Exhibit 99.1

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

JANUARY 24, 2008

EXPLANATORY NOTE

The Company is amending its Annual Report for the fiscal year ended April 30, 2007 filed with Canadian securities regulatory authorities on July 26, 2007 (the “Original Annual Report”) as a result of restating its consolidated financial statements for the years ended April 30, 2007, 2006 and 2005 (the “Restatement”). The Company has not amended and does not intend to amend any of its previously filed Annual Reports or quarterly reports for the periods affected by the Restatement other than this Annual Report (“the Amended Report”). Accordingly, the Company’s previously issued financial statements, earnings press releases and similar communications affected by the Restatement and any related reports of its independent auditors should not be relied upon, in so far as they relate to the periods and items that are the subject matter of the Restatement.

Following an internal review of existing and expired non-financial contracts during the adoption of the new financial instruments guidance under Canadian generally accepted accounting principles (“Canadian GAAP”) effective for the Company for fiscal 2008, the Company concluded that the reconciliation to accounting principles generally accepted in the United States (“US GAAP Reconciliation”) note to its consolidated financial statements for the years ending April 30, 2007, 2006, 2005 and 2004 should be restated to record the impact of foreign currency embedded derivatives that required separation from their host contracts under SFAS 133 – Accounting for Derivative Instruments and Hedging Activities to correct for a material accounting error in prior years. The Company has adjusted its US GAAP Reconciliation Note 32 to the audited consolidated financial statements for the fiscal years ended April 30, 2007, 2006 and opening retained earnings for fiscal 2006 for these embedded derivatives. The adjustment to record these embedded derivatives is reflected appropriately in the financial statements prepared in accordance with Canadian GAAP and therefore, only the US GAAP Reconciliation is impacted by the restatement. The host contracts (“the Contracts”) containing these embedded derivatives were all entered into in fiscal 2004 and beyond. Therefore, there is no impact on net earnings according to US generally accepted accounting principles (“US GAAP”) in fiscal years prior to 2004.

As a result of the Restatement, net earnings according to US GAAP for the fiscal years ended April 30, 2006, 2005 and 2004 decreased by $0.5 million, $6.3 million and $0.6 million, respectively. Net earnings according to US GAAP for the fiscal year ended April 30, 2007 increased by $1.8 million.

As described in further detail on page 52, “Management’s Consideration of the Restatement”, management has reconsidered its original conclusions on the effectiveness of internal controls over financial reporting as at April 30, 2007 and has concluded that due to the failure to detect and record the impact of the embedded derivatives in the Contracts, there was a material weakness in its internal control over financial reporting as of April 30, 2007. Management has also concluded that the Company’s disclosure controls and procedures were not effective as of April 30, 2007.

The Company has had in place, since fiscal 2007, an effective contract review control to, among other things, detect and record embedded derivatives in all new contracts. As well, as a result of the adoption of new Canadian accounting standards for financial instruments, the Company has reviewed all relevant contracts entered into prior to the new contract review control being implemented. Between the filing of the Original Annual Report and the Amended Report, the Company made improvements to its controls to value and record embedded derivatives in all contracts.

This management’s discussion and analysis (“MD&A”) may contain forward-looking information within the meaning of certain securities laws including the “safe harbour” provision of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. While these projections, conclusions, forecasts and other statements represent our best current judgment, the actual results could differ materially from the conclusion, forecast or projection contained in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection in the forward-looking information contained herein. Such factors include, but are not limited to, the following: exchange rate fluctuations, trade credit risk, industry exposure, inflation, contract loss, inability to maintain government issued licenses, inability to obtain necessary aircraft or insurance, competition, political, economic and regulatory uncertainty, loss of key personnel, work stoppages due to labour disputes, and future material acquisitions. These factors are further detailed in the Annual Report on Form 20-F and in other filings of CHC Helicopter Corporation (the “Company” or “CHC”) with the United States Securities and Exchange Commission and in the Company’s Annual Information Form filed with the Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. The Company disclaims any intentions or obligations to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

This MD&A should be read in conjunction with both the Company’s Restated Audited Consolidated Financial Statements and related notes thereto, as at, and for the years ended April 30, 2007 and 2006. Financial data presented in the MD&A has been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). All amounts are in Canadian dollars unless otherwise noted.

OVERVIEW

The Company is the world’s largest global commercial helicopter operator. The Company, through its subsidiaries, has been providing helicopter services for more than 60 years and currently operates in over 30 countries, on all seven continents and in most of the major offshore oil and gas producing regions of the world. The Company’s major operating units are based in the United Kingdom, Norway, the Netherlands, South Africa, Australia and Canada. The Company provides helicopter transportation services to the oil and gas industry for production and exploration activities through its European and Global Operations segments. The Company also provides helicopter transportation services for emergency medical services (“EMS”) and search and rescue (“SAR”) activities and ancillary services such as flight training. The Company’s Heli-One segment is the world’s largest non-original equipment manufacturer helicopter support company, providing repair and overhaul (“R&O”) services, aircraft leasing, integrated logistics support, helicopter parts sales and distribution, and other related services to the Company’s flight operations and third-party customers around the world.

The Company provides helicopter transportation services to a broad base of independent and state-owned oil and gas companies transporting personnel to offshore production platforms, drilling rigs and other facilities. In general, the Company targets opportunities with long-term contracts and customers who require sophisticated medium and heavy helicopters operated by highly trained personnel. The Company is a market leader in most of the regions it serves, with an established reputation for high quality and reliable service. The Company is the largest operator in the North Sea and a global operator servicing the oil and gas industry in Brazil, Africa, Australia, Asia and Canada. For the fiscal years ended April 30, 2007 and 2006, revenue generated by helicopter transportation services for the oil and gas industry was approximately 70% of the Company’s total revenue.

The Company believes that its repair and overhaul and flight training capabilities reduce its costs and give it control over the quality and timeliness of its maintenance and training. The Company believes that these capabilities enhance its competitive position, further diversify its revenue and solidify its worldwide reputation as a full-service, high-quality helicopter operator. Furthermore, the Company believes that its repair and overhaul capabilities provide it with a source of relatively stable third-party revenue.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company’s global customer base consists of a broad range of oil and gas companies and governmental bodies and includes operating subsidiaries of, and government bodies in:


Agip	ExxonMobil	Premier
Apache	Ireland	Royal Dutch/Shell Group
bp	Maersk	Statoil
Chevron	Marathon	TotalFinaElf
Commonwealth of Australia	Nexen	Unocal
ConocoPhillips	Petrobras

Revenue for the fiscal year ended April 30, 2007 was $1,149.1 million, up $152.0 million from revenue of $997.1 million in fiscal 2006. Net earnings from continuing operations for fiscal 2007 were $41.0 million ($0.90 per share, diluted) compared to $89.7 million ($1.95 per share, diluted) in fiscal 2006. Net earnings from continuing operations in fiscal 2006 includes gains from the sale of various long-term investments totalling $32.3 million after-tax.

The Company’s Class A subordinate voting shares and its Class B multiple voting shares trade on the Toronto Stock Exchange (“TSX”) under the symbols “FLY.A” and “FLY.B”. Its Class A subordinate voting shares also trade on the New York Stock Exchange under the symbol “FLI”.

BUSINESS STRATEGY

The Company’s goal is to enhance its leadership position in the global helicopter services industry by continuing to provide value-added services to its customers while maximizing return on assets, earnings and cash flows. In its pursuit of this goal, the Company intends to focus on the following key initiatives:

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Strengthen Competitive Position in Existing Markets. The Company intends to increase its ability to win new contracts, renew existing contracts, strengthen its existing customer relationships and enhance its competitive position by improving its focus on customer needs and reducing costs while maintaining high standards for safety and reliability. The Company’s organizational structure ideally positions it to service increased demand from existing customers and new entrants to the marketplace.

•

Growth Through Acquisition. During the year the Company acquired an equity position in BHS - Brazilian Helicopter Services Taxi Aereo Ltda., one of the largest helicopter operators in the Brazilian offshore sector. The Company also acquired Heli-Dyne Systems Inc., a helicopter completion and maintenance centre based in Hurst, Texas. The Company intends to seek out additional acquisition opportunities to further strengthen its position in existing markets and expansion into new markets.

•

Selectively Expand International Operations. The Company intends to capitalize on its broad geographic coverage, its long-term customer relationships and its fleet capabilities to pursue new opportunities in Africa, Asia, Brazil and other developing oil and gas regions, which are expected to be the fastest growing markets for offshore helicopter transportation services.

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Expand the Helicopter Support Business with Heli-One. The Company plans to continue to expand its repair and overhaul business by further penetrating the Eurocopter (Super Puma and EC225) major component and engine overhaul market and pursuing new opportunities in heavy and medium aircraft maintenance and military helicopter support through the development of facilities in North America, including the acquisition of Heli-Dyne in fiscal 2007. During the year, the Company began construction of a 240,000 square foot R&O facility at Boundary Bay Airport in Delta, BC, Canada, which is expected to be completed in the fourth quarter of fiscal 2008. Heli-One has the capability to support, on a nose-to-tail basis, the Company’s entire fleet of over 150 Sikorsky S61 and S76 and Eurocopter Super Puma aircraft and to compete for helicopter work for a worldwide fleet of aircraft in this sector. In addition to repair and overhaul, Heli-One provides the following services to the helicopter industry:

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Integrated logistics support;

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Aircraft leasing;

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Heavy maintenance;

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Design and engineering;

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Helicopter parts and distribution; and

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Inventory management.

•

Pursue Profitable New Business Beyond the Oil and Gas Sector. The Company believes that it has a competitive advantage in the EMS/SAR sectors by virtue of its experience in servicing both the oil and gas and EMS/SAR industries. The Company believes that this advantage stems from its ability to operate sophisticated twin-engine medium and heavy helicopters with highly trained pilots in complex situations. Typically, EMS/SAR customers require the operator to meet stringent quality standards on a long-term basis.

During the year the Company was awarded a new EMS contract with the Ambulance Service of New South Wales for the provision of five AW139 and EC145 aircraft in the Greater Sydney area. This contract commenced during the third quarter of fiscal 2007. The seven-year contract is the largest helicopter EMS contract ever awarded in Australia and includes three years of extension options.

During the first quarter of fiscal 2008, the Company will commence operations on the five-year, £ 106 million contract with the United Kingdom Maritime and Coastguard Agency to provide commercial search and rescue helicopter service from four bases in the UK.

•

Continue to Focus on Long-Term Contracts. The Company seeks to enter into long-term contracts with its major customers in order to maximize the stability of its revenue. Revenue from operations under long-term contracts represented approximately 67% of the Company’s revenue during the year, compared to 66% in the prior year.

COMPETITIVE STRENGTHS

The Company believes that it has the following competitive advantages:

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Global Coverage. The Company currently provides helicopter transportation services in over 30 countries and on all seven continents. This broad geographic coverage and an efficient management structure enable the Company to respond quickly and cost effectively to customer needs and new business opportunities while adhering to local market regulations and customs. Since new contract and base start-up costs can represent a significant portion of operating expenses, the Company’s global network of bases allows it to reallocate equipment and crews efficiently and bid on new contracts at competitive rates. Additionally, as multinational oil and gas companies seek service providers that can provide one standard of service in many locations around the world, the Company’s geographic coverage makes it one of only two global providers that can effectively compete for many of these contracts.

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Focus on Safety. In over 60 years of operations, the Company has developed sophisticated safety and training programs and practices that have resulted in a strong safety record. The Company has implemented a single Safety Management System worldwide and continues to meet or exceed the stringent safety and performance audits that are conducted by its customers. The Company’s advanced flight training facility in Norway provides a wide variety of training services to its employees as well as third-party civil and military organizations around the world. Providing and expanding these advanced training services in Aberdeen and Vancouver enhances the Company’s global reputation for leadership and excellence in helicopter services.

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Low Cost Operator. The Company believes that it has significant cost advantages over its competitors with respect to its medium and heavy helicopter services, which increase its likelihood of winning new contracts. The Company believes that its economies of scale, lower insurance costs related to its industry leading safety record and in-house repair and overhaul and training capabilities give it a cost advantage over competitors who must incorporate higher third-party repair and overhaul costs into their contract bids.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Long-Term Customer Relationships. The Company has worked successfully for many years with major oil and gas companies, some of which have been customers continuously for more than 20 years. As a result of its established long-term customer relationships, its focus on safety and flight training, its crews’ experience and the quality of its services, the Company consistently meets or exceeds its customers’ standards and is invited to bid on new projects. In addition to standard helicopter transportation services, certain of the Company’s customers rely on it for ancillary services, including the Company’s computerized logistics systems for crew scheduling and passenger handling services, all of which help strengthen customer relationships.

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Large, Modern and Diversified Fleet of Helicopters. To meet the diverse operational requirements of its customers, the Company operates a large fleet that includes some of the most sophisticated helicopters in the world. The Company has led the industry in fleet renewal with aircraft sought after by customers for their improved speed, range, passenger capacity, comfort and general superior performance. As of April 30, 2007, the Company operated 255 aircraft, comprised of 86 heavy helicopters, 146 medium helicopters, three light helicopters and twenty fixed-wing aircraft. The helicopter fleet consists of more than a dozen types of helicopters manufactured primarily by Eurocopter, Sikorsky, AgustaWestland and Bell. During the year the Company added an additional four Sikorsky S92 aircraft for a total of ten S92 aircraft to complement its fleet of twenty Super Puma MkIIs. These two aircraft types represent the most advanced civilian heavy helicopter types in service today. In addition, the Company has six AgustaWestland AW139 in its fleet. The AgustaWestland AW139 is a new aircraft type, which the Company has added to the fleet along with the Sikorsky S92. During the year, the Company signed a contract with Eurocopter for the purchase of 16 new EC225 helicopters to be delivered between fiscal 2008 and fiscal 2012. The EC225 aircraft is also a new heavy aircraft type.

