 2005, we had two helicopter accidents involving fatalities: an accident in Alaska that resulted in one fatality and an accident in the Gulf of Guinea, offshore Nigeria, that resulted in four fatalities. Subsequent to March 31, 2005, we had one helicopter accident in the U.S. Gulf of Mexico resulting in two fatalities. In fiscal year 2004, we did not have any helicopter accidents involving fatalities. We maintain insurance with respect to the aircraft involved and related liabilities and believe that our insurance coverage will be adequate to cover any claims ultimately paid.

We maintain hull and liability insurance, which generally insures us against damage to our aircraft, as well as certain legal liabilities to others. We also carry workers’ compensation, auto liability, property and casualty coverages for most of our U.S. and U.K. operations. It is also our policy to carry insurance for, or require our customers to indemnify us against, expropriation, war risk and confiscation of the helicopters we use in our International Operations.

Terrorist attacks, the continuing threat of terrorist activity and economic and political uncertainties have led to significant increases in our premiums for much of our insurance protection. There is no assurance that in the future we will be able to maintain our existing coverage or that we will not experience further substantial increases in premiums. There is no assurance that our liability coverage will be adequate to cover all potential claims that may arise.

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Our Production Management operations are subject to the normal risks associated with working on oil and gas production facilities. These risks could result in damage to or loss of property and injury to or death of personnel. We carry customary business insurance including general liability, workers’ compensation, automobile liability and property and casualty coverages.

ENVIRONMENTAL

All of our operations are subject to national and local laws and regulations controlling the discharge of materials into the environment or otherwise relating to the protection of the environment. To date, such laws and regulations have not had a material adverse effect on our business, results of operations or financial condition. Increased public awareness and concern over the environment, however, may result in future changes in the regulation of the oil and gas industry, which in turn could adversely affect us. We have been named as a potentially responsible party in connection with certain sites. See “Item 3. Legal Proceedings.”

EMPLOYEES

As of September 30, 2005, we employed approximately 3,300 employees. Approximately 2,825 of these employees are employed in our Helicopter Services segment, approximately 450 are employed in our Production Management Services segment and approximately 25 are employed in the corporate office.

We employ approximately 300 pilots in our North American Operations who are represented by the Office and Professional Employees International Union (“OPEIU”) under a collective bargaining agreement. We and the pilots represented by the OPEIU ratified an amended collective bargaining agreement on April 4, 2005. The terms under the amended agreement are fixed until October 3, 2008 and include a wage increase for the pilot group and improvements to several benefit plans. We do not believe that these increases will place us at a competitive, financial or operational disadvantage.

We employ approximately 700 employees (pilots, air crewmen, mechanics, and support staff) in our North Sea Operations and certain Technical Services Operations who are represented by collective bargaining agreements which are ongoing with no specific termination dates.

We employ approximately 75 employees (pilots and aircraft engineers) in our Australian operations who are represented by collective bargaining agreements which are ongoing with no specific termination dates.

In addition, many of the employees of our affiliates are represented by collective bargaining agreements.

Activities engaged in by certain of our current and former employees have been examined in the Internal Review, some of which are discussed in greater detail in “Item 3. Legal Proceedings.” We have taken corrective actions intended to ensure that each of our employees complies with the laws of the countries in which we operate and with our own ethical guidelines. See “Item 9a. Controls and Procedures” and “Risk Factors — The SEC investigation, any related proceedings in other countries and the consequences of the activities identified in the Internal Review could result in civil or criminal proceedings, the imposition of fines and penalties the commencement of third-party litigation, the incurrence of expenses, the loss of business and other adverse effects on our Company” included elsewhere in this Annual Report.

We believe that our relations with our employees are satisfactory.

CONSOLIDATED AND UNCONSOLIDATED AFFILIATES

Most countries limit foreign ownership of aviation companies. To comply with these regulations and yet expand internationally, we have formed or acquired interests in numerous foreign helicopter operations. These investments typically combine a local ownership interest with our experience in providing helicopter services to the oil and gas industry. These arrangements have allowed us to expand operations while diversifying the risks and reducing the capital outlays associated with independent expansion. Because we do not own a majority of the equity or maintain voting control of these entities, we may not have the ability to control their policies, management or

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affairs. We refer to these entities as unconsolidated affiliates. We lease our aircraft to these unconsolidated affiliates to service customers for providing helicopter services in their home country.

For a further description of our unconsolidated affiliates, see the statements under “Introduction” and “Risk Factors” and Note C in our “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report. For a further discussion of Bristow Aviation Holdings, Ltd., or Bristow, our consolidated affiliate, see Note J in our “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.

Consolidated Affiliate.  The United Kingdom, as do most countries, limits foreign ownership of aviation companies. To comply with these restrictions, we own only 49% of the Common Stock of Bristow, but we own 100% of Bristow’s subordinated debt. In addition, we have a put/call agreement with the other two stockholders of Bristow which grants us the right to buy all of their shares of Bristow Common Stock (and them the right to require us to buy all of their shares). Under U.K. regulations, to maintain Bristow’s operating license, we would be required to find a qualified European Union owner to acquire any of the Bristow shares that we have the right or obligation to acquire under the put/call agreement.

Unconsolidated Affiliates.  Set forth below is a brief description of our significant unconsolidated affiliates as of March 31, 2005:

Mexico.  We own a 49% interest in Heliservicio Campeche, S.A. de C.V., or HC, a Mexican corporation that provides onshore helicopter services to the Mexican Federal Electric Commission and offshore helicopter transportation to other companies on a contract and ad hoc basis. HC owned four aircraft and leased 12 aircraft from us to provide helicopter services its customers.

We own a 49% interest in Rotorwing Leasing Resources, L.L.C., or RLR, a Louisiana limited liability company. RLR owned six aircraft and leased three aircraft from us, all of which it leases to HC.

Brazil.  We own a 50% interest in Aeroleo Taxi Aereo S.A., or Aeroleo, a Brazilian corporation. Aeroleo provides offshore helicopter transportation services primarily to the Brazilian national oil company and also serves other oil and gas companies. Aeroleo owned two aircraft and leased eight aircraft from us. We are currently negotiating the termination of our ownership interest in this entity.

We own a 50% interest in Helicopter Leasing Associates, or HLA, a Louisiana limited liability company. HLA leased three aircraft from a third party which it leases to Aeroleo.

Egypt.  We own a 25% interest in Petroleum Air Services, or PAS, an Egyptian corporation. PAS provides helicopter and fixed wing transportation to the oil and gas industry. Additionally, spare fixed-wing capacity is chartered to tourism operators. PAS owned 33 aircraft and leased one aircraft from us.

Norway.  We own a 49% interest in Norsk Helikopter AS, a Norwegian corporation that provides helicopter transportation services in the Norwegian sector of the North Sea. Norsk operated 11 aircraft, five of which are leased from us. During the first quarter of fiscal year 2006, Norsk completed the acquisition of Lufttransport A/S, a Norwegian company, and its sister company, Lufttransport AB, in Sweden, collectively operating 28 aircraft and engaged in providing air ambulance services in Scandinavia. In addition, subsequent to March 31, 2005, we entered into an agreement regarding the purchase of three large aircraft to be utilized and owned by Norsk Helikopter AS. The purchase of these aircraft, supported by a multi-year contract to provide helicopter services offshore in Norway, will be funded through additional borrowings by Norsk and additional funding by both shareholders.

United Kingdom.  We own a 50% interest in each of FBS Limited, or FBS, FB Heliservices Limited, or FBH, and FB Leasing Limited, or FBL, British corporations which principally provide pilot training, maintenance and support services to the British military. FBS and FBL owned a total of 59 aircraft.

Item 1A.   Risk Factors

A discussion of risk factors applicable to us is set forth under “Risk Factors” above.

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Item 1B.   Unresolved Staff Comments

Not applicable.

Item 2.   Properties

The number and types of aircraft we operate are described under “Business — Aircraft Fleet” above. In addition, we lease the significant properties listed below for use in our operations.

•  Approximately 18.6 acres of land at the Acadiana Regional Airport in New Iberia, Louisiana, under a lease expiring in fiscal year 2030. We have constructed on that site office, training, parts facilities and helicopter maintenance facilities containing about 120,000 square feet of floor space. The property has access to the airport facilities, as well as to a major highway.

•  Approximately 77,000 square feet of land at Redhill Aerodrome near London, England, including office and workshop space under a lease expiring in 2075.

•  A helicopter terminal, offices and hangar facilities totaling approximately 12,600 square feet at Aberdeen Airport, Scotland under a lease expiring in 2013 with an option to extend to 2023. We also maintain additional hangar and office facilities at Aberdeen Airport under a lease expiring in 2030.

•  Approximately 42,000 square feet of office and shop space in a building in Tucson, Arizona under a lease expiring in 2007, which is used by our Technical Services business.

•  Approximately 17,800 square feet of office space in a building in Houston, Texas under a lease expiring in 2011, which we use as our headquarters and for our Production Management business.

In addition to these facilities, we lease various office and operating facilities worldwide, including facilities along the U.S. Gulf of Mexico which support our North American Operations and numerous residential locations near our operating bases in the United Kingdom, Australia, China, Russia, Nigeria and Trinidad primarily for housing pilots and staff supporting those areas of operation. These facilities are generally suitable for our operations and can be replaced with other available facilities if necessary.

Item 3.   Legal Proceedings

The United States Environmental Protection Agency (“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 or financial condition.

On June 15, 2005, we issued a press release stating that one of our subsidiaries had received a document subpoena from the Antitrust Division of the DOJ. Contemporaneously, similar subpoenas were served on two of our former executive officers. The subpoena relates to a grand jury investigation of potential antitrust violations among providers of helicopter transportation services in the U.S. Gulf of Mexico. We are continuing to investigate this matter and intend to comply with requests for information from the DOJ in connection with this investigation. The outcome of the DOJ investigation and any related legal and administrative proceedings could include civil

21

injunctive or criminal proceedings, the imposition of fines and other penalties, remedies and/or sanctions, referral to other governmental agencies and/or the payment of damages in civil litigation. It is not possible to accurately predict at this time when the government investigation described above will be completed. Based on current information, we cannot predict the outcome of such investigation or what, if any, actions may be taken by the DOJ or other U.S. agencies or authorities or the effect that it may have on us.

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 a foreign country. The Internal Review, which initially focused on Foreign Corrupt Practices Act matters, was subsequently expanded to cover operations in other countries and other issues. In connection with this review, special outside counsel to the Audit Committee retained forensic accountants.

The SEC then notified us that it had initiated an informal inquiry and requested that we provide certain documents on a voluntary basis. Subsequently, the SEC advised us that the inquiry had become an investigation. We have responded to the SEC’s requests for documents and are continuing to do so.

The Internal Review is complete and the accompanying financial statements reflect all known required restatements. As a follow-up to matters identified during the course of the Internal Review, Special Counsel to the Audit Committee is completing certain work, and may be called upon to undertake additional work in the future to assist in responding to inquiries from the SEC, from other governmental authorities or customers, or as follow-up to the steps being performed by Special Counsel.

In October 2005, the Audit Committee reached certain conclusions with respect to findings to date from the Internal Review. The Audit Committee concluded that, over a considerable period of time, (a) improper payments were made by, and on behalf of, certain foreign affiliated entities directly or indirectly to employees of the Nigerian government, (b) improper payments were made by certain foreign affiliated entities to Nigerian employees of certain customers with whom we have contracts, (c) inadequate employee payroll declarations and, in certain instances, tax payments were made by us or our affiliated entities in certain jurisdictions, (d) inadequate valuations for customs purposes may have been declared in certain jurisdictions resulting in the underpayment of import duties, and (e) an affiliated entity in a South American country, with the assistance of our personnel and two of our other affiliated entities, engaged in transactions which appear to have assisted the South American entity in the circumvention of currency transfer restrictions and other regulations. In addition, as a result of the Internal Review, the Audit Committee and management determined that there were deficiencies in our books and records and internal controls with respect to the foregoing and certain other activities.

Based on the Audit Committee’s findings and recommendations, the Board of Directors has taken disciplinary action with respect to our personnel who it determined bore responsibility for these matters. The disciplinary actions included termination or resignation of employment (including certain members of senior management), changes of job responsibility, reductions in incentive compensation payments and reprimands. One of our affiliates has also obtained the resignation of certain of its personnel.

We have initiated remedial action, including initiating action to correct underreporting of payroll tax, disclose to certain customers inappropriate payments made to customer personnel and terminate certain agency, business and joint venture relationships. We also have taken steps to reinforce our commitment to conduct our business with integrity by creating an internal corporate compliance function, instituting a new code of business conduct (our new code of business conduct entitled “Code of Business Integrity” is available on our website, http://www.olog.com), and developing and implementing a training program for all employees. In addition to the disciplinary actions referred to above, we have also taken steps to strengthen our control environment by hiring new personnel and realigning reporting lines within the accounting function so that field accounting reports directly to the corporate accounting function instead of operations management.

Following the Audit Committee’s conclusions, we initiated the process of voluntarily advising governmental authorities in certain countries of the Audit Committee’s findings. We have not yet advised such foreign governmental authorities of the Audit Committee findings, but intend to do so. Such disclosure may result in 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

22

authorities, the imposition of fines and other penalties, remedies and/or sanctions, including precluding us from participating in business operations in their countries. To the extent that violations of the law may have occurred in several countries in which we operate, we do not yet know whether such violations can be cured merely by the payment of fines or whether other actions may be taken against us, including requiring us to curtail our business operations in one or more such countries for a period of time. In the event that we curtail our business operations in any such country, we may face difficulties exporting our aircraft. As of September 30, 2005, the book values of our aircraft in Nigeria and the South American country where certain improper activities took place were approximately $79.4 million and $2.9 million, respectively.

We cannot predict the ultimate outcome of the SEC investigation, nor can we predict whether other applicable U.S. and foreign governmental authorities will initiate separate investigations. The outcome of the SEC investigation and any related legal and administrative proceedings could include the institution of administrative, civil injunctive or criminal proceedings involving us and/or current or former employees, officers and/or directors, the imposition of fines and other penalties, remedies and/or sanctions, modifications to business practices and compliance programs and/or referral to other governmental agencies for other appropriate actions. It is not possible to accurately predict at this time when matters relating to the SEC investigation will be completed, the final outcome of the SEC investigation, what if any actions may be taken by the SEC or by other governmental agencies in the U.S. or in foreign jurisdictions, or the effect that such actions may have on our consolidated financial statements. In addition, in view of the findings of the Internal Review, we expect to encounter difficulties in the future conducting business in Nigeria and a South American country, and with certain customers. It is also possible that certain of our existing contracts may be cancelled and that we may become subject to claims by third parties, possibly resulting in litigation. 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.

In connection with its conclusions regarding payroll declarations and tax payments, the Audit Committee determined on November 23, 2005, following the recommendation of our senior management, that there is a need to restate our historical consolidated financial statements for fiscal years 2000, 2001, 2002, 2003 and 2004 and for quarterly periods in fiscal year 2005. We have accrued $15.8 million for the taxes, penalties and interest attributable to underreported employee payroll. Operating income for fiscal year 2005 includes $3.8 million attributable to this accrual, and the remainder has been reported as adjustments to amounts previously reported for fiscal year 2004 and earlier. At this time, we cannot estimate what additional payments, fines, penalties and/or litigation and related expenses may be required in connection with the matters identified as a result of the Internal Review, the SEC investigation, any other regulatory investigation that may be instituted or third-party litigation; however, such payments, fines, penalties and/or expenses could have a material adverse effect on our business, financial condition and results of operations.

As we continue to respond to the SEC investigation and other governmental authorities and take other actions relating to improper activities that have been identified in connection with the Internal Review, there can be no assurance that additional restatements will not be required or that the historical financial statements included in this Annual Report will not change or require amendment. In addition, new issues may be identified that may impact our financial statements and the scope of the restatements described in this Annual Report and lead us to take other remedial actions or otherwise adversely impact our Company.

In November 2005, certain of our consolidated affiliates were named in a lawsuit filed with the High Court of Lagos State, Nigeria by Mr. Benneth Osita Onwubalili and Kensit Nigeria Limited, which allegedly acted as agents of the affiliates in Nigeria. The claimants allege that an agreement between the parties was terminated without justification by the defendants and seek damages of $16.3 million. We are continuing to investigate this matter.

We are involved from time to time in various litigation and regulatory matters arising in the ordinary course of business. The amount, if any, of our ultimate liability with respect to these matters cannot be determined, but we do not expect the resolution of any pending matters to have a material adverse effect on our business or financial condition.

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

Not applicable.

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PART II

Item 5.   Market for the Registrant’s Common Equity and Related Stockholder Matters

Since March 12, 2003, our Common Stock has been listed on the New York Stock Exchange under the symbol “OLG.” Prior to becoming listed on the NYSE, our Common Stock had been quoted on the NASDAQ National Market system since 1984.

The following table shows the range of closing prices for our Common Stock during each quarter of our last two fiscal years.

	March 31, 2005				March 31, 2004
	High		Low		High		Low
First Quarter	$	28.16	$	21.85	$	22.15	$	17.53
Second Quarter		34.42		27.08		22.10		19.45
Third Quarter		38.05		32.47		25.64		20.69
Fourth Quarter		35.12		29.10		24.40		20.50

As of September 30, 2005, there were 737 holders of record of our Common Stock.

We have not paid dividends on our Common Stock since January 1984. We do not intend to declare or pay regular dividends on our Common Stock in the foreseeable future. Instead, we generally intend to invest any future earnings in our business. Subject to Delaware law, our Board of Directors will determine the payment of future dividends on our Common Stock, if any, and the amount of any dividends in light of:

•  any applicable contractual restrictions limiting our ability to pay dividends,

•  our earnings and cash flows,

•  our capital requirements,

•  our financial condition, and

•  other factors our Board of Directors deems relevant.

On June 20, 2003, we issued $230 million of 61/8% Senior Notes due 2013. The terms of these Senior Notes restrict our payment of cash dividends to shareholders.

Please refer to Item 12 of this Annual Report for information concerning securities authorized under our equity compensation plans.

During fiscal year 2005, we issued securities without registration under the Securities Act of 1933 that were not previously reported on the quarterly reports on Form 10-Q filed by us. In January 2005 we issued general contractual obligations (the “Deferred Compensation Obligations”) to pay or distribute to the participants in our Deferred Compensation Plan an indeterminate amount of future compensation, the receipt of which the participants elected to defer in accordance with the terms of the Plan. The Deferred Compensation Obligations are payable in cash in a lump-sum distribution or in installments, in accordance with the terms of the Plan, upon a participant’s termination of employment for any reason, including but not limited to death, disability or retirement. The Deferred Compensation Obligations are not convertible into any other security of ours. As of March 31, 2005, our outstanding Deferred Compensation Obligations were $1.2 million.

The above private issuances of securities were issued in reliance upon the exemption for sales of securities not involving a public offering, under section 4(2) of the Securities Act of 1933. The transactions were made in accordance with Rule 506 of Regulation D, and we filed a Notice of Sale on Form D with the SEC on June 9, 2005.

Item 6.   Selected Financial Data

The following table contains selected historical consolidated financial data for us. You should read this table along with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the

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Consolidated Financial Statements and “Notes to Consolidated Financial Statements” that are included elsewhere in this Annual Report.

Amounts previously reported for fiscal years 2004, 2003, 2002 and 2001 have been restated to reflect adjustments to accrue for liabilities and expenses identified in connection with the Internal Review, to properly report customer reimbursables as revenues rather than offsetting such amounts against the related expenses and to properly record expenses for severance benefits and payroll taxes associated with certain foreign subsidiaries. See “Item 3. Legal Proceedings” above and “Restatement of Previously Reported Amounts” in Note A and “Internal Review” in Note D in the “Notes to Consolidated Financial Statements” for further discussion of these matters. Amounts for fiscal year 2005 were not previously audited or filed with the SEC, but had been announced. Amounts for the first three fiscal quarters in that year had been filed.

	Fiscal Year Ended March 31,
	2005		2004		2003		2002(1)		2001
	(In thousands, except per share data)
			(Restated)		(Restated)		(Restated)		(Restated)
Statement of Operations Data:
Operating revenue	$	673,646	$	617,001	$	601,550	$	552,913	$	518,588
Net income	$	51,560	$	49,825	$	40,404	$	42,039	$	28,175
Net income per common share:
Basic	$	2.24	$	2.21	$	1.80	$	1.91	$	1.33
Diluted	$	2.21	$	2.15	$	1.67	$	1.75	$	1.25
Cash dividends	$	—	$	—	$	—	$	—	$	—
Balance Sheet Data:
Total assets	$	1,149,576	$	1,046,828	$	906,031	$	807,301	$	754,820
Long-term debt, including current maturities	$	262,080	$	255,534	$	232,818	$	208,014	$	222,312

(1)  Effective April 1, 2001, we no longer consolidate the results of our Norwegian affiliate.

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with “Forward-Looking Statements”, “Risk Factors” and our Consolidated Financial Statements for fiscal years 2005, 2004 and 2003, and the related notes thereto, included elsewhere in this Annual Report.

Amounts previously reported for fiscal years 2004 and 2003 have been restated to reflect adjustments to accrue for liabilities and expenses identified in connection with the Internal Review, to properly report customer reimbursables as revenues rather than offsetting such amounts against the related expenses and to properly record expenses for severance benefits and payroll taxes associated with certain foreign subsidiaries. See “Item 3. Legal Proceedings” above and “Restatement of Previously Reported Amounts” in Note A and “Internal Review” in Note D in the “Notes to Consolidated Financial Statements” for further discussion of these matters. Amounts for fiscal year 2005 were not previously audited or filed with the SEC, but had been announced. Amounts for the first three fiscal quarters in that year had been filed.

Executive Overview

We are a leading provider of helicopter transportation services to the worldwide offshore oil and gas industry with major operations in the U.S. Gulf of Mexico and the North Sea. We also have operations, both directly and indirectly, in most of the other major offshore oil and gas producing regions of the world, including Australia, Brazil, China, Mexico, Nigeria, Russia and Trinidad. Additionally, we are a leading provider of production

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management services for oil and gas production facilities in the U.S. Gulf of Mexico. As of March 31, 2005, we operated 320 aircraft and our unconsolidated affiliates operated an additional 113 aircraft throughout the world.

Market Outlook

Worldwide demand for hydrocarbons is expected to continue to grow for the foreseeable future. This growth, driven largely by economic expansion, is expected to result in sustained strength in oil and natural gas prices, driving further increases in offshore exploration and development activity by our customers. This increase in offshore exploration and development activity is also likely to lead to growth in production related activities as these development projects come on stream. As a result of the current commodity price environment, we have experienced an increase in aircraft fleet utilization in all of our present markets and expect this trend to continue. In addition, as operators increasingly pursue prospects in deepwater and push further offshore, we expect demand for medium and large helicopters to be further stimulated.

In particular, we expect growth in demand for additional helicopter support in North and South America, West Africa and Asia, including the Caspian Sea region. This growth will provide us with opportunities to add new aircraft to our fleet, as well as opportunities to redeploy aircraft from weaker markets into markets that will sustain higher rates for our services. Currently, helicopter manufacturers are indicating very limited supply availability during the next three years. We expect that this tightness in aircraft availability from the manufacturers and the lack of suitable aircraft in the secondary market, coupled with the increase in demand for helicopter support, will result in upward pressure on the rates we charge for our services. At the same time, we believe that our recent aircraft acquisitions and commitments position us to capture a portion of the upside created by the current market conditions.

Current activity levels in the Gulf of Mexico are at or near all-time highs. In the near term, we also believe that the impact of hurricanes Katrina and Rita will result in higher activity levels as operators repair facilities and work to bring production back on line. Furthermore, our North Sea activities are under strong pricing pressure as one particular competitor is aggressively seeking to gain market share with lower rates. At the same time, while contracts in the North Sea are generally long term, we have experienced a recent trend of increased spot market contracting of helicopters as exploration activity has increased in the North Sea. Our other International Operations have experienced high aircraft utilization and we expect this trend to continue. Due to the current high levels of fleet utilization, we have experienced, along with other helicopter operators, some difficulty in meeting our customers’ needs for short notice exploration drilling support, particularly in remote international locations. Our operations in Nigeria and a South American country are likely to be negatively affected as a result of our actions taken in connection with the Internal Review, as discussed in more detail below under “Investigations.”

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Operating Results

The following table presents our restated operating results and other income statement information for fiscal years 2005, 2004 and 2003:

	Fiscal Year Ended March 31,
	2005(1)			2004(1)			2003(1)
	(In thousands)
				(Restated)			(Restated)
Operating revenue	$	673,646		$	617,001		$	601,550
Direct cost		518,139			475,449			467,776
Depreciation and amortization		40,693			39,543			37,664
General and administrative		45,245			38,892			34,478
Gain on disposal of assets		(8,039	)		(3,943	)		(3,734	)
		596,038			549,941			536,184
Curtailment gain		—			21,665			—
Operating income		77,608			88,725			65,366
Earnings from unconsolidated affiliates, net		9,600			11,039			12,054
Interest expense, net		(12,477	)		(15,140	)		(13,381	)
Loss on extinguishment of debt		—			(6,205	)		—
Other income (expense), net		(1,126	)		(7,810	)		(3,284	)
Income before provision for income taxes and minority interest		73,605			70,609			60,755
Provision for income taxes		21,835			19,402			18,554
Minority interest		(210	)		(1,382	)		(1,797	)
Net income	$	51,560		$	49,825		$	40,404

(1) Amounts previously reported for fiscal years 2004 and 2003 have been restated to reflect adjustments to accrue for liabilities and expenses identified in connection with the Internal Review, to properly report customer reimbursables as revenues rather than offsetting such amounts against the related expense and to properly record expenses for severance benefits and payroll taxes associated with certain foreign subsidiaries. See “Item 3. Legal Proceedings” above and “Restatement of Previously Reported Amounts” in Note A and “Internal Review” in Note D in the “Notes to Consolidated Financial Statements” for further discussion of these matters. Amounts for fiscal year 2005 were not previously audited or filed with the SEC, but had been announced. Amounts for the first three fiscal quarters in that year had been filed.

Investigations

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 a foreign country. The Internal Review, which initially focused on Foreign Corrupt Practices Act matters, was subsequently expanded to cover operations in other countries and other issues. In connection with this review, special outside counsel to the Audit Committee retained forensic accountants.

The SEC then notified us that it had initiated an informal inquiry and requested that we provide certain documents on a voluntary basis. Subsequently, the SEC advised us that the inquiry had become an investigation. We have responded to the SEC’s requests for documents and are continuing to do so.

The Internal Review is complete and the accompanying financial statements reflect all known required restatements. As a follow-up to matters identified during the course of the Internal Review, Special Counsel to the Audit Committee is completing certain work, and may be called upon to undertake additional work in the future to

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assist in responding to inquiries from the SEC, from other governmental authorities or customers, or as follow-up to the steps being performed by Special Counsel.

In October 2005, the Audit Committee reached certain conclusions with respect to findings to date from the Internal Review. The Audit Committee concluded that, over a considerable period of time, (a) improper payments were made by, and on behalf of, certain foreign affiliated entities directly or indirectly to employees of the Nigerian government, (b) improper payments were made by certain foreign affiliated entities to Nigerian employees of certain customers with whom we have contracts, (c) inadequate employee payroll declarations and, in certain instances, tax payments were made by us or our affiliated entities in certain jurisdictions, (d) inadequate valuations for customs purposes may have been declared in certain jurisdictions resulting in the underpayment of import duties, and (e) an affiliated entity in a South American country, with the assistance of our personnel and two of our other affiliated entities, engaged in transactions which appear to have assisted the South American entity in the circumvention of currency transfer restrictions and other regulations. In addition, as a result of the Internal Review, the Audit Committee and management determined that there were deficiencies in our books and records and internal controls with respect to the foregoing and certain other activities.

Based on the Audit Committee’s findings and recommendations, the Board of Directors has taken disciplinary action with respect to our personnel who it determined bore responsibility for these matters. The disciplinary actions included termination or resignation of employment (including certain members of senior management), changes of job responsibility, reductions in incentive compensation payments and reprimands. One of our affiliates has also obtained the resignation of certain of its personnel.

We have initiated remedial action, including initiating action to correct underreporting of payroll tax, disclose to certain customers inappropriate payments made to customer personnel and terminate certain agency, business and joint venture relationships. We also have taken steps to reinforce our commitment to conduct our business with integrity by creating an internal corporate compliance function, instituting a new code of business conduct (our new code of business conduct entitled “Code of Business Integrity” is available on our website, http://www.olog.com), and developing and implementing a training program for all employees. In addition to the disciplinary actions referred to above, we have also taken steps to strengthen our control environment by hiring new personnel and realigning reporting lines within the accounting function so that field accounting reports directly to the corporate accounting function instead of operations management.

Following the Audit Committee’s conclusions, we initiated the process of voluntarily advising governmental authorities in certain countries of the Audit Committee’s findings. We have not yet advised such foreign governmental authorities of the Audit Committee findings, but intend to do so. Such disclosure may result in 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 their countries. To the extent that violations of the law may have occurred in several countries in which we operate, we do not yet know whether such violations can be cured merely by the payment of fines or whether other actions may be taken against us, including requiring us to curtail our business operations in one or more such countries for a period of time. In the event that we curtail our business operations in any such country, we may face difficulties exporting our aircraft. As of September 30, 2005, the book values of our aircraft in Nigeria and the South American country where certain improper activities took place were approximately $79.4 million and $2.9 million, respectively.

We cannot predict the ultimate outcome of the SEC investigation, nor can we predict whether other applicable U.S. and foreign governmental authorities will initiate separate investigations. The outcome of the SEC investigation and any related legal and administrative proceedings could include the institution of administrative, civil injunctive or criminal proceedings involving us and/or current or former employees, officers and/or directors, the imposition of fines and other penalties, remedies and/or sanctions, modifications to business practices and compliance programs and/or referral to other governmental agencies for other appropriate actions. It is not possible to accurately predict at this time when matters relating to the SEC investigation will be completed, the final outcome of the SEC investigation, what if any actions may be taken by the SEC or by other governmental agencies in the U.S. or in foreign jurisdictions, or the effect that such actions may have on our consolidated financial

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statements. In addition, in view of the findings of the Internal Review, we expect to encounter difficulties in the future conducting business in Nigeria and a South American country, and with certain customers. It is also possible that certain of our existing contracts may be cancelled and that we may become subject to claims by third parties, possibly resulting in litigation. 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.

In connection with its conclusions regarding payroll declarations and tax payments, the Audit Committee determined on November 23, 2005, following the recommendation of our senior management, that there is a need to restate our historical consolidated financial statements for fiscal years 2000, 2001, 2002, 2003 and 2004 and for quarterly periods in fiscal year 2005. We have accrued $15.8 million for the taxes, penalties and interest attributable to underreported employee payroll. Operating income for fiscal year 2005 includes $3.8 million attributable to this accrual, and the remainder has been reported as adjustments to amounts previously reported for fiscal year 2004 and earlier. At this time, we cannot estimate what additional payments, fines, penalties and/or litigation and related expenses may be required in connection with the matters identified as a result of the Internal Review, the SEC investigation, any other regulatory investigation that may be instituted or third-party litigation; however, such payments, fines, penalties and/or expenses could have a material adverse effect on our business, financial condition and results of operations.

As we continue to respond to the SEC investigation and other governmental authorities and take other actions relating to improper activities that have been identified in connection with the Internal Review, there can be no assurance that additional restatements will not be required or that the historical financial statements included in this Annual Report will not change or require amendment. In addition, new issues may be identified that may impact our financial statements and the scope of the restatements described in this Annual Report and lead us to take other remedial actions or otherwise adversely impact our Company.

For fiscal year 2005, we have incurred approximately $1.9 million in legal and other professional costs in connection with the Internal Review. During the first two quarters of fiscal year 2006, we incurred an additional $7.0 million in legal and other professional costs related to the Internal Review. We expect to incur additional costs associated with the Internal Review, which will be expensed as incurred and which could be significant in the fiscal quarters in which they are recorded.

As a result of the disclosure and remediation of a number of activities identified in the Internal Review, we expect to 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 may be significantly impacted.

We have commenced actions to disclose activities in Nigeria identified in the Internal Review to affected customers, and one or more of these customers may seek to cancel their contracts with us. One of such customers already has commenced its own investigation. Among other things, we have been advised that such customer intends to exercise its rights to audit a specific contract, as well as to review its other relations with us. Although we have no indication as to what the final outcome of the audit and review will be, it is possible that such customer may seek to cancel one or more existing contracts if it believes that they were improperly obtained or that we breached any of their terms. Since our customers in Nigeria are affiliates of major international petroleum companies, with whom we do business throughout the world, any actions which are taken by certain customers could have a material adverse effect on our business, financial position and results of operations, and these customers may preclude us from bidding on future business with them either locally or on a worldwide basis. In addition, applicable governmental authorities may preclude us from bidding on contracts to provide services in the countries where improper activities took place.

In connection with the Internal Review, we also have terminated our business relationship with certain agents and have taken actions to terminate business relationships with other agents. One of the terminated agents has commenced litigation against two of our foreign affiliated entities claiming damages of $16.3 million for breach of contract. We may be required to indemnify certain of our agents to the extent that regulatory authorities seek to hold them responsible in connection with activities identified in the Internal Review.

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In a South American country where certain improper activities took place, we are negotiating to terminate our ownership interest in the joint venture that provides us with the local ownership content necessary to meet local regulatory requirements for operating in that country. During fiscal year 2005, we derived approximately $9.9 million of leasing and other revenues, of which $3.2 million was paid by us to a third party for the use of the aircraft, and approximately $0.3 million of dividend income from this joint venture. Without a joint venture partner, we will be unable to maintain an operating license and our future activities in that country may be limited to leasing our aircraft to unrelated operating companies. Our joint venture partners and agents are typically influential members of the local business community and instrumental in aiding us in obtaining contracts and managing our affairs in the local country. As a result of terminating these relationships, our ability to continue conducting business in these countries where the improper activities took place may be negatively affected. We may not be successful in our negotiations to terminate our ownership interest in the joint venture, and the outcome of such negotiations may negatively affect our ability to continue leasing our aircraft to the joint venture or other unrelated operating companies or conducting other business in that country, to export our aircraft or to recover our investment in the joint venture.

Many of the improper actions identified in the Internal Review resulted in decreasing the costs incurred by us in performing our services. The remedial actions we are taking will result in an increase in these costs and, if we cannot raise our prices simultaneously and to the same extent of our increased costs, our operating income will decrease.

On June 15, 2005, we issued a press release disclosing that one of our subsidiaries received a document subpoena from the Antitrust Division of the DOJ. The subpoena pertains to a grand jury investigation of potential antitrust violations among providers of helicopter transportation services in the U.S. Gulf of Mexico. We are continuing to investigate this matter and intend to comply with requests for information from the DOJ in connection with this investigation. The outcome of the DOJ investigation and any related legal and administrative proceedings could include civil injunctive or criminal proceedings, the imposition of fines and other penalties, remedies and/or sanctions, referral to other governmental agencies and/or the payment of damages in civil litigation. To date, we have not identified any material adjustments to our financial statements in connection with the investigation and do not expect, based on information developed to date, that any such adjustment is likely to be required. We expect to incur costs associated with this investigation, which will be expensed as incurred and which could be significant in the fiscal quarters in which they are recorded. For additional information regarding the SEC and DOJ investigations, see “Item 3. Legal Proceedings.”

Restatement of Previously Reported Amounts

As a result of the Internal Review findings discussed above, we have restated our historical financial statements to accrue for payroll taxes, penalties and interest attributable to underreported employee payroll. In connection with this matter, our restated consolidated statements of income reflect reductions in operating income of $4.2 million and $3.2 million for fiscal years 2004 and 2003, respectively, and $4.6 million for earlier fiscal years from previously reported amounts. In addition, our consolidated statements of income reflect reductions in operating income of $3.8 million for fiscal year 2005 from the previously announced amount. At this time, we cannot estimate what additional payments, fines and/or penalties may be required in connection with the matters identified as a result of the Internal Review or the SEC investigation; however, such payments, fines and/or penalties could have a material adverse effect on our business, financial condition and results of operations.

Our management has separately determined that we were not reporting reimbursements received from our customers for costs incurred on their behalf in accordance with GAAP. Our customers reimburse us for certain costs incurred on their behalf, which have historically been recorded by offsetting such amounts against the related expenses. In addition, our management has determined that we did not properly record expenses related to severance benefits for certain employees of a foreign subsidiary and we did not properly record expenses related to payroll taxes incurred by one of our foreign subsidiaries. In accordance with GAAP, we have restated our historical financial statements for fiscal years 2004 and 2003 to reflect such reimbursement as an increase in revenue and a corresponding increase in expense, and we increased direct costs to reflect the severance obligation and payroll taxes in the applicable periods. With respect to customer reimbursements, operating revenues and direct costs were increased $53.4 million and $46.4 million for fiscal years 2004 and 2003, respectively, from previously reported

30

amounts, with no impact on income from operations or net income. With respect to the severance benefits and payroll taxes, direct costs were increased by $0.5 million and $0.2 million in fiscal years 2004 and 2003, respectively. For all three items, operating revenues were increased $55.3 million and direct costs were increased by $56.3 million from the previously announced amount for fiscal year 2005. Amounts for the fourth quarter of fiscal year 2005 were not previously audited or filed with the SEC, but had been announced. Amounts for the first three fiscal quarters in that year had been filed.

The impact of these adjustments on the consolidated statement of income, balance sheet and cash flows is reflected in the tables below (in thousands except per share amounts):

	Fiscal Year Ended March 31,
	2004				2003
	As				As
	Previously				Previously
Statements of Income	Reported		Restated		Reported		Restated
Operating revenue	$	563,649	$	617,001	$	555,110	$	601,550
Direct costs		417,417		475,449		417,910		467,776
Total operating expenses		491,909		549,941		486,318		536,184
Operating income		93,405		88,725		68,792		65,366
Income before provision for taxes and minority interests		75,289		70,609		64,181		60,755
Provision for income taxes		20,803		19,402		19,254		18,554
Net income		53,104		49,825		43,130		40,404
Basic EPS		2.36		2.21		1.92		1.80
Diluted EPS		2.29		2.15		1.77		1.67

	Fiscal Quarter Ended
	June 30(1)		September 30(1)		December 31(1)		March 31(1)
	(Unaudited)
2005
As previously reported:
Gross revenue	$	147,382	$	158,724	$	155,977
Operating income		20,541		26,343		20,414
Net income		12,970		18,036		11,499
Basic earnings per share		0.57		0.79		0.49
Diluted earnings per share		0.57		0.77		0.49
Restated:
Gross revenue	$	160,401	$	170,627	$	172,167
Operating income		19,351		25,152		19,216
Net income		11,587		16,651		10,108
Basic earnings per share		0.51		0.73		0.43
Diluted earnings per share		0.51		0.71		0.43
2004
As previously reported:
Gross revenue	$	133,893	$	139,429	$	138,715	$	151,612
Operating income		16,473		20,021		10,770		46,141
Net income		8,268		8,500		2,790		33,546
Basic earnings per share		0.37		0.38		0.12		1.49	(2)
Diluted earnings per share		0.35		0.37		0.12		1.45	(2)

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	Fiscal Quarter Ended
	June 30(1)		September 30(1)		December 31(1)		March 31(1)
	(Unaudited)
Restated:
Gross revenue	$	145,730	$	151,151	$	152,480	$	167,640
Operating income		15,308		18,857		9,599		44,961
Net income		7,455		7,688		1,969		32,713
Basic earnings per share		0.33		0.34		0.09		1.45	(2)
Diluted earnings per share		0.32		0.32		0.09		1.42	(2)

(1)	Amounts for fiscal year 2005 were not previously audited or filed with the SEC, but had been announced. Amounts for the first three fiscal quarters in that year had been filed.
(2)	Includes $21.7 million, $15.7 million net of tax, of curtailment gain relating to the pension plan discussed in Note G.

Balance Sheets

	March 31, 2004
	As Previously
	Reported			Restated
Deferred tax asset — current	$	—		$	650
Total current assets		350,772			352,697
Total assets		1,044,903			1,046,828
Accrued liabilities		65,257			83,875
Deferred taxes — current		1,802			—
Current liabilities		98,915			117,006
Retained earnings		352,602			338,155
Accumulated other comprehensive loss		(48,094	)		(49,813	)
Total stockholders’ investment		446,118			429,952
Total liabilities and stockholders’ investment		1,044,903			1,046,828

Statements of Cash Flows

	Fiscal Year Ended March 31,
	2004					2003
	As Previously					As Previously
	Reported			Restated		Reported			Restated
Net income	$	53,104		$	49,825	$	43,130		$	40,404
Deferred income taxes		10,571			9,046		14,844			13,917
Increase (decrease) in accrued liabilities		(4,496	)		308		(16,388	)		(12,735	)
Net cash provided by operating activities		83,331			83,331		62,387			62,387

Certain line items within the consolidated Statements of Stockholders’ Investment have also been restated. With the exception of translation adjustments, the impact on these line items is set out in the consolidated income statement and consolidated balance sheet disclosures above. The translation adjustments were restated from $33.1 million and $27.8  million as previously reported for fiscal years 2004 and 2003, respectively, to $31.7 million and $27.2 million, respectively.

In addition, certain information in Notes F, H, K, L and N has been restated to reflect the effect of these adjustments.

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Other Matters

Fiscal Year 2005 and Following

In December 2005, we were informed that we were not awarded the contract extension commencing in mid 2007 to provide search and rescue services using seven S-61 aircraft and operate four helicopter bases for the U.K. Maritime and Coastguard Agency.

We employ approximately 300 pilots in our North American Operations who are represented by the Office and Professional Employees International Union (“OPEIU”) under a collective bargaining agreement. We and the pilots represented by the OPEIU ratified an amended collective bargaining agreement on April 4, 2005. The terms under the amended agreement are fixed until October 3, 2008 and include a wage increase for the pilot group and improvements to several benefit plans that we do not expect to have a material effect on our future operating expenses.

In January 2005, Bristow was awarded two contracts to provide helicopter services in the North Sea. The first is a seven-year contract that began on July 1, 2005 at the conclusion of the current seven-year contract, and is for a total of two large and four medium aircraft. The second contract is a five-year contract that commenced on April 1, 2005 and utilizes two large aircraft. Additionally, Bristow was awarded the renewal of a contract in Nigeria with an international oil company in January 2005 for a minimum of five medium aircraft. The contract term is for five years beginning on April 1, 2005.

In November 2004, we sold certain contracts held by our Technical Services business to an existing joint venture. The remaining operations of the Technical Services business were downsized by ceasing to perform certain services for third parties that had generated poor financial results during the prior two years. As a result of the downsizing, we reduced staffing levels by an additional 80 positions in the Technical Services business unit over a nine-month period ending on December 31, 2004. Approximately £1.5 million ($2.8 million) in severance costs and approximately $76,000 in other related costs have been incurred as of March 31, 2005.

On July 15, 2004, we purchased a 48.5% interest in Aviashelf, a Russian helicopter company that owns five large twin-engine helicopters and simultaneously, through two 51% owned companies, purchased two large twin-engine helicopters and two fixed-wing aircraft, for an aggregate purchase price of $10.7 million. The acquisition was accounted for under the purchase method, and we have consolidated the results of the Russian helicopter company from the date of acquisition. The acquisition was financed with $2.0 million of existing cash and the assumption of $8.7 million in debt. The purchase price was allocated to the assets and liabilities acquired based upon estimated fair values. No goodwill was recorded. The pro forma effect on operations of the acquisition when presented, as of the beginning of the periods presented, was not material to our consolidated statements of income.

In May 2005, Bristow was awarded a three-year extension to the Integrated Aviation Consortium (“IAC”) contract. This extension began on July 1, 2005 and will continue the utilization of five large aircraft.

Prior to Fiscal Year 2005

As part of the restructuring, in January 2004, we amended our defined benefit pension plan covering certain United Kingdom and other overseas employees. The amendment, which was effective February 1, 2004, essentially removed the defined benefit feature for a participant’s future services and replaced it with a defined contribution arrangement. Under the new defined contribution feature, we contribute a maximum of 7% of a participant’s non-variable salary to a defined contribution section of the plans. The participant is required to contribute a minimum of 5% of non-variable salary for us to match the contribution. Participants were also given the option to transfer out of the plans. The net impact on our statement of income as a result of these changes was a reduction in pension expense of approximately £1.4 million ($2.6 million) for our fourth quarter of fiscal year 2004. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits”, the above change to the plans constitutes a “curtailment” of benefits and, accordingly, all previously deferred service gains or losses are immediately recognized in the statement of income. At the date of the 2004 amendment, we had a deferred prior service gain of £11.9 million ($21.7 million), or $0.65 per diluted share, related to prior plan amendments, which was recognized as a curtailment gain in fiscal year 2004.

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In November 2003, our 49%-owned Mexican affiliate was unsuccessful in renewing a contract for seven aircraft contracted to Petróleos Mexicanos, or PEMEX, that expired during calendar year 2004, although in October 2004, that affiliate was awarded a five-month contract for five of the seven aircraft mentioned above that concluded on February 28, 2005. Four of the seven aircraft continue to be used in Mexico for the ad hoc market, and the other three have been redeployed to other markets.

In October 2003, we announced that we had begun a restructuring of our North Sea Operations. The restructuring was designed to reduce costs and promote operational and managerial efficiencies to enable us to remain competitive in the North Sea offshore helicopter market. As part of the restructuring program, we reduced staffing levels by approximately 100 positions, or 11%, of our United Kingdom workforce over a twelve-month period. We incurred approximately $4.6 million in severance and other restructuring costs, of which $4.0 million was incurred in fiscal year 2004 and $0.6 million was expensed in fiscal year 2005.

In conjunction with our previously announced fleet and facilities renewal and refurbishment program, we changed the residual value estimate of certain aircraft and the useful lives estimate of certain aircraft, effective July 1, 2003. We believe that this new estimate more closely reflects the actual salvage values realized and useful lives experienced by us. The effect of this change was a reduction in depreciation expense of $3.9 million ($2.9 million net of tax) for fiscal year 2005 and $3.2 million ($2.3 million net of tax) for fiscal year 2004.

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 bearing on our financial condition and operating performance.

General

We operate our business in two segments:  Helicopter Services and Production Management Services. During fiscal year 2005, our Helicopter Services were conducted through the following four business units:

•  North American Operations;

•  North Sea Operations;

•  International Operations; and

•  Technical Services.

We currently conduct our Helicopter Services through six business units:

•  North American Operations;

•  South and Central American Operations;

•  European Operations;

•  West African Operations;

•  Southeast Asian Operations; and

•  Other International Operations.

During fiscal year 2005, our North American Operations, North Sea Operations, International Operations and Technical Services contributed approximately 22%, 33%, 33% and 3%, respectively, of our total operating revenue. Despite a decrease in flight hours in each of the last three years, our operating revenue has increased over the same time period. This increase in revenue was the result of the full impact in fiscal year 2005 of a 7% rate increase for the U.S. Gulf of Mexico that was phased in throughout fiscal year 2004 and an increase in ad hoc flights for hurricane evacuations during the second quarter of fiscal year 2005. We expect that the percentage of our operating revenue derived from our International Operations will continue to increase as the major oil and gas companies increasingly focus on prospects outside of North America and the North Sea.

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Our Production Management Services segment contributed the remaining 9% of our operating revenue in fiscal year 2005. Operating revenue from this segment in fiscal year 2005 increased from fiscal year 2004 primarily due to additional work for a major customer.

Helicopter Services are seasonal in nature, as our flight activities are influenced by the length of daylight hours and weather conditions. The worst of these conditions typically occurs during the winter months when our ability to safely fly, and our customers’ ability to safely conduct their operations is inhibited. Accordingly, our flight activity is generally lower in the fourth fiscal quarter.

Our operating revenue depends on the demand for our services and the pricing terms of our contracts. We measure the demand for our helicopter services in flight hours. Demand for our services depends on the level of worldwide offshore oil and gas exploration, development and production activities. We believe that our customers’ exploration and development activities are influenced by actual and expected trends in commodity prices for oil and gas. Exploration and development activities generally use medium-size and larger aircraft on which we typically earn higher margins. We believe that production-related activities are less sensitive to variances in commodity prices, and accordingly, provide more stable activity levels and revenue stream. We estimate that a majority of our operating revenue from Helicopter Services is related to the production activities of the oil and gas companies.

Our helicopter contracts are generally based on a two-tier rate structure consisting of a daily or monthly fixed fee plus additional fees for each hour flown. We also provide services to customers on an “ad hoc” basis, which usually entails a shorter notice period and shorter duration. Our charges for ad hoc services are generally based on an hourly rate, or a daily or monthly fixed fee plus additional fees for each hour flown. We estimate that our ad hoc services have a higher margin than our other helicopter contracts due to supply and demand dynamics. Our rate structure is based on fuel costs remaining at or below a predetermined threshold. Fuel costs in excess of this threshold are generally reimbursed by the customer.

Our helicopter contracts are for varying periods and generally permit the customer to cancel the charter before the end of the contract term. In our North American Operations, we typically enter into short-term contracts for 12 months or less, although we occasionally enter into longer-term contracts. In our North Sea Operations, contracts are longer term, generally between two and five years. In our International Operations, contract length generally ranges from three to five years. At the expiration of a contract, our customers often negotiate renewal terms with us for the next contract period. In other instances, customers solicit new bids at the expiration of a contract. Contracts are generally awarded based on a number of factors, including price, quality of service, equipment and record of safety. An incumbent operator has a competitive advantage in the bidding process based on its relationship with the customer, its knowledge of the site characteristics and its understanding of the cost structure for the operations.

Maintenance and repair expenses, training costs, employee wages and insurance premiums represent a significant portion of our overall expenses. Our production management costs also include contracted transportation services. We expense maintenance and repair costs, including major aircraft component overhaul costs, as the costs are incurred. In certain instances, major aircraft components, primarily engines and transmissions, are maintained by third-party vendors under contractual arrangements. The maintenance costs related to these contractual arrangements are recorded ratably as the components are used to generate flight revenue. As a result, our earnings in any given period are directly impacted by the amount of our maintenance and repair expenses for that period.

In addition to our variable operating expenses, we incur fixed charges for depreciation of our property and equipment. For accounting purposes, we depreciate our helicopters on a straight-line basis over their estimated useful lives, taking into account an estimated residual value of 30% to 50% of their original cost. We generally estimate the useful life of a helicopter to be seven to 15 years. Our estimates of useful lives and residual values are based upon our historical experience, aircraft type and aircraft condition, as well as our judgment and expectations regarding future operations and market conditions.

We own 49% of the Common Stock of Bristow, and we own 100% of Bristow’s subordinated debt. In addition, we have a put/call agreement with the other two stockholders of Bristow which grants us the right to buy all of their shares of Bristow Common Stock and grants to each of them the right to require us to buy their shares. The per share price upon the exercise of the put/call option by us or the other stockholders of Bristow would be equal to its par

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value plus a factor representing a guaranteed return on investment. In March 2004, we prepaid a portion of the put/call option price representing the amount of guaranteed return since inception, amounting to $11.4 million. In consideration of this, the other shareholders of Bristow agreed to reduce the guaranteed return factor used in calculating the put/call option price, effective April 1, 2004, from 12% per annum to LIBOR plus 3%. In May 2004, we acquired eight million shares of deferred stock, essentially a subordinated class of stock with no voting rights, from Bristow for £1 per share ($14.4 million in total). Bristow used these proceeds to redeem £8 million ($14.4 million) of its ordinary share capital at par value on a pro rata basis from all of its outstanding shareholders, including ourselves. The result of these changes will be to reduce the cost of the guaranteed return to the other shareholders, which we record as minority interest expense, by approximately $2.3 million on an annual basis. Consequently, beginning in September 2004, we began paying the amount of guaranteed return on the put/call on a quarterly basis. In fiscal year 2005, the amount paid was £46,776 ($85,771) representing the amount due from May 8, 2004 to December 31, 2004. Subsequent to March 31, 2005, we paid £36,198 ($65,919) representing the amount due from January 1, 2005 to June 30, 2005. These payments were charged against minority interest on our balance sheet where this obligation had been accrued and included in minority interest expense in the Consolidated Statements of Income. Under U.K. regulations, to maintain Bristow’s operating license, we would be required to find a qualified European Union owner to acquire any of the Bristow shares that we have the right or obligation to acquire under the agreement. The only restriction under the put/call agreement limiting our ability to exercise the put/call option is a requirement to consult with the CAA regarding the suitability of the new holder of the Bristow shares. The put/call agreement does not contain any provisions should the CAA not approve the new holder of the Bristow shares. However, we would work diligently to find a European Union owner suitable to the CAA. As a result of our ownership and contractual arrangements, we consolidate the results of Bristow and its subsidiaries. For additional information about Bristow, see Note A and Note J in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.

As a result of local laws limiting foreign ownership of aviation companies, we conduct helicopter services in many foreign countries through interests in unconsolidated affiliates. Generally, we realize revenue from these foreign operations by leasing aircraft and providing services and technical support to those entities. We also receive dividend income from the earnings of some of these entities. We report lease revenue as operating revenue and dividend income as part of earnings from unconsolidated affiliates, as the results of these foreign operations are not included in our revenue or operating income. For additional information about these unconsolidated affiliates, see Note C in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report.

Results of Operations

The following table sets forth, for the periods indicated, certain operating information for our two segments, Helicopter Services and Production Management Services, and for the four business units comprising our Helicopter Services segment. The table also presents certain operating information about our corporate activities which primarily relate to intercompany leasing of aircraft and are eliminated in consolidation. For additional information about our business segments, see Note K in the “Notes to Consolidated Financial Statements” included elsewhere in this Annual Report. Amounts previously reported for fiscal years 2004 and 2003 have been restated to reflect adjustments to accrue for liabilities and expenses identified in connection with the Internal Review and to properly report customer reimbursables as revenues rather than offsetting such amounts against the related expenses. See above and “Restatement of Previously Reported Amounts” in Note A and “Internal Review” in Note D in the “Notes to Consolidated Financial Statements” for further discussion of these matters. Amounts for

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fiscal year 2005 were not previously audited or filed with the SEC, but had been announced. Amounts for the first three fiscal quarters in that year had been filed.

	As of March 31,
	2005		2004		2003
Number of Aircraft:
Helicopter Services:
North American Operations		166		172		178
North Sea Operations		45		53		57
International Operations		109		101		97
Technical Services		—		6		3
Total		320		332		335

	Fiscal Year Ended March 31,
	2005		2004		2003
Flight hours (excludes unconsolidated affiliates):
Helicopter Services:
North American Operations		118,371		123,488		123,565
North Sea Operations		38,556		43,144		48,153
International Operations		89,205		88,278		85,874
Technical Services		1,421		1,882		1,289
Total		247,553		256,792		258,881

	Fiscal Year Ended March 31,
	2005(2)			2004(2)			2003(2)
	(In thousands, except percentages)
				(Restated)			(Restated)
Operating revenue:
Helicopter Services:
North American Operations	$	167,552		$	162,291		$	151,477
North Sea Operations		238,598			224,430			229,935
International Operations		222,497			183,845			169,037
Technical Services		34,276			44,858			45,878
Less: Intercompany		(41,731	)		(42,699	)		(37,156	)
Total		621,192			572,725			559,171
Production Management Services		58,982			49,815			47,685
Corporate		10,513			12,820			12,046
Less: Intercompany		(17,041	)		(18,359	)		(17,352	)
Consolidated total	$	673,646		$	617,001		$	601,550

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	Fiscal Year Ended March 31,
	2005(2)			2004(2)			2003(2)
	(In thousands, except percentages)
				(Restated)			(Restated)
Operating expenses(1):
Helicopter Services:
North American Operations	$	142,827		$	134,468		$	135,510
North Sea Operations		210,051			205,875			208,898
International Operations		197,641			166,257			146,283
Technical Services		36,143			42,282			42,899
Less: Intercompany		(41,731	)		(42,699	)		(37,156	)
Total		544,931			506,183			496,434
Production Management Services		55,075			47,301			44,738
Corporate		21,112			18,759			16,098
Gain on disposal of assets		(8,039	)		(3,943	)		(3,734	)
Less: Intercompany		(17,041	)		(18,359	)		(17,352	)
Consolidated total	$	596,038		$	549,941		$	536,184
Operating income:
Helicopter Services:
North American Operations	$	24,725		$	27,823		$	15,967
North Sea Operations		28,547			18,555			21,037
International Operations		24,856			17,588			22,754
Technical Services		(1,867	)		2,576			2,979
Curtailment gain allocated to Helicopter Services		—			20,365			—
Total		76,261			86,907			62,737
Production Management Services		3,907			2,514			2,947
Corporate		(10,599	)		(5,939	)		(4,052	)
Curtailment gain allocated to Corporate		—			1,300			—
Gain on disposal of assets		8,039			3,943			3,734
Consolidated total	$	77,608		$	88,725		$	65,366
Operating margin:
Helicopter Services:
North American Operations		14.8	%		17.1	%		10.5	%
North Sea Operations		12.0	%		8.3	%		9.1	%
International Operations		11.2	%		9.6	%		13.5	%
Technical Services		(5.4	)%		5.7	%		6.5	%
Total		12.3	%		15.2	%		11.2	%
Production Management Services		6.6	%		5.0	%		6.2	%
Consolidated total		11.5	%		14.4	%		10.9	%

(1)  Operating expenses, excluding curtailment gain, include depreciation and amortization in the following amounts for the periods presented:

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	Fiscal Year Ended March 31,
	2005		2004		2003
	(In thousands)
Helicopter Services:
North American Operations	$	15,649	$	13,398	$	11,807
North Sea Operations		17,439		18,810		16,666
International Operations		5,014		4,527		5,005
Technical Services		283		280		233
Total		38,385		37,015		33,711
Production Management Services		194		166		170
Corporate		2,114		2,362		3,783
Consolidated total	$	40,693	$	39,543	$	37,664

(2)  Amounts previously reported for fiscal years 2004 and 2003 have been restated to reflect adjustments to accrue for liabilities and expenses identified in connection with the Internal Review, to properly report customer reimbursables as revenues rather than offsetting such amounts against the related expenses and to properly record expenses for severance benefits and payroll taxes associated with certain foreign subsidiaries. See “Item 3. Legal Proceedings” above and “Restatement of Previously Reported Amounts” in Note A and “Internal Review” in Note D in the “Notes to Consolidated Financial Statements” for further discussion of these matters. Amounts for fiscal year 2005 were not previously audited or filed with the SEC, but had been announced. Amounts for the first three fiscal quarters in that year had been filed.

Fiscal Year 2005 compared to Fiscal Year 2004

Consolidated Results

Our operating revenue increased to $673.6 million, or 9.2%, for fiscal year 2005 from $617.0 million for fiscal year 2004. The increase in operating revenue occurred in our Helicopter Services segment and our Production Management Services segment primarily due to higher third-party revenue from rate increases in our North American Operations and a favorable change in the mix of aircraft in our International Operations as compared to fiscal year 2004. Operating revenue from our Production Management Services segment increased due to additional activity from a major customer. Our operating expense for fiscal year 2005 increased to $596.0 million, or 8.4%, from $549.9 million in fiscal year 2004. The increase was primarily a result of higher labor and maintenance costs. Our operating income and operating margin for fiscal year 2005 decreased to $77.6 million and 11.5%, respectively, compared to $88.7 million and 14.4%, respectively, in fiscal year 2004. However, excluding the curtailment gain of $21.7 million in fiscal year 2004 discussed under “ — Fiscal Year 2004 compared to Fiscal Year 2003 — Consolidated Results”, our operating income and operating margin for fiscal year 2005 increased compared to fiscal year 2004 primarily as a result of higher revenue.

Net income for fiscal year 2005 was $51.6 million, compared to net income of $49.8 million in fiscal year 2004. Excluding the curtailment gain discussed above, our net income for fiscal year 2005 increased by $17.5 million compared to fiscal year 2004, primarily as a result of higher revenue and a decrease in other expense. Other expenses decreased due to lower foreign exchange losses in fiscal year 2005 as compared to fiscal year 2004 and the $6.2 million loss on extinguishment of debt charged to expense during fiscal year 2004. Set forth below is a discussion of the results of operations of our segments and business units.

Helicopter Services

Operating revenue from Helicopter Services increased to $621.2 million, or 8.5%, during fiscal year 2005 and operating expenses increased 7.6% to $544.9 million from $506.2 million. This resulted in an operating margin of 12.3% for fiscal year 2005 as compared to 15.2% for fiscal year 2004. Operating income in fiscal year 2004 included a $20.4 million curtailment gain allocated to Helicopter Services. Helicopter Services results are further explained below by business unit.

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North American Operations.  Operating revenue from our North American Operations increased by 3.2% in fiscal year 2005 as compared to the prior fiscal year while flight activity decreased by 4.1%. Operating revenue increased despite a decrease in flight hours as a result of the full impact in the current fiscal year of a 7% rate increase for the U.S. Gulf of Mexico that was phased in throughout fiscal year 2004, and an increase in ad hoc flights for hurricane evacuations during the second quarter of fiscal year 2005.

Operating expense from our North American Operations increased to $142.8 million for fiscal year 2005 from $134.5 million for fiscal year 2004. The increase in operating expense was primarily in salary costs and additional depreciation expense. Depreciation expense for fiscal year 2005 was $15.6 million, or 16.8% higher than for fiscal year 2004, primarily due to additional aircraft added to the fleet during the past two fiscal years. The increase in depreciation expense was offset in part by a $3.0 million decrease resulting from a change in salvage value and useful lives on certain aircraft types. As a result of higher operating expense, our operating margin in our North American Operations decreased to 14.8% for fiscal year 2005 from 17.1% for fiscal year 2004.

