Ground-based electrical and electromagnetic methods are used systematically for quantitative hydrogeologic investigations in Denmark. In recent years, a desire for faster and more cost-efficient methods has led to growing interest in the possibility of using airborne systems, and in 2001 a number of test flights were performed using a frequency-domain, helicopter-borne electromagnetic (HEM) system. We perform a theoretical examination of the resolution capabilities of the applied system. Quantitative model parameter analyses show that the system only weakly resolves conductive, near-surface layers but can resolve layer boundary to a depth of more than 100 m. Modeling experiments also show that the effect of altimeter errors on the inversion results is serious. We suggest a new interpretation scheme for HEM data founded solely on full nonlinear 1D inversion and providing layered-earth models supported by datamisfit parameters and a quantitative model-parameter analysis. The backbone of the scheme is the removal of cultural coupling effects followed by a multilayer inversion that in turn provides reliable starting models for a subsequent few-layer inversion. A new procedure for correlation in the model space ensures model sections with slow lateral variations in resistivity, normally assumed in sedimentary environments. A field example from a Danish survey demonstrates that the interpretation scheme can produce satisfactory results within the limitations of the system.