Executive Summary / Key Takeaways

• Bristow Group Inc. (NYSE: VTOL) is poised for significant growth, projecting a 27% increase in adjusted EBITDA from 2025 to 2026, driven by the full operational ramp-up of its Government Services contracts and sustained demand in Offshore Energy Services.
• The company's core investment thesis is underpinned by its market leadership in specialized vertical flight solutions, a diversified revenue base with stable, long-term government contracts, and a resilient Offshore Energy Services segment focused on production support.
• Bristow is actively investing in next-generation aviation, exemplified by its participation in Norway's Test Arena for Zero Low Emission Aviation, positioning itself at the forefront of Advanced Air Mobility (AAM) development.
• A new capital allocation framework prioritizes debt reduction to $500 million by the end of 2026, opportunistic share repurchases, and the initiation of a quarterly cash dividend of $0.12 per share starting in Q1 2026.
• Despite persistent supply chain challenges impacting aircraft availability and new deliveries, Bristow's strategic positioning and operational efficiencies are expected to drive strong financial performance and free cash flow generation, with approximately $140 million projected for 2026.

A Legacy of Vertical Flight: Bristow's Strategic Ascent

Bristow Group Inc. stands as a global leader in innovative and sustainable vertical flight solutions, providing essential aviation services to offshore energy companies and government entities across 18 countries and six continents. The company's journey, rooted in Bristow Helicopters established in 1955, has been marked by evolution, including a pivotal merger with Era Group in June 2020 that saw it re-emerge as a public entity under the ticker VTOL. This strategic combination, following a period of financial restructuring in 2019, laid the groundwork for its current diversified business model.

The company's strategic responses to market dynamics are evident in its recent operational and structural enhancements. In the fourth quarter of 2024, Bristow undertook a significant realignment, segmenting its operations into Offshore Energy Services (OES), Government Services, and Other Services. This restructuring, which included reclassifying fixed-wing revenues in Africa to OES and integrating Australian fixed-wing operations into Other Services, was designed to enhance clarity and focus on distinct customer profiles and contract dynamics. This foundational context highlights Bristow's adaptability and commitment to optimizing its operational framework for sustained growth.

Technological Edge: Powering Critical Missions and Future Mobility

Bristow's competitive advantage is deeply rooted in its specialized fleet and proactive engagement with emerging aviation technologies. The company is the world's largest operator of the S-92, AW189, and AW139 helicopter models, which remain the most in-demand platforms for both offshore crew transportation and Search and Rescue (SAR) missions. These heavy and medium helicopters are critical for their ability to fly longer distances, carry heavier payloads, and operate reliably in demanding weather conditions, making them indispensable for complex offshore and rescue operations. The current market for these specialized aircraft is characterized by near full effective utilization levels and manufacturing lead times of approximately 24 months, a significant barrier to entry that benefits existing operators like Bristow by constraining new capacity.

Beyond its conventional fleet, Bristow is actively shaping the future of vertical flight through its Advanced Air Mobility (AAM) initiatives. In August 2025, the company launched operations at Norway's Test Arena for Zero Low Emission Aviation at Stavanger Airport, featuring flights of BETA Technologies' all-electric ALIA CX300 aircraft. This pioneering "sandbox" project, a collaboration with Avinor and the Civil Aviation Authority of Norway, aims to collect real-world data, validate operational assumptions, and prepare the ecosystem for commercial AAM integration. This initiative is a critical step in commercializing advanced air mobility and is expected to be replicated in other countries. For investors, this technological foresight and leadership in AAM development represent a potential long-term growth vector, contributing to future revenue streams and solidifying Bristow's market positioning as an innovator in vertical flight. While AAM contributions are not factored into 2026 guidance, potential first deliveries are anticipated in the 2027-2028 timeframe, following expected certification in 2026.

Segment Performance: A Story of Growth and Strategic Transitions

Bristow's financial performance reflects a dynamic interplay of robust demand in offshore energy and strategic investments in government services. For the nine months ended September 30, 2025, total revenues reached $1.11 billion, an increase from $1.06 billion in the prior year period. Net income for the same period was $110.75 million, significantly higher than $63.10 million in the nine months ended September 30, 2024.

Offshore Energy Services (OES)

The OES segment, which accounts for the majority of Bristow's revenue, demonstrated strong performance. For the nine months ended September 30, 2025, OES revenues increased by $17.1 million year-over-year to $743.03 million. This growth was primarily fueled by higher utilization and additional aircraft capacity in Africa, alongside increased utilization in the U.S. and Brazil. Operating income for OES surged by $25.6 million to $123.39 million for the nine-month period, with operating income margins improving from 13% to 17%. The segment's resilience is attributed to its heavy weighting towards production support activities, which constitute 85% of its revenues, and a contract model where the majority of revenues are earned on a monthly standing charge, de-risking exposure to flight activity. Growth markets such as Brazil, West Africa (Nigeria), and the Caribbean (Suriname) are seeing increased demand and aircraft mobilization. While the North Sea remains a softer, mature market, new aircraft deployments there are primarily for fleet replacements, enhancing profitability on secure long-term contracts. Despite persistent supply chain challenges impacting aircraft availability, higher vendor credits helped mitigate repairs and maintenance costs, which decreased by $20 million for the nine-month period.

