CHC Helicopter 10-Q 2013 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended October 31, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to.

Commission File Number: 333-179072

CHC Helicopter S.A.

(Exact name of registrant as specified in its charter)

Luxembourg	N/A
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4740 Agar Drive

Richmond, BC V7B 1A3, Canada

(Address of principal executive offices, zip code)

(604) 276-7500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of October 31, 2012, there were 1,870,561,417 Class A Shares, 7,742,469 Class B Shares, 318,000 Special Shares and one Class C Share of stock outstanding.

CHC Helicopter S.A.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED

October 31, 2012

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION

		Page Number
	Trademarks		3
	Glossary		3
ITEM 1.	Financial statements		4
	6922767 Holding S.à.r.l. consolidated balance sheets (unaudited) as of October 31, 2012 and April 30, 2012		4
	6922767 Holding S.à.r.l. consolidated statements of operations (unaudited) for the three and six months ended October 31, 2012 and 2011		5
	6922767 Holding S.à.r.l. consolidated statements of comprehensive income (loss) (unaudited) for the three and six months ended October 31, 2012 and 2011		6
	6922767 Holding S.à.r.l. consolidated statements of cash flows (unaudited) for the six months ended October 31, 2012 and 2011		7
	6922767 Holding S.à.r.l. consolidated statements of shareholder’s equity (unaudited) for the six months ended October 31, 2012 and 2011		8
	Notes to 6922767 Holding S.à.r.l. interim consolidated financial statements (unaudited)		9
ITEM 2.	Management’s discussion and analysis of financial condition and results of operations		41
ITEM 3.	Quantitative and qualitative disclosures about market risk		62
ITEM 4.	Controls and procedures		62
	PART II—OTHER INFORMATION
ITEM 1.	Legal proceedings		63
ITEM 1A.	Risk factors		63
ITEM 2.	Unregistered sales of equity securities and use of proceeds		63
ITEM 3.	Defaults upon senior securities		63
ITEM 4.	Mine safety disclosures		63
ITEM 5.	Other information		63
ITEM 6.	Exhibits		63

2

TRADEMARKS

CHC Helicopter and the CHC Helicopter logo are trademarks owned by CHC Helicopter S.A. through a wholly-owned subsidiary. All other trademarks and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders. All rights reserved. The absence of a trademark or service mark or logo from this Quarterly Report on Form 10-Q does not constitute a waiver of trademark or other intellectual property rights of CHC Helicopter S.A, its affiliates and/or licensors.

GLOSSARY

Embedded equity	Embedded equity represents the amount by which the estimated market value of a leased aircraft exceeds the leased aircraft purchase option price at September 16, 2008, the acquisition date. Embedded equity is assessed on an ongoing basis for impairment. Impairment, if any, is recognized in the consolidated statements of operations.
EMS	Emergency medical services.
Fixed wing	An airplane.
Heavy helicopter	A category of twin-engine helicopters that requires two pilots, can accommodate 19 to 26 passengers and can operate under instrument flight rules, which allow daytime and nighttime flying in a variety of weather conditions. The greater passenger capacity, larger cabin, longer range, and ability to operate in adverse weather conditions make heavy aircraft more suitable than single engine aircraft for offshore support. Heavy helicopters are generally utilized to support the oil and gas sector, construction and forestry industries and SAR and EMS customer requirements.
IFR	Instrument flight rules, which allow for daytime and nighttime flying in a variety of weather conditions.
Long-term contracts	Contracts of three years or longer in duration.
Medium helicopter	A category of twin-engine helicopters that generally requires two pilots, can accommodate nine to 15 passengers and can operate under instrument flight rules, which allow daytime and nighttime flying in a variety of weather conditions. The greater passenger capacity, longer range, and ability to operate in adverse weather conditions make medium aircraft more suitable than single engine aircraft for offshore support. Medium helicopters are generally utilized to support the oil and gas sector, construction and forestry industries and SAR and EMS customer bases in certain jurisdictions. Medium helicopters can also be used to support the utility and mining sectors, where transporting a smaller number of passengers or carrying light loads over shorter distances is required.
Medium term contracts	Contracts of greater than one year and less than three years in duration.
MRO	Maintenance, repair and overhaul.
New technology	When used herein to classify our aircraft, a category of higher value, recently produced, more sophisticated and more comfortable aircraft, including Eurocopter’s EC225, EC135, EC145 and EC155; Agusta’s AW139; and Sikorsky’ S76C+, S76C++ and S92A.
Old technology	When used herein to classify our aircraft, all aircraft other than new technology aircraft, including Eurocopter’s AS365 and Super Puma; Sikorsky’s 76A, 76B, 76C and S61N; and Bell’s 412, 212 and 214.
OEM	Original equipment manufacturer.
PBH	Power-by-the-hour. A program where an aircraft operator pays a fee per flight hour to an MRO provider as compensation for repair and overhaul components required in order for the aircraft to maintain an airworthy condition.
SAR	Search and rescue.
VFR	Visual flight rules, which require daylight and good weather conditions.

3

PART I – FINANCIAL INFORMATION

ITEM 1. – FINANCIAL STATEMENTS

6922767 Holding S.à.r.l.

Consolidated Balance Sheets

(Expressed in thousands of United States dollars, except share information)

(Unaudited)

	October 31, 2012			April 30, 2012
Assets
Current assets:
Cash and cash equivalents	$	68,778		$	55,547
Receivables, net of allowance for doubtful accounts of $2,300 and $2,600, respectively (note 2)		304,701			266,115
Income taxes receivable		25,078			20,747
Deferred income tax assets		9,361			8,542
Inventories (note 4)		95,740			90,013
Prepaid expenses		20,069			21,183
Other assets (note 5)		38,039			33,195
		561,766			495,342
Property and equipment, net		1,041,490			1,026,860
Investments		25,466			24,226
Intangible assets (note 6)		205,493			217,890
Goodwill		432,059			433,811
Restricted cash (note 2)		20,353			25,994
Other assets (note 5)		410,986			363,103
Deferred income tax assets		49,020			48,943
Assets held for sale (note 3)		63,295			79,813
	$	2,809,928		$	2,715,982
Liabilities and Shareholder’s Equity
Current liabilities:
Payables and accruals	$	356,519		$	363,064
Deferred revenue		20,775			23,737
Income taxes payable		40,169			43,581
Deferred income tax liabilities		13,073			11,729
Current facility secured by accounts receivable (note 2)		55,317			45,566
Other liabilities (note 7)		20,155			23,648
Current portion of long-term debt (note 8)		14,039			17,701
		520,047			529,026
Long-term debt (note 8)		1,401,504			1,269,379
Deferred revenue		50,221			43,517
Other liabilities (note 7)		189,820			191,521
Deferred income tax liabilities		18,943			20,072
Total liabilities		2,180,535			2,053,515
Redeemable non-controlling interests (note 2)		4,489			1,675
Capital stock: Par value 1 Euro; Authorized and issued: 1,228,377,770 and 1,228,377,770, respectively		1,607,101			1,607,101
Contributed surplus		55,541			55,318
Deficit		(966,137	)		(940,031	)
Accumulated other comprehensive loss		(71,601	)		(61,596	)
Total shareholder’s equity		624,904			660,792
	$	2,809,928		$	2,715,982

See accompanying notes to interim consolidated financial statements.

4

6922767 Holding S.à.r.l.

Consolidated Statements of Operations

(Expressed in thousands of United States dollars)

(Unaudited)

	Three months ended						Six months ended
	October 31, 2012			October 31, 2011			October 31, 2012			October 31, 2011
Revenue	$	446,786		$	423,000		$	862,855		$	832,649
Operating expenses:
Direct costs		(351,397	)		(343,346	)		(697,484	)		(679,987	)
Earnings from equity accounted investees		825			625			1,837			1,221
General and administration costs		(18,914	)		(15,421	)		(37,439	)		(29,452	)
Amortization		(27,635	)		(25,429	)		(55,945	)		(52,532	)
Restructuring costs		(1,797	)		(7,080	)		(3,727	)		(11,884	)
Recovery (impairment) of receivables and funded residual value guarantees		143			63			(572	)		47
Impairment of intangible assets		(6,339	)		(1,717	)		(5,818	)		(1,825	)
Impairment of assets held for sale (note 3)		(3,650	)		(4,251	)		(9,297	)		(11,632	)
Impairment of assets held for use		—			—			(660	)		—
Gain (loss) on disposal of assets		(3,026	)		(316	)		(4,617	)		3,741
		(411,790	)		(396,872	)		(813,722	)		(782,303	)
Operating income		34,996			26,128			49,133			50,346
Interest on long-term debt		(30,075	)		(29,516	)		(59,958	)		(60,186	)
Foreign exchange gain		10,562			2,446			3,161			2,639
Other financing charges (note 9)		(3,449	)		(6,491	)		(11,603	)		(6,235	)
Income (loss) from continuing operations before income tax		12,034			(7,433	)		(19,267	)		(13,436	)
Income tax recovery (expense) (note 10)		(5,022	)		8,638			(6,303	)		12,485
Income (loss) from continuing operations		7,012			1,205			(25,570	)		(951	)
Earnings (loss) from discontinued operations, net of tax		467			(7,526	)		812			(8,312	)
Net earnings (loss)	$	7,479		$	(6,321	)	$	(24,758	)	$	(9,263	)
Net earnings (loss) attributable to:
Controlling interest	$	6,999		$	(11,420	)	$	(26,106	)	$	(19,793	)
Non-controlling interest		480			5,099			1,348			10,530
Net earnings (loss)	$	7,479		$	(6,321	)	$	(24,758	)	$	(9,263	)

See accompanying notes to interim consolidated financial statements.

5

6922767 Holding S.à.r.l.

Consolidated Statements of Comprehensive Income (Loss)

(Expressed in thousands of United States dollars)

(Unaudited)

	Three months ended						Six months ended
	October 31, 2012			October 31, 2011			October 31, 2012			October 31, 2011
Net earnings (loss)	$	7,479		$	(6,321	)	$	(24,758	)	$	(9,263	)
Other comprehensive income (loss):
Net foreign currency translation adjustments		24,747			(24,550	)		(3,817	)		(36,027	)
Net change in defined benefit pension plan, net of income tax		(1,913	)		(564	)		(4,553	)		(855	)
Net change in cash flow hedges		—			(654	)		(169	)		(1,387	)
Comprehensive income (loss)	$	30,313		$	(32,089	)	$	(33,297	)	$	(47,532	)
Comprehensive income (loss) attributable to:
Controlling interest	$	30,123		$	(37,054	)	$	(36,111	)	$	(56,473	)
Non-controlling interest		190			4,965			2,814			8,941
Comprehensive income (loss)	$	30,313		$	(32,089	)	$	(33,297	)	$	(47,532	)

See accompanying notes to interim consolidated financial statements.

6

6922767 Holding S.à.r.l.

Consolidated Statements of Cash Flows

(Expressed in thousands of United States dollars)

(Unaudited)

	Six months ended
	October 31, 2012			October 31, 2011
Cash provided by (used in):
Operating activities:
Net loss	$	(24,758	)	$	(9,263	)
Earnings (loss) from discontinued operations, net of tax		812			(8,312	)
Loss from continuing operations		(25,570	)		(951	)
Adjustments to reconcile net loss to cash flows provided by (used in) operating activities:
Amortization		55,945			52,532
Loss (gain) on disposal of assets		4,617			(3,741	)
Impairment (recovery) of receivables and funded residual value guarantees		572			(47	)
Impairment of intangible assets		5,818			1,825
Impairment of assets held for use		660			—
Impairment of assets held for sale		9,297			11,632
Earnings from equity accounted investees		(1,837	)		(1,221	)
Deferred income taxes		(6,252	)		(13,953	)
Non-cash stock-based compensation expense		223			600
Amortization of unfavorable contract credits		(2,826	)		(5,849	)
Amortization of lease related fixed interest rate obligations		(1,443	)		(1,705	)
Amortization of long-term debt and lease deferred financing costs		4,719			4,211
Non-cash accrued interest income on funded residual value guarantees		(3,580	)		(3,812	)
Mark to market loss on derivative instruments		2,964			5,637
Non-cash defined benefit pension expense		3,431			8,775
Defined benefit contributions and benefits paid		(20,867	)		(24,335	)
Increase to deferred lease financing costs		(1,489	)		(7,488	)
Unrealized gain on foreign currency exchange translation		(582	)		(3,569	)
Other		7,922			3,609
Decrease in cash resulting from changes in operating assets and liabilities (note 13)		(55,480	)		(32,226	)
Cash used in operating activities		(23,758	)		(10,076	)
Financing activities:
Sold interest in accounts receivable, net of collections		8,917			40,082
Proceeds from issuance of senior secured notes		202,000			—
Long-term debt proceeds		390,229			405,000
Long-term debt repayments		(471,824	)		(390,539	)
Increase in deferred financing costs relating to revolver and notes		(3,793	)		—
Proceeds from issuance of capital stock		—			60,000
Cash provided by financing activities		125,529			114,543
Investing activities:
Property and equipment additions		(142,267	)		(164,751	)
Proceeds from disposal of property and equipment		93,413			91,120
Aircraft deposits net of lease inception refunds		(40,926	)		(36,115	)
Restricted cash		5,384			753
Distributions from equity investments		—			936
Cash used in investing activities		(84,396	)		(108,057	)
Cash provided by (used in) continuing operations		17,375			(3,590	)
Cash flows provided by (used in) discontinued operations:
Cash flows provided by (used in) operating activities		812			(1,488	)
Cash flows provided by (used in) financing activities		(812	)		1,488
Cash provided by (used in) discontinued operations		—			—
Effect of exchange rate changes on cash and cash equivalents		(4,144	)		(10,804	)
Change in cash and cash equivalents during the period		13,231			(14,394	)
Cash and cash equivalents, beginning of period		55,547			68,921
Cash and cash equivalents, end of period	$	68,778		$	54,527

See accompanying notes to interim consolidated financial statements.

7

6922767 Holding S.à.r.l.

Consolidated Statements of Shareholder’s Equity

(Expressed in thousands of United States dollars)

(Unaudited)

Six months ended October 31, 2012	Capital stock		Contributed surplus		Deficit			Accumulated other comprehensive earnings (loss)			Total shareholder’s equity			Redeemable non- controlling interests
April 30, 2012	$	1,607,101	$	55,318	$	(940,031	)	$	(61,596	)	$	660,792		$	1,675
Net change in cash flow hedges		—		—		—			(169	)		(169	)		—
Foreign currency translation		—		—		—			(5,844	)		(5,844	)		2,027
Stock compensation expense		—		223		—			—			223			—
Defined benefit plan, net of income tax		—		—		—			(3,992	)		(3,992	)		(561	)
Net earnings (loss)		—		—		(26,106	)		—			(26,106	)		1,348
October 31, 2012	$	1,607,101	$	55,541	$	(966,137	)	$	(71,601	)	$	624,904		$	4,489
Six months ended October 31, 2011	Capital stock		Contributed surplus		Deficit			Accumulated other comprehensive earnings (loss)			Total shareholder’s equity			Redeemable non- controlling interests
April 30, 2011	$	1,547,101	$	14,583	$	(832,609	)	$	15,201		$	744,276		$	3,087
Issuance of capital stock		60,000		—		—			—			60,000			—
Net change in cash flow hedges		—		—		—			(1,387	)		(1,387	)		—
Foreign currency translation		—		—		—			(34,519	)		(34,519	)		(1,508	)
Stock compensation expense		—		600		—			—			600			—
Defined benefit plan, net of income tax		—		—		—			(774	)		(774	)		(81	)
Net earnings (loss)		—		—		(19,793	)		—			(19,793	)		10,530
October 31, 2011	$	1,607,101	$	15,183	$	(852,402	)	$	(21,479	)	$	748,403		$	12,028

See accompanying notes to interim consolidated financial statements.

8

6922767 Holding S.à.r.l.

Notes to Interim Consolidated Financial Statements (Unaudited)

(Tabular amounts expressed in thousands of United States dollars unless otherwise noted)

(Unaudited)

1.     Significant accounting policies:

(a) Basis of presentation:

The unaudited interim consolidated financial statements (“interim financial statements”) include the accounts of 6922767 Holding S.à.r.l. and its subsidiaries after elimination of all significant intercompany accounts and transactions. The interim financial statements are presented in United States dollars and have been prepared in accordance with the United States Generally Accepted Accounting Principles (“US GAAP”) for interim financial information. Accordingly, the interim financial statements do not include all of the information and disclosures for complete financial statements.

In the opinion of management, these financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position, results of operations and cash flows for the periods indicated. Results of operations for the periods presented are not necessarily indicative of results of operations for the entire year.

The financial information as of April 30, 2012 is derived from the Company’s annual audited consolidated financial statements and notes for the fiscal year ended April 30, 2012. These interim financial statements should be read in conjunction with the Company’s annual consolidated financial statements and related notes for the fiscal year ended April 30, 2012, which are included in Amendment No. 1 to the Company’s Registration Statement on Form S-4 which was filed with the SEC on November 9, 2012.

(b) Foreign currency:

The currencies which most influence the Company’s foreign currency translations and the relevant exchange rates were:

	Six months ended
	October 31, 2012		October 31, 2011
Average rates:
US $/£		1.582551		1.610304
US $/CAD		0.998203		1.016157
US $/NOK		0.169695		0.181486
US $/AUD		1.023458		1.048471
US $/€		1.264125		1.413881
Period end rates:
US $/£		1.611044		1.614092
US $/CAD		1.000400		1.006543
US $/NOK		0.175170		0.181379
US $/AUD		1.036815		1.060966
US $/€		1.295818		1.394665

9

1.     Significant accounting policies (continued):

(c) Recent accounting pronouncements adopted in the period

Presentation of comprehensive income in financial statements:

In June 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement that provides new guidance on the presentation of comprehensive income in financial statements. Entities are required to present total comprehensive income either in a single, continuous statement of comprehensive income or in two, separate, but consecutive, statements. Under either method, entities must display adjustments for items reclassified from other comprehensive income to net income in both net income and comprehensive income. In December 2011, the FASB issued an accounting pronouncement that defers the requirement to present components of reclassifications of comprehensive income by income statement line item on the statement of comprehensive income, with all other requirements of the presentation of comprehensive income unaffected. The provisions for these pronouncements are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The Company has adopted this guidance using the two-statement approach presentation.