North Sea Operations.  Operating revenue from North Sea Operations increased for fiscal year 2005 to $238.6 million, or 6.3%, from $224.4 million for fiscal year 2004. Included in fiscal year 2005 operating revenue is $19.5 million attributable to foreign exchange effects. Excluding the foreign exchange effects, revenue from North Sea Operations decreased 2.4% in fiscal year 2005 primarily due to lower flight activity during fiscal year 2005 as compared to fiscal year 2004. Flight hours decreased by 10.6% between the current fiscal year and the prior fiscal year. The reduction in flight hours is due primarily to a change in our lease arrangements in Norway. While we continue to lease aircraft to our unconsolidated affiliate, Norsk Helikopter AS, we no longer provide maintenance services for these aircraft. Therefore, we no longer report the flight hours. Excluding the flight hours for Norway, flight activity decreased by 4.4% from fiscal year 2004 to fiscal year 2005.

Operating expenses from North Sea Operations increased $4.2 million in fiscal year 2005. Included in the operating expense for the North Sea Operation is $17.6 million attributable to foreign exchange effects. Excluding the foreign exchange effects, operating expense decreased 6.5% in fiscal year 2005. This decrease was primarily in salary costs due to the restructuring of the North Sea Operations and the amendment of the pension plan. The operating margin in North Sea Operations increased to 12.0% from 8.3% between the current fiscal year and the prior fiscal year.

International Operations.  Operating revenue from International Operations increased in fiscal year 2005 to $222.5 million, or 21.1%, from $183.8 million in fiscal year 2004. Flight activity increased 1.1% from the prior fiscal year. Increases were primarily noted in Australia and Nigeria with a decrease in activity noted in Brazil.

Flight activity and operating revenue for Australia increased for fiscal year 2005 by 15.8% and 34.5%, respectively, over fiscal year 2004. The increase was primarily due to a 15-month contract that began in July 2004 and higher ad hoc flying for fiscal year 2005.

In Nigeria, flight activity and operating revenue for fiscal year 2005 increased 6.6% and 22.9%, respectively, compared to fiscal year 2004. The increase is primarily due to the addition of two medium aircraft in November 2003 and two large and one medium aircraft in April 2004. Again, the increase in revenue significantly exceeded the increase in flight activity as a result of a favorable change in the mix of aircraft. Nigeria accounted for approximately 43.2% of operating revenue from International Operations in fiscal year 2005. As a result of the potential cancellation by customers of their contracts with us, we may experience a substantial reduction in business activity in Nigeria in future periods.

In Brazil, flight activity decreased 14.4% and operating revenue decreased 1.9% for fiscal year 2005 compared to fiscal year 2004. Flight activity decreased significantly more than operating revenue primarily as a result of a change in the mix of aircraft operating in Brazil. While the decrease in flight activity negatively affected operating revenue, the addition of a large aircraft at higher rates largely offset the decrease. Brazil accounted for approximately 5% of operating revenue from International Operations in fiscal year 2005. We are negotiating the termination of our ownership interest in the joint venture that operates in Brazil, and upon such termination, absent our development of a satisfactory relationship with another local operating company, we expect to experience a substantial reduction in business activity in Brazil in future periods.

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Operating expenses for our International Operations increased in fiscal year 2005 to $197.6 million, or 18.8%, from $166.3 million in fiscal year 2004. The increase was primarily due to higher salary costs, maintenance costs and lease fees related to an increase in activity in our international areas. The operating margin in our International Operations increased to 11.2% in the current fiscal year from 9.6% in the prior fiscal year.

Technical Services.  Operating revenue for Technical Services decreased to $34.3 million during fiscal year 2005 from $44.9 million for fiscal year 2004 primarily due to a restructuring of the technical service business and the sale of certain contracts to an existing joint venture in November 2004. Operating expenses decreased from $42.3 million for fiscal year 2004 to $36.1 million for fiscal year 2005. The decrease in operating expenses is primarily due to the reduction in activity caused by the restructuring and sale of contracts offset by severance costs of approximately $2.8 million recorded in the current fiscal year related to the downsizing of the Technical Services operations in the United Kingdom. The restructuring reduced staffing levels by approximately 80 positions over a nine-month period. As a result of lower operating revenues and the severance costs, our operating margin for Technical Services decreased to (5.4)% in fiscal year 2005 from 5.7% in fiscal year 2004.

Production Management Services

Operating revenue from the Production Management Services business increased to $59.0 million, or 18.5% in fiscal year 2005 from $49.8 million in fiscal year 2004 primarily due to increased activity with a major customer that needed additional production management services. Operating expenses increased to $55.1 million, or 16.5%, in fiscal year 2005 from $47.3 million in fiscal year 2004 primarily due to higher labor and helicopter transportation costs. As a result of the higher revenue, our operating margin increased to 6.6% from 5.0% in fiscal year 2004.

General and Administrative Costs

Consolidated general and administrative costs increased by $6.4 million for fiscal year 2005 primarily due to an increase in compensation costs and higher professional fees, partially offset by a decrease in restructuring charges for our North Sea Operations. Restructuring charges for our North Sea Operations in fiscal years 2005 and 2004 were approximately $1.1 million and $3.1 million, respectively. Professional fees in the current fiscal year included fees incurred in connection with the investigation by outside counsel of activities related to the Internal Review, an executive search, Sarbanes Oxley compliance initiatives and other projects requiring consulting services.

Earnings from Unconsolidated Affiliates

Earnings from unconsolidated affiliates decreased in fiscal year 2005 by $1.4 million primarily due to a decrease in dividends received from investments accounted for under the cost method of accounting. The decrease in dividends received was primarily related to a reduction in dividends from our unconsolidated affiliate in Mexico, which experienced a decline in activity as a result of the completion of the PEMEX contract as previously discussed.

Interest Expense, Net

Interest expense, net, decreased in fiscal year 2005 by $2.7 million from fiscal year 2004. Approximately $1.2 million of this decrease resulted from lower interest expense during fiscal year 2005 caused by the refinancing of our 6% Convertible Subordinated Notes and 77/8% Senior Notes with the issuance 61/8% Senior Notes during fiscal year 2004 and an increase in interest income of $1.5 million resulting from higher cash balances and investment returns in fiscal year 2005. Interest expense in fiscal year 2005 and fiscal year 2004 was offset by approximately $1.3 million and $1.2 million, respectively, of capitalized interest.

Loss on extinguishment of debt

In fiscal year 2005, no loss on extinguishment of debt was recognized, compared to a recognized loss on extinguishment of debt of $6.2 million in fiscal year 2004. The loss in fiscal year 2004 related to the redemption on July 29, 2003 of our 6% Convertible Subordinated Notes and our 77/8% Senior Notes. Approximately $4.7 million of the loss in fiscal year 2004 pertained to the payment of redemption premiums and $1.5 million pertained to the

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write-off of unamortized debt issuance costs related to the 6% Convertible Subordinated Notes and 77/8% Senior Notes.

Other Income (Expense)

Other expense, net, in fiscal year 2005 was $1.1 million compared to other expense, net, of $7.8 million in fiscal year 2004 and primarily represents foreign currency transaction gains and losses. These gains and losses arise from the consolidation of Bristow, whose functional currency is the British pound sterling, yet contracts for a portion of its revenue and expense in U.S. dollars and other currencies for operations outside of the North Sea. The weakening of the U.S. dollar against the British pound is the primary reason for the losses.

Fiscal Year 2004 compared to Fiscal Year 2003

Consolidated Results

During fiscal year 2004, our operating revenue increased to $617.0 million, or 2.6%, from $601.6 million in fiscal year 2003. The increase in operating revenue was primarily a result of increased oil and gas activity in our International Operations and rate increases on customer contracts in our North American Operations. Our fiscal year 2004 consolidated operating expenses increased to $549.9 million, or 2.6%, from $536.2 million in fiscal year 2003. This increase in operating expenses was due primarily to $4.1 million in restructuring charges related to our North Sea Operations. In connection with this restructuring, we amended our defined benefit pension plan which resulted in the recognition of a non-cash curtailment gain of $21.7 million in fiscal year 2004. As a result, operating income for fiscal year 2004 increased to $88.7 million as compared to $65.4 million for fiscal year 2003.

Our fiscal year 2004 net income was $49.8 million, representing a 23.3% increase from fiscal year 2003. This increase primarily resulted from the curtailment gain discussed above offset by the restructuring charges related to our North Sea Operations, debt restructuring charges and higher foreign currency transaction losses. Set forth below is a discussion of the results of our segments and business units.

Helicopter Services

Operating revenue from Helicopter Services increased to $572.7 million, or 2.4%, during fiscal year 2004, with operating expenses increasing slightly to $506.2 million in fiscal year 2004 from $496.4 million in fiscal year 2003. The portion of the curtailment gain allocated to Helicopter Services of $20.4 million led to an operating margin of 15.2% in fiscal year 2004 as compared to 11.2% in fiscal year 2003. Helicopter Services results are further explained below by business unit.

North American Operations.  Operating revenue from our North American Operations increased in fiscal year 2004 to $162.3 million, or 7.1%, from the prior fiscal year while flight activity remained constant. The increase in operating revenue with static flight activity is due primarily to the 7% rate increase in the U.S. Gulf of Mexico that went into effect March 2003 and was phased-in throughout fiscal year 2004.

Operating expenses from our North American Operations decreased to $134.5 million in fiscal year 2004 from $135.5 million in fiscal year 2003 primarily due to lower maintenance and insurance costs. Depreciation expense for fiscal year 2004 increased $1.6 million, or 13.5%. This increase in depreciation expense was offset in part by a decrease of approximately $3.2 million resulting from a change in salvage value and useful lives on certain aircraft types on depreciation.

The result of our higher revenue and lower operating expenses was an increase in our operating margin in our North American Operations to 17.1% for fiscal year 2004 from 10.5% in the prior fiscal year.

North Sea Operations.  Operating revenue from our North Sea Operations decreased in fiscal year 2004 to $224.4 million, or 2.4%, from fiscal year 2003 revenue of $230.0 million. Operating revenue from North Sea Operations in fiscal year 2004 included $28.3 million attributable to foreign exchange effects and revenue related to the assets in Italy disposed of in November 2002. Excluding foreign exchange effects and revenue related to Italy, fiscal year 2004 revenue from these operations decreased 11.7% from fiscal year 2003 revenue. This decrease

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relates to reduced activity as reflected by the reduction in flight hours of 10.4% between fiscal year 2004 and fiscal year 2003.

Operating expenses from our North Sea Operations decreased by 1.4% between fiscal year 2004 and fiscal year 2003. $26.5 million of operating expense from our North Sea Operations in fiscal year 2003 was attributable to foreign exchange effects and costs related to the assets in Italy disposed of in November 2002. The decrease in operating expenses was primarily the result of lower maintenance and repair expense offset by approximately $1.0 million in restructuring costs. The operating margin in our North Sea Operations decreased to 8.3% in fiscal year 2004 from 9.1% in fiscal year 2003 primarily due to the reduction in revenue.

International Operations.  Operating revenue from International Operations increased in fiscal year 2004 to $183.8 million, or 8.8%, from $169.0 million in fiscal year 2003, primarily as a result of a 2.8% increase in flight activity from the prior fiscal year.

In Brazil, flight activity and operating revenue for fiscal year 2004 increased by 26.5% and 29.2%, respectively, from fiscal year 2003. The increase in flight activity and operating revenue was primarily due to three additional aircraft sent to the area during the fourth quarter of fiscal year 2003 in response to increased drilling activity.

In Mexico, flight activity and operating revenue for fiscal year 2004 increased over the prior fiscal year levels by 6.3% and 5.0%, respectively. The increase in flight activity and operating revenue were primarily due to the addition of two aircraft in the second quarter of fiscal year 2004. Operating revenue was positively impacted by the addition of the two aircraft and a favorable change in the mix of aircraft. However, during July 2003, six older aircraft which we directly leased into Mexico were replaced with six newer aircraft owned by an unconsolidated affiliate. Accordingly, the revenue from these aircraft is no longer consolidated in our results. Instead, we record our 49% equity in the net results of the unconsolidated affiliate in earnings from unconsolidated affiliates, which for fiscal year 2004 was $1.8 million.

In Nigeria, customer flight hours and operating revenue increased for fiscal year 2004 by 5.2% and 18.2%, respectively over fiscal year 2003. This increase resulted primarily from the acquisition of a controlling interest in a West African operating company in July 2003, when we began to provide services to a major oil company under a five-year contract. This increase was partially offset by the decrease in flight activity with one customer that furnishes its own aircraft (not reflected in hours). Operating margins were virtually unchanged.

Operating expenses for our International Operations increased in fiscal year 2004 to $166.3 million, or 13.7% from $146.3 million in fiscal year 2003. This increase was primarily a result of higher salary costs, maintenance costs and lease fees due to increased operations in our international areas. The operating margin in our International Operations decreased to 9.6% in fiscal year 2004 from 13.5% in fiscal year 2003.

Technical Services.  Operating revenue for Technical Services decreased during fiscal year 2004 to $44.9 million, or 2.2%, compared to $45.9 million in the prior fiscal year. Operating expenses for Technical Services decreased slightly in fiscal year 2004 to $42.3 million, or 1.4%, from $42.9 million in fiscal year 2003. Operating margin for Technical Services for fiscal year 2004 decreased to 5.7% from 6.5% in the prior year.

Production Management Services

Operating revenue from our Production Management Services segment increased to $49.8 million, or 4.4%, in fiscal year 2004 from $47.7 million in fiscal year 2003, primarily due to the addition of a contract with a major customer. Operating expenses in this segment increased to $47.3 million, or 5.8%, in fiscal year 2004 from $44.7 million in fiscal year 2003 due to higher transportation charges. Our operating margin decreased to 5.0% from 6.2% in fiscal year 2003.

General and Administrative Costs

Consolidated general and administrative costs increased by $4.4 million in fiscal year 2004 primarily due to restructuring charges for our North Sea Operations of $3.1 million.

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Earnings from Unconsolidated Affiliates

Earnings from unconsolidated affiliates decreased in fiscal year 2004 by $1.0 million primarily due to a decrease in dividends received from investments accounted for under the cost method of accounting. The decrease was primarily due to a reduction in dividends from our unconsolidated affiliate in Egypt partially offset by higher earnings from equity method investees.

Interest Expense, net

Interest expense, net, increased in fiscal year 2004 by $1.8 million primarily due to the debt refinancing transaction that took place in June and July 2003. See Note B in the “Notes to Consolidated Financial Statements” for further discussion. This interest was offset by $1.2 million of interest capitalized in fiscal year 2004 related to progress payments for our fleet and facilities renewal and refurbishment program and $0.3 million of interest income from the investment of the proceeds of the debt refinancing for approximately one month.

Loss on extinguishment of debt

A loss on extinguishment of debt of $6.2 million was recognized in fiscal year 2004 related to the redemption on July 29, 2003 of our 6% Convertible Subordinated Notes and our 77/8% Senior Notes. Approximately $4.7 million of the loss pertains to the payment of redemption premiums and $1.5 million pertains to the write-off of unamortized debt issuance costs relating to the 6% Convertible Subordinated Notes and 77/8% Senior Notes.

Other Income (Expense)

Other expense, net, for fiscal year 2004 was $7.8 million compared to other expense, net, of $3.3 million in fiscal year 2003 and primarily represents foreign currency transaction losses. These losses arise from the consolidation of our United Kingdom operations, whose functional currency is the British pound sterling, yet contracts for a portion of its revenue and expense in U.S. dollars and other currencies for operations outside of the North Sea. The weakening of the U.S. dollar against the British pound since March 31, 2003 is the primary reason for these losses.

Income Taxes

Our effective income tax rates from continuing operations were 29.7%, 27.5% and 30.5% for fiscal years 2005, 2004 and 2003, respectively. The variance between the U.S. federal statutory rate and the effective rate for these periods is due primarily to the permanent reinvestment outside the U.S. of foreign earnings, upon which no U.S. tax has been provided. Our effective tax rate is also impacted by the amount of our foreign source income and our ability to realize foreign tax credits.

Liquidity and Capital Resources

During fiscal year 2005, our primary source of funds to meet working capital needs, service debt and fund capital expenditures was cash from operations. We believe that our future cash flow from operations, our existing U.S. revolving credit facility and alternative financing sources will be sufficient to meet our working capital, capital expenditure and debt service needs in the foreseeable future. We will likely need to raise additional funds through public or private debt or equity financings to finance existing commitments under our fleet renewal program and to execute our growth strategy. See “Risk Factors — In order to grow our business, we may require additional capital in the future, which may not be available to us.”

Operating Activities

Cash and cash equivalents were $146.4 million, $85.7 million and $56.8 million as of March 31, 2005, 2004 and 2003, respectively. Working capital as of March 31, 2005, 2004 and 2003 was $270.7 million, $235.7 million and $101.1 million, respectively. The increase in working capital in fiscal year 2005 was primarily a result of an increase in cash and cash equivalents, accounts receivable and inventory offset in part by an increase in accounts

44

payable, accrued liabilities and current deferred taxes. The increase in working capital in fiscal year 2004 was due primarily to the redemption in July 2003 of $90.9 million of the 6.0% Convertible Subordinated Notes due in December 2003 with proceeds from the issuance of the 61/8% Senior Notes. See “Financing Activities” below.

Net cash flows provided by operating activities were $104.5 million, $83.3 million, $62.4 million for fiscal years 2005, 2004, and 2003, respectively. The increase in cash flows provided by operating activities in fiscal year 2005 was primarily the result of an increase in net income after excluding the non-cash impact in fiscal year 2004 of the curtailment gain. The increase in cash flows in fiscal year 2004 from fiscal year 2003 was primarily the result of an increase in non-cash working capital.

Investing Activities

Cash flows used in investing activities were $46.5 million, $62.6 million and $48.2 million for fiscal years 2005, 2004 and 2003, respectively. The following table shows capital expenditures for fiscal years 2005, 2004 and 2003 (in thousands):

	Capital Expenditures
	2005		2004		2003
Aircraft and Related Equipment	$	74,211	$	66,792	$	47,796
Other		3,878		1,063		7,235
Total Capital Expenditures	$	78,089	$	67,855	$	55,031

Fiscal Year 2005.  During fiscal year 2005, we received proceeds of $26.6 million primarily from the disposal of ten aircraft and certain equipment, which resulted in a net gain of $5.9 million. We also received proceeds of $15.1 million from the sale of seven aircraft and certain contracts in our Technical Services business unit to a 50% owned unconsolidated affiliate which resulted in a gain of $2.1 million. See Note J in the “Notes to Consolidated Financial Statements” for further discussion.

In fiscal year 2003, we initiated a fleet renewal program. Under the program, we expect to incur additional capital expenditures over the next five to seven fiscal years to replace certain of our aircraft and upgrade strategic base facilities. As of March 31, 2005, we have expended $99.6 million as deposits and progress payments toward firm purchase commitments of $142.0 million under the fleet renewal program. Subsequent to March 31, 2005, we made additional payments under this program of $51.4 million and incurred additional firm purchase commitments of $286.2 million. To the extent they occur, any sales and trade-ins of older aircraft will reduce these projected expenditures. We plan to use internally generated funds and alternative financing sources, if needed, to meet our obligations under the program.

Apart from commitments under our fleet renewal program, we purchased one large aircraft for $17.1 million. Additionally, subsequent to March 31, 2005, we purchased five small aircraft for $6.4 million and paid deposits of $17.8 million for five large aircraft and four medium aircraft. These aircraft acquisitions were made with existing cash and were made to fulfill customer contract requirements. Subsequent to March 31, 2005, we also entered into firm purchase commitments for aircraft outside of the fleet renewal program of $130.0 million.

Fiscal Year 2004.  During fiscal year 2004, we received proceeds of $6.9 million primarily from the disposal of aircraft and equipment, which resulted in a net gain of $3.9 million. Apart from commitments under our fleet and facilities renewal and refurbishment program, we purchased one small aircraft for $1.0 million and three medium aircraft for $12.6 million. These aircraft acquisitions were made with existing cash and were made to fulfill customer contract requirements.

In March 2004, we entered a purchase agreement with Bell Helicopter for a new medium sized aircraft. The total purchase price for the aircraft is $6.3 million, of which a deposit of $0.3 million was made in April 2004. The balance of the purchase price was paid with cash from operations in fiscal year 2005.

In January 2004, we entered into a purchase agreement with Eurocopter for two new large aircraft to be delivered in calendar 2005. In connection with this purchase agreement, Eurocopter has found a purchaser for four

45

of our used large aircraft. The proceeds from the sale of the four used aircraft and some surplus spares will principally fund the purchase of the two new aircraft.

In May 2003, we entered into a purchase agreement with Bell Helicopter for five new medium aircraft. The total purchase price of the five aircraft was $30.1 million. We funded $12.2 million of the purchase price from available cash and the balance of $17.9 million was financed by the manufacturer for 90 days with interest payable at 3-month LIBOR plus 2.95%. In addition, we purchased a sixth medium aircraft for $5.3 million. These aircraft were purchased to meet the contract renewal requirements of an existing customer of our unconsolidated affiliate in Mexico, and replaced older aircraft currently being used on the contract.

On July 11, 2003, we sold these six aircraft, at our cost, to a newly formed limited liability company, Rotorwing Leasing Resources, L.L.C. or RLR. The capital of RLR is owned 49% by us and 51% by the same principal with whom we have other jointly owned businesses operating in Mexico. RLR financed 90% of the purchase price of these aircraft through a five-year term loan of $31.8 million with a bank requiring monthly principal and interest payments of $346,047 and a balloon payment of $18.3 million due July 11, 2008 (the “RLR Note”). The RLR Note is secured by the six aircraft. We guaranteed 49% of the RLR Note ($15.6 million) and the other shareholder guaranteed the remaining 51% of the RLR Note ($16.2 million). In addition, we have given the bank a put option which the bank may exercise if the aircraft are not returned to the United States within 30 days of a default on the RLR Note. Any such exercise would require us to purchase the RLR Note from the bank. We simultaneously entered into a similar agreement with the other RLR shareholder which requires that, in event of exercise by the bank of its put option to us, the other shareholder will be required to purchase 51% of the RLR Note from us. As of March 31, 2005, a liability of $0.9 million representing the fair value of this guarantee was reflected in our balance sheet in other liabilities and deferred credits. The fair value of the guarantee being amortized over the term of the RLR Note.

As of June 30, 2005, we were in default of various financial information reporting covenants under the RLR Note for not providing financial information for fiscal year 2005 when due, and also for not providing similar information to other creditors. This situation resulted from the activities identified in the Internal Review discussed earlier which prevented us from filing our financial report for fiscal year 2005 on time. The bank initially provided a waiver through August 14, 2005, and subsequently provided a second waiver through November 15, 2005. Further, we extended the waiver at our election through December 15, 2005 upon payment of a fee, and we have elected to exercise our option to further extend these waivers through January 16, 2006 upon payment of an additional fee.

We used the proceeds received from the sale of the aircraft to RLR to repay the $17.9 million short-term note to the manufacturer in July 2003. No gain or loss was recognized on the sale.

As of March 31, 2004, we expended $57.4 million as deposits and progress payments, and incurred firm purchase commitments of $138.6 under the November 2002 fleet and facilities renewal and refurbishment program.

Fiscal Year 2003.  During fiscal year 2003, we received proceeds of $22.8 million primarily from the disposal of aircraft and equipment, which resulted in a gain of $5.0 million, and we purchased 12 small aircraft for $14.4 million and four medium aircraft for $8.5 million. In addition, we paid $3.5 million of the balance due on an AS 332L2 Super Puma. An additional approximately $4.4 million was paid in November 2003 on this aircraft.

As of March 31, 2003, we had expended $18.2 million as deposits and progress payments, and entered into incurred firm purchase commitments of $125.2 under the fleet renewal program discussed above.

Financing Activities

Cash flows provided by (used in) financing activities were $2.8 million, $3.5 million and ($1.1 million) in fiscal years 2005, 2004 and 2003, respectively. Total debt as of March 31, 2005 was $262.1 million as compared to $255.5 million and $232.8 million as of March 31, 2004 and 2003, respectively.

Revolving Credit Facility.  As of March 31, 2005, we had a $30.0 million revolving credit facility with a U.S. bank that expires on August 31, 2006. This credit facility is subject to a sublimit of $10.0 million for the issuance of letters of credit. Borrowings bear interest at a rate equal to one month LIBOR plus a spread ranging from 1.25% to 2.0%. The rate of the spread depends on a financial covenant ratio under the credit facility. Borrowings

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under this credit facility are unsecured and are guaranteed by certain of our U.S. subsidiaries. We had no amounts drawn under this facility as of March 31, 2005, but did have $0.7 million of letters of credit utilized which reduced availability under the facility. As of March 31, 2005, we were in compliance with all of the covenants under this credit facility. As of June 30, 2005, however, we were in default of various financial information reporting covenants for not providing financial information for fiscal year 2005 when due, and also for not providing similar information to other creditors. This situation resulted from the activities identified in the Internal Review discussed earlier which prevented us from filing our financial report for fiscal year 2005 on time. The bank initially provided a waiver through August 14, 2005, and subsequently provided a second waiver through November 15, 2005. Waivers were extended through December 15, 2005 upon payment of a fee, and we have elected to exercise our option to further extend these waivers though January 16, 2006 upon payment of an additional fee.

U.K. Facilities.  As of March 31, 2005, Bristow had a £6 million ($11.3 million) facility for letters of credit, of which £3.4 million ($6.4 million) was outstanding, and a £1 million ($1.9 million) net overdraft facility, of which no borrowings were outstanding. The letter of credit facility is provided on an uncommitted basis and outstanding letters of credit bear a rate of 0.7% per annum. Borrowings under the net overdraft facility are payable on demand and bear interest at the bank’s base rate plus a spread that can vary between 1% and 3% per annum depending on the net overdraft amount. The net overdraft facility was scheduled to expire on August 31, 2005, but has been extended to August 31, 2006. The facilities are guaranteed by certain of Bristow’s subsidiaries and secured by several helicopter mortgages and a negative pledge of Bristow’s assets.

6.0% Convertible Subordinated Notes.  In December 1996, we issued $98.0 million aggregate principal amount of 6.0% convertible subordinated notes due 2003. During 1999, we repurchased $7.1 million in principal amount of the notes in the open market. The notes were convertible at any time into our Common Stock at a conversion price of $22.86 per share, or approximately 43.74 shares per $1,000 principal amount, and were redeemable at our option. In July 2003, we redeemed all the outstanding notes, $90.9 million, as discussed in Note B in the “Notes to Consolidated Financial Statements.”

77/8% Senior Notes.  In January 1998, we issued $100.0 million aggregate principal amount of 77/8% senior notes due 2008. The notes were unsecured and were guaranteed by certain of our U.S. subsidiaries. The notes became redeemable in full at our option beginning in January 2003. In July 2003, we redeemed all the outstanding notes, $100.0 million, as discussed in Note B in the “Notes to Consolidated Financial Statements.”

61/8% Senior Notes.  In June 2003, we issued $230.0 million aggregate principal amount of 61/8% senior notes due 2013 (“Senior Notes”). The Senior Notes are unsecured and are guaranteed by certain of our U.S. subsidiaries. The Senior Notes are redeemable at our option. A portion of the net proceeds from the issuance and sale of these notes was used to redeem all our outstanding 77/8% Senior Notes and 6.0% Convertible Subordinated Notes. The remaining net proceeds were used for general corporate purposes. On June 16, 2005, we received notice from the trustee that we were in default of financial reporting covenants in the indenture under which the Senior Notes were issued as we were not able to provide the required financial reporting information within the time period specified in the covenants and that, unless the deficiency was remedied within 60 days, an event of default would occur under the indenture. On August 16, 2005 we completed a consent solicitation with the holders of the Senior Notes to waive defaults under and make amendments to the indenture under which the Senior Notes were issued. Under the terms of the consent solicitation, a consent fee of $6.25 per $1,000 principal amount of Senior Notes, or $1.4 million, was paid on August 17, 2005 to holders of Senior Notes on July 25, 2005 that delivered (and not revoked) valid consents on or prior to August 15, 2005. The majority of Senior Note holders waived the defaults under the indenture through November 15, 2005. Further, we extended the waivers through December 15, 2005 upon payment of an additional fee, and we have elected to exercise our option to further extend these waivers through January 16, 2006 upon payment of another additional fee. See Note M in the “Notes to Consolidated Financial Statements” for further discussion.

Limited Recourse Term Loans.  Our debt includes two limited recourse term loans with a United Kingdom bank arising in connection with sale and lease transactions for two aircraft entered into with a special purpose entity in fiscal year 1999. The term loans are secured by both aircraft and our guarantee of the underlying lease obligations. In addition, we have provided asset value guarantees totaling up to $3.8 million, payable at expiration of the leases depending on the value received for the aircraft at the time of disposition. As a result of these

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guarantees and the terms of the underlying leases, for financial statement purposes, the aircraft and associated term loans are reflected on our consolidated balance sheet. As of March 31, 2005, the aggregate balance of the term loans was $21.1 million. The term loans provide for rates of interest payable to the bank of 7.1% and 7.2%, quarterly amortization payments totaling $0.7 million and balloon payments of $9.8 million and $9.2 million in fiscal years 2007 and 2008, respectively.

Short term advance from customer.  Our debt includes a $3.4 million advance from a customer that is reimbursement for value added taxes paid by us, the ultimate obligation for which is currently under dispute between ourselves and the customer and the taxing authority. The advance is non-interest bearing and will be repaid as taxes are refunded to us by the applicable governmental agency.

Sakhalin Aviation Services Ltd. advance.  In connection with the acquisition of Aviashelf, a Russian helicopter company, we assumed the note to Sakhalin Aviation Services Ltd. (“SASL”). SASL is the former owner of Aviashelf. Our balance sheet reflects advances of approximately $0.6 million made to Aviashelf by SASL. The advances are in the form of a non-interest bearing note with no specific repayment terms. See Note I in the “Notes to Consolidated Financial Statements” for further discussion of the acquisition.

Sakhalin Debt.  On July 16, 2004, we assumed various existing debt liabilities that were outstanding and secured against assets purchased as part of our acquisition of a business in Sakhalin, Russia. See Note I in the “Notes to Consolidated Financial Statements” for further discussion of the acquisition. Two promissory notes totaling $1.7 million at March 31, 2005 are being repaid over five years at an interest rate of 8.5% and are scheduled to be fully paid in 2009 and 2010. The other liabilities assumed included a finance lease on an aircraft totaling $1.2 million at March 31, 2005, with an interest rate of 6.5% and expiring in 2007; a finance lease on an aircraft totaling $3.3 million at March 31, 2005, with an interest rate of 8.5% and expiring in 2009 with a final termination payment of $2.4 million; and two loan notes on spares packages totaling $0.8 million at March 31, 2005, with interest rates at 10% to 18% expiring in 2007.

Surety Bond.  As of March 31, 2005, we had a surety bond outstanding to the Mexican Federal Electric Commission in the amount of 77.4 million Mexican pesos ($6.9 million). The surety bond guarantees performance of our unconsolidated Mexican affiliate under its contract with the customer.

U.K. Taxes.  During January 2004, we reached a settlement with the United Kingdom Inland Revenue regarding the tax treatment for certain aircraft maintenance expenditures by our primary United Kingdom operating company. These expenditures are contractual cash payments made to certain repair and maintenance service providers in advance of the actual repair requirement. We have historically deducted these expenditures for tax purposes as the payments were made, but will now treat these expenditures as prepayments for United Kingdom income tax purposes to be deducted when the repair or maintenance service actually occurs. This change in treatment was made effective April 1, 2002, and resulted in a cash payment for taxes and interest of £4.0 million ($7.4 million) in fiscal year 2004, with a further payment during the first quarter of fiscal year 2005 of £4.6 million ($8.3 million). The payment of these taxes will not affect total tax expense on our income statement but will instead be treated as a deferred tax asset to be deducted in the future when the repair and maintenance services are provided.

Pension Plan.  As of March 31, 2005, we had recorded on our balance sheet a $158.0 million pension liability and a $36.5 million prepaid pension asset related to the Bristow pension plan. The liability represents the excess of the present value of the defined benefit pension plan liabilities over the fair value of plan assets that existed at that date. The asset represents the cumulative contributions made by Bristow in excess of accrued net periodic pension cost. In addition to the recognition of the minimum pension liability, the United Kingdom rules governing pension plan funding require us to make additional cash contributions to the plan. In February 2004, we agreed to a schedule of contributions for our defined benefit pension plan in order to comply with the minimum funding rules of the United Kingdom. Those rules require us to make scheduled contributions in amounts sufficient to bring the plan up to 90% funded (as defined by United Kingdom legislation) within three years and 100% funded within ten years. In recognition of participants’ concerns regarding the under-funded position of the plan as well as other changes we made to the plan (as more fully described under “— Executive Overview — Other Matters — Prior to Fiscal Year 2005”), on February 1, 2004, we contributed £5.2 million ($9.6 million) to the plan to reach the 90% funded level, and agreed to monthly contributions of £0.2 million ($0.4 million) for the next ten years to comply with the 100% funding requirement. The £5.2 million ($9.6 million) contribution was made from existing cash balances and did

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not materially impact our working capital position. In March 2005, we agreed, subject to our review every three years, to increase the monthly contributions to £0.4 million ($0.8 million) for the next 20 years beginning May 2005. Nevertheless, regulatory agencies in the United Kingdom may require us to increase the monthly contributions further.

Minority Interest.  In March 2004, we prepaid $11.4 million, representing a portion of the put/call option price over the 51% of the ordinary share capital of Bristow that we do not own. This payment was made from existing cash balances. Beginning in September 2004, we began to pay the amount of guaranteed return on the put/call on a quarterly basis. In fiscal year 2005, the amount paid was £46,776 ($85,771) representing the amount due from May 8, 2004 to December 31, 2004. Subsequent to March 31, 2005, we paid £36,198 ($65,919) representing the amount due from January 1, 2005 to June 30, 2005. In May 2004, we acquired eight million shares of deferred stock (essentially a subordinated class of stock with no voting rights) from Bristow for £1 per share ($14.4 million in total). Bristow used the proceeds to redeem £8 million of its ordinary share capital at par value from all of its outstanding shareholders, including ourselves. The result of these changes will be to reduce the cost of the guaranteed return to the other shareholders, which we record as minority interest expense, by $2.3 million on an annual basis.

Contractual Obligations and Commercial Commitments.  We have the following contractual obligations and commercial commitments as of March 31, 2005:

	Payments Due by Period
			Less Than						After
	Total		1 Year		1-3 Years		4-5 Years		5 Years
	(In thousands)
Contractual obligations:
Long-term debt	$	262,080	$	6,413	$	25,667	$	—	$	230,000
Operating leases		19,381		3,478		7,695		2,871		5,337
Pension obligations		192,400		9,200		28,800		19,200		135,200
Unconditional purchase obligations(2)		62,904		43,829		19,075		—		—
Total contractual cash obligations	$	536,765	$	62,920	$	81,237	$	22,071	$	370,537

	Amount of Commitment Expiration Per Period
			Less Than						Over
	Total		1 Year		1-3 Years		4-5 Years		5 Years
	(In thousands)
Other commercial commitments:
Debt guarantee	$	33,245	$	—	$	—	$	14,356	$	18,889
Letters of credit and surety bond		13,967		13,700		267		—		—
Total commercial commitments	$	47,212	$	13,700	$	267	$	14,356	$	18,889

(1)	We have guaranteed the repayment of up to £10 million ($18.9 million) of the debt of FBS and $14.4 million of the debt of RLR, both unconsolidated affiliates.
(2)	Since March 31, 2005, we have entered into unconditional purchase obligations of $416.2 million for additional aircraft not reflected in the table above.

Currency Fluctuations

Through our foreign operations, we are exposed to currency fluctuations and exchange rate risks. The majority of our revenue and expenses from our North Sea Operations are in British pounds sterling. In addition, some of our contracts to provide services internationally provide for payment in foreign currencies. Our foreign exchange rate risk is even greater when our revenue is denominated in a currency different from the associated costs. We attempt to minimize our foreign exchange rate exposure by contracting the majority of our services other than our North Sea Operations in U.S. dollars. As a result, a strong U.S. dollar may increase the local cost of our services that are

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provided under U.S. dollar denominated contracts, which may reduce the demand for our services in foreign countries. Generally, we do not enter into hedging transactions to protect against foreign exchange risks related to our operating revenue.

Because we maintain our financial statements in U.S. dollars, we are vulnerable to fluctuations in the exchange rate between the British pound sterling and the U.S. dollar and between other foreign currencies and the U.S. dollar. In preparing our financial statements, we must convert all non-U.S. dollar currencies to U.S. dollars. The effect of foreign currency translation is reflected in a component of stockholders’ investment and foreign currency transaction gains or losses are credited or charged to income and reflected in other income (expense). In the past three fiscal years our stockholders’ investment has increased by $66.2 million as a result of translation adjustments. Changes in exchange rates could cause significant changes in our financial position and results of operations in the future.

The British pound sterling is the currency in which most of Bristow’s revenue and expenses are paid. Approximately 36% of our operating revenue for fiscal year 2005 was translated for financial reporting purposes from British pounds sterling into U.S. dollars. In addition, we receive other revenue that is not in U.S. dollars or British pounds sterling, such as Australian Dollars, Euros, Nigerian Naira, and Trinidad and Tobago Dollars. We can reduce or eliminate our exposure to exchange rate fluctuations to the extent that we also have expenses that are payable in the same foreign currency as our revenue. Our principal exposure is to changes in the value of the British pound relative to the U.S. dollar. During fiscal year 2005, the British pound to U.S. dollar exchange rate ranged from a low of one British pound = U.S. $1.75 to a high of one British pound = U.S. $1.95, with an average of one British pound = U.S. $1.85 for the fiscal year. As of March 31, 2005, the exchange rate was one British pound = U.S. $1.89. During fiscal year 2004, the British pound to U.S. dollar exchange rate ranged from a low of one British pound = U.S. $1.55 to a high of one British pound = U.S. $1.90 for the fiscal year, with an average of one British pound = U.S. $1.70. As of March 31, 2004, the exchange rate was one British pound = U.S. $1.84.

Critical Accounting Policies And Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, whereas, in other circumstances, generally accepted accounting principles require us to make estimates, judgments and assumptions that we believe are reasonable based upon information available. We base our estimates and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions. We believe that of our significant accounting policies, as discussed in the “Notes to Consolidated Financial Statements”, the following involve a higher degree of judgment and complexity.

Income Taxes.  Our annual tax provision is based on expected taxable income, statutory rates and tax planning opportunities available to us in the various jurisdictions in which we operate. The determination and evaluation of our annual tax provision and tax positions involves the interpretation of the tax laws in the various jurisdictions in which we operate and requires significant judgment and the use of estimates and assumptions regarding significant future events such as the amount, timing and character of income, deductions and tax credits. Changes in tax laws, regulations, agreements, and treaties, foreign currency exchange restrictions or our level of operations or profitability in each jurisdiction would impact our tax liability in any given year. We also operate in many jurisdictions where the tax laws relating to the offshore oilfield service industry are not well developed. While our annual tax provision is based on the best information available at the time, a number of years may elapse before the ultimate tax liabilities in the various jurisdictions are determined.

We recognize foreign tax credits available to us to offset the U.S. income taxes due on income earned from foreign sources. These credits are limited by the total income tax on the U.S. income tax return as well as by the ratio of foreign source income in each statutory category to total income. In estimating the amount of foreign tax credits that are realizable, we estimate future taxable income in each statutory category. These estimates are subject to change based on changes in the market condition in each statutory category and the timing of certain deductions available to us in each statutory category. We periodically reassess these estimates and record changes to the amount of realizable foreign tax credits based on these revised estimates. Changes to the amount of realizable foreign tax

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credits can be significant given any material change to our estimates on which the realizability of foreign tax credits is based.

We maintain reserves for estimated tax exposures in jurisdictions of operation. Our annual tax provision includes the effect of reserve provisions and changes to reserves that we consider appropriate, as well as related interest. Tax exposure items primarily include potential challenges to intercompany pricing, disposition transactions and the applicability or rate of various withholding taxes. These exposures are resolved primarily through the settlement of audits within these tax jurisdictions or by judicial means, but can also be affected by changes in applicable tax law or other factors, which could cause us to conclude a revision of past estimates is appropriate. We believe that an appropriate liability has been established for estimated exposures. However, actual results may differ materially from these estimates. We review these liabilities quarterly.

We do not believe it is possible to reasonably estimate the potential effect of changes to the assumptions and estimates identified because the resulting change to our tax liability, if any, is dependent on numerous factors which cannot be reasonably estimated. These include, among others, the amount and nature of additional taxes potentially asserted by local tax authorities; the willingness of local tax authorities to negotiate a fair settlement through an administrative process; the impartiality of the local courts; and the potential for changes in the tax paid to one country to either produce, or fail to produce, an offsetting tax change in other countries. Our experience has been that the estimates and assumptions we have used to provide for future tax assessments have proven to be appropriate. However, past experience is only a guide and the potential exists that the tax resulting from the resolution of current and potential future tax controversies may differ materially from the amounts accrued.

Judgment is required in determining whether deferred tax assets will be realized in full or in part. When it is estimated to be more likely than not that all or some portion of specific deferred tax assets, such as foreign tax credit carryovers or net operating loss carry forwards, will not be realized, a valuation allowance must be established for the amount of the deferred tax assets that are estimated to not be realizable. As of March 31, 2003, our valuation allowance against certain deferred tax assets, primarily U.S. foreign tax credit carry forwards was $16.6 million. We decreased the valuation allowance as of March 31, 2004 to $14.4 million, and decreased it to $14.3 million as of March 31, 2005. If our facts or financial results were to change, thereby impacting the likelihood of realizing the deferred tax assets, judgment would have to be applied to determine changes to the amount of the valuation allowance in any given period. Such changes could result in either a decrease or an increase in our provision for income taxes, depending on whether the change in judgment resulted in an increase or a decrease to the valuation allowance. We continually evaluate strategies that could allow for the future utilization of our deferred tax assets.

We have not provided for U.S. deferred taxes on the unremitted earnings of certain foreign subsidiaries that are permanently reinvested. Should we make a distribution from the unremitted earnings of these subsidiaries, we could be required to record additional taxes. At the current time, a determination of the amount of unrecognized deferred tax liability is not practical. The American Jobs Creation Act of 2004 (the “Act”), enacted in October 2004, included a provision creating a temporary incentive for U.S. corporations to repatriate foreign earnings by providing an 85% deduction for certain dividends paid by controlled foreign corporations of U.S. corporations. The deduction is subject to a number of limitations and requirements, one of which is to adopt a Domestic Reinvestment Plan (“DRIP”) to document planned reinvestments of amounts equal to the foreign earnings repatriated under the Act. See Note F in the “Notes to Consolidated Financial Statements.”

We have not provided for deferred taxes in circumstances where we expect that, due to the structure of operations and applicable law, the operations in such jurisdictions will not give rise to future tax consequences. Should our expectations change regarding the expected future tax consequences, we may be required to record additional deferred taxes that could have a material adverse effect on our consolidated financial position, results of operations and cash flows.

Property and equipment.  Our net property and equipment represents 53% percent of our total assets as of March 31, 2005. We determine the carrying value of these assets based on our property and equipment accounting policies, which incorporate our estimates, assumptions, and judgments relative to capitalized costs, useful lives and salvage values of our assets.

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Our property and equipment accounting policies are also designed to depreciate our assets over their estimated useful lives. The assumptions and judgments we use in determining the estimated useful lives and residual values of our aircraft reflect both historical experience and expectations regarding future operations, utilization and performance of our assets. The use of different estimates, assumptions and judgments in the establishment of property and equipment accounting policies, especially those involving the useful lives and residual values of our aircraft, would likely result in materially different net book values of our assets and results of operations.

Useful lives of aircraft and residual values are difficult to estimate due to a variety of factors, including changes in operating conditions or environment, the introduction of technological advances in aviation equipment, changes in market or economic conditions including changes in demand for certain types of aircraft and changes in laws or regulations affecting the aviation or offshore oil and gas industry. We evaluate the remaining useful lives of our aircraft when certain events occur that directly impact our assessment of the remaining useful lives of the aircraft.

We review our property and equipment for impairment when events or changes in circumstances indicate that the carrying value of such assets or asset groups may be impaired or when reclassifications are made between property and equipment and assets held for sale as prescribed by SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.”

Asset impairment-evaluations are based on estimated undiscounted cash flows for the assets being evaluated. If the sum of the expected future cash flows is less than the carrying amount of the asset, we would be required to recognize an impairment loss. When determining fair value, we utilize various assumptions, including projections of future cash flows. A change in these underlying assumptions will cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts. In such event, we would then be required to record a corresponding charge, which would reduce our earnings. We continue to evaluate our estimates and assumptions and believe that our assumptions, which include an estimate of future cash flows based upon the anticipated performance of the underlying business units, are appropriate.

Supply and demand are the key drivers of aircraft idle time and our ability to contract our aircraft at economical rates. During periods of oversupply, it is not uncommon for us to have aircraft idled for extended periods of time, which could be an indication that an asset group may be impaired. In most instances our aircraft could be used interchangeably. In addition, our aircraft are generally equipped to operate throughout the world. Because our aircraft are mobile, we may move aircraft from a weak geographic market to a stronger geographic market if an adequate opportunity arises to do so. As such, our aircraft are considered to be interchangeable within classes or asset groups and accordingly, our impairment evaluation is made by asset group.

An impairment loss is recorded in the period in which it is determined that the aggregate carrying amount of assets within an asset group is not recoverable. This requires us to make judgments regarding long-term forecasts of future revenues and costs related to the assets subject to review. In turn, these forecasts are uncertain in that they require assumptions about demand for our services, future market conditions and technological developments. Significant and unanticipated changes to these assumptions could require a provision for impairment in a future period. Given the nature of these evaluations and their application to specific asset groups and specific times, it is not possible to reasonably quantify the impact of changes in these assumptions.

Revenue Recognition.  In general, we recognize revenue when it is both realized or realizable and earned. We consider revenue to be realized or realizable and earned when the following conditions exist: the persuasive evidence of an arrangement, generally a customer contract; the services or products have been performed or delivered to the customer; the sales price is fixed or determinable within the contract; and collection is probable. More specifically, revenue from Helicopter Services is recognized based on contractual rates as the related services are performed. The charges under these contracts are generally based on a two-tier rate structure consisting of a daily or monthly fixed fee plus additional fees for each hour flown. These contracts are for varying periods and generally permit the customer to cancel the contract before the end of the term. We also provide services to customers on an “ad hoc” basis, which usually entails a shorter notice period and shorter duration. Our charges for ad hoc services are generally based on an hourly rate or a daily or monthly fixed fee plus additional fees for each hour flown. We estimate that our ad hoc services have a higher margin than our other helicopter contracts due to supply and demand dynamics. In order to offset potential increases in operating costs, our long-term contracts may provide for periodic increases in the contractual rates charged for our services. We recognize the impact of these rate

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increases when the criteria outlined above have been met. This generally includes written recognition from our customers that they are in agreement with the amount of the rate escalation. In addition, our standard rate structure is based on fuel costs remaining at or below a predetermined threshold. Fuel costs in excess of this threshold are generally reimbursed by the customer. Revenue from Production Management is recognized based on contractual rates as the related services are performed. Contracts are generally evergreen with a yearly review. Each party has a thirty-day cancellation clause. The rates charged to the customer are either monthly, based on services specified in the contract, or hourly if outside the scope of the contract. Typically hourly rates are charged for services provided beyond the basic level contemplated in the contract. Services provided include personnel and transportation. Any escalation in rates is agreed to in writing by the customer. With respect to both our Helicopter Services and Production Management, cost reimbursements from customers are recorded as revenue.

Pension and other postretirement benefits.  Our defined benefit pension and other postretirement benefit (retiree life insurance and medical benefits) obligations and the related benefit costs are accounted for in accordance with SFAS No. 87, “Employers’ Accounting for Pensions”, and SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions.” Pension and postretirement costs and obligations are actuarially determined and are affected by assumptions including expected return on plan assets, discount rates, compensation increases, employee turnover rates and health care cost trend rates. We evaluate our assumptions periodically and make adjustments to these assumptions and the recorded liabilities as necessary.

Two of the most critical assumptions are the expected long-term rate of return on plan assets and the assumed discount rate. We evaluate our assumptions regarding the estimated long-term rate of return on plan assets based on historical experience and future expectations on investment returns, which are calculated by our third-party investment advisor utilizing the asset allocation classes held by the plan’s portfolios. We utilize a Sterling denominated AA corporate bond index as a basis for determining the discount rate for our U.K. plans. Changes in these and other assumptions used in the actuarial computations could impact our projected benefit obligations, pension liabilities, pension expense and other comprehensive income. We base our determination of pension expense on a market-related valuation of assets that reduces year-to-year volatility. This market-related valuation recognizes investment gains or losses over a five-year period from the year in which they occur. Investment gains or losses for this purpose are the difference between the expected return calculated using the market-related value of assets and the actual return based on the market-related value of assets.

Allowance for doubtful accounts.  We establish reserves for doubtful accounts on a case-by-case basis when we believe the payment of amounts owed to us is unlikely to occur. In establishing these reserves, we consider our historical experience, changes in our customer’s financial position, restrictions placed on the conversion of local currency to U.S. dollars, as well as disputes with customers regarding the application of contract provisions to our services. We derive a significant portion of our revenue from services to international oil companies and government-owned or government-controlled oil companies. Our receivables are concentrated in certain oil-producing countries. We generally do not require collateral or other security to support client receivables. If the financial condition of our clients was to deteriorate or their access to freely convertible currency was restricted, resulting in impairment of their ability to make the required payments, additional allowances may be required. During fiscal years 2005, 2004 and 2003, we established new reserves for doubtful accounts of $0.3 million, $0.4 million and $1.0 million, respectively. Additionally, in each of the three fiscal years ended March 31, 2005, 2004 and 2003 we wrote off uncollectible accounts of $0.7 million, $0.8 million and $0.1 million, respectively, all of which had been previously reserved.

Inventory Reserve.  We maintain inventory that primarily consists of spare parts to service our aircraft. We periodically review the condition and continuing usefulness of the parts to determine whether the realizable value of this inventory is lower than its book value. If our valuation of these parts is significantly lower than the book value of the parts, an additional provision may be required.

Insurance.  We are self-insured for our group medical insurance plans in the U.S. In addition, we have several medical plans covering certain non-U.S. employee groups. We must make estimates to record the expenses related to these plans. We also have workers’ compensation programs in the U.S. for work-related injuries. In addition, we have insurance for work-related injuries covering certain non-U.S. employee groups. We estimate the expenses related to the retained portion of that risk. If actual experience under any of our insurance plans is greater than our

53

original estimates, we may have to record charges to income when we identify the risk of additional loss. Conversely, if actual costs are lower than our estimates or return premiums are larger than originally projected, we may have to record credits to income.

Contingent liabilities.  We establish reserves for estimated loss contingencies when we believe a loss is probable and the amount of the loss can be reasonably estimated. Our contingent liability reserves relate primarily to litigation, personal injury claims and potential tax assessments. Revisions to contingent liability reserves are reflected in income in the period in which different facts or information become known or circumstances change that affect our previous assumptions with respect to the likelihood or amount of loss. Reserves for contingent liabilities are based upon our assumptions and estimates regarding the probable outcome of the matter. Should the outcome differ from our assumptions and estimates or other events result in a material adjustment to the accrued estimated reserves, revisions to the estimated reserves for contingent liabilities would be required and would be recognized in the period the new information becomes known.

Goodwill Impairment.  We perform a test for impairment of our goodwill annually as of March 31 as prescribed by SFAS No. 142, “Goodwill and Other Intangible Assets.” Because our business is cyclical in nature, goodwill could be significantly impaired depending on when the assessment is performed in the business cycle. The fair value of our reporting units is based on a blend of estimated discounted cash flows, publicly traded company multiples and acquisition multiples. Estimated discounted cash flows are based on projected flight hours and rates. Publicly traded company multiples and acquisition multiples are derived from information on traded shares and analysis of recent acquisitions in the marketplace, respectively, for companies with operations similar to ours. Changes in the assumptions used in the fair value calculation could result in an estimated reporting unit fair value that is below the carrying value, which may give rise to an impairment of goodwill. In addition to the annual review, we also test for impairment should an event occur or circumstances change that may indicate a reduction in the fair value of a reporting unit below its carrying value.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 153, “Exchange of Nonmonetary Assets”, effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. This statement amends APB Opinion No. 29, “Accounting for Nonmonetary Transactions”, to eliminate the similar productive assets concept and replace it with the concept of commercial substance. Commercial substance occurs when the future cash flows of an entity are changed significantly due to the nonmonetary exchange. We do not expect the adoption of SFAS No. 153 to have a significant impact on our financial statements.

In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment”, which is a revision of SFAS No. 123, “Accounting for Stock Based Compensation” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R becomes effective for our fiscal year beginning April 1, 2006 and will require companies to expense stock options and other share based payments. We do not currently know whether implementation of SFAS No. 123R would result in financial results materially different from pro forma results presented in Note A in the “Notes to Consolidated Financial Statements.”

In December 2004, the FASB issued FASB Staff Position No. 109-1, “Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004” (“FSP 109-1”) which provides accounting guidance to companies that will be eligible for the tax deduction resulting from “qualified production activities income” as defined in the American Jobs Creation Act of 2004 (the “Act”). FSP No. 109-1 provides that this deduction will be treated as a “special deduction” as described in SFAS 109 rather than a reduction in the statutory tax rate applied to deferred tax items. As such, FSP 109-1 does not result in a revaluation of our U.S. deferred tax assets. The impact of this deduction, if it applies, will first be reported in fiscal year 2006, the first tax year commencing after December 31, 2004. We are in the process of reviewing whether any of our operations qualify for this deduction.

In December 2004, the FASB issued Staff Position No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP No. 109-2”) to address the treatment of a special one time incentive provided in the Act for companies to repatriate foreign earnings. Signed into law on October 22, 2004, the Act provides for a special one-time tax deduction equal to 85%

54

of dividends received out of qualifying foreign earnings that are paid in either a company’s last tax year that began before the enactment date, or the first tax year that begins during the one-year period beginning on the enactment date. The special deduction is subject to a number of limitations and requirements, one of which is to adopt a Domestic Reinvestment Plan (“DRIP”) to document planned reinvestments of amounts equal to the foreign earnings repatriated under the Act. FSP 109-2 provides entities additional time to assess the effect of repatriating foreign earnings under the Act for purposes of applying SFAS No. 109, which otherwise requires the effect of a new tax law to be recorded in the period of enactment. As of March 31, 2005, the Company had not made a decision on whether, and to what extent, to repatriate previously unremitted foreign earnings. However, in September 2005, senior management approved a DRIP that provides for the repatriation of up to $75 million of previously unremitted foreign earnings under the Act. If the Company does repatriate the maximum amount called for in the DRIP, the related U.S. tax liability associated with the total repatriated earnings would be approximately $5.3 million. Technical corrections, regulations and additional guidance from the U.S. Treasury related to the statute could impact our estimate of the tax liability associated with the potential range of repatriation. The favorable U.S. tax rate on such repatriations under the Act applies to qualifying distributions received by the Company through March 31, 2006. As of October 2005, the Company had received $30.9 million of repatriated funds intended to qualify under the Act.

In March 2005, the FASB issued Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations”, an interpretation of SFAS No. 143, “Accounting for Asset Retirement Obligations.” The interpretation is effective for our fiscal year ending March 31, 2006. Interpretation No. 47 provides clarification on conditional asset retirement obligations and the fair value of such obligations as referred to in SFAS No. 143. We do not expect the adoption of Interpretation No. 47 to have a significant impact on our financial statements.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”, which is a replacement of APB Opinion No. 20, “Accounting Changes”, and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements.” SFAS No. 154 becomes effective for our fiscal year beginning April 1, 2006 and provides guidance on the accounting for and reporting of accounting changes and error corrections. SFAS No. 154 establishes the method of retrospective application as the required method of reporting a change in accounting principle, unless impracticable, or unless the new accounting principle explicitly states transition requirements. We do not expect the adoption of SFAS No. 154 to have a significant impact on our financial statements, and the adoption of this standard would not have affected the restatements reflected in this Annual Report.

Item 7a.   Quantitative and Qualitative Disclosures about Market Risk

As of March 31, 2005, we have $262.1 million of debt outstanding, none of which carries a variable rate of interest. However, the market value of our fixed rate debt fluctuates with changes in interest rates.

We occasionally use off-balance sheet hedging instruments to manage our risks associated with our operating activities conducted in foreign currencies. In limited circumstances and when considered appropriate, we will use forward exchange contracts to hedge anticipated transactions. We have historically used these instruments primarily in the buying and selling of certain spare parts, maintenance services and equipment. We attempt to minimize our exposure to foreign currency fluctuations by matching our revenue and expenses in the same currency for our contracts. Most of our revenue and expenses from our North Sea Operations are denominated in British pound sterling. Approximately 36% of our operating revenue for fiscal year 2005 was translated for financial reporting purposes from British pounds sterling into U.S. dollars. As of March 31, 2005, we did not have any nominal forward exchange contracts outstanding. Subsequent to March 31, 2005, we have not entered into any nominal forward exchange contracts.

Item 8.   Consolidated Financial Statements and Supplementary Data

55

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Offshore Logistics, Inc.:

We have audited the accompanying consolidated balance sheets of Offshore Logistics, Inc. (the Company) and subsidiaries as of March 31, 2005 and 2004, and the related consolidated statements of income, stockholders’ investment and cash flows for each of the years in the three-year period ended March 31, 2005. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Offshore Logistics, Inc. and subsidiaries as of March 31, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note A to the consolidated financial statements, the fiscal years’ 2004 and 2003 consolidated financial statements have been restated.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of March 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated June 9, 2005, except for the fifth paragraph of Management’s Report on Internal Control Over Financial Reporting as to which the date is December 9, 2005, expressed an unqualified opinion on management’s assessment of, and an adverse opinion on the effective operation of, internal control over financial reporting.

/s/  KPMG LLP

New Orleans, Louisiana

June 9, 2005,

except for the “Restatement of

Previously Reported Amounts”

section in Note A, the ninth

paragraph of Note B,

the “Internal Review” section

of Note D, and Note M, as to which

the date is December 9, 2005

56

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	Fiscal Year Ended March 31
	2005			2004			2003
	(In thousands, except per share amounts)
				(Restated)			(Restated)
Gross revenue:
Operating revenue	$	673,646		$	617,001		$	601,550
Operating expenses:
Direct cost		518,139			475,449			467,776
Depreciation and amortization		40,693			39,543			37,664
General and administrative		45,245			38,892			34,478
Gain on disposal of assets		(8,039	)		(3,943	)		(3,734	)
		596,038			549,941			536,184
Curtailment gain		—			21,665			—
Operating income		77,608			88,725			65,366
Earnings from unconsolidated affiliates, net of losses		9,600			11,039			12,054
Interest income		3,188			1,689			1,523
Interest expense		(15,665	)		(16,829	)		(14,904	)
Loss on extinguishment of debt		—			(6,205	)		—
Other income (expense), net		(1,126	)		(7,810	)		(3,284	)
Income before provision for income taxes and minority interest		73,605			70,609			60,755
Provision for income taxes		21,835			19,402			18,554
Minority interest		(210	)		(1,382	)		(1,797	)
Net income	$	51,560		$	49,825		$	40,404
Net income per common share:
Basic	$	2.24		$	2.21		$	1.80
Diluted	$	2.21		$	2.15		$	1.67

The accompanying notes are an integral part of these statements.

57

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,
	2005			2004
	(In thousands)
				(Restated)
ASSETS
Current assets:
Cash and cash equivalents	$	146,440		$	85,679
Accounts receivable		133,839			122,421
Inventories		140,706			133,073
Deferred tax asset		—			650
Prepaid expenses and other		11,459			10,874
Total current assets		432,444			352,697
Investments in unconsolidated affiliates		37,176			38,929
Property and equipment — at cost:
Land and buildings		32,543			26,594
Aircraft and equipment		827,031			797,783
		859,574			824,377
Less — Accumulated depreciation and amortization		(250,512	)		(238,721	)
		609,062			585,656
Goodwill		26,809			26,829
Other assets		44,085			42,717
	$	1,149,576		$	1,046,828
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	35,640		$	28,714
Accrued liabilities		101,904			83,875
Deferred taxes		17,740			—
Current maturities of long-term debt		6,413			4,417
Total current liabilities		161,697			117,006
Long-term debt, less current maturities		255,667			251,117
Other liabilities and deferred credits		164,728			147,326
Deferred taxes		69,977			92,042
Minority interest		4,514			9,385
Commitments and contingencies (Note D)
Stockholders’ investment:
Common stock, $.01 par value, authorized 35,000,000 shares; outstanding 23,314,708 in 2005 and 22,631,221 in 2004 (exclusive of 1,281,050 treasury shares)		233			226
Additional paid in capital		157,100			141,384
Retained earnings		389,715			338,155
Accumulated other comprehensive loss		(54,055	)		(49,813	)
		492,993			429,952
	$	1,149,576		$	1,046,828

The accompanying notes are an integral part of these statements.