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Retention of Asset Value. Based on independent appraisals as of April 30, 2007 the estimated fair market value of the Company’s owned aircraft fleet was $628.2 million, exceeding its net book value by approximately $33.1 million. Since a significant portion of a helicopter’s value resides in its major components including engines, gearboxes, transmissions and repairable parts, which are replaced or upgraded on a regular basis, older models of helicopters that have been upgraded are capable of meeting many of the same performance standards as newer aircraft. As a result, when helicopters are sold as part of the Company’s ongoing fleet management, the Company often receives prices in excess of net book value.

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In-house Repair and Overhaul Business. The Company believes that its repair and overhaul activities reduce its costs, diversify its revenue streams and help position it as a full-service, high-quality helicopter operator. The Company is a market leader in repair and overhaul capability and has the only licensed commercial engine and major component repair and overhaul facility in the world for the Eurocopter Super Puma and EC225 helicopters, other than the original equipment manufacturers, and has the capability to support several other helicopter types including Eurocopter Dauphin, Sikorsky S61 and S76 and Bell 212/412. This capability allows the Company to control the quality and cost of its helicopter maintenance, repair and refurbishment. The development of the Boundary Bay R&O facility, acquisition of Heli-Dyne and the expansion of in-house capabilities may result in the Company’s exit from third-party power-by-the-hour (“PBH”) maintenance programs in the future.

INDUSTRY OVERVIEW

Helicopters first came into widespread commercial use in the oil and gas industry for transporting personnel and supplies to offshore oil rigs and remote onshore areas. Over the years, the use of helicopters has expanded into many other areas where urgency or difficulty of access justifies the cost. Although the oil and gas industry still accounts for a substantial portion of the demand for helicopter services worldwide, helicopters have been used for a variety of purposes for several decades, including forestry, mining, search and rescue, emergency medical services, scheduled service, construction, and recreation.

The level of worldwide offshore oil and gas exploration and production has traditionally influenced demand for helicopter transportation services. Exploration activities are sensitive to changes in oil and gas prices, whereas production activities are generally more stable. For the fiscal year ended April 30, 2007, approximately 70% of the Company’s total revenue was derived from oil and gas activity (fiscal 2006 - 70%). Technology improvements allow oil and gas exploration and production companies to push production into deeper waters. This translates into longer trips, more flying hours and the need for larger new technology helicopters, which generally have an improved range and passenger capacity. The Company also expects new exploration and production activity to occur in already producing regions and in currently non-producing regions of Africa, Asia, South America, the Caspian Sea, Australia, the North Sea and eastern Canada. The Company believes this increase in activity will result in increased global demand for helicopter transportation services. There are 133 deep-water installations forecast for the period from 2007 to 2011 compared to 93 installations in the preceding five-year period. Demand for new offshore helicopters is forecast to increase by 100 aircraft between 2006 and 2010.

The North Sea is the largest producing offshore oil and gas region in the world and continues to experience growth in rig demand. Rig utilization in the North Sea rose above 95% in June 2007 for a new high in recent history. Projected utilization rates have also risen, indicating that the market will likely remain strong in the future. In addition to new smaller oil and gas producers targeting the North Sea, large companies are expanding their activities and upgrading production facilities to extend field production life. The market’s buoyancy is also prompting an increase in new-build contracts. The Company believes the need for transportation services will increase as activity throughout the world continues to increase from current levels.

The Company expects further increased demand for helicopter services as a result of government momentum towards civil SAR services in the UK, Australia and throughout Europe. The UK government intends to privatize ten to thirteen additional coastguard bases commencing in 2012 for a period of 20-30 years. The Company has already entered into the bidding process for this contract.

To effectively compete on a global basis for helicopter transportation service contracts, the Company believes a helicopter service provider needs to have:

•	an established brand name;

•	a strong track record of providing high quality, safe and reliable service;

•	a large, diversified fleet of helicopters to accommodate various customer requirements;

•	a highly skilled and dedicated team of pilots, engineers and support staff;

•	a cost structure that allows the provision of services at competitive prices;

•	an effective capital structure that permits financing of new aircraft;

•	a broad network of regional bases to cost-effectively bid for new contracts in most areas of the world as opportunities arise; and

•	familiarity with a variety of local business practices and regulations around the world and established local joint venture partnerships and strategic customer alliances.

The Company believes it possesses all of these characteristics.

THE BUSINESS

Helicopter flying operations

Helicopters in use today may be divided into two general categories. Single engine (light) aircraft, which have a passenger capacity of three to six, operate under visual flight rules (“VFR”) (daylight and good weather flying only) and can be operated with one pilot. Given their low passenger capacity and inability to fly in poor weather conditions, these aircraft are generally limited to onshore operations. In recent years, the Company has sold most of its operations and aircraft in this category. During fiscal 2007, the Company sold an additional six light aircraft and at April 30, 2007, only has three light helicopters remaining in its fleet.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Twin-engine (heavy and medium size) aircraft generally require two pilots, have a passenger capacity of nine to twenty-six and can operate under instrument flight rules (“IFR”) (daytime and night time flying under a variety of weather conditions). The greater passenger capacity, longer range, and ability to operate in adverse weather conditions make these aircraft more suitable than single engine aircraft for offshore support. The high cost of these larger aircraft, their limited availability, and long lead time on orders tends to lessen competition from smaller operators. The Company operated 232 helicopters in this category (86 heavy and 146 medium helicopters) as at April 30, 2007.

Various types of helicopters are required to meet the diverse needs of the industries they serve. Medium to heavy helicopters are generally utilized to support the oil and gas, construction and forestry industries and EMS/SAR customer base. They are also used for transporting larger numbers of passengers and supplies or for lifting heavy weights, and are capable of operating during the night and in adverse weather conditions. Typically equipped with IFR equipment, medium to heavy helicopters are capable of long distance flights to offshore oil platforms. Where appropriate, specialized equipment is installed to provide emergency medical service support or for use in certain challenging environments such as the North Sea. Light to medium helicopters are used to support the utility and mining sectors, as well as certain parts of the construction and forestry industry, where transporting a smaller number of passengers or carrying light loads is required.

The Company contracts with customers to provide aircraft for various periods of time. Contracts for helicopter services in support of oil and gas exploration activities are generally short-term, usually twelve months or less. Contracts for transport of personnel and equipment to oil and gas production sites are generally long-term with terms typically ranging from two to ten years, averaging approximately five years. Such contracts are ordinarily awarded following a competitive bidding process among pre-qualified bidders. Contracts may be based on a fixed monthly fee with an additional hourly charge for actual flight time or solely on an hourly charge for actual flight time. Approximately 45% of the Company’s fiscal 2007 flying revenue (fiscal 2006 - 51%) was derived from hourly charges and the remaining 55% (fiscal 2006 - 49%) was generated by fixed monthly charges. Typically, the Company supplies crew and maintenance personnel in addition to aircraft. However, the Company has a limited number of contracts under which it supplies aircraft only to local helicopter operators, often in conjunction with other services. The Company will continue to pursue this latter type of contract as such arrangements may allow it to partner with other local operators to effectively penetrate new markets.

A substantial number of the Company’s long-term contracts contain provisions permitting early termination by the customer without penalty. However, during the last eight fiscal years, with the exception of contracts that were transferred to another operator due to the merger of oil and gas producers and contracts cancelled as a result of political instability or local unrest, no customer has exercised that right. At the expiration of a contract, customers typically solicit new bids for the next contract period. Contracts are usually awarded based on a number of factors, including price, long-term relationships, safety record of the helicopter service provider and quality of customer service. Generally, an incumbent operator has a competitive advantage in the bidding process stemming from its relationship with the customer, its knowledge of site characteristics, its understanding of the cost structure for the specific operations and its proven ability to meet service level requirements and provide the necessary aircraft and services.

The Company’s contracts generally require that fuel be provided directly by the customer or be charged directly to the customer based on actual fuel costs. As a result, the Company has no significant exposure to changes in fuel prices.

New contract start-up costs can represent a significant portion of operating costs. The Company therefore believes that its global network of bases and aircraft operating licenses give it a competitive advantage in bidding on new contracts throughout most of the world. The Company is well positioned to meet the requirements of customers in most regions of the world within short periods of time at competitive rates. The Company also has long-term working relationships with most of the major oil and gas companies, including the operating subsidiaries of bp, ExxonMobil, ConocoPhillips, Shell, Statoil, TotalFinaElf, Chevron, Maersk, Nexen and Unocal. Many of these companies have been customers of the Company for more than 30 years.

The Company is one of only two global providers of helicopter transportation services to the offshore oil and gas industry. There are other competitors, but they are smaller, regional operators. The Company has a significant market position in all global offshore oil and gas markets, with the exception of the Gulf of Mexico, where it does not have a presence. The Company’s absence in that market stems from the fact that the oil and gas companies operating in the Gulf of Mexico utilize primarily light and medium helicopters under short-term contracts. The Company estimates that it has a market share of approximately 64% in the combined Norwegian, UK, Danish and Dutch sectors of the North Sea, the world’s largest area of offshore oil and gas development. The Company is well positioned to capitalize on future growth opportunities. As oil and gas wells are depleted, oil companies are going further offshore to develop deep-water reserves. The Company’s global presence, long-term customer relationships and modern fleet of aircraft, including new technologically advanced aircraft, position it to participate in new oil and gas developments in most offshore oil and gas regions.

At present, the limited supply of helicopters available for use in the offshore oil and gas industry is a competitive advantage for the Company. In the Company’s experience, the Eurocopter Super Puma MkII, Sikorsky S92, Sikorsky S76C++, AgustaWestland AW139 and new Eurocopter EC225 aircraft are the aircraft of choice for major oil and gas companies due to their superior flying range, passenger capacity and cabin crew comfort. At present, the Company and its major competitor operate approximately 90% of the worldwide fleet of commercial Super Puma aircraft configured for offshore work. The manufacturers of these aircraft do not stock new aircraft. The current lead time to acquire a new EC225 or S92 is in excess of two years and the next available delivery slot for heavy aircraft (S92 or EC225) is the fall of 2009. During the year, the Company added four Sikorsky S92 aircraft and four AgustaWestland AW139 aircraft to its fleet. In addition, during the year, the Company announced the signing of a contract with Eurocopter for the purchase of 16 new EC225 helicopters, expected to be delivered between fiscal 2008 and fiscal 2012. The Company plans to use these aircraft in support of new offshore oil and gas contracts and potentially as SAR aircraft to meet the unprecedented demand from various customers in both the offshore oil and gas industry and government sponsored SAR.

Fixed-Wing Flying Operations

The Company also provides fixed-wing aviation services to support, directly and indirectly, oil and gas operations around the world, flying in conjunction with, or independent of, its offshore helicopter services. Fixed-wing customers include Aero Contractors Company of Nigeria Limited (“ACN”) (a 40% owned equity investment), Woodside, EEPCI, Encana, COTCO, Debmar and Premier. The Company operates dedicated Bombardier Dash-8 series aircraft, business jets and other turbo prop aircraft, as well as Boeing 737 aircraft. The majority of the fixed-wing aircraft are used to provide an integrated service to our oil and gas customers. The Company had 20 fixed-wing aircraft in its fleet as at April 30, 2007.

Repair and overhaul

All aircraft airframes, engines and components are required by their manufacturers and government regulations to be serviced and overhauled based on flight hours, cycles or the actual condition of parts. The repair and overhaul process includes the disassembly, cleaning, inspection, repair and reassembly of engines, components and accessories, and the testing of complete engines and components. The choice of whether to perform a given task in-house or to outsource to a third-party depends on the complexity and cost of the task and the capabilities of the operator in question. Companies engaged in the R&O business are required to obtain licenses from government regulatory bodies and, in many cases, the manufacturers. Companies active in this industry include (i) the manufacturers of the helicopters, components, and accessories; (ii) repair facilities authorized by the manufacturers to repair and overhaul their products; and (iii) small workshops not typically authorized by the manufacturers. The low cost of transporting components relative to the total cost of the repair and overhaul services has resulted in the development of a worldwide market for repair and overhaul services.

The Company’s Heli-One segment is the world’s largest independent helicopter support company. The Company will continue to grow this segment with the development of the new R&O facility at Boundary Bay Airport which is currently under construction. Heli-One provides comprehensive capability for repair, overhaul, modification and testing of dynamic components, including Sikorsky S61 and S76, Bell 206, 205, 212 and 412 and all Eurocopter Super Puma AS332/532 models in North America and Norway.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Heli-One’s main competitors within the R&O business are the original equipment manufacturers of helicopters and their components. As such, its main competitors are also its main parts suppliers. To minimize issues related to availability and pricing of parts that Heli-One needs to perform its business, Heli-One generally has long-term supply arrangements with the original equipment manufacturers and works closely with them on items such as modifications and approvals of parts and components.

Heli-One is also able to provide its customers with integrated logistics support, providing 24-hour service, covering all scheduled and unscheduled R&O for engines, dynamic components, all repairable components and consumable parts, plus support for any special mission equipment. The Company’s global buying power translates to competitive pricing on all major components. Heli-One can offer next day delivery in most locations on a wide range of helicopter parts from all major manufacturers through its global distribution network utilizing its new global warehouse facility in the Netherlands. In addition, the Company has extensive expertise in all areas of engineering and design, for either conversion upgrades or refurbishments including avionics.

