Bristow Group Inc. - Quarter Report: 2021 December (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

________________________________________

FORM 10-Q

________________________________________

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	December 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission File Number

001-35701

Bristow Group Inc.

(Exact name of registrant as specified in its charter)


Delaware		72-1455213
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

3151 Briarpark Drive, Suite 700
Houston,	Texas	77042
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code:

(713) 267-7600


None

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	VTOL	NYSE

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☐

☑

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☑ No ☐

The total number of shares of common stock, par value $0.01 per share, outstanding as of January 28, 2022 was 28,301,943. The Registrant has no other class of common stock outstanding.

BRISTOW GROUP INC.

INDEX


PART I. Financial Information			1

	Item 1.	Financial Statements (Unaudited)	1

		Condensed Consolidated Statements of Operations	1

		Condensed Consolidated Statements of Comprehensive Income (Loss)	2

		Condensed Consolidated Balance Sheets	3

		Condensed Consolidated Statements of Cash Flows	4

		Condensed Consolidated Statements of Changes in Stockholders’ Equity	5

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

	Item 4.	Controls and Procedures	39

PART II. Other Information			39

	Item 1.	Legal Proceedings	39

	Item 1A.	Risk Factors	39

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities	39

	Item 3.	Defaults Upon Senior Securities	39

	Item 4.	Mine Safety Disclosures	39

	Item 5.	Other Information	40

	Item 6.	Exhibits	40

		Signatures	41

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenues:
Operating revenues	$	285,010	$	300,275	$	863,480	$	857,505
Reimbursable revenues	10,609		9,622		34,324		27,225
Total revenues	295,619		309,897		897,804		884,730

Costs and expenses:
Operating expenses	221,875		227,031		655,146		632,868
Reimbursable expenses	10,561		9,525		33,863		27,092
General and administrative expenses	40,966		37,599		117,419		112,604
Merger-related costs	34		4,450		2,416		26,367
Restructuring costs	17		1,547		985		17,885
Depreciation and amortization	17,223		17,931		58,062		52,824
Total costs and expenses	290,676		298,083		867,891		869,640

Loss on impairment	—		(53,249)		(24,835)		(90,078)
Gain (loss) on disposal of assets	727		1,951		1,388		(1,000)
Earnings (losses) from unconsolidated affiliates, net	(860)		896		(1,413)		866
Operating income (loss)	4,810		(38,588)		5,053		(75,122)

Interest income	36		359		144		1,055
Interest expense	(10,230)		(13,203)		(31,280)		(39,152)
Loss on extinguishment of debt	—		(229)		(124)		(844)
Reorganization items, net	(29)		1,984		(578)		1,984
Loss on sale of subsidiaries	—		—		(2,002)		—
Change in fair value of preferred stock derivative liability	—		—		—		15,416
Gain on bargain purchase	—		—		—		81,093
Other, net	3,969		5,864		25,483		20,457
Total other income (expense), net	(6,254)		(5,225)		(8,357)		80,009
Income (loss) before income taxes	(1,444)		(43,813)		(3,304)		4,887
Income tax benefit (expense)	1,608		(13,447)		(8,034)		(18,736)
Net income (loss)	164		(57,260)		(11,338)		(13,849)
Net (income) loss attributable to noncontrolling interests	(220)		139		(141)		343
Net loss attributable to Bristow Group Inc.	$	(56)	$	(57,121)	$	(11,479)	$	(13,506)
Income (loss) per common share(1):
Basic	$	—	$	(1.97)	$	(0.40)	$	5.15
Diluted	$	—	$	(1.97)	$	(0.40)	$	3.58
Weighted average common shares outstanding(1):
Basic	28,214,650		28,944,908		28,633,875		23,178,914
Diluted	28,214,650		28,944,908		28,633,875		32,375,532

(1) See Note 9 to the condensed consolidated financial statements for details on prior year income (loss) per share and weighted average common shares outstanding.

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

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited, in thousands)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020

Net income (loss)	$	164	$	(57,260)	$	(11,338)	$	(13,849)
Other comprehensive income (loss):
Currency translation adjustments	2,351		27,705		(12,059)		46,190
Pension liability adjustment, net	(162)		—		711		—
Unrealized gain (loss) on cash flow hedges, net	(430)		(1,232)		2,121		(3,396)

Total comprehensive income (loss)	1,923		(30,787)		(20,565)		28,945
Net comprehensive (income) loss attributable to noncontrolling interests	(220)		139		(141)		343
Total comprehensive income (loss) attributable to Bristow Group Inc.	$	1,703	$	(30,648)	$	(20,706)	$	29,288

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

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except share amounts)


	December 31,		March 31,
	2021		2021
ASSETS
Current assets:
Cash and cash equivalents	$	273,967	$	228,010
Restricted cash	3,495		3,069
Accounts receivable, net of allowance for doubtful accounts of $2,049 and $2,300 as of December 31 and March 31, 2021, respectively	177,102		215,620
Inventories	88,487		92,180
Assets held for sale	5,432		14,750
Prepaid expenses and other current assets	27,981		32,119
Total current assets	576,464		585,748
Property and equipment	1,086,177		1,090,094
Accumulated depreciation and amortization	(133,595)		(85,535)
Property and equipment, net	952,582		1,004,559
Investment in unconsolidated affiliates	18,596		37,530
Right-of-use assets	213,840		246,667
Other assets	103,307		117,766
Total assets	$	1,864,789	$	1,992,270
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	60,305	$	69,542
Accrued wages, benefits and related taxes	47,535		58,595
Income taxes payable and other accrued taxes	17,594		19,972
Deferred revenue	13,417		13,598
Accrued maintenance and repairs	35,249		26,907
Current portion of operating lease liabilities	72,705		77,909
Accrued interest and other accrued liabilities	28,497		22,632
Short-term borrowings and current maturities of long-term debt	13,125		15,965
Total current liabilities	288,427		305,120
Long-term debt, less current maturities	517,687		527,528
Accrued pension liabilities	28,891		44,150
Other liabilities and deferred credits	4,748		6,681
Deferred taxes	39,883		42,430
Long-term operating lease liabilities	140,841		167,718
Total liabilities	$	1,020,477	$	1,093,627
Commitments and contingencies (Note 10)
Redeemable noncontrolling interests	—		1,572
Stockholders’ equity:
Common stock, $0.01 par value, 110,000,000 authorized; 28,301,943 and 29,694,071 outstanding as of December 31 and March 31, 2021, respectively	303		303
Additional paid-in capital	696,092		687,715
Retained earnings	215,533		227,011
Treasury shares, at cost; 1,967,769 and 466,700 shares as of December 31 and March 31, 2021, respectively	(51,083)		(10,501)
Accumulated other comprehensive loss	(16,142)		(6,915)
Total Bristow Group Inc. stockholders’ equity	844,703		897,613
Noncontrolling interests	(391)		(542)
Total stockholders’ equity	844,312		897,071
Total liabilities and stockholders’ equity	$	1,864,789	$	1,992,270

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

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	Nine Months Ended December 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(11,338)	$	(13,849)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	67,249		68,325
Deferred income taxes	(1,672)		8,312
Loss from extinguishment of debt	124		844

Bad debt expense	309		—
Amortization of deferred financing fees	978		—
Discount amortization on long-term debt	5,858		12,823
Reorganization items, net	578		(1,984)
Loss (gain) on disposal of assets	(1,388)		1,000
Loss on impairment	24,835		90,078
Loss on sale of subsidiaries	2,002		—

Gain on bargain purchase	—		(81,093)
Change in fair value of preferred stock derivative liability	—		(15,416)
Stock-based compensation	8,377		9,377
Equity in earnings from unconsolidated affiliates less than dividends received	1,413		2,700
Increase (decrease) in cash resulting from changes in:
Accounts receivable	37,226		24,942
Inventory, prepaid expenses and other assets	3,515		(3,060)
Accounts payable, accrued expenses and other liabilities	(19,789)		(42,930)
Net cash provided by operating activities	118,277		60,069
Cash flows from investing activities:
Capital expenditures	(23,226)		(11,232)
Proceeds from asset dispositions	14,549		66,501

Cash transferred in sale of subsidiaries, net of cash received	(851)		—
Increase in cash from Era merger	—		120,236
Net cash provided by (used in) investing activities	(9,528)		175,505
Cash flows from financing activities:

Debt issuance costs	(2,988)		—
Repayment of debt and debt redemption premiums	(16,022)		(126,231)
Purchase of treasury shares	(40,582)		(10,007)
Old Bristow share repurchases	—		(4,807)
Net cash used in financing activities	(59,592)		(141,045)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2,774)		4,183
Net increase in cash, cash equivalents and restricted cash	46,383		98,712
Cash, cash equivalents and restricted cash at beginning of period	231,079		199,121
Cash, cash equivalents and restricted cash at end of period	$	277,462	$	297,833
Cash paid during the period for:
Interest	$	17,296	$	25,641
Income taxes	$	10,451	$	13,029

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

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)


			Total Bristow Group Inc. Stockholders’ Equity
	Redeemable Noncontrolling Interests		Common Stock		Common Stock (Shares)		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Stockholders’ Equity
March 31, 2021	$	1,572	$	303	29,694,071		$	687,715	$	227,011	$	(10,501)	$	(6,915)	$	(542)	$	897,071
Share award amortization	—		—		48,851		2,326		—		—		—		—		2,326
Share repurchases	—		—		(936,567)		—		—		(25,199)		—		—		(25,199)
Currency translation adjustments	—		—		—		—		—		—		—		5		5
Net loss	—		—		—		—		(14,197)		—		—		(14)		(14,211)
Sale of noncontrolling interest	(1,572)		—		—		—		—		—		—		—		—
Other comprehensive income	—		—		—		—		—		—		2,166		—		2,166
June 30, 2021	$	—	$	303	28,806,355		$	690,041	$	212,814	$	(35,700)	$	(4,749)	$	(551)	$	862,158
Share award amortization	—		—		60,367		2,661		—		—		—		—		2,661
Share repurchases	—		—		(564,502)		—		—		(15,383)		—		—		(15,383)
Currency translation adjustments	—		—		—		—		—		—		—		5		5
Net income (loss)	—		—		—		—		2,775		—		—		(65)		2,710

Other comprehensive loss	—		—		—		—		—		—		(13,152)		—		(13,152)
September 30, 2021	$	—	$	303	28,302,220		$	692,702	$	215,589	$	(51,083)	$	(17,901)	$	(611)	$	838,999
Share award amortization	—		—		(277)		3,390		—		—		—		—		3,390


Net income (loss)	—		—		—		—		(56)		—		—		220		164

Other comprehensive income	—		—		—		—		—		—		1,759		—		1,759
December 31, 2021	$	—	$	303	$	28,301,943	$	696,092	$	215,533	$	(51,083)	$	(16,142)	$	(391)	$	844,312

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

BRISTOW GROUP INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)


					Total Bristow Group Inc. Stockholders’ Investment
	Redeemable Noncontrolling Interests		Mezzanine Equity Preferred Stock		Common Stock		Common Stock (Shares)(1)		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Noncontrolling Interests		Total Stockholders’ Investment
March 31, 2020	$	—	$	149,785	$	1	11,235,566		$	295,897	$	139,228	$	(8,641)	$	—	$	(269)	$	426,216
Share repurchases	—		(2,151)		—		(142,721)		—		1,263		—		—		—		1,263
Preferred stock share conversion	—		(146,448)		4		34,836,688		270,678		142,614		—		—		—		413,296
Elimination of Old Bristow stock	—		—		(5)		(45,929,533)		5		—		—		—		—		—
Exchange of common stock	—		—		231		23,026,894		(231)		—		—		—		—		—
Era purchase price	—		—		72		7,175,029		108,268		—		—		—		—		108,340
Preferred stock compensation activity and conversion	—		(1,186)		—		—		6,370		—		—		—		—		6,370

Purchase of Company common stock (tax withholding)	—		—		—		(42,199)		—		—		—		—		—		—
Currency translation adjustments	—		—		—		—		—		—		—		—		13		13
Net income (loss)	—		—		—		—		—		71,477		—		—		(73)		71,404
Other comprehensive income	—		—		—		—		—		—		2,278		—		—		2,278
June 30, 2020	—		—		303		30,159,724		680,987		354,582		(6,363)		—		(329)		1,029,180
Share award amortization			—		—		—		2,008		—		—		—		—		2,008
Purchase of treasury shares	—		—		—		(345,757)		—		—		—		(7,579)		—		(7,579)
Era purchase price adjustment	1,501		—		—		(233)		395		—		—		—		—		395
Currency translation adjustments	—		—		—		—		—		—		—		—		(14)		(14)
Net loss	(18)		—		—		—		—		(27,861)		—		—		(113)		(27,974)
Other comprehensive income	—		—		—		—		—		—		14,043		—		—		14,043
September 30, 2020	1,483		—		303		29,813,734		683,390		326,721		7,680		(7,579)		(456)		1,010,059
Share award amortization	—		—		—		—		2,185		—		—		—		—		2,185
Purchase of treasury shares	—		—		—		(103,258)		—		—		—		(2,428)		—		(2,428)
Purchase price adjustment	—		—		—		—		—		—		—		—		—		—
Currency translation adjustments	—		—		—		—		—		—		—		—		(8)		(8)
Net loss	(30)		—		—		—		—		(57,121)		—		—		(109)		(57,230)
Other comprehensive income	—		—		—		—		—		—		26,473		—		—		26,473
December 31, 2020	$	1,453	$	—	$	303	$	29,710,476	$	685,575	$	269,600	$	34,153	$	(10,007)	$	(573)	$	979,051

_______________________

(1) Certain shares were reclassified out of common stock issued and into un-issued.

