Bristow Group Inc.

We derive our revenues primarily from providing aviation services, and our profits depend on our cost of capital, the acquisition costs of aircraft, our operating costs, market conditions, customer demand and our ability to win and negotiate profitable contracts. A majority of our revenues are generated through two types of contracts: helicopter services and fixed wing services. We operate in three segments: Offshore Energy Services, Government Services and Other Services.

The primary drivers of our revenues are utilization, rates and capacity. Utilization can refer to either aircraft utilization, which is the number of hours an aircraft has flown during the period, or contract utilization, which is the commencement or end of contracts and the number of aircraft on contract in a given period. Rates mainly refer to the Monthly Standing Charge (“MSC”), which is the fixed monthly fee charged to a customer for the right to use an aircraft, or the Fixed Hourly Rate (“FHR”), which is an incremental per flight hour charge for hours flown. Capacity can refer to new aircraft that have been added to the fleet, older aircraft that have been removed from the fleet, or when an existing aircraft has been moved to a different market, increasing or decreasing the capacity in that market.

Revenues under our Offshore Energy Services segment are primarily generated from offshore energy exploration, development and production activities by our customers, with contracts generally ranging between one to five years or in some cases, longer. Revenues are typically earned through a combination of an MSC plus an incremental FHR. Ad hoc revenues are typically earned through either a combination of a daily fixed fee plus a charge based on hours flown or an hourly rate with a minimum number of hours to be charged daily.

In our Government Services segment, we provide public sector SAR and other aviation services to government agencies. Revenues for these emergency response services are also earned through an MSC plus an incremental FHR fee.

In our Other Services segment, we derive revenues from our fixed wing operations by providing transportation services through regular passenger transport (scheduled airline service with individual commercial ticket sales)

and charter services. For charter services, our contracts typically include variable rates based on the number of passengers, flights or flight hours. These charter service agreements may also include an MSC; however, this is much less common as compared to helicopter contracts.

For helicopters that we lease to third parties under arrangements whereby the customer assumes operational responsibility (dry leases), we often provide technical parts support but generally do not incur other material operating costs. In some instances, we may provide training and other services to support our leasing customers for an additional charge.

In many cases, aircraft components, such as engines and transmissions, are maintained by third-party vendors under contractual agreements also referred to as power-by-the-hour (“PBH”) maintenance agreements. Under these agreements, the Company is charged an agreed amount per hour of flying time related to maintenance, repair and overhaul of the parts and components covered. The costs under these arrangements are expensed in the period that the flight hours were incurred. When the Company places a helicopter in a PBH program after a maintenance period has begun, it may be necessary to pay an initial buy-in charge based on hours flown since the previous maintenance event. The timing of entering or exiting third-party PBH programs and the timing of credits issued by the OEMs (also referred to as vendor credits) may create variation in our operating expenses between comparative periods.

For aircraft that are not covered by PBH programs, maintenance and repair costs, including major aircraft component overhaul costs, are recognized in the period they are incurred.

In our industry, vendor credits are common practice and generally provided for reasons such as (i) credits tied to asset purchases, particularly when a customer has placed orders for several aircraft; (ii) OEM performance and delays; and (iii) incentives when entering or extending long-term PBH and other maintenance contracts or as refunds when exiting such contracts or as aircraft covered by PBH contracts are retired. We have historically applied vendor credits towards aircraft and inventory parts purchases or towards ongoing maintenance.

Our policy of expensing helicopter repair costs as incurred, particularly for those aircraft not on PBH agreements, and recognizing vendor credits may result in operating expenses varying substantially when compared with a prior year or prior quarter if a disproportionate number of repairs, refurbishments, overhauls or credits are undertaken.

The aggregate cost of our operations depends primarily on the size and asset mix of the fleet and the number of flight hours. Our direct operating expenses are grouped into the following categories:

•personnel (includes wages, benefits, payroll taxes and savings plans);

•repairs and maintenance (includes hourly charges for PBH maintenance contracts, amortization of PBH buy-in charges, vendor credits, inventory usage and adjustments and additional maintenance and repair costs, including major aircraft component overhaul costs);

•insurance (includes the cost of hull and liability insurance premiums and loss deductibles);

•fuel;

•leased-in equipment (includes the cost of leasing helicopters and equipment); and

•other (primarily base and facility expenses, amortization of deferred contract costs, subcontractor costs, property, sales and use taxes, training, transportation, freight, flight systems costs and other).