Bristow Group (VTOL) Q3 2026 earnings review
Bristow's offshore profit climbs, but government helicopter delays cut margins
Bristow Group, which flies helicopters for offshore oil rigs and government rescue agencies, leaned on higher offshore energy rates and a recent acquisition to offset worsening delays in its government contracts. Total sales rose 13% from a year ago, or 7% by our math excluding the July purchase of Berry Aviation. Operating cash profit (Ebitda excluding one-offs) climbed 33%, allowing chief executive Chris Bradshaw to keep the $310 million full-year target on track.
| Sales from businesses owned a year ago | +6.6% total revenue +13.4% to $437.9M |
|---|---|
| Ebitda, excluding one-offs | $89.6M +33.5% from a year ago |
| Government Services FY26 profit outlook | Cut $20M middle of the range down to $40M from $60M |
| Full-year Ebitda outlook | Unchanged middle of the range: $310M (+26% growth) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because booming offshore oil and gas margins merely covered a second straight profit cut in Government Services. Management slashed its full-year operating profit target for the government unit by a third as late helicopter modifications triggered availability fines in Ireland. On the positive side, stronger cash flow allowed the company to buy back $25 million of stock.
The question now is whether the government contract problems are temporary transition delays or a lasting squeeze from helicopter manufacturers prioritizing military buyers. If the delays are temporary, segment margins will rebound once modifications finish; if parts remain scarce, availability penalties and spare-parts stockpiling will keep draining profit. Fourth-quarter government operating profit, which needs to rise 41% by our math to meet the lowered plan, will provide the next test.
🐂 Bull Case
Offshore Helicopter Rates Carry the Full-Year Plan
Bristow's Offshore Energy Services segment flies crews to oil and gas rigs. Chief executive Chris Bradshaw sees "more favorable industry conditions than we’ve seen in more than a dozen years" because tight helicopter supply lets the company raise contract rates.
Those higher rates lifted segment operating profit before depreciation (Adjusted Operating Income) by 34% from a year ago to $68.5 million, even though flight hours in Europe fell 14%. Lower fuel and repair costs also helped, as repair expenses dropped 0.7 percentage points of segment sales from last quarter to 15.6%, and other operating costs fell 1.7 percentage points to 13.0%. Management raised its full-year profit target for the oil and gas unit by $5 million at the middle of the range, to $240–250 million.
What to watch: fourth-quarter segment operating profit before depreciation, which the full-year outlook puts near $60 million by our math. Holding that level without one-off repair credits from manufacturers would show that higher contract rates alone sustain the 27% margin.
Berry Aviation Lifts Sales and Charter Profit
In July, Bristow paid $105 million to buy Berry Aviation, a US operator that flies special missions and cargo for military customers, now renamed Bristow Special Missions. Bradshaw said the unit "contributed strong financial results" and that management expects "this growth to accelerate in the fourth quarter and full-year 2027."
The new unit added $26.1 million in third-quarter revenue: $16.9 million in Government Services and $9.2 million in Other Services, which covers regional charters and cargo. By our math, sales from businesses owned a year ago grew 6.6%, meaning the acquisition provided half of Bristow's 13.4% total revenue growth. Combined with busier charter flights in Australia, the purchase lifted Other Services operating profit before depreciation from $5.3 million last quarter to $12.6 million.
What to watch: fourth-quarter revenue in Other Services, which the full-year outlook puts at $48.7 million by our math. Reaching that figure would show that the military cargo business can keep growing after Australia's seasonal charter peak fades.
Bristow Restarts Buybacks as Cash Flow Rebounds
After keeping its $125 million share buyback plan mostly unused for a year during deal talks, Bristow spent $25 million in the third quarter to repurchase 547,785 shares at an average price of $45.64. It also paid its $0.125 quarterly dividend.
Stronger cash generation funded the payout. Free cash flow (operating cash flow minus maintenance capital spending) rose to $56.0 million from $34.3 million last quarter and $20.3 million a year ago, helped by smaller working-capital outflows and $19.2 million in cash from selling aircraft. Capital spending on property and equipment dropped to $20.8 million from $67.4 million last quarter as major helicopter purchases wound down.
