10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended December 31, 2005
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period           to

Commission File Number 001-31617

Bristow Group Inc.

(Exact name of registrant as specified in its charter)

Delaware	72-0679819
(State or other jurisdiction of incorporation or organization)	(IRS 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

Offshore Logistics, Inc.

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

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

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

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

Large accelerated filer  þ Accelerated filer  o Non-accelerated filer  o

      Indicate the number shares outstanding of each of the issuer’s classes of Common Stock, as of January 31, 2006.

23,358,007 shares of Common Stock, $.01 par value

BRISTOW GROUP INC.

INDEX — FORM 10-Q

		Page
PART I
Item 1.	Financial Statements		2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		51
Item 4.	Controls and Procedures		51
PART II
Item 1.	Legal Proceedings		54
Item 1A.	Risk Factors		54
Item 3.	Defaults Upon Senior Securities		54
Item 4.	Submission of Matters to a Vote of Security Holders		54
Item 6.	Exhibits		55
Signatures			56
Form of Aircraft Lease Agreement
Letter from KPMG LLP
Certification of CEO, President & CFO Pursuant to Rule 13a-14(a)
Certification of CEO, President & CFO Pursuant to Section 1350

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

			Three Months Ended						Nine Months Ended
			December 31,						December 31,
			2005			2004			2005			2004
						(Restated)						(Restated)
			(Unaudited)
			(In thousands, except per share amounts)
Operating revenues			$	192,267		$	172,167		$	567,609		$	503,195
Operating expenses:
	Direct costs			148,170			133,107			433,296			382,749
	Depreciation and amortization			10,653			10,790			32,160			31,820
	General and administrative			15,338			11,075			46,005			33,084
	Loss (gain) on disposal of assets			374			(2,021	)		1,276			(8,177	)
				174,535			152,951			512,737			439,476
		Operating income		17,732			19,216			54,872			63,719
Earnings from unconsolidated affiliates, net of losses				1,351			1,769			1,770			5,690
Interest income				898			985			2,879			2,168
Interest expense				(3,903	)		(4,056	)		(11,288	)		(11,970	)
Other income (expense), net				2,296			(2,599	)		4,308			(2,038	)
		Income before provision for income taxes and minority interest		18,374			15,315			52,541			57,569
Provision for income taxes				4,984			5,146			12,453			18,924
Minority interest				10			(61	)		(84	)		(299	)
		Net income	$	13,400		$	10,108		$	40,004		$	38,346
Net income per common share:
	Basic		$	0.57		$	0.43		$	1.71		$	1.67
	Diluted		$	0.57		$	0.43		$	1.70		$	1.65

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

2

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

			December 31,			March 31,
			2005			2005
			(Unaudited)
			(In thousands)
ASSETS
Current assets:
	Cash and cash equivalents		$	129,053		$	146,440
	Accounts receivable			154,906			133,839
	Inventories			149,804			140,706
	Prepaid expenses and other			25,030			11,459
		Total current assets		458,793			432,444
Investments in unconsolidated affiliates				40,028			37,176
Property and equipment — at cost:
	Land and buildings			34,685			32,543
	Aircraft and equipment			825,019			827,031
				859,704			859,574
Less: accumulated depreciation and amortization				(257,143	)		(250,512	)
				602,561			609,062
Goodwill				26,837			26,809
Other assets				45,090			44,085
			$	1,173,309		$	1,149,576
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
	Accounts payable		$	41,757		$	35,640
	Accrued liabilities			122,356			101,904
	Deferred taxes			5,839			17,740
	Current maturities of long-term debt			4,548			6,413
		Total current liabilities		174,500			161,697
Long-term debt, less current maturities				258,089			255,667
Other liabilities and deferred credits				160,443			164,728
Deferred taxes				67,501			69,977
Minority interest				4,186			4,514
Commitments and contingencies (Note E)
Stockholders’ investment:
	Common Stock, $.01 par value, authorized 35,000,000 shares; outstanding 23,345,508 shares and 23,314,708 shares at December 31 and March 31, respectively (exclusive of 1,281,050 treasury shares)			233			233
	Additional paid-in capital			157,837			157,100
	Retained earnings			429,719			389,715
	Accumulated other comprehensive loss			(79,199	)		(54,055	)
				508,590			492,993
			$	1,173,309		$	1,149,576

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

3

BRISTOW GROUP INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

			Nine Months Ended
			December 31,
			2005			2004
						(Restated)
			(Unaudited)
			(In thousands)
Cash flows from operating activities:
	Net income		$	40,004		$	38,346
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			32,160			31,820
	Increase (decrease) in deferred taxes			(12,350	)		6,415
	Loss (gain) on asset dispositions			1,276			(8,177	)
	Equity in earnings from unconsolidated affiliates (over) under dividends received			(689	)		8,826
	Minority interest in earnings			84			299
Increase (decrease) in cash resulting from changes in:
		Accounts receivable		(28,565	)		26
		Inventories		(15,386	)		(4,387	)
		Prepaid expenses and other		(4,817	)		974
		Accounts payable		8,246			4,989
		Accrued liabilities		1,282			(1,108	)
		Other liabilities and deferred credits		10,104			1,849
Net cash provided by operating activities				31,349			79,872
Cash flows from investing activities:
	Capital expenditures			(102,307	)		(51,689	)
	Proceeds from asset dispositions			72,620			39,805
	Acquisitions, net of cash received			—			(1,986	)
	Investments			—			(8,166	)
Net cash used in investing activities				(29,687	)		(22,036	)
Cash flows from financing activities:
	Cash collateral provided under operating leases			(10,285	)		—
	Repayment of debt			(3,160	)		(1,794	)
	Partial prepayment of put/call obligation			(66	)		(51	)
	Repurchase of shares from minority interests			—			(7,389	)
	Issuance of common stock			602			11,871
Net cash provided by (used in) financing activities				(12,909	)		2,637
Effect of exchange rate changes on cash and cash equivalents				(6,140	)		3,768
Net increase (decrease) in cash and cash equivalents				(17,387	)		64,241
Cash and cash equivalents at beginning of period				146,440			85,679
Cash and cash equivalents at end of period			$	129,053		$	149,920
Supplemental disclosure of cash flow information:
Cash paid during the period for:
	Interest, net of interest capitalized		$	13,658		$	14,450
	Income taxes		$	13,241		$	19,920
Supplemental disclosure of non-cash investing activities:
	Nonmonetary exchange of assets		$	—		$	5,876
	Capital expenditures funded by short-term notes		$	14,746		$	—

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

4

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements

NOTE A — BASIS OF PRESENTATION AND CONSOLIDATION

      The following consolidated financial statements include the accounts of Bristow Group Inc. (formerly Offshore Logistics, Inc.) and its consolidated entities (the “Company”) after elimination of all significant intercompany accounts and transactions. On February 1, 2006, OL Sub, Inc., a wholly owned subsidiary of Offshore Logistics, Inc., merged into Offshore Logistics, Inc. In conjunction with the merger, the name of the Company changed from Offshore Logistics, Inc. to Bristow Group Inc.

      The information contained in the following condensed notes to consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and related notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2005 (“Annual Report”). Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the entire fiscal year.

      The condensed consolidated financial statements included herein are unaudited; however, they include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair presentation of the consolidated financial position of the Company at December 31, 2005, the consolidated results of operations for the three and nine months ended December 31, 2005 and 2004, and the consolidated cash flows for the nine months ended December 31, 2005 and 2004.

Restatement of Previously Reported Amounts

      As a result of the Internal Review findings discussed further in Note E, the Company restated its historical financial statements to accrue for payroll taxes, penalties and interest attributable to underreported employee payroll. For further information regarding the Internal Review and related matters, including the Company’s restatement of its historical financial statements, refer to the Annual Report. The restated condensed consolidated statements of income included in this Quarterly Report on Form 10-Q for the fiscal period ended December 31, 2005 (“Quarterly Report”) reflect reductions in operating income of $0.9 million for the three months ended December 31, 2004 and $2.8 million for the nine months ended December 31, 2004 in connection with this matter. As of December 31, 2005, accrued liabilities includes $18.8 million related to this matter. 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 related Securities and Exchange Commission (“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 the three and nine months ended December 31, 2004 to reflect such reimbursements 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 $16.2 million for the three months and $41.1 million for the nine months ended December 31, 2004, 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 $0.2 million for the three months and $0.7 million for the nine months ended December 31, 2004.

5

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

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

	Three Months Ended				Nine Months Ended
	December 31, 2004				December 31, 2004
	(Unaudited)				(Unaudited)
	As				As
	Previously				Previously
	Reported		Restated		Reported		Restated
Statements of Income
Operating revenues	$	155,977	$	172,167	$	462,083	$	503,195
Direct costs		115,719		133,107		338,058		382,749
Total operating expenses		135,563		152,951		394,785		439,476
Operating income		20,414		19,216		67,298		63,719
Income before provision for taxes and minority interests		16,513		15,315		61,148		57,569
Provision for income taxes		4,953		5,146		18,344		18,924
Net income		11,499		10,108		42,505		38,346
Basic EPS		0.49		0.43		1.85		1.67
Diluted EPS		0.49		0.43		1.82		1.65

	Nine Months Ended
	December 31, 2004
	(Unaudited)
	As
	Previously
	Reported			Restated
Statements of Cash Flows
Net income	$	42,505		$	38,346
Deferred taxes		5,470			6,415
Decrease in accrued liabilities		(4,322	)		(1,108	)
Net cash provided by operating activities		79,872			79,872

      In addition, certain information in Notes B, H, I and J has been restated to reflect the effect of these adjustments. Certain amounts in the above presentation for 2004 have been reclassified to conform to the current year presentation. Specifically, gains and losses on asset disposals were previously included in revenues but are now included in operating expenses.

Recent Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 153, “Exchange of Nonmonetary Assets” (“SFAS No. 153”), effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. SFAS No. 153 amends Accounting Principles Board (“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 adoption of SFAS No. 153 did not have a significant impact on the Company’s financial statements.

      In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment” (“SFAS No. 123R”), which is a revision of SFAS No. 123, “Accounting for Stock Based Compensation” (“SFAS No. 123”) and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB Opinion No. 25”). 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 in Note B.

6

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

      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 the Company’s U.S. deferred tax assets. The impact of this deduction has not had and is not expected to have a material effect on the Company’s results for fiscal year 2006, the first tax year in which this tax deduction is available.

      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. 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. 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 the Company’s 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 December 31, 2005, the Company had received $30.9 million of repatriated funds intended to qualify under the Act, and the Company has reflected the tax in its overall effective tax rate for the nine months ended December 31, 2005.

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

      In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections” (“SFAS No. 154”), 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 the new accounting principle explicitly states transition requirements, and the Company expects that in the future there will be more instances of retrospective application of new accounting principles to prior periods whereas previously such applications were typically required to be reported as a cumulative adjustment in the period in which the accounting principle was adopted. With respect to reporting the correction of an error in previously issued financial statements, SFAS No. 154 carries forward without change the guidance contained in APB Opinion No. 20 which requires the correction to be reflected as a prior period

7

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

adjustment, and therefore the adoption of this standard would not have affected the restatements reflected in these financial statements.

NOTE B — EARNINGS PER SHARE

      Basic earnings per common share was computed by dividing net income by the weighted average number of shares of Common Stock outstanding during the period. Diluted earnings per common share for the three and nine months ended December 31, 2005 excluded options to purchase 101,400 and 32,379 shares, respectively, at a weighted average exercise price of $33.72 and $35.93, respectively, which were outstanding during the period but were anti-dilutive. Diluted earnings per share for the three and nine months ended December 31, 2004 excluded options to purchase 15,642 and 31,545 shares, respectively, at a weighted average exercise price of $36.61 and $33.28, respectively, which were outstanding during the period but were anti-dilutive. The following table sets forth the computation of basic and diluted net income per share:

			Three Months Ended				Nine Months Ended
			December 31,				December 31,
			2005		2004		2005		2004
					(Restated)				(Restated)
Net income (in thousands):
	Income available to common stockholders		$	13,400	$	10,108	$	40,004	$	38,346
Shares:
	Weighted average number of common shares outstanding			23,343,465		23,272,477		23,334,939		22,954,297
	Options and restricted stock units			254,280		344,224		265,850		356,329
		Weighted average number of common shares outstanding, including assumed conversions		23,597,745		23,616,701		23,600,789		23,310,626
Basic earnings per share			$	0.57	$	0.43	$	1.71	$	1.67
Diluted earnings per share			$	0.57	$	0.43	$	1.70	$	1.65

      The Company accounts for its stock-based employee compensation under the intrinsic-value based method. Pro forma calculations of earnings and net earnings per share as if the fair value method of

8

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

accounting had been applied are shown in the following table. The pro forma data presented below may not be representative of the effects on reported amounts for future years.

		Three Months Ended						Nine Months Ended
		December 31,						December 31,
		2005			2004			2005			2004
					(Restated)						(Restated)
		(In thousands, except per share amounts)
Net income, as reported:		$	13,400		$	10,108		$	40,004		$	38,346
	Stock-based employee compensation expense included in reported net income, net of tax		185			—			280			—
	Stock-based employee compensation expense, net of tax		(457	)		(681	)		(1,586	)		(1,475	)
	Pro forma net income	$	13,128		$	9,427		$	38,698		$	36,871
Basic earnings per share:
	Earnings per share, as reported	$	0.57		$	0.43		$	1.71		$	1.67
	Stock-based employee compensation expense, net of tax		(0.01	)		(0.03	)		(0.05	)		(0.06	)
	Pro forma basic earnings per share	$	0.56		$	0.40		$	1.66		$	1.61
Diluted earnings per share:
	Earnings per share, as reported	$	0.57		$	0.43		$	1.70		$	1.65
	Stock-based employee compensation expense, net of tax		(0.01	)		(0.03	)		(0.06	)		(0.06	)
	Pro forma diluted earnings per share	$	0.56		$	0.40		$	1.64		$	1.59

NOTE C — INVESTMENTS IN UNCONSOLIDATED AFFILIATES

      Norsk Helikopter AS — During the first quarter of fiscal 2006, the Company’s unconsolidated Norwegian affiliate, Norsk Helikopter AS (“Norsk”), completed the acquisition of Lufttransport AS, 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, in the first quarter of fiscal year 2006, 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 of its shareholders.

      Mexican Joint Venture — Since the conclusion of the contract with Petroleós Mexicanos in February 2005, the Company’s 49% owned unconsolidated affiliates, Hemisco Helicopters International, Inc. (“Hemisco”) and Heliservicio Campeche, S.A. de C.V. (“Heliservicio” and together with Hemisco “HC”) have experienced difficulties in meeting their obligations to make lease rental payments to the Company and RLR. During the three months ended June 30, 2005, the Company and RLR made a determination that because of the uncertainties as to collectibility, lease revenues from HC would be recognized as they were collected. For the three and nine months ended December 31, 2005, $1.0 and $5.7 million, respectively, of revenues billed but not collected from HC have not been recognized in the Company’s results, and the Company’s 49% share of equity in earnings of RLR has been reduced by $0.9 and $3.7 million, respectively, for revenues billed but not collected from HC.

      In order to improve the financial condition of Heliservicio, the Company and its joint venture partner, Compania Controladora de Servicios Aeronauticos, S.A. de C.V. (“CCSA”), completed a recapitalization of Heliservicio on August 19, 2005. As a result of this recapitalization, Heliservicio’s two shareholders, the Company and CCSA, have notes payable to Hemisco of $4.4 million and $4.6 million, respectively, and

9

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

obligations of Heliservicio in the same amounts were cancelled thereby increasing its capital. The $4.4 million note owed by the Company to Hemisco bears interest at 3% annually and is due on July 31, 2015.

      The Company is continuing to evaluate certain actions to return HC’s operations to profitability, including reducing the number of HC’s aircraft to a lower level based on current utilization, and the Company is actively seeking other markets in which to redeploy the aircraft that are currently operating in Mexico on an ad hoc basis. Although not anticipated or known at this time, such actions could result in future losses.

NOTE D — LONG-TERM DEBT

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

		December 31,		March 31,
		2005		2005
61/8% Senior Notes due 2013		$	230,000	$	230,000
Limited recourse term loans			20,309		21,116
Hemisco Helicopter International, Inc.			4,380		—
Short-term advance from customer			1,400		3,400
Note to Sakhalin Aviation Services Ltd.			622		641
Sakhalin debt			5,926		6,923
	Total debt		262,637		262,080
	Less current maturities		4,548		6,413
	Total long-term debt	$	258,089	$	255,667

      At December 31, 2005, the Company had a $30 million unsecured line of credit with a U.S. bank that expires on August 31, 2006. Borrowings bear interest at a rate equal to one month LIBOR plus a spread ranging from 1.25% to 2.0%. The Company had $0.7 million of outstanding letters of credit and no borrowings under this facility as of December 31, 2005.

      At December 31, 2005, Bristow Aviation Holdings, Ltd. (“Bristow Aviation”) had a £6.0 million ($10.3 million) facility for letters of credit, of which £1.7 million ($2.9 million) was outstanding, and a £1.0 million ($1.7 million) net overdraft facility, of which no borrowings were outstanding. Both facilities are with a U.K. bank. The letter of credit facility is provided on an uncommitted basis, and outstanding letters of credit bear fees at a rate of 0.7% per annum. Borrowings under the net overdraft facility are payable upon 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 August 31, 2005, but has been extended to August 31, 2006.

      Defaults Under Certain Long-Term Debt Agreements — The $230.0 million 6¹/8% Senior Notes due 2013 (“Senior Notes”) were issued on June 20, 2003. On June 16, 2005, the Company received notice from the trustee of the indenture underlying the Senior Notes 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. The Company solicited consents from all holders of the 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 16, 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 required financial reporting information, and on August 16, 2005 completed the consent solicitation. A consent fee of $1.4 million was paid to consenting holders of Senior Notes on August 17, 2005 to waive until November 15, 2005 the financial reporting covenants and the compliance certificate and auditors’ statement covenants in the indenture.

10

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

      The Company elected to exercise its option to extend the waiver to December 15, 2005 and then to further extend this waiver through January 16, 2006 upon payment of additional fees totalling $1.2 million. The consent and waiver fees have been deferred and are being amortized over the remaining term of the Senior Notes. In January 2006, the default was cured.

      As of June 30, 2005, the Company was in default of the various financial information reporting covenants in its revolving credit facility and a five-year $31.8 million term loan (the “RLR Note”) under which an unconsolidated affiliate, Rotorwing Leasing Resources, L.L.C. (“RLR”), is a borrower and the Company is a guarantor. The defaults were as a result of not providing financial information for fiscal 2005 when due, and also for not providing similar information to other creditors. This situation resulted from activities identified in connection with the Internal Review discussed in Note E which prevented the Company from filing the financial report for fiscal year 2005 on time. 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 $26,000, and were further extended through January 16, 2006 upon payment of an additional fee of $26,000. In January 2006, the defaults were cured.

NOTE E — COMMITMENTS AND CONTINGENCIES

      Sale and Leaseback Financing — On December 30, 2005, the Company sold nine aircraft for $68.6 million in aggregate to a subsidiary of General Electric Capital Corporation, and then leased back each of the nine aircraft under separate operating leases with terms of ten years expiring in January 2016. Each “net” lease agreement requires the Company to be responsible for all operating costs and has an effective interest rate of approximately 5%. Rent payments under each lease are payable monthly and total $6.3 million and $7.6 million annually during the first 60 months and second 60 months, respectively, for all nine leases. Each lease has an end of lease purchase option at ten years, an early purchase option at 60 months (December 2010), and an early termination option at 24 months (December 2007). The early purchase option price for the nine aircraft at 60 months is approximately $52 million in aggregate. There was a deferred gain on the sale of the aircraft in the amount of approximately $10.8 million in aggregate. The deferred gain will be amortized as a reduction in lease expense over the 10 year lease term in proportion to the rent payments. Additional collateral in the amount of at least $11.8 million is to be provided until the conclusion of the SEC investigation related to the Internal Review. A portion of the proceeds ($10.3 million) was retained by the lessor until January 30, 2006 when the additional collateral, which consisted of five aircraft and a $2.5 million letter of credit, was provided.

11

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

      Aircraft Purchase Contracts — The Company has entered into several agreements to purchase new and used aircraft which are reflected in the following table. As of December 31, 2005, the Company had $381.1 million remaining to be paid in connection with its aircraft purchase commitments.

			Delivered				Remaining to be Delivered
					Nine Months		Three Months
			Prior to		Ended		Ended		Fiscal Year Ended March 31,
			April 1,		December 31,		March 31,
			2005		2005		2006		2007		2008		2009-2013		Total
Number of aircraft(1):
	New:
		Small		7		4		1		—		—		—		12
		Medium		10		8		1		12		11		15		57
		Large		—		2		1		4		—		—		7
				17		14		3		16		11		15		76
	Used:
		Small		—		5		—		—		—		—		5
		Medium		1		—		—		—		—		—		1
				18		19		3		16		11		15		82
Related expenditures(2)			$	104,370	$	89,668	$	35,964	$	166,573	$	66,844	$	111,758	$	575,177

(1)	The Company also has options to purchase 24 additional aircraft. As of December 31, 2005, the options with respect to six of the aircraft are now subject to availability.
(2)	Subsequent to December 31, 2005, the Company entered into purchase obligations of $5.0 million for additional aircraft not reflected in the table above.

      In connection with our agreement to purchase three large aircraft to be utilized and owned by Norsk, the Company agreed to fund the purchase of one aircraft (reflected in the table above), and Norsk and the other equity owner in Norsk each agreed to fund the purchase of one of the two other aircraft. One was delivered in the third quarter of fiscal year 2006 and the remaining two are expected to be delivered in fiscal year 2007.

      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

12

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

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 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 of 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.bristowgroup.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.

      In connection with the Audit Committee’s conclusions, the Company will voluntarily advise certain foreign governmental authorities 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 December 31, 2005, the book values of its aircraft in Nigeria and the South American country where certain improper activities took place were approximately $117.0 million and $2.8 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

13

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

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, 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 the Company’s 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 was a need to restate the Company’s historical consolidated financial statements, including those for the quarterly periods in fiscal year 2005. As of December 31, 2005, the Company has accrued $18.8 million for the taxes, penalties and interest attributable to underreported employee payroll. Operating income for the nine months ended December 31, 2005 and 2004 includes $3.0 million and $2.8 million, respectively, attributable to this accrual. 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 this Quarterly Report and the Annual Report and lead the Company to take other remedial actions or that may otherwise adversely impact the Company.