58

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Fiscal Year Ended March 31,
	2005			2004			2003
	(In thousands)
				(Restated)			(Restated)
Cash flows from operating activities:
Net income	$	51,560		$	49,825		$	40,404
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		40,693			39,543			37,664
Deferred income taxes		3,325			9,046			13,917
Gain on asset dispositions		(8,039	)		(3,943	)		(3,734	)
Curtailment gain		—			(21,665	)		—
Loss on extinguishment of debt		—			6,205			—
Equity in earnings from unconsolidated affiliates under (over) dividends received		9,802			(5,114	)		(4,767	)
Minority interest in earnings		210			1,382			1,797
Change in operating assets and liabilities, net of acquisitions:
(Increase) decrease in accounts receivable		(8,612	)		10,984			533
(Increase) decrease in inventories		(5,127	)		(4,111	)		(6,545	)
(Increase) decrease in prepaid expenses and other		(724	)		5,232			(3,541	)
Increase (decrease) in accounts payable		6,889			(5,156	)		1,621
Increase (decrease) in accrued liabilities		15,034			308			(12,735	)
Increase (decrease) in other liabilities and deferred credits		(657	)		795			(2,558	)
Other		119			—			331
Net cash provided by operating activities		104,473			83,331			62,387
Cash flows from investing activities:
Capital expenditures		(78,089	)		(67,855	)		(55,031	)
Assets purchased on behalf of unconsolidated affiliate		—			(35,394	)		(26,019	)
Proceeds from sale of assets to unconsolidated affiliate		—			35,394			26,019
Proceeds from asset dispositions		41,722			6,854			22,803
Acquisition, net of cash received		(1,986	)		—			(15,953	)
Investments		(8,186	)		(1,581	)		—
Net cash used in investing activities		(46,539	)		(62,582	)		(48,181	)
Cash flows from financing activities:
Proceeds from borrowings		—			251,412			45,286
Repayment of debt and debt redemption premiums		(2,427	)		(233,627	)		(49,026	)
Debt issuance costs		—			(4,889	)		—
Partial prepayment of put/call obligation		(86	)		(11,442	)		—
Repurchase of shares from minority interest		(7,389	)		—			—
Issuance of Common Stock		12,665			2,085			2,631
Net cash provided by (used in) financing activities		2,763			3,539			(1,109	)
Effect of exchange rate changes in cash and cash equivalents		64			4,591			1,033
Net increase in cash and cash equivalents		60,761			28,879			14,130
Cash and cash equivalents at beginning of period		85,679			56,800			42,670
Cash and cash equivalents at end of period	$	146,440		$	85,679		$	56,800
Supplemental disclosure of non-cash investing activities:
Non-monetary exchange of assets	$	11,934		$	—		$	—

The accompanying notes are an integral part of these statements.

59

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT

							Accumulated
							Other
					Additional		Comprehensive						Total
	Common Stock				Paid in		Income			Retained			Stockholders’
	Shares		Amount		Capital		(Loss)			Earnings			Investment
	(In thousands, except share amounts)
BALANCE — March 31, 2002		22,298,921	$	223	$	135,886	$	(52,443	)	$	256,368		$	340,034
Prior period adjustment		—		—		—		348			(8,442	)		(8,094	)
BALANCE — March 31, 2002 (restated)		22,298,921		223		135,886		(52,095	)		247,926			331,940
Comprehensive income:
Net income (restated)		—		—		—		—			40,404			40,404
Translation adjustments (restated)		—		—		—		27,186			—			27,186
Pension liability adjustment (net of tax of $28,022)		—		—		—		(52,486	)		—			(52,486	)
Total comprehensive income (restated)		—		—		—		—			—			15,104
Tax benefit related to the exercise of employee stock options		—		—		531		—			—			531
Stock options exercised		212,000		2		2,629		—			—			2,631
BALANCE — March 31, 2003 (restated)		22,510,921		225		139,046		(77,395	)		288,330			350,206
Comprehensive income:
Net income (restated)		—		—		—		—			49,825			49,825
Translation adjustments (restated)		—		—		—		31,673			—			31,673
Pension liability adjustment (net of tax of $2,179)		—		—		—		(4,091	)		—			(4,091	)
Total comprehensive income (restated)		—		—		—		—			—			77,407
Tax benefit related to the exercise of employee stock options		—		—		254		—			—			254
Stock options exercised		120,300		1		2,084		—			—			2,085
BALANCE — March 31, 2004 (restated)		22,631,221		226		141,384		(49,813	)		338,155			429,952
Comprehensive income:
Net income		—		—		—		—			51,560			51,560
Translation adjustments		—		—		—		7,354			—			7,354
Pension liability adjustment (net of tax of $4,796)		—		—		—		(11,596	)		—			(11,596	)
Total comprehensive income		—		—		—		—			—			47,318
Tax benefit related to the exercise of employee stock options		—		—		2,939		—			—			2,939
Stock options exercised		683,487		7		12,777		—			—			12,784
BALANCE — March 31, 2005		23,314,708	$	233	$	157,100	$	(54,055	)	$	389,715		$	492,993

The accompanying notes are an integral part of these statements.

60

OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A — OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — Offshore Logistics, Inc., a Delaware corporation (together with its majority-owned entities and non-majority owned entities and predecessors, unless the context requires otherwise, “OLG,” the “Company,” “we,” “us,” or “our”), is a leading provider of aviation services to the global offshore oil and gas industry. With a fleet of 433 aircraft, OLG and its affiliates conduct helicopter operations in all of the major offshore oil-producing regions of the world. We also are a leading provider of helicopter military training and search and rescue services. In addition, we are a leading provider of production management services to oil and gas companies operating in the Gulf of Mexico.

The following consolidated financial statements include the accounts of the Company after elimination of all significant intercompany accounts and transactions. Investments in affiliates in which the Company owns 50% or less of the equity but has retained the majority of the economic risk of the operating assets and related results are consolidated. Other investments in affiliates in which the Company owns 50% or less of the equity but has the ability to exercise significant influence are accounted for using the equity method. Investments which the Company does not consolidate or in which the Company does not exercise significant influence are accounted for under the cost method whereby dividends are recognized as income when received.

The United Kingdom, as do most countries, limits foreign ownership of aviation companies. To comply with these restrictions, the Company owns only 49% of the Common Stock of Bristow, but owns 100% of Bristow’s subordinated debt. In addition, the Company has a put/call agreement with the other two stockholders of Bristow which grants the Company the right to buy all of their shares of Bristow Common Stock (and them the right to require the Company to buy all of their shares). Under U.K. regulations, to maintain Bristow’s operating license, the Company would be required to find a qualified European Union owner to acquire any of the Bristow shares that the Company has the right or obligation to acquire under the put/call agreement.

Restatement of Previously Reported Amounts — As a result of the Internal Review findings discussed further in Note D, the Company has restated its historical financial statements to accrue for payroll taxes, penalties and interest attributable to underreported employee payroll. In connection with this matter, the restated consolidated statements of income reflect reductions in operating income of $4.2 million and $3.2 million for fiscal years 2004 and 2003, respectively, and $4.6 million for earlier fiscal years from previously reported amounts. In addition, our consolidated statements of income reflect reductions on operating income of $3.8 million for fiscal year 2005 from the previously announced income. At this time, the Company cannot estimate what additional payments, fines and/or penalties may be required in connection with the matters identified as a result of the Internal Review or the SEC investigation; however, such payments, fines and/or penalties could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company’s management has separately determined that the Company was not reporting reimbursements received from its customers for costs incurred on their behalf in accordance with United States generally accepted accounting principles (“GAAP”). The Company’s customers reimburse it for certain costs incurred on their behalf, which have historically been recorded by offsetting such amounts against the related expenses. In addition, the Company’s management has determined that the Company did not properly record expenses related to severance benefits for certain employees of a foreign subsidiary and the Company did not properly record expenses related to payroll taxes incurred by one of the Company’s foreign subsidiaries. In accordance with GAAP, the Company has restated its historical financial statements for fiscal years 2004 and 2003 to reflect such reimbursement as an increase in revenue and a corresponding increase in expense, and the Company increased direct costs to reflect the severance obligation and payroll taxes in the applicable periods. With respect to customer reimbursements, operating revenues and direct costs were increased $53.4 million and $46.4 million for fiscal years 2004 and 2003, respectively, from previously reported amounts, with no impact on income from operations or net income. With respect to the severance benefits and payroll taxes, direct costs were increased by $0.5 million and $0.2 million in fiscal years 2004 and 2003, respectively. For all three items, operating revenues were increased $55.3 million and direct costs were increased by $56.3 million from the previously announced amount for fiscal year 2005.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The impact of these adjustments on the consolidated statements of income, balance sheet and cash flows is reflected in the tables below (in thousands except per share amounts). Amounts for fiscal year 2005 were not previously audited or filed with the SEC, but had been announced. Amounts for the first three fiscal quarters in that year had been filed.

Statements of Income

	2004				2003
	As Previously				As Previously
	Reported		Restated		Reported		Restated
Operating revenue	$	563,649	$	617,001	$	555,110	$	601,550
Direct costs		417,417		475,449		417,910		467,776
Total operating expenses		491,909		549,941		486,318		536,184
Operating income		93,405		88,725		68,792		65,366
Income before provision for taxes and minority interests		75,289		70,609		64,181		60,755
Provision for income taxes		20,803		19,402		19,254		18,554
Net income		53,104		49,825		43,130		40,404
Basic EPS		2.36		2.21		1.92		1.80
Diluted EPS		2.29		2.15		1.77		1.67

	Fiscal Quarter Ended
	June 30		September 30		December 31		March 31
	(In thousands, except per share amounts)
	(Unaudited)
2005
As previously reported:
Gross revenue	$	147,382	$	158,724	$	155,977
Operating income		20,541		26,343		20,414
Net income		12,970		18,036		11,499
Basic earnings per share		0.57		0.79		0.49
Diluted earnings per share		0.57		0.77		0.49
Restated:
Gross revenue	$	160,401	$	170,627	$	172,167
Operating income		19,351		25,152		19,216
Net income		11,587		16,651		10,108
Basic earnings per share		0.51		0.73		0.43
Diluted earnings per share		0.51		0.71		0.43
2004
As previously reported:
Gross revenue	$	133,893	$	139,429	$	138,715	$	151,612
Operating income		16,473		20,021		10,770		46,141
Net income		8,268		8,500		2,790		33,546
Basic earnings per share		0.37		0.38		0.12		1.49
Diluted earnings per share		0.35		0.37		0.12		1.45

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Fiscal Quarter Ended
	June 30		September 30		December 31		March 31
	(In thousands, except per share amounts)
	(Unaudited)
Restated:
Gross revenue	$	145,730	$	151,151	$	152,480	$	167,640
Operating income		15,308		18,857		9,599		44,961
Net income		7,455		7,688		1,969		32,713
Basic earnings per share		0.33		0.34		0.09		1.45
Diluted earnings per share		0.32		0.32		0.09		1.42

Balance Sheets

	2004
	As Previously
	Reported			Restated
Deferred tax asset — current	$	—		$	650
Total current assets		350,772			352,697
Total assets		1,044,903			1,046,828
Accrued liabilities		65,257			83,875
Deferred taxes — current		1,802			—
Current liabilities		98,915			117,006
Retained earnings		352,602			338,155
Accumulated other comprehensive loss		(48,094	)		(49,813	)
Total stockholders’ investment		446,118			429,952
Total liabilities and stockholders’ investment		1,044,093			1,046,828

Statements of Cash Flows

	2004					2003
	As Previously					As Previously
	Reported			Restated		Reported			Restated
Net income	$	53,104		$	49,825	$	43,130		$	40,404
Deferred income taxes		10,571			9,046		14,844			13,917
Increase (decrease) in accrued liabilities		(4,496	)		308		(16,388	)		(12,735	)
Net cash provided by operating activities		83,331			83,331		62,387			62,387

Certain line items within the consolidated Statements of Stockholders’ Investment have also been restated. With the exception of translation adjustments, the impact on these line items is set out in the consolidated income statement and consolidated balance sheet disclosures above. The translation adjustments were restated from $33.1 million and $27.8 million as previously reported for fiscal years 2004 and 2003, respectively, to $31.7 million and $27.2 million, respectively.

In addition, certain information in Notes F, H, K, L and N has been restated to reflect the effect of these adjustments.

Certain amounts in the prior year’s consolidated balance sheet have been reclassified to conform to the current year presentation. Specifically, gains and losses on asset disposals were previously included in revenue but now are included in operating expense. These reclassifications had no effect on previously reported net income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Use of Estimates — The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents — The Company’s cash equivalents include funds invested in highly-liquid debt instruments with original maturities of 90 days or less.

Accounts Receivable — Trade and other receivables are stated at net realizable value and the allowance for uncollectible accounts was $9.2 million and $9.7 million at March 31, 2005 and 2004, respectively. The Company grants short-term credit to its customers, primarily major and independent oil and gas companies. The Company establishes reserves for doubtful accounts on a case-by-case basis when a determination is made that the required payment is unlikely to occur. In making the determination, the Company considers a number of factors, including changes in the financial position of the customer, restrictions placed on the conversion of local currency into U.S. dollars and disputes with the customer. During fiscal years 2005, 2004 and 2003, the Company increased the allowance account through charges to expense by $0.3 million, $0.4 million and $1.0 million, respectively, and decreased the allowance account for write-offs and recoveries of specifically identified uncollectible accounts by $0.8 million, $1.4 million and $0.1 respectively.

Inventories — Inventories are stated at the lower of average cost or market and consist primarily of spare parts. The valuation reserve related to obsolete and excess inventory was $10.4 million and $12.8 million at March 31, 2005 and 2004, respectively. During fiscal years 2005 and 2004, the Company decreased the valuation reserve for write-offs of identified obsolete and excess inventory by $2.4 million and $0.6 million, respectively. During fiscal year 2004, the Company increased the valuation reserve through charges to expenses by $0.5 million. There were no charges to operations during fiscal year 2003.

Goodwill — Goodwill represents the excess of cost over fair value of assets of businesses acquired. Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment. We test the carrying amount of goodwill annually in the fourth quarter and whenever events or circumstances indicate impairment may have occurred. Impairment testing is conducted in accordance with the provisions of SFAS No. 142. SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.”

The Company had unamortized goodwill of $14.0 million and $6.3 million relating to its Production Management segment and Technical Services business unit, respectively. In connection with the acquisition discussed in Note I, an additional $6.6 million of goodwill was recorded in fiscal year 2003. At March 31, 2005 and 2004, the Company completed a goodwill impairment test on these balances, which involved the use of estimates related to the fair market value of the Company’s business units to which goodwill was allocated. The tests indicated the goodwill was not impaired.

Other Assets —  Included in other assets as of March 31, 2005 is prepaid pension cost of $36.5 million, restricted cash of $0.2 million and debt issuance costs of $5.2 million, which are being amortized over the life of the related debt. See Note G for further discussion of the Company’s prepaid pension cost.

Impairment of Long-Lived Assets —  Long-lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

Revenue Recognition —  In general, the Company recognizes revenue when it is both realized or realizable and earned. The Company considers revenue to be realized or realizable and earned when the following conditions exist: the persuasive evidence of an arrangement, generally a customer contract; the services or products have been performed or delivered to the customer; the sales price is fixed or determinable within the contract; and collection is probable. More specifically, revenue from Helicopter Services is recognized based on contractual rates as the related services are performed. The charges under these contracts are generally based on a two-tier rate structure consisting of a daily or monthly fixed fee plus additional fees for each hour flown. These contracts are for varying periods and generally permit the customer to cancel the contract before the end of the term. The Company also provides services to customers on an “ad hoc” basis, which usually entails a shorter notice period and shorter duration. The Company’s charges for ad hoc services are generally based on an hourly rate or a daily or monthly fixed fee plus additional fees for each hour flown. The Company estimates that its ad hoc services have a higher margin than its other helicopter contracts due to supply and demand dynamics. In order to offset potential increases in operating costs, the Company’s long-term contracts may provide for periodic increases in the contractual rates charged for our services. The Company recognizes the impact of these rate increases when the criteria outlined above have been met. This generally includes written recognition from the customers that they are in agreement with the amount of the rate escalation. In addition, the Company’s standard rate structure is based on fuel costs remaining at or below a predetermined threshold. Fuel costs in excess of this threshold are generally reimbursed by the customer. Revenue from Production Management is recognized based on contractual rates as the related services are performed. Contracts are generally evergreen with a yearly review. Each party has a thirty-day cancellation clause. The rates charged to the customer are either monthly, based on services specified in the contract, or hourly if outside the scope of the contract. Typically hourly rates are charged for services provided beyond the basic level contemplated in the contract. Services provided include personnel and transportation. Any escalation in rates is agreed to in writing by the customer. With respect to both Helicopter Services and Production Management, cost reimbursements from customers are recorded as revenue.

Depreciation and Amortization — Depreciation and amortization are provided on the straight-line method over the estimated useful lives of the assets. The estimated useful lives of aircraft range from seven to 15 years, and the residual value used in calculating depreciation of aircraft ranges from 30% to 50% of cost. The estimated useful lives for buildings on owned properties range from 15 years to 40 years. Other depreciable assets are depreciated over estimated useful lives ranging from three to 15 years. The costs and related accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and the resulting gains or losses are included in income.

Property and equipment includes construction in process of $32.7 million and $12.5 million as of March 31, 2005 and 2004, respectively.

In conjunction with the Company’s previously announced a fleet and facilities renewal and refurbishment program, the Company changed the estimated residual value of certain aircraft from 30% to 50% and changed the useful lives of certain aircraft to 15 years from a range of seven to ten years, effective July 1, 2003. The Company believes the revised amounts reflect its historical experience and more appropriately matches costs over the estimated useful lives and salvage values of these assets. The effect of this change for fiscal years 2005 and 2004 was a reduction in depreciation expense of $3.9 million, $2.9 million after tax, and $3.2 million, $2.3 million after tax, respectively. The reduction in depreciation expense increased the Company’s net income for fiscal years 2005 and 2004 by $0.12 and $0.10 per diluted share, respectively.

Maintenance and Repairs — The Company charges maintenance and repair costs, including major aircraft component overhaul costs, to earnings as the costs are incurred. Certain major aircraft components, primarily engines and transmissions, are maintained by third-party vendors under contractual arrangements. The maintenance

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

costs related to these contractual arrangements are recorded ratably as the components are used to generate flight revenue.

The Company capitalizes betterments and improvements to its aircraft and amortizes such costs over the useful lives of the aircraft. Betterments and improvements increase the life or utility of an aircraft.

Income Taxes — Income taxes are accounted for in accordance with the provisions of SFAS No. 109, “Accounting for Income Taxes.” Under this statement, deferred income taxes are provided for by the asset and liability method. The Company also applies APB No. 23 as it relates to the exception for providing U.S. income tax on earnings of foreign subsidiaries that are considered to be permanently reinvested outside of the U.S.

Foreign Currency Translation — Bristow maintains its accounting records in its local currency (British pound sterling). Foreign currencies are converted to United States dollars with the effect of the foreign currency translation reflected as a component of shareholders’ investment in accordance with SFAS No. 52, “Foreign Currency Translation.” Foreign currency transaction gains or losses are credited or charged to income and such amounts are included in other income (expense). During fiscal year 2005, the British pound to U.S. dollar exchange rate ranged from a low of one British pound = U.S. $1.75 to a high of one British pound = U.S. $1.95, with an average of one British pound = U.S. $1.85 for the fiscal year. At March 31, 2005, the exchange rate was one British pound = U.S. $1.89. Balance sheet information for fiscal year 2005 is presented based on the conversion rate at March 31, 2005, and income statement information is presented based on the average conversion rate for fiscal year 2005.

Derivative Financial Instruments — Effective April 1, 2001, the Company adopted SFAS No. 138, “Accounting for Certain Derivative Instruments and Hedging Activities”, that amends certain provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The pronouncements require that all derivatives be recognized as either assets or liabilities and measured at fair value. The adoption of SFAS No. 133, as amended, did not have a material impact on the Company’s financial statements.

The Company enters into forward exchange contracts from time to time to hedge committed transactions denominated in currencies other than the functional currency of the business. Foreign currency contracts are scheduled to mature at the anticipated currency requirement date and rarely exceed one year. The purpose of the Company’s foreign currency hedging activities is to protect the Company from the risk that foreign currency outflows resulting from payments for services and parts to foreign suppliers will be adversely affected by changes in exchange rates. As of March 31, 2005 and 2004, the Company had no forward exchange contracts outstanding. No gains or losses were recognized in earnings on foreign currency hedging contracts during fiscal years 2005 or 2004.

Financial instruments may be designated as a hedge at inception where there is a direct relationship to the price risk associated with the related service and parts. Hedge contracts are recorded at cost and periodic adjustments to fair market value are deferred and recorded as a component of equity in Other Comprehensive Income. Settlements of hedge contracts are recorded to costs or revenue as they occur. If the direct relationship to price risk ceases to exist, and a hedge is no longer deemed effective at reducing the intended exposure, fair value of a forward contract at that date is recognized over the remaining term of the contract. Subsequent changes in the fair value of ineffective contracts are recorded to current earnings.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Compensation — The Company accounts for its stock-based employee compensation under the principles prescribed by the Accounting Principles Board’s Opinion No. 25, Accounting for Stock Issued to Employees (‘Opinion No. 25’). SFAS No. 123, “Accounting for Stock-Based Compensation” permits the continued use of the intrinsic-value based method prescribed by Opinion No. 25 but requires additional disclosures, including pro forma calculations of earnings and net earnings per share as if the fair value method of accounting prescribed by SFAS No. 123 had been applied. As required by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” which amended SFAS No. 123, the following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation. The pro forma data presented below is not representative of the effects on reported amounts for future years (in thousands, except per share amounts and model assumptions).

	Fiscal Year Ended March 31,
	2005			2004			2003
				(Restated)			(Restated)
Net income, as reported	$	51,560		$	49,825		$	40,404
Stock-based employee compensation expense included in reported net income, net of tax		275			—			—
Stock-based employee compensation expense, net of tax		(2,442	)		(1,207	)		(853	)
Pro forma net income	$	49,393		$	48,618		$	39,551
Basic earnings:
Earnings, as reported	$	2.24		$	2.21		$	1.80
Stock-based employee compensation expense, net of tax		(0.10	)		(0.06	)		(0.04	)
Pro forma basic earnings per share	$	2.14			2.15		$	1.76
Diluted earnings:
Earnings, as reported	$	2.21		$	2.15		$	1.67
Stock-based employee compensation expense, net of tax		(0.10	)		(0.05	)		(0.03	)
Pro forma diluted earnings per share	$	2.11		$	2.10		$	1.64
Black-Scholes option pricing model assumptions:
Risk free interest rate		3.3% - 3.9	%		3.1% - 3.3	%		2.8% - 3.0	%
Expected life (years)		5			5			5
Volatility		40	%		46	%		54	%
Dividend yield		—			—			—

For fiscal year 2005, $0.4 million is included in compensation costs relating to the acceleration of the vesting period for certain options granted under the plans.

Recent Accounting Pronouncements — In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 153, “Exchange of Nonmonetary Assets”, effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. This statement amends APB Opinion No. 29, “Accounting for Nonmonetary Transactions”, to eliminate the similar productive assets concept and replace it with the concept of commercial substance. Commercial substance occurs when the future cash flows of an entity are changed significantly due to the nonmonetary exchange. The Company does not expect the adoption of SFAS No. 153 to have a significant impact on its financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment”, which is a revision of SFAS No. 123, “Accounting for Stock Based Compensation” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R becomes effective for the Company’s fiscal year beginning April 1, 2006 and will require companies to expense stock options and other share based payments. The Company does not currently know whether implementation of SFAS No. 123R would result in financial results materially different from pro forma results presented under stock compensation above.

In December 2004, the FASB issued FASB Staff Position No. 109-1, “Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004” (“FSP 109-1”) which provides accounting guidance to companies that will be eligible for the tax deduction resulting from “qualified production activities income” as defined in the American Jobs Creation Act of 2004 (the “Act”). FSP No. 109-1 provides that this deduction will be treated as a “special deduction” as described in SFAS 109 rather than a reduction in the statutory tax rate applied to deferred tax items. As such, FSP 109-1 does not result in a revaluation of our U.S. deferred tax assets. The impact of this deduction, if it applies, will first be reported in fiscal year 2006, the first tax year commencing after December 31, 2004. We are in the process of reviewing whether any of our operations qualify for this deduction.

In December 2004, the FASB issued Staff Position No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP No. 109-2”) to address the treatment of a special one time incentive provided in the Act for companies to repatriate foreign earnings. Signed into law on October 22, 2004, the Act provides for a special one-time tax deduction equal to 85% of dividends received out of qualifying foreign earnings that are paid in either a company’s last tax year that began before the enactment date, or the first tax year that begins during the one-year period beginning on the enactment date. The special deduction is subject to a number of limitations and requirements, one of which is to adopt a Domestic Reinvestment Plan (“DRIP”) to document planned reinvestments of amounts equal to the foreign earnings repatriated under the Act. FSP 109-2 provides entities additional time to assess the effect of repatriating foreign earnings under the Act for purposes of applying SFAS No. 109, which otherwise requires the effect of a new tax law to be recorded in the period of enactment. As of March 31, 2005, the Company had not made a decision on whether, and to what extent, to repatriate previously unremitted foreign earnings. However, in September 2005, senior management approved a DRIP that provides for the repatriation of up to $75 million of previously unremitted foreign earnings under the Act. If the Company does repatriate the maximum amount called for in the DRIP, the related U.S. tax liability associated with the total repatriated earnings would be approximately $5.3 million. Technical corrections, regulations and additional guidance from the U.S. Treasury related to the statute could impact our estimate of the tax liability associated with the potential range of repatriation. The favorable U.S. tax rate on such repatriations under the Act applies to qualifying distributions received by the Company through March 31, 2006. As of October 2005, the Company had received $30.9 million of repatriated funds intended to qualify under the Act.

In March 2005, the FASB issued Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations”, an interpretation of SFAS No. 143, “Accounting for Asset Retirement Obligations.” The interpretation is effective for the Company’s fiscal year ending March 31, 2006. Interpretation No. 47 provides clarification on conditional asset retirement obligations and the fair value of such obligations as referred to in SFAS No. 143. The Company does not expect the adoption of Interpretation No. 47 to have a significant impact on its financial statements.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”, which is a replacement of APB Opinion No. 20, “Accounting Changes”, and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements.” SFAS No. 154 becomes effective for the Company’s fiscal year beginning April 1, 2006 and provides guidance on the accounting for and reporting of accounting changes and error corrections. SFAS No. 154 establishes the method of retrospective application as the required method of reporting a change in accounting principle, unless impracticable, or unless the new accounting principle explicitly states transition

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

requirements. The Company does not expect the adoption of SFAS No. 154 to have a significant impact on its financial statements, and the adoption of this standard would not have affected the restatements reflected in these financial statements.

B — LONG-TERM DEBT

Long-term debt at March 31, 2005 and 2004 consisted of the following (in thousands):

	March 31,
	2005		2004
61/8% Senior Notes due 2013	$	230,000	$	230,000
Limited recourse term loans		21,116		22,134
Short term advance from customer		3,400		3,400
Note to Sakhalin Aviation Services Ltd.		641		—
Sakhalin Debt		6,923		—
Total debt		262,080		255,534
Less current maturities		6,413		4,417
Total long-term debt	$	255,667	$	251,117

On June 20, 2003, the Company completed a private placement of $230.0 million 61/8% Senior Notes due 2013 (“Senior Notes”). These notes are unsecured senior obligations and rank effectively junior in right of payment to all the Company’s existing and future secured indebtedness, rank equally in right of payment with the Company’s existing and future senior unsecured indebtedness and rank senior in right of payment to any of the Company’s existing and future subordinated indebtedness. The Senior Notes are guaranteed by certain of the Company’s U.S. subsidiaries and are redeemable at the Company’s option. A portion of the net proceeds from the issuance and sale of these notes was used to redeem all of the Company’s outstanding 77/8% Senior Notes due 2008 and all of the Company’s outstanding 6% Convertible Subordinated Notes due 2003. The remaining net proceeds from the private placement were used for general corporate purposes. The redemptions took place on July 29, 2003. The Company recorded a loss on the extinguishment of debt of $6.2 million in July 2003. Approximately $4.7 million of the loss pertains to redemption premiums and $1.5 million pertains to unamortized debt issuance costs relating to the redeemed debt. The Company filed a registration statement on July 18, 2003, with respect to an offer to exchange the notes for a new issue of equivalent notes registered under the Securities Act. The registration statement was declared effective on August 4, 2003 and the exchange of notes was concluded on September 4, 2003.

The limited recourse term loans were created in connection with sale and lease transactions for two aircraft entered into with a special purpose entity in fiscal year 1999. The term loans are secured by both aircraft and the Company’s guarantee of the underlying lease obligations. In addition, the Company has provided asset value guarantees totaling up to $3.8 million, payable at expiration of the leases depending on the value received for the aircraft at the time of disposition. As a result of these guarantees and the terms of the underlying leases, for financial statement purposes, the aircraft and associated term loans are reflected on the Company’s consolidated balance sheet. The term loans provide for rates of interest payable to the bank of 7.1% and 7.2%, quarterly amortization payments totaling $0.7 million and balloon payments of $9.8 million and $9.2 million in fiscal years 2007 and 2008, respectively.

The short term advance from a customer is reimbursement for value added taxes paid by the Company, the obligation for which is currently under dispute between the Company and the customer and the taxing authority. The advance is non-interest bearing and will be repaid as taxes are refunded to the Company by the applicable governmental agency.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The note to Sakhalin Aviation Services Ltd. (“SASL”) was assumed by the Company in connection with the acquisition of a Russian helicopter company which is further discussed in Note I. SASL is the former owner of the purchased company, and this amount represents advances made to the company by SASL. The advances are in the form of a non-interest bearing note with no specific repayment terms.

On July 16, 2004, the Company assumed various existing liabilities that were outstanding and secured against assets purchased as part of the Company’s acquisition of a business in Sakhalin, Russia. See Note I for further discussion of the acquisition. Two promissory notes totaling $1.7 million at March 31, 2005 are being repaid over five years at an interest rate of 8.5% and are scheduled to be fully paid in 2009 and 2010. The other liabilities assumed include: a finance lease on an aircraft totaling $1.2 million at March 31, 2005, with an interest rate of 6.5% and expiring in 2007; a finance lease on an aircraft totaling $3.3 million at March 31, 2005, with an interest rate of 8.5% and expiring in 2009 with a final termination payment of $2.4 million; and two loan notes on spares packages totaling $0.8 million at March 31, 2005, with interest rates at 10% to 18% expiring in 2007.

As of March 31, 2005, the Company had a surety bond outstanding to the Mexican Federal Electric Commission in the amount of 77.4 million Mexican pesos ($6.9 million). The surety bond guarantees performance of the Company’s unconsolidated Mexican affiliate under its contract with the customer.

As of March 31, 2005, Bristow had a £6 million ($11.3 million) facility for letters of credit, of which £3.4 million ($6.4 million) was outstanding, and a £1 million ($1.9 million) net overdraft facility, of which no borrowings were outstanding. The letter of credit facility is provided on an uncommitted basis and outstanding letters of credit bear a rate of 0.7% per annum. Borrowings under the net overdraft facility are payable on demand and bear interest at the bank’s base rate plus a spread that can vary between 1% and 3% per annum depending on the net overdraft amount. The net overdraft facility was scheduled to expire on August 31, 2005, but has been extended to August 31, 2006. The facilities are guaranteed by certain of Bristow’s subsidiaries and secured by several helicopter mortgages and a negative pledge of Bristow’s assets.

At March 31, 2005, the Company had a $30 million revolving credit facility with a U.S. bank that expires on August 31, 2006. The facility is subject to a sublimit of $10.0 million for the issuance of letters of credit. The Company has no amounts drawn under this facility but did have $0.7 million of letters of credit utilized which reduced availability under the line as of March 31, 2005. Borrowings bear interest at a rate equal to one month LIBOR plus a spread ranging from 1.25% to 2.0%. The rate of the spread depends on a financial covenant ratio under the credit facility. Borrowings under this credit facility are unsecured and are guaranteed by certain of the Company’s U.S. subsidiaries. The agreement requires the Company to pay a quarterly commitment fee at an annual rate of 0.20% on the average unused portion of the line. As discussed further in Note M, as of June 30, 2005, the Company was in default of the various financial information reporting requirements. The Company has a waiver through December 15, 2005, and the Company has elected to exercise its option to extend this waiver through January 16, 2006 upon payment of an additional fee.

Among other restrictions, the credit agreements and notes contain covenants relating to liens, cash flow and interest coverage (as defined in the agreements). At March 31, 2005, the Company was in compliance with all covenants. As of June 30, 2005, the Company was in default of various financial information reporting covenants of the $30 million revolving credit facility, and had not provided similar required information to other creditors. As a result of the activities identified in the Internal Review discussed in Note D, the Company was not able to provide required financial information within the required time period as specified in the covenants. The Company obtained a waiver of this violation through August 14, 2005 from the bank. The bank provided a second waiver through November 15, 2005, and at the Company’s election, the waiver was extended to December 15, 2005 upon payment of a fee, and the Company has elected to exercise its option to further extend these waivers through January 16, 2006 upon payment of an additional fee. Also, with regard to the $230 million 61/8% Senior Notes, on June 16, 2005, the Company received notice from the trustee that the Company was in default of various financial information reporting covenants in the indenture under which the Senior Notes were issued and that unless the deficiency was remedied within 60 days, an event of default would occur. On August 16, 2005, the Company completed a consent

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solicitation with the holders of the Senior Notes to waive defaults under and make amendments to the indenture for a consent fee of $6.25 for $1,000 principal amount of Notes. The majority Senior Note holders waived the defaults under the indenture through November 15, 2005. Waivers were extended at the Company’s election through December 15, 2005 upon payment of a fee, and the Company has elected to exercise its option to further extend these waivers through January 16, 2006 upon payment of an additional fee. For additional information see Note M.

Aggregate annual maturities for all long-term debt for the next five years are as follows: 2006 — $6.4 million; 2007 — $12.7 million; 2008 — $11.1 million; 2009 — $1.9 million; 2010 — $0 million; 2014 — $230.0 million.

Interest paid in fiscal years 2005, 2004 and 2003 was $15.7 million, $16.8 million and $14.9 million, respectively. Capitalized interest was $1.3 million, $1.2 million and $0.0 million in fiscal years 2005, 2004 and 2003, respectively.

The estimated fair value of the Company’s total debt at March 31, 2005 and 2004 was $255.2 million and $253.2 million, respectively, based on quoted market prices for the publicly listed 61/8% Senior Notes.

C — INVESTMENTS IN UNCONSOLIDATED AFFILIATES

The Company has investments in four unconsolidated affiliates that are accounted for on the cost method, Hemisco Helicopters International, Inc. and Heliservicio Campeche S.A. de C.V. (collectively referred to as “HC”), Aeroleo Taxi Aereo S.A. (“Aeroleo”) and Petroleum Air Services (“PAS”), as the Company is unable to exert significant influence over their operations. The Company also has investments in six unconsolidated affiliates, FBS Limited (“FBS”), FB Heliservices Limited (“FBH”), FB Leasing Limited (“FBL”), collectively referred to as the FB Entities, Helicopter Leasing Associates, L.L.C. (“HLA”), Rotorwing Leasing Resources, L.L.C. (“RLR”) and Norsk Helikopter AS (“Norsk”), which it accounts for under the equity method. Each of these entities is principally involved in the provision of helicopter transportation services to the offshore oil and gas industry, with the exception of the FB Entities, whose activities are described in further detail below.

The FB Entities originated in 1996 when Bristow was awarded a contract to provide pilot training and maintenance services to the Defence Helicopter Flying School (“DHFS”), a then newly established training school for all branches of the British military, under a fifteen-year contract valued at approximately £500 million over the full term. FBS purchased and specially modified 47 aircraft dedicated to conducting these training activities, which began in May 1997. Bristow and its partner have given joint and several guarantees of up to £15.0 million ($28.3 million) related to the performance of this contract. Bristow has also guaranteed repayment of up to £10 million ($18.9 million) of FBS’s outstanding debt obligation, which is primarily collateralized by the 47 aircraft discussed above. Since May 1997, the FB Entities have been awarded additional government work. These entities together have purchased and modified 12 additional aircraft and maintain a staff of approximately 590 employees.

In July 2003, the Company sold six aircraft, at cost, to RLR. RLR financed 90% of the purchase price of these aircraft through a five-year $31.8 million term loan (the “RLR Note”). The RLR Note is secured by the six aircraft. The Company guaranteed 49% of the RLR Note ($15.6 million) and the other shareholder guaranteed the remaining 51% of the RLR Note ($16.2 million). In addition, the Company gave the bank a put option which the bank may exercise if the aircraft are not returned to the United States within 30 days of a default on the RLR Note. Any such exercise would require the Company to purchase the RLR Note from the bank. The Company simultaneously entered into a similar agreement with the other RLR shareholder which requires that, in event of exercise by the bank of its put option to the Company, the other shareholder will be required to purchase 51% of the RLR Note from the Company. As of March 31, 2005, a liability of $0.9 million representing the fair value of this guarantee was reflected in the balance sheet in other liabilities and deferred credits. The fair value of the guarantee is being amortized over the term of the RLR Note.

For discussion of the recapitalization of HC see Note M.

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The percentage ownership and investment balance for the unconsolidated affiliates at March 31 were as follows (in thousands):

	Fiscal Year Ended March 31,
	Percentage
	Ownership			2005		2004
Cost Method
HC		49	%	$	2,637	$	2,637
PAS		25	%		6,286		6,286
Aeroleo		50	%(1)		1,040		1,290
Other					842		612
Equity Method
RLR		49	%		4,655		3,465
HLA		50	%		150		—
Norsk		49	%		5,488		6,625
FB Entities		50	%		16,078		18,014
				$	37,176	$	38,929

(1)  Includes interest in non-voting equity.

Dividends from entities accounted for on the cost method were as follows (in thousands):

	Fiscal Year Ended March 31,
	2005		2004		2003
HC	$	610	$	2,356	$	2,146
PAS		2,500		2,500		4,600
Aeroleo		250		—		540
	$	3,360	$	4,856	$	7,286

A summary of combined financial information of these unconsolidated affiliates is set forth below (in thousands):

	March 31,
	2005		2004
	(Unaudited)		(Unaudited)
Current assets	$	151,576	$	217,881
Non-current assets		274,125		220,081
Total assets	$	425,701	$	437,962
Current liabilities	$	71,669	$	69,258
Non-current liabilities		221,912		247,689
Equity		132,120		121,015
Total liabilities and equity	$	425,701	$	437,962

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	Fiscal Year Ended March 31,
	2005		2004		2003
	(Unaudited)		(Unaudited)		(Unaudited)
Revenue	$	323,345	$	300,412	$	261,709
Gross profit	$	74,764	$	81,190	$	61,573
Net income	$	36,082	$	40,358	$	27,218

The Company leases a number of aircraft to its unconsolidated affiliates. As of March 31, 2005, the number of aircraft leased to unconsolidated affiliates was twelve to HC, three to RLR (all of which it leased to HC), eight to Aeroleo, one to PAS and five to Norsk. During fiscal years 2005, 2004 and 2003, respectively, revenue of $46.6 million, $54.1 million and $54.0 million was recognized for leased aircraft and other services provided to these unconsolidated affiliates by the Company. At March 31, 2005 and March 31, 2004, $8.9 million and $12.9 million, respectively, were due from these unconsolidated affiliates for services provided.

D — COMMITMENTS AND CONTINGENCIES

Operating Leases — The Company has noncancelable operating leases in connection with the lease of certain equipment, land and facilities. Rental expense incurred under these leases was $3.6 million in fiscal year 2005, $2.5 million in fiscal year 2004, and $4.8 million in fiscal year 2003. As of March 31, 2005, aggregate future payments under noncancelable operating leases are as follows: fiscal year 2006 — $3.5 million; fiscal year 2007 — $3.2 million; fiscal year 2008 — $2.8 million; fiscal year 2009 — $1.7 million; fiscal year 2010 — $1.5 million; and after — $6.7 million.

Collective Bargaining Agreement — The Company employs approximately 300 pilots in its North American Operations who are represented by the Office and Professional Employees International Union (“OPEIU”) under a collective bargaining agreement. The Company and the pilots represented by the OPEIU ratified an amended collective bargaining agreement on April 4, 2005. The terms under the amended agreement are fixed until October 3, 2008 and include a wage increase for the pilot group and improvements to several other benefit plans. The Company does not believe that these increases will place it at a competitive, financial or operational disadvantage.

Internal Review — In February 2005, the Company voluntarily advised the SEC that the Audit Committee of its Board of Directors had engaged special outside counsel to undertake a review of certain payments made by two of the Company’s affiliated entities in a foreign country. The review of these payments, which initially focused on Foreign Corrupt Practices Act matters, was subsequently expanded to cover operations in other countries and other issues (the “Internal Review”). In connection with this review, special outside counsel to the Audit Committee retained forensic accountants.

The SEC then notified the Company that it had initiated an informal inquiry and requested that the Company provide certain documents on a voluntary basis. Subsequently, the SEC advised the Company that the inquiry had become an investigation. The Company has responded to the SEC’s requests for documents and is continuing to do so.

The Internal Review is complete and the accompanying financial statements reflect all known required restatements. As a follow-up to matters identified during the course of the Internal Review, Special Counsel to the Audit Committee is completing certain work, and may be called upon to undertake additional work in the future to assist in responding to inquiries from the SEC, from other governmental authorities or customers, or as follow-up to the steps being performed by Special Counsel.

In October 2005, the Audit Committee reached certain conclusions with respect to findings to date from the Internal Review. The Audit Committee concluded that, over a considerable period of time, (a) improper payments were made by, and on behalf of, certain foreign affiliated entities directly or indirectly to employees of the Nigerian

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government, (b) improper payments were made by certain foreign affiliated entities to Nigerian employees of certain customers with whom the Company has contracts, (c) inadequate employee payroll declarations and, in certain instances, tax payments were made by the Company or its affiliated entities in certain jurisdictions, (d) inadequate valuations for customs purposes may have been declared in certain jurisdictions resulting in the underpayment of import duties, and (e) an affiliated entity in a South American country, with the assistance of Company personnel and two of its other affiliated entities, engaged in transactions which appear to have assisted the South American entity in the circumvention of currency transfer restrictions and other regulations. In addition, as a result of the Internal Review, the Audit Committee and management determined that there were deficiencies in the Company’s books and records and internal controls with respect to the foregoing and certain other activities.

Based on the Audit Committee’s findings and recommendations, the Board of Directors has taken disciplinary action with respect to the Company’s personnel who it determined bore responsibility for these matters. The disciplinary actions included termination or resignation of employment (including certain members of senior management), changes of job responsibility, reductions in incentive compensation payments and reprimands. One of the Company’s affiliates has also obtained the resignation of certain of its personnel.

The Company has initiated remedial action, including initiating action to correct underreporting of payroll tax, disclose to certain customers inappropriate payments made to customer personnel and terminate certain agency, business and joint venture relationships. The Company also has taken steps to reinforce its commitment to conduct its business with integrity by creating an internal corporate compliance function, instituting a new code of business conduct (the Company’s new code of business conduct entitled “Code of Business Integrity” is available on its website, http://www.olog.com), and developing and implementing a training program for all employees. In addition to the disciplinary actions referred to above, the Company has also taken steps to strengthen its control environment by hiring new personnel and realigning reporting lines within the accounting function so that field accounting reports directly to the corporate accounting function instead of operations management.

Following the Audit Committee’s conclusions, the Company initiated the process of voluntarily advising governmental authorities in certain countries of the Audit Committee’s findings. The Company has not yet advised such foreign governmental authorities of the Audit Committee findings, but intends to do so. Such disclosure may result in legal and administrative proceedings, the institution of administrative, civil injunctive or criminal proceedings involving the Company 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 the Company from participating in business operations in their countries. To the extent that violations of the law may have occurred in several countries in which the Company operates, the Company does not yet know whether such violations can be cured merely by the payment of fines or whether other actions may be taken against the Company, including requiring the Company to curtail its business operations in one or more such countries for a period of time. In the event that the Company curtails its business operations in any such country, the Company may face difficulties exporting its aircraft. As of September 30, 2005, the book values of its aircraft in Nigeria and the South American country where certain improper activities took place were approximately $79.4 million and $2.9 million, respectively.

The Company cannot predict the ultimate outcome of the SEC investigation, nor can the Company predict whether other applicable U.S. and foreign governmental authorities will initiate separate investigations. The outcome of the SEC investigation and any related legal and administrative proceedings could include the institution of administrative, civil injunctive or criminal proceedings involving the Company and/or current or former employees, officers and/or directors, the imposition of fines and other penalties, remedies and/or sanctions, modifications to business practices and compliance programs and/or referral to other governmental agencies for other appropriate actions. It is not possible to accurately predict at this time when matters relating to the SEC investigation will be completed, the final outcome of the SEC investigation, what if any actions may be taken by the SEC or by other governmental agencies in the U.S. or in foreign jurisdictions, or the effect that such actions may have on the Company’s consolidated financial statements. In addition, in view of the findings of the Internal Review,

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the Company expects to encounter difficulties in the future conducting business in Nigeria and a South American country, and with certain customers. It is also possible that certain of the Company’s existing contracts may be cancelled and that the Company may become subject to claims by third parties, possibly resulting in litigation. The matters identified in the Internal Review and their effects could have a material adverse effect on its business, financial condition and results of operations.

In connection with its conclusions regarding payroll declarations and tax payments, the Audit Committee determined on November 23, 2005, following the recommendation of the Company’s senior management, that there is a need to restate the Company’s historical consolidated financial statements for fiscal years 2000, 2001, 2002, 2003 and 2004 and for quarterly periods in fiscal year 2005. The Company has accrued $15.8 million for the taxes, penalties and interest attributable to underreported employee payroll. Operating income for fiscal year 2005 includes $3.8 million attributable to this accrual, and the remainder has been reported as adjustments to amounts previously reported for fiscal years ended March 31, 2004 and earlier. At this time, the Company cannot estimate what additional payments, fines, penalties and/or litigation and related expenses may be required in connection with the matters identified as a result of the Internal Review, the SEC investigation, any other regulatory investigation that may be instituted or third-party litigation; however, such payments, fines, penalties and/or expenses could have a material adverse effect on the Company’s business, financial condition and results of operations.

As the Company continues to respond to the SEC investigation and other governmental authorities and take other actions relating to improper activities that have been identified in connection with the Internal Review, there can be no assurance that additional restatements will not be required or that these historical financial statements will not change or require amendment. In addition, new issues may be identified that may impact the financial statements and the scope of the restatements described in Note A and lead the Company to take other remedial actions or otherwise adversely impact the Company.

For fiscal year 2005, the Company has incurred approximately $1.9 million in legal and other professional costs in connection with the Internal Review. During the first two quarters of fiscal year 2006, the Company incurred an additional $7.0 million in legal and other professional costs related to the Internal Review. The Company expects to incur additional costs associated with the Internal Review, which will be expensed as incurred and which could be significant in the fiscal quarters in which they are recorded.

As a result of the disclosure and remediation of a number of activities identified in the Internal Review, the Company expects to encounter difficulties conducting business in certain foreign countries and retaining and attracting additional business with certain customers. The Company cannot predict the extent of these difficulties; however, its ability to continue conducting business in these countries and with these customers may be significantly impacted.

The Company has commenced actions to disclose activities in Nigeria identified in the Internal Review to affected customers, and one or more of these customers may seek to cancel their contracts with the Company. One of such customers already has commenced its own investigation. Among other things, the Company has been advised that such customer intends to exercise its rights to audit a specific contract, as well as to review its other relations with the Company. Although the Company has no indication as to what the final outcome of the audit and review will be, it is possible that such customer may seek to cancel one or more existing contracts if it believes that they were improperly obtained or that the Company breached any of their terms. Since its customers in Nigeria are affiliates of major international petroleum companies with whom the Company does business throughout the world, any actions which are taken by certain customers could have a material adverse effect on its business, financial position and results of operations, and these customers may preclude the Company from bidding on future business with them either locally or on a worldwide basis. In addition, applicable governmental authorities may preclude the Company from bidding on contracts to provide services in the countries where improper activities took place.

In connection with the Internal Review, the Company also has terminated its business relationship with certain agents and has taken actions to terminate business relationships with other agents. One of the terminated agents has

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

commenced litigation against two of the Company’s foreign affiliated entities claiming damages of $16.3 million for breach of contract. The Company may be required to indemnify certain of its agents to the extent that regulatory authorities seek to hold them responsible in connection with activities identified in the Internal Review.

In a South American country, where certain improper activities took place, the Company is negotiating to terminate its ownership interest in the joint venture that provides the Company with the local ownership content necessary to meet local regulatory requirements for operating in that country. During fiscal year 2005, the Company derived approximately $9.9 million of leasing and other revenues, of which $3.2 million was paid by the Company to a third party for the use of the aircraft, and approximately $0.3 million of dividend income from this joint venture. Without a joint venture partner, the Company will be unable to maintain an operating license and its future activities in that country may be limited to leasing its aircraft to unrelated operating companies. The Company’s joint venture partners and agents are typically influential members of the local business community and instrumental in aiding the Company in obtaining contracts and managing its affairs in the local country. As a result of terminating these relationships, the Company’s ability to continue conducting business in these countries where the improper activities took place may be negatively affected. The Company may not be successful in its negotiations to terminate its ownership interest in the joint venture, and the outcome of such negotiations may negatively affect the Company’s ability to continue leasing its aircraft to the joint venture or other unrelated operating companies or conducting other business in that country, to export its aircraft or to recover its investment in the joint venture.

Many of the improper actions identified in the Internal Review resulted in decreasing the costs incurred by the Company in performing its services. The remedial actions the Company is taking will result in an increase in these costs and, if the Company cannot raise our prices simultaneously and to the same extent of its increased costs, its operating income will decrease.

In November 2005, certain of the Company’s consolidated affiliates were named in a lawsuit filed in the High Court of Lagos State, Nigeria by Mr. Benneth Osita Onwubalili and Kensit Nigeria Limited, which allegedly acted as agents of the affiliates in Nigeria. The claimants allege that an agreement between the parties was terminated without justification by the defendants and seek damages of $16.3 million. The Company is continuing to investigate this matter.

Aircraft Repurchase Commitments — During November 2002, the Company sold assets related to its activities in Italy. As a result of the sale, the Company recognized a pre-tax loss on the disposal of these assets during fiscal year 2003 of $1.3 million. The loss represents the excess of the net book value of the assets over the sales proceeds, plus the accrual of certain future obligations totaling $0.9 million. In connection with the initial sale, the Company also agreed to acquire ownership of three aircraft used in the Italy operations and currently leased from an unrelated third party at future dates, and transfer ownership to the buyer. As part of this arrangement, the Company agreed to exercise its purchase option at the conclusion of each lease and to sell these aircraft to the buyer for an aggregate sales price of €8.8 million ($11.4 million). During fiscal year 2005, the first two purchase options were exercised by the Company and the sale to the buyer closed on two of these aircraft, resulting in the recognition of a $2.3 million gain. It is expected that the purchase option on the remaining aircraft will be exercised and the sale completed in the first quarter of fiscal year 2007, resulting in a gain of approximately $2.2 million.

Environmental Contingencies — The United States Environmental Protection Agency, also referred to as the EPA, has in the past notified the Company that it is 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. The Company was 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 Operating Industries, Inc. Superfund site in Monterey Park, California in 2003. The Company has not received any correspondence from the EPA with respect to the Western

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

Other Matters — See Note M for discussion of additional commitments and contingencies.

The Company is 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 the Company’s financial position, results of operations or cash flows.

E — RESTRUCTURING CHARGES

In October 2003, the Company announced that its U.K. affiliate, Bristow, had begun a restructuring of its U.K. based operations. The restructuring was designed to reduce costs and promote operational efficiencies that enable the Company to remain competitive in the North Sea offshore helicopter market.

As part of the restructuring program, Bristow reduced staffing levels by approximately 100 positions, or 11% of its U.K. workforce, over a twelve-month period that ended on December 31, 2004. For fiscal year 2005, Bristow incurred approximately £0.3 million ($0.6 million) in severance costs that are included in general and administrative expense in the accompanying consolidated statement of income and are allocated to Corporate. Bristow has incurred to date approximately £2.2 million ($4.0 million) in severance costs and approximately £0.3 million ($0.6 million) in other restructuring costs.

In November 2004, the Company sold certain contracts held by its Technical Services business to an existing joint venture. See Note J for further discussion. The remaining operations of the Technical Services business were downsized by ceasing to perform certain services for third-parties that had generated poor financial results for the previous two years. As a result of the downsizing, the Company reduced staffing levels by an additional 80 positions in the Technical Services business unit over a nine-month period ending on December 31, 2004. For fiscal year 2005, the Company incurred approximately £1.5 million ($2.8 million) in severance costs and approximately £40,000 ($76,000) in other related costs. Approximately £1.2 million ($2.3 million) and £0.3 million ($0.5 million) of costs incurred to date are included in Direct Cost and General and Administrative expense, respectively, in the consolidated statement of income and have been allocated to the Helicopter Services segment, specifically the Technical Services business unit.

The balance of the accrued restructuring charges recorded in connection with the restructuring of the Company’s U.K. Technical Services business is as follows at March 31, 2005:

	Employee Severance			Other
	and Other Related			Restructuring
	Benefits			Costs			Total
	(In thousands)
Restructuring Costs, incurred to date	$	6,820		$	665		$	7,485
Cash payments		(6,717	)		(665	)		(7,382	)
Accrual balance at March 31, 2005	$	103		$	—		$	103

The balance is expected to be paid in the second half of fiscal year 2006.

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F — INCOME TAXES

The components of deferred tax assets and liabilities are as follows:

	March 31,
	2005			2004
	(In thousands)
				(Restated)
Deferred Tax Assets:
Foreign tax credits	$	47,317		$	79,801
Pension minimum liability		86,156			88,512
Accrual for maintenance and repair		8,360			8,113
Other		15,313			13,598
Valuation allowance		(14,252	)		(14,418	)
Total deferred tax assets		142,894			175,606
Deferred Tax Liabilities:
Property and equipment		(173,697	)		(195,154	)
Inventories		(11,333	)		(10,913	)
Deferred revenue		—			(1,912	)
Prepaid pension costs		(18,661	)		(22,768	)
Investments in affiliates		(11,039	)		(16,092	)
Other foreign deductions		(13,077	)		(12,168	)
Other		(2,804	)		(7,991	)
Total deferred tax liabilities		(230,611	)		(266,998	)
Net deferred tax liabilities	$	(87,717	)	$	(91,392	)

Companies may use foreign tax credits to offset the United States income taxes due on income earned from foreign sources. However, the credit that may be claimed for a particular taxable year is limited by the total income tax on the United States income tax return as well as by the ratio of foreign source net income in each statutory category to total net income. The amount of creditable foreign taxes available for the taxable year that exceeds the limitation (i.e.; “excess foreign tax credits”) may be carried back one year and forward ten years. As of March 31, 2005 and 2004, the Company did not believe it was more likely than not that it would generate sufficient foreign sourced income within the appropriate period to utilize all of its excess foreign tax credits. Therefore, the valuation allowance was established for the deferred tax asset related to foreign tax credits.

A portion of the above foreign tax credit asset represents the Company’s expected US foreign tax credit that would result from the recognition of foreign deferred tax liabilities. As such, the credit may not be claimed on the United States income tax return until such time that the related foreign deferred tax liabilities become current. At March 31, 2005 and 2004, $19.2 million and $37.7 million, respectively, of the above foreign deferred tax asset represent credits that relate to deferred foreign tax liabilities with respect to which the limitation on utilization and timing of carryovers have yet to begin.

Certain of the above components have changed due to fluctuations in foreign currency exchange rates.

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As of March 31, 2005, the Company’s U.S. foreign tax credit carryovers generated by fiscal year and the related expiration dates of those credits if they were to expire unutilized are as follows:

Fiscal Year Generated	Amount of Carryover		Expiration Date
	(In thousands)
March 2001	$	3,106		March 31, 2011
March 2002		4,689		March 31, 2012
March 2003		11,922		March 31, 2013
March 2004		5,300		March 31, 2014
Total Carryover to March 2006	$	25,017

The components of income from continuing operations before provision for income taxes and minority interest for fiscal years 2005, 2004 and 2003 are as follows:

	Fiscal Year Ended March 31,
	2005		2004		2003
	(In thousands)
			(Restated)		(Restated)
Domestic	$	20,375	$	11,549	$	10,375
Foreign		53,230		59,060		50,380
Total	$	73,605	$	70,609	$	60,755

The provision for income taxes for fiscal years 2005, 2004 and 2003 consisted of the following:

	Fiscal Year Ended March 31,
	2005			2004			2003
	(In thousands)
				(Restated)			(Restated)
Current:
Domestic	$	7,377		$	1,023		$	2,324
Foreign		16,361			9,526			20,134
		23,738			10,549			22,458
Deferred:
Domestic		8,967			5,022			(3,272	)
Foreign		(10,870	)		4,112			(1,643	)
		(1,903	)		9,134			(4,915	)
Increase (decrease) in valuation allowance		—			(281	)		1,011
Total	$	21,835		$	19,402		$	18,554

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The reconciliation of U.S. Federal statutory and effective income tax rates is shown below:

	Fiscal Year Ended March 31,
	2005			2004			2003
				(Restated)			(Restated)
Statutory rate		35.0	%		35.0	%		35.0	%
Foreign earnings taxed at rates other than the U.S. rate		3.3	%		(0.2	)%		(0.1	)%
Foreign earnings permanently reinvested abroad		(8.8	)%		(5.2	)%		(3.0	)%
Change in valuation allowance		0.0	%		(0.4	)%		0.3	%
State taxes provided		0.4	%		0.2	%		0.4	%
Other, net		(0.2	)%		(1.9	)%		(2.1	)%
Effective tax rate		29.7	%		27.5	%		30.5	%

The U.S. Internal Revenue Service has examined the Company’s U.S. Federal income tax returns for all years through 1996. All tax years through 2001 have been closed, either through settlement or expiration of the statute of limitations.

Unremitted foreign earnings reinvested abroad upon which U.S. income taxes have not been provided aggregated approximately $59.0 million, $53.9 million and $50.5 million at March 31, 2005, 2004 and 2003, respectively. Due to the timing and circumstances of repatriation of such earnings, if any, it is not practicable to determine the unrecognized deferred tax liability relating to such amounts. Therefore, no accrual of income tax has been made for fiscal year 2005 related to these permanently reinvested earnings as there was no plan in place to repatriate any of these foreign earnings to the U.S. as of the end of the fiscal year. Withholding taxes, if any, upon repatriation would not be significant.

The Act, enacted in October 2004, included a provision creating a temporary incentive for U.S. corporations to repatriate foreign earnings by providing an 85% deduction for certain dividends paid by controlled foreign corporations of U.S. corporations. The deduction is subject to a number of limitations and requirements, one of which is to adopt a Domestic Reinvestment Plan (“DRIP”) to document planned reinvestments of amounts equal to the foreign earnings repatriated under the Act. As of March 31, 2005, the Company had not made a decision on whether, and to what extent, to repatriate previously unremitted foreign earnings. However, in September 2005, senior management approved a DRIP related to the repatriation of a maximum of $75 million of previously unremitted foreign earnings under the Act. If the Company does repatriate the maximum amount called for in the DRIP adopted in September 2005, the related U.S. incremental tax liability associated with the total repatriated earnings would be approximately $5.3 million. Technical corrections, regulations and additional guidance from the U.S. Treasury related to the statute could impact our estimate of the tax liability associated with the potential range of repatriation. The favorable U.S. tax rate on such repatriations under the Act applies to qualifying distributions received by the Company through March 31, 2006. As of October 2005, the Company had received $30.9 million of repatriated funds intended to qualify under the Act. See Note M — Subsequent Events.

The Company’s operations are subject to the jurisdiction of multiple tax authorities and their review of taxable income as reported in the Company’s tax filings. Determination of taxable income in any jurisdiction requires the interpretation of related tax laws, regulations, judicial decisions and administrative interpretations of the local tax authority. As a result, the Company is subject to tax assessments in such jurisdictions including the re-determination of taxable income by tax authorities that may not agree with the Company’s interpretations and positions taken. The Company believes that the settlement of any such amounts would not have a significant impact on the Company’s consolidated financial position, results of operations and/or liquidity.

The Act also provides for a tax deduction for qualified production activities. Based on FASB Staff Position No. 109-1, “Application of FASB Statement No. 109, “Accounting for Income Taxes”, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004,” the deduction will be treated

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as a “special deduction” as described in SFAS 109 and not as a reduction in the statutory tax rate applied to deferred tax items. As such, the special deduction has no effect on deferred tax assets and liabilities existing on the date of enactment. The impact of this deduction, if it applies to the Company’s operations, will be reported in the period in which it is claimed on the Company’s tax return. The Company is in the process of reviewing whether any of its operations qualify for this deduction.

The Company receives a tax benefit that is generated by certain employee stock benefit plan transactions. This benefit is recorded directly to additional paid-in-capital and does not reduce the Company’s effective income tax rate. The tax benefit for fiscal years 2005, 2004 and 2003 totaled approximately $2.9 million, $0.3 million and $0.5 million, respectively.

Income taxes paid during fiscal years 2005, 2004 and 2003 were $21.6 million, $20.0 million and $13.7 million, respectively.

G — EMPLOYEE BENEFIT PLANS

Savings and Retirement Plans

The Company currently has three qualified defined contribution plans, which cover substantially all employees other than Bristow employees.

The Offshore Logistics, Inc. Employee Savings and Retirement Plan (“OLG Plan”) covers Corporate and Air Logistics or “AirLog” employees. Under the OLG Plan, the Company matches each participant’s contributions up to 3% of the employee’s compensation. In addition, under the OLG Plan the Company contributes an additional 3% of the employee’s compensation at the end of each calendar year.

The Grasso Production Management, Inc. Thrift & Profit Sharing Trust covers eligible Grasso Production Management, Inc. employees. The Company matches each participant’s contributions up to 3% of the employee’s compensation, plus a 50% match of contributions up to an additional 2% of compensation.

The Turbo Engines, Inc., formerly Pueblo Airmotive, Inc., 401(k) Plan covers Turbo Engines, Inc. employees. The Company matches each participant’s contributions up to 3% of the employee’s compensation.

Bristow has a defined benefit pension plan, which covers all full-time employees of Bristow employed on or before December 31, 1997. The plan is funded by contributions partly from employees and partly from Bristow. Members of the plan contribute up to 9.5% of pensionable salary (as defined in the plan) and can pay additional voluntary contributions to provide additional benefits. The benefits are based on the employee’s annualized average last three years pensionable salaries. Plan assets are held in separate trustee administered funds, which are primarily invested in equities and bonds in the United Kingdom. Effective March 31, 2002, this plan was amended to limit the rate of annual increases in pensionable salary to the lesser of (a) annual increases in a retail price index or (b) 5%. In addition, the amendment requires participants to contribute an additional 2% of pensionable salary to the plan. The amendment also introduces a defined contribution element to the plan effective July 1, 2002, whereby Bristow will make contributions of up to 7% of the excess of a participant’s salary over his pensionable salary. The participants will be allowed to make contributions into this portion of the plan. For employees hired after December 31, 1997, Bristow contributes 4% (5% for pilots) of the employee’s base salary into a defined contribution retirement plan. Bristow’s contribution level was changed to 7% on January 1, 2005 for all staff covered by the plan.

