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INTERNATIONAL STRATEGIC ANALYSIS-BRISTOW

Matthew Tyler Harman

MBAA 635

Embry-Riddle Aeronautical University

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Table of Contents

EXECUTIVE REVIEW .................................................................................................................

HISTORY OF THE FIRM ............................................................................................................

FINANCIAL OVERVIEW ............................................................................................................

CORPORATE GOVERNANCE ...................................................................................................

MISSION AND VISION STATEMENTS ....................................................................................

ANALYSES OF KEY STRATEGIES ..........................................................................................

SWOT ANALYSIS .........................................................................................................................

TOWS ANALYSIS .........................................................................................................................

CONCLUSIONS .............................................................................................................................

APPENDICES .................................................................................................................................

REFERENCES ................................................................................................................................

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HISTORY OF THE FIRM

Bristow Group, Inc. has had a very interesting and diverse historical experience. With

established market experience in a large portion of the offshore transportation industry, this

company has found opportunities in new and developed technologies. Bristow originally began

serving the offshore markets in 1969, under the name Offshore Logistics, Inc. The company

began with transportation using watercraft but in 1972, the company began using helicopters.

According to a publication, “in 1997, the current CEO had retired and OLOG increased the size

of its helicopter fleet, purchasing 23 new aircraft, 18 of which it bought outright” ("Offshore

logistics, Inc.”). It was at this point that OLOG had started to rebrand itself as the strong

offshore transportation company known as Bristow. Helicopters are the primary tool used in

Bristow’s transportation fleet today. Accordingly, “Bristow Group Inc. provides helicopter

services to the offshore energy industry primarily in Europe, West Africa, North America, and

Australia” ("Bristow Group Inc.," ). This company is also known for its versatility and the

ability to work in several market sectors at once. While the company was first formed as an

offshore transportation company focused heavily on the natural resource sectors, the company

has grown into a profitable entity.

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In 1987, the company formed a smaller niche targeted service known as Search and

Rescue (SAR). According to the company, “Specially outfitted SAR helicopters operated by

highly trained Bristow pilots have rescued more than 7,000 people in the U.K. alone”

("Helicopter search and,”) In addition to the SAR business unit, Bristow has also formed several

other business units. These include, “Oil & Gas Transportation, Industry Air Support, Search

and Rescue, Training, Maintenance and Modifications, and Helicopter Sales” ("Helicopter

transportation services,”). By covering all facets of the rotorcraft marketplace, the company has

positioned itself for a successful future.

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FINANCIAL OVERVIEW

The Bristow Group has developed a dynamic financial plan in order to meet competition

and maintain financial success. The fiscal year-end for Bristow is in March which is congruent to

many of the companies in the industry. They have indicated that their credit score is a, “low risk

prescreen” ("2012 annual report," 2012). Bristow is traded on the New York Stock Exchange

under the stock symbol BRS. According to the CEO, "The strong operating performance we

experienced in our fiscal 2012 fourth quarter continued in the first quarter of fiscal 2013,"

("Bristow group reports," 2012). The market is also indicating that there will be a rise in activity

in the North Sea Region which will allow Bristow to position itself for maximum profits with the

addition of new, larger helicopters in that area.

Bristow’s historical current ratio can be seen below in Graph 1. The historical trend has

been generally upward with the exception of 2009 and 2012. These can be explained by the

acquisition of new aircraft to remain competitive. This acquisition has been completed through

Milestone Aviation Group. This group recently commented on the situation saying, “The

companies completed operating leases in December 2011 for two Eurocopter EC225s deliverable

in mid-2012 and anticipates closing the leases for three 2011 Sikorsky S-92 helicopters later this

quarter” ("Milestone aviation group," 2012).

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In comparison with the market averages for 2012, Bristow is positioned well against the

competitors in the Gulf of Mexico region. This will allow for continued revenue within this

market. The average current ratios for the Gulf of Mexico region can be seen below in Graph 2.

Accordingly, “the current ratio shows a firm’s ability to pay current liabilities using assets that

can be converted to cash in the near term” (Thompson, et al.).

2.9

3

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

2008 2009 2010 2011 2012

Graph 1. Historical Current Ratio

0

1

2

3

4

5

6

7

Bristow GroupInc.