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

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — BASIS OF PRESENTATION, CONSOLIDATION AND ACCOUNTING POLICIES

Basis of Presentation

The condensed consolidated financial statements include the accounts of Bristow Group Inc. and its consolidated entities. On January 23, 2020, Era Group Inc. (“Era”), Ruby Redux Merger Sub, Inc., a wholly owned subsidiary of Era (“Merger Sub”) and Bristow Group Inc. (“Old Bristow”) entered into an Agreement and Plan of Merger, as amended on April 22, 2020 (the “Merger Agreement”). On June 11, 2020, the merger (the “Merger”) contemplated by the Merger Agreement was consummated and Merger Sub merged with and into Old Bristow, with Old Bristow continuing as the surviving corporation and as a direct wholly owned subsidiary of Era. Following the Merger, Era changed its name to Bristow Group Inc., and Old Bristow changed its name to Bristow Holdings U.S. Inc. Unless the context otherwise indicates, in this Quarterly Report on Form 10-Q, references to:

•the “Company”, “Combined Company,” “Bristow”, “we”, “us” and “our” refer to the entity currently known as Bristow Group Inc. and formerly known as Era Group Inc., together with all of its current subsidiaries;

•“Old Bristow” refers to the entity formerly known as Bristow Group Inc. and now known as Bristow Holdings U.S. Inc., together with its subsidiaries prior to the consummation of the Merger; and

•“Era” refers to Era Group Inc. (currently known as Bristow Group Inc., the parent of the Combined Company) and its subsidiaries prior to consummation of the Merger.

Pursuant to the United States (“U.S.”) generally accepted accounting principles (“GAAP”), the Merger was accounted for as an acquisition by Old Bristow of Era even though Era was the legal acquirer and remained the ultimate parent of the Combined Company. As a result, upon the closing of the Merger, Old Bristow’s historical financial statements replaced Era’s historical financial statements for all periods prior to the completion of the Merger, and the financial condition, results of operations, comprehensive income and cash flows of Era have been included in those financial statements since June 12, 2020. Any reference to comparative period disclosures in the Quarterly Report on Form 10-Q refers to Old Bristow.

The Company’s fiscal year ends March 31, and fiscal years are referenced based on the end of such period. Therefore, the fiscal year ending March 31, 2022 is referred to as “fiscal year 2022”.

The condensed consolidated financial information for the three and nine months ended December 31, 2021 and December 31, 2020 has been prepared by the Company in accordance with GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information reporting on Quarterly Form 10-Q and Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from that which would appear in the annual consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, filed with the SEC on May 27, 2021.

The preparation of these financial statements and accompanying footnotes requires the Company to make estimates and assumptions; however, they include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair presentation of the condensed consolidated balance sheet, the condensed consolidated statements of operations and comprehensive loss, the condensed consolidated statements of cash flows and the condensed consolidated statements of changes in stockholders equity. Operating results for the interim period presented are not necessarily indicative of the results that may be expected for the entire fiscal year.

The condensed consolidated financial information found on this Quarterly Form 10-Q has not been audited by the Company’s independent registered public accounting firm.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Basis of Consolidation

The consolidated financial statements include the accounts of Bristow Group Inc., its wholly and majority-owned subsidiaries and entities that meet the criteria of variable interest entities (“VIEs”) of which the Company is the primary beneficiary. All significant inter-company accounts and transactions are eliminated in consolidation.

Summary of Significant Accounting Policies and Other Accounting Considerations

Reclassifications — Certain amounts reported for prior periods in the consolidated financial statements have been reclassified to conform with the current period’s presentation.

Sale of Subsidiary — During the nine months ended December 31, 2021, the Company sold its 75% interest in Hauser Investments Limited (“Hauser”), which owns 100% of Sicher Helicopters SAS (“Sicher”), a provider of helicopter services to Colombia’s oil and gas market. The sale resulted in a $2.0 million loss included in sale of subsidiaries on the condensed consolidated statement of operations.

Investment in Unconsolidated Affiliates — The Company has a 25% economic interest in Petroleum Air Services (“PAS”), an Egyptian corporation that provides helicopter and fixed wing transportation to the offshore energy industry and other general aviation services in Egypt. During the nine months ended December 31, 2021, upon evaluating its investment in PAS, the Company identified an indicator for impairment due to a decline in PAS’s performance. As a result, the Company performed a fair valuation of its investment in PAS using a market approach that relied on significant Level III inputs due to the nature of unobservable inputs that required significant judgment and assumptions. The market approach utilized two methods, each yielding similar valuation outcomes through the use of a multiple relevant to each method, derived from select guideline public companies, and an expected dividend rate or earnings of PAS. This resulted in a $16.0 million loss on impairment recorded during the nine months ended December 31, 2021. As of December 31, 2021, the investment in PAS was $17.0 million and is included on the condensed consolidated balance sheets in investment in unconsolidated affiliates. PAS is a cost method investment.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standard updates (“ASUs”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s consolidated financial position or results of operations.

Adopted

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, “Reference Rate Reform” (Topic 848). The guidance is intended to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The standard was effective beginning in fiscal year 2022 for the Company. Adoption of this accounting standard had no material impact to the Company’s financial statements.

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes” (Topic 740), new guidance to simplify the accounting for income taxes, which eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. This standard also included guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The standard was effective beginning in fiscal year 2022 for the Company. Adoption of this accounting standard had no material impact to the Company’s financial statements.

Not Yet Adopted

In May 2021, the FASB issued ASU Update No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The purpose of this update is to clarify and reduce diversity in practice for

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

the accounting of certain modifications or exchanges of equity written call options. Under the guidance, an issuer determines the accounting for the modification or exchange based on whether the transaction was executed to issue equity, to issue or modify debt, or for other reasons. The standard will be effective for the Company beginning in fiscal year 2023 and early adoption is permitted. The Company is currently evaluating the effect this accounting guidance will have on its consolidated financial statements.

Note 2 — BUSINESS COMBINATIONS

Era Group Inc.

On June 11, 2020, the combination of Old Bristow with Era was successfully completed in an all-stock transaction with Era having issued shares of common stock (“Combined Company Common Stock”) to Old Bristow’s stockholders in exchange for such holders shares of common stock in Old Bristow. The transaction was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). In the Merger, Old Bristow merged with and into Merger Sub, a subsidiary of Era, with Old Bristow remaining as the surviving company and as a subsidiary of Era, the ultimate parent of the Combined Company. Era was one of the largest helicopter operators in the world and the longest serving helicopter transport operator in the U.S., primarily servicing offshore energy installations. The transaction was structured as an all-stock, reverse-triangular merger, whereby Era issued shares of Combined Company Common Stock to Old Bristow stockholders, allowing it to qualify as a tax free reorganization for U.S. federal income tax purposes. Following the Merger, Era changed its name to Bristow Group Inc., and the Combined Company Common Stock continued to trade on the NYSE under the new ticker symbol VTOL.

While Era was the legal acquirer in the Merger, Old Bristow was determined to be the accounting acquirer, based upon the terms of the Merger and other considerations including that: (i) immediately following completion of the Merger, Old Bristow stockholders owned approximately 77% of the outstanding shares of Combined Company Common Stock and pre-Merger holders of Era common stock (“Era Common Stockholders”) owned approximately 23% of the outstanding shares of Combined Company Common Stock and (ii) the board of directors of the Company consisted of eight directors, including six Old Bristow designees. The Merger was accounted for under the acquisition method of accounting under ASC 805, Business Combinations. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The Company completed its assessment of the fair value of assets acquired and liabilities assumed within the required one-year period from the date of acquisition. Management recorded the acquired aircraft at an aggregate fair value of $179.9 million. Based upon the illiquid state of the secondary market, relevant and reliable market data for the Era fleet was not readily available. As a result, the Company derived the fair value of the Era fleet of aircraft from the estimated enterprise value of Era, using the discounted cash flow method of the income approach. The estimated enterprise value of Era was made using principal assumptions such as forecasted revenues and discount rate. All non-aircraft acquired assets and assumed liabilities were valued at fair value, which based upon their nature were more readily determinable. After allocating fair values to all the non-aircraft acquired assets and assumed liabilities, the remaining value was attributed to the aircraft.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The acquisition date fair value of the consideration transferred consisted of the following (in thousands):


Fair value of Combined Company Common Stock issued (1)	$	106,440
Fair value of accelerated stock awards (2)	2,067
Fair value of exchanged stock awards (3)	228
Total consideration transferred	$	108,735
Fair value of redeemable noncontrolling interest	1,501
Total fair value of Era	$	110,236

___________________________

(1)Represents the fair value of Combined Company Common Stock retained by Era Common Stockholders based on the closing market price of Era shares on June 11, 2020, the acquisition date.

(2)Represents the fair value of restricted share awards of Combined Company Common Stock held by Era employees that were accelerated upon consummation of the Merger.

(3)Represents the fair value of restricted share awards of Combined Company Common Stock held by Era employees relating to the pre-Merger vesting period.

The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition, June 11, 2020 (in thousands):


Assets acquired:
Cash and cash equivalents	$	120,236
Accounts receivable from non-affiliates	35,079
Prepaid expenses and other current assets	17,598
Inventories	8,826
Property and equipment	223,256
Right-of-use assets	8,395
Other assets	14,792
Total assets acquired	$	428,182
Liabilities assumed:
Accounts payable	$	9,686
Accrued wages, benefits and related taxes	8,319
Income taxes payable	1,791
Deferred revenue	236


Current portion of operating lease liabilities	1,711
Other accrued liabilities	18,474
Short-term borrowings and current maturities of long-term debt	17,485
Long-term debt, less current maturities	136,704
Other liabilities and deferred credits	1,404
Deferred taxes	34,198
Long-term operating lease liabilities	6,845
Total liabilities and redeemable noncontrolling interest assumed	$	236,853

Net assets acquired	$	191,329

The Merger initially resulted in a gain on bargain purchase due to the estimated fair value of the identifiable net assets acquired exceeding the purchase consideration transferred by $75.4 million; after further analysis, during the second quarter of fiscal year 2021, the Company recorded measurement period adjustments to its preliminary estimates due to additional information received primarily related to aircraft, redeemable noncontrolling interest and income taxes, resulting in an increase in bargain purchase gain of $5.7 million, for a total of $81.1 million shown as a gain on bargain purchase on the consolidated statements of operations, for the fiscal year ended March 31, 2021. The bargain purchase was a result of a combination of

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

factors including depressed oil and gas prices and market volatility linked to the COVID-19 pandemic between the initial announcement and consummation of the Merger.