During January 2004, Bristow again amended the defined benefit pension plan. The amendment, effective February 1, 2004, essentially removes the defined benefit feature for a participant’s future services and replaces it with a defined contribution arrangement. Under the new defined contribution feature, Bristow will contribute 5% of a participant’s non-variable salary to a defined contribution section of the plan up until December 31, 2004. After this date Bristow’s contribution increased to a maximum of 7% of a participant’s non-variable salary. The participant will be required to contribute a minimum of 5% of non-variable salary for Bristow to match the contribution. Participants were also given the option to transfer out of the plan. In accordance with SFAS No. 88,

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

“Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits”, the above change to the plan constitutes a “curtailment” of benefits and accordingly, all previously deferred service gains or losses are immediately recognized in the statement of income. At the date of the amendment Bristow had a deferred prior service gain of £11.9 million ($21.7 million) related to prior plan amendments. This amount was recorded as a gain in fiscal year 2004.

The following tables provide a rollforward of the projected benefit obligation and the fair value of plan assets in accordance with SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits” (SFAS No. 132), set forth the defined benefit retirement plan’s funded status in accordance with the provisions of SFAS No. 87, “Employers’ Accounting for Pensions” (“SFAS No. 87”) and provides a detail of the components of net periodic pension cost calculated in accordance with SFAS No. 87. The measurement date adopted for the SFAS No. 87 calculations is March 31. For the purposes of amortizing gains and losses, the 10% corridor approach has been adopted and assets are taken at fair market value. Following the cessation of the defined benefit accruals for retirement pensions effective February 1, 2004, any such gains or losses are amortized over the average remaining life expectancy of the plan members.

	March 31,
	2005			2004
	(In thousands)
Change in Benefit Obligation:
Projected benefit obligation (PBO) at beginning of period	$	381,657		$	299,258
Service cost		288			5,251
Interest cost		20,721			17,781
Member contributions		—			2,436
Prior service costs		340			—
Actuarial loss		25,933			17,030
Benefit payments and expenses		(17,569	)		(12,157	)
Effect of exchange rate changes		10,799			52,058
Projected benefit obligation (PBO) at end of period	$	422,169		$	381,657

	March 31,
	2005			2004
	(In thousands)
Change in Plan Assets:
Market value of assets at beginning of period	$	277,686		$	195,979
Actual return on assets		27,786			39,997
Employer contributions		5,101			15,150
Member contributions		—			2,436
Benefit payments and expenses		(17,569	)		(12,157	)
Effect of exchange rate changes		7,709			36,281
Market value of assets at end of period	$	300,713		$	277,686

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	March 31,
	2005			2004
	(In thousands)
Reconciliation of Funded Status:
Accumulated benefit obligation (ABO)	$	422,169		$	381,657
Projected benefit obligation (PBO)	$	422,169		$	381,657
Fair value of assets		300,713			277,686
Deficit of assets over PBO		(121,456	)		(103,971	)
Unrecognized prior service credit		—			—
Unrecognized experience losses		—			—
Unrecognized actuarial losses		157,999			139,978
Prepaid pension cost		36,543			36,007
Adjustment to recognize minimum liability		(157,999	)		(139,978	)
Net recognized pension liability	$	(121,456	)	$	(103,971	)

	Fiscal Year Ended March 31,
	2005			2004			2003
	(In thousands)
Components of Net Periodic Pension Cost:
Service cost for benefits earned during the period	$	288		$	5,251		$	5,339
Interest cost on PBO		20,721			17,781			16,227
Expected return on assets		(19,243	)		(16,028	)		(17,172	)
Prior service costs		340			—			—
Amortization of Unrecognized Plan Amendment Effects		—			(1,827	)		(2,000	)
Amortization of Unrecognized Experience Losses		3,403			9,221			2,666
Subtotal		5,509			14,398			5,060
Curtailment gain		—			(21,665	)		—
Net periodic pension (benefit) cost	$	5,509		$	(7,267	)	$	5,060

Actuarial assumptions used to develop these components were as follows:

	2005		2004		2003
Discount rate		5.45%		5.50%		5.50%
Expected long-term rate of return on assets		7.00%		7.25%		7.25%
Rate of compensation increase		2.60%		2.25%		2.25%

The expected rate of return assumptions have been determined following consultation with the Company’s actuarial advisors. In the case of bond investments, the rates assumed have been directly based on market redemption yields at the measurement date and those on other asset classes represent forward-looking rates that have typically been based on other independent research by investment specialists.

  Plan Asset and Investment Information

Under U.K. legislation, it is the Trustees who are responsible for the investment strategy of the two plans, although day-to-day management of the assets is delegated to a team of regulated investment fund managers. The

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Trustees of the Bristow Staff Pension Scheme have the following three stated primary objectives when determining investment strategy:

(i)	to ensure that sufficient assets are available to pay out members’ benefits as and when they arise;
(ii)	to ensure that should the Scheme be discontinued at any point in time there would be sufficient assets to meet the discontinued liabilities, on actuarial advice, as the cost of securing benefits for pensioners with an insurance company, and providing deferred members with the cash equivalent of their deferred benefits; and
(iii)	to ensure that the Scheme maintains the minimum level of funding known as the Minimum Funding Requirement (the MFR) as required by The Pensions Act 1995.

Subject to these constraints, the Trustees’ investment objective is to maximize the return on the assets held. The types of investment are held, and the relative allocation of assets to investments is selected, in light of the liability profile of the plan, its cash flow requirements and the funding level. In addition, in order to avoid an undue concentration of risk, a spread of assets is held, this diversification being within and across asset classes.

In determining the overall investment strategy for the plans, the Trustees undertake regular asset and liability modeling (“ALM”) with the assistance of their U.K. actuary. The ALM looks at a number of different investment scenarios and projects both a range and a best estimate of likely return from each one. Based on these analyses, and following consultation with the Company, the Trustees determine the benchmark allocation for the plans’ assets.

The market value of the plan assets as of March 31, 2005 and 2004 was allocated between asset classes as follows. Details of target allocation percentages under the Trustees’ investment strategies as of the same dates are also included.

				Actual Allocation Fiscal Year Ended March 31,
Asset Category:	Target Allocation			2005			2004
Equity securities		63.3	%		63.0	%		63.2	%
Debt securities		36.7	%		36.6	%		36.5	%
Real estate/property		0.0	%		0.0	%		0.0	%
Other assets		0.0	%		0.4	%		0.3	%
Total		100	%		100	%		100	%

Estimated future benefit payments over each of the next five fiscal years from March 31, 2005 and in aggregate for the following five fiscal years after fiscal year 2010, including life assurance premiums, are as follows:

Projected Benefit Payments for Fiscal
Years Ending March 31,	Payments
	(In thousands)
2006	$	16,622
2007	$	17,000
2008	$	17,189
2009	$	18,133
2010	$	18,511
Aggregate 2011 - 2015	$	106,534

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company expects to fund these payments with cash contributions to the plans by the Company, plan assets and earnings on plan assets. The current best estimate of cash contributions to the plans by the Company for the year ending March 31, 2006 is $9.9 million.

In January 2004, the Company instituted a new non-qualified deferred compensation plan for its senior executives. Under the terms of the plan, participants can elect to defer a portion of their compensation for distribution at a later date. In addition, the Company has the discretion to make annual tax deferred contributions to the plan on the participants’ behalf. The assets of the plan are held in a rabbi trust and are subject to the general creditors of the Company. At March 31, 2005, the amount held in trust was $1.2 million.

The Company’s contributions to the five plans were $6.3 million, $19.8 million and $9.7 million for fiscal years 2005, 2004 and 2003, respectively.

Incentive and Stock Option Plans

Under the 1994 Long-Term Management Incentive Plan, as amended (“1994 Plan”), a maximum of 2,900,000 shares of Common Stock, or cash equivalents of Common Stock, were provided for awards to officers and key employees.

Awards granted under the 1994 Plan may be in the form of stock options, stock appreciation rights, restricted stock, deferred stock, other stock-based awards or any combination thereof. Options become exercisable at such time or times as determined at the date of grant and expire no more than ten years after the date of grant. Incentive stock option prices cannot be less than fair market value of the Common Stock at the date of grant. Non-qualified stock option prices cannot be less than 50% of the fair market value of the Common Stock at the date of grant. Stock option prices are determined by the Board. This plan expired in 2005 and is in effect only for options outstanding at March 31, 2005.

Under the 2004 Stock Incentive Plan (“2004 Plan”), a maximum of 1,000,000 shares of Common Stock, or cash equivalents of Common Stock, were provided for awards to officers and key employees. Awards granted under the 2004 Plan may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards or any combination thereof. Options become exercisable at such time or times as determined at the date of grant and expire no more than ten years after the date of grant. Stock option and Free-Standing Stock Appreciation Right prices cannot be less than the fair market value of the Common Stock at the date of grant.

The Annual Incentive Compensation Plan (“Annual Plan”) provides for an annual award of cash bonuses to key employees based primarily on pre-established objective measures of Company and subsidiary performance. Participants are permitted to receive all or any part of their annual incentive bonus in the form of shares of restricted stock in accordance with the terms of the 1994 Plan. The bonuses related to this plan were $2.7 million, $2.1 million and $1.4 million for fiscal years 2005, 2004 and 2003, respectively. There were no shares of restricted stock outstanding as of March 31, 2005 related to the Annual Plan.

The 1991 Non-qualified Stock Option Plan for Non-employee Directors, as amended (“1991 Plan”), provides for a maximum of 200,000 shares of Common Stock to be issued pursuant to such plan. As of the date of each annual meeting, each non-employee director who meets certain attendance criteria is automatically granted an option to purchase 2,000 shares of the Company’s Common Stock. The exercise price of the options granted is equal to the fair market value of the Common Stock on the date of grant, and the options are exercisable not earlier than six months after the date of grant and have an indefinite term. This plan expired in 2003 and is in effect only for options outstanding at March 31, 2004.

The 2003 Non-qualified Stock Option Plan for Non-employee Directors provides for a maximum of 250,000 shares of Common Stock to be issued pursuant to such plan. As of the date of each annual meeting, each non-employee director who meets certain attendance criteria is automatically granted an option to

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

purchase 5,000 shares of the Company’s Common Stock. The exercise price of the options granted is equal to the fair market value of the Common Stock on the date of grant, and the options are exercisable not earlier than six months after the date of grant and expire no more than ten years after the date of grant.

Under the Company’s stock option plans there are 1,935,513 shares of Common Stock reserved for issue at March 31, 2005, of which 1,104,000 shares are available for future grants.

A summary of the Company’s stock options as of March 31, 2005, 2004 and 2003 and changes during the periods ended on those dates is presented below:

	Weighted-Average		Number
	Exercise Price		of Shares
Balance at March 31, 2002	$	16.27		924,500
Granted		18.04		252,300
Exercised		12.41		(212,000	)
Expired or cancelled		20.41		(60,000	)
Balance at March 31, 2003		17.39		904,800
Granted		20.97		351,500
Exercised		17.33		(120,300	)
Expired or cancelled		19.58		(24,000	)
Balance at March 31, 2004		18.48		1,112,000
Granted		26.25		409,500
Exercised		18.14		(683,487	)
Expired or cancelled		19.82		(6,500	)
Balance at March 31, 2005	$	22.59		831,513

As of March 31, 2005, 2004 and 2003, the number of options exercisable under the stock option plans was 358,901, 672,833 and 668,500, respectively, and the weighted average exercise price of those options was $20.30, $17.42 and $17.18, respectively.

The following table summarizes information about stock options outstanding as of March 31, 2005:

	Options Outstanding						Options Exercisable
			Wgtd. Avg.		Wgtd. Avg.				Wgtd. Avg.
Range of	Number		Remaining		Exercise		Number		Exercise
Exercise Prices	Outstanding		Contr. Life		Price		Exercisable		Price
$ 7.375 - $19.760		238,401		6.28	$	17.39		203,132	$	17.11
$21.150 - $29.820		504,112		8.86	$	23.08		110,769	$	21.17
$32.610 - $36.610		89,000		9.49	$	33.69		45,000	$	32.61
$ 7.375 - $36.610		831,513		8.19	$	22.59		358,901	$	20.30

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

H — EARNINGS PER SHARE

Basic earnings per common share were computed by dividing net income by the weighted average number of shares of Common Stock outstanding during the fiscal year. Diluted earnings per common share for fiscal years 2004 and 2003 were determined on the assumption that the Convertible Subordinated Notes were converted on April 1, 2003 and 2002, respectively. Diluted earnings per share for fiscal years 2005 and 2003 excluded 45,712 and 237,500 stock options at a weighted average exercise price of $33.47 and $21.34, respectively which were outstanding during the period but were anti-dilutive. The following table sets forth the computation of basic and diluted income from continuing operations per share:

	Fiscal Year Ended March 31,
	2005		2004		2003
			(Restated)		(Restated)
Net income (In thousands):
Income available to Common Stockholders	$	51,560	$	49,825	$	40,404
Interest and redemption premium on convertible debt, net of taxes		—		1,809		3,819
Income available to Common Stockholders, plus assumed conversions	$	51,560	$	51,634	$	44,223
Shares:
Weighted average number of common shares outstanding		23,040,565		22,545,183		22,429,056
Options and restricted stock units		340,003		174,423		153,425
Convertible debt		—		1,293,045		3,976,928
Weighted average number of common shares outstanding, including assumed conversions		23,380,568		24,012,651		26,559,409
Basic earnings per share	$	2.24	$	2.21	$	1.80
Diluted earnings per share	$	2.21	$	2.15	$	1.67

The Company adopted a stockholder rights plan on February 9, 1996, as amended on May 6, 1997 and on January 10, 2003, designed to assure that the Company’s stockholders receive fair and equal treatment in the event of any proposed takeover of the Company and to guard against partial tender offers, squeeze-outs, open market accumulations and other abusive tactics to gain control without paying all stockholders a fair price. The rights plan was not adopted in response to any specific takeover proposal. Under the rights plan, the Company declared a dividend of one right (“Right”) on each share of the Company’s Common Stock. Each Right entitles the holder to purchase one one-hundredth of a share of a new Series A Junior Participating Preferred Stock, par value $1.00 per share, at an exercise price of $50.00. Each Right entitles its holder to purchase a number of common shares of the Company having a market value of twice the exercise price. The Rights are not currently exercisable and will become exercisable only in the event a person or group acquires beneficial ownership of ten percent or more of the Company’s Common Stock (except that certain institutional investors may hold up to 12.5%). The dividend distribution was made on February 29, 1996 to stockholders of record on that date. The Rights will expire on February 28, 2006.

I — ACQUISITION

On July 15, 2004, Bristow purchased a 48.5% interest in Aviashelf, a Russian helicopter company that owns five large twin-engine helicopters and simultaneously, through two 51% owned companies, purchased two large twin-engine helicopters and two fixed-wing aircraft, for an aggregate purchase price of $10.7 million. The

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

acquisition was accounted for under the purchase method, and the Company has consolidated the results of the Russian helicopter company from the date of acquisition. The acquisition was financed with $2.0 million of existing cash and the assumption of $8.7 million in debt. Included in the debt assumed is $1.8 million due to a company that is affiliated with other shareholders of Aviashelf. The purchase price was allocated to the assets and liabilities acquired based upon estimated fair value. No goodwill was recorded. The pro forma effect of operations of the acquisition when presented as of the beginning of the periods presented was not material to the Company’s consolidated statements of income.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

	July 15, 2004
	(In thousands)
Current assets	$	2,565
Property and equipment		11,932
Other assets		100
Total Assets Acquired	$	14,597
Current liabilities	$	(2,422	)
Long term debt		(7,757	)
Minority interest		(2,398	)
Total Liabilities Assumed		(12,577	)
Net Assets Acquired	$	2,020

On July 1, 2002, the Company purchased a controlling interest in Pan African Airlines (Nigeria) Ltd., a West Africa helicopter operating company, and simultaneously purchased ten single-engine helicopters and three fixed-wing aircraft, for an aggregate purchase price of $16.0 million. The purchase price reflected a significant element of goodwill as this acquisition was viewed as strategic in protecting our existing market share in West Africa. The purchase was contingent upon the award of a three-party contract by a major oil company for helicopter transportation for a five-year term. The three parties to the contract include the major oil company, one of the Company’s wholly owned operating subsidiaries, and the West Africa helicopter company. Upon award of the contract, which would not have been awarded without the participation of one of the Company’s wholly owned operating subsidiaries, the Company acquired the controlling interest discussed above. The acquisition was accounted for under the purchase method and the results of the West Africa helicopter company from the date of acquisition are included in the consolidated results. The acquisition was financed with $2.0 million of existing cash and $14.0 million of borrowings under the Company’s U.S. credit facility. The purchase price was allocated to the assets and liabilities acquired based upon estimated fair values. The excess of the purchase price over the fair market value of the tangible net assets acquired of $6.6 million was allocated to goodwill, $4.8 million of which is deductible for tax purposes. No other intangible assets were acquired. The pro forma effect of operations of the acquisition when presented as of the beginning of the periods was not material to the Company’s consolidated statements of income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

	July 1, 2002
	(In thousands)
Current assets	$	2,307
Property and equipment		8,627
Goodwill		6,559
Total Assets Acquired	$	17,493
Current liabilities	$	(536	)
Other liabilities and deferred credits		(957	)
Total Liabilities Assumed	$	(1,493	)
Net Assets Acquired	$	16,000

J — RELATED PARTIES

In November 2004, Bristow sold certain of its contracts within the Technical Services business unit and seven medium aircraft to FB Heliservices Limited (“FBH”), a 50% owned unconsolidated affiliate. Bristow received proceeds of approximately £7.9 million ($15.1 million) on this transaction and recognized a gain of £1.1 million ($2.1 million) that is included in the consolidated statement of income. Bristow and the other 50% shareholder of FBH each contributed to FBH £4.3 million ($8.2 million) to enable it to consummate the transaction. This additional investment in FBH is included in the consolidated statement of cash flows.

On December 19, 1996, the Company and one of its subsidiaries acquired 49% of Bristow’s Common Stock and a significant amount of its subordinated debt as further discussed below. Bristow is incorporated in England and holds all of the outstanding shares in Bristow Helicopter Group Limited (“BHGL”). Bristow is organized with three different classes of ordinary shares (“Common Stock”) having disproportionate voting rights. The Company, Caledonia Investments plc and its subsidiary, Caledonia Industrial & Services Limited (collectively, “Caledonia”) and a Norwegian investor (the “Norwegian Investor”), originally owned 49%, 49% and 2%, respectively, of Bristow’s total outstanding ordinary shares. In December 2002, the Company called the shares of the Norwegian Investor in accordance with the put/call agreement described below and sold them to a U.K. investor (the “E.U. Investor”). In turn, the E.U. Investor became a party to the put/call agreement on substantially the same terms as had applied to the Norwegian Investor. In March 2004, Caledonia sold a portion of its holdings in Bristow equal to 3% of the total outstanding ordinary shares to the E.U. Investor.

The Company paid £80.2 million (approximately $132 million) in cash (funded from existing cash balances and the proceeds of the 6% Notes), issued $7.5 million of the 6% Notes to Caledonia and issued 1,374,389 shares of Common Stock to Caledonia on December 19, 1996 for its 49% ownership of Bristow. Caledonia received 1,300,000 shares of Common Stock and BHGL’s management received 74,389 shares. In addition, the Company acquired £5.0 million (approximately $8.4 million) principal amount of BHGL’s subordinated debt for cash of £5.4 million (approximately $8.9 million) including accrued interest.

In addition to its ownership of 49% of Bristow’s outstanding ordinary shares and £5.0 million ($8.3 million) principal amount of Bristow’s subordinated debt, the Company acquired £91.0 million (approximately $150 million) principal amount of subordinated unsecured loan stock (debt) of Bristow bearing interest at an annual rate of 13.5% and payable semi-annually. Payment of interest on such debt has been deferred since its incurrence. Deferred interest accrues at an annual rate of 13.5% and aggregated $289.7 million at March 31, 2005. No interest payments have been paid through March 31, 2005.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company, Caledonia, the E.U. Investor and Bristow entered into a shareholders’ agreement respecting, among other things, the composition of the board of directors of Bristow. On matters coming before Bristow’s board, Caledonia’s representatives have a total of three votes and the two other directors have one vote each. So long as Caledonia has a significant interest in the shares of the Company’s Common Stock issued to it pursuant to the transaction or maintains its voting control of Bristow, Caledonia will have the right to nominate two persons to the Board of Directors of the Company and to replace any such directors so nominated.

Caledonia, the Company and the E.U. Investor also entered into a put/call agreement under which, upon giving specified prior notice, the Company has the right to buy all the Bristow shares held by Caledonia and the E.U. Investor, who, in turn, each have the right to require the Company to purchase such shares. Under current English law, the Company would be required, in order for Bristow to retain its operating license, to find a qualified European investor to own any Bristow shares it has the right to acquire under the put/call agreement. The only restriction under the put/call agreement limiting the Company’s ability to exercise the put/call option is a requirement to consult with the CAA regarding the suitability of the new holder of the Bristow shares. The put/call agreement does not contain any provisions should the CAA not approve the new European investor. However, the Company would work diligently to find a European investor suitable to the CAA. In March 2004, the Company prepaid a portion of the put/call option price, representing the amount of guaranteed return since inception, amounting to $11.4 million. Beginning in September 2004, the Company began paying to Caledonia the amount of guaranteed return on the put/call on a quarterly basis. In fiscal year 2005, the amount paid to Caledonia was £46,776 ($85,771) representing the amount due from May 8, 2004 to December 31, 2004. Subsequent to March 31, 2005, the Company has paid to Caledonia £36,198 ($65,919) representing the amount due from January 1, 2005 to June 30, 2005. These payments were charged against minority interest on the Company’s balance sheet where this obligation had been accrued and included in minority interest expense in the consolidated statements of income. In consideration of this, the other shareholders of Bristow agreed to reduce the guaranteed return factor used in calculating the put/call option price, effective April 1, 2004, from 12% per annum to LIBOR plus 3%. In May 2004, the Company acquired eight million shares of deferred stock, essentially a subordinated class of stock with no voting rights, from Bristow for £1 per share ($14.4 million in total). Bristow used these proceeds to redeem £8 million ($14.4 million) of its ordinary share capital at par value on a pro rata basis from all of its outstanding shareholders, including the Company. Caledonia received management fees from Bristow that were payable semi-annually in advance through June 2003.

See Note C for discussion of the Company’s investments in and transactions with unconsolidated affiliates.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

K — SEGMENT INFORMATION

The Company has adopted SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”, which requires that companies disclose segment data based on how management makes decisions about allocating resources to segments and measuring their performance. The Company operates principally in two business segments: Helicopter Services and Production Management Services. The Company provides helicopter services under the Air Logistics and Bristow names, and is a major supplier of helicopter transportation services to the worldwide offshore oil and gas industry. The Company provides production management services, contract personnel and medical support services in the U.S. Gulf of Mexico to the domestic oil and gas industry under the Grasso Production Management name. The following shows reportable segment information for fiscal years 2005, 2004 and 2003, reconciled to consolidated totals, and prepared on the same basis as the Company’s consolidated financial statements:

	Fiscal Year Ended March 31,
	2005			2004			2003
	(In thousands
				(Restated)			(Restated)
Segment operating revenue from external customers:
Helicopter Services	$	613,133		$	565,111		$	552,967
Production Management Services		58,915			49,750			47,621
Total segment operating revenue	$	672,048		$	614,861		$	600,588
Intersegment operating revenue:
Helicopter Services	$	8,059		$	7,614		$	6,204
Production Management Services		67			65			64
Total intersegment operating revenue	$	8,126		$	7,679		$	6,268
Consolidated operating revenue reconciliation:
Helicopter Services	$	621,192		$	572,725		$	559,171
Production Management Services		58,982			49,815			47,685
Intersegment eliminations		(8,126	)		(7,679	)		(6,268	)
Corporate		1,598			2,140			962
Total consolidated operating revenue	$	673,646		$	617,001		$	601,550

	Fiscal Year Ended March 31,
	2005			2004			2003
	(In thousands)
				(Restated)			(Restated)
Consolidated operating income reconciliation:
Helicopter Services including allocation of 2004 curtailment gain	$	76,261		$	86,907		$	62,737
Production Management Services		3,907			2,514			2,947
Total segment operating income		80,168			89,421			65,684
Gain on disposal of assets		8,039			3,943			3,734
Corporate including allocations of 2004 curtailment gain		(10,599	)		(4,639	)		(4,052	)
Total consolidated operating income	$	77,608		$	88,725		$	65,366

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Capital Expenditures
	Fiscal		Fiscal		Fiscal
	2005		2004		2003
	(In thousands)
Helicopter Services	$	77,810	$	67,410	$	54,784
Production Management Services		167		436		133
Corporate		112		9		114
Total	$	78,089	$	67,855	$	55,031

	Depreciation and Amortization
	Fiscal		Fiscal		Fiscal
	2005		2004		2003
	(In thousands)
Helicopter Services	$	38,385	$	37,015	$	33,711
Production Management Services		194		166		170
Corporate		2,114		2,362		3,783
Total	$	40,693	$	39,543	$	37,664

	Identifiable Assets as of March 31,
	2005		2004
	(In thousands)
			(Restated)
Helicopter Services	$	1,041,615	$	940,754
Production Management Services		31,807		28,164
Corporate and other		76,154		77,910
Total	$	1,149,576	$	1,046,828

The Company attributes revenue to various countries based on the location where Helicopter Services or Production Management Services are actually performed. Long-lived assets consist primarily of helicopters and are attributed to various countries based on the physical location of the asset at a given fiscal year end. Entity-wide information by geographic area is as follows:

	Fiscal Year Ended March 31,
	2005		2004		2003
	(In thousands)
			(Restated)		(Restated)
Operating revenue:
United States	$	216,255	$	203,728	$	196,101
United Kingdom		223,075		211,468		207,257
Nigeria		94,215		76,683		64,864
Australia		43,143		32,072		26,823
Mexico		24,264		25,611		24,385
Other countries		72,694		67,439		82,120
	$	673,646	$	617,001	$	601,550

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	As of March 31,
	2005		2004
			(Restated)
	(In thousands)
Long-lived assets:
United States	$	179,835	$	160,419
United Kingdom		164,787		160,080
Nigeria		77,537		57,068
Australia		31,892		39,506
Mexico		31,166		41,463
Other countries		123,845		127,120
	$	609,062	$	585,656

Goodwill related to Production Management Services was $14.0 million as of March 31, 2005 and March 31, 2004. Goodwill related to Helicopter Services was $12.8 million as of March 31, 2005 and March 31, 2004.

During fiscal years 2005, 2004 and 2003, the Company conducted operations in over 12 foreign countries as well as in the United States and the United Kingdom. Due to the nature of the principal assets of the Company, they are regularly and routinely moved between operating areas (both domestic and foreign) to meet changes in market and operating conditions. During fiscal years ended March 31, 2005, 2004 and 2003, the aggregate activities of one international oil company customer accounted for 11%, 11% and 15%, respectively, of consolidated operating revenue, excluding revenues associated with reimbursements for costs incurred on behalf of customers. During fiscal year 2005, the Company’s top ten customers accounted for 48% of its operating revenue, excluding revenues associated with reimbursements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

L — QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

	Fiscal Quarter Ended
	June 30(2)		September 30(2)		December 31(2)		March 31(2)
	(In thousands, except per share amounts)
	(Restated)		(Restated)		(Restated)
2005
Gross revenue	$	160,401	$	170,627	$	172,167	$	170,451
Operating income		19,351		25,152		19,216		13,889
Net income		11,587		16,651		10,108		13,214
Basic earnings per share		0.51		0.73		0.43		0.57
Diluted earnings per share		0.51		0.71		0.43		0.56
2004		(Restated)		(Restated)		(Restated)		(Restated)
Gross revenue	$	145,730	$	151,151	$	152,480	$	167,640
Operating income		15,308		18,857		9,599		44,961
Net income		7,455		7,688		1,969		32,713
Basic earnings per share		0.33		0.34		0.09		1.45	(1)
Diluted earnings per share		0.32		0.32		0.09		1.42	(1)

(1)

Includes $21.7 million, $15.7 million net of tax, of curtailment gain relating to the pension plan discussed in Note G.

(2)

As discussed further in Note A, amounts previously reported have been restated to reflect adjustments to accrue for liabilities and expenses identified in connection with the Internal Review, to properly report customer reimbursables as revenues rather than offsetting such amounts against the related expenses and to properly record expenses for severance benefits and payroll taxes associated with certain foreign subsidiaries.

M — SUBSEQUENT EVENTS

Document Subpoena from U.S. Department of Justice — On June 15, 2005, the Company issued a press release stating that one of the Company’s subsidiaries had received a document subpoena from the Antitrust Division of the U.S. Department of Justice (“DOJ”). The subpoena relates to a grand jury investigation of potential antitrust violations among providers of helicopter transportation services in the U.S. Gulf of Mexico. The Company is continuing to investigate this matter and intends to comply with requests for information from the DOJ in connection with this investigation. The outcome of the DOJ investigation and any related legal and administrative proceedings could include civil injunctive or criminal proceedings, the imposition of fines and other penalties, remedies and/or sanctions, referral to other governmental agencies and/or the payment of damages in civil litigation. It is not possible to predict accurately at this time when the government investigation described above will be completed. Based on current information, the Company cannot predict the outcome of such investigation or what, if any, actions may be taken by the DOJ or other U.S. agencies or authorities or the effect that they may have on the Company.

Fleet Renewal Program — In fiscal year 2003, the Company initiated a fleet renewal program. In December 2002, the Company entered into a contract with Sikorsky Aircraft Corporation, a major helicopter manufacturer, to acquire 15 new medium-sized helicopters, which are the Company’s most versatile aircraft. Six of the 15 initial aircraft were delivered in fiscal year 2004. Four of the 15 initial aircraft were delivered in fiscal year 2005. Two of the 15 initial aircraft were delivered in the first half of fiscal year 2006, and one is expected to be delivered in the fourth quarter of fiscal year 2006. The remaining two of the 15 initial aircraft are expected to be delivered in early fiscal year 2007. In June 2005, the Company amended the initial contract to acquire 32 additional medium-sized helicopters as part of its ongoing fleet renewal program. The first helicopter under the amended contract is due to be

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

delivered early in fiscal year 2007, and a total of 17 additional aircraft are to be delivered in fiscal years 2007 and 2008. The remaining helicopters are slated for delivery between fiscal years 2009 and 2013. The agreement allows the Company to trade in one previously purchased Sikorsky aircraft for each new aircraft purchased. The agreement also gives the Company the option to purchase up to 24 additional aircraft with deliveries through fiscal year 2013, provided the Company exercises the options by an annual deadline. Thereafter, the option aircraft are subject to availability. As of September 30, 2005, the options with respect to six of the aircraft are now subject to availability.

Subsequent to March 31, 2005, the Company also entered into firm purchase commitments for aircraft outside of the fleet renewal program of $130.0 million.

Defaults Under Certain Long-Term Debt Agreements — On June 16, 2005, the Company received notice from the trustee of the $230 million 61/8% Senior Notes due 2013 that it was in breach of the financial reporting covenants contained in the indenture, and stating that, unless the deficiency was remedied within 60 days, an event of default would occur under the indenture. On July 26, 2005, the Company solicited consents from all holders of its Senior Notes to extend until November 15, 2005 (or, at the election of the Company and upon the payment of additional fees, until December 15, 2005 or January 15, 2006, as applicable) the period in which the Company must file and deliver its financial reports and related documents, and to waive certain past defaults under the indenture relating to the Company’s failure to timely file and deliver its Form 10-K for fiscal year 2005.

The Company amended the terms of its solicitation of consents on August 9, 2005 and August 11, 2005 and on August 16, 2005 completed the consent solicitation. The terms of the consent solicitation were as follows:

•  A consent fee to holders of Senior Notes as of 5:00 p.m. (EST) on July 25, 2005 that delivered (and not revoked) valid consents on or prior to August 15, 2005 (the “Expiration Date”) were paid $6.25 per $1,000 principal amount of Senior Notes, or $1.4 million, on August 17, 2005.

•  In the event that the Company did not comply with the financial reporting covenants and related compliance certificate and auditors’ statement covenants on or before November 15, 2005 and elected to pay on or before the third business day following such date an additional fee to consenting holders in an amount equal to $2.50 per $1,000 principal amount of Senior Notes in respect of which consents had been delivered (and not revoked), the Company would have until December 15, 2005 to comply with the financial reporting covenants and the compliance certificate and auditors’ statement covenants in the indenture. In addition, if the Company did not comply with the financial reporting covenants and related compliance certificate and auditors’ statement covenants on or before December 15, 2005 and elected to pay on or before the third business day following such date a further additional fee to consenting holders in an amount equal to $2.50 per $1,000 principal amount of Senior Notes in respect of which consents have been delivered (and not revoked), the Company would have until January 16, 2006 to comply with the financial reporting covenants and the compliance certificate and auditors’ statement covenants in the indenture. In the event that the Company did not comply with the financial reporting covenants and related compliance certificate and auditors’ statement covenants on or before November 15, 2005 (or, at the election of the Company and upon the payment of an additional fee described above, until December 15, 2005 or January 16, 2006, as applicable), the Trustee or the holders of at least 25% in principal amount of the outstanding Senior Notes could have declared all of the Senior Notes due and payable immediately.

On November 15, 2005, the Company elected to extend the waiver to December 15, 2005 upon payment of the additional fee described above. The Company has elected to exercise its option to further extend the waiver through January 16, 2006 upon payment of the second additional fee described above.

As of June 30, 2005, the Company was in default of the various financial information reporting covenants in its revolving credit facility and the RLR Note as a result of not providing financial information for fiscal year 2005 when due, and also for not providing similar information to other creditors. This situation resulted from the Internal Review discussed earlier which prevented the Company from filing the financial report for fiscal year 2005 on time.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The bank initially provided waivers through August 14, 2005, and subsequently provided additional waivers through November 15, 2005. Further, the waivers were extended at the Company’s election through December 15, 2005 upon payment of a fee, and the Company has elected to exercise its option to further extend these waivers through January 16, 2006 upon payment of an additional fee.

The Company will not be in compliance with the financial information reporting covenants and related compliance certificate and auditors’ statement covenants discussed above on or prior to December 15, 2005. As a result, the Company has elected to exercise its option to extend the waivers with respect to the credit facility and RLR Note through January 16, 2006 and pay the required additional fee.

Flight Accident — On August 18, 2005, one of the Company’s helicopters operating in the U.S. Gulf of Mexico was involved in an accident that resulted in two fatalities. The cause of the accident is still under investigation by the Company and the National Transportation Safety Board. The Company’s liability in connection with this accident is not likely to have a material adverse effect on its business or financial condition.

Recapitalization of Heliservicio Campeche, S.A. de C.V. — On August 19, 2005, the Company’s unconsolidated affiliate in Mexico, Heliservicio Campeche, S.A. de C.V. (“HC”) completed a recapitalization. In this recapitalization, HC’s two shareholders, the Company and Compania Controladora de Servicios Aeronauticos, S.A. de C.V., purchased $4.4 million and $4.6 million, respectively, in trade receivables from a creditor of HC. The shareholders contributed these receivables to HC as a capital contribution. The shareholders purchased the receivables with notes in the respective purchase amounts. The creditor assigned these notes to Hemisco Helicopter International Inc. (“Hemisco”), a Panamanian unconsolidated affiliate that is owned 49% by a wholly-owned subsidiary of the Company. As a result, the Company owes $4.4 million to Hemisco. This note bears interest at 3% and is due on July 31, 2015.

Income Taxes on Distributions of Foreign Earnings — In September 2005, in response to the tax-favored provisions on repatriation of foreign earnings into the U.S. provided for in the American Jobs Creation Act of 2004 (the “Act”), the Company’s senior management approved a Domestic Reinvestment Plan (“DRIP”), as required by the Act, documenting the Company’s plan to repatriate up to a maximum of $75 million from its foreign subsidiaries. The Company’s Board of Directors subsequently approved the plan in November 2005. The favorable U.S. tax rate on such repatriations under the Act applies to qualifying distributions received by the Company through March 31, 2006. Through October 2005, the Company has received distributions intended to qualify under the Act totaling $30.9 million from one of its foreign subsidiaries. The Company is currently exploring its options with respect to sources of additional repatriations from its foreign subsidiaries but cannot at this time estimate the total amount, out of the $75 million approved in the DRIP, that will ultimately be received by March 31, 2006.

Hurricanes Katrina and Rita — As a result of Hurricanes Katrina and Rita, several of the Company’s shorebase facilities located along the U.S. Gulf Coast sustained significant hurricane damage. In particular, Hurricane Katrina caused a total loss of the Company’s Venice Louisiana shorebase facility, and Hurricane Rita severely damaged the Creole, Louisiana base and flooded the Intracoastal City, Louisiana base. The Company expects to record a $0.3 million net gain ($2.9 million in anticipated insurance recoveries offset by $2.6 million of involuntary conversion losses) related to property damage to these facilities.

Norsk Acquisition — During the first quarter of fiscal year 2006, the Company’s unconsolidated Norwegian affiliate, Norsk Helicopters AS, completed the acquisition of Lufttransport A/S, a Norwegian company and its sister company Lufttransport AB, in Sweden, collectively operating 28 aircraft and engaged in providing air ambulance services in Scandinavia. In addition, subsequent to March 31, 2005, Norsk committed to purchase three large aircraft. The purchase of these three aircraft, supported by a multi-year contract to provide helicopter services offshore in Norway, will be funded through additional borrowings by Norsk and additional funding by both shareholders.

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OFFSHORE LOGISTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

N — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

In connection with the sale of the Company’s $230 million 61/8% Senior Notes due 2013, certain of the Company’s subsidiaries (the “Guarantor Subsidiaries”) jointly, severally and unconditionally guaranteed the payment obligations under the Notes. The following supplemental financial information sets forth, on a consolidating basis, the balance sheet, statement of income and cash flow information for Offshore Logistics, Inc. (“Parent Company Only”), for the Guarantor Subsidiaries and for Offshore Logistics, Inc.’s other subsidiaries (the “Non-Guarantor Subsidiaries”). On March 31, 2004, Airlog International Ltd., one of the Company’s wholly-owned subsidiaries exceeded the threshold for the determination of a significant subsidiary as defined in the $230 million 61/8% Senior Note indenture. Therefore, this subsidiary executed a Supplemental Indenture and its financial information is reflected in Guarantor Subsidiaries in the accompanying Supplemental Condensed Consolidating Balance Sheet as of March 31, 2005 and the Supplemental Condensed Consolidating Statement of Income and Supplemental Condensed Consolidating Statement of Cash Flows for the twelve months ended March 31, 2005. The Company has 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 the Company believes that the disclosures made are adequate to make the information presented not misleading. Certain reclassifications were made to conform all of the financial information to the financial presentation on a consolidated basis. The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenues and expenses.

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

97

Supplemental Condensed Consolidating Statement of Income
Year Ended March 31, 2005

	Parent						Non-
	Company			Guarantor			Guarantor
	Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)
Gross revenue:
Operating revenue	$	1,685		$	249,116		$	422,845		$	—		$	673,646
Intercompany revenue		—			6,185			4,301			(10,486	)		—
		1,685			255,301			427,146			(10,486	)		673,646
Operating expenses:
Direct cost		50			188,969			329,120			—			518,139
Intercompany expense		—			4,301			5,720			(10,021	)		—
Depreciation and amortization		108			15,357			25,228			—			40,693
General and administrative		11,628			12,239			21,843			(465	)		45,245
Gain on disposal of assets		—			(956	)		(7,083	)		—			(8,039	)
		11,786			219,910			374,828			(10,486	)		596,038
Operating income (loss)		(10,101	)		35,391			52,318			—			77,608
Earnings from unconsolidated affiliates, net		23,794			2,356			7,453			(24,003	)		9,600
Interest income		50,682			109			3,749			(51,352	)		3,188
Interest expense		(14,890	)		(241	)		(51,886	)		51,352			(15,665	)
Other income (expense), net		(29	)		9			(1,106	)		—			(1,126	)
Income before provision for income taxes and minority interest		49,456			37,624			10,528			(24,003	)		73,605
Allocation of consolidated income taxes		(2,314	)		5,518			18,631			—			21,835
Minority interest		(210	)		—			—			—			(210	)
Net income	$	51,560		$	32,106		$	(8,103	)	$	(24,003	)	$	51,560

98

Supplemental Condensed Consolidating Balance Sheet
As of March 31, 2005

	Parent						Non-
	Company			Guarantor			Guarantor
	Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	23,947		$	7,907		$	114,586		$	—		$	146,440
Accounts receivable		19,108			41,253			97,484			(24,006	)		133,839
Inventories		—			72,892			67,814			—			140,706
Prepaid expenses and other		470			2,529			8,460			—			11,459
Total current assets		43,525			124,581			288,344			(24,006	)		432,444
Intercompany investment		297,709			1,046			—			(298,755	)		—
Investments in unconsolidated affiliates		683			4,121			32,372			—			37,176
Intercompany notes receivable		554,655			—			10,727			(565,382	)		—
Property and equipment — at cost:
Land and buildings		135			23,466			8,942			—			32,543
Aircraft and equipment		1,426			327,214			498,391			—			827,031
		1,561			350,680			507,333			—			859,574
Less: Accumulated depreciation and amortization		(1,398	)		(100,549	)		(148,565	)		—			(250,512	)
		163			250,131			358,768			—			609,062
Goodwill		—			18,593			8,105			111			26,809
Other assets		6,543			634			36,908			—			44,085
	$	903,278		$	399,106		$	735,224		$	(888,032	)	$	1,149,576
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	673		$	10,997		$	29,176		$	(5,206	)	$	35,640
Accrued liabilities		9,364			22,868			88,472			(18,800	)		101,904
Deferred taxes		4,740			—			13,000			—			17,740
Current maturities of long-term debt		—			—			6,413			—			6,413
Total current liabilities		14,777			33,865			137,061			(24,006	)		161,697
Long-term debt, less current maturities		230,000			—			25,667			—			255,667
Intercompany notes payable		10,246			86,103			469,033			(565,382	)		—
Other liabilities and deferred credits		3,065			416			161,247			—			164,728
Deferred taxes		37,307			1,773			30,897			—			69,977
Minority interest		2,131			—			2,383			—			4,514
Stockholders’ investment:
Common stock		233			4,062			13,941			(18,003	)		233
Additional paid in capital		157,100			51,169			13,477			(64,646	)		157,100
Retained earnings		389,715			221,718			(5,723	)		(215,995	)		389,715
Accumulated other comprehensive income (loss)		58,704			—			(112,759	)		—			(54,055	)
		605,752			276,949			(91,064	)		(298,644	)		492,993
	$	903,278		$	399,106		$	735,224		$	(888,032	)	$	1,149,576

99

Supplemental Condensed Consolidating Statement of Cash Flows
Year Ended March 31, 2005

	Parent						Non-
	Company			Guarantor			Guarantor
	Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)
Net cash provided by (used in) operating activities	$	(2,863	)	$	49,935		$	78,662		$	(21,261	)	$	104,473
Cash flows from investing activities:
Capital expenditures		(104	)		(52,196	)		(27,967	)		2,178			(78,089	)
Proceeds from asset dispositions		8,034			12,826			23,040			(2,178	)		41,722
Acquisitions, net of cash received		—			—			(1,986	)		—			(1,986	)
Investments		1,000			(1,150	)		(8,036	)		—			(8,186	)
Net cash provided by (used in) investing activities		8,930			(40,520	)		(14,949	)		—			(46,539	)
Cash flows from financing activities:
Proceeds from borrowings		—			—			7,087			(7,087	)		—
Repayment of debt and debt redemption premiums		—			—			(2,427	)		—			(2,427	)
Repayment of intercompany debt		(18,416	)		(9,400	)		(532	)		28,348			—
Partial prepayment of put/call obligation		(86	)		—			—			—			(86	)
Re-purchase of shares from minority interest		(7,389	)		—			—			—			(7,389	)
Issuance of common stock		12,665			—			—			—			12,665
Net cash provided by (used in) financing activities		(13,226	)		(9,400	)		4,128			21,261			2,763
Effect of exchange rate changes in cash and cash equivalents		—			—			64			—			64
Net increase (decrease) in cash and cash equivalents		(7,159	)		15			67,905			—			60,761
Cash and cash equivalents at beginning of period		31,106			7,892			46,681			—			85,679
Cash and cash equivalents at end of period	$	23,947		$	7,907		$	114,586		$	—		$	146,440

100

Supplemental Condensed Consolidating Statement of Income
Year Ended March 31, 2004
(Restated)

	Parent						Non-
	Company			Guarantor			Guarantor
	Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)
Gross revenue:
Operating revenue	$	1,530		$	196,213		$	419,258		$	—		$	617,001
Intercompany revenue		—			12,553			1,700			(14,253	)		—
		1,530			208,766			420,958			(14,253	)		617,001
Operating expenses:
Direct cost		61			153,244			322,144			—			475,449
Intercompany expense		8			1,691			11,591			(13,290	)		—
Depreciation and amortization		200			12,709			26,634			—			39,543
General and administrative		6,900			10,395			22,560			(963	)		38,892
Gain on disposal of assets		—			(1,055	)		(2,888	)		—			(3,943	)
		7,169			176,984			380,041			(14,253	)		549,941
Curtailment gain		—			—			21,665			—			21,665
Operating income (loss)		(5,639	)		31,782			62,582			—			88,725
Earnings from unconsolidated affiliates, net		31,529			—			11,197			(31,687	)		11,039
Interest income		43,208			20			1,939			(43,478	)		1,689
Interest expense		(15,939	)		(60	)		(44,308	)		43,478			(16,829	)
Loss on extinguishment of debt		(6,205	)		—			—			—			(6,205	)
Other income (expense), net		(976	)		(16	)		(6,818	)		—			(7,810	)
Income before provision for income taxes and minority interest		45,978			31,726			24,592			(31,687	)		70,609
Allocation of consolidated income taxes		(5,229	)		1,834			22,797			—			19,402
Minority interest		(1,382	)		—			—			—			(1,382	)
Net income	$	49,825		$	29,892		$	1,795		$	(31,687	)	$	49,825

101

Supplemental Condensed Consolidating Balance Sheet
As of March 31, 2004
(Restated)

	Parent						Non-
	Company			Guarantor			Guarantor
	Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	31,106		$	5,990		$	48,583		$	—		$	85,679
Accounts receivable		8,135			38,804			85,923			(10,441	)		122,421
Inventories		—			68,807			64,117			149			133,073
Deferred tax asset		493			—			157			—			650
Prepaid expenses and other		302			4,161			6,411			—			10,874
Total current assets		40,036			117,762			205,191			(10,292	)		352,697
Intercompany investment		276,695			—			—			(276,695	)		—
Investments in unconsolidated affiliates		894			—			38,035			—			38,929
Intercompany notes receivable		507,001			—			25,688			(532,689	)		—
Property and equipment — at cost:
Land and buildings		135			17,689			8,770			—			26,594
Aircraft and equipment		1,464			294,910			501,409			—			797,783
		1,599			312,599			510,179			—			824,377
Less: Accumulated depreciation and amortization		(1,410	)		(95,629	)		(141,682	)		—			(238,721	)
		189			216,970			368,497			—			585,656
Goodwill		—			13,839			12,879			111			26,829
Other assets		6,255			119			36,343			—			42,717
	$	831,070		$	348,690		$	686,633		$	(819,565	)	$	1,046,828
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	333		$	7,191		$	24,807		$	(3,617	)	$	28,714
Accrued liabilities		7,863			12,520			70,315			(6,823	)		83,875
Deferred taxes		—			—			—			—			—
Current maturities of long-term debt		—			—			4,417			—			4,417
Total current liabilities		8,196			19,711			99,539			(10,440	)		117,006
Long-term debt, less current maturities		230,000			—			21,117			—			251,117
Intercompany notes payable		24,576			88,941			419,172			(532,689	)		—
Other liabilities and deferred credits		1,271			3,130			142,925			—			147,326
Deferred taxes		30,732			1,208			60,102			—			92,042
Minority interest		9,385			—			—			—			9,385
Stockholders’ investment:
Common stock		226			4,062			13,923			(17,985	)		226
Additional paid in capital		141,384			51,168			13,475			(64,643	)		141,384
Retained earnings		338,155			180,470			13,338			(193,808	)		338,155
Accumulated other comprehensive income (loss)		47,145			—			(96,958	)		—			(49,813	)
		526,910			235,700			(56,222	)		(276,436	)		429,952
	$	831,070		$	348,690		$	686,633		$	(819,565	)	$	1,046,828

102

Supplemental Condensed Consolidating Statement of Cash Flows
Year Ended March 31, 2004

	Parent						Non-
	Company			Guarantor			Guarantor
	Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)
Net cash provided by operating activities	$	1,547		$	58,606		$	12,506		$	10,672		$	83,331
Cash flows from investing activities:
Capital expenditures		(9	)		(57,813	)		(10,033	)		—			(67,855	)
Assets purchased on behalf of unconsolidated affiliate		(17,869	)		(6,217	)		(11,308	)		—			(35,394	)
Proceeds from sale of assets to unconsolidated affiliate		17,869			6,217			11,308			—			35,394
Proceeds from asset dispositions		4			2,984			3,866			—			6,854
Investments in subsidiaries		(2,953	)		—			1,372			—			(1,581	)
Net cash used in investing activities		(2,958	)		(54,829	)		(4,795	)		—			(62,582	)
Cash flows from financing activities:
Proceeds from borrowings		262,270			—			3,592			(14,450	)		251,412
Repayment of debt and debt redemption premiums		(231,289	)		—			(6,116	)		3,778			(233,627	)
Debt issuance costs		(4,889	)		—			—			—			(4,889	)
Partial prepayment of put/call obligation		(11,442	)		—			—			—			(11,442	)
Issuance of common stock		2,085			—			—			—			2,085
Net cash provided by (used in) financing activities		16,735			—			(2,524	)		(10,672	)		3,539
Effect of exchange rate changes in cash and cash equivalents		—			—			4,591			—			4,591
Net increase in cash and cash equivalents		15,324			3,777			9,778			—			28,879
Cash and cash equivalents at beginning of period		15,782			2,213			38,805			—			56,800
Cash and cash equivalents at end of period	$	31,106		$	5,990		$	48,583		$	—		$	85,679

103

Supplemental Condensed Consolidating Statement of Income
Year Ended March 31, 2003
(Restated)

	Parent						Non-
	Company			Guarantor			Guarantor
	Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)
Gross revenue:
Operating revenue	$	1,232		$	185,854		$	414,464		$	—		$	601,550
Intercompany revenue		9			9,268			2,286			(11,563	)		—
		1,241			195,122			416,750			(11,563	)		601,550
Operating expenses:
Direct cost		52			151,339			316,385			—			467,776
Intercompany expense		74			2,211			8,315			(10,600	)		—
Depreciation and amortization		496			11,977			25,191			—			37,664
General and administrative		6,643			9,760			19,038			(963	)		34,478
Gain on disposal of assets		(650	)		(1,430	)		(1,654	)		—			(3,734	)
		6,615			173,857			367,275			(11,563	)		536,184
Operating income		(5,374	)		21,265			49,475			—			65,366
Earnings from unconsolidated affiliates, net		31,037			—			12,054			(31,037	)		12,054
Interest income		36,705			33			1,180			(36,395	)		1,523
Interest expense		(14,820	)		—			(36,479	)		36,395			(14,904	)
Other income (expense), net		(391	)		73			(2,966	)		—			(3,284	)
Income before provision for income taxes and minority interest		47,157			21,371			23,264			(31,037	)		60,755
Allocation of consolidated income taxes		4,956			6,411			7,187			—			18,554
Minority interest		(1,797	)		—			—			—			(1,797	)
Net income	$	40,404		$	14,960		$	16,077		$	(31,037	)	$	40,404

104

Supplemental Condensed Consolidating Statement of Cash Flows
Year Ended March 31, 2003

	Parent						Non-
	Company			Guarantor			Guarantor
	Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)
Net cash provided by (used in) operating activities	$	(22,658	)	$	42,129		$	16,916		$	26,000		$	62,387
Cash flows from investing activities:
Capital expenditures		(114	)		(45,854	)		(9,063	)		—			(55,031	)
Assets purchased on behalf of affiliate		—			—			(26,019	)		—			(26,019	)
Proceeds from sale of assets to affiliate		—			—			26,019			—			26,019
Proceeds from asset dispositions		846			3,728			18,229			—			22,803
Acquisition, net of cash received		—			—			(15,953	)		—			(15,953	)
Investments in subsidiaries		498			(498	)		—			—			—
Net cash provided by (used in) investing activities		1,230			(42,624	)		(6,787	)		—			(48,181	)
Cash flows from financing activities:
Proceeds from borrowings		24,000			—			47,286			(26,000	)		45,286
Repayment of debt		—			—			(49,026	)		—			(49,026	)
Issuance of common stock		2,631			—			—			—			2,631
Net cash provided by (used in) financing activities		26,631			—			(1,740	)		(26,000	)		(1,109	)
Effect of exchange rate changes in cash and cash equivalents		—			—			1,033			—			1,033
Net decrease in cash and cash equivalents		5,203			(495	)		9,422			—			14,130
Cash and cash equivalents at beginning of period		10,579			2,708			29,383			—			42,670
Cash and cash equivalents at end of period	$	15,782		$	2,213		$	38,805		$	—		$	56,800

105

Item 9.   Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

There have been no disagreements with the independent auditors on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

Item 9a.   Controls and Procedures

A.  Disclosure Controls and Procedures — Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

We carried out an evaluation, as of March 31, 2005, 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 upon that evaluation, and as a result of information reviewed by the Audit Committee of our Board of Directors, our Chief Executive Officer and Chief Financial Officer determined that, as of March 31, 2005, our disclosure controls and procedures were not effective in reporting, on a timely basis, information required to be disclosed in our reports to the SEC under the Securities Exchange Act of 1934 because of the material weaknesses in internal controls, as described in Management’s Report on Internal Control Over Financial Reporting.

B.  Management’s Report on Internal Control Over Financial Reporting — Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, 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 and includes those policies and procedures that:

•  Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

•  Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

•  Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness in internal control over financial reporting is defined by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 2 as a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Our management, including our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of March 31, 2005. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework”. This assessment included an evaluation of the design and operation of internal controls over financial reporting.

106

Based on this assessment, management concluded that, as of March 31, 2005, the Company did not maintain effective internal control over financial reporting because of material weaknesses described below:

Our former senior management and other personnel failed to establish or adhere to appropriate internal controls related to the control environment of the Company. Specifically, former management failed to establish and act with appropriate integrity and ethical values. As a result of this deficiency the following incidents occurred (as further described in Note D of the “Notes to Consolidated Financial Statements”):

(a) improper payments to government officials and personnel of customers,

(b) understated employee payroll tax declarations and payments,

(c) improper valuations for customs purposes may have been declared in certain jurisdictions resulting in the underpayment of import duties,

(d) assistance in the apparent circumvention of legal requirements in at least one country in which we operate, through the use of false invoices and misleading representations and

(e) the related balance sheet amounts being not properly described or classified in the Company’s books and records.

Furthermore:

•  We did not follow accounting controls related to the affiliate accounts receivable reconciliation process that would have detected the false invoices described above.

•  We failed to follow procedures that addressed concerns raised by employees about improper activities, and certain members of our former senior management failed to set the proper ethical tone.

•  We did not provide sufficient training to personnel engaged in key elements of the financial reporting process, including training on relevant regulations such as the Foreign Corrupt Practices Act.

•  We failed to educate and train employees in identifying, monitoring or reporting and responding to alleged misconduct or unethical behavior.

This material weakness resulted in an under payment and accrual of payroll and other taxes. Accordingly, we restated our 2004 and 2003 consolidated financial statements and the first three quarters of fiscal 2005 to accrue payroll and other taxes, penalties and interest.

We did not have sufficient technical expertise to address or establish adequate policies and procedures associated with accounting matters. In addition, we did not maintain policies and procedures to ensure adequate management review of the information supporting the financial statements. As a result:

•  We did not have personnel with adequate technical expertise to effectively carry out the Company’s policies and procedures related to the review of technical accounting matters and to ensure adequate management review of information supporting the financial statements.

•  We did not establish or maintain adequate policies and procedures over the selection and application of appropriate accounting policies.

•  We failed to establish controls to properly identify and record expenses related to severance benefits for certain employees of a foreign subsidiary.

This material weakness resulted in an underreporting of revenue and direct costs. Accordingly, we restated our 2004 and 2003 consolidated financial statements and the first three quarters of fiscal 2005 to report customer reimbursements in revenue and direct costs and to record additional operating expense for the severance benefits.

We did not have sufficient technical tax expertise to establish and maintain adequate policies and procedures associated with the operation of certain complex tax structures. As a result, we failed to establish proper procedures to ensure the actions required to enable us to realize the benefits of these structures as previously recognized in our financial statements were performed.

107

This material weakness resulted in an underreporting of direct costs and income tax expense. Accordingly, we restated our 2004 and 2003 consolidated financial statements and the first three quarters of fiscal 2005 to report an increase in direct costs and income tax expense.

Our independent auditors have issued an audit report on our assessment of the Company’s internal control over financial reporting.

C.  Changes in Internal Control Over Financial Reporting — There were no changes during the quarter ended March 31, 2005 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

D.  Remediation — Subsequent to March 31, 2005, Management has taken a series of actions to remediate these weaknesses in the control environment, including the following:

•  Former senior management and other management personnel were terminated or required to resign.

•  New key members of senior and financial management were or are being hired, including persons with appropriate technical accounting expertise.

•  Functional reporting lines of field accounting personnel were realigned to report directly to the corporate accounting function and not through operations management.

•  Policies and procedures over the selection and application of appropriate accounting policies and account analyses and reconciliations have been or will be developed and implemented.

•  A comprehensive compliance program was adopted and implemented, including the introduction and dissemination of a new Code of Business Integrity to all employees, which included the following:

u	A position for a Chief Compliance Officer with primary responsibility to administer and set compliance policy and report to the CEO and Board of Directors on matters concerning legal and ethical compliance;
u	A zero tolerance policy with respect to facilitating payments;
u	Mandatory employee and director participation in company-wide business integrity training;
u	Strict requirements on engaging or conducting business through intermediaries, including joint venture partners and agents;
u	Membership in a non-profit organization that specializes in anti-bribery due diligence reviews and compliance training for international commercial intermediaries; and
u	An enhanced “Whistleblower” hotline.

•  Internal audits to ensure that the compliance program is followed are planned.

108

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of
Offshore Logistics, Inc.:

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting (Item 9a.B), that Offshore Logistics, Inc. (the Company) did not maintain effective internal control over financial reporting as of March 31, 2005, because of the effect of material weaknesses identified in management’s assessment, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The following material weaknesses have been identified and included in management’s assessment:

Former senior management and other personnel failed to establish or adhere to appropriate internal controls related to the control environment of the Company. Specifically, former management failed to establish and act with appropriate integrity and ethical values. As a result of this deficiency the following incidents occurred (as further described in Note D of the “Notes to Consolidated Financial Statements”):

(a) improper payments to government officials and personnel of customers,

(b) understated employee payroll tax declarations and payments,

(c) improper valuations for customs purposes may have been declared in certain jurisdictions resulting in the underpayment of import duties,

(d) assistance in the apparent circumvention of legal requirements in at least one country in which we operate, through the use of false invoices and misleading representations and

109

(e)  the related balance sheet amounts being not properly described or classified in the Company’s books and records.

Furthermore:

•  The Company did not follow accounting controls related to the affiliate accounts receivable reconciliation process that would have detected the false invoices described above.

•  The Company failed to follow procedures that addressed concerns raised by employees about improper activities, and certain members of our former senior management failed to set the proper ethical tone.

•  The Company did not provide sufficient training to personnel engaged in key elements of the financial reporting process, including training on relevant regulations such as the Foreign Corrupt Practices Act.

•  The Company failed to educate and train employees in identifying, monitoring or reporting and responding to alleged misconduct or unethical behavior.

This material weakness resulted in an under payment and accrual of payroll and other taxes. Accordingly, the Company restated the 2004 and 2003 consolidated financial statements and the first three quarters of fiscal 2005 to accrue payroll and other taxes, penalties and interest.

The Company did not have sufficient technical expertise to address or establish adequate policies and procedures associated with accounting matters. In addition, the Company not maintain policies and procedures to ensure adequate management review of the information supporting the financial statements. As a result:

•  The Company did not have personnel with adequate technical expertise to effectively carry out the Company’s policies and procedures related to the review of technical accounting matters and to ensure adequate management review of information supporting the financial statements.

•  The Company did not establish or maintain adequate policies and procedures over the selection and application of appropriate accounting policies.

•  The Company failed to establish controls to properly identify and record expenses related to severance benefits for certain employees of a foreign subsidiary.

This material weakness resulted in an underreporting of revenue and direct costs. Accordingly, the Company restated the 2004 and 2003 consolidated financial statements and the first three quarters of fiscal 2005 to report customer reimbursements in revenue and direct costs and to record additional operating expense for the severance benefits.

The Company did not have sufficient technical tax expertise to establish and maintain adequate policies and procedures associated with the operation of certain complex tax structures. As a result, the Company failed to establish proper procedures to ensure the actions required to enable us to realize the benefits of these structures as previously recognized in our financial statements were performed.