Factors that affect competition within the repair and overhaul market include price, quality and customer service. The Company believes that Heli-One has a competitive advantage over original equipment manufacturers in that it focuses on supporting commercial operations and can leverage CHC’s extensive operational experience. The Company believes Heli-One is able to provide low cost quality support services to civilian and military helicopter operators worldwide.

Flight training

The Company operates an advanced flight training facility in Norway that provides additional revenue and enhances the Company’s global reputation for excellence and leadership in helicopter services. The facility enables the Company to satisfy fully the Eurocopter Super Puma training requirements for its pilots, in addition to selling training services to external pilots. The Company’s experienced instructors provide a wide variety of training services to its employees as well as civil and military organizations around the world. The Company’s Norwegian flight training group operates two full flight simulators and is certified and approved by the Norwegian Civil Aviation Authority as well as several other national aviation authorities. Since its inception, this facility has trained more than 30,000 pilots, engineers and helideck landing officers from over 40 countries. The Company is currently building in-house flight training capability in Vancouver and Aberdeen.

Helicopter leasing

The Company manages the world’s largest fleet of medium and heavy civilian helicopters, enabling the Company to offer flexible leasing terms on a wide range of aircraft to third-party customers.

ACQUISITIONS

BHS - Brazilian Helicopter Services Taxi Aereo Ltda.

On March 8, 2007, following regulatory approval, the Company acquired an equity position in BHS - Brazilian Helicopter Services Taxi Aereo Ltda., subsequently named BHS - Brazilian Helicopter Services Taxi Aereo S.A. (“BHS”). 100% of the voting common shares were acquired through a jointly owned subsidiary BHH - Brazilian Helicopters Holdings S.A. (“BHH”). BHS is one of the largest helicopter operators in the Brazilian offshore sector. This acquisition was accounted for using the purchase method, with results of operations included in the consolidated financial statements of the Company from the date of acquisition. The purchase price was allocated based on the fair value of the net identifiable assets acquired as follows (in thousands of Canadian dollars):

Fair value of net assets acquired
Cash	$	2,529
Other current assets		5,066
Intangible assets (i)		17,564
Goodwill (ii)		55,794
Property and equipment		1,619
Current liabilities		(4,155	)
Due to CHC		(32,830	)
Long-term debt		(3,555	)
Tax and other liabilities		(41,177	)
	$	855
Purchase price
Consideration	$	-
Acquisition costs		855
	$	855

(i)	The intangible assets consist of customer contracts and related intangibles which are being amortized on a straight line basis over their estimated useful life of seven years.

(ii)	The acquisition resulted in goodwill of $55.8 million, of which $31.1 million has been allocated to Global Operations and $24.7 million has been allocated to Heli-One. The goodwill is not expected to be deductible for tax purposes.

The purchase price allocation for this acquisition is preliminary and may be adjusted further as a result of obtaining additional information regarding preliminary estimates of fair values made at the date of purchase.

Heli-Dyne Systems Inc.

On November 30, 2006, the Company acquired 100% of the issued and outstanding shares of Heli-Dyne Systems Inc. (“Heli-Dyne”), subsequently named Heli-One USA Inc., a helicopter completion and maintenance centre based in Hurst, Texas. Heli-Dyne specializes in the design and installation of helicopter interiors and the maintenance of airframes and avionics.

This acquisition was accounted for using the purchase method, with results of operations included in the consolidated financial statements from the acquisition date. The net purchase price of $18,000 was allocated based on the fair value of the net identifiable assets acquired. This allocation resulted in an excess of the fair value of the net identifiable assets over the cost of the purchase, which is sometimes referred to as negative goodwill. The negative goodwill was allocated to the fair value of the long-term assets acquired and the remaining excess of $0.8 million was recognized as an extraordinary gain.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DISCONTINUED OPERATIONS

During fiscal 2007 the Company classified Survival-One Limited (“Survival-One”), the Company’s survival suit and safety equipment supply and manufacturing business, as held-for-sale as a result of the decision by management to divest of this business. The assets and liabilities of Survival-One were measured using discounted cash flows at the lower of their carrying amount and their estimated fair value less costs to sell. No fair value adjustment was recorded when Survival-One was classified as discontinued operations at January 31, 2007. The Company has recorded imputed interest in the results of discontinued operations. The results of operations of Survival-One have been reported in discontinued operations for the year ended April 30, 2007, and the prior period comparative figures have been reclassified. Previously, these amounts were included in the Heli-One segment.

Subsequent to April 30, 2007, the Company completed the sale of Survival-One for gross proceeds of approximately $37 million. The Company will record a gain of approximately $18 million on this divestiture in the first quarter of fiscal 2008, subject to any post closing adjustments. The operations and cash flows of Survival-One have been eliminated from the ongoing operations of the Company.

FLEET

The Company’s fleet at April 30, 2007 was comprised of the following aircraft by segment:

Aircraft Type	Global Operations		European Operations		Heli-One		Total		Owned		Leased
Heavy
Eurocopter Super Puma		9		18		5		32		17		15
Eurocopter Super Puma MkII		4		16		-		20		1		19
Sikorsky S61N		12		9		3		24		22		2
Sikorsky S92		2		5		3		10		-		10
		27		48		11		86		40		46
Medium
AgustaWestland AW139		2		4		-		6		2		4
Bell 212		10		-		-		10		9		1
Bell 412		15		-		2		17		8		9
Eurocopter 365 Series		15		8		9		32		19		13
Sikorsky S76 Series		55		13		10		78		48		30
Other		-		3		-		3		1		2
		97		28		21		146		87		59
Light
Eurocopter AS350/355		1		-		1		2		2		-
Other		-		-		1		1		1		-
		1		-		2		3		3		-
Total Helicopters		125		76		34		235		130		105
Fixed-wing		20		-		-		20		14		6
Total Aircraft		145		76		34		255		144		111

During fiscal 2007, the Company completed 28 sale-leaseback transactions, entered into new operating leases for ten aircraft, returned four aircraft to lessors and purchased five aircraft off-lease. As a result of the foregoing transactions, the number of leased aircraft in the Company’s fleet increased by 29 during fiscal 2007, from 82 leased aircraft as at April 30, 2006 to 111 leased aircraft as at April 30, 2007. The Company also purchased 30 aircraft, disposed of 13 aircraft and lost one aircraft in a helicopter accident. See page 13, “Helicopter Accident“. As a result of these purchases, disposals and the aforementioned leasing transactions, the number of owned aircraft in the Company’s fleet decreased from 151 as at April 30, 2006 to 144 as at April 30, 2007.

Based on independent appraisals, the estimated fair market value of the Company’s owned aircraft fleet was $628.2 million as at April 30, 2007, exceeding its book value by approximately $33.1 million. See page 6, “Competitive Strengths - Retention of Asset Value”. The appraisal surplus has declined from $46.7 million at April 30, 2006 to $33.1 million at April 30, 2007. This decline is attributable primarily to the impact of foreign exchange fluctuations on the translation of the aircrafts’ appraised values.

Lease Obligations

The Company has entered into aircraft operating leases with 27 lessors on 111 aircraft included in the Company’s fleet at April 30, 2007. At inception, the Company’s aircraft leases had terms not exceeding 8.5 years. At April 30, 2007, these leases had expiry dates ranging from fiscal 2008 to 2016. The total minimum lease payments under these aircraft operating leases totalled $556.3 million at April 30, 2007. The Company has options to purchase the aircraft at fair market value or 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 to perform inspections, major repairs and overhauls of major components are at the Company’s expense. The Company may either perform this work internally through Heli-One or have the work performed by an external repair and overhaul service provider. The Company has also given guarantees to certain lessors in connection with these aircraft leases. See page 33, “Off-Balance Sheet Arrangements”.

In addition to payment under aircraft operating leases, the Company has minimum lease payments of $44.6 million for the same periods related to operating lease commitments for buildings, land and other equipment.

For additional details see page 33, “Contractual Obligations” and also Notes 26 and 28 to the Company’s restated fiscal 2007 audited consolidated financial statements.

Commitments to Acquire New Aircraft

As at April 30, 2007, the Company had ordered and made deposits for a number of aircraft. At April 30, 2007, the Company had committed to purchase 34 heavy and 37 medium aircraft, most of which are expected to be delivered by the end of fiscal 2009. Total capital committed to these purchases is approximately $837.1 million (US $756.4 million). The Company also has options to purchase up to 12 additional aircraft over the next five years. The Company expects that most of these aircraft will be used internally to support continued growth.

Depending on market conditions, the Company intends to obtain the use of these aircraft through operating leases.

Helicopter Accident

On December 27, 2006, the Company suffered the loss of one medium AS365N aircraft in a helicopter accident off the west coast of England. Five passengers and two crew members perished in the accident. The cause of this unfortunate accident has not yet been ascertained as it is still under investigation by the Air Accidents Investigation Branch. This aircraft had a net book value of $3.2 million which has been fully recovered through insurance proceeds. All other incurred or outstanding liabilities relating to this incident are expected to be covered by the Company’s insurance providers.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Foreign Exchange

The Company is a global operator and its financial results are therefore impacted by fluctuations in foreign exchange rates, particularly those with respect to various European currencies and the US dollar. The unfavourable impact of foreign exchange (“FX”) due to rate changes from the prior fiscal year on revenue for fiscal 2007 was approximately $11.0 million. Since financing charges, income tax expense, capital expenditures and debt repayments are also primarily in various European currencies and US dollars, the net impact of FX on net earnings and cash flow is not as significant. Operating income was still negatively impacted by FX of approximately $0.3 million. The Company’s overall approach to managing foreign currency exposures includes identifying and quantifying its currency exposures, utilizing natural hedges where possible and putting in place financial instruments, when considered appropriate, to manage the remaining exposures. In managing this risk, the Company may use financial instruments including forwards, swaps, and other derivative instruments. Company policy specifically prohibits the use of derivatives for speculative purposes. See page 30, “Liquidity and Capital Resources - Financing Activities”, page 32, “Financial Instruments” and page 40, “Risks and Uncertainties - Foreign Exchange Rate Risk.”

Segments

This MD&A provides certain financial and related information about the Company’s operating segments and also about their products and services, the geographic areas in which they operate and their major customers. The Company’s objective is to provide information about the different types of business activities in which it engages and the different economic environments in which it operates in order to help users of the Company’s consolidated financial statements (i) better understand its performance, (ii) better assess its prospects for future net cash flows and (iii) make more informed judgments about the Company as a whole. In its efforts to achieve this objective, the Company provides information about segment revenues, segment EBITDAR and operating income because these financial measures are used by its key decision makers in making operating decisions and assessing performance. For additional information about the Company’s segment revenues and segment EBITDAR, including a reconciliation of these measures to its consolidated financial statements, see Note 25 to the Company’s restated fiscal 2007 audited consolidated financial statements.

The Company reports its results under four segments. The primary factors considered in identifying segments are: consistency with the Company’s internal operational and management structure, geographic coverage, the type of contracts that are entered into, the type of aircraft that are utilized and information used by the Company’s key decision makers to evaluate the results of operations. The Company’s four reporting segments are:

•	The Global Operations segment includes helicopter and fixed-wing flying services for offshore oil and gas and EMS/SAR customers in Australia, Africa, the Middle East, the Americas, Asia and other locations around the world, excluding Europe.

•	The European Operations segment provides offshore oil and gas flying operations from 17 bases in the UK, Norway, Ireland, the Netherlands and Denmark, as well as EMS/SAR and training operations throughout Europe.

•

The Heli-One segment combines the Company’s helicopter services support capabilities including repair and overhaul, maintenance, integrated logistics support and aircraft leasing to both internal and external customers. Heli-One operates repair and overhaul facilities located in Norway, Canada, the UK, the US, Australia and Africa. Heli-One also performs composite aerospace component manufacturing.

•	The Corporate and other segment includes corporate head office and other corporate costs in various jurisdictions.

Comparative figures for April 30, 2006 have been reclassified as a result of the classification of Survival-One as discontinued operations as outlined in Note 2 to the Company’s restated fiscal 2007 audited consolidated financial statements and on page 12, “Discontinued operations.”

Revenue

Total revenue for fiscal 2007 was $1,149.1 million, an increase of $152.0 million from revenue of $997.1 million for fiscal 2006. The increase of $152.0 million from fiscal 2006 includes revenue growth of $163.0 million offset by unfavourable FX of $11.0 million. The following are the primary reasons for the change in revenue:

(i)

Excluding the impact of FX, there was a $108.1 million increase in revenue in fiscal 2007 in Global Operations primarily due to increased flying revenue from new and expanded contracts in Australia, South America, Africa and Southeast Asia, as well as increased fixed-wing activity in Nigeria and rate increases on a number of existing contracts.

(ii)

European Operations’ revenue increased by $17.1 million, excluding FX, over fiscal 2006 due to new and renewed contracts and rate increases earned on new aircraft types. These increases were partially offset by the loss of the ConocoPhillips contract in late fiscal 2006 and the impact of aircraft availability issues in fiscal 2007.

(iii)

An increase in external revenue in fiscal 2007 in Heli-One of $37.4 million, excluding FX. This increase was due to increases in both external fleet and R&O revenues. External fleet revenue increased due to incremental lease revenue on a larger third-party leased fleet, including new aircraft lease contracts in Mexico and the US. R&O revenue increased due to an increase in customer flying hours, new PBH contracts in Malaysia and Mexico, part sales increases and an increase in base maintenance activities. Base maintenance activities increased primarily as a result of the consolidation of Heli-Dyne in the US, which was acquired during fiscal 2007, as well as increases in third party base maintenance work performed in Norway and Europe.