      Through December 31, 2005, the Company has incurred approximately $12.4 million, including $2.2 million and $10.3 million in the three and nine months ended December 31, 2005, respectively, in legal and other professional costs in connection with 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 such customer 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

14

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

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. As described further below, in November 2005, one of the terminated agents and his affiliated entity have 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 received approximately $0.3 million of dividend income from this joint venture. During the nine months ended December 31, 2005, the Company derived approximately $6.3 million of leasing and other revenues, of which $3.0 million was paid by the Company to a third party for the use of the aircraft, and received no 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 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 its prices simultaneously and to the same extent of its increased costs, its operating income will decrease.

      In November 2005, two of the Company’s consolidated foreign 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.

      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 benefit plans. The Company does not believe that these increases will place it at a competitive, financial or operational disadvantage.

      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

15

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

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. In connection with this matter, the Company has incurred $1.0 million in legal and other professional fees for the nine months ended December 31, 2005. It is not possible to predict accurately at this time when this government investigation 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.

      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 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.

      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 expected to have a material adverse effect on its business or financial condition.

      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 recorded a $0.3 million net gain ($2.9 million in anticipated insurance recoveries offset by $2.6 million of involuntary conversion losses) during the nine months ended December 31, 2005 related to property damage to these facilities. The Company reopened its Intracoastal City, Louisiana base in December 2005 and expects to reopen its Venice and Creole, Louisiana bases in the fourth quarter of fiscal year 2006.

      Other Matters — 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.

16

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

NOTE F — INCOME TAXES

      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 December 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.

NOTE G — EMPLOYEE BENEFIT PLANS

      Savings and Retirement Plans — The following table provides a detail of the components of net periodic pension cost:

	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2005			2004			2005			2004
	(In thousands)
Service cost for benefits earned during the period	$	69		$	75		$	212		$	220
Interest cost on pension benefit obligation		5,220			5,240			16,094			15,417
Expected return on assets		(4,749	)		(4,866	)		(14,641	)		(14,317	)
Amortization of unrecognized experience losses		893			861			2,754			2,532
Net periodic pension cost	$	1,433		$	1,310		$	4,419		$	3,852

      The current estimate of cash contributions to the pension plans by the Company for the year ending March 31, 2006 is $9.9 million, $2.4 million of which was paid during the nine months ended December 31, 2005.

      Stock Option and Restricted Stock Unit Grant — On December 29, 2005, the Company granted options to purchase 105,915 shares at an exercise price of $29.17 per share and granted 143,600 shares of restricted stock units pursuant to the 2004 Stock Incentive Plan. The options vest ratably over three years on each anniversary from the date of grant and expire ten years from the date of grant. The restricted stock units fully vest on the fifth anniversary from the date of grant if the “Cumulative Annual Shareholder Return” (as defined in the restricted stock unit agreements) exceeds an annual average of 3% for the five year period. Partial vesting occurs on the third or fourth anniversary after the date of grant if the Cumulative Annual Shareholder Return equals or exceeds 10%, with full vesting if such amount equals or exceeds 15%.

17

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

NOTE H — COMPREHENSIVE INCOME

      Comprehensive income is as follows:

		Three Months Ended					Nine Months Ended
		December 31,					December 31,
		2005			2004		2005			2004
					(Restated)					(Restated)
		(In thousands)
Net income		$	13,400		$	10,108	$	40,004		$	38,346
Other comprehensive income (loss):
	Currency translation adjustments		(8,027	)		15,364		(25,144	)		11,406
Comprehensive income		$	5,373		$	25,472	$	14,860		$	49,752

NOTE I — SEGMENT INFORMATION

      The Company operates principally in two business segments: Helicopter Services and Production Management Services. Beginning in fiscal year 2006, the Company conducts the operations of its Helicopter Services segment through six business units: North America, South and Central America, Europe, West Africa, Southeast Asia and Other International. Previously, the Company conducted these operations through four business units: North America, North Sea, International and Technical Services. 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 change in business units reflects changes made in fiscal year 2006 by the Company’s president and chief executive officer (its chief decision maker) and other senior management to the way they manage and evaluate the Company’s results of operations. Accordingly, the Company has modified its segment disclosure to reflect the change in business units. The following shows reportable segment information for the three and nine months ended

18

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

December 31, 2005 and 2004, reconciled to consolidated totals, and prepared on the same basis as the Company’s consolidated financial statements:

				Three Months Ended				Nine Months Ended
				December 31,				December 31,
				2005		2004		2005		2004
						(Restated)				(Restated)
				(In thousands)
Segment operating revenues from external customers:
	Helicopter Services:
		North America		$	50,291	$	37,836	$	151,466	$	117,712
		South and Central America			10,977		12,942		30,295		40,407
		Europe			60,709		60,820		184,327		178,637
		West Africa			29,830		25,749		85,605		71,343
		Southeast Asia			15,789		14,990		44,197		39,533
		Other International			6,340		4,608		18,221		11,526
	Total Helicopter Services				173,936		156,945		514,111		459,158
	Production Management Services				16,234		14,925		50,105		43,214
			Total segment operating revenues	$	190,170	$	171,870	$	564,216	$	502,372
Intersegment and intrasegment operating revenues:
	Helicopter Services:
		North America		$	6,578	$	4,996	$	19,104	$	16,597
		South and Central America			450		225		1,350		850
		Europe			4,755		4,418		13,194		12,321
		West Africa			—		—		—		3
		Southeast Asia			—		—		—		—
		Other International			344		5		1,060		89
	Total Helicopter Services				12,127		9,644		34,708		29,860
	Production Management Services				19		18		58		50
			Total intersegment and intrasegment operating revenues	$	12,146	$	9,662	$	34,766	$	29,910

19

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

				Three Months Ended						Nine Months Ended
				December 31,						December 31,
				2005			2004			2005			2004
							(Restated)						(Restated)
				(In thousands)
Consolidated operating revenues reconciliation:
	Helicopter Services:
		North America		$	56,869		$	42,832		$	170,570		$	134,309
		South and Central America			11,427			13,167			31,645			41,257
		Europe			65,464			65,238			197,521			190,958
		West Africa			29,830			25,749			85,605			71,346
		Southeast Asia			15,789			14,990			44,197			39,533
		Other International			6,684			4,613			19,281			11,615
		Intrasegment eliminations			(9,545	)		(7,550	)		(28,151	)		(23,628	)
	Total Helicopter Services				176,518			159,039			520,668			465,390
	Production Management Services				16,253			14,943			50,163			43,264
	Corporate				4,245			2,445			9,836			7,590
	Intersegment eliminations				(4,749	)		(4,260	)		(13,058	)		(13,049	)
			Total consolidated operating revenues	$	192,267		$	172,167		$	567,609		$	503,195
Consolidated operating income (loss) reconciliation:
	Helicopter Services:
		North America		$	8,785		$	4,053		$	33,160		$	19,356
		South and Central America			1,392			2,862			2,053			9,533
		Europe			7,005			8,473			22,503			21,294
		West Africa			2,596			1,672			7,041			6,713
		Southeast Asia			1,701			1,791			2,785			3,858
		Other International			1,402			43			3,198			(634	)
	Total Helicopter Services				22,881			18,894			70,740			60,120
	Production Management Services				1,117			1,219			3,675			2,985
	Gain (loss) on disposal of assets				(374	)		2,021			(1,276	)		8,177
	Corporate				(5,892	)		(2,918	)		(18,267	)		(7,563	)
			Total consolidated operating income	$	17,732		$	19,216		$	54,872		$	63,719

NOTE J — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

      In connection with the sale of the Senior Notes, certain of the Company’s subsidiaries (the “Guarantor Subsidiaries”) jointly, severally and unconditionally guaranteed the payment obligations under these notes. The following supplemental financial information sets forth, on a consolidating basis, the balance sheet, statement of income and cash flow information for Bristow Group Inc. (“Parent Company Only”), for the Guarantor Subsidiaries and for Bristow Group Inc.’s other subsidiaries (the “Non-Guarantor Subsidiaries”). 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

20

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

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.

Supplemental Condensed Consolidating Statement of Income

Three Months Ended December 31, 2005

(In thousands)

			Parent						Non-
			Company			Guarantor			Guarantor
			Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Operating revenues			$	7		$	73,374		$	118,886		$	—		$	192,267
Intercompany revenues				—			1,934			2,693			(4,627	)		—
				7			75,308			121,579			(4,627	)		192,267
Operating expenses:
	Direct costs			1,041			53,592			93,537			—			148,170
	Intercompany expenses			—			2,695			1,823			(4,518	)		—
	Depreciation and amortization			37			4,564			6,052			—			10,653
	General and administrative			4,747			5,048			5,652			(109	)		15,338
	Loss on disposal of assets			—			1			373			—			374
				5,825			65,900			107,437			(4,627	)		174,535
		Operating income (loss)		(5,818	)		9,408			14,142			—			17,732
Earnings (losses) from unconsolidated affiliates, net of losses				31,258			(922	)		2,325			(31,310	)		1,351
Interest income				13,733			50			985			(13,870	)		898
Interest expense				(3,708	)		(3	)		(14,062	)		13,870			(3,903	)
Other income (expense), net				(261	)		60			2,497			—			2,296
		Income before provision for income taxes and minority interest		35,204			8,593			5,887			(31,310	)		18,374
Allocation of consolidated income taxes				21,766			172			(16,954	)		—			4,984
Minority interest				(38	)		—			48			—			10
		Net income	$	13,400		$	8,421		$	22,889		$	(31,310	)	$	13,400

21

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

Supplemental Condensed Consolidating Statement of Income

Nine Months Ended December 31, 2005

(In thousands)

			Parent						Non-
			Company			Guarantor			Guarantor
			Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Operating revenues			$	39		$	223,702		$	343,868		$	—		$	567,609
Intercompany revenues				—			5,566			6,534			(12,100	)		—
				39			229,268			350,402			(12,100	)		567,609
Operating expenses:
	Direct costs			17			161,271			272,008			—			433,296
	Intercompany expenses			—			6,535			5,236			(11,771	)		—
	Depreciation and amortization			69			13,642			18,449			—			32,160
	General and administrative			18,873			11,396			16,065			(329	)		46,005
	Loss (gain) on disposal of assets			4			(142	)		1,414			—			1,276
				18,963			192,702			313,172			(12,100	)		512,737
		Operating income (loss)		(18,924	)		36,566			37,230			—			54,872
Earnings (losses) from unconsolidated affiliates, net of losses				48,248			(2,959	)		4,886			(48,405	)		1,770
Interest income				40,938			138			3,160			(41,357	)		2,879
Interest expense				(10,895	)		(10	)		(41,740	)		41,357			(11,288	)
Other income (expense), net				(717	)		59			4,966			—			4,308
		Income before provision for income taxes and minority interest		58,650			33,794			8,502			(48,405	)		52,541
Allocation of consolidated income taxes				18,529			2,512			(8,588	)		—			12,453
Minority interest				(117	)		—			33			—			(84	)
		Net income	$	40,004		$	31,282		$	17,123		$	(48,405	)	$	40,004

22

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

Supplemental Condensed Consolidating Statement of Income

Three Months Ended December 31, 2004

(Restated)

(In thousands)

			Parent						Non-
			Company			Guarantor			Guarantor
			Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Operating revenues			$	253		$	61,027		$	110,887		$	—		$	172,167
Intercompany revenues				—			1,249			1,326			(2,575	)		—
				253			62,276			112,213			(2,575	)		172,167
Operating expenses:
	Direct costs			8			47,880			85,219			—			133,107
	Intercompany expenses			—			1,326			1,175			(2,501	)		—
	Depreciation and amortization			25			3,921			6,844			—			10,790
	General and administrative			2,916			3,056			5,177			(74	)		11,075
	Gain on disposal of assets			—			(202	)		(1,819	)		—			(2,021	)
				2,949			55,981			96,596			(2,575	)		152,951
		Operating income (loss)		(2,696	)		6,295			15,617			—			19,216
Earnings from unconsolidated affiliates, net of losses				10,044			589			1,234			(10,098	)		1,769
Interest income				13,028			31			1,048			(13,122	)		985
Interest expense				(3,785	)		(49	)		(13,344	)		13,122			(4,056	)
Other expense, net				(137	)		(5	)		(2,457	)		—			(2,599	)
		Income before provision for income taxes and minority interest		16,454			6,861			2,098			(10,098	)		15,315
Allocation of consolidated income taxes				6,306			4,999			(6,159	)		—			5,146
Minority interest				(40	)		—			(21	)		—			(61	)
		Net income	$	10,108		$	1,862		$	8,236		$	(10,098	)	$	10,108

23

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

Supplemental Condensed Consolidating Statement of Income

Nine Months Ended December 31, 2004

(Restated)

(In thousands)

			Parent						Non-
			Company			Guarantor			Guarantor
			Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Operating revenues			$	703		$	188,147		$	314,345		$	—		$	503,195
Intercompany revenues				—			2,999			2,697			(5,696	)		—
				703			191,146			317,042			(5,696	)		503,195
Operating expenses:
	Direct costs			35			140,954			241,760			—			382,749
	Intercompany expenses			—			2,697			2,609			(5,306	)		—
	Depreciation and amortization			87			11,256			20,477			—			31,820
	General and administrative			8,292			8,978			16,204			(390	)		33,084
	Gain on disposal of assets			—			(1,774	)		(6,403	)		—			(8,177	)
				8,414			162,111			274,647			(5,696	)		439,476
		Operating income (loss)		(7,711	)		29,035			42,395			—			63,719
Earnings from unconsolidated affiliates, net of losses				26,404			1,784			4,064			(26,562	)		5,690
Interest income				37,314			59			2,662			(37,867	)		2,168
Interest expense				(11,272	)		(195	)		(38,370	)		37,867			(11,970	)
Other income (expense), net				(151	)		12			(1,899	)		—			(2,038	)
		Income before provision for income taxes and minority interest		44,584			30,695			8,852			(26,562	)		57,569
Allocation of consolidated income taxes				6,069			8,869			3,986			—			18,924
Minority interest				(169	)		—			(130	)		—			(299	)
		Net income	$	38,346		$	21,826		$	4,736		$	(26,562	)	$	38,346

24

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

Supplemental Condensed Consolidating Balance Sheet

As of December 31, 2005

(In thousands)

				Parent						Non-
				Company			Guarantor			Guarantor
				Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
	Cash and cash equivalents			$	66,238		$	2,317		$	60,498		$	—		$	129,053
	Accounts receivable				20,288			67,238			101,372			(33,992	)		154,906
	Inventories				—			73,595			76,209			—			149,804
	Prepaid expenses and other				270			14,314			10,446			—			25,030
			Total current assets		86,796			157,464			248,525			(33,992	)		458,793
Intercompany investment					311,939			2,036			—			(313,975	)		—
Investments in unconsolidated affiliates					4,905			1,164			33,959			—			40,028
Intercompany notes receivable					533,513			—			26,995			(560,508	)		—
Property and equipment — at cost:
	Land and buildings				171			24,852			9,662			—			34,685
	Aircraft and equipment				1,505			335,004			488,510			—			825,019
					1,676			359,856			498,172			—			859,704
Less: accumulated depreciation and amortization					(1,327	)		(107,943	)		(147,873	)		—			(257,143	)
					349			251,913			350,299			—			602,561
Goodwill					—			18,593			8,133			111			26,837
Other assets					8,796			288			36,006			—			45,090
				$	946,298		$	431,458		$	703,917		$	(908,364	)	$	1,173,309
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
	Accounts payable			$	1,538		$	15,651		$	38,325		$	(13,757	)	$	41,757
	Accrued liabilities				18,468			20,195			103,928			(20,235	)		122,356
	Deferred taxes				(3,746	)		(452	)		10,037			—			5,839
	Current maturities of long-term debt				—			—			4,548			—			4,548
		Total current liabilities			16,260			35,394			156,838			(33,992	)		174,500
Long-term debt, less current maturities					234,380			—			23,709			—			258,089
Intercompany notes payable					25,927			80,213			454,368			(560,508	)		—
Other liabilities and deferred credits					3,427			10,205			146,811			—			160,443
Deferred taxes					35,650			914			30,937			—			67,501
Minority interest					1,814			—			2,372			—			4,186
Stockholders’ investment:
	Common stock				233			4,062			21,418			(25,480	)		233
	Additional paid-in capital				157,837			51,170			13,476			(64,646	)		157,837
	Retained earnings				429,719			249,500			(19,500	)		(230,000	)		429,719
	Accumulated other comprehensive income (loss)				41,051			—			(126,512	)		6,262			(79,199	)
					628,840			304,732			(111,118	)		(313,864	)		508,590
				$	946,298		$	431,458		$	703,917		$	(908,364	)	$	1,173,309

25

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

Supplemental Condensed Consolidating Balance Sheet

As of March 31, 2005

(In thousands)

			Parent						Non-
			Company			Guarantor			Guarantor
			Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
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

26

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

Supplemental Condensed Consolidating Statement of Cash Flows

Nine Months Ended December 31, 2005

(In thousands)

		Parent						Non-
		Company			Guarantor			Guarantor
		Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities		$	42,014		$	20,813		$	7,735		$	(39,213	)	$	31,349
Cash flows from investing activities:
	Capital expenditures		(331	)		(78,391	)		(23,585	)		—			(102,307	)
	Proceeds from asset dispositions		73			70,373			2,174			—			72,620
Net cash used in investing activities			(258	)		(8,018	)		(21,411	)		—			(29,687	)
Cash flows from financing activities:
	Cash collateral provided under operating leases		—			(10,285	)		—			—			(10,285	)
	Repayment of debt		—			—			(3,160	)		—			(3,160	)
	Repayment of intercompany debt		(1	)		(4,600	)		(212	)		4,813			—
	Dividends paid		—			(3,500	)		(30,900	)		34,400			—
	Partial prepayment of put/call obligation		(66	)		—			—			—			(66	)
	Issuance of common stock		602			—			—			—			602
Net cash provided by (used in) financing activities			535			(18,385	)		(34,272	)		39,213			(12,909	)
Effect of exchange rate changes on cash and cash equivalents			—			—			(6,140	)		—			(6,140	)
Net increase (decrease) in cash and cash equivalents			42,291			(5,590	)		(54,088	)		—			(17,387	)
Cash and cash equivalents at beginning of period			23,947			7,907			114,586			—			146,440
Cash and cash equivalents at end of period		$	66,238		$	2,317		$	60,498		$	—		$	129,053

27

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements — (Continued)

Supplemental Condensed Consolidating Statement of Cash Flows

Nine Months Ended December 31, 2004

(Restated)

(In thousands)

		Parent						Non-
		Company			Guarantor			Guarantor
		Only			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities		$	(4,560	)	$	43,427		$	66,746		$	(25,741	)	$	79,872
Cash flows from investing activities:
	Capital expenditures		(98	)		(44,256	)		(9,513	)		2,178			(51,689	)
	Proceeds from asset dispositions		8,011			12,234			21,738			(2,178	)		39,805
	Acquisition, net of cash received		—			—			(1,986	)		—			(1,986	)
	Investments		1,000			(1,150	)		(8,016	)		—			(8,166	)
Net cash provided by (used in) investing activities			8,913			(33,172	)		2,223			—			(22,036	)
Cash flows from financing activities:
	Proceeds from borrowings		—			—			987			(987	)		—
	Repayment of debt		—			—			(1,794	)		—			(1,794	)
	Repayment of intercompany debt		(18,415	)		(8,000	)		(313	)		26,728			—
	Partial prepayment of put/call obligation		(51	)		—			—			—			(51	)
	Repurchase of shares from minority interests		(7,389	)		—			—			—			(7,389	)
	Issuance of common stock		11,871			—			—			—			11,871
Net cash used in financing activities			(13,984	)		(8,000	)		(1,120	)		25,741			2,637
Effect of exchange rate changes on cash and cash equivalents			—			—			3,768			—			3,768
Net increase (decrease) in cash and cash equivalents			(9,631	)		2,255			71,617			—			64,241
Cash and cash equivalents at beginning of period			31,106			5,990			48,583			—			85,679
Cash and cash equivalents at end of period		$	21,475		$	8,245		$	120,200		$	—		$	149,920

28

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Bristow Group Inc.:

      We have reviewed the condensed consolidated balance sheet of Bristow Group Inc. and subsidiaries (formerly, Offshore Logistics, Inc.) as of December 31, 2005 and the related condensed consolidated statements of income and cash flows for the three-month and nine-month periods ended December 31, 2005 and 2004. These condensed consolidated financial statements are the responsibility of the Company’s management.

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

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

      As discussed in Note A to the Condensed Notes to Consolidated Financial Statements, the condensed consolidated statements of income and cash flows for the three-month and nine-month periods ended December 31, 2004 have been restated.

      We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Bristow Group Inc. and subsidiaries as of March 31, 2005, and the related consolidated statements of income, stockholders’ investment, and cash flows for the year then ended (not presented herein); and in our report dated 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, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2005, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ KPMG LLP

New Orleans, Louisiana

February 3, 2006

29

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

      Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes thereto as well as our Annual Report on Form 10-K for the fiscal year ended March 31, 2005 (“Annual Report”) and the MD&A contained therein. In the discussion that follows, the terms “Current Quarter” and “Comparable Quarter” refer to the three months ended December 31, 2005 and 2004, respectively, and the terms “Current Period” and “Comparable Period” refer to the nine months ended December 31, 2005 and 2004, respectively. As discussed further in Note A in the “Condensed Notes to Consolidated Financial Statements,” on February 1, 2006, the name of the Company changed from Offshore Logistics, Inc. to Bristow Group Inc.

      Amounts previously reported for the Comparable Quarter and Period 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 “Restatement of Previously Reported Amounts” in Note A and “Internal Review” in Note E in the “Condensed Notes to Consolidated Financial Statements” as well as “Investigations” and “Restatement of Previously Reported Amounts” below for further discussion of these matters.

Forward-Looking Statements

      This Form 10-Q for December 31, 2005 (“Quarterly Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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. All statements in this Quarterly Report, other than statements of historical fact or historical financial results, are forward-looking statements.

