Bristow Group consolidates amid stabilizing revenues

 - February 19, 2010, 11:34 AM

Bristow Group consolidated its business units and made changes in the executive suite just weeks before posting declining net income, but modestly increasing revenues. The company said it made the changes “in an effort to improve operations and financial performance.”

Bristow is combining several business units including Eastern and Western hemisphere, Other International and Latin America, and Gulf of Mexico and Arctic. Bristow also is creating a global shared services organization to support finance, accounting, human resources and information technology. The move comes a little more than a month after Bristow added three new board members and includes several senior personnel changes.

Meera Sikka, vice president of global business development, and Patrick Corr, senior vice president for global training and director of the Bristow Academy, both have left the company. Their responsibilities will now be handled by Mark Duncan, senior vice president-commercial. Richard Burman assumed the role of senior vice president for operations and Hilary Ware is senior vice president of administration. Burman had been senior vice president for the Eastern hemisphere and Ware had been vice president of global human resources.

While Bristow’s revenues grew modestly in the last quarter, the company’s operating income posted double-digit decreases. However, lower costs due to fleet rejuvenation, changes in currency valuations and the improved performance of individual operating units, particularly those in West Africa and Australia, helped to mitigate the decline. While demand for services was down in the Gulf of Mexico, further Gulf business erosion appears to have been mitigated by upgrading to larger aircraft serving deepwater projects farther offshore. Bristow sees Brazil as a particularly promising market for future revenues.

Approximately 80 percent of Bristow’s revenues derive from non-U.S. markets, while 56 percent are from Europe and West Africa. The bulk of the company’s revenues are from operations serving established production from international oil companies through monthly fixed-cost contracts. Bristow operates 575 aircraft in 20 countries and employs 3,400. Over the last four years it has spent $1.2 billion on 124 new helicopters and over the next five years it has options for 47 more and orders for 12. Last year Bristow acquired three AgustaWestland AW139s to integrate into its fleet in response to customer discussions relating to future contracts. Bristow continues to dispose of legacy aircraft, such as S-61s from North Sea operations, when valuations are appropriate. Other aircraft are being held off the market until demand improves and their retail prices stabilize. The company had a zero accident rate from its oil and gas-related operations last year, and 25 percent of executive incentive compensation is tied to the company’s safety record.

CEO William Chiles said that Bristow “sees the market stabilizing” and that pressure from customers for lower pricing appears to be abating in the short term after the market retreated from expectations associated with $130-a-barrel oil in 2008. Bristow is helping customers to contain costs through cooperative ventures that include the resale of unused customer flight hours and by altering the fleet mix in given markets to match costs.