SEACORHoldings Inc.

PHI, Inc. Industry Market

Graph 2. Industry Current Ratio 2012

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Another financial tool that can be used to analyze a company’s financial status is known

as the days of sales outstanding ratio, also known as the average collection period. This ratio,

“indicates the average length of time the firm must wait after making a sale to receive cash

payment” The industry average can be seen below in Graph 3” (Thompson, et al.). By analyzing

the record below, Bristow could maximize their profitability by decreasing the number of days

that it takes to receive payments. As shown in the diagram below, the leader in this field is

approximately 44% lower than Bristow.

According to the text, “the inventory turnover ratio measures the number of inventory

turns per year” (Thompson, et al.). With this measure, it is important for researchers to

remember that the higher the number, the better the result is. The industry results can be seen

below in Graph 4. In the Gulf of Mexico, the market leader in this characteristic is

approximately 396% higher than Bristow. However, Bristow is higher than the industry average

by 14%. In the rotorcraft transportation industry, the amount of inventory turns per year is

crucial because of the fast-paced environment.

0

10

20

30

40

50

60

70

80

Bristow Group Inc. SEACOR HoldingsInc.

PHI, Inc. Industry Market

Graph 3. Industry Days of Sales Outstanding 2012

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When measuring publically traded companies in the same market, a useful ratio is the

price-to-sales ratio. According to a recent article, “ this ratio is used for valuing a stock relative

to its own past performance, other companies, or the market itself”("Price-to-sales ratio -," ). As

it can be seen below in Graph 5, there is a very close correlation between the large operators in

the Gulf of Mexico region. This signifies that the companies have similar profitability with

relation to their stock options.

0

5

10

15

20

25

Bristow GroupInc.

SEACORHoldings Inc.

PHI, Inc. Industry Market

Graph 4. Industry Inventory Turnover 2012

0

5

10

15

20

25

30

Bristow GroupInc.

SEACORHoldings Inc.

PHI, Inc. Industry Market

Graph 5. Industry Price/Sales Ratio 2012

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One of the most essential ratio tools that are used in the rotorcraft transportation industry

is the gross profit margin ratio. This ratio, “shows the percentage of revenues available to cover

operating expenses and yield a profit” (Thompson, et al.). The gross profit ratio allows

researchers to identify the company’s ability to maintain profitability over their operating

expenses. Graph 6 shows Bristow’s results along with the direct competitive leaders. As seen in

this graph, Bristow is the leader in this region with approximately 14% over the industry

average. This number indicates that Bristow has a very high level of ability to cover the expense

costs with their revenue.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

Bristow GroupInc.

SEACORHoldings Inc.

PHI, Inc. Industry Market

Graph 6. Industry Gross Profit Margin 2012

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A final observation that can be made in this region with regards to financial obligations is the

number of employees within each company. The market leaders in this region have a direct

obligation to maintain positions for these individuals. The amount of revenue that can be

generated from a similar number of employees can give investors an overview of the company’s

effectiveness; the totals for the market leaders in the Gulf of Mexico region can be seen below in

Graph 7.

0

1000

2000

3000

4000

5000

6000

7000

Bristow Group Inc. SEACOR Holdings Inc. PHI, Inc.

Graph 7. Competitor Number of Employees 2012

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CORPORATE GOVERNANCE

Bristow has a very diverse group of individuals in the executive leadership team.

Bristow is governed by a board of directors who in turn oversee the selection of members within

the upper executive level. Bristow has outlined a strategic set of guidelines that provides an

overview including the role of the board, independence of directors, composition of the board,

director compensation, equity ownership, responsibilities of the board, and functions of the

board. Accordingly, the board is self-governed and provides a self-evaluation at least once a

year. This group is then further evaluated by the Corporate Governance and Nominating

Committee which conducts a presentation of their findings at the annual meeting of stockholders

under the captions, “Corporate Governance,” “Committees of the Board of Directors” ("2012

annual report," 2012). According to the Corporate Governance Plan, “The Corporate Governance

and Nominating Committee shall also review the performance, preparation and contribution of

individual Directors when considering whether to recommend nominating Directors for annual

reelection.” ("Bristow Group Inc.,”).