      Our forward-looking statements reflect our views and assumptions on the date of this Quarterly Report regarding future events and operating performance. We believe that they are reasonable, but they involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Accordingly, you should not put undue reliance on any forward-looking statements. Factors that could cause our forward-looking statements to be incorrect and actual events or our actual results to differ from those that are anticipated include those Risk Factors disclosed in our Annual Report; the cautionary statements made in our Annual Report with respect to our forward-looking statements; the risks cited in, and the cautionary statements made in, our Forms 10-Q and 8-K filed during the current fiscal year; the level of activity in the oil and natural gas industry; production related activities becoming more sensitive to variances in commodity prices; and the DOJ or the SEC investigation having a greater than anticipated financial impact.

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

Executive Overview

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

30

      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 Alaska, Australia, Brazil, China, Mexico, Nigeria, Russia and Trinidad. Additionally, we are a leading provider of production management services for oil and gas production facilities in the U.S. Gulf of Mexico. As of December 31, 2005, we operated 324 aircraft (excluding eight aircraft held for sale) and our unconsolidated affiliates operated an additional 140 aircraft throughout the world. The following table sets forth the number of our aircraft operated as of the dates indicated:

		As of March 31,		As of December 31,
		2005		2005
North America			166		166
South and Central America			34		33
Europe			45		45
West Africa			45		47
Southeast Asia			22		14
Other International			8		19
	Total		320		324
Additional aircraft operated by unconsolidated affiliates			113		140

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. We believe 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.”

31

Operating Results

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

		Three Months Ended						Nine Months Ended
		December 31,						December 31,
		2005			2004(1)			2005			2004(1)
		(Unaudited)						(Unaudited)
					(Restated)						(Restated)
		(In thousands)
Operating revenues		$	192,267		$	172,167		$	567,609		$	503,195
Direct costs			(148,170	)		(133,107	)		(433,296	)		(382,749	)
Depreciation and amortization			(10,653	)		(10,790	)		(32,160	)		(31,820	)
General and administrative			(15,338	)		(11,075	)		(46,005	)		(33,084	)
Gain (loss) on disposal of assets			(374	)		2,021			(1,276	)		8,177
	Operating income		17,732			19,216			54,872			63,719
Earnings from unconsolidated affiliates, net of losses			1,351			1,769			1,770			5,690
Interest expense, net			(3,005	)		(3,071	)		(8,409	)		(9,802	)
Other income, net			2,296			(2,599	)		4,308			(2,038	)
	Income before provision for income taxes and minority interest		18,374			15,315			52,541			57,569
Provision for income taxes			(4,984	)		(5,146	)		(12,453	)		(18,924	)
Minority interest			10			(61	)		(84	)		(299	)
	Net income	$	13,400		$	10,108		$	40,004		$	38,346

(1)  Amounts previously reported for the Comparable Quarter and Period 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 “Restatement of Previously Reported Amounts” in Note A and “Internal Review” in Note E in the “Condensed Notes to Consolidated Financial Statements” as well as “Investigations” and “Restatement of Previously Reported Amounts” below for further discussion of these matters.

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 of these payments, 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.

32

      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 of 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.bristowgroup.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.

      In connection with the Audit Committee’s conclusions, we will voluntarily advise certain foreign governmental authorities 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 December 31, 2005, the book values of our aircraft in Nigeria and the South American country where certain improper activities took place were approximately $117.0 million and $2.8 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

33

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.

      As discussed further in our Annual Report, 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 was a need to restate our historical consolidated financial statements, including those for the quarterly periods in fiscal year 2005. As of December 31, 2005, we have accrued $18.8 million for the taxes, penalties and interest attributable to underreported employee payroll. Operating income for the Current Quarter and Period includes $1.0 million and $3.0 million, respectively, attributable to this accrual. Operating income for the Comparable Quarter and Period includes $0.9 million and $2.8 million, respectively, attributable to this accrual. 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 Quarterly 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 Quarterly Report and our Annual Report and lead us to take other remedial actions or that may otherwise adversely impact us.

      Through December 31, 2005, we have incurred approximately $12.4 million, including $2.2 million and $10.3 million in the Current Quarter and Period, respectively, in legal and other professional costs in connection with 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 such customer has already 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 and his affiliated entity have 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.

34

      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 received approximately $0.3 of dividend income from this joint venture. During the Current Period, we derived approximately $6.3 million of leasing and other revenues, of which $3.0 million was paid by us to a third party for the use of the aircraft, and received no 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 its 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.

Document Subpoena from U.S. Department of Justice

      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 and/or 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. In connection with this matter, we have incurred $1.0 million in legal and professional fees for the Current Period. We expect to incur further 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 DOJ investigation, see “Document Subpoena from U.S. Department of Justice” in Note E in the “Condensed Notes to Consolidated Financial Statements.”

Restatement of Previously Reported Amounts

      As a result of the Internal Review findings discussed further in Note E in the “Condensed Notes to Consolidated Financial Statements”, we restated our historical financial statements to accrue for payroll taxes, penalties and interest attributable to underreported employee payroll. For further information regarding the Internal Review and related matters, including our restatement of our historical financial statements, refer to the Annual Report. Our restated condensed consolidated statements of income included in this Quarterly Report reflect reductions in operating income of $0.9 million for the Comparable Quarter and $2.8 million for the Comparable Period in connection with this matter. As of December 31, 2005, accrued liabilities includes $18.8 million related to this matter. 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 related SEC investigation; however, such payments, fines and/or penalties could have a material adverse effect on our business, financial condition and results of operations.

35

      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 the Comparable Quarter and Period, 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 $16.2 million for the Comparable Quarter and $41.1 million for the Comparable Period, 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 $0.2 million for the Comparable Quarter and $0.7 million for the Comparable Period.

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

	Three Months Ended				Nine Months Ended
	December 31, 2004				December 31, 2004
	(Unaudited)				(Unaudited)
	As				As
	Previously				Previously
	Reported		Restated		Reported		Restated
Statements of Income
Operating revenues	$	155,977	$	172,167	$	462,083	$	503,195
Direct costs		115,719		133,107		338,058		382,749
Total operating expenses		135,563		152,951		394,785		439,476
Operating income		20,414		19,216		67,298		63,719
Income before provision for taxes and minority interests		16,513		15,315		61,148		57,569
Provision for income taxes		4,953		5,146		18,344		18,924
Net income		11,499		10,108		42,505		38,346
Basic EPS		0.49		0.43		1.85		1.67
Diluted EPS		0.49		0.43		1.82		1.65

	Nine Months Ended
	December 31, 2004
	(Unaudited)
	As
	Previously
	Reported			Restated
Statements of Cash Flows
Net income	$	42,505		$	38,346
Deferred taxes		5,470			6,415
Decrease in accrued liabilities		(4,322	)		(1,108	)
Net cash provided by operating activities		79,872			79,872

In addition, certain information in Notes B, H, I and J in the “Condensed Notes to Consolidated Financial Statements” has been restated to reflect the effect of these adjustments. Certain amounts in the above presentation for 2004 have been reclassified to conform to the current year presentation. Specifically, gains and losses on asset disposals were previously included in revenues but are now included in operating expenses.

Other Matters

      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

36

the pilot group and improvements to several benefit plans. We do not expect the new agreement 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 began 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 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.

      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. During fiscal year 2005 and for the Current Period, we had $26.4 million and $20.6 million, respectively, in operating revenues associated with this contract.

      On December 30, 2005, we sold nine aircraft for $68.6 million in aggregate to a subsidiary of General Electric Capital Corporation, and then leased back each of the nine aircraft under separate operating leases with terms of ten years expiring in January 2016. There was a deferred gain on the sale of the aircraft in the amount of approximately $10.8 million in aggregate. See “— Liquidity and Capital Resources — Financing Activities” for further information related to this transaction.

General

      We operate our business in two segments: Helicopter Services and Production Management Services. We conduct our Helicopter Services through the following six business units:

•  North America;

•  South and Central America;

•  Europe;

•  West Africa;

•  Southeast Asia; and

•  Other International.

      For the Current Period, our North America, South and Central America, Europe, West Africa, Southeast Asia and Other International business units contributed 28%, 6%, 30%, 16%, 8% and 3%, respectively, of our operating revenue. We expect that the percentage of our operating revenue derived from our Southeastern Asia and Other International business units will continue to increase as the major oil and gas companies increasingly focus on prospects outside of North America and the North Sea. Our Production Management Services segment contributed the remaining 9% of our operating revenue for the Current Period.

      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 a more stable activity level and revenue stream. We

37

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 North America, we typically enter into short-term contracts for twelve months or less, although we occasionally enter into longer-term contracts. In Europe, contracts are longer term, generally between two and five years. In South and Central America, West Africa, Southeast Asia and Other International, 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. 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 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.

      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 and fixed wing aircraft 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 and fixed wing aircraft 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.

      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 in our Annual Report.

38

Results of Operations

      The following tables set forth certain operating information, which forms the basis for discussion of our Helicopter Services and Production Management Services, and for the six business units comprising our Helicopter Services segment. Certain reclassifications have been made to prior year information to conform to the current presentation of the Helicopter Services segment’s business units. See Note I in the “Condensed Notes to Consolidated Financial Statements” for further information. The tables also present certain operating information about our corporate activities which primarily relate to intercompany leasing of aircraft and are eliminated in consolidation. Amounts previously reported for 2004 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 E in the “Condensed Notes to Consolidated Financial Statements” for further discussion of these matters.

				Three Months Ended				Nine Months Ended
				December 31,				December 31,
				2005		2004		2005		2004
Flight hours (excludes unconsolidated affiliates):
	Helicopter Services:
		North America			36,211		28,180		109,443		92,604
		South and Central America			9,569		9,560		29,198		33,307
		Europe			9,329		9,500		29,323		31,942
		West Africa			9,108		8,971		26,647		25,374
		Southeast Asia			3,117		3,341		8,844		8,850
		Other International			1,487		460		4,209		1,616
			Total		68,821		60,012		207,664		193,693

				Three Months Ended						Nine Months Ended
				December 31,						December 31,
				2005			2004(2)			2005			2004(2)
							(Restated)						(Restated)
				(In thousands)
Operating revenue:
	Helicopter Services:
		North America		$	56,869		$	42,832		$	170,570		$	134,309
		South and Central America			11,427			13,167			31,645			41,257
		Europe			65,464			65,238			197,521			190,958
		West Africa			29,830			25,749			85,605			71,346
		Southeast Asia			15,789			14,990			44,197			39,533
		Other International			6,684			4,613			19,281			11,615
		Intrasegment eliminations			(9,545	)		(7,550	)		(28,151	)		(23,628	)
	Total Helicopter Services				176,518			159,039			520,668			465,390
	Production Management Services				16,253			14,943			50,163			43,264
	Corporate				4,245			2,445			9,836			7,590
	Intersegment eliminations				(4,749	)		(4,260	)		(13,058	)		(13,049	)
			Consolidated total	$	192,267		$	172,167		$	567,609		$	503,195

39

				Three Months Ended						Nine Months Ended
				December 31,						December 31,
				2005			2004(2)			2005			2004(2)
							(Restated)						(Restated)
				(In thousands)
Operating expenses(1):
	Helicopter Services
		North America		$	48,084		$	38,779		$	137,410		$	114,953
		South and Central America			10,035			10,305			29,592			31,724
		Europe			58,459			56,765			175,018			169,664
		West Africa			27,234			24,077			78,564			64,633
		Southeast Asia			14,088			13,199			41,412			35,675
		Other International			5,282			4,570			16,083			12,249
		Intrasegment eliminations			(9,545	)		(7,550	)		(28,151	)		(23,628	)
	Total Helicopter Services				153,637			140,145			449,928			405,270
	Production Management Services				15,136			13,724			46,488			40,279
	Loss (gain) on disposal of assets				374			(2,021	)		1,276			(8,177	)
	Corporate				10,137			5,363			28,103			15,153
	Intersegment eliminations				(4,749	)		(4,260	)		(13,058	)		(13,049	)
			Consolidated total	$	174,535		$	152,951		$	512,737		$	439,476
Operating income:
	Helicopter Services
		North America		$	8,785		$	4,053		$	33,160		$	19,356
		South and Central America			1,392			2,862			2,053			9,533
		Europe			7,005			8,473			22,503			21,294
		West Africa			2,596			1,672			7,041			6,713
		Southeast Asia			1,701			1,791			2,785			3,858
		Other International			1,402			43			3,198			(634	)
	Total Helicopter Services				22,881			18,894			70,740			60,120
	Production Management Services				1,117			1,219			3,675			2,985
	Gain (loss) on disposal of assets				(374	)		2,021			(1,276	)		8,177
	Corporate				(5,892	)		(2,918	)		(18,267	)		(7,563	)
			Consolidated total	$	17,732		$	19,216		$	54,872		$	63,719
Operating margin:
	Helicopter Services
		North America			15.4	%		9.5	%		19.4	%		14.4	%
		South and Central America			12.2	%		21.7	%		6.5	%		23.1	%
		Europe			10.7	%		13.0	%		11.4	%		11.2	%
		West Africa			8.7	%		6.5	%		8.2	%		9.4	%
		Southeast Asia			10.8	%		11.9	%		6.3	%		9.8	%
		Other International			21.0	%		0.9	%		16.6	%		(5.5	)%
	Total Helicopter Services				13.0	%		11.9	%		13.6	%		12.9	%
	Production Management Services				6.9	%		8.2	%		7.3	%		6.9	%
			Consolidated total		9.2	%		11.2	%		9.7	%		12.7	%

40

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

			Three Months Ended				Nine Months Ended
			December 31,				December 31,
			2005		2004		2005		2004
			(In thousands)
Helicopter Services:
	North America		$	4,494	$	3,817	$	12,856	$	10,957
	South and Central America			508		523		1,578		1,586
	Europe			3,568		4,594		11,030		14,054
	West Africa			324		290		1,433		836
	Southeast Asia			96		70		311		190
	Other International			470		447		1,393		972
Total Helicopter Services				9,460		9,741		28,601		28,595
Production Management Services				49		50		148		145
Corporate				1,144		999		3,411		3,080
		Consolidated total	$	10,653	$	10,790	$	32,160	$	31,820

(2)  Amounts previously reported for the Comparable Quarter and Period 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 netting such amounts against the related expenses and to properly record expenses for severance benefits and payroll taxes associated with certain foreign subsidiaries. See “Restatement of Previously Reported Amounts” in Note A and “Internal Review” in Note E in the “Condensed Notes to Consolidated Financial Statements” as well as “Investigations” and “Restatement of Previously Reported Amounts” above for further discussion of these matters.

Quarter ended December 31, 2005 compared to Quarter ended December 31, 2004

Consolidated Results

      Our operating revenues increased to $192.3 million for the Current Quarter from $172.2 million for the Comparable Quarter. The increase in operating revenues occurred in both our Helicopter Services segment and our Production Management Services segment. Our operating expenses for the Current Quarter increased to $174.5 million from $153.0 million for the Comparable Quarter. The increase was primarily a result of higher costs associated with higher activity levels, higher labor costs, higher fuel rates and higher professional fees due to the Internal Review and the DOJ investigation. In addition, we had a loss on disposal of assets of $0.4 million in the Current Quarter as compared to a gain of $2.0 million in the Comparable Quarter. As a result, our operating income and operating margin for the Current Quarter decreased to $17.7 million and 9.2%, respectively, compared to $19.2 million and 11.2%, respectively, for the Comparable Quarter.

      Net income for the Current Quarter of $13.4 million represents a $3.3 million increase from the Comparable Quarter. This increase primarily resulted from an increase in other income, net for the Current Quarter as compared to the Comparable Quarter. Set forth below is a discussion of the results of operations of our segments and business units.

Helicopter Services

      Operating revenues from Helicopter Services increased to $176.5 million for the Current Quarter from $159.0 million for the Comparable Quarter, and operating expenses increased to $153.6 million from $140.1 million. This resulted in an operating margin of 13.0% as compared to 11.9% in the Comparable Quarter. These improvements are primarily attributable to results for North America where flight hours and

41

operating revenues have increased quarter over quarter. Helicopter Services results are further explained below by business unit.

      North America. Operating revenues from North America increased to $56.9 million, or 32.9%, during the Current Quarter from $42.8 million in the Comparable Quarter, and flight activity increased by 28.5%. The increase in operating revenues is due to a rate increase of 8% for the U.S. Gulf of Mexico that is being phased in beginning in May 2005, increases in fuel surcharges as fuel prices have increased and an increase in the number of aircraft on month-to-month contracts for the Current Quarter.

      Operating expenses from North America increased to $48.1 million for the Current Quarter from $38.8 million for the Comparable Quarter. The increase was primarily due to higher labor costs due to salary increases and higher fuel costs associated with both the increase in flight activity and a higher average cost per gallon.

      Our operating margin in North America increased to 15.4% for the Current Quarter from 9.5% for the Comparable Quarter primarily due to the higher revenues discussed above.

      South and Central America. Operating revenues for South and Central America decreased by 13.2% for the Current Quarter from the Comparable Quarter due to a 43.4% reduction in operating revenues in Mexico and Brazil. The reduction in operating revenues was offset in part by an increase in Trinidad. In Mexico, operating revenues decreased 54.7% due to the conclusion of the contract with Petroleós Mexicanos (“PEMEX”) in February 2005. As a result, the Company’s 49% owned unconsolidated affiliates, Hemisco and Heliservicio, have experienced difficulties in meeting their obligations to make lease rental payments to the Company and RLR. During the three months ended June 30, 2005, the Company and RLR made a determination that because of the uncertainties as to collectibility, lease revenues from HC would be recognized as they were collected. For the three months ended December 31, 2005, $1.0 million of revenues billed but not collected from HC have not been recognized in the Company’s results, and the Company’s 49% share of the equity in earnings of RLR has been reduced by $0.9 million for revenues billed but not collected from HC. Brazil’s operating revenues decreased 18.6%, due to the conclusion of a contract for one aircraft in October 2004. In Trinidad, operating revenues increased 34.5% due to the renewal of a contract in November 2004. 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.

      Since the conclusion of the PEMEX contract in February 2005, we have taken several actions to improve the financial condition and profitability of HC, and as discussed further in Note C in the “Condensed Notes to Consolidated Financial Statements,” on August 19, 2005, a recapitalization of Heliservicio was completed. We are continuing to evaluate certain actions to return HC’s operations to profitability, including reducing the number of aircraft to a lower level based on current utilization, and we are actively seeking other markets in which to redeploy the aircraft in Mexico that are currently operating on an ad hoc basis. Although not anticipated or known at this time, such actions could result in future losses.

      Operating income and the operating margin for South and Central America decreased to $1.4 million and 12.2% for the Current Quarter from $2.9 million and 21.7% for the Comparable Quarter as a result of the lower operating revenues discussed above.

      Europe. Operating revenues from Europe increased for the Current Quarter to $65.5 million, or 0.5% from $65.2 million for the Comparable Quarter while flight hours decreased by 1.8% between the Current Quarter and the Comparable Quarter. The reduction in flight hours was due primarily to a change in our lease arrangements in Norway and the sale of certain technical services contracts in November 2004. 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. Operating revenues for

42

technical services in the U.K. decreased to $3.2 million for the Current Quarter from $5.2 million for the Comparable Quarter due to the downsizing of our technical services operations in the U.K. in fiscal year 2005.

      Excluding the flight hours for Norway and the technical services contracts that were sold, flight activity increased by 7.8%. The majority of this increase in flight hours related to the start of two contracts within the North Sea. One contract commenced in April 2005 and the second contract commenced in July 2005.

      Operating expenses for Europe increased $1.7 million or 3.0% for the Current Quarter compared to the Comparable Quarter. The increase in operating expenses was due to an increase in activity in the North Sea and higher fuel rates in the Current Quarter versus the Comparable Quarter. The operating margin in Europe for the Current Quarter was 10.7% and 13.0% for the Comparable Quarter.

      West Africa. Operating revenues from West Africa increased in the Current Quarter to $29.8 million, or 16.0%, from $25.7 million in the Comparable Quarter, primarily as a result of a 1.5% increase in flight activity from the Comparable Quarter, as well as additional ad hoc flying at higher rates in Nigeria.

      Operating expenses for West Africa increased in the Current Quarter to $27.2 million, or 12.9%, from $24.1 million in the Comparable Quarter. The increase was primarily as a result of higher salary expense due to the increase in activity. The operating margin in West Africa increased to 8.7% in the Current Quarter from 6.5% in the Comparable Quarter.

      Approximately 15.3% of our revenues for the Current Quarter came from Nigeria. 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.

      Southeast Asia. Operating revenues from Southeast Asia increased 5.3% from $15.0 million for the Comparable Quarter to $15.8 million for the Current Quarter due to higher revenues noted in Australia with an offset in China. Australia’s activity decreased 9.1% but operating revenues increased 8.8% over the Comparable Quarter primarily due to higher ad hoc flying. China’s operating revenues for the Current Quarter decreased 14.7% from the Comparable Quarter primarily due to having one less aircraft on contract.

      Operating expenses increased to $14.1 million, or 6.8%, during the Current Quarter from $13.2 million for the Comparable Quarter. As a result of higher expenses during the Current Quarter, the operating margin decreased to 10.8% from 11.9% in the Comparable Quarter.

      Other International. Operating revenues for Other International increased to $6.7 million during the Current Quarter from $4.6 million for the Comparable Quarter. The increase in operating revenues was primarily due to increased flight activity of 1,027 hours. Higher activity was noted throughout our Other International locations, particularly in Russia, Egypt and Turkmenistan.

      Operating expenses increased from $4.6 million for the Comparable Quarter to $5.3 million for the Current Quarter. The increase in operating expenses is primarily due to higher salary and maintenance costs. As a result of the higher operating revenues, our operating margin for Other International increased to 21.0% in the Current Quarter from 0.9% in the Comparable Quarter.

Production Management Services

      Operating revenues from the Production Management Services segment increased to $16.3 million during the Current Quarter, as compared to $14.9 million for the Comparable Quarter primarily due to increased activity with a customer that acquired additional properties. Operating expenses increased to $15.1 million for the Current Quarter from $13.7 million for the Comparable Quarter, primarily due to higher transportation costs associated with the increase in activity. As a result of the higher expenses, our operating margin decreased to 6.9% from 8.2% in the Comparable Quarter.

43

General and Administrative Costs

      Excluding the restructuring changes for our U.K. operations of $2.0 million that are included within the Comparable Quarter, consolidated general and administrative costs increased by $6.3 million for the Current Quarter primarily due to higher professional fees. During the Current Quarter, we incurred $2.2 million and $0.6 million, respectively, in the connection with the Internal Review and DOJ investigation.

