Bristow thinks big: Second quarter profits increase by $81m

A helicopter operated by the Bristow Group.

Bristow helicopters can be identified by the company's red, white and white colour scheme.

The Bristow Group sounded like a confident company during its latest earnings call.
A helicopter operated by the Bristow Group.

Bristow helicopters can be identified by the company’s red, white and white colour scheme.

Even the most experienced manager can be forgiven for being a little nervous before an analyst calls and relieved when the conversation is over. However, if you listen to Bristow’s second quarter earnings call (F2Q 2014), it sounds like Bill Chiles and the others were disappointed that there were not more questions.

This is not a surprise. Bristow’s profit from the quarter was up $81 million to $110.6 million, driven by more activity in West Africa and Europe and the acquisition of Cougar Helicopters. Bristow is also confident about its strategy of focusing on large helicopters and deep water operations. The company has already exited Alaska and signed a letter of intent for the sale of its entire fleet of Bell 206 L4s, which operate in the Gulf of Mexico.

Following its win of the UK search and rescue (SAR) contract (and it is documenting leases for this now), it is also focusing on this market. The company sees up to 15 oil and gas SAR aircraft opportunities in various countries including Australia, Brazil, Libya, the Netherlands and Nigeria. It has also pre-qualified for the Falkland Islands government SAR contract.

More than 20 per cent of Bristow’s fleet is now leased and soon it will be 30 per cent. “We have got a lot of lessors who want to work with us and we want to show partnerships,” said Jonathan Baliff, CFO of Bristow. “But more importantly, it really has lowered our overall cost of capital given the advantages that we have as an investment grade secured company.”

He added: “For us that’s something we want to take advantage of it. It’s also a low interest environment. That being said, we like the residual value of our helicopters. We like owning more helicopters than leasing. We appreciate the partnership that it gives us in the capital efficiency, but we like owning helicopters.”