Along with the Corporate Governance Committee, this group is also governed by several

other committees. These committees include the audit committee, compensation committee, and

the Corporate Governance Committee. According to the Corporate Governance Plan, “At least

once each year, the Board, together with senior management, devotes an extended meeting to

discussing and providing direction for the corporate strategic plan” ("Bristow group Inc.”).

In addition to the pay allocated for the board of directors, they are also eligible for a

continuing education program. According to the Continuing Education Policy, “In order to

encourage continuing director education, the Company will reimburse directors for all costs of

attending one director education program each year” ("Bristow group Inc.”). This addition

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allows the executive board to gain knowledge of the practices involved within the Bristow

Group. In addition to this continuing education policy, the board of directors is required to attend

an FCPA educational program which continues the recognition involved within the company.

The leadership team is comprised of a CEO, along with several senior vice presidents,

directors, and vice presidents. Each of these individuals is carefully selected by their knowledge

of the market and their direct experience within the industry. This combined with the education

experience of the individual is used to evaluate their projected performance with the company.

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MISSION AND VISION STATEMENTS

Bristow has created a diverse collection of strong points that emphasize their direct

mission. Bristow has stated their vision statement as, “One global team setting the standard for

excellence, growing and succeeding together…soaring above the competition.” ("Values,”). This

statement of vision was formed by the board of directors and serves as a guideline for those

under the Bristow umbrella.

Bristow has also formed a mission statement that states, “Our mission is to provide the

safest and most efficient helicopter services and aviation support worldwide.” ("Values,”). This

mission statement emphasizes the dedication that has been established by this global leader in

helicopter transportation. It also provides consumers with the knowledge that the company can

operate in a variety of different fields. According to a recent article, “The Company has major

operations in the North Sea, Nigeria, and the U.S. Gulf of Mexico, as well as most of the other

major offshore oil and gas producing regions of the world; including Alaska, Australia, Brazil,

Russia, and Trinidad” ("Bristow CEO Bill," 2012). This company has been able to conform to

several different environments and wants their mission statement to reflect this dedication.

Accordingly, the executive team has decided to present the public with a mission statement that

fully grasps the concept of flexibility.

Bristow has recently reorganized their structure which will eliminate the division of the

company by geographic location. The company wants to be recognized as a whole company and

these statements seem to parallel that change. By stating that the company is a “global team”

they suggest that the union of the company will no longer divide the internal workings. In

summary, these statements have clearly established the perspective that the company is

extremely diverse and can operate safely in challenging environments. With the rise of predicted

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oil exploration in remote areas, these statements will position the company as a market leader for

this industry.

ANALYSES OF KEY STRATEGIES

Bristow has worked to develop several strategies that include all of the company’s

strategy-making hierarchy. By establishing new business practices and policies, the company

hopes to generate awareness for the areas of needed improvement. Bristow has developed

policies that affect the operating, functional, and business strategy. Because Bristow is a single

business group, the business and corporate strategy can be considered as one unit under the

business strategy (Thompson, et al.).

Bristow has clearly shown that their current strategy in the operation of their offshore

transportation business unit is to increase the number of “large aircraft” in their fleet. The

company states in their annual report that, “Our aim is for leased aircraft to account for 25 to 30

percent of our Large Aircraft Equivalent (“LACE”) aircraft once the strategy is fully

implemented” ("2012 annual report," 2012). By financing these aircraft through Milestone

Aviation, the company will reduce their capital needed to continue growth. This action will also

secure their credit rating with the leasing group. Milestone identifies that, “Today, helicopter

operators are utilizing operating leases more frequently to diversify their capital structure, take

advantage of the low capital requirements, improve cash flow, reduce risk and increase

operational flexibility” ("Milestone aviation group," 2012). This strategy is further identified in

the annual report which states, “Our strategy will involve funding our short-term liquidity

requirements with borrowings under our amended and restated revolving credit and term loan

agreement (“Amended and Restated Credit Agreement”), which consists of a $200 million

revolving credit facility (“Revolving Credit Facility”) and a $250 million term loan (“Term

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Loan”) (together referred to as our “Credit Facilities”), and funding our long-term financing

needs, while maintaining a prudent capital structure, among the following alternatives: a)

operating and capital leases, b) bank debt, c) public debt and/or equity placements and d)private

and export credit agency-supported financings” ("2012 annual report," 2012).