By industry sector, the distribution of the year-over-year change in revenue is set forth in the table below:

	Year Ended April 30
	2007			2006			Change			2007		2006		Change(i)
Industry Sector	(percentage of total revenue)									(in millions of Canadian dollars)
Oil and Gas		69.9	%		69.9	%		-		$	803.4	$	696.7	$	106.7
Repair and Overhaul		13.9	%		13.2	%		0.7	%		159.3		131.5		27.8
EMS/SAR		7.0	%		8.3	%		(1.3	)%		80.7		82.7		(2.0	)
Other		6.4	%		6.1	%		0.3	%		73.3		61.4		11.9
Passenger Transportation		2.3	%		1.8	%		0.5	%		26.8		18.0		8.8
Training		0.5	%		0.7	%		(0.2	)%		5.6		6.8		(1.2	)
Total		100.0	%		100.0	%		-		$	1,149.1	$	997.1	$	152.0

(i)

The $106.7 million increase in revenue in the oil and gas sector was due primarily to growth in Global Operations and European Operations offset partially by unfavourable FX. The $27.8 million increase in repair and overhaul revenue was primarily due to an increase in customer flying hours, increased base maintenance activities in Norway and Europe and the acquisition of Heli-Dyne in the US during the year, partially offset by unfavourable FX.

The table below provides a summary of segment revenue by quarter for fiscal 2007 and 2006:

Revenue Summary by Quarter

(in millions of Canadian dollars)

Period		Global Operations		European Operations		Total Flying Segments		Heli-One		Corporate & Other			Total
Fiscal 2007	Q1	$	91.8	$	132.9	$	224.7	$	38.4	$	-		$	263.1
	Q2		97.8		131.7		229.5		43.3		0.2			273.0
	Q3		119.7		135.5		255.2		45.5		0.1			300.8
	Q4		118.7		139.8		258.5		53.5		0.2			312.2
		$	428.0	$	539.9	$	967.9	$	180.7	$	0.5		$	1,149.1

Fiscal 2006	Q1	$	76.0	$	133.6	$	209.6	$	33.4	$	-		$	243.0
	Q2		79.5		138.5		218.0		34.5		(0.1	)		252.4
	Q3		86.6		126.0		212.6		40.8		0.1			253.5
	Q4		88.8		122.3		211.1		37.0		0.1			248.2
		$	330.9	$	520.4	$	851.3	$	145.7	$	0.1		$	997.1

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company derives its flying revenue from two types of contracts. Approximately 45% of the Company’s fiscal 2007 flying revenue (fiscal 2006 - 51%) was derived from hourly charges (including hourly charges on contracts that also have fixed charges), and the remainder was generated by fixed monthly charges. Because of the significant fixed charge component of the Company’s flying revenue mix, an increase or decrease in flying hours may not result in a proportionate change in revenue. While flying hours may not correlate directly with revenues, they remain a good measure of the level of activity and fleet utilization. The following two tables provide, respectively, a quarterly summary of the Company’s flying hours and a summary of its flying revenue hourly vs. fixed mix for fiscal 2007 and 2006, in each case by segment.

Flying Hours

		Flying Hours						Number of Aircraft at Period End
Period		Global Operations		European Operations		Total		Global Operations		European Operations		Heli-One		Total
Fiscal 2007	Q1		19,502		24,240		43,742		132		76		44		252
	Q2		20,981		23,256		44,237		128		77		43		248
	Q3		21,547		21,556		43,103		128		75		47		250
	Q4		22,177		21,956		44,133		145		76		34		255
			84,207		91,008		175,215

Fiscal 2006	Q1		16,262		23,713		39,975		127		77		14		218
	Q2		17,042		25,968		43,010		128		71		27		226
	Q3		18,854		23,764		42,618		131		72		27		230
	Q4		17,701		22,026		39,727		131		72		30		233
			69,859		95,471		165,330

Flying Revenue Mix - Hourly vs. Fixed

(in millions of Canadian dollars)

	Hourly				Fixed				Total
Segment	Fiscal 2007		Fiscal 2006		Fiscal 2007		Fiscal 2006		Fiscal 2007		Fiscal 2006
Global Operations		114.1		97.2		260.6		210.7		374.7		307.9
European Operations		282.4		311.0		231.9		186.2		514.3		497.2
	$	396.5	$	408.2	$	492.5	$	396.9	$	889.0	$	805.1

The Company utilizes primarily heavy aircraft in its European Operations segment and medium aircraft in its Global Operations segment. As illustrated in the table below, the overall mix of revenue by aircraft type remained relatively consistent from fiscal 2006 to fiscal 2007.

Flying Revenue Mix - Aircraft Type

(in millions of Canadian dollars)

	2007															2006
Segment	Heavy			Medium			Light			Fixed Wing			Total			Heavy			Medium			Light			Fixed Wing			Total
Global Operations	$	87.8		$	242.1		$	0.9		$	43.9		$	374.7		$	70.0		$	204.8		$	2.5		$	30.6		$	307.9
European Operations		378.2			136.1			-			-			514.3			369.7			127.5			-			-			497.2
Total
Flying Revenue	$	466.0		$	378.2		$	0.9		$	43.9		$	889.0		$	439.7		$	332.3		$	2.5		$	30.6		$	805.1
Total %		52.5	%		42.5	%		0.1	%		4.9	%		100.0	%		54.6	%		41.3	%		0.3	%		3.8	%		100.0	%

Aberdeen Airport Ltd. in the UK no longer reports monthly passenger traffic for all helicopter operations in Aberdeen, Scotland. Therefore, the Company is no longer able to provide this information.

Direct Costs

Direct costs for fiscal 2007 increased by $136.2 million to $924.7 million from $788.5 million for fiscal 2006. The increase from fiscal 2006 is primarily due to an increase in variable costs incurred to support revenue growth.

General and Administration Costs

General and administration costs for fiscal 2007 increased by $15.5 million to $43.4 million from $27.9 million for fiscal 2006. The increase of $15.5 million from fiscal 2006 is due primarily to $8.9 million incurred during fiscal 2007 relating to the Company’s SOX Section 404 project. In addition, contract settlement costs of $3.1 million were incurred during the year and there was an increase in professional fees of $7.4 million relating to external audit, consulting and other fee increases. These increases are partially offset by a reduction in variable compensation costs of $1.7 million and a reduction in claim reserves for various insured risks of $1.3 million compared to fiscal 2006.

Amortization

Amortization expense increased $9.8 million to $65.3 million in fiscal 2007 from $55.5 million in fiscal 2006. The increase in amortization is due to an increase in spares (rotables), base maintenance capitalized cost and the increased value of aircraft in the fleet.

Restructuring

During the year ended April 30, 2007, the Company reversed $2.3 million of previously expensed restructuring costs as the liability was determined no longer necessary. During the year ended April 30, 2006, the Company expensed $16.2 million in connection with restructuring activities. Restructuring costs were comprised of severance, termination, relocation, planning, consulting and benefit adjustments.

Loss on Disposal of Assets

During fiscal 2007 the Company disposed of property and equipment, primarily aircraft (see page 12, “Fleet” and page 31, “Liquidity and Capital Resources - Investing Activities”), and received net proceeds of $318.3 million, resulting in a net loss of $3.0 million and a deferred gain of $29.5 million. The latter related primarily to the 28 aircraft sale-leaseback transactions that occurred during the year. The $3.0 million loss primarily relates to the sale of seven helicopters during the second quarter at a combined loss of $1.6 million. The majority of this loss related to one heavy helicopter. As well, during the second quarter, the Company divested of a small non-core parts trading business originally acquired as part of the Schreiner acquisition, for a loss of approximately $0.7 million.

Operating Income

Operating income increased by $6.0 million to $115.1 million in fiscal 2007 from $109.1 million in fiscal 2006. The increase from fiscal 2006 was due primarily to a $28.3 million (excluding FX) increase in the Global Operations segment and an $8.2 million (net of FX) increase in the Heli-One segment. These increases are partially offset by a decrease in the European Operations segment of $22.3 million (excluding FX) and an increase in Corporate costs of $15.1 million (net of FX).

Financing Charges

Financing charges for the fiscal year ended April 30, 2007 totalled $58.3 million compared to $53.0 million in fiscal 2006. The increase in financing charges is primarily due to an increase in interest on debt obligations of $8.4 million, partially offset by other interest income of $2.9 million in fiscal 2007.

(in millions of Canadian dollars)	2007			2006
Interest on debt obligations	$	51.9		$	43.5
Amortization of deferred financing costs		1.4			1.6
Foreign exchange losses		8.2			6.2
Release of currency translation adjustment		(0.3	)		2.6
Other interest income		(2.9	)		(0.9	)
Total	$	58.3		$	53.0

The average rate on the Company’s variable-rate senior credit facilities during fiscal 2007 was 5.8% compared to 4.4% in fiscal 2006. In addition to higher effective interest rates on the senior credit facility borrowings, interest on long-term debt increased due to higher average borrowings primarily on capital expenditures and increased working capital in fiscal 2007 compared to fiscal 2006.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Gain on Sale of Long-term Investments

Gain on sale of long-term investments in fiscal 2006 included a $15.7 million gain from the sale of the Company’s interest in Inversiones Aereas SL (“Inaer”) and a $21.8 million gain from the sale of the Company’s interest in Canadian Helicopters Limited (“CHL”) and other long-term investments.

Equity Earnings of Associated Companies and Non-Controlling Interest

Equity earnings of associated companies and non-controlling interest decreased by $5.5 million to $1.1 million in fiscal 2007 from $6.6 million in fiscal 2006. The decrease is due to the sale of the Company’s 38% equity ownership in Inaer and its 41.75% interest in CHL during fiscal 2006.

Income Taxes

The Company had an income tax provision of $16.8 million in fiscal 2007 compared to $10.5 million in fiscal 2006. This provision was comprised of the following:

(in millions of Canadian dollars)	2007			2006
Earnings from continuing operations before income taxes	$	57.8		$	100.2
Combined Canadian federal and provincial statutory income tax rate		34	%		34	%
Income tax provision calculated at statutory rate		(19.7	)		(34.1	)
(Increase) decrease in income tax provision resulting from:
Rate differences in various jurisdictions		12.9			13.5
Effect of change in tax law		(1.3	)		(0.2	)
Non-deductible items		(0.6	)		(1.2	)
Large corporations tax		-			(0.5	)
Other foreign taxes		(7.8	)		(3.5	)
Non-taxable portion of capital gains		0.6			13.6
Non-taxable income		1.9			2.7
Valuation allowance		0.7			(0.3	)
Other		(3.5	)		(0.5	)
Income tax provision	$	(16.8	)	$	(10.5	)

During fiscal 2007, legislation was enacted in Canada to reduce the federal corporate income tax rate from 22.12% to 19% in phased reductions over the period 2008 to 2010. As a result, the Company adjusted the value of its future income tax assets related to losses carried forward and other temporary differences in Canada by $1.2 million.

The Company is subject to taxation in many jurisdictions throughout the world. The effective tax rate and tax liability are affected by a number of factors, such as the amount of taxable income in particular jurisdictions, the tax rates in such jurisdictions, tax treaties between jurisdictions, the extent to which funds are transferred between jurisdictions and income is repatriated, and changes in law. Generally, the tax liability for each legal entity is determined on either (i) a non-consolidated basis or (ii) a consolidated basis with other entities incorporated in the same jurisdiction, in either case, without regard to the taxable losses of non-consolidated affiliate entities. As a result, the Company may pay income taxes in certain jurisdictions even though on an overall basis a net loss for the period may be incurred.

The Company has accumulated approximately $153.7 million in non-capital tax losses of which $72.9 million is available to reduce future Canadian income taxes otherwise payable and $80.8 million is available to reduce future income taxes otherwise payable in other foreign jurisdictions. If unused, these losses will expire as follows:

(in millions of Canadian dollars)
2008	$	5.1
2009		8.9
2014		3.0
2015		19.3
2026		33.0
2027		4.2
Indefinitely		80.2
	$	153.7

Net Earnings from Continuing Operations

Net earnings from continuing operations for fiscal 2007 were $41.0 million ($0.90 per share, diluted), a decrease of $48.7 million from $89.7 million ($1.95 per share, diluted) in fiscal 2006. The decrease from fiscal 2006 was primarily the result of the gains on sale of long-term investments during fiscal 2006 of $37.5 million and a reduction in equity earnings of associated companies of $5.5 million. In addition, a higher tax provision of $6.3 million and increased financing charges of $5.3 million contributed to the overall decrease.

Net Earnings from Discontinued Operations

Net earnings from discontinued operations for fiscal 2007 were $2.2 million ($0.05 per share, diluted) compared to $1.0 million for fiscal 2006 ($0.02 per share, diluted). The increase is primarily due to an increase in survival suit sales and repairs for Survival-One during fiscal 2007.

Extraordinary Item

During fiscal 2007, the Company acquired Heli-Dyne. See page 11, “Acquisitions“. The purchase price was allocated based on the fair value of the net identifiable assets acquired. This allocation resulted in negative goodwill, which was allocated to the fair value of the long-term assets acquired and the remaining excess of $0.8 million ($0.02 per share, diluted) was recorded as an extraordinary gain.