Specifically, the Era share price declined from $8.59 to $5.16 between the last trading day prior to the announcement of the Merger and the date the Merger closed. The aggregate Merger consideration was based on an exchange ratio that was fixed and did not fluctuate in the event that the value of Old Bristow’s common stock increased or Era’s common stock decreased, between the date of entry into the Merger agreement and consummation of the Merger.

The following unaudited supplemental pro forma combined financial information presents the Company’s results of operations for the three and nine months ended December 31, 2020, as though the Merger had occurred on November 1, 2019, the effective date of Old Bristow’s emergence from the Chapter 11 Cases. The unaudited pro forma financial information is as follows (in thousands)(1):


	Three Months Ended December 31, 2020		Nine Months Ended December 31, 2020
Total revenues	$	309,897	$	919,860
Net loss	$	(55,059)	$	(59,666)
Net loss attributable to Bristow Group Inc.	$	(54,920)	$	(59,301)

____________________

(1)As a result of the Merger, the Company was required to dispose of its investment in Líder which occurred in August 2020. The Company recorded an impairment in June 2020 of $18.7 million related to the future disposition of the investment. This impairment has been excluded from the pro forma combined Net income and Net income attributable to Bristow Group Inc. for the nine months ended December 31, 2020, due to its nonrecurring nature.

Note 3 — PROPERTY AND EQUIPMENT

Property and Equipment Acquisitions

The Company made capital expenditures as follows (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Number of aircraft delivered(1)	—		—		1		—
Capital expenditures:
Aircraft and equipment	$	5,711	$	3,564	$	21,671	$	10,612
Land and buildings	209		296		1,555		620
Total capital expenditures	$	5,920	$	3,860	$	23,226	$	11,232

___________________________

(1)Previously leased S92 heavy helicopter acquired during the nine months ended December 31, 2021 pursuant to a contractual obligation in the lease.

Property and Equipment Dispositions

The following table presents details on the aircraft sold or disposed of (in thousands, except for number of aircraft):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Number of aircraft sold or disposed of	1		14		10		46
Proceeds from sale or disposal of assets	$	740	$	14,361	$	14,549	$	66,501

Gain (loss) on disposal of assets	$	727	$	1,951	$	1,388	$	(1,000)

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Property, Equipment and Inventory Considerations

During the nine months ended December 31, 2021, the Company recognized a $8.8 million loss on impairment in connection with H225 helicopter parts inventory and aircraft held for sale to reflect the aircraft at expected sales values. During the nine months ended December 31, 2020, the Company recognized a $12.4 million loss on impairment related to certain equipment and inventory items in connection to the sale of aircraft.

Note 4 — REVENUES

Revenue Recognition

The Company derives its revenues primarily from oil and gas flight services, government services and fixed wing services. A majority of the Company’s revenue is generated through two types of contracts: helicopter services, which includes oil and gas, government and other services, and fixed wing services. Revenue is recognized when control of the identified distinct goods or services has been transferred to the customer, the transaction price is determined and allocated to the satisfied performance obligations and the Company has determined that collection has occurred or is probable of occurring.

The Company determines revenue recognition by applying the following steps:

1.Identify the contract with a customer;

2.Identify the performance obligations in the contract;

3.Determine the transaction price;

4.Allocate the transaction price to the performance obligations; and

5.Recognize revenue as the performance obligations are satisfied.

Operating revenue from the Company’s oil and gas line of service is derived mainly from fixed-term contracts with its customers. Fixed-term contracts typically have original terms of one to five years, subject to provisions permitting early termination by customers. Customers are typically invoiced on a monthly basis with payment terms of 30-60 days.

The following table shows the total revenues (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenues from contracts with customers	$	287,465	$	303,836	$	876,031	$	857,489
Total other revenues	8,154		6,061		21,773		27,241
Total revenues	$	295,619	$	309,897	$	897,804	$	884,730

Beginning in fiscal year 2022, the revenues by line of service tables have been modified to more accurately reflect how management views the Company’s lines of service. These changes include the addition of a Government services line of service which includes revenues from U.K. SAR, the U.S. Bureau of Safety and Environmental Enforcement (“BSEE”), and other government contracts. In addition, our Other activities and services (“other” services) will now reflect revenues derived from leasing aircraft to non-governmental third party operators, oil and gas contracts that do not materially fit into one of the three major oil and gas operating regions and other services as they arise. As such, operating revenues from Asia Pacific oil and gas services are now shown under other services following the exit of that line of service in the Asia Pacific region. Prior period amounts will not match the previously reported amounts by individual lines of service. Management believes this change provides more relevant information needed to understand and analyze the Company’s current lines of service.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Revenues by Service Line. The following table sets forth the operating revenues earned by service line for the applicable periods (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Oil and gas services	$	194,934	$	206,027	$	578,399	$	602,412
Government services(1)	66,435		64,866		206,619		185,099
Fixed wing services	20,509		20,054		68,566		51,836
Other services(2)	3,132		9,328		9,896		18,158
Total operating revenues	$	285,010	$	300,275	$	863,480	$	857,505

____________________

(1)Includes revenues of approximately $8.4 million and $19.0 million related to government services that were previously included in the oil and gas and other service lines for the three and nine months ended December 31, 2020, respectively.

(2)Includes Asia Pacific and certain Europe revenues of approximately $3.3 million and $9.9 million that were previously included in the oil and gas service line for the three and nine months ended December 31, 2020, respectively.

Contract Assets, Liabilities and Receivables

The Company generally satisfies performance of contract obligations by providing helicopter and fixed wing services to its customers in exchange for consideration. The timing of performance may differ from the timing of the customer’s payment, which results in the recognition of a contract asset or a contract liability. A contract asset exists when the Company has a contract with a customer for which revenue has been recognized (i.e., services have been performed), but customer payment is contingent on a future event (i.e., satisfaction of additional performance obligations). These contract assets are transferred to receivables when the right to consideration becomes unconditional. Contract liabilities relate to deferred revenues in which advance consideration is received from customers for contracts where revenues are recognized based on future performance of services.

As of December 31 and March 31, 2021, receivables related to services performed under contracts with customers were $143.2 million and $167.3 million, respectively. During the nine months ended December 31, 2021, the Company recognized $12.2 million of revenues from outstanding contract liabilities. Contract liabilities related to services performed under contracts with customers were $12.6 million and $13.3 million as of December 31, 2021 and March 31, 2021, respectively. Contract liabilities are primarily generated by fixed wing services where customers pay for tickets in advance of receiving the Company’s services and advanced payments from helicopter services customers. There were no contract assets as of December 31 and March 31, 2021.

Remaining Performance Obligations

Remaining performance obligations represent firm contracts for which work has not been performed and future revenue recognition is expected. The table below discloses (1) the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period and (2) the expected timing to recognize this revenue (in thousands):


	Remaining Performance Obligations
	Three Months Ending March 31, 2022		Fiscal Year Ending March 31,								Total
			2023		2024		2025		2026 and thereafter
Outstanding Service Revenue:
Helicopter contracts	$	121,508	$	263,994	$	211,573	$	165,436	$	127,335	$	889,846
Fixed wing contracts	794		47		—		—		—		841
Total remaining performance obligation revenue	$	122,302	$	264,041	$	211,573	$	165,436	$	127,335	$	890,687

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Although substantially all of the Company’s revenue is derived under contract, due to the nature of the business, the Company does not have significant remaining performance obligations as its contracts typically include unilateral termination clauses that allow its customers to terminate existing contracts with a notice period of 30 to 365 days. The table above includes performance obligations up to the point where the parties can cancel existing contracts. Any applicable cancellation penalties have been excluded. As such, the Company’s actual remaining performance obligation revenue is expected to be greater than what is reflected in the table above. In addition, the remaining performance obligation disclosure does not include expected consideration related to performance obligations of a variable nature (i.e., flight services) as they cannot be reasonably and reliably estimated.

Note 5 — DEBT

Debt as of December 31 and March 31, 2021, consisted of the following (in thousands):


	December 31, 2021		March 31, 2021
6.875% Senior Notes	$	391,590	$	391,550
Lombard Debt	139,222		146,006
Airnorth Debt	—		5,631
Humberside Debt	—		306
Total debt	530,812		543,493
Less short-term borrowings and current maturities of long-term debt	(13,125)		(15,965)
Total long-term debt	$	517,687	$	527,528

6.875% Senior Notes — In February 2021, the Company issued $400.0 million aggregate principal amount of its 6.875% senior secured notes due March 2028 (the “6.875% Senior Notes”) and received net proceeds of $395.0 million. The 6.875% Senior Notes are fully and unconditionally guaranteed as to payment by a number of subsidiaries. Interest on the 6.875% Senior Notes is payable semi-annually in arrears on March 1st and September 1st of each year. The 6.875% Senior Notes may be redeemed at any time and from time to time, with sufficient notice and at the applicable redemption prices set forth in the indenture governing the 6.875% Senior Notes, inclusive of any accrued and unpaid interest leading up to the redemption date. The indenture governing the 6.875% Senior Notes contains covenants that restrict the Company’s ability to, among other things, incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem the Company’s capital stock, prepay, redeem or repurchase certain debt, make loans and investments, sell assets, incur liens, enter into transactions with affiliates, enter into agreements restricting its subsidiaries’ ability to pay dividends, and consolidate, merge or sell all or substantially all of its assets. In addition, upon a specified change of control trigger event or specified asset sale, the Company may be required to repurchase the outstanding balance of the 6.875% Senior Notes. As of December 31, 2021, the Company had $8.4 million of unamortized debt issuance costs associated with the 6.875% Senior Notes.

Lombard Debt — During the three and nine months ended December 31, 2021, the Company made $3.3 million and $9.9 million, respectively, in principal payments on the Lombard debt.

Airnorth Debt — During the nine months ended December 31, 2021, the Company made $1.1 million in principal payments on the Airnorth debt. In August 2021, the Company made a $4.6 million payment to extinguish the Airnorth debt, resulting in a loss of $0.1 million.

Humberside Debt — In December 2021, the Company made a $0.3 million payment to extinguish the Humberside debt.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

ABL Facility — The Company’s asset-backed revolving credit facility (as amended or modified, the “ABL Facility”) matures in April 2023, subject to certain early maturity triggers related to maturity of other material debt or a change of control of the Company. Amounts borrowed under the ABL Facility are (i) secured by certain accounts receivable owing to the borrower subsidiaries, Bristow Helicopters Limited, Bristow Norway AS, Bristow U.S. LLC and Era Helicopters, LLC (collectively, the “ABL Borrowers”), and the deposit accounts into which payments on such accounts receivable are deposited, and (ii) fully and unconditionally guaranteed as to payment by the Company, as parent guarantor, and each of the ABL Borrowers. The ABL Facility currently provides for commitments in an aggregate amount of $85.0 million. The Company retains the ability under the ABL Facility to increase the total commitments up to a maximum aggregate amount of $115.0 million, subject to the terms and conditions therein.

As of December 31, 2021, there were no outstanding borrowings under the ABL Facility nor had the Company made any draws during the three months ended December 31, 2021. Letters of credit issued under the ABL Facility in the aggregate face amount of $21.6 million were outstanding on December 31, 2021.

LIBOR Transition — On March 5, 2021, the Financial Conduct Authority in the U.K. issued an announcement on the future cessation or loss of representativeness of LIBOR benchmark settings published by ICE Benchmark Administration. That announcement confirmed that LIBOR will either cease to be provided by any administrator or will no longer be representative after December 31, 2021 for all non-USD LIBOR reference rates, and for certain short-term USD LIBOR reference rates, and after June 30, 2023 for other reference rates. The Company replaced LIBOR as the benchmark for the Lombard Debt with a new reference rate, the Sterling Overnight Interbank Average Rate (“SONIA”). Furthermore, the Company agreed not to make additional borrowings under the ABL Facility in denominations for which no LIBOR reference rate is available until such time as a replacement benchmark is agreed. No modification has been made yet to the Company’s ABL Facility as it pertains to USD borrowings, though changes will be required in the future. The overall financial market and the ability to raise future indebtedness in a cost-effective manner may be disrupted as a result of the phase-out or replacement of LIBOR. Disruption in the financial market could have an adverse effect on the Company’s results of operations and liquidity.