Other Income, Net

      Other income, net, for the Current Quarter was $2.3 million compared to a net loss of $2.6 million for the Comparable Quarter and primarily represents foreign currency transaction gains and losses. These gains and losses arise from the consolidation of our United Kingdom operations, whose functional currency is the British pound, yet contracts for a portion of its revenue and expense in U.S. dollars and other currencies for operations outside of the North Sea.

Provision for Income Taxes

      The provision for income taxes decreased in the Current Quarter by $0.2 million as a result of a decrease in the Company’s overall effective tax rate from 33.6% for the Comparable Quarter to 27.1% for the Current Quarter. This decrease is primarily attributable to the impact of the reversal of reserves for tax contingencies due to expiration of the related statutes of limitations.

Nine months ended December 31, 2005 compared to Nine months ended December 31, 2004

Consolidated Results

      Our operating revenues increased to $567.6 million for the Current Period from $503.2 million for the Comparable Period. The increase in operating revenues was noted in both our Helicopter Services segment and our Production Management Services segment. Our operating expenses for the Current Period increased to $512.7 million from $439.5 million for the Comparable Period. The increase was primarily a result of higher costs associated with higher activity levels, higher labor costs, higher fuel rates and higher professional fees due to the Internal Review and DOJ investigation. In addition, we had a loss on disposal of assets of $1.3 million for the Current Period as compared to a gain on disposal of assets of $8.2 million for the Comparable Period. As a result, our operating income and operating margin for the Current Period decreased to $54.9 million and 9.7%, respectively, compared to $63.7 million and 12.7%, respectively, for the Comparable Period.

      Net income for the Current Period of $40.0 million represents a $1.7 million increase from the Comparable Period. This increase primarily resulted from lower income taxes and an increase in other income, net in the Current Period as compared to the Comparable Period. Set forth below is a discussion of the results of operations of our segments and business units.

Helicopter Services

      Operating revenues from Helicopter Services increased to $520.7 million for the Current Period from $465.4 million for the Comparable Period, and operating expenses increased to $449.9 million from $405.3 million. This resulted in an operating margin of 13.6% as compared to 12.9% in the Comparable Period. These improvements are primarily attributable to results for North America where flight hours and operating revenues have increased period over period. Helicopter Services results are further explained below by business unit.

      North America. Operating revenues from North America increased by 27.0% during the Current Period from the Comparable Period, and flight activity increased by 18.2%. This increase in operating revenues is due to the effect in the Current Period of an 8% rate increase for the U.S. Gulf of Mexico that is being phased in beginning in May 2005, fuel surcharges as fuel prices have increased and an increase in the number of aircraft on month-to-month contracts for the Current Period.

44

      Operating expenses from North America increased to $137.4 million for the Current Period from $115.0 million for the Comparable Period. The increase was primarily due to higher labor costs due to salary increases, higher maintenance due to increased flight activity and higher fuel costs associated with both the increase in flight activity and a higher average cost per gallon.

      Our operating margin in North America increased to 19.4% for the Current Period from 14.4% for the Comparable Period primarily due to the higher revenues discussed above.

      South and Central America. Operating revenues for South and Central America decreased to $31.6 million, or 23.5%, from $41.3 million for the Current Period from the Comparable Period due to a 16.4% reduction in flight activity in Mexico and Brazil. In Mexico, flight activity decreased 17.1% and operating revenue decreased 35.6% during the Current Period as compared to the Comparable Period. The reduction in flight activity and revenues is due to the conclusion of the contract with PEMEX in February 2005. As a result, the Company’s 49% owned unconsolidated affiliates, Hemisco and Heliservicio, have experienced difficulties in meeting their obligations to make lease rental payments to the Company and RLR. During the three months ended June 30, 2005, the Company and RLR made a determination that because of the uncertainties as to collectibility, lease revenues from HC would be recognized as they were collected. For the nine months ended December 31, 2005, $5.7 million of revenues billed but not collected from HC have not been recognized in the Company’s results, and the Company’s 49% share of the equity in earnings of RLR has been reduced by $3.7 million for revenues billed but not collected from HC. Brazil’s activity and operating revenues decreased 15.3% and 20.4%, respectively, due to the conclusion of contracts for two aircraft, one in August 2004 and the other in October 2004. 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.

      Since the conclusion of the PEMEX contract in February 2005, we have taken several actions to improve the financial condition and profitability of HC, and as discussed further in Note C in the “Condensed Notes to Consolidated Financial Statements,” on August 19, 2005, a recapitalization of Heliservicio was completed. We are continuing to evaluate certain actions to return HC’s operations to profitability, including reducing the number of aircraft to a lower level based on current utilization, and we are actively seeking other markets in which to redeploy the aircraft in Mexico that are currently operating on an ad hoc basis. Although not anticipated or known at this time, such actions could result in future losses.

      Operating income for South and Central America decreased to $2.1 million for the Current Period from $9.5 million for the Comparable Period as a result of the lower operating revenues discussed above. The operating margin for this business unit was 6.5% for the Current Period as compared to 23.1% for the Comparable Period.

      Europe. Operating revenues from Europe increased for the Current Period to $197.5 million, or 3.4%, from $191.0 million for the Comparable Period. Excluding foreign exchange effects, revenue from these operations increased by 5.6% while flight hours decreased by 8.2% between the Current Period and the Comparable Period. The reduction in flight hours was due primarily to a change in our lease arrangements in Norway and the sale of certain technical services contracts in November 2004. 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. Operating revenues for technical services in the U.K. decreased to $9.0 million for the Current Period from $18.4 million for the Comparable Period due to the downsizing of our technical services operations in the U.K. in fiscal year 2005.

      Excluding the flight hours for Norway and the technical services contracts that were sold, flight activity increased by 12.4%. The majority of this increase in flight hours related to the start of two contracts within the North Sea. One contract commenced in April 2005 and the second contract commenced in July 2005.

45

      Operating expenses for Europe were $175.0 million for the Current Period compared to $169.7 million for the Comparable Period. The increase in operating expenses was due to an increase in flight activity in our North Sea operations and higher fuel rates. This increase was offset in part by the downsizing of our technical services operation in the U.K. The operating margin in Europe increased to 11.4% from 11.2% between the Current Period and the Comparable Period.

      West Africa. Operating revenues from West Africa increased in the Current Period to $85.6 million, or 20.1%, from $71.3 million in the Comparable Period primarily as a result of a 5.0% increase in flight activity from the Comparable Period. Additional ad hoc flying in Nigeria and a contract for two medium aircraft in Mauritania that began in September 2004 were the principle drivers for the increased flight activity and revenues.

      Operating expenses for West Africa increased in the Current Period to $78.6 million, or 21.7%, from $64.6 million in the Comparable Period. The increase was primarily due to higher salary and maintenance expense due to the increase in activity. The operating margin in Africa decreased to 8.2% in the Current Period from 9.4% in the Comparable Period.

      Approximately 14.9% of our revenues for the Current Period came from Nigeria. 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.

      Southeast Asia. Operating revenues from Southeast Asia increased 11.9% from $39.5 million for the Comparable Period to $44.2 million. The higher revenues and flight activity was noted in Australia with an offset in China. Australia’s activity and operating revenues increased 5.7% and 20.6%, respectively, over the Comparable Period primarily due to the utilization of an additional large aircraft and higher ad hoc flying. China’s flight activity and operating revenues for the Current Period decreased 19.4% and 26.4%, respectively, from the Comparable Period primarily due to having one less aircraft on contract.

      Operating expenses increased to $41.4 million, or 16.0%, during the Current Period from $35.7 million for the Comparable Period. As a result of higher expenses during the Current Period, the operating margin decreased to 6.3% from 9.8% in the Comparable Period.

      Other International. Operating revenues for Other International increased to $19.3 million during the Current Period from $11.6 million for the Comparable Period. The increase in operating revenues was primarily due to increased flight activity which more than doubled. Higher activity was noted in Russia and Egypt.

      Operating expenses increased from $12.2 million for the Comparable Period to $16.1 million for the Current Period. The increase in operating expenses is primarily due to higher salary and maintenance costs and increased activity throughout our Other International locations. As a result of the higher operating revenues, our operating margin for Other International increased to 16.6% in the Current Period from (5.5)% in the Comparable Period.

Production Management Services

      Operating revenues from the Production Management Services segment increased by 15.9% during the Current Period, as compared to the Comparable Period primarily due to increased activity with a customer that acquired additional properties. Operating expenses increased to $46.5 million for the Current Period from $40.3 million for the Comparable Period, primarily due to higher labor and transportation costs associated with the increase in activity. As a result of the higher revenue, our operating margin increased to 7.3% from 6.9% in the Comparable Period.

General and Administrative Costs

      Consolidated general and administrative costs increased by $12.9 million for the Current Period. Excluding the $2.0 million of restructuring charges for our U.K. operations that are included within the Comparable Period, general and administrative costs increased $14.9 million. The increase is primarily due to

46

higher compensation costs and higher professional fees. Professional fees in the Current Period included approximately $10.3 million and $1.0 million, respectively, in connection with the Internal Review and DOJ investigation.

Other Income, Net

      Other income, net, for the Current Period was $4.3 million compared to a net loss of $2.0 million for the Comparable Period and primarily reflects foreign currency transaction gains and losses. These gains and losses arise from the consolidation of our U.K. 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.

Provision for Income Taxes

      The provision for income taxes decreased for the Current Period by $6.5 million as a result of a decrease in the Company’s overall effective tax rate from 32.9% for the Comparable Period to 23.7% for the Current Period. This decrease is primarily attributable to the impact of the reversal of reserves for tax contingencies due to expiration of the related statutes of limitations.

Liquidity and Capital Resources

      During the Current Period, our primary source of funds to meet working capital needs, service debt and fund capital expenditures was existing cash and cash equivalents. 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” in the Annual Report.

Operating Activities

      Cash and cash equivalents were $129.1 million as of December 31, 2005, a $17.4 million decrease from March 31, 2005. Working capital as of December 31, 2005 was $284.3 million, a $13.5 million increase from March 31, 2005.

      For the Current Period, the Company had net cash flows provided by operating activities of $31.3 million as compared to $79.9 million for the Comparable Period. This decrease was primarily a result of an increase in accounts receivable and inventories during the Current Period and a decline in dividends received from unconsolidated affiliates.

Investing Activities

      Cash flows used in investing activities were $29.7 million and $22.0 million for the Current and Comparable Periods, respectively. The following table shows capital expenditures (including expenditures financed with short-term notes) for the period (in thousands):

	Nine Months Ended
	December 31,
	2005		2004
Aircraft and related equipment	$	107,872	$	48,687
Other		9,181		3,002
Total capital expenditures	$	117,053	$	51,689

47

      During the Current Period, we received proceeds of $72.6 million primarily from the disposal of ten aircraft and certain equipment. During the Comparable Period, we received proceeds of $39.8 million primarily from the disposal of 16 aircraft and certain equipment.

      As shown in the table below, 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 December 31, 2005, we have $381.1 million remaining under several aircraft purchase agreements. 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 these agreements. Subsequent to December 31, 2005, we also entered into firm purchase commitments for aircraft of $5.0 million.

			Delivered				Remaining to be Delivered
					Nine Months		Three Months
			Prior to		Ended		Ended		Fiscal Year Ended March 31,
			April 1,		December 31,		March 31,
			2005		2005		2006		2007		2006		2009-2013		Total
Number of aircraft(1):
	New:
		Small		7		4		1		—		—		—		12
		Medium		10		8		1		12		11		15		57
		Large		—		2		1		4		—		—		7
				17		14		3		16		11		15		76
	Used:
		Small		—		5		—		—		—		—		5
		Medium		1		—		—		—		—		—		1
				18		19		3		16		11		15		82
Related expenditures			$	104,370	$	89,668	$	35,964	$	166,573	$	66,844	$	111,758	$	575,177

(1)  The Company also has options to purchase 24 additional aircraft. As of December 31, 2005, the options with respect to six of the aircraft are now subject to availability.

Financing Activities

      Cash flows provided by (used in) financing activities were $(12.9) million and $2.6 million for the Current and Comparable Periods, respectively. Total debt as of December 31, 2005 was $262.6 million, an increase of $0.6 million since March 31, 2005.

      Sale and Leaseback Financing — On December 30, 2005, we sold nine aircraft for $68.6 million in aggregate to a subsidiary of General Electric Capital Corporation, and then leased back each of the nine aircraft under separate operating leases with terms of ten years expiring in January 2016. Each “net” lease agreement requires us to be responsible for all operating costs and has an effective interest rate of approximately 5%. Rent payments under each lease are payable monthly and total $6.3 million and $7.6 million annually during the first 60 months and second 60 months, respectively, for all nine leases. Each lease has an end of lease purchase option at ten years, an early purchase option at 60 months (December 2010), and an early termination option at 24 months (December 2007). The early purchase option price for the nine aircraft at 60 months is approximately $52 million in aggregate. There was a deferred gain on the sale of the aircraft in the amount of approximately $10.8 million in aggregate. The deferred gain will be amortized as a reduction in lease expense over the 10 year lease term in proportion to the rent payments. Additional collateral in the amount of at least $11.8 million is to be provided until the conclusion of the SEC investigation related to the Internal Review. A portion of the proceeds ($10.3 million) was retained by the lessor until January 30, 2006 when the additional collateral, which consisted of five aircraft and a $2.5 million letter of credit, was provided.

48

      Revolving Credit Facility. As of December 31, 2005, we had a $30.0 million revolving credit facility with a U.S. bank that expires on August 31, 2006. This facility is subject to a sub-limit 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 this facility. Borrowings under this facility are unsecured and are guaranteed by certain of our U.S. subsidiaries. We had no amounts drawn under this facility as of December 31, 2005, but did have $0.7 million of letters of credit utilized which reduced availability under this facility. As of June 30, 2005, 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 of $30,000, and further extended through January 16, 2006 upon payment of an additional fee of $30,000. In January 2006, the default was cured.

      U.K. Facilities. As of December 31, 2005, Bristow Aviation had a £6.0 million ($10.3 million) facility for letters of credit, of which £1.7 million ($2.9 million) was outstanding, and a £1.0 million ($1.7 million) net overdraft facility, of which no borrowings were outstanding. Both facilities are with a U.K. bank. 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.

      6¹/8% Senior Notes. We have $230.0 million aggregate principal amount outstanding 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. On June 16, 2005, we received notice from the trustee of the indenture underlying the Senior Notes that we were in default of financial reporting covenants in the indenture 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 the terms of the consent solicitation, a consent fee of $1.4 million was paid on August 17, 2005 to consenting holders of Senior Notes. 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 of $0.6 million, and further extended the waivers through January 16, 2006 upon payment of another additional fee of $0.6 million. In January 2006, the default was cured. See Note D in the “Condensed Notes to Consolidated Financial Statements” for further discussion.

      RLR Note. As of June 30, 2005, we were in default of the various financial information reporting covenants in its revolving credit facility and a five-year $31.8 million term loan (the “RLR Note”) under which an unconsolidated affiliate, Rotorwing Leasing Resources, L.L.C., is a borrower and we are a guarantor. The defaults were 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 activities identified in connection with the Internal Review discussed in Note E in the “Condensed Notes to Consolidated Financial Statements” which prevented us from filing the financial report for fiscal year 2005 on time. The bank initially provided waivers through August 14, 2005, and subsequently provided additional waivers through November 15, 2005. The waivers were extended at our election through December 15, 2005 upon payment of $26,000, and were further extended through January 16, 2006 upon payment of an additional fee of $26,000. In January 2006, the default was cured.

      Pension Plan. As of December 31, 2005, we had recorded on our balance sheet a $143.7 million pension liability and a $35.7 million prepaid pension asset related to the Bristow Aviation 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 Aviation in excess of accrued net periodic pension cost. In addition to the recognition of the minimum pension

49

liability, the U.K. rules governing pension plan funding require us to make additional cash contributions to the plan. 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 U.K. may require us to increase the monthly contributions further.

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

			Payments Due by Period
					Less Than		1-3		4-5		After 5
			Total		1 Year		Years		Years		Years
			(In thousands)
Contractual obligations:
	Long-term debt		$	262,637	$	4,548	$	23,709	$	—	$	234,380
	Aircraft operating leases			69,564		6,300		18,900		13,913		30,451
	Other operating leases			16,204		789		7,486		2,926		5,003
	Pension obligation			185,600		9,600		28,800		19,200		128,000
	Aircraft purchase obligations(2)			381,139		174,036		108,173		49,096		49,834
	Other purchase obligations			25,632		21,525		4,107		—		—
		Total contractual cash obligations	$	940,776	$	216,798	$	191,175	$	85,135	$	447,668

			Amount of Commitment Expiration per Period
					Less Than		1-3		4-5		Over 5
			Total		1 Year		Years		Years		Years
			(In thousands)
Other commercial commitments:
	Debt guarantee(1)		$	30,264	$	—	$	—	$	13,079	$	17,185
	Letters of credit and surety bond(3)			11,573		11,306		267		—		—
		Total commercial commitments	$	41,837	$	11,306	$	267	$	13,079	$	17,185

(1)	We have guaranteed the repayment of up to £10 million ($17.2 million) of the debt of FBS Limited (“FBS”) and $13.1 million of the debt of RLR, both unconsolidated affiliates.
(2)	Since December 31, 2005, we have entered into purchase obligations of $5.0 million for additional aircraft which are not reflected in the table above.
(3)	In January 2006, a letter of credit was issued against the Revolving Credit Facility for $2.5 million in conjunction with the additional collateral for the sale and leaseback financing discussed in Notes E in the “Condensed Notes to Consolidated Financial Statements”. The letter of credit expires January 27, 2007.

Critical Accounting Policies and Estimates

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

Recent Accounting Pronouncements

      See Note A in the “Condensed Notes to Consolidated Financial Statements” for a discussion of certain new accounting pronouncements and their potential impact on the Company.

50

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

      As of December 31, 2005, we have $262.6 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 pounds sterling. Approximately 30.4% of our operating revenue for the Current Period was translated for financial reporting purposes from British pounds sterling into U.S. dollars. As of December 31, 2005, we did not have any nominal forward exchange contracts outstanding. Subsequent to December 31, 2005, we have not entered into any nominal forward exchange contracts.

Item 4. Controls and Procedures.

Material Weaknesses Previously Disclosed

      As discussed in Item 9a of our Annual Report, our management, including our Chief Executive Officer (principal executive officer, “CEO”) and Chief Financial Officer (principal financial officer, “CFO”), concluded that, as of March 31, 2005, the Company did not maintain effective internal control over financial reporting because of the 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 E in the “Condensed 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 Consolidated Financial Statements for fiscal years 2004 and 2003 and for the first three quarters of fiscal year 2005 to accrue payroll and other taxes, penalties and interest.

51

      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 Consolidated Financial Statements for fiscal years 2004 and 2003 and for the first three quarters of fiscal year 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.

      This material weakness resulted in an underreporting of direct costs and income tax expense. Accordingly, we restated our Consolidated Financial Statements for fiscal years 2004 and 2003 and for the first three quarters of fiscal year 2005 to report an increase in direct costs and income tax expense.

      As also disclosed in our Annual Report, 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:

•  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;

•  A zero tolerance policy with respect to facilitation payments;

•  Mandatory employee and director participation in company-wide business integrity training;

•  Strict requirements on engaging or conducting business through intermediaries, including joint venture partners and agents;

•  Membership in a non-profit organization that specializes in anti-bribery due diligence reviews and compliance training for international commercial intermediaries; and

•  An enhanced “Whistleblower” hotline.

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

52

      While we have made progress in remediating the material weakness associated with the overall control environment, we are continuing to address the issues underlying the material weaknesses.

Evaluation of Disclosure Controls and Procedures

      As of December 31, 2005, we carried out an evaluation, under the supervision of our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. In light of the material weaknesses associated with the control environment previously disclosed, which had not been completely remediated as of December 31, 2005, our CEO and CFO concluded, after the evaluation described above, that our disclosure controls and procedures were not effective, as of such date.

Changes in Internal Control Over Financial Reporting

      As discussed under “Material Weaknesses Previously Disclosed” above, the CEO and CFO concluded that as of March 31, 2005, the Company did not maintain effective internal control over financial reporting because of several material weaknesses. This section also describes the series of actions we have undertaken to remediate these weaknesses in the control environment. These remediation actions began in the first quarter of fiscal 2006 and continued into the third quarter of fiscal 2006, and will favorably impact our control over financial reporting. Outside of these remediation efforts there has been no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

53

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

      We have certain actions or claims pending that have been discussed and previously reported in Part I. Item 3. “Legal Proceedings” in the Annual Report. There have been no material developments in these previously reported matters.

      See also Note E in the “Condensed Notes to Consolidated Financial Statements” in Part I. Item 1. “Financial Statements” of this Quarterly Report, which is incorporated herein by reference, for discussion of certain of our legal matters.

Item 1A. Risk Factors.

      If you hold our securities or are considering an investment in our securities, you should carefully consider the risks discussed under “Risk Factors” beginning on page 3 of our Annual Report, which is incorporated herein by reference.

Item 3. Defaults Upon Senior Securities.

      As of December 31, 2005, we were in default of the various financial information reporting covenants in our revolving credit facility and the limited recourse term loans as a result of not providing financial information for fiscal 2005 when due, and also for not providing similar information to other creditors. These defaults were cured in January 2006. For a discussion of these defaults, see “Defaults Under Certain Long-Term Debt Agreements” in Note D in the “Condensed Notes to Consolidated Financial Statements” and Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Financing Activities” of this Quarterly Report, which are incorporated herein by reference.

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

      The annual meeting of stockholders was held on February 6, 2006. Matters voted on at the meeting consisted of:

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

Nominee	For		Withheld
Thomas N. Amonett		21,981,558		278,520
Peter N. Buckley		21,823,072		437,006
Stephen J. Cannon		21,916,788		343,290
Jonathan H. Cartwright		20,127,887		2,132,191
William E. Chiles		21,914,412		345,666
Michael A. Flick		21,977,744		282,334
Kenneth M. Jones		21,824,878		435,200
Pierre H. Jungels, CBE		20,796,321		1,463,757
Thomas C. Knudson		21,981,770		278,308
Ken C. Tamblyn		21,916,777		343,301
Robert W. Waldrup		21,981,769		278,309

      2. Proposal to approve and ratify the selection of KPMG LLP as auditors for the Company for the fiscal year ending March 31, 2006. The results were as follows:

For	Against	Abstain
21,912,697	345,475	1,906

54

Item 6. Exhibits.