What to watch: fourth-quarter share repurchases against the $96 million remaining on the buyback plan. Continued buying would show that management prefers returning cash to shareholders over paying down its $760 million debt load.
🐻 Bear Case
Government Helicopter Delays Force Another Profit Cut
Bristow flies search-and-rescue helicopters for the UK and Irish governments under ten-year contracts. "We expect these supply chain issues to stabilize during 2027, facilitating a return to historically strong margins on these long-term government contracts," Bradshaw said. Yet the numbers keep moving the wrong way.
- Full-year Government Services operating profit before depreciation outlook: cut to $35–45 million, down from $55–65 million last quarter and $70–80 million in the first quarter
- Third-quarter Government Services operating profit before depreciation: $9.7 million, down 10.5% from a year ago despite adding $16.9 million of Berry revenue
- Irish Coast Guard contract revenue: down $0.7 million from last quarter due to "higher penalties related to aircraft availability"
Bradshaw blamed "delayed aircraft modification programs for the Company’s new search and rescue contracts". Because manufacturers delivered helicopters late, Bristow paid availability fines in Ireland and recognized previously deferred staff training costs, keeping the segment in a $1.4 million GAAP operating loss.
What to watch: fourth-quarter Government Services operating profit before depreciation, which the lowered outlook puts at $13.6 million by our math. Missing that reduced bar would mean manufacturer delays are spilling deeper into 2027.
Spare Parts Stockpiling and Deal Debt Lift Leverage
While third-quarter operating cash flow improved, helicopter parts shortages and acquisition spending weighed on the balance sheet. In its presentation, Bristow noted that "Inventory levels have grown in effort to defend availability" and that "KPI penalties and negotiated discounts have not solved underlying problems".
Spare parts inventories climbed to $151.1 million, up 10.2% from last quarter and 11.6% from a year ago, tying up cash just to keep helicopters flying. At the same time, paying for Berry Aviation and buying back shares reduced unrestricted cash from $312.3 million to $233.4 million. That drop pushed net debt (total debt principal minus unrestricted cash) up 16.3% in a single quarter, from $453 million to $527 million.
What to watch: spare parts inventory and net debt at year-end. A further rise in inventory above $151 million would show that Bristow must keep tying up working capital to offset manufacturer delays.
Risks this quarter didn't answer
Three standing issues received no clear numbers in the third-quarter release or presentation.
- Planned sale of the Norway offshore business: announced in June covering 23 heavy helicopters and four bases, but unmentioned in this quarter's materials; a sale agreement or cancellation on the call will show if the exit is still happening.
- Total government availability penalties: management disclosed $3.6 million of fines last quarter, but this quarter said only that UK fines fell while Irish fines rose; the quarterly filing will show the exact dollar drag.
- Currency swings: non-cash foreign exchange losses dropped to $1.1 million from $7.7 million last quarter, but the company still gives no sensitivity for how British pound and euro moves affect government contract revenue.
👓 Other Themes
Offshore Customer Spending Rebounds Despite Supply Bottlenecks
Industry data in Bristow's presentation shows why offshore helicopter rates stay high despite lower European flight hours. Global oil and gas companies are on pace to approve more than $110 billion of offshore projects in 2026, up 61% from $70 billion in 2025. Meanwhile, industry-wide base maintenance downtime for heavy helicopters has doubled since 2020 to 75 days, keeping 91% to 100% of active offshore helicopters in use.
💲 Other KPIs
Current deferred revenue — cash customers have paid upfront for flight services to be delivered within a year — jumped 29.4% from last quarter and 50.2% from a year ago. That $8.9 million quarterly addition outpaced the 6.4% rise in reported revenue and points to growing advance payments on government and offshore contracts.
Flight activity rose 4.5% from last quarter after falling for three straight quarters, though hours remained 0.5% below a year ago. Adding Berry Aviation lifted Government Services hours by 18.8% and Other Services hours by 28.9% from last quarter, offsetting a 13.9% drop in European offshore flying.