(d) Recent accounting pronouncements not yet adopted

Multiemployer defined benefit plans:

In September 2011, the FASB provided additional guidance on disclosures surrounding multiemployer defined benefit plans including the level of Company participation in the plan, the financial health of the plan and the nature of commitments to the plan. This guidance will be effective for the annual financial statements for the year ending April 30, 2013. We are currently assessing the impact of this new guidance on our consolidated financial statements.

Annual indefinite-life intangible asset impairment testing:

In July 2012, the FASB amended the accounting guidance on the annual indefinite-life intangible asset impairment testing to allow for the assessment of qualitative factors in determining if it is more likely than not that asset might be impaired and whether it is necessary to perform the intangible asset impairment test required by the current accounting standards. This guidance is effective for the Company’s fiscal year ending April 30, 2014. We have determined that this new guidance will not have a material impact on our consolidated financial statements.

(e) Comparative figures:

Certain comparative figures have been reclassified to conform with the financial presentation adopted for the current year. Financing charges were reclassified to reflect the change in presentation whereby foreign exchange gain (loss) and interest on long-term debt are shown separately on the face of the consolidated statement of operations rather than combined with other financing charges. MRO segment revenues and Helicopter Services segment direct costs were also reclassified to reflect the helicopter parts and supplies provided by MRO to Helicopter Services for use at the bases.

10

2.    Variable interest entities:

(a) VIEs of which the Company is the primary beneficiary:

(i) Local ownership VIEs:

Certain areas of operations are subject to local governmental regulations that may limit foreign ownership of aviation companies. Accordingly, operations in certain jurisdictions may require the establishment of local ownership entities that are considered to be VIEs. The nature of the Company’s involvement with consolidated local ownership entities is as follows:

EEA Helicopters Operations B.V. (“EHOB”)

EHOB is incorporated in the Netherlands and through its wholly-owned subsidiaries in Norway, Denmark, the Netherlands, the United Kingdom and Ireland provides helicopter flying services to customers in Europe.

The Company owns 49.9% of the common shares (9,896,085 Class B shares) of EHOB, with the remaining 50.1% of the common shares (9,935,750 Class A shares) held by a European investor. The Management Board of EHOB is comprised of one director nominated by the Class B shareholders and three directors nominated by the Class A shareholder.

The Company also owns 7,000,000 par value 1 Euro Profit Certificates in EHOB. Through its ownership of the Profit Certificates, the Company is entitled to a cumulative annual dividend equal to 30% of the issue price of each Profit Certificate (equivalent to a cumulative annual dividend of € 2.1 million) for the first 7 years after issuance and thereafter, a cumulative annual dividend equal to 5% of the issue price of each Profit Certificate (equivalent to a cumulative annual dividend of €0.35 million), subject to Board approval and the availability of cash and further subject to any and all restrictions applicable under Dutch law.

The Company also holds a call option over the Class A shareholder’s stock in EHOB and has granted a put option to the Class A shareholder which entitles the Class A shareholder to put its shares back to the Company. Both the put and call are exercisable in certain circumstances including: liquidation, events of default, and if the Company makes a public offering of its shares resulting in change in control. The Class A shareholder also holds a call option over the Company’s Class B shares which is exercisable only in the event of bankruptcy.

The Company has determined that the activities that most significantly impact the economic performance of EHOB are: servicing existing flying services contracts and entering into new contracts, safety and training, and maintenance of aircraft. Through agreement with EHOB, the Company has the right to enter directly into new flying services contracts and require that EHOB act as the subcontractor for provision of those services. EHOB’s fleet of aircraft is leased entirely from the Company and the lease agreements require that all aircraft maintenance be provided by the Company. The shareholders’ agreement requires EHOB to ensure safety standards meet minimums set by the Company.

As a result of consolidating EHOB, the Company has recorded a non-controlling interest relating to the 50.1% Class A shareholder’s interest in the net assets of EHOB. As at October 31, 2012, the redeemable non-controlling interest is $4.5 million (April 30, 2012 - $1.7 million). Because of the terms of the put and call arrangements with the European investor, the non-controlling interest is considered redeemable and is classified outside of equity.

11

2.    Variable interest entities (continued):

(a) VIEs of which the Company is the primary beneficiary (continued):

(i) Local ownership VIEs (continued):

BHH - Brazilian Helicopter Holdings S.A. (“BHH”)

BHH holds an investment in the common shares of its subsidiary, BHS - Brazilian Helicopter Services Taxi Aereo S.A. (“BHS”). BHS provides helicopter flying services to customers in Brazil.

The Company has a 60% interest in BHH, comprised of 100% of the non-voting preferred shares and 20% of the ordinary voting shares. The remaining equity interest comprised of 80% of the ordinary voting shares is held by a Brazilian investor, whose investment was financed by the Company and is therefore considered to be a related party.

The Company has entered into a put/call arrangement which gives it the right to purchase the BHH shares held by the Brazilian investor and the Brazilian investor the right to put its shares to the Company at any time and for any reason. The put/call price is the greater of the book value of the shares and the original capital contribution plus 2% per annum. The guaranteed return due to the Brazilian investor has been recorded as a redeemable non-controlling interest.

The Company has entered into a shareholders’ agreement with the Brazilian Investor, which requires unanimous shareholder consent for important business decisions.

CHC Helicopters Canada Inc (“CHC Canada”)

CHC Canada provides helicopter flying services to customers in Canada.

The Company owns 200,000 Class A Common Shares (25%) and 200,000 (100%) Class B Non-voting Preferred Shares of CHC Canada, with the remaining 600,000 (75%) of the Class A Common Shares held by a Canadian Investor who is a director of the Company’s ultimate parent and therefore a related party. The Board of CHC Canada is comprised of one director nominated by the Company and two directors nominated by the Canadian Investor.

The Company has entered in an arrangement which allows the Canadian Investor to put its shares back to it at any time for any reason. The Company has also entered into a call arrangement which allows it or the Canadian Investor to elect to purchase the other party’s shares. The calls are exercisable in certain circumstances including: liquidation, events of default, and if the Company makes a public offering of its shares resulting in change of control. The price on the put and the call arrangement is the higher of the book value of the shares and the original capital contribution plus 6% per annum. The guaranteed return due to the Canadian investor has been recorded as a redeemable non-controlling interest.

The Company has entered into a shareholder’s agreement with the Canadian Investor, which requires unanimous shareholder consent for CHC Canada to enter into any material contracts.

12

2.     Variable interest entities (continued):

(a) VIEs of which the Company is the primary beneficiary (continued):

(i) Local ownership VIEs (continued):

Atlantic Aviation Limited and Atlantic Aviation FZE (collectively “Atlantic Aviation”)

On October 22, 2012, the Company and a Nigerian company (“Nigerian Company”) finalized an agreement to provide helicopter flying services to customers in Nigeria through Atlantic Aviation.

The Company has no equity ownership interest in Atlantic Aviation as 100% of the share capital of Atlantic Aviation is held by the Nigerian Company.

The Nigerian Company’s risks and rewards are not representative of its equity interest as it is only entitled to a management fee for the first four years of the agreement with its share of losses capped at a maximum of $3 million in the first two years combined. In the fifth year the Nigerian Company can opt to receive 40% of the profits or losses or continue with the existing arrangement. The Company will bear all losses exceeding $3 million in the first two years and 100% of the losses in the third and fourth year.

Under the terms of the agreement the Nigerian Company will not provide any additional funding to Atlantic Aviation. The Company will fund all start-up costs.

The Company has also entered into a put/call arrangement which gives it the right to purchase all of the Atlantic Aviation shares held by the Nigerian Company and the Nigerian Company the right to put its shares to the Company. The calls are exercisable in certain circumstances including: liquidation, events of default, and change of control initiated by the Company or the Nigerian Company. The put is exercisable in the event the agreement is terminated with cause and the Nigerian Company does not continue the business of Atlantic Aviation. The price on the put/call arrangement is a multiple of the Nigerian Company’s share of the preceding 12 months of profits of Atlantic Aviation.

The Company has determined that the activities that most significantly impact the economic performance of Atlantic Aviation are: entering into flying contracts, safety and training, and maintenance of aircraft. Atlantic Aviation’s fleet of aircraft is leased entirely from the Company and the lease agreements require that all aircraft maintenance be provided by the Company. The Company has entered into various contracts with Atlantic Aviation to provide management, employees and technical services. The framework agreement requires Atlantic Aviation to ensure safety standards meet minimums set by the Company.

The Company has not finalized the purchase price allocation related to Atlantic Aviation.

13

2.     Variable interest entities (continued):

(a) VIEs of which the Company is the primary beneficiary (continued):

(i) Local ownership VIEs (continued):

Other local ownership VIEs

The Company also has operations in several other countries that are conducted through entities with local ownership. The Company has consolidated these entities because the local owners do not have extensive knowledge of the aviation industry and defer to the Company in the overall management and operation of these entities.

Financial information of local ownership VIEs

All of the local ownership VIEs and their subsidiaries have the same purpose and are exposed to similar operational risks and are monitored on a similar basis by management. As such, the financial information reflected on the consolidated balance sheets and statements of operations for all local ownership VIEs has been presented in the aggregate below, including intercompany amounts with other consolidated entities:

	October 31, 2012		April 30, 2012
Cash and cash equivalents	$	45,489	$	30,372
Receivables, net of allowance		104,846		86,623
Other current assets		37,946		28,423
Goodwill		72,101		72,269
Other long-term assets		91,623		84,127
Total assets	$	352,005	$	301,814
Payables and accruals	$	287,674	$	231,191
Other current liabilities		33,269		40,455
Accrued pension obligations		49,496		55,365
Other long-term liabilities		58,885		58,183
Total liabilities	$	429,324	$	385,194

	Three months ended					Six months ended
	October 31, 2012		October 31, 2011			October 31, 2012		October 31, 2011
Revenue	$	274,788	$	266,805		$	535,537	$	534,302
Net earnings (loss)		1,700		(3,982	)		6,018		13,295

14

2.     Variable interest entities (continued):

(a) VIEs of which the Company is the primary beneficiary (continued):

(ii) Accounts receivable securitization:

The Company enters into trade receivables securitization transactions to raise financing, through the sale of pools of receivables, or beneficial interests therein, to a VIE, Finacity Receivables – CHC 2009, LLC (“Finacity”). Finacity only buys receivables or beneficial interests therein, from the Company. These transactions with Finacity satisfy the requirements for sales accounting treatment. Finacity is financed directly by a multi-seller commercial paper conduit, Hannover Funding Company LLC (“Hannover”), which purchases undivided ownership interests in the receivables, or beneficial interests therein, acquired by Finacity from the Company.

The Company has determined that servicing decisions most significantly impact the economic performance of Finacity and as the Company has the power to make these decisions, it is the primary beneficiary of Finacity.

As a result of consolidation, intercompany receivables and payables between the Company and Finacity together with any gain/(loss) arising from the sales treatment of the securitization transactions have been eliminated. The securitized assets and associated liabilities are included in the consolidated financial statements. Cash and cash equivalent balances of Finacity are used only to support the securitizations of the receivables transferred, including the payment of related fees, costs and expenses. The receivables that have been included in securitizations are pledged as security for the benefit of Hannover and are only available for payment of the debt or other obligations arising in the securitization transactions until the associated debt or other obligations are satisfied. The asset backed debt has been issued directly by Finacity.

The following table shows the assets and the associated liabilities related to the Company’s secured debt arrangements that are included in the consolidated financial statements:

	October 31, 2012		April 30, 2012
Restricted cash	$	7,107	$	14,882
Transferred receivables		73,774		66,177
Current facility secured by accounts receivable		55,317		45,566

(iii) Trinity Helicopters Limited:

As at October 31, 2012 the Company leased two aircraft from Trinity Helicopters Limited (“Trinity”), an entity considered to be a VIE. Prior to December 2011, Trinity was funded by an unrelated lender who was considered to be the primary beneficiary. In conjunction with the Company’s lease covenant negotiations, the Company agreed to purchase the aircraft off lease from the lender. Instead of outright purchasing the aircraft the Company loaned the lease termination sum to Trinity who used these funds to repay the financing from the unrelated lender and continued to lease the aircraft to the Company. The security interest in the aircraft was assigned to the Company.

15

2.     Variable interest entities (continued):

(a) VIEs of which the Company is the primary beneficiary (continued):

(iii) Trinity Helicopters Limited (continued):

The Company has been determined to be the primary beneficiary of the VIE and began consolidating this entity upon repayment of the previous lender. Prior to consolidation of this entity, the aircraft leases were recorded as capital leases.

(b) VIEs of which the Company is not the primary beneficiary:

(i) Local ownership VIEs:

Thai Aviation Services (“TAS”)

TAS provides helicopter flying services in Thailand. The Company has a 29.9% interest in the ordinary shares of TAS, with the remaining 70.1% owned by a group of Thai Investors who are considered to be related to each other. The Thai investors have the ability to call and the Company has the ability to put all shares owned by the Company to the Thai investors at fair value in the event of a dispute.

The Company has determined that the activities that most significantly impact the economic performance of TAS are: servicing existing flying services contracts and entering into new contracts, safety and training, maintenance of aircraft and other investment activities. The Thai investors have the ability to control the majority of these decisions through Board majority.

The following table summarizes the amounts recorded for TAS in the consolidated balance sheet:

	October 31, 2012				April 30, 2012
	Carrying amounts		Maximum exposure to loss		Carrying amounts		Maximum exposure to loss
Receivables, net of allowances	$	2,371	$	2,371	$	2,408	$	2,408
Equity method investment		16,719		16,719		15,548		15,548

(ii) Leasing entities:

Related party lessors

As at October 31, 2012 the Company had operating lease agreements for the lease of 29 aircraft (October 31, 2011 – 14 aircraft) from individual related party entities considered to be VIEs. The total operating lease expense for these leases was $11.9 million for the three months ended October 31, 2012 (October 31, 2011 - $5.7 million) and $22.8 million for the six months ended October 31, 2012 (October 31, 2011 - $11.4 million), with $4.6 million outstanding in payables and accruals at October 31, 2012 (April 30, 2012 - $4.4 million).

16

2. Variable interest entities (continued):

(b) VIEs of which the Company is not the primary beneficiary (continued):

(ii) Leasing entities (continued):

The lessor VIEs are considered related parties because they are partially financed through equity contributions from entities that have also invested in the Company. The Company has determined that the activity that most significantly impacts the economic performance of the related party lessor VIEs is the remarketing of the aircraft at the end of the lease term. As the Company does not have the power to make remarketing decisions, the Company has determined that it is not the primary beneficiary of the lessor VIEs.

Other VIE lessors

At October 31, 2012 the Company leased 10 aircraft (October 31, 2011 – nine aircraft) from two different entities considered to be VIEs. At October 31, 2012, all 10 leases were considered to be operating leases (October 31, 2011 – seven operating leases and two capital leases).

The Company has determined that the activity that most significantly impacts the economic performance of the lessor VIEs is the remarketing of the aircraft at the end of the lease term. As the Company does not have the power to make remarketing decisions, the Company has determined that it is not the primary beneficiary of the lessor VIEs.

3.    Assets held for sale:

The Company has classified certain assets such as aircraft and buildings as held for sale as these assets are ready for immediate sale and management expects these assets to be sold within one year.

	October 31, 2012						April 30, 2012
	# Aircraft						# Aircraft
Aircraft held for sale:
Book value, beginning of period		18		$	79,293			12		$	31,782
Classified as held for sale, net of impairment		8			1,090			19			82,377
Sales		(6	)		(13,726	)		(10	)		(21,147	)
Reclassified as held for use		(1	)		(3,386	)		(3	)		(12,740	)
Foreign exchange		—			(494	)		—			(979	)
Aircraft held for sale		19			62,777			18			79,293
Building held for sale		—			518			—			520
Total assets held for sale				$	63,295					$	79,813

The aircraft classified as held for sale are older technology aircraft that are being divested by the Company. The building classified as held for sale is the result of relocation of certain of the Company’s base operations. During the six months ended October 31, 2012, there was one aircraft that was reclassified to assets held for use as management reviewed its fleet strategy and decided to redeploy this aircraft to flying operations.

During the three and six months ended October 31, 2012, certain aircraft held for sale were written down to their fair value less costs to sell. This measurement is considered a level 2 measurement in the fair value hierarchy as the measurement is based on third party appraisals using market data.

17

4.    Inventories:

	October 31, 2012			April 30, 2012
Work-in-progress for maintenance contracts under completed contract accounting	$	4,998		$	3,951
Consumables		100,824			96,588
Provision for obsolescence		(10,082	)		(10,526	)
	$	95,740		$	90,013

5.    Other assets:

	October 31, 2012		April 30, 2012
Current:
Aircraft operating lease funded residual value guarantees	$	14,006	$	7,004
Deferred financing costs		8,709		7,880
Mobilization costs		4,961		4,780
Prepaid aircraft rentals		4,195		4,958
Foreign currency embedded derivatives and forward contracts (note 12)		4,054		6,524
Residual value guarantee		2,114		2,049
	$	38,039	$	33,195
Non-current:
Aircraft operating lease funded residual value guarantees	$	194,819	$	190,147
Aircraft deposits		72,550		44,557
Deferred financing costs		49,748		50,698
Accrued pension asset		31,378		19,449
Mobilization costs		16,700		13,789
Prepaid aircraft rentals		13,324		13,730
Residual value guarantee		10,888		11,632
Security deposits		6,265		9,535
Foreign currency embedded derivatives and forward contracts (note 12)		5,084		1,695
Pension guarantee assets		4,992		4,974
Other assets		5,238		2,897
	$	410,986	$	363,103

6.    Intangible Assets:

Due to a decline in aircraft values, the Company impaired a portion of its embedded equity in the six months ended October 31, 2012 and 2011 to fair value. This measurement is considered a level 2 measurement in the fair value hierarchy as the measurement of embedded equity is based on aircraft values from third party appraisals using market data.

