UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



		Form 10-Q



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended ~~December 31, 2018~~September 30, 2019



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to



	Commission File Number 001-31617
	Bristow Group Inc.
	(Exact name of registrant as specified in its charter)



Delaware		72-0679819
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

~~2103 City West Blvd.,~~3151 Briarpark Drive, 4^th ~~Floor~~Suite 700 Houston, Texas		77042 (Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:

(713) 267-7600



			None

		(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
	Title of each class		Trading ~~symbol(s)~~Symbol(s)	Name of each exchange on which registered
	~~Common Stock ($.01 par value)~~None		~~N/A~~None	None⁽¹⁾
	~~_______~~
	⁽¹⁾~~Prior to May 13, 2019, the registrant’s common stock was traded on the New York Stock Exchange.~~

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes þ No

Indicate by check mark whether the ~~number shares outstanding of each~~registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the ~~issuer’s classes~~Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.



þ Yes o No

Pursuant to an Amended Joint Plan of Reorganization (as modified, the “Plan”), Bristow Group Inc.’s existing common stock, par value $0.01 (the “Existing Common Stock”) was cancelled as of October 31, 2019. On October 31, 2019, Bristow Group Inc. issued common stock, par value $0.0001 (the “New Common Stock”), and preferred stock, par value $0.0001 (the “New Preferred Stock”), under the Plan pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended, under Section 1145 of Chapter 11 of Title 11 of the United States Code and Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder. As of November 30, 2019, there were 11,235,535 shares of New Common Stock ~~as of~~ ~~June 14, 2019~~.

~~35,918,916~~outstanding and 6,824,582 shares of ~~Common~~New Preferred Stock ~~$.01 par value~~outstanding.

BRISTOW GROUP INC.

INDEX — FORM 10-Q



		Page
PART I
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5767
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	93106
Item 4.	Controls and Procedures	93106
PART II
Item 1.	Legal Proceedings	95109
Item 1A.	Risk Factors	95109
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~101~~109
Item 3.	Defaults Upon Senior Securities	~~101~~109
Item 4.	Mine Safety Disclosures	~~101~~109
Item 5.	Other Information	~~101~~109
Item 6.	Exhibits	~~102~~110
Signatures		~~104~~113

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

Condensed Consolidated Statements of Operations


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018

	(Unaudited) (In thousands, except per share amounts)												(Unaudited) (In thousands, except per share amounts)
Revenue:
Operating revenue from non-affiliates	$	303,206		$	328,944		$	963,252		$	991,655		$	291,348		$	321,580		$	595,478		$	660,046
Operating revenue from affiliates	13,885			16,584			39,537			51,594			13,336			11,817			25,782			23,112
Reimbursable revenue from non-affiliates	14,238			15,207			47,091			43,271			13,536			15,946			30,136			32,853
	331,329			360,735			1,049,880			1,086,520			318,220			349,343			651,396			716,011
Operating expense:
Direct cost	262,039			271,894			819,307			842,216			236,655			277,217			494,414			557,268
Reimbursable expense	13,862			14,725			44,960			42,365			12,840			15,194			28,974			31,098
Prepetition restructuring charges													—			—			13,476			—
Depreciation and amortization	30,615			31,682			92,045			94,119			31,303			30,489			62,642			61,430
General and administrative	40,742			43,366			119,682			138,695			37,820			38,839			72,590			78,940
	347,258			361,667			1,075,994			1,117,395			318,618			361,739			672,096			728,736

Loss on impairment	—			—			(117,220		)	(1,192		)	(62,101		)	(117,220		)	(62,101		)	(117,220		)
Loss on disposal of assets	(16,015		)	(4,591		)	(18,986		)	(12,418		)	(230		)	(1,293		)	(4,017		)	(2,971		)
Earnings (losses) from unconsolidated affiliates, net	780			1,996			(2,333		)	3,394
Earnings from unconsolidated affiliates, net of losses													633			1,461			2,980			(86		)
Operating loss	(31,164		)	(3,527		)	(164,653		)	(41,091		)	(62,096		)	(129,448		)	(83,838		)	(133,002		)

Interest expense, net	(27,113		)	(19,093		)	(80,690		)	(53,677		)	(22,445		)	(26,433		)	(48,766		)	(53,577		)
Other income (expense), net	(3,660		)	(736		)	(10,814		)	235
Loss before benefit (provision) for income taxes	(61,937		)	(23,356		)	(256,157		)	(94,533		)
Benefit (provision) for income taxes	(23,764		)	13,419			(5,258		)	(2,546		)
Reorganization items, net													(93,943		)	—			(170,299		)	—
Gain (loss) on sale of subsidiaries													420			—			(55,883		)	—
Other expense, net													(6,637		)	(3,204		)	(10,510		)	(7,154		)
Loss before benefit for income taxes													(184,701		)	(159,085		)	(369,296		)	(193,733		)
Benefit for income taxes													21,782			15,655			37,289			18,506
Net loss	(85,701		)	(9,937		)	(261,415		)	(97,079		)	(162,919		)	(143,430		)	(332,007		)	(175,227		)
Net (income) loss attributable to noncontrolling interests	(243		)	1,664			(827		)	2,322
Net income attributable to noncontrolling interests													(55		)	(517		)	(213		)	(584		)
Net loss attributable to Bristow Group	$	(85,944	)	$	(8,273	)	$	(262,242	)	$	(94,757	)	$	(162,974	)	$	(143,947	)	$	(332,220	)	$	(175,811	)

Loss per common share:
Basic	$	(2.40	)	$	(0.23	)	$	(7.34	)	$	(2.69	)	$	(4.54	)	$	(4.02	)	$	(9.25	)	$	(4.93	)
Diluted	$	(2.40	)	$	(0.23	)	$	(7.34	)	$	(2.69	)	$	(4.54	)	$	(4.02	)	$	(9.25	)	$	(4.93	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018

	(Unaudited) (In thousands)												(Unaudited) (In thousands)
Net loss	$	(85,701	)	$	(9,937	)	$	(261,415	)	$	(97,079	)	$	(162,919	)	$	(143,430	)	$	(332,007	)	$	(175,227	)
Other comprehensive loss:
Currency translation adjustments	(6,462		)	(57		)	(43,462		)	20,394			(12,334		)	(7,967		)	4,565			(37,000		)
Pension liability adjustment, net of tax benefit of $0.5 million, zero, $0.5 million, and zero, respectively	(2,410		)	—			(2,410		)	—
Unrealized gain (loss) on cash flow hedges, net of tax benefit (provision) of zero, zero, $0.2 million and zero, respectively	(5		)	—			1,245			—
Unrealized gain (loss) on cash flow hedges, net of tax benefit of zero, $(0.1) million, zero and $0.2 million, respectively													1,124			(98		)	1,598			1,250
Total comprehensive loss	(94,578		)	(9,994		)	(306,042		)	(76,685		)	(174,129		)	(151,495		)	(325,844		)	(210,977		)

Net (income) loss attributable to noncontrolling interests	(243		)	1,664			(827		)	2,322
Net income attributable to noncontrolling interests													(55		)	(517		)	(213		)	(584		)
Currency translation adjustments attributable to noncontrolling interests	(52		)	(17		)	(223		)	530			35			(32		)	24			(171		)
Total comprehensive (income) loss attributable to noncontrolling interests	(295		)	1,647			(1,050		)	2,852
Total comprehensive income attributable to noncontrolling interests													(20		)	(549		)	(189		)	(755		)
Total comprehensive loss attributable to Bristow Group	$	(94,873	)	$	(8,347	)	$	(307,092	)	$	(73,833	)	$	(174,149	)	$	(152,044	)	$	(326,033	)	$	(211,732	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

Condensed Consolidated Balance Sheets


	December 31, 2018			March 31, 2018			September 30, 2019			March 31, 2019
	(Unaudited)						(Unaudited)
	(In thousands)						(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	231,326		$	380,223		$	153,885		$	178,055
Restricted cash							38,910			—
Accounts receivable from non-affiliates	204,641			233,386			211,058			203,631
Accounts receivable from affiliates	13,186			13,594			17,735			13,160
Inventories	115,254			129,614			113,514			121,308
Assets held for sale	22,485			30,348			—			5,350
Prepaid expenses and other current assets	48,646			47,234			42,545			44,009
Total current assets	635,538			834,399			577,647			565,513
Investment in unconsolidated affiliates	113,974			126,170			109,986			118,203
Property and equipment – at cost:
Land and buildings	240,201			250,040			238,208			244,273
Aircraft and equipment	2,479,543			2,511,131			2,403,726			2,497,622
	2,719,744			2,761,171			2,641,934			2,741,895
Less – Accumulated depreciation and amortization	(872,201		)	(693,151		)	(963,634		)	(907,715		)
	1,847,543			2,068,020			1,678,300			1,834,180
Right-of-use assets							331,743			—
Goodwill	18,271			19,907			—			18,436
Other assets	116,418			116,506			94,899			116,267
Total assets	$	2,731,744		$	3,165,002		$	2,792,575		$	2,652,599

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	91,916		$	101,270		$	93,433		$	99,573
Accrued wages, benefits and related taxes	52,073			67,334			45,774			48,151
Income taxes payable	5,169			8,453			3,234			3,646
Other accrued taxes	5,628			7,378			7,775			6,729
Deferred revenue	9,966			15,833			6,161			11,932
Accrued maintenance and repairs	26,620			28,555			24,932			24,337
Accrued interest	18,317			16,345			2,649			17,174
Current portion of operating lease liabilities							83,630			—
Other accrued liabilities	38,692			65,978			58,434			38,679
Short-term borrowings and current maturities of long-term debt	1,421,050			1,475,438			947,041			1,418,630
Total current liabilities	1,669,431			1,786,584			1,273,063			1,668,851
Long-term debt, less current maturities	9,174			11,096			75,611			8,223
Accrued pension liabilities	28,036			37,034			18,706			25,726
Other liabilities and deferred credits	28,573			36,952			7,905			26,229
Deferred taxes	119,057			115,192			59,862			111,203
Long-term operating lease liabilities							251,399			—
Total liabilities not subject to compromise							1,686,546			1,840,232
Liabilities subject to compromise							624,867			—
Total liabilities							2,311,413			1,840,232
Commitments and contingencies (Note 8)
Stockholders’ investment:
Common stock, $.01 par value, authorized 90,000,000; outstanding: 35,798,185 as of December 31, 2018 and 35,526,625 as of March 31, 2018 (exclusive of 1,291,441 treasury shares)	385			382
Common stock, $.01 par value, authorized 90,000,000; outstanding: 35,918,916 as of September 30 and March 31 (exclusive of 1,291,441 treasury shares)							386			386
Additional paid-in capital	860,745			852,565			863,546			862,020
Retained earnings	524,846			788,834			123,378			455,598
Accumulated other comprehensive loss	(330,944		)	(286,094		)	(321,802		)	(327,989		)
Treasury shares, at cost (2,756,419 shares)	(184,796		)	(184,796		)	(184,796		)	(184,796		)
Total Bristow Group stockholders’ investment	870,236			1,170,891			480,712			805,219
Noncontrolling interests	7,237			7,253			450			7,148
Total stockholders’ investment	877,473			1,178,144			481,162			812,367
Total liabilities and stockholders’ investment	$	2,731,744		$	3,165,002		$	2,792,575		$	2,652,599

The accompanying notes are an integral part of these condensed consolidated financial statements.

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows


	Nine Months Ended December 31,						Six Months Ended September 30,
	2018			2017			2019				2018

	(Unaudited) (In thousands)						(Unaudited) (In thousands)
Cash flows from operating activities:
Net loss	$	(261,415	)	$	(97,079	)	$	(332,007	)		$	(175,227	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	92,045			94,119			62,642				61,430
Deferred income taxes	(5,848		)	(14,665		)	(45,252		)		(27,651		)
Write-off of deferred financing fees	—			1,138			4,038				—
Discount amortization on long-term debt	4,713			343			1,520				3,101
Reorganization items, net							119,333				—
Loss on disposal of assets	18,986			12,418			4,017				2,971
Loss on impairment	117,220			1,192			62,101				117,220
Loss on sale of subsidiaries							55,883			—	—
Deferral of lease payments	3,967			2,423			285				2,841
Stock-based compensation	5,651			8,776			1,526				3,714
Equity in earnings from unconsolidated affiliates less than (in excess of) dividends received	2,518			(3,185		)
Equity in earnings from unconsolidated affiliates less than dividends received							636				2,812
Increase (decrease) in cash resulting from changes in:
Accounts receivable	16,063			(3,785		)	(20,805		)		6,792
Inventories	(3,065		)	(4,618		)	(201		)		(3,785		)
Prepaid expenses and other assets	(1,571		)	10,250			(2,675		)		2,980
Accounts payable	(1,956		)	(14,540		)	12,745				7,651
Accrued liabilities	(47,390		)	(5,528		)	32,890				(26,703		)
Other liabilities and deferred credits	(8,820		)	3,434			(13,841		)		(5,048		)
Net cash used in operating activities	(68,902		)	(9,307		)	(57,165		)		(26,902		)
Cash flows from investing activities:
Capital expenditures	(33,711		)	(36,441		)	(25,950		)		(17,302		)
Proceeds from asset dispositions	9,093			48,547			5,003				8,462
Proceeds from OEM cost recoveries	—			94,463
Net cash provided by (used in) investing activities	(24,618		)	106,569
Cash transferred in sale of subsidiaries, net of cash received							(22,458		)		—
Net cash used in investing activities							(43,405		)		(8,840		)
Cash flows from financing activities:
Proceeds from borrowings	387			548,768			225,585				387
Debt issuance costs	(2,599		)	(11,653		)	(14,130		)		(2,554		)
Repayment of debt	(49,116		)	(609,667		)	(99,228		)		(29,970		)
Purchase of 4½% Convertible Senior Notes call option	—			(40,393		)
Proceeds from issuance of warrants	—			30,259
Partial prepayment of put/call obligation	(40		)	(36		)	(1,323		)		(27		)
Dividends paid to noncontrolling interest	(580		)	—			—				(580		)
Common stock dividends paid	—			(2,465		)
Issuance of common stock	2,830			—			—				2,830
Repurchases for tax withholdings on vesting of equity awards	(1,505		)	(591		)	—				(1,504		)
Net cash used in financing activities	(50,623		)	(85,778		)
Effect of exchange rate changes on cash and cash equivalents	(4,754		)	9,708
Net increase (decrease) in cash and cash equivalents	(148,897		)	21,192
Net cash provided by (used in) financing activities							110,904				(31,418		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash							4,406				(5,272		)
Net increase (decrease) in cash, cash equivalents and restricted cash							14,740				(72,432		)
Cash and cash equivalents at beginning of period	380,223			96,656			178,055				380,223
Cash and cash equivalents at end of period	$	231,326		$	117,848
Cash, cash equivalents and restricted cash at end of period							$	192,795			$	307,791
Cash paid during the period for:
Interest	$	73,604		$	69,896		$	37,165			$	48,555
Income taxes	$	13,500		$	20,440		$	8,631			$	9,919

The accompanying notes are an integral part of these condensed consolidated financial statements.

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Investment

(Unaudited)

(In thousands, except share amounts)


	Total Bristow Group Stockholders’ Investment																				Total Bristow Group Stockholders’ Investment
	Common Stock		Common Stock (Shares)	Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Noncontrolling Interests			Total Stockholders’ Investment			Common Stock		Common Stock (Shares)	Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Noncontrolling Interests			Total Stockholders’ Investment
March 31, 2018	$	382	35,526,625	$	852,565	$	788,834		$	(286,094	)	$	(184,796	)	$	7,253		$	1,178,144
Adoption of new accounting guidance ⁽¹⁾	—		—	—		(1,746		)	—			—			—			(1,746		)
March 31, 2019																					$	386	35,918,916	$	862,020	$	455,598		$	(327,989	)	$	(184,796	)	$	7,148		$	812,367
Issuance of common stock																					—		—	824		—			—			—			—			824
Sale of subsidiaries																					—		—	—		—			—			—			(5,612		)	(5,612		)
Currency translation adjustments																					—		—	—		—			—			—			(11		)	(11		)
Net income (loss)																					—		—	—		(169,246		)	—			—			158			(169,088		)
Other comprehensive income																					—		—	—		—			17,362			—			—			17,362
June 30, 2019																					$	386	35,918,916	$	862,844	$	286,352		$	(310,627	)	$	(184,796	)	$	1,683		$	655,842
Issuance of common stock	3		238,650	4,261		—			—			—			—			4,264			—		—	702		—			—			—			—			702
Distributions paid to noncontrolling interests	—		—	—		—			—			—			(14		)	(14		)	—		—	—		—			—			—			(1,323		)	(1,323		)
Currency translation adjustments	—		—	—		—			—			—			(139		)	(139		)	—		—	—		—			—			—			35			35
Net income (loss)	—		—	—		(32,108		)	—			—			67			(32,041		)	—		—	—		(162,974		)	—			—			55			(162,919		)
Other comprehensive loss	—		—	—		—			(27,824		)	—			—			(27,824		)
June 30, 2018	385		35,765,275	856,826		754,980			(313,918		)	(184,796		)	7,167			1,120,644
Issuance of common stock	—		32,910	1,983		—			—			—			—			1,983
Distributions paid to noncontrolling interests	—		—	—		—			—			—			(13		)	(13		)
Dividends paid to noncontrolling interest	—		—	—		—			—			—			(580		)	(580		)
Currency translation adjustments	—		—	—		—			—			—			(32		)	(32		)
Net income (loss)	—		—	—		(144,190		)	—			—			517			(143,673		)
Other comprehensive loss	—		—	—		—			(8,097		)	—			—			(8,097		)
September 30, 2018	385		35,798,185	858,809		610,790			(322,015		)	(184,796		)	7,059			970,232
Issuance of common stock	—		—	1,936		—			—			—			—			1,936
Distributions paid to noncontrolling interests	—		—	—		—			—			—			(13		)	(13		)
Currency translation adjustments	—		—	—		—			—			—			(52		)	(52		)
Net income (loss)	—		—	—		(85,944		)	—			—			243			(85,701		)
Other comprehensive loss	—		—	—		—			(8,929		)	—			—			(8,929		)
December 31, 2018	$	385	35,798,185	$	860,745	$	524,846		$	(330,944	)	$	(184,796	)	$	7,237		$	877,473
Other comprehensive income																					—		—	—		—			(11,175		)	—			—			(11,175		)
September 30, 2019																					$	386	35,918,916	$	863,546	$	123,378		$	(321,802	)	$	(184,796	)	$	450		$	481,162

The accompanying notes are an integral part of these condensed consolidated financial statements.

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Investment

(Unaudited)

(In thousands, except share amounts)



	Total Bristow Group Stockholders’ Investment
	Common Stock		Common Stock (Shares)	Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Noncontrolling Interests			Total Stockholders’ Investment
March 31, 2018	$	382	35,526,625	$	852,565	$	794,191		$	(286,094	)	$	(184,796	)	$	7,253		$	1,183,501
Adoption of new accounting guidance ⁽¹⁾	—		—	—		(1,746		)	—			—			—			(1,746		)
Issuance of common stock	3		238,650	4,261		—			—			—			—			4,264
Distributions paid to noncontrolling interests	—		—	—		—			—			—			(14		)	(14		)
Currency translation adjustments	—		—	—		—			—			—			(139		)	(139		)
Net income (loss)	—		—	—		(31,864		)	—			—			67			(31,797		)
Other comprehensive loss	—		—	—		—			(27,824		)	—			—			(27,824		)
June 30, 2018	385		35,765,275	856,826		760,581			(313,918		)	(184,796		)	7,167			1,126,245
Issuance of common stock	—		32,910	1,983		—			—			—			—			1,983
Distributions paid to noncontrolling interests	—		—	—		—			—			—			(13		)	(13		)
Dividends paid to noncontrolling interest	—		—	—		—			—			—			(580		)	(580		)
Currency translation adjustments	—		—	—		—			—			—			(32		)	(32		)
Net income (loss)	—		—	—		(143,947		)	—			—			517			(143,430		)
Other comprehensive loss	—		—	—		—			(8,097		)	—			—			(8,097		)
September 30, 2018	$	385	35,798,185	$	858,809	$	616,634		$	(322,015	)	$	(184,796	)	$	7,059		$	976,076

_____________


⁽¹⁾	Cumulative-effect adjustment upon the adoption of new accounting guidance related to current and deferred income taxes for intra-entity transfer of assets other than inventory. For further details, see Note 1.

~~BRISTOW GROUP INC. AND SUBSIDIARIES~~

~~Condensed Consolidated Statements of Changes in Stockholders’ Investment— (Continued)~~

~~(Unaudited)~~

~~(In thousands, except share amounts)~~

Total Bristow Group Stockholders’ Investment
Redeemable Noncontrolling Interest
Common
Stock

Common
Stock
(Shares)

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Treasury
Stock

Noncontrolling
Interests

Total
Stockholders’
Investment
March 31, 2017 $ 6,886
$ 379
35,213,991
$ 809,995
$ 986,957
$ (328,277 ) $ (184,796 ) $ 5,025
$ 1,289,283
Issuance of common stock —
1
89,849
3,862
—
—
—
—
3,863
Distributions paid to noncontrolling interests —
—
—
—
—
—
—
(12 ) (12 )
Common stock dividends ($0.07 per share) —
—
—
—
(2,465 ) —
—
—
(2,465 )
Currency translation adjustments 258
—
—
—
—
—
—
52
52
Net income (loss) (795 ) —
—
—
(55,275 ) —
—
325
(54,950 )
Other comprehensive income —
—
—
—
—
10,070
—
—
10,070
June 30, 2017 6,349
380
35,303,840
813,857
929,217
(318,207 ) (184,796 ) 5,390
1,245,841
Issuance of common stock —
1
57,696
2,133
—
—
—
—
2,134
Distributions paid to noncontrolling interests —
—
—
—
—
—
—
(11 ) (11 )
Currency translation adjustments 194
—
—
—
—
—
—
43
43
Net income (loss) (541 ) —
—
—
(31,209 ) —
—
353
(30,856 )
Other comprehensive income —
—
—
—
—
10,928
—
—
10,928
September 30, 2017 6,002
381
35,361,536
815,990
898,008
(307,279 ) (184,796 ) 5,775
1,228,079
Issuance of common stock —
—
13,844
2,191
—
—
—
—
2,191
Equity component 4½% Convertible Senior Notes issued —
—
—
36,778
—
—
—
—
36,778
Purchase of 4½% Convertible Senior Notes call option —
—
—
(40,393 ) —
—
—
—
(40,393 )
Proceeds from issuance of warrants —
—
—
30,259
—
—
—
—
30,259
Distributions paid to noncontrolling interests —
—
—
—
—
—
—
(13 ) (13 )
Currency translation adjustments 37
—
—
—
—
—
—
(54 ) (54 )
Net income (loss) (2,180 ) —
—
—
(8,273 ) —
—
516
(7,757 )
Other comprehensive loss —
—
—
—
—
(74 ) —
—
(74 )
December 31, 2017 $ 3,859
$ 381

35,375,380
$ 844,825
$ 889,735
$ (307,353 ) $ (184,796 ) $ 6,224
$ 1,249,016

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — BASIS OF PRESENTATION, CONSOLIDATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements include the accounts of Bristow Group Inc. and its consolidated entities (“Bristow Group”, the “Company”, “we”, “us”, or “our”) after elimination of all significant intercompany accounts and transactions. Our fiscal year ends March 31, and we refer to fiscal years based on the end of such period. Therefore, the fiscal year ending March 31, ~~2019~~2020 is referred to as “fiscal year ~~2019~~2020”. Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ~~(“SEC”~~(the “SEC”), the information contained in the following notes to condensed consolidated financial statements is condensed from that which would appear in the annual consolidated financial statements; accordingly, the condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and related notes thereto contained in ~~our~~the Company’s Annual Report on Form 10-K for the fiscal year ~~2018~~ ~~Annual Report~~ended March 31, 2019 (the “fiscal year ~~2018~~2019 Financial Statements”). Operating results for the interim period presented are not necessarily indicative of the results that may be expected for the entire fiscal year.

The condensed consolidated financial statements included herein are unaudited; however, they include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair presentation of the consolidated balance sheet of the Company as of ~~December 31, 2018~~September 30, 2019, the consolidated statements of operations and comprehensive loss for the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019 and ~~2017~~2018, the consolidated cash flows for the ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ and the consolidated statements of changes in stockholders’ investment for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018.

Bankruptcy and Restructuring Support Agreement ~~and Going Concern~~

~~The Company’s liquidity outlook has recently changed resulting in substantial doubt about the Company’s ability to continue as a going concern.~~ On May 11, 2019 (the “Petition Date”), Bristow Group Inc. and certain of its ~~subsidiaries~~subsidiaries: BHNA Holdings Inc., Bristow Alaska Inc., Bristow Helicopters Inc., Bristow U.S. Leasing LLC, Bristow U.S. LLC, BriLog Leasing Ltd. and Bristow Equipment Leasing Ltd. (together, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). The Debtors’ Chapter 11 Cases ~~are~~were jointly administered under the caption In re: Bristow Group Inc., et al., Main Case No. 19-32713. ~~The~~During the pendency of the Chapter 11 Cases, the Debtors ~~continue~~continued to operate their businesses and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

On May 10, 2019, we entered into a restructuring support agreement (the ~~“RSA”~~“Initial RSA”) with (i) certain holders ~~(the “Supporting Secured Noteholders”)~~ of the Company’s 8.75% Senior Secured Notes due 2023 (the “8.75% Senior Secured Notes”) and (ii) the guarantors of the 8.75% Senior Secured Notes (the “Secured Guarantors”), to support a restructuring of the Company (the “Restructuring”). On June 27, 2019, we entered into an amendment and restatement of the Initial RSA and on July 24, 2019, we entered into a second amendment and restatement thereof (as so amended and restated, the “Second Amended RSA”), with a group of holders representing approximately 99.3% of the 8.75% Senior Secured Notes (the “Supporting Secured Noteholders”), the Secured Guarantors and a group of holders representing approximately 73.6% (together with the Supporting Secured Noteholders, the “Supporting Noteholders”) of the 6¼% Senior Notes due 2022 (the “6¼% Senior Notes”) and the 4½% Convertible Senior Notes due 2023 (the “4½% Convertible Senior Notes”) combined (together, the “Unsecured Notes”). The Second Amended RSA contemplated implementation of the Restructuring on the amended terms set forth in the term sheet contained in an exhibit to the Second Amended RSA (the “Restructuring Term Sheet”)~~. The RSA contemplates the filing of the Chapter 11 Cases to implement the Restructuring~~ pursuant to a Chapter 11 plan of reorganization ~~(the “Plan”)~~ and the various related transactions set forth in or contemplated by the Restructuring Term Sheet, the term sheet for the DIP ~~Term Sheet~~Credit Agreement (as defined herein) and the other restructuring documents attached to the Second Amended RSA.

On August 1, 2019, the Debtors filed with the Bankruptcy Court the Joint Chapter 11 Plan of Reorganization of Bristow Group Inc. and its Debtor Affiliates and the Disclosure Statement related thereto. On August 20, 2019, the Debtors filed with the Bankruptcy Court the Amended Joint Chapter 11 Plan of Reorganization of Bristow Group Inc. and its Debtor Affiliates (as further modified on August 22, 2019, the “Amended Plan”) and the Disclosure Statement related thereto (as further modified on August 22, 2019, the “Amended Disclosure Statement”). On October 4, 2019, the Bankruptcy Court approved the Amended Disclosure Statement and indicated that it would confirm the Amended Plan. On October 8, 2019, the Bankruptcy Court entered an order approving the Amended Disclosure Statement and confirming the Amended Plan.

The ~~RSA contains certain covenants on the part of each~~effective date of the ~~Company and the Supporting Secured Noteholders, including limitations~~Amended Plan (the “Effective Date”) occurred on ~~the Supporting Secured Noteholders’ ability to pursue alternative transactions, commitments by the Supporting Secured Noteholders to vote in favor~~October 31, 2019.

Table of the Plan and commitments of the Company and the Supporting Secured Noteholders to negotiate in good faith to finalize the documents and agreements governing the Plan. The RSA also provides for certain conditions to the obligations of the parties and for termination upon the occurrence of certain events, including without limitation, the failure to achieve certain milestones and certain breaches by the parties under the RSA.Contents

~~The Company expects to continue operations in the normal course during the pendency of the Chapter 11 Cases.~~BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Bankruptcy Accounting

The condensed consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business and reflect the application of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 852, Reorganizations (“ASC 852”). ASC 852 requires that the financial statements, for periods subsequent to the filing of the Chapter 11 Cases, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain expenses, gains and losses that are realized or incurred in the bankruptcy proceedings are recorded in reorganization items, net on our condensed consolidated statements of operations. In addition, prepetition unsecured and under-secured obligations that may be impacted by the bankruptcy reorganization process have been classified as liabilities subject to compromise on our condensed consolidated balance sheet as of September 30, 2019. As of September 30, 2019, these liabilities were reported at the amounts expected to be allowed as claims by the Bankruptcy Court, although some were subsequently settled for less. Where there was uncertainty about whether a secured claim would be paid or impaired pursuant to the Chapter 11 Cases, we classified the entire amount of the claim as an outstanding liability subject to compromise as of September 30, 2019. For specific discussion on balances of liabilities subject to compromise and reorganization items, net, see Note 2.

The accompanying condensed consolidated financial statements do not purport to reflect or provide for the consequences of the Chapter 11 Cases. In particular, the condensed consolidated financial statements do not purport to show: (i) the realizable value of assets on a liquidation basis or their availability to satisfy liabilities; (ii) the full amount of prepetition liabilities that may be allowed for claims or contingencies, or the status and priority thereof; (iii) the effect on stockholders’ investment accounts of any changes that may be made to our capitalization; or (iv) the effect on operations of any changes that may be made to our business.

Going Concern

The significant risks and uncertainties related to the Chapter 11 Cases raise substantial doubt about the Company’s ability to continue as a going concern. In addition, each of the commencement of the Chapter 11 Cases and the delivery of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018, as amended by the amendment thereto (the “Amended 10-K”), with a going concern qualification or explanation constituted an event of default under certain of our secured equipment financings, giving those secured equipment lenders the right to accelerate repayment of the applicable debt, subject to Chapter 11 protections, and triggering cross-default and/or cross-acceleration provisions in substantially all of our other debt instruments should that right to accelerate repayment be exercised. The condensed consolidated financial statements included herein have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of ~~substantial doubt as to~~ the ~~Company’s ability to continue as a~~ going ~~concern.~~concern uncertainty.

~~Table of Contents~~

~~BRISTOW GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

Loss on Impairment

Loss on impairment for the three and six months ended September 30, 2019 and 2018 includes the following (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,				Three and six months ended September 30, 2019		Three and six months ended September 30, 2018
	2018		2017		2018		2017
Impairment of property and equipment ⁽¹⁾									$	42,022	$	104,939
Impairment of goodwill									17,504		—
Impairment of inventories	$	—	$	—	$	9,276	$	1,192	—		9,276
Impairment of property and equipment⁽¹⁾	—		—		104,939		—
Impairment of investment in unconsolidated affiliates									2,575		—
Impairment of intangible assets	—		—		3,005		—		—		3,005
	$	—	$	—	$	117,220	$	1,192	$	62,101	$	117,220

~~_____________~~___________


⁽¹⁾	Includes impairment of $42.0 million for H225 aircraft for the three and six months ended September 30, 2019. Includes impairment of $87.5 million for H225 aircraft and $17.5 million for Eastern Airways International Limited (“Eastern Airways”) aircraft and ~~equipment.~~equipment for the three and six months ended September 30, 2018.

We recorded impairment of goodwill of $17.5 million during the three months ended September 30, 2019 attributable to Capiteq Limited, operating under the name Airnorth (see discussion under “— Goodwill” below).

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

We perform regular reviews of each investee’s financial condition, the business outlook for its products and services, and its present and projected results and cash flows. When an investee has experienced consistent declines in financial performance or difficulties raising capital to continue operations, and when we expect the decline to be other-than-temporary, the investment is written down to fair value. Actual results may vary from estimates due to the uncertainty regarding the projected financial performance of investees, the severity and expected duration of declines in value, and the available liquidity in the capital markets to support the continuing operations of the investees in which we have investments.

We own a 17.2% investment in Sky Future Partners Limited (“Sky Future Partners”), a provider of drone-based inspection services to the global industrial markets. Given the negative evolution of Sky Future Partners’ liquidity forecast during the three months ended September 30, 2019 and the impact this would have on continued operations and future opportunities, we determined the investment to be other-than-temporarily impaired as of September 30, 2019. During the three months ended September 30, 2019, we recorded a $2.6 million impairment to our investment in Sky Future Partners in our Corporate and other region.

The fair value of investment in unconsolidated affiliates is estimated using the income approach. The estimate of fair value includes unobservable inputs, representative of Level 3 fair value measurement, including assumptions related to future performance, such as projected demand for services.

Prior to the three months ended September 30, 2018, we had been actively marketing our H225 aircraft with the expectation of a substantial return of the aircraft to oil and gas service. However, market conditions and more significantly, the ~~recent~~ development of alternative opportunities outside of our traditional oil and gas service for our H225 aircraft and our decision to pursue those opportunities during the three months ended September 30, 2018, indicated a substantial return to oil and gas service within our operations was not likely. Therefore, during the three months ended September 30, 2018, we concluded that cash flows associated with our H225 helicopters ~~were~~are largely independent from the cash flows associated with the remainder of our oil and gas related property and equipment ~~(“oil~~(the “oil and gas asset group”) and should be tested for impairment as a stand-alone asset group. In accordance with ~~Accounting Standard Codification (“ASC”)~~ASC 360-10, we performed an impairment analysis for our stand-alone H225 asset group (“H225 asset group”) and determined that the forecasted cash flows over the remaining useful life of the asset group were insufficient to recover the carrying value of the asset group. We determined the fair value of the H225 asset group to be $116.4 million and recorded an impairment charge of $87.5 million. In addition, we performed a review of our H225 ~~aircraft related~~aircraft-related inventory and recorded an impairment charge of $8.9 million to record the inventory at the lower of cost or net realizable value. These impairments are included in our Corporate and other region in Note ~~12.~~13. The inputs used in our fair value estimates were from Level 3 of the fair value hierarchy discussed in Note 6.

~~The removal~~In September 2019, we identified a potential decline in the fair value of the H225 ~~aircraft from our oil and gas~~ asset group based on market transactions for the aircraft and ~~changes~~as a result, in accordance with ASC 360-10, we performed an impairment analysis for our H225 asset group. We determined that the forecasted cash flows ~~for that~~over the remaining useful life of the H225 asset group ~~during~~were insufficient to recover the carrying value of the H225 asset group. We determined the fair value of the H225 asset group to be $61.2 million and recorded an impairment charge of $42.0 million in the three months ended September 30, ~~2018 indicated the need for the performance of a recoverability analysis~~2019. The inputs used in our fair value estimates were from Level 2 of the oil and gas asset group. In accordance with ASC 360-10, we estimate future undiscounted cash flows to test the recoverability of our oil and gas asset group, which largely consists of our oil and gas related held for use aircraft. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs, including assumptions related to projected demand for services, rates and anticipated aircraft disposal values. We determined that the estimated future undiscounted cash flows exceeded the carryingfair value ~~for our oil and gas asset group as of September 30, 2018, and no impairment was recorded on these assets. Future declines~~hierarchy discussed in operating performance, aircraft disposal values, anticipated business outlook, or projected aircraft deliveries currently accounted for as construction in progress may reduce our estimated future undiscounted cash flows and result in impairment of our oil and gas asset group.Note 6.

~~In addition, changes~~Changes in our forecasted cash flows during the three months ended September 30, 2018 indicated the need for the performance of a recoverability analysis for the airline related assets of Eastern Airways. In accordance with ASC 360-10, we estimate future undiscounted cash flows to test the recoverability of the airline related assets of Eastern Airways for potential impairment. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs including assumptions related to projected demand for services and rates. We determined that the estimated future undiscounted cash flows were below the carrying value for our airline related assets of Eastern Airways as of September 30, 2018. We determined the fair value of the asset group to be $20.5 million and recorded an impairment charge of $17.5 million. As part of our impairment review of the airline assets of Eastern Airways, we also recorded impairments of $3.0 million related to the remaining intangible assets and $0.3 million related to inventory. These impairments are included in our Europe and Caspian region in Note ~~12.~~13. The inputs used in our fair value estimates were from Level 3 of the fair value hierarchy discussed in Note 6.