Note 6 — FAIR VALUE DISCLOSURES

The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. The fair values of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their carrying values due to the short-term nature of these items.

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

•Level 1 – observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2 – inputs that reflect quoted prices for identical assets or liabilities in markets which are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

•Level 3 – unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Fair Value of Debt

The fair value of the Company’s debt has been estimated in accordance with the accounting standard regarding fair value. The fair value of the Company’s long-term debt was estimated using discounted cash flow analysis based on market prices for those loans and estimated current rates for similar types of arrangements. Considerable judgment was required in developing certain of the estimates of fair value, and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

The carrying and fair values of the Company’s debt are as follows (in thousands):


	Carrying Amount		Level 1		Level 2		Level 3
December 31, 2021
LIABILITIES
6.875% Senior Notes(1)	$	391,590	$	—	$	423,817	$	—
Lombard Debt	139,222		—		146,086		—
Airnorth Debt	—		—		—		—
Humberside Debt	—		—		—		—
	$	530,812	$	—	$	569,903	$	—
March 31, 2021
LIABILITIES
6.875% Senior Notes(1)	$	391,550	$	—	$	398,870	$	—
Lombard Debt	146,006		—		155,270		—
Airnorth Debt	5,631		—		5,656		—
Humberside Debt	306		—		306		—
	$	543,493	$	—	$	560,102	$	—

_________________

(1)The carrying value of the 6.875% Senior Notes is net of unamortized debt issuance costs of $8.4 million.

The carrying values are net of unamortized discounts as follows (in thousands):


	December 31, 2021		March 31, 2021

Lombard Debt	$	15,371	$	21,495
Airnorth Debt	—		154
Total unamortized debt discount	$	15,371	$	21,649

Old Bristow Preferred Stock Embedded Derivative

The fair value of Old Bristow’s preferred stock embedded derivative was estimated on the pre-merger basis, using the income approach, namely a “with” and “without” analysis. The difference between the value of Old Bristow’s preferred stock in the “with” and “without” analyses represented the value of the embedded derivative. Old Bristow was private on the pre-merger basis and hence, the Old Bristow preferred stock value was estimated based on the expected exchange ratio upon the merger. As there was no trading price or any directly observable market information for the embedded derivative itself or Old Bristow’s preferred stock price the fair value of the embedded derivative represents a model value. Due to these facts and circumstances, the fair value of Old Bristow’s preferred stock embedded derivative was derived from Level 3 inputs, due to the nature of unobservable inputs that required significant estimates, judgments and assumptions.

Changes in the fair value of the preferred stock derivative liability, carried at fair value, were reported as change in fair value of the preferred stock derivative liability in the condensed consolidated statements of operations. During the nine months ended December 31, 2020, the Company recognized non-cash gain of approximately $15.4 million due to an increase in the preferred stock derivative liability related to the embedded derivative in the preferred stock.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The following table provides a rollforward of the preferred stock embedded derivative Level 3 fair value measurements for the nine months ended December 31, 2020:


	Significant Unobservable Inputs (Level 3)
Derivative financial instruments:	(in thousands)
March 31, 2020	$	286,182
Change in fair value	(15,416)
Preferred stock shares conversion	(266,846)
Share repurchases	(3,920)
December 31, 2020	$	—

On June 11, 2020, immediately before the Merger was executed, Old Bristow exercised its call right on the preferred stock, allowing Old Bristow to repurchase the shares upon a Fundamental Transaction (which included a merger or consolidation). Upon exercise of the call right, Old Bristow issued 5.17962 shares of Old Bristow’s common stock to the remaining holders of the preferred stock for each share of preferred stock held. The Old Bristow preferred stock was converted into Old Bristow common stock immediately prior to consummation of the Merger. For further discussion, see Note 7 in the Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Note 7 — COMMITMENTS AND CONTINGENCIES

Fleet — The Company’s unfunded capital commitments as of December 31, 2021 consisted primarily of agreements to purchase helicopters and totaled $80.4 million, payable beginning in fiscal year 2022. The Company also had $1.3 million of deposits paid on options not yet exercised.

Included in these commitments are orders to purchase three AW189 heavy helicopters and five AW169 light twin helicopters. The AW189 helicopters are scheduled to be delivered in fiscal year 2023 through 2025. Delivery dates for the AW169 helicopters have yet to be determined. In addition, the Company had outstanding options to purchase up to ten additional AW189 helicopters. If these options are exercised, the helicopters would be scheduled for delivery in fiscal years 2024 through 2026. The Company may, from time to time, purchase aircraft for which it has no orders.

The Company may terminate $68.4 million of its capital commitments (inclusive of deposits paid on options not yet exercised) without further liability other than aggregate liquidated damages of approximately $1.9 million.

General Litigation and Disputes

In July 2021, the Company settled a bankruptcy preference claim related to amounts paid under a termination agreement between Old Bristow and Columbia Helicopters, Inc. The settlement was considered a gain contingency and resulted in a $9.0 million cash receipt.

The Company operates in jurisdictions internationally where it is subject to risks that include government action to obtain additional tax revenue. In a number of these jurisdictions, political unrest, the lack of well-developed legal systems and legislation that is not clear enough in its wording to determine the ultimate application, can make it difficult to determine whether legislation may impact the Company’s earnings until such time as a clear court or other ruling exists. The Company operates in jurisdictions currently where amounts may be due to governmental bodies that the Company is not currently recording liabilities for as it is unclear how broad or narrow legislation may ultimately be interpreted. The Company believes that payment of amounts in these instances is not probable at this time, but is reasonably possible.

In the normal course of business, the Company is involved in various litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. In addition, from time to time, the Company is involved in tax and other disputes with various government agencies. Management has used estimates in determining the Company’s potential exposure to these matters and has recorded reserves in its condensed consolidated financial statements related thereto as appropriate. It is possible that a change in its estimates related to these exposures could occur, but the Company does not expect such changes in estimated costs or uninsured losses, if any, would have a material effect on its business, consolidated financial position or results of operations.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Note 8 — TAXES

The Company’s effective tax rate was 111.4% and (30.7)% during the three months ended December 31, 2021 and December 31, 2020, respectively, and (243.2)% and 383.4% during the nine months ended December 31, 2021 and December 31, 2020, respectively. The effective tax rate in the nine months ended December 31, 2021 includes the impact of impairment losses, utilization of net operating losses in certain foreign jurisdictions and adjustment to the Company’s valuation allowances against future realization of deductible business interest expense. The Company’s provision for income taxes for the interim period ended December 31, 2021 was prepared by applying the estimated annual income tax rate for the full fiscal year to income from continuing operations, excluding discrete items, for the reporting period. For the three months ended December 31, 2020, the Company utilized the discrete effective tax rate method to report its provision for income taxes.

The relationship between the Company’s provision for or benefit from income taxes and the Company’s pre-tax book income can vary significantly from period to period considering, among other factors, (a) the overall level of pre-tax book income, including asset sales, (b) changes in the blend of income that is taxed based on gross revenues or at high effective tax rates versus pre-tax book income or at low effective tax rates and (c) the Company’s geographical blend of pre-tax book income. Consequently, the Company’s income tax expense or benefit does not change proportionally with the Company’s pre-tax book income or loss. Significant decreases in the Company’s pre-tax book income typically result in higher effective tax rates, while significant increases in pre-tax book income can lead to lower effective tax rates, subject to the other factors impacting income tax expense noted above. The change in the Company’s effective tax rate excluding discrete items for the three and nine months ended December 31, 2021 compared to the three and nine months ended December 31, 2020 primarily related to changes in the blend of earnings taxed in relatively high taxed jurisdictions versus low taxed jurisdictions. Additionally, the Company reduced its valuation allowances by $1.6 million and increased its valuations allowances by $2.3 million for the nine months ended December 31, 2021 and 2020, respectively.

Valuation allowances are presented as reductions to the Company’s deferred tax assets. The Company evaluates its deferred tax assets quarterly, which requires significant management judgment to determine the recoverability of these deferred tax assets by assessing whether it is more likely than not that some or all of the deferred tax asset will be realized before expiration. After considering all available positive and negative evidence using a “more likely than not” standard, the Company believes it is appropriate to value against deferred tax assets related to foreign tax credits and certain foreign net operating losses.

The benefit of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the condensed consolidated financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority. Interest and penalties, if any, related to uncertain tax positions would be recorded in interest expense and other expense, respectively.

Note 9 — STOCKHOLDERS’ INVESTMENT, EARNINGS PER SHARE AND ACCUMULATED OTHER COMPREHENSIVE INCOME

Share Repurchases.

On September 16, 2020, the Board authorized a stock repurchase plan providing for the repurchase of up to $75.0 million of the Company's common stock. Repurchases under the program may be made in the open market, including pursuant to a Rule 10b5-1 plan, by block repurchases, in private transactions (including with related parties) or otherwise, from time to time, depending on market conditions. The share repurchase program has no expiration date and may be suspended or discontinued at any time without notice, subject to any changes in regulation currently pending and under review by the SEC.

During the nine months ended December 31, 2021, the Company repurchased 1,480,804 shares of common stock for gross consideration of $40.0 million, which is an average cost per share of $27.02. After these repurchases, $25.0 million remained available of the authorized $75.0 million share repurchase program.

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Earnings per Share

Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share excludes options to purchase common shares and restricted stock units and awards which were outstanding during the period but were anti-dilutive. The following table shows the computation of basic and diluted earnings per share (in thousands, except share and per share amounts):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Income (loss):
Net loss attributable to Bristow Group Inc.	$	(56)	$	(57,121)	$	(11,479)	$	(13,506)
Less: PIK dividends (1)	—		—		—		(12,039)
Plus: Deemed contribution from conversion of preferred stock	—		—		—		144,986
Income (loss) available to common stockholders – basic	$	(56)	$	(57,121)	$	(11,479)	$	119,441
Add: PIK dividends	—		—		—		12,039
Less: Changes in fair value of preferred stock derivative liability	—		—		—		(15,416)
Income (loss) available to common stockholders – diluted	$	(56)	$	(57,121)	$	(11,479)	$	116,064
Shares:
Weighted average number of common shares outstanding – basic	28,214,650		28,944,908		28,633,875		23,178,914
Net effect of dilutive preferred stock	—		—		—		9,196,618

Weighted average number of common shares outstanding – diluted(2)	28,214,650		28,944,908		28,633,875		32,375,532

Earnings (losses) per common share - basic	$	—	$	(1.97)	$	(0.40)	$	5.15
Earnings (losses) per common share - diluted	$	—	$	(1.97)	$	(0.40)	$	3.58

___________________________

(1)See Note 6 and discussion below for further details on PIK dividends and changes in fair value of preferred stock derivative liability.

(2)Excludes weighted average common shares of 1,628,275 and 1,633,094 for the three and nine months ended December 31, 2021, respectively, for certain share awards as the effect of their inclusion would have been antidilutive. Excludes weighted average common shares of 1,275,170 for each of the three and nine months ended December 31, 2020, respectively, for certain share awards as the effect of their inclusion would have been antidilutive.

Stockholders’ Investment, Old Bristow Common Stock and Old Bristow Preferred Stock

In connection with the Merger, the Old Bristow preferred stock was converted into Old Bristow common stock, and then all Old Bristow common stock was subsequently converted into the Company’s common stock.