18

7.    Other liabilities:

	October 31, 2012		April 30, 2012
Current:
Foreign currency embedded derivatives and forward contracts (note 12)	$	12,059	$	11,089
Fixed interest rate obligations		2,438		2,900
Deferred gains on sale-leasebacks of aircraft		2,418		1,853
Aircraft modifications		2,098		2,377
Contract inducement		801		801
Lease aircraft return costs		258		1,632
Residual value guarantees		83		83
Unfavorable contract credits		—		2,913
	$	20,155	$	23,648
Non-current:
Accrued pension obligations	$	104,166	$	107,699
Foreign currency embedded derivatives and forward contracts (note 12)		20,451		17,384
Residual value guarantees		17,779		17,345
Deferred gains on sale-leasebacks of aircraft		17,727		14,475
Insurance claims accrual		11,718		13,646
Contract inducement		9,774		10,233
Fixed interest rate obligations		1,861		3,137
Deferred rent liabilities		607		2,013
Other		5,737		5,589
	$	189,820	$	191,521

8.    Long-term debt and capital lease obligations:

	Principal Repayment terms	Facility maturity dates	October 31, 2012			April 30, 2012
Senior secured notes	At maturity	October 2020	$	1,286,722		$	1,084,109
Revolving credit facility:
US LIBOR plus a 4.5% margin	At maturity	October 2015		20,000			125,000
Alternate Base Rate plus a 3.5% margin	At maturity	October 2015		30,000			—
Other term loans:
Eurocopter Loan – 2.50%	On demand	—		2,175			4,623
EDC-B.A. CDOR rate (6 month) plus a 0.8% margin	Semi-annually	June 2014		2,171			2,745
EDC-B.A. CDOR rate (6 month) plus a 0.8% margin	Semi-annually	April 2018		4,748			10,476
Capital lease obligations	Quarterly	December 2012 - October 2017		37,227			26,922
Boundary Bay financing – 6.93%	Monthly	April 2035		32,500			33,205
Total long-term debt and capital lease obligations				1,415,543			1,287,080
Less: current portion				(14,039	)		(17,701	)
Long-term debt and capital lease obligations			$	1,401,504		$	1,269,379

19

8. Long-term debt and capital lease obligations (continued):

On October 5, 2012, the Company issued an additional $200.0 million of senior secured notes (the “notes”). The notes were issued under the same indenture that governs the $1.1 billion of senior secured notes which were previously issued in October 2010. The notes have an aggregate principal value of $200.0 million, were issued at 101.0% of par value, bear interest at a rate of 9.25% with semi-annual interest payments on April 15 and October 15 and mature on October 15, 2020.

The notes were issued by one of the Company’s subsidiaries and are guaranteed by the Company and most of its subsidiaries through a general secured obligation. The notes are secured on a first-priority lien basis by the collateral of each guarantor subject to the permitted liens under the indenture, are subordinated to the priority payment lien obligations including the revolving credit facility and are senior to all unsecured indebtedness of each guarantor.

The notes have the following optional redemption features:

• Any time prior to October 15, 2013, the Company can redeem 35% of the aggregate principal amount of the notes at a redemption price of 109.25% of the principal plus accrued and unpaid interest with the net proceeds of one or more equity offerings provided that at least 50% of the aggregate principal of the notes remains outstanding and the redemption occurs within 180 days of the closing date of the equity offering.

• The Company can redeem the notes in whole or part, on or after October 15, 2015, at redemption prices that range from 100% to 104.625% of the principal, plus accrued and unpaid interest.

• The Company can redeem up to 10% of the aggregate principal amount of the notes in any twelve month period following the issuance date up to October 15, 2015 at a redemption price of 103% of the principal plus accrued interest and unpaid interest.

The Company can redeem the notes in whole or in part at a price of 100% of the aggregate principal amount plus a premium equal to the greater of 1% of the principal amount or the excess of the present value at the redemption date over the principal amount of the notes. Under this option, the present value at the redemption is to be computed based on a redemption price of 104.625% on October 15, 2015 plus all required interest payments due on the notes through October 15, 2015 (excluding accrued but unpaid interest to the applicable redemption date). The applicable discount rate is equal to the treasury rate plus 50 basis points.

Each holder of the notes has the right to require the Company to repurchase the notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest upon the occurrence of certain events constituting a change in control of the Company.

The notes contain certain covenants limiting the incurrence of additional indebtedness and liens based on the ratio of consolidated adjusted earnings before interest, taxes, depreciation and amortization to fixed charges and total indebtedness as defined in the indenture and other restrictions including limitations on disposition of assets, the payment of dividends or redemption of equity interests and transactions with affiliates.

20

9.    Other financing charges:

	Three months ended						Six months ended
	October 31, 2012			October 31, 2011			October 31, 2012			October 31, 2011
Amortization of deferred financing costs	$	(1,849	)	$	(1,613	)	$	(3,486	)	$	(3,242	)
Net gain (loss) on fair value of derivative financial instruments		608			(4,200	)		(3,703	)		(3,997	)
Amortization of guaranteed residual values		(546	)		(454	)		(1,067	)		(864	)
Interest expense		(3,282	)		(2,244	)		(6,363	)		(2,664	)
Interest income		3,239			3,282			6,326			6,423
Other		(1,619	)		(1,262	)		(3,310	)		(1,891	)
	$	(3,449	)	$	(6,491	)	$	(11,603	)	$	(6,235	)

10.    Income taxes:

As the Company operates in several tax jurisdictions, its income is subject to various rates of taxation. The income tax recovery (expense) differs from the amount that would have resulted from applying the Luxembourg statutory income tax rates to income (loss) from continuing operations before income taxes as follows:

	Three months ended						Six months ended
	October 31, 2012			October 31, 2011			October 31, 2012			October 31, 2011
Income (loss) from continuing operations before income tax	$	12,034		$	(7,433	)	$	(19,267	)	$	(13,436	)
Combined Luxemburg statutory income tax rate		29	%		29	%		29	%		29	%
Income tax recovery (expense) calculated at statutory rate		(3,490	)		2,156			5,587			3,896
(Increase) decrease in income tax recovery (expense) resulting from:
Rate differences in various jurisdictions		9,019			16,737			11,219			21,053
Change in tax law		(178	)		(738	)		(757	)		(938	)
Non-deductible items		(7,281	)		(7,871	)		(15,751	)		(16,713	)
Other foreign taxes		(2,363	)		(2,545	)		(5,795	)		(7,350	)
Non-deductible portion of capital losses		(102	)		(10	)		81			493
Non-taxable income		7,511			71			14,777			836
Adjustments to prior years		(667	)		2,551			(706	)		2,921
Functional currency adjustments		(3,904	)		(4,110	)		4,130			(2,415	)
Valuation allowance		(3,630	)		3,171			(18,791	)		10,198
Other		63			(774	)		(297	)		504
Income tax recovery (expense)	$	(5,022	)	$	8,638		$	(6,303	)	$	12,485

As at October 31, 2012, there was $13.6 million in unrecognized tax benefits, of which $6.8 million would have an impact on the effective tax rate, if recognized.

During the six months ended, no new uncertain tax positions were identified. As of October 31, 2012 and April 30, 2012, interest and penalties totaling $2.9 million and $2.9 million, respectively, were accrued.

21

11.     Employee pension plans:

The net defined benefit pension plan expense is as follows:

	Three months ended						Six months ended
	October 31, 2012			October 31, 2011			October 31, 2012			October 31, 2011
Current service cost	$	4,808		$	4,579		$	9,458		$	9,265
Interest cost		7,847			9,114			15,577			18,428
Expected return on plan assets		(10,391	)		(8,724	)		(20,485	)		(17,632	)
Amortization of net actuarial and experience losses		258			135			511			275
Amortization of past service credits		(94	)		—			(186	)		—
Employee contributions		(733	)		(771	)		(1,444	)		(1,561	)
	$	1,695		$	4,333		$	3,431		$	8,775

12.     Derivative financial instruments and fair value measurements:

The Company is exposed to foreign exchange risk primarily from its subsidiaries which incur revenue and operating expenses in currencies other than U.S. dollars with the most significant being the Pound Sterling, Norwegian Kroner, Canadian dollars, Australian dollars and Euros. The Company monitors these exposures through its cash forecasting process and regularly enters into foreign exchange forward contracts to manage its exposure to fluctuations in expected future cash flows related to transactions in currencies other than the functional currency.

The Company’s outstanding foreign exchange forward contracts are as follows:

		Notional		Fair value asset		Maturity dates
October 31, 2012:
Purchase contracts to sell U.S. dollars and buy Canadian dollars	CAD		242,973	$	3,227		November 2012 to April 2015
Purchase contracts to sell U.S. dollars and buy Euros	€		69,268		4,180		December 2013 to July 2014

The Company enters into long-term revenue agreements, which provide for pricing denominated in currencies other than the functional currency of the parties to the contract. This pricing feature was determined to be an embedded derivative which has been bifurcated for valuation and accounting purposes. The embedded derivative contracts are measured at fair value and included in other assets or other liabilities.

22

12.    Derivative financial instruments and fair value measurements (continued):

The following tables summarize the financial instruments measured at fair value on a recurring basis excluding cash and cash equivalents and restricted cash:

	October 31, 2012
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Fair value
Financial assets:
Other assets, current:
Foreign currency forward contracts	$	—	$	3,641	$	—	$	3,641
Foreign currency embedded derivatives		—		413		—		413
Other assets, non-current:
Foreign currency forward contracts		—		5,080		—		5,080
Foreign currency embedded derivatives		—		4		—		4
	$	—	$	9,138	$	—	$	9,138

	October 31, 2012
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)		Fair value
Financial liabilities:
Other liabilities, current:
Foreign currency forward contracts	$	—	$	(562	)	$	—	$	(562	)
Foreign currency embedded derivatives		—		(11,497	)		—		(11,497	)
Other liabilities, non-current:
Foreign currency forward contracts		—		(752	)		—		(752	)
Foreign currency embedded derivatives		—		(19,699	)		—		(19,699	)
	$	—	$	(32,510	)	$	—	$	(32,510	)

Inputs to the valuation methodology for Level 2 measurements include quoted prices for similar assets and liabilities in active markets, and inputs are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Company had no transfers between categories in the fair value hierarchy.

The carrying values of the Company’s other financial instruments, which are measured at other than fair value, approximate fair value due to the short terms to maturity, except for non-revolving debt obligations, the fair values of which are as follows:

	October 31, 2012
	Fair value		Carrying value
Senior secured notes	$	1,322,750	$	1,286,722

The fair value of the senior secured notes is determined based on market information provided by third parties which is considered to be a level 2 measurement in the fair value hierarchy.

23

13.    Supplemental cash flow information:

	Three months ended				Six months ended
	October 31, 2012		October 31, 2011		October 31, 2012		October 31, 2011
Cash interest paid	$	54,964	$	54,100	$	58,354	$	56,815
Cash taxes paid		6,060		2,679		14,086		8,347
Assets acquired through non-cash capital leases		13,905		—		13,905		48,529

Change in cash resulting from changes in operating assets and liabilities:

	Six months ended
	October 31, 2012			October 31, 2011
Receivables, net of allowance	$	(36,666	)	$	(63,888	)
Income taxes		(7,546	)		(2,819	)
Inventory		(7,503	)		4,198
Prepaid expenses		1,089			(5,888	)
Payables and accruals		(2,733	)		42,350
Deferred revenue		348			1,188
Other assets and liabilities		(2,469	)		(7,367	)
	$	(55,480	)	$	(32,226	)

14.    Guarantees:

The Company has provided limited guarantees to third parties under some of its operating leases relating to a portion of the residual aircraft values at the termination of the leases, which have terms expiring between fiscal 2013 and 2022. The Company’s exposure under the asset value guarantees including guarantees in the form of funded and unfunded residual value guarantees, rebateable advance rentals and deferred payments is approximately $230.9 million as at October 31, 2012 (April 30, 2012 - $223.0 million).

15.    Related party transactions:

(a) Related party leasing transactions and balances:

During the three months ended October 31, 2012 the Company engaged in leasing transactions with VIEs related to the Company’s ultimate parent (note 2).

(b) Balances with Ultimate Parent:

At October 31, 2012, $2.0 million in payables and accruals is due to and $1.2 million in receivables is due from the Company’s ultimate parent.

24

16.    Commitments:

The Company has aircraft operating leases with 17 lessors in respect of 161 aircraft included in the Company’s fleet at October 31, 2012 (April 30, 2012 – 18 lessors in respect of 164 aircraft). As at October 31, 2012, these leases had expiry dates ranging from fiscal 2013 to 2023. The Company has the option to purchase the majority of the aircraft for agreed amounts that do not constitute bargain purchase options, but has no commitment to do so. With respect to such leased aircraft, substantially all of the costs of major inspections of airframes and the costs to perform inspections, major repairs and overhauls of major components are at the Company’s expense. The Company either performs this work internally through its own repair and overhaul facilities or has the work performed by an external repair and overhaul service provider.

At October 31, 2012, the Company had commitments with respect to operating leases for aircraft, buildings, land and equipment. The minimum lease rentals required under operating leases are payable in the following amounts over the following years ended October 31:

	Aircraft operating leases		Building, land and equipment operating leases		Total operating leases
2013	$	207,361	$	11,156	$	218,517
2014		187,042		9,614		196,656
2015		173,075		8,328		181,403
2016		153,165		6,637		159,802
2017		129,196		5,543		134,739
and thereafter		335,413		60,322		395,735
	$	1,185,252	$	101,600	$	1,286,852

As at October 31, 2012, the Company has committed to purchase 36 new aircraft. The total required additional expenditures related to these purchase commitments is approximately $785.0 million. These aircraft are expected to be delivered in fiscal 2013 to 2017 and will be deployed in the Company’s Helicopter Services segment. The Company intends to enter into leases for these aircraft or purchase them outright upon delivery from the manufacturer.

The terms of certain of the Company’s helicopter lease agreements impose operating and financial limitations on the Company. Such agreements limit the extent to which the Company may, among other things, incur indebtedness and fixed charges relative to its level of consolidated adjusted earnings before interest, taxes, depreciation and amortization.

Generally, in the event of a covenant breach, a lessor has the option to terminate the lease and require the return of the aircraft, with the repayment of any arrears of lease payments plus the present value of all future lease payments and certain other amounts which could be material to the Company’s financial position. The aircraft would then be sold and the surplus, if any, returned to the Company. Alternatively the Company could exercise its option to purchase the aircraft. As at October 31, 2012 the Company was in compliance with all financial covenants.

During the six months ended October 31, 2012, a lessor that had been engaged in discussions with the Company approved a financial covenant reset to October 31, 2013. As part of previous negotiations in 2011 with this lessor, the Company also made a commitment to further reduce its total operating lease portfolio by $39.4 million.

25

17.    Contingencies:

The Company and its subsidiaries are, from time to time, named as defendants in lawsuits arising in the ordinary course of our business. The Company maintains adequate insurance coverage to respond to most claims. The Company cannot predict the outcome of any such lawsuits with certainty, but management does not expect the outcome of pending or threatened legal matters to have a material adverse impact on our financial condition.

In addition, from time to time, the Company and its subsidiaries are subject to investigation by various government agencies in the jurisdictions in which we operate. In 2006, we voluntarily disclosed to OFAC that our subsidiary formerly operating as Schreiner Airways may have violated applicable U.S. laws and regulations by re-exporting to Iran, Sudan, and Libya certain helicopters, related parts, map data, operation and maintenance manuals, and aircraft parts for third-party customers. OFAC’s investigation is ongoing and the Company continues to fully cooperate. Should the U.S. government determine that these activities violated applicable laws and regulations, we or our subsidiaries could be subject to civil or criminal penalties, including fines and/or suspension of the privilege to engage in trading activities involving goods, software and technology subject to the U.S. jurisdiction. At October 31, 2012, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition and result of operations.

Brazilian customs authorities seized one of the Company’s helicopters (valued at approximately $10.0 million) as a result of allegations that the Company violated Brazilian customs law by failing to ensure its customs agent and the customs agent’s third party shipping company followed approved routing of the helicopter during transport. The Company secured release of the helicopter and is disputing through administrative court action any claim for penalties associated with the seizure and the alleged violation. The Company has preserved its rights by filing a civil action against its customs agent for any losses that may result. At October 31, 2012, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition and result of operations.

Our Brazilian subsidiary is disputing a claim from the Brazilian tax authorities regarding eligibility for certain tax benefits that our subsidiary claimed in the past in connection with the importation of aircraft parts. The tax authorities are seeking to assess up to $20 million in additional taxes plus interest and penalties. We believe that based on our interpretation of tax legislation and well established aviation industry practice we are in compliance with all applicable tax legislation. On December 19, 2011, a First Level Administrative Panel decision reduced the assessment to $0.3 million. We are appealing the remaining assessment. We will continue to defend this claim vigorously. At October 31, 2012, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition and result of operations.

Our Brazilian subsidiary is also disputing claims from the Brazilian tax authorities that it was not entitled to certain credits in 2004 and 2007. The tax authorities are seeking up to $3.8 million in additional taxes plus interest and penalties. We believe that based on our interpretation of tax legislation and well established aviation industry practice we are in compliance with all applicable tax legislation and plan to defend this claim vigorously. At October 31, 2012, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition and result of operations.

26

17.    Contingencies (continued):

The Company received an inquiry from the Nigerian government regarding the tax treatment of certain of its former joint venture partner’s operations in Nigeria. The Company is cooperating with the government of Nigeria. At October 31, 2012, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition and result of operations.

In the United Kingdom, the Ministry for Transport is investigating potential wrongdoing involving two ex-employees in conjunction with the SAR-H bid award processes. This arose from the Company self-reporting potential improprieties by these individuals upon their discovery in 2010. The SAR-H bid process was subsequently cancelled. The Company will continue to cooperate in all aspects of the investigation. At October 31, 2012, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition and result of operations.

18.    Segment information:

The Company operates under the following segments:

• Helicopter Services;

• Maintenance, repair and overhaul (“MRO”);

• Corporate and other.

The Company has provided information on segment revenues and segment EBITDAR (adjusted) because these are the financial measures used by the Company’s chief operating decision maker in making operating decisions and assessing performance. Transactions between operating segments are at standard industry rates.

The Helicopter Services segment includes flying operations around the world serving offshore oil and gas, EMS/SAR and other industries. While management does not include aircraft lease and associated costs in an internal measure of profitability for the Helicopter Services segment, these costs are presented in the Helicopter Services column as they are most directly attributable to Helicopter Services operations and revenues.

The MRO segment includes facilities in Norway, Canada, Australia, Poland, and the US that provide helicopter repair and overhaul services for the Company’s fleet and for a growing external customer base in Europe, Asia and North America.

Corporate and other includes corporate office costs in various jurisdictions and is not considered a reportable segment.

The accounting policies of the segments and the basis of accounting for transactions between segments are the same as those described in the summary of significant accounting policies.