This material weakness resulted in an underreporting of direct costs and income tax expense. Accordingly, the Company restated our 2004 and 2003 consolidated financial statements and the first three quarters of fiscal 2005 to report an increase in direct costs and income tax expense.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Offshore Logistics, Inc. and subsidiaries as of March 31, 2005 and 2004, and the related consolidated statements of income, stockholders’ investment and cash flows for each of the years in the three year period ended March 31, 2005. These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2005 consolidated financial statements, and this report does not affect our report dated June 9, 2005, except for the “Restatement of Previously Reported Amounts” section in Note A, the ninth paragraph of Note B, the “Internal Review Section of Note D, and Note M, as to which the date is December 9, 2005, which expressed an unqualified opinion on those consolidated financial statements.

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In our opinion, management’s assessment that the Company did not maintain effective internal control over financial reporting as of March 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of March 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

New Orleans, Louisiana

June 9, 2005, except for

the fifth paragraph

of management’s report

on internal control over

financial reporting

as to which the date is

December 9, 2005

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PART III

Item 10.   Directors and Executive Officers of the Registrant

DIRECTORS

The following sets forth certain information about our directors and persons nominated for election to our Board at our next annual meeting of stockholders. All of the directors are elected annually for a one-year term. Except as described below, there are no arrangements or understandings between us and any person pursuant to which such person has been elected a director, and no director or nominee is related to any of our other directors, nominees or executive officers.

THOMAS N. AMONETT, age 62, and resident of New York, New York, has been nominated for election to our Board at our next annual meeting of stockholders. Mr. Amonett has served as President, Chief Executive Officer and a director of Champion Technologies, Inc. since 1999. Champion Technologies, Inc. is an international provider of specialty chemicals and related services primarily to the oilfield production sector. Mr. Amonett serves as Chairman of the Board of TODCO, where he serves on the Corporate Governance and Executive Compensation Committees, and a director of Reunion Industries, Inc., where he serves on the Compensation and Audit Committees. Mr. Amonett served as director of Stelmar Shipping Ltd. from 2002 to January 2005 and served on the Audit Committee during his tenure, serving as chairman of the Audit Committee from 2003 to 2005.

PETER N. BUCKLEY(1), age 63, and a resident of London, England, currently serves as the Chairman of Caledonia Investments plc (a U.K. investment trust company). Mr. Buckley joined our Board in 1997 in connection with our investment in Bristow Aviation Holdings Limited. He also serves as a director of Kerzner International, Ltd., whose shares trade on the New York Stock Exchange, and as a director of Close Brothers Group plc. He has served as a member of our Executive Committee since 2000.

STEPHEN J. CANNON, age 51, and a resident of Southlake, Texas. Mr. Cannon joined our Board in 2002. He is currently the President and Chief Executive Officer of DynCorp International LLC, a CSC Company, a technology company with annual revenues in excess of $2 billion. From 1997 to 2000 he was Senior Vice President of DynCorp, and from 2000 to February 2005 he was President of DynCorp. Mr. Cannon has worked at DynCorp for 20 years and served in a variety of other capacities, including General Manager of its technical service subsidiary and Vice President of its aerospace technology subsidiary. He has served as a member of our Audit Committee since 2002 and our Corporate Governance Committee since 2004.

JONATHAN H. CARTWRIGHT(1), age 52, and a resident of London, England, where he is the Finance Director of Caledonia Investments plc. He, too, joined our board in 1997 in conjunction with our investment in Bristow Aviation Holdings Limited.

WILLIAM E. CHILES, age 57, and a resident of Houston, Texas, became the President and Chief Executive Officer of our Company effective July 15, 2004. Prior to his employment by the Company, Mr. Chiles was employed by Grey Wolf, Inc., an onshore oil and gas drilling company traded on the American Stock Exchange, from March 2003 until June 21, 2004 as Executive Vice President and Chief Operating Officer. Mr. Chiles served as Vice President of Business Development at ENSCO International Incorporated, an offshore oil and gas drilling company listed on the New York Stock Exchange, from August 2002 until March 2003. From August 1997 until its merger into an ENSCO International affiliate in August 2002, Mr. Chiles served as President and Chief Executive Officer of Chiles Offshore, Inc. Mr. Chiles serves as a director of Basic Energy Services, L.P., a contractor for land based oil and gas services. He has served as a member of our Executive Committee since 2004.

MICHAEL A. FLICK, age 57, and a resident of New Orleans, Louisiana, has been nominated for election to our Board at our next annual meeting of stockholders. Mr. Flick has been selected by our Board to succeed Mr. Johnson, who we expect to resign as director on the date of our next annual meeting of stockholders. Mr. Flick began his career in commercial banking in 1970 at First National Bank, which subsequently became a wholly owned subsidiary of First Commerce Corporation, whose shares were traded on the NASDAQ. Mr. Flick held a variety of positions at First Commerce Corporation, including Chief Financial Officer and Chief Credit Policy Officer, and retired in 1998 as the Executive Vice President and Chief Administrative Officer. Thereafter, he served as a director and chairman of the Audit Committee of Community Coffee Company, a privately held company until

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his term expired in July 2005. He also serves as a director of the University of New Orleans Foundation and chairman of its Audit Committee.

DAVID M. JOHNSON, age 67, and a resident of Houston, Texas. Mr. Johnson joined our Board in 1983. We expect Mr. Johnson to resign as director effective on the date of our next annual meeting of stockholders. He is currently a private investor. He previously served as President and Chairman of the Board of Q Services, an oilfield service company with annual revenues over $200,000,000. Mr. Johnson also serves on the boards of Champion Technologies and Permian Mud Services, Inc., both private companies with annual revenues in excess of $600,000,000. He currently serves on our Audit Committee and Nominating Committee.

KENNETH M. JONES, age 72, and a resident of Flat Rock, North Carolina. Mr. Jones was a founding director of Offshore Logistics, Inc. and served as President and Chief Operating Officer from 1969 until 1984. During this period he was a director of the Helicopter Association International and the American Helicopter Society. He retired from our Company in 1984 to manage an oil royalty investment trust, but he has served continuously as a director since 1969 to the present. In October 2001, Mr. Jones was elected as Chairman of the Board of our Company and is currently serving in that capacity. In addition, Mr. Jones serves on our Executive Committee.

PIERRE H. JUNGELS, CBE, age 61, and a resident of Enborne, England. Dr. Jungels joined our Board in 2002. He served as President of the Institute of Petroleum until December 2003. From 1996 through 2001 he served as a director and Chief Executive Officer of Enterprise Oil plc, one of the largest independent European oil companies at the time. In 1996, Dr. Jungels served as the managing director of exploration and production at British Gas plc. From 1975 through 1995 he served in a variety of capacities at Petrofina S.A. and its predecessors, including serving as a director of FINA, Inc., as Managing Director and Chief Executive Officer of FINA, plc (U.K.) and Chief Executive Officer of FINA Angola. Mr. Jungels is also a director of Woodside Petroleum Ltd., a director and Chairman of the Board of OHM Offshore Hydrocarbon Mapping Plc, a director of Imperial Tobacco Group plc, where he serves on the Audit and Compensation Committees, and a director and chairman of the board of Rockhopper Exploration Plc. He has served on our Compensation Committee since 2002 and also serves on our Corporate Governance Committee.

THOMAS C. KNUDSON, age 59, and a resident of Houston, Texas. Mr. Knudson joined our Board in June 2004. Following seven years of active duty as a U.S. Naval aviator and an aerospace engineer, he joined Conoco in 1975. His diverse corporate career included engineering, operations, business development and commercial assignments across a broad spectrum of Conoco Phillips businesses, including service as the Chairman of Conoco Europe Exploration and Production. He retired from Conoco Phillips on January 1, 2004 as Senior Vice President, Human Resources, Government Affairs and Communications. Mr. Knudson is also a director of NATCO Group, Inc., a leading provider of wellhead process equipment, systems and services used in the production of oil and gas. Mr. Knudson has served on our Compensation Committee and Corporate Governance Committee since 2004, and a director of Williams Partners L.P., a provider of midstream natural gas processing and transportation services.

KEN C. TAMBLYN, age 62, and a resident of Folsom, Louisiana. Mr. Tamblyn joined our Board in 2002. He spent the first 20 years of his business career as a certified public accountant with Peat Marwick, a predecessor of KPMG. In 1986 he joined Tidewater, Inc. as Executive Vice President and Chief Financial Officer. He served in that capacity until his retirement in August 2000. Mr. Tamblyn currently serves as a director of Gulf Island Fabrication, Inc. where he serves on the Audit Committee. Mr. Tamblyn has served on our Audit Committee since 2002 and also serves on our Nominating Committee.

ROBERT W. WALDRUP, age 61, and a resident of Kingwood, Texas. Mr. Waldrup joined our Board in 2001. He is one of the founders of Newfield Exploration Company where he served as the Vice President of Operations and as a director from 1992 until his retirement in 2001. Mr. Waldrup currently serves as the director of a privately-held company, Marine Spill Response Corporation, which provides environmental clean up services and on whose compensation committee he serves. He has served on our Executive Committee since 2004, on our Compensation Committee since 2001 and on our Nominating Committee since 2002.

(1)  Peter N. Buckley and Jonathan H. Cartwright, directors and executive officers of Caledonia Industrial & Services Limited (“CIS”), were designated by CIS and elected to our Board of Directors in February 1997

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pursuant to a Master Agreement dated December 12, 1996 among the Company, CIS and certain other persons in connection with our acquisition of 49% and other substantial interests in Bristow Aviation Holdings Limited. The Master Agreement provides that so long as CIS owns (1) at least 1,000,000 shares of Common Stock of the Company or (2) at least 49% of the total outstanding ordinary shares of Bristow Aviation Holdings Limited, CIS will have the right to designate two persons for nomination of our Board of Directors and to replace any directors so nominated. On December 4, 2002, CIS transferred its rights and obligations under the Master Agreement to Caledonia Investments plc. For a further discussion of this transfer, see “Other Matters.”

Our Board of Directors has the following committees, the membership of which as of December 1, 2005, was as set forth below:

			Number of Meetings
Name of Committee and Members	Function of Committee(2)		in Fiscal 2005
EXECUTIVE		Acts in accordance with committee charter.		0
Peter N. Buckley Kenneth M. Jones Robert W. Waldrup William E. Chiles
AUDIT(1)		Acts in accordance with committee charter.		6
Stephen J. Cannon David M. Johnson Ken C. Tamblyn
COMPENSATION(1)		Acts in accordance with committee charter.		5
Pierre H. Jungels, CBE Thomas C. Knudson Robert W. Waldrup
CORPORATE GOVERNANCE(1)		Acts in accordance with committee charter.		2
Stephen J. Cannon Pierre H. Jungels, CBE Thomas C. Knudson
NOMINATING(1)		Acts in accordance with committee charter.		3
David M. Johnson Ken C. Tamblyn Robert W. Waldrup

(1)	As of August 31, 2005, all members of the Audit, Compensation, Corporate Governance, and Nominating Committees were independent as defined in the applicable NYSE rules.
(2)	The charters of our Executive, Audit, Compensation, Corporate Governance, and Nominating Committees are posted on our Internet website under the caption “Corporate Governance” and are available free of charge on request to our Secretary at 2000 W. Sam Houston Parkway South, Suite 1700, Houston, Texas 77042.

AUDIT COMMITTEE

We have a separately designed standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. As of August 31, 2005, the members of the Audit Committee are Messrs. Cannon, Johnson and Tamblyn. The Audit Committee’s principal functions are to recommend to the Board of Directors each year the engagement of a firm of independent auditors, to assist the Board of Directors in fulfilling its responsibility for oversight of the Company’s accounting and internal control systems and principal accounting policies, to recommend to the Company’s Board of Directors, based on its discussions with the Company’s management and independent auditors, the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K and to oversee the entire independent audit function. The Company believes that each of the three members of the Audit Committee satisfy the requirements of the applicable rules of the SEC and the NYSE as to

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independence, financial literacy and experience. The Board of Directors has determined that at least one member, Ken C. Tamblyn, is an audit committee financial expert as defined by the SEC.

EXECUTIVE OFFICERS OF THE REGISTRANT

Under our by-laws, our Board of Directors elects our executive officers annually. Each executive officer remains in office until that officer ceases to be an officer or his or her successor is elected. There are no family relationships among any of our executive officers. At December 1, 2005, our executive officers were as follows:

Name	Age		Position Held with Registrant
William E. Chiles		57	President, Chief Executive Officer and Director
Joseph Baj		47	Vice President, Treasurer and Secretary
Elizabeth Brumley		47	Controller
Richard Burman		52	Senior Vice President, Eastern Hemisphere
Bill Donaldson		65	Executive Vice President, Production Management
Michael R. Suldo		59	Senior Vice President, Western Hemisphere
Brian C. Voegele		45	Senior Vice President and Chief Financial Officer

Mr. Chiles joined us in July 2004 as Chief Executive Officer and President. Mr. Chiles served as Executive Vice President and Chief Operating Officer of Grey Wolf, Inc. from March 2003 until June 2004. Mr. Chiles served as Vice President of Business Development at ENSCO International Incorporated from August 2002 until March 2003. From August 1997 until its merger into an ENSCO International affiliate in August 2002, Mr. Chiles served as President and Chief Executive Officer of Chiles Offshore, Inc. From May 1996 until March 1997, Mr. Chiles served as Senior Vice President — Drilling Operations of Cliffs Drilling Company. From 1992 to May 1996, Mr. Chiles served as President and Chief Executive Officer of Southwestern Offshore Corporation, an offshore contract drilling company that he founded in 1992. Mr. Chiles co-founded Chiles Offshore Corporation in 1987 and its predecessor company, Chiles Drilling Company, in 1977, each of which was an offshore contract drilling company.

Mr. Baj joined us in July 2005 as Assistant Treasurer. In November 2005, Mr. Baj was elected Vice President, Treasurer and Secretary. Prior to joining the Company, Mr. Baj was a treasury consultant from 2004 to 2005. Prior to 2004, Mr. Baj was Assistant Treasurer with Transocean Inc. from 1997 to 2003, held various treasury and investor relations positions with Sterling Chemicals, Inc. from 1987 to 1997, and worked in the treasury group of Anderson, Clayton and Co. from 1983 to 1987.

Ms. Brumley joined us and was elected Controller in November 2005. Before joining the Company, Ms. Brumley was the Vice President and Controller of Noble Drilling Services, Inc., a drilling company, from March 2005 to September 2005. From 1996 to March 2005, she served with MAXXAM Inc., a forest products, real estate investment and development, and racing company, where she served as Controller beginning in January 1999 and ultimately becoming Vice President and Controller in December 2003. She has also worked for GulfMark Offshore, Inc. (formerly GulfMark International, Inc.), an offshore marine services company, serving as Controller from 1990 until 1996. A Certified Public Accountant, Ms. Brumley was a senior auditor with Arthur Andersen LLP prior to joining GulfMark in 1987.

Mr. Burman joined us in 2004 as Senior Vice President, Eastern Hemisphere and Managing Director of Bristow. Prior to joining us, Mr. Burman held various positions within the Baker Hughes group of companies, most recently Region General Manager, Mediterranean and Africa for Baker Hughes INTEQ.

Mr. Donaldson joined us in 1995 as Vice President, Marketing of Grasso Production Management, Inc. Mr. Donaldson was appointed President of GPM in 1996 and Executive Vice President, Production Management in 2004, and currently serves in those positions. Mr. Donaldson has 40 years experience in the offshore oil service business in the Gulf of Mexico. Prior to joining us, Mr. Donaldson held the positions of President of Savage Drilling, Inc. and Vice President, Operations for Tidewater, Inc.

Mr. Suldo joined us in 2002 as Assistant General Manager of Air Logistics and was elected General Manager in 2003. In June 2005, Mr. Suldo was promoted to Senior Vice President, Western Hemisphere and President of Air Logistics. Prior to joining us, Mr. Suldo retired as a Commander in the US Navy following a 20 year career. He was

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employed at Petroleum Helicopters Inc. from July 1988 until March 2002 in Gulf of Mexico operations in various managerial positions.

Mr. Voegele joined us in June 2005 as Senior Vice President, Chief Financial Officer, Secretary and Treasurer. Prior to joining the Company, Mr. Voegele was employed by Transocean, Inc., a worldwide provider of offshore drilling services, from July 1989 until January 2005. During his tenure with Transocean, Mr. Voegele served in various executive roles including Vice President, Corporate Planning and Development from October 2002 to December 2004, Vice President, Tax from April 2001 to October 2002 and Vice President, Finance from February 1998 through April 2001. Prior to joining Transocean, Mr. Voegele was employed by Arthur Young & Co. from 1983 to 1989. Mr. Voegele has notified the Company of his intent to resign his positions with the Company to pursue another opportunity with a larger oilfield services company. In November 2005, Mr. Voegele ceased to hold the positions of Secretary and Treasurer when Mr. Baj was elected to those positions. Mr. Voegele remained with the Company as of the date we are filing this Annual Report.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, officers, and certain beneficial owners (collectively, “Section 16 Persons”) to file with the Securities and Exchange Commission and NYSE reports of beneficial ownership on Form 3 and reports of changes in ownership on Form 4 or 5. Copies of all such reports are required to be furnished to us. To our knowledge, based solely on a review of the copies of Section 16(a) reports furnished to us for fiscal year 2005, and other information, all filing requirements for the Section 16 Persons have been complied with during or with respect to fiscal year 2005 except that two Form 3s were filed late by Thomas C. Knudson and William Hopkins, respectively, and one Form 4 was filed late by William Hopkins with respect to options for shares of Common Stock granted to him.

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CODE OF ETHICS

The Company has adopted a code of business conduct and ethics applicable to the Company’s directors, officers (including the Company’s principal executive officer, principal financial officer and controller) and employees, known as the Code of Business Integrity. The Code of Business Integrity is available on the Company’s website and in print form to any shareholder who requests a copy. In the event that we amend or waive any of the provisions of the Code of Business Integrity, we intend to disclose the amendment or waiver on the Company’s Internet website at http://www.olog.com.

Item 11.  Executive Compensation

The following table sets forth the aggregate cash and non-cash compensation paid by us and our subsidiaries for services rendered during the last three fiscal years to our Chief Executive Officer, our former Chief Executive Officer and our four other most highly compensated executive officers who were serving as such on March 31, 2005:

SUMMARY COMPENSATION TABLE

								Long-Term Compensation
								Awards(3)
						Other				Securities
	Fiscal					Annual		Restricted		Underlying		All Other
	Year	Annual Compensation				Compen-		Stock		Options/		Compen-
Name & Principal Position	Ended	Salary ($)(6)		Bonus ($)(1)(6)		sation ($)(2)		Award(s) ($)		SARs (#)		sation ($)(4)
William E. Chiles (5)	2005	$	301,042	$	331,193	$	—	$	680,250		75,000	$	39,339
President and	2004	$	—	$	—	$	—	$	—		—	$	—
Chief Executive Officer	2003	$	—	$	—	$	—	$	—		—	$	—
Drury A. Milke (5) (8)	2005	$	250,000	$	—	$	—	$	—		24,000	$	58,499
President, Air Logistics LLC	2004	$	234,000	$	126,662	$	—	$	—		24,000	$	51,380
	2003	$	222,167	$	100,688	$	—	$	—		24,000	$	15,907
Richard Burman (5)	2005	$	114,349	$	55,269	$	—	$	—		24,000	$	14,294
Managing Director,	2004	$	—	$	—	$	—	$	—		—	$	—
Bristow Helicopters Ltd.	2003	$	—	$	—	$	—	$	—		—	$	—
Bill Donaldson (5)	2005	$	195,000	$	119,851	$	—	$	—		24,000	$	44,681
President, Grasso Production	2004	$	188,000	$	104,938	$	—	$	—		24,000	$	42,780
Management, Inc.	2003	$	178,000	$	101,905	$	—	$	—		10,000	$	7,097
H. Eddy Dupuis (5) (9)	2005	$	175,000	$	—	$	—	$	—		24,000	$	42,792
Vice President and	2004	$	165,000	$	94,622	$	—	$	—		24,000	$	37,849
Chief Financial Officer	2003	$	143,100	$	81,925	$	—	$	—		18,000	$	16,536
George M. Small (7)	2005	$	354,274	$	—	$	—	$	—		—	$	118,854
President and	2004	$	290,000	$	223,359	$	—	$	—		40,000	$	83,684
Chief Executive Officer	2003	$	272,500	$	123,063	$	—	$	—		33,000	$	15,891

(1)	Cash bonuses are listed in the fiscal year earned but were paid partially or entirely in the following fiscal year. Under the terms of the 1994 Long-Term Management Incentive Plan (the “1994 Plan”), certain participants may elect to receive all or a portion of their awarded bonus in the form of restricted stock. These amounts (including the 20% additional awards in restricted stock provided as a deferral incentive) are reflected in the “Restricted Stock Award(s)” column, although the restricted stock awards were not made until the following year.
(2)	The stated amounts exclude perquisites and other personal benefits because the aggregate amounts paid to or for any executive officer as determined in accordance with the rules of the Securities and Exchange Commission relating to executive compensation did not exceed the lesser of $50,000 or 10% of salary and bonus for fiscal years 2005, 2004 and 2003.
(3)	Mr. Chiles was awarded 25,000 shares of restricted stock units in fiscal year 2005. We awarded no other restricted stock to these individuals for fiscal years 2005, 2004 and 2003. All options granted to Messrs. Chiles,

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	Milke, Donaldson, Dupuis and Small were awarded pursuant to the 1994 Plan. Options granted to Mr. Burman were awarded pursuant to the 2004 Stock Incentive Plan (“2004 Plan”).
(4)	The stated amounts for Messrs. Chiles, Milke, Dupuis and Small consist of our contributions made pursuant to our Employee Savings and Retirement Plan (the “401(k) Plan”), 65% of which was vested with respect to Mr. Chiles and 100% of which was vested with respect to Messrs. Milke, Dupuis and Small, our contributions made pursuant to the Deferred Compensation Plan (defined below) and the cost to us for premiums on life insurance policies that we maintained for certain key employees. During fiscal year 2005, our expense for the life insurance premiums were $2,480, $2,649 and $2,680 for Messrs. Milke, Dupuis and Small, respectively, and our contributions to the 401(k) Plan were $9,088; $12,420; $10,425 and $12,478 for Messrs. Chiles, Milke, Dupuis and Small, respectively. The stated amount for Mr. Donaldson consists of our contributions made pursuant to the 401(k) Plan, all of which are 100% vested and our contributions made pursuant to the Deferred Compensation Plan. The stated amount for Mr. Burman consists of our contributions made pursuant to Bristow’s defined contribution retirement plan.
(5)	For additional information regarding the compensation of these individuals, see the section below entitled “Employment, Severance and Change-of-Control Arrangements.”
(6)	Under the terms of the Company’s non-qualified deferred compensation plan for senior executives (“Deferred Compensation Plan,”) participants can elect to defer a portion of their compensation for distribution at a later date. The 2005 Salary and Bonus columns include the following amounts deferred pursuant to the Deferred Compensation Plan, respectively: William E. Chiles — $-0- and $-0-, Drury A. Milke — $68,750 and $-0-, Richard Burman — $-0- and $-0-, Bill Donaldson — $97,500 and $62,680, H. Eddy Dupuis — $14,875 and $-0- and George M. Small — $-0- and $-0-. We have general contractual obligations to pay the deferred compensation upon the participants’ termination of employment for any reason, including but not limited to death, disability or retirement.
(7)	Mr. Small entered into a Retirement Agreement with the Company dated as of April 26, 2004 (the “GMS Agreement”). Under the GMS Agreement, Mr. Small assisted in the transition to the new CEO for a period of 180 days beginning on the date the new CEO assumed office, which was July 15, 2004. During this 180 day period, we paid Mr. Small an annual rate equal to his 2004 base salary of $290,000 plus the average of his bonus for the last three fiscal years (the “Compensation Rate”). From the end of this 180 day transition period to November 29, 2009, we will pay Mr. Small an annual amount equal to 50% of the Compensation Rate.
(8)	Effective April 26, 2005, Mr. Milke’s employment was terminated by the Company. Michael R. Suldo, former general manager of Air Logistics, L.L.C., was appointed Senior Vice President, Western Hemisphere and President of Air Logistics, L.L.C., effective June 2, 2005.
(9)	Effective April 26, 2005, Mr. Dupuis resigned from the Company. Brian C. Voegele, previously employed by Transocean, Inc., was named the Company’s Chief Financial Officer, effective June 1, 2005.

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OPTION/SAR GRANTS IN LAST FISCAL YEAR

The following table shows, as to the named executive officers, information about option/SAR grants during fiscal year 2005:

Individual Grants
	Number of			% of Total
	Securities			Options/SARs
	Underlying			Granted to			Exercise
	Options/SARs			Employees in			Price		Expiration		Grant Date
Name	Granted (#)(1)			Fiscal Year			($/Share)		Date		Present Value(2)
William E. Chiles		75,000	(1)		20.6	%	$	27.21		6/21/2014	$	835,151
Drury A. Milke		24,000	(1)		6.6	%	$	22.81		6/3/2014	$	223,852
Richard Burman		24,000	(2)		6.6	%	$	36.61		11/1/2014	$	352,513
Bill Donaldson		24,000	(1)		6.6	%	$	22.81		6/3/2014	$	223,852
H. Eddy Dupuis		24,000	(1)		6.6	%	$	22.81		6/3/2014	$	223,852
George M. Small		—			—			—		—		—

(1)

These awards were made pursuant to the 1994 Plan, have a ten-year term, have an exercise price equal to the fair market value (as defined in the 1994 Plan) of the Common Stock on the grant date, and include the right of the Company to purchase all or any part of the shares of Common Stock issuable upon exercise of the options by paying to the optionee an amount, in cash or Common Stock, equal to the excess of the fair market value of our Common Stock on the effective date of such purchase over the exercise price per share. These options will vest in annual installments of one-third each beginning on the first anniversary of the grant date. Options granted under the 1994 Plan may be exercised for cash and may also be paid for by delivering to us unrestricted Common Stock already owned by the optionee or by our withholding shares otherwise issuable upon exercise of the options (or a combination thereof), as well as in such other manner as may be authorized by the committee administering the 1994 Plan (the “Committee”). Options under the 1994 Plan also grant the optionee the right, if the optionee makes payment of the exercise price by delivering shares of Common Stock held by the optionee, to purchase the number of shares of Common Stock delivered by the optionee in payment of the exercise price (a “Replacement Option”). Replacement Options are exercisable at a price equal to the fair market value of our Common Stock as of the date of the grant of the Replacement Option. The options granted under the 1994 Plan also provide for certain “cashout” rights following a Change In Control (as defined in the 1994 Plan). The options granted under the 1994 Plan also provide that, subject to certain conditions, the Committee may permit the optionee to pay all or a portion of any taxes due with respect to exercise of the options (a) by electing to have us withhold shares of Common Stock due to the optionee upon exercise of the option or (b) by delivering to us previously owned shares of Common Stock.

(2)

These awards were made pursuant to the 2004 Plan, have a ten-year term, have an exercise price equal to the fair market value (as defined in the 2004 Plan) of the Common Stock on the grant date, and include the right of the Company to purchase all or any part of the shares of Common Stock issuable upon exercise of the options by paying to the optionee an amount, in cash or Common Stock, equal to the excess of the fair market value of our Common Stock on the effective date of such purchase over the exercise price per share. These options will vest in annual installments of one-third each beginning on the first anniversary of the grant date. Options granted under the 2004 Plan may be exercised for cash and may also be paid for by delivering to us unrestricted Common Stock already owned by the optionee or by our withholding shares otherwise issuable upon exercise of the options (or a combination thereof), as well as in such other manner as may be authorized by the committee administering the 2004 Plan (the “Committee”). Options under the 2004 Plan also grant the optionee the right, if the optionee makes payment of the exercise price by delivering shares of Common Stock held by the optionee, to purchase the number of shares of Common Stock delivered by the optionee in payment of the exercise price (a “Reload Option”). Reload Options are exercisable at a price equal to the fair market value of our Common Stock as of the date of the grant of the Reload Option. The options granted under the 2004 Plan also provide for certain adjustments following a Change In Control (as defined in the 2004 Plan). The options granted under the 2004 Plan also provide that, subject to certain conditions, the Committee may permit the optionee to pay all or a portion of any taxes due with respect to exercise of the options (a) by electing

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	to have us withhold shares of Common Stock due to the optionee upon exercise of the option or (b) by delivering to us previously owned shares of Common Stock.
(3)	The present value for these options was estimated at the date of grant, using the Black-Scholes option-pricing model. The following assumptions were used to obtain the grant-date present value for the options granted:

	June 3, 2004			June 21, 2004			November 1, 2004
Risk free interest rate		3.89	%		3.91	%		3.36	%
Expected life (years)		5			5			5
Volatility		39.93	%		39.93	%		40.07	%
Dividend yield		—			—			—

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES

The following table shows, as to the named executive officers, the aggregate option exercises during fiscal year 2005 and the values of unexercised options as of March 31, 2005:

					Number of Securities				Value of Unexercised
	Shares				Underlying Unexercised				In-the-Money
	Acquired		Value		Options/SARs at FY End				Options/SARs at FY End(1)
Name	on Exercise		Realized		Exercisable		Unexercisable		Exercisable		Unexercisable
William E. Chiles		—	$	—		—		75,000	$	—	$	458,250
Drury A. Milke		79,000	$	1,143,045		—		48,000	$	—	$	569,520
Richard Burman		—	$	—		—		24,000	$	—	$	—
Bill Donaldson		33,833	$	299,982		3,333		43,334	$	51,067	$	498,037
H. Eddy Dupuis		32,700	$	578,298		26,800		46,000	$	362,664	$	538,880
George M. Small		148,000	$	1,491,166		—		—	$	—	$	—

(1) The dollar amounts shown in this column represent the aggregate excess of the market value of the shares underlying the unexercised in-the-money options as of March 31, 2005, over the aggregate exercise price of the options.

COMPENSATION OF DIRECTORS

For the period April 1, 2004 to September 8, 2004, each non-employee member of the Board of Directors received $5,500 per quarter. Non-employee directors also received $1,100 for each meeting attended, including committee meetings. Each committee chairman received $2,500 (in lieu of the $1,100 per meeting fee) for each committee meeting chaired. Effective September 9, 2004, we increased the amounts we compensate our non-employee directors for their services. Each non-employee member of the Board of Directors (other than Mr. Jones) received $7,500 per quarter and $1,500 for each meeting attended, including committee meetings. The Audit Committee chairman received $5,000 for each committee meeting chaired. Each other committee chairman (other than Mr. Jones) received $2,500 (in lieu of the $1,500 per meeting fee) for each committee meeting chaired. In addition, pursuant to the 2003 Nonqualified Stock Option Plan for Non-employee Directors, on September 9, 2004 each Non-employee Director (as defined in the plan) received options to purchase 5,000 shares of the Company’s Common Stock, at an exercise price equal to its then fair market value.

The 2003 Nonqualified Stock Option Plan for Non-employee Directors (the “2003 Plan”) provides for the granting to directors who are not employees of the Company (the “Non-employee Directors”) of nonqualified options to purchase Common Stock. The 2003 Plan is administered by the Board of Directors. A total of 160,000 shares of Common Stock have been reserved at March 31, 2005 for issuance upon the exercise of options under the 2003 Plan, subject to adjustment in the event of stock splits, stock dividends and similar changes in the Company’s Common Stock.

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As of the date of the Company’s Annual Meeting of Stockholders in each year that the 2003 Plan is in effect beginning with the Annual Meeting held on September 15, 2003, each Non-employee Director who is elected or re-elected, or otherwise continues as a director of the Company following such Annual Meeting, will be granted an option to purchase 5,000 shares of Common Stock. However, no such options shall be granted to any Non-employee Director who during the preceding 12 months missed 50% or more of the meetings of the Board of Directors and committees on which he served.

The option price per share for each option granted under the 2003 Plan is the fair market value of the Common Stock on the date of grant. Under the 2003 Plan, options are not exercisable until six months after the date of the grant. The 2003 Plan terminates on, and no options shall be issued after, the date of the Annual Meeting of Stockholders in 2012 and any options outstanding on that date will remain outstanding until they have either expired or been exercised.

Effective October 1, 2001, Mr. Jones ceased receiving quarterly and per meeting director fees. Instead, his director’s fees are set at $12,000 per month. On February 11, 2002, he received options to purchase 50,000 shares of the Company’s Common Stock at an exercise price equal to the fair market value on the date of grant with an expiration date of February 11, 2012, and subsequently elected to forego the September 16, 2002 annual grant under the 1991 Nonqualified Stock Option Plan for Non-employee Directors (the “1991 Plan”).

EMPLOYMENT, SEVERANCE AND CHANGE-OF-CONTROL ARRANGEMENTS

We have entered into change of control agreements (the “Change of Control Agreements”) with certain of our executive officers. The Change of Control Agreements for each executive officer provide for continued employment for a three-year period following a Change of Control, as defined (the “Employment Term”). Should the officer’s employment be terminated during the Employment Term for any reason other than death, disability or “Cause”, as defined, or should the officer terminate his employment for “Good Reason”, as defined, the officer will become entitled to certain benefits. The benefits include a lump sum payment equal to three times the sum of the officer’s Annual Base Salary, as defined, and Highest Annual Bonus, as defined. Also, the officer will be entitled to continued welfare benefits under various Company plans and programs for a minimum of thirty-six months following the “Date of Termination”, as defined, as well as outplacement services and other benefits. In the event that any payments by the Company to or for the benefit of the officer (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (“Excise Tax”), then the officer will be entitled to an additional payment (“Gross-Up Payment”) in an amount such that, after payment by such officer of all taxes imposed on the Gross-Up Payment, the officer retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. The Change of Control Agreements also provide that no award granted under the 1994 Plan or pursuant to any other plan or arrangements maintained by the Company will be reduced as a result of being potentially non-deductible under Section 280G of the Internal Revenue Code.

Under the terms of the 1994 Plan and the 2004 Plan, if a change in control (as defined in the Plans) occurs, all outstanding options and SARs held by the employee participant become immediately exercisable; the restrictions and deferral limitations (if any) applicable to any then outstanding shares of Restricted Stock, Restricted Stock Units, Deferred Stock or other stock based awards made pursuant to the 1994 Plan and the 2004 Plan (if any) become free of all restrictions, fully vested and transferable to the full extent of the award. Also, under the 1994 Plan, for a 60-day period following a change in control (as defined in the 1994 Plan), unless the Committee that administers the 1994 Plan determines otherwise at the time of the award the participant has the right to elect to surrender to the Company all or part of the stock options in exchange for a cash payment equal to the spread between the change in control price (as defined in the 1994 Plan) and the option exercise price. Likewise, the Committee that administers the 2004 Plan, may in its discretion make certain equitable adjustments following a change in control, including the cancellation of stock options in exchange for a cash payment equal to the excess, if any, of the consideration being paid for each underlying share of Common Stock pursuant to the change in control transaction over the exercise price of the option.

In connection with Mr. Chiles joining the Company, he and the Company entered into an Employment Agreement that became effective June 21, 2004. The agreement initially has a term of 3 years, and, upon each anniversary, this term will be automatically extended by successive one year periods unless either party thereto

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gives appropriate notice. Under the agreement, Mr. Chiles serves as President and Chief Executive Officer of the Company and reports to the Board of Directors. The Company will pay Mr. Chiles a base salary of $425,000 and he will be eligible for a cash bonus, if he and the Company meet certain performance targets, of up to 150% of his base salary. The Company will also credit an annual amount equal to 20% of Mr. Chiles’ annual salary and bonus to Mr. Chiles pursuant to the Deferred Compensation Plan. Upon signing the agreement, Mr. Chiles received options to purchase 75,000 shares of our Common Stock with an exercise price equal to the Common Stock’s closing price on the date of the grant. In addition, he received 25,000 Performance Accelerated Restricted Stock Units. The Company will provide Mr. Chiles a ten-year term life insurance policy in the amount of $3 million payable to his designated beneficiaries. If Mr. Chiles’ employment is terminated by the Company without Cause or by him for Good Reason (as those terms are defined in the agreement), he will be entitled to a lump sum cash payment calculated pursuant to a formula set forth therein, along with other benefits. The agreement also contains confidentiality, non-competition, employee non-solicitation and other provisions. Mr. Chiles and the Company also entered into a Change of Control Agreement substantially similar to those described above.

Mr. Small entered into a Retirement Agreement with the Company dated as of April 26, 2004 (the “GMS Agreement”). Under the GMS Agreement, Mr. Small assisted in the transition to the new CEO for a period of 180 days beginning on the date the new CEO assumed office, which was July 15, 2004. During this 180 day period, we paid Mr. Small an annual rate equal to his 2004 base salary of $290,000 plus the average of his bonus for the last three fiscal years (the “Compensation Rate”). From the end of this 180 day transition period to November 20, 2009, we will pay Mr. Small an annual amount equal to 50% of the Compensation Rate. The GMS Agreement also contains confidentiality, non-competition, employee non-solicitation and other provisions.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Introduction

This Compensation Committee report summarizes the major responsibilities of the Committee, the compensation philosophy which underlies specific decisions regarding compensation, each component of the program, and the basis on which the compensation for the CEO, corporate officers, and subsidiary presidents, and other key employees was determined for the fiscal year ended March 31, 2005.

During the fiscal year ended March 31, 2005, each member of the Committee satisfied the independence requirements of the New York Stock Exchange. Each member of the Committee also met the definitions of “non-employee director” under Rule 16b-3 of the Securities and Exchange Act of 1934 and “outside director” under Section 162(m) of the Internal Revenue Code of 1986 (as amended). The Committee was comprised of Mr. Robert Waldrup (Chairman), Mr. Pierre Jungels, and Mr. Thomas Knudson. The Committee met five times during fiscal year 2005.

The Company periodically undertakes a comprehensive review and evaluation of the total compensation program for corporate officers, subsidiary presidents, and other key employees. These evaluations, which are completed with the assistance of outside consultants retained by the Committee, evaluate the overall pay philosophy of the Company, the market competitiveness of key employee and director compensation, the design and structure of the annual and longer-term incentive plans, and the Committee’s level of compliance with compensation and governance provisions of the Sarbanes-Oxley Act of 2002, the rules of the Securities and Exchange Commission and other regulatory proposed governance standards.

Annually the Committee, with the assistance of its advisors, evaluates the effectiveness of the overall program and compares the compensation levels of its executives and the performance of the Company to the compensation received by executives and the performance of similar oilfield services companies. The primary market comparisons include a peer company group of companies similar in size and industry segment, and the broad oilfield services industry, adjusted for size and job responsibilities. The peer group includes substantially all the companies used in the Relative Market Performance graph presented elsewhere in this Annual Report and is representative of the market in which the Company competes for executive talent. These data sources provide a consistent and stable market reference from year to year.

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Compensation Philosophy

The overall mission of the Company is to enhance long-term stockholder value by being the best oilfield services company providing aviation transportation and related services. Specifically, the Company strives to have:

• the highest level of customer satisfaction,

• the highest emphasis on safety,

• profitable operations, and

• growth within defined markets.

The executive compensation program for executives is designed to support and reinforce the mission of the Company and lead to the consistent enhancement of stockholder value.

The program targets total compensation that is consistent with the market median when individual and organizational performance objectives are achieved and provides the opportunity to earn above average compensation when performance exceeds expectations. To achieve this objective the program has a significant “at-risk” component in the form of variable annual and long-term incentives. The program also seeks to balance “fixed” (salary and benefits) and “variable” (annual and long-term incentives).

Variable incentives, both annual and longer-term, are important components of the program and are used to align actual pay levels with performance results. Long-term incentives are designed to create a strong emphasis on enhancing total stockholder value over the longer-term and align the interests of management with those of stockholders through share ownership. Annual incentives reward participants based on corporate, business unit and individual results. When annual and long-term results are above average, total compensation will be above average.

The Compensation Committee also considers the potential impact of Section 162(m) of the Internal Revenue Code of 1986, as amended (Section 162(m)). Section 162(m) disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1 million in any taxable year for the Chief Executive Officer and the other senior executive officers, other than compensation that is performance-based under a plan that is approved by the shareholders of the corporation and that meets certain technical requirements. Based on these requirements, the Compensation Committee has determined that Section 162(m) will not prevent the Company from receiving a tax deduction for any of the compensation paid to executive officers.

Severance Compensation Paid to our Former President and Chief Executive Officer, George M. Small

Mr. Small entered into a Retirement Agreement with the Company dated as of April 26, 2004 (the “GMS Agreement”). Under the GMS Agreement, Mr. Small assisted in the transition to the new CEO for a period of 180 days beginning on the date the new CEO assumed office, which was July 15, 2004. During this 180 day period, we paid Mr. Small an annual rate equal to his 2004 base salary of $290,000 plus the average of his bonus for the last three fiscal years (the “Compensation Rate”). From the end of this 180 day transition period to November 20, 2009, under the GMS Agreement, Mr. Small is to be paid an annual amount equal to 50% of the Compensation Rate. The GMS Agreement also contains confidentiality, non-competition, employee non-solicitation and other provisions.

Program Components

  Base Salary

The base salary program targets the median of comparable industry competitors. The performance of each executive is reviewed annually. Salary adjustments are based on the individual’s experience and background, the general movement of salaries in the marketplace, and the Company’s financial position. Due to these factors, an executive’s base salary may be above or below the market median at any point in time. The base salaries of the corporate officers and key executives are generally consistent with the market median.

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  Annual Incentive Compensation

The Committee administers the Executive Bonus Plan for key corporate and subsidiary managers. For fiscal year 2005, incentive awards were determined based on corporate, subsidiary and individual performance. Corporate and subsidiary performance measures were based on pre-determined financial performance goals to determine the incentive award for each factor. An individual award component was based on the performance evaluation or other individual objectives for each executive. For fiscal year 2006, all participants will be judged on the Company’s safety record, as well as individual performance, corporate earnings per share, corporate EBITDA, corporate return on capital, and profitability and revenue growth at the business unit level.

  Long-Term Incentives

The goal of the Company’s long-term incentive program is to directly link a significant portion of the executive’s compensation to the enhancement of stockholder value over the longer-term.

The Company generally makes stock option awards on an annual basis, with corporate and subsidiary officers and key managers eligible for such awards. Option awards are made at fair market value, have a term of 10 years, and vest over three years.

In the future, the Company expects to combine options with performance restricted stock unit awards that vest over three years and are based on total shareholder return, which is intended to further align stockholder and executive interests.

  Compensation of the Chief Executive Officer

William Chiles has served as Chief Executive Officer since July 2004 pursuant to an Employment Agreement with the Company dated June 21, 2004. In his capacity as CEO, Mr. Chiles has been responsible for working with the Board to develop and execute the Company’s strategic business plan and oversee day-to-day operations of the Company. Mr. Chiles’ performance has been evaluated by the Chairman of the Board and the Committee.

During fiscal year 2005, Mr. Chiles’ base salary was $425,000, and he had a target annual incentive compensation opportunity of 75% of base salary. The actual incentive award may vary from 0%-150% of base salary depending on the performance of the Company and Mr. Chiles’ individual contributions. For the fiscal year ending March 31, 2005, Mr. Chiles received an incentive award of $331,193, which was approximately 110% of Mr. Chiles’ base salary received for the year. In determining to grant the maximum amount, the Committee focused on Mr. Chiles’ leadership skills during a difficult period for the Company. Seventy percent of the potential award was based on performance results of the Company and thirty percent on the formal appraisal of his performance in leading the organization. During the fiscal year Mr. Chiles also received an award of 75,000 non-qualified stock options, whose option price was the “fair market value” on the date of grant. Additionally, Mr. Chiles received 25,000 Performance Restricted Stock Units. The annual incentive compensation, stock option awards and Restricted Stock Unit awards provide a significant “at-risk” component to Mr. Chiles’ total compensation opportunity and creates a strong “pay-performance” linkage.

Compensation Committee

Robert W. Waldrup, Chairman
Pierre H. Jungels, CBE
Thomas C. Knudson

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STOCK PERFORMANCE GRAPH

The following performance graph compares the yearly cumulative return on the Company’s Common Stock to the Standard & Poor’s 500 Stock Index (“S&P 500”) and a peer group index of companies selected by the Company, over a five fiscal year period ending on March 31, 2005. The peer group companies are Oceaneering International, Inc.; Petroleum Helicopters, Inc.; Tidewater, Inc.; Rowan Companies, Inc.; McDermott International, Inc., and GulfMark Offshore, Inc. The graph assumes (i) the reinvestment of dividends, if any, and (ii) the value of the investment in the Company’s Common Stock and each index to have been $100 at March 31, 2000.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

AMONG OFFSHORE LOGISTICS, INC., THE S&P 500 INDEX AND A PEER GROUP

	Cumulative Total Return
	3/00		3/01		3/02		3/03		3/04		3/05
OFFSHORE LOGISTICS, INC		100.00		178.83		155.32		130.09		166.13		240.14
S & P 500		100.00		78.32		78.51		59.07		79.82		85.16
PEER GROUP		100.00		117.45		115.02		78.87		91.77		136.72

* $100 invested on 3/31/00 in stock or index — including reinvestment of dividends. Fiscal year ending March 31.

Copyright © 2002. Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. All rights reserved. www.researchdatagroup.com/S&P.htm

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Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

	(a)		(b)		(c)
					Number of Securities
			Weighted-Average		Remaining Available for
	Number of Securities to Be		Exercise Price of		Future Issuance under
	Issued upon Exercise of		Outstanding		Equity Compensation
	Outstanding Options,		Options, Warrants		Plans (excluding securities
Plan Category	Warrants and Rights		and Rights		reflected in column (a)
Equity Compensation plans approved by security holders(1)		831,513	$	22.59		1,104,000
Equity Compensation plans not approved by security holders		N/A		N/A		N/A
Total		831,513	$	22.59		1,104,000

(1) These figures include options outstanding under the 1991 Plan, the 1994 Plan, the 2003 Plan and the 2004 Plan. The amounts for the 1991 Plan alone are: column (a) 68,000, column (b) $15.85, column (c) —. The amounts for the 1994 Plan alone are: column (a) 627,513, column (b) $21.76, column (c) —. The amounts for the 2003 Plan alone are: column (a) 80,000, column (b) $26.99, column (c) 160,000. The amounts for the 2004 Plan alone are: column (a) 56,000, column (b) $33.73, column (c) 944,000.

HOLDINGS OF PRINCIPAL STOCKHOLDERS

The following table shows as of December 9, 2005, certain information with respect to beneficial ownership of our Common Stock by any person known by us to be the beneficial owner of more than five percent of any class of our voting securities:

	Amount
	Beneficially			Title		Percent
Name and Address of Beneficial Owner	Owned			of Class		of Class(1)
Caledonia Investments plc Cayzer House, 30 Buckingham Gate London, England SW1 E6NN		1,300,000	(2)		Common		5.6%
Dimensional Fund Advisors, Inc. 1299 Ocean Avenue, 11th Floor Santa Monica, CA 90401		1,796,686	(3)		Common		7.7%
Franklin Resources, Inc. One Parker Plaza, 9th Floor Fort Lee, NJ 07024		1,221,550	(4)		Common		5.2%
FMR Corp. 82 Devonshire Street Boston, MA 02109		2,903,300	(5)		Common		12.4%

(1)	Percentage of the Common Stock of the Company outstanding as of December 9, 2005.
(2)	According to a Schedule 13D/A filed on July 29, 2003 by (i) Caledonia Investments plc (“Caledonia”) as the direct beneficial owner of 1,300,000 of such shares of Common Stock; and (ii) The Cayzer Trust Company Limited (“Cayzer Trust”) as an indirect beneficial owner given its direct holdings of the securities of Caledonia. Caledonia and Cayzer Trust have shared voting and dispositive power over the 1,300,000 shares of Common Stock.
(3)	According to a Schedule 13G/A filed on February 9, 2005 with the Securities and Exchange Commission, Dimensional Fund Advisors, Inc. has sole voting and dispositive power with respect to and beneficially owns 1,796,686 of such shares of Common Stock.

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(4)

According to a Schedule 13G filed on February 11, 2005 with the Securities and Exchange Commission, the securities are beneficially owned by one or more open or closed-end investment companies or other managed accounts which are advised by direct and indirect investment advisory subsidiaries (the “Adviser Subsidiaries”) of Franklin Resources, Inc. (“FRI”). Such advisory contracts grant to such Adviser Subsidiaries all investment and/or voting power over the securities owned by such advisory clients. Franklin Advisory Services, LLC, has sole voting power with respect to 1,202,200 shares of Common Stock and sole dispositive power with respect to 1,205,600 shares of Common Stock. Fiduciary Trust Company International has sole voting and dispositive power with respect to 15,950 shares of Common Stock.

(5)

According to Schedule 13G/A filed on February 14, 2005 with the Securities and Exchange Commission, FMR Corp. has sole voting power with respect to 515,900 of such shares of Common Stock, sole dispositive power with respect to 2,903,000 of such shares of Common Stock, and beneficially owns 2,903,000 of such shares of Common Stock.

HOLDINGS OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS

The following table shows as of December 9, 2005, certain information with respect to beneficial ownership of our Common Stock by (i) each director or nominee, (ii) each of the executive officers named in the Summary Compensation Table above, and (iii) all of our directors, nominees and executive officers as a group:

	Amount
	Beneficially			Title		Percent
Name of Beneficial Owner	Owned(1)			of Class		of Class(2)
Thomas N. Amonett		0			Common		*
Peter N. Buckley		1,322,000	(3)		Common		5.7	%
Richard Burman		8,000			Common		*
Stephen J. Cannon		5,000			Common		*
Jonathan H. Cartwright		1,322,000	(3)		Common		5.7	%
William E. Chiles		25,000			Common		*
Bill Donaldson		19,333			Common		*
H. Eddy Dupuis(4)		0			Common		*
Michael A. Flick		0			Common		*
David M. Johnson		50,000			Common		*
Kenneth M. Jones		50,600			Common		*
Pierre H. Jungels		12,000			Common		*
Thomas C. Knudson		5,000			Common		*
Drury A. Milke(5)		415			Common		*
George M. Small(6)		515			Common		*
Ken C. Tamblyn		13,000			Common		*
Robert W. Waldrup		29,000			Common		*
All Directors, Nominees and Executive Officers as a Group (21 persons)(3) (7)		1,618,001			Common		6.9	%

*

Less than 1%.

(1)

Based on information as of December 9, 2005, supplied by directors, nominees and executive officers. Unless otherwise indicated, all shares are held by the named individuals with sole voting and investment power. Stock ownership described in the table includes for each of the following directors or executive officers options to purchase within 60 days after September 20, 2005, the number of shares of Common Stock indicated after such director’s or executive officer’s name: Peter N. Buckley — 22,000 shares; Richard Burman — 8,000 shares; Stephen J. Cannon — 5,000 shares; Jonathan H. Cartwright — 22,000 shares; William E. Chiles — 25,000 shares; Bill Donaldson — 19,333 shares; David M. Johnson — 38,000 shares; Kenneth M. Jones — 48,000 shares; Pierre H. Jungels — 12,000 shares; Thomas C. Knudson — 5,000 shares; Ken C. Tamblyn — 12,000 shares; and Robert W. Waldrup — 14,000 shares and the following number of shares of Common Stock which were vested at June 30, 2005, under the Company’s Employee Savings and Retirement

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	Plan (the “401(k) Plan”), based on the 401(k) Plan statement dated June 30, 2005: George M. Small — 515 shares. Shares held in the 40l(k) Plan are voted by the trustee.
(2)	Percentages of our Common Stock outstanding as of December 9, 2005.
(3)	Because of the relationship of Messrs. Buckley and Cartwright to Caledonia, Messrs. Buckley and Cartwright may be deemed indirect beneficial owners of our securities owned by Caledonia (see “Holdings of Principal Stockholders”). Pursuant to Rule 16a-1(a)(3), both Mr. Buckley and Mr. Cartwright are reporting indirect beneficial ownership of the entire amount of our securities owned by Caledonia. Messrs. Buckley and Cartwright disclaim beneficial ownership of the securities owned by Caledonia.
(4)	Effective April 26, 2005, Mr. Dupuis resigned from the Company.
(5)	Effective April 26, 2005, Mr. Milke’s employment was terminated by the Company.
(6)	Mr. Small retired from the Company effective July 15, 2005.
(7)	Including 275,331 shares, which may be acquired within 60 days of December 9, 2005 upon exercise of options.

Item 13.  Certain Relationships and Related Transactions

The information required by Item 13 appears in Items 11 and 12 of this report.

Item 14.  Principal Accounting Fees and Services

ACCOUNTING FEES AND SERVICES

Set forth below are the fees paid by the Company to its independent auditor, KPMG, for the fiscal years indicated.

	2005		2004
Audit—
Audit Fees	$	633,357	$	676,360
Audit-Related Fees		1,266,775		—
Tax Fees		32,990		93,448
All Other Fees		—		—

Audit-Related Fees — 2005 audit fees include (i) Sarbanes-Oxley Section 404 Certification — $518,036 and (ii) forensic services — $748,739.

Tax Fees — comprise fees for tax compliance, tax advice and tax planning services rendered by the Company’s independent accountants.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

Our Audit Committee has policies and procedures that require the pre-approval by the Audit Committee of all fees paid to, and all services performed by, our independent accounting firm. At the beginning of each year, the Audit Committee approves the proposed services, including the nature, type and scope of services contemplated and the related fees, to be rendered by KPMG during the year. In addition, Audit Committee pre-approval is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved by the Audit Committee.

Our Audit Committee policy requires prior Audit Committee approval of all services performed by our independent accounting firm, regardless of the scope of such services. The Audit Committee has delegated this prior approval authority to its Chairman for all non-audit services undertaken in the ordinary course. Any services approved by the Audit Committee Chairman pursuant to this delegated authority must be reported to the full Audit Committee at its next regularly scheduled meeting.

Pursuant to the Sarbanes-Oxley Act of 2002, the fees and services provided as noted in the table above were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described herein.

128

PART IV

Item 15.  Exhibits, Financial Statement Schedules

(a)(1)	Financial Statements —
	Report of Independent Registered Public Accounting Firm.
	Consolidated Statement of Income for fiscal years 2005, 2004 and 2003.
	Consolidated Balance Sheet — As of March 31, 2005 and 2004.
	Consolidated Statement of Cash Flows for fiscal years 2005, 2004 and 2003.
	Consolidated Statement of Stockholders’ Investment for fiscal years 2005, 2004 and 2003.
	Notes to Consolidated Financial Statements.
(a)(2)	Financial Statement Schedules

All schedules have been omitted because the information required is included in the financial statements or notes or have been omitted because they are not applicable or not required.

(a)(3)

			Incorporated
			by Reference
			to
			Registration
			or File	Form or		Exhibit
Exhibits			Number	Report	Date	Number
(3)	Articles of Incorporation and By-laws
	(1)	Delaware Certificate of Incorporation	0-5232	10-K	June 1989	3(10)
	(2)	Agreement and Plan of Merger dated December 29, 1987	0-5232	10-K	June 1989	3(11)
	(3)	Certificate of Merger dated December 29, 1987	0-5232	10-K	June 1990	3(3)
	(4)	Certificate of Correction of Certificate of Merger dated January 20, 1988	0-5232	10-K	June 1990	3(4)
	(5)	Certificate of Amendment of Certificate of Incorporation dated November 30, 1989	0-5232	10-K	June 1990	3(5)
	(6)	Certificate of Amendment of Certificate of Incorporation dated December 9, 1992	0-5232	8-K	Dec. 1992	3
	(7)	Rights Agreement and Form of Rights Certificate	0-5232	8-A	Feb. 1996	4
	(8)	Amended and Restated By-laws	0-5232	8-K	Feb. 1996	3(7)
	(9)	Certificate of Designation of Series A Junior Participating Preferred Stock	0-5232	10-K	June 1996	3(9)
	(10)	First Amendment to Rights Agreement	0-5232	8-A/A	May 1997	5
	(11)	Second Amendment to Rights Agreement	0-5232	8-A/A	January 2003	4.3
(4)	Instruments defining the rights of security holders, including indentures
	(1)	Registration Rights Agreement dated December 19, 1996, between the Company and Caledonia Industrial and Services Limited	0-5232	10-Q	Dec. 1996	4(3)

129

			Incorporated
			by Reference
			to
			Registration
			or File	Form or		Exhibit
Exhibits			Number	Report	Date	Number
	(2)	Indenture, dated as of June 20, 2003, among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee	333-107148	S-4	July 18, 2003	4.1
	(3)	Registration Rights Agreement, dated as of June 20, 2003, among the Company and Credit Suisse First Boston LLC, Deutsche Bank Securities Inc., Robert W. Baird & Co. Incorporated, Howard Weil, A Division of Legg Mason Wood Walker, Inc., Jefferies & Company, Inc., and Johnson Rice & Company L.L.C.	333-107148	S-4	July 18, 2003	4.2
	(4)	Form of 144A Global Note representing $228,170,000 Principal Amount of 61/8% Senior Notes due 2013	333-107148	S-4	July 18, 2003	4.3
	(5)	Form of Regulation S Global Note representing $1,830,000 Principal Amount of 61/8% Senior Notes due 2013	333-107148	S-4	July 18, 2003	4.4
	(6)	Indenture, dated as of June 30, 2004, among the Company, the Guarantors named therein and U.S. Bank National Association as Trustee	001-31617	10-Q	June 2004	4.1
(10)	Material Contracts
	(1)	Executive Welfare Benefit Agreement, similar agreement omitted pursuant to Instruction 2 to Item 601 of Regulation S-K*	33-9596	S-4	Dec. 1986	10(ww)
	(2)	Executive Welfare Benefit Agreement, similar agreements are omitted pursuant to Instruction 2 to Item 601 of Regulation S-K*	33-9596	S-4	Dec. 1986	10(xx)
	(3)	Agreement and Plan of Merger dated as of June 1, 1994, as amended	33-79968	S-4	Aug. 1994	2(1)
	(4)	Shareholders Agreement dated as of June 1, 1994	33-79968	S-4	Aug. 1994	2(2)
	(5)	Proposed Form of Non-competition Agreement with Individual Shareholders	33-79968	S-4	Aug. 1994	2(3)
	(6)	Proposed Form of Joint Venture Agreement	33-79968	S-4	Aug. 1994	2(4)
	(7)	Offshore Logistics, Inc. 1994 Long-Term Management Incentive Plan*	33-87450	S-8	Dec. 1994	84
	(8)	Offshore Logistics, Inc. Annual Incentive Compensation Plan*	0-5232	10-K	June 1995	10(20)

130

			Incorporated
			by Reference
			to
			Registration
			or File	Form or		Exhibit
Exhibits			Number	Report	Date	Number
	(9)	Indemnity Agreement, similar agreements with other directors of the Company are omitted pursuant to Instruction 2 to Item 601 of Regulation S-K.	0-5232	10-K	March 1997	10(14)
	(10)	Master Agreement dated December 12, 1996	0-5232	8-K	Dec. 1996	2(1)
	(11)	Supplemental Letter Agreement dated December 19, 1996 to the Master Agreement	5-34191	13-D	April 1997	2
	(12)	Change of Control Agreement between the Company and George M. Small. Substantially identical contracts with five other officers are omitted pursuant to Item 601 of Regulation S-K Instructions.*	0-5232	10-Q	Sept. 1997	10(1)
	(13)	Offshore Logistics, Inc. 1994 Long-Term Management Incentive Plan, as amended*	0-5232	10-K	March 1999	10(15)
	(14)	Agreement between Pilots Represented by Office and Professional Employees International Union, AFL-CIO and Offshore Logistics, Inc.	0-5232	10-K	March 1999	10(16)
	(15)	Offshore Logistics, Inc. 1991 Non-qualified Stock Option Plan for Non-employee Directors, as amended.*	33-50946	S-8	Aug. 1992	4.1
	(16)	Agreement with Louis F. Crane dated October 18, 2001, executed January 7, 2002.*	0-5232	10-K	March 2002	10(17)
	(17)	Offshore Logistics, Inc. 1994 Long-Term Management Incentive Plan, as amended.*	333-100017	S-8	September 2002	4.12
	(18)	Continuing Employment and Separation Agreement with Hans J. Albert dated October 1, 2002*	001-31617	10-K	March 2003	10(16)
	(19)	Offshore Logistics, Inc. Deferred Compensation Plan*	001-31617	10-K	March 2004	10(18)
	(20)	Offshore Logistics, Inc. 2003 Nonqualified Stock Option Plan for Non-employee Directors*	33-115473	S-8	May 13, 2004	4(12)
	(21)	Agreement with Keith Chanter dated January 13, 2004*	001-31617	10-K	March 2004	10(20)
	(22)	Retirement Agreement with George Small dated April 26, 2004*	001-31617	10-Q	June 2004	10(1)
	(23)	Employment Agreement with William E. Chiles dated June 21, 2004*	001-31617	10-Q	June 2004	10(2)

131

			Incorporated
			by Reference
			to
			Registration
			or File	Form or		Exhibit
Exhibits			Number	Report	Date	Number
	(24)	Change of Control Employment Agreement with William E. Chiles dated June 21, 2004	001-31617	10-Q	June 2004	10(3)
	(25)	Offshore Logistics, Inc. 2004 Stock Incentive Plan*	001-31617	10-Q	Sept. 2004	10(1)
	(26)	Separation Agreement between Bristow Aviation Holdings, Ltd. and Keith Chanter dated September 1, 2004	001-31617	8-K	Sept. 2004	10(1)
	(27)	Employment Agreement with Richard Burman dated October 15, 2004*†
	(28)	Agreement between Pilots Represented by Office and Professional Employees International Union, AFL-CIO and Offshore Logistics, Inc.*†
(21)†	Subsidiaries of the Registrant
(23)†	Consent of Independent Registered Public Accounting Firm
(31.1)†	Certification by President and Chief Executive Officer
(31.2)†	Certification by Chief Financial Officer
(32.1)†	Certification of the 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 the 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

*	Compensatory Plan or Arrangement
†	Furnished herewith

Agreements with respect to certain of the registrant’s long-term debt are not filed as Exhibits hereto inasmuch as the debt authorized under any such Agreement does not exceed 10% of the registrant’s total assets. The registrant agrees to furnish a copy of each such Agreement to the Securities and Exchange Commission upon request.