Government Services

The Government Services segment is undergoing a significant transformation, with 2025 designated as a "transition year." Revenues for this segment increased by $32.2 million to $279.34 million for the nine months ended September 30, 2025, driven by the commencement of the Irish Coast Guard (IRCG) contract and higher UKSAR revenues. However, operating income for the period decreased by $12.1 million to $6.69 million, with margins at 2%, primarily due to higher expenses associated with the launch of new contracts in Ireland and the ongoing transition to the UKSAR2G contract. These large and complex projects involve elevated subcontractor, amortization, and personnel costs. Bristow has taken delivery of five aircraft for these contracts—two AW189s for IRCG in Ireland and three AW139s for UKSAR2G in the United Kingdom—which are currently undergoing final modifications. Management anticipates the negative drag on profitability from these transitions to invert in 2026, with adjusted operating income from Government Services projected to nearly double year-over-year as these contracts reach full operational run rates.

Other Services

The Other Services segment, comprising fixed-wing services, dry-leasing, and part sales, saw revenues increase by $1.9 million to $90.88 million for the nine months ended September 30, 2025. This was primarily due to higher activity in Australia, partially offset by the conclusion of certain dry-lease contracts. Operating income for the period decreased by $1.8 million to $8.28 million, with margins at 9%, largely due to higher operating expenses offsetting the revenue growth. The company expects the improved economics of its regional airline in Australia to persist, ensuring this segment remains consistent and cash flow accretive.

Financial Health and Capital Allocation: A Disciplined Approach

Bristow maintains a strong financial position, with $245.50 million in unrestricted cash and $67.90 million in remaining availability under its ABL Facility as of September 30, 2025, totaling $313.40 million in liquidity. Operating cash flows for the nine months ended September 30, 2025, were $121.49 million, impacted by working capital uses of $49.30 million primarily for inventory to mitigate supply chain constraints and start-up costs for new Government Services contracts. Capital expenditures for the period were $112.89 million, mainly for aircraft and leasehold improvements.

The company has articulated a clear capital allocation framework aimed at protecting its balance sheet, pursuing high-impact growth, and returning capital to shareholders. Bristow intends to reduce its gross debt to approximately $500 million by the end of 2026, having already made $40.10 million in accelerated principal payments on its UKSAR Debt during the nine months ended September 30, 2025. A new $125 million stock repurchase program was approved in February 2025, with $121 million remaining available. Demonstrating confidence in its future cash flows, Bristow plans to initiate a quarterly cash dividend of $0.12 per share ($0.50 per share annualized) starting in the first quarter of 2026, a decision directly linked to the stability of its Government Services cash flows. The company's Net Asset Value (NAV) was approximately $1.7 billion, or $57 per share, as of December 31, 2024, representing a significant premium to its current trading price.

Competitive Landscape: A Niche Leader with Strategic Advantages

Bristow operates in a specialized aviation services market where direct public competitors are scarce. Its primary competitive advantage stems from its global operational network, specialized aviation expertise, and robust regulatory licenses for offshore and rescue services. The industry is characterized by high barriers to entry, including stringent regulatory requirements, substantial capital investment for fleets, and the need for established client relationships. These factors limit new entrants and help Bristow defend its market position.

Compared to broader offshore support providers like Tidewater Inc. (TDW) or offshore drilling specialists such as Valaris Ltd. (VAL), Bristow's aviation-centric approach offers superior efficiency in aerial transport and rapid deployment for rescue operations. While competitors like TDW might offer more comprehensive marine support, Bristow's specialized fleet and operational focus provide a qualitative edge in flexibility and responsiveness for critical missions. Bristow's long-term contracts, particularly in Government Services, provide stable revenue streams that differentiate it from more volatile segments of the energy services sector. The tight supply-demand dynamics for heavy and super medium helicopters, with two-plus year lead times for new builds, further solidifies Bristow's position as a preferred provider.

Outlook and Risks: A Clear Flight Path with Headwinds

Bristow's management has provided a robust outlook, tightening its 2025 adjusted EBITDA guidance to $240 million to $250 million on revenues of $1.46 billion to $1.53 billion. For 2026, adjusted EBITDA is projected to be between $295 million and $325 million on revenues of $1.6 billion to $1.7 billion, representing an impressive 27% increase at the midpoint from 2025. OES adjusted operating income is expected to be approximately $200 million in 2025, rising to $225 million to $235 million in 2026 (a 15% increase). Government Services adjusted operating income is anticipated to see a 76% increase in 2026 compared to 2025.

Despite this positive outlook, Bristow faces several risks. Persistent supply chain disruptions continue to impact aircraft availability and new deliveries, potentially leading to lost revenue opportunities or contractual penalties. The company's reliance on a limited number of helicopter manufacturers and suppliers exacerbates this risk. Geopolitical instability and unclear legislation in international jurisdictions also pose challenges. While deepwater projects are expected to remain resilient, a significant downturn in crude oil prices below $60 per barrel could impact customer spending plans. However, Bristow's strategic focus on production support and long-term contracts mitigates some of this exposure.

Conclusion

Bristow Group Inc. is charting a compelling course for investors, marked by strong growth projections, a disciplined capital allocation strategy, and a clear vision for the future of vertical flight. The company's market leadership in specialized helicopter operations, coupled with its strategic diversification into stable government services, provides a robust foundation for consistent financial performance. The anticipated 27% increase in adjusted EBITDA from 2025 to 2026, driven by the full operational ramp-up of its Government Services contracts and sustained demand in Offshore Energy Services, underscores a powerful growth narrative.

Bristow's proactive engagement in Advanced Air Mobility, as demonstrated by its Norway Test Arena initiative, positions it as a forward-thinking leader in the evolving aviation landscape. The commitment to debt reduction and the initiation of a quarterly dividend signal a maturing financial profile focused on shareholder value. While supply chain challenges and macroeconomic uncertainties persist, Bristow's operational resilience, technological differentiation, and strategic positioning in high-barrier-to-entry markets suggest a company well-equipped to deliver long-term value. Investors seeking exposure to a specialized aviation leader with a clear growth trajectory and a commitment to capital returns will find Bristow Group an attractive proposition.