27

18.    Segment information (continued):

Three months ended October 31, 2012

	Helicopter Services			MRO			Corporate and other			Inter-segment eliminations			Consolidated
Revenue from external customers	$	402,617		$	42,488		$	1,681		$	—		$	446,786
Add: Inter-segment revenues		1,288			77,354			—			(78,642	)		—
Total revenue		403,905			119,842			1,681			(78,642	)		446,786
Direct costs (i)		(283,799	)		(91,760	)		(5,683	)		78,642			(302,600	)
Earnings from equity accounted investees		825			—			—			—			825
General and administration costs		—			—			(18,914	)		—			(18,914	)
Segment EBITDAR (adjusted) (ii)		120,931			28,082			(22,916	)		—			126,097
Aircraft lease and associated costs		(48,797	)											(48,797	)
Amortization														(27,635	)
Restructuring costs														(1,797	)
Recovery of receivables and funded residual value guarantees														143
Impairment of intangible assets (iii)														(6,339	)
Impairment of assets held for sale														(3,650	)
Loss on disposal of assets														(3,026	)
Interest on long-term debt														(30,075	)
Foreign exchange gain														10,562
Other financing charges														(3,449	)
Income tax expense														(5,022	)
Income from continuing operations														7,012
Earnings from discontinued operations, net of tax														467
Net earnings													$	7,479
Segment assets	$	868,281		$	365,810		$	1,512,542		$	—		$	2,746,633
Segment assets - held for sale		518			—			62,777			—			63,295
Total assets	$	868,799		$	365,810		$	1,575,319		$	—		$	2,809,928

(i) Direct costs in the segment information presented excludes aircraft lease and associated costs. In the consolidated statement of operations these costs are combined.

(ii) Segment EBITDAR (adjusted) is defined as earnings before interest, taxes, depreciation, amortization and aircraft lease and associated costs or total revenue plus earnings from equity accounted investees less direct costs excluding aircraft lease and associated costs less general and administrative expenses.

(iii) Impairment of intangible assets relates to the Corporate and other segment.

28

18. Segment information (continued):

Six months ended October 31, 2012

	Helicopter Services			MRO			Corporate and other			Inter-segment eliminations			Consolidated
Revenue from external customers	$	792,521		$	67,034		$	3,300		$	—		$	862,855
Add: Inter-segment revenues		2,137			145,815			—			(147,952	)		—
Total revenue		794,658			212,849			3,300			(147,952	)		862,855
Direct costs (i)		(572,941	)		(171,103	)		(4,165	)		147,952			(600,257	)
Earnings from equity accounted investees		1,837			—			—			—			1,837
General and administration costs		—			—			(37,439	)		—			(37,439	)
Segment EBITDAR (adjusted) (ii)		223,554			41,746			(38,304	)		—			226,996
Aircraft lease and associated costs		(97,227	)											(97,227	)
Amortization														(55,945	)
Restructuring costs														(3,727	)
Impairment of receivables and funded residual value guarantees														(572	)
Impairment of intangible assets (iii)														(5,818	)
Impairment of assets held for sale														(9,297	)
Impairment of assets held for use														(660	)
Loss on disposal of assets														(4,617	)
Interest on long-term debt														(59,958	)
Foreign exchange gain														3,161
Other financing charges														(11,603	)
Income tax expense														(6,303	)
Loss from continuing operations														(25,570	)
Earnings from discontinued operations, net of tax														812
Net loss													$	(24,758	)

(i) Direct costs in the segment information presented excludes aircraft lease and associated costs. In the consolidated statement of operations these costs are combined.

(ii) Segment EBITDAR (adjusted) is defined as earnings before interest, taxes, depreciation, amortization and aircraft lease and associated costs or total revenue plus earnings from equity accounted investees less direct costs excluding aircraft lease and associated costs less general and administrative expenses.

(iii) Impairment of intangible assets relates to the Corporate and other segment.

29

18. Segment information (continued):

Three months ended October 31, 2011

	Helicopter Services			MRO			Corporate and other			Inter-segment eliminations			Consolidated
Revenue from external customers	$	383,279		$	38,409		$	1,312		$	—		$	423,000
Add: Inter-segment revenues		985			72,336			—			(73,321	)		—
Total revenue		384,264			110,745			1,312			(73,321	)		423,000
Direct costs (i)		(277,889	)		(91,810	)		(4,364	)		73,321			(300,742	)
Earnings from equity accounted investees		625			—			—			—			625
General and administration costs		—			—			(15,421	)		—			(15,421	)
Segment EBITDAR (adjusted) (ii)		107,000			18,935			(18,473	)		—			107,462
Aircraft lease and associated costs		(42,604	)		—			—			—			(42,604	)
Amortization														(25,429	)
Restructuring costs														(7,080	)
Recovery of receivables and funded residual value guarantees														63
Impairment of intangible assets (iii)														(1,717	)
Impairment of assets held for sale														(4,251	)
Loss on disposal of assets														(316	)
Interest on long-term debt														(29,516	)
Foreign exchange gain														2,446
Other financing charges														(6,491	)
Income tax recovery														8,638
Income from continuing operations														1,205
Loss from discontinued operations, net of tax														(7,526	)
Net loss													$	(6,321	)

(i) Direct costs in the segment information presented excludes aircraft lease and associated costs. In the consolidated statement of operations these costs are combined.

(ii) Segment EBITDAR (adjusted) is defined as earnings before interest, taxes, depreciation, amortization and aircraft lease and associated costs or total revenue plus earnings from equity accounted investees less direct costs excluding aircraft lease and associated costs less general and administrative expenses.

(iii) Impairment of intangible assets relates to the Corporate and other segment.

30

18. Segment information (continued):

Six months ended October 31, 2011

	Helicopter Services			MRO			Corporate and other			Inter-segment eliminations			Consolidated
Revenue from external customers	$	756,573		$	73,297		$	2,779		$	—		$	832,649
Add: Inter-segment revenues		2,249			139,821			30			(142,100	)		—
Total revenue		758,822			213,118			2,809			(142,100	)		832,649
Direct costs (i)		(557,355	)		(173,169	)		(8,463	)		142,100			(596,887	)
Earnings from equity accounted investees		1,221			—			—			—			1,221
General and administrative		—			—			(29,452	)		—			(29,452	)
Segment EBITDAR (adjusted) (ii)		202,688			39,949			(35,106	)		—			207,531
Aircraft lease and associated costs		(83,100	)		—			—			—			(83,100	)
Amortization														(52,532	)
Restructuring costs														(11,884	)
Recovery of receivables and funded residual value guarantees														47
Impairment of intangible assets (iii)														(1,825	)
Impairment of assets held for sale														(11,632	)
Gain on disposal of assets														3,741
Interest on long-term debt														(60,186	)
Foreign exchange gain														2,639
Other financing charges														(6,235	)
Income tax recovery														12,485
Loss from continuing operations														(951	)
Loss from discontinued operations, net of tax														(8,312	)
Net loss													$	(9,263	)

(i) Direct costs in the segment information presented excludes aircraft lease and associated costs. In the consolidated statement of operations these costs are combined.

(ii) Segment EBITDAR (adjusted) is defined as earnings before interest, taxes, depreciation, amortization and aircraft lease and associated costs or total revenue plus earnings from equity accounted investees less direct costs excluding aircraft lease and associated costs less general and administrative expenses.

(iii) Impairment of intangible assets relates to the Corporate and other segment.

31

19.    Subsequent events:

On November 30, 2012, the Company committed to acquire $100 million of helicopter parts over a three year period.

20.    Supplemental condensed consolidated financial information:

The Company and certain of its direct and indirect wholly-owned subsidiaries (the “Guarantor Subsidiaries”) guaranteed, subject to customary automatic subsidiary releases, on a joint and several basis, certain outstanding indebtedness of CHC Helicopter SA. The following consolidating schedules present financial information as of October 31, 2012 and for the three and six months ended October 31, 2012 and 2011, based on the guarantor structure that was in place at the date of issuance of the financial statements

32

Balance Sheets as at October 31, 2012 (Expressed in thousands of United States dollars)	Parent			Issuer			Guarantor		Non-guarantor			Eliminations			Consolidated
Assets
Current Assets
Cash and cash equivalents	$	(2,408	)	$	(14,545	)	$	80,412	$	(9,226	)	$	14,545		$	68,778
Receivables, net of allowance for doubtful accounts		4			113			134,798		170,459			(673	)		304,701
Current intercompany receivables	��	6,055			580,533			545,495		318,738			(1,450,821	)		—
Income taxes receivable		—			—			4,202		20,876			—			25,078
Deferred income tax assets		—			—			5,422		3,939			—			9,361
Inventories		—			—			88,751		6,989			—			95,740
Prepaid expenses		—			106			7,749		12,320			(106	)		20,069
Other assets		—			33,439			62,402		59,204			(117,006	)		38,039
		3,651			599,646			929,231		583,299			(1,554,061	)		561,766
Property and equipment, net		—			—			959,215		82,656			(381	)		1,041,490
Investments		625,498			322,781			384,481		16,716			(1,324,010	)		25,466
Intangible assets		—			—			203,567		1,926			—			205,493
Goodwill		—			—			335,634		96,425			—			432,059
Restricted cash		—			—			6,020		14,333			—			20,353
Other assets		—			32,194			368,258		42,681			(32,147	)		410,986
Long-term intercompany receivables		—			866,482			29,712		493,867			(1,390,061	)		—
Deferred income tax assets		—			—			31,245		17,775			—			49,020
Assets held for sale		—			—			63,295		—			—			63,295
	$	629,149		$	1,821,103		$	3,310,658	$	1,349,678		$	(4,300,660	)	$	2,809,928
Liabilities and Shareholder’s Equity
Current Liabilities
Payables and accruals	$	677		$	8,955		$	250,121	$	105,720		$	(8,954	)	$	356,519
Deferred revenue		—			—			12,555		8,220			—			20,775
Income taxes payable		2,852			2,181			25,270		12,047			(2,181	)		40,169
Current intercompany payables		700			34,359			347,238		522,262			(904,559	)		—
Deferred income tax liabilities		—			—			12,983		90			—			13,073
Current facility secured by accounts receivable		—			—			—		55,317			—			55,317
Other liabilities		—			54,980			68,062		35,660			(138,547	)		20,155
Current portion of long-term debt		—			—			14,039		—			—			14,039
		4,229			100,475			730,268		739,316			(1,054,241	)		520,047
Long-term debt		—			1,336,722			1,401,504		—			(1,336,722	)		1,401,504
Long-term intercompany payables		—			—			454,632		68,901			(523,533	)		—
Deferred revenue		—			—			24,456		25,765			—			50,221
Other liabilities		16			—			112,465		77,339			—			189,820
Deferred income tax liabilities		—			—			16,082		2,861			—			18,943
Total liabilities		4,245			1,437,197			2,739,407		914,182			(2,914,496	)		2,180,535
Redeemable non-controlling interests		—			—			—		4,489			—			4,489
Shareholder’s equity		624,904			383,906			571,251		431,007			(1,386,164	)		624,904
	$	629,149		$	1,821,103		$	3,310,658	$	1,349,678		$	(4,300,660	)	$	2,809,928

33

Balance Sheets as at April 30, 2012 (Expressed in thousands of United States dollars)	Parent		Issuer			Guarantor		Non-guarantor		Eliminations			Consolidated
Assets
Current Assets
Cash and cash equivalents	$	196	$	(6,771	)	$	41,032	$	14,319	$	6,771		$	55,547
Receivables, net of allowance for doubtful accounts		4		113			115,853		150,881		(736	)		266,115
Current intercompany receivables		6,065		463,703			521,817		282,677		(1,274,262	)		—
Income taxes receivable		—		—			4,203		16,544		—			20,747
Deferred income tax assets		—		—			5,192		3,350		—			8,542
Inventories		—		—			80,879		9,134		—			90,013
Prepaid expenses		—		—			12,088		9,095		—			21,183
Other assets		—		14,202			38,973		38,575		(58,555	)		33,195
		6,265		471,247			820,037		524,575		(1,326,782	)		495,342
Property and equipment, net		—		—			950,024		77,217		(381	)		1,026,860
Investments		661,373		324,255			358,315		15,548		(1,335,265	)		24,226
Intangible assets		—		—			215,949		1,941		—			217,890
Goodwill		—		—			336,703		97,108		—			433,811
Restricted cash		—		—			6,039		19,955		—			25,994
Other assets		—		31,497			333,683		29,362		(31,439	)		363,103
Long-term intercompany receivables		—		873,263			30,151		496,926		(1,400,340	)		—
Deferred income tax assets		—		—			30,759		18,184		—			48,943
Assets held for sale		—		—			79,813		—		—			79,813
	$	667,638	$	1,700,262		$	3,161,473	$	1,280,816	$	(4,094,207	)	$	2,715,982
Liabilities and Shareholder’s Equity
Current Liabilities
Payables and accruals	$	45	$	5,796		$	255,960	$	107,059	$	(5,796	)	$	363,064
Deferred revenue		—		—			14,020		9,717		—			23,737
Income taxes payable		5,433		3,908			20,763		17,385		(3,908	)		43,581
Current intercompany payables		1,352		31,754			327,798		489,454		(850,358	)		—
Deferred income tax liabilities		—		—			11,652		77		—			11,729
Current facility secured by accounts receivable		—		—			—		45,566		—			45,566
Other liabilities		—		34,606			49,277		18,641		(78,876	)		23,648
Current portion of long-term debt		—		—			17,701		—		—			17,701
		6,830		76,064			697,171		687,899		(938,938	)		529,026
Long-term debt		—		1,209,109			1,269,379		—		(1,209,109	)		1,269,379
Long-term intercompany payables		—		—			449,595		69,313		(518,908	)		—
Deferred revenue		—		—			17,955		25,562		—			43,517
Other liabilities		16		—			107,491		84,014		—			191,521
Deferred income tax liabilities		—		—			16,931		3,141		—			20,072
Total liabilities		6,846		1,285,173			2,558,522		869,929		(2,666,955	)		2,053,515
Redeemable non-controlling interests		—		—			—		1,675		—			1,675
Shareholder’s equity		660,792		415,089			602,951		409,212		(1,427,252	)		660,792
	$	667,638	$	1,700,262		$	3,161,473	$	1,280,816	$	(4,094,207	)	$	2,715,982

34

Statements of Operations for the three months ended October 31, 2012 (Expressed in thousands of United States dollars)	Parent			Issuer			Guarantor			Non-guarantor			Eliminations			Consolidated
Revenue	$	—		$	—		$	288,236		$	291,016		$	(132,466	)	$	446,786
Operating expenses:
Direct costs		—			(12	)		(210,318	)		(273,540	)		132,473			(351,397	)
Earnings from equity accounted investees		7,116			55,305			84,217			490			(146,303	)		825
General and administration costs		(186	)		(1,118	)		(13,493	)		(5,209	)		1,092			(18,914	)
Amortization		—			—			(25,024	)		(2,611	)		—			(27,635	)
Restructuring costs		—			—			(597	)		(1,200	)		—			(1,797	)
Recovery of receivables and funded residual value guarantees		—			—			143			—			—			143
Impairment of intangible assets		—			—			(6,339	)		—			—			(6,339	)
Impairment of assets held for use		—			—			(3,650	)					—			(3,650	)
Loss on disposal of assets		—			—			(3,021	)		(5	)		—			(3,026	)
		6,930			54,175			(178,082	)		(282,075	)		(12,738	)		(411,790	)
Operating income		6,930			54,175			110,154			8,941			(145,204	)		34,996
Financing income (charges)		(78	)		(46,422	)		(99,290	)		76,406			46,422			(22,962	)
Income from continuing operations before income tax		6,852			7,753			10,864			85,347			(98,782	)		12,034
Income tax recovery (expense)		147			(1,224	)		(4,214	)		(955	)		1,224			(5,022	)
Income from continuing operations		6,999			6,529			6,650			84,392			(97,558	)		7,012
Earnings from discontinued operations, net of tax		—			—			467			—			—			467
Net earnings		6,999			6,529			7,117			84,392			(97,558	)		7,479
Net earnings (loss) attributable to:
Controlling interest		6,999			6,529			7,117			83,912			(97,558	)		6,999
Non-controlling interests		—			—			—			480			—			480
Net earnings	$	6,999		$	6,529		$	7,117		$	84,392		$	(97,558	)	$	7,479
Comprehensive income	$	30,123		$	28,157		$	30,240		$	97,373		$	(155,580	)	$	30,313

35

Statements of Operations for the six months ended October 31, 2012 (Expressed in thousands of United States dollars)	Parent			Issuer			Guarantor			Non-guarantor			Eliminations			Consolidated
Revenue	$	—		$	—		$	549,636		$	568,293		$	(255,074	)	$	862,855
Operating expenses:
Direct costs		—			(43	)		(405,207	)		(547,346	)		255,112			(697,484	)
Earnings (loss) from equity accounted investees		(26,075	)		(2,852	)		22,260			1,171			7,333			1,837
General and administration costs		(188	)		(2,816	)		(30,283	)		(6,986	)		2,834			(37,439	)
Amortization		—			—			(50,551	)		(5,394	)		—			(55,945	)
Restructuring costs		—			—			(1,630	)		(2,097	)		—			(3,727	)
Impairment of receivables and funded residual value guarantees		—			—			(572	)		—			—			(572	)
Impairment of intangible assets		—			—			(5,818	)		—			—			(5,818	)
Impairment of property and equipment		—			—			(660	)		—			—			(660	)
Impairment of assets held for use		—			—			(9,297	)		—			—			(9,297	)
Gain (loss) on disposal of assets		—			—			(4,645	)		28						(4,617	)
		(26,263	)		(5,711	)		(486,403	)		(560,624	)		265,279			(813,722	)
Operating income (loss)		(26,263	)		(5,711	)		63,233			7,669			10,205			49,133
Financing income (charges)		13			(17,666	)		(78,413	)		10,000			17,666			(68,400	)
Income (loss) from continuing operations before income tax		(26,250	)		(23,377	)		(15,180	)		17,669			27,871			(19,267	)
Income tax recovery (expense)		144			(1,984	)		(11,707	)		5,260			1,984			(6,303	)
Income (loss) from continuing operations		(26,106	)		(25,361	)		(26,887	)		22,929			29,855			(25,570	)
Earnings from discontinued operations, net of tax		—			—			812			—			—			812
Net earnings (loss)		(26,106	)		(25,361	)		(26,075	)		22,929			29,855			(24,758	)
Net earnings (loss) attributable to:
Controlling interest		(26,106	)		(25,361	)		(26,075	)		21,581			29,855			(26,106	)
Non-controlling interests		—			—			—			1,348			—			1,348
Net earnings (loss)	$	(26,106	)	$	(25,361	)	$	(26,075	)	$	22,929		$	29,855		$	(24,758	)
Comprehensive income (loss)	$	(36,111	)	$	(34,849	)	$	(36,080	)	$	18,390		$	55,353		$	(33,297	)