As Old Bristow’s preferred stock could be redeemed in certain circumstances outside of the sole control of Old Bristow (including at the option of the holder), but was not mandatorily redeemable, the Old Bristow preferred stock was classified as mezzanine equity and initially recognized at fair value of $618.9 million as of its Emergence from Voluntary Reorganization under Chapter 11, the “Effective Date”. This amount was reduced by the fair value of the bifurcated derivative liability of $470.3 million as of the Effective Date, resulting in an initial value of $148.6 million. The difference between (a) the carrying value of the embedded derivative of $270.8 million plus the carrying value of the preferred stock Host of $148.6 million and (b) the fair value of the Old Bristow Common Stock of $270.7 million paid as consideration for the Old Bristow preferred stock was recognized in retained earnings, because the fair value of the Old Bristow Common Stock was less than the combined carrying values of the Old Bristow preferred stock host and embedded derivative.

Prior to the Merger, there were 11,092,845 shares of Old Bristow Common Stock and 6,725,798 shares of Old Bristow preferred stock issued and outstanding. Old Bristow repurchased certain shares of Old Bristow Common Stock and shares of Old Bristow preferred stock immediately prior to the conversion of the Old Bristow preferred stock into Old Bristow Common Stock. The repurchase was accounted for in the same manner as the share conversion and included in the calculation described

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

above. The Old Bristow preferred stock was converted into Old Bristow Common Stock at a rate of 5.179562 shares of Old Bristow Common Stock for each share of Old Bristow preferred stock.

The Old Bristow Common Stock was then subsequently exchanged for the Combined Company Common Stock, resulting in a total of 24,195,693 shares of Combined Company Common Stock issued to Old Bristow stockholders. This resulted in a total of 30,882,471 shares of Combined Company Common Stock issued and outstanding immediately after consummation of the Merger.

Accumulated Other Comprehensive Income (Loss)

The following table shows the changes in balances for accumulated other comprehensive income (loss) (in thousands):


	Currency Translation Adjustments		Pension Liability Adjustments (1)		Unrealized gain (loss) on cash flow hedges (2)		Total
Balance as of March 31, 2021	$	32,646	$	(37,965)	$	(1,596)	$	(6,915)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification	(11,348)		—		2,121		(9,227)

Net current period other comprehensive income (loss)	(11,348)		—		2,121		(9,227)
Foreign exchange rate impact	(711)		711		—		—
Balance as of December 31, 2021	$	20,587	$	(37,254)	$	525	$	(16,142)

__________________________

(1)Reclassification of amounts related to pension liability adjustments are included as a component of net periodic pension cost.

(2)Reclassification of amounts related to cash flow hedges were included as direct costs.

Note 10 — SEGMENT INFORMATION

The Company conducts business in one segment: aviation services. The aviation services operations include four regions as follows: Europe, Africa, the Americas and Asia Pacific. The Europe region comprises all of the Company’s operations and affiliates in Europe, including Norway and the U.K. The Africa region comprises all of the Company’s operations and affiliates on the African continent, including Nigeria. The Americas region comprises all of the Company’s operations and affiliates in North America and South America, including Brazil, Canada, Guyana, Suriname, Trinidad and the U.S. Gulf of Mexico. The Asia Pacific region comprises all of the Company’s operations and affiliates in Australia and Southeast Asia.

The following tables show region information reconciled to consolidated totals, and prepared on the same basis as the Company’s condensed consolidated financial statements (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Region revenue from external customers:
Europe	$	158,447	$	159,415	$	499,860	$	491,328
Americas	102,667		100,152		284,432		254,627
Asia Pacific	16,768		21,350		58,949		54,720
Africa	17,300		25,325		53,174		80,103
Corporate and other	437		3,655		1,389		3,952
Total region revenue (1)	$	295,619	$	309,897	$	897,804	$	884,730

_________________________________________________

(1) The above table represents disaggregated revenue from contracts with customers except for the following (in thousands):

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Revenues not from contracts with customers:
Europe	$	587	$	118	$	2,126	$	808
Americas(1)	7,425		5,839		19,331		23,865
Asia Pacific	142		21		316		178

Corporate and other	—		83		—		2,390
Total region revenue	$	8,154	$	6,061	$	21,773	$	27,241

_________________________________________________

(1) Includes revenues of approximately $0.1 million and $2.4 million from our unconsolidated affiliate in Canada, Cougar Helicopters Inc. (“Cougar”), previously included in Corporate and other for the three and nine months ended December 31, 2020, respectively.


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Earnings (losses) from unconsolidated affiliates, net – equity method investments:

Americas	$	(860)	$	896	$	(1,413)	$	866

Total earnings (losses) from unconsolidated affiliates, net – equity method investments	$	(860)	$	896	$	(1,413)	$	866

Consolidated operating income (loss):
Europe	$	11,109	$	11,916	$	47,625	$	58,842
Americas	19,829		(29,235)		53,784		(26,049)
Asia Pacific	(4,093)		717		(5,851)		3,724
Africa	(4,435)		(1,407)		(19,407)		(10,348)
Corporate and other	(18,327)		(22,530)		(72,486)		(100,291)
Gain on disposal of assets	727		1,951		1,388		(1,000)
Total consolidated operating income (loss)	$	4,810	$	(38,588)	$	5,053	$	(75,122)

Depreciation and amortization:
Europe	$	8,182	$	7,904	$	26,351	$	24,196
Americas	3,726		4,788		13,226		12,841
Asia Pacific	1,719		1,948		5,548		6,002
Africa	1,290		1,214		5,266		3,815
Corporate and other	2,306		2,077		7,671		5,970
Total depreciation and amortization	$	17,223	$	17,931	$	58,062	$	52,824

BRISTOW GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)


	December 31, 2021		March 31, 2021
Identifiable assets:
Europe	$	988,579	$	1,026,042
Americas	548,015		579,169
Asia Pacific	52,846		102,169
Africa	132,614		179,445
Corporate and other	142,735		105,445
Total identifiable assets	$	1,864,789	$	1,992,270


Investments in unconsolidated affiliates – equity method:
Europe	$	25	$	679
Americas	1,571		3,851

Total investments in unconsolidated affiliates – equity method	$	1,596	$	4,530

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, 2021, filed with the Securities and Exchange Commission (the “SEC”) on May 27, 2021. In the discussion that follows, the terms “Current Quarter” and “Prior Year Quarter” refer to the three months ended December 31, 2021 and 2020, respectively. Our fiscal year ends March 31, and we refer to fiscal years based on the end of such period. Therefore, the fiscal year ending March 31, 2022, is referred to as “fiscal year 2022.”

Unless the context otherwise indicates, in this MD&A: (i) the “Company”, “Combined Company,” “Bristow”, “we”, “us” and “our” refer to the entity currently known as Bristow Group Inc. and formerly known as Era Group Inc., together with its subsidiaries; (ii) “Old Bristow” refers to the entity formerly known as Bristow Group Inc. and now known as Bristow Holdings U.S. Inc., together with its subsidiaries; and (iii) “Era” refers to Era Group Inc. (currently known as Bristow Group Inc.), the parent of the Combined Company and its subsidiaries prior to consummation of the Merger.

Forward-Looking Statements

This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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, vendors and regulators: and other matters. Some of the forward-looking statements can be identified by the use of words such as “believes”, “belief”, “forecasts”, “expects”, “plans”, “anticipates”, “intends”, “projects”, “estimates”, “may”, “might”, “will”, “would”, “could”, “should” or other similar words; however, all statements in this Quarterly Report, other than statements of historical fact or historical financial results, are forward-looking statements.

Our forward-looking statements reflect our views and assumptions on the date we are filing this Quarterly Report regarding future events and operating performance. We believe that they are reasonable, but they involve significant 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.

You should consider the following key factors when evaluating these forward-looking statements:

•public health crises, such as pandemics (COVID-19) and epidemics, and any related government policies and actions;

•expected cost synergies and other financial or other benefits of the Merger might not be realized within the expected time frames, might be less than projected or may not be realized at all;

•the ability to successfully integrate the operations, accounting and administrative functions of Era and Old Bristow;

•managing a significantly larger company than before the completion of the Merger;

•diversion of management time on issues related to integration of the Company;

•the increase in indebtedness as a result of the Merger;

•operating costs, customer loss and business disruption following the Merger, including, without limitation, difficulties in maintaining relationships with employees and customers, may be greater than expected;

•our reliance on a limited number of customers and the reduction of our customer base as a result of bankruptcies or consolidation;

•the possibility that we may be unable to maintain compliance with covenants in our financing agreements;

•global and regional changes in the demand, supply, prices or other market conditions affecting oil and gas, including changes resulting from a public health crisis or from the imposition or lifting of crude oil production quotas or other actions that might be imposed by the Organization of Petroleum Exporting Countries (OPEC) and other producing countries;

•fluctuations in the demand for our services;

•the possibility that we may impair our long-lived assets and other assets, including inventory, property and equipment and investments in unconsolidated affiliates;

•our ability to implement operational improvement efficiencies with the objective of rightsizing our global footprint and further reducing our cost structure;

•the possibility of significant changes in foreign exchange rates and controls, including as a result of the U.K. having exited from the European Union;

•potential effects of increased competition and the introduction of energy efficient alternative modes of transportation and solutions;

•the risk of future material weaknesses we may identify while we work to align policies, principles, and practices of the combined company following the Merger or any other failure by us to maintain effective internal controls;

•the possibility that we may be unable to re-deploy our aircraft to regions with greater demand;

•the possibility of changes in tax and other laws and regulations and policies, including, without limitation, actions of the Biden Administration that impact oil and gas operations or favor renewable energy projects in the U.S.;

•the possibility that we may be unable to dispose of older aircraft through sales into the aftermarket;

•general economic conditions, including the capital and credit markets;

•the possibility that segments of our fleet may be grounded for extended periods of time or indefinitely;

•the existence of operating risks inherent in our business, including the possibility of declining safety performance;

•the possibility of political instability, war or acts of terrorism in any of the countries where we operate;

•the possibility that reductions in spending on aviation services by governmental agencies could lead to modifications of our search and rescue (“SAR”) contract terms with the UK government, our contracts with the Bureau of Safety and Environmental Enforcement ("BSEE") or delays in receiving payments under such contracts; and

•our reliance on a limited number of helicopter manufacturers and suppliers capabilities.

The above description of risks and uncertainties is by no means all-inclusive, but is designed to highlight what we believe are important factors to consider. All forward-looking statements in this Quarterly Report on Form 10-Q are qualified by these cautionary statements and are only made as of the date of this Quarterly Report. The forward-looking statements in this Quarterly Report should be evaluated together with the many uncertainties that affect our businesses, particularly those discussed in greater detail in Part I, Item 1A, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Annual Report on Form 10-K and under the heading “Risk Factors” and Part II Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q.

We disclaim any obligation or undertaking, other than as required by law, to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which the forward-looking statement is based, whether as a result of new information, future events or otherwise.

Executive Overview

Bristow Group Inc. is the leading global provider of innovative and sustainable vertical flight solutions. We primarily provide aviation services to a broad base of major integrated, national and independent energy companies. We also provide commercial search and rescue (“SAR”) services in multiple countries and public sector SAR services in the United Kingdom (“U.K.”) on behalf of the Maritime & Coastguard Agency (“MCA”). Additionally, we offer fixed wing transportation and other aviation related solutions. Our oil and gas customers charter our helicopters primarily to transport personnel to, from and between onshore bases and offshore production platforms, drilling rigs and other installations.

Our core business of providing aviation services to leading global energy companies and public and private sector SAR services provides us with geographic and customer diversity which helps mitigate risks associated with a single market or customer. We currently have customers in Australia, Brazil, Canada, Chile, Colombia, Guyana, India, Mexico, Nigeria, Norway, Spain, Suriname, Trinidad, the U.K and the United States (“U.S.”).

Certain of our operations are subject to seasonal factors. For example, operations in the U.S. Gulf of Mexico are often at their highest levels from April to September, as daylight hours increase, and are at their lowest levels from December to February, as daylight hours decrease. See “Markets, Segment and Seasonality” in Item 1 of our Annual Report on Form 10-K for further discussion on seasonality.

