Airport-owning Bristow's future up in the air as financial management probed
By Scunthorpe Telegraph | Posted: 16 Apr 2019
The troubled US owner of Humberside Airport and Eastern Airways has told investors it is working “diligently” to secure the financial and operational future of the company.
No accounts have been filed for the final quarter of 2018 after Bristow Group found “material weakness in internal controls over financial reporting”, flouting New York Stock Exchange rules.
It has walked away from a potential buy-out of Columbia Helicopters, with shares sliding from $18.91 in May last year to $1.07 today.
Already struggling to deal with a downturn in oil and gas, the company was found to have issues with helicopters and their engines being mis-matched after service and maintenance, putting high value leases in default.
Bristow said nine aircraft were involved from 385 covered by financial agreements across the fleet. The issue emerged in February, with the company instructing investors to no longer rely on the previous year’s financial results.
As well as the significant investment at Kirmington, bought in 2014 from Eastern Group - itself taking the reigns from Manchester Airports Group in 2012 - it operates search and rescue services on behalf of the UK government, with 10 strategically placed bases around the country, including the one at Humberside Airport.
Yesterday the Houston-headquartered firm announced it had obtained waivers from certain lenders that extend the repayment deadlines under its agreements. It has also retained financial and legal advisors to explore strategic financial alternatives, with the objective of strengthening its long-term capital position – warning that there are no assurances that a particular outcome will result, with some city analysts suggesting it is closer to failing.
Bristow is also exercising a contractual right to invoke a 30-day grace period and not make interest payments of $12.5 million on the 6.25 per cent senior unsecured notes maturing in 2022 as it continues to work on its overall financing arrangements.
President and chief executive Don Miller, appointed in February having previously served as chief financial officer, said: “Bristow is working diligently with its financial and legal advisors to best position the company for the future, both financially and operationally. The steps we are announcing will afford us additional time to continue our efforts to complete our financial reporting process and address our capital structure.
“Most importantly, we are, as always, focused on continuity of service in a safe, reliable and professional manner for our valued employees, clients and passengers, as we continue to navigate a challenging market.”
Bristow said it does not intend to comment further on its financial results or performance until its Form 10-Q - the quarterly report mandated by the United States federal Securities and Exchange Commission, to be filed by publicly traded corporations, has been filed.
Eastern, which has independent management teams for both the airline and airport, has previously declined to comment on the performance of the parent company, “in line with usual practice” with no-one immediately available.
In the full years of ownership by Bristow, revenues there have dropped 18 per cent from $144.8 million (£110.6 million) in 2015 to $118.5 (£90.6 million) in 2018.
North Lincolnshire Council retains an 18 per cent stake, a legacy investment maintained from the times of the local authorities bringing forward the facility.
It is understood future options have been discussed at board level for the two businesses which are described as operationally sound, operating as standalone subsidiaries.