36

Cash Flows for the six months ended October 31, 2012 (Expressed in thousands of United States dollars)	Parent			Issuer			Guarantor			Non-guarantor			Eliminations			Consolidated
Cash provided by (used in) operating activities	$	(2,604	)	$	(130,981	)	$	6,099		$	(27,253	)	$	130,981		$	(23,758	)
Financing activities:
Increase in deferred financing costs relating to revolver and notes		—			(3,793	)		(3,793	)		—			3,793			(3,793	)
Sold interest in accounts receivable, net of collections		—			—			—			8,917			—			8,917
Proceeds from senior secured notes		—			202,000			202,000			—			(202,000	)		202,000
Long term debt proceeds		—			390,000			390,229			—			(390,000	)		390,229
Long term debt repayments		—			(465,000	)		(471,824	)		—			465,000			(471,824	)
Cash provided by financing activities		—			123,207			116,612			8,917			(123,207	)		125,529
Investing activities:
Property and equipment additions		—			—			(132,286	)		(9,981	)		—			(142,267	)
Proceeds from disposal of property and equipment		—			—			93,380			33			—			93,413
Aircraft deposits net of lease inception refunds		—			—			(40,926	)		—			—			(40,926	)
Restricted cash		—			—			—			5,384			—			5,384
Cash used in investing activities		—						(79,832	)		(4,564	)					(84,396	)
Cash provided by (used in) continuing operations		(2,604	)		(7,774	)		42,879			(22,900	)		7,774			17,375
Cash provided by (used in) discontinued operations:
Cash provided by operating activities		—			—			812			—			—			812
Cash used in financing activities		—			—			(812	)		—			—			(812	)
Cash provided by (used in) discontinued operations		—			—			—			—			—			—
Effect of exchange rate changes on cash and cash equivalents		—			—			(3,499	)		(645	)		—			(4,144	)
Change in cash and cash equivalents during the period		(2,604	)		(7,774	)		39,380			(23,545	)		7,774			13,231
Cash and cash equivalents, beginning of the period		196			(6,771	)		41,032			14,319			6,771			55,547
Cash and cash equivalents, end of the period	$	(2,408	)	$	(14,545	)	$	80,412		$	(9,226	)	$	14,545		$	68,778

37

Statements of Operations for the three months ended October 31, 2011 (Expressed in thousands of United States dollars)	Parent			Issuer			Guarantor			Non-guarantor			Eliminations			Consolidated
Revenue	$	—		$	—		$	277,494		$	282,541		$	(137,035	)	$	423,000
Operating expenses:
Direct costs		—			(1,149	)		(204,032	)		(275,282	)		137,117			(343,346	)
Earnings (loss) from equity accounted investees		(12,050	)		(22,089	)		(10,776	)		304			45,236			625
General and administration recovery (costs)		(161	)		38,862			(1,499	)		(14,956	)		(37,667	)		(15,421	)
Amortization		—			—			(23,359	)		(2,070	)		—			(25,429	)
Restructuring costs		—			—			(7,079	)		(1	)		—			(7,080	)
Recovery of receivables and funded residual value guarantees		—			—			63			—			—			63
Impairment of intangible assets		—			—			(1,717	)		—			—			(1,717	)
Recovery (impairment) of assets held for sale		—			—			(4,286	)		35			—			(4,251	)
Gain (loss) on disposal of assets		—			—			(326	)		10			—			(316	)
		(12,211	)		15,624			(253,011	)		(291,960	)		144,686			(396,872	)
Operating income (loss)		(12,211	)		15,624			24,483			(9,419	)		7,651			26,128
Financing income (charges)		12			(28,494	)		(40,398	)		6,988			28,331			(33,561	)
Loss from continuing operations before income tax		(12,199	)		(12,870	)		(15,915	)		(2,431	)		35,982			(7,433	)
Income tax recovery (expense)		779			(133	)		11,391			(3,533	)		134			8,638
Loss from continuing operations		(11,420	)		(13,003	)		(4,524	)		(5,964	)		36,116			1,205
Loss from discontinued operations, net of tax		—			—			(7,526	)		—			—			(7,526	)
Net loss	$	(11,420	)	$	(13,003	)	$	(12,050	)	$	(5,964	)	$	36,116		$	(6,321	)
Net earnings (loss) attributable to:
Controlling interest	$	(11,420	)	$	(13,003	)	$	(12,050	)	$	(11,063	)	$	36,116		$	(11,420	)
Non-controlling interest		—			—			—			5,099			—			5,099
Net loss	$	(11,420	)	$	(13,003	)	$	(12,050	)	$	(5,964	)	$	36,116		$	(6,321	)
Comprehensive loss	$	(37,054	)	$	(37,054	)	$	(37,684	)	$	(10,043	)	$	89,746		$	(32,089	)

38

Statements of Operations for the six months ended October 31, 2011 (Expressed in thousands of United States dollars)	Parent			Issuer			Guarantor			Non-guarantor			Eliminations			Consolidated
Revenue	$	—		$	—		$	537,497		$	571,130		$	(275,978	)	$	832,649
Operating expenses:
Direct costs		—			(1,189	)		(413,092	)		(542,874	)		277,168			(679,987	)
Earnings (loss) from equity accounted investees		(20,307	)		(5,400	)		2,685			513			23,730			1,221
General and administration recovery (costs)		(233	)		36,153			(3,681	)		(25,493	)		(36,198	)		(29,452	)
Amortization		—			—			(47,219	)		(5,313	)		—			(52,532	)
Restructuring costs		—			—			(11,861	)		(23	)		—			(11,884	)
Recovery of receivables and funded residual value guarantees		—			—			47			—			—			47
Impairment of intangible assets		—			—			(1,825	)		—			—			(1,825	)
Impairment of assets held for sale		—			—			(10,923	)		(709	)		—			(11,632	)
Gain on disposal of assets		—			—			3,731			10			—			3,741
		(20,540	)		29,564			(482,138	)		(573,889	)		264,700			(782,303	)
Operating income (loss)		(20,540	)		29,564			55,359			(2,759	)		(11,278	)		50,346
Financing income (charges)		(32	)		(48,271	)		(84,619	)		21,032			48,108			(63,782	)
Income (loss) from continuing operations before income tax		(20,572	)		(18,707	)		(29,260	)		18,273			36,830			(13,436	)
Income tax recovery (expense)		779			(1,170	)		17,265			(5,559	)		1,170			12,485
Income (loss) from continuing operations		(19,793	)		(19,877	)		(11,995	)		12,714			38,000			(951	)
Loss from discontinued operations, net of tax		—			—			(8,312	)		—			—			(8,312	)
Net earnings (loss)		(19,793	)		(19,877	)		(20,307	)		12,714			38,000			(9,263	)
Net earnings (loss) attributable to:
Controlling interest		(19,793	)		(19,877	)		(20,307	)		2,184			38,000			(19,793	)
Non-controlling interest		—			—			—			10,530			—			10,530
Net earnings (loss)	$	(19,793	)	$	(19,877	)	$	(20,307	)	$	12,714		$	38,000		$	(9,263	)
Comprehensive loss	$	(56,473	)	$	(54,309	)	$	(56,987	)	$	(1,382	)	$	121,619		$	(47,532	)

39

Statements of Cash Flows for six months ended October 31, 2011 (Expressed in thousands of United States dollars)	Parent			Issuer			Guarantor			Non-guarantor			Eliminations			Consolidated
Cash provided by (used in) operating activities	$	(28,811	)	$	(147,705	)	$	87,289		$	(68,554	)	$	147,705		$	(10,076	)
Financing activities:
Sold interest in accounts receivable, net of collections		—			—			—			40,082			—			40,082
Long term debt proceeds		—			405,000			405,000			—			(405,000	)		405,000
Long term debt repayments		—			(355,000	)		(390,539	)		—			355,000			(390,539	)
Long term intercompany flow—issuance of debt		(31,501	)		31,501			31,501			—			(31,501	)		—
Proceeds from the issuance of capital stock		60,000			—			—			—			—			60,000
Cash provided by (used in) financing activities		28,499			81,501			45,962			40,082			(81,501	)		114,543
Investing activities:
Property and equipment additions		—			—			(151,774	)		(12,977	)		—			(164,751	)
Proceeds from disposal of property and equipment		—			—			91,114			6			—			91,120
Aircraft deposits net of lease inception refunds		—			—			(36,115	)		—			—			(36,115	)
Restricted cash		—			—			536			217			—			753
Distributions from equity investments		—			—			936			—			—			936
Cash provided by (used in) investing activities		—			—			(95,303	)		(12,754	)		—			(108,057	)
Cash provided by (used in) continuing operations		(312	)		(66,204	)		37,948			(41,226	)		66,204			(3,590	)
Cash flows provided by (used in) discontinued operations:
Cash flows provided by operating activities		—			—			(1,488	)		—			—			(1,488	)
Cash flows used in financing activities		—			—			1,488			—			—			1,488
Cash provided by (used in) discontinued operations		—			—			—			—			—			—
Effect of exchange rate changes on cash and cash equivalents		—			—			(8,430	)		(2,374	)		—			(10,804	)
Change in cash and cash equivalents during the year		(312	)		(66,204	)		29,518			(43,600	)		66,204			(14,394	)
Cash and cash equivalents, beginning of the year		28			2,692			15,016			53,877			(2,692	)		68,921
Cash and cash equivalents, end of the period	$	(284	)	$	(63,512	)	$	44,534		$	10,277		$	63,512		$	54,527

40

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to provide an understanding of our results of operations, financial condition and where appropriate, factors that may affect future performance. The following discussion of our results of operations and financial condition should be read in conjunction with the unaudited interim consolidated financial statements and the notes thereto as well as our annual audited financial statements for the fiscal year ended April 30, 2012, the notes thereto, and the MD&A related thereto included in Amendment No. 1 to our Registration Statement Form S-4 which was filed with the SEC on November 9, 2012. In the discussion that follows, the term “current year quarter and prior year quarter” and “current year period and prior year period” refers to the three and six months ended October 31, 2012 and 2011, respectively. The following discussions include forward-looking statements that involve certain risks and uncertainties, including those identified under Part II, Item 1A “Risk Factors” elsewhere in this Quarterly Report on Form 10-Q and those identified in the “Risk Factor” sections of Amendment No. 1 to our Registration Statement on Form S-4 which was filed with the SEC on November 9, 2012 and our Annual Report on Form 10-K which was filed with the SEC on July 11, 2012. Our actual results could differ materially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements and Other Industry and Market Data” below.

This MD&A also contains non-GAAP financial measures, segment earnings before interest, taxes, depreciation, amortization and aircraft lease rent and associated costs (“segment EBITDAR (adjusted)”) and Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) that are not required by, or presented in accordance with GAAP. These non-GAAP measures are not performance measures under GAAP and should not be considered as alternatives to net earnings (loss) or any other performance or liquidity measures derived in accordance with GAAP. In addition, these measures may not be comparable to similarly titled measures of other companies.

We have chosen to include segment EBITDAR (adjusted) as we consider this measure to be a significant indicator of our financial performance and use this measure to assist us in allocating available capital resources. Segment EBITDAR (adjusted), which is defined as earnings before interest, taxes, depreciation, amortization and aircraft lease and associated costs or total segment revenue plus earnings from equity accounted investees less direct costs excluding aircraft lease and associated costs less general and administration expenses. Segment EBITDAR (adjusted) also excludes restructuring costs, recovery (impairment) of receivables and funded residual value guarantees, impairment of intangible assets, impairment of assets held for use, impairment of assets held for sale, gain (loss) on disposal of assets and goodwill impairment if any. These items are significant components to understanding and assessing financial performance and liquidity. For additional information about our segment revenue and segment EBITDAR (adjusted), including a reconciliation of these measures to its consolidated financial statements, seeNote 18 of the consolidated financial statements for the six months ended October 31, 2012 included elsewhere in this Quarterly Report on Form 10-Q.

We have also chosen to include Adjusted EBITDA as it provides useful information to investors as a measure to calculate certain financial covenants related to our revolving credit facility and certain covenants in the senior secured note indenture. Adjusted EBITDA has limitations and should not be considered as discretionary cash available to us to reinvest in the growth of our business or a measure of cash that will be available to meet our obligations. For additional information about our Adjusted EBITDA, including a reconciliation of this measure to our unaudited interim consolidated financial statements, see “— Covenants and Adjusted EBITDA” below.

41

Cautionary Note Regarding Forward-Looking Statements and Other Industry and Market Data

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, about our future expectations, plans or prospects and our business. All statements contained in this Quarterly Report on Form 10-Q, other than statements of historical fact, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Although these forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events, actual results may differ materially from those stated in or implied by these forward-looking statements. Such factors include, but are not limited to, the following:

• Competition in the markets we serve;

• loss of any of our large, long-term support contracts;

• failure to maintain standards of acceptable safety performance;

• political, economic and regulatory uncertainty;

• problems with our non-wholly owned entities, including potential conflicts with the other owners of such entities;

• exposure to credit risks;

• assimilation of acquisitions and the impact of any future material acquisitions;

• inability to fund our working capital requirements;

• unanticipated costs or cost increases associated with our business operations, including replacement aircraft and replacement aircraft parts;

• risks inherent in the operation of helicopters;

• reduced activity in the oil and gas industry;

• inability to obtain or maintain necessary aircraft, aircraft parts, insurance or lease financing;

• exchange rate fluctuations;

• loss of key personnel;

• labor problems;

• global financial market instability;

• insufficient assets in our defined benefit pension plan;

• allocation of risk between our customers and us;

• inability to dispose of our older aircraft and parts;

• inability to service our debt obligations or comply with our obligations under our operating leases;

• compliance risks associated with international activities;

• application of tax laws in various jurisdictions;

• inability to upgrade our technology;

• reduction or cancellation of services for government agencies;

• our sponsor may have interests that conflict with ours;

• risk related to our operations under local law; and

• inability to maintain government issued licenses.

Actual results may differ materially from those discussed in these forward-looking statements due to a number of factors, including the risks set forth in the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and elsewhere in this filing and in the other documents we have filed, and will file from time to time, with the SEC. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform our prior statements to actual results.

42

Overview of Business

We are a world leading commercial operator of medium and heavy helicopters, providing mission-critical services to the offshore oil and gas industry and SAR and EMS to government agencies. We believe the services we provide to the oil and gas industry are critical for the continued production of hydrocarbons from existing offshore oil and gas platforms and the exploration and development of new oil fields, while our SAR and EMS are crucial for saving lives. In addition, our MRO segment, Heli-One is a world leading commercial provider of helicopter support services, with offerings that include MRO, integrated logistics support, and the complete outsourcing of all maintenance activities for helicopter operators. Heli-One services our own flight operations as well as third party customers around the world.

Through our subsidiaries and Predecessor companies, we have been providing helicopter services for over 60 years, covering most major offshore oil and gas producing regions of the world. Our major operations are in Norway, the United Kingdom, Ireland, the Netherlands, Australia, Brazil, Canada, and Africa. We earn the majority of our revenue from helicopter transportation services for the oil and gas industry, SAR and EMS activities and MRO services.

This MD&A provides certain financial and related information about our segments and also about our products and services, the geographic areas in which we operate and our major customers. Our objective is to provide information about the different types of business activities in which we engage and the different economic environments in which we operate in order to help users of our consolidated financial statements (i) better understand our performance, (ii) better assess our prospects for future net cash flows and (iii) make more informed judgments about us as a whole.

Segments

We operate under two operating segments and have a corporate and other segment comprised primarily of general and administration costs and the costs related to managing the fleet of aircraft.

The two operating segments are as follows:

Helicopter Services:

• Helicopter Services consists of flying operations in the Eastern North Sea, Western North Sea, the Americas, the Asia-Pacific region and the Africa-Euro Asia region serving the offshore oil and gas, SAR, EMS and other industries. The Eastern North Sea is comprised mainly of Norway while the Western North Sea includes the United Kingdom, Ireland, the Netherlands and Denmark. The Americas is comprised of Brazil and North and South American countries. The Asia-Pacific region includes Australia and Southeast Asian countries and the Africa-Euro Asia region includes Nigeria, Kazakhstan, Turkey, Mozambique, Tanzania and other African and European countries.

MRO:

• The MRO segment includes helicopter repair and overhaul facilities in Norway, Poland, Canada, Australia and the United States, providing helicopter repair and overhaul services for our fleet and for a growing external customer base in Europe, Asia and North America.

43

Market Outlook

Oil and gas production customers are the principle source of our revenue, while exploration and development customers provide a lesser portion of our revenue. The production business is typically less cyclical than the exploration and development business because the production platforms remain in place over the long-term and are relatively unaffected by economic cycles, as the marginal cost of lifting a barrel of oil once the platform is in position is low. Our customers typically base their capital expenditure budgets on their long-term commodity price expectations and not exclusively on the current spot price. In 2009 and 2010, the credit, equity and commodity markets experienced significant volatility, causing many of our oil and gas company customers to reduce capital spending plans and defer projects.

Our MRO business is subject to economic cycles. Although aircraft maintenance is mandatory, during difficult economic times, such as those experienced since 2008, many of our customers cut maintenance expenditures by reducing flying hours and deferring certain expenditures.

We have seen growing confidence amongst our customers, which has led to increased spending and improvement in many metrics reflected in our fiscal 2011 and 2012 financial performance. We are cautiously optimistic that improvements will continue through the remainder of fiscal 2013. We are continuing to see growth in the offshore production as new technology has allowed oil and gas companies to continue exploration and drilling farther offshore. To remain competitive and to service existing and new contracts in this industry, older aircraft in the fleet must be replaced with new aircraft technology to meet customers’ changing demands. The industry is constrained by the pace at which it renews its fleet due to the limited supply of new technology aircraft and the secondary market for aircraft resales. To address these constraints, we have continued to focus on the reduction of our idle aircraft and have continued efforts to secure commitments to obtain new technology aircraft to support our future growth.

At October 31, 2012, we have commitments to purchase 36 aircraft with the delivery of these aircraft beginning in fiscal 2013 and continuing through to fiscal 2017. These aircraft will be purchased outright or financed through leases. In addition to the limited supply of new aircraft, the secondary market for the sale of aircraft is improving, providing an additional source of capital for new aircraft purchases and lease buyouts.