Recent Developments

Dutch SAR Contract Award

In January 2022, the Company announced it was awarded a 10-year government SAR helicopter contract beginning in November 2022. The Netherlands Defense Materiel Organization (“DMO”) awarded Bristow their prestigious contract to provide SAR helicopter capacity with dedicated SAR equipped AW189 helicopters at the Den Helder and Midden Zeeland Airports, to the Netherlands Coastguard.

Sustainable Aviation Fuel

In December 2021, the Company successfully completed offshore revenue flights using sustainable aviation fuel (“SAF”), marking one of the first SAF-powered flights to an offshore operation in the UK Continental Shelf. The aircraft flew from Aberdeen to offshore installations as part of a demonstration using a Bristow S-92 helicopter. Utilizing SAF for operational flights is one of many global initiatives, including an increased use of electric-powered ground support vehicles at select operating bases, as part of the Bristow's efforts to significantly reduce its carbon emissions.

COVID-19

The COVID-19 pandemic has resulted in a global crisis beginning in 2020, with many countries placing restrictions on national and international travel and instituting other measures, including, among other things, reducing or eliminating public gatherings by placing limits on such events, shuttering non-essential stores and services, encouraging voluntary quarantines and imposing involuntary quarantines, in an effort to reduce and slow the spread of COVID-19. The COVID-19 pandemic has had a significant influence on economic activity and global supply chains and likely will continue to have a significant impact on the global economy in the near-to-medium-term, which in turn can cause volatility in global markets, generally, and in oil and natural gas prices, more specifically. While demand and oil and natural gas prices have largely recovered, demand is still not back to pre-pandemic levels. There continues to be uncertainty and unpredictability around the extent to which COVID-19 may adversely affect demand for our services. The speed and extent of this recovery will be influenced by whether and at what pace the COVID-19 restrictions that have reduced economic activity and depressed demand globally are eased.

During fiscal year 2021, the availability of vaccines around the world improved and business activity increased. Nevertheless, some countries face a resurgence of the virus and its variants that could impact logistics and materials movement and pose a risk to our business. We continue to take precautionary measures to reduce the risk of exposure to and spread of the COVID-19 virus in our operations through screening, testing and, when appropriate, quarantining personnel upon arrival to our facilities.

Lines of Service

Beginning in fiscal year 2022, the revenues by line of service tables have been modified to more accurately reflect how management views the Company’s lines of service. These changes include the addition of a government services line of service which includes revenues from U.K. SAR, BSEE, and other government contracts. In addition, our other activities and services (“other” services) will now reflect revenues derived from leasing aircraft to non-governmental third party operators, oil and gas contracts that do not materially fit into one of the three major oil and gas operating regions and other services as they arise. As such, operating revenues from Asia Pacific oil and gas services are now shown under other services following the exit of that line of service in the Asia Pacific region. Prior period amounts will not match the previously reported amounts by individual lines of service. Management believes this change provides more relevant information needed to understand and analyze the Company’s current lines of service.

Oil and Gas. The offshore oil and gas market is highly cyclical with demand highly correlated to the price of oil and gas, which tends to fluctuate depending on many factors, including global economic activity, levels of inventory and overall demand. In addition to the price of oil and gas, the availability of acreage and local tax incentives or disincentives and requirements for maintaining interests in leases affect activity levels in the oil and gas industry. Price levels for oil and gas by themselves can cause additional fluctuations by inducing changes in consumer behavior. The three main regions where we offer oil and gas transportation services are Europe, the Americas and Africa.

Government Services. Since 2015, we have been providing SAR services in the U.K. on behalf of the MCA. Additionally, we provide aviation services to various government agencies, globally.

Fixed Wing Services. Our fixed wing services are currently operating in Australia and Nigeria, providing regular passenger transport (scheduled airline service with individual ticket sales) and charter services.

Other Activities and Services. In order to diversify sources of our earnings and cash flow, we deploy a number of helicopters in support of other industries and activities, one of which includes entering into lease arrangements for our helicopters with operators primarily located in international markets such as Chile, Colombia, India, Mexico and Spain. The helicopters are contracted to non-governmental local helicopter operators, which often prefer to lease helicopters rather than purchase them. Leasing affords us the opportunity to access new markets without significant infrastructure investment and generally without ongoing operating risk, as well as countries where we are not eligible to own and control our own operating certificate. Revenues derived from oil and gas services outside of our three major operating regions and other aviation services not included in the three lines of service noted above are also reflected here.

Fleet Information

As of December 31, 2021, the aircraft in our fleet were as follows:


	Number of Aircraft
	Operating Aircraft
Type	Owned Aircraft	Leased Aircraft	Aircraft Held For Sale	Total Aircraft	Maximum Passenger Capacity	Average Age (years)(1)
Heavy Helicopters:
S-92	36	21	—	57	19	13
S-92 U.K. SAR	3	7	—	10	19	7
H225	—	—	2	2	19	11
AW189	6	1	—	7	16	6
AW189 U.K. SAR	11	—	—	11	16	5
	56	29	2	87
Medium Helicopters:
AW139	51	6	—	57	12	11
S-76 C+/C++	16	—	—	16	12	14
S-76D	8	—	—	8	12	8
B212	2	—	—	2	12	40
	77	6	—	83
Light—Twin Engine Helicopters:
AW109	4	—	—	4	7	15
EC135	10	—	—	10	6	13
	14	—	—	14
Light—Single Engine Helicopters:
AS350	17	—	—	17	4	24
AW119	13	—	—	13	7	15
	30	—	—	30

Total Helicopters	177	35	2	214		13
Fixed wing	6	8	—	14
UAV	—	2	—	2
Total Fleet	183	45	2	230

______________________

(1)Reflects the average age of helicopters that are owned.

The chart below presents the number of aircraft in our fleet and their distribution among the regions as of December 31, 2021, the number of helicopters we had on order as of December 31, 2021, and the percentage of operating revenue each of our regions provided during the Current Quarter.


	Percentage of Current Quarter Operating Revenue		Helicopters				UAV	Fixed Wing
			Heavy	Medium	Light Twin	Light Single			Total (1)
Europe	54	%	63	12	—	3	2	—	80
Americas	35	%	20	57	14	27	—	—	118
Asia Pacific	6	%	—	—	—	—	—	12	12
Africa	5	%	4	14	—	—	—	2	20
Total	100	%	87	83	14	30	2	14	230
Aircraft not currently in fleet:
On order			3	—	5	—	—	—	8

_____________

(1)Includes 45 leased aircraft as follows:












	Helicopters				UAV	Fixed Wing
	Heavy	Medium	Light Twin	Light Single			Total
Europe	27	1	—	—	2	—	30
Americas	—	2	—	—	—	6	8
Asia Pacific	—	1	—	—	—	2	3
Africa	2	2	—	—	—	—	4
Total	29	6	—	—	2	8	45

Results of Operations

Management believes the comparison of the most recently completed quarter to the immediately preceding quarter provides more relevant information needed to understand and analyze the business. As such, pursuant to Item 303(c)(2)(ii) of Regulation S-K, we have elected to discuss any material changes in our results of operations by including a comparison of our most recently completed fiscal quarter to the immediately preceding fiscal quarter.

The following table presents our operating results and other statement of operations information for the three months ended December 31, 2021 and the three months ended September 30, 2021 (in thousands, except percentages):


	Three Months Ended				Favorable (Unfavorable)
	December 31, 2021		September 30, 2021
Revenues:
Operating revenues	$	285,010	$	290,120	$	(5,110)	(1.8)	%
Reimbursable revenues	10,609		11,464		(855)		(7.5)	%
Total revenues	295,619		301,584		(5,965)		(2.0)	%

Costs and expenses:
Operating expenses
Personnel	75,903		77,310		1,407		1.8	%
Repairs and maintenance	64,806		62,659		(2,147)		(3.4)	%
Insurance	6,072		7,501		1,429		19.1	%
Fuel	19,892		17,082		(2,810)		(16.5)	%
Leased-in equipment	25,117		26,198		1,081		4.1	%
Other	30,085		28,018		(2,067)		(7.4)	%
Total operating expenses	221,875		218,768		(3,107)		(1.4)	%
Reimbursable expenses	10,561		11,188		627		5.6	%
General and administrative	40,966		38,970		(1,996)		(5.1)	%
Merger-related costs	34		647		613		nm
Restructuring costs	17		117		100		85.5	%
Depreciation and amortization	17,223		17,644		421		2.4	%
Total costs and expenses	290,676		287,334		(3,342)		(1.2)	%

Loss on impairment	—		(2,901)		2,901		nm
Gain on disposal of assets	727		162		565		nm
Earnings (losses) from unconsolidated affiliates, net	(860)		964		(1,824)		nm
Operating income	4,810		12,475		(7,665)		(61.4)	%

Interest income	36		42		(6)		(14.3)	%
Interest expense	(10,230)		(10,426)		196		1.9	%
Loss on extinguishment of debt	—		(124)		124		nm
Reorganization items, net	(29)		(103)		74		71.8	%

Other, net	3,969		15,330		(11,361)		nm
Total other income (expense), net	(6,254)		4,719		(10,973)		nm
Income (loss) before benefit for income taxes	(1,444)		17,194		(18,638)		nm
Income tax benefit (expense)	1,608		(14,484)		16,092		nm
Net income	164		2,710		(2,546)		nm
Net (income) loss attributable to noncontrolling interests	(220)		65		(285)		nm
Net income (loss) attributable to Bristow Group Inc.	$	(56)	$	2,775	$	(2,831)	nm

Revenues by Service Line. The table below sets forth the operating revenues earned by service line for the applicable periods (in thousands):


	Three Months Ended				Favorable (Unfavorable)
	December 31, 2021		September 30, 2021
Oil and gas services:
Europe	$	88,278	$	93,420	$	(5,142)	(5.5)	%
Americas	91,834		84,207		7,627		9.1	%
Africa	14,822		16,054		(1,232)		(7.7)	%
Total oil and gas services	194,934		193,681		1,253		0.6	%
Government services	66,435		69,742		(3,307)		(4.7)	%
Fixed wing services	20,509		23,501		(2,992)		(12.7)	%
Other services	3,132		3,196		(64)		(2.0)	%
	$	285,010	$	290,120	$	(5,110)	(1.8)	%

Current Quarter compared to Preceding Quarter

Operating Revenues. Operating revenues were $5.1 million lower in the three months ended December 31, 2021 (the “Current Quarter”) compared to the three months ended September 30, 2021 (the “Preceding Quarter”).

Operating revenues from oil and gas services were $1.3 million higher in the Current Quarter.

Operating revenues from oil and gas services in the Americas region were $7.6 million higher in the Current Quarter primarily due to higher utilization in the U.S. Gulf of Mexico and Guyana and higher cash receipts from Cougar Helicopters Inc. (“Cougar”) of $3.0 million.

Operating revenues from oil and gas services in the Africa region were $1.2 million lower primarily due to lower utilization.

Operating revenues from oil and gas services in the Europe region were $5.1 million lower in the Current Quarter primarily due to lower utilization and the weakening of the British pound sterling relative the U.S. dollar.

Operating revenues from government services were $3.3 million lower in the Current Quarter primarily due to lower utilization and the weakening of the British pound sterling relative to the U.S. dollar.

Operating revenues from fixed wing services were $3.0 million lower in the Current Quarter primarily due to COVID-19 related travel restrictions and seasonality.

Operating Expenses. Operating expenses were $3.1 million higher in the Current Quarter. Fuel costs were $2.8 million higher primarily due to increased global fuel prices. Repairs and maintenance costs were $2.1 million higher primarily due to the timing of repairs. Other operating costs were $2.1 million higher in the Current Quarter primarily due to costs incurred to relocate operations from bases damaged during Hurricane Ida. These increases were partially offset by lower insurance costs of $1.4 million primarily due to the recognition of insurance deductibles related to Hurricane Ida in the Preceding Quarter. Personnel costs were $1.4 million lower primarily due to headcount reductions in the U.K. Leased-in equipment costs were $1.1 million lower due to lease returns in the Current Quarter.