      The following exhibits are filed as part of this quarterly report:

Exhibit
Number			Description of Exhibit
	10	.1	Employment Agreement effective as of June 1, 2005 between the Company and Michael R. Suldo (filed as Exhibit 10.1 to the Form 8-K filed on February 8, 2006 and incorporated by reference).
	*10	.2	Form of Aircraft Lease agreement between CFS Air, LLC and Air Logistics, L.L.C. (a Schedule I has been filed as part of this exhibit setting forth certain terms omitted from the Form of Aircraft Lease Agreement)+
	*15	.1	Letter from KPMG LLP dated February 3, 2006, regarding unaudited interim financial information.
	*31	.1	Rule 13a-14(a) Certification by the Chief Executive Officer, President and Chief Financial Officer of the Registrant.
	*32	.1	Section 1350 Certification of the Chief Executive Officer, President and Chief Financial Officer of the Registrant.

*  Furnished herewith.

+  Confidential information has been omitted from this exhibit and filed separately with the SEC pursuant to a confidential treatment request under Rule 24(b)-2

55

SIGNATURES

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

BRISTOW GROUP INC.

By:  /s/ William E. Chiles

William E. Chiles

Chief Executive Officer, President and Chief Financial Officer

By:  /s/ Elizabeth D. Brumley

Elizabeth D. Brumley

Vice President and Chief Accounting Officer

February 9, 2006

56

Index to Exhibits

Exhibit
Number			Description of Exhibit
	10	.1	Employment Agreement effective as of June 1, 2005 between the Company and Michael R. Suldo (filed as Exhibit 10.1 to the Form 8-K filed on February 8, 2006 and incorporated by reference).
	*10	.2	Form of Aircraft Lease Agreement between CFS Air, LLC and Air Logistics, L.L.C. (a Schedule I has been filed as part of this exhibit setting forth certain terms omitted from the Form of Aircraft Lease Agreement)+
	*15	.1	Letter from KPMG LLP dated February 3, 2006, regarding unaudited interim financial information.
	*31	.1	Rule 13a-14(a) Certification by the Chief Executive Officer, President and Chief Financial Officer of the Registrant.
	*32	.1	Section 1350 Certification of the Chief Executive Officer, President and Chief Financial Officer of the Registrant.

* Furnished herewith.

+  Confidential information has been omitted from this exhibit and filed separately with the SEC pursuant to a confidential treatment request under Rule 24(b)-2.

EX-10.2

Exhibit 10.2

FORM OF AIRCRAFT LEASE AGREEMENT (SN [See Schedule I])
dated as of December _______, 2005 (“Agreement”)

This Agreement (together with all supplements, annexes, exhibits and schedules hereto hereinafter referred to as the “Lease”) is between CFS Air, LLC, with an office at 44 Old Ridgebury Road, Danbury, CT 06810 (together with its successors and assigns, if any “Lessor”) and Air Logistics, L.L.C., a limited liability company organized and existing under the laws of the State of Louisiana with its mailing address and chief place of business at 4605 Industrial Drive, New Iberia, LA 70560 (hereinafter called “Lessee”).

1. LEASING:

     (a) Subject to the terms and conditions set forth below, Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the aircraft, including the airframe, engines and all appurtenant equipment and property (together hereinafter the “Aircraft”) described in Annex A.

     (b) Lessor shall purchase the Aircraft from Lessee and lease it to Lessee if on or before the Last Delivery Date (specified in Annex B) Lessor receives each of the following documents in form and substance satisfactory to Lessor: (i) a copy of this Lease executed by Lessee, (ii) a Bill of Sale from Lessee to Lessor in the form of Annex C; (iii) copies of insurance policies or, at Lessor’s option, such other evidence of insurance which complies with the requirements of Section 10, (iv) evidence of an N number for the Aircraft; (v) evidence that the Aircraft has been duly certified as to type and airworthiness by the Federal Aviation Administration (“FAA”); (vi) evidence that Lessor’s designated FAA escrow agent (which may be FAA counsel) has received in escrow the executed bill(s) of sale (which shall include, without limitation, a standard form FAA Bill of Sale) and AC Form 8050-1 Aircraft Registration Form (except for the pink copy which shall be available to be placed on the Aircraft upon acceptance thereof), and an executed duplicate of this Lease all in proper form for filing with the FAA; (vii) resolution of Lessee authorizing this Lease in the form of Annex D; (viii) a completed inspection and/or survey with respect to the Aircraft in accordance with the requirements set forth in the Certificate of Acceptance; (ix) an Additional Collateral Agreement executed by Lessee in a form and substance satisfactory to Lessor; and (x) a Corporate Guaranty agreement executed by Offshore Logistics, Inc. (the “Guarantor”) in a form and substance satisfactory to Lessor (the “Guaranty”). Lessor’s obligation to lease the Aircraft hereunder is further conditioned upon (1) the cost to Lessor of the acquisition of the Aircraft not exceeding the Capitalized Lessor’s Cost stated on Annex A; (2) upon delivery of the Aircraft, Lessee’s execution and delivery to Lessor of a Certificate of Acceptance in the form of Annex E; and (3) filing of all necessary documents with, and the acceptance thereof by, the FAA.

     (c) Lessor hereby appoints Lessee its agent for inspection and acceptance of the Aircraft from the Supplier. Once the Certificate of Acceptance has been signed, Lessee may not cancel this Lease other than in accordance with its express terms.

2. TERM, RENT AND PAYMENT:

     (a) The rent (“Rent”) payable for the Aircraft and Lessee’s right to use the Aircraft begins on the date of the Certificate of Acceptance (“Commencement Date”). The term (“Term”) of this Lease shall commence on the Commencement Date and shall continue, unless earlier terminated pursuant to the provisions of this Lease, until and including the Expiration Date stated in Annex B. If any Term is extended or renewed, the word “Term” shall be deemed to refer to all extended or renewal Terms, and all provisions of this Lease shall apply during any such extension or renewal Terms, except as may be otherwise specifically provided in writing.

     (b) Lessee shall pay rent to Lessor at its address stated above, except as otherwise directed by Lessor. Rent payments shall be in the amount, payable at such intervals and due in accordance with the provisions of Annex B. (Each payment of Rent is hereinafter referred to as a “Rent Payment”). If any Interim Rent (as defined in Annex B) or Advance Rent (as defined in Annex B) is payable, such Interim Rent and/or Advance Rent shall be set forth on Annex B and due in accordance with the provisions of Annex B, and when received by Lessor, such Interim Rent shall be applied to the Rent Payment due for the Interim Period as set forth on Annex B and such Advance Rent shall be applied to the first Basic Term for Rent Payment as set forth on Annex B and any balance, if any, shall be applied to the next scheduled Rent Payment. In no event shall any Advance Rent, Interim Rent or any other Rent Payment be refunded to Lessee. If Lessor does not receive from Lessee payment in full of any Rent Payment or other payment due hereunder on or prior to the due date thereof, then Lessee shall pay to Lessor a late fee equal to 3% of the amount due but not received within 10 days after the due date therefor, in addition to, the unpaid amount of such Rent Payment, but not exceeding the lawful maximum, if any. Such late fee will be immediately due and payable and is in addition to any other costs, fees and expenses Lessee may owe as a result of such late payment.

3. RENT ADJUSTMENT:

     (a) If, solely as a result of Congressional enactment of any law (including, without limitation, any modification of, or amendment or addition to, the Internal Revenue Code of 1986, as amended, (“Code”)), the maximum effective corporate income tax rate (exclusive of any minimum tax rate) for calendar-year taxpayers (“Effective Rate”) is higher than thirty-five percent (35%) for any year during the Term of this Lease, then Lessor shall have the right to increase such rent payments by requiring payment of a single additional sum. The additional sum shall be equal to the product of (i) the Effective Rate (expressed as a decimal) for such year less .35 (or, in the event that any adjustment has been made hereunder for any previous year, the Effective Rate (expressed as a decimal) used in calculating the next previous adjustment) times (ii) the adjusted Termination Value (defined below) divided by (iii) the difference between the new Effective Rate (expressed as a decimal) and one (1). The adjusted Termination Value shall be the Termination Value (calculated as of the first rental due in the year for which such adjustment is being made) minus the Tax Benefits that would be allowable under Section 168 of the Code (as of the first day of the year for which such adjustment is being made and all future years of the lease term). The Termination Values are defined on Annex F and the Tax Benefits are defined on Annex B. Lessee shall pay to Lessor the full amount of the additional rent payment on the later of (i) receipt of notice or (ii) the first day of the year for which such adjustment is being made.

     (b) Lessee’s obligations under this Section 3 accruing prior to the expiration or termination of this Lease shall survive any expiration or termination of this Agreement.

4. TAXES AND FEES: If permitted by law, Lessee shall report and pay promptly all taxes, fees and assessments due, imposed, assessed or levied against the Aircraft or any part thereof or any engine thereof (or purchase, disposition, ownership, delivery, leasing, possession, use or operation thereof), this Agreement (or any rents or receipts hereunder), any Schedule, Lessor or Lessee, by any domestic or foreign governmental entity or taxing authority during or related to the term of this Agreement, including, without limitation, all license and registration fees, and all sales, use, personal property, excise, gross receipts, franchise, stamp, value added, custom duties, landing fees, airport charges, navigation service charges, route navigation charges or other taxes, imposts, duties and charges, together with any penalties, fines or interest thereon (collectively “Taxes”). Lessee shall have no liability for Taxes imposed by the United States of America or any state or political subdivision thereof which are on or measured by the net income of Lessor except as provided in Sections 3 and 14(c) (“Income Taxes”). Lessee shall promptly reimburse (on an after tax basis) Lessor for any Taxes charged to or assessed against Lessor other than Income Taxes except as provided in Sections 3 and 14(c). Lessee shall show Lessor as the owner of the Aircraft on all tax reports or returns, and send Lessor a copy of each report or return and evidence of Lessees payment of Taxes upon request. All of Lessor’s rights, privileges and indemnities contained in this Section 4 shall survive the expiration or other termination of this Lease. The rights, privileges and indemnities contained herein are expressly made for the benefit of, and shall be enforceable by Lessor, its successors and assigns.

5. REPORTS: Lessee will provide Lessor with the following in writing within the time periods specified: (a) notice of any tax or other lien which attaches to the Aircraft and the full particulars of the tax or lien, within thirty (30) days after Lessee becomes aware of the tax or lien, (b) Guarantor’s complete financial statements, certified by a recognized firm of certified public accountants, within ninety (90) days of the close of each fiscal year of Guarantor, and any further financial information or reports, upon reasonable request (it being understood that so long as Guarantor continues to report its financial statements in SEC form 10-K, and such 10-K remains publicly available, Guarantor shall have no further obligation to deliver annual financial statements); (c) notice to Lessor of the Aircraft’s location, and the location of all information, logs, documents and records relating to the Aircraft and its use, maintenance and/or condition, immediately upon reasonable request; (d) notice to Lessor of the relocation of the Aircraft’s primary hangar location, as soon as practicable upon intent by Lessee to so relocate and in any event at least simultaneously with any relocation; (e) notice of loss or damage to the Aircraft which would cost more than the lesser of (i) ten percent (10%) of the original Capitalized Lessor’s Cost or (ii) two hundred fifty thousand Dollars ($250,000.00) to repair or replace, within ten (10) days of such loss or damage; (f) notice of any accident involving the Aircraft causing personal injury or property damage, within the earlier of twenty (20) days of such accident or when required to be reported to the FAA; (g) copies of the insurance policies or other evidence of insurance required by the terms hereof, promptly upon request by Lessor; (h) copies of all information, logs, documents and records relating to the Aircraft and its use, maintenance and/or condition, required to be reported to the FAA or reasonably requested by Lessor; (i) such information as may be required to enable Lessor to file any reports required by any governmental authority as a result of Lessor’s ownership of the Aircraft, promptly upon request of Lessor; (j) copies of any manufacturer’s maintenance service program contract for the airframe or engines, promptly upon request by Lessor; (k) evidence of Lessee’s compliance with FAA airworthiness directives and advisory circulars and of compliance with other maintenance provisions of Section 7 hereof and the return provisions of Section 11, promptly upon request of Lessor; and (l) notice of any change

in Lessee’s state of incorporation or organization, within thirty (30) days of such change and (m) such other reports or information as Lessor may reasonably request.

6. DELIVERY, REGISTRATION, USE AND OPERATION:

     (a) The Aircraft shall be delivered directly from the Supplier to Lessee unless the Aircraft is being leased pursuant to a sale leaseback transaction in which case Lessee acknowledges that it is in possession of the Aircraft as of the Commencement Date.

     (b) Lessee, at its own cost and expense, shall cause the Aircraft to be duly registered in the name of Lessor under the Title 49, Subtitle VII of the United States Code, as amended (the “FAA Act”), and shall not register the Aircraft under the laws of any other country.

     (c) The possession, use and operation of the Aircraft shall be at the sole risk and expense of Lessee. Lessee acknowledges that it accepts full “operational control” of the Aircraft (as defined in the Federal Aviation Regulations (“FAR”). Lessee agrees that the Aircraft will be used and operated: (i) in compliance with any and all statutes, laws, ordinances, regulations and standards or directives issued by any governmental agency applicable to the use or operation thereof; (ii) in compliance with any airworthiness certificate, license or registration relating to the Aircraft issued by any agency; (iii) in compliance with all safety and security directives of the FAA and similar government regulations relating to aircraft security; and (iv) in a manner that does not modify or impair any existing warranties on the Aircraft or any part thereof. Lessee will operate the Aircraft predominantly in the conduct of its business and will not use or operate, or permit the Aircraft to be used or operated, (aa) in violation of any United States export control law, (bb) in a manner wherein the predominant use during any twelve month period is for a purpose other than transportation for Lessee, its affiliates or its customers, or in a manner, for any time period, such that Lessor or a third party shall be deemed to have “operational control” of the Aircraft (except as otherwise expressly permitted hereunder), or (cc) for the transport of mail or contraband. The Aircraft will, at all times be operated by duly qualified pilots holding at least a valid pilot certificate for aircraft having the same weight as the Aircraft and instrument rating and any other certificate, rating, type rating or endorsement appropriate to the Aircraft, purpose of flight, condition of flight or as otherwise required by the FAR. Every pilot of the Aircraft shall be employed and/or paid and contracted for by Lessee or its affiliates (except for any FAA pilot who operates the Aircraft as part of an FAA inspection or to certify an airman), shall meet all recency of flight requirements and shall meet the requirements established and specified by the insurance policies required under this Lease and the FAA. The primary hangar location of the Aircraft shall be as stated in Annex B (subject to Section 5(d)). Lessee shall not relocate the primary hangar location to a hangar location outside the United States. Lessor may examine and inspect the Aircraft, wherever located, on land and in flight, after giving Lessee reasonable prior notice.

     (d) AT ALL TIMES DURING THE TERM OF THE LEASE, THE AIRCRAFT WILL BE LOCATED AND USED SOLELY WITHIN THE CONTINENT OF NORTH AMERICA (INCLUDING MEXICO) AND THE CARIBBEAN (INCLUDING TRINIDAD) WITH THE EXCEPTION OF CUBA. NOTWITHSTANDING THE FOREGOING, AT ALL TIMES DURING THE TERM OF THE LEASE, LESSEE AGREES NOT TO OPERATE OR LOCATE THE AIRCRAFT, OR ALLOW THE AIRCRAFT TO BE OPERATED OR LOCATED IN OR OVER (i) ANY COUNTRY OR JURISDICTION THAT DOES NOT MAINTAIN FULL DIPLOMATIC RELATIONS WITH THE UNITED STATES, (ii) ANY AREA OF HOSTILITIES, (iii) ANY GEOGRAPHIC AREA WHICH IS NOT COVERED BY THE INSURANCE POLICIES REQUIRED BY THIS LEASE, OR (iv) ANY JURISDICTION OR NATION WHEREIN THE OPERATION OR LOCATION THEREOF WOULD VIOLATE ANY APPLICABLE LAW, REGULATION, OR RESTRICTION, INCLUDING, BUT NOT LIMITED TO, THE U.S. EXPORT ADMINISTRATION REGULATIONS AND THE U.S. INTERNATIONAL TRAFFIC IN ARMS REGULATIONS. LESSEE ALSO AGREES TO PROHIBIT ANY NATIONAL OF SUCH RESTRICTED NATIONS FROM OPERATING THE AIRCRAFT.

     (e) The engines set forth on Annex A shall be used only on the airframe described in Annex A and shall only be removed for maintenance in accordance with the provisions of this Lease, except as otherwise expressly permitted herein.

     (f) Lessor shall not disturb Lessee’s quiet enjoyment of the Aircraft during the Term of this Lease unless an Event of Default has occurred and is continuing under this Lease. Lessor shall not create or permit to exist any lien, encumbrance or defect of title on the Aircraft other than this Lease or other liens in favor of Lessor.

     (g) At all times prior to the termination or expiration of this Lease in accordance with its terms, Lessee expressly assumes sole and exclusive responsibility for the determination and implementation of all security measures and systems necessary or appropriate for the proper protection of the Aircraft (whether on the ground or in flight) against theft, vandalism, hijacking, destruction, bombing, terrorism or similar acts directly or indirectly affecting the Aircraft, any part thereof, or any persons who (whether or not on board the Aircraft) may sustain any injury or damage as a result of any such acts. Lessee expressly acknowledges that Lessee’s implementation of such security measures and systems is a

material obligation of Lessee under this Lease, and that Lessor shall have absolutely no responsibility therefor. Lessee shall provide Lessor with such evidence as is reasonably requested by Lessor regarding Lessee’s compliance with its obligations under this Section. However, in no event shall Lessor have any duty or obligation to monitor, review or assess any security measures maintained by Lessee or Lessee’s compliance with the provisions of this Section. Any review by Lessor of such evidence as is provided pursuant to Lessor’s request hereunder shall be for Lessor’s informational purposes only, and there shall be no inference or implication therefrom that Lessor has reviewed or approved the adequacy or sufficiency of such recommendations or of the actual security measures or systems employed by Lessee. Without limiting the generality of the foregoing, it is expressly understood and acknowledged that Lessee, being in sole “operational control” of the Aircraft, is uniquely in a position to identify and implement those security measures necessary to comply with this Section and that in doing so, Lessee has not relied upon, and shall not rely upon, any statement, act, or omission of Lessor.

7. MAINTENANCE:

     (a) Lessee agrees that the Aircraft will be maintained in compliance with any and all statutes, laws, ordinances, regulations and standards or directives issued by any governmental agency applicable to the maintenance thereof, in compliance with any airworthiness certificate, license or registration relating to the Aircraft issued by any agency and in a manner that does not modify or impair any existing warranties on the Aircraft or any part thereof.

     (b) Lessee shall maintain, inspect, service, repair, overhaul and test the Aircraft (including each engine) in accordance with (i) all maintenance manuals initially furnished with the Aircraft, including any subsequent amendments or supplements to such manuals issued by the manufacturer from time to time, (ii) all mandatory “Service Bulletins” issued, supplied, or available by or through the manufacturer and/or the manufacturer of any engine or part with respect to the Aircraft, (iii) all airworthiness directives applicable to the Aircraft issued by the FAA or similar regulatory agency having jurisdictional authority, and causing compliance to such directives to be completed through corrective modification in lieu of operating manual restrictions (except for temporary operating manual restrictions for a flight to a repair facility), and (iv) all maintenance requirements set forth in Annex G hereto. Lessee shall maintain all records, logs and other materials required by the manufacturer for enforcement of any warranties or by the FAA. All maintenance procedures required hereby shall be undertaken and completed in accordance with the manufacturer’s recommended procedures, and by properly trained, licensed, and certificated maintenance sources and maintenance personnel, so as to keep the Aircraft and each engine in as good operating condition as when delivered to Lessee hereunder, ordinary wear and tear excepted, and so as to keep the Aircraft in such operating condition as may be necessary to enable the airworthiness certification of such Aircraft to be maintained in good standing at all times under the FAA.

     (c) Lessee agrees, at its own cost and expense, to (i) cause the Aircraft and, subject to Section 8 hereof, each engine thereon to be kept numbered with the identification in serial number therefor as specified in Annex A; (ii) prominently display on the Aircraft that N number, and only that N number, specified in Annex A; and (iii) notify Lessor in writing thirty (30) days prior to making any change in the configuration (other than changes in configuration mandated by the FAA), appearance and coloring of the Aircraft from that in effect at the time the Aircraft is accepted by Lessee hereunder, and in the event of such change or modification of configuration, coloring or appearance, to restore, upon request of Lessor, the Aircraft to the configuration, coloring or appearance in effect on the Commencement Date or, at Lessor’s option to pay to Lessor an amount equal to the reasonable cost of such restoration. Lessee will not place the Aircraft in operation or exercise any control or dominion over the same until such Aircraft marking has been placed thereon. Lessee will replace promptly any such Aircraft marking which may be removed, defaced or destroyed. Notwithstanding anything in this Section 7(c), it is agreed and understood by Lessor and Lessee that (i) the Aircraft will be re-painted a new color scheme in red, white and blue during the Term when the Aircraft is brought in for maintenance and (ii) at such time, the marking on the Aircraft that reads “Air Logistics” will be changed to read “Air Logistics, a Bristow company” (the changes contemplated by clause (i) and (ii), collectively, the “Approved Changes”). Lessor agrees that Lessee shall not be obligated to restore the Aircraft to its configuration, coloring and appearance it had in order to merely remove the Approved Changes.

     (d) Lessee shall be entitled from time to time during the Term of this Lease to acquire and install on the Aircraft at Lessee’s expense, any additional accessory, device or equipment as Lessee may desire (each such accessory, device or equipment, an “Addition”), but only so long as such Addition (i) is ancillary to the Aircraft; (ii) is not required to render the Aircraft complete for its intended use by Lessee; (iii) does not alter or impair the originally intended function or use of the Aircraft; and (iv) can be readily removed without causing material damage. Title to each Addition which is not removed by Lessee prior to the return of the Aircraft to Lessor shall vest in Lessor upon such return. Lessee shall repair all damage to the Aircraft resulting from the installation or removal of any Addition so as to restore the Aircraft to its condition prior to installation, ordinary wear and tear excepted.