~~No further triggers to review our assets for impairment exist as of December 31, 2018.~~

During the nine months ended December 31, 2017, as a result of changes in expected future utilization of aircraft within our training fleet we recorded a $1.2 million charge to impair inventory used on our training fleet, which is included in loss on

Table of Contents

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

~~impairment on our condensed consolidated statement of operations. This impairment is included in our Corporate and other region in Note 12.~~

Foreign Currency

During the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, ~~and~~ ~~2017~~, our primary foreign currency exposure was to the British pound sterling, the euro, the Australian dollar, the Norwegian kroner and the Nigerian naira. The value of these currencies has fluctuated relative to the U.S. dollar as indicated in the following table:


	Three Months Ended December 31,		Nine Months Ended December 31,		Three Months Ended September 30,		Six Months Ended September 30,
	2018	2017	2018	2017	2019	2018	2019	2018
One British pound sterling into U.S. dollars
High	1.32	1.35	1.43	1.36	1.27	1.33	1.32	1.43
Average	1.29	1.33	1.32	1.31	1.23	1.30	1.26	1.33
Low	1.25	1.31	1.25	1.24	1.21	1.27	1.21	1.27
At period-end	1.27	1.35	1.27	1.35	1.23	1.30	1.23	1.30
One euro into U.S. dollars
High	1.16	1.20	1.24	1.20	1.13	1.18	1.14	1.24
Average	1.14	1.18	1.17	1.15	1.11	1.16	1.12	1.18
Low	1.13	1.16	1.13	1.06	1.09	1.13	1.09	1.13
At period-end	1.14	1.20	1.14	1.20	1.09	1.16	1.09	1.16
One Australian dollar into U.S. dollars
High	0.74	0.79	0.78	0.81	0.70	0.75	0.72	0.78
Average	0.72	0.77	0.74	0.77	0.69	0.73	0.69	0.74
Low	0.70	0.75	0.70	0.74	0.67	0.71	0.67	0.71
At period-end	0.70	0.78	0.70	0.78	0.67	0.72	0.67	0.72
One Norwegian kroner into U.S. dollars
High	0.1227	0.1269	0.1290	0.1294	0.1172	0.1249	0.1179	0.1290
Average	0.1183	0.1225	0.1215	0.1219	0.1129	0.1214	0.1143	0.1230
Low	0.1136	0.1193	0.1136	0.1152	0.1097	0.1179	0.1097	0.1179
At period-end	0.1155	0.1223	0.1155	0.1223	0.1101	0.1228	0.1101	0.1228
One Nigerian naira into U.S. dollars
High	0.0028	0.0028	0.0028	0.0033	0.0028	0.0028	0.0028	0.0028
Average	0.0027	0.0028	0.0028	0.0030	0.0028	0.0028	0.0028	0.0028
Low	0.0027	0.0028	0.0027	0.0027	0.0028	0.0027	0.0028	0.0027
At period-end	0.0028	0.0028	0.0028	0.0028	0.0028	0.0027	0.0028	0.0027

_____________

Source: FactSet

Other income (expense), net, in our condensed consolidated statements of operations includes foreign currency transaction losses of ~~$2.8~~$5.8 million and ~~gains of $0.4~~$2.3 million for the three months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively, and ~~foreign currency transaction losses of $8.1~~$8.7 million and ~~gains of $1.2~~$5.3 million for the ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively. Transaction gains and losses represent the revaluation of monetary assets and liabilities from the currency that will ultimately be settled into the functional currency of the legal entity holding the asset or liability. The most significant items revalued are denominated in U.S. dollars on entities with British pound sterling ~~Australian dollar~~ and Nigerian naira functional currencies and denominated in British pound sterling on entities with U.S. dollar functional currencies, with transaction gains or losses primarily resulting from the strengthening or weakening of the U.S. dollar versus those other currencies.

910

Table of Contents

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Our earnings ~~(losses)~~ from unconsolidated affiliates, net of losses, are also affected by the impact of changes in foreign currency exchange rates on the reported results of our unconsolidated affiliates. During the three months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ earnings (losses) from unconsolidated affiliates, net decreased by ~~$0.2~~$1.6 million and ~~$0.8~~$1.0 million, respectively, and during the ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ earnings ~~(losses)~~ from unconsolidated affiliates, net of losses, decreased by ~~$3.8~~$1.7 million and ~~$1.6~~$3.6 million, respectively, as a result of the impact of changes in foreign currency exchange rates on the earnings of our unconsolidated affiliates, primarily the impact of changes in the Brazilian real to U.S. dollar exchange rate on earnings for our affiliate in Brazil. The value of the Brazilian real has fluctuated relative to the U.S. dollar as indicated in the following table:


	Three Months Ended December 31,		Nine Months Ended December 31,		Three Months Ended September 30,		Six Months Ended September 30,
	2018	2017	2018	2017	2019	2018	2019	2018
One Brazilian real into U.S. dollars
High	0.2726	0.3198	0.3020	0.3244	0.2675	0.2699	0.2675	0.3020
Average	0.2628	0.3076	0.2647	0.3117	0.2524	0.2537	0.2538	0.2657
Low	0.2482	0.3004	0.2390	0.2995	0.2393	0.2390	0.2393	0.2390
At period-end	0.2580	0.3015	0.2580	0.3015	0.2401	0.2504	0.2401	0.2504

_____________

Source: FactSet

We estimate that the fluctuation of currencies versus the same period in the prior fiscal year had the following effect on our financial condition and results of operations (in thousands):

Three Months Ended
December 31, 2018 Nine Months Ended
December 31, 2018
Revenue $ (7,844 ) $ (2,652 )
Operating expense 10,452
10,178
Earnings (losses) from unconsolidated affiliates, net 555
(2,163 )
Non-operating expense (3,153 ) (9,335 )
Loss before provision for income taxes 10
(3,972 )
Benefit for income taxes 144
1,338
Net loss 154
(2,634 )
Cumulative translation adjustment (6,514 ) (43,685 )
Total stockholders’ investment $ (6,360 ) $ (46,319 )



	Three Months Ended September 30, 2019			Six Months Ended September 30, 2019
Revenue	$	(11,361	)	$	(23,964	)
Operating expense	11,025			21,855
Earnings from unconsolidated affiliates, net of losses	(576		)	1,888
Other income (expense), net	(3,509		)	(3,411		)
Income before provision for income taxes	(4,421		)	(3,632		)
Provision for income taxes	1,041			415
Net income	(3,380		)	(3,217		)
Cumulative translation adjustment	(12,299		)	4,589
Total stockholders’ investment	$	(15,679	)	$	1,372

Interest Expense, Net

During the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ interest expense, net consisted of the following (in thousands):


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Interest income	$	2,269		$	144		$	3,677		$	512		$	270		$	1,229		$	657		$	1,408
Interest expense	(29,382		)	(19,237		)	(84,367		)	(54,189		)	(22,715		)	(27,662		)	(49,423		)	(54,985		)
Interest expense, net	$	(27,113	)	$	(19,093	)	$	(80,690	)	$	(53,677	)	$	(22,445	)	$	(26,433	)	$	(48,766	)	$	(53,577	)

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Restricted Cash

As of September 30, 2019, restricted cash consisted of $37.0 million deposited in a financial institution trust held in escrow to be used in accordance with the DIP Credit Agreement and $1.9 million related to Norway withholding taxes. See Note 5 for further details on the DIP Credit Agreement.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows.



	September 30, 2019		March 31, 2019

	(In thousands)
Reconciliation of cash, cash equivalents and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents	$	153,885	$	178,055
Restricted cash	38,910		—
Total cash, cash equivalents and restricted cash	$	192,795	$	178,055

Accounts Receivable

As of ~~December 31~~September 30 and March 31, ~~2018,~~2019, the allowance for doubtful accounts for non-affiliates was ~~$0.6~~$0.8 million and ~~$3.3~~$1.6 million, respectively. There were no allowances for doubtful accounts related to accounts receivable due from affiliates as of ~~December 31~~September 30 and March 31, ~~2018.~~2019. The allowance for doubtful accounts for non-affiliates as of ~~December 31, 2018 primarily relates to various customers of Eastern Airways. The allowance for doubtful accounts for non-affiliates as of~~September 30, 2019 and March 31, ~~2018~~2019 primarily relates to amounts due from a customer in Nigeria for which we no longer believed collection was probable. During the nine months ended December 31, 2018, we wrote-off $2.3 million of accounts receivable previously reserved for from this customer as no collection is expected.

~~Table of Contents~~

~~BRISTOW GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

Australia.

Inventories

As of ~~December 31~~September 30 and March 31, ~~2018,~~2019, inventories were net of allowances of ~~$21.1~~$18.7 million and ~~$26.0~~$19.4 million, respectively. As discussed ~~above in~~under “—Loss on ~~Impairment~~Impairment”, we performed a review of our H225 aircraft related inventory and Eastern Airways inventory and recorded impairment charges of $8.9 million and $0.3 million, respectively, to record the inventories at the lower of cost or net realizable value during the ~~nine~~three months ended ~~December 31,~~September 30, 2018. During the nine months ended December 31, 2017, as a result of changes in expected future utilization of aircraft within our training fleet, we recorded a $1.2 million charge to impair inventory used on our training fleet, which is included in loss on impairment on our condensed consolidated statement of operations. These impairment charges are not reflected in the allowances above.

Prepaid Expenses and Other Current Assets

As of ~~December 31~~September 30 and March 31, ~~2018,~~2019, prepaid expenses and other current assets included the short-term portion of contract acquisition and pre-operating costs totaling ~~$9.6~~$9.2 million and ~~$10.8~~$9.8 million, respectively, related to the search and rescue (“SAR”) contracts in the U.K. and two customer contracts in Norway, which are recoverable under the contracts and will be expensed over the terms of the contracts. For the three months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ we expensed ~~$2.4~~$2.6 million and ~~$2.8~~$2.5 million, respectively, and for the ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ we expensed ~~$7.6~~$4.7 million and ~~$8.5~~$5.2 million, respectively, related to these contracts.

Goodwill

Goodwill is recorded when the cost of acquired businesses exceeds the fair value of the identifiable net assets acquired. Goodwill has an indefinite useful life and is not amortized, but is assessed for impairment annually or when events or changes in circumstances indicate that a potential impairment exists.

Goodwill ~~of $18.3 million and $19.9 million as of December 31 and March 31, 2018, respectively,~~ related to our Asia Pacific reporting unit was as follows (in thousands):

March 31, 2018 $ 19,907
Foreign currency translation (1,636 )
December 31, 2018 $ 18,271

~~Accumulated goodwill impairment of $50.9 million as of both December 31 and March 31, 2018 related to our reporting units were as follows (in thousands):~~

Europe Caspian $ (33,883 )
Africa (6,179 )
Americas (576 )
Corporate and other (10,223 )
Total accumulated goodwill impairment $ (50,861 )



March 31, 2019	$	18,436
Foreign currency translation	(932		)
Impairments	(17,504		)
September 30, 2019	$	—

1112

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

~~Other Intangible Assets~~

~~Intangible assets with finite useful lives are amortized over their respective estimated useful lives~~Accumulated goodwill impairment of $68.4 million and $50.9 million as as of September 30 and March 31, 2019, respectively, related to ~~their estimated residual values. Intangible assets by type were~~our reporting units as follows (in thousands):

Customer
relationships Trade name and trademarks Internally developed software Licenses Total

Gross Carrying Amount
March 31, 2018 $ 12,777
$ 4,878
$ 1,107
$ 755
$ 19,517
Foreign currency translation (213 ) (263 ) (13 ) (2 ) (491 )
December 31, 2018 $ 12,564
$ 4,615
$ 1,094
$ 753
$ 19,026

Accumulated Amortization
March 31, 2018 $ (11,372 ) $ (1,213 ) $ (915 ) $ (719 ) $ (14,219 )
Impairments —
(2,933 ) (72 ) —
(3,005 )
Amortization expense (89 ) (142 ) (107 ) (34 ) (372 )
December 31, 2018 $ (11,461 ) $ (4,288 ) $ (1,094 ) $ (753 ) $ (17,596 )

Weighted average remaining contractual life, in years 7.0
*
0.0
0.0
7.0



	Europe Caspian			Africa			Americas			Asia Pacific			Corporate and other			Total
March 31, 2019	$	(33,883	)	$	(6,179	)	$	(576	)	$	—		$	(10,223	)	$	(50,861	)
Impairments	—			—			—			(17,504		)	—			(17,504		)
September 30, 2019	$	(33,883	)	$	(6,179	)	$	(576	)	$	(17,504	)	$	(10,223	)	$	(68,365	)

~~_____________~~


*	~~Trade name and trademarks relating to Airnorth were determined to have indefinite useful lives and therefore were not amortized, but instead are tested for impairment on an annual basis.~~

~~Future amortization expense~~We test goodwill for impairment on an annual basis as of ~~intangible assets for each of the years ending~~ March 31 ~~is as follows (in thousands):~~or when events or changes in circumstances indicate that a potential impairment exists. For the purposes of performing an analysis of goodwill, we evaluate whether there are reporting units below the reporting segment we disclose for segment reporting purposes by assessing whether our regional management typically reviews results and whether discrete financial information exists at a lower level.

2019 $ 39
2020 157
2021 157
2022 157
2023 157
Thereafter 436
$ 1,103

The Bristow Norway AS and Eastern Airways acquisitions, included in our Europe Caspian region, resulted in intangible assets for customer contracts, customer relationships, trade names and trademarks, internally developed software and licenses. On May 10,During the three months ended September 30, 2019, we ~~sold Eastern Airways. The Capiteq Limited,~~noted an overall reduction in expected operating ~~under~~results for Airnorth from continued cost pressure combined with less than expected passenger and route fulfillment. We concluded the ~~name~~fair value of our goodwill for Airnorth ~~acquisition included in our Asia Pacific region, resulted in intangible assets~~could have fallen below its carrying value and that an interim period analysis of goodwill was required. We performed the interim impairment test of goodwill for ~~customer contracts, customer relationships and trade name and trademarks. As discussed above in~~ ~~Loss on Impairment, during~~Airnorth as of September 30, 2019, concluding the ~~nine months ended December 31, 2018, we~~estimated fair value of Airnorth was below its carrying value. We recorded an impairment charge of ~~$3.0~~$17.5 million reflected in loss on impairment on our statements of operations for the three and six months ended September 30, 2019.

We estimated the implied fair value of Airnorth using the income and market approaches. The determination of estimated fair value required us to use significant unobservable inputs, representative of a Level 3 fair value measurement, including assumptions related to ~~Eastern Airways intangible assets. As~~the future performance of ~~December 31, 2018, Eastern Airways has no remaining intangible assets.~~the reporting units, such as projected demand for our services and rates.

The income approach was based on a discounted cash flow model, which utilized present values of cash flows to estimate fair value. The future cash flows were projected based on our estimates of future rates for our services, utilization, operating costs, capital requirements, growth rates and terminal values. Forecasted rates and utilization take into account current market conditions and our anticipated business outlook, both of which have been impacted by the adverse changes in the offshore energy and mining business environment from the downturn. Operating costs were forecasted using a combination of our historical average operating costs and expected future costs. Capital requirements in the discounted cash flow model were based on management’s estimates of future capital costs driven by expected market demand in future periods. The estimated capital requirements included cash outflows for new aircraft, infrastructure and improvements, if necessary. A terminal period was used to reflect our estimate of stable, perpetual growth. The future cash flows were discounted using a market-participant risk-adjusted weighted average cost of capital for the reporting unit. These assumptions were derived from unobservable inputs and reflect management’s judgments and assumptions.

The market approach was based upon the application of price-to-earnings multiples to management’s estimates of future earnings adjusted for a control premium. Management’s earnings estimates were derived from unobservable inputs that require significant estimates, judgments and assumptions as described in the income approach.

For purposes of the goodwill impairment test, we calculated Airnorth’s estimated fair value as a combination of the values calculated under the income approach and the market approach.

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Other Assets

The long-term portion of intangible assets and intangible assets with indefinite lives are included within other assets. Intangible assets with finite useful lives are amortized over their respective estimated useful lives to their estimated residual values. The Airnorth acquisition included in our Asia Pacific region, resulted in intangible assets for customer relationships and trade name and trademarks. Intangible assets by type not fully amortized were as follows (in thousands):



	Customer relationships			Trade name and trademarks			Total

	Gross Carrying Amount
March 31, 2019	$	2,143		$	331		$	2,474
Foreign currency translation	(54		)	(16		)	(70		)
September 30, 2019	$	2,089		$	315		$	2,404

	Accumulated Amortization
March 31, 2019	$	(1,070	)	$	—		$	(1,070	)
Amortization expense	(75		)	—			(75		)
September 30, 2019	$	(1,145	)	$	—		$	(1,145	)

Weighted average remaining contractual life, in years	6.3			*			6.3

_____________


*	Trade name and trademarks relating to Airnorth were determined to have indefinite useful lives and therefore were not amortized, but instead are tested for impairment on an annual basis.

Future amortization expense of intangible assets for each of the years ending March 31 is as follows (in thousands):



2020	$	75
2021	150
2022	150
2023	150
2024	150
Thereafter	584
	$	1,259

In addition to the other intangible assets described above, other assets included the long-term portion of contract acquisition and pre-operating costs totaling ~~$38.7~~$30.5 million and ~~$50.6~~$37.1 million, respectively, as of ~~December 31~~September 30 and March 31, ~~2018,~~2019, related to the SAR contracts in the U.K. and two customer contracts in Norway, which are recoverable under the contracts and will be expensed over the terms of the contracts.

Property and Equipment

During the three and six months ended September 30, 2019 and 2018, we made capital expenditures as follows:



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018

Capital expenditures (in thousands):
Aircraft and equipment	$	16,074	$	4,394	$	22,762	$	12,731
Land and buildings	2,437		4,013		3,188		4,571
Total capital expenditures	$	18,511	$	8,407	$	25,950	$	17,302

As of December 31, 2018, we revised the salvage values of certain aircraft to reflect our expectation of future sales values given our disposal plans for those aircraft. We recorded additional depreciation expense of $1.4 million and $2.8 million during the three and six months ended September 30, 2019, respectively.

1214

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

~~Property~~We evaluate our asset groups for impairment whenever facts or circumstances indicate the carrying value of an asset group may not be recoverable.

The removal of the H225 aircraft from our oil and ~~Equipment, Assets Held~~gas asset group and changes in our forecasted cash flows for ~~Sale~~that asset group during the three months ended September 30, 2018 indicated the need for the performance of a recoverability analysis of our oil and ~~OEM Cost Recoveries~~gas asset group. In accordance with ASC 360-10, we estimate future undiscounted cash flows to test the recoverability of our oil and gas asset group, which largely consists of our oil and gas-related held for use aircraft. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs including assumptions related to projected demand for services, rates and anticipated aircraft disposal values. We determined that the estimated future undiscounted cash flows exceeded the carrying value for our oil and gas asset group as of September 30, 2018, and no impairment was recorded on these assets.

~~During~~Changes in our forecasted cash flows as a result of actions taken during the Chapter 11 Cases during the three months ended September 30, 2019 triggered a review of our oil and gas asset group for potential impairment. In accordance with ASC 360-10, we estimate future undiscounted cash flows to test the recoverability of our oil and gas asset group, which largely consists of our oil and gas-related held for use aircraft. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs including assumptions related to projected demand for services, rates and anticipated aircraft disposal values. We determined that the estimated future undiscounted cash flows exceeded the carrying value for our oil and gas asset group as of September 30, 2019, and no impairment was recorded on these assets. Future declines in operating performance, anticipated business outlook and asset disposal values may reduce our estimated future undiscounted cash flows and result in impairment of our oil and gas asset group.

Changes in our forecasted cash flows during the three months ended September 30, 2019 indicated the need for the performance of a recoverability analysis for the airline related assets of Airnorth. In accordance with ASC 360-10, we estimate future undiscounted cash flows to test the recoverability of the airline related assets of Airnorth for potential impairment. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs including assumptions related to projected demand for services and rates. We determined that the estimated future undiscounted cash flows exceeded the carrying value for our Airnorth asset group as of September 30, 2019 and no impairment was recorded on these assets. Future declines in operating performance, anticipated business outlook and asset disposal values may reduce our estimated future undiscounted cash flows and result in impairment of our Airnorth asset group.

The following table presents details on the property and equipment sold or disposed of and impairments on property and equipment during the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019 and ~~2017, we took delivery of aircraft and made capital expenditures as follows:~~2018:

Three Months Ended
December 31, Nine Months Ended
December 31,
2018
2017 2018
2017
(In thousands, except for number of aircraft)
Number of aircraft delivered:
Medium ⁽¹⁾
1
—
1
5
Total aircraft 1
—
1
5
Capital expenditures (in thousands):
Aircraft and equipment ⁽¹⁾⁽²⁾
$ 15,839
$ 10,311
$ 28,570
$ 26,800
Land and buildings 570
1,813
5,141
9,641
Total capital expenditures $ 16,409
$ 12,124
$ 33,711
$ 36,441



	Three Months Ended September 30,						Six Months Ended September 30,
	2019			2018			2019			2018

	(In thousands, except for number of aircraft)
Number of aircraft sold or disposed of	1			—			3			3
Proceeds from sale or disposal of assets ⁽¹⁾	$	1,799		$	688		$	5,003		$	8,462
Loss from sale or disposal of assets ⁽²⁾	$	(230	)	$	(1,293	)	$	(4,017	)	$	(2,971	)

Impairment charges on property and equipment ⁽³⁾	$	42,022		$	104,939		$	42,022		$	104,939

_____________


⁽¹⁾	~~During the three~~Includes proceeds received for sale of property and ~~nine months ended December 31, 2018, we purchased an aircraft that was not on order that was previously leased.~~equipment (including aircraft) during each period.


⁽²⁾	~~During the nine months ended December 31, 2017, we spent $2.3 million on progress payments for aircraft to be delivered in future periods. During the three months ended December 31, 2017~~ ~~and the~~ ~~three and nine months ended December 31, 2018, we made no progress payments for aircraft to be delivered in future periods.~~

The following table presents details on the aircraft sold or disposed of and impairment charges on assets held for sale and property and equipment during the three and nine months ended December 31, 2018 and 2017:

Three Months Ended
December 31, Nine Months Ended
December 31,
2018 2017 2018 2017

(In thousands, except for number of aircraft)
Number of aircraft sold or disposed of —
5
3
11
Proceeds from sale or disposal of assets $ 631
$ 6,303
$ 9,093
$ 48,547
Loss from sale or disposal of assets ⁽¹⁾
$ 694
$ 3,031
$ 3,665
$ 1,111

Number of held for sale aircraft impaired 2
1
2
5
Impairment charges on assets held for sale ⁽¹⁾⁽²⁾
$ 1,350
$ 1,560
$ 1,350
$ 11,307
Impairment charges on property and equipment ⁽³⁾
$ —
$ —
$ 104,939
$ —
Contract termination costs⁽¹⁾⁽⁴⁾
$ 13,971
$ —
$ 13,971
$ —

~~_____________~~


⁽¹⁾	Included in loss on disposal of assets on our condensed consolidated statements of operations.


⁽²⁾	Includes ~~a $6.5 million impairment~~gain (loss), net for sale or disposal of ~~the Bristow Academy disposal group for the nine months ended December 31, 2017.~~property and equipment (including aircraft) during each period.

⁽³⁾

Includes an$42.0 million impairment related to the H225s for the three and six months ended September 30, 2019. Includes $87.5 million impairment related to H225s and a $17.5 million ~~impairment~~ related to Eastern Airways assets for the ~~nine~~three and six months ended ~~December 31,~~September 30, 2018, included in loss on impairment on our condensed consolidated statement of operations. See “—Loss on ~~Impairment~~Impairment” above for further details.


⁽⁴⁾ 15 Table of Contents BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (Unaudited) OEM Cost Recoveries	~~Includes $11.7 million of progress payments and $2.3 million of capitalized interest for an aircraft purchase contract that was terminated in December 2018. For further details, see Note 8.~~

During fiscal year 2018, we reached agreements with original equipment manufacturers (“OEM”) to recover approximately $136.0 million related to ongoing aircraft issues, of which $125.0 million was realized during fiscal year 2018 and $11.0 million was recovered during the ~~nine~~three months ended ~~December 31,~~June 30, 2018. To reflect the amount realized from these OEM cost recoveries during fiscal year 2018, we recorded a $94.5 million decrease in the carrying value of certain aircraft in our fleet through a decrease in property and equipment – at cost, reduced rent expense by $16.6 million and recorded a deferred liability of $13.9 million,

~~Table of Contents~~

~~BRISTOW GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

included in other accrued liabilities and other liabilities and deferred credits, related to a reduction in rent expense to be recorded in future periods, of which ~~$1.0~~$2.4 million and ~~$6.9~~$5.9 million was recognized during the three and ~~nine~~six months ended ~~December~~September 30, 2018, respectively, and $2.0 million was recognized during the six months ended March 31, ~~2018, respectively.~~2019. We determined the realized portion of the cost recoveries related to a long-term performance issue with the aircraft, requiring a reduction of carrying value for owned aircraft and a reduction in rent expense for leased aircraft. During the six months ended September 30, 2019, we returned the remaining four leased aircraft and recognized all of the remaining deferred liability related to the leased aircraft of $6.0 million as a reduction in rent expense. For the owned aircraft, we allocated the $94.5 million as a reduction in carrying value by reducing the historical acquisition value of each affected aircraft on a pro-rata basis utilizing the historical acquisition value of the aircraft. For the leased aircraft, we will recognize the remaining deferred liability of $7.0 million as a reduction in rent expense prospectively on a straight-line basis over the remaining lease terms. This will result in a reduction to rent expense of $1.0 million during the three months ending March 31, 2019, $4.0 million during fiscal year 2020 and $2.0 million during fiscal year 2021.

During the ~~nine~~six months ended ~~December 31,~~September 30, 2018, we recovered the remaining $11.0 million in OEM cost recoveries by agreeing to net certain amounts previously accrued for aircraft leases and capital expenditures against those recoveries. During the ~~nine~~six months ended ~~December 31,~~September 30, 2018, we recorded a $7.6 million increase in revenue and a ~~$3.1~~$2.1 million decrease in direct cost. We ~~expect to realize~~realized the remaining ~~$0.3~~$1.3 million ~~as a decrease in direct cost in the three months ending March 31,~~recovery during fiscal year 2019. The increase in revenue relates to compensation for lost revenue in prior periods from the late delivery of aircraft and the decreases in direct cost over fiscal year 2019 relate to ~~prior~~ costs we have ~~incurred and future costs we expect to incur.~~incurred.

In connection with the $87.5 million impairment of our H225 aircraft, we revised our salvage values for each H225 aircraft. In accordance with accounting standards, we will recognize the change in depreciation due to the reduction in carrying value and revision of salvage values on a prospective basis over the remaining life of the aircraft. This resulted in an additional $1.5 million of depreciation expense during the three and nine months ended December 31, 2018 and will result in an increase of depreciation expense of $1.5 million during the remainder of fiscal year 2019, $5.9 million during fiscal year 2020, $1.9 million during fiscal year 2021 and a reduction of $10.3 million during fiscal year 2022 and beyond.

As of December 31, 2018, we revised the salvage values of certain aircraft to reflect our expectation of future sales values given our disposal plans for those aircraft. We expect to record additional depreciation expense of $1.4 million during the remainder of fiscal year 2019 and $2.8 million during fiscal year 2020.

On November 1, 2017, we sold our 100% interest in Bristow Academy. As of September 30, 2017, we concluded the disposal group, comprised of the Bristow Academy assets and liabilities met the assets held for sale criteria under ASC 360, but did not meet the requirements for classification as discontinued operations. We evaluated the carrying value of the Bristow Academy disposal group and determined an impairment of $6.5 million, recorded within loss on disposal of assets on our condensed consolidated statement of operations, was necessary to record the disposal group at fair value based on the terms of the sale. The Bristow Academy disposal group is included in Corporate and other in Note 12 — Segment Information.

Other Accrued Liabilities

Other accrued liabilities of ~~$38.7~~$58.4 million and ~~$66.0~~$38.7 million as of ~~December 31~~September 30 and March 31, ~~2018,~~2019, respectively, includes the following:


	December 31, 2018		March 31, 2018		September 30, 2019		March 31, 2019

	(In thousands)				(In thousands)
Accrued lease costs	$	9,028	$	11,708	$	1,291	$	6,017
Deferred OEM cost recovery	3,997		8,082		—		3,997
Eastern Airways overdraft liability ⁽¹⁾	—		8,989
Backstop Commitment Agreement ⁽¹⁾					19,250		—
Accrued legal and professional fees					17,446		3,070
Accrued property and equipment	490		4,874		860		997
Deferred gain on sale leasebacks	1,305		1,305		789		1,305
Other operating accruals	23,872		31,020		18,798		14,437
Eastern Airways other accrued liabilities⁽²⁾					—		8,856
	$	38,692	$	65,978	$	58,434	$	38,679

_____________


⁽¹⁾	Estimated fees related to the Backstop Commitment Agreement (the “Backstop Commitment Agreement”). See Note 5 for further details.


⁽²⁾	Eastern Airways ~~overdraft liability related to its revolving credit facility, which matured~~was sold on ~~December 31, 2018.~~May 10, 2019.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Gain (Loss) on Sale of Subsidiaries

Gain (loss) on sale of subsidiaries includes the following:



	Three Months Ended September 30, 2019		Six Months Ended September 30, 2019

	(in thousands)
Sale of Eastern Airways	$	—	$	(46,852	)
Sale of Aviashelf and Bristow Helicopters Leasing Limited	420		(9,031		)
	$	420	$	(55,883	)

Eastern Airways

Bristow Helicopters Limited (“Bristow Helicopters”), a subsidiary of Bristow Group, together with its legal and financial advisors, pursued various transactions to exit the Eastern Airways business, which made negative contributions to our operating income in each of the last three fiscal years, including pursuing a sales process with several third parties over an extended period. On May 10, 2019, Bristow Helicopters completed the sale of all of the shares of Eastern Airways to Orient Industrial Holdings Limited (“OIHL”), an entity affiliated with Mr. Richard Lake, a director of Bristow Helicopters, pursuant to a Sale and Purchase Agreement (the “EAIL Purchase Agreement”). Pursuant to the EAIL Purchase Agreement and related agreements, Bristow Helicopters contributed approximately £17.1 million to Eastern Airways as working capital, OIHL acquired Eastern Airways. Bristow Helicopters retained its controlling ownership of the shares in Humberside International Airport Limited that it previously held through Eastern Airways. Certain intercompany balances between Bristow Helicopters and Eastern Airways were also written off. As a result of the transaction, OIHL now owns and operates Eastern Airways, which had previously operated as a separate unit within Bristow Group, and Bristow Helicopters maintains its controlling interest in Humberside Airport, from which Bristow Helicopters provides U.K. SAR services.

The EAIL Purchase Agreement contained customary representations and warranties. OIHL agreed to certain covenants with respect to non-solicitation of directors, officers or employees of Bristow Helicopters for a period of 12 months. Pursuant to the terms of the EAIL Purchase Agreement, Bristow Helicopters has the right to appoint an observer to the board of directors of Eastern Airways for an initial period of 12 months following the sale. Eastern Airways also agreed to provide certain transition services for a minimum of 12 months from the date of the completion of the transaction.

The loss on the sale of Eastern Airways for the six months ended September 30, 2019 of $46.9 million includes the write-off of net assets of $35.0 million and write-off of cumulative translation adjustment of $11.9 million.

Aviashelf and Bristow Helicopters Leasing Limited

As of March 31, 2019, Bristow Aviation Holdings Limited (“Bristow Aviation”) had an indirect 48.5% interest in Aviashelf Aviation Co. (“Aviashelf”), a Russian helicopter company. Additionally, we owned 60% of two U.K. joint venture companies, Bristow Helicopters Leasing Limited (“BHLL”) and Sakhalin Bristow Air Services Ltd. These two U.K. companies lease aircraft to Aviashelf which held the client contracts for our Russian operations. Aviashelf was consolidated based on the ability of certain consolidated subsidiaries of Bristow Aviation to control the vote on a majority of the shares of Aviashelf, rights to manage the day-to-day operations of the company which were granted under a shareholders’ agreement, and our ability to acquire an additional 8.5% interest in Aviashelf under a put/call option agreement. In April 2019, we sold our 60% ownership interest in BHLL for $1.4 million. In June 2019, we sold our 48.5% ownership interest in Aviashelf for $2.6 million. In August 2019, we exercised our call option to acquire an 8.5% interest in Aviashelf and subsequently sold that interest for $0.4 million.

The loss on the sale of Aviashelf and BHLL for the six months ended September 30, 2019 of $9.0 million includes the loss on sale of net assets of $1.8 million and write-off of cumulative translation adjustment of $7.2 million.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Recent Accounting Pronouncements

We consider the applicability and impact of all accounting standard updates (“ASUs”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued accounting guidance on revenue recognition replacing the existing accounting standard and industry-specific guidance for revenue recognition with a five-step model for recognizing and measuring revenue from contracts with customers. The underlying principle of the new standard is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. This new standard is effective for annual reporting periods beginning after December 15, 2017. We adopted the standard as of April 1, 2018 using the modified retrospective method applied to open contracts and only to the version of the contracts in effect as of April 1, 2018. Prior period amounts have not been adjusted and continue to be reflected in accordance with our historical accounting policy. There was no impact on our condensed consolidated financial statements and no cumulative effect adjustment was recognized. For further details, see Note 3.Adopted

In February 2016, the FASB issued accounting guidance Accounting Standard Codification (“ASC”) 842 which amends ASC 840 the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ~~This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted.~~ Additionally, ~~this accounting guidance~~ASC 842 requires a modified retrospective transition approach for all leases existing at, or entered into after the date of initial application, with an option to use certain transition relief. ~~In July~~The guidance was updated in March 2018 ~~the FASB issued a practical expedient~~to include an amendment that would allow ~~entities~~us to consider the ~~option to apply the provisions~~beginning of the ~~new lease guidance at~~period of adoption as the effective date of ~~adoption without adjusting~~initial application of the ~~comparative periods presented. In December 2018,~~standard. We implemented this accounting standard with an effective date of April 1, 2019. Based on the FASB transition guidance, we do not have to apply the disclosure requirement to periods prior to adoption. We elected the package of practical expedients to not re-evaluate existing lease contracts or lease classifications and therefore will not make changes to those leases already recognized on the consolidated balance sheet under ASC 840 until the leases are fully amortized, amended, or modified. In addition, we did not reassess initial direct costs for any existing leases and elected the short-term lease exception provided ~~certain improvements to this topic that are narrow~~for in ~~scope. We have not yet adopted this~~the standard and ~~are currently evaluating~~therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year. We elected the ~~effect~~practical expedient to not separate lease and non-lease components for all asset classes.

We completed a system implementation and have updated our accounting policies to meet the standard’s requirements. On April 1, 2019, our adoption of this accounting standard ~~will have~~resulted in recording on our ~~financial statements.~~

~~In October 2016, the FASB issued accounting guidance related to current and deferred income taxes for intra-entity transfer~~condensed consolidated balance sheet right-of-use assets of assets other than inventory. This accounting guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. We adopted this accounting guidance effective April 1, 2018 using the modified retrospective method, through a cumulative-effect adjustment directly to retained earnings. Upon adoption, we increased deferred tax liabilities by approximately $1.7$281.0 million and ~~recognized~~ an ~~offsetting decrease to retained earnings.~~

~~In January 2017, the FASB issued accounting guidance which clarifies the definition~~increase in lease liabilities of ~~a business~~$285.3 million with the objective of adding guidance to assist in evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The amendment provides criteria for determining when a transaction involves the acquisition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the transaction does not involve the acquisition of a business. If the criteria are not met, then the amendment requires that to be considered a business, the operation must include at a minimum an input and a substantive process that together significantly contribute to the ability to create an output. The guidance may reduce the number of transactions accounted for as business acquisitions. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. The amendments should be applied prospectively, and no ~~disclosures are required at the effective date. We adopted this accounting guidance effective April 1, 2018. This accounting guidance has had no~~material impact on our ~~financial~~consolidated statements ~~since adoption as we have not entered into any transactions during this period.~~

In March 2017, the FASB issued accounting guidance related to the presentation of net periodic pension cost and net periodic post-retirement benefit cost. The accounting guidance requires employers to disaggregate the service cost component from the other components of net benefit cost and disclose the amount of net benefit cost that is included in the statement of operations or capitalized in assets, by line item. The accounting guidance requires employers to report the service cost component in the same line item(s) as other compensation costs and to report other pension-related costs (which include interest costs, amortization of pension-related costs from prior periods, and the gains or losses on plan assets) separately and exclude them from the subtotal of operating income. The accounting guidance also allows only the service cost component to be eligible for capitalization when applicable. This accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted as of the first interim period of an annual period for which interim or annual financial statements have not been issued. The accounting guidance requires application on a retrospective basis for the presentation of the service cost component and the other components of net periodic pension cost and net periodic post-retirement benefit cost in the statement of operations and consolidated statements of cash flows. For further information on ~~a prospective basis for the capitalization of the service cost component of net periodic pension cost~~

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~~BRISTOW GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

and net periodic post-retirement benefit in assets. We adopted this accounting guidance effective April 1, 2018, and our statement of operations was retrospectively adjusted by $0.1 million and $0.1 million with an increase in direct cost and a corresponding credit in other income (expense), net for the three and nine months ended December 31, 2017, respectively.