132

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

OFFSHORE LOGISTICS, INC.

By:  /s/  Brian C. Voegele

Brian C. Voegele

Senior Vice President and

Chief Financial Officer

December 14, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/  Brian C. Voegele Brian C. Voegele	Senior Vice President and Chief Financial Officer	December 14, 2005
/s/  Peter N. Buckley Peter N. Buckley	Director	December 14, 2005
/s/  Jonathan H. Cartwright Jonathan H. Cartwright	Director	December 14, 2005
/s/  Stephen J. Cannon Stephen J. Cannon	Director	December 14, 2005
/s/  David M. Johnson David M. Johnson	Director	December 14, 2005
/s/  Kenneth M. Jones Kenneth M. Jones	Chairman of the Board and Director	December 14, 2005
/s/  Dr. Pierre Henri Jungels Dr. Pierre Henri Jungels	Director	December 14, 2005
/s/  Thomas C. Knudson Thomas C. Knudson	Director	December 14, 2005
/s/  William E. Chiles William E. Chiles	President, Chief Executive Officer and Director	December 14, 2005
/s/  Ken C. Tamblyn Ken C. Tamblyn	Director	December 14, 2005
/s/  Robert W. Waldrup Robert W. Waldrup	Director	December 14, 2005

133

EXHIBIT INDEX

			Incorporated
			by Reference
			to
			Registration
			or File	Form or		Exhibit
Exhibits			Number	Report	Date	Number
(3)	Articles of Incorporation and By-laws
	(1)	Delaware Certificate of Incorporation	0-5232	10-K	June 1989	3(10)
	(2)	Agreement and Plan of Merger dated December 29, 1987	0-5232	10-K	June 1989	3(11)
	(3)	Certificate of Merger dated December 29, 1987	0-5232	10-K	June 1990	3(3)
	(4)	Certificate of Correction of Certificate of Merger dated January 20, 1988	0-5232	10-K	June 1990	3(4)
	(5)	Certificate of Amendment of Certificate of Incorporation dated November 30, 1989	0-5232	10-K	June 1990	3(5)
	(6)	Certificate of Amendment of Certificate of Incorporation dated December 9, 1992	0-5232	8-K	Dec. 1992	3
	(7)	Rights Agreement and Form of Rights Certificate	0-5232	8-A	Feb. 1996	4
	(8)	Amended and Restated By-laws	0-5232	8-K	Feb. 1996	3(7)
	(9)	Certificate of Designation of Series A Junior Participating Preferred Stock	0-5232	10-K	June 1996	3(9)
	(10)	First Amendment to Rights Agreement	0-5232	8-A/A	May 1997	5
	(11)	Second Amendment to Rights Agreement	0-5232	8-A/A	January 2003	4.3
(4)	Instruments defining the rights of security holders, including indentures
	(1)	Registration Rights Agreement dated December 19, 1996, between the Company and Caledonia Industrial and Services Limited	0-5232	10-Q	Dec. 1996	4(3)
	(2)	Indenture, dated as of June 20, 2003, among the Company, the Guarantors named therein and U.S. Bank National Association, as Trustee	333-107148	S-4	July 18, 2003	4.1
	(3)	Registration Rights Agreement, dated as of June 20, 2003, among the Company and Credit Suisse First Boston LLC, Deutsche Bank Securities Inc., Robert W. Baird & Co. Incorporated, Howard Weil, A Division of Legg Mason Wood Walker, Inc., Jefferies & Company, Inc., and Johnson Rice & Company L.L.C.	333-107148	S-4	July 18, 2003	4.2

134

			Incorporated
			by Reference
			to
			Registration
			or File	Form or		Exhibit
Exhibits			Number	Report	Date	Number
	(4)	Form of 144A Global Note representing $228,170,000 Principal Amount of 61/8% Senior Notes due 2013	333-107148	S-4	July 18, 2003	4.3
	(5)	Form of Regulation S Global Note representing $1,830,000 Principal Amount of 61/8% Senior Notes due 2013	333-107148	S-4	July 18, 2003	4.4
	(6)	Indenture, dated as of June 30, 2004, among the Company, the Guarantors named therein and U.S. Bank National Association as Trustee	001-31617	10-Q	June 2004	4.1
(10)	Material Contracts
	(1)	Executive Welfare Benefit Agreement, similar agreement omitted pursuant to Instruction 2 to Item 601 of Regulation S-K*	33-9596	S-4	Dec. 1986	10(ww)
	(2)	Executive Welfare Benefit Agreement, similar agreements are omitted pursuant to Instruction 2 to Item 601 of Regulation S-K*	33-9596	S-4	Dec. 1986	10(xx)
	(3)	Agreement and Plan of Merger dated as of June 1, 1994, as amended	33-79968	S-4	Aug. 1994	2(1)
	(4)	Shareholders Agreement dated as of June 1, 1994	33-79968	S-4	Aug. 1994	2(2)
	(5)	Proposed Form of Non-competition Agreement with Individual Shareholders	33-79968	S-4	Aug. 1994	2(3)
	(6)	Proposed Form of Joint Venture Agreement	33-79968	S-4	Aug. 1994	2(4)
	(7)	Offshore Logistics, Inc. 1994 Long-Term Management Incentive Plan*	33-87450	S-8	Dec. 1994	84
	(8)	Offshore Logistics, Inc. Annual Incentive Compensation Plan*	0-5232	10-K	June 1995	10(20)
	(9)	Indemnity Agreement, similar agreements with other directors of the Company are omitted pursuant to Instruction 2 to Item 601 of Regulation S-K.	0-5232	10-K	March 1997	10(14)
	(10)	Master Agreement dated December 12, 1996	0-5232	8-K	Dec. 1996	2(1)
	(11)	Supplemental Letter Agreement dated December 19, 1996 to the Master Agreement	5-34191	13-D	April 1997	2

135

			Incorporated
			by Reference
			to
			Registration
			or File	Form or		Exhibit
Exhibits			Number	Report	Date	Number
	(12)	Change of Control Agreement between the Company and George M. Small. Substantially identical contracts with five other officers are omitted pursuant to Item 601 of Regulation S-K Instructions.*	0-5232	10-Q	Sept. 1997	10(1)
	(13)	Offshore Logistics, Inc. 1994 Long-Term Management Incentive Plan, as amended*	0-5232	10-K	March 1999	10(15)
	(14)	Agreement between Pilots Represented by Office and Professional Employees International Union, AFL-CIO and Offshore Logistics, Inc.	0-5232	10-K	March 1999	10(16)
	(15)	Offshore Logistics, Inc. 1991 Non-qualified Stock Option Plan for Non-employee Directors, as amended.*	33-50946	S-8	Aug. 1992	4.1
	(16)	Agreement with Louis F. Crane dated October 18, 2001, executed January 7, 2002.*	0-5232	10-K	March 2002	10(17)
	(17)	Offshore Logistics, Inc. 1994 Long-Term Management Incentive Plan, as amended.*	333-100017	S-8	September 2002	4.12
	(18)	Continuing Employment and Separation Agreement with Hans J. Albert dated October 1, 2002*	001-31617	10-K	March 2003	10(16)
	(19)	Offshore Logistics, Inc. Deferred Compensation Plan*	001-31617	10-K	March 2004	10(18)
	(20)	Offshore Logistics, Inc. 2003 Nonqualified Stock Option Plan for Non-employee Directors*	33-115473	S-8	May 13, 2004	4(12)
	(21)	Agreement with Keith Chanter dated January 13, 2004*	001-31617	10-K	March 2004	10(20)
	(22)	Retirement Agreement with George Small dated April 26, 2004*	001-31617	10-Q	June 2004	10(1)
	(23)	Employment Agreement with William E. Chiles dated June 21, 2004*	001-31617	10-Q	June 2004	10(2)
	(24)	Change of Control Employment Agreement with William E. Chiles dated June 21, 2004	001-31617	10-Q	June 2004	10(3)
	(25)	Offshore Logistics, Inc. 2004 Stock Incentive Plan*	001-31617	10-Q	Sept. 2004	10(1)
	(26)	Separation Agreement between Bristow Aviation Holdings, Ltd. and Keith Chanter dated September 1, 2004	001-31617	8-K	Sept. 2004	10(1)

136

			Incorporated
			by Reference
			to
			Registration
			or File	Form or		Exhibit
Exhibits			Number	Report	Date	Number
	(27)	Employment Agreement with Richard Burman dated October 15, 2004*†
	(28)	Agreement between Pilots Represented by Office and Professional Employees International Union, AFL-CIO and Offshore Logistics, Inc.*†
(21)†	Subsidiaries of the Registrant
(23)†	Consent of Independent Registered Public Accounting Firm
(31.1)†	Certification by President and Chief Executive Officer
(31.2)†	Certification by Chief Financial Officer
(32.1)†	Certification of the 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 the 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

*	Compensatory Plan or Arrangement
†	Furnished herewith

Agreements with respect to certain of the registrant’s long-term debt are not filed as Exhibits hereto inasmuch as the debt authorized under any such Agreement does not exceed 10% of the registrant’s total assets. The registrant agrees to furnish a copy of each such Agreement to the Securities and Exchange Commission upon request.

137

EX-10.27

Page 1 of 10

EXHIBIT 10.27

AGREEMENT dated the 15th day of October 2004 between

BRISTOW HELICOPTER GROUP LIMITED a Company incorporated under the Companies Acts and having its registered office at Redhill Aerodrome, Redhill, Surrey (hereinafter called “the Company”) of the first part

and

Richard David Burman of 8, Moray Place, Aberdeen AB15 4AF (hereinafter called the “Executive”) of the second part

WHEREAS the Executive is employed by the Company and it is desired to regulate the terms of the Executive’s employment with the Company.

NOW IT IS HEREBY AGREED as follows:

1.	APPOINTMENT
	The Company agrees to employ the Executive as Managing Director of the Company (“the Appointment”) and the Executive accepts the Appointment and agrees to serve the Company upon the terms set out in this Agreement and the Schedule hereto. The Executive will report directly to the Board of Directors of Bristow Aviation Holdings Limited or their authorised nominee (“Board”).
2.	PERIOD
	The Appointment shall commence on 15th October 2004 and (subject to the provisions in Clause 14 for earlier termination of this Agreement) shall continue unless terminated by either:

(i)	the Executive giving to the Company not less than 12 months previous notice in writing to that effect; or
(ii)	the Company giving to the Executive not less than 12 months previous notice in writing to that effect.
The appointment shall terminate upon the Executive attaining the age of 60 years.

3.	DUTIES OF EXECUTIVE
	During the continuance of the Appointment the Executive:

(a)	shall perform the duties set out in the Schedule which may be amended by the Company from time to time with the agreement of the Executive:
(b)	shall devote the whole of his time, attention and skill during his agreed hours of work to the duties of the Appointment and shall faithfully, efficiently, competently and diligently perform such duties and exercise such powers as may from time to time be assigned to or vested in him and shall obey all reasonable and lawful directions given to him by or under the authority of the Board of Directors and use all reasonable endeavours to promote and extend the Company’s business, to protect and further the interest and reputation of the Company and its Associated Companies. The agreed hours of work of the Executive shall be normal business hours and such other hours as may be required for the proper performance of the duties of the Appointment. The Working Time Regulations 1998, effective from 1st October 1998, state that a worker’s average working time shall not exceed 48 hours per week on average over a 17 week period, unless the worker agrees in writing that the limit shall not apply. The Executive hereby agrees that there may be occasions when he may work in excess of an average of 48 hours per week. The Executive shall not be entitled to receive any additional remuneration for work outside the normal hours;
(c)	may be required in pursuance of his duties hereunder to perform services not only for the Company but also for any

Page 2 of 10

	Associated Company and without further remuneration (except as otherwise agreed) to accept such offices in any Associated Company as the Company may from time to time reasonably require;
(d)	may be required to travel within the United Kingdom and elsewhere abroad in the performance of his duties on such occasions as the Board may from time to time reasonably require. The Executive’s normal place of work shall be at Redhill or at such other place within 50 miles thereof as the Company may reasonably specify or elsewhere as agreed between the Executive and the Company;
(e)	shall not during the term of this Agreement (except with the Company’s prior consent in writing) be directly or indirectly engaged or concerned whether as principal, servant, agent, consultant or otherwise in the conduct of any other business nor shall he be directly or indirectly interested in any such business save through his holding or being interested in investments (quoted or unquoted) not representing more than five per centum of the issued securities of any class of any one company;
(f)	shall abide by the terms and conditions applicable to the Appointment as are contained in the Company Administration Manual which may be reviewed upon request and of which relevant changes will be notified when they occur.

4.	SALARY
	During the continuance of the Appointment the Company shall pay to the Executive salary at the rate of £135,000 per annum or such higher rate as may from time to time be agreed such salary to be subject to review annually in accordance with the Company’s normal practice. The said salary (less tax and statutory deductions) shall be payable to the Executive by equal monthly payments in arrears each such payment being made by no later than the last day of each month. The said salary shall be deemed to accrue on a daily basis. The Executive shall also be entitled to be a member of the Incentive Scheme with a target bonus of 40% (in accordance with Company policy from time to time) and will be proposed for membership of the approved Share Option Scheme (in accordance with Company policy from time to time).
5.	EXPENSES
	During the continuance of the Appointment the Company shall refund to the Executive subject where appropriate to the production of vouchers, all out-of-pocket expenses reasonably incurred by him in the proper performance of his duties including (but not limited to) expenses of entertainment, hotel, subsistence and travelling in accordance with normal Company procedures.
	[written insertion: The Executive will also be reimbursed, subject to the production of vouchers, subscription costs and annual fees for membership of a local club (e.g. golf club)] In addition the Company shall refund to the Executive subject to the production of vouchers, school expenses for the Executive’s son, Jamie Burman, up to the age of eighteen years or the completion of Year 13 whichever is the later date, subject to a maximum payment of £3,000 per term or £9,000 per annum whichever is the lower. In addition the Company shall refund to the Executive subject to the production of vouchers, reasonable removal expenses at the discretion of the Board for one move from Aberdeen to a residence not more than 50 miles from the Company’s Registered Office. [written insertion: Such expenses shall include, but not be limited to, all costs directly related to the sale of the Executive’s residence in Aberdeen as well as those related to the purchase of the Executive’s residence in the Redhill area.] Should the Executive give notice to the Company of termination of employment under Clause 2 of this Agreement within two years of the date of appointment then all expenses paid by the Company to the Executive in respect of removal expenses are recoverable by the Company from the Executive and the Executive agrees that such sums can be deducted from any payments due to the Executive from the Company on such termination.
6.	HOLIDAYS
	During the continuance of the Appointment the Executive shall be entitled without loss of remuneration to twenty-five working days holiday in each year (in addition to Bank and other public holidays) to be taken at such time or times as the Board may approve. Neither Saturday nor Sunday shall be regarded as a working day. For the purpose of holiday entitlement the year commences on the date of joining the Company. If employment ceases before the end of such year, any holiday taken in excess of entitlement will be evaluated and deducted from final salary payment. Holiday accrued but not taken will not normally be carried over into the subsequent year.

Page 3 of 10

7.	INCAPACITY
	The following are the conditions that govern payment during absence due to sickness and/or accidents.
a)	Periods during which payment of wages or salary will be made
	Payment of salary during sickness or accident absences will be made for up to 26 weeks during any one calendar year, i.e. from January to December, or any consecutive period of sickness or accident absence whichever is the greater.
b)	Requalifying for salary payment after entitlement exhausted
	For the purpose of calculating entitlement to payment of salary during sickness or accident absences, if the Executive is absent through sickness or accident at the end of a calendar year and has exhausted entitlement to payment during sickness or accident in such calendar year, (or carried entitlement for payment during a consecutive period of absence, from one calendar year to another), he shall have no entitlement to payment during sickness or accident in the next following calendar year until normal duties have been resumed for a period of 2 weeks following a certificate of fitness for duty.
c)	Certification of sickness
	A self-certified medical certificate shall be provided by the Executive from the first day of sickness or disability up to and including the 7th day. Thereafter, a medical certificate from a properly qualified medical practitioner shall be provided by the Executive at weekly or other such intervals as may be required by the Company.
8.	PENSIONS & LIFE ASSURANCE
	The Company shall contribute an amount equivalent to 121/2% of the Executive’s salary as set out in Clause 4 to the Executive’s account in a Group Personal Pension Plan. Such payments shall be made by monthly installments. The Company shall include the Executive in the Company’s Life Assurance arrangements whereby Life Assurance benefit will be payable in an amount of four times salary as set out in Clause 4. If the Executive dies whilst in the employment of the Company payment of any benefit is subject to the insurers accepting the claim and making payment to the Company.
9.	MEDICAL EXPENSES INSURANCE
	The Executive and his wife and eligible children shall be entitled during the period of the appointment to participate at the Company’s expense in the Company’s private medical expenses scheme subject always to the rules of such scheme.
10.	PERSONAL ACCIDENT INSURANCE
	Subject to the conditions set out below Personal Accident Benefit will be payable in an amount of four times salary as set out in Clause 4 if the Executive suffers accidental bodily injury during the course of employment with the Company which results in:

(i)	Death — (such benefit being additional to any life assurance payment being payable in accordance with Clause 8).
(ii)	Disablement — loss of one or two limbs (loss of use or separation above wrist or ankle).
(iii)	Disablement — loss of sight of one or both eyes (total or permanent).
(iv)	Permanent disablement from any other cause precluding the Executive from carrying out his normal duties.

     The following conditions apply:

Page 4 of 10

a)	The Company insures the benefit referred to above and accordingly the provisions of this schedule are intended only as a guide to the cover. Payment of any benefit is subject to the insurers accepting the claim and making payment to the Company.
b)	The death or disablement must have resulted from an accident occurring during the period of employment.
c)	1)     Immediate notice must be given to the Company of any accident likely to result in a claim under this Clause.

2) The death or disablement must have occurred within 36 months of the date of the accident.

d)	No benefit will be payable if (amongst other things) the Executive caused or contributed to the death, disablement or accident by intentional self-injury, suicide or attempted suicide, deliberate exposure to danger (except in an attempt to save human life or prevent the destruction of property) or any criminal act. Further details of the exceptions are set out in the Company Administration Manual. However the policy wording itself should be referred to for the definitive terms and conditions.
e)	Any benefit payable under this Clause will be paid to the Executive or his personal representatives provided that the Company may within 6 years after the accident, if the Company shall in its absolute discretion think fit, pay the benefit instead to any one or more of the wife, widow, child or children or other relations of the Executive or any other person who in the opinion of the Company was dependant on the Executive.
f)	If any other claim against the Company in connection with the accident, death or disablement is made by the Executive, his personal representatives or any other person, then:

1)	Any benefit otherwise payable under this claim shall be reduced by any amount previously recovered in respect of such other claim.
2)	Any benefit already paid under this clause shall, to the extent of any award made against the Company in respect of such other claim, either be recoverable by the Company or set against any such award at the Company’s option.

11.	MOTOR CAR
	For the purpose of enabling the Executive properly to perform his duties hereunder, subject to the Executive holding a current full drivers licence the Company shall pay a car allowance to the value of Category A of the Company car policy, currently £908 per month.
12.	REDRESS OF GRIEVANCE AND DISCIPLINARY RULES
	The Executive’s route of appeal in respect of grievance to any employment issue will always be to the Board. Details of grievance and disciplinary procedures will be found in the Company Administration Manual.
13.	NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
a)	The Executive shall not directly or indirectly divulge or communicate to any person (other than those within the employment of the Company whose province it is to know the same or with the prior authority of the Company) nor shall he make use of any of the trade secrets, designs, techniques, design improvements, know-how, business information, methods, lists or other confidential information of the Company or of any Associated Company or of their respective customers which he may (whether heretofore or hereafter) have received or obtained while in the service of the Company or of any Associated Company. This restriction shall continue to apply after the termination of the Appointment.
b)	The Executive shall use all reasonable endeavours to prevent the publication or disclosure of any of the trade secrets or other confidential information of the Company or of any Associated Company whether relating to its trade dealings, financial affairs or otherwise which he may have received or obtained or may hereafter receive or obtain while in the service of the Company or of any Associated Company.

Page 5 of 10

14.	TERMINATION
	Without in any way limiting any rights of the Company this Agreement shall be subject to termination by the Company by summary notice in writing if the Executive:
(i)	shall have committed any serious breach of any term of this Agreement; or
(ii)	shall have been guilty of gross misconduct which brings the Company or any associated company into disrepute; or
(iii)	shall have been found guilty of any major criminal offence resulting in a custodial penalty; or
(iv)	shall have been permanently admitted to hospital under the provisions of any statute relating to mental health; or
(v)	shall have become bankrupt or made any formal arrangement or composition with his creditors generally.
15.	PROVISIONS ON TERMINATION
	All drawings, designs, photographs, plans, models, blueprints, reports, manuals, files, notes, accounts, documents or other material and all notes and memoranda of any trade secrets or confidential information of the Company or of any Associated Company as shall have been made or received by the Executive during the course of his employment (whether heretofore or hereafter) are and shall be the property of the Company and shall be surrendered by the Executive to someone duly authorised by the Company upon the termination of this Agreement or at the request of the Board at any time during the course of his employment hereunder.
16.	NON-COMPETITION
a)	In this Clause the expression “the Termination Date” means the date on which this Agreement shall determine irrespective of the cause or manner.
b)	Since the Executive has obtained or is likely to obtain in the course of his employment with the Company knowledge of trade secrets, designs, design improvements, know-how, techniques, methods, lists and other confidential information relating to the Company and any Associated Company and also to their respective customers he hereby agrees that in addition to the restrictions contained in Clause 13 of this Agreement he hereby covenants and undertakes with the Company and so that each covenant and undertaking below shall be a further and separate and severable obligation and without prejudice and in addition to all other like obligations already or hereafter so undertaken by the Executive that he will not whether on his own account or jointly with or as manager, agent officer, employee, shareholder or otherwise on behalf of any other person, firm or company, and whether directly or indirectly and without the express prior written consent of the Board:

(i)

during his employment hereunder and for a period of one year following the Termination Date be engaged, concerned or interested in or associated with any business within the United Kingdom which is the same as, or competes with, any business carried on by the Company or any Associated Company on or at any time during the period of three months ending on the Termination Date (“the Relevant Business”);

(ii)

during his employment hereunder;

(aa)

and for a period of one year following the Termination Date, within the United Kingdom carry on or be engaged, concerned or interested in the sale of goods or provision of services of a kind supplied by the Company or any Associated Company in connection with its Relevant Business, to any person, firm or company which has at the time within the period of two years preceding the Termination Date been a customer of, or in the habit of dealing with, such company for such goods or services;

(bb)

and for a period of one year following the Termination Date solicit, interfere with or endeavour to entice away from the Company or any Associated Company any person, firm or company who to his knowledge is or has during the two years preceding the Termination Date been a client, customer, correspondent or agent of, or in the habit of dealing with, such company nor enter into a partnership or any association whether directly or indirectly with any such person;

Page 6 of 10

(cc) and for a period of one year after the Termination Date, solicit, interfere with or endeavour to entice away from the Company or any Associated Company or offer to employ any person who on or during the twelve months preceding the Termination Date is or was an officer or employee of or full time consultant to, the Company or any Associated Company;

PROVIDED ALWAYS THAT nothing in this Clause shall prohibit the Executive from holding or being interested in investments (quoted or unquoted) not representing more than five percentum of the issued securities of any class or any one company.

(c)	The Executive also covenants and undertakes with the Company (for itself and as agent for each Associated Company) as a further and separate obligation as aforesaid that, save in his proper performance of his duties hereunder, he will not directly or indirectly during his employment hereunder or thereafter make use of any corporate or business name which is identical or similar to or is likely to be confused with the corporate name or any business name of the Company or Associated Company or which might suggest a connection with the same.
(d)	While the restrictions aforesaid are considered by both parties to be reasonable in all circumstances it is recognised that restrictions of the nature in question may fail for technical reasons unforeseen, and accordingly it is hereby declared and agreed that if any of such restrictions shall be adjudged to be void as going beyond what is reasonable in all the circumstances for the protection of the interest of the Company but would be valid if part of the wording thereof were deleted and/or the periods (if any) thereof reduced and/or area dealt with thereby reduced in scope the said restrictions shall apply with such modifications as may be necessary to make them valid and effective.
(e)	The restrictions set out in this Clause 16 shall not be enforceable by the Company against the Executive in the event of the Appointment being terminated by the Company other than in accordance with the provisions of Clauses 2 and 14 of this Agreement.
17.	INVENTIONS
	In view of the fact that the business of the Company and of Associated Companies consists in part in the development and exploitation of inventions, techniques and methods and that it is the Executive’s responsibility to further the interests of the Company and Associated Companies in respect thereof he agrees that each and every discovery by him at any time whether before or after the date hereof but after he becomes an employee of the Company whether capable of being patented or registered or not (and whether or not made or discovered in the course of his employment hereunder) in connection with or in any way affecting or relating to the business of the Company or of any Associated Company or capable of being used or adapted for use therein or in connection therewith shall forthwith be disclosed to the Company and shall belong to and be the absolute property of the Company or such Associated Company as the Company may nominate for the purpose. The Executive hereby irremovably appoints the Company to be his authorised attorney to do all such things and to execute all such documents in his name and on his behalf as may be necessary to secure for the Company the full benefit and advantage of the rights arising under this Clause.
18.	RECONSTRUCTION OR AMALGAMATION
	If this Agreement is terminated because of the liquidation of the Company for the purpose of amalgamation or reconstruction and the Executive is offered employment with such amalgamated or reconstructed company in a position and on terms (mutatis mutandis) identical in all respects to the terms of this Agreement, the Executive shall have no claim against the Company in respect of such termination.
19.	DEFINITIONS
(a)	In this Agreement words and phrases defined in Section 736 of the Companies Act 1985 shall bear the same meaning.
(b)	The following expression shall for the purposes of this Agreement have the following meanings:
	“Associated Company” means any company which now or from time to time hereafter is:

(i) a company having an ordinary share capital of which not less than 25 per centum is owned directly or indirectly by the Company or its holding company; or

Page 7 of 10

(ii) a holding company of the Company or any subsidiary of any such holding company;

	and the provisions of Section 838 of the Income and Corporation Taxes Act 1988 shall apply in determining the question of ownership;
	“the Schedule” means the Schedule to this Agreement which shall form part of this Agreement and be of full force and effect as though it were expressly set out in the body of this Agreement.
20.	NOTICES
	Notices may be given by either party by first class prepaid recorded delivery letter or by facsimile transmission or telex addressed to the other, or by personal delivery at (in the case of a notice to the Company) its registered office for the time being and (in the case of a notice to the Executive) his last known address and in the case of a letter shall be deemed to have been given 72 hours after posting and in the case of facsimile telex or personal delivery shall be deemed to have been given 09.00a.m. on the business day following transmission or delivery as the case may be.
21.	EMPLOYMENT PROTECTION CONSOLIDATION ACT
	The information contained herein constitutes a written statement of the terms of the Executive’s employment in compliance with the provisions of the Employment Protection (Consolidation) Action 1978 as amended.
22.	SURVIVAL OF AGREEMENTS
	The expiration or determination of this Agreement howsoever arising shall not operate to affect such of the provisions hereof as in accordance with their terms are expressed to operate or have effect thereafter.
23.	ENTIRE AGREEMENT
	This Agreement is in substitution for all previous contracts of service between the Company or any Associated Company and the Executive that shall be deemed to have been terminated by mutual consent as from the date on which this Agreement is deemed to have commenced. The Executive acknowledges that he has no claim against the Company or any Associated Company (or against any of their respective assets) arising under or out of any such contract.
24.	NON-WAIVER
	No failure of the Company to exercise, nor any delay in exercising, any right hereunder shall operate as a waiver or that or any other right or remedy of the Company, nor shall any partial exercise preclude any further or other exercise.
25.	PROPER LAW
	This Agreement shall be governed by and construed in accordance with English Law.

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IN WITNESS WHEREOF this Agreement consisting of this and the preceding 11 pages together with the Schedule is executed as follows:

Signed for BRISTOW HELICOPTER GROUP LTD
/s/ Allan Blake

in the presence of:
/s/ Lyn Stringer

Signed by the said Richard Burman
/s/ Richard Burman

in the presence of:
/s/ Carol Burman

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SCHEDULE

Managing Director, Bristow Helicopter Group Limited

Job Description

Responsible to: the Chairman of the Board of Directors of Bristow Aviation Holdings Limited or his authorised nominee (“the Board”).

For the purposes of this Job Description, “the Companies” includes those services provided by any associated or affiliated companies of Bristow Helicopter Group Limited or Bristow Aviation Holdings Limited.

The Managing Director shall ensure:

1.	The effective and safe operation of the Companies, to be managed and operated in compliance with the Company’s Operations and Safety Manuals or the terms and conditions of service contracts between the Companies and their clients or the provisions of relevant statutory or regulatory provisions whichever is the more stringent. Where there is any risk of non-compliance with relevant statutory, regulatory or client requirements, the Board must be informed immediately.
2.	The Companies are staffed with appropriate skills to meet short and long term business needs.
3.	The Companies are properly structured and adequately informed to undertake the responsibilities and tasks required of the Companies.
4.	Potential customers of the Companies are identified and notified to the Board and that quotations for potential customers are prepared and approved by the Board.
5.	The maintenance and provision to the Board of monthly management accounts.
6.	All invoices and expense claims submitted by the Managing Director are approved by a nominee of the Board.
7.	The provision of financial information to in accordance with the schedule required by the Board.
8.	Compliance with such delegated authority requirements as may from time to time be approved by the Board.
9.	Immediate reporting to the Board of the following matters relating to the Companies:

a.	Any issue that affects or could affect the safe operation of helicopter and fixed wing operations including any accidents or incidents that caused injury to individuals or damage to aircraft and any insured claim or any near misses that could have led to such an accident or incident;
b.	Any issues of actual, alleged or suspected financial impropriety or any indication that the Companies could be or are at risk of trading whilst insolvent;
c.	Any changes in senior personnel or Directors of the Companies.
d.	Any indication of potential or actual material litigation by any party against the Companies.
e.	Any absence from work of the Managing Director of more than three days duration, and any other period

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           of time when the Managing Director is unavailable for work.

10.	The provision of such reports on a regular or ad hoc basis as may be required by the Board.
11.	That any other responsibilities that may from time to time be agreed by the Board are met.
12.	The Companies and the Managing Director do not, without Board consent,

a.	Borrow any sums in aggregate in excess of £[to be agreed by the Board] at any time;
b.	Make any loan or advance to a Shareholder or receive any loan or advance from a Shareholder of any amount;
c.	Make any loan or advance or otherwise give credit (other than credit given in the normal course of Company business) to any person except for the purpose of making deposits with its bankers;
d.	Give any guarantee bond or indemnity in respect of or to secure the liabilities or obligations of any person;
e.	Create or issue any debenture mortgage charge or other security over any assets of the Companies except for the purpose of securing sums borrowed by the Companies from their bankers in the ordinary and usual course of business;
f.	Undertake in any Financial Year or part of a Financial Year any single item or series of items of capital expenditure (including finance leases but excluding operating leases as respectively defined in SSAP 21) involving an aggregate liability during that Financial Year in excess of £[to be agreed by the Board];
g.	Enter into any operating lease (as defined in SSAP 21) either as lessor or lessee of any property plant or equipment of a duration exceeding five years or involving aggregate premium and annual rental payments for the operating lease in question in excess of £[to be agreed by the Board];
h.	Appoint any person to the Board;
i.	Enter into or make any material change to any contract or transaction:

a.	with any of the parties or their respective Affiliates; or
b.	except on normal arm’s length commercial terms; or
c.	which involves aggregate revenues or expenditure in excess of £[to be agreed by the Board];

j.	Enter into or make any material change to any contract of employment with any senior manager of the Companies (whatever his title or job description);
k.	Engage any new employee or consultant at a salary or fee in excess of £[to be agreed by the Board] per annum or dismiss any employee with a salary in excess of £[to be agreed by the Board] per annum.

EX-10.28

Page 1 of 62

EXHIBIT 10.28

AMENDED AGREEMENT

BETWEEN

PILOTS

REPRESENTED

BY

OFFICE AND PROFESSIONAL EMPLOYEES INTERNATIONAL UNION, AFL-CIO

AND

OFFSHORE LOGISTICS, INC.

Page 2 of 62

CONTENTS

ARTICLE	SUBJECT	PAGE
1	Statement of Purpose	2
2	Recognition and Representation	2
3	Status of Agreement	4
4	Pilot Status	5
5	Seniority	5
6	Seniority Roster	6
7	Reductions in Workforce	7
8	Job Posting and Bidding	8
9	Categories of Aircraft	10
10	Schedules of Service	11
11	Leaves of Absence	11
12	Vacation and Sick Time	14
13	On-the-Job Injury (OJI) Leave	17
14	Bereavement Leave	18
15	Jury Duty	19
16	Fees and Physical Examinations	19
17	Training	20
18	Facilities, Equipment and Uniforms	22
19	Severance Pay	23
20	Moving Expense	24
21	Compensation	25
22	Supplemental Pay	26
23	Bonuses	26
24	Workover/Overtime	27
25	Travel Pay	29
26	Per Diem	29
27	Insurance Benefits	29
28	Retirement and 401(k) Plan	30
29	Safety/Accident Prevention	30
30	General and Miscellaneous	31
31	Union Bulletin Boards and Communications	33
32	Grievance Procedure	33
33	System Board of Adjustment	36
34	No Strike/No Lockout	37
35	Union Representation	38
36	Union Security	38
37	Savings Clause	42
38	Duration	43
	Appendix A — Gulf of Mexico Pay Scales	44
	Alaska Addendum	46
	Appendix B — Alaska Pay Scales	58
	Letter of Agreement #1 — Fixed Wing Pilots	59
	Letter of Agreement #2 — IFR Cadre (Amended)	60
	Letter of Agreement #3 — System Board of Adjustment-Alaska	62

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AGREEMENT

This Agreement and Contract is made by and between OFFICE and PROFESSIONAL EMPLOYEES INTERNATIONAL UNION hereinafter called the “Union” or the “OPEIU” and OFFSHORE LOGISTICS, INC., hereinafter called the “Company” or “Employer”.

ARTICLE 1

STATEMENT OF PURPOSE

Section 1. The purpose of this Agreement is, in the mutual interest of the Company and its pilots, to provide for the operation of the services of the Company under methods which will further, to the fullest extent possible, the safety of air transportation and the efficiency of operation.

Section 2. No Pilot covered by this Agreement will be interfered with, restrained, coerced or discriminated against by the Company, its officers, or its agents because of membership in or lawful activity on behalf of the Union.

Section 3. It is understood, whenever in this Agreement, Pilots or jobs are referred to in the male gender, it shall be recognized as referring to both male and female Pilots. The provisions of this Agreement apply to all Pilots regardless of sex, color, race, creed, age, religion, national origin, handicapped or veteran status or other protected status in accordance with applicable national or state law.

ARTICLE 2

RECOGNITION AND REPRESENTATION

Section 1. This Agreement is made and entered into in accordance with the provisions of Title II of the Railway Labor Act, as amended, by and between Offshore Logistics, Inc. (the “Company”) and the Office and Professional Employees International Union (the “Union”) representing employees composed of the craft or class of Pilots as certified by the National Mediation Board in Case Number R-6517, August 6, 1997.

A. The Company hereby recognizes the Union as the sole collective bargaining agent and authorized representative for those employees described in Section 1 above, to represent them and, in their behalf, to negotiate and conclude agreements with the Company as to hours of work, wages, and other conditions of employment in accordance with the provisions of the Railway Labor Act, as amended.

Section 2. The term Pilot as used in this Agreement means Pilots (PIC) and/or Co-Pilots (SIC) covered by this Agreement and for whom the Union is the recognized collective bargaining representative. Pilot trainees are Pilots within the meaning of Section 1 of this Article.

Section 3. This Agreement covers all revenue and all known and recurring miscellaneous flying performed by the Company with Pilots on its payroll. All flying covered by this Agreement shall be performed by Pilots whose names appear on the Air Logistics L.L.C. and Air Logistics of Alaska, Inc. Pilot’s System Seniority List.

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Section 4.     A. Pilots covered by this Agreement shall be governed by all reasonable Company rules, regulations and orders previously or hereafter issued by proper authorities of the Company which are not in conflict with the terms and conditions of this Agreement. Prior to deciding to implement new rules, regulations or orders, or to change any existing rules, regulations or orders, the Company will meet and confer with the Union.

B. For the purpose of familiarizing new hires with existing Company rules and regulations, the Company will present and discuss those rules and regulations with each new hire as a part of his initial Company orientation.

Section 5. If the Union considers the rule to be unreasonable, it will have the right to file a written grievance challenging such rule prior to the implementation by the Company. Grievances properly filed in this respect will be subject to the normal Grievance and System Board of Adjustment procedures as set forth in Article 32 and Article 33 of this Agreement.

Section 6. The Company may engage in Subcontracted Revenue Flying under the following circumstances: Subcontracted Revenue Flying may be engaged in for periods not to exceed one hundred and eighty (180) days per occurrence during the term of this Agreement when (i) such Subcontracted Revenue Flying is necessary to accomplish the needs of the service of the Company, (ii) the Company determines that it does not have sufficient or appropriate aircraft, or sufficient or appropriately trained Pilots, available to perform the Subcontracted Revenue Flying, and (iii) the Company does not furlough any Pilot as a direct result of such engagement in Subcontracted Revenue Flying. It is understood and agreed that nothing in this paragraph will prevent the Company from furloughing Pilots or severing the employment relationship with Pilots for economic reasons independent of or unrelated to its engagement in Subcontracted Revenue Flying.

Section 7. Notwithstanding Section 6 above, in the event the Company engages in Subcontracted Revenue Flying solely due to circumstances over which the Company does not have control, it may engage in the Subcontracted Revenue Flying for a time not to exceed the duration of the circumstance beyond the Company’s control or six (6) months, whichever is less. Circumstances beyond the Company’s control shall be limited to: act of nature, a strike affecting the Company’s business, grounding of a substantial number of the Company’s aircraft by a government agency or court; loss or destruction of the Company’s aircraft; war emergency; or owner’s or manufacturer’s delay in the delivery of aircraft scheduled for delivery.

ARTICLE 3

STATUS OF AGREEMENT

Section 1. It is fully understood and agreed that this Agreement supercedes any and all Agreements now existing or previously executed between the Company and any other Union, or individual, affecting the class or craft of employees covered by this Agreement.

Section 2. The Company shall give notice of the existence of this Agreement, and its full terms, to any entity which engages in a possible transaction.

Section 3. Mergers

A.

In the event of a complete merger between the Company and another helicopter company (i.e., the combination of all or substantially all the assets of the two carriers) where the surviving carrier decides to integrate the pre-merger operations, the following procedures will apply: (1) if the Company is the surviving carrier, the Company will integrate the two Pilot groups in accordance with OPEIU Merger Policy if both groups are OPEIU-represented, and in accordance with Sections 3 and 13 of the Allegheny Mohawk LPPs if Pilots of the Company’s merger partner are not represented by OPEIU, and (2) if the Company is not the surviving carrier, the Company will make reasonable efforts to have the surviving carrier integrate the two Pilot groups in the same manner as stated in (1) of this paragraph.

B.

In the event the Company acquires all or substantially all of the assets or equity of another air carrier, or another air carrier acquires all or substantially all of the assets or equity of the Company, the Company will meet promptly with the Union to negotiate a possible “Fence Agreement” to be in effect during the

Page 5 of 62

period, if any, the two carriers are operated separately without integration of the Pilot work force. These discussions shall not be pursuant to Section 6 of the Railway Labor Act, and reaching an agreement with the Union shall not be a prerequisite for closing, or any other aspect of the transaction or operations pursuant to the transaction.

Section 4. Management Rights

A.	The Union recognizes that the management of the business of the Company and the direction of the working force are vested exclusively with the employer, subject to the provisions of this Agreement.
B.	The management functions shall not be used for the purpose of discrimination against any Pilot because of Union activity or for the purpose of evading any of the provisions of this Agreement.
C.	Except as restricted by the express terms of this Agreement, the Company shall retain all rights to manage and operate its business and work force, including but not limited to the right to sell or discontinue all or part of the business; to sell or lease aircraft or facilities; to determine where and when to operate scheduled or unscheduled flights; to determine its marketing methods and strategies; and to enter into affiliation or marketing agreements with other carriers; to invest (including equity investments) in other business entities including, without limitation, other helicopter carriers; and to determine the type of aircraft it will utilize.
D.	The parties agree that any past practices established prior to the date of this Agreement shall not create any contractual or legal obligation to continue such practices following the effective date of this Agreement.
E.	The waiver of any provision of this Agreement or any breach of this Agreement by either party during the term of the Agreement shall not constitute a precedent for the future waiver of any breach or provision.

ARTICLE 4

PILOT STATUS

Section 1. Each newly hired Pilot shall be on probation for a period which normally will not exceed six (6) months of cumulative service. The probationary period will begin on the date a Pilot enters training. During this time, a Pilot will become acquainted with his job duties, fellow Pilots and Company facilities while being evaluated by his supervisor. Evaluation of probationary period job performance is based on a number of factors including attitude, attendance, competence, and overall work performance. A supervisor who requires additional time to evaluate a Pilot’s suitability for a position may extend the probationary period for an additional ninety (90) days of cumulative active service.

Section 2. A newly employed Pilot shall be entitled to all the rights and benefits of any other Pilot under the terms of this Agreement, except that the termination of a Pilot’s employment during his probationary period, will not be subject to the grievance procedures and System Board of Adjustment as set forth in this Agreement. After completing the probationary period, such Pilot shall be considered a non-probationary Pilot.

Section 3. Once each month, the Company will provide the Union office with a listing of Pilots who have been hired, terminated, transferred and/or granted a military leave of absence during the prior month. This listing will include the home address of these Pilots.

ARTICLE 5

SENIORITY

Section 1. Seniority of a Pilot shall begin on the date a Pilot enters the Company’s training program.

Section 2. There shall be two (2) types of seniority, Company seniority and Bidding seniority.

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A.

Company Seniority — Company Seniority shall be defined as a Pilot’s length of service with the Company, regardless of location, and shall govern pay rates, and accrual or granting of paid days off pursuant to Article 12 of this Agreement. Company Seniority shall be adjusted for leaves of absence and reductions in force as provided for in Articles 7 and 11 of this Agreement.

B.

Bidding Seniority — Bidding Seniority shall be defined as a Pilot’s length of service with the Company, adjusted for leaves of absence as provided for in Article 5, Section 4, and Article 11 of this Agreement. Bidding Seniority shall govern all Pilots covered by this Agreement in bidding for job assignments and vacancies, layoffs, reemployment after layoff, demotions due to a reduction in force, and awarding of full week vacation periods, as provided for in this Agreement.

Section 3. In the Gulf of Mexico, a Pilot who is promoted to a non-flying or supervisory position shall continue to accrue Company and bidding seniority for one (1) year. Thereafter, such Pilot shall continue to accrue Company Seniority and retain his Bidding Seniority. In the Alaska operation, a pilot who is promoted to a non-flying or supervisory position shall continue to accrue Company and Bidding seniority. If said Pilot returns to flying duty, it shall be in accordance with his Company and Bidding seniority. In the event there is no vacancy, he shall be carried as an overage until the Company adjusts its staffing levels. If a Pilot is terminated while in a supervisory or non-flying position, such Pilot shall have no rights under this Agreement.

Section 4. A Pilot elected or appointed to a full-time position with the Union shall retain and accrue Company and bidding seniority in their immediate former classification.

Section 5. A Pilot will lose his seniority rights and his name will be removed from the seniority list under the following conditions:

A.	Resignation or retirement;
B.	Discharge for just cause;
C.	In the Gulf of Mexico, absent from work for forty-eight (48) consecutive hours without proper notification to the Director of Operations or his designee of the reason, unless the employee is physically incapable of providing the Company with the proper notification of his absence;
D.	Failure to return to work from an authorized leave of absence in the time provided for by the Company, giving a false reason for obtaining a leave of absence or accepting gainful employment while on a leave of absence, when the employment was not specifically authorized;
E.	Failure to inform the designated Company representative in person or by certified mail of his intention to return to work as provided for in Article 7, Section 5(a);
F.	Failure to return to work on or before a date specified in the notice of recall from the designated Company representative after a layoff as provided for in Article 7, Section 5.b.;
G.	A Pilot who is furloughed and who is not recalled to service with the Company within three (3) years from the date of furlough.

Section 6. Disputes arising over seniority shall be handled in accordance with Article 32 and Article 33 of this Agreement.

ARTICLE 6

SENIORITY ROSTER

Section 1. The Company will post a seniority roster on bulletin boards at all bases, listing the names of its Pilots, date of hire, station and base as reflected by its records. Copies of the seniority roster will be furnished to the Union.

Section 2. When two or more Pilots are employed on the same date, they shall be placed on the seniority roster according to the last four digits of each new-hire’s social security number. If two individuals have the same last four digits

Page 7 of 62

in their social security number, the digit immediately preceding the last four digits will be used to determine the lowest number. The Pilot with the lowest last four digits will be awarded the most senior position in the class. The balance of the class will be awarded seniority positions in order of their numbers, with the highest social security number receiving the lowest seniority.

Section 3. The Company agrees to update the seniority roster once each month, beginning with the effective date of this Agreement with a copy to the Union. A Pilot shall have a period of thirty (30) days after the posting of the seniority roster to protest to the Company any omission or incorrect posting affecting his seniority. Pilots on vacation, leave of absence or furlough shall be permitted thirty (30) days after their return to duty to make any protest concerning his seniority. Once the thirty (30) day period has expired without a protest, a Pilot’s posting will be considered correct and shall not be subject to further protest, unless the omission or incorrect posting was the result of a clerical error on the part of the Company.

ARTICLE 7

REDUCTIONS IN WORKFORCE

Section 1.     A. When it becomes necessary to reduce the workforce, a Pilot’s seniority, pursuant to Article 5 of this Agreement, shall govern the layoff. Pilots with the least seniority at a location shall be laid off first. For the purposes of this Article, there shall be two locations: the Gulf of Mexico operation and the Alaska operation. The Company shall give at least fourteen (14) days notice of an impending layoff at the affected location, or two (2) weeks pay in lieu thereof. The Company shall notify the Union in advance of the impending reductions.

B. The fourteen (14) day notice or pay in lieu thereof may be waived by the Company if the reduction in force is caused by circumstances beyond the control of the Company. Examples of this would include a war or foreign invasion, an act of God/natural disaster, an official state of emergency, a strike affecting the Company’s business, a work stoppage, a government grounding of aircraft, the revocation of operating certificate(s), or an unannounced cancellation of contract flying without proper notice.

Section 2. Pilots will be recalled from furlough in seniority order, with the most senior laid-off Pilot being recalled first: provided, however, that no pilot will be returned to work without a current medical certificate (as referred to in Article 16 Section 4.) The Company will make reasonable efforts to place the recalled Pilot in his former position or one of equal status.

Section 3. Pilots shall continue to accrue Bidding Seniority while on furlough. He shall not accrue Company Seniority while on a furlough of more than thirty (30) days duration.

Section 4. Laid off Pilots are required to file their proper address and telephone number(s) with the Director of Operations at the time of the lay off and will notify the Company of any address changes promptly.

Section 5. Laid off Pilots shall be notified of a recall by telephone, or certified mail, to the most recent telephone number and address provided by the Pilot. Notification by telephone must be accomplished by positive telephone contact with the Pilot and the call must be followed up with official notification by certified mail. The date of recall notification shall be the earlier of the date of positive telephone contact with the pilot or the date on which the recall letter was mailed. Notices sent to the last address of record shall be considered conclusive evidence of notice to the Pilot.

A.	Each Pilot accepting recall shall answer his recall notice no later than five (5) days after receipt of such notice in person or by certified mail. Pilots are strongly encouraged to notify the Company prior to the five (5) day period of his acceptance of the recall.
B.	A laid off Pilot will not be allowed more than fifteen (15) days after the date of recall notification to report to duty from layoff. Nothing shall prevent the Company from beginning recall classes prior to the end of the fifteen (15) day period if a sufficient number of Pilots agree to return from recall early.
C.	Pilots who fail to respond to a recall notice within the time limits set forth above, Pilots who refuse recall, or Pilots who reject a recall notice shall forfeit all recall rights and have his name stricken from the

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	seniority list.
D.	Seniority and recall rights shall terminate if a laid off Pilot is not recalled within thirty-six (36) months from the commencement of his layoff.

ARTICLE 8

JOB POSTING AND BIDDING (GULF OF MEXICO PILOTS)

I. PERMANENT VACANCIES

Section 1.     A. Pilots working in the Alaska operation shall not be displaced by either active or furloughed Pilots working in the Gulf of Mexico operation. Pilots working in the Gulf of Mexico operation shall not be displaced by either active or furloughed Pilots working in the Alaska operation.

B. When a job or crew position vacancy occurs on a full-time basis, or when a new job or crew position is created, the vacancy will be posted at all locations within seven (7) days after the vacancy occurs. The notice shall provide as much information as is available regarding the vacant position, including the job, location, aircraft and customer specific qualifications and closing date for bid application.

Section 2. Bidding Procedures

A.	Pilots will be given fourteen (14) calendar days from the initial posting to bid on any vacant position. The fourteen (14) days shall commence with the time the notice is faxed to all bases.
B.	The Company will make the awards within five (5) calendar days after the bidding has closed, not including Saturdays, Sundays, and holidays.
C.	The senior qualified Pilot, as defined in Section 2, Paragraph G, of this Article that bids on a vacancy shall be awarded the job.
D.	The Company reserves the right to remove a Pilot from an awarded job based on a customer complaint, in which case the Company will make reasonable efforts to obtain the customer’s complaint in writing. A copy of such written complaint shall be provided to the Pilot and to the Union.
E.	A Pilot responding to more than one (1) vacancy shall indicate his order of preference on the bid and shall be awarded his first preference.
F.	A Pilot on vacation, sick leave, or leave of absence for the entire period that bids are posted shall have an additional seven (7) days to bid on the vacancy.
G.	Definition Of Qualified
1.	The term qualified as used in this Article and Agreement means that a Pilot has been trained in an aircraft model or holds the necessary Pilot License and endorsements to be trained by the Company in that aircraft model.
2.	A Pilot will be considered qualified in an aircraft model although he may not be “current” as per FAR 135.293(b), 135.299, etc. If that Pilot is otherwise qualified and can become current within a reasonable amount of time, the Company will provide training, in accordance with Article 17.
H.	In the event no bid is received on a posted vacancy and pool Pilot(s) exist, such vacancies will be filled by the pool Pilots in reverse seniority order. A pool Pilot is a Pilot who has not been awarded to a contract on a full-time basis.

Section 3. After a Pilot has been awarded a bid job and has completed the necessary training, the Company will not allow any other Pilot to temporarily perform work on that job, provided the bid Pilot is available for work during his

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normal hitch. If an immediate operational requirement exists, an available qualified Pilot may be removed from his awarded job, in reverse seniority order, to fulfill such requirement for as short a period as possible, not to exceed three (3) days. In such cases, the Pilot being removed from his position will be pay protected until such time as he has returned to his original job.

Section 4. A Pilot may bid on any posted position, provided that once he has been awarded a vacancy, the Pilot shall be ineligible to bid on another vacancy for six (6) months from the date of transfer. Date of transfer is defined as the first date a Pilot performs in revenue service at his new job and/or base. The following exceptions apply to the six (6) month rule:

A.	A Pilot is being promoted from VFR to SIC, VFR to PIC, or SIC to PIC, or in any case where an increase in pay and/or supplemental pay will result from the new assignment.
B.	Once every two (2) calendar years, a Pilot may request and shall be granted an exemption from the six (6) month rule.

Section 5. During the time necessary to in-house train the Pilot who is to regularly fill a new job or crew position, the Company may fill the vacancy on a temporary basis not to exceed forty-five (45) days. Training at third party training facilities will be conducted as soon as possible.

Section 6. The Company may elect, based on operational needs, to withhold a Pilot who has successfully bid for a vacancy from entering training for a period not to exceed forty-five (45) days unless mutually agreed otherwise by the Company and the Pilot. If a Pilot is withheld, he will be compensated at the base salary he would have been entitled to if he had completed training and the higher base salary will commence when he was originally scheduled to enter training.

Section 7. Pilots who have reached the IFR level may not bid downward without the authorization of the Director of Operations.

II. TEMPORARY VACANCIES

Section 1. Temporary vacancies are positions created to fill needs for ninety (90) consecutive days or less.

Section 2. Temporary vacancies shall be filled by offering the positions to pool Pilots in seniority order. If no pool Pilot accepts the opening, the job will be assigned to a pool Pilot in reverse seniority order. If there are no pool Pilots, the Company shall assign a Workover. If no Workover Pilots are available, the Company shall assign the job in reverse seniority order.

Section 3. Pilots assigned to temporary vacancies shall be returned to their former position, if it still exists, upon completion of the temporary assignment.

Section 4. A Pilot assigned to a temporary vacancy with a higher salary than his current salary will receive such pay for the duration of the temporary assignment.

Section 5. A Pilot assigned to a temporary vacancy pursuant to II, Section 3 will be pay protected in accordance with the provisions of this Article.

III. GENERAL

Section 1. A Pilot will not be considered qualified for an IFR PIC job unless he has completed six (6) months as an IFR SIC with Air Logistics and is recommended by either an IFR Line Captain or an IFR Check Airman, and successfully completes an IFR flight and classroom check by a Check Airman.

Section 2. When operational needs dictate the need for additional IFR PIC crew positions:

A. Any Pilot who has completed the requirements of III, Section 1, may request and shall, within a reasonable amount of time, be given an IFR PIC Training Ride by a Check Airman. Following this training ride, the Check Airman may recommend the Pilot for an IFR PIC Check Ride.

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B. When a Check Airman has recommended the Pilot for an IFR PIC Check Ride, the Company shall make that ride available within a reasonable amount of time.

IV. PILOT IOE

Section 1. A Pilot under initial operating experience (IOE) is a newly hired Pilot who is assigned as the second Pilot to an aircraft which is normally operated by one Pilot. Nothing in this Agreement shall prohibit the Company from employing Pilot IOEs and placing such pilots in IOE seats on aircraft normally operated by a single Pilot.

Section 2. Line Training Captains

A.	A Line Training Captain is a Company designated flight instructor to whom a Pilot under IOE is assigned.
B.	The Company may assign a Pilot to become a Line Training Captain on his existing job, provided the Pilot agrees to the assignment. In the event such a Pilot decides he no longer wishes to be a Line Training Captain, he will be permitted to remain on his existing job.
C.	Line Training Captains shall be compensated in accordance with Article 22.

ARTICLE 9

CATEGORIES OF AIRCRAFT

Section 1. For the purpose of this Agreement, aircraft shall be divided into three (3) categories as follows:

A.	Single/Light Twin: Any single or multi-engine aircraft designed to carry eight (8) passengers or less.
B.	Medium Aircraft: Any aircraft designed to carry nine (9) passengers or more; and having a maximum gross weight of less than twelve thousand five hundred (12,500) pounds.
C.	Large Aircraft: Any aircraft with a gross weight of twelve thousand five hundred (12,500) pounds or greater.

Section 2. For the purpose of this Agreement, “Upgrade” shall be defined as any one or more of the following:

A.	Moving into a larger category of aircraft as per Section 1.
B.	Moving from a SIC seat to a PIC seat on crew-served aircraft.
C.	Any aircraft or job assignment requiring a formal training school.
D.	Any change in aircraft or job assignment that involves an increase in pay.

Section 3. When it becomes necessary to upgrade a pilot, seniority shall be given full consideration and the upgrade will be offered on a bid basis, in accordance with Article 8 of this agreement.

Section 4. A VFR medium twin (i.e., 212 or 412) job which is sold to the customer as “limited by waiver to nine(9) or less passengers” and is subject to increased passenger load at customer request will be considered an IFR contract for purposes of the Pilot pay scale.

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ARTICLE 10

SCHEDULES OF SERVICE

Section 1. Pilots will work one of the following schedules as determined by the needs of service provided it is consistent with applicable FARs:

A.	Seven (7) consecutive duty days, followed by seven (7) consecutive days of rest.
B.	Five (5) consecutive duty days, followed by two (2) consecutive days of rest.
C.	Four (4) consecutive duty days, followed by three (3) consecutive days of rest.
D.	Alternate fourteen (14) scheduled duty days on, followed by fourteen (14) consecutive days off duty can be worked provided the Company, Pilots and customers are agreeable, and the applicable FARs are followed.

1.	In the event of a vacancy in a 14 & 14 job, it shall be bid as a 14 & 14 job and preference shall be given to the senior qualified Pilot willing to work 14 & 14. If there are no qualified bidders willing to work 14 & 14, the job will be awarded or assigned as a 7 & 7 job.
2.	If, for any reason, a Pilot who has been working a 14 & 14 job is placed in the Pool, that Pilot shall be allowed to remain 14 & 14 for one additional hitch. If the Pilot has prepaid airline tickets, he will be allowed to remain in the Pool 14 & 14 until the expiration of those tickets.

Section 2. Any work schedules not provided for in this Article must be discussed with the Union prior to implementing any changes.

Section 3. The schedule in Section 1(A) of this Article shall be considered standard. Any other schedule shall be considered non-standard. Nonstandard schedules shall be filled on a voluntary basis. The Company reserves the right to fill the nonstandard job that is not bid by hiring for the position. It is not the intention of the Company to use this Article to dramatically change schedules from the standard schedule.

Section 4. Break-days shall not be changed without seven (7) calendar days notice, except for Pool Pilots and changes to meet customer requirements.

Section 5. This Agreement requires that Pilots not engage in business activities that are in competition with the Company and flying activities that interfere with their service to the Company, provided, however, that this provision shall not be construed to prohibit Pilots from affiliating with the Armed Forces of the United States.

ARTICLE 11

LEAVES OF ABSENCE

I. PERSONAL LEAVE OF ABSENCE

Section 1. A Pilot who has accrued sixty (60) days of continuous active service with the Company shall be eligible for an unpaid personal leave of absence.

Section 2. No Pilot may begin a personal leave of absence without written permission from the Company. The written application submitted to the Company must specify the reasons for such leave. Requests for personal leave and mutually agreed upon start and end dates shall be in writing.

Section 3. Personal leaves shall not normally exceed sixty (60) days in duration. Such leaves may be extended for additional periods, if approved by the Company. Once a personal leave has been awarded, it may only be cancelled prior to the end date by mutual agreement between the Company and the Pilot.

Section 4. A Pilot who is granted a personal leave of absence to fly in the service of the international operation shall continue to accrue Seniority in the following manner:

A. Company Seniority shall continue to accrue.

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B.	Bidding Seniority shall accrue for twenty-four (24) months. Following this twenty-four (24) month period, Bidding Seniority shall be retained.
C.	In order to satisfy the requirements of Section 4b, the Pilot must be on the payroll of Air Logistics or Air Logistics of Alaska for a period of sixty (60) consecutive calendar days.
D.	A Pilot returning from such leave will not be permitted to bump another Pilot from his job assignment. If no job assignment exists, he will serve as a pool Pilot until a job becomes available for which he may bid or until he is assigned to an open job in accordance with Article 8.

II. UNION LEAVE OF ABSENCE

Section 1. A Pilot who accepts a temporary position with the Union (less than three (3) months) will be permitted to return to his original position upon release from such temporary assignment. Time under this paragraph will be extended if requested by the Union and agreed to by the Company up to a maximum of six (6) months.

Section 2. When requested by the Union, a Pilot who is elected or appointed to a full-time position with the Union shall be granted an indefinite leave of absence. A Pilot leaving full-time service of the Union, for any reason, must return to duty within thirty (30) days or voluntarily forfeit all seniority rights.

Section 3. A Pilot on a Union Leave of Absence shall continue to retain and accrue Bidding and Company Seniority for the duration of the leave.

III. FAMILY AND MEDICAL LEAVE OF ABSENCE

Section 1. Eligible Pilots shall be granted a leave specified under federal or state law provisions of the Family and Medical Leave Act (FMLA). All leaves granted by the Company which would qualify as FMLA will run concurrently with the employee’s FMLA entitlement.

A. Refer to the Company Administrative Procedures Manual for specific rules and regulations with respect to the administration of FMLA.

Section 2. Pilots on FMLA shall retain and accrue Company and Bidding Seniority and shall receive all benefits as provided for by the FMLA or applicable state statute.

Section 3. A Pilot on a medical leave of absence due to a serious nonoccupational health condition of the Pilot, who does not return to work during the twelve (12) week period provided for under the FMLA, shall be granted an additional medical leave for the duration of the illness or injury, not to exceed twenty-seven (27) months or the length of his employment, whichever is less. During such leave, a Pilot shall retain and accrue Company and Bidding Seniority and shall be eligible for benefits pursuant to Section 5 below.

Section 4. As provided for in the FMLA, regular accrued sick time and vacation must be taken during a FMLA leave of absence.

Section 5. Pilots shall retain insurance coverage, provided the premiums are paid for at the applicable employee contribution costs for a period not to exceed twelve (12) months. Once the twelve (12) month period has been exhausted, the Pilot will be eligible for medical insurance under COBRA for the applicable period of time.

Section 6. The Company will require a Pilot who requests a medical leave to present a report to the Company from his physician that sufficiently certifies his medical condition.

Section 7. Prior to returning to duty from medical leave, a Pilot will be required to present a physician’s statement to the Company verifying that he is medically fit to perform all Pilot duties. In the event there is a dispute concerning the Pilot’s fitness for duty, the procedures in Article 16 shall be utilized to resolve the dispute.

Section 8. A Pilot may choose to utilize either his disability benefits or sick time while on medical leave, however, he may not use both at the same time. Once a Pilot begins to receive disability benefits or requests and is granted an

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unpaid medical leave, he cannot use any additional sick time until he returns to active duty.