     (e) Any alteration or modification (each an “Alteration”) with respect to the Aircraft that may at any time during the Term of this Lease (i) that are necessary or advisable to comply with Lessee’s obligations pursuant to this Lease or (ii) may be required to comply with any applicable law or any governmental rule or regulation shall be made at the expense of Lessee. Any repair made by Lessee of or upon the Aircraft or replacement parts, including any replacement engine, installed thereon in the course of repairing or maintaining the Aircraft, or any Alteration, shall be deemed an accession, and title thereto shall be immediately vested in Lessor without cost or expense to Lessor.

     (f) Except as permitted under this Section 7, Lessee will not modify the Aircraft or affix or remove any accessory to the Aircraft leased hereunder.

     (g) The Aircraft shall be maintained and operated in accordance with the applicable Part 135 standards.

8. LIENS, SUBLEASE AND ASSIGNMENT:

     (a) LESSEE SHALL NOT SELL, TRANSFER, ASSIGN OR ENCUMBER THE AIRCRAFT, ANY ENGINE OR ANY PART THEREOF, LESSOR’S TITLE OR ITS RIGHTS UNDER THIS LEASE, EXCEPT AS OTHERWISE EXPRESSLY PERMITTED HEREIN. LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, SUBLET, CHARTER OR PART WITH POSSESSION OF THE AIRCRAFT OR ANY ENGINE OR PART THEREOF OR ENTER INTO ANY INTERCHANGE AGREEMENT EXCEPT AS OTHERWISE PERMITTED HEREIN. Lessee shall keep the Aircraft, each engine and any part thereof free and clear of all liens and encumbrances other than those which result from (i) the respective rights of Lessor and Lessee as herein provided; (ii) liens arising from the acts of Lessor or its agents; (iii) liens for taxes not yet due or being reasonably disputed in good faith so long as Lessee delivers collateral to Lessor in an amount satisfactory to Lessor and such amount does not result in any imminent risk of loss or forfeiture of the Aircraft or any civil or criminal liability on Lessor; and (iv) materialmen’s, mechanics’, workmen’s, repairmen’s, employees’ or other like liens (whether inchoate or not) arising in the ordinary course of business of Lessee for sums not yet delinquent or being contested in good faith (and for the payment of which adequate assurances in Lessor’s judgment have been provided Lessor).

     Notwithstanding the foregoing, so long as Lessee is not in default hereunder, Lessee may charter the Aircraft so long as:

     (i) The rights of any users of the Aircraft are subject and subordinate to all terms of the Lease and all rights of Lessor in and to the Aircraft and under the Lease including, without limitation, the right of Lessor to inspect and take possession of the Aircraft from time to time according to the terms and provisions of the Lease and applicable law;

     (ii) Lessee acknowledges that Lessor shall have none of Lessee’s obligations or duties with respect to the Aircraft contained in any charter arrangement, including but not limited to maintenance, repairs, service or insurance;

     (iii) Lessee shall maintain accurate and complete records of all charter operations in which the Aircraft is used, including without limitation copies of all receipts and invoices relating to any such operations; and (ii) make any and all such records fully available to both Lessor and any governmental agency (including, without limitation any state or federal taxing authority) promptly upon demand from any such parties;

     (iv) Lessee currently has, and will maintain all required Federal Aviation Administration (“FAA”) licenses to operate a chartering company and to perform all of its obligations thereunder. Lessee shall at all times maintain a Certificate pursuant to Part 135 of the FAA Regulations. The Aircraft shall not be used for any pilot training activities except recurrent training for Lessee’s and Lessee’s affiliates’ pilots who will be flying the Aircraft. Lessee shall at all times maintain “operational control,” (as defined in the FAA Regulations) of the Aircraft;

     (v) Any default by Lessee under the Lease shall constitute a default under the chartering arrangements;

     (vi) Lessee agrees that the Aircraft shall not be used by any governmental entity, any tax exempt entity or any person or entity that would cause any Loss of, or otherwise adversely affect any of, Lessor’s Tax Benefits in the Aircraft; and

     (vii) Lessee shall not allow the use of the Aircraft in violation of the Lease.

     Notwithstanding anything contained in this Lease to the contrary, so long as Lessee is not in default hereunder, Lessee may replace parts and the engines on the Aircraft in accordance with its customary arrangements with Turbomeca, its other maintenance service providers or its customary business practices so long as (i) the replacement part or engine shall be the same make and model and have the same or better fair market value as the part or engine being replaced (assuming such engine or part had been maintained in accordance with the provisions hereof and has not experienced any damage or other casualty event) (a “Replacement Engine” or a “Replacement Part”, as the case may be), (ii) with respect to any Replacement Engine, Lessor shall acquire title to such Replacement Engine which may occur pursuant to a limited assignment of such customary arrangements with Turbomeca and Lessee shall have made all appropriate filings to protect Lessor’s interest in the replacement engines with the FAA, the UCC and if the Cape Town Convention on International Interests in Mobile Equipment (the “Convention”) and the Protocol thereto On Matters Specific To Aircraft Equipment (the “Protocol”) concluded in Cape Town in November 2001 (the Convention and

the Protocol, each, in the official English language text thereof, are collectively referred to herein as the “Cape Town Convention”) comes into force prior to the effectiveness of such replacement an AC Form 8050-135 FAA Entry Point Filing Form International Registry for filing with the FAA and the international registry (the “International Registry”) established pursuant to the Cape Town Convention and any other form proscribed by the International Registry or the FAA, and (iii) with respect to any Replacement Part, Lessor shall have acquired title thereto which will vest automatically upon installation of such Replacement Part in the Aircraft. Upon the acquisition of title by Lessor to any such Replacement Engine or Replacement Part, as the case may be, together with the fulfillment of all Lessee’s obligations set forth in this paragraph, this Lease shall terminate with respect to any engine or part being so replaced by such Replacement Engine or Replacement Part, as the case may be, and title thereto shall be conveyed by Lessor, at the sole cost and expense of Lessee, to Lessee on an AS IS BASIS, without representation or warranty of any kind, other than the absence of liens created by or though Lessor.

     (b) Lessor and any assignee of Lessor may assign this Lease, or any part hereof and/or the Aircraft to any person or entity so long as (A) (x) such person or entity or its affiliates is either not operating in the same line of business as Lessee or (y) such person or entity is a financial institution or an insurance company having a tangible net worth at least equal to $50,000,000 and (B) such person or entity is not in material litigation with Lessee as disclosed in Guarantor’s most recent public filings on Form 10-Q or Form 10-K, as the case may be (and/or any filing on Form 8-K filed after the date of such most recent Form 10-Q or Form 10-K, as the case may be). Lessee hereby waives and agrees not to assert against any such assignee, or assignee’s assigns, any defense, set-off, recoupment claim or counterclaim which Lessee has or may at any time have against Lessor for any reason whatsoever. Lessee agrees that if Lessee receives written notice of an assignment from Lessor, Lessee will pay all rent and all other amounts payable under this Lease to such assignee or as instructed by Lessor. Lessee also agrees to confirm in writing receipt of the notice of assignment as may be reasonably requested by assignee and shall cooperate with Lessor and any such assignee in delivering to such assignee a certificate of insurance reflecting assignee as loss payee and additional insured.

9. LOSS, DAMAGE AND STIPULATED LOSS VALUE: Lessee hereby assumes and shall bear the entire risk of any loss, theft, confiscation, expropriation, requisition, damage to, or destruction of, the Aircraft, any engine or part thereof from any cause whatsoever, including without limitation, intentional criminal acts and acts of terrorism. If for any reason the Aircraft, or any engine thereto becomes worn out, lost, stolen, confiscated, expropriated, requisitioned, hijacked, destroyed, irreparably damaged, or unusable (“Casualty Occurrences”) Lessee shall promptly and fully notify Lessor in writing. If, in the opinion of Lessor, a Casualty Occurrence has occurred which affects only the engine(s) of the Aircraft, then Lessee, at its own cost and expense, shall replace such engine(s) with a Replacement Engine(s) or other engine acceptable to Lessor and shall cause title to such Replacement Engine(s) or engine to be transferred to Lessor for lease to Lessee under this Lease. Upon transfer of title to Lessor of such engine(s), such engine(s) shall be subject to the terms and conditions of this Lease, and Lessee shall execute whatever documents or filings Lessor deems necessary and appropriate in connection with the substitution of such replacement engine(s) for the original engine(s). If, in the opinion of Lessor, a Casualty Occurrence has occurred with respect to the Aircraft in its entirety, on the Rent Payment Date no later than ninety (90) days after a Casualty Occurrence (the “Payment Date”), Lessee shall pay Lessor the sum of (i) the Stipulated Loss Value as set forth in Annex F calculated as of the Rent Payment Date prior to such Casualty Occurrence; and (ii) all Rent and other amounts which are due under this Lease as of the Payment Date. In the event Lessor receives insurance proceeds after receipt in full of the amounts set forth in clause (i) and (ii) in the foregoing sentence, Lessor shall refund to Lessee the all amounts received from Lessee in respect of Stipulated Loss Value up to the amount of the insurance proceeds Lessor actually received. Upon payment of all sums due hereunder, the Term of this Lease as to the Aircraft shall terminate and Lessee shall have no further right to use or operate the Aircraft.

10. INSURANCE: Lessee shall secure and maintain in effect at its own expense throughout the Term of the Lease insurance against such hazards and for such risks as Lessor may require; provided that Lessor shall not require insurance in greater amounts or covering additional risks with respect to the Aircraft than Lessor generally requires of its lessees to whom it leases similar aircraft. All such insurance shall be with companies with a AM Best rating of “A” or better or otherwise satisfactory to Lessor. Without limiting the generality of the foregoing, Lessee shall maintain (i) liability insurance covering public liability and property, cargo and sudden accidental pollution coverage, in amounts not less than fifty million (50,000,000) United States dollars for any single occurrence; (ii) all-risk aircraft hull and engine insurance (including, without limitation, with respect to engine or part thereof while removed from the aircraft and foreign object damage insurance) in an amount which is not less than the then Stipulated Loss Value; and (iii) confiscation, expropriation and war risk, hijacking and allied perils insurance (which insurance shall include coverage against acts of terrorism and similar criminal acts) in an amount which is (x) for physical damage, not less than the then Stipulated Loss Value and (y) for liability coverage, not less than fifty million (50,000,000) United States dollars for any single occurrence. All insurance shall: (1) name Lessor as owner of the Aircraft and as loss payee and additional insured (without responsibility for premiums), (2) provide that any cancellation or substantial change in coverage shall not be effective as to the Lessor for thirty (30) days (ten (10) days in the event of non-payment of premiums, seven (7) days in the case of war risks coverage) after receipt by Lessor of written notice from the insurer of such cancellation or change, (3) insure Lessor’s interest regardless of any breach of warranty or other act or omission of Lessee, (4) include a

severability of interest clause providing that such policy shall operate in the same manner as if there were a separate policy covering each insured, (5) waive any right of set-off against Lessee or Lessor, and any rights of subrogation against Lessor, and (6) be primary and not be subject to any offset by any other insurance carried by Lessor or Lessee. Lessee hereby appoints Lessor as Lessee’s attorney-in-fact to make proof of loss and claim for and to receive payment of and to execute or endorse all documents, checks or drafts in connection with all policies of insurance in respect of the Aircraft. Lessor shall not act as Lessees attorney-in-fact until the occurrence and during a continuation of an Event of Default or any incipient default under Sections 12(a)(i), (vii) or (viii). Lessee shall pay any reasonable expenses of Lessor in adjusting or collecting insurance proceeds. Lessor shall pay proceeds of any insurance claim in an amount not exceeding five hundred thousand ($500,000) _ United States dollars to Lessee and Lessee shall, as promptly as practicable, repair the Aircraft or repair or replace any part thereof. Lessor may, at its option, apply proceeds of insurance with respect to claims in excess of five hundred thousand ($500,000) United States dollars , in whole or in part, to (A) repair the Aircraft, or repair or replace any part thereof, or (B) satisfy any obligation of Lessee to Lessor due under this Lease.

11. RETURN OF AIRCRAFT:

     (a) At expiration or termination of this Lease (the “Return Date”), Lessee shall return the Aircraft to Lessor, at a location within the Gulf Coast region of the United States as Lessor shall direct. Lessee shall also return all logs, loose equipment, manuals and data associated with the Aircraft, including without limitation, inspection, modification and overhaul records required to be maintained with respect to the Aircraft under this Lease or under the applicable rules and regulations of the FAA or the manufacturer’s recommended maintenance program, along with a currently effective FAA airworthiness certificate. Lessee shall, upon request, assign to Lessor its rights under any manufacturer’s maintenance service contract or extended warranty for the Aircraft, any engine or part thereof. The Aircraft shall be returned in the condition in which the Aircraft is required to be maintained pursuant to Section 7, but with all logos or other identifying marks of Lessee removed. Additionally, Lessee shall ensure that the Aircraft complies with all requirements and conditions set forth on Annex G hereto. Lessee shall pay for all costs to comply with this Section 11(a).

     (b) Lessor shall arrange for the inspection of the Aircraft on the Return Date to determine if the Aircraft has been maintained and returned in accordance with the provisions of this Lease. Lessee shall be responsible for the cost of such inspection and shall pay Lessor such amount as additional Rent within ten (10) days of demand. If the results of such inspection indicate that the Aircraft, any engine thereto or part thereof, has not been maintained or returned in accordance with the provisions of this Lease, Lessee shall pay to Lessor within ten (10) days of demand, as liquidated damages, the estimated cost (“Estimated Cost”) of servicing or repairing the Aircraft, engine or part. The Estimated Cost shall be determined by Lessor by obtaining two quotes for such service or repair work, with one quote selected by Lessee reasonably acceptable to Lessor and one quote selected by Lessor reasonably acceptable to Lessee and taking their average. Lessee shall bear the cost, if any, incurred by Lessor in obtaining such quotes.

     (c) If Lessee fails to return the Aircraft on the Return Date, Lessor shall be entitled to damages equal to the higher of (i) the Rent for the Aircraft, pro-rated on a per diem basis, for each day the Aircraft is retained beyond the Return Date; or (ii) the daily fair market rental for the Aircraft at the Return Date. Such damages for retention of the Aircraft after the Return Date shall not be interpreted as an extension or reinstatement of the Term.

     (d) All of Lessor’s rights contained in this Section shall survive the expiration or other termination of this Lease.

12. EVENTS OF DEFAULT AND REMEDIES:

     (a) Lessee shall be in default under this Lease and each of the other Documents (as that term is defined in Section 16 below) upon the occurrence of any of the following “Events of Default”: (i) Lessee breaches its obligation to pay Rent or any other sum when due and fails to cure the breach within ten (10) days of written invoice from Lessor; (ii) Lessee breaches any of its insurance obligations under Section 10; (iii) Lessee breaches any of its other obligations in any material respect and fails to cure that breach within thirty (30) days after written notice from Lessor to Lessee; (iv) any representation or warranty made by Lessee in connection with this Lease or Bill of Sale, or Guarantor in connection with the Guaranty agreement shall be false or misleading in any material respect; (v) Lessee or Guarantor or other obligor for any of the obligations hereunder (collectively “Guarantor”), dissolves, terminates its existence, becomes insolvent or ceases to do business as a going concern; (vi) the Aircraft or any other property of Lessee is illegally used, confiscated, sequestered, seized or levied upon; (vii) a receiver is appointed for all or of any part of the property of Lessee or any Guarantor, or Lessee or any Guarantor makes any assignment for the benefit of creditors; (viii) a petition is filed by or against Lessee or any Guarantor under any bankruptcy, insolvency or similar laws and in the event of an involuntary petition, the petition is not dismissed within sixty (60) days of the filing date; (ix) the occurrence of any “Event of Default” under any Aircraft Lease Agreement dated as of even date herewith between Lessor and Lessee (the “Related Leases”); (x) any Guarantor revokes or attempts to revoke its

guaranty or fails to observe or perform any covenant, condition or agreement to be performed under any guaranty or other related document to which it is a party, (xi) Lessee is declared in default under any contract or obligation requiring the payment of money in a principal amount outstanding greater than $10,000,000.00; (xii) there is any dissolution, or termination of existence of the Lessee or Guarantor, or change in controlling ownership of Lessee (meaning Guarantor fails to own directly or indirectly more than 50% of the voting equity of the Lessee) or any Guarantor Change of Control (as defined in Annex H herein) has occurred or (xiii) there is any merger or consolidation of Guarantor or Lessee in violation of this Lease.

     (b) Upon the occurrence of any Event of Default and so long as the same shall be continuing, Lessor may, at its option, at any time thereafter, exercise one or more of the following remedies, as Lessor in its sole discretion shall lawfully elect: (i) demand that Lessee immediately pay as liquidated damages, for loss of a bargain and not as a penalty, an amount equal to (x) the Stipulated Loss Value of the Aircraft, computed as of the Basic Term Rent Date prior to such demand together with (y) all Rent and other amounts due and payable for all periods up to and including the Basic Term Rent Date following such demand; (ii) demand that Lessee pay all amounts due for failure to maintain or return the Aircraft as provided herein and cause Lessee to assign to Lessor Lessee’s rights under any manufacturer’s service program contract or any extended warranty contract in force for the Aircraft; (iii) proceed by appropriate court action, either at law or in equity, to enforce the performance by Lessee of the applicable covenants of this Lease or to recover damages for breach hereof; (iv) by notice in writing terminate this Lease, whereupon all rights of Lessee to use of the Aircraft or any part thereof shall absolutely cease and terminate, and Lessee shall immediately return the Aircraft in accordance with Section 11, but Lessee shall remain liable as provided in Section 11; (v) request Lessee to return the Aircraft to a designated location in accordance with Section 11; (vi) peacefully enter the premises where the Aircraft may be and take possession of the Aircraft; (vii) sell or otherwise dispose of the Aircraft at private or public sale, in bulk or in parcels, with or without notice, and without having the Aircraft present at the place of sale; (viii) lease or keep idle all or part of the Aircraft; (ix) use Lessee’s premises for storage pending lease or sale or for holding a sale without liability for rent or costs for five (5) months; (x) collect from Lessee all actual out-of-pocket costs, charges and expenses, including reasonable legal fees and disbursements, incurred by Lessor by reason of the occurrence of any Event of Default or the exercise of Lessor’s remedies with respect thereto; (xi) draw on any Acceptable Letter of Credit, foreclose on any Additional Collateral or Security Deposit Pledge (as each such term is defined in the Additional Collateral Agreement, dated as of even date herewith, between Lessor and Lessee); and/or (xii) declare any Event of Default under the terms of this Lease to be a default under the Related Leases or any other agreement for borrowed money between Lessor (and/or General Electric Capital Corporation) on the one hand, and Lessee or Guarantor (or any of their affiliates or parent entities) on the other hand.

     (c) Lessor shall apply any proceeds of sale, lease or other disposition of the Aircraft or any other collateral, letter of credit or deposit, if any, and shall have the right to apply same in the following order of priorities: (i) to pay all of Lessor’s costs, charges and expenses incurred in enforcing its rights under this Lease or in taking, removing, holding, repairing, selling, leasing or otherwise disposing of the Aircraft; then, (ii) to the extent not previously paid by Lessee, to pay Lessor all sums due from Lessee under this Lease or any other Related Lease in any priority as Lessor determines; then (iii) to reimburse to Lessee any sums previously paid by Lessee representing Stipulated Loss Value as liquidated damages pursuant to Section 12(b)(i)(x); and (iv) any surplus shall be retained by Lessor. Lessee shall immediately pay on demand any deficiency in (i) and (ii) of the immediately preceding sentence. Lessor’s obligation hereunder shall survive any termination of this Lease.

     (d) The foregoing remedies are cumulative, and any or all thereof may be exercised instead of or in addition to each other or any remedies at law, in equity, or under statute. Waiver of any Event of Default shall not be a waiver of any other or subsequent Event of Default.

     (e) Upon the indefeasible payment in full of all amounts owed to Lessor after an Event of Default (including, without limitation, all accrued Rent, actual out-of-pocket costs and expenses (including attorney’s fees), indemnity payments and any other sums due and owing hereunder) and, if so elected by Lessor, delivery of the Aircraft meeting the requirements of Section 11 (provided that the proceeds thereof shall be applied as set forth in Section 12(c)), this Lease shall terminate and neither Lessor nor Lessee shall have no further obligations under the Lease, except with respect to obligations which by the terms of this Lease survive the termination hereof.

13. NET LEASE:

     This Lease is a net lease. The Lessor shall have no obligation, liability or responsibility to the Lessee or any other person with respect to operation, maintenance, repairs, alterations, modifications, correction of faults or defects (whether or not required by applicable law) or insurance with respect to the Aircraft, all of which matters shall be, as between Lessor and Lessee, the sole responsibility of Lessee, regardless of upon whom such responsibilities may fall under applicable law or otherwise, and the Rent payable hereunder has been set in reliance upon the Lessee’s sole responsibility for all such matters. The Lessee acknowledges and agrees that its obligations to pay Rent and all other amounts due and owing in accordance with the terms hereof shall be absolute and unconditional and shall not be released, discharged, waived, reduced, set-off or affected

by any circumstance whatsoever. Lessor and Lessee agree that the foregoing shall not operate as a waiver of any claim for breach Lessee may have against Lessor.