In May 2017, the FASB issued accounting guidance on determining which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. We have adopted this accounting guidance effective April 1, 2018, with no impact on our financial statements as there were no changes to the terms or conditions of share-based payment awards.leases, see Note 9.

In February 2018, the FASB issued new accounting guidance on income statement reporting of comprehensive income, specifically pertaining to reclassification of certain tax effects from accumulated other comprehensive ~~income.~~income to retained earnings. This pronouncement is effective for fiscal years, and for interim periods within those years, beginning after December 15, 2018, with early adoption ~~permitted, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date.~~permitted. We ~~have not yet~~ adopted this accounting guidance ~~and are currently evaluating the effect this accounting guidance will have~~ on ~~our financial statements.~~April 1, 2019. We did not elect to reclassify certain tax effects from accumulated other comprehensive income to retained earnings.

In June 2018, the FASB issued an amendment to the accounting guidance related to accounting for employee share-based payments which clarifies that an entity should recognize excess tax benefits in the period in which the amount of the deduction is determined. This amendment is effective for annual periods beginning after December 15, ~~2018.~~ 2018, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. We ~~have not yet~~ adopted this accounting guidance ~~and are currently evaluating the effect this accounting guidance will have~~ on April 1, 2019 with no impact to our financial statements.

Not Yet Adopted

In August 2018, the FASB modified the disclosure requirements on fair value measurements. The amendment modifies, removes, and adds several disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The amendment is effective for fiscal years ending after December 15, 2021 for public business entities and early adoption is permitted. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our disclosure requirements.

In August 2018, the FASB modified disclosure requirements for employers that sponsor defined benefit pension plans. Certain disclosure requirements were removed and certain disclosure requirements were added. The amendment also clarifies disclosure requirements for projected benefit obligation ~~(“PBO”)~~ and accumulated benefit obligation ~~(“ABO”)~~ in excess of respective plan assets. The amendment is effective ~~for~~beginning in our fiscal ~~years ending after December 15, 2020 for public business entities~~year 2021 financial statements and early adoption is permitted. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our disclosure requirements.

In August 2018, the FASB issued new accounting guidance that addresses the accounting for implementation costs associated with a hosted service. The guidance provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. ~~This guidance~~The amendment is effective ~~for public business entities for~~beginning in our fiscal ~~years beginning after December 15, 2019,~~year 2021 financial statements and ~~interim periods within those fiscal years, with~~ early adoption is permitted. The guidance will be applied either

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

retrospectively or prospectively to all implementation costs incurred after the date of adoption. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our financial statements.

In October 2018, the FASB amended the guidance for determining whether a decision-making fee is a variable interest. The amendments require organizations to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in generally accepted accounting principles). Therefore, these amendments likely will result in more decision makers not consolidating ~~variable interest entities (“VIEs”).~~VIEs. This amendment is effective beginning in our fiscal year 2021 financial ~~statements.~~statements and early adoption is permitted. We have not yet adopted this accounting guidance and are currently evaluating the effect this accounting guidance will have on our disclosure requirements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~— (Continued)~~

(Unaudited)

Note 2 — ~~ACQUISITION~~BANKRUPTCY AND ~~DISPOSITION~~RELATED MATTERS

~~Columbia Helicopters~~ ~~— On February 11, 2019, we announced that our agreement to acquire Columbia Helicopters, Inc. (“Columbia”) had been terminated by mutual agreement of the parties.~~ Fiscal Year 2020 Incentive Plans

Key Employee Incentive Plans

In connection with the ~~termination, we paid $20~~Chapter 11 Cases, the Compensation Committee of the Board of Directors of the Company (“Board”) adopted on behalf of the Company an Executive Key Employee Incentive Plan (the “Executive KEIP”) and a Non-Executive Key Employee Incentive Plan (“Non-Executive KEIP”), each approved by the Bankruptcy Court on August 22, 2019. The Executive KEIP is designed to incentivize ten of the Company’s senior executives by providing a total potential cash award pool of approximately $3.1 million at threshold, $6.1 million at target and up to ~~Columbia, which~~$12.3 million for exceeding target, and is contingent upon achievement of certain financial targets and safety metrics, and the timing of confirmation of the Amended Plan by the Bankruptcy Court. The Non-Executive KEIP is designed to enhance retention of up to 183 other non-insider employees and provides a total potential cash award pool of approximately $7.7 million at threshold, $10.3 million at target and up to $15.4 million for exceeding target, with 50 percent of the payment contingent upon achievement of certain financial targets and safety metrics, and 50 percent of the payment being based on continued employment with the Company. The payments for the Executive KEIP will be ~~included as expense~~made quarterly with the first payment made in ~~our condensed consolidated statements of operations~~October 2019. The payments for the ~~three months ended March 31,~~Non-Executive KEIP will be made quarterly with the first payment made in October 2019. ~~Upon termination~~

Management Incentive Plan

Effective as of the ~~acquisition agreement,~~Effective Date, the ~~financing agreements related to the acquisition also terminated pursuant to their respective terms. Due to the termination~~Compensation Committee of the ~~acquisition agreement,~~Board adopted the ~~amendment~~2019 Management Incentive Plan (the “MIP”). The MIP is an equity-based compensation plan for directors, officers and participating employees and other service providers of the Company and its affiliates, pursuant to ~~the indenture for the 8.75% Senior Secured Notes, for~~ which the Company ~~obtained~~may issue awards covering shares of the ~~requisite consent of holders of such notes in connection~~new common stock, par value $0.0001 (the “New Common Stock”), and new preferred stock, par value $0.0001 (the “New Preferred Stock” and, together with the ~~planned acquisition financing, did not become operative, and~~New Common Stock, the ~~related consent fees did not become payable.~~

~~Eastern Airways and Humberside Airport~~ ~~— Bristow Helicopters Limited, an indirect consolidated affiliate~~“New Stock”), of the Company, ~~(“Bristow Helicopters”~~as reorganized pursuant to the Amended Plan (the “Reorganized Company”). As adopted, the share reserve of the MIP was initially comprised of 473,218 shares of New Common Stock and 284,358 shares of New Preferred Stock, representing in the aggregate 4.0% of our outstanding New Stock on a fully diluted basis. On December 6, 2019, the Board approved an increase to the share reserve of the MIP, bringing the total share reserve to 699,890 shares of New Common Stock and 323,664 shares of New Preferred Stock, which represents in the aggregate 5.0% of our outstanding New Stock on a fully diluted basis.

Severance Plan and Participation Agreements

Effective as of the Effective Date, the Company adopted the Amended and Restated 2019 Management Severance Benefits Plan for U.S. Employees (the “Severance Plan”), ~~together with its legal~~which provides severance benefits to certain key employees, which are categorized into five “tiers” based on job title or job grade level, including L. Don Miller (President and ~~financial advisors, pursued various transactions to exit the Eastern Airways business, which made negative contributions to our Adjusted EBITDA in~~Chief Executive Officer), who is a Tier 1 participant, and each of Brian J. Allman (Senior Vice President and Chief Financial Officer), Robert Phillips (Senior Vice President, Americas), Alan Corbett (Senior Vice President, EAMEA) and Victoria Lazar (Senior Vice President, General Counsel and Corporate Secretary), all of whom are Tier 2 participants (collectively, the ~~last three~~“Specified Officers”) and those with a title of Vice President being Tier 3 participants. Each of the Tier 1, Tier 2 and Tier 3 participants will also be required to enter into a separate participation agreement to the Severance Plan (a “Participation Agreement”), which provides for certain enhanced benefits and imposes additional requirements in addition to the terms of the Severance Plan.

The Severance Plan provides participants with severance benefits in the event of a termination by the Company without Cause (as defined therein) or, in the case of Tier 1 through 3 participants, by the participant for Good Reason (as defined therein) (each, a “Qualifying Termination”), with such severance benefits consisting of the following for the Specified Officers: (i) cash severance in the form of continued base salary payments for 24 months (Tier 1 participant) or 12 months (Tier 2 participant) post-termination; (ii) subsidized COBRA coverage for 18 months post-termination (both Tier 1 and 2 participants); (iii) outplacement services for 12 months post-termination (both Tier 1 and 2 participants); and (iv) if the Qualifying Termination occurs after fiscal ~~years, including pursuing~~year 2020, a ~~sales process with several third parties over an extended period. On May 10, 2019, Bristow Helicopters completed~~pro-rata annual bonus for the ~~sale~~year of termination based on actual performance (both Tier 1 and 2 participants).

For Tier 1 and 2 participants (i.e., all of the ~~shares~~Specified Officers), the Severance Plan and Participation Agreements provide for enhanced severance benefits in the event that the Qualifying Termination occurs within the two-year period following a Change in Control (as defined therein), with such enhanced severance benefits consisting of ~~Eastern Airways to Orient Industrial Holdings Limited (“OIHL”), an entity affiliated with Mr. Richard Lake, pursuant to a Sale and Purchase Agreement (the “EAIL Purchase Agreement”). Pursuant~~the same severance benefits as described in the preceding paragraph, subject to the ~~EAIL Purchase Agreement and related agreements, Bristow Helicopters contributed approximately £17.1 million~~following enhancements: (i) the cash severance consists of an amount equal to ~~Eastern Airways as working capital, OIHL acquired Eastern Airways, Bristow Helicopters retained its controlling ownership~~2.0x (Tier 1 participant) or 1.5x (Tier 2 participants) the sum of the ~~shares~~participant’s (x) base salary and (y) target bonus (initially 110% of base salary (Tier 1 participant) and 65% of base salary (Tier 2 participants, other than Mr. Allman, whose target bonus is initially 75%

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

of base salary)), payable in ~~Humberside International Airport Limited~~installments over the 24-month (Tier 1 participant) or 18-month (Tier 2 participants) post-termination period; and (ii) the pro-rata annual bonus is based on target (as opposed to actual) performance. If the Qualifying Termination occurs after the date that ~~it previously held~~the Compensation Committee of the Board determines annual compensation for fiscal year 2021, then the amount in clause (i)(y) above will equal to the greatest of (x) the Specified Officer’s initial target bonus amount described above, (y) 100% of the Specified Officer’s target bonus for the fiscal year in which the Qualifying Termination occurs and (z) 100% of the Specified Officer’s target bonus for the prior fiscal year (excluding fiscal year 2020 and all prior years).

The Participation Agreements also subject Tier 1 through ~~Eastern Airways~~Tier 3 participants, including the Specified Officers, to restrictive covenants as a condition of participating therein, with such covenants consisting of the following: (i) 12-month (or, if longer, the length of the base salary continuation period) post-termination non-compete; (ii) 24-month post-termination non-solicitation/non-hire; (iii) assignment of inventions; and ~~certain intercompany balances between Bristow Helicopters~~(iv) perpetual confidentiality and ~~Eastern Airways were written off.~~ non-disparagement. The Participation Agreements also provide that the Severance Plan may not be amended in an adverse manner to the Tier 1 through Tier 3 participants during the three-year period following the Effective Date.

Liabilities Subject to Compromise

As a result of the ~~transaction, OIHL now owns~~Chapter 11 Cases, the payment of prepetition indebtedness was subject to compromise or other treatment under the Amended Plan. Generally, actions to enforce or otherwise effect payment of prebankruptcy filing liabilities are stayed. Although payment of prepetition claims is generally not permitted, the Bankruptcy Court granted the Debtors authority to pay certain prepetition claims in designated categories and ~~operates Eastern Airways, which had previously operated~~subject to certain terms and conditions. This relief generally was designed to preserve the value of the Debtor’s businesses and assets. Among other things, the Bankruptcy Court authorized the Debtors to pay certain prepetition claims relating to employee wages and benefits, customers, vendors, and suppliers in the ordinary course of business as ~~a separate unit within Bristow Group,~~well as certain principal and ~~Bristow Helicopters maintains its controlling~~ interest ~~in Humberside Airport, from which Bristow Helicopters provides U.K. SAR services.~~payments.

The ~~EAIL Purchase Agreement contained customary representations~~Debtors have been paying and ~~warranties. OIHL agreed~~intend to ~~certain covenants with~~continue to pay undisputed post-petition claims in the ordinary course of business. With respect to ~~non-solicitation of directors, officers or employees of Bristow Helicopters for a period of 12 months. Pursuant to~~prepetition claims, the ~~terms~~Debtors notified all known claimants of the ~~EAIL Purchase Agreement, Bristow Helicopters has~~deadline to file a proof of claim with the ~~right~~Bankruptcy Court. The Debtors’ liabilities subject to ~~appoint an observer~~compromise represent the estimate as of September 30, 2019 of claims expected to be allowed under the ~~board~~Amended Plan. Prepetition liabilities that are subject to compromise were required to be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts.

Liabilities subject to compromise included in our condensed consolidated balance sheet includes the following as of ~~directors~~September 30, 2019 (in thousands):



6¼% Senior Notes due 2022 principal and accrued interest ⁽¹⁾	$	415,894
4½% Convertible Senior Notes due 2023 principal and accrued interest ⁽²⁾	146,627
Accrued lease termination costs ⁽³⁾	35,000
Milestone Omnibus Agreement ⁽⁴⁾	20,063
Corporate lease termination ⁽⁵⁾	5,300
Deferred compensation plan	1,983
	$	624,867

_____________


⁽¹⁾	Includes $401.5 million of principal and $14.4 million of interest accrued through May 11, 2019. See Note 5 for further details.


⁽²⁾	Includes $143.8 million of principal and $2.9 million of interest accrued through May 11, 2019. See Note 5 for further details.


⁽³⁾	Relates to ten aircraft leases rejected in June 2019, including nine S-76C+s and one S-76D. See Note 9 for further details.


⁽⁴⁾	Includes costs related to the return of four leased H225s on May 6, 2019 and includes lease termination costs, deferred lease costs previously included as short-term debt on our condensed consolidated balance sheet and additional lease return costs. See Note 9 for further details.


⁽⁵⁾	See Note 9 for further details.

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Prepetition Restructuring Charges

Prepetition restructuring charges totaling $13.5 million for ~~an initial period~~the six months ended September 30, 2019 include professional fees incurred prior to May 11, 2019 related to our Chapter 11 Cases.

Reorganization Items, Net

Reorganization items, net included in our condensed consolidated statement of ~~12 months following the sale. Eastern Airways also agreed~~operations represent amounts incurred after May 11, 2019 or expected to ~~provide certain transition services for a minimum of 12 months~~be incurred directly resulting from the ~~date~~Chapter 11 Cases and consist of the ~~completion~~following items for the three and six months ended September 30, 2019 (in thousands):



	Three Months Ended September 30, 2019			Six Months Ended September 30, 2019

Professional fees	$	35,462		$	50,965
H175 settlement agreement ⁽¹⁾	31,830			31,830
Lease termination costs ⁽²⁾	4,170			30,221
Write-off of discount on 4½% Convertible Senior Notes due 2023	—			30,158
Backstop Commitment Agreement ⁽³⁾	19,250			19,250
Write-off of deferred financing fees ⁽⁴⁾	4,114			8,758
Corporate lease termination cost	1,063			1,063
Milestone Omnibus Agreement allowed claim adjustment ⁽⁵⁾	(1,946		)	(1,946		)
	$	93,943		$	170,299

_____________


⁽¹⁾	During the three and six months ended September 30, 2019, we rejected our aircraft purchase agreement with Airbus Helicopters S.A.S. for the 22 H175 helicopters.


⁽²⁾	Relates to ten aircraft leases rejected in June 2019, including nine S-76C+s and one S-76D.


⁽³⁾	The three and six months ended September 30, 2019 includes $19.3 million of estimated fees related to the Backstop Commitment Agreement. See Note 5 for further details.

⁽⁴⁾

The three months ended September 30, 2019 includes $4.1 million incurred for fees related to the DIP Credit Agreement. The six months ended September 30, 2019 includes $2.4 million related to the 6¼% Senior Notes due 2022 (“6¼% Senior Notes”), $2.3 million related to deferred financing fees related to the 4½% Convertible Senior Notes due 2023 (“4½% Convertible Senior Notes”) and $4.1 million incurred for fees related to the DIP Credit Agreement.


⁽⁵⁾	During the three months ended September 30, 2019, the allowed claim for the Milestone Omnibus Agreement was adjusted lower by $1.9 million.

Cash paid for reorganization items during the three and six months ended September 30, 2019 was $14.3 million and $15.7 million, respectively, and related to professional fees and debt financing fees.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Financial Statements of the ~~transaction.~~Debtors

The financial statements below represent condensed combined financial statements of the Debtors, which excludes non-debtor entities. Intercompany transactions among the Debtors have been eliminated in the financial statements contained below. Intercompany transactions among the Debtors and the non-debtor subsidiaries have not been eliminated in the Debtors’ financial statements below.

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION)

Condensed Combined Statements of Operations



	Three Months Ended September 30, 2019			Six Months Ended September 30, 2019

	(Unaudited)
	(In thousands)
Revenue	$	90,918		$	180,630
Operating expense:
Direct cost and reimbursable expense	62,397			134,741
Prepetition restructuring charges	—			12,449
Depreciation and amortization	31,319			62,608
General and administrative	19,999			33,760
	113,715			243,558

Loss on impairment	(42,022		)	(42,022		)
Gain (loss) on disposal of assets	(375		)	4,200
Operating loss	(65,194		)	(100,750		)
Interest expense, net	(18,364		)	(39,817		)
Reorganization items, net	(83,392		)	(159,289		)
Other income, net	1,000			1,679
Loss before benefit for income taxes	(165,950		)	(298,177		)
Benefit for income taxes	25,291			44,350
Net loss	(140,659		)	(253,827		)
Net income attributable to noncontrolling interests	(10		)	(24		)
Net loss attributable to Bristow Group	$	(140,669	)	$	(253,851	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION)

Condensed Combined Balance Sheet



	September 30, 2019
	(Unaudited)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	39,093
Restricted cash	34
Accounts receivable	43,395
Intercompany accounts receivable	458,008
Inventories	35,658
Prepaid expenses and other current assets	11,250
Total current assets	587,438
Intercompany investment	633,197
Intercompany notes receivable	377,069
Property and equipment, net	1,323,267
Right-of-use assets	298,860
Other assets	7,998
Total assets	$	3,227,829

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	37,586
Intercompany accounts payable	109,756
Accrued liabilities	56,618
Accrued interest	2,418
Intercompany accrued interest	4,365
Current portion of operating lease liabilities	84,927
Short-term borrowings and current maturities of long-term debt	831,778
Total current liabilities	1,127,448
Long-term debt, less current maturities	34,161
Intercompany notes payable	77,422
Other liabilities and deferred credits	4,599
Deferred taxes	40,287
Long-term operating lease liabilities	217,421
Total liabilities not subject to compromise	1,501,338
Liabilities subject to compromise	624,867
Total liabilities	2,126,205
Stockholders’ investment:
Total Bristow Group stockholders’ investment	1,100,351
Noncontrolling interests	1,273
Total stockholders’ investment	1,101,624
Total liabilities and stockholders’ investment	$	3,227,829

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION)

Condensed Combined Statement of Cash Flows



	Six Months Ended September 30, 2019

	(Unaudited)
	(In thousands)
Cash flows from operating activities:
Net loss	$	(253,827	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	62,608
Deferred income taxes	(45,283		)
Loss on impairment	42,022
Discount amortization on long-term debt	1,520
Write-off of deferred financing fees	2,726
Reorganization items, net	109,259
Gain on disposal of assets	(4,200		)
Deferral of lease payments	285
Stock-based compensation	1,159
Increase (decrease) in cash resulting from changes in:
Accounts receivable	2,156
Inventories	(328		)
Prepaid expenses and other assets	(4,507		)
Accounts payable	24,130
Accrued liabilities	39,415
Other liabilities and deferred credits, including intercompany activity	(80,800		)
Net cash used in operating activities	(103,665		)
Cash flows from investing activities:
Capital expenditures	(4,472		)
Proceeds from asset dispositions	4,935
Net cash provided by investing activities	463
Cash flows from financing activities:
Proceeds from borrowings	150,000
Debt issuance costs	(6,696		)
Repayment of debt	(94,573		)
Partial prepayment of put/call obligation	(37		)
Net cash provided by financing activities	48,694
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(549		)
Net decrease in cash, cash equivalents and restricted cash	(55,057		)
Cash and cash equivalents at beginning of period	94,184
Cash, cash equivalents and restricted cash at end of period	$	39,127

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 — REVENUE RECOGNITION

Revenue Recognition

In general, we recognize revenue when a service is provided or a good is sold to a customer and there is a contract. At contract inception, we assess the goods and services promised in our contracts with customers and identify all performance obligations for each distinct promise that transfers a good or service (or bundle of goods or services) to the customer. To identify the performance obligations, we consider all goods or services promised in the contract, whether explicitly stated or implied based on customary business practices. Revenue is recognized when control of the identified distinct goods or services have been transferred to the customer, the transaction price is determined and allocated to the performed performance obligations and we have determined that collection has occurred or is probable of occurring.

A majority of our revenue from contracts with customers is currently generated through two types of contracts: helicopter services and fixed wing services. Each contract type has a single distinct performance obligation as described below.

Helicopter services — Our customers — major integrated, national and independent offshore energy companies — charter our helicopters primarily to transport personnel between onshore bases and offshore production platforms, drilling rigs and other installations. To a lesser extent, our customers also charter our helicopters to transport time-sensitive equipment to these offshore locations. The customers for SAR services include both the oil and gas industry and governmental agencies. Revenue from helicopter services is recognized when the performance obligation is satisfied over time based on contractual rates as the related services are performed.

A performance obligation arises under contracts with customers to render services and is the unit of account under the new accounting guidance for revenue. Operating revenue from our oil and gas segment is derived mainly from fixed-term contracts with our customers, a substantial portion of which is competitively bid. A small portion of our oil and gas customer revenue is derived from providing services on an ~~"ad-hoc"~~“ad-hoc” basis. Our fixed-term contracts typically have original terms of one year to seven years (subject to provisions permitting early termination by our customers). We account for services rendered separately if they are distinct and the service is separately identifiable from other items provided to a customer and if a customer can benefit from the services rendered on its own or with other resources that are readily available to the customer. A contract’s transaction price

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Within this contract type for helicopter services, we determined that each contract has a single distinct performance obligation. These services include a fixed monthly rate for a particular model of aircraft, and flight hour services, which represents the variable component of a typical contract with a customer. Rates for these services vary depending on the type of services provided and can be based on a per flight hour, per day, or per month basis. Variable charges within our flight services contracts are not effective until a customer-initiated flight order is received and the actual hours flown are determined; therefore, the associated flight revenue generally cannot be reasonably and reliably estimated beforehand. A contract’s standalone selling prices are determined based upon the prices that we charge for our services rendered. Revenue is recognized as performance obligations are satisfied over time, by measuring progress towards satisfying the contracted services in a manner that best depicts the transfer of services to the customer, which is generally represented by a period of 30 days or less. We typically invoice customers on a monthly basis and the term between invoicing and when the payment is due is typically between 30 and 60 days. In order to offset potential increases in operating costs, our long-term contracts may provide for periodic increases in the contractual rates charged for our services. We recognize the impact of these rates when estimable and applicable, which generally includes written acknowledgment from the customers that they are in agreement with the amount of the rate escalation. Cost reimbursements from customers are recorded as reimbursable revenue with the related reimbursed costs recorded as reimbursable expense on our condensed consolidated statements of operations.

Taxes collected from customers and remitted to governmental authorities and revenue are reported on a net basis in our financial statements. Thus, we exclude taxes imposed on the customer and collected on behalf of governmental agencies to be remitted to these agencies from the transaction price in determining the revenue related to contracts with a customer.

Fixed wing services — ~~Eastern Airways and~~ Airnorth ~~provide~~provides fixed wing transportation services through regular passenger transport (scheduled airline service with individual ticket sales) and charter services. A performance obligation arises under contracts with customers to render services and is the unit of account under the new accounting guidance for revenue. Within fixed wing services, we determined that each contract has a single distinct performance obligation. Revenue is recognized over time at the earlier of the period in which the service is provided or the period in which the right to travel expires, which is determined by the terms and conditions of the ticket. Ticket sales are recorded within deferred revenue in accordance with the above policy. Both chartered and scheduled airline service revenue is recognized net of passenger taxes and discounts. ~~Eastern Airways was sold on May 10, 2019.~~

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Contract Assets, Liabilities and Receivables

We generally satisfy performance of contract obligations by providing helicopter and fixed wing services to our customers in exchange for consideration. The timing of performance may differ from the timing of the customer’s payment, which results in the recognition of a contract asset or a contract liability. A contract asset exists when we have a contract with a customer for which revenue has been recognized (i.e., services have been performed), but customer payment is contingent on a future event (i.e. satisfaction of additional performance obligations). These contract assets are transferred to receivables when the right to consideration becomes unconditional. Contract liabilities relate to deferred revenue in which advance consideration is received from customers for contracts where revenue is recognized on future performance of services.

As of ~~December 31~~September 30 and March 31, ~~2018,~~2019, receivables related to services performed under contracts with customers were ~~$160.5~~$187.0 million and ~~$176.5~~$164.7 million, respectively. All receivables from non-affiliates and affiliates are broken out further in our condensed consolidated balance sheets. During the ~~nine~~six months ended ~~December 31, 2018,~~September 30, 2019, we recognized ~~$9.6~~$8.3 million of revenue from outstanding contract liabilities as of March 31, ~~2018.~~2019. Contract liabilities related to services performed under contracts with customers was ~~$7.9~~$5.8 million and ~~$13.3~~$10.0 million as of ~~December 31~~September 30 and March 31, ~~2018,~~2019, respectively. Contract liabilities are primarily generated by our fixed wing services where customers pay for tickets in advance of receiving our services and advanced payments from helicopter services customers. There were no contract assets as of ~~December 31~~September 30 and March 31, ~~2018.~~2019.

There was no revenue recognized from satisfied performance obligations related to prior periods for the three months ended September 30, 2019 and 2018. For the ~~three and nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, there was ~~$1.9 million~~zero and ~~$1.9~~$1.0 million, respectively, of revenue recognized from satisfied performance obligations related to prior periods (for example, due to changes in transaction price).

Revenue from third party customers

Total revenue related to third party customers is as follows (in thousands):



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Revenue:
Operating revenue from non-affiliates	$	290,939	317,369		$	594,672	$	642,725
Operating revenue from affiliates	5,365		3,819		9,840		8,387
Reimbursable revenue from non-affiliates	13,536		15,946		30,136		32,853
Revenue from Contracts with Customers	309,840		337,134		634,648		683,965
Other revenue from non-affiliates	409		4,211		806		17,321
Other revenue from affiliates	7,971		7,998		15,942		14,725
Total Revenue	$	318,220	$	349,343	$	651,396	$	716,011

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~Adoption Impact~~

In accordance with the new revenue standard requirements discussed in Note 1, the disclosure of the impact of adoption on our condensed consolidated financial statements for the three and nine months ended December 31, 2018 follows (in thousands):

Three Months Ended
December 31, 2018 Nine Months Ended
December 31, 2018
Balances After Adoption Balances without Adoption Effect of change Balances After Adoption Balances without Adoption Effect of change
Revenue:
Operating revenue from non-affiliates $ 301,439
$ 303,206
$ (1,767 ) $ 944,164
$ 963,252
$ (19,088 )
Operating revenue from affiliates 5,895
13,885
(7,990 ) 16,822
39,537
(22,715 )
Reimbursable revenue from
non-affiliates
14,238
14,238
—
47,091
47,091
—
Revenue from Contracts with Customers 321,572
331,329
(9,757 ) 1,008,077
1,049,880
(41,803 )
Other revenue from non-affiliates 1,767
—
1,767
19,088
—
19,088
Other revenue from affiliates 7,990
—
7,990
22,715
—
22,715
Total Revenue $ 331,329
$ 331,329
$ —
$ 1,049,880
$ 1,049,880
$ —

~~No cumulative effect adjustment to retained earnings was required upon adoption on April 1, 2018.~~

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Remaining Performance Obligations

Remaining performance obligations represent firm contracts for which work has not been performed and future revenue recognition is expected. The table below discloses (1) the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period and (2) the expected timing to recognize this revenue (in thousands).:


	Remaining Performance Obligations																	Remaining Performance Obligations
	Three Months Ending March 31, 2019			Fiscal Year Ending March 31,											Total			Six Months Ending March 31, 2020		Fiscal Year Ending March 31,							Total
			2020			2021			2022			2023 and thereafter					2021			2022		2023		2024 and thereafter			Total
	Three Months Ending March 31, 2019														Total
Outstanding Service Revenue:																		Six Months Ending March 31, 2020
Helicopter contracts	$	130,992		$	301,475		$	211,246		$	193,589		$	481,467	$	1,318,769		$	249,470	$	240,042	$	186,194	$	176,615	268,028	$	1,120,349
Fixed-wing contracts	1,779			346			—			—			—		2,125			1,549		378		—		—		—	1,927
Total remaining performance obligation revenue	$	132,771		$	301,821		$	211,246		$	193,589		$	481,467	$	1,320,894		$	251,019	$	240,420	$	186,194	$	176,615	268,028	$	1,122,276

Although substantially all of our revenue is under contract, due to the nature of our business we do not have significant remaining performance obligations as our contracts typically include unilateral termination clauses that allow our customers to terminate existing contracts with a notice period of 30 to 180 days. The table above includes performance obligations up to the point where the parties can cancel existing contracts. Any applicable cancellation penalties have been excluded. As such, our actual remaining performance obligation revenue is expected to be greater than what is reflected above. In addition, the remaining performance obligation disclosure does not include expected consideration related to performance obligations of a variable nature (i.e., flight services) as they cannot be reasonably and reliably estimated.

Other Considerations and Practical Expedients

We were awarded a government contract to provide SAR services for all of the U.K., which commenced in April 2015. We previously incurred costs related to this contract that generate or enhance the resources used to fulfill the performance obligation within the contract and the costs are expected to be recoverable. These contract acquisition and pre-operating costs qualify for capitalization. We amortize these capitalized contract acquisition and pre-operating costs related to the UKU.K. SAR contract and two customer contracts in Norway. We determined that an amortization method that allocates the capitalized costs on a relative basis to the revenue recognized is a reasonable and systematic basis for the amortization of the pre-operating costs asset. For further details on the short and long-term pre-operating cost balances, see Note 1.

We incur incremental direct costs for obtaining contracts through sales commissions paid to ticket agents to sell seats on regular public transportation flights for our fixed-wing services only. We will utilize the practical expedient allowed by the FASB that permits us to expense the incremental costs of obtaining a contract when incurred, if the amortization period of the contract asset that we otherwise would have recognized is one year or less.

In addition, we have applied the tax practical expedient to exclude all taxes in the scope of the election from the transaction price and the invoice practical expedient that allows us to recognize revenue in the amount to which we have the right to invoice the customer and corresponds directly with the value to the customer of our performance completed to date.

Note 4 — VARIABLE INTEREST ENTITIES

A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. If we determine that we have operating power and the obligation to absorb losses or receive benefits, we consolidate the VIE as the primary beneficiary, and if not, we do not consolidate.

As of ~~December 31, 2018~~September 30, 2019, we had interests in four VIEs of which we were the primary beneficiary, which are described below, and had no interests in VIEs of which we were not the primary beneficiary. See Note 23 to the fiscal year ~~2018~~2019 Financial Statements for a description of other investments in significant affiliates.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Bristow Aviation Holdings Limited — We own 49% of Bristow ~~Aviation Holdings Limited’s (“Bristow Aviation”)~~Aviation’s common stock and a significant amount of its subordinated debt. Bristow Aviation is incorporated in England and, through its subsidiaries, holds all the outstanding shares in Bristow Helicopters. Bristow Aviation’s subsidiaries provide industrial aviation services to customers primarily in the U.K., Norway, Australia, Nigeria and Trinidad and fixed wing services primarily in the U.K. and Australia. Bristow Aviation is organized with three different classes of ordinary shares having disproportionate voting rights. The Company, Caledonia Investments plc (“Caledonia”) and a European Union investor (the “E.U. Investor”) ~~own~~owned 49%, 46% and 5%, respectively, of Bristow Aviation’s total outstanding ordinary shares, although Caledonia ~~has~~had voting control over the E.U. Investor’s shares.

In addition to our ownership of 49% of Bristow Aviation’s outstanding ordinary shares, in May 2004, we acquired eight million shares of deferred stock, essentially a subordinated class of stock with no voting rights, from Bristow Aviation for £1 per share ($14.4 million in total). We also have £91.0 million ($~~115.9~~112.1 million) principal amount of subordinated unsecured loan stock (debt) of Bristow Aviation bearing interest at an annual rate of 13.5% and payable semi-annually. Payment of interest on such debt has been deferred since its incurrence in 1996. Deferred interest accrues at an annual rate of 13.5% and aggregated ~~$2.3~~$2.7 billion as of ~~December 31, 2018~~September 30, 2019.

Our operations in the U.K. are subject to the Civil Aviation Act 1982 and other similar English and E.U. statutes and regulations. We carry persons and property in our aircraft pursuant to an operating license issued by the Civil Aviation Authority (the “CAA”). The holder of an operating license must meet the ownership and control requirements of Council Regulation 2407/92. To operate under this license, the company through which we conduct operations in the U.K., Bristow Helicopters, must be owned directly or through majority ownership by E.U. nationals, and must at all times be effectively controlled by them. Our ownership of 49% of the ordinary shares of Bristow Aviation, the entity that owns Bristow Helicopters, is to comply with these restrictions.

Caledonia, the Company and the E.U. Investor also ~~have~~ entered into a put/call agreement under which, upon giving specified prior notice, we ~~have~~had the right to buy all the Bristow Aviation shares held by Caledonia and the E.U. Investor, who, in turn, each ~~have~~had the right to require us to purchase such shares. As discussed above, under current English law, we would be required, in order for Bristow Aviation to retain its operating license, to find a qualified E.U. investor to own any Bristow Aviation shares we have the right to acquire under the put/call agreement. In addition, the put/call agreement limits our ability to exercise the put/call option through a requirement to consult with the CAA in the U.K. regarding the suitability of the new holder of the Bristow Aviation shares. The put/call agreement does not contain any provisions should the CAA not approve the new E.U. investor. However, we would work diligently to find an E.U. investor suitable to the CAA. The amount by which we could purchase the shares of the other investors holding 51% of the equity of Bristow Aviation is fixed under the terms of the call option, and we have reflected this amount on our condensed consolidated balance sheets as noncontrolling interest. On March 14, 2019, the E.U. Investor provided notice of his intent to exercise his right to require us or a qualified E.U. investor to purchase his Bristow Aviation shares for £100,000. In addition, on April 29, 2019, Caledonia provided notice of its intent to exercise its right to require us or a qualified E.U. investor to purchase its Bristow Aviation shares for ~~£920,000. With respect to each of the notices from the E.U. Investor~~£920,000, under our put/call agreement with this stockholder. As a result, in September 2019 and ~~Caledonia, we have 180 days from receipt~~October 2019, 5% and 46%, respectively, of such ~~notice to (i) nominate either Bristow Group Inc., a related party of Bristow Group Inc. or an E.U. investor as the purchaser of the relevant~~ shares ~~and (ii) confirm that we have been notified~~were purchased by ~~the CAA that the holding of any of our licenses granted by the CAA will not be affected as a result of such transfer. We are in the process of identifying~~Impigra Aviation Holdings Limited (“Impigra”), a qualified E.U. investor, with proceeds from two loans received from Bristow Holdings Company Ltd. III (“BHC III”), a Bristow subsidiary. Impigra, is a British company owned 100% by U.K. Bristow employees and now owns 51% of the ordinary shares of Bristow Aviation. There was no material change to be the ~~new holder of such~~ Bristow Aviation ~~shares.~~shareholders’ agreement or the put/call agreement which Impigra is now a party to. Impigra is also a VIE that we consolidate as the primary beneficiary and we eliminate the loans discussed above in consolidation. Brexit is anticipated to require a qualified U.K. investor rather than a qualified E.U. investor. Impigra is expected to meet the requirements to satisfy a qualified U.K. investor requirement.