Net Earnings

Net earnings decreased by $46.7 million to $44.0 million ($0.97 per share, diluted) in fiscal 2007 compared to $90.7 million ($1.97 per share, diluted) in fiscal 2006. This reflects a $48.7 million decrease in net earnings from continuing operations, partially offset by an increase of $1.2 million in net earnings from discontinued operations and an extraordinary gain of $0.8 million recognized in fiscal 2007.

Fourth Quarter 2007

Revenue for the fourth quarter of fiscal 2007 was $312.2 million, an increase of $63.9 million or 26% from the same period last year. This increase in revenue was due to an increase of $46.7 million from all operating segments and a favourable FX impact of $17.2 million.

Operating income for the fourth quarter of fiscal 2007 was $28.4 million, an increase of $4.7 million from the same period last year. This was due to an increase in Global Operations of $3.8 million and an increase in Heli-One of $7.3 million. These increases were partially offset by a decrease in European Operations of $5.6 million and Corporate of $0.8 million.

Net earnings from continuing operations increased by $1.4 million to $11.7 million in the fourth quarter of fiscal 2007 from the same period in the prior fiscal year.

Net earnings for the fourth quarter of fiscal 2007 was $13.5 million, an increase of $2.7 million from the same period last year. This increase resulted from an increase in net earnings from continuing operations of $1.4 million and an increase in net earnings from discontinued operations of $1.3 million.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For further information on the Company’s fourth quarter 2007 results, please refer to the Company’s fourth quarter press release on June 26, 2007.

Quarterly Information

The table below provides a summary of the Company’s revenue, net earnings from continuing operations, net earnings, total assets, total long-term financial liabilities, cash dividends per share, net earnings per share from continuing operations and net earnings per share for each quarter of fiscal 2007, 2006 and 2005. All information has been reclassified for the classification of Survival-One as discontinued operations as outlined in Note 2 to the Company’s restated fiscal 2007 audited consolidated financial statements.

Fiscal	Revenue		Net earnings from continuing operations			Net earnings			Total assets		Total long-term financial liabilities		Cash dividends per share		Net earnings per share from continuing operations						Net earnings per share
2007	(in millions of Canadian dollars)												declared		Basic			Diluted			Basic			Diluted
Q1	$	263.1	$	9.0		$	8.8		$	1,838.2	$	1,043.4	$	-	$	0.21		$	0.20		$	0.21		$	0.19
Q2		273.0		8.3			8.9			1,839.0		1,018.2		0.50		0.20			0.18			0.21			0.20
Q3		300.8		12.0			12.8			2,012.6		877.6		-		0.28			0.26			0.30			0.28
Q4		312.2		11.7			13.5			2,102.2		842.7		-		0.28			0.26			0.32			0.30
Total	$	1,149.1	$	41.0		$	44.0						$	0.50	$	0.97		$	0.90		$	1.04		$	0.97

Fiscal 2006
Q1	$	243.0	$	18.8		$	19.2		$	1,669.8	$	975.2	$	-	$	0.45		$	0.41		$	0.46		$	0.42
Q2		252.4		39.2			39.2			1,675.1		939.1		0.40		0.93			0.85			0.93			0.85
Q3		253.5		21.4			21.5			1,685.6		945.8		-		0.51			0.47			0.51			0.47
Q4		248.2		10.3			10.8			1,686.1		911.7		-		0.25			0.22			0.26			0.23
Total	$	997.1	$	89.7		$	90.7						$	0.40	$	2.14		$	1.95		$	2.16		$	1.97

Fiscal 2005
Q1	$	239.7	$	18.2		$	17.5		$	1,494.0	$	829.9	$	-	$	0.44		$	0.40		$	0.42		$	0.37
Q2		238.8		(0.7	)		(0.7	)		1,512.8		855.0		0.30		(0.02	)		(0.01	)		(0.02	)		(0.01	)
Q3		238.3		14.7			22.5			1,624.5		924.2		-		0.35			0.32			0.54			0.49
Q4		237.4		14.7			17.2			1,686.7		934.4		-		0.35			0.32			0.41			0.38
Total	$	954.2	$	46.9		$	56.5						$	0.30	$	1.12		$	1.03		$	1.35		$	1.23

There is some impact of seasonality in the quarterly results in the foregoing table. The seasonal variations are due primarily to variations in the activity levels of the Company’s oil and gas industry customers’ exploration and development activities. Poor weather in the North Sea can inhibit flying during the winter months. In the current fiscal year poor weather conditions in December and January prevented flying activity for a number of days resulting in a temporary reduction in activity.

Foreign exchange has had a significant impact on quarterly revenue levels on a year-over-year basis. Quarterly revenues in fiscal 2007, in comparison to quarterly revenues for fiscal 2006, have been impacted by foreign exchange in the following amounts: Q1-$(22.3) million, Q2-$(9.3) million, Q3-$3.4 million and Q4-$17.2 million.

Quarterly revenue, net earnings from continuing operations and net earnings in the table above were impacted by the following significant items that affect their comparability (not all variances are listed, including variances from restructuring and debt settlement costs):

(i)	In Q2 of fiscal 2005, the Company recorded a fair value adjustment for CHC Composites Inc. (“Composites”) of $14.3 million.

(ii)

In Q3 of fiscal 2005, the Company incurred a net-of-tax gain on the sale of Schreiner Aircraft Maintenance B.V. (“SAMCO”) and Schreiner Canada Ltd. (“Schreiner Canada”) of $7.5 million included in discontinued operations. The remaining $1.1 million net-of-tax gain on the sale of SAMCO and Schreiner Canada was incurred in Q4 of fiscal 2006.

(iii)

Results for Q2 of fiscal 2006 included a pre-tax gain of $21.8 million for the sale of the Company’s remaining interest in CHL and other long-term investments.

(iv)	Results for Q3 of fiscal 2006 included a pre-tax gain of $15.7 million for the sale of the Company’s equity interest in Inaer.

(v)

Results for Q1 of fiscal 2007 included aircraft introduction costs of approximately $5.5 million in support of future growth.

(vi)

Results for Q2 of fiscal 2007 included foreign exchange losses of approximately $6.6 million relating to various items including repatriation of cash to Canada, internal financing arrangements between subsidiaries of the Company in currencies other than their functional currencies, and short-term imbalances in third-party trade and other balances in the Company’s Norwegian and South African subsidiaries.

(vii)

Results for Q3 of fiscal 2007 included revenue on the sale of an aircraft of approximately $13.0 million.

(viii)

Results for Q4 of fiscal 2007 included aircraft introduction costs of $5.1 million in support of continued growth.

For additional information on the foregoing quarterly items, see page 18, “Results of Operations - Gain on Sale of Long-term Investments.”

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

REVIEW BY SEGMENT - FISCAL 2007 COMPARED TO FISCAL 2006

The following table provides annual external revenue, segment EBITDAR(iv), segment EBITDA(iv) and operating income variance analysis between fiscal 2007 and 2006 for the Company’s segments. The numbers in this analysis are referred to in the review of each operating segment that follows the table.

Segment Revenue from External Customers - Variance Analysis

(in thousands of Canadian dollars)


	Global Operations			European Operations			Heli-One			Corporate & Other		Inter-segment Eliminations	Total
Year ended April 30, 2006 (i)	$	330,877		$	520,367		$	145,668		$	175	N/A	$	997,087
Foreign exchange impact (ii)		(11,007	)		2,468			(2,453	)		13	N/A		(10,979	)
Revenue increase		108,086			17,086			37,398			429	N/A		162,999
Year ended April 30, 2007	$	427,956		$	539,921		$	180,613		$	617	N/A	$	1,149,107

Total revenue increase	$	97,079		$	19,554		$	34,945		N/A		N/A	$	152,020
% increase		29.3	%		3.8	%		24.0	%	N/A		N/A		15.2	%
% increase excluding FX		32.7	%		3.3	%		25.7	%	N/A		N/A		16.3	%

Segment EBITDAR(iv) Variance Analysis

(in thousands of Canadian dollars)


	Global Operations			European Operations			Heli-One			Corporate & Other			Inter-segment Eliminations			Total
Year ended April 30, 2006 (i)	$	90,922		$	107,481		$	229,475		$	(27,662	)	$	(154,049	)	$	246,167
Foreign exchange impact (ii)		(3,183	)		(3,679	)		1,302			1,428			-			(4,132	)
Segment EBITDAR increase (decrease)		47,392			(8,460	)		42,397			(15,104	)		(26,808	)		39,417
Year ended April 30, 2007	$	135,131		$	95,342		$	273,174		$	(41,338	)	$	(180,857	)	$	281,452

Segment EBITDAR margin(iii)
- Last year		27.5	%		20.7	%		45.8	%	N/A			N/A				24.7	%
- This year		31.6	%		17.7	%		47.7	%	N/A			N/A				24.5	%
Total Segment EBITDAR increase (decrease)	$	44,209		$	(12,139	)	$	43,699		$	(13,676	)	$	(26,808	)	$	35,285
% increase (decrease)		48.6	%		(11.3	%)		19.0	%		49.4	%	N/A				14.3	%
% increase (decrease) excluding FX		52.1	%		(7.9	%)		18.5	%		54.6	%	N/A				16.0	%

Segment EBITDA(iv) Variance Analysis

(in thousands of Canadian dollars)


	Global Operations			European Operations			Heli-One			Corporate & Other			Inter-segment Eliminations		Total
Year ended April 30, 2006 (i)	$	7,706		$	31,857		$	168,790		$	(27,662	)	$	-	$	180,691
Foreign exchange impact (ii)		(1,366	)		(3,792	)		4,266			1,416			-		524
Segment EBITDA increase (decrease)		27,811			(25,830	)		12,901			(15,092	)		-		(210	)
Year ended April 30, 2007	$	34,151		$	2,235		$	185,957		$	(41,338	)	$	-	$	181,005

Segment EBITDA margin(iii)
- Last year		2.3	%		6.1	%		33.7	%	N/A			N/A			18.1	%
- This year		8.0	%		0.4	%		32.5	%	N/A			N/A			15.8	%
Total Segment EBITDA increase (decrease)	$	26,445		$	(29,622	)	$	17,167		$	(13,676	)	$	-	$	314
% increase (decrease)		343.2	%		(93.0	%)		10.2	%		(49.4	%)	N/A			0.2	%
% increase (decrease) excluding FX		360.9	%		(81.1	%)		7.6	%		(54.6	%)	N/A			(0.1	%)

Segment Operating Income Variance Analysis

(in thousands of Canadian dollars)


	Global Operations			European Operations			Heli-One			Corporate & Other			Inter-segment Eliminations	Total
Year ended April 30, 2006 (i)	$	2,913		$	24,721		$	116,297		$	(34,865	)	N/A	$	109,066
Foreign exchange impact (ii)		(1,133	)		(3,736	)		3,196			1,391		N/A		(282	)
Operating income increase (decrease)		28,271			(22,275	)		8,212			(7,936	)	N/A		6,272
Year ended April 30, 2007	$	30,051		$	(1,290	)	$	127,705		$	(41,410	)	N/A	$	115,056

Total operating income increase (decrease)	$	27,138		$	(26,011	)	$	11,408		$	(6,545	)	N/A	$	5,990
% increase (decrease)		931.6	%		(105.2	%)		9.8	%		18.8	%	N/A		5.5	%
% increase (decrease) excluding FX		970.5	%		(90.1	%)		7.1	%		22.8	%	N/A		5.8	%

(i)	Comparative figures have been reclassified for the classification of Survival-One as discontinued operations as outlined in Note 2 to the Company’s restated fiscal 2007 audited consolidated financial statements.

(ii)

Includes both the foreign exchange on the translation of the financial results of the foreign subsidiaries into Canadian dollars (“translation impact”) and the foreign exchange on the translation of foreign currency denominated transactions into the reporting currencies of the subsidiaries (“transaction impact”).

(iii)

Segment EBITDAR and segment EBITDA as a percent of revenue from external customers except for the Heli-One segment, which is a percent of total revenue.

(iv)	See Note 25 to the Company’s restated fiscal 2007 audited consolidated financial statements.

Global Operations

The Global Operations segment consists of flying operations in Australia, Africa, the Middle East, the Americas, Asia and in other locations around the world, serving offshore oil and gas, EMS/SAR and other industries.

Revenue by Industry - Global Operations	Revenue by Location - Global Operations

Revenue for fiscal 2007 was $428.0 million, an increase of $97.1 million from revenue of $330.9 million in fiscal 2006. The increase included revenue growth of $108.1 million, partially offset by an unfavourable FX impact of $11.0 million. The $108.1 million revenue increase was due to increased flying activity from new and expanded contracts in Australia, South America, Africa and Southeast Asia for both oil and gas and EMS/SAR customers, increased fixed-wing activity in Nigeria, additional ad hoc work in Africa and rate increases on a number of existing contracts. Total flying hours increased from 69,859 in fiscal 2006 to 84,207 in fiscal 2007, representing growth of 14,348 hours or 21%. During the second quarter of fiscal 2007, Global Operations purchased an aircraft with the intention of selling the aircraft to a third party. The sale of the aircraft occurred in the third quarter and generated revenue of approximately $13.0 million.

Segment EBITDAR for fiscal 2007 was $135.1 million, which is an increase of $44.2 million from segment EBITDAR of $90.9 million in fiscal 2006. This increase included segment EBITDAR growth of $47.4 million, partially offset by an unfavourable FX impact of $3.2 million. The segment EBITDAR increase is due to an increase in revenue and segment EBITDAR margins. Segment EBITDAR margins for Global Operations increased from 27.5% in fiscal 2006 to 31.6% in fiscal 2007 due to rate increases on a number of contracts as a result of the introduction of new aircraft and a net decrease of $15.6 million in provisions on trade receivables that have been collected.