Section 9. Pilots on an approved medical leave of absence shall have the option of applying for a temporary “light duty” position, if any are available, provided the Pilot meets the skill level for the position and his personal physician certifies that he is able to perform the job. The duration of the job is at the Company’s discretion and his performance must be acceptable to the Company. Compensation for light duty will be at the Pilot’s regular base rate of pay.

IV. MILITARY LEAVE OF ABSENCE

Section 1. Military leaves of absence and reemployment rights upon return from such leave shall be granted in accordance with applicable local, state, or federal law.

Section 2. All orders for military duty, including National Guard and Reserve duty, shall be provided in writing, if available, to the Director of Operations, within four (4) calendar days of receiving the orders. If verification of the orders is not obtained in advance of the duty, the request for Guard or Reserve duty may be denied. Time off for optional training and/or course work must be approved in advance by the Director of Operations.

Section 3. A Pilot on a military leave shall retain and accrue Company and Bidding Seniority.

Section 4. All insurance benefits shall continue to be available to a Pilot for the duration of any military leave of absence of less than sixty (60) days.

V. GENERAL

Section 1. Except as provided for in this Agreement, during any nonmedical leave of absence, a Pilot will retain and accrue Bidding Seniority, but will accrue Company Seniority for purposes of pay, vacation and sick time for up to the first thirty (30) days of such leave. Unused or banked sick time cannot be used for leaves, except for FMLA leave. Earned vacation for the year will be paid out to the Pilot at the commencement of his leave of absence.

Section 2. 2. In the event of a layoff, a Pilot on a leave of absence who would otherwise be laid off will have his leave of absence cancelled. A Pilot will be notified that his rights under the Agreement have been changed to those of a furloughed Pilot.

Section 3. Except as otherwise provided for in this Agreement, a Pilot returning from a military leave of absence, or any Pilot returning from any other approved leave of absence not to exceed ninety (90) days, will be restored to his former position if the position still exists or he will be placed in any other position where his seniority permits. Being restored to his former position means his job at the time of his leave of absence, his seat, aircraft type and job number. All other returning Pilots will be placed in any other vacant position for which he is qualified.

A. Any Pilot returning from a leave of absence who requires training prior to returning to flying will be scheduled for required training as soon as possible at the discretion of the Company, not to exceed one (1) week. Pay shall resume when a Pilot commences training and shall be based on the position for which he is training.

Section 4. All leaves of absences granted shall specify a date on which the Pilot will return to duty unless mutually agreed otherwise or by operation of law.

Section 5. All leaves of absence shall be without pay, unless otherwise specified in the Agreement.

Section 6. Unless otherwise specified in the Agreement, insurance coverage for a leave of absence will terminate at the end of the month in which the leave commences. After this date, an employee may elect to pay an amount equal to the group insurance premiums paid by the Company.

Section 7. Failure of a Pilot to return to active status at the end of any leave of absence shall be deemed a voluntary resignation from the Company and his name will be removed from the seniority list.

Section 8. Any Pilot on a personal leave who enters the services of another employer or who enters into a competing

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business of his own without first obtaining written permission from the Company will voluntarily forfeit his seniority rights with the Company.

Section 9. A Pilot who is granted a leave of absence during his probationary period shall have his probationary period extended accordingly.

Section 10. A Pilot on a leave of absence will keep the Company informed of his current address and telephone number.

Section 11. All requests for leaves of absences must be submitted in writing through the Pilot’s immediate supervisor for approval. Final approval shall be obtained through the Director of Operations.

ARTICLE 12

VACATION AND SICK TIME

I. VACATION DAYS

Section 1. Vacation Accrual

Years	Vacation Days		Bi-Weekly Accrual (V)		Sick Days		Total
1-5		7		0.269		7		14
6		8		0.308		7		15
7		9		0.346		7		16
8		10		0.385		7		17
9		11		0.423		7		18
10-11		14		0.538		7		21
12-13		15		0.577		7		22
14-15		16		0.615		7		23
16-17		17		0.654		7		24
18		18		0.692		7		25
19		19		0.731		7		26
20		20		0.769		7		27
21 or more		21		0.808		7		28

Pilots working a five on and two off schedule/add 0.19 days bi-weekly accrual. Pilots working a four on and three off schedule/add 0.11 days bi-weekly accrual.

A.	In order to accrue vacation days, a Pilot must be an active employee on the payroll for at least fifteen (15) days in a month.
B.	New hire Pilots will accrue vacation days in a month only if they are on the payroll prior to the fifteenth (15th) of the month.

Section 2. One-Hitch Vacation Scheduling

A.

On or before October 1 of each year, all Pilots eligible for vacation during the following year may submit a vacation request form for a one-hitch vacation not to exceed seven (7) days (except that eligible Pilots on a 14/14 schedule may request a full hitch vacation). The form shall list up to five choices for vacation. Any Pilot not submitting a vacation request form will be treated as not desiring this first one-hitch vacation.

B.

By October 15 of each year, the Company will publish a list of approved one-hitch vacations.

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C.	On or before November 15 of each year, all eligible Pilots who are not granted a one-hitch vacation may resubmit a vacation request form, listing up to five (5) alternate choices, for a one-hitch vacation for any week not filled in accordance with I, Section 2A above.
D.	By November 25 of each year, the Company will publish a revised vacation schedule including all vacation requests granted, based on the criteria listed in I, Section 2A and B above.
E.	The Company will contact Pilots who, after completing the steps described in Sections 1 through 4 above, have been unable to schedule a one-hitch vacation, to discuss an acceptable time for the vacation in a week not filled in accordance with I, Section 2 A-D above.

Section 3. Second One-Hitch Vacation Scheduling

A.	On or before December 1 of each year, all Pilots who are eligible for a second week of vacation during the following year may submit a second vacation request form for a second one-hitch vacation not to exceed seven (7) days. The form shall list up to five (5) choices for a second week of vacation during any week not already filled. Any Pilot not submitting a vacation request form will be treated as not desiring a second one-hitch vacation.
B.	By December 15 of each year, the Company will publish a list of approved vacations based on the criteria listed in I, Section 3A above.
C.	If an eligible Pilot does not receive a second one-hitch vacation, he may submit another vacation request form requesting a vacation in any week not already filled in accordance with I, Section 3A above.
D.	The Company will contact Pilots who, after completing the steps in Sections 1 through 3 above, have been unable to schedule a second one-hitch vacation, to discuss an acceptable time for the vacation.
E.	The Company will make available a sufficient number of weekly vacation slots each calendar year to insure that eligible Pilots will be offered their one-hitch and second hitch vacations; provided that a substantial change in the number of pilots employed by the Company will trigger a reevaluation of scheduled vacations to meet operational needs. The Company will formulate the number of yearly full hitch vacation slots by dividing the total number of anticipated vacation hitches for the year by 52.

Section 4. Day-at-a-Time Vacations

A.

All Pilots who have accrued vacation may request a one-day (or several days) vacation at any time. Such requests will be granted on a first-come, first serve basis, consistent with operational needs. Operational needs permitting, the Company will make available to eligible Pilots such vacations up to three (3) consecutive days, but may grant up to seven (7) consecutive days. Requests for day-at-a-time vacations in November and December should be submitted no later than November 1; however, a request may be submitted at any time.

B.

In the event a Pilot voluntarily leaves the Company, he will be paid for his accrued vacation days, provided he has given the Company two (2) weeks notice of his departure.

Section 5. Vacation Cancellation

A.	Any Pilot who is assigned a one-hitch vacation according to I above and who subsequently elects not to take the approved one-hitch vacation will not cause the Company to revise or reallocate other previously approved one-hitch vacations.
B.	When a one-hitch vacation is cancelled, the Pilot and the Company shall attempt to find a mutually agreeable substitute block during the current year. A Pilot whose vacation has been involuntarily cancelled, and cannot be rescheduled, shall receive one hundred and fifty percent (150%) compensation for that hitch.
C.	In the event the Company cancels a scheduled one-hitch vacation, all non-refundable vacation deposits

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	that the Pilot is unable to recover, with the assistance of the Company, shall be reimbursed to the Pilot. Such expenses may include vacation deposits, pre-paid tickets, hotel fees, or any other pre-paid expenses associated with the cancelled vacation. In order to receive reimbursement, the Pilot shall provide the Company with proof of the expense.
D.	In the event it becomes necessary to cancel scheduled vacations, cancellations shall first be offered to volunteers in seniority order. If an insufficient number of Pilots voluntarily accept cancellation, vacations shall be involuntarily cancelled in inverse seniority order.
E.	Pilots returning from leave of absence who are unable to participate in the vacation request and approval process described above will receive priority on unassigned vacation weeks, or vacations that have been previously approved and cancelled.

Section 6. Vacation Miscellaneous

A.

New hire Pilots will accrue vacation days in a month only if they are on the payroll prior to the fifteenth (15th) of the month. New hire Pilots are not eligible to take scheduled vacation days during their probationary period. The Company shall place three (3) days into a Pilot’s Sick Time Off Bank (STO) upon his successful completion of his probationary period. At the end of his first year of employment, an additional four (4) days shall be placed in his bank.

B.

A Pilot may use his current year’s allotment of vacation days in advance of time earned, but if a Pilot leaves the Company or is terminated before it is earned, any such time will be deducted from his final paycheck. Vacation days from the next year’s vacation allotment may not be advanced to a Pilot for use in the current year.

II. SICK TIME (STO)

Section 1. Accrual

A.

The number of sick days accrued each year is dependent on a Pilot’s years of active service with the Company in accordance with the schedule listed in I, Section 1. A Pilot may accrue a maximum of ninety seven (97) days sick leave, except that any Pilot who has greater than this maximum at the time this Agreement is executed shall be grandfathered with his accrued sick days and will not accrue any additional sick days until such time as his total sick days drops below the ninety seven (97) day maximum. Within ninety (90) days after the execution of this Agreement, a Pilot has the option of being paid for any sick days in excess of ninety (90) days at 100% of his applicable daily rate.

B.

Pilots must have at least seven (7) days in the STO Bank at the beginning of each calendar year prior to bidding vacations for that calendar year. Pilots who have less than seven (7) days in the STO Bank are required to set aside the appropriate number of vacation days to satisfy the STO Bank minimum.

Section 2. Miscellenous

A.	The Company reserves the right to require a medical excuse for absences due to sickness. To the extent the Company requires a medical examination not covered by insurance, it shall be paid for by the Company, provided the Pilot submits receipts for reimbursement in a timely manner.
B.	Once the STO Bank is exhausted, a Pilot may use his remaining unused vacation days for sickness or injury off the job.

III. PAYMENTS AND REIMBURSEMENT

Section 1. Vacation/Sick Time Off Audit

A. The Company shall track the number of vacation and sick days, both taken and remaining, in the Pilot’s Vacation/Sick Time Off Banks and shall make this information to the pilot on request during normal working hours.

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B.	A Pilot will be paid for his unused vacation days at the end of each year, unless the Pilot notifies the Company no later than November 30 of the calendar year that he wishes to place his unused vacation days into the STO bank.
C.	Unused vacation days will be paid out at one hundred (100) percent of a Pilot’s applicable daily rate.

Section 2. Separation of Employment

A.	If a Pilot voluntarily leaves the Company, he will be paid for his accrued vacation days at the rate of one hundred (100) percent, provided he has given the Company two (2) weeks notice of his departure.
B.	Upon normal retirement from the Company (defined as reaching age 62), or when declared medically retired by the Company, a Pilot will be paid his accrued vacation.

IV. GENERAL AND MISCELLANEOUS

Section 1. Personal Days and Emergency Days Off

A.	While on hitch, a Pilot may request a personal day off for unscheduled, personal reasons. Such requests will be given reasonable consideration by the Company and granted if operationally feasible.
B.	Personal days will be charged against the Pilot’s Vacation Bank.
C.	Personal days must be requested at least twelve (12) hours in advance.

V. SWAP PROGRAM

A.	The Company will maintain a Pilot SWAP system which allows Pilots to swap days or hitches. Under this system, the swap must be between two Pilots who are qualified to fly the job to be swapped. The Company will permit Pilots to use Company mail and fax machines to administer the swap system and will permit Pilots to display swap requests on bulletin boards.
B.	The Swap must be submitted in writing for approval at least seven (7) days in advance of the swap, except in cases of emergency, and must contain all pertinent information concerning the swap, including contact numbers for both Pilots. The request must be signed by both Pilots.
C.	The swap may only be done in increments of one (1) full day.
D.	Within three (3) working days of the swap request, the Company will confirm to the two Pilots its receipt and acceptance or rejection of the swap request. When the Company has accepted a swap request, both Pilots become responsible for the swapped jobs as if they were their own; provided however, that if the responsible pilot has voluntarily terminated his employment prior to the date of his swapped assignment, the regularly assigned pilot is responsible for the assignment. If the Pilot is involuntarily terminated prior to performing his swapped assignment, the Company will deduct from his vacation bank the amount of pay for such swapped assignment.

ARTICLE 13

ON-THE-JOB INJURY (OJI) LEAVE

Section 1. Pilots are eligible for worker’s compensation benefits with respect to injuries or illnesses arising out of and in the course of employment with the Company.

Section 2. Vacation and Sick Days will not be charged to a Pilot who is injured on the job.

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Section 3. A Pilot must report the occurrence of an OJI to his supervisor immediately.

Section 4.     A. A pilot injured on the job, whose injury is covered by the Longshoreman and Harborworkers Act (USL&H Law), will receive worker’s compensation benefits in accordance with that law.

B.	A pilot, whose job is to work offshore, and whose injury is covered by State worker compensation law, will receive a supplemental payment from the Company in an amount equal to the difference between the benefit provided by State Law and the benefit provided by the USL&H Law.
C.	During the statutory waiting period, an injured Pilot will receive his base pay.

Section 5. All insurance benefits shall continue to be available to a Pilot on the same basis as an active employee for a maximum of twelve (12) months, provided the Pilot continues to pay his portion of the insurance premium. Once the twelve (12) month period has been exhausted, the Pilot shall be eligible for medical insurance under COBRA for the applicable period of time.

Section 6. The Company may require an injured Pilot to submit to a physical examination in accordance with the provisions of Article 16.

Section 7. Prior to returning to duty from an OJI Leave, a Pilot shall be required to present a physician’s statement to the Company verifying that he is medically fit to perform all Pilot duties. In the event there is a dispute concerning the Pilot’s fitness for duty, the procedures of Article 16 shall be utilized to resolve the dispute. Upon return from an OJI Leave, a Pilot shall be returned to his former position if the position exists or to any other position where his seniority permits

Section 8. When a Pilot covered by this Agreement suffers a job-related injury, the Company shall inform the Pilot of his rights under the applicable state’s Worker’s Compensation statute and the Longshoreman’s Act, if applicable.

Section 9. During an OJI Leave, the Company may offer, and a Pilot may accept light duty, provided it is consistent with his medical restrictions. During a light duty assignment, the Pilot shall be compensated at his applicable base pay.

Section 10. Worker’s Compensation benefits made by the Company shall be reduced (as allowed by applicable Worker’s Compensation statutes) to the extent the Pilot receives income from other sources. These shall include, but not be limited to, such other outside income as social security benefits and/or outside employment.

Section 11. If a Pilot sustains an on-the-job-injury while at work away from his base station, the Company shall provide transportation to return the Pilot to his base station. If a Pilot sustains an on-the-job-injury requiring medical attention, the Company shall provide the Pilot transportation to the extent necessary to obtain medical attention.

ARTICLE 14

BEREAVEMENT LEAVE

Section 1. The Company shall grant a bereavement leave for a reasonable time, not to exceed seven (7) days for the death of a member of the Pilot’s immediate family. Pilots on bereavement leave shall be paid for each duty day missed, up to a maximum of seven (7) days. In exceptional circumstances, the Company may extend such paid leaves beyond seven (7) days. With respect to pilots in the Alaska operations, bereavement leave includes absences due to life-threatening illness, injury or death of an immediate family member.

Section 2. For the purposes of this Article, a Pilot’s immediate family shall include his mother, father or legal guardians, spouse, children, brother, sister, grandparents, mother-in-law and father-in-law.

Section 3. The Company, at its discretion, may extend the duration of a bereavement leave or grant bereavement leave for persons other than the Pilot’s immediate family.

Section 4. Bereavement leave is not compensable when the Pilot is on days off, leave of absence, vacation, sick leave,

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   layoff, or suspension.

Section 5. The Company will accept any method of reasonable proof of death and funeral. This will include a newspaper clipping, copy of death certificate, etc.

ARTICLE 15

JURY DUTY

Section 1. When a Pilot is called for Jury Duty, he is required to present proof in the form of a court summons or subpoena for jury duty to his supervisor as soon as possible.

Section 2. A Pilot serving on Jury Duty shall receive his regular pay. The day or days for which a Pilot will receive pay for Jury Duty must fall within the Pilot’s regularly assigned workweek (the day or days the Pilot normally works). Any monies received by a Pilot from the court for Jury Duty shall be signed over to the Company.

Section 3. Jury pay is not applicable when a Pilot is on suspension, leave of absence, Vacation/sick time, layoff or day(s) off.

Section 4. In the event a Pilot is released from Jury Duty on a duty day, he shall be required to return to his base provided the court is located within reasonable proximity to the base and he has at least six (6) hours remaining in his duty day.

Section 5. If a Pilot is called for Jury Duty twice within a twelve (12) month period in a jurisdiction where citizens are exempt on the second call within the twelve (12) month period, the Company is not obligated to pay for Jury Duty.

Section 6. Pilots under subpoena for reasons other than those benefiting the Company or Jury Duty, will be charged to vacation. When vacation is not available, the time off will be without pay.

ARTICLE 16

FEES AND PHYSICAL EXAMINATIONS

Section 1. Should the Company require any Pilot to be bonded in the performance of his duties, the premium involved shall be paid by the Company.

Section 2. In the event identification badges or cards are required, the Company shall provide identification badges or cards at no cost to the Pilot. In the event the I.D. badge or card is lost or misplaced by the Pilot, he shall be charged for the total cost of a replacement badge or card and shall be required to secure such badge or card on one of his days off.

Section 3. Pilots shall maintain a rotorcraft Helicopter Commercial Certificate with an Instrument Rating at his expense.

Section 4.     A. It shall be the responsibility of each Pilot to pay for and arrange his regular medical examinations by a qualified aeromedical examiner of the Pilot’s choice, as required by the Federal Aviation Regulations. Examinations will be scheduled while the Pilot is off-duty. A copy of the medical certificate will be provided to the office of the Chief Pilot by the 25^th day of the month due. If a pilot, whose certificate is expiring, cannot complete his work hitch prior to the end of the month, he will not be allowed to begin that work hitch.

B. Any additional physical exams and/or tests required by the Company or a customer beyond those required as provided for in Section 5(A) of this Article shall be paid for by the Company, including reasonable and necessary travel expenses.

Section 5.     A. When the Company believes that there are grounds to question a Pilot’s physical or mental condition to remain on flight status, the Company may require that such Pilot be examined by a medical examiner

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designated by the Company.

B.	Any medical examination or tests required by the Company pursuant to Section 5(A) of this Article shall be paid for by the Company. Payment shall be made by the Company directly to the medical examiner and/or test facility conducting such examination or tests.
C.	A Pilot will be provided a copy of the Company physician’s report. This report will state specifically if the Pilot is able to perform his duties.
D.	A Pilot who fails to pass a Company physical examination may have a review of the case. Such review will proceed in the following manner:

1.	Within fifteen (15) calendar days of the date the Pilot is presented the report of the Company physician, the Pilot may employ a qualified medical examiner of his own choosing and at his own expense for the purpose of conducting a physical examination for the same medical purpose as the examination made by the Company’s medical examiner.
2.	A copy of the findings of the qualified medical examiner chosen by the Pilot shall be submitted to the Company within seven (7) business days of receipt by the Pilot, and will state if he is able to perform Pilots’ duties. In the event that such findings verify the findings of the medical examiner employed by the Company, no further medical review of the case shall be afforded.
3.	In the event that the findings of the medical examiner chosen by the Pilot disagree with the findings of the medical examiner employed by the Company, the Company will, at the written request of the Pilot, ask the two (2) medical examiners to agree upon and appoint a third qualified and impartial medical examiner who is a specialist in the area of the Pilot’s alleged disability, for the purpose of making a further medical examination of the Pilot. In the event the Pilot fails to submit a written request, within fifteen (15) calendar days after the findings, the results of the original Company examination shall govern.
4.	The decision of the impartial physician, who has been agreed upon by the Company physician and the Pilot’s physician, shall be final and binding on all parties.
5.	The expense of employing the impartial medical examiner shall be borne equally by the Company and the Pilot. Copies of the medical examiner’s report shall be furnished to the Company and to the Pilot.

E. When a Pilot is removed from flight status by the Company as a result of failure to pass the Company’s physical examination, and appeals such action under the provisions of this Section, he shall, if subsequently found by the impartial examiner to have been fit to perform the work at the time of removal, be reimbursed at his regular rate of pay and medical expenses.

ARTICLE 17

TRAINING

I. RECURRENT TRAINING

Section 1. The Company will attempt to schedule recurrent training on days off to minimize disruption to the operation. The Company will make reasonable efforts to schedule training immediately before or immediately after a Pilot’s hitch. If recurrent training cannot be scheduled immediately before or after his hitch, the Company shall provide the Pilot with housing and per diem during the day(s) off between his training and his hitch. Pay for recurrent training will be in accordance with Article 21 of this Agreement.

Section 2. In the event a Pilot is unable to attend training on the day(s) assigned, he will notify the Manager of Gulf Coast Operations as far in advance as possible. The Manager will work with the Pilot to arrange for alternative training dates. However, if there are no mutually agreeable dates available, the Pilot will remain obligated to conduct the training on the original dates assigned by the Company.

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Section 3. Each month, the Company will publish a list of recurrent training. At the beginning of each year, the Company will also publish a list of scheduled recurrent training classes for the year along with a list of Pilots assigned to such training. It will be the responsibility of the Pilot to know the dates for his scheduled recurrent training class and whether a Pilot’s recurrent training has been rescheduled due to a change in assignments.

II. UPGRADE TRAINING

Section 1.     A. Upgrade training is defined in Article 9, Section 2.

B. The Company will attempt to schedule upgrade training on days off to minimize disruption to the operation. The Company will make reasonable efforts to schedule training immediately before or immediately after a Pilot’s hitch. If upgrade training cannot be scheduled immediately before or after his hitch, the Company shall provide the Pilot with housing and per diem during the day(s) off between his training and his hitch. Pay while in upgrade training will be in accordance with Article 21 of this Agreement.

III. SPECIAL TRAINING AND NEW HIRE TRAINING

Section 1. The Company will attempt to assign any nonrecurrent special training on a Pilot’s day off to minimize disruption to the operation. The Company will make reasonable efforts to schedule training immediately before or immediately after a Pilot’s hitch. If special training cannot be scheduled immediately before or after his hitch, the Company shall provide the Pilot with housing and per diem during the day(s) off between his training and his hitch. (This preceding sentence is not applicable for new hire training.) Pay for special assignment training will be in accordance with Article 21 of this Agreement.

IV. TRAINING FAILURES

Section 1. It is recognized that not all Pilots reach the required level of proficiency in the same amount of time. Therefore, when it becomes apparent to the Company that a Pilot will require time in excess of that usually required to reach proficiency, the Company Training Department will, in consultation with the Pilot, determine the cause of his inability to reach the required proficiency level and establish a plan for correcting the problem. In the event a Pilot fails to demonstrate the required degree of proficiency after completion of the individual training plan, he will be handled in accordance with the provisions outlined below.

A. Recurrent Training

1.	A Pilot who fails any portion of recurrent training (written exam, oral exam, flight check) will be removed from line duty without pay for up to seven (7) days, commencing with the first day of his next scheduled hitch, or until he has commenced retraining and has been successfully retested by the Company.
2.	A Pilot who fails his oral exam or flight check may request a change in instructor or additional training prior to his retest.
3.	If the Pilot fails the retest, his status with the Company will be reviewed.

B. Upgrade/Transition Training

1.	A Pilot who fails any portion of his upgrade/transition training after a retest (written, oral or flight check) will have the training discontinued. The Pilot will be returned to his previously flown aircraft if the aircraft is still being flown by the Company, or any other available aircraft for which he is qualified.
2.	A Pilot who fails his oral exam or flight check may request a change in instructor or additional training prior to his retest.
3.	A Pilot who fails upgrade/transition training will not be permitted to upgrade in that aircraft for a period of six (6) months following his training failure. A Pilot who fails upgrade/transition training a second time will not be permitted to upgrade in that type of aircraft for a period of thirty (30) months following his training failure. It is understood and agreed that the Company has the right to conduct a line check following any training failure.

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4. A Pilot who fails upgrade/transition training for a third (3^rd) time will no longer be considered eligible for upgrade training in that type of aircraft.

C. Flight Check/Progress Ride

1.	When a Pilot fails a flight check given as a result of an aircraft incident or an observed departure from normal flight procedures, his status with the Company will be reviewed.
2.	If an oral exam is necessary and the Pilot fails a retest, his status with the Company will also be reviewed.

D. Initial Training (New Hire)

1. A Pilot who fails any portion of his new hire training will be subject to termination by the Company.

ARTICLE 18

FACILITIES, EQUIPMENT AND UNIFORMS

Section 1. In the Gulf of Mexico, the Company shall provide Pilots with clean and comfortable rooms near its operating bases. For the purpose of this Agreement, clean and comfortable rooms may be either apartment units, motels or mobile homes. These rooms will be provided under the following circumstances:

A.	When a Pilot engages in a Workover at an unassigned base;
B.	When a Pilot does not work within a reasonable proximity of his home regardless of whether he is on regular hitch or Workover; or
C.	When travel back to his home would prevent a Pilot from receiving minimum rest in accordance with FARs.
D.	All new mobile homes purchased by the Company will be limited to a maximum of five (5) bedrooms. Existing mobile homes that have six (6) bedrooms may continue to be used. However, if any Pilot in a six (6) bedroom mobile home objects to such sleeping accommodations, the Company will place one (1) of those Pilots into a nearby apartment unit, motel, or another mobile home when available. No Pilot will be asked to share his sleeping room with another. Normal furnishings will be provided, including air-conditioning, furniture, television, stove and/or microwave oven, cooking and eating utensils and washer and dryer. If not provided in the mobile homes, washers and dryers shall be provided near the housing.
E.	All bases shall maintain an adequate supply of overnight gear, including sheets, blankets, pillows, pillow cases and towels for transient pilots.
F.	When Company-provided rooms are filled to capacity, or otherwise not available, the Company shall, provide individual motel accommodations, when available, including transportation to and from such facility for non-domiciled Pilots.

Section 2.     A. In the Alaska operation, the Company provides an apartment in the Fairbanks area to Pilots who do not live within a reasonable proximity of the Fairbanks area, regardless of whether they are on regular hitch, training, or workover, on a first come, first serve basis. To the extent that such housing is not available, the Company will provide these Pilots with other clean and comfortable accommodations.

B. When an Alaska Pilot works away from the Fairbanks area overnight, his lodging and meal expenses will be reimbursed by the Company.

Section 3. Company-provided accommodations will be cleaned at Company expense at least once a week. It will be the responsibility of each Pilot housed in Company-provided accommodations to treat all furnishings and appliances with care.

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Section 4. The Company will make a reasonable effort to insure that customer-provided accommodations are suitable, clean and comfortable. If a Pilot finds the customer-provided accommodations substandard, he shall immediately report his specific complaint to the Company, and the Company will promptly investigate and will work with both the Customer and the Pilot to resolve the complaint. In any case where the customer-provided accommodations are substandard, the Pilot will be permitted to move to another location with acceptable accommodations, if such accommodations are reasonably available. In the Alaska operation, the Company will define the “standard” for accommodations for particular jobs.

Section 5. The Company shall furnish its Pilots with all necessary equipment to perform their duties. This equipment shall not include headsets or computers, but shall include Switlik vest style PFDs.

Section 6. Pilots are responsible for all equipment assigned to them, and if they lose equipment, or damage equipment through negligence, the Pilot will be required to reimburse the Company for the cost of the replacement. Company-provided equipment that becomes inoperative as a result of normal wear and tear shall be repaired or replaced by the Company.

Section 7. In the Gulf of Mexico, Pilots will be issued a set of seven (7) uniforms and a jacket upon hire. Should a Pilot uniform show exceptional wear and tear during a one (1) year period, the Pilot should consult with his supervisor for replacement items. Upon request and subject to approval by the Company, Pilots shall be entitled to four (4) replacement items per year. Pilots assigned to Air Logistics of Alaska will be issued two (2) Nomex flight suits, one (1) winter coverall or equivalent, and one (1) Multi-season jacket.

Section 8. On or before June 1^st of each year, the Company will pay to each Pilot an equipment allowance of two hundred dollars ($200.00).

Section 9. The Company shall have the right to determine reasonable grooming standards for Pilots. Such standards will be published and distributed to all Pilots.

ARTICLE 19

SEVERANCE PAY

Section 1. A Pilot who is laid off shall receive severance pay based on the total amount of Company Seniority under this Agreement unless one or more of the following conditions exist:

A.	He exercises his seniority in order to remain in the employ of the company.
B.	He accepts any other employment with the Company or refuses to accept a job or assignment within his category as “Pilot” in the Company.
C.	The layoff is caused by circumstances beyond the control of the Company. Examples of this would include a war or foreign invasion, an act of God/natural disaster, an official state of emergency, a strike affecting the Company’s business, a work stoppage, a government grounding of aircraft, or the revocation of operating certificate(s).
D.	He is dismissed for just cause, resigns or retires.

Section 2. The amount of severance pay due to a Pilot under this Article shall be based on the Pilot’s Company Seniority with the Company and shall be computed on the basis of the Pilot’s regular base pay at the time of layoff as follows:

Completed Years of Service	Severance Allowance
1 year but less than 4 years	2 weeks
4 years but less than 8 years	4 weeks
8 years but less than 12 years	6 weeks
12 years but less than 16 years	8 weeks
16 years or more	10 weeks

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Section 3. Severance pay shall be paid on the dates of his regular pay periods.

Section 4. Severance pay shall continue until all severance pay has been paid. However, if a Pilot is recalled, severance pay shall stop on the effective date of recall.

Section 5. The Company may offer voluntary leaves of absence to offset scheduled furloughs.

Section 6. The Company may offer voluntary furloughs to Pilots flying a specific aircraft and/or seat to offset scheduled involuntary furloughs. Volunteers shall be entitled to all of the provisions of this Article, except that severance pay will be calculated based on the position of the most junior Pilot scheduled for involuntary furlough. Return to active status shall occur only as a result of the normal recall process.

Section 7. Medical, dental and life insurance for laid off Pilots and their eligible dependents will continue on the same basis as active Pilots until all severance pay has been paid.

ARTICLE 20

MOVING EXPENSE

Section 1. The Company shall provide a paid move to a Pilot who is required to move by the Company as a result of the opening of a new base(s) that is not part of the Gulf Coast operations, provided that the Pilot moves within thirty (30) miles of his new base. The Company shall also provide a paid move to a Pilot who elects to relocate his residence to within a thirty (30) mile radius of his currently assigned base from a residence outside such a radius. However, a move will only be paid if it results in the Company not having to provide the Pilot with Company-provided accommodations at his current base.

Section 2. In order to receive a Company-paid move, Pilots must complete such move within twelve (12) months from the date of notice and shall be entitled to the following reimbursement upon presentation of reasonable documentation.

A. Actual moving expense for normal household effects including normal packing charges up to a maximum of twelve thousand (12,000) pounds. Not included in the move are the transportation of pets/animals, boats, automobiles, motorcycles, heavy shop or hobby equipment.

Section 3. Pilots shall be allowed the following enroute expenses when properly substantiated by receipts during the period of enroute travel:

A.	For Pilot only — $30.00/day
B.	For Pilot and Spouse — $60.00/day
C.	For each dependent child — $15.00/day

The period of enroute travel shall continue after arrival until the day the household effects arrive or until the end of the fifth day, whichever comes first.

Section 4. For the purpose of determining necessary travel time, the Company will allow one (1) travel day for each five hundred (500) miles or fraction thereof, to a maximum of three (3) travel days when driving a vehicle. The Pilot is expected to move during his days off and be prepared to work on his regular hitch. Travel time will be determined by the most direct AAA mileage between the two (2) cities.

Section 5. In addition to moving expenses, one (1) vehicle per family may be driven to the new location and the Pilot will be reimbursed at the rate established by the IRS. It is agreed by the parties that as of the date of signing of this Agreement, the mileage rate will be thirty-one (31) cents per mile by the most direct AAA highway mileage. No expenses will be paid for a second vehicle.

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Section 6. To be eligible to obtain reimbursement from the Company, a Pilot must meet the requirements of Section 1 of this Article and have:

A.	completed his probationary period,
B.	provided the Company with at least thirty (30) days advance notice of the move,
C.	not have had another Company-paid move in the preceding twenty-four (24) months, and
D.	use a Company contracted mover, if required to do so by the Company.

Section 7. Pilots who voluntarily leave the Company within twenty-four (24) months of a paid move will be required to reimburse the Company for all moving expenses provided under this Article.

Section 8. Pilots eligible for reimbursement of moving expenses electing to move themselves shall be reimbursed for actual moving expenses such as truck rental, gas, oil, drop-off, and other Company-approved expenses. Pilots must notify the Company in advance of a move, receive prior Company approval, and follow the specified procedures per Company policy in order to be reimbursed.

A.	The actual expenses reimbursed cannot exceed the total estimated cost of a Company-coordinated move.
B.	If the actual move by the employee is less than the lowest estimate for a Company-coordinated move, one half of the difference will be paid to the employee. Total reimbursement shall not exceed the reimbursement for which the employee is eligible pursuant to Sections 2, 3 & 5 of this Article.

ARTICLE 21

COMPENSATION

Section 1. Rates of pay for Pilots in the Gulf of Mexico are shown in Appendix A and shall become effective on the dates listed in the Appendix.

Section 2. While attending training, as defined in Article 17, a Pilot will receive 100% of his applicable base pay, regardless of whether the training occurs on or off hitch.

Section 3. Training pay for new hire Pilots will be determined by the Company and may be modified from time-to-time based on market conditions. In no event shall pay for new hire Pilots exceed the base salary for Pilots in their first year of service.

Section 4. A Pilot’s base salary will not increase until he has successfully completed all training and reports for duty for the first revenue flight in the upgraded aircraft.

Section 5. Effective on the date of the execution of this Agreement, Pilots who have been given credit for offshore experience (not to exceed five (5) years) at the time of hire will be advanced on the pay scale to the level of their credited experience and years of service with the Company.

Section 6.     A. Thirty (30) days after the execution of this Agreement, Pilots on the active payroll will be paid a lump sum equivalent to 100 percent of the increase in the base pay for the Step he occupied the day before the execution of this Agreement, provided in Section 1 of this article, and workover provided in Section 8 of this article, from May 19, 2003 to the date of ratification of this Agreement, to the extent the Pilot was on the active payroll during such period.

(Note: The Company will consider days spent on Union Leave by members of the Union Negotiating Committee to be days worked for the purpose of calculating retroactive pay.)

B. Pilots who are on military leave or medical leave at the time of the execution of this Agreement will receive such retroactive pay in a lump sum to the extent they were on the active payroll and working during the period from May 19, 2003 and the date of ratification of this Agreement.

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Section 7. All supplemental pay for Workovers and temporary assignments shall be paid at the rate of one-fifteenth (1/15) of the monthly supplement for each day of applicable work performed.

Section 8. Workovers. A Workover shall be paid at one and one-half (1.5) times the daily rate in the Gulf of Mexico operation. The daily rate is equal to one-fifteenth (1/15) of the monthly base salary for the actual aircraft flown or for what a Pilot was scheduled to fly on the workover, whichever is greater as provided in this Article.

Section 9. Partial Workovers. If a Pilot is required to remain overnight because of weather or other operational necessities or accepts work on a scheduled day off for the purpose of repositioning an aircraft, he will receive workover pay based on duty time rounded to the next hour with a minimum of four (4)hours (based on a twelve (12) hour day.)

ARTICLE 22

SUPPLEMENTAL PAY

Section 1. Check Airman. In addition to their base pay, Company-designated Check Airmen shall receive an override of five hundred dollars ($500.00) per month. The monthly override shall be prorated if the Check Airman serves in that capacity for a portion of the month.

Section 2.	Field Check Airman. In addition to their base pay, Company-designated Field Check Airmen shall receive an override of two hundred dollars ($200.00) per month. The monthly override shall be prorated if the Field Check Airmen serves in that capacity for a portion of the month.
Section 3.	Pilot Mechanic. In addition to their base pay, Company-designated Pilot/Mechanics shall receive an override of five hundred dollars ($500.00) per month. The monthly override shall be paid only when the Pilot is called upon to perform such work and shall be prorated based on the number of days actually working in that function.

Section 4.	Lead Pilot. In addition to their base pay, Company-designated Lead Pilots shall receive an override of three hundred ($300) per month. The monthly override shall be prorated if the Lead Pilot serves in that capacity for a portion of the month. The Company may reserve two line pilot flying jobs, which they may assign to four lead pilots without bidding
Section 5.	Line Training Captain. In addition to their base pay, Company-designated Pilot Trainers shall receive an override of two hundred dollars ($200.00) per month for all periods or partial periods the Pilot performs such functions with a new hired Pilot. Any partial periods will be pro-rated for the month.

Section 6. IFR/SIC Pilots. In addition to their base pay, IFR/SIC Pilots shall receive an override of one hundred twenty-five dollars ($125.00) per month. Any partial periods will be pro-rated for the month.

ARTICLE 23

BONUSES

Section 1. Offshore Bonus. In addition to his base salary, a Pilot required by the Company or customer to remain at an offshore location overnight shall receive forty dollars ($40) per night and is not eligible for per diem.

Section 2. Sling Bonus. In addition to base salary and when sling rates are charged to customers, a Pilot required by the Company to conduct external load operations in revenue service shall receive thirty-five ($35) per flight hour or fraction thereof.

Section 3. Night Flight Bonus. In addition to base pay and when night rates are charged to customers, a Pilot required by the Company to fly in revenue service during the hours of official sunset to official sunrise as reported by the United States Naval Observatory shall receive thirty-five ($35) per flight hour or fraction thereof.

Section 4. SAFETY AND SERVICE INCENTIVE PLAN (SSIP)

A.	For the term of this agreement, the SSIP will be provided to Pilots on the same terms as it is provided to all other eligible employees of the Company.
B.	A Pilot shall be eligible for the SSIP once he has completed a full quarter of active service with the Company. Active service means a Pilot on the payroll.

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ARTICLE 24

WORKOVER/OVERTIME

Section 1. Workover Pay

A.	A Workover is defined as being scheduled for and reporting to work on a regularly scheduled day off.
B.	A Workover rate shall apply regardless of job assignment, aircraft flown or hours on duty.

Section 2. Workover Procedures And Assignments

A.	It is understood that Workovers are a viable and popular means for providing additional income and, as such, should be assigned in a fair and equitable manner.
B.	A Pilot who desires a Workover assignment will submit a Written Workover Form, which will be provided by the Company, to the ARA scheduling department. The request will include:

1.	Pilot’s name and contact number;
2.	The date(s) a Pilot is available to Workover on his off hitch;
3.	The aircraft a Pilot is able and willing to fly;
4.	The bases at which a Pilot is willing to Workover; and
5.	Whether the Pilot can be contacted to perform emergency Workovers.

C.	A Pilot is responsible for ensuring that the information on file in the scheduling department is accurate and that the dates requested for the Workover are correct.
D.	The Company will maintain a Workover list that will be redone each Friday. Therefore, Pilots must request Workovers no later than the Friday before the week that includes the Workover. A Pilot who agrees to a Workover shall be considered on hitch for the dates agreed to by the Company and Pilot. If the Company cannot reach a Pilot to cancel a Workover before the Pilot leaves home, the Pilot will be given the choice of returning home, with mileage and meal allowance in accordance with Articles 25 and 26, or accepting other available work. If other work is not available, the Pilot will receive workover pay in accordance with Article 21.
E.	The Company shall maintain two (2) Workover lists.

1.	The Emergency list will contain the names of those Pilots who are able to report to work on two (2) hours notice.
2.	The Normal Roster will be divided into two (2) groups: those Pilots who want to perform Workovers at any base; and those Pilots who want to perform Workovers only at a specified base.

F. Normal Workovers will be offered in the following order:

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1.	To Pilots with “off days” between training and their hitch;
2.	To Pilots who fly the job on the opposite hitch;
3.	To any qualified Pilot, in seniority order, by requested base;
4.	To supervisors.

G.	Emergency Workovers will only be offered to Pilots who meet the criteria identified in Section 2, Paragraph (E.1) of this Article except in the event of a hurricane. In the event of a hurricane, the Company will make reasonable efforts to contact workover Pilots on a seniority basis, but reserves the right to make assignments on a first come, first serve basis.
H.	Pilots will be passed over for Workovers when:

1.	A Pilot is not qualified;
2.	A specific customer requests that a certain Pilot not fly his job;
3.	There is a conflict with a Pilot’s regular job (i.e., FAR limitations);
4.	The dates of a Pilot’s availability conflict with the length of a job (i.e., 1-day job vs. RON);
5.	A pilot does not answer a phone call from the Company. A daily phone record shall be maintained to verify that a call to the Pilot has been made.
6.	A Pilot is unable to give the scheduling department a definitive answer at the time of the call.

I.	A Pilot will be allowed to use a beeper as his contact number only for Normal Workovers. A Pilot contacted on his beeper will have fifteen (15) minutes to respond to his page or he will be passed over for a Workover assignment. It will be the Pilot’s responsibility to make certain that his beeper is in working order.
J.	Any Pilot who refuses two (2) Workover offers will be placed at the bottom of the list for the remainder of the hitch.
K.	When the procedures of Section 2, Paragraph F of this Article have been exhausted, the Company may remove a Pilot from his job at his base, in reverse seniority order, to fulfill such requests for as short a period as possible, not to exceed three (3) days. This is in accordance with the procedures of Article 8, I, Section 3.
L.	When assigning Workovers, base supervisors will make every reasonable effort to follow the guidelines set forth in this Article. Further, they will insure, to the best of their ability, that Workovers are distributed equally to all whose names appear on Workover rosters at their respective bases.
M.	Supervisors shall not be used on revenue flights which could be flown by Pilots on Workover status, or in any manner so as to avoid hiring a Workover Pilot, except in the following circumstances:

1.	Medical emergencies;
2.	When every reasonable effort has been made to secure a Workover Pilot in accordance with the provisions of this Article and such efforts were unproductive.

Section 3. Compensatory Time

A.	Compensatory Time means a Pilot requests a day off from a regularly scheduled workday in lieu of Workover pay. Such time shall be compensated as his regular base pay.
B.	The request for compensatory time must be agreed to by the Company and the day off shall be granted by

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mutual agreement. In the event mutual agreement cannot be reached, the Pilot shall receive the applicable Workover pay.

ARTICLE 25

TRAVEL PAY

Section 1. Mileage pay shall be paid at the applicable rate established by the Internal Revenue Service under the following circumstances:

A.	When required to relocate to another base or location other than the Pilot’s assigned base via personal vehicle. Mileage will be calculated from the point of the Pilot’s assigned base to the location directed by the Company.
B.	When mileage is in excess of thirty (30) miles for use of a personal vehicle. When computing mileage, figures must reflect mileage from ARA to Workover base or mileage from the Pilot’s home to Workover base, whichever is the lesser distance or if applicable, mileage from assigned base to the Workover base.

Section 2. Mileage will not be paid in cases of Workover at the assigned bases when such Workover immediately proceeds or follows a normal work schedule.

Section 3.     A. Additional Crew Member Agreement (ACM). As the flight deck crewmembers covered under this agreement reside in various locations, and are subject to frequent changes of job assignment with little or no notice, the Company shall make reasonable efforts to enter into ACM Agreements with other carriers in the Air Transportation Industry to provide for transportation related to commuting to and from their residence to job assignments.

B. If requested by a Pilot, the Company shall provide a Photo Identification Card that provides sufficient information about each Pilot and the Company. The Photo ID System shall be available within ninety (90) days from the effective date of this Agreement.

ARTICLE 26

PER DIEM

Section 1. A Pilot shall receive per diem under the following circumstances.

A.	Pilot On Regular Work Schedule — When required to relocate via vehicle or aircraft after arriving at their assigned base, a meal allowance is paid. This excludes an offshore location where a Pilot receives an offshore bonus.
B.	Pilots Assigned Offshore — Pilots assigned to offshore contracts who are required to RON onshore during a hitch shall receive per diem of $22.50 per day in lieu of offshore bonus.
C.	Pilot Working Over — When a Pilot is on a Workover, a meal allowance is paid.

Section 2. Per Diem shall be paid at the rate of $7.50 per meal, to a maximum of $22.50 per day.

ARTICLE 27

INSURANCE BENEFITS

Section 1.     A. The Company shall provide the following employee benefit plans:

Group Term Life/AD&D Insurance: 2 x salary to $200,000. The Company will provide group term life/AD&D

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benefits on a non-contributory basis.

Disability Insurance:

Short Term Disability: 66.6% of base pay to a maximum monthly benefit of $2,500.

Long Term Disability: 50% of covered monthly compensation to a maximum monthly benefit of $5,000.

The Company will permit employees to purchase a short term disability option and up to two supplemental insurance coverages, selected by the Union, through AFLAC each year at the time of open enrollment. The Union will notify the Company which two supplemental insurance plans have been selected for the year at least thirty (30) days in advance of the time of open enrollment.

Medical Insurance:

$750 deductible plan: Benefit amended to provide an individual out-of-pocket maximum of $2,000 (including deductible) and a family out-of-pocket maximum of $4,000 (including deductibles). Note: Plan provisions prohibit some benefits from being reimbursed at 100%.

Contributions for the $750 deductible plan will be made on the same basis as other Company employees.

Dental Insurance: Current Company policy.

Section 2. As announced to all Employees, by the Company, on November 14, 2003, contributions for the 750 deductible plan are as follows:

Employee only coverage: $36.00 per month.

Additional for dependent coverage: $175.00 per month.

These contributions will remain in effect to 12/31/2006. Any future adjustments to the current employee contributions will be made on the same basis as other company employees and will not exceed the percentage of increase in national healthcare costs as shown in the Kaiser Family Foundation Health Benefit Survey during the term of this Agreement.

ARTICLE 28

RETIREMENT AND 401(K) PLAN

Section 1. The Company shall match a participating Pilot’s 401(k) salary deferral contribution dollar for dollar to a maximum of the first three (3) percent of gross earnings, exclusive of bonuses.

Section 2. The Company shall also contribute three (3) percent of gross earnings, exclusive of bonuses for each Pilot who is on the payroll as of December 31 of each year. Contributions shall be made on an annual basis. No contribution shall be required to be made by any Pilot in order to be eligible for the three (3) percent Company contribution.

ARTICLE 29

SAFETY/ACCIDENT PREVENTION

Section 1. The Company shall continue to maintain safe and healthful working conditions for its Pilots and agrees to further that important goal by establishing a joint Company/Union Safety Committee and creating an Accident Prevention Policy.

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Section 2. In that the Company is engaged in a vital service to our Customers, the Company and Union have a particular obligation to carry out this service courteously, efficiently and with due regard for the safety of our passengers and ourselves. The Company and the Union recognize their duty and responsibility to assist in the maintenance of the Accident Prevention Policy. The Policy shall consist of the following guidelines:

A.	Safety is a primary concern of every operational undertaking.
B.	The Company and the Union recognize that the safe working conditions, proper and adequate training, equipment and protective devices are important elements in the workplace setting. Required equipment shall be provided by the Company.
C.	The Company will train Pilots in any new aircraft, its components, or on any new procedures which they may be required to utilize.
D.	All Pilots must follow accident prevention measures.
E.	Both the Company and the Pilots must follow all applicable Federal Aviation Regulations.

Section 3. In the Gulf of Mexico operation, the Company agrees to include in its monthly Safety Committee meeting two Pilots on work hitch, selected by the Union, one of whom shall be from the Training Department and one of whom shall be an on-duty Line Pilot on regular duty assignment at one of the following bases: Creole, Intracoastal City, New Iberia, Patterson, Houma or Galliano. If the Pilot is required to travel, he will receive mileage and per diem. In the Alaska operation, one Pilot will be selected to attend each meeting of the Safety Committee.

Section 4. In the event either the NTSB or the FAA conducts an investigation of an accident, and the Company is permitted to have a representative participate, the Company will request that a Pilot selected by the Union also be permitted to participate. Any such Pilot will not be paid by the Company for time spent in such an investigation.

ARTICLE 30

GENERAL AND MISCELLANEOUS

Section 1. Any deviation from this Agreement shall be made by mutual consent between the Company and the OPEIU. Such mutual agreement must be in writing and signed by both parties thereto.

Section 2. Any Pilot leaving the service of the Company shall, upon request to the Human Resources Department, be provided with a letter setting forth the Company’s record of his job classification, stating his length of service and rate of pay at the time he left the Company.

Section 3. There shall be no loss of pay when a line Pilot is displaced by a supervisor on a revenue flight.

Section 4. All orders or notices to a Pilot covered by this Agreement involving a transfer, promotion, demotion, layoff, or leave of absence shall be given in writing to such Pilot with a copy to the Union within five (5) business days.

Section 5. The pay period is currently every fourteen (14) days (bi-weekly). If the Company wishes to change the pay period timing, it shall meet and discuss the change with the Union prior to implementation. The Company shall continue to offer, on a voluntary basis to its Pilots, Electronic Funds Transfer (EFT) to the Pilot’s bank of choice.

Section 6. Where there is a shortage equal to twenty-five (25) dollars or more in the pay of a Pilot, the Pilot will inform his immediate supervisor as soon as possible. He will then be reimbursed by supplemental check or in his regular check, whichever is more timely, for such shortage as soon as possible but no later than five (5) working days. If a Pilot is overpaid, he will have the option to:

A. have a new corrected check issued on the same work day;

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B.	reimburse the Company the total amount; or
C.	reimburse the Company through payroll deductions spread equally over four (4) pay periods.

Section 7. The parties agree that the intention of this Agreement is not to inadvertently reduce a benefit or working condition heretofore enjoyed by the Pilots.

Section 8. The Union shall be responsible for printing and distributing a copy of this Agreement to each Pilot as well as an adequate number of additional copies needed by each side. The company and the Union shall share these associated costs equally.

Section 9. If the Company decides to place into service aircraft other than those already included in this contract, it shall notify the Union as soon as possible. Conferences shall be initiated by either the Company or Union upon written notice to the other party for the purpose of establishing rates of pay, rules and working conditions applicable to the new equipment.

A.	The parties shall meet at a mutually agreed upon time, but no later than sixty (60) calendar days before the aircraft is to be placed into service.
B.	In the event the parties fail to reach an agreement prior to placing the new equipment into service, the Company may place such new equipment into service. Pilot operating that new equipment shall be compensated at the contractual rate of pay appropriate to his seat and pay year. Nothing herein shall deny the Company the right to place new equipment into service.
C.	The provisions of Section 9 are not intended to hinder the acquisition or use of new equipment.

Section 10. Pilots shall not engage in any flying or other business activities which interfere or are in conflict with their service to the Company, provided, however, that this provision shall not be construed to prohibit Pilots from affiliating with Armed Forces of the United States.

Section 11. Personnel File

Upon request, a Pilot’s personnel file shall be open for his inspection during normal office hours in the presence of a Company representative. Nothing of a derogatory nature will be placed in a Pilot’s file unless a copy is sent to the Pilot. Upon receipt of such report, the Pilot shall have the option of responding by returning his explanation or comments to be included with the report in his file or by challenging the truth or accuracy of the report. If the Company determines the challenge to be justified, the report will be removed from the Pilot’s file and destroyed. If the Company determines otherwise, it shall notify the Pilot who may then avail himself of the provisions of Article 32 to appeal this decision.

A.	Customer complaints shall not serve as the basis for employment action, including discipline, after twelve (12) months from the date of issuance unless within the twelve (12) month period there has been a recurrence of the same or similar nature.
B.	Disciplinary records other than those related to the safe operation of aircraft shall not serve as the basis for any employment action, including discipline, after eighteen (18) months from the date of issuance unless within the eighteen (18) month period there has been a recurrence of the same or similar nature.

1. Disciplinary records are limited to written counseling statements, written warnings and disciplinary suspensions.

C.	Disciplinary records related to the safe operation of aircraft shall not serve as the basis of any employment action, including discipline, after three (3) years from the date of issuance unless within the three (3) year period there has been a recurrence of the same or similar nature.
D.	A Pilot may request that any customer complaints or disciplinary records be removed from his personnel file after the document has become stale under this Section. However, the Company shall not be required to remove copies of public records or documents which are required to be retained in accordance with applicable law or governmental regulations.

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ARTICLE 31

UNION BULLETIN BOARDS & COMMUNICATIONS

Section 1. The Company shall permit the Union to display an unlocked bulletin board at each base location. The Union shall purchase the bulletin boards and shall be responsible for its installation. The bulletin board shall be a maximum of four (4) feet by five (5) feet. The bulletin boards shall only be placed in areas where pilots normally and routinely congregate.

Section 2. The bulletin board used by the Union and Pilots covered by this Agreement shall be for posting notices of Union social and recreational affairs, meetings and elections, and other matters of importance to the governing of the Union.

Section 3. General distributions, posted notices and official business will bear the seal or signature of an officer of the Union or a Pilot representative and will not contain anything defamatory, derogatory, inflammatory, negative or of a personal nature attacking the Company or its representatives.

Section 4. The Company may refuse to permit any posting that would violate any of the provisions of this Agreement. Any notices posted that are not in accordance with this Article shall be removed by the Union or by the Company upon notice to the Union. Upon the second infraction of this provision the Company will have the right to discontinue the bulletin board at that specific location for a period of three (3) months.

ARTICLE 32

GRIEVANCE PROCEDURE

Section 1. Introduction

The procedures described in this Article shall be the mandatory and exclusive mechanism for the resolution of all grievances concerning an action of the company affecting a Pilot or group of Pilots, including, without limitation, any and all grievances arising from discipline, discharge, or the interpretation or application of the express terms of this Agreement.

Section 2. Discipline And Discharge

A.	The Company normally follows the principle of progressive discipline. However, discipline can be more or less severe depending on the seriousness of the infraction.
B.	Based on the severity of the infraction, a Pilot may be subject to disciplinary action, up to and including discharge, for any violation(s) or infraction(s) of Company regulations, policies or violation of provisions contained in this Agreement. Disciplinary action will be in accordance with the following procedures:

1.	The Company may suspend the Pilot with pay prior to notifying the Pilot of the charge;
2.	The Company will provide the affected Pilot, with a copy to the Union, notice of the charge(s). In the event the charge(s) is the result of an alleged safety violation the notice of the charge will specifically state that it is safety related.
3.	Within seven (7) working days after the completion of the investigation the Company will inform the Pilot in writing, with a copy to the Union, of its decision regarding the charge and any discipline imposed. The investigation will normally be completed within ten (10) working days of the event. If the Company needs additional time to complete the investigation it will advise the Union of the additional time required. If a Pilot is suspended pending an internal investigation, he will remain on the payroll until that investigation is complete. However, the Pilot will not be entitled to any workover pay, mileage or per diem if discipline is imposed.

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C.	A Pilot may be immediately removed from payroll and may be suspended without pay (for a period no longer than seventeen (17) working days) for violation of the FAA drug/alcohol policy, acts of violence or sabotage or threatening same, theft, gross negligence in the operation of an aircraft, or use of a weapon on Company premises.
D.	In the event the Pilot feels he had been unjustly disciplined or discharged, the Pilot or the Union may appeal in writing the Company’s decision to the Director of Operations within ten (10) calendar days of the Company’s decision. The appeal must set forth a concise statement of the facts giving rise to the appeal, and state the remedy or relief requested.
E.	The Director of Operations or his designee may elect to investigate the matter, and shall issue a decision in writing to the Pilot, with a copy to the Union, regarding disposition of the appeal within seven (7) calendar days of when the appeal was filed. In the event the decision on the appeal is not satisfactory to the Pilot, he or the Union may appeal to the System Board of Adjustment in accordance with Article 33 of this Agreement.

Section 3. Grievance Procedure

A. Disputes arising under this Agreement or between the parties with respect to the interpretation or application of the Agreement, excluding discipline or discharge matters subject to Section 2 of this Article, shall be processed in the following manner:

1.

Pilot(s) shall first attempt to resolve any dispute informally through consultation with his immediate supervisor within seven (7) calendar days of the date on which the affected Pilot, or any Pilot among a group of affected Pilots know or reasonably should have known of the facts on which the grievance is based. The supervisor shall render a decision within seven (7) calendar days from the date of consultation.

2.

If the dispute is not resolved to the satisfaction of the Pilot(s) within this time period, the aggrieved party or the Union shall reduce the grievance to writing signed by an authorized representative of the Union, and present it to the Director of Operations. At a minimum the written grievance shall contain the following information:

a.	A reference to the provisions of the Agreement alleged to have been breached;
b.	A statement of the facts involved;
c.	The specific remedy requested by the affected Pilot(s); and
d.	Grievance number.

3.	The written grievance must be submitted to the Director of Operations within ten (10) calendar days of the date on which the grievance was denied or deemed to have been denied by the supervisor.
4.	The Director of Operations shall render a decision on the grievance in writing within ten (10) calendar days of the date on which the grievance was filed. In the event this decision is unacceptable to the Union, it may appeal the decision in writing to the General Manager, with a copy to the Director of Human Resources, within fourteen (14) calendar days of receipt of the decision. The appeal must include a statement of the reason(s) why the Union believes that the decision by the Director of Operations was erroneous.
5.	The General Manager shall render a decision on the appeal in writing within fourteen (14) calendar days of the date on which the grievance was appealed. In the event the General Manager’s decision is unacceptable to the Union, it may appeal to the System Board of Adjustment in accordance with Article 33 of this Agreement.

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Section 4. Time Limits

A.	The failure of a Company representative to issue a decision or hold a hearing within the deadlines prescribed by this Article shall be deemed a denial of the grievance or appeal, and such grievance or appeal shall be deemed to have been immediately and automatically appealed to the next step unless the Union indicates that it wishes to withdraw such appeal.
B.	The failure of the Pilot(s) or the Union to comply with any of the time limits set forth in this Section shall be deemed an immediate, automatic, and final withdrawal of the grievance or appeal unless an extension of time has been requested from the Gulf Coast Manager or Director of Operations within the prescribed time limits set forth in this Article.

Section 5. General

A.	Unless expressly provided otherwise, all notification(s) or appeals required by this Article shall be in writing, and accomplished by either hand delivery verified by an initialed copy or by delivery system prepaid with return receipt requested. A notification or appeal required by this Article shall only be valid if it is sent to the last known address of the party to whom the notice is directed.
B.	Compliance with all time limits specified in this Article shall be determined by the date of mailing, as established by postmark or by date of hand delivery, as established by the initialed copy.
C.	A group grievance may be filed by the Union. Any such grievance shall contain sufficient information to permit the Company to identify the individual Pilots covered by the group grievance. No remedy awarded in a group grievance shall provide monetary compensation for periods prior to thirty (30) calendar days from the date on which the formal, written grievance was filed or the date the alleged violation, whichever is less.
D.	Time limits specified in this Agreement may be waived by mutual written consent of the parties.
E.	The parties will notify one another of the persons designated to file and answer grievances.
F.	All grievances resolved at any step of the Grievance Procedure prior to the System Board of Adjustment shall be on a non-precedential basis unless mutually agreed otherwise.
G.	If a grievant is exonerated, his personnel file shall be cleared of all reference to the incident. Records may be kept in a separate file but may not be used in future disciplinary actions. A grievant who is cleared of all charges shall be made whole as pertains to wages, seniority, longevity and benefits.
H.	A Pilot shall have the right of Union representation at all meetings with the Company. A Pilot shall be advised in advance of the nature of the subject of any hearing or conference.
I.	When there is an active grievance on file relating to discipline or discharge of a Pilot, the Pilot and his Union Representative shall have access to the Personnel File of the Pilot involved. Such access shall include all letters of warning issued to the Pilot and all records of disciplinary actions initiated by the Company relating to the Pilot, as well as all current and available grievance related material regarding the current disciplinary action which would become a part of the Pilot(s) personnel file. In addition, the Union shall have the right to make reasonable requests and obtain copies of any documents in the Pilot(s) personnel file, which are relevant to the grievance.
J.	The Company agrees that the Union may request, and will be provided, with documents which are relevant to the processing of an active grievance filed by the Union. Such data shall be produced within a reasonable time (which is normally 14 days) after receipt of the request. If the Company needs additional time, it will advise the Union as soon as possible.

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ARTICLE 33

SYSTEM BOARD OF ADJUSTMENT

Section 1. In compliance with Section 204, Title II of the Railway Labor Act, as amended, there is hereby established a System Board of Adjustment, which shall be known as the “AIR LOGISTICS PILOT’S SYSTEM BOARD OF ADJUSTMENT” (hereinafter referred to as the Board).

Section 2. The Board shall have jurisdiction over disputes between any Pilot and the Company with respect to discipline or discharge, and over grievances or disputes growing out of the interpretation or application of this Agreement. The Company and the Union intend that procedures set forth in this Article shall be the exclusive and mandatory forum of all such disputes.

Section 3. The Board shall not have jurisdiction over any disputes unless all of the procedures required in Article 32 have been completely exhausted with respect to the dispute, and the dispute has been properly submitted to the Board pursuant to the provision of this Article.

Section 4. The Board shall have no jurisdiction to modify, add to, or otherwise change the terms of this Agreement, or to establish or change the rates of pay, rules, and working conditions covered by this Agreement.

Section 5. The Board shall consist of two (2) members, one (1) of whom shall be selected and appointed by the Company and one (1) of whom shall be the President of Local 107 or his designee. Board members shall have a vote in connection with all actions taken by the Board. The Board shall render its decision in no more than thirty (30) days after the filing of the appeal.

