PHI Reports Loss for 2006

PHI, Inc. late Thursday reported a net loss of $0.7 million ($0.05 per diluted share) on operating revenues of $413.1 million for the year ended December 31, 2006, compared to net earnings of $14.2 million ($1.76 per diluted share) on operating revenues of $363.6 million for the year ended December 31, 2005.

The current year's results include a charge for debt restructuring of $12.8 million, as well as reduced revenue and increased costs related to the pilots' strike which commenced September 20, 2006. These items are more fully discussed in our Form 10-K.

Operating revenues for 2006 were $413.1 million compared to $363.6 million for 2005, an increase of $49.5 million. Domestic Oil and Gas operating revenues increased $28.4 million due primarily to customer requirements for additional aircraft, and contractual rate increases. Operating revenues in the Air Medical segment increased $21.3 million, or 19%, due to the additional operations established during 2005 that were in operation for a full year in 2006. Although Domestic Oil and Gas and Air Medical segments reflected increased revenues compared to 2005, both segments were adversely affected by the pilots' strike.

As previously reported, the pilots represented by the OPEIU (the Office and Professional Employees International Union) commenced a general strike on September 20, 2006 affecting both the Domestic Oil and Gas and Air Medical segments. Approximately 236 pilots initially participated in this strike, out of a total pilot work force of 597. On November 10, 2006, the OPEIU notified the Company that it was ending the strike, purportedly offering an "unconditional" return to work of the remaining striking pilots.

To date, 196 of 236 striking pilots (83%) have been rehired or have taken themselves out of consideration for continued employment. In addition to processing the remaining striking pilots back to work, we continue to hire additional pilots. That process was interrupted November 10, 2006, when the union announced that the striking pilots would return to work unconditionally, but in early January 2007, we again commenced hiring pilots based on increasing needs due to new aircraft deliveries. As of February 28, 2007, the pilot work force was 648, compared to a total pilot work force on the date the strike commenced of 597. Continuing legal issues related to the pilots' strike are more fully discussed in our Form 10K.

In the fourth quarter of 2006, operating revenues were $95.3 million compared to operating revenues of $102.6 million in the same quarter of 2005. The net loss in the fourth quarter 2006 was $5.3 million, or $0.34 per share diluted share, compared to net earnings of $6.4 million or $0.62 per diluted share in the fourth quarter of 2005. There were 4.9 million more shares outstanding at December 31, 2006 than were outstanding at December 31, 2005.

PHI provides helicopter transportation and related services to a broad range of customers including the oil and gas industry, air medical industry and also provides third-party maintenance services to select customers.


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