Global Operations has added 26 aircraft to its fleet since fiscal 2006, which is partially offset by aircraft returned to Heli-One for re-deployment and the sale of light aircraft in the second quarter of fiscal 2007. During fiscal 2007, Global Operations expensed $3.6 million (fiscal 2006 - $3.8 million) in aircraft introduction costs. This is significantly lower than the aircraft introduction costs incurred by European Operations. The cost of introducing aircraft is not as significant for Global Operations as it is for European Operations for numerous reasons including the fact that most of these new aircraft are Sikorsky S76C++ aircraft, which are an advancement from previous S76 models but do not represent completely new aircraft types like the Sikorsky S92 and AgustaWestland AW139. New aircraft types require significant introduction costs primarily due to the training of personnel and serviceability issues related to unplanned maintenance and modification requirements. Global Operations experienced less aircraft down-time due to training as new crews were hired specifically to operate these new aircraft types. Global Operations’ contracts typically result in lower utilization of aircraft, reducing the frequency of maintenance requirements. Global Operations’ aircraft flew an average of 581 hours per aircraft during fiscal 2007, while European Operations flew an average of 1,197 hours per aircraft in the same period. As such, Global Operations has been able to introduce numerous aircraft during the year without a significant financial impact.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Operating income for fiscal 2007 was $30.0 million, an increase of $27.1 million from operating income of $2.9 million in fiscal 2006. This increase was due primarily to a an increase in segment EBITDAR, partially offset by an unfavourable FX impact of $1.1 million and an increase in lease costs of $17.8 million due to an increased number and higher value aircraft used by Global Operations on new and expanded contracts.

At April 30, 2007, there were 145 aircraft in this segment, consisting of 27 heavy, 97 medium, one light and 20 fixed-wing aircraft. This represents an increase of 14 aircraft since the start of the fiscal year, which is related to increased activity in the Global Operations segment in fiscal 2007. The fleet deployed in this segment consists primarily of medium aircraft such as Sikorsky S76 models and AgustaWestland AW139 aircraft, but also includes a number of heavy aircraft, including the Eurocopter Super Puma, the Sikorsky S61N and the Sikorsky S92.

Approximately 87% of flying revenue in the segment was derived from long-term contracts. The major customers in this segment included Amerada Hess, ExxonMobil, Unocal, Chevron, bp, Shell, Premier, Phillips, Soekor, Sonair, the Ambulance Service of New South Wales, the Royal Australian Air Force, Victoria Police, the United Nations, Encana and United Helicharters.

During and subsequent to fiscal 2007 the Company was awarded the following new contracts and contract renewals:

•	through BHS, the Company was awarded a five-year contract for the provision of eight Sikorsky S-76C+ helicopters in support of Petrobras’ operations in the Brazilian offshore sector.

•	a seven-year (plus three years of extension options) EMS contract with the Ambulance Service of New South Wales for the provision of five aircraft in the Greater Sydney area. The contract commenced in late fiscal 2007 and calls for AgustaWestland AW139 and Eurocopter EC145 aircraft.

European Operations

The European Operations segment consists primarily of flying operations in the UK, Norway, Ireland, the Netherlands and Denmark, mainly serving the helicopter transportation requirements of the offshore oil and gas industry in the North Sea, as well as EMS/SAR services throughout Europe.

Revenue by Industry - European Operations	Revenue by Location - European Operations

Revenue for fiscal 2007 was $539.9 million, an increase of $19.5 million from revenue of $520.4 million earned in fiscal 2006. This increase was attributable to an increase of $17.1 million in revenue and a favourable FX impact of $2.4 million. Revenue increased due to new contracts with Marathon, Nexen, Perenco UK Limited, Total E&P Nederland BV, Wintershall Noordszee BV, PetroCanada Netherlands BV and Tullow Oil, as well as an increase in flying hours on existing contracts and increased ad hoc work. In addition, rate increases on new aircraft types have contributed to increased revenue. These increases are partially offset by a decrease in flying hours and the loss of the ConocoPhillips contract during fiscal 2006. The loss of the ConocoPhillips contract resulted in reduced revenue but did not result in a corresponding reduction in costs as crews were retained to train and fly on new contracts commencing in future periods. Flying hours decreased by 4,463 hours to 91,008 hours in fiscal 2007 compared to 95,471 hours in fiscal 2006. This decrease is largely due to aircraft serviceability issues on certain new aircraft types experienced by European Operations throughout fiscal 2007, discussed further below.

Segment EBITDAR for fiscal 2007 was $95.3 million, down $12.2 million from segment EBITDAR of $107.5 million in fiscal 2006. This decrease was due primarily to reduced segment EBITDAR of $8.5 million due to serviceability issues on certain new aircraft types and aircraft introduction costs and an unfavourable FX impact of $3.7 million. These decreases are partially offset by segment EBITDAR earned on increased revenue. Segment EBITDAR margins decreased from 20.7% in fiscal 2006 to 17.7% in fiscal 2007. Fiscal 2007 margins were negatively impacted by significant aircraft introduction costs incurred during the year and serviceability issues on certain new aircraft types.

European Operations has added seven aircraft to its fleet since fiscal 2006, which is partially offset by aircraft returned to Heli-One for redeployment. Most of the aircraft added to the fleet are new aircraft types including the AgustaWestland AW139 and Sikorsky S92. The introduction of new aircraft types to meet the requirements of new and existing customers has resulted in aircraft introduction costs of approximately $7.8 million (fiscal 2006 - $4.4 million) expensed during fiscal 2007 primarily relating to the training of personnel for upcoming contracts, including the Statoil contract in Norway, which will generate revenue in the first quarter of fiscal 2008. The cost of introducing aircraft has been significant for European Operations as a result of the new technology aircraft types introduced and the requirement to type-convert and align existing crews on these aircraft.

European Operations has also experienced a high amount of scheduled and unscheduled maintenance on new and older aircraft during fiscal 2007. This maintenance resulted in customer penalties and reduced revenue as aircraft were unable to operate on contract. The segment EBITDAR impact of aircraft availability issues for fiscal 2007 totalled approximately $8.5 million. Even though it is normal that new aircraft types have a lower rate of availability during the introduction period, the current performance of these new types continues to be below expectations. The availability rate on these aircraft did improve in the fourth quarter of fiscal 2007 and is expected to continue to improve in future periods. The Company continues to work with manufacturers to remedy serviceability issues on new technology aircraft by increasing spare parts production and improving technical support.

During fiscal 2007, European Operations experienced an operating loss of $1.3 million, which is a decrease of $26.0 million from operating income of $24.7 million in fiscal 2006. This decrease is due to a reduction in segment EBITDAR, increased lease costs of $17.5 million and an unfavourable FX impact of $3.7 million. Lease costs increased due to the addition of higher value, technologically advanced aircraft in the European Operations fleet and short-term lease costs incurred on aircraft required to address serviceability issues and other related costs.

At April 30, 2007 there were 76 aircraft in this segment, consisting of 48 heavy and 28 medium aircraft. Included in the heavy aircraft were 34 Super Pumas, including 16 Super Puma MkIIs and five Sikorsky S92 aircraft.

During fiscal 2007, European Operations lost one AS365N medium aircraft in a helicopter accident off the west coast of England. The cause of the accident has not yet been ascertained as it is still under investigation by the Air Accidents Investigation Branch. For additional details, see page 13, “Helicopter Accident“.

In fiscal 2007, approximately 70% of flying revenue in this segment was derived from long-term contracts. The major customers in this segment during fiscal 2007 included Apache, bp, TotalFinaElf, Maersk, Statoil, Nexen, Marathon, Tullow Oil, Perenco UK Limited and the Irish Coast Guard.

During and subsequent to fiscal 2007 the Company was awarded the following new contracts and contract renewals:

•	a contract renewal by the Irish Minister for Transport for the continued provision of marine SAR services in Ireland from July 2007 to July 2010, plus three option years.

•	a three-year contract and two five-year contracts by Statoil for the provision of helicopter services in the Norwegian Sea commencing in mid-2007.

•	a four-year contract renewal by Apache North Sea Limited for the provision of helicopter services in support of Apache’s offshore operations. The contract commenced on September 1, 2006 and is supported by a Sikorsky S92 aircraft.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

•

a three-year contract (plus two option years) by TOTAL E&P Norge AS for the provision of helicopter transportation services from Stavanger and Kristiansund, Norway, commencing in early 2008. A Eurocopter EC225 will be deployed on the contract. The contract is expected to generate annual revenue of approximately $9.0 million.

•

two major contracts by Statoil ASA, Norway for provision of helicopter services in the Norwegian Sea. The Company believes that this is the largest bundle of helicopter services contracts ever awarded, with a total value of approximately $1.1 billion, over the fixed and option periods. The contract details are as follows:

A five-year contract for the provision of five Sikorsky S-92 and two Eurocopter EC225 aircraft in support of Statoil's offshore operations based out of Floroe and Bergen, Norway, plus an additional back-up Eurocopter AS332L2 in Bergen. The operation in Floroe will commence in June 2009 and the contract in Bergen in January 2010. The contract includes options for up to four additional years.

A seven-year contract for the provision of two all-weather Search and Rescue EC225 aircraft. One helicopter will be based at Statoil's Statfjord field in the North Sea, and the other in Bergen as back-up for this service. Commencing in March 2009, the contract includes options for up to four additional years.

•	a five-year contract renewal by Statoil for the provision of helicopter services in support of Statoil’s offshore operations. The contract will commence on July 1, 2009 and is anticipated to generate up to $170 million over the five-year extension period.

•	a five-year contract renewal by GDF Production Nederland BV in Den Helder. The contract was renewed in June 2007 and is expected to generate revenue of approximately $55 million over the five-year extension period.

Heli-One

The Heli-One segment includes helicopter repair and overhaul facilities in Norway, Canada, Australia, Africa, the US and the UK, providing helicopter repair and overhaul services for the Company’s fleet and for a growing external customer base in Europe, Asia and North America. As well, Heli-One performs composite aerospace component manufacturing.

External Revenue by Type - Heli-One	External Revenue by Customer - Heli-One

The following table provides annual financial information (in thousands of Canadian dollars) on Heli-One fleet and repair & overhaul activities (without adjusting for the impact of FX).

	Fleet						R&O						Total
	Fiscal 2007			Fiscal 2006			Fiscal 2007			Fiscal 2006			Fiscal 2007			Fiscal 2006
Revenue
External
PBH/R&O	$	-		$	-		$	130,878		$	106,104		$	130,878		$	106,104
Lease		21,338			12,882			-			-			21,338			12,882
Other(i)		-			-			28,397			26,682			28,397			26,682
Total		21,338			12,882			159,275			132,786			180,613			145,668
Internal
PBH/R&O		-			-			210,098			194,915			210,098			194,915
Lease		181,200			150,855			-			-			181,200			150,855
Other(i)		-			-			222			9,243			222			9,243
Total		181,200			150,855			210,320			204,158			391,520			355,013
Total Revenue		202,538			163,737			369,595			336,944			572,133			500,681

Direct costs(ii)		(18,839	)		(19,872	)		(280,120	)		(251,334	)		(298,959	)		(271,206	)
Segment EBITDAR(ii)		183,699			143,865			89,475			85,610			273,174			229,475
Segment EBITDAR margin		90.7	%		87.9	%		24.2	%		25.4	%		47.7	%		45.8	%
Aircraft lease and associated costs(ii)		(87,217	)		(60,685	)		-			-			(87,217	)		(60,685	)
Segment EBITDA(ii)	$	96,482		$	83,180		$	89,475		$	85,610			185,957			168,790
Segment EBITDA margin		47.6	%		50.8	%		24.2	%		25.4	%		32.5	%		33.7	%
Amortization														(56,474	)		(44,363	)
Restructuring (costs) recovery														991			(7,445	)
Loss on disposal of assets														(2,769	)		(685	)
Operating income													$	127,705		$	116,297

(i)	Other consists of Composites, Heli-One Components B.V. and the recently sold trading surplus business.

(ii)	See Note 25 to the Company’s restated fiscal 2007 audited consolidated financial statements.

Heli-One’s third-party revenue for fiscal 2007 was $180.6 million, of which approximately 49% was derived from long term contracts, compared to $145.7 million in fiscal 2006. The $34.9 million increase in third-party revenue was due to increases in both fleet and R&O revenue totalling $37.4 million, partially offset by an unfavourable FX impact of $2.5 million. External fleet revenue has increased $8.5 million (without adjusting for the impact of FX) due to incremental lease revenue on a larger fleet, including new leasing contracts in Mexico and the US. External R&O revenue has increased by $26.5 million (without adjusting for the impact of FX) due to an increase in customer flying hours, new PBH contracts in Malaysia and Mexico, part sales increases and an increase in base maintenance activities. Base maintenance activities increased primarily as a result of the consolidation of Heli-Dyne, which was acquired during fiscal 2007, as well as increases in third-party base maintenance work performed in Norway and Europe.