Furthermore, the call option provides a mechanism whereby the economic risk for the other ~~investors~~investor is limited should the financial condition of Bristow Aviation deteriorate. The call option price is the nominal value of the ordinary shares held by the noncontrolling ~~shareholders (~~£shareholder (£1.0 million as of ~~December 31, 2018~~)September 30, 2019) plus an annual guaranteed rate of return less any prepayments of such call option price and any dividends paid on the shares concerned. We can elect to pre-pay the guaranteed return element of the call option price wholly or in part without exercising the call option. No dividends have been paid by Bristow Aviation. We have accrued the annual return due to the other ~~shareholders~~shareholder at a rate of sterling LIBOR plus 3% ~~or 6% (prior to May 2004, the rate was fixed at~~ ~~12%~~) by recognizing noncontrolling interest expense on our condensed consolidated statements of operations, with a corresponding increase in noncontrolling interest on our condensed consolidated balance sheets. Prepayments of the guaranteed return element of the call option are reflected as a reduction in noncontrolling interest on our condensed consolidated balance sheets. The other ~~investors have~~investor has an option to put ~~their~~its shares in Bristow Aviation to us. The put option price is calculated in the same way as the call option price except that the guaranteed rate for the period to April 2004 was 10% per annum. If the put option is exercised, any pre-payments of the call option price are set off against the put option price.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Bristow Aviation and its subsidiaries are exposed to similar operational risks and are therefore monitored and evaluated on a similar basis by management. Accordingly, the financial information reflected on our condensed consolidated balance sheets and statements of operations for Bristow Aviation and subsidiaries is presented in the aggregate, including intercompany amounts with other consolidated entities, as follows (in thousands):

December 31,
2018 March 31,
2018
Assets
Cash and cash equivalents $ 76,432
$ 90,788
Accounts receivable 303,108
256,735
Inventories 80,596
98,314
Prepaid expenses and other current assets 39,009
38,665
Total current assets 499,145
484,502
Investment in unconsolidated affiliates 2,930
3,608
Property and equipment, net 278,562
327,440
Goodwill 18,271
19,907
Other assets 219,636
231,884
Total assets $ 1,018,544
$ 1,067,341
Liabilities
Accounts payable $ 413,998
$ 292,893
Accrued liabilities 106,811
140,733
Accrued interest 2,330,164
2,130,433
Current maturities of long-term debt 7,963
23,125
Total current liabilities 2,858,936
2,587,184
Long-term debt, less current maturities 460,019
479,571
Accrued pension liabilities 28,036
37,034
Other liabilities and deferred credits 5,521
7,342
Deferred taxes 29,431
26,252
Total liabilities $ 3,381,943
$ 3,137,383



	September 30, 2019		March 31, 2019
Assets
Cash and cash equivalents	$	98,991	$	83,499
Restricted cash	1,939		—
Accounts receivable	304,368		307,864
Inventories	77,856		85,977
Prepaid expenses and other current assets	31,275		36,646
Total current assets	514,429		513,986
Investment in unconsolidated affiliates	329		3,087
Property and equipment, net	261,390		281,944
Right-of-use assets	148,492		—
Goodwill	—		18,436
Other assets	164,103		229,902
Total assets	$	1,088,743	$	1,047,355
Liabilities
Accounts payable	$	479,989	$	442,187
Accrued liabilities	94,228		113,905
Accrued interest	2,702,306		2,399,704
Current maturities of long-term debt	77,763		85,287
Total current liabilities	3,354,286		3,041,083
Long-term debt, less current maturities	381,559		384,369
Accrued pension liabilities	18,706		25,726
Other liabilities and deferred credits	3,302		4,810
Deferred taxes	—		37,063
Long-term operating lease liabilities	34,852		—
Total liabilities	$	3,792,705	$	3,493,051


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Revenue	$	292,047		$	309,461		$	935,304		$	933,387		$	276,568		$	311,788		$	571,723		$	643,257
Operating loss	(9,496		)	(17,463		)	(40,642		)	(40,095		)	(13,692		)	(38,510		)	(2,412		)	(31,146		)
Net loss	(85,922		)	(79,789		)	(270,263		)	(221,039		)	(21,034		)	(115,320		)	(383,882		)	(184,341		)

Bristow Helicopters (Nigeria) Ltd. — Bristow Helicopters (Nigeria) Ltd. (“BHNL”) is a joint venture in Nigeria in which Bristow Helicopters owns a 48% interest, a Nigerian company owned 100% by Nigerian employees owns a 50% interest and an employee trust fund owns the remaining 2% interest as of ~~December 31, 2018.~~September 30, 2019. BHNL provides industrial aviation services to customers in Nigeria.

In order to be able to bid competitively for our services in the Nigerian market, we were required to identify local citizens to participate in the ownership of entities domiciled in the region. However, these owners do not have extensive knowledge of the aviation industry and have historically deferred to our expertise in the overall management and day-to-day operation of BHNL (including the establishment of operating and capital budgets and strategic decisions regarding the potential expansion of BHNL’s operations). We have also historically provided subordinated financial support to BHNL and will need to continue to do so unless and until BHNL acquires sufficient equity to permit itself to finance its activities without that additional support from us. As we have the power to direct the most significant activities affecting the economic performance and ongoing success of BHNL and hold a variable interest in the entity in the form of our equity investment and working capital infusions, we consolidate BHNL as the primary beneficiary. The employee-owned Nigerian entity referenced above purchased a 19% interest in BHNL in December 2013 with proceeds from a loan received from BGI Aviation Technical Services Nigeria Limited (“BATS”). In July 2014, the employee-owned Nigerian entity purchased an additional 29% interest with proceeds from a loan received from Bristow Helicopters

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

(International) Limited (“BHIL”). In April 2015, Bristow Helicopters purchased an additional 8% interest in BHNL and the employee-owned Nigerian entity purchased an additional 2% interest with proceeds from a loan received from BHIL. Both BATS

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~~BRISTOW GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

and BHIL are wholly-owned subsidiaries of Bristow Aviation. The employee-owned Nigerian entity is also a VIE that we consolidate as the primary beneficiary and we eliminate the loans discussed above in consolidation.

BHNL is an indirect subsidiary of Bristow Aviation; therefore, financial information for this entity is included within the amounts for Bristow Aviation and its subsidiaries presented above.

Pan African Airlines (Nigeria) Ltd. — Pan African Airlines (Nigeria) Ltd. (“PAAN”) is a joint venture in Nigeria with local partners in which we own ~~an interest of~~a 50.17%. interest. PAAN provides industrial aviation services to customers in Nigeria.

The activities that most significantly impact PAAN’s economic performance relate to the day-to-day operation of PAAN, setting the operating and capital budgets and strategic decisions regarding the potential expansion of PAAN’s operations. Throughout the history of PAAN, our representation on the board and our secondment to PAAN of its managing director has enabled us to direct the key operational decisions of PAAN (without objection from the other board members). We have also historically provided subordinated financial support to PAAN. As we have the power to direct the most significant activities affecting the economic performance and ongoing success of PAAN and hold a variable interest in the form of our equity investment and working capital infusions, we consolidate PAAN as the primary beneficiary. However, as long as we own a majority interest in PAAN, the separate presentation of financial information in a tabular format for PAAN is not required.

Note 5 — DEBT

Debt as of ~~December 31~~September 30 and March 31, ~~2018~~2019 consisted of the following (in thousands):

December 31,
2018 March 31,
2018
8.75% Senior Secured Notes due 2023 $ 347,205
$ 346,610
4½% Convertible Senior Notes due 2023 111,514
107,397
6¼% Senior Notes due 2022 401,535
401,535
Lombard Debt 182,388
211,087
Macquarie Debt 174,528
185,028
PK Air Debt 216,637
230,000
Airnorth Debt 11,738
13,832
Eastern Airways Debt —
14,519
Other Debt 7,959
3,991
Unamortized debt issuance costs (23,280 ) (27,465 )
Total debt 1,430,224
1,486,534
Less short-term borrowings and current maturities of long-term debt (1,421,050 ) (1,475,438 )
Total long-term debt $ 9,174
$ 11,096

~~Consent Solicitation and Supplemental Indenture~~ — On November 21, 2018, we completed the previously announced solicitation of consents from holders of our outstanding 8.75% Senior Secured Notes to amend certain provisions of the indenture governing the 8.75% Senior Secured Notes pursuant to a supplemental indenture (the “Supplemental Indenture”). The Supplemental Indenture became effective upon the execution and delivery thereof, but would become operative only upon the delivery of a cash payment to eligible holders of the 8.75% Senior Secured Notes who validly delivered and did not revoke consents prior to the receipt of the consents required to effect the amendments under the Supplemental Indenture. As the cash payment was not made, the Supplemental Indenture did not become operative.

~~ABL Facility~~ — On April 17, 2018, two of our subsidiaries entered into a new asset-backed revolving credit facility (the “ABL Facility”), which provides for commitments in an aggregate amount of $75 million, with a portion allocated to each borrower subsidiary, subject to an availability block of $15 million and a borrowing base calculated by reference to eligible accounts receivable. The maximum amount of the ABL Facility may be increased from time to time to a total of as much as $100 million, subject to the satisfaction of certain conditions, and any such increase would be allocated among the borrower subsidiaries. The ABL Facility matures in April 2023, subject to certain early maturity triggers related to maturity of other material debt or a change of control of the Company. Amounts borrowed under the ABL Facility are secured by certain accounts receivable owing to the borrower subsidiaries and the deposit accounts into which payments on such accounts receivable are deposited. As of December 31, 2018, there were no outstanding borrowings under the ABL Facility nor had we made any draws during the nine months ended December 31, 2018. As of December 31, 2018, we had $16.2 million in letters of credit outstanding under the ABL Facility and our available borrowing capacity under the ABL Facility was $5.6 million.

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~~(Unaudited)~~

We amended the ABL Facility pursuant to a letter agreement, dated effective as of November 7, 2018 and made by us and agreed to by Barclays Bank PLC, on behalf of the finance parties under the ABL Facility (the “First ABL Amendment”). The First ABL Amendment amends the ABL Facility to, among other things, provide that certain of the provisions, including covenants and events of default contained therein, will exclude unrestricted subsidiaries (as designated under the indenture governing the 8.75% Senior Secured Notes) from the requirements and defaults thereunder.

We also amended the ABL Facility pursuant to a letter agreement effective as of February 19, 2019 and made by us and agreed to by Barclays Bank PLC, on behalf of the finance parties under the ABL Facility (the “Second ABL Amendment”). Under the Second ABL Amendment, the Company received a waiver of any Default (as defined in the ABL Facility) that would otherwise exist or occur under the ABL Facility as a result of (i) our failure to provide our unaudited consolidated financial statements for the quarter ended December 31, 2018 within 45 days after the end of the quarter or (ii) certain representations and warranties not being correct when made due to the existence of any Default specified in the preceding clause (i); provided that we must provide such unaudited consolidated financial statements within 75 days after the end of the quarter. In addition, the Second ABL Amendment amends (i) the borrowing base determination provisions in the ABL Facility and (ii) the maturity date of the ABL Facility, which was previously five years from the date of the ABL Facility, to December 14, 2021 (in each case, subject to certain early maturity triggers related to maturity of other material debt or a change of control of us). The ABL Facility was further amended pursuant to the ABL Waiver (as defined herein). As discussed below under “—Waiver of Defaults,” the ABL Waiver provided that the maturity date of December 14, 2021 shall be subject to certain early maturity triggers related to a Change of Control of the Company (as such definition has been amended by the ABL Waiver) or the ABL Waiver Termination Date (as defined herein).

~~4½% Convertible Senior Notes due 2023~~ — The balances of the debt and equity components of our 4½% Convertible Senior Notes due 2023 (the “4½% Convertible Senior Notes”) as of December 31 and March 31, 2018 is as follows (in thousands):

December 31,
2018 March 31,
2018

Equity component - net carrying value ⁽¹⁾
$ 36,778
$ 36,778
Debt component:
Face amount due at maturity $ 143,750
$ 143,750
Unamortized discount (32,236 ) (36,353 )
Debt component - net carrying value $ 111,514
$ 107,397



	September 30, 2019			March 31, 2019
8.75% Senior Secured Notes due 2023 ⁽¹⁾	$	273,449		$	347,400
4½% Convertible Senior Notes due 2023 ⁽¹⁾⁽²⁾	143,750			112,944
6¼% Senior Notes due 2022 ⁽¹⁾⁽²⁾	401,535			401,535
DIP Credit Agreement ⁽¹⁾	150,000			—
Term Loan	75,000			—
Lombard Debt	167,519			183,450
Macquarie Debt	164,028			171,028
PK Air Debt	202,634			212,041
Airnorth Debt	9,416			11,058
Humberside Debt	351			—
Other Debt ⁽²⁾	9,370			9,168
Unamortized debt issuance costs	(19,745		)	(21,771		)
Total debt	1,577,307			1,426,853
Less amounts included in liabilities subject to compromise	(554,655		)	—
Less short-term borrowings and current maturities of long-term debt	(947,041		)	(1,418,630		)
Total long-term debt	$	75,611		$	8,223

_____________

⁽¹⁾ ~~Net of equity issuance costs of $1.0 million.~~

The remaining debt discount is being amortized to interest expense over the term of the 4½% Convertible Senior Notes using the effective interest rate. The effective interest rate for the three and nine months ended December 31, 2018 was 11.0%. Interest expense related to our 4½% Convertible Senior Notes for the three and nine months ended December 31, 2018 was as follows (in thousands):

Three Months Ended
December 31, Nine Months Ended
December 31,
2018 2017 2018 2017

Contractual coupon interest $ 1,620
$ 234
$ 4,867
$ 234
Amortization of debt discount 1,412
181
4,117
181
Total interest expense $ 3,032
$ 415
$ 8,984
$ 415

~~Eastern Airways Debt~~— All outstanding obligations under Eastern Airways’ revolving credit facility matured on December 31, 2018, and a final repayment of $7.4 million was made in December 2018. Eastern Airways’ debt also included borrowings under a term loan facility that matured on August 31, 2018, and was repaid in a principal amount of $4.9 million in August 2018.

~~Debt Covenants~~— Certain of our credit facilities which are secured by pledges of aircraft, with aggregate outstanding borrowings of $391.2 million at December 31, 2018, and certain of our aircraft leasing arrangements to which we are the lessee, contain covenants of a non-financial nature related to pledged and leased aircraft. Each aircraft pledge specifically identifies the airframes and engines of the aircraft pledged to its credit facility. Similarly, each aircraft lease specifically identifies the airframe(s) and engines of the aircraft covered by the lease. The agreements contain a requirement to maintain specific engines on each specified airframe with limited exceptions for, among other things, the repair and maintenance of the engines. From time to time, engines are removed and replaced on an airframe. In some cases, these actions are permitted under the credit and lease agreements so long

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

as (a) a pledged or leased engine is replaced with another engine subject to the same transaction or, in some cases, any other engine, so long as such other engine is free and clear of liens other than certain permitted liens, and/or (b) in the case of a “loaner” engine furnished by a maintenance provider temporarily replacing a pledged or leased engine, the “loaner” engine is replaced with an engine (which may be the original engine, post-maintenance) subject to the same transaction within 180 days after the removal of the original engine. During the three months ended December 31, 2018, we determined that in some instances a “loaner” engine owned by a maintenance provider and installed on a pledged or leased airframe had been on that airframe for more than 180 days after the removal of the original engine. We are reliant upon third-party maintenance providers to complete maintenance work on these subject engines; however, in some instances these maintenance providers did not complete the required maintenance work on an engine within the 180-day period permitted by the relevant agreement for the engine can be separated from the assigned airframe, and the relevant maintenance providers have been able to provide a timetable for the ultimate completion of the work on those engines. These instances, while involving a small subset of the approximately 385 helicopter engines that were then subject to our secured financings or helicopter leases, constituted defaults under the affected credit and lease agreements. All issues related to this matter were cured by December 31, 2018 for all but nine helicopter engines (relating to three agreements) where a pledged or leased engine was not returned to the pledged or leased airframe within the specified period due to delays by the relevant maintenance service provider. We obtained waivers of such non-compliance under the applicable agreements, extending the time for the return of each pledged or leased engine to the relevant pledged or leased airframe to the earlier of (i) the date that occurs 30 days after the receipt by the Company of such engine at our facility where the relevant airframe is then located or (ii) February 10, 2020.

These notes were settled in accordance with the Amended Plan.


⁽²⁾	Reclassified to liabilities subject to compromise on our condensed consolidated balance sheet as of September 30, 2019. See Note 2 and “— 4½% Convertible Senior Notes due 2023” and “— 6¼% Convertible Senior Notes due 2023” below for further details.


⁽³⁾	Unamortized debt issuance costs as of September 30, 2019 relate to 8.75% Senior Secured Notes due 2023, Term Loan, Lombard Debt, Macquarie Debt and PK Air Debt. Unamortized debt issuance costs as of March 31, 2019 relate to 8.75% Senior Secured Notes due 2023, 4½% Convertible Senior Notes due 2023, 6¼% Senior Notes due 2022 Term Loan, Lombard Debt, Macquarie Debt and PK Air Debt.

Classification of Debt — ~~The Company’s liquidity outlook has recently changed resulting in substantial doubt about the Company’s ability to continue as a going concern.~~ As discussed in Note 1, on the Petition Date, the Debtors filed the Chapter 11 Cases in the Bankruptcy Court seeking relief under Chapter 11 of the Bankruptcy Code. The Debtors’ Chapter 11 Cases ~~are~~were jointly administered under the caption In re: Bristow Group Inc., et al., Main Case No. 19-32713. ~~The~~During the pendency of the Chapter 11 Cases, the Debtors ~~continue~~continued to operate their businesses and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The significant

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risks and uncertainties related to the Chapter 11 Cases raise substantial doubt about the Company’s ability to continue as a going concern. In addition, each of the commencement of the Chapter 11 Cases and the delivery of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018, as amended by the amendment thereto, with a going concern qualification or explanation ~~included in the accompanying report of the Company’s independent registered public accounting firm~~ constituted an event of default under certain of our secured equipment financings, giving those secured equipment lenders the right to accelerate repayment of the applicable debt, subject to Chapter 11 protections, and triggering cross-default and/or cross-acceleration provisions in substantially all of our other debt instruments should that right to accelerate repayment be exercised. As ~~such, substantially all of our debt is in default and accelerated, but subject to stay under the Bankruptcy Code. As~~ a result of the facts and circumstances discussed above, the Company ~~concluded that substantially all~~has classified debt balances of approximately $947.0 million and $1.4 billion as of ~~December~~September 30 and March 31, ~~2018 should be classified~~2019, respectively, as short-term borrowings and current maturities of long-term debt on our condensed consolidated balance sheet.

~~Notice~~ If not classified separately as liabilities subject to compromise as of ~~Default~~September 30, 2019, the additional $554.7 million would have been classified as current maturities of ~~Aircraft Leases~~— ~~On March 22, 2019, we received~~long-term debt on our condensed consolidated balance sheet as a ~~notice~~result of ~~default with respect to four aircraft leases (the “Leases”) entered into in September 2014 by our subsidiary BriLog Leasing Ltd., as lessee. The notice of default cited failure by~~ the lessee to comply with its obligations to maintain the aircraft leased pursuant to such Leases so as to enable the certificate of airworthiness for the aircraft to be continually maintained without restriction or limitation. Unless the lessee remedied such default within 30 days after the date of such notice, such default would mature into an Event of Default (as defined in the Leases). Prior to the end of such 30-day period, we reached a settlement with respect to such default,same facts and ~~therefore, such default did not mature into an Event of Default.~~circumstances.

Waiver of Defaults — Prior to the Petition Date, we entered into waiver letters with respect to certain of our debt agreements, including the credit agreement, dated as of July 17, 2017, among Bristow Equipment Leasing Ltd., the several banks, other financial institutions and other lenders from time to time party thereto and PK AirFinance S.à r.l. (“PK AirFinance”), as agent and as security trustee (as amended, the “PK Credit Agreement”); the term loan credit agreement, dated as of February 1, 2017, among Bristow U.S. LLC, the several banks, other financial institutions and other lenders from time to time party thereto and Macquarie Bank Limited, as administrative agent and as security agent (as amended, the “Macquarie Credit Agreement”); the ABL ~~Facility;~~Facility (as defined below); and certain other secured equipment financings and leases. Pursuant to such waiver letters, we received waivers of breaches, defaults or events of default under such debt agreements arising from the Company’s failure to timely provide its unaudited consolidated financial statements for the quarter ended December 31, 2018 and/or the failure to make the April 15, 2019 interest payment due on the 6¼% Senior Notes ~~due 2022 (the “6¼% Senior Notes”)~~ by May 15, 2019, and certain other related events of default and cross-defaults. As discussed below under “—Events of Default,” the filing of the Chapter 11 Cases constituted an event of default that accelerated the obligations under the PK Credit Agreement, the BALL Lombard Credit Agreement (as defined below) and the Macquarie Credit Agreement.

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~~(Unaudited)~~

On May 10, 2019, Bristow Norway AS and Bristow Helicopters, as borrowers and guarantors, and the Company, as guarantor, entered into a waiver letter (the ~~“ABL~~“First ABL Waiver”) with Barclays Bank PLC, as agent, and Credit Suisse AG, Cayman Islands Branch, as lender, with respect to the ABL Facility. The First ABL Waiver ~~waives,~~waived, subject to certain conditions, any Default (as defined in the ABL Facility) or cross-defaults that would otherwise exist or occur under the ABL Facility as a result of, among other things, (i) the Company’s failure to timely provide its unaudited consolidated financial statements for the quarters ended December 31, 2018 and March 31, 2019, (ii) the amendment of the Company’s periodic reports for fiscal year 2018 as previously disclosed, (iii) the failure to make the April 15, 2019 interest payment due on the 6¼% Senior Notes, (iv) potential cross defaults under the 4½% Convertible Senior Notes and 8.75% Senior Secured Notes, (v) other events related to the Chapter 11 Cases, potential insolvency issues or possible failure to comply with certain financial covenants or (vi) certain representations and warranties not being correct when made. Such Defaults ~~are~~were waived until the date (the “ABL Waiver Termination Date”) on which the Company or its subsidiaries enter into or modify debt agreements that would materially adversely impact the ability to perform obligations under the ABL Facility, any security that is not permitted security is granted over the share capital or assets of either borrower or the Chapter 11 Cases are dismissed or converted to a case under Chapter 7 of the Bankruptcy Code, subject to certain conditions as specified in the First ABL Waiver. The First ABL Waiver contains certain amendments to the ABL Facility, including (i) expanding the definition of Change of Control to include the consummation of a plan of reorganization in connection with the commencement of a bankruptcy proceeding and (ii) providing that the maturity date of December 14, 2021 shall be subject to certain early maturity triggers related to a Change of Control of the Company (as such definition has been amended by the First ABL Waiver) or the ABL Waiver Termination Date.

On September 30, 2019, Bristow Norway AS and Bristow Helicopters, as borrowers and guarantors, and the Company, as guarantor, entered into a waiver letter (the “Second ABL Waiver”) with Barclays Bank PLC, as agent, and Credit Suisse AG, Cayman Islands Branch, as lender, with respect to the ABL Facility. The Second ABL Waiver further extended the delivery dates (i) for the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2019 until October 31, 2019 and (ii) for the Company’s unaudited consolidated financial statements for each of the fiscal quarters ended June 30, 2019 and September 30, 2019 until December 31, 2019.

On May 10, 2019, Bristow Aircraft Leasing Limited (“BALL”), as borrower, entered into a waiver letter (the ~~“Lombard~~“First BALL Lombard Waiver”) with Lombard North Central Plc, as administrative agent and as security trustee, with respect to the term loan credit agreement, dated as of November 11, 2016 (the “BALL Lombard Credit Agreement”). IfBecause an Insolvency Proceeding (as defined in the First BALL Lombard Waiver) iswas commenced on or before May 15, 2019, the First BALL Lombard Waiver ~~extends,~~extended, subject to certain conditions, the waivers received under the previous waiver letter (as described in our Current Report

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on Form 8-K filed with the SEC on April 15, 2019), until the ~~earliest~~earlier of (a) certain events related to a plan of reorganization or liquidation of the Company, Insolvency Proceeding or debtor-in-possession financing or (b) December 15, 2019 (the “Lombard Waiver Termination Date”). In addition, the First BALL Lombard Waiver ~~waives,~~waived, until the Lombard Waiver Termination Date, any Default or Event of Default (each as defined in the BALL Lombard Credit Agreement) as a result of (i) the amendment of the Company’s periodic reports for fiscal year 2018, (ii) the possible commencement of an Insolvency Proceeding or any related acceleration of other material indebtedness and (iii) the possible occurrence of an Event of Default under the term loan credit agreement, dated as of November 11, 2016, among Bristow U.S. Leasing LLC, as borrower, the lenders from time to time party thereto and Lombard North Central plc, as administrative agent and as security trustee (the “BULL Lombard Credit Agreement”), subject to certain conditions.

On September 30, 2019, BALL, as borrower, entered into a waiver letter (the “Second BALL Lombard Waiver”) with Lombard North Central Plc, as administrative agent and as security trustee, with respect to the BALL Lombard Credit Agreement. In addition, BULL, as borrower, entered into a waiver letter (the “BULL Lombard Waiver”) with Lombard North Central Plc, as administrative agent and as security trustee, with respect to the BULL Lombard Credit Agreement. The Second BALL Lombard Waiver and the BULL Lombard Waiver both extended the delivery dates (i) for the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2019 until October 31, 2019 and (ii) for the Company’s unaudited consolidated financial statements for each of the fiscal quarters ended June 30, 2019 and September 30, 2019 until December 31, 2019.

Events of Default — The filing of the Chapter 11 Cases constituted an event of default that accelerated the obligations under the following instruments and agreements:

the Third Supplemental Indenture, dated as of October 12, 2012, to the Indenture, dated as of June 17, 2008 (the “Base Indenture”), among the Company, the guarantors named therein and Wilmington Trust, National Association, ~~(“Wilmington Trust”),~~ as successor trustee to U.S. Bank National Association (“U.S. Bank”), and our 6¼% Senior Notes issued thereunder;

the Sixth Supplemental Indenture to the Base Indenture, dated as of December 18, 2017, among the Company, the guarantors named therein and ~~Wilmington~~Delaware Trust Company, as successor trustee to U.S. Bank, and our 4½% Convertible Senior Notes issued thereunder;

the Indenture, dated as of March 6, 2018, among the Company, the guarantors named therein and U.S. Bank, as trustee and collateral agent (the “Secured Indenture”), and our 8.75% Senior Secured Notes issued thereunder;

the PK Credit Agreement;

the Macquarie Credit Agreement;

the BULL Lombard Credit Agreement; and

various aircraft operating leases and real estate leases.

The instruments and agreements described above provide that, as a result of the commencement of the Chapter 11 Cases, the financial obligations thereunder, including for the debt instruments any principal amount, together with accrued interest thereon, are immediately due and payable. However, any efforts to enforce payment of such financial obligations under such instruments

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~~(Unaudited)~~

and agreements ~~are~~were automatically stayed as a result of the filing of the Chapter 11 Cases and the holders’ rights of enforcement in respect of such financial obligations ~~are~~were subject to the applicable provisions of the Bankruptcy Code.

Term Loan Agreement — On May 10, 2019, the Company entered into a Term Loan Credit Agreement, dated the same date (the “Term Loan Agreement”), by and among the Company and ~~Bristow Holdings Company Ltd.~~BHC III, ~~(“BHC III”),~~ as borrowers, certain subsidiaries of the Company as guarantors party thereto, the lenders from time to time party thereto (initially, certain holders of the 8.75% Senior Secured Notes), and Ankura Trust Company, LLC, as administrative agent (the “Term Loan Agent”), for a senior secured term loan of $75 million (the “2019 Term Loan”). Immediately upon entering into the Term Loan Agreement, and prior to the Petition Date, the Company and BHC III borrowed the full amount thereunder, the net proceeds of which ~~may be used only in compliance with a cash flow forecast required pursuant to the terms of the Term Loan Agreement, which the Company expects will be~~were used for general corporate purposes, including to fund the working capital and liquidity requirements of the Company during the pendency of the Chapter 11 Cases. The full principal amount of the 2019 Term Loan is due May 10, 2022. At the Company’s election, borrowings under the 2019 Term Loan will bear interest at either (x) the Eurodollar Rate (as defined in the Term Loan Agreement) plus 7% or (y) the Base Rate (as defined in the Term Loan Agreement) plus 6%. The initial borrowings under the 2019 Term Loan will be Eurodollar Rate loans with monthly interest payments. The 2019 Term Loan is secured by a first lien on certain specified collateral, including, among other things, equity pledges of 35% of the equity interests in certain of the Company’s first-tier foreign subsidiaries (the remaining 65%

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of such entities have been previously pledged under the 8.75% Senior Secured Notes), 100% of the equity of BHC III, ~~and~~ Bristow International Panama S. de RL, and two newly formed special-purpose vehicles, as well as a junior lien on certain collateral securing the 8.75% Senior Secured Notes. The borrowers have the option in connection with the consummation of a Reorganization Plan (as defined in the Term Loan Agreement) that is satisfactory to the lenders to require that the 2019 Term Loan be converted into equity of the Company upon consummation of such Reorganization Plan, subject to certain conditions. The Term Loan Agreement contains customary pre-payment requirements.

The Term Loan Agreement contains certain customary negative covenants that, among other things, restrict, subject to certain exceptions, the Company’s and its subsidiaries’ incurrence of additional indebtedness or liens, mergers, dispositions of assets, investments, restricted payments, modifications to material agreements, transactions with affiliates and fundamental changes. In addition, the Term Loan Agreement ~~requires~~required that, on the delivery of each Variance Report (as defined in the Term Loan Agreement), total operating disbursements and total receipts of the Company and its subsidiaries for certain specified periods shall not exceed (with respect to disbursements) or be less than (with respect to total receipts) the aggregate amount forecasted therefor for such period by more (with respect to disbursements) or less (with respect to total receipts) than a specified percentage of the forecasted amount. The Term Loan Agreement also contains customary affirmative covenants and customary representations and warranties.

The Term Loan Agreement specifies certain customary events of default, including, among others, failure to pay principal or interest on the 2019 Term Loan when due, the breach of representations or warranties in any material respect, non-performance of other covenants and obligations, judgments, the occurrence of certain ERISA events and certain change of control events. The filing of the Chapter 11 Cases neither constitutes an event of default nor accelerates the maturity of the Company’s indebtedness under the Term Loan Agreement.

On June 6, 2019, we entered into Amendment No. 1 to the Term Loan Agreement (the ��First Term Loan Amendment”), dated the same date, by and among the Company, BHC III and the lenders party thereto. Among other things, the First Term Loan Amendment extended the deadline for delivery to the administrative agent and the lenders of (i) the annual audit report of the borrower and its subsidiaries for the fiscal year ended March 31, 2019 from 90 days to 120 days after the end of such fiscal year and (ii) monthly unaudited consolidated financial statements of the borrower and its subsidiaries from 10 days to 20 business days after the end of each month.

On August 22, 2019, we entered into Amendment No. 2 to the Term Loan Agreement (the “Second Term Loan Amendment”), dated the same date, by and among the Company, BHC III and the Term Loan Agent. The Second Term Loan Amendment amended the Term Loan Agreement in order to clarify the definition of Pledged Aircraft under the Term Loan Agreement.

On August 26, 2019, in connection with the entry into the DIP Credit Agreement, we entered into Amendment No. 3 to the Term Loan Agreement (the “Third Term Loan Amendment”), dated the same date, by and among the Company, BHC III, the lenders party thereto and the Term Loan Agent. The Third Term Loan Amendment amended and restated the Term Loan Agreement in order to, among other things, permit the entry into the DIP Credit Agreement, the incurrence of indebtedness thereunder and the granting of related liens thereunder, and make certain other conforming changes.

On September 30, 2019, we entered into Amendment No. 4 to the Term Loan Agreement (the “Fourth Term Loan Amendment”), dated the same date, by and among the Company, BHC III and the Term Loan Agent. The Fourth Term Loan Amendment amended the Term Loan Agreement in order to extend the delivery dates (i) for the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2019 until October 31, 2019 and (ii) for the Company’s unaudited consolidated financial statements for each of the fiscal quarters ended June 30, 2019 and September 30, 2019 until December 31, 2019.

In connection with the Amended Plan, on October 31, 2019, we entered into Amendment No. 5 to the Term Loan Agreement (the “Fifth Term Loan Amendment”), dated the same date, by and among the Company, BHC III, the guarantors party thereto, the lenders party thereto and the Term Loan Agent. The Fifth Term Loan Amendment amended the Term Loan Agreement in order to, among other things, (i) increase the applicable margin in respect of all outstanding term loans to 8.00% in the case of Eurodollar Rate loans and 7.00% for Base Rate loans (with increases to 9.00% and 8.00%, respectively, with respect to all such term loans outstanding after the six-month anniversary of the Effective Date), (ii) release Bristow Helicopter Group Limited from all guaranty and collateral obligations in respect of the 2019 Term Loan, (iii) modify certain negative covenants to, among other things, allow for future aircraft-related financings and related liens and investments and (iv) delete certain provisions relating to the Chapter 11 Cases, in light of the occurrence of the Effective Date of the Amended Plan, including the deletion of the requirements to (x) deliver Variance Reports (as defined in the Term Loan Agreement) and (y) ensure that total operating disbursements and total receipts of the Company and its subsidiaries for certain specified periods did not exceed (with respect to disbursements) or were

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(Unaudited)

not less than (with respect to total receipts) the aggregate amount forecasted therefor for such period by more (with respect to disbursements) or less (with respect to total receipts) than a specified percentage of the forecasted amount.

Backstop Commitment Agreement — On July 24, 2019, the Company entered into the Backstop Commitment Agreement with the other parties thereto (the “Commitment Parties”), pursuant to which the Commitment Parties agreed to backstop a total $385 million new money rights offering (the “Rights Offering”) of New Stock of the Reorganized Company. In accordance with the Amended Plan and certain Rights Offering procedures filed as part of the Amended Plan, the Company granted the Supporting Noteholders, including certain Commitment Parties who are Unsecured Noteholders (the “Unsecured Commitment Parties”) or Secured Noteholders (the “Secured Commitment Parties”), and holders of certain other unsecured claims (collectively with the Unsecured Noteholders, the “Unsecured Claims”), the right to purchase shares of New Stock of the Reorganized Company (the “Rights Offering Shares”), which were comprised of 91.825% of New Common Stock and 8.175% of New Preferred Stock, for an aggregate purchase price of, in the case of the Unsecured Claims, $347.5 million (the “Unsecured Rights Offering Amount”) and, in the case of the Secured Noteholders, $37.5 million (the “Secured Rights Offering Amount” and, together with the Unsecured Rights Offering Amount, the “Rights Offering Amount”)). Under the Backstop Commitment Agreement, the Commitment Parties agreed to purchase any Rights Offering Shares that were not duly subscribed for pursuant to the Rights Offering (the “Unsubscribed Shares”) at the Per Equity Share Purchase Price (as defined in the Backstop Commitment Agreement).