14. INDEMNIFICATION:

     (a) Lessee hereby agrees to indemnify (on an after tax basis) Lessor and any other entity which has an ownership interest in, is owned by or is under common ownership with, Lessor, and the respective or collective officers, directors, agents, employees, successors and assigns of each (each, an “Indemnified Party”) from and against any and all losses, damages, penalties, injuries, claims, demands, actions and suits, (collectively “Claims”) whether in law or equity, or in contract, tort, or otherwise, including reasonable attorneys’ fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal arising out of or relating to the Aircraft or this Lease and shall include, but is not limited to, Lessor’s strict liability in tort and Claims that may be imposed on, incurred by or asserted against an Indemnified Party in any way arising out of (i) the selection, manufacture, purchase, acceptance or rejection of the Aircraft, the ownership of the Aircraft during the term of this Lease, and the delivery, lease, possession, maintenance, uses, condition, return or operation of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable by Lessor, any Indemnified Party or Lessee and any claim for patent, trademark or copyright infringement or environmental damage); (ii) any breach of Lessee’s obligations under the Lease or the failure by Lessee to comply with any term, provision or covenant contained in this Lease or any other agreement executed by Lessee in connection with this Lease or the Aircraft or with any applicable law, rule or regulation with respect to the Aircraft, or the nonconformity of the Aircraft or its operation with any applicable law; (iii) vandalism, hijacking, destruction, bombing, terrorism or similar acts directly or indirectly affecting the Aircraft, any part thereof, or any persons who (whether or not on board the Aircraft) may sustain any injury or damage as a result of any such acts, regardless of whether or not Lessee was at the time of such use, complying with the security requirements of the Lease or applicable law; (iv) any actions brought against any Indemnified Party that arise out of Lessee’s actions (or actions of Lessee’s agents); or (v) any Indemnified Party’s reliance on any representation or warranty made or deemed made by Lessee or Guarantor (or any of their officers) under or in connection with this Lease or any other Document or any report or other information delivered by Lessee or Guarantor pursuant hereto which shall have been incorrect in any material respect when made or deemed made or delivered; provided, that Lessee shall not be obligated to pay and shall have no indemnity liability for any Claims (x) imposed on or against an Indemnified Party to the extent that such Claims are caused by the gross negligence or willful misconduct of such Indemnified Party or (y) to the extent imposed with respect to any Claim solely based on events occurring after the earlier of (A) the expiration or other termination of the Term in circumstances not requiring the return of the Aircraft and payment in full of all amounts due from Lessee under this Lease and any other Document and (B) the satisfaction by Lessee of all its obligations under Section 11 of the Lease and payment in full of all amounts due from Lessee under this Lease and any Document . Lessee shall pay on demand to each Indemnified Party any and all amounts necessary to indemnify such Indemnified Party from and against any of the foregoing. Lessee shall, upon request, defend any actions based on, or arising out of, any of the foregoing.

     (b) Lessee and Lessor agree that, as of the Commencement Date, (i) is the intent of the parties that Lessor is the owner of the Aircraft for state law and federal income tax purposes, (ii) Lessor intends to take depreciation deductions with respect to the Aircraft in accordance with Section 168 of the Internal Revenue Code of 1986, as amended, as set forth on Annex B (“Tax Benefits”), (iii) it is the intent of the parties that the Aircraft leased under the Lease shall qualify for all tax deductions in the hands of Lessor, and (iv) at no time during the Term of this Lease will Lessee take or omit to take, nor will it permit any sublessee or assignee to take or omit to take, any action (whether or not such act or omission is otherwise permitted by Lessor unless expressly permitted by this Lease), which will result in the disqualification of the Aircraft for, or recapture of, all or any portion of such Tax Benefits.

     (c) If as a result of a breach of any representation, warranty or covenant of the Lessee contained in this Lease (i) independent tax counsel selected by Lessor and reasonably acceptable to Lessee shall determine that Lessor is not entitled to claim on its Federal income tax return all or any portion of the Tax Benefits with respect to the Aircraft, or (ii) any Tax Benefit claimed on the Federal income tax return of Lessor is disallowed or adjusted by the Internal Revenue Service, or (iii) any Tax Benefit is recalculated or recaptured (any determination, disallowance, adjustment, recalculation or recapture being a “Loss”), then Lessee shall pay to Lessor, as an indemnity and as additional rent, an amount that shall, in the reasonable opinion of Lessor, cause Lessor’s after-tax economic yields and cash flows to equal the Net Economic Return that would have been realized by Lessor if such Loss had not occurred. Such amount shall be payable within thirty (30) days of written demand accompanied by a statement describing in reasonable detail such Loss and the computation of such amount. The economic yields and cash flows shall be computed on the same assumptions, including tax rates as were used by Lessor in originally evaluating the transaction (“Net Economic Return”). If an adjustment has been made under Section 3 then the Effective Rate used in the next preceding adjustment shall be substituted.

     (d) Lessee hereby further represents, warrants and covenants that all amounts includible in the gross income of Lessor with respect to the Aircraft, and all deductions or credits allowable to Lessor with respect to the Aircraft, will be treated as derived from or allocable to sources

within the United States in each and every year taxable year of Lessor throughout the entire term of this Lease. If as a result of any breach of the representation, warranty and covenant contained in the immediately preceding sentence, any item of income, credit or deduction with respect to the Aircraft shall not be treated as derived from or allocable to, sources within the United States for any taxable year of Lessor (any such event hereinafter referred to as a “Foreign Loss”), then Lessee shall pay to Lessor as an indemnity, on the next succeeding rental payment date, or in any event within 30 days after written demand to Lessee by Lessor, such amount as, after deduction of all taxes required to be paid by Lessor in respect of the receipt of such amounts under the laws of any federal, state or local government or taxing authority of the United States, shall equal the sum of: (i) the excess of (x) the foreign tax credits which Lessor would have been entitled to for such year had no such Foreign Loss occurred over (y) the foreign tax credits to which Lessor was limited as a result of such Foreign Loss and (ii) the amount of any interest, penalties or additions to tax payable as a result of such Foreign Loss.

     (e) Lessee shall not be obligated to pay any sums required in Section 14 in the event the cause of the Loss results from one or more of the following events: (1) a failure of Lessor to timely claim accelerated cost recovery (or depreciation) deductions for any Aircraft in Lessor’s tax return, other than a failure resulting from Lessor’s determination, based on opinion of its counsel or otherwise, that no reasonable basis exists for claiming accelerated cost recovery (or depreciation) deductions, (2) a failure of Lessor to have sufficient gross income to benefit from accelerated cost recovery (or depreciation) deductions, or (3) a change in the tax law applicable to accelerated cost receovery (or depreciation) deductions disallows deductions to which Lessor would otherwise be entitled unless such loss is caused by an act or omission of Lessee. Lessor agrees to promptly notify Lessee of any claim made by any federal or state tax authority against Lessor with respect to the disallowance of such accelerated cost recovery (or depreciation) deductions, together with sufficient details (to the extent the information is available to Lessor) of the nature of, or reasons for, the claim by such tax authority and Lessor’s position with respect thereto (including a copy of any correspondence from the applicable taxing authority). All references to Lessor in this Section 14 include Lessor and the consolidated taxpayer group of which Lessor is a member.

     (f) All of Lessor’s rights, privileges and indemnities contained in this Section 14 shall survive the expiration or other termination of this Lease. The rights, privileges and indemnities contained herein are expressly made for the benefit of, and shall be enforceable by Lessor, its successors and assigns.

15. DISCLAIMER:

     LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE AIRCRAFT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES AND THAT LESSOR IS LEASING THE AIRCRAFT IN AN “AS IS” CONDITION. LESSOR DOES NOT MAKE, HAS NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE AIRCRAFT LEASED UNDER THIS LEASE OR ANY COMPONENT THEREOF, OR ANY ENGINE INSTALLED THEREON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO CONDITION, AIRWORTHINESS, DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE. All such risks, as between Lessor and Lessee, are to be borne by Lessee. Without limiting the foregoing, Lessor shall have no responsibility or liability to Lessee or any other person with respect to any of the following: (i) any liability, loss or damage caused or alleged to be caused directly or indirectly by the Aircraft, any inadequacy thereof, any deficiency or defect (latent or otherwise) of the Aircraft, or any other circumstance in connection with the Aircraft; (ii) the use, operation or performance of the Aircraft or any risks relating to it; (iii) any interruption of service, loss of business or anticipated profits or consequential damages; or (iv) the delivery, operation, servicing, maintenance, repair, improvement or replacement of the Aircraft. If, and so long as, no Event of Default has occurred and is continuing under this Lease, Lessee shall be, and hereby is, authorized during the Term of this Lease to assert and enforce, at Lessee’s sole cost and expense, in the name of and for the account of Lessor and/or Lessee, as their interests may appear, whatever claims and rights Lessor may have against any Supplier of the Aircraft.

16. REPRESENTATIONS AND WARRANTIES OF LESSEE:

A. Lessee hereby represents and warrants to Lessor that on the date of this Lease :

     (a) Lessee has adequate limited liability company power and capacity to enter into, and perform under, this Lease and all related documents (together, the “Documents”) and is duly qualified to do business wherever necessary to carry on its present business and operations, including the jurisdiction(s) where the Aircraft has its primary hangar location.

     (b) The Documents have been duly authorized, executed and delivered by Lessee and constitute valid, legal and binding agreements, enforceable in accordance with their terms, except to the extent that the enforcement of remedies may be limited under applicable bankruptcy, insolvency or creditors’ rights generally laws and principles of equity.

     (c) No approval, consent or withholding of objections is required from any governmental authority or entity with respect to the entry into or performance by Lessee of the Documents except such as have already been obtained.

     (d) The entry into and performance by Lessee of the Documents will not: (i) violate any judgment, order, law or regulation applicable to Lessee or any provision of Lessee’s Certificate of Formation or Operating Agreement; or (ii) result in any breach of, constitute a default under or result in the creation of any lien, charge, security interest or other encumbrance upon any Aircraft pursuant to any indenture, mortgage, deed of trust, bank loan or credit agreement (other than this Lease) to which Lessee is a party.

     (e) There are no suits or proceedings pending or threatened in court or before any commission, board or other administrative agency against or affecting Lessee, which will have a material adverse effect on the ability of Lessee to fulfill its obligations under this Lease.

     (f) The financial statements contained in Guarantor’s report on Form 10-K for fiscal year ended March 31, 2005 delivered to Lessor has been prepared in accordance with generally accepted accounting principles consistently applied, and since March 31, 2005, there has been no material adverse change.

B. Lessee hereby:

     (a) Represents and warrants that its exact legal name is as set forth in the first sentence of this Lease and Lessee is and will be at all times validly existing and in good standing under the laws of the State of its incorporation (specified in the first sentence of this Lease) and Lessee is and will continue to be a “Citizen of the United States” within the meaning of Section 40102(15) of the FAA. Lessee shall not consolidate, reorganize or merge with any other corporation or entity (other than a wholly-owned subsidiary of Guarantor) or sell, convey, transfer or lease all or substantially all of its property to any corporation or entity (other than a wholly-owned subsidiary of Guarantor) during the Term of this Lease.

     (b) Represents and warrants that its the chief executive office or chief place of business (as either of such terms is used in Article 9 of the Uniform Commercial Code) of Lessee is located at the address set forth above, and Lessee agrees to give Lessor prior written notice of any relocation of said chief executive office or chief place of business from its present location.

     (c) Agrees that a copy of this Lease, and a current and valid AC Form 8050-l will be kept on the Aircraft at all times during the Term of this Lease.

     (d) Represents and warrants that Lessee has selected the Aircraft, manufacturer and vendor thereof, and all maintenance facilities required hereby.

     (e) Covenants that it shall maintain all logs, books and records (including any computerized maintenance records) pertaining to the Aircraft and engines and their maintenance during the Term in accordance with FAA rules and regulations.

     (f) Represents and warrants that throughout the Term of this Lease, Lessee will not use or operate and will not permit the Aircraft to be used or operated “predominately” outside the United States as that phrase is used in Section 168(g)(1)(A) of the Code.

     (g) Represents that it is and covenants that it will remain in material compliance with all laws and regulations applicable to it including, without limitation, (i) ensuring that no person who owns a controlling interest in or otherwise controls Lessee is or shall be (Y) listed on the Specially Designated Nationals and Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the Treasury, and/or any other similar lists maintained by OFAC pursuant to any authorizing statute, Executive Order or regulation or (Z) a person designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any other similar Executive Orders, and (ii) compliance with all applicable Bank Secrecy Act (“BSA”) laws, regulations and government guidance on BSA compliance and on the prevention and detection of money laundering violations.

     (h) Covenants that it shall duly qualify to do business in any jurisdiction(s) where the Aircraft shall have its primary hangar location.

17. EARLY TERMINATION:

     (a) On or after the First Termination Date (specified in Annex B), Lessee may, so long as no Event of Default or any event or occurrence which with the giving of notice or passage of time or both would result in an Event of Default exists and continues under this Lease, terminate this Lease as of a Rent Payment Date (“Termination Date”). Lessee must give Lessor at least ninety (90) days prior written notice of the termination.

     (b) Lessee shall, and Lessor may, solicit cash bids for the Aircraft on an AS IS, WHERE IS basis without recourse to or warranty from Lessor, express or implied (other than the absence of any liens created by or through Lessor) (“AS IS BASIS”). Prior to the Termination Date, Lessee shall, (i) certify to Lessor any bids received by Lessee; and (ii) pay to Lessor, (a) the Termination Value (calculated as of the Termination Date) for the Aircraft; and (b) all Rent and other sums due and unpaid as of the Termination Date. Neither Lessee nor its agents shall be permitted to bid.

     (c) If all amounts due hereunder have been paid on the Termination Date, Lessor shall (i) sell the Aircraft on an AS IS BASIS for cash to the highest bidder; and (ii) refund the proceeds of such sale (net of any related expenses) to Lessee up to the amount of the Termination Value paid by Lessee. If such sale is not consummated, no termination shall occur and Lessor shall refund the Termination Value (less any expenses incurred by Lessor) to Lessee.

     (d) Notwithstanding the foregoing, Lessor may elect by written notice, at any time prior to the Termination Date, not to sell the Aircraft. In that event, on the Termination Date Lessee shall: (i) return the Aircraft (in accordance with Section 11); and (ii) pay to Lessor all amounts required (x) under Section 17(b)(ii)(a) less the amount of the highest bid certified by Lessee to Lessor and (y) under Section 17(b)(ii)(b).

     (e) If Lessor exercises its rights to increase Lessee’s rental obligations under Section 3(a), Lessee may, upon ninety (90) days notice and so long as no default exists under the this Lease, terminate this Lease as of any Rent Payment Date

18. EARLY PURCHASE OPTION:

     (a) On the Early Purchase Option Date (specified in Annex B), Lessee may, so long as no Event of Default or any event or occurrence which with the giving of notice or passage of time or both would result in an Event of Default exists hereunder and this Lease has not been earlier terminated, purchase the Aircraft on an AS IS BASIS for cash equal to the Early Purchase Option Price (specified on Annex B), plus all applicable sales taxes. Lessee must give Lessor at least thirty (30) days, but not more than ninety (90) days, prior written notice of the purchase. Lessor and Lessee agree that the Option Price is a reasonable prediction of the price that a willing buyer (who is neither a lessee in possession or a used aircraft dealer) would pay for the Aircraft on the Early Purchase Option Date in an arm’s length transaction to a willing seller under no compulsion to sell.

     (b) If Lessee has elected to purchase the Aircraft, then on the Early Purchase Option Date Lessee shall pay to Lessor the Early Purchase Option Price (plus all applicable sales taxes) together with any Rent and other sums due and unpaid on the Early Purchase Option Date. Upon receipt of indefeasible payment in full of such amounts by Lessor, Lessor shall convey all of its right, title and interest in and to the Aircraft to Lessee on an AS IS BASIS without representation or warranties of any kind, other than the absence of liens created by or through Lessor.

19. END OF LEASE PURCHASE OPTION:

     (a) On the Expiration Date (specified in Annex B), Lessee may, so long as no Event of Default or any event or occurrence which with the giving of notice or passage of time or both would result in an Event of Default exists hereunder and this Lease has not been earlier terminated, purchase the Aircraft on an AS IS BASIS for cash equal to its then Fair Market Value (plus all applicable sales taxes together with any Rent and other sums due and unpaid on the Expiration Date). Upon receipt of indefeasible payment in full of such amounts by Lessor, Lessor shall convey all of its right, title and interest in and to the Aircraft to lessee on an AS IS BASIS without representation or warranties of any kind, other than the absence of liens created by or through Lessor. Lessee must give Lessor at least ninety (90) days, but not more than one hundred eighty (180) days, prior written notice of its intent to purchase.

     (b) “Fair Market Value” shall mean the price which a willing buyer (who is neither a lessee in possession nor a used equipment dealer) would pay for the Aircraft in an arm’s-length transaction to a willing seller under no compulsion to sell. In determining the Fair Market Value: (i) the Aircraft shall be assumed to be in the condition in which it is required to be maintained and returned under this Lease, (ii) any installed additions to the Aircraft shall be valued on an installed basis; and (iii) costs of removal of the Aircraft from the current location shall not be a deduction from the value of the Aircraft. If Lessor and Lessee are unable to agree on the Fair Market Value at least sixty (60) days before Lease expiration, Lessor shall appoint an independent appraiser (reasonably acceptable to Lessee) to determine Fair Market Value. The independent appraisers determination shall be final, binding and conclusive. Lessee shall bear all costs associated with any such appraisal.

     (c) Lessee shall be deemed to have waived this purchase option unless it provides Lessor with written notice of its irrevocable election to exercise the option within fifteen (15) days after the Fair Market Value is told to Lessee.

20. MISCELLANEOUS:

     (a) LESSEE AND LESSOR HEREBY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE AND LESSOR. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION . THIS LEASE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     (b) The Aircraft shall remain Lessor’s property unless Lessee purchases the Aircraft from Lessor, and until such time Lessee shall only have the right to use the Aircraft as a lessee. Any cancellation or termination by Lessor of this Lease, pursuant to the provisions of this Lease, shall not release Lessee from any then outstanding obligations to Lessor hereunder (unless otherwise expressly stated herein).

     (c) Time is of the essence of this Lease. Lessee agrees, upon Lessor’s request, to execute, or otherwise authenticate, any document, record or instrument necessary or expedient for filing, recording or perfecting the interest of Lessor or to carry out the intent of this Agreement. In addition, Lessee hereby authorizes Lessor to file a financing statement and amendments thereto describing the Aircraft and any engines, attachments, appurtenances and parts relating thereto and containing any other information required by the applicable Uniform Commercial Code. At the request of Lessor following any expiration or termination of this Lease, Lessee shall execute and deliver to Lessor, for filing with the FAA, such documents as Lessor shall require to evidence and confirm the expiration or termination of this Lease and the release of the Aircraft from the terms and conditions hereof, and if Lessee fails for any reason to execute and deliver such documents to Lessor, Lessee hereby irrevocably authorizes Lessor to sign Lessee’s name to such documents and file such documents with the FAA. Lessee hereby ratifies its prior authorization for Lessor to file financing statements and amendments thereto describing the Aircraft and containing any other information required by any applicable law (including without limitation the Uniform Commercial Code) if filed prior to the date hereof. All notices required to be given hereunder shall be deemed adequately given if delivered in hand or sent by registered or certified mail to the addressee at its address stated herein, or at such other place as such addressee may have designated in writing. This Lease together with the Annexes hereto constitute the entire agreement of the parties with respect to the subject matter hereof, and all Annexes referenced herein are incorporated herein by reference. NO VARIATION OR MODIFICATION OF THIS LEASE OR ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF EACH PARTY TO THIS LEASE.

     (d) If Lessee does not comply with any provision of this Agreement, Lessor shall have the right, but shall not be obligated, to effect such compliance, in whole or in part. All reasonable amounts spent and obligations incurred or assumed by Lessor in effecting such compliance shall constitute additional Rent due to Lessor. Lessee shall pay the additional Rent within ten days after the date Lessor sends an invoice to Lessee requesting payment. Lessor’s effecting such compliance shall not be a waiver of any Event of Default.

     (e) Any Rent or other amount not paid to Lessor when due shall bear interest from the due date until paid, at the lesser of twelve percent (12%) per annum or the maximum rate allowed by law. Any provisions in this Lease which are in conflict with any statute, law or applicable rule shall be deemed omitted, modified or altered to conform thereto. Notwithstanding anything to the contrary contained in this Lease, in no event shall this Lease require the payment or permit the collection of amounts in excess of the maximum permitted by applicable law.

     (f) THIS LEASE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE AIRCRAFT.

     (g) This Lease may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and either of the parties hereto may execute this Lease by signing any such counterpart.

     (h) Each party hereto agrees to keep confidential, the terms and provisions of the Documents and the transactions contemplated hereby and thereby (collectively, the “Transactions”). Notwithstanding the foregoing, the obligations of confidentiality contained herein, as they relate to the Transactions, shall not apply to the federal tax structure or federal tax treatment of the Transactions, and each party hereto (and any employee, representative, or agent of any party hereto) may disclose to any and all persons, without limitation of any kind, the federal tax structure and federal tax treatment of the Transactions. The preceding sentence is intended to cause each Transaction to be treated as not having been offered under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations promulgated under Section 6011 of the Internal Revenue Code of 1986, as amended, and shall be construed in a manner consistent with such purpose. In addition, each party hereto acknowledges that it has no proprietary or exclusive rights to the federal tax structure of the Transactions or any federal tax matter or federal tax idea related to the Transactions .

     IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease to be executed by their duly authorized representatives as of the date first above written.

LESSOR:	LESSEE:
CFS Air, LLC	Air Logistics, L.L.C.
By its Manager	By its Manager
General Electric Capital Corporation	William E. Chiles
By:	By:
Name:	Name:	William E. Chiles
Title:	Title:	Manager

ANNEX A (SN     )
TO AIRCRAFT LEASE AGREEMENT (SN     )
DATED AS OF DECEMBER ______, 2005
Description of Aircraft, Lessor’s Cost, and Aircraft Markings

I. Description Cost: $[See Schedule I]

Sikorsky Model S-76C Helicopter which consists of the following components:

(a) Airframe bearing FAA Registration Mark     and Manufacturer’s Serial No.  ;

(b) Two (2) Turbomeca Arriel 2S1 engines bearing Manufacturer’s Serial Nos. and     respectively (each of which has 750 or more rated takeoff horsepower or the equivalent of such horsepower);

(c) Four (4) 76150-09100-053 main rotor blades bearing Manufacturer’s Serial Nos.   ,   ,     and      ;

(d) All other property essential and appropriate to the operation of the Aircraft, including but not limited to all instruments, avionics, auxiliary power units, equipment and accessories attached to, connected with or related to the Aircraft, and all logs, manuals and other documents issued for, or reflecting use or maintenance of, the Aircraft.

Capitalized Lessor’s Cost     $[See Schedule I]

II. Aircraft Markings (referenced in the MAINTENANCE Section of Lease)

(a) None, unless Aircraft is operated outside the United States and then; Four-by-six inch plaque to be maintained in cockpit and affixed in conspicuous position stating:

CFS Air, LLC Owner and Lessor.
Air Logistics, L.L.C. Lessee under a certain
Lease (SN     ) dated as of December _____, 2005
has operational control of this aircraft.

(b) Similar markings shall be permanently affixed to each engine.

Initials:

Lessee: Lessor

ANNEX B (SN     )
DATED THIS DECEMBER ______, 2005
TO AIRCRAFT LEASE AGREEMENT (SN     )
DATED AS OF DECEMBER _____, 2005

Lessor & Mailing Address:	Lessee & Mailing Address:
CFS Air, LLC	Air Logistics, L.L.C.
44 Old Ridgebury Road	4605 Industrial Drive
Danbury, CT 06810	New Iberia, LA 70560

Capitalized terms not defined herein shall have the meanings assigned to them in the Aircraft Lease Agreement (SN     ) identified above.