Heli-One’s internal revenues have increased by $36.5 million to $391.5 million in fiscal 2007 from $355.0 million in fiscal 2006. This increase is due to increases in both internal fleet leasing and R&O revenue. Internal fleet revenue has increased by $30.3 million, due to incremental revenue on an increase in the number and value of aircraft deployed by European Operations and Global Operations. Internal R&O revenue has increased by $6.2 million due to PBH earned on increased flying hours. Internal revenues are expected to continue to grow as Global Operations and European Operations deploy more aircraft and increase flying activity.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment EBITDAR for fiscal 2007 was $273.2 million, an increase of $43.7 million from segment EBITDAR of $229.5 million in fiscal 2006. This increase was due to increased EBITDAR of $42.4 million earned on increased activity and a favourable FX impact of $1.3 million. Segment EBITDAR from fleet leasing has increased by $39.8 million due to an increase in the number and value of aircraft in the fleet compared to fiscal 2006. Segment EBITDAR from R&O has increased by $3.9 million, primarily due to an increase in revenue, an increase in external work at improved margins and a reduction in maintenance costs primarily due to an estimated $4.0 million net credit on the planned exit from a third-party PBH maintenance program. These increases are partially offset by the sale of a non-core parts trading business during fiscal 2007. In fiscal 2006, this business contributed segment EBITDAR of $1.8 million. The development of the Boundary Bay R&O facility and expansion of in-house capabilities may result in the exit from other third-party PBH maintenance programs in the future.

Segment EBITDAR margins have improved from 45.8% in fiscal 2006 to 47.7% in fiscal 2007. This increase is due to improved margins on external R&O work and a reduction in maintenance costs as noted above.

The number of aircraft in the Heli-One fleet has increased by four aircraft to 34 aircraft at April 30, 2007 compared to fiscal 2006. The increase is due to the addition of aircraft to the fleet that are not yet deployed in the flying operations as the aircraft are undergoing post-delivery modifications and an increase in the number of aircraft leased to third-parties. Of the 34 aircraft in the Heli-One fleet, five aircraft are undergoing post-delivery modifications, two are undergoing major inspections, 19 aircraft are leased to third parties and eight aircraft are available for sale.

Operating income for fiscal 2007 was $127.7 million, an increase of $11.4 million from operating income of $116.3 million in fiscal 2006. This increase was due primarily to an increase in segment EBITDAR and a favourable FX impact of $3.2 million. These increases are partially offset by an increase in external lease charges of $30.1 million and an increase in amortization of $12.1 million. Amortization increased over fiscal 2006 due to an increase in spares (rotables), base maintenance capitalized costs and the increased value of aircraft in the fleet. External lease charges increased due to an increase in the percentage of leased aircraft in the fleet and an increase in the interest component of lease expense.

The Company continues to develop its Heli-One operations in anticipation of growth opportunities in this segment. The Company has 71 aircraft (34 heavy and 37 medium aircraft) on order, expected to be delivered over the next five years. The Company expects that the majority of these aircraft will be used internally to support continued growth. Significant opportunities also exist from the continued development of Heli-One’s North American R&O facilities through the establishment of the 240,000 square foot R&O facility at Boundary Bay Airport in Delta, BC, Canada expected to be completed in the fourth quarter of fiscal 2008 and the acquisition of Heli-Dyne in the US during fiscal 2007.

During and subsequent to fiscal 2007 the Company announced the following contracts and contract renewals:

•

a five-year helicopter lease and maintenance contract, plus two option years, with AB Norrlandsflyg of Sweden commencing in January 2008. Heli-One will provide Norrlandsflyg with two new Sikorsky S76C++ helicopters in SAR configuration and will support the helicopters’ major components through a PBH maintenance agreement. Norrlandsflyg will operate the aircraft in a SAR capacity for the Swedish Maritime Agency.

•	contracts with major European Air Forces as follows:

1.	Modifications to twelve Royal Norwegian Air Force Bell 412SP helicopters and upgrades to a further six 412 helicopters form SP to HP models. Work will be carried out in 2007 and 2008.

2.	S-61A fleet support for Royal Danish Air Force, including C-inspections, component repair and overhaul, and personnel support.

3.	Phase inspections on two Royal Netherlands Air Force AS532U1 Cougar helicopters (with options for a further five inspections) to be performed at Royal Netherlands Air Force facilities in Woensdrecht.

•

a contract with Eurocopter for the purchase of 16 new EC225 helicopters. Total value of the contract is approximately $430 million. These aircraft are expected to be delivered between fiscal 2008 and fiscal 2012. The Company plans to use these aircraft in support of new offshore oil and gas contracts and potentially as SAR aircraft to meet the unprecedented demand from various customers in both the offshore oil and gas industry and government sponsored SAR. The EC225 fleet will be fully supported by Heli-One who will provide total maintenance, repair and overhaul support for the advanced EC225. Heli-One has been granted an exclusive license to perform R&O on EC225 components.

Subsequent to April 30, 2007, the Company announced the completion of the sale of Survival-One, the Company’s Aberdeen-based, non-core operating unit engaged in the manufacture, repair and distribution of cold-water survival suits and other safety equipment, for gross proceeds of approximately $37 million. A gain on sale of Survival-One of approximately $18 million will be recorded in the first quarter of fiscal 2008, subject to any post-closing adjustments.

Corporate and Other Segment

Corporate segment EBITDAR of $(41.3) million in fiscal 2007 decreased by $13.7 million from fiscal 2006. This decrease is due to increased costs of $15.1 million, partially offset by a favourable FX impact of $1.4 million. The increase in costs of $15.1 million from fiscal 2006 is due primarily to $8.9 million incurred during fiscal 2007 relating to the Company’s SOX Section 404 project. In addition, contract settlement costs of $3.1 million were incurred during the year and there was an increase in professional fees of $7.4 million relating to external audit, consulting and other fee increases. These increases are partially offset by a reduction in variable compensation costs of $1.7 million and a reduction in claim reserves for various insured risks of $1.3 million compared to fiscal 2006.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Cash flows from operations of $26.2 million (2006 - $32.1 million) consisted of $41.0 million in net earnings from continuing operations plus various items not involving cash and long-term receivables increases of $17.3 million due to the build-up of operating capability for BHS in Brazil. This is partially offset by a change in non-cash working capital of $37.2 million.

The change in non-cash working capital was impacted by the following items:

•

An increase in receivables of $50.8 million over the prior year primarily related to an increase in trade receivables from increased activity and an increase in non-trade receivables of $10.9 million related to the sale of an aircraft to a lessor. Days sales in trade receivables decreased from 69 days at April 30, 2006 to 66 days at April 30 2007, which was offset by an increase in trade receivables of $47.4 million resulting from an increase in activity.

•	An increase in inventory of $39.9 million over the prior year due to the introduction of 40 aircraft, increases in safety stock at bases throughout the world to improve aircraft serviceability, and increased base maintenance related to the acquisition of Heli-Dyne in fiscal 2007.

•	An increase in prepaid expenses of $30.4 million over the prior year largely related to the advancement of approximately $25 million of security deposits related to future lease transactions.

•	An increase in payables and accruals of $83.9 million over the prior year mainly related to approximately $40 million in final balances owing on recent aircraft purchases and overall increased activity.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company believes that it will be able to generate sufficient cash flow to meet its current and future working capital, capital expenditure and debt obligations. As at April 30, 2007 the Company had unused borrowing capacity under its credit facilities of $38.3 million (April 30, 2006 - $147.1 million) and cash and cash equivalents of $89.5 million (April 30, 2006 - $26.3 million), for a total of $127.8 million (April 30, 2006 - $173.4 million). The Company does not expect any material changes to its future working capital requirements other than possible changes caused by major acquisitions and continued fleet expansion. The Company’s growth strategy includes the pursuit of various acquisition targets. It is expected that acquisitions would be largely debt financed. The Company does not expect to use sale-leaseback transactions from the sale of long-term currently owned aircraft as a source of liquidity. Sale-leaseback transactions are used by the Company as a cost effective way to finance new aircraft. Aircraft are sometimes acquired over an extended period through deposits and then sold and leased back shortly after acquisition.

There are no material or legal restrictions on the ability of the Company to obtain cash from its subsidiaries. Certain jurisdictions that the Company operates in give rise to practical restrictions on the ability of the Company to obtain cash from its subsidiaries due to central banking legislation in these jurisdictions. These restrictions have not and are not expected to have an impact on the Company’s ability to meet its obligations. There are no material trends and no expected material fluctuations in the Company’s liquidity position. The Company is not aware of any balance sheet conditions, income items or cash flow items that could have a material impact on its liquidity. There are also currently no liquidity problems associated with the Company’s financial instruments. However, changes in FX rates affect the fair market value of currency swaps into which the Company has entered in connection with hedging its net investment in its self-sustaining foreign operations. It is possible that such changes in the fair market value of these financial instruments could be material. See page 32, “Financial Instruments“.

Financing Activities

Cash flow from financing activities was $207.3 million for fiscal 2007, compared to $76.5 million for fiscal 2006. Total debt increased by $216.5 million during the year from $624.1 million at April 30, 2006 to $840.6 million at April 30, 2007. The $216.5 million increase was comprised of an increase in debt of $220.5 million offset by favourable FX of $4.0 million.

During fiscal 2007, the Company negotiated increases in capacity of its two existing operating lease facilities and added a third facility with a major European bank, creating new operating lease capacity of US $235 million (approximately $260 million). These facilities provide the Company with operating flexibility including the ability to move aircraft among countries within agreed limits, as long as pre-negotiated percentages of limits of facility value are maintained in primary and non-primary jurisdictions. During fiscal 2007, the Company entered into financing transactions on 29 aircraft related to these facilities.

During the third quarter of fiscal 2007, the Company reclassified the outstanding balance under the senior revolving credit facility to “Current portion of debt obligations” in the consolidated financial statements, as the facility is due for renewal in December 2007. The Company is currently in discussions with financiers to renew the facility and does not anticipate any obstacles in the renewal.

To minimize the impact of foreign exchange on its cash flows, the Company has denominated its debt in various currencies to more closely match net operating cash flows with debt service obligations. See page 32, “Financial Instruments”. At April 30, 2007 the Company’s total net debt was denominated in the following currencies:

Currency		Debt in functional currency (millions)		Canadian equivalent (millions)
UK pound sterling	£		9.6	$	21.2
Euro	€		33.2		50.2
Canadian dollar	$		164.2		164.2
US dollar	USD	505.0			558.9
Norwegian kroner	NOK	240.0			44.7
Brazilian real	BRL	2.7			1.4
Cash (various currencies)					(89.5	)
Total net debt				$	751.1

The terms of certain of the Company’s debt agreements and helicopter lease agreements impose operating and financial limitations on the Company. Such agreements limit, among other things, the Company’s ability to incur additional indebtedness, create liens, make capital expenditures, sell or sublease assets, engage in mergers or acquisitions and make dividend and other payments. The Company’s ability to comply with any of the foregoing limitations and with loan repayment provisions will depend on future performance. This will be subject to prevailing economic conditions and other factors, some of which may be beyond the Company’s control. At April 30, 2007 the Company was, and continues to be, in compliance with all covenants, all requirements for the payment of interest and principal and all other conditions imposed by its debt and lease agreements.

During fiscal 2007 the Company declared an annual dividend of $0.50 payable quarterly on each Class A subordinate voting share and Class B multiple voting share (approximately $21.9 million). Of this, dividends totalling $10.6 million were paid by April 30, 2007. During fiscal 2006, the Company declared an annual dividend of approximately $17.1 million or $0.40 per share, $8.5 million of which was paid in fiscal 2006 with the remaining $8.6 million paid in fiscal 2007. There have been no defaults or arrears in dividend payments.

Cash generated by Class A subordinate voting share issues under the employee share purchase plan and the employee stock option plan was $6.3 million during fiscal 2007 (2006 - $0.5 million). This is primarily related to the exercise of 792,000 options into 1,584,000 Class A subordinate voting shares for cash proceeds of $5.6 million.

At April 30, 2007, long-term debt (including current portion) totalled $840.6 million (2006 - $624.1 million) and shareholders’ equity totalled $551.3 million (2006 - $490.7 million). The long-term debt to equity ratio was 1.5:1 at April 30, 2007, compared to 1.3:1 at April 30, 2006.

Investing Activities

Cash used for investing activities was $169.3 million in fiscal 2007. Property and equipment additions of $393.2 million were comprised of (i) $245.3 million for the purchase of 35 helicopters (five aircraft purchased off-lease), including 24 that were subsequently leased through sale-leaseback transactions, (ii) $18.1 million for aircraft modifications, (iii) $39.4 million related to buildings and other equipment; and (iv) $90.4 million related to investments in spare parts (rotables) to support the Company’s existing fleet and additional aircraft and new aircraft types. The aircraft expenditures of $245.3 million consisted of aircraft purchases of $330.4 million less the application of deposits on these aircraft of $85.1 million. The Company advanced new aircraft deposits during the year of $87.6 million toward future aircraft purchases. The Company novated certain of its aircraft purchases to lessors during the year and has been reimbursed $40.9 million in deposits from aircraft manufacturers resulting in net payments of aircraft deposits of $46.7 million.

Capital expenditures during fiscal 2007 for helicopter major inspections totalled $30.1 million. These expenditures were financed from net proceeds totalling $318.3 million, primarily from proceeds received on 28 sale-leaseback transactions and the disposal of 13 aircraft.

Cash used for investing activities was $124.2 million in fiscal 2006. Property and equipment additions in fiscal 2006 of $280.7 million were comprised of (i) $177.2 million for the purchase of 20 helicopters, including 12 that were subsequently leased through sale-leaseback transactions, (ii) $12.6 million for aircraft modifications, (iii) $67.1 million for major spares and repairable parts, (iv) $3.6 million in connection with the construction of buildings and hangars, and (v) $20.2 million for ground equipment, vehicles, a simulator and office furniture and fixtures. The aircraft expenditures of $177.2 million consisted of aircraft purchases of $264.9 million less the application of deposits on these aircraft of $87.7 million. The Company advanced new aircraft deposits during the year of $125.0 million toward future aircraft purchases.