Bristow is currently engaged in a fierce competition for a European search and rescue

contract. According to a recent article, “The winner will provide about 20 to 25 helicopters under

a 10-year service provision contract to provide search-and-rescue services across the U.K. and

within 250 nautical miles offshore”("Bond Aviation, Bristow,," 2012).On the corporate level,

Bristow has recently acquired Cougar from competitor VIH Aviation Group. According to an

outside source, “Bristow will pay $250 million for the unit, with an additional three year earn out

of $40 million, depending upon performance targets. The acquisition includes eight Sikorsky S-

92 helicopters and passenger, maintenance and SAR facilities at different locations” ("Bristow

group," 2012). This acquisition will further support the strategy provided by Bristow as a need

for “large aircraft”. The acquisition of this large aircraft fleet may have been in response to the

to this SAR contract. Thomas has indicated that, “the key focus on the business strategy is thon

crafting responses to changing market circumstances and initiating actions to develop strong

competitive capabilities, build competitive advantage, strengthen market position, and enhance

performance” (Thompson, et al.).

In alignment with the acquisition of new aircraft through the use of financial techniques

and leasing strategies, Bristow as also announced that they have , “sold seven aircraft for $147.8

million and entered into seven separate agreements to lease back these aircraft” ("2012 annual

report," 2012). This will generate capital funds that can be used as a leasing strategy to obtain a

greater number of aircraft. This set lease will be used to the extent and then new aircraft can be

purchased in order to maintain Bristow’s fleet as one of the most technologically advanced.

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The major affect in the business strategy is the reaction to the previous downturn in the

rotorcraft operations market. According to recent market statistics, “the helicopter industry is

forecasted to reach approximately 13,186 from 2012-2022, while in 2023-2033 there is an

estimated 20,711 units” ("Global civil helicopter," 2012). This prediction is approximately 12%

higher than the 2000-2010 results. This forecast can be seen as an opportunity for both rotorcraft

manufacturers and operators as the forecast shows a significant growth. In an effort to improve

the company’s image, the executive team has placed several new procedures and policies into

action over the past few years. These changes have recently been recognized by the Helicopter

Association International, a recognized industry backbone. Several members of the Bristow

team including flight operations, engineering, quality, and management received awards for their

safety practices at the annual helicopter exposition led by the Helicopter Association

International ("Bristow employees receive," 2012).

The functional area strategies have become an area of dedicated focus in Bristow’s

organization. The company has diverted corporate strategies to improving the image of the

company with regard to customer service and marketing. This need is the direct result of new

competition and the introduction of increased consumer safety needs. Because of the historical

value placed on safety in the market, Bristow is a strong competitor in these fields. With the

application of their core competencies, Bristow can increase their market shares in these new

locations.

According to Thompson the function area strategies, “concern the actions an approaches

employed in managing particular functions within a business like R&D, production, strategy,

sales, and marketing” (Thompson, et al.). This focus has been heavily in the South American

region. Bristow is relatively new to this region and does not have a large market share.

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According to Bristow, “While growth is forecast in all of the major offshore oil and gas markets,

35 percent of the growth opportunities projected over the next five years are in Latin America,

where large helicopter demand is expected to almost double next year and again by 2020” ("2012

annual report," 2012). New contracts are constantly being researched and sought after while

current contracts are also being maintained. Bristow has identified that, “Contracts are generally

awarded based on a number of factors, including price, quality of service, operational

experience, record of safety, quality and type of equipment, client relationship and professional

reputation” ("2012 annual report," 2012). In order for Bristow to maintain a healthy flow of new

contracts, they must continue to promote these areas of concentration. Bristow has also stated

that, “As a result of significant competition, we must continue to provide safe and efficient

service or we will lose market share, which could have a material adverse effect on our business,

financial condition and results of operations due to the loss of a significant number of our clients

or termination of a significant number of our contracts” ("2012 annual report," 2012).