General and Administrative. General and administrative expenses were $2.0 million higher in the Current Quarter primarily due to increased professional services fees.

Loss on Impairment. During the Preceding Quarter, the Company recognized a $2.9 million loss on the impairment of H225 helicopter parts inventory.

Gain on Disposal of Assets. During the Current Quarter, the Company sold one fixed wing aircraft and other equipment resulting in a net gain of $0.7 million. In the Preceding Quarter, the Company sold four S-76C++ medium helicopters and two AW109 light-twin helicopters resulting in a net gain of $0.2 million.

Earnings (losses) from Unconsolidated Affiliates. During the Current Quarter, the Company recognized losses of $0.9 million from unconsolidated affiliates compared to earnings of $1.0 million in the Preceding Quarter.

Operating Income. Operating income as a percentage of operating revenues was 1.7% in the Current Quarter compared to 4.3% in the Preceding Quarter primarily due to lower government and fixed wing services revenues and higher operating expenses.

Other Income (Expense), net. Other income, net of $4.0 million in the Current Quarter was primarily related to government grants to fixed wing services of $3.2 million and a favorable interest adjustment to the Company’s pension liability of $0.7 million. Other income, net of $15.3 million in the Preceding Quarter was primarily related to a bankruptcy-related legal settlement of $9.0 million, government grants to fixed wing services of $2.7 million, net foreign exchange gains of $2.2 million, insurance proceeds of $0.6 million and a favorable interest adjustment to the Company’s pension liability of $0.6 million


	Three Months Ended
	December 31, 2021		September 30, 2021		Favorable (Unfavorable)





Foreign currency gains (losses)	$	(771)	$	2,243	$	(3,014)
Pension-related costs	656		634		22
Other	4,084		12,453		(8,369)
Other income (expense), net	$	3,969	$	15,330	$	(11,361)

Income Tax Benefit (Expense). Income tax benefit was $1.6 million in the Current Quarter compared to income tax expense of $14.5 million in the Preceding Quarter. The change in income tax expense in the Current Quarter was driven by lower pre-tax earnings, the tax impact of valuation allowances on the Company’s net losses and the tax impact of deductible business interest expense.

The following table presents our operating results and other statement of operations information for the nine months ended December 31, 2021 and 2020 (in thousands, except percentages):


	Nine Months Ended December 31,				Favorable (Unfavorable)
	2021		2020
Revenues:
Operating revenues	$	863,480	$	857,505	$	5,975	0.7	%
Reimbursable revenues	34,324		27,225		7,099		26.1	%
Total revenues	897,804		884,730		13,074		1.5	%

Costs and expenses:
Operating expenses
Personnel	228,182		233,913		5,731		2.5	%
Repairs and maintenance	187,930		171,175		(16,755)		(9.8)	%
Insurance	18,940		16,077		(2,863)		(17.8)	%
Fuel	53,639		31,926		(21,713)		(68.0)	%
Leased-in equipment	78,167		89,039		10,872		12.2	%
Other	88,288		90,738		2,450		2.7	%
Total operating expenses	655,146		632,868		(22,278)		(3.5)	%
Reimbursable expenses	33,863		27,092		(6,771)		(25.0)	%
General and administrative	117,419		112,604		(4,815)		(4.3)	%
Merger-related costs	2,416		26,367		23,951		90.8	%
Restructuring costs	985		17,885		16,900		94.5	%
Depreciation and amortization	58,062		52,824		(5,238)		(9.9)	%
Total costs and expenses	867,891		869,640		1,749		0.2	%

Loss on impairment	(24,835)		(90,078)		65,243		nm
Gain (loss) on disposal of assets	1,388		(1,000)		2,388		nm
Earnings (losses) from unconsolidated affiliates, net	(1,413)		866		(2,279)		nm
Operating income (loss)	5,053		(75,122)		80,175		nm

Interest income	144		1,055		(911)		nm
Interest expense	(31,280)		(39,152)		7,872		20.1	%
Loss on extinguishment of debt	(124)		(844)		720		nm
Reorganization items, net	(578)		1,984		(2,562)		nm
Loss on sale of subsidiaries	(2,002)		—		(2,002)		nm
Change in fair value of preferred stock derivative liability	—		15,416		(15,416)		nm
Bargain purchase gain	—		81,093		(81,093)		nm
Other, net	25,483		20,457		5,026		24.6	%
Total other income (expense), net	(8,357)		80,009		(88,366)		nm
Income (loss) before income taxes	(3,304)		4,887		(8,191)		nm
Income tax expense	(8,034)		(18,736)		10,702		57.1	%
Net loss	(11,338)		(13,849)		2,511		18.1	%
Net (income) loss attributable to noncontrolling interests	(141)		343		(484)		nm
Net loss attributable to Bristow Group Inc.	$	(11,479)	$	(13,506)	$	2,027	15.0	%

Revenues by Service Line. The table below sets forth the operating revenues earned by service line for the applicable periods (in thousands):


	Nine Months Ended December 31,				Favorable (Unfavorable)
	2021		2020
Oil and gas services:
Europe	$	281,598	$	296,455	$	(14,857)	(5.0)	%
Americas	251,233		231,648		19,585		8.5	%
Africa	45,568		74,309		(28,741)		(38.7)	%
Total oil and gas services	578,399		602,412		(24,013)		(4.0)	%

Government services(1)	206,619		185,099		21,520		11.6	%
Fixed wing services	68,566		51,836		16,730		32.3	%
Other services(2)	9,896		18,158		(8,262)		(45.5)	%
	$	863,480	$	857,505	$	5,975	0.7	%

_________________________

(1)Includes revenues of approximately $19.0 million related to government services that were previously included in the oil and gas and other service lines for the nine months ended December 31, 2020.

(2)Includes Asia Pacific and certain Europe revenues of approximately $9.9 million that were previously included in the oil and gas service line for the nine months ended December 31, 2020.

Current Nine Months compared to Prior Year Nine Months

Operating Revenues. Operating revenues were $6.0 million higher in the nine months ended December 31, 2021 (the "Current Period”) compared to the nine months ended December 31, 2020 (the "Prior Year Period").

Operating revenues from oil and gas services were $24.0 million lower in the Current Period.

Operating revenues from oil and gas services in the Africa region were $28.7 million lower primarily due to lower utilization.

Operating revenues from oil and gas services in the Europe region were $14.9 million lower in the Current Period. Revenues in the U.K. were $20.0 million lower primarily due to lower utilization, partially offset by the strengthening of the British pound sterling relative to the U.S. dollar. Revenues in Norway were $5.1 million higher primarily due to the strengthening of the Norwegian krone relative to the U.S. dollar.

Operating revenues from oil and gas services in the Americas region were $19.6 million higher in the Current Period primarily due to the benefit of the Merger with Era Group Inc. (“the Merger”) in June 2020, partially offset by lower utilization in the U.S. Gulf of Mexico.

Operating revenues from government services were $21.5 million higher in the Current Period primarily due to the strengthening of the British pound sterling relative to the U.S. dollar, the benefit of the Merger and higher utilization.

Operating revenues from fixed wing services were $16.7 million higher in the Current Period primarily due to higher utilization and the strengthening of the Australian dollar relative to the U.S. dollar.

Operating revenues from other services were $8.3 million lower in the Current Period primarily due to the end of oil and gas services in Australia, partially offset by the benefit of the Merger.

Operating Expenses. Operating expenses were $22.3 million higher in the Current Period. Fuel expense was $21.7 million higher primarily due to increased fight hours and higher global fuel prices. Repairs and maintenance costs were $16.8 million higher primarily due to the impact of the Merger, increased flight hours and the timing of repairs. Insurance costs were $2.9 million higher primarily due to insurance deductibles related to Hurricane Ida. These increases were partially offset by lower lease costs of $10.9 million primarily due to aircraft lease returns since the Prior Year Period, lower personnel costs of $5.7 million primarily due to headcount reductions and lower other operating costs of $2.5 million primarily due to a decrease in costs associated with the end of a contract.

General and Administrative. General and administrative expenses were $4.8 million higher primarily due to higher compensation and insurance costs and the absence of certain government grants to fixed wing services.

Merger-related costs. Merger-related costs, which primarily consist of professional services fees and severance costs, were $2.4 million in the Current Period compared to $26.4 million in the Prior Year Period.

Restructuring costs. Restructuring costs were $1.0 million in the Current Period compared to $17.9 million in the Prior Year Period.

Depreciation and Amortization. Depreciation and amortization expenses were $5.2 million higher primarily due to the addition of existing assets to the depreciation and amortization calculation in the Current Period.

Loss on Impairment. During the Current Period, the Company recognized losses on impairment of $24.8 million, consisting of $16.0 million related to Petroleum Air Services (“PAS”), $5.9 million in connection with certain helicopters held for sale and $2.9 million related to H225 helicopter parts inventory. During the Prior Year Period, the Company recognized a loss on impairment of $90.1 million, consisting of $51.9 million related to its investment in Cougar, $18.7 million related to its investment in Líder Táxi Aéreo S.A. (“Líder”), $12.9 million related to the write down of inventory and $6.6 million related to helicopters that were held for sale.

Gain (loss) on Disposal of Assets. During the Current Period, the Company sold 10 aircraft and other equipment resulting in a net gain of $1.4 million. During the Prior Year Period, the Company sold 46 aircraft and other equipment resulting in net losses of $1.0 million.

Earnings (losses) from Unconsolidated Affiliates, net. During the Current Period, the Company recognized losses of $1.4 million from its equity method investments compared to earnings of $0.9 million in the Prior Year Period.

Operating Income (Loss). Operating income as a percentage of operating revenues was 0.6% in the Current Period compared to operating loss as a percentage of operating revenues of (8.8)% in the Prior Year Period. The improvement in operating income as a percentage of operating revenues was primarily due to the reduction in impairment losses, merger-related costs and restructuring costs.

Interest Expense. Interest expense was $7.9 million lower in the Current Period primarily due to lower debt balances.

Reorganization items, net. During the Current Period, the Company recognized losses of $0.6 million related to reorganization items. During the Prior Year Period, the Company recognized a gain of $2.0 million related to the release of the rabbi trust which held investments related to the Company’s non-qualified deferred compensation plan for the Company’s executives.

Loss on sale of Subsidiaries. During the Current Period, the Company recognized a loss of $2.0 million on the sale of its subsidiary in Colombia.

Change in Fair Value of Preferred Stock Derivative. During the Prior Year Period, Old Bristow recognized a $15.4 million gain on the change in fair value of preferred stock derivative liability.

Gain on Bargain Purchase. During the Prior Year Period, the Company recognized a bargain purchase gain of $81.1 million related to the Merger.

Other Income (Expense), net. Other income, net was $25.5 million in the Current Period compared to $20.5 million in the Prior Year Period. Other income in the Current Period primarily consisted of a bankruptcy-related legal settlement of $9.0 million, government grants to fixed wing services of $8.7 million, insurance proceeds of $4.4 million, a favorable interest adjustment to the Company’s pension liability of $2.0 million and net foreign exchange gains of $1.1 million. Other income, net in the Prior Year Period was primarily due to net foreign exchange gains of $9.2 million, government grants to fixed wing services of $7.6 million, and a favorable interest adjustment to the Company’s pension liability of $2.9 million.


	Nine Months Ended December 31,				Favorable (Unfavorable)
	2021		2020
Foreign currency gains	$	1,086	$	9,181	$	(8,095)
Pension-related costs	1,955		2,851		(896)
Other	22,442		8,425		14,017
Other income (expense), net	$	25,483	$	20,457	$	5,026

Income Tax Benefit (Expense). Income tax expense was $8.0 million in the Current Period compared to $18.7 million in the Prior Year Period. The income tax expense in the Current Period was primarily due to changes in the blend of pre-tax earnings, the tax impact of valuation allowances on the Company’s net losses, deductible business interest expense and the tax impact of the bankruptcy-related legal settlement.