Capital expenditures during fiscal 2006 for helicopter major inspections totalled $23.6 million. These expenditures were financed from proceeds received on property and equipment dispositions and from operating cash flow. Proceeds from disposals during fiscal 2006 totalled $313.7 million. These proceeds were composed of $209.8 million received in connection with 21 aircraft sale-leaseback transactions and the disposal of four additional aircraft, $95.5 million received on the sale of long-term investments, and $8.4 million received from other dispositions.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company had no other material capital expenditure commitments at April 30, 2007 other than commitments to take delivery of aircraft as discussed previously in the MD&A. See page 13, “Fleet - Commitments to Acquire New Aircraft.“ See also Note 26 to the Company’s restated fiscal 2007 audited consolidated financial statements. Aircraft and other assets required to accommodate future growth will be purchased with funding from operations and/or additional debt, or will be leased under operating lease arrangements.

FINANCIAL INSTRUMENTS

Primary Financial Instruments

The carrying values of the primary financial instruments for the Company, with the exception of the Company’s senior subordinated notes, substantially approximate fair value due to the short-term maturity and/or other terms of those instruments.

The fair value of the senior subordinated notes is based on quoted market prices. The fair value of these debt instruments is as follows (in millions of Canadian dollars):

	2007					2006
	Fair Value		Carrying Value			Fair Value		Carrying Value
Senior subordinated notes (7⅜%)	$	429.4		$	442.7	$	454.3		$	448.1

Derivative Financial Instruments Used for Risk Management

The Company regularly enters into forward foreign exchange contracts, equity forward pricing agreements and other derivative instruments to hedge the Company’s exposure to expected future cash flows from foreign operations and anticipated transactions in currencies other than the Canadian dollar. The Company does not enter into derivative transactions for speculative or trading purposes.

The Company has designated its US $400.0 million 7⅜% senior subordinated notes and related forward foreign currency contracts as effective hedges of the Company’s net investments in certain self-sustaining operations in Canada, the UK, the Netherlands, and Norway. The Company has also designated other pound sterling and euro denominated debt as hedges of its net investments in its self-sustaining operations in the UK, the Netherlands, and Canada respectively. As a result of these effective hedging relationships, revaluation gains and losses on the debt, net investments and currency swaps are offset in the foreign currency translation adjustment account in the equity section of the balance sheet in accordance with Canadian GAAP at April 30, 2007.

The nature, maturity, notional amount and fair market value of the Company’s derivatives used in risk management activities as at April 30, 2007 are as follows:

Hedging Item	Maturity		Notional amount (millions)		Fair market value Gain (loss) (millions)
Forward foreign exchange contracts
Sell US dollar; buy Canadian dollar	Various	$		118.0	$	5.0
Sell pound sterling; buy euro	Various	€		30.5		(1.2	)
Sell Norwegian kroner; buy pound sterling	May 2007	£		12.4		-
Sell Norwegian kroner; buy Australian dollar	May 2007	AUD	28.0			-
Sell Norwegian kroner; buy euro	May 2007	€		26.9		-
Sell Canadian dollar; buy euro	May 2007	€		2.7		-
Sell Brazilian real; buy US dollar	May 2007	USD	28.0			0.1
Sell Canadian dollar; buy Norwegian kroner	May 2007	NOK	150.0			(0.2	)
Sell Canadian dollar; buy US dollar	June 2007	USD	150.0			(0.2	)
					$	3.5

Credit Risk on Financial Instruments

Credit risk on financial instruments arises from the potential for counterparties to default on their contractual obligations and is limited to those contracts where the Company would incur a loss in replacing the instrument. The Company limits its credit risk by dealing only with counterparties that possess investment grade credit ratings.

Interest Rate Risk

The Company has used interest rate swap agreements in the past in order to achieve an appropriate mix of fixed and variable interest rate debt. The Company’s current exposure to interest rates is such that fixed and variable rates are appropriately balanced at April 30, 2007 without the use of interest rate derivative instruments.

OFF-BALANCE SHEET ARRANGEMENTS

In addition to the derivatives noted above, the Company has entered into guarantees and leasing arrangements that can be considered as off-balance sheet arrangements.

The Company has provided guarantees to certain lessors in respect of operating leases. If the Company fails to meet the senior credit facilities' financial ratios or breaches any of the covenants of those facilities and, as a result, the senior lenders accelerate debt repayment, the leases provide for a cross-acceleration that could enable the lessors and financial institutions that are lenders to those lessors the right to terminate the leases and require return of the aircraft and payment of the present value of all future lease payments and certain other amounts. If the realized value of the aircraft is insufficient to discharge the obligations due to those lessors in respect of the present value of the future lease payments, those lessors’ lenders could obtain payment of that deficiency from the Company under these guarantees.

The Company has provided limited guarantees to third parties under some of its operating leases relating to a portion of the aircraft values at the termination of the leases. The leases have terms expiring between fiscal 2008 and 2016. The Company’s exposure under the asset value guarantees including guarantees in the form of junior loans, rebateable advance rentals and deferred payments is approximately $86.4 million (2006 - $60.8 million). The resale market for the aircraft types for which the Company has provided guarantees remains strong, and as a result, the Company does not anticipate incurring any liability or loss with respect to these guarantees.

The Company has provided guarantees to certain lessors in respect of novated aircraft purchase contracts. Under these contracts, if the manufacturer fails to meet specified delivery terms or becomes insolvent prior to aircraft delivery, the Company may be required to reimburse the lessor for amounts paid by the lessor to the aircraft manufacturer. Under either scenario, the Company has recourse against the aircraft manufacturer. Once aircraft are delivered under the novated aircraft purchase agreements, the Company no longer has an obligation under these guarantees. The Company’s maximum exposure under the guarantees in the novated aircraft purchase agreements at April 30, 2007, was approximately $179.5 million (April 30, 2006 - $nil). The Company does not anticipate incurring any liability or loss with respect to these guarantees.

At April 30, 2007 the Company operated 16 aircraft (2006 - 19 aircraft) under operating leases with four entities that would be considered variable interest entities (“VIEs”) under Canadian and US GAAP. These leases have terms and conditions similar to those of the Company’s other operating leases over periods ranging from fiscal 2010 to 2014. The Company has concluded that it is not the primary beneficiary of any of the aforementioned VIEs and that it is not required to consolidate any of these VIEs in its consolidated financial statements.

Based on appraisals by independent helicopter valuation companies as at April 30, 2007, the estimated fair market value of the aircraft leased from VIEs is $94.3 million (2006 - $134.1 million). The Company has provided junior loans and loans receivable in connection with operating leases with these VIEs. The Company’s maximum exposure to loss related to the junior loans and loans receivable as a result of its involvement with the VIEs is $14.4 million (2006 - $17.7 million).

CONTRACTUAL OBLIGATIONS

The following table contains a summary of the Company’s obligations and commitments to make future payments under contracts, including debt, lease and purchase agreements at April 30, 2007. Additional information is contained in Notes 14 and 26 to the Company’s restated fiscal 2007 audited consolidated financial statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Payments due by period

(in millions of Canadian dollars)

Contractual obligations	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Long-term debt	$	397.9	$	333.7	$	41.5	$	9.6	$	13.1
Senior subordinated notes (7⅜%)		442.7		-		-		-		442.7
Operating lease (aircraft)		556.3		103.4		187.5		151.7		113.7
Operating lease (other)		44.6		5.7		9.0		7.5		22.4
New aircraft commitments		837.1		295.5		474.2		67.4		-
Total contractual obligations	$	2,278.6	$	738.3	$	712.2	$	236.2	$	591.9

DEFINED BENEFIT PENSION PLANS

Approximately 33% of the Company’s active employees are covered by defined benefit pension plans. At April 30, 2007, the Company had a net unfunded deficit of $23.6 million relating to defined benefit pension plans that are required to be funded, compared to $28.0 million at April 30, 2006, a decrease of $4.4 million. Of the $23.6 million unfunded deficit at April 30, 2007, $37.6 million, $5.2 million, and $2.7 million were related to plans in the UK, the Netherlands and Norway, respectively. These deficits were offset by a surplus of $21.9 million in one of the Norwegian plans. In addition, at April 30, 2007, the Company had a deficit of $53.6 million related to plans that do not require funding, compared to a deficit of $46.2 million for those plans at April 30, 2006.

The unfunded deficit relating to funded plans decreased during fiscal 2007 primarily due to decreases in estimated benefit obligations mainly resulting from increases in the discount rates used and a positive FX impact.

Pension expense for fiscal 2007 was $20.9 million, compared to $27.9 million for fiscal 2006. The primary reasons for the $7.0 million decrease in pension expense from fiscal 2006 to fiscal 2007 were an $8.7 million increase in the return on plan assets and a $3.1 million decrease in the amortization of net actuarial and experience losses.

During the year ended April 30, 2007, a plan amendment resulted in a $2.3 million increase in the benefit obligation of the Norwegian plan. This amendment arose as a result of legislation in Norway that requires certain variable pay amounts to be included in pensionable earnings.

While the asset mix varies in each plan, overall the asset mix was 48% equities, 37% fixed income and 15% money market as at April 30, 2007.

SHARE DATA

The Company’s share capital as at April 30 was comprised of the following:

	Number of Shares				Consideration
(amounts in thousands)	2007		2006		2007			2006
Class A subordinate voting shares		39,858		36,860	$	235,346		$	223,241
Class B multiple voting shares		5,863		5,861		18,413			18,413
Ordinary shares		22,000		22,000		33,000			33,000
Ordinary share loan		-		-		(33,000	)		(33,000	)
Class A subordinate voting employee share purchase loans		-		-		(1,254	)		(1,502	)
					$	252,505		$	240,152
Contributed surplus					$	5,042		$	4,363

Class A subordinate voting shares that would be issued upon conversion of the following:
					2007			2006
Class B multiple voting shares						5,863			5,861
Stock options						2,232			3,819
Convertible debt						-			1,379

The Class A subordinate voting shares carry the right to one vote per share and the Class B multiple voting shares carry the right to 10 votes per share. Each single Class B multiple voting share may be converted into a single Class A subordinate voting share at the option of the shareholder. In all other respects the Class A subordinate voting shares rank equally and ratably with the Class B multiple voting shares.

The Company has issued 22 million ordinary shares to a company owned by its majority shareholder for subscriptions of $33.0 million. Concurrently, to fund the subscriptions for the ordinary shares, the Company made a non-interest bearing loan to the purchaser, payable on demand and the Company has a lien on the ordinary shares issued. The ordinary shares entitle the holder thereof to (i) one vote for every 10 ordinary shares held; (ii) dividends equivalent on a per share basis to any dividend paid on the Company’s Class A subordinate voting shares and Class B multiple voting shares, subject to prior minority shareholder approval; and (iii) receive a share of the residual of the Company, on a liquidation or winding-up, equal, on a share for share basis, to the amount received by a holder of a Class A subordinate voting share or a Class B multiple voting share. The ordinary shares are redeemable at the option of the Company at the subscription price thereof in certain circumstances (see Note 23 to the Company’s restated fiscal 2007 audited consolidated financial statements).

The Company’s Class A subordinate voting employee share purchase loans are non-interest bearing, full recourse loans and have, as collateral, a pledge of the related shares purchased with a fair market value of $14.5 million as at April 30, 2007. As a result, the employee share purchase loans, of $1.3 million at April 30, 2007 (2006 - $1.5 million), are deducted from shareholders’ equity. Payments equal to 5% of the original loan principal are required on each loan anniversary date with the balance payable on the tenth anniversary. Upon termination of employment, the loans are required to be repaid within 60 days.

During the first two months of fiscal 2008, the Company issued 14,867 Class A subordinate voting shares for consideration of approximately $0.4 million.

SEASONALITY

See page 20, “Results of Operations - Quarterly Information” for discussion on the impacts of seasonality.

RISKS AND UNCERTAINTIES

The following is a summary of the Company’s significant business risks. The risks described below are not the only ones faced by the Company. Additional risks may impair its business operations. The Company’s business, results of operations, or financial condition could be materially adversely affected if any of these risks materialize.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Dependent on the Level of Activity in the Oil and Gas Industry

The Company’s operations are largely dependent upon the level of activity in the oil and gas industry. To varying degrees these activity levels are affected by trends in oil and gas prices. Historically, the prices for oil and gas have been volatile and are subject to wide fluctuations in response to changes in the supply of and demand for oil and gas, market uncertainty and a variety of additional factors beyond the Company’s control. The Company cannot predict future oil and gas price movements. Any prolonged reduction in oil and gas prices could depress the level of helicopter activity in support of exploration and to a lesser extent, production activity and, therefore, have a material adverse effect on the business, financial condition and results of operations. For the fiscal years ended April 30, 2007 and 2006 revenue generated by helicopter transportation services for the oil and gas industry was 70% of the Company’s total revenue.

Cost Reduction Methods Undertaken by Oil and Gas Companies

Companies in the oil and gas production and exploration sector continually seek to implement measures aimed at greater cost savings, including helicopter support operations. For example, companies have reduced manning levels on both old and new installations by using new technology to permit unmanned installations. The implementation of such measures could reduce the demand for helicopter transportation services and have a material adverse effect on the business, financial condition and results of operations.

Competitive Markets

CHC HELICOPTER CORP 6-K/A