On an operating level strategy, Bristow has provided that in the next year they will,

“position our business to be the preferred provider of helicopter services by maintaining strong

relationships with our clients and providing safe and high-quality service” ("2012 annual report,"

2012). Bristow will continue to focus on their “Target Zero” program in order to further promote

their excellent safety standards as a company. This combined with the effort to maintain a close

relationship with their business partners will serve as a strong framework for the upcoming

position.

Bristow’s global strategy based upon historical actions within the market. Bristow is one

of the top operators for harsh environments and continues delivery services in new locations.

The majority of business is reflected in the offshore transportation industry. This industry has

high levels of variation. Bristow has stated that, Global demand for medium and large

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helicopters is driven by drilling, development and production activity levels in deep-water

locations throughout the world, as the medium and large aircraft are able to travel to these deep-

water locations” ("2012 annual report," 2012). Thompson has defined the operating strategies as,

“relatively narrow strategic initiatives and approaches for managing key operating units such as

plants, distribution centers, purchasing centers, and specific operating activities with strategic

significance” (Thompson, et al.).

One challenge that Bristow faces as part of the international marketplace are the rules and

regulations of that country. Being an air transportation company, Bristow needs to meet the

requirements of the host aviation authority, environmental authority, and local regulations. An

example of this is stated in Bristow’s Annual Report, “We conduct some of our operations

through entities in which citizens of such countries own a majority interest and we hold a

noncontrolling interest, or under contracts which provide that we operate assets for the local

companies and conduct their flight operations. Such contracts are used for our operations in

Russia and Turkmenistan” ("2012 annual report," 2012). Another example of the effect of local

regulations is observed in Nigeria with reference to the Nigerian Content Act. This act, “which

requires that oil and gas contracts be awarded to a company that is seen or perceived to have

more "local content" than a “Foreign” competitor even if such company’s services are up to 10%

more expensive” ("2012 annual report," 2012). This requires Bristow to make a considerable

effort to become active in the local environment in order to maintain the high-profile contract.

Because of these international environments it is essential for Bristow to become completely

familiar with the policies and procedures in that country to remain profitable.

Bristow faces another challenge in some of the countries that it operates in.

Approximately 52% of the total employees are represented by a labor union or collective

bargaining unit ("2012 annual report," 2012). These employees are located in the U.K., Norway,

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Nigeria, the U.S. and Australia. If Bristow does not maintain a healthy relationship with their

employees and dedicate a serious effort to act within the needs of these organizations, there can

be serious consequences.

Bristow has developed a new slogan stating, “Confidence in Flight, Worldwide”

("Bristow group Inc.,”). This slogan has helped the company to identify its image in the

consumer market as one company. In the past, the geographic locations of the company

throughout the world became a challenge as they had become very independent. The executive

team at Bristow is working to improve this relationship and re-brand the company as a single

operating unit.

SWOT ANALAYSIS

Bristow has developed a very attractive strategic plan in the market. There are several

elements both internally and externally that affect the profitability of the aviation marketplace.

Bristow typically exceeds the market averages in several fields and has remained strong in all of

the key areas.

There are several external factors that affect Bristow in the international marketplace.

Each of the arenas in which Bristow operates in can offer a specific set of problems and

challenges. Bristow has had to become extremely adaptable to changing environments in new

marketplaces where competitors may have already begun operations. Graph 8 shows the

adjusted EBITDAR, or net income from continuing operations before income taxes broken down

into the major business units.

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In North America, Bristow identifies that, “Among our strengths in this region, in

addition to our ten operating facilities, are our advanced flight-following systems and our

widespread and strategically located offshore fuel stations” ("2012 annual report," 2012).

Operating in the Gulf of Mexico offshore transportation sector has remained a competitive field

but Bristow has been successfully adjusting to maintain profits. This area has provided a

relatively consistent level of revenue over the past three years with a variance of 3.63. The

European market continues to grow with a slight increase of .06%. This market is made up of

the three bases that utilize a large percentage of the “large” aircraft fleet. Bristow has just

established a contract which will require, “SAR services starting July 2013, using four Sikorsky

S-92 helicopters based in the Scottish bases of Stornoway and Sumburgh” ("2012 annual report,"

2012). The Australian business unit has seen a decrease in revenue of approximately 20.5%

despite a 1.5% increase in operating revenue. This decline is associated to, “an increase in

salaries and benefits due to annual salary increases and an increase in training costs resulting

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%

Graph 8. Historical Adjusted EBITDAR

2010

2011

2012

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from their introduction of a new aircraft type into this market. ("2012 annual report," 2012).