Under the Backstop Commitment Agreement, the Debtors agreed to pay (i) on the earlier of the closing date of the transactions contemplated by the Backstop Commitment Agreement or the termination of the Backstop Commitment Agreement, a backstop commitment fee (the “Backstop Commitment Fee”) in, at the election of the Commitment Parties, New Stock equal to 10% of (a) the Unsecured Rights Offering Amount to the Unsecured Commitment Parties and (b) the Secured Rights Offering Amount to the Secured Commitment Parties and (ii) both as promptly as reasonably practicable after entry of the BCA Approval Order (as defined in the Backstop Commitment Agreement) and on a monthly basis thereafter, all reasonably incurred and documented professional fees of the Commitment Parties. The Backstop Commitment Fee was paid in New Stock to the Commitment Parties pro rata based on the amount of their respective backstop commitments.

The rights to purchase Rights Offering Shares (excluding Unsubscribed Shares) in the Rights Offering were issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to section 1145 of the Bankruptcy Code. A portion of the New Common Stock issued in the Rights Offering was issued in reliance upon such exemption, and a portion of the New Common Stock and all of the New Preferred Stock were issued in reliance upon the exemption from registration under the Securities Act provided by Section 4(a)(2) thereof or another available exemption from registration thereunder. The offer and sale of the Unsubscribed Shares purchased by the Commitment Parties pursuant to the Backstop Commitment Agreement were made in reliance upon the exemption from registration under the Securities Act provided by Section 4(a)(2) thereof or another available exemption from registration thereunder. As a condition to the closing of the transactions contemplated by the Backstop Commitment Agreement, the Reorganized Company entered into a registration rights agreement with certain Commitment Parties requiring the Reorganized Company, subject to the terms and conditions thereof, to register the Commitment Parties’ securities under the Securities Act. As of September 30, 2019, we accrued estimated fees of $19.3 million included in other accrued liabilities on our condensed consolidated balance sheet.

The Commitment Parties’ commitments to backstop the Rights Offering and the other transactions contemplated by the Backstop Commitment Agreement were conditioned upon satisfaction of all applicable conditions set forth therein. The Rights Offering Shares were issued pursuant to the Rights Offering and the Backstop Commitment Agreement on the Effective Date.

On September 30, 2019, we entered into a limited waiver and amendment to the Backstop Commitment Agreement (the “BCA Amendment”), dated the same date, by and between the Company, on behalf of itself and each of the other Debtors, and certain Commitment Parties. The BCA Amendment extended the delivery dates (i) for the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2019 until October 31, 2019 and (ii) for the Company’s unaudited consolidated financial statements for each of the fiscal quarters ended June 30, 2019 and September 30, 2019 until December 31, 2019.

Debtor-in-Possession ~~Commitment Letter~~Credit Agreement — — In connection with the Chapter 11 Cases and pursuant to a ~~Commitment Letter, dated May 10, 2019, from~~commitment letter between the DIP Borrowers (as defined below) and the lenders party thereto, on July 25, 2019, the Debtors filed a motion seeking, among other things, interim and ~~agreed to by~~final approval of the proposed Superpriority Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”) among the Company, ~~and~~as lead borrower, BHC III, as co-borrower (together with the Company, the “DIP Borrowers”), ~~an ad hoc group of holders of~~ the ~~8.75% Senior Secured Notes has agreed~~other Debtors and guarantors party thereto and other guarantors from time to ~~provide~~time party thereto, the ~~DIP Borrowers with a superpriority senior secured debtor-in-possession credit facility~~financial institutions or other entities from time to time party thereto, and Ankura Trust Company, LLC, as administrative agent and collateral agent (the “DIP ~~Facility”~~Agent”) on. On August 21, 2019, the ~~terms set forth in the DIP Facility Term Sheet attached thereto (the “DIP Term Sheet”). The DIP Term Sheet provides that,~~Bankruptcy Court entered a final order, which, among other things, approved the DIP ~~Facility shall be comprised of loans in an aggregate principal~~Credit Agreement, and on August 26, 2019, the Company entered into the DIP Credit Agreement. On August 27, 2019, the Company borrowed the full amount ~~of $75.0 million. The availability~~ of the DIP ~~Facility is subject to certain conditions and milestones, including approval by the Bankruptcy Court, which has not been obtained~~Credit Agreement of $150 million at ~~this time.~~an 8.5% borrowing rate, $75 million of

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(Unaudited)

which was used to pay down a portion of the 8.75% Senior Secured Notes discussed below and the remainder of which was to be used for general corporate purposes.

On September 30, 2019, we entered into Amendment No. 1 to the DIP Credit Agreement (the “DIP Credit Agreement Amendment”), dated the same date, among the Company, BHC III and the DIP Agent. The DIP Credit Agreement Amendment amended the DIP Credit Agreement to extend the delivery dates (i) for the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2019 until October 31, 2019 and (ii) for the Company’s unaudited consolidated financial statements for each of the fiscal quarters ended June 30, 2019 and September 30, 2019 until December 31, 2019. On October 31, 2019, we repaid borrowings under the DIP Credit Agreement in exchange for New Stock of the Reorganized Company, and the DIP Credit Agreement terminated pursuant to its terms.

Consent Solicitation and Supplemental Indenture — On November 21, 2018, we completed the previously announced solicitation of consents from holders of our outstanding 8.75% Senior Secured Notes to amend certain provisions of the Secured Indenture pursuant to a supplemental indenture (the “Secured Supplemental Indenture”). The Secured Supplemental Indenture became effective upon the execution and delivery thereof, but would become operative only upon the delivery of a cash payment to eligible holders of the 8.75% Senior Secured Notes who validly delivered and did not revoke consents prior to the receipt of the consents required to effect the amendments under the Secured Supplemental Indenture. As the cash payment was not made, the Secured Supplemental Indenture did not become operative.

ABL Facility — On April 17, 2018, two of our subsidiaries entered into a new asset-backed revolving credit facility (the “ABL Facility”), which provides for commitments in an aggregate amount of $75 million, with a portion allocated to each borrower subsidiary, subject to an availability block of $15 million and a borrowing base calculated by reference to eligible accounts receivable. The maximum amount of the ABL Facility could be increased from time to time to a total of as much as $100 million, subject to the satisfaction of certain conditions, and any such increase would be allocated among the borrower subsidiaries. The ABL Facility matures in five years, subject to certain early maturity triggers related to maturity of other material debt or a change of control of the Company. Amounts borrowed under the ABL Facility are secured by certain accounts receivable owing to the borrower subsidiaries and the deposit accounts into which payments on such accounts receivable are deposited. As of September 30, 2019, there were no outstanding borrowings under the ABL Facility nor had we made any draws during the six months ended September 30, 2019. Letters of credit issued under the ABL Facility in the aggregate face amount of $15.0 million were outstanding on September 30, 2019.

The ABL Facility was amended pursuant to the ABL Waiver. As discussed above under “—Waiver of Defaults,” the ABL Waiver provided that the maturity date of December 14, 2021 shall be subject to certain early maturity triggers related to a Change of Control of the Company (as such definition has been amended by the ABL Waiver) or the ABL Waiver Termination Date.

On the Effective Date, the Company entered into an Amendment and Restatement, Confirmation and Waiver Agreement (the “ABL Amendment”) to the ABL Facility (together with the ABL Amendment, the “Amended ABL”), by and among the Company, as parent, Bristow Norway AS and Bristow Helicopters, as borrowers and guarantors, the financial institutions from time to time party thereto as lenders and Barclays Bank PLC, in its capacity as agent and security trustee. The ABL Amendment amended the ABL Facility in order to, among other things, (i) make permanent certain waivers of defaults or events of default that were previously provided during the pendency of the Chapter 11 Cases, (ii) confirm the existing maturity date of April 17, 2023, (iii) provide that the maximum amount of the Amended ABL may be increased, subject to satisfaction of certain conditions, from time to time to a total of as much as $115 million from its current aggregate of $100 million, and (iv) provide for the accession at a later date of Bristow U.S. LLC as a co-borrower under the Amended ABL and the addition of certain of its receivables to the borrowing base and the collateral for the Amended ABL.

8.75% Senior Secured Notes due 2023— On August 12, 2019, we commenced a tender offer (the “Tender Offer”) to purchase for cash our outstanding 8.75% Senior Secured Notes, up to an aggregate principal amount that would not result in an aggregate purchase price (including accrued and unpaid interest to, but not including, the settlement date) that exceeded $75.0 million. On September 11, 2019, we completed the Tender Offer, purchasing $74.8 million aggregate principal amount of the 8.75% Senior Secured Notes for $74.8 million, plus accrued and unpaid interest of $0.2 million, using funds borrowed under the DIP Credit Agreement. In accordance with the Amended Plan, on the Effective Date, all outstanding obligations under the 8.75% Senior Secured Notes, including the indentures governing such obligations, were cancelled, except to the limited extent expressly set forth in the Amended Plan.

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(Unaudited)

4½% Convertible Senior Notes due 2023 — The balances of the debt and equity components of our 4½% Convertible Senior Notes are as follows (in thousands):



	September 30, 2019		March 31, 2019

Equity component - net carrying value ⁽¹⁾	$	36,778	$	36,778
Debt component:
Face amount due at maturity	$	143,750	$	143,750
Unamortized discount	—		(30,806		)
Debt component - net carrying value	$	143,750	$	112,944

_____________

⁽¹⁾ Net of equity issuance costs of $1.0 million.

Prior to May 11, 2019, the remaining debt discount was being amortized to interest expense over the term of the 4½% Convertible Senior Notes using the effective interest rate. The effective interest rate for April 1, 2019 to May 11, 2019 and the three and six months ended September 30, 2018 was 11.0%. Interest expense related to our 4½% Convertible Senior Notes was as follows (in thousands):



	Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018
Contractual coupon interest	$	—	$	1,636	$	715	$	3,247
Amortization of debt discount	—		1,392		648		2,705
Total interest expense	$	—	$	3,028	$	1,363	$	5,952

As of May 11, 2019, we determined that the 4½% Convertible Senior Notes were an allowed claim and therefore reclassified the balance to liabilities subject to compromise and discontinued accruing interest on these obligations. Contractual interest on the 4½% Convertible Senior Notes for the three and six months ended September 30, 2019 was $1.6 million and $3.2 million, respectively, which is $1.6 million and $2.5 million in excess of reported interest expense for the three and six months ended September 30, 2019, respectively. In connection with reclassifying the 4½% Convertible Senior Notes to liabilities subject to compromise, we wrote-off $30.2 million of unamortized discount and $2.3 million of deferred financing fees. See Note 2 for further details. In accordance with the Amended Plan, on the Effective Date, all outstanding obligations under the 4½% Convertible Senior Notes, including the indentures governing such obligations, were cancelled, except to the limited extent expressly set forth in the Amended Plan.

Macquarie Debt — On October 3, 2019, the Bankruptcy Court approved a term sheet (the “Macquarie Term Sheet”) among the Company, as guarantor, Bristow U.S. LLC, as borrower and lessee, BriLog Leasing Ltd., as lessee, Macquarie Bank Limited, as administrative agent and security agent, Macquarie Leasing LLC, as lender and owner participant, and Macquarie Rotorcraft Leasing Holdings Limited, as owner participant, pursuant to which, among other matters, the parties agreed to enter into definitive documentation at emergence for an amendment to the Macquarie Credit Agreement (the “Macquarie Amendment”).

The parties entered into the Macquarie Amendment on October 31, 2019. Among other things, the Macquarie Amendment (i) extended the maturity date of the loan made under the Macquarie Credit Agreement by 12 months to March 6, 2023, (ii) adjusted the loan amortization in accordance with the newly extended maturity date, (iii) confirmed that an event of default under four or more existing leases involving parties to the Macquarie Term Sheet that remains unremedied after the applicable grace period for such an event of default will constitute an event of default under the Macquarie Credit Agreement, (iv) to the extent permitted by other debt instruments, provided for the collateralization of the obligations owed under such existing leases with the liens securing the Macquarie Credit Agreement and (v) allowed for the delivery by October 31, 2019 of the annual financial statements of the Company and its subsidiaries for the fiscal year ended March 31, 2019, and by December 31, 2019 of the quarterly financial statements of the Company and its subsidiaries for the fiscal quarters of the Company ended June 30, 2019 and September 30, 2019.

PK Air Debt — On October 3, 2019, the Company entered into an Omnibus Agreement (the “Omnibus Agreement”), dated the same date, among Bristow Equipment Leasing Ltd., as borrower,PK Transportation Finance Ireland Limited (“PK Transportation”), as lender, PK AirFinance, as agent for the lender and as security trustee for the MAG Agent and the MAG Parties (each as defined in the PK Credit Agreement), PK AirFinance and PK Transportation. Pursuant to the Omnibus Agreement, among

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other matters, the parties have agreed, effective upon satisfaction of the conditions precedent set forth in the Omnibus Agreement (the “Omnibus Effective Date”), to amend the PK Credit Agreement to, among other things, extend the maturity date of the 24 loans made under the PK Credit Agreement by 18 months to January 27, 2025 and increase the principal amount of the loans in an aggregate amount of approximately $17.3 million. The Omnibus Agreement also updates the amortization schedule as of October 3, 2019 to provide that, among other things, only interest will be payable on the loans for the six months following the Omnibus Effective Date, with a balloon amount of approximately $104.2 million due on the maturity date. If the loans are refinanced by full prepayment during the six-month period following the Effective Date, no prepayment penalty will be due. Each loan is secured by an aircraft which has been pledged as collateral for the loans.

The Omnibus Agreement also provides that the Borrower Guarantee and Indemnity Cap (as defined in the PK Credit Agreement) will be reduced by the amount of increased principal when paid. In addition, the Omnibus Agreement adjusts the information covenants under the PK Credit Agreement such that the Company shall provide a copy of the annual audit report for each fiscal year for the Company and its subsidiaries as soon as available and in any event within 90 days after the end of such fiscal year of the Company (or, in the case of the fiscal year ended March 31, 2019, by October 31, 2019), and quarterly financial statements of the Company and its subsidiaries within 45 days after the end of each fiscal quarter of the Company (and, in the case of each of the fiscal quarters ended June 30, 2019 and September 30, 2019, by December 31, 2019). In the Omnibus Agreement, PK Transportation also agreed to waive certain events of default arising from breaches of covenants in other agreements as a result of the Chapter 11 Cases and failure to provide its financial statements by their required due dates.

6¼% Senior Notes due 2022 — As of May 11, 2019, we determined that the 6¼% Senior Notes were an allowed claim and therefore reclassified the balance to liabilities subject to compromise and discontinued accruing interest on these obligations. Contractual interest on the 6¼% Senior Notes for the three and six months ended September 30, 2019 was $6.3 million and $12.5 million, respectively, which is $6.3 million and $9.8 million in excess of reported interest expense for the three and six months ended September 30, 2019, respectively. In connection with reclassifying the 6¼% Senior Notes to liabilities subject to compromise, we wrote-off $2.4 million of deferred financing fees. See Note 2 for further details. In accordance with the Amended Plan, on the Effective Date, all outstanding obligations under the 6¼% Senior Notes, including the indentures governing such obligations, were cancelled, except to the limited extent expressly set forth in the Amended Plan.

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(Unaudited)

Note 6 — FAIR VALUE DISCLOSURES

Assets and liabilities subject to fair value measurement are categorized into one of three different levels depending on the observability of the inputs employed in the measurement, as follows:

Level 1 – observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – inputs that reflect quoted prices for identical assets or liabilities in markets which are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

Recurring Fair Value Measurements

The following table summarizes the financial instruments we had as of ~~December 31, 2018,~~September 30, 2019, valued at fair value on a recurring basis (in thousands):


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2018		Balance Sheet Classification	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of September 30, 2019		Balance Sheet Classification
Derivative financial instruments	$	—	$	3,174	$	—	$	3,174	Prepaid expenses and other current assets	$	—	$	3,443	$	—	$	3,443	Prepaid expenses and other current assets
Rabbi Trust investments	1,850		—		—		1,850		Other assets	2,645		—		—		2,645		Other assets
Total assets	$	1,850	$	3,174	$	—	$	5,024		$	2,645	$	3,443	$	—	$	6,088

The following table summarizes the financial instruments we had as of March 31, ~~2018,~~2019, valued at fair value on a recurring basis (in thousands):


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of March 31, 2018		Balance Sheet Classification	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of March 31, 2019		Balance Sheet Classification
Derivative financial instruments	$	—	$	718	$	—	$	718	Prepaid expenses and other current assets	$	—	$	1,845	$	—	$	1,845	Prepaid expenses and other current assets
Rabbi Trust investments	2,296		—		—		2,296		Other assets	2,544		—		—		2,544		Other assets
Total assets	$	2,296	$	718	$	—	$	3,014		$	2,544	$	1,845	$	—	$	4,389

The rabbi trust investments consist of cash and mutual funds whose fair value are based on quoted prices in active markets for identical assets, and are designated as Level 1 within the valuation hierarchy. The rabbi trust holds investments related to our non-qualified deferred compensation plan for our senior executives. The derivative financial instruments consist of foreign currency put option contracts whose fair value is determined by quoted market prices of the same or similar instruments, adjusted for counterparty risk. See Note 7 for a discussion of our derivative financial instruments.

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(Unaudited)

Non-recurring Fair Value Measurements

The majority of our non-financial assets, which include inventories, property and equipment, assets held for sale, goodwill and other intangible assets, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur such that a non-financial asset is required to be evaluated for impairment and deemed to be impaired, the impaired non-financial asset is recorded at its fair value.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

The following table summarizes the assets as of September 30, 2019, valued at fair value on a non-recurring basis ~~during the three and nine months ended December 31, 2018~~ (in thousands):

Quoted Prices in Active
Markets for
Identical Assets
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Loss for the
Three Months
Ended
December 31, 2018 Total
Loss for the
Nine Months
Ended
December 31, 2018
Inventories ⁽¹⁾
$ —
$ —
$ 7,697
$ —
$ (9,276 )
Assets held for sale ⁽²⁾
—
—
22,485
(1,350 ) (1,350 )
Aircraft and equipment ⁽¹⁾
—
—
136,338
—
(104,939 )
Other intangible assets ⁽¹⁾
—
—
—
—
(3,005 )
Total assets $ —
$ —
$ 166,520
$ (1,350 ) $ (118,570 )



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of September 30, 2019		Total Loss for the Three Months Ended September 30, 2019			Total Loss for the Six Months Ended September 30, 2019
Aircraft and equipment	$	—	$	60,426	$	—	$	60,426	$	(42,022	)	$	(42,022	)
Investment in unconsolidated affiliates	—		—		—		—		(2,575		)	(2,575		)
Goodwill	—		—		—		—		(17,504		)	(17,504		)
Total assets	$	—	$	60,426	$	—	$	60,426	$	(62,101	)	$	(62,101	)

~~_____________~~


⁽¹⁾	~~Fair value as of September 30, 2018.~~


⁽²⁾	~~Fair value as of December 31, 2018.~~

The following table summarizes the assets as of September 30, 2018, valued at fair value on a non-recurring basis ~~during the three and nine months ended December 31, 2017~~ (in thousands):


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Loss for the Three Months Ended December 31, 2017			Total Loss for the Nine Months Ended December 31, 2017			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of September 30, 2018		Total Loss for the Three Months Ended September 30, 2018			Total Loss for the Six Months Ended September 30, 2018
Inventories ⁽¹⁾	$	—	$	—	$	1,252	$	—		$	(1,192	)	$	—	$	—	$	7,697	$	7,697	$	(9,276	)	$	(9,276	)
Assets held for sale ⁽²⁾	—		—		31,038		(1,560		)	(11,307		)
Aircraft and equipment													—		—		136,338		136,338		(104,939		)	(104,939		)
Other intangible assets													—		—		—		—		(3,005		)	(3,005		)
Total assets	$	—	$	—	$	32,290	$	(1,560	)	$	(12,499	)	$	—	$	—	$	144,035	$	144,035	$	(117,220	)	$	(117,220	)

~~_____________~~ The fair value of goodwill, using Level 3 inputs, is determined using a combination of an income and market approach. The estimate of fair value was derived from unobservable inputs that require significant estimates, judgments and assumptions as described in Note 1 under the heading “— Goodwill”.


⁽¹⁾ The fair value of investment in unconsolidated affiliates is estimated using the income approach. The estimate of fair value includes unobservable inputs, representative of Level 3 fair value measurement, including assumptions related to future performance, such as projected demand for services. For further details on our investment in unconsolidated affiliates, see Note 1.	~~Fair value as of June 30, 2017.~~


⁽²⁾	~~Fair value as of December 31, 2017.~~

The fair value of inventories using Level ~~2 and~~ 3 inputs is determined by evaluating the current economic conditions for sale and disposal of spare parts, which includes estimates as to the recoverability of the carrying value of the parts based on historical experience with sales and disposal of similar spare parts, the expected time frame of sales or disposals, the location of the spare parts to be sold and the condition of the spare parts to be sold or otherwise disposed of.

The fair value of aircraft and equipment, using Level 3 inputs, is determined using a market approach. The market approach consisted of a thorough review of recent market activity, available transaction data involving the subject aircraft, current demand and availability on the market. We took into account the age, specifications, accrued hours and cycles, and the maintenance status of each subject aircraft.

The fair value of aircraft and equipment, using Level 2 inputs, is determined using inputs that are derived principally from or corroborated by observable market data or inputs other than quoted prices that are observable for the asset including potential sale prices contemplated in arms-length transactions with third-parties.

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(Unaudited)

The fair value of other intangible assets, using Level 3 inputs, is estimated using the income approach. The estimate of fair value includes unobservable inputs, including assumptions related to future performance, such as projected demand for services, rates, and levels of expenditures.

The fair value of assets held for sale using Level 3 inputs is determined through evaluation of expected sales proceeds for aircraft. This analysis includes estimates based on historical experience with sales, recent transactions involving similar assets, quoted market prices for similar assets and condition and location of aircraft to be sold or otherwise disposed of. The loss for the three and nine months ended December 31, 2018 related to two aircraft held for sale. The loss for the three and nine months ended December 31, 2017 related to one and five aircraft held for sale, respectively. Additionally, the loss for the nine months ended December 31, 2017 includes a $6.5 million impairment relating to the Bristow Academy disposal group. For further details on Bristow Academy disposal group, see Note 1 to our fiscal year 2018 Financial Statements.

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~~BRISTOW GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

Fair Value of Debt

The fair value of our debt has been estimated in accordance with the accounting standard regarding fair value. The fair value of our fixed rate long-term debt is estimated based on quoted market prices and has not been updated for any possible acceleration ~~clauses.~~provisions in our debt instruments. The carrying and fair value of our debt, excluding unamortized debt issuance costs, are as follows (in thousands):


	December 31, 2018				March 31, 2018				September 30, 2019				March 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
8.75% Senior Secured Notes due 2023 ⁽¹⁾	$	347,205	$	250,250	$	346,610	$	353,500	$	273,449	$	269,678	$	347,400	$	252,000
4½% Convertible Senior Notes due 2023 ⁽²⁾	111,514		54,984		107,397		158,772
4½% Convertible Senior Notes due 2023^{(2) (3)}									143,750		14,375		112,944		28,923
6¼% Senior Notes due 2022(3)	401,535		140,537		401,535		325,243		401,535		28,107		401,535		75,288
DIP Credit Agreement									150,000		150,000		—		—
Term Loan									75,000		75,000		—		—
Lombard Debt	182,388		182,388		211,087		211,087		167,519		167,519		183,450		183,450
Macquarie Debt	174,528		174,528		185,028		185,028		164,028		164,028		171,028		171,028
PK Air Debt	216,637		216,637		230,000		230,000		202,634		202,634		212,041		212,041
Airnorth Debt	11,738		11,738		13,832		13,832		9,416		9,416		11,058		11,058
Eastern Airways Debt	—		—		14,519		14,519		351		351		—		—
Other Debt	7,959		7,959		3,991		3,991
Other Debt⁽³⁾									9,370		9,370		9,168		9,168
	$	1,453,504	$	1,039,021	$	1,513,999	$	1,495,972	$	1,597,052	$	1,090,478	$	1,448,624	$	942,956

_____________


⁽¹⁾	The carrying value is net of unamortized discount of ~~$2.8~~$1.7 million and ~~$3.4~~$2.6 million as of ~~December 31~~September 30, 2019 and March 31, ~~2018,~~2019, respectively.


⁽²⁾	The carrying value is net of unamortized discount of ~~$32.2 million~~zero and ~~$36.4~~$30.8 million as of ~~December 31~~September 30, 2019 and March 31, ~~2018,~~2019, respectively.


⁽³⁾	Reclassified to liabilities subject to compromise on our condensed consolidated balance sheet as of September 30, 2019. See Note 2 and Note 5 for further details.

Other

The fair values of our cash and cash equivalents, accounts receivable and accounts payable approximate their carrying values due to the short-term nature of these items.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Note 7 — DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

From time to time, we enter into forward exchange contracts as a hedge against foreign currency asset and liability commitments and anticipated transaction exposures, including intercompany purchases. All derivatives are recognized as assets or liabilities and measured at fair value. We do not use financial instruments for trading or speculative purposes.

During fiscal year ~~2018~~2019 and the ~~nine~~six months ended ~~December 31, 2018,~~September 30, 2019, we entered into foreign currency put option contracts of £5 million per month through ~~November 2019~~September 2020 to mitigate a portion of our foreign currency exposure. These derivatives were designated as cash flow hedges.

The designation of a derivative instrument as a hedge and its ability to meet relevant hedge accounting criteria determines how the change in fair value of the derivative instrument will be reflected in the consolidated financial statements. A derivative qualifies for hedge accounting if, at inception, the derivative is expected to be highly effective in offsetting the hedged item’s underlying cash flows or fair value and the documentation requirements of the accounting standard for derivative instruments and hedging activities are fulfilled at the time we enter into the derivative contract. A hedge is designated as a cash flow hedge, fair value hedge, or a net investment in foreign operations hedge based on the exposure being hedged. The asset or liability value of the derivative will change in tandem with its fair value. For derivatives designated as cash flow hedges, the changes in fair value are recorded in accumulated other comprehensive income (loss). The derivative’s gain or loss is released from accumulated other comprehensive income (loss) to match the timing of the effect on earnings of the hedged item’s underlying cash flows.

We review the effectiveness of our hedging instruments on a quarterly basis. We discontinue hedge accounting for any hedge that we no longer consider to be highly effective. Changes in fair value for derivatives not designated as hedges or those not qualifying for hedge accounting are recognized in current period earnings.

None of our derivative instruments contain credit-risk-related contingent features. Counterparties to our derivative contracts are high credit quality financial institutions.

The following table presents the balance sheet location and fair value of the portions of our derivative instruments that were designated as hedging instruments as of ~~December 31, 2018~~September 30, 2019 (in thousands):


	Derivatives designated as hedging instruments		Derivatives not designated as hedging instruments		Gross amounts of recognized assets and liabilities		Gross amounts offset in the Balance Sheet		Net amounts of assets and liabilities presented in the Balance Sheet		Derivatives designated as hedging instruments		Derivatives not designated as hedging instruments		Gross amounts of recognized assets and liabilities		Gross amounts offset in the Balance Sheet		Net amounts of assets and liabilities presented in the Balance Sheet

Prepaid expenses and other current assets	$	3,174	$	—	$	3,174	$	—	$	3,174	$	3,443	$	—	$	3,443	$	—	$	3,443
Net	$	3,174	$	—	$	3,174	$	—	$	3,174	$	3,443	$	—	$	3,443	$	—	$	3,443

The following table presents the balance sheet location and fair value of the portions of our derivative instruments that were designated as hedging instruments as of March 31, ~~2018~~2019 (in thousands):


	Derivatives designated as hedging instruments		Derivatives not designated as hedging instruments		Gross amounts of recognized assets and liabilities		Gross amounts offset in the Balance Sheet		Net amounts of assets and liabilities presented in the Balance Sheet		Derivatives designated as hedging instruments		Derivatives not designated as hedging instruments		Gross amounts of recognized assets and liabilities		Gross amounts offset in the Balance Sheet		Net amounts of assets and liabilities presented in the Balance Sheet

Prepaid expenses and other current assets	$	718	$	—	$	718	$	—	$	718	$	1,845	$	—	$	1,845	$	—	$	1,845
Net	$	718	$	—	$	718	$	—	$	718	$	1,845	$	—	$	1,845	$	—	$	1,845

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The following table presents the impact that derivative instruments, designated as cash flow hedges, had on our accumulated other comprehensive loss (net of tax) and our consolidated statements of operations for the three months ended ~~December 31, 2018~~September 30, 2019 (in thousands):

Financial statement location

Amount of loss recognized in accumulated other comprehensive loss $ (5 ) Accumulated other comprehensive loss
Amount of loss reclassified from accumulated other comprehensive loss into earnings $ —

Statement of operations — Direct cost

The following table presents the impact that derivative instruments, designated as cash flow hedges, had on our accumulated other comprehensive loss (net of tax) and our consolidated statements of operations for the ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019 (in thousands):


			Financial statement location			Financial statement location

Amount of gain recognized in accumulated other comprehensive loss	$	2,403	Accumulated other comprehensive loss	$	2,733	Accumulated other comprehensive loss
Amount of gain reclassified from accumulated other comprehensive loss into earnings	$	1,158	Statement of operations — Direct cost	$	1,135	Statement of operations

We estimate that $1.2 million of net gain in accumulated other comprehensive loss associated with our derivative instruments is expected to be reclassified into earnings within the next twelve months.

Note 8 — COMMITMENTS AND CONTINGENCIES

Aircraft Purchase Contracts — As shown in the table below, we ~~expect~~have obligations to make additional capital expenditures over the next ~~seven~~two fiscal years to purchase additional aircraft. As of ~~December 31, 2018,~~September 30, 2019, we had 26three aircraft on order and no options to acquire an additional ~~four~~ aircraft. Although a similar number of our existing aircraft may be sold during the same period, the additional aircraft on order will provide incremental fleet capacity in terms of revenue and operating income.

Three Months Ending March 31, 2019 Fiscal Year Ending March 31,
2020 2021 2022
2023 and thereafter⁽¹⁾
Total
Commitments as of December 31, 2018:
Number of aircraft:
Large —
—
4
5
13
22
U.K. SAR —
4
—
—
—
4
—
4
4
5
13
26
Related commitment expenditures (in thousands) ⁽²⁾

Large $ 2,197
$ 24,310
$ 74,946
$ 83,195
$ 188,401
$ 373,049
U.K. SAR —
59,946
—
—
—
59,946
$ 2,197
$ 84,256
$ 74,946
$ 83,195
$ 188,401
$ 432,995
Options as of December 31, 2018:
Number of aircraft:
Large 2
2
—
—
—
4
2
2
—
—
—
4

Related option expenditures (in thousands) ⁽²⁾
$ 44,181
$ 31,536
$ —
$ —
$ —
$ 75,717



	Six Months Ending March 31, 2020		Fiscal Year Ending March 31,
	Six Months Ending March 31, 2020		2021		2022		2023		2024 and thereafter		Total
Commitments as of September 30, 2019:⁽¹⁾⁽²⁾
Number of aircraft:
U.K. SAR⁽³⁾	2		1		—		—		—		3

Related commitment expenditures (in thousands)
U.K. SAR	$	28,747	$	14,374	$	—	$	—	$	—	$	43,121

_____________

⁽¹⁾

~~Includes $91.1~~On July 25, 2019, we entered into an amendment to our agreement for the purchase of four AW189 U.K. SAR configuration helicopters. Pursuant to the amendment, the parties mutually agreed to postpone the delivery dates for three helicopters to the second half of fiscal year 2020 and the first quarter of fiscal year 2021. The postponement in deliveries resulted in deferral of approximately $14.4 million in capital expenditures scheduled for ~~five aircraft orders that can be cancelled prior to delivery dates. We made non-refundable deposits~~fiscal years 2020 into fiscal year 2021. The impact of ~~$4.5 million related to these aircraft~~this amendment is included in ~~prior periods.~~the table above. One of the four AW189s was purchased in August 2019.


⁽²⁾	~~Includes progress payments~~In October 2019, the Bankruptcy Court approved our agreement with Airbus Helicopters S.A.S. to reject our aircraft purchase contract for 22 large aircraft. This impact of this agreement is included in the table above.


⁽³⁾	The three AW189 U.K. SAR configured aircraft on ~~aircraft scheduled to be delivered~~order were being leased as of March 31, 2019. One of the AW189s was purchased in ~~future periods only if options are exercised.~~October 2019.

We periodically purchase aircraft for which we have no orders. ~~During the three months ended December 31, 2018, we purchased an aircraft that was not on order.~~

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

In December 2018, a large aircraft order was terminated and we removed $17.5 million of future commitments from the table above. We recorded contract termination costs of $14.0 million included in loss on disposal of assets on our condensed consolidated statements of operations for amounts previously included in construction in progress on our condensed consolidated balance sheets. We have an ongoing dispute with the OEM to recover a portion of these progress payments. For further details, see Note 1.

On May 1, 2019, we entered into an amendment to our agreement with Airbus Helicopters for the purchase of 22 H175 helicopters which includes five aircraft that can be cancelled by us prior to the delivery dates. Pursuant to the amendment, the parties mutually agreed to postpone the delivery dates for such helicopters for 18 months from the previous schedule with the first three helicopters now scheduled for delivery in the second half of fiscal year 2022. The postponement in deliveries resulted in various amendments to the payment terms under the purchase agreement including the deferral of approximately $110.0 million in capital expenditures scheduled for fiscal years 2019 to 2023 into fiscal years 2024 and beyond. Our capital commitments related to these H175 helicopters now total approximately $14.0 million for fiscal years 2020 and 2021. In connection with this amendment, the overall purchase price of these helicopters has been increased by $18.4 million to account for inflation. The impact of this amendment is not included in the table above.

~~Operating Leases —~~ We have non-cancelable operating leases in connection with the lease of certain equipment, including leases for aircraft, and land and facilities. Rent expense incurred under all operating leases was $48.2 million and $42.6 million for the three months ended December 31, 2018 and 2017, respectively, and $147.8 million and $158.5 million for the nine months ended December 31, 2018 and 2017, respectively. Rent expense incurred under operating leases for aircraft was $42.8 million and $36.5 million for the three months ended December 31, 2018 and 2017, respectively, and $129.9 million and $137.9 million for the nine months ended December 31, 2018 and 2017, respectively.

The aircraft leases range from base terms of up to 180 months with renewal options of up to 240 months in some cases, include purchase options upon expiration and some include early purchase options. The leases contain terms customary in transactions of this type, including provisions that allow the lessor to repossess the aircraft and require us to pay a stipulated amount if we default on our obligations under the agreements. The following is a summary of the terms related to aircraft leased under operating leases with original or remaining terms in excess of one year as of December 31, 2018:



	~~End of Lease Term~~		~~Number of Aircraft~~
	~~Three months ending March 31, 2019 to fiscal year 2020~~		29
	~~Fiscal year 2021 to fiscal year 2023~~		36
	~~Fiscal year 2024 to fiscal year 2025~~		11
			76

In April and May 2019, we agreed to return our remaining four H225 leased aircraft and paid $4.3 million in lease return costs. We owe an additional $2.8 million in lease return costs, $9.7 million in future rent and $9.4 million in deferred rent related to these four H225 lease returns.

Separation Programs — Beginning in March 2015, we initiated involuntary separation programs (“ISPs”) in certain regions. The expense related to the ISPs for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018 ~~and 2017~~ is as follows (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended September 30,				Six Months Ended September 30,
	2018		2017		2018		2017		2019		2018		2019		2018
Direct cost	$	2,096	$	2,661	$	4,809	$	5,208	$	2,525	$	1,212	$	3,988	$	2,713
General and administrative	313		120		2,046		8,662		10		1,515		163		1,733
Total	$	2,409	$	2,781	$	6,855	$	13,870	$	2,535	$	2,727	$	4,151	$	4,446

Environmental Contingencies — The U.S. Environmental Protection Agency (the “EPA”), has in the past notified us that we are a potential responsible party (“PRP”) at three former waste disposal facilities that are on the National Priorities List of contaminated sites. Under the federal Comprehensive Environmental Response, Compensation and Liability Act, also known as the Superfund law, persons who are identified as PRPs may be subject to strict, joint and several liability for the costs of cleaning

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~~BRISTOW GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

up environmental contamination resulting from releases of hazardous substances at National Priorities List sites. Although we have not yet obtained a formal release of liability from the EPA with respect to any of the sites, we believe that our potential liability in connection with the sites is not likely to have a material adverse effect on our business, financial condition or results of operations.