Australia, Norway, the U.K., Brazil and Nigeria and other countries in the Africa-Euro Asia region continue to be important growth areas for us due to an increase in oil and gas activity. In October 2012, we received our Nigerian air operating certificate. We believe Nigeria is a growing market due to the number of deep water oil-and-gas discoveries.

Heli-One, our MRO operation is continuing to grow its third party business with additional contract wins in Norway, the U.K. and the U.S.. To further support the growth of the MRO business and expand our global footprint, we have opened an additional MRO facility in Poland and will be expanding to Brazil in fiscal 2013. The MRO operation is also reviewing its global inventory management processes and implementing a number of lean process techniques to continue to drive efficiencies in the workshops. In November 2012, we reached a key milestone in our broad transformation initiatives as we turned on our new integrated MRO system. The system will support future growth as it replaces a number of legacy systems, creates improved productivity and standardizes processes across our worldwide MRO operations.

We conduct our business in various foreign jurisdictions, and as such, our cash flows and earnings are subject to fluctuations and related risks from changes in foreign currency exchange rates. Throughout the six months ended October 31, 2012, our primary foreign currency exposures were related to the Norwegian Kroner, Euro, British pound sterling, Canadian dollar, and Australian dollar. For details on this exposure and the related impact on our results of operations, see Part I, Item 3 “Quantitative and qualitative disclosures about market risk” included elsewhere in this Quarterly Report on Form 10-Q.

To further support our profit growth, we are continuing with our broad transformation program. The program includes transformative thinking and technology to achieve cost efficiencies through the global standardization of processes and restructuring of the organization to allow us to continue to reshape our earnings and cash flows. Together, these qualities allow us to maximize our value proposition to our customers – allowing them to go further, do more, and come home safely. The transformation program looks at all major aspects of our operations and includes a number of work streams, each including a multitude of initiatives:

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1. Overhead transformation – redesign the organizational structure of all indirect functions and improve and streamline global processes for support;

2. Base transformation – reengineer the entire operations at all 60 bases to standardize processes and share operational best practices around the world;

3. Optimizing contracts – working with customers to optimize terms and economics of all contracts;

4. MRO productivity improvement – dramatically increase MRO efficiency and reduce cost and inventory levels through lean processes and other techniques;

5. Overhauling the business management systems – launch a global key leading performance indicator dashboard to provide headlights on business performance; and

6. Overall project management – deploy centralized project management and analytical resources to assist business teams on various work streams.

The transformation program is progressing in accordance with our plan as we continue to consolidate, standardize and enhance our capabilities, tools, processes and systems. As of October 31, 2012, we achieved milestones including the standardization of key performance indicators, detailed reviews of operations in key bases in the Netherlands, Eastern and Western North Sea and Brazil, the opening of the centralized Integrated Operations Center in Dallas, Texas, and the opening of our new MRO facility in Poland. In November 2012, we also turned on our new integrated MRO system, which will standardize our global processes and support future growth in MRO Operations. We are proceeding with our plans to further implement global systems to further enhance operations such as pilot and line maintenance scheduling.

Recent Developments

On October 22, 2012, one of our EC225 helicopters was forced to make a controlled water landing in the North Sea. The aircraft that made the controlled water landing was fully insured and has been recovered. There were no reported injuries to any of the 19 passengers and crew, and no uninsured losses to third party property.

The UK Air Accidents Investigation Branch (AAIB) issued a special bulletin with a preliminary determination about the cause of the incident. (See http://www.aaib.gov.uk/publications/special_bulletins/s6_2012___ec225_lp_super_puma__g_chcn.cfm). Neither the foregoing website nor the report accessible through such website shall be deemed incorporated into, and neither shall be a part of, this Quarterly Report on Form 10-Q. The AAIB’s primary finding is that the failure of the main gearbox and emergency lubrication systems in this incident mirror those related to a controlled water landing of another EC225 (Bond Helicopter’s G-REDW) on May 10, 2012. Namely, that a bevel vertical gear shaft driving the main gear box oil pumps failed. With this significant information, the European Helicopter Operators Committee (EHOC) and UK Helicopter Safety Steering Group (HSSG) – variously representing major oil-and-gas helicopter operators, oil and gas companies, employee unions and other groups – reconvened on October 25, 2012 with the following outcome: Flights using EC225 aircraft and other Super Puma aircraft with the same type of bevel gear vertical shafts will remain on hold worldwide pending more information and a plan to assure their airworthiness. The UK and Norwegian Civil Aviation Authorities have since issued operational directives prohibiting the use of the new vertical bevel gear shaft for offshore transport.

We are working closely with our customers to provide alternate aircraft to meet their needs and to mutually agree to modified service obligations in order to compensate for the hold imposed by the directives noted above on the EC225 and other Super Puma aircraft with the new shaft design. We are also working closely with the investigators, other operators and Eurocopter to find a solution that will lift the hold. We are taking all measures to mitigate our losses and to preserve our rights to recover any losses we may experience and remain committed to our primary objective of safety.

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Fleet

As of October 31, 2012, our fleet was comprised of the following aircraft:

Aircraft Type:	Total
Medium
Sikorsky S76C+		22
Sikorsky S76C++		23
Sikorsky S76A/B/C		24
Eurocopter EC135/145/155		6
Eurocopter AS365 series		12
Bell 412		12
Bell 212/214		1
Agusta AW139		30
		130
Heavy
Eurocopter Super Puma series		45
Eurocopter 225		29
Sikorsky S92A		34
Sikorsky S61N		6
		114
TOTAL HELICOPTERS		244
Fixed Wing		1
TOTAL AIRCRAFT		245

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RESULTS OF OPERATIONS

The Three Months Ended October 31, 2012 Compared to the Three Months Ended October 31, 2011

Consolidated Results Summary

For the quarter ended October 31,

(In thousands of U.S. dollars)

							Favorable (Unfavorable)
	2012			2011			$ Change			% Change
Helicopter Services (i)	$	402,617		$	383,279		$	19,338			5.0	%
MRO		42,488			38,409			4,079			10.6	%
Corporate and other		1,681			1,312			369			28.1	%
Total revenue		446,786			423,000			23,786			5.6	%
Direct costs (ii)		(302,600	)		(300,742	)		(1,858	)		-0.6	%
Aircraft lease and associated costs		(48,797	)		(42,604	)		(6,193	)		-14.5	%
Total direct costs	($	351,397	)	($	343,346	)	($	8,051	)		-2.3	%
Flying hours		42,391			44,329			(1,938	)		-4.4	%
# of aircraft		245			259			(14	)		-5.4	%

(i) Includes revenue from the customer reimbursement of fuel costs of $24.2 million for the three months ended October 31, 2012 and $25.4 million for the three months ended October 31, 2011.

(ii) Includes $25.0 million in fuel costs for the three months ended October 31, 2012 and $26.3 million for the three months ended October 31, 2011.

Consolidated Results of Operations

Revenue

Revenue increased by $23.8 million to $446.8 million compared to the prior year quarter. Helicopter Services revenue increased by $19.3 million, due primarily to new flying contracts in the Americas, the Western North Sea and Asia-Pacific. In addition to the new contracts, the Western North Sea and Asia-Pacific had an increase in ad hoc flying hours. These revenue increases were offset by a decrease in the Eastern North Sea and the Africa-Euro Asia region. The Americas contributed an additional $23.4 million in revenues, due primarily to new contracts for heavy helicopters in Brazil. Asia-Pacific contributed an additional $6.2 million due primarily a new contract in Australia, higher ad hoc flying hours and deployment of all aircraft under a heavy helicopter contract.The increases in Australia were offset by a net decrease in Southeast Asia due to a reduction in flying hours and aircraft deployed. The Western North Sea contributed additional revenues of $4.8 million, due primarily to an increase in oil and gas activity in Scotland and England, resulting in an increase to ad hoc flying hours in the current year quarter and new contracts in Scotland. These increases in the Western North Sea’s revenue were offset by a decrease in Denmark due to a lost contract. The Eastern North Sea’s revenues decreased by $11.0 million, due primarily to contract expiries and a decrease in ad hoc flying hours offset by the start of a new contract in the current year quarter. Africa-Euro Asia’s revenues decreased by $4.1 million due primarily to a reduction in flying hours in Nigeria and Chad offset by revenue increases in Mozambique, Kazakhstan, Kenya and Namibia. In Nigeria, the Company had exited its previous relationship with its partner and was awaiting the receipt of its air operating certificate, which was received in October 2012. In Chad, the fixed wing aircraft sold in the fourth quarter of fiscal 2012 resulted in no flying hours in the current year quarter. An increase in oil and gas activities in Mozambique, Kazakhstan, Kenya and Namibia generated additional revenues through new contracts and additional flying hours.

MRO revenue increased by $4.1 million due primarily to third party component work that was completed in the current year quarter and an increase in third party PBH revenues from higher flight hours.

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Direct Costs

For the three months ended October 31,

(In thousands of U.S. dollars)

							Favorable (Unfavorable)
	2012			2011			$ Change			% Change
Crew costs	($	107,529	)	($	101,507	)	($	6,022	)		-5.9	%
Base and operations and other costs		(95,231	)		(92,007	)		(3,224	)		-3.5	%
Maintenance		(58,687	)		(71,828	)		13,141			18.3	%
Support costs		(41,153	)		(35,400	)		(5,753	)		-16.3	%
	($	302,600	)	($	300,742	)	($	1,858	)		-0.6	%

Direct costs increased by $1.9 million to $302.6 million compared to the prior year quarter. The increase in direct costs was due primarily to an increase in crew, base and operations and other costs and support costs partially offset by a decrease in maintenance.

Crew costs including salary, benefits, training and recruitment increased by $6.0 million to $107.5 million compared to the prior year quarter. Crew costs have increased due primarily to the hiring of additional crew for new and existing contracts in Brazil, Australia, and the UK. These increases were partially offset by a decrease in crew costs in Chad due to the sale of the fixed wing aircraft and expired contracts in Norway.

Base operations and other costs including insurance, travel and fuel costs re-chargeable to our customers increased by $3.2 million to $95.2 million compared to the prior year quarter. The increase in base operations costs is primarily due to fuel costs and landing fees from higher flying hours in Brazil, Australia, and Kazakhstan from new and existing contracts partially offset by Norway, Nigeria and Chad from lower flying hours and lost contracts. Insurance costs are also higher as there was an insurance recovery received in the prior year quarter that did not reoccur in the current year quarter.

Maintenance costs decreased by $13.1 million to $58.7 million compared to the prior year quarter due primarily to the timing of maintenance events partially offset by the net increase in flying hours from new and existing contracts in Brazil, Australia and the UK.

Support costs increased by $5.8 million to $41.2 million compared to the prior year quarter due primarily to the personnel costs related to the centralized operations center and professional fees incurred to support the operations.

Aircraft Lease and Associated Costs

Aircraft leasing costs increased by $6.2 million to $48.8 million, due primarily to the conversion of a number of capital leases to operating leases as part of the refinancing activities in fiscal 2012 and new technology aircraft additions that have higher lease costs. We are acquiring new technology aircraft to meet customers’ needs as they continue exploration and development into deeper waters. We anticipate that we will continue to finance aircraft through operating leases and may make strategic decisions as required to purchase certain aircraft outright. The purchase of aircraft allows for greater jurisdictional flexibility as some lease agreements restrict the movement of aircraft to certain countries.

General and Administration Costs

General and administration costs included in the results of the Corporate and other segment increased by $3.5 million to $18.9 million compared to the prior year quarter. The increase is due primarily to information technology and personnel support costs partially offset by a decrease in reported insurance claims. Information technology costs have increased as we incurred more training and consulting costs to support the go-live of the new integrated MRO system in November 2012. Personnel support costs have increased due primarily to compensation costs where vacant roles have been filled.

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Restructuring Costs

Restructuring costs decreased by $5.3 million to $1.8 million compared to the prior year quarter as there has been a decrease in the consulting costs incurred as part of the transformation program to achieve long-term cost efficiencies through new systems and processes allowing for global standardization. Of the current year restructuring costs, $0.9 million related to the Corporate and other segment, $0.7 million related to the MRO segment and $0.2 million related to the Helicopter Services segment.

Loss on Disposal of Fixed Assets

Loss on disposal of fixed assets increased by $2.7 million to $3.0 million compared to the prior year quarter due solely to the loss on the sale of aircraft in the current year quarter.

Foreign Exchange Gains

Foreign exchange gains have increased by $8.1 million to $10.6 million compared to the prior year quarter primarily from the revaluation of net liability positions denominated in U.S. dollars in entities with Norwegian Kroner and Euro functional currencies.

Other Financing Charges

Other financing charges decreased by $3.0 million to $3.4 million compared to the prior year quarter. The decrease in financing charges is due primarily to net gains on the revaluation of foreign currency forward contracts to purchase Euros partially offset by an increase in overdraft interest expense.

Income Tax Recovery (Expense)

Income tax recovery decreased by $13.7 million to an income tax expense of $5.0 million compared to the prior year quarter. The effective tax rate for the current year period is 41.7% compared to (116.2)% in the prior year quarter. The below table provides a discussion of the movements between the current year quarter and the prior year quarter.

	Increase/(decrease) in tax recovery			Effective tax rate
Income tax recovery at October 31, 2011	$	8,638			(116.2	%)
Valuation allowance		(6,801	)
Change in tax recovery calculated at the statutory rate		(5,646	)
Other		(2,009	)
Non-deductible items		590
Functional currency adjustments		206
Income tax expense at October 31, 2012	($	5,022	)		41.7	%

The decrease in the income tax recovery as compared to the prior year period was due primarily to an increase in the valuation allowance taken against deferred tax assets in certain jurisdictions, an increase in income before tax in the current year quarter, and a decrease in rate differences in various jurisdictions.

The increase in valuation allowance compared to the prior year quarter was due to a change in our assessment of the future realization of certain tax assets resulting in a net increase in the valuation allowance of $6.8 million for deferred tax assets in Canada, Norway and the UK.

The income tax recovery calculated at the statutory rate also decreased by $5.6 million due to the increase in income before tax in the current year quarter.

Other items including the tax rate differences of various jurisdictions, and the restructure of intercompany debt creating non-taxable income has decreased by $2.0 million as there was a favorable filing adjustment which did not recur in the current year quarter.

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Non-Controlling Interest

Net earnings allocated to non-controlling interest decreased by $4.6 million to $0.5 million, due primarily to a decrease in net earnings in EEA Helicopters Operations B.V. (“EHOB”).

Segmented Results of Operations

During fiscal 2012, the segmented results of operations were reclassified to reflect the revenues earned by the MRO segment on helicopter parts and supplies provided to Helicopter Services for use at the bases. These expenses are included as direct costs for Helicopter Services. The prior year quarter comparatives have been reclassified to conform to the current year presentation.

Helicopter Services

For the three months ended October 31,

(In thousands of U.S. dollars)

							Favorable (Unfavorable)
	2012			2011			$ Change			% Change
Third party revenue	$	402,617		$	383,279		$	19,338			5.0	%
Internal revenue		1,288			985			303			30.8	%
Total revenue		403,905			384,264			19,641			5.1	%
Direct costs		(283,799	)		(277,889	)		(5,910	)		-2.1	%
Earnings from equity accounted investees		825			625			200			32.0	%
Segment EBITDAR (adjusted)	$	120,931		$	107,000		$	13,931			13.0	%
Segment EBITDAR (adjusted) Margin		29.9	%		27.8	%		2.1	%		7.6	%
Flight Hours		42,391			44,329			(1,938	)		-4.4	%
# of Aircraft		245			259			(14	)		-5.4	%
Aircraft lease and associated costs	($	48,797	)	($	42,604	)	($	6,193	)		-14.5	%

Helicopter Services segment EBITDAR (adjusted) has increased by $13.9 million to $120.9 million compared to the prior year quarter. The increase in segment EBITDAR (adjusted) was due primarily to the Americas, the Western North Sea and the Africa-Euro Asia region partially offset by a decrease in Asia-Pacific. Eastern North Sea’s segment EBITDAR (adjusted) is flat quarter over quarter. America’s segment EBITDAR (adjusted) increased by $10.8 million due primarily to margins from new heavy helicopter contracts in Brazil and improved aircraft and crew availability. The Western North Sea’s segment EBITDAR (adjusted) increased by $2.5 million due primarily to margins from an increase in oil and gas activities in Scotland and England, resulting in higher ad hoc flying hours and new contracts. These increases in the Western North Sea’s segment EBITDAR (adjusted) were offset by a decrease in Denmark due to a lost contract. Africa-Euro Asia’s segment EBITDAR (adjusted) increased by $1.1 million due primarily to margins from new contracts generated from an increase in oil and gas activities in Mozambique, Kazakhstan, Kenya, and Namibia and a change in estimate for certain contingencies. These margin increases were partially offset by the costs that we are continuing to incur in Nigeria while we transition to our new partner and Chad where we sold our fixed wing aircraft. During October 2012, we obtained our Nigerian air operating certificate. These increases in Helicopter Services’ segment EBITDAR (adjusted) are offset by a decrease in Asia-Pacific’s segment EBITDAR (adjusted) of $0.6 million. The increase in Australian crew costs from the rapid expansion of the business offset the margins from new flying contracts, deployment of all aircraft under a heavy helicopter contract and increase in ad hoc flying hours in Australia. Segment EBITDAR (adjusted) also decreased in Southeast Asia from a combination of decreased flying hours and aircraft deployed in the area.

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Aircraft leasing costs increased by $6.2 million to $48.8 million, due primarily to the conversion of a number of capital leases to operating leases as part of the refinancing activities in fiscal 2012 and new technology aircraft additions that have higher lease costs. We are acquiring new technology aircraft to meet customers’ needs as they continue exploration and development into deeper waters. We anticipate that we will continue to finance aircraft through operating leases and may make strategic decisions as required to purchase certain aircraft outright. The purchase of aircraft allows for greater jurisdictional flexibility as some lease agreements restrict the movement of aircraft to certain countries.