Liquidity and Capital Resources

General

Our ongoing liquidity requirements arise primarily from working capital needs, meeting our capital commitments (including the purchase of helicopters and other equipment) and the repayment of debt obligations. In addition, we may use our liquidity to fund acquisitions, repay debt, repurchase shares or debt securities or make other investments. Our primary sources of liquidity are cash balances and cash flows from operations, borrowings under our ABL and, from time to time, we may obtain additional liquidity through the issuance of equity, or debt or other financing options or through asset sales.

Summary of Cash Flows


	Nine Months Ended December 31,
	2021		2020
	(in thousands)
Cash flows provided by or (used in):
Operating activities	$	118,277	$	60,069
Investing activities	(9,528)		175,505
Financing activities	(59,592)		(141,045)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2,774)		4,183
Net increase in cash, cash equivalents and restricted cash	$	46,383	$	98,712

Operating Activities

Cash flows provided by operating activities were $118.3 million during the nine months ended December 31, 2021 (“Current Year”) compared to $60.1 million during the nine months ended December 31, 2020 (“Prior Year”). Operating income before depreciation, impairment charges, gains or losses on asset dispositions, net and earnings or losses from unconsolidated affiliates, net was $20.1 million higher in the Current Year compared to the Prior Year primarily due to lower Merger-related and restructuring costs.

During the Current Year, changes in working capital provided cash flows of $21.0 million primarily due to a decrease in receivables and an increase in accounts payable, accrued expenses and other liabilities. During the Prior Year, changes in working capital used cash flows of $21.0 million primarily due to an increase in inventory and other assets.

Cash paid for interest expense and income taxes was $17.3 million and $10.5 million, respectively, in the Current Year compared to $25.6 million and $13.0 million, respectively, in the Prior Year.

Investing Activities

During the Current Year, net cash used in investing activities was $9.5 million primarily as follows:

•Capital expenditures of $23.2 million, and

•Cash transferred in the sale of a subsidiary of $0.9 million, partially offset by

•Proceeds of $14.5 million from the sale or disposal of aircraft and other equipment.

During the Prior Year, net cash provided by investing activities was $175.5 million primarily as follows:

•Increase in cash from the Merger of $120.2 million, and

•Proceeds of $66.5 million from the sale or disposal of aircraft and other equipment, partially offset by

•Capital expenditures of $11.2 million.

Financing Activities

During the Current Year, net cash used in financing activities was $59.6 million primarily as follows:

•Share repurchases of $40.6 million,

•Net repayments of debt and redemption premiums of $16.0 million, and

•Payment on debt issuance costs of $3.0 million.

During the Prior Year, net cash used in financing activities was $141.0 million primarily as follows:

•Net repayments of debt and redemption premiums of $126.2 million, and

•Share repurchases of $14.8 million.

Short and Long-Term Liquidity Requirements

We anticipate that we will generate positive cash flows from operating activities and that these cash flows will be adequate to meet our working capital requirements. To support our capital expenditure program and/or other liquidity requirements, we may use any combination of operating cash flow, cash balances, borrowings under our ABL, proceeds from sales of assets, issue debt or equity, or other financing options.

Our availability of long-term liquidity is dependent upon our ability to generate operating profits sufficient to meet our requirements for working capital, debt service, capital expenditures and a reasonable return on investment. While demand and oil and natural gas prices have largely recovered, demand is still not back to pre-pandemic levels. There continues to be uncertainty and unpredictability around the extent to which COVID-19 may adversely affect demand for our services, which in turn could affect our business and liquidity. As of December 31, 2021, we had $274.0 million of unrestricted cash and $52.4 million of remaining availability under our amended asset-backed revolving credit facility (the “ABL Facility”) for total liquidity of $326.4 million. Borrowings under the amended ABL Facility are subject to certain conditions and requirements.

As of December 31, 2021, approximately 76% of our total cash balance was held outside the U.S. and is generally used to meet the liquidity needs of our non-U.S. operations. Most of our cash held outside the U.S. could be repatriated to the U.S., and any such repatriation could be subject to additional taxes. If cash held by non-U.S. operations is required for funding operations in the U.S., we may make a provision for additional taxes in connection with repatriating this cash, which is not expected to have a significant impact on our results of operations.

The significant factors that affect our overall liquidity include cash from or used to fund operations, capital expenditure commitments, debt service, pension funding, adequacy of bank lines of credit and the Company’s ability to attract capital on satisfactory terms.

Debt Obligations

Our principal debt balance as of December 31, 2021 was $530.8 million primarily comprised of the 6.875% Senior Notes due in March 2028 and two tranches of the Lombard Debt due December 29, 2023 and January 30, 2024, respectively.

Currently, we believe we are able to meet the maintenance and other covenants in our debt instruments.

Lease Obligations

We have non-cancelable operating leases in connection with the lease of certain equipment, including leases for aircraft, and land and facilities used in our operations. The related lease agreements, which range from non-cancelable and month-to-month terms, generally provide for fixed monthly rentals and can also include renewal options. As of December 31, 2021, aggregate future payments under all non-cancelable operating leases that have initial terms in excess of one year were as follows (in thousands):


	Aircraft		Other		Total
Fiscal year ending March 31,
2022(1)	18,955		3,035		$	21,990
2023	65,767		12,355		78,122
2024	51,621		10,118		61,739
2025	33,014		8,109		41,123
2026	6,814		7,140		13,954
Thereafter	1,161		20,909		22,070
	$	177,332	$	61,666	$	238,998

____________________

(1)Reflects the amounts for the remaining three months of the fiscal year ending March 31, 2022.

During the three and nine months ended December 31, 2021, we recognized $25.9 million and $80.6 million of operating lease expense, respectively. During the three and nine months ended December 31, 2020, we recognized $29.8 million and $92.0 million of operating lease expense, respectively.

Cash paid for amounts included in the measurement of lease liabilities during the nine months ended December 31, 2021 and 2020 was $71.0 million and $89.6 million, respectively.

From time to time we may, under favorable market conditions and when necessary, enter into opportunistic aircraft lease agreements in support of our global operations. The following table reflects the timing of our current contractual lease expirations by fiscal year and aircraft type. The timing and number of aircraft shown below do not factor in any potential renewals that management may consider to ensure sufficient availability to meet future demand and activity levels.


	2022	2023	2024	2025 and Beyond
Aircraft type:
S-92	2	2	11	13
AW189	—	1	—	—
AW139	3	1	2	—
Fixed wing / UAV	1	7	2	—
	6	11	15	13

Contractual Obligations and Commercial Commitments

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

As of December 31, 2021, we had unfunded capital commitments of $80.4 million, consisting primarily of agreements to purchase helicopters, including three AW189 heavy helicopters and five AW169 light twin helicopters. The AW189 helicopters are scheduled to be delivered in fiscal year 2023 through 2025. Delivery dates for the AW169 helicopters have yet to be determined. In addition, we had outstanding options to purchase up to ten additional AW189 helicopters. If these options are exercised, the helicopters would be scheduled for delivery in fiscal years 2024 through 2026.

These commitments are payable beginning in fiscal year 2022, and $68.4 million of our capital commitments (inclusive of deposits paid on options not yet exercised) may be terminated without further liability other than aggregate liquidated damages of approximately $1.9 million. If we do not exercise our rights to cancel these capital commitments, we expect to finance the remaining acquisition costs for these helicopters through a combination of cash on hand, cash provided by operating activities, asset sales and financing options.

Selected Financial Information on Guarantors of Securities

On February 25, 2021, Bristow Group Inc. (“the Parent”) issued its 6.875% Senior Notes due 2028 (the “6.875% Senior Notes”). The 6.875% Senior Notes, issued under an indenture, are fully and unconditionally guaranteed as to payment by a number of subsidiaries of the Parent (collectively, the “Guarantors”). The Parent is a holding company with no significant assets other than the stock of its subsidiaries. In order to meet its financial needs and obligations, the Parent relies exclusively on income from dividends and other cash flow from such subsidiaries. The subsidiary guarantees provide that, in the event of a default on the 6.875% Senior Notes, the holders of the 6.875% Senior Notes may institute legal proceedings directly against the Guarantors to enforce the guarantees without first proceeding against the Parent.

None of the non-Guarantor subsidiaries of the Parent are under any direct obligation to pay or otherwise fund amounts due on the 6.875% Senior Notes or the guarantees, whether in the form of dividends, distributions, loans or other payments. If such subsidiaries are unable to transfer funds to the Parent or Guarantors and sufficient cash or liquidity is not otherwise available, the Parent or Guarantors may not be able to make principal and interest payments on their outstanding debt, including the 6.875% Senior Notes or the guarantees. We believe the following selected financial information of the Guarantors presents a sufficient financial position of Bristow Group Inc. to continue to fulfill its obligations under the requirements of the 6.875% Senior Notes. This selected financial information should be read in conjunction with the accompanying consolidated financial statements and notes (amounts shown in thousands).


	December 31, 2021		March 31, 2021
Current assets	$	789,111	$	798,189
Non-current assets	$	2,085,064	$	1,686,646
Current liabilities	$	531,630	$	224,078
Non-current liabilities	$	800,498	$	1,112,490

	Three Months Ended December 31, 2021		Nine Months Ended December 31, 2021
Total revenues	$	115,668	$	327,479
Operating income (expense)	$	28,880	$	40,798
Net income (loss)	$	26,592	$	36,328
Net income (loss) attributable to Bristow Group	$	26,581	$	36,273

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” of the Annual Report on Form 10-K for a discussion of our critical accounting estimates. There have been no material changes to our critical accounting policies and estimates provided since the Annual Report on Form 10-K.

For discussion of recent accounting pronouncements and accounting changes, see Part I, Item 1. Financial Statements, Note 1 of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are subject to certain market risks arising from the use of financial instruments in the ordinary course of business. These risks arise primarily as a result of potential changes in the fair market value of financial instruments that would result from adverse fluctuations in foreign currency exchange rates, credit risk, and interest rates.

For additional information about our exposure to market risk, refer to “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of the Annual Report on Form 10-K. Our exposure to market risk has not changed materially since March 31, 2021.

Item 4. Controls and Procedures.

With the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), management evaluated, with reasonable assurance, the effectiveness of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2021.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the quarter ended December 31, 2021, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of our business, we become involved in various litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. Management has used estimates in determining our potential exposure to these matters and has recorded reserves in our financial statements related thereto as appropriate. It is possible that a change in our estimates related to these exposures could occur, but we do not expect any such changes in estimated costs would have a material effect on our consolidated financial position or results of operations.

Item 1A. Risk Factors

For a detailed discussion of our risk factors, see “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

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

The following table presents information regarding our repurchases of shares of our Common Stock on a monthly basis during the three months ended December 31, 2021:


	Total Number of Shares Repurchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Value of Shares that May Yet be Purchased Under the Plans or Programs
October 1, 2021 - October 31, 2021	—	$	—	—	$	24,999,300
November 1, 2021 - November 30, 2021	—	$	—	—	$	24,999,300
December 1, 2021 - December 31, 2021	—	$	—	—	$	24,999,300

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

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


Exhibit Number						Description of Exhibit
10.1*						Amendment Agreement, dated as of December 8, 2021, among Bristow Aircraft Leasing Limited, Lombard North Central Plc and the other parties thereto.
10.2*						Amendment Agreement, dated as of December 8, 2021, among Bristow U.S. Leasing LLC, Lombard North Central Plc and the other parties thereto.
31.1**						Rule 13a-14(a) Certification by Chief Executive Officer of Registrant.
31.2**						Rule 13a-14(a) Certification by Chief Financial Officer of Registrant.
32.1**						Certification of Chief Executive Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification of Chief Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document.
†						Compensatory Plan or Arrangement.
*						Filed herewith.
**						Furnished herewith.

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/ Jennifer D. Whalen
						Jennifer D. Whalen Senior Vice President and Chief Financial Officer


			By:			/s/ Richard E. Tatum
						Richard E. Tatum Vice President and Chief Accounting Officer

DATE: February 3, 2022