~~CEO Transition~~ — On November 9, 2018, the Company announced the upcoming retirement of Jonathan E. Baliff, who served as President and Chief Executive Officer of the Company. Mr. Baliff stepped down from the position of President effective November 9, 2018, while continuing to serve as Chief Executive Officer. On February 11, 2019, the Company entered into a Retirement and Consulting Agreement (the “Retirement and Consulting Agreement”) with Mr. Baliff. Under the Retirement and Consulting Agreement, Mr. Baliff ceased to serve as Chief Executive Officer of the Company and resigned from the Board of Directors of the Company (the “Board”), effective February 28, 2019. Commencing March 1, 2019, Mr. Baliff provided consulting services to the Company through June 30, 2019 and received a monthly consulting fee of $30,000.

Mr. Baliff’s retirement constituted a separation of employment entitling him to benefits under the Company’s Management Severance Benefits Plan for U.S. Employees (the “Severance Plan”). Pursuant to the Severance Plan and subject to Mr. Baliff’s execution and non-revocation of a release of claims against the Company, upon his termination of employment, Mr. Baliff became entitled to: (a) severance of $1,442,000, equal to two times Mr. Baliff’s base salary; (b) Company payment of Mr. Baliff’s COBRA premiums for 36 months (extended from 18 months); (c) outplacement services for 12 months; (d) accelerated vesting of Company equity awards and Company performance cash awards granted in June 2016 that would have vested by their terms in June 2019; and (e) a pro-rata bonus, assuming target performance, for the portion of fiscal year 2019 during which Mr. Baliff served as Chief Executive Officer.

In consideration of Mr. Baliff’s agreement to extend the post-termination non-compete and employee non-solicitation provisions from one year to two years, the Company agreed that the following Company equity awards would remain outstanding and continue to vest, subject to Mr. Baliff’s compliance with the restrictive covenants and satisfaction of his obligations under the consulting arrangement described above: (a) options to purchase 43,503 shares of Company stock, scheduled to vest on June 5, 2019; (b) options to purchase 102,190 shares of Company stock, scheduled to vest on June 12, 2019; (c) 74,502 Company restricted stock units, scheduled to vest on June 12, 2020; and (d) 23,927 Company restricted stock units, scheduled to vest on June 5, 2021.

Effective upon Mr. Baliff’s retirement and until the appointment of a new Chief Executive Officer, the Board named Thomas N. Amonett, the Vice-Chairman of the Board and interim President of the Company, to the additional role of interim Chief Executive Officer.

On March 1, 2019, the Company announced that L. Don Miller, Senior Vice President and Chief Financial Officer of the Company, had been appointed to succeed Mr. Baliff as President and Chief Executive Officer of the Company, effective as of the close of business on February 28, 2019. Mr. Miller joined the Board concurrently with the effectiveness of his appointment as President and Chief Executive Officer. Mr. Amonett, who has been serving as the interim President of the Company, was appointed to the role of Executive Vice Chairman of the Board, effective upon the effectiveness of Mr. Miller’s appointment. Brian J. Allman, Vice President and Chief Accounting Officer of the Company, was appointed to succeed Mr. Miller as Senior Vice President and Chief Financial Officer.

Other Purchase Obligations — As of ~~December 31, 2018,~~September 30, 2019, we had ~~$52.0~~$28.3 million of other purchase obligations representing unfilled purchase orders for aircraft parts and non-cancelable power-by-the-hour maintenance commitments.

Sikorsky Lawsuit — On January 8, 2019, we filed suit in the District Court of Harris County, Texas against Sikorsky Aircraft Corporation (“Sikorsky”) for breach of contract, unjust enrichment and conversion as a result of Sikorsky terminating a sales agreement after we sought to delay delivery of a helicopter and retaining our $11.7 million deposit as liquidated damages. We are seeking a ruling that Sikorsky be required to return the deposit and provide an accurate calculation of its damages under the sales agreement. ~~Sikorsky has challenged venue, and discovery related thereto is underway. With~~Bristow recently removed the ~~advice of counsel, we are evaluating the feasibility of transferring the matter~~claim to the ~~Bankruptcy Court for disposition.~~Southern District of Texas bankruptcy court based on Sikorsky’s decision to file a claim in bankruptcy related to this case. We expect a resolution in the next six to nine months.

Other Matters— Although infrequent, aircraft accidents have occurred in the past, and the related losses and liability claims have been covered by insurance subject to deductible, self-insured retention and loss sensitive factors.

On March 10, 2019, one of our Bell 407 model aircraft was involved in an accident in the Gulf of Mexico in which one pilot and one passenger were fatally injured. The cause(s) of the accident remain unknown at this time. We continue to work with authorities in their investigation.

As previously reported, on April 29, 2016, another company’s EC 225LP (also known as a H225LP) model helicopter crashed near Turøy outside of Bergen, Norway resulting in the European Aviation Safety Agency issuing airworthiness directives prohibiting

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~~BRISTOW GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~flight of H225LP and AS332L2 model aircraft. On July 20,~~November 6, 2017, the U.K. CAA and NCAA issued safety and operational directives which detail the conditions to apply for safe return to service of H225LP and AS332L2 model aircraft, where operators wish to do so. On July 5, 2018, the Accident Investigation Board Norway issued its final investigation report on the accident. The report cited a fatigue fracture within the epicyclic module of the main gear box as the cause of the accident, and issued safety recommendations in a number of areas, including gearbox design and certification requirements, failure tolerance, and continued airworthiness of the AS332L2 and the H225LP helicopters. We continue not to operate for commercial purposes our H225LP model aircraft, and we are carefully evaluating next steps for the H225LP model aircraft in our operations worldwide, with the safety of passengers and crews remaining our highest priority. Recent third-party market transactions and the development of alternative opportunities outside of our traditional oil and gas services for our H225 aircraft indicated a substantial return to oil and gas service within our operations was not likely. See Note 1 for further details.

~~The~~ Huntington National Bank (“Huntington”) filed suit against the Company and Bristow U.S. LLC in the U.S. District Court for the Southern District of New York (the “Southern District of New York Court”). Huntington alleges violation of an addendum of a lease agreement for failure to arrange for the enrollment of the aircraft engines in a maintenance agreement and seeks approximately $2.5 million in damages. We submitted a counterclaim for approximately $100,000 of costs related to storage, maintenance and insurance of the aircraft following the expiration of the lease. On March 1, 2019, the Southern District of New York Court denied Huntington’s motion for summary judgment. We initiated discovery; however, on May 16, 2019, the proceedings were stayed as a result of the Chapter 11 Cases. Huntington filed a claim in the bankruptcy proceedings for the damages alleged in its initial lawsuit and for damages allegedly incurred as a result of Bristow returning a second leased aircraft. The Company, Bristow U.S. LLC, and Huntington entered into a Settlement Agreement on October 17, 2019 that provides a framework for resolution of Huntington’s claims with respect to both leased aircraft. The Bankruptcy Court approved the settlement on October 23, 2019.

Two purported class action complaints, Kokareva v. Bristow Group Inc., Case No. 4:19-cv-0509 and Lilienfield v. Bristow Group Inc., Case No. 4:19-cv-1064, were filed in the U.S. District Court for the Southern District of Texas (the “Southern District of Texas Court”) on February 14, 2019 and March 21, 2019, respectively. The complaints, which also name Jonathan E. Baliff and L. Don Miller as defendants, allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), arising out of the Company’s disclosures and alleged failure to make timely disclosure of inadequate monitoring control processes related to non-financial covenants within certain of its secured financing and lease agreements. On May 17, 2019, the Southern District of Texas Court appointed BRS Investor Group as Lead Plaintiff and consolidated both actions under Kokareva v. Bristow Group Inc., Case No. 4:19-cv-0509.

When the Company filed the Chapter 11 Cases on May 11, 2019, the litigation against the Company was automatically stayed. ~~The~~When the Company emerged from bankruptcy, all the claims against the Company were released, but the case ~~was not automatically stayed~~is still proceeding against the individual defendants. Plaintiffs filed a Consolidated Amended Complaint on November 4, 2019, and defendants ~~but the Company intends~~have until January 3, 2020 to request that the stay also extend to the individual defendants. On May 31, 2019, the Lead Plaintiff requested that the Southern District of Texas Court schedule an initial conference, and the defendants requested that any conference be postponed until after the Bankruptcy Court decides whether the stay should extend to the individual defendants. The Southern District of Texas Court has not yet setfile a ~~date for an initial conference.~~response. The defendants believe that the claims are without merit and intend to vigorously defend against them.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

King, Matthew Masters, David C. Gompert, Bruce H. Stover, L. Don Miller, and Brian J. Allman (the “Derivative Defendants”) in the United States District Court for the District of Delaware. The complaint alleges breaches of fiduciary duties and violations of Section 10(b) of the ~~Securities~~ Exchange Act ~~of 1934~~ arising out of Company disclosures and failing to have adequate monitoring control processes related to non-financial covenants within certain of our secured financing and lease agreements. The complaint also alleges waste of corporate assets, gross mismanagement, and unjust enrichment. On July 19, 2019, the parties submitted a Joint Stipulation to stay the case pending the resolution of any motion to dismiss filed in the actions in the Southern District of Texas Court. The Derivative Defendants believe that the claims are without merit and intend to vigorously defend against them.

We operate in jurisdictions internationally where we are subject to risks that include government action to obtain additional tax revenue. In a number of these jurisdictions, political unrest, the lack of well-developed legal systems and legislation that is not clear enough in its wording to determine the ultimate application, can make it difficult to determine whether legislation may impact our earnings until such time as a clear court or other ruling exists. We operate in jurisdictions currently where amounts may be due to governmental bodies that we are not currently recording liabilities for as it is unclear how broad or narrow legislation may ultimately be interpreted. We believe that payment of amounts in these instances is not probable at this time, but is reasonably possible.

A loss contingency is reasonably possible if the contingency has a more than remote but less than probable chance of occurring. Although management believes that there is no clear requirement to pay amounts at this time and that positions exist suggesting that no further amounts are currently due, it is reasonably possible that a loss could occur for which we have estimated a maximum loss at December 31, 2018 to be approximately $3 million.

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~~BRISTOW GROUP INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

We are a defendant in certain claims and litigation arising out of operations in the normal course of business. In the opinion of management, uninsured losses, if any, will not be material to our financial position, results of operations or cash flows.

~~See Part II. Item 1. “Legal Proceedings” included elsewhere in this Quarterly Report for a discussion~~

Table of ~~other actions or claims pending.~~Contents

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Note 9 — ~~TAXES~~LEASES

As discussed in Note 1, we adopted ASC 842 on a prospective basis on April 1, 2019 and used the effective date as the date of initial application. Therefore, prior period financial information has not been adjusted and continues to be reflected in accordance with our historical accounting policies. The lease standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.

We ~~estimate~~elected to adopt the ~~full-year~~“package of practical expedients”, which allows us to carry forward historical assessments of whether existing agreements contain a lease, classification of existing lease agreements, and treatment of initial direct lease costs. We also elected to account for non-lease and lease components as a single lease component for all asset classes and exclude short-term leases (those with terms of 12 months or less) from balance sheet presentation.

The adoption of this accounting standard had the effects specified in Note 1.

Accounting Policy for Leases

We determine if an arrangement is a lease at inception. All of our leases are operating leases and are recorded in ROU assets, accounts payable and operating lease liabilities in our condensed consolidated balance sheet as of September 30, 2019.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligations to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of a lease based on the present value of lease payments over the lease term. We use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease. The lease term includes options to extend when we are reasonably certain to exercise the option. We are not, however, reasonably certain that we will exercise any option(s) to extend at commencement of a lease as each extension would be based on the relevant facts and circumstances at the time of the decision to exercise or not exercise an extension option, and as such, they have not been included in the remaining lease terms. We will evaluate the impact of lease extensions, if and when the exercise of an extension option is probable.

Overview

We have non-cancelable operating leases in connection with the lease of certain equipment, including leases for aircraft, and land and facilities used in our operations. The related lease agreements, which range from non-cancelable and month-to-month terms, generally provide for fixed monthly rentals, and can also include renewal options. We generally pay all insurance, taxes, and maintenance expenses associated with these leases, and these costs are not included in the lease liability and are recognized in the period in which they are incurred.



	End of Lease Term		Number of Aircraft
	Six months ending March 31, 2019 to fiscal year 2020		6
	Fiscal year 2021 to fiscal year 2023		23
	Fiscal year 2024 to fiscal year 2025		20
			49

Rent expense incurred under all operating leases was $38.3 million and $49.6 million for the three months ended September 30, 2019 and 2018, respectively, and $90.4 million and $99.7 million for the six months ended September 30, 2019 and 2018, respectively. For the three and six months ended September 30, 2019, a portion of the total operating lease expense relating to short-term leases was $0.3 million and $0.6 million, respectively. Rent expense incurred under operating leases for aircraft was $32.8 million and $43.2 million for the three months ended September 30, 2019 and 2018, respectively, and $79.3 million and $87.3 million for the six months ended September 30, 2019 and 2018, respectively.

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Operating leases as of September 30, 2019 were as follows (in thousands):




Operating lease right-of-use assets	$	331,743

Current portion of operating lease liabilities	83,630
Operating lease liabilities	251,399
Total operating lease liabilities	$	335,029

	Six Months Ended September 30, 2019

Cash paid for operating leases	$	83,113
ROU assets obtained in exchange for lease obligations	$	134,352
Weighted average remaining lease term	5 years
Weighted average discount rate	7.14		%

As of September 30, 2019, aggregate future payments under all non-cancelable operating leases that have initial or remaining terms in excess of one year, including leases for 49 aircraft, are as follows (in thousands):



	Aircraft		Other		Total
Fiscal year ending March 31,
2020	$	47,496	$	4,254	$	51,750
2021	87,201		6,849		94,050
2022	77,440		5,725		83,165
2023	57,126		4,424		61,550
2024	44,722		4,020		48,742
Thereafter	32,400		23,394		55,794
	$	346,385	$	48,666	$	395,051

We lease six S-92 model aircraft and one AW139 model aircraft from VIH Aviation Group, which is a related party due to common ownership of Cougar Helicopters Inc. (“Cougar”) and paid lease fees of $3.0 million and $4.5 million during the three months ended September 30, 2019 and 2018, respectively, and $7.5 million and $9.5 million during the six months ended September 30, 2019 and 2018, respectively. Additionally, we lease a facility in Galliano, Louisiana from VIH Helicopters USA, Inc., another related party due to common ownership of Cougar, and paid lease fees of $0.1 million and $0.1 million during the three months ended September 30, 2019 and 2018, respectively, and $0.1 million and $0.1 million during the six months ended September 30, 2019 and 2018, respectively.

In April and May 2019, we returned our remaining four H225 leased aircraft and paid $4.3 million in lease return costs. As of June 30, 2019, we accrued an additional $2.8 million in lease return costs, $9.7 million in future rent and $9.4 million in deferred rent related to these four H225 lease returns. These amounts are included in liabilities subject to compromise in our condensed consolidated balance sheet as of September 30, 2019. Also, we reduced our right-of-use assets by $11.9 million and operating lease liabilities by $12.4 million in connection with these lease returns. For further information regarding the Omnibus Agreement, see Note 5.

In June 2019, we rejected ten aircraft leases including nine S-76C+s and one S-76D and recorded $26.0 million of lease termination costs, net. In September 2019, we recorded an additional $4.2 million of lease termination costs to adjust our liabilities subject to compromise to the allowed claim. Also, in connection with these ten aircraft lease returns, we reduced our right-of-use assets by $18.6 million and operating lease liabilities by $20.2 million. On October 31, 2019, as part of the Amended Plan, we settled and paid these liabilities in full for $3.9 million.

In September 2019, we rejected the lease for our corporate headquarters in Houston, Texas. As of September 30, 2019, we recorded an allowed claim of $5.3 million, which was settled and paid in full for $0.6 million on October 31, 2019, as part of the Amended Plan. Also, in connection with the corporate lease rejection, as of September 30, 2019 we reduced our right-of-use assets by $13.2 million and operating lease liabilities by $18.9 million.

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Note 10 — TAXES

Our provision for income taxes for the interim period ended September 30, 2019 was prepared using a discrete effective tax rate method. Historically, we calculated our provision for income taxes during interim reporting periods by applying the estimated annual income tax rate for the full fiscal year to income from continuing operations, ~~and apply this rate to our year-to-date~~excluding discrete items, for the reporting period. We determined that since small changes in estimated pre-tax income ~~from continuing operations. In addition, we separately calculate the tax impact of unusual~~ or ~~infrequent items, if any. The tax impacts of such unusual or infrequent items are treated discretely~~loss would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate of income taxes for the quarter ended September 30, 2019. We will continue to evaluate income tax estimates under the historical method in ~~which they occur.~~subsequent quarters and employ a discrete effective tax rate method if warranted. During the three months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ our effective tax rate was ~~(38.4)%~~11.8% and ~~57.5%~~9.8%, respectively, and during the ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ our effective tax rate was ~~(2.1)%~~10.1% and ~~(2.7)%~~9.6%, respectively. The effective tax ~~rates~~rate for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018 ~~and 2017~~ were impacted by ~~net operating losses in certain foreign jurisdictions and~~ valuation allowances against future realization of foreign tax ~~credits.~~credits and net operating losses in certain foreign jurisdictions.

The relationship between our provision for or benefit from income taxes and our pre-tax book income can vary significantly from period to period considering, among other factors, (a) the overall level of pre-tax book income, (b) changes in the blend of income that is taxed based on gross revenues or at high effective tax rates versus pre-tax book income or at low effective tax rates and (c) our geographical blend of pre-tax book income. Consequently, our income tax expense or benefit does not change proportionally with our pre-tax book income or loss. Significant decreases in our pre-tax book income typically result in higher effective tax rates, while significant increases in pre-tax book income can lead to lower effective tax rates, subject to the other factors impacting income tax expense noted above. The change in our effective tax rate excluding discrete items for the three ~~and nine~~ months ended ~~December 31, 2018~~September 30, 2019 compared to the three ~~and nine~~ months ended ~~December 31, 2017~~September 30, 2018 primarily related to changes in the blend of earnings taxed in relatively high taxed jurisdictions versus low taxed jurisdictions. Additionally, ~~we increased~~ our valuation allowance increased by ~~$33.5~~$3.6 million and ~~$2.1~~$9.3 million for the three months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively, and ~~$43.8~~our valuation allowance increased by $3.3 million and ~~$13.4~~$10.3 million for the ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively, which also impacted our effective tax rate.

As of ~~December 31, 2018,~~September 30, 2019, there were ~~$4.3~~$4.1 million of unrecognized tax benefits, all of which would have an impact on our effective tax rate if recognized.

On December 22, 2017, the president of the United States signed into law tax legislation commonly known as the Tax Cuts and Jobs Act (the “Act”). The Act includes numerous changes in existing U.S. tax law, including a permanent reduction in the U.S. federal corporate income tax rate from 35% to 21%. The rate reduction took effect on January 1, 2018. Further, the Act provides for a one-time “deemed repatriation” of accumulated foreign earnings of certain foreign corporations. Under U.S. generally accepted accounting principles, our net deferred tax liabilities are required to be revalued during the period in which the new tax legislation is enacted. We have completed our analysis of the income tax implications of the Act during the three months ended December 31, 2018 and recorded adjustments accordingly to previously reported provisional amounts.

Certain provisions under the Act became applicable to us on April 1, 2018 and our income tax provision for the three and nine months ended December 31, 2018 includes the tax implications of these provisions. These provisions include Global Intangible Low-Taxed Income (“GILTI”), Base Erosion and Anti-Avoidance Tax (“BEAT”), Foreign Derived Intangible Income (“FDII”), and certain limitations on the deduction of interest expense and utilization of net operating losses.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Note 1011 — EMPLOYEE BENEFIT PLANS

Pension Plans

The components of net periodic pension cost other than the service cost component are included in other income (expense), net on our condensed consolidated statement of operations. ~~As discussed in Note 1, on April 1, 2018, we adopted new accounting guidance related to the presentation of net periodic pension cost.~~ The following table provides a detail of the components of net periodic pension cost (in thousands):


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Service cost for benefits earned during the period	$	207		$	214		$	636		$	632		$	152		$	210		$	311		$	429
Interest cost on pension benefit obligation	3,179			3,230			9,764			9,530			2,799			3,221			5,718			6,585
Expected return on assets	(4,191		)	(5,299		)	(12,872		)	(15,633		)	(3,841		)	(4,247		)	(7,846		)	(8,681		)
Prior service costs													34			—			69			—
Amortization of unrecognized losses	1,945			2,040			5,972			6,016			1,976			1,970			4,037			4,027
Net periodic pension cost	$	1,140		$	185		$	3,500		$	545		$	1,120		$	1,154		$	2,289		$	2,360

The current estimates of our cash contributions to our defined benefit pension plans to be paid in fiscal year ~~2019~~2020 are ~~$16.3~~$15.6 million, of which ~~$12.7~~$7.6 million was paid during the ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019. The weighted-average expected long-term rate of return on assets for our U.K. pension plans as of March 31, ~~2018~~2019 was ~~3.6%~~3.4%.

In October 2018, the U.K. High Court ruled that the U.K. defined pension schemes will be required to equalize for the effect of unequal guaranteed minimum pensions (“GMPs”) accrued between 1990 and 1997 by adjusting other non-GMP benefits. We recorded additional pension liability of $2.9 million as of December 31, 2018 related to this ruling that will be recorded as additional service cost over the future service period of approximately 20 years.

Incentive Compensation

~~Stock-based~~Prior to May 11, 2019, stock-based awards ~~are currently~~were made under the Bristow Group Inc. 2007 Long-Term Incentive Plan ~~as amended and restated on August 3, 2016~~ (the “2007 Plan”). A maximum of 10,646,729 shares of common stock ~~are~~were reserved. Awards granted under the 2007 Plan ~~may be~~were in the form of stock options, stock appreciation rights, shares of restricted stock, other stock-based awards (payable in cash or common stock) or performance awards, or any combination thereof, and ~~may be~~were made to outside directors, employees or consultants. As of ~~December 31, 2018~~September 30, 2019, ~~1,811,843~~2,355,625 shares remained available for grant under the 2007 Plan.

We have a number of other incentive and stock option plans which are described in Note 910 to our fiscal year ~~2018~~2019 Financial Statements.

Total stock-based compensation expense, which includes stock options and restricted stock, totaled ~~$1.9~~$0.7 million and ~~$2.2~~$2.0 million ~~during~~for the three months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively, and ~~$5.7~~$1.5 million and ~~$8.8~~$3.7 million for the ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively. Stock-based compensation expense has been allocated to our various regions.

No stock-based compensation was awarded in fiscal year 2020 under the 2007 Plan. The 2007 Plan and all awards thereunder were cancelled effective upon emergence from bankruptcy on October 31, 2019. See Note 2 for further details on fiscal year 2020 incentive compensation awards.

In addition to the key employee incentive plans approved by the Bankruptcy Court described in Note 2, we made retention payments in April and October 2019 totaling $3.2 million to non-executives and retention payments in April 2019 totaling $3.1 million to executives and made $3.5 million of payments for the first quarter fiscal year 2020 management incentive plan in May 2019.

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BRISTOW GROUP INC. ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~During the nine months ended~~ ~~December 31, 2018~~, we awarded 400,788 shares of restricted stock at an average grant date fair value of $12.53 per share. Also during the nine months ended December 31, 2018, 593,129 stock options were granted. The following table shows the assumptions used to compute the stock-based compensation expense for stock options granted during the nine months ended December 31, 2018:



~~Risk free interest rate~~	~~2.76~~	%
~~Expected life (years)~~	5
~~Volatility~~	~~62.8~~	%
~~Dividend yield~~	—	%
~~Weighted average exercise price of options granted~~	~~$12.19 per option~~
~~Weighted average grant-date fair value of options granted~~	~~$6.71 per option~~

During June 2018 and 2017, we awarded certain members of management phantom restricted stock which will be paid out in cash after three years. We account for these awards as liability awards. As of December 31, 2018 and March 31, 2018, we had $0.4 million and $1.0 million, respectively, included in other liabilities and deferred credits on our condensed consolidated balance sheet accrued for these awards. Additionally, changes in the fair values of these liability awards reduced compensation expense by $1.1 million and $0.4 million during the three and nine months ended December 31, 2018, respectively, and increased compensation expense by $0.5 million and $0.9 million during the three and nine months ended December 31, 2017, respectively.

Performance cash awards granted in June 2017 and 2018 have two components. One half of each performance cash award will vest and pay out in cash three years after the date of grant at varying levels depending on our performance in Total Shareholder Return against a peer group of companies. The other half of each performance cash award will be earned based on absolute performance in respect of improved average adjusted earnings per share for the Company over the three-year performance period beginning on April 1, 2017 and 2018, as applicable. Performance cash awards granted in June 2016 vest and pay out in cash three years after the date of grant at varying levels depending on our performance in Total Shareholder Return against a peer group of companies. These awards were designed to tie a significant portion of total compensation to performance. One of the effects of this type of compensation is that it requires liability accounting which can result in volatility in earnings. The liability recorded for these awards as of December 31 and March 31, 2018 was $3.9 million and $7.7 million, respectively, and represents an accrual based on the fair value of the awards on those dates. The decrease in the liability during the nine months ended December 31, 2018 resulted from the payout in June 2018 of the awards granted in June 2015, partially offset by the value of the new awards granted in June 2018. Any changes in fair value of the awards in future quarters will increase or decrease the liability and impact results in those periods. The effect, either positive or negative, on future period earnings can vary based on factors including changes in our stock price or the stock prices of the peer group companies, as well as changes in other market and company-specific assumptions that are factored into the calculation of fair value of the performance cash awards.

Changes in the fair values of performance cash awards reduced compensation expense by $1.3 million and $0.8 million during the three months ended December 31, 2018 and 2017, respectively, and reduced compensation expense by $0.2 million and increased compensation expense by $0.6 million during the nine months ended December 31, 2018 and 2017, respectively.

~~Table of Contents~~

~~BRISTOW GROUP INC.~~(DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Note 1112 — EARNINGS PER SHARE AND ACCUMULATED OTHER COMPREHENSIVE INCOME

Earnings per Share

Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share excludes options to purchase shares and restricted stock awards, which were outstanding during the period but were anti-dilutive, as follows:


	Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended September 30,				Six Months Ended September 30,
	2018		2017		2018		2017		2019		2018		2019		2018
Options:
Outstanding	3,447,397		2,729,888		2,682,918		2,791,193		3,161,465		2,751,470		3,179,147		2,794,032
Weighted average exercise price	$	25.62	$	38.12	$	33.11	$	39.88	$	26.58	$	31.26	$	26.57	$	33.25
Restricted stock awards:
Outstanding	671,258		681,571		591,808		432,596		841,574		773,799		646,040		515,395
Weighted average price	$	9.58	$	8.67	$	11.64	$	23.25	$	6.44	$	12.29	$	8.51	$	13.68

The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Loss (in thousands):
Loss available to common stockholders – basic	$	(85,944	)	$	(8,273	)	$	(262,242	)	$	(94,757	)	$	(162,974	)	$	(143,947	)	$	(332,220	)	$	(175,811	)
Interest expense on assumed conversion of 4½% Convertible Senior Notes, net of tax ⁽¹⁾	—			—			—			—
Loss available to common stockholders – diluted	(85,944		)	(8,273		)	$	(262,242	)	$	(94,757	)	(162,974		)	(143,947		)	$	(332,220	)	$	(175,811	)
Shares:
Weighted average number of common shares outstanding – basic	35,798,185			35,368,212			35,712,735			35,260,746			35,918,916			35,768,232			35,918,916			35,685,388
Assumed conversion of 4½% Convertible Senior Notes outstanding during period ⁽¹⁾	—			—			—			—
Net effect of dilutive stock options and restricted stock awards based on the treasury stock method	—			—			—			—			—			—			—			—
Weighted average number of common shares outstanding – diluted ⁽²⁾	35,798,185			35,368,212			35,712,735			35,260,746
Weighted average number of common shares outstanding – diluted ⁽¹⁾													35,918,916			35,768,232			35,918,916			35,685,388

Basic loss per common share	$	(2.40	)	$	(0.23	)	$	(7.34	)	$	(2.69	)	$	(4.54	)	$	(4.02	)	$	(9.25	)	$	(4.93	)
Diluted loss per common share	$	(2.40	)	$	(0.23	)	$	(7.34	)	$	(2.69	)	$	(4.54	)	$	(4.02	)	$	(9.25	)	$	(4.93	)

_____________

⁽¹⁾

Diluted loss per common share for three and nine months ended December 31, 2018 excludes a number of potentially dilutive shares determined pursuant to a specified formula initially issuable upon the conversion of our 4½% Convertible Senior Notes. The 4½% Convertible Senior Notes will be convertible, under certain circumstances, into cash, shares of our common stock or a combination of cash and our common stock, at our election. We have initially elected combination settlement. As of December 31, 2018 and March 31, 2018, the base conversion price of the notes was approximately $15.64, based on the base conversion rate of 63.9488 shares of common stock per $1,000 principal amount of convertible notes (subject to adjustment in certain circumstances). In general, upon conversion of a note, the holder will receive cash equal to the principal amount of the note and common stock to the extent of the note’s conversion value in excess of such principal amount. Such shares did not impact our calculation of diluted loss per share for the three and nine months ended December 31, 2018 as our average stock price during these periods did not meet or exceed the conversion requirements.

⁽²⁾

Potentially dilutive shares issuable pursuant to our warrant transactions entered into concurrently with the issuance of our 4½% Convertible Senior Notes (the “Warrant Transactions”) were not included in the computation of diluted ~~loss~~income per share for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, because to do so would have been anti-dilutive. For further details on the Warrant Transactions, see Note 45 in our fiscal year ~~2018~~2019 Financial Statements.

Pursuant to the Amended Plan, upon the Effective Date all existing equity interests in the Company were cancelled and discharged, including the options and restricted stock awards.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Accumulated Other Comprehensive Loss

The following table sets forth the changes in the balances of each component of accumulated other comprehensive loss (in thousands):


	Currency Translation Adjustments			Pension Liability Adjustments ⁽¹⁾			Unrealized gain (loss) on cash flow hedges⁽²⁾			Total			Currency Translation Adjustments			Pension Liability Adjustments ⁽¹⁾			Unrealized gain (loss) on cash flow hedges⁽²⁾			Total
Balance as of March 31, 2018	$	(79,066	)	$	(206,682	)	$	(346	)	$	(286,094	)
Balance as of March 31, 2019													$	(137,867	)	$	(189,734	)	$	(388	)	$	(327,989	)
Other comprehensive income before reclassification	(43,685		)	(2,410		)	2,403			(43,692		)	4,589			—			2,733			7,322
Reclassified from accumulated other comprehensive income	—			—			(1,158		)	(1,158		)	—			—			(1,135		)	(1,135		)
Net current period other comprehensive income	(43,685		)	(2,410		)	1,245			(44,850		)	4,589			—			1,598			6,187
Foreign exchange rate impact	(24,363		)	24,363			—			—			(12,133		)	12,133			—			—
Balance as of December 31, 2018	$	(147,114	)	$	(184,729	)	$	899		$	(330,944	)
Balance as of September 30, 2019													$	(145,411	)	$	(177,601	)	$	1,210		$	(321,802	)

_____________


⁽¹⁾	Reclassification of amounts related to pension liability adjustments are included as a component of net periodic pension cost. ~~For further details on additional pension liability recorded during the nine months ended December 31, 2018, see Note 10~~.


⁽²⁾	Reclassification of amounts related to cash flow hedges were included as direct costs.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Note 1213 — SEGMENT INFORMATION

We conduct our business in one segment: industrial aviation services. The industrial aviation services global operations are conducted primarily through two hubs that include four regions as follows: Europe Caspian, Africa, Americas and Asia Pacific. The Europe Caspian region comprises all our operations and affiliates in Europe and Central Asia, including Norway, the U.K. and Turkmenistan. The Africa region comprises all our operations and affiliates on the African continent, including Nigeria and Egypt. The Americas region comprises all our operations and affiliates in North America and South America, including Brazil, Canada, Guyana, Trinidad and the U.S. Gulf of Mexico. The Asia Pacific region comprises all our operations and affiliates in Australia and Southeast ~~Asia, including Malaysia and Sakhalin.~~Asia. Prior to the sale of ~~Bristow Academy on November 1, 2017,~~BHLL and Aviashelf during the three months ended September 30, 2019, we ~~operated a training unit, Bristow Academy,~~had operations in Sakhalin, Russia which ~~was previously~~is included in ~~Corporate and other.~~our Asia Pacific region.