These new aircraft were introduced to offer a sufficient negotiating to a potential contract.

Internally, there were some issues within the business management operations. Bristow

accrued $800,000 worth of expenses associated with dividend inclusion as a result of internal

realignment. This alignment is seen as a weakness in the balance sheet for 2011 but will

ultimately reduce the costs in the next five years due to the procedure for calculated taxes.

Another $5.3 million was recorded as a loss on the 2011 records because of software

depreciation costs associated with an abandoned project. These types of transactions promote a

negative impact on investor opinions and should be minimized. In the 2011 fiscal year, Bristow

had the lowest debt-to-equity ratio among other competitors in the market which can be seen in

Graph 9. Thompson suggests that, “a higher ratio signals excessive debt, lower creditworthiness,

and a weaker balance sheet strength” (Thompson, et al.). Bristow has opted to establish an

outside provider for new large aircraft in order to increase the availability of capital funds. This

directly affected the company’s debt-to-equity.

0.00

0.20

0.40

0.60

0.80

1.00

1.20

Bristow SEACOR PHI Industry Market

Graph 9. Debt-to-Equity Ratio

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Internally, Bristow had one of the lowest values with respect to asset turnover in 2011.

However, with the relatively close ratio of the top competitors and the industry average this ratio

is a good example of the company’s ability to converting its assets to revenue and the high level

of competition associated with this industry. The summary of asset turnover in 2011 is shown in

Graph 10.

Bristow is extremely unique with regard to the wide range of markets that the company is

involved in. The company has recently changed the structure of the company in order to better

relay this message to customers. Operating under one common name instead of by geographic

locations is a clear message related to the overall power of the company. Bristow has effectively

utilized the aircraft available in the fleet to maximize their effectiveness at the international

locations. As stated above, Bristow has recently acquired several large helicopters from the

acquisition of VIH helicopters. This acquisition will place them as a strong competitor in the

offshore transportation marketplace. The allocation of aircraft in Bristow’s flee is showing in

Graph 11.

0.5

0.6 0.6

0.8

0.3

Bristow Group SEACORHoldings Inc

PHI Industry Market

Graph 10. Asset Turnover

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In 2011, there were several events that occurred to both Bristow and the aviation industry

as a whole. These factors had positive and negative effects Bristow’s financial report.

According to the annual report, “Changes in foreign currency exchange rates decreased operating

income, net income and diluted earnings per share in fiscal year 2012 by $5.5 million, $4.5

million and $0.12, respectively, compared to fiscal year 2011” ("2012 annual report," 2012).

The tax rates for the market are shown in Graph 12 where Bristow is shown to have a lower

percentage with relation to the top competitors and the industry average.

01020304050607080

Graph 11. Helicopter Allocation

Small Helicopter

Medium Helicopter

Large Helicopter

17%

39% 40%

30% 28%

Bristow Group SEACORHoldings Inc

PHI Industry Market

Graph 12. Effective Tax Rate

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The past few years have been financially difficult with respect to the offshore market and

helicopter transportation. Graph 13 shows the relationship between the 36 month net incomes

with relation to overall revenue.

As shown above, both of the top competitors with Bristow also realized a negative

net income growth despite a positive revenue growth. Bristow has shown that it is financially

sound and has an equal balance between the overall net income and total revenue. In summary,

the ten most vital points to the SWOT analysis are list below. These items are critical in the

overall future of the company.

Pending contact in Australia/introduction of new aircraft in that region.

Increased profit margins in the European and other international theatres

Reduction of abandoned projects

Low debt-to-equity ratio

Increase the asset turnover ratio

Proper aircraft allocation

Negative impact of exchange rates

-20.05%

-43.17% -40.91%

5.78% 8.96%

1.97%

Bristow Group SEACOR Holdings Inc PHI

Graph 13. 36 Month Net Income/Revenue

36- Month Net Income Growth 36- Month Revenue Growth

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Positive maintenance of the realized tax rate

Positive revenue growth

Negative net income

The factors above are examples of the current strengths, weaknesses, opportunities, and

threats. Bristow has identified several of these factors in the company’s most recent annual

report. Within this extremely competitive marketplace, Bristow needs to concentrate on future

procedures. Overall, this SWOT analysis has identified the key factors involved with the

corporate business structure.