MRO

For the three months ended October 31,

(In thousands of U.S. dollars)

							Favorable (Unfavorable)
	2012			2011			$ Change			% Change
Third party revenue	$	42,488		$	38,409		$	4,079			10.6	%
Internal Revenue		77,354			72,336			5,018			6.9	%
Total Revenue		119,842			110,745			9,097			8.2	%
Direct Costs		(91,760	)		(91,810	)		50			0.1	%
Segment EBITDAR (adjusted)	$	28,082		$	18,935		$	9,147			48.3	%
Segment EBITDAR (adjusted) Margin		23.4	%		17.1	%		6.3	%		36.8	%

MRO generates the majority of its revenue by supporting the internal flying operations and is continuing to expand its services to third parties, which represent 35.5% of the total revenues. Segment EBITDAR (adjusted) increased by $9.1 million to $28.1 million compared to the prior year quarter due primarily to increased margins from PBH revenues partially offset by decreased margins in non-PBH revenues. Segment EBITDAR (adjusted) increased by $10.5 million due to an increase in third party and internal PBH revenues from higher flying hours resulting in a favorable margin impact of 7.3%. Segment EBITDAR (adjusted) for non-PBH revenues decreased by $0.6 million during the current year quarter due to timing in the completion of projects, delays in receipt of the projects, and projects in the prior year quarter that earned higher margins. This had an unfavorable impact to the segment EBITDAR (adjusted) margin of 0.4%. Support costs were also higher in the current year quarter by $0.9 million with an unfavorable margin impact of 0.6% due to an increase in personnel costs to support the MRO operations.

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The Six Months Ended October 31, 2012 Compared to the Six Months Ended October 31, 2011

Consolidated Results Summary

For the six months ended October 31,

(In thousands of U.S. dollars)

							Favorable (Unfavorable)
	2012			2011			$ Change			% Change
Helicopter Services (i)	$	792,521		$	756,573		$	35,948			4.8	%
MRO		67,034			73,297			(6,263	)		-8.5	%
Corporate and other		3,300			2,779			521			18.7	%
Total revenue		862,855			832,649			30,206			3.6	%
Direct costs (ii)		(600,257	)		(596,887	)		(3,370	)		-0.6	%
Aircraft lease and associated costs		(97,227	)		(83,100	)		(14,127	)		-17.0	%
Total direct costs	($	697,484	)	($	679,987	)	($	17,497	)		-2.6	%
Flying hours		85,763			88,522			(2,759	)		-3.1	%
# of aircraft		245			259			(14	)		-5.4	%

(i) Includes revenue from the customer reimbursement of fuel costs of $52.2 million for the six months ended October 31, 2012 and $49.1 million for the six months ended October 31, 2011.

(ii) Includes $53.0 million in fuel costs for the six months ended October 31, 2012 and $50.8 million for the six months ended October 31, 2011.

Consolidated Results of Operations

Revenue

Revenue increased by $30.2 million to $862.9 million compared to the prior year period. Helicopter Services revenue increased by $35.9 million due primarily to new flying contracts and an increase in ad hoc flying hours in the Americas, the Western North Sea and Asia-Pacific. These increases in revenue are partially offset by revenue decreases in the Eastern North Sea and Africa-Euro Asia. The Americas contributed an additional $44.2 million in revenues, due primarily to new contracts for heavy helicopters in Brazil. In addition, all aircraft were fully deployed under a contract in the Falkland Islands in the current year period. Asia-Pacific contributed an additional $18.0 million due primarily to Australia where there was a new contract, higher ad hoc flying hours and deployment of all aircraft under a heavy helicopter contract for the current year period. These revenue increases were partially offset by decreases in Southeast Asia due to a reduction in flying hours and aircraft deployed in the area. The Western North Sea contributed additional revenues of $8.4 million, due primarily to an increase in oil and gas activity in Scotland and England, resulting in an increase to ad hoc flying hours and new contracts in the current year period. These increases in the Western North Sea’s segment EBITDAR (adjusted) were offset by a decrease in Denmark due to a lost contract. Eastern North Sea’s revenues decreased by $30.3 million due primarily to a contract expiry and a decrease in ad hoc flying hours partially offset by new contract revenues in the current year quarter. Revenues also decreased by $4.3 million in the Africa-Euro Asia region due primarily to lower flying hours in Nigeria, Chad, and Turkey partially offset by new contracts from an increase in oil and gas activity in Mozambique, Kazakhstan, and Tanzania. Nigeria had a decrease in flying hours as we were transitioning to a new partner. During October 2012, we received our Nigerian air operating certificate. Chad’s revenues decreased as there were no flying hours in the current year period as the fixed wing aircraft were sold in the latter half of fiscal 2012. Turkey’s revenues also decreased due to a contract expiry.

MRO revenue decreased by $6.3 million due primarily to the timing of third party airframe and components work where the related revenues are deferred until the completion of the projects partially offset by an increase in third party PBH revenues from higher flying hours.

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Direct Costs

For the six months ended October 31,

(In thousands of U.S. dollars)

							Favorable (Unfavorable)
	2012			2011			$ Change			% Change
Crew costs	($	209,973	)	($	202,683	)	($	7,290	)		-3.6	%
Base and operations and other costs		(185,257	)		(184,111	)		(1,146	)		-0.6	%
Maintenance		(125,084	)		(133,673	)		8,589			6.4	%
Support costs		(79,943	)		(76,420	)		(3,523	)		-4.6	%
	($	600,257	)	($	596,887	)	($	3,370	)		-0.6	%

Direct costs increased by $3.4 million to $600.3 million compared to the prior year period. The increase in direct costs was due primarily to an increase in crew and support costs which was offset by a decrease in maintenance.

Crew costs increased by $7.3 million to $210.0 million compared to the prior year period. The increase was due primarily to additional crew and trainings costs for new and existing contracts in Brazil, Australia, Mozambique, Kazakhstan and Tanzania partially offset by a decrease in Turkey due to a reduction in flying hours and the sale of the fixed wing aircraft in Chad.

Maintenance costs decreased by $8.6 million to $125.1 million compared to the prior year quarter due primarily to a decrease in the timing of maintenance events partially offset by the net increase in flying hours from new and existing contracts in Brazil, Australia and the UK.

Support costs increased by $3.5 million to $79.9 million compared to the prior year period due primarily to an increase in costs to support the centralized flying operations center and consulting costs.

Aircraft Lease and Associated Costs

Aircraft leasing costs increased by $14.1 million to $97.2 million, due primarily to the conversion of a number of capital leases to operating leases as part of the refinancing activities in fiscal 2012 and new technology aircraft additions that have higher lease costs. We are acquiring new technology aircraft to meet customers’ needs as they continue exploration and development into deeper waters. We anticipate that we will continue to finance aircraft through operating leases and may make strategic decisions as required to purchase certain aircraft outright. The purchase of aircraft allows for greater jurisdictional flexibility as some lease agreements restrict the movement of aircraft to certain countries.

General and Administration Costs

General and administration costs included in the results of the Corporate and other segment increased by $8.0 million to $37.4 million compared to the prior year period. The increase is due primarily to information technology costs and personnel support costs partially offset by a decrease in reported insurance claims. Information technology costs have increased as we incurred more training and consulting costs to support the go-live of the new integrated MRO system in November 2012 and to support other new global systems that are being implemented as part of the broad transformation initiative. Personnel support costs have increased due primarily to compensation costs where vacant roles have been filled.

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Restructuring Costs

Restructuring costs decreased by $8.2 million to $3.7 million compared to the prior year period as there has been a decrease in the consulting costs incurred as part of the transformation program to achieve long-term cost efficiencies through new systems and processes allowing for global standardization. Of the current year restructuring costs, $2.4 million related to the Corporate and other segment, $1.4 million related to the MRO segment and the Helicopter Services segment had a recovery of costs of $0.1 million.

Impairment of Assets Held For Sale

Impairment of assets held for sale related to the Corporate and other segment decreased by $2.3 million to $9.3 million compared to the prior year period due to the impairment of a building that did not reoccur in the current year period and aircraft with lowering carrying values in the current year period as an impairment loss was recognized in prior years on old technology aircraft. The impairment recognized in the current year period relates primarily to aircraft that will be sold as parts.

Gain (Loss) on Disposal of Fixed Assets

Gain on disposal of fixed assets decreased by $8.4 million to a loss of $4.6 million compared to the prior year period. The gain on disposal of fixed assets has decreased as there was a $3.8 million gain on the sale of a building recognized in the prior year period that did not recur. The remaining $4.6 million relates to losses on the sale of aircraft in the current year period.

Other Financing Charges

Other financing charges increased by $5.4 million to $11.6 million compared to the prior year period. The increase in financing charges is due primarily to an increase in overdraft interest expenses and banking fees.

Income Tax Recovery (Expense)

Income tax recovery decreased by $18.8 million to an income tax expense of $6.3 million compared to the prior year period. The effective tax rate for the current year period is 32.7% compared to (92.9%) in the prior year period. The below table provides a discussion of the movements between the current year quarter and the prior year quarter.

	Increase (decrease) in tax recovery			Effective tax rate
Income tax recovery at October 31, 2011	$	12,485			(92.9	%)
Valuation allowance		(28,989	)
Functional currency adjustments		6,545
Other		1,965
Change in tax recovery calculated at the statutory rate		1,691
Income tax expense at October 31, 2012	($	6,303	)		32.7	%

The decrease in the income tax recovery as compared to the prior year period was due primarily to a net increase in the valuation allowance taken against deferred tax assets in certain jurisdictions.

The net increase in the valuation allowance compared to the prior year period was due to a change in our assessment of the future realization of certain tax assets resulting in a net increase in the valuation allowance of $29.0 million related to deferred tax assets in Canada, Norway and the U.K.

The income tax recovery increased by $6.5 million due to foreign currency losses related to tax balances denominated in Norwegian Kroner, Euro and Canadian dollars in entities with a U.S. dollar functional currency.

Other items including the tax rate differences of various jurisdictions, non-deductible items and the restructure of intercompany debt creating non-taxable income has increased the tax recovery by $2.0 million.

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Non-Controlling Interest

Net earnings allocated to non-controlling interest decreased by $9.2 million to $1.3 million, due primarily to a decrease in net earnings in EEA Helicopters Operations B.V. (“EHOB”).

Segmented Results of Operations

During fiscal 2012, the segmented results of operations were reclassified to reflect the revenues earned by the MRO segment on helicopter parts and supplies provided to Helicopter Services for use at the bases. These expenses are included as direct costs for Helicopter Services. The prior year period comparatives have been reclassified to conform to the current year presentation.

Helicopter Services

For the six months ended October 31,

(In thousands of U.S. dollars)

							Favorable (Unfavorable)
	2012			2011			$ Change			% Change
Third party revenue	$	792,521		$	756,573		$	35,948			4.8	%
Internal revenue		2,137			2,249			(112	)		-5.0	%
Total revenue		794,658			758,822			35,836			4.7	%
Direct costs		(572,941	)		(557,355	)		(15,586	)		-2.8	%
Earnings from equity accounted investees		1,837			1,221			616			50.5	%
Segment EBITDAR (adjusted)	$	223,554		$	202,688		$	20,866			10.3	%
Segment EBITDAR (adjusted) Margin		28.1	%		26.7	%		1.4	%		5.2	%
Flight Hours		85,763			88,522			(2,759	)		-3.1	%
# of Aircraft		245			259			(14	)		-5.4	%
Aircraft lease and associated costs	($	97,227	)	($	83,100	)	($	14,127	)		-17.0	%

Helicopter Services segment EBITDAR (adjusted) increased by $20.9 million to $223.6 million compared to the prior year period. The increase in segment EBITDAR (adjusted) was due primarily to the Americas, the Western North Sea, Asia-Pacific, and the Africa-Euro Asia region partially offset by a decrease in the Eastern North Sea. Americas’ segment EBITDAR (adjusted) increased by $17.7 million due primarily to new heavy helicopter contracts in Brazil and improved aircraft and crew availability. Additional margins were also earned from a contract in the Falklands where all aircraft were deployed in the current year period. Asia-Pacific’s segment EBITDAR (adjusted) increased by $3.7 million due primarily to Australia from margins on new contracts, an increase in ad hoc flying hours and the deployment of all aircraft under a heavy helicopter contract for the current year period and a change in estimate for certain contingencies in Southeast Asia. The increase in margins was partially offset by an increase in crew costs resulting from rapid expansion of the business. The Western North Sea’s segment EBITDAR (adjusted) increased by $5.4 million due primarily to an increase in oil and gas activities in Scotland and England, resulting in margins from new contracts and an increase in ad hoc flying hours. These increases in the Western North Sea’s segment EBITDAR (adjusted) were offset by a decrease in Denmark due to a lost contract. Africa-Euro Asia’s segment EBITDAR (adjusted) increased by $3.7 million due primarily to increases in oil and gas activities that generated margins from new contracts in Tanzania, Kazakhstan, and Mozambique. These increases in the Africa-Euro Asia region were offset by a decrease in Nigeria’s segment EBITDAR (adjusted) where we are transitioning to a new partner and Chad where we sold our fixed wing aircraft. In October 2012, we received our Nigerian air operating certificate. These increases in Helicopter Services are offset by a decrease in the Eastern North Sea’s segment EBITDAR (adjusted) of $10.0 million due to the expiry of a contract and a decrease in ad hoc flying hours.

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Aircraft leasing costs increased by $14.1 million to $97.2 million, due primarily to the conversion of a number of capital leases to operating leases as part of the refinancing activities in fiscal 2012 and new technology aircraft additions that have higher lease costs. We are acquiring new technology aircraft to meet customers’ needs as they continue exploration and development into deeper waters. We anticipate that we will continue to finance aircraft through operating leases and may make strategic decisions as required to purchase certain aircraft outright. The purchase of aircraft allows for greater jurisdictional flexibility as some lease agreements restrict the movement of aircraft to certain countries.

MRO

For the six months ended October 31,

(In thousands of U.S. dollars)

	2012			2011			Favorable (Unfavorable)
	(Unaudited)			(Unaudited)			$ Change			% Change
Third party revenue	$	67,034		$	73,297		($	6,263	)		-8.5	%
Internal Revenue		145,815			139,821			5,994			4.3	%
Total Revenue		212,849			213,118			(269	)		-0.1	%
Direct Costs		(171,103	)		(173,169	)		2,066			1.2	%
Segment EBITDAR (adjusted)	$	41,746		$	39,949		$	1,797			4.5	%
Segment EBITDAR (adjusted) Margin		19.6	%		18.7	%		0.9	%		4.8	%

MRO generates the majority of its revenue by supporting the internal flying operations and is continuing to expand its services to third parties, which represent 31.5% of the total revenues. Segment EBITDAR (adjusted) increased by $1.8 million to $41.7 million compared to the prior year period due primarily to increased margins from third party and internal PBH revenues offset by decreased margins from non-PBH revenues. Support costs period over period were flat. Segment EBITDAR (adjusted) increased by $8.6 million due to an increase in third party and internal PBH revenues from higher flying hours resulting in a favorable margin impact of 4.3%. Segment EBITDAR (adjusted) decreased by $7.1 million due primarily to the timing of airframe, engines and components work, which includes delays in project completion, delays in receipt of projects from customers and projects in the prior year period that earned higher margins. This decrease in segment EBITDAR (adjusted) unfavorably impacted the segment EBITDAR (adjusted) margin by 3.6%. Revenues related to the airframe and components work are deferred and will be recognized on completion.

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FINANCIAL CONDITION AND SOURCES OF LIQUIDITY

Analysis of Historical Cash Flows

For the six months ended October 31,

(in thousands of U.S. dollars)

	2012			2011
Cash used in operating activities	($	23,758	)	($	10,076	)
Cash provided by financing activities		125,529			114,543
Cash used in investing activities		(84,396	)		(108,057	)
Effect of exchange rate changes on cash and cash equivalents		(4,144	)		(10,804	)
Change in cash and cash equivalents during the period	$	13,231		($	14,394	)

Cash Flows Used In Operating Activities

Cash flows used in operating activities increased by $13.7 million to $23.8 million compared to the prior year period due primarily to the unfavorable movements in operating capital of $23.3 million offset by an increase in the operational results of $7.6 million and a decrease in the pension contributions of $3.5 million due to timing in the funding of contributions. The unfavorable movements in operating capital resulted primarily from payables and accruals, inventory, and income taxes offset by favorable movements in accounts receivable and prepaid expenses.

Payables and accruals have decreased as the prior year period included an accrual for two aircraft for approximately $40.0 million. Inventory has increased to support the growth in the new technology aircraft. Income taxes have increased due to an increase in withholding taxes and cash taxes from higher taxable income in certain jurisdictions. These unfavorable movements in operating capital were offset by decreases in receivables and prepaid expenses. Receivables have decreased due primarily to balances in Norway and Denmark from contract expiries and losses and the timing of collections in Australia. Prepaid expenses have decreased due to the timing of insurance payments.

One of our continued areas of focus is the improvement of our cash flows through operational growth. We have implemented a number of initiatives and have not consistently decreased our use of cash in operations. No assurance can be given that our continued efforts to continue this decline in operational cash requirements, including continued efforts to achieve greater cost efficiencies through our broad transformation program, will be effective. The business may not generate sufficient net cash from operating activities and future borrowings may not be available in amounts sufficient to enable us to service our debt or to fund our other liquidity needs. It is currently expected that the net cash from operating activities will, together with our ability to access financing through the revolving line of credit, other financing markets, new operating leases and proceeds from the sale of aircraft and other assets, be sufficient to meet the on-going cash flow requirements. If we are unable to meet our debt obligations or fund other liquidity needs, alternative financing plans may need to be undertaken, such as refinancing or restructuring debt, selling assets, reducing or delaying capital investments or raising additional capital. See “Risk Factors—Risks Related to Our Business—Our indebtedness and lease obligations could adversely affect our business and liquidity position” in Amendment No. 1 to our Registration Statement on Form S-4 which was filed with the SEC on November 9, 2012 and “Liquidity and Sources of Liquidity” below.

Cash Flows Provided By Financing Activities

Cash flows provided by financing activities increased by $11.0 million to $125.5 million compared to the prior year period, due primarily to net proceeds from the issuance of senior secured notes of $198.2 million on October 5, 2012 partially offset by a decrease in the draws on the revolving credit facility net of repayments of $96.1 million, a decrease in the securitization of accounts receivables of $31.2 million due to timing in the funding of receivables and issuance of capital stock in the prior year period of $60.0 million.

On October 5, 2012, we issued an additional $200.0 million of senior secured notes (the “notes”) which increased our overall liquidity. The gross proceeds from the notes of $202.0 million were used to repay a portion of the outstanding borrowings under our senior secured revolving credit facility. We also incurred financing fees of $3.8

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million, which are being amortized over the term of the notes. The notes were issued under the same indenture that governs the $1.1 billion of senior secured notes which were previously issued in October 2010. The notes have an aggregate principal value of $200.0 million were issued at 101.0% of par value, bear interest at a rate of 9.25% with semi-annual interest payments on April 15 and October 15 and mature on October 15, 2020.