The following tables show region information for the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019 and ~~2017~~2018 and as of ~~December 31~~September 30 and March 31, ~~2018~~2019, where applicable, reconciled to consolidated totals, and prepared on the same basis as our condensed consolidated financial statements (in thousands):


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Region revenue from external customers:
Europe Caspian	$	186,537		$	196,958		$	606,584		$	592,280		$	179,870		$	201,547		$	368,464		$	420,047
Africa	43,830			48,712			119,638			149,289			47,165			39,392			96,681			75,808
Americas	56,669			58,468			166,644			173,431			61,726			56,068			118,716			107,435
Asia Pacific	43,829			55,691			155,653			167,421			29,449			51,628			67,260			111,824
Corporate and other	464			906			1,361			4,099			10			708			275			897
Total region revenue ⁽¹⁾	$	331,329		$	360,735		$	1,049,880		$	1,086,520		$	318,220		$	349,343		$	651,396		$	716,011
Intra-region revenue:
Europe Caspian	$	1,913		$	1,481		$	5,847		$	4,000		$	572		$	2,254		$	1,616		$	3,934
Africa	—			—			—			—			—			—			122			—
Americas	1,262			2,147			3,910			6,391			537			1,011			1,848			2,648
Asia Pacific	—			—			—			—			29			—			73			—
Corporate and other	1			5			2			27			—			—			—			1
Total intra-region revenue	$	3,176		$	3,633		$	9,759		$	10,418		$	1,138		$	3,265		$	3,659		$	6,583
Consolidated revenue:
Europe Caspian	$	188,450		$	198,439		$	612,431		$	596,280		$	180,442		$	203,801		$	370,080		$	423,981
Africa	43,830			48,712			119,638			149,289			47,165			39,392			96,803			75,808
Americas	57,931			60,615			170,554			179,822			62,263			57,079			120,564			110,083
Asia Pacific	43,829			55,691			155,653			167,421			29,478			51,628			67,333			111,824
Corporate and other	465			911			1,363			4,126			10			708			275			898
Intra-region eliminations	(3,176		)	(3,633		)	(9,759		)	(10,418		)	(1,138		)	(3,265		)	(3,659		)	(6,583		)
Total consolidated revenue ⁽¹⁾	$	331,329		$	360,735		$	1,049,880		$	1,086,520		$	318,220		$	349,343		$	651,396		$	716,011

_____________

⁽¹⁾

The above table represents disaggregated revenue from contracts with customers except for ~~$9.8~~$8.4 million of revenue included in totals ($~~1.7~~0.3 million from Europe Caspian, $8.0 million from Americas and $0.1 million from Asia Pacific) for the three months ended ~~December 31, 2018~~September 30, 2019 and ~~$41.8~~$12.2 million of revenue included in totals ($~~18.8~~4.1 million from Europe Caspian, ~~$22.8~~$8.0 million from Americas and $0.1 million from Asia Pacific) for the three months ended September 30, 2018. The above table represents disaggregated revenue from contracts with customers except for $16.8 million of revenue included in totals ($0.6 million from Europe Caspian, $16.0 million from Americas and $0.2 million from Asia Pacific) for the ~~nine~~six months ended ~~December 31,~~September 30, 2019 and $32.0 million of revenue included in totals ($17.1 million from Europe Caspian, $14.7 million from Americas and $0.2 million from Asia Pacific) for the six months ended September 30, 2018. For further details on revenue recognition, see Note 3.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Three Months Ended
December 31, Nine Months Ended
December 31,
2018 2017 2018 2017
Earnings (losses) from unconsolidated affiliates, net – equity method investments:
Europe Caspian $ (2 ) $ 34
$ 17
$ 125
Americas 839
2,097
(2,052 ) 3,712
Corporate and other (100 ) (135 ) (341 ) (443 )
Total earnings (losses) from unconsolidated affiliates, net – equity method investments $ 737
$ 1,996
$ (2,376 ) $ 3,394

Consolidated operating loss:
Europe Caspian $ 3,342
$ 5,274
$ 13,856
$ 19,499
Africa 5,286
10,470
7,892
28,353
Americas 4,412
5,308
(1,362 ) 11,535
Asia Pacific (6,654 ) (941 ) (14,613 ) (19,374 )
Corporate and other (21,535 ) (19,047 ) (151,440 ) (68,686 )
Loss on disposal of assets (16,015 ) (4,591 ) (18,986 ) (12,418 )
Total consolidated operating loss ⁽¹⁾
$ (31,164 ) $ (3,527 ) $ (164,653 ) $ (41,091 )

Depreciation and amortization:
Europe Caspian $ 13,041
$ 12,771
$ 37,985
$ 36,789
Africa 3,732
3,664
10,811
10,330
Americas 7,108
6,909
21,299
20,906
Asia Pacific 3,812
4,479
12,221
15,347
Corporate and other 2,922
3,859
9,729
10,747
Total depreciation and amortization $ 30,615
$ 31,682
$ 92,045
$ 94,119


	December 31, 2018		March 31, 2018		Three Months Ended September 30,						Six Months Ended September 30,
Identifiable assets:
					2019			2018			2019			2018
Earnings from unconsolidated affiliates, net of losses – equity method investments:
Europe Caspian					$	(3	)	$	(6	)	$	168		$	19
Americas					315			1,573			2,491			136
Corporate and other					321			(106		)	321			(241		)
Total earnings from unconsolidated affiliates, net of losses – equity method investments					$	633		$	1,461		$	2,980		$	(86	)

Consolidated operating loss:
Europe Caspian	$	904,490	$	1,087,437	$	11,224		$	(11,414	)	$	23,031		$	10,514
Africa	398,606		374,121		6,528			1,465			14,273			2,606
Americas	751,981		788,879		3,527			2,056			7,095			(5,287		)
Asia Pacific	248,861		342,166		(19,848		)	(6,988		)	(32,282		)	(7,959		)
Corporate and other ⁽²⁾	427,806		572,399
Total identifiable assets	$	2,731,744	$	3,165,002
Corporate and other					(63,297		)	(113,274		)	(91,938		)	(129,905		)
Loss on disposal of assets					(230		)	(1,293		)	(4,017		)	(2,971		)
Total consolidated operating loss ⁽¹⁾					$	(62,096	)	$	(129,448	)	$	(83,838	)	$	(133,002	)

Depreciation and amortization:
Europe Caspian					$	12,395		$	12,189		$	24,834		$	24,944
Africa					5,007			3,665			9,998			7,079
Americas					7,590			7,310			14,470			14,191
Asia Pacific					2,970			4,054			6,691			8,409
Corporate and other					3,341			3,271			6,649			6,807
Total depreciation and amortization					$	31,303		$	30,489		$	62,642		$	61,430

Investments in unconsolidated affiliates – equity method investments:
Europe Caspian $ 215
$ 270
Americas 104,758
116,276
Corporate and other 2,715
3,338
Total investments in unconsolidated affiliates – equity method investments $ 107,688
$ 119,884



	September 30, 2019		March 31, 2019
Identifiable assets:
Europe Caspian	$	1,281,386	$	1,070,863
Africa	351,345		325,502
Americas	690,547		661,266
Asia Pacific	171,809		255,136
Corporate and other ⁽²⁾	297,488		339,832
Total identifiable assets	$	2,792,575	$	2,652,599



Investments in unconsolidated affiliates – equity method investments:
Europe Caspian	$	329	$	375
Americas	103,371		108,831
Corporate and other	—		2,711
Total investments in unconsolidated affiliates – equity method investments	$	103,700	$	111,917

_____________

⁽¹⁾

Results for the three months ended ~~December 31,~~September 30, 2018 were positively impacted by a reduction to rent expense of ~~$1.0~~$2.4 million (included in direct costs) impacting Europe Caspian and Asia Pacific regions by ~~$0.2~~$1.7 million and ~~$0.8~~$0.7 million, respectively, related to OEM cost recoveries for ongoing aircraft issues. Results for the ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019 were positively impacted by a reduction to rent expense of ~~$6.9~~$6.0 million (included in direct costs) impacting Europe Caspian and Asia Pacific regions by ~~$4.6~~$1.5 million and ~~$2.3~~$4.5 million, respectively, related to OEM cost recoveries for ongoing aircraft issues. Results for the six months ended September 30, 2018 were positively impacted by a reduction to rent expense of $5.9 million (included in direct costs) impacting Europe Caspian and Asia Pacific regions by $4.4 million and $1.5 million, respectively, related to OEM cost recoveries for ongoing aircraft issues. For further details, see Note 1.

⁽²⁾

Includes ~~$52.9~~$20.5 million and ~~$67.7~~$51.7 million ofconstruction in progress within property and equipment on our condensed consolidated balance sheets as of ~~December 31~~September 30 and March 31, ~~2018,~~2019, respectively, which primarily represents progress payments on aircraft to be delivered in future periods. ~~In December 2018, a large~~During the three and six months ended September 30, 2019, we rejected our aircraft ~~order was terminated~~purchase agreement with Airbus Helicopters S.A.S. and ~~we recorded contract termination costs~~wrote-off $30.6 million of ~~$14.0 million included in loss on disposal of assets on our condensed consolidated statements of operations for amounts previously included in~~ construction in ~~progress on our condensed consolidated balance sheets. For further details, see Notes 1 and 8.~~progress.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Note 1314 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Company ~~has~~had registered senior notes that the Guarantor Subsidiaries ~~have~~ fully, unconditionally, jointly and severally guaranteed. The following supplemental financial information sets forth, on a consolidating basis, the balance sheet, statement of operations, comprehensive income and cash flow information for Bristow Group Inc. (“Parent Company Only”), for the Guarantor Subsidiaries and for our other subsidiaries (the “Non-Guarantor Subsidiaries”). We have not presented separate financial statements and other disclosures concerning the Guarantor Subsidiaries because management has determined that such information is not material to investors. For further details on the registered senior notes, which were discharged upon the emergence from bankruptcy, see Note 45 to the fiscal year ~~2018~~2019 Financial Statements.

The supplemental condensed consolidating financial information has been prepared pursuant to the rules and regulations for condensed financial information and does not include all disclosures included in annual financial statements, although we believe that the disclosures made are adequate to make the information presented not misleading. The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenue and expense.

The allocation of the consolidated income tax provision was made using the with and without allocation method.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Operations

Three Months Ended ~~December 31, 2018~~September 30, 2019


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated

	(In thousands)															(In thousands)
Revenue:
Gross revenue	$	(9	)	$	37,253		$	294,085		$	—		$	331,329		$	—		$	41,768		$	276,452		$	—		$	318,220
Intercompany revenue	—			26,844			—			(26,844		)	—			—			22,416			—			(22,416		)	—
	(9		)	64,097			294,085			(26,844		)	331,329			—			64,184			276,452			(22,416		)	318,220
Operating expense:
Direct cost and reimbursable expense	14			40,188			235,699			—			275,901			32			42,709			206,754			—			249,495
Intercompany expenses	5,399			—			21,445			(26,844		)	—			—			—			22,416			(22,416		)	—
Depreciation and amortization	3,087			19,175			8,353			—			30,615			3,192			17,970			10,141			—			31,303
General and administrative	16,004			4,174			20,564			—			40,742			15,967			3,949			17,904			—			37,820
	24,504			63,537			286,061			(26,844		)	347,258			19,191			64,628			257,215			(22,416		)	318,618

Loss on disposal of assets	(512		)	(15,321		)	(182		)	—			(16,015		)
Earnings (losses) from unconsolidated affiliates, net	(22,023		)	—			780			22,023			780
Loss on impairment																—			(42,022		)	(20,079		)	—			(62,101		)
Gain (loss) on disposal of assets																—			(377		)	147			—			(230		)
Earnings from unconsolidated affiliates, net of losses																(103,132		)	—			633			103,132			633
Operating income (loss)	(47,048		)	(14,761		)	8,622			22,023			(31,164		)	(122,323		)	(42,843		)	(62		)	103,132			(62,096		)
Interest expense, net	(16,997		)	(5,807		)	(4,309		)	—			(27,113		)	(11,100		)	(5,376		)	(5,969		)	—			(22,445		)
Reorganization items, net																(56,589		)	(28,552		)	(8,802		)	—			(93,943		)
Gain on sale of subsidiaries																—			—			420			—			420
Other income (expense), net	122			485			(4,267		)	—			(3,660		)	244			758			(7,639		)	—			(6,637		)

Income (loss) before (provision) benefit for income taxes	(63,923		)	(20,083		)	46			22,023			(61,937		)
Loss before (provision) benefit for income taxes																(189,768		)	(76,013		)	(22,052		)	103,132			(184,701		)
Allocation of consolidated income taxes	(22,006		)	(463		)	(1,295		)	—			(23,764		)	26,805			(1,513		)	(3,510		)	—			21,782
Net loss	(85,929		)	(20,546		)	(1,249		)	22,023			(85,701		)	(162,963		)	(77,526		)	(25,562		)	103,132			(162,919		)
Net income attributable to noncontrolling interests	(15		)	—			(228		)	—			(243		)	(11		)	—			(44		)	—			(55		)
Net loss attributable to Bristow Group	$	(85,944	)	$	(20,546	)	$	(1,477	)	$	22,023		$	(85,944	)	$	(162,974	)	$	(77,526	)	$	(25,606	)	$	103,132		$	(162,974	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Operations

Three Months Ended ~~December 31, 2017~~September 30, 2018


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated

	(In thousands)															(In thousands)
Revenue:
Gross revenue	$	188		$	47,377		$	313,170		$	—		$	360,735		$	45		$	36,798		$	312,500		$	—		$	349,343
Intercompany revenue	—			28,608			—			(28,608		)	—			—			27,496			—			(27,496		)	—
	188			75,985			313,170			(28,608		)	360,735			45			64,294			312,500			(27,496		)	349,343
Operating expense:
Direct cost and reimbursable expense	81			49,540			236,998			—			286,619			20			40,981			251,410			—			292,411
Intercompany expenses	—			—			28,608			(28,608		)	—			15,307			—			12,189			(27,496		)	—
Depreciation and amortization	3,048			12,489			16,145			—			31,682			3,092			17,733			9,664			—			30,489
General and administrative	13,937			6,514			22,915			—			43,366			12,907			5,125			20,807			—			38,839
	17,066			68,543			304,666			(28,608		)	361,667			31,326			63,839			294,070			(27,496		)	361,739

Gain (loss) on disposal of assets	(1,757		)	(3,657		)	823			—			(4,591		)
Earnings (losses) from unconsolidated affiliates, net	(11,503		)	—			1,996			11,503			1,996
Operating income (loss)	(30,138		)	3,785			11,323			11,503			(3,527		)
Loss on impairment																—			(87,474		)	(29,746		)	—			(117,220		)
Loss on disposal of assets																—			(318		)	(975		)	—			(1,293		)
Earnings from unconsolidated affiliates, net of losses																(123,744		)	—			1,461			123,744			1,461
Operating loss																(155,025		)	(87,337		)	(10,830		)	123,744			(129,448		)
Interest expense, net	(9,480		)	(5,008		)	(4,605		)	—			(19,093		)	(15,564		)	(5,915		)	(4,954		)	—			(26,433		)
Other income (expense), net	(16		)	227			(947		)	—			(736		)	50			242			(3,496		)	—			(3,204		)

Income (loss) before (provision) benefit for income taxes	(39,634		)	(996		)	5,771			11,503			(23,356		)
Loss before (provision) benefit for income taxes																(170,539		)	(93,010		)	(19,280		)	123,744			(159,085		)
Allocation of consolidated income taxes	31,373			(1,791		)	(16,163		)	—			13,419			26,605			(1,176		)	(9,774		)	—			15,655
Net loss	(8,261		)	(2,787		)	(10,392		)	11,503			(9,937		)	(143,934		)	(94,186		)	(29,054		)	123,744			(143,430		)
Net (income) loss attributable to noncontrolling interests	(12		)	—			1,676			—			1,664
Net income attributable to noncontrolling interests																(13		)	—			(504		)	—			(517		)
Net loss attributable to Bristow Group	$	(8,273	)	$	(2,787	)	$	(8,716	)	$	11,503		$	(8,273	)	$	(143,947	)	$	(94,186	)	$	(29,558	)	$	123,744		$	(143,947	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Operations

~~Nine~~Six Months Ended ~~December 31, 2018~~September 30, 2019


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated

	(In thousands)															(In thousands)
Revenue:
Third party revenue	$	81		$	108,186		$	941,613		$	—		$	1,049,880		$	—		$	79,567		$	571,829		$	—		$	651,396
Intercompany revenue	—			80,857			—			(80,857		)	—			—			47,093			—			(47,093		)	—
	81			189,043			941,613			(80,857		)	1,049,880			—			126,660			571,829			(47,093		)	651,396
Operating expense:
Direct cost and reimbursable expense	50			123,045			741,172			—			864,267			151			84,333			438,904			—			523,388
Intercompany expenses	20,706			—			60,151			(80,857		)	—			—			—			47,093			(47,093		)	—
Prepetition restructuring charges																12,449			—			1,027			—			13,476
Depreciation and amortization	9,245			55,130			27,670			—			92,045			6,329			35,631			20,682			—			62,642
General and administrative	41,699			13,097			64,886			—			119,682			25,678			7,879			39,033			—			72,590
	71,700			191,272			893,879			(80,857		)	1,075,994			44,607			127,843			546,739			(47,093		)	672,096

Loss on impairment	—			(87,474		)	(29,746		)	—			(117,220		)	—			(42,022		)	(20,079		)	—			(62,101		)
Loss on disposal of assets	(1,318		)	(16,799		)	(869		)	—			(18,986		)	—			(853		)	(3,164		)	—			(4,017		)
Earnings (losses) from unconsolidated affiliates, net	(153,319		)	—			(2,333		)	153,319			(2,333		)
Earnings from unconsolidated affiliates, net of losses																(204,089		)	—			2,980			204,089			2,980
Operating income (loss)	(226,256		)	(106,502		)	14,786			153,319			(164,653		)	(248,696		)	(44,058		)	4,827			204,089			(83,838		)
Interest expense, net	(48,940		)	(18,552		)	(13,198		)	—			(80,690		)	(24,467		)	(11,241		)	(13,058		)	—			(48,766		)
Reorganization items, net																(106,434		)	(54,603		)	(9,262		)	—			(170,299		)
Loss on sale of subsidiaries																—			—			(55,883		)	—			(55,883		)
Other income (expense), net	306			1,802			(12,922		)	—			(10,814		)	363			1,259			(12,132		)	—			(10,510		)

Loss before (provision) benefit for income taxes	(274,890		)	(123,252		)	(11,334		)	153,319			(256,157		)	(379,234		)	(108,643		)	(85,508		)	204,089			(369,296		)
Allocation of consolidated income taxes	12,691			(746		)	(17,203		)	—			(5,258		)	47,040			(2,689		)	(7,062		)	—			37,289
Net loss	(262,199		)	(123,998		)	(28,537		)	153,319			(261,415		)	(332,194		)	(111,332		)	(92,570		)	204,089			(332,007		)
Net income attributable to noncontrolling interests	(43		)	—			(784		)	—			(827		)	(26		)	—			(187		)	—			(213		)
Net loss attributable to Bristow Group	$	(262,242	)	$	(123,998	)	$	(29,321	)	$	153,319		$	(262,242	)	$	(332,220	)	$	(111,332	)	$	(92,757	)	$	204,089		$	(332,220	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Operations

~~Nine~~Six Months Ended ~~December 31, 2017~~September 30, 2018


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated

	(In thousands)															(In thousands)
Revenue:
Third party revenue	$	188		$	140,104		$	946,228		$	—		$	1,086,520		$	90		$	70,933		$	644,988		$	—		$	716,011
Intercompany revenue	—			92,518			—			(92,518		)	—			—			54,013			—			(54,013		)	—
	188			232,622			946,228			(92,518		)	1,086,520			90			124,946			644,988			(54,013		)	716,011
Operating expense:
Direct cost and reimbursable expense	3,350			147,829			733,402			—			884,581			36			82,857			505,473			—			588,366
Intercompany expenses	—			—			92,518			(92,518		)	—			15,307			—			38,706			(54,013		)	—
Depreciation and amortization	8,981			38,209			46,929			—			94,119			6,158			35,955			19,317			—			61,430
General and administrative	50,924			17,899			69,872			—			138,695			25,695			8,923			44,322			—			78,940
	63,255			203,937			942,721			(92,518		)	1,117,395			47,196			127,735			607,818			(54,013		)	728,736

Loss on impairment	—			(1,192		)	—			—			(1,192		)	—			(87,474		)	(29,746		)	—			(117,220		)
Gain (loss) on disposal of assets	(1,757		)	7,356			(18,017		)	—			(12,418		)
Earnings (losses) from unconsolidated affiliates, net	(22,506		)	—			3,394			22,506			3,394
Loss on disposal of assets																(806		)	(1,478		)	(687		)	—			(2,971		)
Earnings from unconsolidated affiliates, net of losses																(130,809		)	—			(86		)	130,809			(86		)
Operating income (loss)	(87,330		)	34,849			(11,116		)	22,506			(41,091		)	(178,721		)	(91,741		)	6,651			130,809			(133,002		)
Interest expense, net	(29,174		)	(16,811		)	(7,692		)	—			(53,677		)	(31,943		)	(12,745		)	(8,889		)	—			(53,577		)
Other income (expense), net	(142		)	(529		)	906			—			235			184			1,317			(8,655		)	—			(7,154		)

Income (loss) before provision for income taxes	(116,646		)	17,509			(17,902		)	22,506			(94,533		)
Loss before (provision) benefit for income taxes																(210,480		)	(103,169		)	(10,893		)	130,809			(193,733		)
Allocation of consolidated income taxes	21,925			(7,896		)	(16,575		)	—			(2,546		)	34,697			(283		)	(15,908		)	—			18,506
Net income (loss)	(94,721		)	9,613			(34,477		)	22,506			(97,079		)
Net (income) loss attributable to noncontrolling interests	(36		)	—			2,358			—			2,322
Net income (loss) attributable to Bristow Group	$	(94,757	)	$	9,613		$	(32,119	)	$	22,506		$	(94,757	)
Net loss																(175,783		)	(103,452		)	(26,801		)	130,809			(175,227		)
Net income attributable to noncontrolling interests																(28		)	—			(556		)	—			(584		)
Net loss attributable to Bristow Group																$	(175,811	)	$	(103,452	)	$	(27,357	)	$	130,809		$	(175,811	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Comprehensive Income (Loss)

Three Months Ended ~~December 31, 2018~~September 30, 2019


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated

	(In thousands)														(In thousands)
Net loss	$	(85,929	)	$	(20,546	)	$	(1,249	)	$	22,023	$	(85,701	)	$	(162,963	)	$	(77,526	)	$	(25,562	)	$	103,132	$	(162,919	)
Other comprehensive loss:
Currency translation adjustments	—			(372		)	(9,146		)	3,056		(6,462		)	—			—			(16,156		)	3,822		(12,334		)
Pension liability adjustment	—			—			(2,410		)	—		(2,410		)
Unrealized loss on cash flow hedges	—			—			(5		)	—		(5		)
Unrealized gain on cash flow hedges															—			—			1,124			—		1,124
Total comprehensive loss	(85,929		)	(20,918		)	(12,810		)	25,079		(94,578		)	(162,963		)	(77,526		)	(40,594		)	106,954		(174,129		)

Net income attributable to noncontrolling interests	(15		)	—			(228		)	—		(243		)	(11		)	—			(44		)	—		(55		)
Currency translation adjustments attributable to noncontrolling interests	—			—			(52		)	—		(52		)	—			—			35			—		35
Total comprehensive income attributable to noncontrolling interests	(15		)	—			(280		)	—		(295		)	(11		)	—			(9		)	—		(20		)
Total comprehensive loss attributable to Bristow Group	$	(85,944	)	$	(20,918	)	$	(13,090	)	$	25,079	$	(94,873	)	$	(162,974	)	$	(77,526	)	$	(40,603	)	$	106,954	$	(174,149	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Comprehensive Income (Loss)

Three Months Ended ~~December 31, 2017~~September 30, 2018


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated

	(In thousands)															(In thousands)
Net loss	$	(8,261	)	$	(2,787	)	$	(10,392	)	$	11,503		$	(9,937	)	$	(143,934	)	$	(94,186	)	$	(29,054	)	$	123,744	$	(143,430	)
Other comprehensive income (loss):
Other comprehensive loss:
Currency translation adjustments	—			(18		)	1,116			(1,155		)	(57		)	—			(159		)	(14,306		)	6,498		(7,967		)
Unrealized loss on cash flow hedges																—			—			(98		)	—		(98		)
Total comprehensive loss	(8,261		)	(2,805		)	(9,276		)	10,348			(9,994		)	(143,934		)	(94,345		)	(43,458		)	130,242		(151,495		)

Net (income) loss attributable to noncontrolling interests	(12		)	—			1,676			—			1,664
Net income attributable to noncontrolling interests																(13		)	—			(504		)	—		(517		)
Currency translation adjustments attributable to noncontrolling interests	—			—			(17		)	—			(17		)	—			—			(32		)	—		(32		)
Total comprehensive (income) loss attributable to noncontrolling interests	(12		)	—			1,659			—			1,647
Total comprehensive income attributable to noncontrolling interests																(13		)	—			(536		)	—		(549		)
Total comprehensive loss attributable to Bristow Group	$	(8,273	)	$	(2,805	)	$	(7,617	)	$	10,348		$	(8,347	)	$	(143,947	)	$	(94,345	)	$	(43,994	)	$	130,242	$	(152,044	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Comprehensive Income (Loss)

~~Nine~~Six Months Ended ~~December 31, 2018~~September 30, 2019


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated

	(In thousands)														(In thousands)
Net loss	$	(262,199	)	$	(123,998	)	$	(28,537	)	$	153,319	$	(261,415	)	$	(332,194	)	$	(111,332	)	$	(92,570	)	$	204,089	$	(332,007	)
Other comprehensive loss:
Currency translation adjustments	—			(1,417		)	(105,254		)	63,209		(43,462		)	—			(355		)	(1,843		)	6,763		4,565
Pension liability adjustment	—			—			(2,410		)	—		(2,410		)
Unrealized gain on cash flow hedges	—			—			1,245			—		1,245			—			—			1,598			—		1,598
Total comprehensive loss	(262,199		)	(125,415		)	(134,956		)	216,528		(306,042		)	(332,194		)	(111,687		)	(92,815		)	210,852		(325,844		)

Net income attributable to noncontrolling interests	(43		)	—			(784		)	—		(827		)	(26		)	—			(187		)	—		(213		)
Currency translation adjustments attributable to noncontrolling interests	—			—			(223		)	—		(223		)	—			—			24			—		24
Total comprehensive income attributable to noncontrolling interests	(43		)	—			(1,007		)	—		(1,050		)	(26		)	—			(163		)	—		(189		)
Total comprehensive loss attributable to Bristow Group	$	(262,242	)	$	(125,415	)	$	(135,963	)	$	216,528	$	(307,092	)	$	(332,220	)	$	(111,687	)	$	(92,978	)	$	210,852	$	(326,033	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Comprehensive Income (Loss)

~~Nine~~Six Months Ended ~~December 31, 2017~~September 30, 2018

Parent
Company
Only Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated

(In thousands)
Net income (loss) $ (94,721 ) $ 9,613
$ (34,477 ) $ 22,506
$ (97,079 )
Other comprehensive income (loss):
Currency translation adjustments —
626
29,686
(9,918 ) 20,394
Total comprehensive income (loss) (94,721 ) 10,239
(4,791 ) 12,588
(76,685 )

Net (income) loss attributable to noncontrolling interests (36 ) —
2,358
—
2,322
Currency translation adjustments attributable to noncontrolling interests —
—
530
—
530
Total comprehensive (income) loss attributable to noncontrolling interests (36 ) —
2,888
—
2,852
Total comprehensive income (loss) attributable to Bristow Group $ (94,757 ) $ 10,239
$ (1,903 ) $ 12,588
$ (73,833 )



	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated

	(In thousands)
Net loss	$	(175,783	)	$	(103,452	)	$	(26,801	)	$	130,809	$	(175,227	)
Other comprehensive loss:
Currency translation adjustments	—			(1,045		)	(96,108		)	60,153		(37,000		)
Unrealized gain on cash flow hedges	—			—			1,250			—		1,250
Total comprehensive loss	(175,783		)	(104,497		)	(121,659		)	190,962		(210,977		)

Net income attributable to noncontrolling interests	(28		)	—			(556		)	—		(584		)
Currency translation adjustments attributable to noncontrolling interests	—			—			(171		)	—		(171		)
Total comprehensive income attributable to noncontrolling interests	(28		)	—			(727		)	—		(755		)
Total comprehensive loss attributable to Bristow Group	$	(175,811	)	$	(104,497	)	$	(122,386	)	$	190,962	$	(211,732	)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Balance Sheet

As of ~~December 31, 2018~~September 30, 2019


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated

	(In thousands)															(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	155,167		$	—		$	77,660		$	(1,501	)	$	231,326		$	31,268		$	7,516		$	115,101		$	—		$	153,885
Restricted cash																33			—			38,877			—			38,910
Accounts receivable	506,745			542,145			293,490			(1,124,553		)	217,827			644,260			679,196			274,543			(1,369,206		)	228,793
Inventories	—			34,658			80,596			—			115,254			—			35,658			77,856			—			113,514
Assets held for sale	—			18,506			3,979			—			22,485			—			—			—			—			—
Prepaid expenses and other current assets	4,520			2,674			41,452			—			48,646			8,261			1,686			32,598			—			42,545
Total current assets	666,432			597,983			497,177			(1,126,054		)	635,538			683,822			724,056			538,975			(1,369,206		)	577,647
Intercompany investment	1,877,133			104,436			128,633			(2,110,202		)	—			1,625,547			97,435			124,463			(1,847,445		)	—
Investment in unconsolidated affiliates	—			—			113,974			—			113,974			—			—			109,986			—			109,986
Intercompany notes receivable	118,003			9,229			147,056			(274,288		)	—			135,327			11,151			115,008			(261,486		)	—
Property and equipment—at cost:
Land and buildings	4,806			58,204			177,191			—			240,201			4,806			58,204			175,198			—			238,208
Aircraft and equipment	155,628			1,311,241			1,012,674			—			2,479,543			158,399			1,277,861			967,466			—			2,403,726
	160,434			1,369,445			1,189,865			—			2,719,744			163,205			1,336,065			1,142,664			—			2,641,934
Less: Accumulated depreciation and amortization	(46,012		)	(403,430		)	(422,759		)	—			(872,201		)	(53,874		)	(497,745		)	(412,015		)	—			(963,634		)
	114,422			966,015			767,106			—			1,847,543			109,331			838,320			730,649			—			1,678,300
Right-of-use assets																23			54,625			317,156			(40,061		)	331,743
Goodwill	—			—			18,271			—			18,271			—			—			—			—			—
Other assets	4,786			2,727			108,905			—			116,418			3,859			4,047			86,993			—			94,899
Total assets	$	2,780,776		$	1,680,390		$	1,781,122		$	(3,510,544	)	$	2,731,744		$	2,557,909		$	1,729,634		$	2,023,230		$	(3,518,198	)	$	2,792,575

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	413,795		$	476,510		$	317,229		$	(1,115,618	)	$	91,916		$	510,741		$	597,832		$	340,339		$	(1,355,479	)	$	93,433
Accrued liabilities	56,645			(7,232		)	116,352			(9,300		)	156,465			72,863			22,702			189,593			(52,569		)	232,589
Short-term borrowings and current maturities of long-term debt	847,023			271,279			302,748			—			1,421,050			380,902			253,294			312,845			—			947,041
Total current liabilities	1,317,463			740,557			736,329			(1,124,918		)	1,669,431			964,506			873,828			842,777			(1,408,048		)	1,273,063
Long-term debt, less current maturities	—			—			9,174			—			9,174			34,161			—			41,450			—			75,611
Intercompany notes payable	103,449			154,527			17,415			(275,391		)	—			88,573			143,233			29,680			(261,486		)	—
Accrued pension liabilities	—			—			28,036			—			28,036			—			—			18,706			—			18,706
Other liabilities and deferred credits	10,732			8,729			9,112			—			28,573			4,548			—			3,357			—			7,905
Deferred taxes	68,416			25,853			24,788			—			119,057			14,224			26,065			19,573			—			59,862
Long-term operating lease liabilities																—			32,060			220,366			(1,027		)	251,399
Liabilities subject to compromise																569,804			35,000			20,063			—			624,867
Stockholders’ investment:
Common stock	385			4,996			131,317			(136,313		)	385			386			4,996			131,317			(136,313		)	386
Additional paid-in-capital	860,745			29,387			284,048			(313,435		)	860,745			863,546			29,387			284,097			(313,484		)	863,546
Retained earnings	524,846			716,378			278,054			(994,432		)	524,846			123,378			585,065			157,576			(742,641		)	123,378
Accumulated other comprehensive income (loss)	78,306			(37		)	256,842			(666,055		)	(330,944		)	78,306			—			255,091			(655,199		)	(321,802		)
Treasury shares	(184,796		)	—			—			—			(184,796		)	(184,796		)	—			—			—			(184,796		)
Total Bristow Group stockholders’ investment	1,279,486			750,724			950,261			(2,110,235		)	870,236			880,820			619,448			828,081			(1,847,637		)	480,712
Noncontrolling interests	1,230			—			6,007			—			7,237			1,273			—			(823		)	—			450
Total stockholders’ investment	1,280,716			750,724			956,268			(2,110,235		)	877,473			882,093			619,448			827,258			(1,847,637		)	481,162
Total liabilities and stockholders’ investment	$	2,780,776		$	1,680,390		$	1,781,122		$	(3,510,544	)	$	2,731,744		$	2,557,909		$	1,729,634		$	2,023,230		$	(3,518,198	)	$	2,792,575

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Balance Sheet

As of March 31, ~~2018~~2019


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated

	(In thousands)															(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	277,176		$	8,904		$	94,143		$	—		$	380,223		$	90,586		$	3,205		$	84,264		$	—		$	178,055
Accounts receivable	211,412			423,214			250,984			(638,630		)	246,980			535,502			583,912			287,822			(1,190,445		)	216,791
Inventories	—			31,300			98,314			—			129,614			—			35,331			85,977			—			121,308
Assets held for sale	—			26,737			3,611			—			30,348			—			5,541			(191		)	—			5,350
Prepaid expenses and other current assets	3,367			4,494			41,016			(1,643		)	47,234			3,734			1,001			39,274			—			44,009
Total current assets	491,955			494,649			488,068			(640,273		)	834,399			629,822			628,990			497,146			(1,190,445		)	565,513
Intercompany investment	2,199,505			104,435			141,683			(2,445,623		)	—			1,829,271			97,435			131,608			(2,058,314		)	—
Investment in unconsolidated affiliates	—			—			126,170			—			126,170			—			—			118,203			—			118,203
Intercompany notes receivable	183,634			36,358			368,575			(588,567		)	—			140,659			11,151			128,410			(280,220		)	—
Property and equipment—at cost:
Land and buildings	4,806			58,191			187,043			—			250,040			4,807			58,204			181,262			—			244,273
Aircraft and equipment	156,651			1,326,922			1,027,558			—			2,511,131			155,667			1,312,115			1,029,840			—			2,497,622
	161,457			1,385,113			1,214,601			—			2,761,171			160,474			1,370,319			1,211,102			—			2,741,895
Less: Accumulated depreciation and amortization	(39,780		)	(263,412		)	(389,959		)	—			(693,151		)	(47,546		)	(419,983		)	(440,186		)	—			(907,715		)
	121,677			1,121,701			824,642			—			2,068,020			112,928			950,336			770,916			—			1,834,180
Goodwill	—			—			19,907			—			19,907			—			—			18,436			—			18,436
Other assets	4,966			2,122			109,418			—			116,506			3,563			3,410			109,294			—			116,267
Total assets	$	3,001,737		$	1,759,265		$	2,078,463		$	(3,674,463	)	$	3,165,002		$	2,716,243		$	1,691,322		$	1,774,013		$	(3,528,979	)	$	2,652,599

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	341,342		$	175,133		$	201,704		$	(616,909	)	$	101,270		$	441,485		$	510,911		$	327,447		$	(1,180,270	)	$	99,573
Accrued liabilities	59,070			6,735			166,026			(21,955		)	209,876			51,071			(9,807		)	119,433			(10,049		)	150,648
Short-term borrowings and current maturities of long-term debt	840,485			296,782			338,171			—			1,475,438			849,524			268,559			300,547			—			1,418,630
Total current liabilities	1,240,897			478,650			705,901			(638,864		)	1,786,584			1,342,080			769,663			747,427			(1,190,319		)	1,668,851
Long-term debt, less current maturities	—			—			11,096			—			11,096			—			—			8,223			—			8,223
Intercompany notes payable	132,740			370,407			41,001			(544,148		)	—			91,664			155,643			32,913			(280,220		)	—
Accrued pension liabilities	—			—			37,034			—			37,034			—			—			25,726			—			25,726
Other liabilities and deferred credits	14,078			7,924			14,950			—			36,952			10,430			8,613			7,186			—			26,229
Deferred taxes	77,373			27,794			10,025			—			115,192			59,302			26,268			25,633			—			111,203
Stockholders’ investment:
Common stock	382			4,996			131,317			(136,313		)	382			386			4,996			131,317			(136,313		)	386
Additional paid-in-capital	852,565			29,387			284,048			(313,435		)	852,565			862,020			29,387			284,048			(313,435		)	862,020
Retained earnings	788,834			838,727			473,712			(1,312,439		)	788,834			455,598			696,397			250,333			(946,730		)	455,598
Accumulated other comprehensive income (loss)	78,306			1,380			363,484			(729,264		)	(286,094		)	78,306			355			255,312			(661,962		)	(327,989		)
Treasury shares	(184,796		)	—			—			—			(184,796		)	(184,796		)	—			—			—			(184,796		)
Total Bristow Group stockholders’ investment	1,535,291			874,490			1,252,561			(2,491,451		)	1,170,891			1,211,514			731,135			921,010			(2,058,440		)	805,219
Noncontrolling interests	1,358			—			5,895			—			7,253			1,253			—			5,895			—			7,148
Total stockholders’ investment	1,536,649			874,490			1,258,456			(2,491,451		)	1,178,144			1,212,767			731,135			926,905			(2,058,440		)	812,367
Total liabilities and stockholders’ investment	$	3,001,737		$	1,759,265		$	2,078,463		$	(3,674,463	)	$	3,165,002		$	2,716,243		$	1,691,322		$	1,774,013		$	(3,528,979	)	$	2,652,599

5364

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BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Cash Flows