A. In the event the two (2) member Board is not able to reach a decision with respect to a particular dispute, either party may submit the dispute to a neutral arbitrator within ten (10) days after the two (2) members of the Board reach a deadlock.

Section 6. Members of the Board who are employees of the Company shall suffer no loss of pay while attending Board meetings.

Section 7. Decisions of the Board shall be final and binding upon the Company, the Union, and the affected Pilot(s).

Section 8. The party appealing a final decision under Article 32 shall submit the dispute for consideration by the Board, within fourteen (14) calendar days of that decision. If the appeal is not made within the fourteen (14) day period, the System Board of Adjustment does not have jurisdiction over the dispute.

Section 9. All disputes referable to the Board shall be sent to the Director of Human Resources.

Section 10. Each case submitted shall be addressed to the Members of the Board and state:

A.	The question or questions at issue;
B.	A statement of the facts with supporting documents;
C.	A reference to the applicable provision(s), if any, of the Agreement alleged to have been breached;
D.	The position of the Pilot or Pilots.
E.	The remedy requested; and
F.	The position of the Company.

Section 11. In the event the parties cannot agree on a neutral arbitrator, within ten (10) days thereafter, either party may request that the American Arbitration Association (AAA) submit a list of seven (7) potential neutrals, and the neutral shall be selected in accordance with the rules of AAA.

Section 12. The Company and the Union will assume the travel expense and other related expenses of the Board Members selected by them, and of the witnesses called by them. Expenses for witnesses called by the Board shall be borne one-half (1/2) by each of the parties.

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Section 13. The expenses and reasonable compensation of the Neutral selected as provided herein shall be borne equally by the Company and the Union.

Section 14. General

A.	The time limits set forth in Articles 32 and 33 may be extended in writing by mutual agreement of the Company and the Union.
B.	The Union and the Company may, by mutual agreement in writing, elect to bypass any or all of the steps in this Section and proceed directly to the neutral arbitrator.
C.	Probationary Pilots shall be subject to discharge at any time without cause.
D.	Compliance with all time limits under this Article shall be determined by the date of mailing, as established by postmark or by date of hand delivery, as established by the initialed copy.
E.	The parties understand and agree that each and every Board member shall be free to discharge his duty in an independent manner, without fear that his individual relations with the Company, Union or other Pilots may be affected in any manner by any action taken by him in good faith in his capacity as a Board member.
F.	Except as expressly provided otherwise, this Article shall not be construed to limit, restrict or abridge the rights or privileges accorded to the Company, the Pilots, or its and their duly accredited representatives under the provisions of the Railway Labor Act, as amended.
G.	A stenographic record of all arbitration hearings will be taken if mutually requested by the parties and cost will be equally shared. If only one (1) party requests that a stenographic record be taken, the cost shall be borne by the requesting party. If the other party subsequently requests to be furnished a copy of the record, it will be provided a copy at the same cost as if the parties had equally shared the cost. Otherwise, the stenographic record shall be the exclusive property of the party requesting such record.

ARTICLE 34

NO STRIKE/NO LOCKOUT

Section 1. During the term of this Agreement, it is understood and agreed that the Company will not lock out any employee covered hereby, and the Union will not authorize or take part in any strike or picketing of the Company premises. Any Pilot engaging in such activity may be subject to discipline up to and including discharge.

Section 2. It shall not be a violation of this Agreement for a Pilot to refuse to cross a customer’s picket line, provided that in cases where a customer’s place of business is being picketed and separate gates are being provided for ingress and egress for persons not involved with the primary labor disputes, Pilots will be required to perform their normal duties at the customer’s place of business.

Section 3. In situations where one of the Company’s customers is being picketed, and if the Company knows about the picket in advance, the Company will notify the Pilot about the picket line before dispatching a Pilot to that customer. Pilots who refuse to take an assignment to cross a picket line because of safety concerns will not be penalized. When no one is willing to cross a picket line, the Company will be permitted to service its customers the best way possible.

Section 4. The Company will not require Pilots to transport replacement workers involved in any labor dispute.

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ARTICLE 35

UNION REPRESENTATION

Section 1. Upon reasonable advance notification to appropriate management personnel, the Company agrees to admit to its stations and bases officially designated representatives of the Union to transact business as is necessary for the administration of the Agreement. Such business shall be transacted in as short a time as possible and shall not interfere with the operations of the Company. The Union representative may be escorted by a management representative while on Company property; in the alternative, the Company may make a private meeting space available to the Union representative for any Union visit.

Section 2. The Union may select elected or appointed representatives and shall notify the Company designee, from time to time of their appointment or removal. The Company designee shall notify the Union of the appropriate Company representative hereunder.

Section 3. The Union shall elect or appoint Pilots to be primary job steward(s) and alternate(s) to conduct Union business and shall notify the Company in writing of their election, appointment or removal.

Section 4.     A. A primary or alternate steward shall be permitted reasonable time to investigate, present and process grievances within the scope of said steward’s station or base on the Company property without loss of pay during his/her regular working hours.

B.	A primary or alternate steward shall be permitted to present grievances to management and attempt to resolve any alleged grievance.
C.	A primary or alternate steward shall be granted the right to consult with Pilots under their jurisdiction for the purpose of enforcing the provisions of this Agreement.
D.	Time spent in handling grievances during the steward’s regular working hours shall be considered hours worked for all purposes.
E.	The provisions of Section 4 above shall not result in any Workovers nor cause any adverse impact on the Company’s operation. In addition, a Pilot, while serving as a primary or alternate steward shall remain available to assist the Base Manager with Pilot-related tasks, if requested. This paragraph shall not be used to keep a steward from performing his union work when he otherwise would not be needed by the Company.

Section 5. Upon forty-eight (48) hours notification by the Union President, the Company will grant a Pilot(s) unpaid time off to perform Union business off the Company premises. In the event the Union business shall require an absence from work in excess of one (1) week, a Union leave of absence will be granted in accordance with Article 11. The Union will cooperate with the Company to minimize any negative impact on operations as a result of this Section (i.e., scheduling meetings/union-sponsored training on Pilot’s days off, limiting the number of Pilots who can have union time off).

Section 6. The Company will notify the Union in writing of the names and hire dates of all newly hired Pilots and transfers. Such notification will be transmitted during the Pilot’s first week on the payroll. Upon notification from the Union, the appropriate Company manager will allow a Union representative who is an employee of the Company access to new hire Pilots to provide Union orientation for thirty (30) minutes before or after the Company’s new hire orientation.

Section 7. Stewards who serve their fellow Pilots at any Company station or base shall be considered Union Representatives.

ARTICLE 36

UNION SECURITY

Section 1. Each Pilot covered by this agreement shall become a member of the Union within sixty (60) days after the effective date of this Agreement, and shall be required as a condition of continued employment by the Company to maintain his/her membership in the Union so long as this Agreement remains in effect, to the extent of paying an initiation (or re-initiation) fee, monthly membership dues and assessments, which are uniformly required of Pilots covered by this Agreement. Such Pilot shall have his/her monthly membership dues deducted from his/her earnings by payroll deduction.

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Section 2. Any Pilot hired into a classification covered by this Agreement on or after the effective date of this Agreement shall become a member of the Union within sixty (60) days after employment and shall be required as a condition of continued employment by the Company to maintain his membership in the Union so long as this Agreement remains in effect, to the extent of paying the uniformly required initiation (or re-initiation) fee, monthly membership dues and assessments.

Section 3.

Any Pilot maintaining or accruing seniority in a classification covered by this Agreement (except as provided in Section 6) but not employed in such classification, or any other classification covered by this Agreement, shall not be required to maintain Union membership during such employment but may do so at his/her option.

Should a Pilot return to a classification covered by this Agreement, s/he shall be required to become a member of the Union within fifteen (15) days after the date s/he returns to such classifications, and shall, as a condition of employment in classification covered by this Agreement, become a member of the Union and maintain membership in the Union so long as this Agreement remains in effect to the extent of paying an initiation (or re-initiation) fee, monthly membership dues and assessments.

Section 4. The provisions of this Agreement shall not apply to any Pilot covered by this Agreement to whom membership in this Union is not available by payment of initiation (or re-initiation) fees, if applicable, monthly dues and assessments under the same terms and conditions as uniformly applicable to any other Pilot, or to any other Pilot to whom membership in the Union is denied or terminated for any reason other than the failure of the employee to pay uniformly levied initiation (or re-initiation) fees, if applicable, monthly dues and assessments. Nothing in this Agreement shall require the payment of any initiation (or re-initiation) fee, by a Pilot if an authorized or permissible transfer according to the Bylaws and Constitution is involved.

Section 5. If a Pilot covered by this Agreement has resigned from the Company and is re-employed, s/he shall be governed by Section 2 of this Article.

A.	If a Pilot is laid off and is recalled from layoff s/he shall be governed by Section 3 of this Article.
B.	The seniority status and rights of Pilots granted leaves of absence to serve in the armed forces shall not be terminated by reason of any of the provisions of this Article but such Pilot shall, upon resumption of employment in classification covered by this Agreement be governed by the provisions of Section 3, Paragraph 2 of this Article.

Section 6. The payment of dues by a member shall not be required as a condition of employment during leave of absence without pay or during periods of transfer or promotions to a classification not covered by this Agreement.

Section 7. When a Pilot does not become a member of the Union by payment of initiation (or re-initiation) fee as provided in this Article, or is a member of the Union and becomes delinquent in the payment of monthly dues or assessments, as provided in this paragraph, the following procedure shall apply:

A. If a new hire Pilot has not become a member of the Union within sixty (60) days after employment with the Company, the Union shall notify such Pilot in writing, certified mail, return receipt requested, copy to the Company designee, that such Pilot must become a member of the Union within the time limits specified in Section 2 of this Article or be subject to discharge as Pilot of the Company. If, upon expiration of the period of time specified in Section 2 of this Article, such new Pilot has not become a member of the Union, the Union shall certify in writing to the Company designee, copy to the Pilot, that the Pilot has failed to become a member of the Union as provided in this Article, and is, therefore, to be discharged. The Company shall then promptly notify the Pilot involved that s/he is to be discharged from the services of the Company and shall promptly take proper steps to so discharge the Pilot.

1. If a Pilot, other than a new hire Pilot, who is required to become a member of the Union as provided in this Article does not become a member of the Union within the time limits specified in this Article for Pilots covered by this Agreement, the Union shall notify the Company designee with a copy to the Pilot, that the Pilot has failed to become a member of the Union as required by this Article and is, therefore, to be discharged. The Company shall then promptly notify the Pilot involved that s/he is to be discharged from the service of the Company and shall promptly take proper steps to discharge said Pilot.

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B.

If a Pilot covered by this Agreement becomes delinquent by more than two (2) calendar months in the payment of monthly dues including assessments, the Union shall notify the Pilot, in writing, certified mail, return receipt requested, copy to the Company designee that said Pilot is delinquent in the payment of monthly membership dues as specified herein and, accordingly, will be subject to discharge as a Pilot of the Company. Such letter shall also notify the Pilot that s/he must remit the required payment to the Secretary-Treasurer of his/her Local Union by the twenty-second (22) day of the month in which notice from the Union was received or be subject to discharge. If such Pilot still remains delinquent in the payment of dues on the twenty-second (22 nd) day of the month in which his/her notice from the Union was received, the Union shall notify in writing the Company designee, with a copy to the Pilot, that the Pilot has failed to remit payment of the dues within the grace period allowed herein and is, therefore, to be discharged. The Company shall then promptly notify the Pilot involved that s/he is to be discharged from the service of the Company, and shall promptly take the proper steps to so discharge the Pilot.

C.

A Pilot discharged by the Company under the provisions of this paragraph shall be deemed to have been discharged for cause.

Section 8. Any discharge under the terms of this Article shall be based solely upon failure of the Pilot to pay or tender initiation (or re-initiation) fee, membership dues and assessments upon the same terms and conditions as are generally applicable to any other member of the Union, within the time limits specified herein, and not because of denial or termination of membership in the Union for any other reason.

Section 9. A grievance by a Pilot who is to be discharged as a result of an interpretation or application of the provisions of this Article shall be subject to the following procedures:

A.	A Pilot who believes the provisions of this Article pertaining to him/her have not been properly interpreted or applied, and who desires a review must submit his/her request for review in writing within five (5) business days from the date of his/her notification by the Company as provided in Section 7, subsection (A) 1 of this Article. The request will be submitted to the Company designee, with a copy to the Union. The Union may be present at the review of the grievance to represent the Union’s interest in the case. The Company designee will review the grievance and render a decision in writing with a copy to the Union no later than ten (10) business days following the receipt of the grievance.
B.	If the decision is not satisfactory to the Union, then it may appeal the decision through the grievance procedure. If the decision is not satisfactory to the Pilot, then he/she may appeal the decision within ten (10) days from the date of receipt directly to a neutral referee who must be agreed upon by the Pilot and the Union within (10) days thereafter.
C.	In the event the parties fail to agree upon a neutral referee within the specified period, either the Pilot or the union may request the National Mediation Board to name such neutral referee.
D.	The decision of the neutral referee shall be binding on all parties to the dispute. The fees and charges of such neutral shall be borne equally by the Pilot and the union.
E.	During the period a grievance is being handled under the provisions of this section and until after the decision by the Company designee or after final decision by the neutral referee, the Pilot shall not be discharged from the Company because of noncompliance with the terms and provisions of this Article.

Section 10. No Pilot(s) covered by this Agreement or Pilot whose employment is terminated pursuant to the provisions of this Article or the Union shall have any claim for loss of time, wages or any other damages against the Company because of agreeing to this Article or because of any alleged violation, misapplications, compliance or noncompliance with any provision of this Article. The Union agrees to hold the Company harmless and to indemnify the Company against any suits, claims, liabilities, and reasonable and customary attorneys’ fees which arise out of or by reason of any action taken by the Company pursuant to a written demand by an authorized union representative under the terms of this Article.

Section 11. During the life of this Agreement, the Company agrees that upon receipt of a properly executed Authorization of Payroll Deduction, voluntarily executed by a Pilot, it will make a single monthly deduction from the Pilot’s earnings, after other deductions authorized by the Pilot or required by law have been made, to cover his/her current standard monthly Union dues, assessments and/or initiation fees uniformly levied in accordance with the

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Constitution and Bylaws of the Union, as set forth in the Railway Labor Act, as amended.

Section 12. The Company will deduct said Pilot’s dues in the month in which the Pilot is recalled from furlough or returns from a leave of absence. In the event the Pilot is recalled from furlough or returns from a leave of absence after the dues have been deducted for a month, the Company will make a double deduction in the following month. The Company will pay over to the designated official of the Union the wages withheld for such initiation fees and dues. The amount withheld shall be reported and paid to the Union within ten (10) business days from when deductions were made.

Section 13. Any authorizations from payroll deductions under this Article shall be effective one (1) week following its receipt by the Company Payroll Department and shall apply to the next paycheck from which dues deduction is made.

Section 14. The Company remittance to the Union will be accompanied by lists of names and Pilot numbers of the Pilots for whom the deductions have been made in that particular period and the individual amounts deducted.

Section 15. Collection of dues not deducted because of insufficient current earnings, dues missed because of clerical error, or inadvertent error in the accounting procedure, dues missed due to delay in receipt of the Authorization for Payroll Deductions shall be the responsibility of the Union and shall not be the subject of payroll deductions from subsequent pay checks, and the Company shall not be responsible in any way for such missed collections. It shall be the Union’s responsibility to verify apparent errors with the individual Union member or Pilot prior to contacting the Company Human Resources Department. The total or balance of unpaid dues, assessments and/or initiation fees due and owing the Union at the time a Pilot terminates his/her employment shall be deducted from the final paycheck in accordance with applicable law.

Section 16. In the event the amount of the standard dues or fees uniformly levied are changed, it shall be the sole responsibility of the Union to notify the Company and to make any necessary adjustments as to the amounts to be deducted from the Pilot’s earnings. So far as the Company is concerned, any such changes shall be made in accordance with the time limits set forth in Section 13 of this Article.

Section 17. An authorization for payroll deduction shall be irrevocable for the term of this Agreement, or for a period of one (1) year from the date of the authorization, whichever occurs sooner. Subject to Section 15 above, an Authorization for Payroll Deduction shall automatically be revoked if:

A.	The Pilot transfers to a position with the Company not covered by this Agreement.
B.	The Pilot’s services with the Company are terminated;
C.	The Pilot is furloughed; or
D.	The Pilot is on an authorized leave of absence.

Section 18. The Authorization for Payroll Deduction to be voluntarily executed shall be signed by the Pilot. It shall stipulate the following language:

“I, (name of Pilot) do hereby authorize and direct my Employer, (circle one) Air Logistics L.L.C. Air Logistics of Alaska, to deduct from my wages for remittance to the authorized official or affiliate of the Office and Professional Employees International Union, Local 107, periodic dues, initiation fees, and/or assessments uniformly required as a condition of acquiring or maintaining membership in accordance with the provisions of the Union Shop Agreement between my Employer and the Union. I further authorize and direct my Employer to deduct from my wages for remittance, as set forth above, the total or balance of unpaid dues, assessments and/or initiation fees due and owing the Union at the time my employment with the above named Employer ends.”

     “This authorization shall not include fines and penalties. I agree that this authorization shall be irrevocable for the term of this Agreement, or for a period of one (1) year from the date of the authorization, whichever occurs sooner. All amounts to be deducted from my wages will commence with the first regular dues deduction paycheck following receipt by my Employer of this notice.”

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ARTICLE 37

SAVINGS CLAUSE

Section 1. Should any part of this Agreement be rendered or declared invalid by reason of any existing or subsequently enacted legislation, act of government agency, or by any decree of a court of competent jurisdiction, such invalidation of such part or portion of this Agreement shall not invalidate the remaining portions hereof, and they shall remain in full force and effect.

Section 2. In the event that any provisions of this Agreement are in conflict with or are rendered inoperative or unlawful by virtue of any duly enacted law or regulation or any governmental agency or commission having jurisdiction over the Company, the Union and Company will meet and attempt to negotiate changes necessary, pertaining only to those provisions so affected or directly related thereto.

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ARTICLE 38

DURATION

Section 1. This Agreement shall become effective on the date of its execution, shall remain in full force and effect for a period of forty two (42) months thereafter, and shall renew itself without change each succeeding year thereafter, unless either party serves written notice of intended change in accordance with Section 6, Title I of the Railway Labor Act, as amended, at least sixty (60) days prior to the end of the forty two (42) month period, or any anniversary thereof.

In witness whereof, the parties hereto have signed this Agreement on this 4th day of April, 2005

FOR OFFICE AND PROFESSIONAL
EMPLOYEES INTERNATIONAL
UNION, AFL—CIO:

/s/ Michael Goodwin Michael Goodwin, President, OPEIU

FOR OFFSHORE LOGISTICS, INC.:

/s/ Drury A. Milke

Drury A. Milke,

Executive Vice President; &

President, AIR LOGISTICS LLC

OPEIU/Local 107

/s/ Kenneth Bruner

Kenneth Bruner

President, OPEIU/Local 107

WITNESSES:

/s/ Pete Catalano

Pete Catalano

/s/ Don Robson

Don Robson

/s/ Carl Brown

Carl Brown

Assistant General Manager —

AIR LOGISTICS LLC

/s/ Ricardo Fira

Ricardo Fira

Director —Human Resources

AIR LOGISTICS LLC

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APPENDIX “A”
AIR LOGISTICS, L.L.C. — PILOT PAY SCALES

IFR-PIC
YR	Start		12 mos (3.0%)		24 mos (3.0%)		36 mos (2.0%)
0-1		52,511		54,086		55,709		56,823
1-2		53,866		55,482		57,146		58,289
2-3		55,026		56,677		58,377		59,545
3-4		56,725		58,427		60,180		61,383
4-5		58,843		60,608		62,427		63,675
5-6		61,359		63,200		65,096		66,398
6-7		63,370		65,271		67,229		68,574
7-8		64,914		66,861		68,867		70,245
8-9		66,614		68,612		70,671		72,084
9-10		68,426		70,479		72,593		74,045
10-11		72,108		74,271		76,499		78,029
11-12		74,361		76,592		78,890		80,467
12-13		76,296		78,585		80,942		82,561
13-14		77,973		80,312		82,722		84,376
14-15		78,668		81,028		83,459		85,128
15-16		79,505		81,890		84,347		86,034
16-17		80,217		82,624		85,102		86,804
17-18		81,017		83,448		85,951		87,670
18-19		81,948		84,406		86,939		88,677
19-20		82,606		85,084		87,637		89,389
20-21		83,076		85,568		88,135		89,898
21-22		83,546		86,052		88,634		90,407
22-23		84,016		86,536		89,133		91,356
23-24		84,486		87,021		89,631		92,305
24-25		84,956		87,505		90,130		93,254
25-26		85,426		87,989		90,628		94,203
26-27		85,896		88,473		91,127		95,152
27-28		86,366		88,957		91,626		96,101
28-29		86,836		89,441		92,124		97,050
29-30		87,306		89,925		92,623		98,000

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VFR-PIC
YR	Start		12 mos (3.0%)		24 mos (3.0%)		36 mos (2.0%)
0-1		47,300		48,719		50,181		51,184
1-2		48,658		50,118		51,621		52,654
2-3		50,186		51,692		53,242		54,307
3-4		51,794		53,348		54,948		56,047
4-5		53,836		55,451		57,115		58,257
5-6		56,578		58,275		60,024		61,224
6-7		58,677		60,437		62,250		63,495
7-8		59,986		61,786		63,639		64,912
8-9		61,680		63,530		65,436		66,745
9-10		62,321		64,191		66,116		67,439
10-11		64,043		65,964		67,943		69,302
11-12		65,043		66,994		69,004		70,384
12-13		66,065		68,047		70,088		71,490
13-14		66,942		68,950		71,019		72,439
14-15		67,099		69,112		71,185		72,609
15-16		67,255		69,273		71,351		72,778
16-17		67,546		69,572		71,660		73,093
17-18		67,836		69,871		71,967		73,407
18-19		68,043		70,084		72,187		73,631
19-20		68,250		70,298		72,406		73,855
20+		68,566		70,623		72,742		74,197

Notes:
1.	Sic will receive the VFR pay scale plus a supplement in accordance with Article 22, Section 6.
2.	Pilots on 4&3 and 5&2 (non-standard) schedules shall be paid the above base salaries plus the following percentages of base pay:
	4&3 —25%
	5&2 —45%

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ALASKA ADDENDUM

This Addendum to the Agreement and Contract between Office and Professional Employees International Union, AFL-CIO (the Union) and Offshore Logistics, Inc., (the Company), is hereby entered into between the Union and the Company in order to address certain unique differences which exist in the Company’s Alaska operations. Therefore, the parties mutually agree that the following Articles of the Agreement and Contract will be amended for the Alaska operations as follows:

ARTICLE 1

STATEMENT OF PURPOSE

Applicable to both Gulf Coast and Alaskan operations.

ARTICLE 2

RECOGNITION AND REPRESENTATION

Sections 1,2,4,5,6, and 7 are applicable to Gulf Coast and Alaskan operations.

Section 3. This Agreement covers all revenue and all known and recurring miscellaneous flying performed by the Company with Pilots on its payroll. All flying covered by this Agreement shall be performed by Pilots whose names appear on the Air Logistics L.L.C. and Air Logistics of Alaska, Inc. Pilot’s System Seniority Roster, except when Air Logistics of Alaska, Inc. Management and seasonal pilots are needed to perform flying services as a result of operational and/or economic requirements of the company.

A.

Regular, full-time Charter Pilots in the Alaska operation will be given preference over Seasonal Pilots to the extent they are qualified to perform all functions of the available work without further training.

B.

Seasonal pilots may not be employed for more than 180 days in any one calendar year. Seasonal Pilots shall become a member of the Union within one hundred-fifty (150) days after employment and shall be required as a condition of continued employment by the Company to maintain his membership in the Union so long as this Agreement remains in effect, to the extent of paying the uniformly required initiation (or re-initiation) fee, monthly membership dues and assessments.

ARTICLE 3

STATUS OF AGREEMENT

Applicable to both Gulf Coast and Alaskan operations.

ARTICLE 4

PILOT STATUS

Applicable to both Gulf Coast and Alaskan operations.

ARTICLE 5

SENIORITY

Sections 1, 2A, 3, 4, 5 & 6 are applicable to both the Gulf of Mexico and Alaska operations.

Section 2.      B. Bidding Seniority — Bidding Seniority shall be defined as a Pilot’s length of service with the Company, adjusted for leaves of absence as provided for in Article 5, Section 4, and Article 11 of this Agreement. Bidding Seniority shall apply to all Pilots covered by this Agreement in bidding for job assignments and vacancies, layoffs, reemployment after layoff, demotions due to a reduction in force, and awarding of full week vacation periods, as provided for in this Agreement.

ARTICLE 6

SENIORITY ROSTER

Applicable to both the Gulf of Mexico and Alaska operations.

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ARTICLE 7

REDUCTIONS IN FORCE

Sections 1B, 3, 4 & 5 are applicable to both the Gulf of Mexico and Alaska operations.

Section 1.     A. When it becomes necessary to reduce the workforce in the Alaska operation, a pilot’s seniority, pursuant to Article 5 of this agreement, shall govern the layoff, if the pilot is qualified to perform all functions of the available work without further training. Pilots with the least seniority at a location shall be laid off first. For the purposes of this article, there shall be two locations; the Gulf of Mexico operation and the Alaska operation. The Company shall give at least fourteen (14) days notice of an impending layoff at the affected location, or two (2) weeks pay in lieu there of. The company shall notify the Union in advance of the impending reductions.

Section 2.      Pilots who are qualified to perform all functions of the available work without further training will be recalled from furlough in seniority order, with the most senior such qualified laid off pilot being recalled first; provided, however, that no pilot will be returned to work without a current medical certificate (As referred to in Art. 16, Section 4). The company will make reasonable efforts to place the recalled pilot in his former position or one of equal status.

ARTICLE 8

JOB POSTING AND BIDDING

I. PERMANENT VACANCIES

Section 1. Job Posting

A.

Pilots working in the Alaska operation shall not be displaced by either active or furloughed Pilots working in the Gulf of Mexico operation. Pilots working in the Gulf of Mexico operation shall not be displaced by either active or furloughed Pilots working in the Alaska operation.

B.

When a job or crew position vacancy occurs on a full-time basis, or when a new full-time job or crew position is created, the vacancy will be posted within seven (7) days after the vacancy occurs. The notice shall provide as much information as is available regarding the vacant position, including the job, location, aircraft and customer specific qualifications and closing date for bid application.

Section 2. Bidding Procedures

A.	Pilots will be given a reasonable time from the initial posting to bid on any vacant position.
B.	The Company will make the awards within five (5) calendar days after the bidding has closed, not including Saturdays, Sundays, and holidays.
C.	The senior qualified Pilot, as defined in Section 3 of this Article, that bids on a vacancy shall be awarded the job.
D.	The Company reserves the right to remove a Pilot from an awarded job based on a customer complaint, in which case the Company will make reasonable efforts to obtain the customer’s complaint in writing. A copy of such written complaint shall be provided to the Pilot and to the Union.
E.	A Pilot responding to more than one (1) vacancy shall indicate his order of preference on the bid and shall be awarded his first preference.
F.	In the event no bid is received on a posted vacancy and Charter Pilots exist, such vacancies will be filled by the Charter Pilots in reverse seniority order to the extent they have demonstrated the ability to complete

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all aspects of the job requirements. In the event such qualified Charter Pilots are not available, the Company may assign other Pilots who are so qualified in reverse seniority order.

G. Definition Of Qualified

1.	Qualified: The term qualified as used in this Article and Agreement means that a Pilot has been trained in an aircraft model, meets the experience requirements of both the customer and Air Logistics of Alaska, and has demonstrated the ability to complete all aspects of the job requirements.
2.	A Pilot will be considered qualified in an aircraft model although he may not be “current” as per FAR 135.293(b), 135.299, etc. If that Pilot is otherwise qualified and can become current within a reasonable amount of time, the Company will provide training, in accordance with Article 17.

Section 3. After a Pilot has been awarded a bid job and has completed the necessary training, the Company will not allow any other Pilot to temporarily perform work on that job, provided the bid Pilot is available for work during his normal hitch. If an immediate operational requirement exists, an available qualified Pilot may be removed from his awarded job, in reverse seniority order, to fulfill such requirement for as short a period as possible, not to exceed forty-five (45) days. In such cases, the Pilot being removed from his position will be pay protected until such time as he has returned to his original job.

Section 4. A Pilot may bid on any posted position, provided that once he has been awarded a vacancy, the Pilot shall be ineligible to bid on another vacancy for one (1) year from the date of transfer. Date of transfer is defined as the first date a Pilot performs in revenue service at his new job.

Section 5.     A. The Company may elect, based on operational needs, to withhold a Pilot who has successfully bid for a vacancy from entering training for a period not to exceed forty-five (45) days, unless mutually agreed otherwise by the Company and the Pilot.

B. If a Pilot is withheld, he will be compensated at the base salary he would have been entitled to if he had completed training and the higher base salary will commence when he was originally scheduled to enter training

II. TEMPORARY VACANCIES

Section 1. Temporary vacancies are positions created to fill operational needs for ninety (90) consecutive days or less. Seasonal vacancies are positions created to fill the operational needs of summer flying.

Section 2. Temporary and Seasonal vacancies shall be filled by offering the positions to Charter Pilots in seniority order. If no Charter Pilot accepts the opening, the job will be assigned to a Charter Pilot in reverse seniority order. Pilots employed by Air Logistics of Alaska Inc will have priority when filling all vacancies in the Alaska operations.

Section 3. Charter Pilots in the Alaska operation will be given preference over Seasonal Pilots to the extent they are qualified to perform all functions of the available work without further training. If no Charter Pilot accepts the opening, the job will be assigned to a Seasonal Pilot. If there are no available qualified Seasonal Pilots, the work will be assigned to Charter Pilots in reverse seniority order.

Section 4. Pilots assigned to temporary vacancies shall be returned to their former position, if it still exists, upon completion of the temporary assignment.

Section 5. A Pilot assigned to a temporary vacancy with a higher salary than his current salary will receive such pay for the duration of the temporary assignment.

Section 6. The Company will post notice to Gulf of Mexico Pilots Temporary and Seasonal Pilot vacancies in the Alaska operation and these Pilots will be eligible to work in such positions subject to the following conditions:

A. The successful completion of a flight check with, and an evaluation by, the Chief Pilot of the Alaska operation;

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B.	The Pilot must meet all of the qualification requirements set forth by the Company and the customer; and
C.	The Pilot is responsible for his own travel to and from Alaska. There will be no travel or mileage pay provided to the Pilot. If a Gulf of Mexico Pilot is involuntarily assigned to Alaska, the Company shall pay for his travel expenses to and from Alaska.

III. GENERAL

Section 1. A Pilot will not be considered qualified for an IFR PIC job unless he is recommended by either an IFR Line Captain or an IFR Check Airman, and successfully completes an IFR flight and classroom check by a Check Airman.

Section 2. For the purpose of bidding on a vacant IFR PIC crew position, any Pilot who has completed the requirements of III, Section 1, may request and shall be given an IFR PIC Training Ride by a Check Airman within a reasonable amount of time. Following this training ride, the Check Airman may recommend the Pilot for an IFR PIC Check Ride.

Section 3. When a Check Airman has recommended the Pilot for an IFR PIC Check Ride, the Company shall make that ride available within a reasonable amount of time.

ARTICLE 9

CATEGORIES OF AIRCRAFT

Applicable only to Gulf of Mexico.

ARTICLE 10

SCHEDULES OF SERVICE

Sections 2 and 5 are applicable to both Gulf Coast and Alaska operations.

Section 1. Pilots in the Alaska operation will work one of the following schedules as determined by the needs of service, provided it is consistent with applicable FARs:

A.	Up to fifteen (15) consecutive duty days, followed by thirteen (13) consecutive days of rest.
B.	Up to eight (8) consecutive duty days, followed by six (6) consecutive days of rest.
C.	Five (5) consecutive duty days, followed by two (2) consecutive days of rest.

Section 3. Not applicable to the Alaska operation.

Section 4. Break days shall not be changed without seven (7) calendar days notice, except for charter pilots and changes to meet customer requirements.

ARTICLE 11

LEAVES OF ABSENCE

I, Sections 1,2,3,4 (including subsection a-c), II, sections 1,2 and 3, III, sections 1,2,3,4,6,7,8 and 9, IV, sections 1,2, 3, and 4, and V, sections 1,2,3,4,5,6,7,8,9,10, and 11 apply to both the Gulf of Mexico and the Alaska operations.

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I, Section 4d. A Pilot returning from such leave will not be permitted to bump another Full Time Pilot from his job assignment. If no job assignment exists, and no Seasonal Pilots are employed, the Pilot will be placed on a preferential recall list. If Seasonal Pilots are employed, the returning Pilot will serve as a Charter Pilot.

III, Section 5. Pilots in the Alaska operation shall retain insurance coverage, provided the premiums are paid for at the applicable employee contribution costs for a period not to exceed one (1) month. Insurance coverage may be retained for an additional two (2) months, provided the premiums are paid for at the applicable employer and employee contribution costs. Once the three (3) months period has been exhausted, the pilot will be eligible for medical insurance under COBRA for the applicable period of time.

V, Section 3a. Any Pilot returning from a leave of absence who requires training prior to returning to flying will be scheduled for required training as soon as possible at the discretion of the Company. Pay shall resume when a Pilot commences training and shall be on the rate of pay that would otherwise be effected. Higher pay for an upgrade will begin when the company uses the services of the Pilot for revenue.

ARTICLE 12

VACATION AND SICK TIME

VACATION DAYS

Section 1. Vacation Accrual

A. The number of vacation days earned each year is dependent on a pilots completed years of active service with the company.

YEARS	VACATION ACCRUAL
1-9 year	0.5 work month
10 -14	.75 work month
15 or more	1.0 work month

Section 2. Vacation Scheduling

A.	No later than December 1 of each year, eligible pilots will be permitted to bid on vacations. To the extent operational needs permit, these requests will be granted. In the event of a conflict in dates requested by eligible pilots, seniority will control.
B.	Vacations may be requested at any other date with one week notice. If operational needs permit, these vacations will be granted on a first come first serve basis.

Section 3. Vacation Cancellation

A. In the event the Company cancels a scheduled vacation all non-refundable vacation expenses the pilot, with the assistance of the Company is unable to recover shall be reimbursed to the pilot. Such expenses include vacation deposits, pre-paid tickets, hotel fees, or any other pre-paid expense associated with the cancelled vacation. In order to receive reimbursement, the pilot shall provide the Company with proof of the deposit.

Section 4. Vacation Miscellaneous

A.	A Pilot may use his current year’s allotment of vacation days in advance of time earned, but if a Pilot leaves the company or is terminated before it is earned, any such time will be deducted from his final paycheck. Vacation days from the next year’s vacation allotment may not be advanced to a Pilot for use in the current year.
B.	A Pilot has the option of being paid for his unused vacation days at the end of each year. Unused vacation days will be paid out at one hundred (100) percent of a Pilot’s applicable daily rate.

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SICK LEAVE

Section 1. Accrual

A.	On January 1 of each calendar year, each full time pilot (employed more than 90 days) will be credited with seven (7) sick leave days for the coming year.
B.	Sick days are to be used by employees when they or an immediate family member are ill. Sick days are not carried forward from year to year.

Section 2. Miscellaneous

A.	The Company reserves the right to require a medical excuse for absences due to sickness. To the extent any Company requested examination is not covered by insurance, it shall be paid for by the Company, provided the Pilot submits receipts for reimbursement in a timely manner.
B.	Once the Sick Time Bank is exhausted, a Pilot may use his remaining unused vacation days for sickness or injury off the job.

PAYMENTS AND REIMBURSEMENTS

Section 1. Vacation / Sick Time Off Audit

A. The Company shall track the number of sick days, both taken and remaining, in the Pilot’s vacation/sick time off banks and shall be made available on request during normal working hours.

Section 2. Separation of Employment

A.	If a Pilot voluntarily leaves the Company, he will be paid for his accrued vacation days, his accrued vacation days at 100%, provided he has given the company two weeks notice of his departure.
B.	Upon retirement from the Company or when declared medically retired by the Company a pilot will be paid his accrued vacation.

GENERAL AND MISCELLANEOUS

Section 1. Personal Days and Emergency Days Off

A.	While on hitch, a Pilot may request a personal day off for unscheduled, personal reasons. Such requests will be given reasonable consideration by the Company and granted if operationally feasible.
B.	Personal days must be requested at least twelve (12) hours in advance.

ARTICLE 13

ON-THE-JOB INJURY (OJI) LEAVE

Sections 1,2,3,4,6,8,9 and 11 apply to both Gulf Coast and Alaska operations.

Section 5. All insurance benefits shall continue to be available to a pilot in the Alaska operation on the same basis as an active employee for a maximum of three (3) months, provided the Pilot continues to pay insurance premiums as specified in Article 11, Leaves of Absence, III, Section 5. Once the three (3) month period has been exhausted, the Pilot shall be eligible for medical insurance under COBRA for the applicable period of time.

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Section 7 is amended to provide that the physician’s statement must come from a designated medical examiner.

Section 10 is not applicable to the Alaska operation.

ARTICLE 14

BEREAVEMENT LEAVE

Applicable to both the Gulf of Mexico and the Alaska operation.

ARTICLE 15

JURY DUTY

Section 1, 3, 4, 5, & 6 Applicable to both the Gulf of Mexico and Alaska operations.

Section 2. A Pilot serving on Jury Duty shall receive his regular pay. The day or days for which a Pilot will receive pay for Jury Duty must fall within the Pilot’s regularly assigned workweek (the day or days the Pilot normally works). Jury service compensation provided by the court will be retained by the Pilot.

ARTICLE 16

FEES AND PHYSICAL EXAMINATIONS

Section 1, 2, 4B, & 5 Applicable to both the Gulf of Mexico and Alaska operations.

Section 3. Applies to Pilots in the Alaska operation. In addition, IFR-PIC pilots in the Alaska operation are also required to hold an ATP certificate.

Section 4.     A. Pilots in the Alaska operation are required to have a first class physical examination once per year at the company’s expense. Examinations will be scheduled while the Pilot is off-duty. A copy of the medical certificate will be provided to the office of the Chief Pilot by the 25^th day of the month due.

ARTICLE 17

TRAINING

I. RECURRENT TRAINING

Section 1. The Company will attempt to schedule recurrent training on days off to minimize disruption to the operation. The Company will make reasonable efforts to schedule training immediately before or immediately after a Pilot’s hitch. If recurrent training cannot be scheduled immediately before or after his hitch, the Company shall provide the Pilot who does not live within a reasonable proximity of the Fairbanks area with housing pursuant to Article 18, Section 2A, during the day(s) off between his training and his hitch. Pay for recurrent training will be in accordance with Article 21 of this Agreement.

Section 2. In the event a Pilot is unable to attend training on the day(s) assigned, he will notify the Chief Pilot as far in advance as possible. The Chief Pilot will work with the Pilot to arrange for alternative training dates. However, if there are no mutually agreeable dates available, the Pilot will remain obligated to conduct the training on the original dates assigned by the Company.

Section 3. Each quarter, the Company will publish a list of recurrent training. At the beginning of each year, the Company will also publish a list of scheduled recurrent training classes for the year along with a list of Pilots assigned to

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such training. It will be the responsibility of the Pilot to know the dates for his scheduled recurrent training class and whether a Pilot’s recurrent training has been rescheduled due to a change in assignments.

II. UPGRADE TRAINING

Section 1. The Company will attempt to schedule upgrade training on days off to minimize disruption to the operation. The Company will make reasonable efforts to schedule training immediately before or immediately after a Pilot’s hitch. If upgrade training cannot be scheduled immediately before or after his hitch, the Company shall provide the Pilot who does not live within a reasonable proximity of the Fairbanks area with housing pursuant to Article 18, Section 2A, during the day(s) off between his training and his hitch. Pay while in upgrade will be in accordance with Article 21 of this Agreement. A Pilot’s base salary will not increase until he has successfully completed all training and reports for duty for the first scheduled revenue flight in the upgraded aircraft. Upgrade training in the Alaska operation is defined as moving from an SIC seat to a PIC seat in the same type aircraft.

III. SPECIAL TRAINING AND NEW HIRE TRAINING

Section 1. The Company will attempt to assign any nonrecurrent special training on a Pilot’s day off to minimize disruption to the operation. The Company will make reasonable efforts to schedule training immediately before or immediately after a Pilot’s hitch. If special training cannot be scheduled immediately before or after his hitch, the Company shall provide the Pilot with housing in accordance with Article 18, Section 2A, during the day(s) off between his training and his hitch. (This preceding sentence is not applicable for new hire training.)

IV. TRAINING FAILURES

Section 1. It is recognized that not all Pilots reach the required level of proficiency in the same amount of time. Therefore, when it becomes apparent to the Company that a Pilot will require time in excess of that usually required to reach proficiency, the Company Training Department will, in consultation with the Pilot, determine the cause of his inability to reach the required proficiency level and establish a plan for correcting the problem. In the event a Pilot fails to demonstrate the required degree of proficiency after completion of the individual training plan, he will be handled in accordance with the provisions outlined below.

A. Recurrent Training

1.	A Pilot who fails any portion of recurrent training (written exam, oral exam, flight check) will be removed from line duty until he has completed retraining and has been successfully retested by the Company.
2.	A Pilot who fails his oral exam or flight check may request a change in instructor or additional training prior to his retest.
3.	If the Pilot fails the retest, his status with the Company will be reviewed.

B. Upgrade/Transition Training

1.	A Pilot who fails any portion of his upgrade/transition training after a retest (written, oral or flight check) will have the training discontinued. The Pilot will be returned to his previously flown aircraft if the aircraft is still being flown by the Company, only after successfully completing a retest (written, oral, flight check).
2.	A Pilot who fails his oral exam or flight check may request a change in instructor or additional training prior to his retest.
3.	A Pilot who fails upgrade/transition training will not be permitted to upgrade in that aircraft for a period of six (6) months following his training failure. If a Pilot fails upgrade/transition training for a second time, his status with the Company will be reviewed. It is understood and agreed that the Company has the right to conduct a line check following any training failure.

C. Flight Check/Progress Ride

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1.	When a Pilot fails a flight check given as a result of an aircraft incident or an observed departure from normal flight procedures, his status with the Company will be reviewed.
2.	If an oral exam is necessary and the Pilot fails a retest, his status with the Company will also be reviewed.

D. Initial Training (New Hire)

1. A Pilot who fails any portion of his new hire training will be subject to termination by the Company.

ARTICLE 18

FACILITIES, EQUIPMENT AND UNIFORMS

Applicable to both the Gulf of Mexico and Alaska operations.

ARTICLE 19

SEVERANCE PAY

This Article does not apply to the Alaska operation.

ARTICLE 20

MOVING EXPENSES

This Article does not apply to the Alaska operation.

ARTICLE 21

COMPENSATION

Section 1. Rates of pay for Pilots in the Alaska operation are shown in Appendix B.

Section 2. A Pilot in recurrent, upgrade, or special training shall be paid one hundred (100) percent of his regular rate, in half (1/2) day increments.

Section 3. A Pilot’s base salary will not increase until he has successfully completed all training and reports for duty for the first revenue flight in the aircraft for which the training was provided.

Section 4. A workover shall be paid at one and one half (1.5) times a pilots applicable daily rate. The daily rate is equal to 1/15th of the monthly base salary.

Section 5. The Company may place new hire Pilots with experience on the pay schedule at any level consistent with their qualifications and skills, as determined by the Chief Pilot. They will accrue longevity for pay purposes at a rate of two (2) years for each one (1) year of service until they catch up with the published pay schedule.

ARTICLE 22

SUPPLEMENTAL PAY

Section 1. In addition to their base pay, Company-designated Check Airmen shall receive an override of four hundred

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dollars ($400.00) per month. The monthly override shall be prorated if the Check Airman serves in that capacity for a portion of the month.

Section 2. Pilots holding unlimited Airline Transport Pilot Ratings earn an additional one hundred dollars ($100.00) per month.

Section 3. On contracts requiring IFR qualifications and currency, the PIC will receive an additional one hundred fifty dollars ($150.00) per day and the SIC will receive an additional seventy five dollars ($75.00) per day.

Section 4. Pilots assigned to a long-line qualification contract will receive an additional fifty dollars ($50.00) per day.

Section 5. Pilots will receive fifty dollars ($50.00) Remote Operation Pay (ROP) for each night spent away from home base while on a revenue producing job in Alaska. ROP is considered reimbursement for expenditures necessitated by having to purchase, repair, clean or otherwise maintain the life sustaining incidentals necessary for creature comfort while on the escalated Alaskan economy and in a field environment.

ARTICLE 23

BONUSES

Applicable only to Gulf Coast Operations. Air Logistics of Alaska Inc. will continue with existing policies.

ARTICLE 24

WORKOVER/OVERTIME

Section 1: Workover

A.	Workover is defined as being scheduled for and reporting to work on a regularly scheduled day off.
B.	A workover shall be paid at one and one half (1.5) times the daily rate. The daily rate is equal to one fifteenth (1/15th) of the monthly base salary for the actual aircraft flown or for what a pilot was scheduled to fly on the workover, whichever is greater as provided for in Article 21 of this agreement.

Section 2: Workover Procedures And Assignments

A. Workovers will be assigned using the following procedures:

1.	Volunteers will be sought based on aircraft and pilot qualifications.
2.	If there are no volunteers the workover will be assigned based upon the pilots last workover date. The appropriately qualified pilot with the longest period since the previous workover date will be assigned the workover.

B.	A workover roster will be maintained at the Fairbanks Base. The roster will be updated at least weekly and the pilot who is next up on the roster will be notified.
C.	Pilots will be assigned from the roster based upon aircraft qualifications and mission requirements.

ARTICLE 25

TRAVEL PAY

Section 1. Mileage pay shall be at the applicable rate established by the Internal Revenue Service under the following

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circumstances:

A.	When required to relocate to a location other than Fairbanks via personal vehicle. Mileage will be calculated from the Fairbanks base to the location directed by the Company.
B.	When mileage is in excess of thirty (30) miles one way for use of a personal vehicle.

ARTICLE 26

PER DIEM

This Article does not apply to the Alaska operation.

ARTICLE 27

INSURANCE

This Article shall be amended for the Alaska operation as follows:

Section 1. The Company shall offer welfare benefits for Alaska Pilots equal in benefits and employee premiums to that of the Company’s non-represented Alaska employees. These welfare benefits include medical insurance, life insurance, short-term disability and long-term disability.

Section 2. The Company will permit employees to purchase buy-up options and up to two types of supplemental insurance plans through AFLAC each year at the time of open enrollment. The Union will notify the Company which two supplemental insurance plans have been selected for the year at least thirty (30) days in advance of the time of open enrollment.

ARTICLE 28

RETIREMENT AND 401 (K) PLAN

Applicable to both the Gulf of Mexico and Alaska operations.

ARTICLE 29

SAFETY/ACCIDENT PREVENTION

Applicable to both the Gulf of Mexico and Alaska operations.

ARTICLE 30

GENERAL AND MISCELLANEOUS

Sections 1, 2, 3, 4, 6, 7, 8, 9, 10 & 11 are applicable to both Gulf Coast and Alaskan operations.

Section 5. The pay periods in the Alaska operation are currently the fifteenth and the last day of each month. If the company wishes to change the pay period timing, it shall meet and discuss the change with the union prior to implementation. The company shall continue to offer, on a voluntary basis to its pilots, electronic funds transfer (EFT) to the pilot’s bank of choice.

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ARTICLE 31

UNION BULLETIN BOARDS AND COMMUNICATIONS

Applicable to both the Gulf of Mexico and Alaska operations.

ARTICLE 32

GRIEVANCE PROCEDURE

Applicable to both the Gulf of Mexico and Alaska operations.

ARTICLE 33

SYSTEM BOARD OF ADJUSTMENT

Applicable to both the Gulf of Mexico and Alaska operations.

ARTICLE 34

NO STRIKE/NO LOCKOUT

Applicable to both the Gulf of Mexico and Alaska operations.

ARTICLE 35

UNION REPRESENTATION

Applicable to both the Gulf of Mexico and Alaska operations.

ARTICLE 36

UNION SECURITY

Applicable to both the Gulf of Mexico and Alaska operations.

ARTICLE 37

SAVINGS CLAUSE

Applicable to both the Gulf of Mexico and Alaska operations.

ARTICLE 38

DURATION

Applicable to both the Gulf of Mexico and Alaska operations.

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APPENDIX “B”

AIR LOGISTICS ALASKA — PILOT PAY SCALES

							PIC
					12 mos		24 mos		36 mos
Pay	Years of		Start		Increase		Increase		Increase
Level	Service		Base Pay		3%		3%		3%
1		0 to 1	$	43,656	$	44,966	$	46,315	$	47,241
2		1 to 2	$	44,940	$	46,288	$	47,677	$	48,630
3		2 to 3	$	46,224	$	47,611	$	49,039	$	50,020
4		3 to 4	$	47,508	$	48,933	$	50,401	$	51,409
5		4 to 6	$	48,792	$	50,256	$	51,763	$	52,799
6		6 to 8	$	50,076	$	51,578	$	53,126	$	54,188
7		8 to 10	$	51,360	$	52,901	$	54,488	$	55,578
8	10 to12		$	52,644	$	54,223	$	55,850	$	56,967
9		12 to 16	$	53,928	$	55,546	$	57,212	$	58,356
10		16 to 20	$	55,212	$	56,868	$	58,574	$	59,746
11		20 to 25	$	56,496	$	58,191	$	59,937	$	61,135
12		25 to 30	$	57,780	$	59,513	$	61,299	$	62,525
							SIC
					12 mos (3.0%)			24 mos (3.0%)		36 mos (2.0%)
Pay	Years of		Current		Increase		Increase		Increase
Level	Service		Base Pay		5%		3%		3%
1		0 to 1	$	32,100	$	33,063	$	34,055	$	34,736
2		1 to 2	$	33,384	$	34,386	$	35,417	$	36,125
3		2 to 3	$	34,668	$	35,708	$	36,779	$	37,515
4		3 to 4	$	35,952	$	37,031	$	38,141	$	38,904
5		4 to 6	$	37,236	$	38,353	$	39,504	$	40,294
6		6 to 8	$	38,520	$	39,676	$	40,866	$	41,683

Note: Does not include $50.00/day supplemental pay for operating away from base

Page 59 of 62

Letter of Agreement #1      Re: Fixed Wing Pilots

Mr. Ken Bruner
President, Local 107
2617 Northside Road, Suite 300
New Iberia, LA 70563-0953

Dear Ken:

     This letter will confirm our understanding that the Pilot(s) employed by Offshore Logistics, Inc. operating fixed wing aircraft under FAR Part 91 will not be covered by the collective bargaining agreement between Offshore Logistics, Inc. and OPEIU.

     If such Pilot(s) performs work operating helicopters in the service of Offshore Logistics, Inc. under FAR Part 135, he will be subject to the terms and conditions of the contract.

     Please sign in the space provided below acknowledging your understanding of this letter.

Sincerely,

Drury Milke
President — AIR LOGISTICS, L.L.C.

Mr. Ken Bruner
President, Local 107
Office and Professional Employee
International Union, AFL-CIO

Page 60 of 62

LETTER OF AGREEMENT #2

Between

Offshore Logistics, Inc.

And

Office and Professional Employees International Union

In the Service of

Air Logistics, L.L.C.

     As Represented by Local 107/OPEIU

WHEREAS, The Company desires to have its most senior, qualified Pilots hold and retain IFR slots; and

WHEREAS, The Company wants to promote professionalism and maintain skill levels and recency of experience;

THEREFORE, The Company will maintain a core group of IFR PIC’s and SIC’s, to be called the IFR Cadre.

A.	The IFR Cadre will be based on seniority and qualification.
B.	The number of Pilots who make up the IFR Cadre will be determined by the number of full-time IFR contracts.
C.	The IFR Cadre will consist of two groups: IFR PIC and IFR SIC.
D.	The minimum number of Pilots in the IFR Cadre will be based on the following criteria.

1.	Night shifts will be considered full-time IFR contracts for purposes of the IFR Cadre.
2.	Four (4)/three (3) crews covering multiple customers will also be considered full-time contracts for purposes of the IFR Cadre.
3.	Five (5)/two (2) crews will be treated as four (4)/three (3) crews for purposes of the IFR Cadre.
4.	No Pilot will be considered qualified to serve as an IFR PIC unless the Pilot has served as an IFR SIC for at least six (6) months, is recommended for upgrade by an IFR Line Captain and successfully completes an IFR flight check by a Check Airman.

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E. Staffing for the IFR Cadre will be reviewed in accordance with the provisions below to determine if and when there should be any adjustments made to the composition of the IFR Cadre.

1.	If additional Pilots are needed for the IFR Cadre as a result of an increased number of contracts, positions will be bid in accordance with the provisions of Article 8 of the Agreement. The most senior, qualified Pilot eligible to bid will either enter the Cadre if qualified, or if not qualified, the Pilot will be scheduled for training and enter the Cadre upon successful completion of Company training.
2.	Upward adjustments in the composition of the IFR Cadre necessitated by additional IFR customer contacts, may be made by the Company each month.
3.	If a downward adjustment in the composition of the IFR Cadre is necessitated by the loss of IFR customer contracts the adjustment will be accomplished in the following manner:

a. The Company will pay protect up to ten (10) percent of those Pilots who lose their IFR jobs due to a downward adjustment in staffing for a period of 90 days. The least senior Pilots displaced will be the individual(s) eligible for the pay protection described in this paragraph. If the Company loses more than ten (10) percent of its IFR contracts in any quarter, there will be no pay protection for any Pilots through the end of a calendar quarter, including the first ten (10) percent who lose their jobs as noted above.

F.

A Pilot leaving the Cadre will become a pool Pilot until such time as he is eligible to bid for a vacancy in accordance with Article 8 of the Agreement. Any such pilot who is qualified will be given preference for TEMPORARY VACANCIES.

G.

The Company reserves the right to remove a Pilot from an awarded job based on a customer complaint. Upon request, written documentation of the reasons for the complaint will be provided to the Pilot and the Union. A Pilot removed from an awarded job based on a customer complaint will be a pool pilot until a new bid is posted and awarded in accordance with Article 8 and will not be provided the pay protection described in this Letter of Agreement.

H. A Pilot who loses his IFR position due to lack of acceptable crew performance will not be provided the pay protection described in this Letter of Agreement.

In witness whereof, the parties hereto have signed this Agreement on the ___ day of                                                             , 2005.

FOR OFFICE AND PROFESSIONAL

EMPLOYEES INTERNATIONAL

UNION, AFL—CIO:

/s/

Michael Goodwin,

President, OPEIU

FOR OFFSHORE LOGISTICS, INC.:

/s/

Drury A. Milke,

Executive Vice President;

OFFSHORE LOGISTICS;

President, AIR LOGISTICS LLC

FOR OPEIU/Local 107

/s/

Kenneth E. Bruner

President, OPEIU, Local 107

WITNESS

/s/

Page 62 of 62

Letter of Agreement #3

October 9, 2003

Mr. Ken Bruner
President, Local 107
2617 Northside Road
New Iberia, LA 70563-0953

Dear Ken:

Pursuant to our discussions during negotiations, we wanted to confirm that:

1.	References to the Director of Operations and the General Manager in Article 32 of the collective bargaining agreement means the person occupying the particular position in either the Gulf of Mexico operation or the Alaska operation.
2.	With respect to all Alaskan disputes referred to the System Board of Adjustment pursuant to section 9 of Article 33, copies of the referral shall be sent to the Director of Operations as well as the Director of Human Resources.

Very truly yours,

AIR LOGISTICS LLC

Ricardo Fira
Director of Human Resources

Mr. Ken Bruner
President, Local 107
Office and Professional Employees
International Union, AFL-CIO

EX-21

EXHIBIT 21

OFFSHORE LOGISTICS, INC.

Subsidiaries of the Registrant as of March 31, 2005¹

		Percentage
	Place of	of Voting
Company	Incorporation	Stock Owned
Aeroleo Taxi Aereo S/A	Brazil		20	%
Air Logistics of Alaska, Inc.	Alaska		100	%
Air Logistics, L.L.C.	Louisiana		100	%
Aircopter Maintenance International, Inc.	Panama		49	%
Airlog International, Inc.	Panama		100	%
Airlog International, Ltd.	Delaware		100	%
Aviashelf	Russia		48.5	%*
Brilog Leasing Limited	Cayman Islands		100	%
Bristow Aviation Holdings Limited	England		49	%
Bristow Caribbean Ltd.	Trinidad/Tobago		40	%*
Bristow Helicopter Group Limited	England		49	%
Bristow Helicopters Australia Pty. Ltd.	Australia		49	%
Bristow Helicopters, Inc.	Connecticut		100	%
Bristow Helicopters International Limited	England		49	%
Bristow Helicopters Leasing Limited	England		51	%*
Bristow Helicopters Limited	England		49	%
Bristow Helicopters Nigeria Limited	Nigeria		40	%*
Bristow International Limited	England		100	%
British Island Airways (Guernsey) Ltd.	Guernsey		49	%
Bristow Technical Services, Ltd	England		49	%
Caledonian Helicopters Ltd	England		49	%
FB Heliservices Limited	England		50	%*
FB Leasing Limited	England		50	%*
FBS Limited	England		50	%*
Grasso Corporation	Delaware		100	%
Grasso Production Management	Texas		100	%
Guaranty Financial International, N.A.	Netherlands Antilles		49	%
Helicopter Leasing Associates, L.L.C.	Louisiana		50	%
Heliservicio Campeche S.A. de C.V.	Mexico		49	%
Hemisco Helicopters International, Inc.	Panama		49	%
Medic Systems, Inc.	Delaware		100	%
Norsk Helikopter AS	Norway		49	%*
Offshore Logistics International, Inc.	Panama		100	%
Pan African Airlines Nigeria Ltd.	Nigeria		40	%
Petroleum Air Services	Egypt		25	%
Turbo Engines, Inc. (formerly Pueblo Airmotive, Inc.)	Arizona		100	%
Rotorwing Leasing Resources, LLC	Louisiana		49	%
Sakhalin Bristow Air Services Limited	England		51	%*
United Helicopter Limited	England		49	%

*	percentage owned by Bristow Helicopters Limited
1	Also includes certain consolidated and unconsolidated affiliates of the registrant as of March 31, 2005.

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Offshore Logistics, Inc.:

We consent to the incorporation by reference in the registration statements No. 333-115473 and No. 333-121207 on Form S-8 of Offshore Logistics, Inc. of our report dated June 9, 2005, except for the “Restatement of Previously Reported Amounts” section in Note A, the ninth paragraph of Note B, the “Internal Review” section of Note D, and Note M, as to which the date is December 9, 2005, with respect to the consolidated balance sheets of Offshore Logistics, Inc. and subsidiaries as of March 31, 2005 and 2004, and the related consolidated statements of income, stockholders’ investment and cash flows for each of the years in the three-year period ended March 31, 2005, and our report dated June 9, 2005, except for the fifth paragraph of management’s report of internal control over financial reporting, as to which the date is December 9, 2005 on management’s assessment of the effectiveness of internal control over financial reporting as of March 31, 2005 and the effectiveness of internal control over financial reporting as of March 31, 2005, which reports appear in the March 31, 2005, annual report on Form 10-K of Offshore Logistics, Inc. Our reports refer to the Company’s restatement of the March 31, 2004 and 2003 consolidated financial statements.

Our report on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of March 31, 2005 expresses an opinion that Offshore Logistics, Inc. and subsidiaries did not maintain effective internal control over financial reporting as of March 31, 2005 because of the effect of material weaknesses on the achievement of the objectives of the control criteria and contains an explanatory paragraph that states that management has identified and included in its revised assessment the following material weaknesses as of March 31, 2005; (i) Former senior management and other personnel failed to establish and adhere to appropriate internal controls related to the control environment, (ii) The company did not have sufficient technical expertise to address or establish adequate policies and procedures associated with accounting matters and (iii) The Company did not have sufficient technical tax expertise to establish and maintain adequate policies and procedures associated with the operation of certain complex tax structures.

/s/ KPMG LLP

New Orleans, Louisiana
December 13 , 2005

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, William E. Chiles, CEO and President, certify that:

1.	I have reviewed this annual report on Form 10-K of Offshore Logistics, 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 13a-15(f) and 15d-(f)) for the registrant and we 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 annual 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 that has materially affected, or is reasonably likely to materially affect, the registration’s 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:

(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: December 14, 2005

/s/ William E. Chiles

William E. Chiles
CEO and President

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Brian C. Voegele, Senior Vice President and Chief Financial Officer, certify that:

1.	I have reviewed this annual report on Form 10-K of Offshore Logistics, 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 13a-15(f) and 15d-(f)) for the registrant and we 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 annual 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 that has materially affected, or is reasonably likely to materially affect, the registration’s 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:

(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: December 14, 2005

/s/ Brian C. Voegele

Brian C. Voegele
Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION UNDER SECTION 906
OF THE
SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report on Form 10-K of Offshore Logistics, Inc. (the “Company”) for the fiscal year ended March 31, 2005, as filed with the Securities and Exchange Commission as of the date hereof (the “Report”), I, William E. Chiles, Chief Executive Officer and President 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: William E. Chiles

Title: Chief Executive Officer and President

Date: December 14, 2005

EX-32.2

EXHIBIT 32.2

CERTIFICATION UNDER SECTION 906
OF THE
SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report on Form 10-K of Offshore Logistics, Inc. (the “Company”) for the fiscal year ended March 31, 2005, as filed with the Securities and Exchange Commission as of the date hereof (the “Report”), I, Brian C. Voegele, Chief Financial Officer, Senior Vice President, Secretary and Treasurer 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/ Brian C. Voegele
Name:	Brian C. Voegele
Title:	Senior Vice President and Chief Financial Officer
Date:	December 14, 2005