TOWS ANALYSIS

Bristow is positioned to develop their current operating procedures into a more

competitive model. There are several outside factors that will influence the profitability of the

company that rely heavily on the offshore energy market.

The offshore energy market is forecasted to decline in the upcoming years. Bristow has

indicated that, “35 percent of the growth opportunities projected over the next five years are in

Latin America, where large helicopter demand is expected to almost double next year and again

by 2020” ("2012 annual report," 2012). According to a recent article, “global demand is

expected to peak in 2010, then drop through 2015” (Duncan & Frank, 2007). Graph 14 shows

this individual’s research regarding the global helicopter demand.

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As operators continue to exhaust the shallow reserves in today’s marketplace, it will

become vital to introduce an increased number of larger aircraft into the marketplace. This fact

will drive the demand of large aircraft while reducing the demand for smaller aircraft.

Therefore, Bristow has begun to shift their concentration to purchasing larger aircraft to prepare

for this increased demand. Bristow identifies in their annual report that, “medium and large

helicopters have historically been preferred in international markets, where the offshore facilities

tend to be larger, the drilling locations tend to be more remote and the onshore infrastructure

tends to be more limited” ("2012 annual report," 2012). By acquiring a considerable amount of

larger aircraft from VIH as identified above, Bristow has identified a unique method to outfitting

their fleet with larger aircraft. In North America, Bristow must continue to introduce larger

aircraft to their business unit in the Gulf of Mexico. The major competition in this area is PHI,

Inc. who is currently operating twenty Sikorsky S-92s, a large aircraft capable of seating up to 19

passengers ("Annual report,"). However, as seen above in Graph 8, there is an opportunity to

increase their market share in this region.

1220

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1420

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Graph 14. Helicopter Market Prediction

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Airframe manufactures in the helicopter industry feel increased pressure from a large

number of customers. This competition allows for manufacturers to offer their products at a

premium because of the increased demand. This characteristic of the marketplace is a relevant

threat to Bristow’s business plan. As indicated on their annual report, “Our dependence on a

small number of helicopter manufacturers poses a significant risk to our business and prospects,

including our ability to execute our growth strategy” ("2012 annual report," 2012). By

broadening their aircraft suppliers, Bristow may be able to generate additional revenue that can

be used in their growth strategy. However, this may be offset by the cost associated with

maintaining another airframe.

With the predicted increase in the business forecast from Latin America, Bristow has the

opportunity to increase the number of aircraft in this sector. Accordingly, Bristow recently used

a recent acquisition to introduce the use of new aircraft in this region. According to Bristow,

“Lider Aviacao Holding S.A., a Brazilian affiliate in which Bristow owns a 42.5% interest, was

awarded three new incremental five-year contracts by Petrobras for three large helicopters

commencing on or before June 30, 2010” ("Bristow group announces," ) This new contract will

promote Bristow in the local area. In order to significantly pursue holdings in Latin America,

Bristow should continue to maintain a positive relationship with this local provider. This should

continue to lead to advanced contracts with larger aircraft. According to the annual report,

“Brazil continues to represent a significant part of our positive growth outlook” ("2012 annual

report," 2012).

Bristow has a very unique opportunity within the helicopter market to train its own

personnel. According to a recent article, “many helicopter pilots and engineers entered the

offshore business from the military following experience in Vietnam and are now approaching

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retirement” (Duncan & Frank, 2007). Bristow’s annual report identifies that. “We hired 24

graduates as instructors at Bristow Academy and 18 graduates as pilots (mostly former

instructors) into our other business units” ("2012 annual report," 2012). By training helicopter

pilots for revenue and then having they placed into one of Bristow’s flight programs, the

company can ultimately reduce the effect felt by the reduction of experienced pilots. This unique

perspective allows the company to focus on recruiting upcoming graduates for direct placement

into Bristow’s pilot pool.