Cash Flows Used In Investing Activities

Cash flows used in investing activities decreased by $23.7 million to $84.4 million compared to the prior year period due primarily to a decrease in property and equipment additions offset by an increase in restricted cash and in aircraft deposits. Property and equipment additions have decreased by $22.5 million as there were less aircraft purchased off lease offset by an increase in rotables purchased to support the new technology aircraft during the current year period. Aircraft deposits have increased by $4.8 million to fund our commitment to purchase additional aircraft in future periods and restricted cash has increased by $4.6 million related to securitization of receivables.

Liquidity and Sources of Liquidity

At October 31, 2012, our liquidity totaled $368.6 million, which was comprised of cash and cash equivalents of $68.8 million, unused capacity in the revolver of $260.4 million, net of letters of credit of $64.6 million and undrawn overdraft facilities of $39.4 million. Our cash requirements include our normal operations as well as our debt and other contractual obligations as discussed under the caption “Future Cash Requirements” below. The $200.0 million additional senior secured notes issued on October 5, 2012 have not increased overall indebtedness as the net proceeds were used to repay the revolving credit facility, but cash requirements have increased by approximately $9.0 million due to the additional interest payment obligation. The ability to satisfy long-term debt obligations, including repayment of principal and interest will depend on future performance, which is subject to general economic conditions and other factors, some of which are beyond our control. We expect our earnings and cash flow to vary significantly from year to year due to the cyclical nature of the industry. As a result, the amount of debt that can be managed in some periods may not be appropriate in other periods. In addition, future cash flows may be insufficient to meet debt obligations and commitments, including the senior secured notes (the “notes”), and revolving credit facility. Any insufficiency could negatively impact the business. In addition, the indenture governing the notes allows us to incur additional indebtedness. The incurrence of additional indebtedness could negatively affect the repayment of principal and interest on the debt, including the notes. We may face delays in obtaining cash from our subsidiaries in certain jurisdictions to fund future cash requirements due to central banking legislation or other regulations in these jurisdictions. These restrictions have not and are not expected to have an impact on our ability to meet our obligations. We believe that our existing and future cash flows, as well as our ability to access financing through the revolving line of credit, other financing markets, new operating leases and proceeds from the sale of aircraft and other assets are sufficient to meet our on-going cash flow requirements. Similarly, we expect that our transformation program will generate new initiatives to create greater liquidity. However, our earnings have been insufficient to cover our fixed charges since 2008. If cash flow from operations is insufficient to satisfy the debt obligations, alternative financing plans may need to be undertaken, such as refinancing or restructuring the debt, selling assets, reducing or delaying capital investments or raising additional capital or indebtedness. Any alternative financing plans that may be undertaken by us, if necessary, may not be sufficient to meet our debt obligations. Our inability to generate sufficient cash flow to satisfy our debt obligations, including obligations under the notes, or to obtain alternative financing, could materially and adversely affect our business, financial condition, results of operations and prospects. See “Risk Factors – Risks Related to Our Business – Our indebtedness and lease obligations could adversely affect our business and liquidity position” in Amendment No. 1 to our Registration Statement on Form S-4 which was filed with the SEC on November 9, 2012.

Sources of Liquidity

On October 5, 2012, the Company issued an additional $200.0 million of senior secured notes. The notes were issued under the same indenture that governs the $1.1 billion of senior secured notes which were previously issued in October 2010. The additional notes with an aggregate principal value of $200.0 million were issued at 101.0% of par value, bear interest at a rate of 9.25% with semi-annual interest payments on April 15 and October 15 and mature on October 15, 2020. The gross proceeds from the notes of $202.0 million were used to repay a portion of the outstanding borrowings under our senior secured revolving credit facility. The Company also incurred financing fees of $3.8 million, which are being amortized over the term of the notes. The senior secured revolving credit facility for $375.0 million is held with a syndicate of financial institutions for a term of five years and bears interest at the alternate base rate, LIBOR, Canadian Prime Rate or EURIBOR, plus an applicable margin that

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ranges from 2.75% to 4.50%. The revolving credit facility is secured on a super senior first priority basis and ranks equally with the note holders except for payments upon enforcement and insolvency, where the revolving credit facility will rank before the note holders. The notes and revolving credit facility are guaranteed on a first-priority lien basis by most of our subsidiaries through a general secured obligation. For information about the financial position and results of operations of our non-guarantor subsidiaries, see Note 20 of our unaudited interim consolidated financial statements for the six months ended October 31, 2012 included elsewhere in this Quarterly Report on Form 10-Q.

To assist with future growth opportunities, a key initiative of our transformation program is to create greater liquidity through the implementation of new cost control measures such as optimizing the procurement of capital expenditures and inventory, working capital improvements, and the optimization of customer contracts and improved profit growth. A more detailed review of other sources of liquidity such as an expansion of our accounts receivable securitization, additional lease financing and alternate market financing is currently underway.

Future Cash Requirements

Operating Lease Commitments

We entered into aircraft operating leases with 17 lessors in respect of 161 aircraft included in our fleet as of October 31, 2012. As of October 31, 2012, these leases had expiry dates ranging from fiscal 2013 to 2023. We have the option to purchase the majority of the aircraft for agreed amounts that do not constitute bargain purchase options, but have no commitment to do so. With respect to such leased aircraft, substantially all of the costs of major inspections of airframes and the costs to perform inspections, major repairs and overhauls of major components are at our expense. We will either perform this work internally through our own repair and overhaul facilities or have the work performed by an external repair and overhaul service provider.

At October 31, 2012, we had commitments with respect to operating leases for aircraft, buildings, land and equipment. We have leases expiring in the next twelve months, of which we have the option to refinance these aircraft leases, purchase the aircraft or return the aircraft under the agreement terms.

The terms of certain of our helicopter lease agreements impose operating and financial limitations on us. Such agreements limit the extent to which we may, among other things, incur indebtedness and fixed charges relative to its level of consolidated adjusted earnings before interest, taxes, depreciation and amortization.

Generally, in the event of a covenant breach, a lessor has the option to terminate the lease and require the return of the aircraft, with the repayment of any arrears of lease payments plus the present value of all future lease payments and certain other amounts, which could be material to our financial position. The aircraft would then be sold and the surplus, if any, returned to us. Alternatively, we could exercise our option to purchase the aircraft.

During the six months ended October 31, 2012, a lessor that had been engaged in discussions with us approved a financial covenant reset to October 31, 2013. As part of previous negotiations in 2011 with this lessor, we also made a commitment to further reduce its total operating lease portfolio by $39.4 million by December 31, 2012. We expect to refinance these leases or make strategic decisions as required to purchase the aircraft outright to provide us with greater jurisdictional flexibility as some lease agreements restrict the movement of aircraft to certain countries.

Other Commitments

As of October 31, 2012, we have committed to purchase 36 new aircraft, of which 11 are expected to be delivered in the remainder of fiscal 2013. The total required additional expenditures related to these purchase commitments is approximately $785.0 million. These aircraft are expected to be delivered in fiscal 2013 ($208.0 million), 2014 ($276.0 million), 2015 to 2017 ($301.0 million) and will be deployed in our Helicopter Services segment. On November 30, 2012, the Company entered into a commitment to acquire $100.0 million of helicopter parts over a three year period.

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Variable Interest Entities

We have variable interest in entities that are not consolidated, as we are not the primary beneficiary, which provide operating lease financing to us and an entity that provides flying services to third party customers. At October 31, 2012, we had operating leases for 29 aircraft with variable interest entities that were not consolidated. See Note 2 of the unaudited interim consolidated financial statements as of October 31, 2012 included elsewhere in this Quarterly Report on Form 10-Q.

Guarantees

We have provided limited guarantees to third parties under some of our operating leases relating to a portion of the residual aircraft values at the termination of the leases. The leases have terms expiring between fiscal 2013 and 2022. At October 31, 2012, our exposure under the asset value guarantees including guarantees in the form of funded and unfunded residual value guarantees, rebateable advance rentals and deferred payments is approximately $230.9 million.

Contingencies

We have exposure for certain legal matters as disclosed in Note 17 to the unaudited interim consolidated financial statements for the six months ended October 31, 2012 included elsewhere in this Quarterly Report on Form 10-Q. There have been no material changes in our exposure to contingencies since October 31, 2012.

Covenants and Adjusted EBITDA

Our notes, revolving credit facility, other long-term debt obligations and certain helicopter lease agreements impose operating and financial limitations on us through covenants, which among other things, limit the ability to incur additional indebtedness, create liens, sell or sublease assets, engage in mergers or acquisitions and make dividend and other payments.

Adjusted EBITDA is calculated by adding to or subtracting from net earnings (loss) certain of the adjustment items permitted in calculating covenant compliance under the indenture governing the senior secured notes. We describe these adjustments to net earnings (loss) in the table below. Adjusted EBITDA is a supplemental measure of our ability to service indebtedness that is not required by, or presented in accordance with, U.S. GAAP. Adjusted EBITDA is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net earnings (loss) or other performance measures derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. In addition, Adjusted EBITDA as presented herein may not be comparable to similarly titled measures of other companies. Management believes that the presentation of Adjusted EBITDA included in this Quarterly Report on Form 10-Q provides useful information to investors regarding our results of operations because it assists in analyzing and benchmarking the performance of our business. We will also use Adjusted EBITDA as a measure to calculate certain financial covenants related to our revolving credit facility and the notes indenture. Under the revolving credit facility agreement, we must maintain a maximum ratio of 2.5 to 1 of first priority net debt as defined in the revolving credit facility agreement to Adjusted EBITDA. If the financial covenant is not maintained, repayment of the revolving credit facility can be accelerated. Under the revolving credit facility agreement and notes indentures, we must meet certain Adjusted EBITDA ratios to incur additional indebtedness above the permitted indebtedness as defined in the revolving credit facility agreement and notes indenture. To incur additional indebtedness which is not otherwise permitted, we must have an Adjusted EBITDA to fixed charges ratio as defined in the revolving credit facility agreement and notes indenture that is equal to or greater than 2.0 to 1.0. However, if the indebtedness is secured by a lien then we must also have a total secured indebtedness, net of cash, to Adjusted EBITDA ratio as defined in the revolving credit facility agreement and notes indenture that is less than or equal to 5.0 to 1.0.

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Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for net earnings (loss), cash flow or other methods of analyzing our results as reported under U.S. GAAP. Some of these limitations are:

• Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• Adjusted EBITDA does not reflect the cash requirements necessary to service principal payments, on our indebtedness;

• Adjusted EBITDA does not reflect the cash requirements to pay our taxes;

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; and

• Adjusted EBITDA is not adjusted for all cash and non-cash income or expense items that are reflected in our statements of cash flow.

Because of these limitations, Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as a measure of cash that will be available to us to meet our obligations.

Set forth below is a reconciliation of net loss to Adjusted EBITDA derived from the last twelve months ended October 31, 2012. As of October 31, 2012, we were in compliance with all financial covenants contained in the agreements governing our outstanding indebtedness.

(in thousands of U.S. dollars)	For the last twelve months ended October 31, 2012			For the last twelve months ended October 31, 2011
Net loss	$	(110,495	)	$	(27,816	)
Discontinued operations, net of tax		6,983			9,786
Earnings from equity accounted investees, net of cash distributions received		(3,262	)		(1,860	)
Fixed charges (a)		115,760			110,557
Other financing charges (income)		18,703			(297	)
Income tax expense (recovery)		67,005			(45,947	)
Amortization		116,380			107,008
Asset impairment charge (b)		20,352			37,557
Loss (gain) on disposal of assets		189			(9,051	)
Restructuring costs		14,336			11,358
Business optimization costs		8,672			20,207
Stock-based compensation expense		358			1,027
Amortization of deferred charges (c)		2,918			2,831
Amortization of advanced aircraft rental payments		4,740			4,686
Unusual/non-recurring costs (d)		—			235
Investment/acquisition/permitted disposal (e)		28			21,026
Pension adjustment (f)		(4,743	)		582
Pro-forma capital lease adjustment (g)		—			1,845
Adjusted EBITDA (g)	$	257,924		$	243,734

(a) Fixed charges include interest expense, the interest component of payments associated with capital lease obligations, net of interest income, and pro-forma adjustments as per the senior secured note indenture. The amortization of debt issuance costs and financing fees are excluded from fixed charges.

(b) Asset impairment charge includes impairment of receivables and funded residual value guarantees, impairment of assets held for sale, impairment of assets held for use and impairment of intangible assets.

(c) Amortization of initial costs on leased aircraft.

(d) Unusual or non-recurring costs that include professional fees.

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(e) Costs incurred related to potential investment, acquisitions, and divestures.

(f) This is an adjustment to arrive at the current service cost of the pension.

(g) Adjusted EBITDA for the periods presented does not include the pro forma effect of aircraft acquisitions or disposals. However, the new revolving credit facility and the indenture governing the notes offered herein permit us to calculate Adjusted EBITDA for purposes of the applicable covenants contained therein giving pro forma effect to aircraft acquisitions, net of disposals.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

See item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Registration Statement Form S-4 for the fiscal year ended April 30, 2012 which was filed with the SEC on November 9, 2012 for a discussion of our critical accounting policies. There have been no material changes to our critical accounting policies and estimates since April 30, 2012.

Recent Accounting Pronouncements

See Note 1 in the interim unaudited consolidated financial statements for the three and six months ended October 31, 2012 contained elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to certain market risks arising from the use of financial instruments in the ordinary course of business. This risk arises primarily as a result of potential changes in the fair market value of financial instruments that would result from adverse fluctuations in foreign currency exchange rates, credit risk and interest rate risk as discussed in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Quantitative and Qualitative Disclosures about Market Risk ” in our Registration Statement Form S-4 for the fiscal year ended April 30, 2012 which was filed with the SEC on November 9, 2012 and Note 1 in the “Notes to the Interim Consolidated Financial Statements” included elsewhere in this Quarterly Report on Form 10-Q. There have been no material changes to our quantitative and qualitative disclosures about market risk since April 30, 2012.

ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of October 31, 2012. Based upon this evaluation and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of October 31, 2012, the end of the period covered by this Quarterly Report on Form 10-Q.

Our Chief Executive Officer and Chief Financial Officer do not expect that our disclosure controls or our internal controls will prevent all error and all fraud. The design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be considered relative to their cost. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that we have detected all of our control issues and all instances of fraud, if any. The design of any system of controls also is based partly on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three and six months ended October 31, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We have certain actions or claims pending that have been discussed and previously reported in the section entitled “Business – Legal Proceedings” in Amendment No. 1 to our Registration Statement on Form S-4 which was filed with the SEC on November 9, 2012. Developments in these previously reported matters are described in Note 17 in the “Notes to the Consolidated Financial Statements” included elsewhere in this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

There have been no material changes during the three and six months ended October 31, 2012 in our “Risk Factors” as discussed on our Annual Report on Form 10-K for the year ended April 30, 2012 which we filed with the SEC on July 11, 2012.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are attached hereto and filed herewith:

EXHIBIT INDEX

The following exhibits are attached hereto and filed herewith:

Exhibit Number	Description
3.1#	CHC Helicopter S.A., Articles of Association, dated January 4, 2012.
3.2#	6922767 Holding S.à r.l, Articles of Association, dated September 9, 2010.
4.1#	Indenture, dated as of October 4, 2010, among CHC Helicopter S.A., the Guarantors named therein, HSBC Corporate Trustee Company (UK) Limited, as Collateral Agent, and The Bank of New York Mellon, as Trustee, governing the 9.250% Senior Secured Notes due 2020.
4.2#	Form of 9.250% Senior Secured Notes due 2020 (included in Exhibit 4.1)
4.3#	Registration Rights Agreement, dated as of October 4, 2010, by and among CHC Helicopter S.A., the Guarantors named therein, Morgan Stanley & Co. Incorporated, HSBC Securities (USA) Inc., RBC Capital Markets Corporation and UBS Securities LLC.

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4.4#	Collateral Agent and Administrative Agent Appointment Deed, dated October 4, 2010, among HSBC Bank plc, as Administrative Agent, The Bank of New York Mellon, as Notes Trustee, the Grantors identified therein, the Lenders identified therein, the Arrangers identified therein, and HSBC Corporate Trust Company (UK) Limited, as Collateral Agent.
4.5(1)	First Supplemental Indenture, dated as of February 20, 2012, among CHC Global Operations Canada (2008) Inc., CHC Helicopter S.A., the Guarantors named therein, HSBC Corporate Trustee Company (UK) Limited, as Collateral Agent, and The Bank of New York Mellon, as Trustee, governing the 9.250% Senior Secured Notes due 2020.
4.6(2)	Intercreditor Agreement, dated as of October 4, 2010, among CHC Helicopter S.A., the other Grantors party thereto, HSBC Corporate Trustee Company (UK) Limited, as Initial Collateral Agent, HSBC Bank plc, as Administrative Agent, The Bank of New York Mellon, as Indenture Trustee, and each Additional Collateral Agent from time to time party thereto.
4.7(3)	Registration Rights Agreement, dated as of October 5, 2012, by and among CHC Helicopter S.A. and the Initial Purchasers as identified therein.
31.1+	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2+	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+	Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2+	Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS§+	XBRL Instance Document
101.SCH§+	XBRL Taxonomy Extension Schema Document
101.CAL§+	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF§+	XBRL Taxonomy Extension Definition Presentation Linkbase Document
101.LAB§+	XBRL Taxonomy Extension Label Linkbase Document
101.PRE§+	XBRL Taxonomy Extension Presentation Linkbase Document

+ Filed herewith

# Filed on January 18, 2012 as an exhibit to our Registration Statement on Form S-4 and incorporated herein by reference.

§ In accordance with Rule 406T of Regulation S-T, the information in these exhibits, when filed, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

(1) Filed on March 28, 2012 as an exhibit to Amendment No. 1 to our Registration Statement on Form S-4/A and incorporated herein by reference.

(2) Filed on May 9, 2012 as an exhibit to Amendment No. 3 to our Registration Statement on Form S-4/A and incorporated herein by reference.

(3) Filed on October 9, 2012 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.

64

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CHC Helicopter S.A.
By:	/s/ Joan Schweikart Hooper
	Joan Schweikart Hooper Senior Vice President and Chief Financial Officer of Heli-One Canada, Inc.* and A Director

Date: December 17, 2012

* CHC Helicopter S.A. has entered into an agreement with its wholly owned subsidiary, Heli-One Canada Inc., to provide certain management services subject to the authority limits as determined by CHC Helicopter S.A.’s board of directors and set out in such agreement