Offshore transport giant CHC has entered into a conditional agreement to acquire Babcock International’s oil-and-gas aviation business, the two companies have announced.

Headquartered in Aberdeen, U.K., Babcock’s oil-and-gas division provides offshore crew transportation services in the U.K., Denmark and Australia. It employs more than 500 people and has a fleet of around 30 aircraft.

Few details have been released at this point — including the fee — but Babcock will keep hold of its other aviation business divisions: defense and emergency services (which spans emergency medical services, search-and-rescue, and firefighting). The deal is expected to close in the second quarter of 2021.

The move represents the latest consolidation of fleet operators in the struggling offshore market, following on from Bristow’s merger with Era last year.

The announcement isn’t totally unexpected — Babcock had been public in the difficulties it was facing in its oil-and-gas business over the last 18 months.

In a February 2020 trading update, Babcock’s then-CEO Archie Bethel detailed a wide-ranging restructuring of its oil-and-gas business in response to market challenges, adding that “we don’t intend to invest further, or stay in that market.”

He said the pressure on the business was caused by tougher competition, with Bristow, CHC and PHI all emerging from Chapter 11 bankruptcy protection with reduced debts and written down assets.

“This is effectively resetting global market pricing levels,” he explained.

Then, in a quarterly earnings call with investors in November 2020, Babcock group finance director Franco Martinelli described the company’s civil aviation business as its “main weakness.”

“Oil-and-gas is a tough breakeven market in normal times, but the lower flying hours that Covid-19 created led to a loss in the period,” he said “Covid-19 had a range of impacts from lower flying hours through to additional costs such as PPE and refitting aircraft. It also reduced efficiency, for example, with reduced aircraft capacity.”

As of June 2020, Babcock had substantially reduced its fleet, retiring leases on seven of 16 S-92s and five of six EC225s.

Among its more recent offshore contract wins was the 2019 award of a five-year agreement to fly two AW139s offshore for Santos in Australia; and a five-year contract for more than 100 flights a month to offshore rigs from Sumburgh, Shetland, for EnQuest, TAQA and CNR International.