As seen in Graph 10 above, Bristow has the lowest asset turnover rate when compared to the

other leading operators. This ratio identifies that Bristow has made an excellent effort to utilize

the resources available to them. Graph 13 shows that while Bristow had a smaller 36-month

revenue growth, they had a smaller loss in 36-month net income. This shows that even as some

of the larger operators continue to build their fleet, they may not be fully prepared for the

demand in larger helicopters.

Finally, with the combination of new pilots being introduced to Bristow’s fleet, a large

aircraft training program may be necessary at the Bristow Academy. This program may aid in

the transition from medium to large aircraft in the coming years. Overall, Bristow has the

opportunity to focus on Latin America while building a fleet that consists largely of higher

capacity rotorcraft.

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CONCLUSIONS

Bristow has become a very serious competitor within many of the most challenging

markets. By establishing a solid corporate image within the industry and maintaining their high

safety standard, Bristow has made excellent investments for future growth. Bristow serves as a

market leader in several operating environments around the world because of their dedication to

their strong business model.

With regards to the financial status of the company, Bristow has maintained on of the

lowest current ratios in the industry indicating a strong ability to pay current liabilities by

converting their assets into cash. Bristow has also accomplished an industry high by minimizing

their days of sales outstanding. This factor indicates that Bristow has utilized their customer

payment method and continued to reduce the payment duration. This financial model has also

been improved by Bristow’s fleet allocation. The inventory turnover model above shows that

Bristow has posted the lowest turnover rate indicating that their fleet has been positioned to fully

maximize their potential usage.

Corporate governance within the company is depicted as a strong collection of

individuals from varying work experience. This team actively assumes responsibilities for their

business units, now under one common company distinction. The executive team is overseen by

a board of directors which is subdivided into several committees that govern the operating

characteristics within the company. This group has come together to develop a new set of

statements that promote the unity within the company focusing on safety and diversity. These

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new statements have been developed as a direct response to the company’s reconstruction which

collected all of the individual geographic markets into one group divided into certain business

units.

Bristow has developed several current strategies to maintain their market share within the

international marketplace. The company’s overall strategy to introduce “large” aircraft into the

current fleet has derived from the decreasing amount of shallow water transportation services.

This has been partially achieved by the recent acquisition of VIH Aviation which will introduce

several large aircraft into the Bristow fleet. The remaining aircraft will be acquired from a recent

business contract between Bristow and Milestone Aviation Group. This will allow for Bristow to

obtain financing for the purchase of additional “large” aircraft while building their short-term

liquidity through financing. Helicopter operations within Latin America are forecasted to rise in

the upcoming years. Bristow has become established within the market by securing local

contracts. These relationships are vital to the success in this market as they will likely determine

the growth potential for Bristow in this marketplace. However, as seen in other markets, the host

country’s rules and regulations can become very challenging. These implications will limit

profitability but will also show a trust in these countries with the introduction of investment.

Bristow has captured the versatility of the international marketplace by serving within

several theatres. This tactic allows for limited incomes and the strategy is typically dictated by

the host countries regulations. Bristow has an opportunity within the North American business

unit to develop the current fleet and introduce “large” aircraft to compete within the Gulf of

Mexico region. The company also has the chance to improve their financial gain by improving

their internal project management and approval process. The historical financial records indicate

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that there have been significant revenue losses due to the cancellation of projects that were

already being implemented.

With the decline in the shallow water offshore market, Bristow has begun to focus on the

replacement of the “small-medium” aircraft with “large” category aircraft. This is a direct result

of the increased market demand for deep water contracts. Bristow has a very unique ability to

train their own pilots by utilizing their training academy. This strategy allows for the company

to generate revenue while training future pilots.

In conclusion, Bristow has presented a very competitive strategy that will secure the

company’s future. Bristow needs to focus on the competitors and work to illustrate to consumers

that they can provide a diverse fleet for a variety of mission types. With the changing trend in

offshore transportation, Bristow has the opportunity to directly introduce new aircraft into these

fields for optimization. This deep water trend combined with the increase in opportunity within

Latin America will offer a few new possible strategies in this highly competitive market.

Page 32 of 33

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