A. Aircraft.

     Pursuant to the terms of the Lease, Lessor agrees to acquire and lease to Lessee the Aircraft described on Annex A (SN     ) to the Lease.

B. Financial Terms.

1.	Advance Rent (if any):	(a) Amount: N/A.
		(b) Due Date: N/A
2.	Capitalized Lessor’s Cost:	$[See Schedule I]
3.	Basic Term Commencement Date:	January 2, 2006.
4.	Basic Term:	One Hundred Twenty (120) months.
5.	First Basic Term Rent Date:	January 2, 2006.
6.	Basic Term Rent Dates:	2nd day of every month.
7.	First Termination Date:	(24) months after the Basic Term Commencement Date.
8.	Last Basic Term Rent Date:	December 2, 2015.
9.	Last Delivery Date:	December 30, 2005 .
10.	Primary Hangar Location:	4605 Industrial Drive, New Iberia, LA 70560
11.	Supplier:	Sikorsky Aircraft Corporation
12.	Lessee Federal Tax ID No.:	72-1412904.
13.	Early Purchase Option:	Option Date: January 2, 2011
		Option Price: $[See Schedule I]
14.	Expiration Date:	January 1, 2016.
15.	Daily Lease Rate Factor:	[See Schedule I]%
16.	Basic Term Lease Rate Factor:
		Factor                                 Rental No.
		[See Schedule I]%              1 – 60
		[See Schedule I]%              61-120

C. Tax Benefits.

     Depreciation Deductions:

a.	Depreciation Method: 200% declining balance method, switching to straight line method for the 1st taxable year for which using the straight line method with respect to the adjusted basis as of the beginning of such year will yield a larger allowance.
b.	Recovery Period: Five (5) years
c.	Basis: 100% of Capitalized Lessor’s Cost.

D. Term and Rent (Rent shall mean Interim Rent and Basic Term Rent) .

1.

Interim Rent. For the period from and including the Commencement Date to the Basic Term Commencement Date (“Interim Period”), Lessee shall pay as Rent (“Interim Rent”) for the Aircraft, the product of the Daily Lease Rate Factor times the Capitalized Lessor’s Cost of the Aircraft on this Annex B (SN     ) times the number of days in the Interim Period. Interim Rent shall be due on January 2, 2006.

2.

Basic Term Rent. Commencing on January 2, 2006 and on the same day of each month thereafter (each, a “Rent Payment Date”) during the Basic Term, Lessee shall pay as Rent (“Basic Term Rent”) the product of the Basic Term Lease Rate Factor times the Capitalized Lessor’s Cost of the Aircraft on this Annex B (SN     ).

E. Insurance.

1.	Public Liability: $ 50,000,000.00 total liability per occurrence.
2.	Casualty and Property Damage: An amount which is not less than the then Stipulated Loss Value of the Aircraft.

F. Funding Holdback.

The Capitalized Lessor’s Cost set forth above and the Stipulated Loss and Termination Value Tables shown in Annex F (SN     ) include $[See Schedule I] (the “Holdback Amount”) to be held by Lessor and released to Lessee per the terms of the Additional Collateral Agreement dated December___, 2005. Lessor shall pay the Holdback Amount in consideration for, among other obligations, transfer of title to the Aircraft on the Commencement Date.

G. Amendments to Lease.

Except as expressly modified hereby, all terms and provisions of the Lease shall remain in full force and effect. This Annex B is not binding or effective with respect to the Lease or the Aircraft until executed on behalf of Lessor and Lessee by authorized representatives of Lessor and Lessee, respectively.

     IN WITNESS WHEREOF, Lessee and Lessor have caused this Annex B to be executed by their duly authorized representatives as of the date first above written.

LESSOR:	LESSEE:
CFS Air, LLC	Air Logistics, L.L.C.
By its Manager	By its Manager
General Electric Capital Corporation	William E. Chiles
By:	By:
Name:	Name:	William E. Chiles
Title:	Title:	Manager
	Attest
	By:
	Name:

ANNEX C (SN     )
TO
TO AIRCRAFT LEASE AGREEMENT (SN     )
DATED AS OF DECEMBER ______, 2005

BILL OF SALE

Air Logistics, L.L.C. (the “Seller”), in consideration of the sum of [See Schedule I] plus sales taxes in the amount of Zero Dollars ($0.00) paid by CFS Air, LLC (together with its successors and assigns, if any, the “Buyer”), receipt of which is acknowledged, hereby grants, sells, assigns, transfers and delivers to Buyer the aircraft (the “Aircraft”) described in Annex A (SN ) to the above referenced Aircraft Lease Agreement (SN ) (“Lease”), along with whatever claims and rights Seller may have against the manufacturer and/or supplier of the Aircraft (the “Supplier”), including but not limited to all warranties and representations.

Buyer is purchasing the Aircraft for leasing to Lessee pursuant to the Lease. Seller represents and warrants to Buyer that (1) Buyer will acquire by the terms of this Bill of Sale good title to the Aircraft free from all liens and encumbrances whatsoever; and (2) Seller has the right to sell the Aircraft.

Seller agrees to save and hold harmless Buyer from and against any and all federal, state, municipal and local license fees and taxes of any kind or nature, including, without limiting the generality of the foregoing, any and all excise, personal property, use and sales taxes, VAT, stamp, withholding, and from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions and suits resulting therefrom and imposed upon, incurred by or asserted against Buyer as a consequence of the sale of the Aircraft to Buyer.

IN WITNESS WHEREOF, Seller has executed this Bill of Sale this ___day of December, 2005.

SELLER:
Air Logistics, L.L.C.
By its Manager
William E. Chiles
By:
Name:	William E. Chiles
Title:	Manager

ANNEX D

CERTIFICATE (SN     )

CERTIFICATE OF MANAGERS/MEMBERS OF AIR LOGISTICS, L.L.C.

INTENTIONALLY OMITTED

ANNEX E

CERTIFICATE OF ACCEPTANCE (SN     )

     AIRCRAFT LEASE AGREEMENT (SN     ) dated as of December ___, 2005 (the “Lease”), between CFS Air, LLC together with its successors and assigns, if any, as lessor (the “Lessor”), and Air Logistics, L.L.C. as lessee (the “Lessee”).

     A. The Aircraft: Lessee hereby certifies, as of the date set forth below, that the Aircraft as set forth and described in Annex A (SN     ) to the Lease has been delivered to Lessee, inspected by Lessee, found to be in good order and fully equipped to operate as required under applicable law for its intended purpose, and is fully and finally accepted under the Lease.

     B. Representations by Lessee: Lessee hereby represents and warrants to Lessor that on the date hereof:

(1)	The representations and warranties of Lessee set forth in the Lease and all certificates delivered in connection therewith were true and correct in all respects when made and are true and correct as of the date hereof.
(2)	Lessee has satisfied or complied with all conditions precedent and requirements set forth in the Lease which are required to be or to have been satisfied or complied with on or prior to the date hereof.
(3)	No Default or Event of Default under the Lease has occurred and is continuing on the date hereof.
(4)	Lessee has obtained, and there are in full force and effect, such insurance policies with respect to the Aircraft, as are required to be obtained under the terms of the Lease.
(5)	Lessee has furnished no equipment for the Aircraft other than as sold to Lessor and as stated on Annex A (SN     ) hereto or permitted as an addition thereto pursuant to the Lease.
(6)	The Lessee has inspected the Aircraft and all pertinent records therefor and the Aircraft has no damage history.

     IN WITNESS WHEREOF, Lessee has caused this Certificate of Acceptance to be duly executed by its officers thereunto duly authorized.

Lessee:

Air Logistics, L.L.C.

By its Manager

William E. Chiles

By:

Name: William E. Chiles

Title: Manager

Date:

ANNEX F (SN )

Stipulated Loss and Termination Values

     The Stipulated Loss and Termination Value of the Aircraft shall be the percentage of Capitalized Lessor’s Cost of the aircraft set forth opposite the applicable rent payment.

Capitalized Lessor’s Cost   $ [See Schedule I]

# of			stipulated
base	termination		loss
payments	value		value
1		103.300		103.300
2		103.236		103.236
3		103.004		103.004
4		102.744		102.744
5		102.475		102.475
6		102.198		102.198
7		101.911		101.911
8		101.621		101.621
9		101.322		101.322
10		101.013		101.013
11		100.702		100.702
12		100.381		100.381
13		100.051		100.051
14		99.717		99.717
15		99.380		99.380
16		99.036		99.036
17		98.686		98.686
18		98.329		98.329
19		97.965		97.965
20		97.598		97.598
21		97.224		97.224
22		96.844		96.844
23		96.460		96.460
24		96.069		96.069
25		95.672		95.672
26		95.272		95.272
27		94.867		94.867
28		94.459		94.459
29		94.046		94.046
30		93.629		93.629
31		93.207		93.207
32		92.783		92.783
33		92.353		92.353

Initials: Lessee                         Lessor:                    

# of			stipulated
base	termination		loss
payments	value		value
34		91.919		91.919
35		91.482		91.482
36		91.041		91.041
37		90.595		90.595
38		90.146		90.146
39		89.693		89.693
40		89.236		89.236
41		88.775		88.775
42		88.310		88.310
43		87.841		87.841
44		87.368		87.368
45		86.892		86.892
46		86.411		86.411
47		85.927		85.927
48		85.439		85.439
49		84.947		84.947
50		84.451		84.451
51		83.952		83.952
52		83.450		83.450
53		82.945		82.945
54		82.438		82.438
55		81.928		81.928
56		81.414		81.414
57		80.898		80.898
58		80.379		80.379
59		79.857		79.857
60		79.332		79.332
61		78.803		78.803
62		78.110		78.110
63		77.413		77.413
64		76.715		76.715
65		76.015		76.015
66		75.314		75.314
67		74.611		74.611
68		73.903		73.903
69		73.195		73.195
70		72.485		72.485
71		71.770		71.770
72		71.054		71.054
73		70.337		70.337
74		69.615		69.615
75		68.889		68.889
76		68.161		68.161
77		67.432		67.432
78		66.703		66.703
79		65.971		65.971

Initials: Lessee                         Lessor:                    

# of			stipulated
base	termination		loss
payments	value		value
80		65.236		65.236
81		64.499		64.499
82		63.761		63.761
83		63.019		63.019
84		62.275		62.275
85		61.530		61.530
86		60.781		60.781
87		60.027		60.027
88		59.273		59.273
89		58.516		58.516
90		57.759		57.759
91		57.001		57.001
92		56.238		56.238
93		55.474		55.474
94		54.708		54.708
95		53.938		53.938
96		53.167		53.167
97		52.395		52.395
98		51.619		51.619
99		50.838		50.838
100		50.055		50.055
101		49.272		49.272
102		48.487		48.487
103		47.701		47.701
104		46.911		46.911
105		46.119		46.119
106		45.327		45.327
107		44.530		44.530
108		43.731		43.731
109		42.932		42.932
110		42.128		42.128
111		41.319		41.319
112		40.510		40.510
113		39.699		39.699
114		38.887		38.887
115		38.073		38.073
116		37.256		37.256
117		36.437		36.437
118		35.617		35.617
119		34.792		34.792
120		33.966		33.966

[Note – Termination and Stipulated Loss Values may vary in individual leases by immaterial amounts.]

Initials: Lessee                         Lessor:                    

ANNEX G (SN     )
TO
AIRCRAFT LEASE (SN ) DATED DECEMBER _____, 2005
ADDITIONAL MAINTENANCE AND RETURN CONDITIONS

The above captioned Aircraft Lease Agreement (SN ) between CFS Air, LLC (“Lessor”) and Air Logistics, L.L.C. (“Lessee”) shall be amended by adding the following:

     GENERAL CONDITIONS:

     (1) Upon Lease termination, Lessee shall, at Lessee’s expense, return the Aircraft to a location in the Continental United States as Lessor shall designate. Lessee shall take reasonable care to protect the Aircraft from damage and mechanical and appearance degradation. Such reasonable care shall include, but not be limited to, installation of all covers, tie-downs, and other protective, shipping or storage devices delivered to Lessee with the Aircraft at Lease inception.

     (2) Upon Lease termination, it is agreed that, if requested in writing, Lessee will use reasonable efforts to locate and secure adequate indoor hangar facilities for the storage of the Aircraft. All costs incurred by Lessee in securing hangar facilities for the Aircraft will be reimbursed by Lessor on a “net-net” basis, and only after Lessee has received written authorization from Lessor to secure such storage, including the rate to be paid.

     (3) If so requested in writing by Lessor, Lessee shall, at Lessor’s expense, maintain uninterrupted insurance coverage with Lessor listed as an “Additional Named Insured”, listing the Lessor as “Loss Payee”, including a “Lender’s (or Lessor’s/Owner’s) Interest Endorsement” (commonly referred to as a “Breach of Warranty Endorsement) for a period not to exceed ninety (90) days. This period may be extended if so agreed in writing by both Lessee and Lessor.

     (4) The Aircraft and all its parts, components, avionics, and installed optional equipment shall be clear of all liens and encumbrances other than those in favor of Lessor or their assignee or permitted under Section 8(a) of the Lease.

     (5) Lessee shall make the Aircraft and all related books and records available for inspection by Lessor or its representative once annually throughout the term of the Lease and any time within a ninety (90) day period prior to Lease termination. This shall be followed by a return acceptance inspection by Lessor or its representative concurrent with Lease termination.

     AIRCRAFT CONDITIONS:

     (6) The Aircraft shall be returned to Lessor in good operating condition. It shall be both flyable and “Airworthy” as described in the Federal Aviation Regulations (“FAR”). All windshields, “chin windows,” door glass, and fuselage windows shall be free of cracks. All interior trim pieces shall be free of damage (normal wear and tear excepted). The exterior paint shall be in good condition (normal wear and tear excepted). All markings applied by, or on behalf of, the Lessee shall be removed in such a manner so as to return the Aircraft to its appearance as of the time the Lessee originally took possession of the Aircraft, or which has been subsequently approved by Lessor.

     (7) All parts and components that have a specified service life or maintenance interval approved by the Federal Aviation Administration (“FAA”), whether it be an overhaul requirement, time retirement or inspection, shall have at least 50% of their scheduled life remaining. Remaining life shall be computed from 50% point of whichever the determining service limit to be reached first is, whether it be calendar time, number of cycles or flight hours. (When computing the remaining life of any component, the most recent intervals published by the manufacturer and approved by the FAA for unrestricted use shall be utilized).

     (8) The dollar figures for calculating the debits of times with a mandatory service life limit shall be the then-current manufacturer’s list price.

     (9) The dollar figures for calculating the debits of items with manufacturer recommended overhaul interval shall be determined by the manufacturers then current list price.

     (10) Any parts and components installed at the termination of the Lease shall be of the same configuration and part number (or approved superceding configuration and part number) as were installed at Lease inception.

     (11) The Aircraft must have had an “Annual Inspection” as described in the FARs performed by an FAA Certificated Repair Station within thirty (30) days of the date of termination of the Lease. Lessee shall, at their expense, correct any discrepancies discovered during the Annual Inspection, and any other discrepancies which may become evident prior to Lease termination.

     Lessee shall provide to Lessor evidence that all monies due pursuant to the Power By Hour maintenance service program has been paid in full to supplier of such program.

     Lessee shall also conduct an engine power assurance check, with the results documented and signed by the person performing the check. Lessee shall, at their expense, take whatever actions are necessary to ensure that the engine(s) produce their rated power. Lessee shall also ensure that main and tail rotor vibration levels shall be equal to, or lower than, the minimum acceptable limits quoted by the airframe manufacturer. In the absence of published minimum vibration levels, main and tail rotor vibration levels shall be 0.2 Inches Per Second (“IPS”) or less.

     (12) Commencing with Lease inception, and continuing uninterrupted throughout the duration of the Lease, the Lessee shall maintain separate consolidated lists of Airworthiness Directives (“AD”) and mandatory Service Bulletins (“SB”), for both the airframe and engine(s), in a form similar to the attached sample forms entitled: “Airworthiness Directive Compliance Record” and “Service Bulletin Compliance Record.”

     NOTE: Computer generated AD & SB compliance reports may be acceptable if EACH PAGE contains at least the information required in blocks 1 through 11 on the sample forms plus a certification statement and signature of an appropriately FAA licensed maintenance technician. The certification statement should be similar to the following:

     I hereby certify that the Airworthiness Directives and manufacturer’s Service Bulletins listed on this sheet have been checked for compliance and have proven to be accurate. I further certify that the necessary entries have been made in the permanent Aircraft records in compliance with Part 43 of the Federal Aviation Regulations.

Signed:              Certificate Number:               Date:                AFTT:             Eng #1 TT                        Eng #2 TT:                      

     (13) All maintenance record entries shall be in the form and format specified in FAR Part 43.

     (14) All parts and components installed on the Aircraft shall originate from commercial manufacturers holding appropriate FAA approvals and shall be traceable to the original manufacturer, with proper statement of manufacturer’s authority quoted. Invoices for parts should include the following, or a similarly worded statement:

     The parts identified on this invoice conform to manufacturer’s approved standards, current (insert OEM name) publications, and FAA requirements.

     (15) The Aircraft shall be returned in the same configuration as it was at the time of delivery to the Lessee, unless otherwise agreed to by both parties. Any FAA approved modifications installed by Lessee during the Lease period that cannot be removed without leaving evidence of their installation shall become a permanent part of the Aircraft and the property of the Lessor.

     (16) The following items shall be returned to Lessor at the termination of the Lease:

(a)	All maintenance records
(b)	Current copies of all parts, maintenance, and flight manuals and copies of all SBs and ADs applicable to the Aircraft
(c)	All loose equipment (tie-downs, ground handling wheels, tow bars, covers, and other specialized equipment) that was delivered to Lessee with the Aircraft, or which have become necessary because of additional installed equipment or modifications to the Aircraft.

Initials:  Lessee                     Lessor:                    

ANNEX H (SN  )
TO
AIRCRAFT LEASE AGREEMENT (SN  )
DATED AS OF DECEMBER ____, 2005

Definition of “Guarantor Change of Control”

“Guarantor Change of Control” means the occurrence of any of the following:

          (1) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Guarantor and its subsidiaries (determined on a consolidated basis);

          (2) the adoption of a plan relating to the liquidation or dissolution of the Guarantor;

          (3) any “person” (as such term is used in Section 13(d)(3) of the Exchange Act) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting stock of the Guarantor; or

          (4) the first day on which more than a majority of the members of the board of directors are not Continuing Directors (as hereinafter defined); provided, however, that, with respect to clause (3) above, a transaction in which the Guarantor becomes a subsidiary of another Entity (as hereinafter defined) shall not constitute a Change of Control if

(a)

the stockholders of the Guarantor immediately prior to such transaction “beneficially own” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, at least a majority of the voting power of the outstanding voting stock of the Guarantor immediately following the consummation of such transaction; and

(b)

immediately following the consummation of such transaction, no “person” (as such term is defined above), other than such other Entity (but including the holders of the equity interests of such other Entity), “beneficially owns” (as such term is defined above), directly or indirectly through one or more intermediaries, more than 50% of the voting power of the outstanding voting stock of the Guarantor.

In this Section, “Continuing Directors” means, as of any date of determination, any member of the board of directors who (a) was a member of the board of directors on June 20, 2003 or (b) was nominated for election to the board of directors with the approval of, or whose election to the board of directors as ratified by, at least a majority of the Continuing Directors who were members of the board of directors at the time of such nomination or election. “Entity” means any corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision hereof or any other entity.

Page 30 of 30

Schedule I – Summary of Lease-specific Terms

Lease No.	Cost / Capitalized Lessor’s Cost		Daily Lease Rate Factor			Holdback Amount		Early Purchase Option Price		Term Lease Rate Factor
SN 760527	$	7,110,000.00		0.0255265	%	$	1,142,000.00		* * *		* * *
SN 760529	$	7,1920,000.00		0.0255267	%	$	1,142,000.00		* * *		* * *
SN 760531	$	7,410,000.00		0.02552363	%	$	1,142,000.00		* * *		* * *
SN 760536	$	7,520,000.00		0.015954	%	$	1,142,000.00		* * *		* * *
SN 760557	$	7,840,000.00		0.016068	%	$	1,142,000.00		* * *		* * *
SN 760562	$	7,880,000.00		0.0160813	%	$	1,142,000.00		* * *		* * *
SN 760564	$	7,830,000.00		0.0160643	%	$	1,142,000.00		* * *		* * *
SN 760579	$	7,920,000.00		0.016095	%	$	1,142,000.00		* * *		* * *
SN 760580	$	7,940,000.00		0.0160853	%	$	1,149,000.00		* * *		* * *

[NOTE — INFORMATION MARKED * * * HAS BEEN OMITTED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SEC PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST UNDER RULE 24b-2.]

EX-15.1

EXHIBIT 15.1

Bristow Group Inc.

Houston, Texas

Re: Registration Statements No. 333-115473 and No. 333-121207 on Form S-8.

      With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated February 3, 2006 related to our review of interim financial information. Our report refers to the Company’s restatement of the condensed consolidated statements of income and cash flows for the three month and nine month periods ended December 31, 2004.

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

/s/ KPMG LLP

New Orleans, Louisiana

February 9, 2006

EX-31.1

EXHIBIT 31.1

CERTIFICATION

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

      1. I have reviewed this Quarterly Report on Form 10-Q of Bristow Group Inc. for the period ended December 31, 2005;

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

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

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

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

      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.

/s/ William E. Chiles

William E. Chiles

Chief Executive Officer, President and Chief Financial Officer

February 9, 2006

*  Since Mr. Chiles is both the principal executive officer and principal financial officer of the registrant, there is no other certifying officer.

EX-32.1

EXHIBIT 32.1

CERTIFICATION UNDER SECTION 906

OF THE

SARBANES-OXLEY ACT OF 2002

      In connection with the Quarterly Report on Form 10-Q of Bristow Group Inc. (the “Company”) for the period ended December 31, 2005, as filed with the Securities and Exchange Commission as of the date hereof, (the “Report”) I, William E. Chiles, Chief Executive Officer, President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/ William E. Chiles

Name: William E. Chiles

Title: Chief Executive Officer, President and Chief Financial Officer

February 9, 2006