Depreciation and amortization expense rose 2.0% from last quarter and 66.2% from a year ago, climbing 2.1 percentage points of revenue to 6.7%. Faster write-downs on older S76D medium helicopters and newly added aircraft from Berry Aviation and search-and-rescue contracts drove the increase, depressing GAAP operating margin by 2.2 percentage points from a year ago.
🔮 Guidance
Cut. Bristow trimmed the top end of its full-year sales plan by $20 million, lowering the middle of the range to $1,670 million, or 12.0% growth from 2025. By our math, that leaves $431.6 million for the fourth quarter, down 1.4% from the third quarter on winter seasonality in Europe and Australia, but up 14.4% from a year ago.
Unchanged at the middle of the range. Management narrowed the band by $5 million on each side, keeping the $310 million center point that calls for 26.2% growth over 2025. By our math, the fourth quarter needs $81.4 million, down from $89.6 million in the third quarter but up 35.3% from a year ago.
Cut. The oil and gas helicopter unit narrowed its sales range, trimming the middle of the range by $5 million to $1,025 million, or 3.5% growth for the year. By our math, that leaves $253.0 million for the fourth quarter, up 2.3% from a year ago as higher Americas activity offsets slower North Sea flying.
Raised. Management lifted the segment profit target by $5 million after raising it by $10 million last quarter, putting the middle of the range at $245 million, up 20.8% from 2025. By our math, that leaves $59.8 million for the fourth quarter, down from $68.5 million in the third quarter but up 17.6% from a year ago.
Cut. The search-and-rescue and military unit trimmed its sales outlook by $5 million at both ends, to a $480 million center point, or 26.5% growth including Berry Aviation. By our math, that leaves $129.9 million for the fourth quarter, matching the third quarter and up 29.7% from a year ago.
Cut. Management lowered the segment profit target by $20 million after cutting it by $15 million last quarter, leaving the $40 million center point barely above 2025's $38.2 million. By our math, the fourth quarter still requires $13.6 million, up 40.6% from the third quarter and 77.9% from a year ago.
Unchanged. The regional charter and cargo plan stays at a $165 million center point, up 36.8% from 2025 with Berry Aviation included. By our math, that leaves $48.7 million for the fourth quarter, down slightly from $51.9 million in the third quarter but up 64.0% from a year ago.
Unchanged. The segment profit outlook holds at a $27.5 million center point, up 35.0% from 2025. After earning $12.6 million in the third quarter, the segment needs $8.5 million in the fourth quarter by our math, more than double the $4.0 million earned in the fourth quarter of 2025.
Unchanged. Full-year cash interest stays near $45 million, reflecting the $500 million of 6.75% senior secured notes issued in January alongside British and Irish government contract debt.
Raised. Management moved the cash tax forecast to the top of its prior $25–30 million range, following a $9.1 million income tax charge in the third quarter on higher pre-tax profit.
Unchanged. The maintenance spending plan holds at $25–30 million. Having spent $16.3 million through the first nine months, Bristow's plan leaves $8.7–13.7 million for the fourth quarter by our math.
❓ Key Questions
Is Bristow still selling its Norway offshore helicopter business?
Management announced plans to sell its Norwegian offshore unit — 23 heavy helicopters and four bases — in June, but omitted any mention of it this quarter while European offshore flight hours fell 13.9%.
How much did Berry Aviation earn in Government Services?
Berry added $16.9 million to Government Services revenue, yet segment operating profit before depreciation still fell 10.5% from a year ago and the full-year profit target dropped by $20 million.
How large were government availability penalties this quarter?
Last quarter Bristow disclosed $3.6 million in total aircraft availability fines; this quarter it said only that UK fines fell while Irish fines rose, leaving investors unable to size the ongoing penalty drag.
How many search-and-rescue helicopters still await modification?
Management now expects supply chain issues to stabilize during 2027 rather than early 2027; knowing the exact count of delayed aircraft would clarify when penalty and transition costs will end.