~~Nine~~Six Months Ended ~~December 31, 2018~~September 30, 2019


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated

	(In thousands)															(In thousands)
Net cash provided by (used in) operating activities	$	(93,365	)	$	23,819		$	2,145		$	(1,501	)	$	(68,902	)	$	(66,491	)	$	17,907		$	(8,581	)	$	—	$	(57,165	)
Cash flows from investing activities:
Capital expenditures	(2,987		)	(12,827		)	(17,897		)	—			(33,711		)	(2,732		)	(2,844		)	(20,374		)	—		(25,950		)
Proceeds from asset dispositions	—			7,529			1,564			—			9,093			—			4,935			68			—		5,003
Net cash used in investing activities	(2,987		)	(5,298		)	(16,333		)	—			(24,618		)
Cash transferred in sale of subsidiaries, net of cash received																—			—			(22,458		)	—		(22,458		)
Net cash provided by (used in) investing activities																(2,732		)	2,091			(42,764		)	—		(43,405		)
Cash flows from financing activities:
Proceeds from borrowings	—			—			387			—			387			150,000			—			75,585			—		225,585
Debt issuance costs	(642		)	(32		)	(1,925		)	—			(2,599		)	(6,695		)	—			(7,435		)	—		(14,130		)
Repayment of debt	—			(15,709		)	(33,407		)	—			(49,116		)	(74,818		)	(10,347		)	(14,063		)	—		(99,228		)
Dividends paid	162,941			1,649			(164,590		)	—			—
Increases (decreases) in cash related to intercompany advances and debt	(189,241		)	(13,333		)	202,574			—			—			(58,549		)	(5,340		)	63,889			—		—
Partial prepayment of put/call obligation	(40		)	—			—			—			(40		)	—			—			(1,323		)	—		(1,323		)
Dividends paid to noncontrolling interest	—			—			(580		)	—			(580		)
Issuance of common stock	2,830			—			—			—			2,830
Repurchases for tax withholdings on vesting of equity awards	(1,505		)	—			—			—			(1,505		)
Net cash provided by (used in) financing activities	(25,657		)	(27,425		)	2,459			—			(50,623		)	9,938			(15,687		)	116,653			—		110,904
Effect of exchange rate changes on cash and cash equivalents	—			—			(4,754		)	—			(4,754		)
Net decrease in cash and cash equivalents	(122,009		)	(8,904		)	(16,483		)	(1,501		)	(148,897		)
Cash and cash equivalents at beginning of period	277,176			8,904			94,143			—			380,223
Cash and cash equivalents at end of period	$	155,167		$	—		$	77,660		$	(1,501	)	$	231,326
Effect of exchange rate changes on cash, cash equivalents and restricted cash																—			—			4,406			—		4,406
Net increase (decrease) in cash, cash equivalents and restricted cash																(59,285		)	4,311			69,714			—		14,740
Cash, cash equivalents and restricted cash at beginning of period																90,586			3,205			84,264			—		178,055
Cash, cash equivalents and restricted cash at end of period																$	31,301		$	7,516		$	153,978		$	—	$	192,795

5465

Table of Contents

BRISTOW GROUP INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Supplemental Condensed Consolidating Statement of Cash Flows

~~Nine~~Six Months Ended ~~December 31, 2017~~September 30, 2018


	Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company Only			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated

	(In thousands)															(In thousands)
Net cash provided by (used in) operating activities	$	(105,817	)	$	34,995		$	62,437		$	(922	)	$	(9,307	)	$	(35,375	)	$	14,041		$	(5,568	)	$	—	$	(26,902	)
Cash flows from investing activities:
Capital expenditures	(8,182		)	(7,755		)	(97,984		)	77,480			(36,441		)	(1,536		)	(2,499		)	(13,267		)	—		(17,302		)
Proceeds from asset dispositions	—			85,760			40,267			(77,480		)	48,547			—			7,528			934			—		8,462
Proceeds from OEM cost recoveries	—			—			94,463			—			94,463
Net cash provided by (used in) investing activities	(8,182		)	78,005			36,746			—			106,569			(1,536		)	5,029			(12,333		)	—		(8,840		)
Cash flows from financing activities:
Proceeds from borrowings	318,550			—			230,218			—			548,768			—			—			387			—		387
Debt issuance costs	(2,558		)	(552		)	(8,543		)	—			(11,653		)	(597		)	(32		)	(1,925		)	—		(2,554		)
Repayment of debt	(569,325		)	(13,137		)	(27,205		)	—			(609,667		)	(8,841		)	(10,505		)	(10,624		)	—		(29,970		)
Purchase of 4½% Convertible Senior Notes call option	(40,393		)	—			—			—			(40,393		)
Proceeds from issuance of warrants	30,259			—			—			—			30,259
Dividends paid	110,637			—			(113,102		)	—			(2,465		)
Dividends received (paid)																162,941			1,649			(164,590		)	—		—
Increases (decreases) in cash related to intercompany advances and debt	291,969			(99,610		)	(192,359		)	—			—			(158,992		)	(17,955		)	176,947			—		—
Partial prepayment of put/call obligation	(36		)	—			—			—			(36		)	(27		)	—			—			—		(27		)
Dividends paid to noncontrolling interest																—			—			(580		)	—		(580		)
Repurchases for tax withholdings on vesting of equity awards	(591		)	—			—			—			(591		)	(1,504		)	—			—			—		(1,504		)
Issuance of Common Stock																2,830			—			—			—		2,830
Net cash provided by (used in) financing activities	138,512			(113,299		)	(110,991		)	—			(85,778		)	(4,190		)	(26,843		)	(385		)	—		(31,418		)
Effect of exchange rate changes on cash and cash equivalents	—			—			9,708			—			9,708			—			—			(5,272		)	—		(5,272		)
Net increase (decrease) in cash and cash equivalents	24,513			(299		)	(2,100		)	(922		)	21,192
Cash and cash equivalents at beginning of period	3,382			299			92,975			—			96,656
Cash and cash equivalents at end of period	$	27,895		$	—		$	90,875		$	(922	)	$	117,848
Net decrease in cash, cash equivalents and restricted cash																(41,101		)	(7,773		)	(23,558		)	—		(72,432		)
Cash, cash equivalents and restricted cash at beginning of period																277,176			8,904			94,143			—		380,223
Cash, cash equivalents and restricted cash at end of period																$	236,075		$	1,131		$	70,585		$	—	$	307,791

~~Report of Independent Registered Public Accounting Firm~~

~~To the Stockholders and Board of Directors~~

~~Bristow Group Inc.:~~

~~Results of Review of Interim Financial Information~~

~~We have reviewed the condensed consolidated balance sheet of Bristow Group Inc. and subsidiaries (the Company) as of~~ ~~December 31, 2018~~, the related condensed consolidated statements of operations and comprehensive loss for the three-month and nine-month periods ended December 31, 2018 and 2017, the related condensed consolidated statements of cash flows for the nine-month periods ended ~~December 31, 2018~~ ~~and~~ ~~2017~~, and the related condensed consolidated statements of changes in stockholders’ investment for the three-month and nine-month periods ended December 31, 2018, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of March 31, 2018, and the related consolidated statements of operations and comprehensive loss, stockholders’ investment and redeemable noncontrolling interest, and cash flows for the year then ended (not presented herein); and in our report dated May 23, 2018, except for the going concern, Note 1 related to the bankruptcy, restructuring support agreement and immaterial corrections to prior period financial information, and Note 4 for the short-term borrowings reclassification, and the restatement as to the effectiveness of internal control over financial reporting for the material weakness related to compliance with non-financial covenants underlying the Company’s secured financing and lease agreements, as to which the date is June 19, 2019, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2018, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

~~Basis for Review Results~~

This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.



	~~/s/ KPMG LLP~~

~~Houston, Texas~~

~~June 19, 2019~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes thereto as well as our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2018~~2019~~, as amended by the amendment thereto (the “Amended 10-K”) filed with the U.S. Securities and Exchange Commission (“SEC”) on June 19, 2019~~ (the “fiscal year ~~2018~~2019 Annual Report” ~~or the “2018 Annual Report”)~~), and the MD&A contained therein. In the discussion that follows, the terms “Current Quarter” and “Comparable Quarter” refer to the three months ended ~~December 31, 2018~~September 30, 2019 and ~~2017~~2018, respectively, and the terms “Current Period” and “Comparable Period” refer to the ~~nine~~six months ended ~~December 31,~~September 30, 2019 and 2018, ~~and 2017,~~ respectively. Our fiscal year ends March 31, and we refer to fiscal years based on the end of such period. Therefore, the fiscal year ending March 31, ~~2019~~2020 is referred to as “fiscal year ~~2019~~2020.”.

Forward-Looking Statements

This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements about our future business, strategy, operations, capabilities and results; financial projections; plans and objectives of our management; expected actions by us and by third parties, including our customers, competitors, vendors and regulators; and other matters. Some of the forward-looking statements can be identified by the use of words such as “believes”, “belief”, “forecasts”, “expects”, “plans”, “anticipates”, “intends”, “projects”, “estimates”, “may”, “might”, “will”, “would”, “could”, “should” or other similar words; however, all statements in this Quarterly Report, other than statements of historical fact or historical financial results, are forward-looking statements.

Our forward-looking statements reflect our views and assumptions on the date we are filing this Quarterly Report regarding future events and operating performance. We believe that they are reasonable, but they involve known and unknown risks, uncertainties and other factors, many of which may be beyond our control, that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements. Accordingly, you should not put undue reliance on any forward-looking statements.

You should consider the following key factors when evaluating these forward-looking statements:

risks and uncertainties relating to our Chapter 11 Cases (as defined herein), including but not limited to: ~~our ability to obtain Bankruptcy Court (as defined herein) approval with respect to motions in the Chapter 11 Cases;~~ the effects of the Chapter 11 Cases on the Company and our various constituents; the impact of Bankruptcy Court (as defined herein) rulings in the Chapter 11 Cases; our ability to develop and implement a plan of reorganization that will be approved by the Bankruptcy Court and the ultimate outcome of the Chapter 11 Cases in general; the length of time we will operate under the Chapter 11 Cases; attendant risks associated with restrictions on our ability to pursue our business strategies; ~~risks associated with third-party motions in the Chapter 11 Cases;~~ the potential adverse effects of the Chapter 11 Cases on our liquidity; ~~the potential cancellation of our common stock in the Chapter 11 Cases;~~ the potential material adverse effect of claims that are not discharged in the Chapter 11 Cases; uncertainty regarding our ability to retain key personnel; and uncertainty and continuing risks associated with our ability to achieve our stated goals and continue as a going concern;

~~our ability to implement operational improvement efficiencies with the objective of rightsizing our global footprint and further reduce our cost structure;~~

adverse changes in our ability to obtain financing or enter into definitive agreements with respect to financings on terms that are favorable to us;

the possibility that we may be unable to maintain compliance with covenants in our financing agreements;

fluctuations in worldwide prices of and demand for oil and natural gas;

fluctuations in levels of oil and natural gas exploration, development and production activities;

fluctuations in the demand for our services;

the possibility that we may ~~be unable to re-deploy our aircraft to regions with greater demand;~~

~~the possibility that we may~~ impair our long-lived assets, including goodwill, inventory, property and equipment and investments in unconsolidated affiliates;

our ability to implement operational improvement efficiencies with the objective of rightsizing our global footprint and further reducing our cost structure;

the possibility of significant changes in foreign exchange rates and controls, including as a result of voters in the U.K. having approved the exit of the U.K. (“Brexit”) from the European Union (“E.U.”);

the impact of continued uncertainty surrounding Brexit negotiations;

potential effects of increased competition;

the inability to remediate the material weaknesses identified in internal controls over financial reporting relating to our monitoring control processes;

the possibility that we may be unable to re-deploy our aircraft to regions with greater demand;

the possibility that the major oil companies do not expand internationally and offshore;

the possibility that we may be unable to defer payment on certain aircraft into future fiscal years or take delivery of certain aircraft later than initially scheduled;

the possibility of changes in tax and other laws and regulations;

the possibility that we may be unable to dispose of older aircraft through sales into the aftermarket;

general economic conditions, including the capital and credit markets;

the possibility that segments of our fleet may be grounded for extended periods of time or indefinitely;

~~the impact of continued uncertainty surrounding Brexit negotiations;~~

~~potential effects of increased competition;~~

~~the inability to remediate the material weaknesses identified in internal controls over financial reporting relating to our monitoring control processes;~~

~~the~~ existence of operating risks inherent in our business, including the possibility of declining safety performance;

the possibility of political instability, war or acts of terrorism in any of the countries where we operate;

the possibility that reductions in spending on aviation services by governmental agencies could lead to modifications of search and rescue (“SAR”) contract terms or delays in receiving payments;

the possibility that we ~~or our suppliers may be unable to deliver new aircraft on time or on budget;~~

~~the possibility that we~~ may be unable to acquire additional aircraft due to limited availability or unable to exercise aircraft purchase options;

the possibility that customers may reject our aircraft due to late delivery or unacceptable aircraft design or operability;

the possibility that we may be unable to successfully execute on our strategic ~~priorities, including STRIVE;~~

the significant changes in our stock price, the liquidity of the market for our common stock and the risk of future declines or fluctuations, including limitations caused by the delisting of our common stock from the New York Stock Exchange and the subsequent trading of our common stock in the less established markets;priorities; and

the possibility that we do not achieve the anticipated benefits from the addition of new-technology aircraft to our fleet.

The above description of risks and uncertainties is by no means all-inclusive, but is designed to highlight what we believe are important factors to consider. For a more detailed description of risk factors, please see the risks and uncertainties described under Item 1A. “Risk Factors” included in the fiscal year ~~2018~~2019 Annual Report.

All forward-looking statements in this Quarterly Report are qualified by these cautionary statements and are only made as of the date of this Quarterly Report. We do not undertake any obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Executive Overview

This Executive Overview only includes what management considers to be the most important information and analysis for evaluating our financial condition and operating performance. It provides the context for the discussion and analysis of the financial information that follows and does not disclose every item impacting our financial condition and operating performance. ~~For a discussion of the Chapter 11 Cases, please see Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.~~

On May 11, 2019 (the “Petition Date”), Bristow Group Inc. and certain of its ~~subsidiaries~~subsidiaries: BHNA Holdings Inc., Bristow Alaska Inc., Bristow Helicopters Inc., Bristow U.S. Leasing LLC, Bristow U.S. LLC, BriLog Leasing Ltd. and Bristow Equipment Leasing Ltd. (together, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). The Debtors’ Chapter 11 Cases ~~are~~were jointly administered under the caption In re: Bristow Group Inc., et al., Main Case No. 19-32713. ~~The~~During the pendency of the Chapter 11 Cases, the Debtors ~~continue~~continued to operate their businesses and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

~~During~~ On August 1, 2019, the Debtors filed with the Bankruptcy Court the Joint Chapter 11 ~~Cases, we expect our~~Plan of Reorganization of Bristow Group Inc. and its Debtor Affiliates (the “Original Plan”) and the Disclosure Statement related thereto. On August 20, 2019, the Debtors filed with the Bankruptcy Court the Amended Joint Chapter 11 Plan of Reorganization of Bristow Group Inc. and its Debtor Affiliates (as further modified on August 22, 2019 and September 30, 2019, the “Amended Plan”) and the Disclosure Statement related thereto (as further modified on August 22, 2019, the “Amended Disclosure Statement”). On October 4, 2019, the Bankruptcy Court approved the Amended Disclosure Statement and indicated that it would confirm the Amended Plan. On October 8, 2019, the Bankruptcy Court entered an order (the “Confirmation Order”) approving the Amended Disclosure Statement and confirming the Amended Plan.

The effective date of the Amended Plan (the “Effective Date”) occurred on October 31, 2019.

Our financial results to continue to be volatile as restructuring activities and expenses, contract terminations and rejections, and claims assessments significantly impact our consolidated financial statements. As a result, our historical financial performance is likely not indicative of our financial performance after the date of the filing of the Chapter 11 Cases. In addition, we have incurred significant professional fees and other costs in connection with ~~preparation for~~ the ~~Chapter 11 Cases and expect that we will continue to incur significant professional fees and costs throughout our~~ Chapter 11 Cases.

General

We are the leading global industrial aviation services provider based on the number of aircraft operated. We have a long history in industrial aviation services through Bristow Helicopters Ltd. (“Bristow Helicopters”) and Offshore Logistics, Inc., which were founded in 1955 and 1969, respectively. We have major transportation operations in the North Sea, Nigeria and the U.S. Gulf of Mexico, and in most of the other major offshore energy producing regions of the world, including Australia, Brazil, Canada, ~~Russia~~Guyana and Trinidad. We provide ~~private sector~~commercial SAR services in Australia, Canada, Guyana, Norway, ~~Russia,~~ Trinidad and the United States. We provide public sector SAR services in the U.K. on behalf of the Maritime & Coastguard Agency. We also provide regional fixed wing scheduled and charter services in ~~Nigeria and in~~ Australia through our consolidated affiliate, Capiteq Limited, operating under the name of Airnorth. To a lesser extent, we also provide regional fixed wing charter services in Nigeria primarily in support of our customers from oil and gas operations. These operations support our primary industrial aviation services operations in those markets, creating a more integrated logistics solution for our customers. We also provided regional fixed wing scheduled and charter services in the U.K. through ~~our~~a consolidated affiliate, Eastern Airways International Limited (“Eastern Airways”), until our disposal of Eastern Airways on May 10, 2019.

During the Current Period, we generated approximately ~~66%~~72% of our consolidated operating revenue from external customers from oil and gas operations, approximately 18% from U.K. SAR operations and approximately ~~16%~~10% from fixed wing services, including charter and scheduled airline services that support our global helicopter operations.

We conduct our business in one segment: industrial aviation services. The industrial aviation services segment operations are conducted primarily through two hubs that include four regions:

Europe Caspian,

Africa,

Americas, and

Asia Pacific.

We primarily provide industrial aviation services to a broad base of major integrated, national and independent offshore energy companies. Our customers charter our helicopters primarily to transport personnel between onshore bases and offshore production platforms, drilling rigs and other installations. To a lesser extent, our customers also charter our helicopters to transport time-sensitive equipment to these offshore locations. These customers’ operating expenditures in the production sector are the principal source of our revenue, while their exploration and development capital expenditures provide a lesser portion of our revenue. The customers for SAR services include both the oil and gas industry, where our revenue is primarily dependent on our customers’ operating expenditures, and governmental agencies, where our revenue is dependent on a country’s desire to privatize SAR and enter into long-term contracts. As of ~~December 31, 2018~~,September 30, 2019, we operated ~~277~~215 aircraft (including ~~191~~155 owned aircraft and 8660 leased ~~aircraft; 10 of the owned aircraft are held for sale)~~aircraft) and our unconsolidated affiliates operated ~~108~~106 aircraft in addition to those aircraft leased from us.

The chart below presents (1) the number of aircraft in our fleet and their distribution among the regions of our industrial aviation services segment as of ~~December 31, 2018~~;September 30, 2019; (2) the number of helicopters which we had on order or under option as of ~~December 31, 2018~~;September 30, 2019; and (3) the percentage of operating revenue which each of our regions provided during the Current Period. For additional information regarding our commitments and options to acquire aircraft, see Note 8 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.


	Percentage of Current Period Operating Revenue		Aircraft in Consolidated Fleet							Percentage of Current Period Operating Revenue		Aircraft in Consolidated Fleet
			Helicopters			Fixed Wing ⁽¹⁾		Unconsolidated Affiliates ⁽⁴⁾				Helicopters			Fixed Wing ⁽¹⁾		Unconsolidated Affiliates ⁽⁴⁾
			Small	Medium	Large	Fixed Wing ⁽¹⁾	Total⁽²⁾⁽³⁾	Unconsolidated Affiliates ⁽⁴⁾	Total			Small	Medium	Large	Fixed Wing ⁽¹⁾	Total⁽²⁾⁽³⁾	Unconsolidated Affiliates ⁽⁴⁾	Total
Europe Caspian	58	%	—	12	75	32	119	—	119	57	%	—	12	77	—	89	—	89
Africa	11	%	3	28	7	3	41	43	84	15	%	—	25	7	4	36	44	80
Americas	17	%	21	40	14	—	75	65	140	18	%	21	34	12	—	67	62	129
Asia Pacific	14	%	—	8	20	14	42	—	42	10	%	—	2	7	14	23	—	23
Total	100	%	24	88	116	49	277	108	385	100	%	21	73	103	18	215	106	321
Aircraft not currently in fleet: ⁽⁵⁾
On order			—	—	26	—	26					—	—	3	—	3
Under option			—	—	4	—	4					—	—	—	—	—

_____________


⁽¹⁾	~~Eastern Airways operates a total of 32 fixed wing aircraft in the Europe Caspian region and provides technical support for two fixed wing aircraft in the Africa region. Additionally,~~ Airnorth operates a total of 14 fixed wing aircraft, which are included in the Asia Pacific region.


⁽²⁾	Includes ~~10 aircraft held for sale and 86~~60 leased aircraft as follows:


	Held for Sale Aircraft in Consolidated Fleet					Leased Aircraft in Consolidated Fleet
	Helicopters					Helicopters
	Small	Medium	Large	Fixed Wing	Total	Small	Medium	Large	Fixed Wing	Total
Europe Caspian	—	1	—	—	1	—	1	36	—	37
Africa	2	3	—	—	5	—	1	3	3	7
Americas	—	3	—	—	3	2	4	3	—	9
Asia Pacific	—	—	—	1	1	—	2	1	4	7
Total	2	7	—	1	10	2	8	43	7	60

	Leased Aircraft in Consolidated Fleet
	Helicopters
	Small	Medium	Large	Fixed Wing	Total
Europe Caspian	—	1	36	12	49
Africa	—	1	3	—	4
Americas	2	13	5	—	20
Asia Pacific	—	3	6	4	13
Total	2	18	50	16	86


⁽³⁾	The average age of our helicopter fleet was approximately ten years as of ~~December 31, 2018~~September 30, 2019.

⁽⁴⁾

The ~~108~~106 aircraft operated by our unconsolidated affiliates do not include those aircraft leased from us. Includes 42 helicopters (primarily medium) and 2219 fixed wing aircraft owned and managed by Líder Táxi Aéreo S.A. (“Líder”), our unconsolidated affiliate in Brazil included in the Americas region, and 36 helicopters and ~~seven~~eight fixed wing aircraft owned by Petroleum Air Services, ~~(“PAS”),~~ our unconsolidated affiliate in Egypt included in the Africa region, and one helicopter operated by Cougar Helicopters Inc. (“Cougar”), our unconsolidated affiliate in ~~Canada included in the Americas region.~~

Canada.

⁽⁵⁾

This table does not reflect aircraft which our unconsolidated affiliates may have on order or under option. In October 2019, the Bankruptcy Court approved our agreement with Airbus Helicopters S.A.S. to reject our aircraft purchase contract for 22 large aircraft. The three AW189 U.K. SAR configured aircraft on order were being leased as of March 31, 2019. One of the AW189s was purchased in October 2019.

The commercial aircraft in our consolidated fleet represented in the above chart are our primary source of revenue. To normalize the consolidated operating revenue of our commercial helicopter fleet for the different revenue productivity and cost, we developed a common weighted factor that combines large, medium and small commercial helicopters into a combined standardized number of revenue producing commercial aircraft assets. We call this measure Large AirCraft Equivalent (“LACE”). Our commercial large, medium and small helicopters, including owned and leased helicopters, are weighted as 100%, 50%, and 25%, respectively, to arrive at a single LACE number, which excludes fixed wing aircraft, unconsolidated affiliate aircraft, aircraft held for sale and aircraft construction in progress. We divide our operating revenue from commercial contracts relating to LACE aircraft, which excludes operating revenue from affiliates and reimbursable revenue, by LACE to develop a LACE rate, which is a standardized rate. Our historical LACE and LACE rate is as follows:

Current
Period ⁽¹⁾
Fiscal Year Ended March 31,
2018 2017 2016 2015 2014
LACE 162
172
174
162
166
158
LACE Rate (in millions) $ 6.95
$ 6.80
$ 6.63
$ 8.85
$ 9.33
$ 9.34



	Current Period ⁽¹⁾		Fiscal Year Ended March 31,
	Current Period ⁽¹⁾		2019		2018		2017		2016		2015
LACE	145		160		172		174		162		166
LACE Rate (in millions)	$	7.88	$	6.94	$	6.74	$	6.55	$	8.60	$	9.26

_____________


⁽¹⁾	LACE rate is annualized.

The following table presents the distribution of LACE helicopters owned and leased, and the percentage of LACE leased as of ~~December 31, 2018~~September 30, 2019. The percentage of LACE leased is calculated by taking the total LACE for leased commercial helicopters divided by the total LACE for all commercial helicopters we operate, including both owned and leased.

LACE
Owned Aircraft Leased Aircraft
Percentage
of LACE
leased
Europe Caspian 44
37
45 %
Africa 16
4
18 %
Americas 26
12
32 %
Asia Pacific 17
8
31 %
Total 103
60
37 %



	LACE
	Owned Aircraft	Leased Aircraft	Percentage of LACE leased
Europe Caspian	47	37	44	%
Africa	16	4	18	%
Americas	29	6	16	%
Asia Pacific	6	2	25	%
Total	97	48	33	%

Our Strategy

Our goal is to strengthen our market position as the leading global industrial aviation services ~~provider globally.~~provider. To do this, we will pursue efficiencies and new opportunities in our core markets, address oversupply and market saturation by diversifying our portfolio, and drive innovation throughout our businesses and industry.

Safety will always be our number one focus. We continue to deliver strong operational safety performance across the group and maintain a recordable injury rate that places us in the upper tier of our peer companies in oilfield services and aviation. We seek to continuously improve our safety systems and processes to allow us to become even safer and to build confidence in our industry and among our regulators with respect to the safety of helicopter transportation globally.

We continually seek to improve our balance sheet and liquidity and reduce our capital costs, with a goal of reduced financing leverage (including lower levels of debt and leases) and a return to profitability. In order to strengthen our balance sheet and achieve a more sustainable debt profile, we filed for Chapter 11 protection on the Petition Date.

We intend to pursue value-added acquisitions with a focus on oil and gas transportation and ~~search and rescue~~SAR that not just make us bigger but better; that generate cost efficiencies that position us to thrive in an economy that is undergoing long-term structural change. We may also divest portions of our business or assets to narrow our product lines and reduce our operational footprint to reduce leverage and improve return on capital and liquidity.

We also intend to continue to utilize portfolio and fleet optimization. During the Chapter 11 Cases, we leveraged relief available to us under Chapter 11. Consistent with our ongoing process to rationalize and simplify our business and global aircraft fleet, we sold 11, 8 and 3 aircraft in fiscal years 2018 and 2019 and Current Period for proceeds of $48.3 million, ~~during fiscal year 2018~~$11.0 million and ~~sold three aircraft during the Current Period for proceeds of $8.1 million.~~$4.9 million, respectively. As of ~~December 31, 2018, we had ten aircraft held for sale and~~September 30, 2019, the average age of our fleet is approximately ten years. ~~Since April 1, 2017,~~During the Current Period, we ~~have~~ returned ~~eleven Airbus~~four H225s under an agreement with a lessor and rejected and returned leases under Chapter 11 protection for nine ~~Sikorsky S-92s to lessors.~~S-76C+s and one S-76D. Also, we disposed of Eastern Airways on May 10, 2019.

Market Outlook

Our core business is providing industrial aviation services ~~primarily~~ to the worldwide oil and gas industry. We also provide public and private sector SAR services and fixed wing transportation services. Our global operations and critical mass of helicopters provide us with geographic and customer diversity which helps mitigate risks associated with a single market or customer.

The oil and gas business environment has experienced significant volatility since fiscal year 2015. Brent crude oil prices declined from approximately $106 per barrel as of July 1, 2014 to a low of approximately $26 per barrel in February 2016. A recovery in Brent crude oil prices followed to approximately $77 per barrel as of June 27, 2018 with another decline to approximately $44 per barrel as of December 27, 2018. Brent crude oil prices were approximately ~~$45~~$54 per barrel as of ~~December 31, 2018.~~September 30, 2019. The decrease in oil prices beginning in fiscal year 2015 was driven by increased global supply primarily from unconventional oil resources in the U.S. Permian Basin and forecasts of reduced demand for crude oil resulting from weaker global economic growth in many regions of the world. The oil price decline negatively impacted the cash flow of our customers and resulted in their implementation of measures to reduce operational and capital costs, negatively impacting helicopter activity beginning in fiscal year 2015. These cost reductions have continued into fiscal year 2019 and have impacted both the offshore production and the offshore exploration activity of our ~~customers.~~customers resulting in a change in the industry with continued focus on supply chain efficiencies without a similar offsetting decease to our maintenance costs. The largest share of our revenue relates to oil and gas production; however, our largest contract, the contract with the U.K. Department for Transport (the “DfT”) to provide public sector SAR services for all of the U.K. (the “U.K. SAR contract”), is not directly impacted by declining oil prices. ~~However, the~~The significant drop in the price of crude oil resulted in the rescaling, delay or cancellation of planned offshore projects ~~which~~and has negatively impacted our operations and could continue to negatively impact our operations in future periods.

To further reduce costs and make offshore drilling more ~~financially attractive,~~economical, the industry is implementing technology-driven solutions that could result in increased transportation needs initially but could result in decreased activity once complete. Recently, we have seen opportunities infor market share gains rather than increased activity. Our oil and gas markets remain competitive as material cost reductions and technological improvements have taken place in the offshore supply chain. The continued volatility of oil prices combined with the excess supply of aircraft could continue to impact the price and demand for helicopters and may continue to have a material impact on our financial position, cash flow and results of operations.

The SAR market is continuing to evolve and we believe further outsourcing of public SAR services to the private sector will continue in the future, although the timing of these opportunities is uncertain. The customers for our SAR services include both the oil and gas industry and governmental agencies. We are pursuing other public and oil and gas SAR opportunities for multiple aircraft in various jurisdictions around the globe and other non-SAR government aircraft logistics opportunities.

Like many of our competitors and other service providers to exploration and production companies, we responded to the constraints in the market during the past four years by implementing cost efficiencies both in our global operations as well as in our corporate headquarters, comprehensively reviewing operational and commercial dealings, exploring value-additive acquisitions and dispositions and developing strategic initiatives. We pursued a strategy of maximizing liquidity and financial flexibility through asset-level borrowings and secured equipment lease transactions. Together with revenue from operations, this additional liquidity allowed us to service our debt and provided a runway to maintain operations through the downturn.

~~Additionally, we took the following actions in an effort to address the downturn:~~

~~In early fiscal year 2018, we took steps to increase cost efficiency by optimizing our operations around two primary geographical hubs in key areas of our business, Europe and the Americas.~~

We increased our financial flexibility by entering into new secured equipment financings that resulted in aggregate proceeds of $630 million funded in fiscal years 2017 and 2018. Additionally, in fiscal year 2018, we completed the sale of $143.8 million of the 4½% Convertible Senior Notes due 2023 (the “4½% Convertible Senior Notes”) and $350 million of the 8.75% Senior Secured Notes due 2023 (the “8.75% Senior Secured Notes”). In April 2018, we entered into a new asset-backed revolving credit facility (the “ABL Facility”) as discussed in Note 5 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report and under “— Recent Events” below.

We worked with our original equipment manufacturers (“OEMs”) to defer approximately $190 million of capital expenditures relating to fiscal years 2018 through 2020 into fiscal year 2020 and beyond and more recently deferred approximately $100 million in capital expenditures for fiscal years 2019 to 2023 into fiscal year 2024 and beyond. We achieved $136 million in cost recoveries from OEMs related to ongoing aircraft issues, of which $125 million was recovered in fiscal year 2018 and $11 million was recovered in May 2018.

We took significant steps to reduce general and administrative costs that included downsizing our corporate office and the size of our senior management team. Consistent with our STRIVE strategy, we are better positioned to win contracts because we are a more nimble, regionally focused and cost efficient business.

In August 2017, we suspended our quarterly dividend as part of a broader plan of reducing costs and improving liquidity. By suspending this $0.07 per share quarterly dividend, we expect to preserve approximately $10 million of cash annually.

Ultimately, however, given the continuing challenges in the offshore oil and gas industry and other matters impacting liquidity, the rate at which ~~our~~the Company’s cash position was declining began to increase, and wethe Company evaluated ~~our~~its strategic alternatives for the benefit of all ~~our~~its stakeholders, including ~~our~~its customers, employees, creditors and other investors. The fundamental shifts in the energy markets and in particular, offshore ~~spending,~~drilling, have required usthe Company to re-think ~~the~~its strategic business plan to restructure with an eye toward an inevitable consolidation in the market for helicopter services. While ~~we have~~the Company has maintained ~~our~~its leading market share, industry demand has declined precipitously, ~~rending~~rendering existing business models unsustainable and creating substantial overcapacity in the marketplace.

On the Petition Date, the Debtors filed the Chapter 11 Cases in the Bankruptcy Court seeking relief under Chapter 11 of the Bankruptcy Code. The Debtors’ Chapter 11 Cases ~~are~~were jointly administered under the caption In re: Bristow Group Inc., et al., Main Case No. 19-32713. ~~The~~During the pendency of the Chapter 11 Cases, the Debtors ~~continue~~continued to operate their businesses and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. On August 1, 2019, the Debtors filed with the Bankruptcy Court the Original Plan and the Disclosure Statement related thereto. On August 20, 2019, the Debtors filed with the Bankruptcy Court the Amended Plan and the Amended Disclosure Statement. On October 4, 2019, the Bankruptcy Court approved the Amended Disclosure Statement and indicated that it would confirm the Amended Plan. On October 8, 2019, the Bankruptcy Court entered the Confirmation Order approving the Amended Disclosure Statement and confirming the Amended Plan.

The Effective Date occurred on October 31, 2019.

The effects of offshore oil and gas market pressures have been felt by nearly all companies in the helicopter service industry. Including the Debtors’ Chapter 11 Cases, there have been five large Chapter 11 proceedings involving helicopter services and leasing companies in the last few years.

Recent Events

Restructuring Support Agreement — On May 10, 2019, we entered into a restructuring support agreement ~~(the “RSA”~~(“the Initial RSA”) with (i) certain holders ~~(the “Supporting Secured Noteholders”)~~ of the 8.75% Senior Secured Notes due 2023 (the “8.75% Senior Secured Notes”) and (ii) the guarantors of the 8.75% Senior Secured Notes (the “Secured Guarantors”), to support a restructuring of the Company (the “Restructuring”). On June 27, 2019, we entered into an amendment and restatement of the Initial RSA. On July 24, 2019, we entered into the second amendment and restatement thereof (as so amended and restated, the “Second Amended RSA”) with a group of holders representing approximately 99.3% of the 8.75% Senior Secured Notes (the “Supporting Secured Noteholders”), the Secured Guarantors and a group of holders representing approximately 73.6% (the “Supporting Unsecured Noteholders” and, together with the Supporting Secured Noteholders, the “Supporting Noteholders”) of the 6¼% Senior Notes due 2022 (the “6¼% Senior Notes”) and the 4½% Convertible Senior Notes due 2023 (the “4½% Convertible Senior Notes”) combined (together, the “Unsecured Notes”). The Second Amended RSA contemplated implementation of the Restructuring on the amended terms set forth in the term sheet contained in an exhibit to the Second Amended RSA (the “Restructuring Term Sheet”)~~. The RSA contemplated the filing of the Chapter 11 Cases to implement the Restructuring~~ pursuant to ~~a Chapter 11 plan of reorganization (the “Plan”)~~the Amended Plan and the various related transactions set forth in or contemplated by the Restructuring Term Sheet, the term sheet for the DIP ~~Term Sheet~~Credit Agreement (as defined herein) and the other restructuring documents attached to the Second Amended RSA.

Pursuant to the terms of the Second Amended RSA and the Restructuring Term Sheet:

holders of claims arising from the ~~8.75% Senior Secured~~Unsecured Notes ~~will~~(the “Unsecured Notes Claims”) would receive their pro rata share of ~~a percentage of~~(i) if they are accredited investors, (x) new common stock, par value $0.0001 (the “New Common Stock”), and new preferred stock, par value $0.0001 (the “New Preferred Stock” and, together with the ~~equity interests (the “Reorganized Equity”~~New Common Stock, the “New Stock”), of the Company, as reorganized pursuant to ~~and under~~ the Amended Plan (the “Reorganized Company”) equal to ~~100% minus~~11% of the New Stock (the “Unsecured Equity Pool”), subject to dilution for the management incentive plan and (v) up to $347.5 million of the Rights Offering (the “Unsecured Rights”), or (ii) if they are not accredited investors, the Unsecured Cash Pool (as defined below) and, in each case, the Unsecured Notes ~~Reorganized Equity percentage (subject to dilution~~will be cancelled and discharged;

holders of claims arising from the ~~MIP and~~8.75% Senior Secured Notes (the “Secured Notes Claims”) would receive payment of their Secured Notes Claims in full consisting of (i) cash equal to 97% of their Secured Notes Claims, plus (ii) their pro rata share of up to $37.5 million of the Rights Offering ~~(each as defined herein)~~(the “Secured Rights”);, and the 8.75% Senior Secured Notes will be cancelled and discharged;

~~if the class of~~ holders of unsecured claims ~~(the “Unsecured Notes Claims”) arising from~~(other than the ~~6¼% Senior Notes due 2022 and the 4½% Convertible Senior Notes (together, the “Unsecured Notes”) accepts the Plan, the holders of~~ Unsecured Notes Claims ~~will~~and general unsecured trade vendor claims) (the “General Unsecured Claims”) would receive their pro rata share of (i) if they are accredited investors, at their option, (a) the ~~Reorganized~~Unsecured Equity ~~(subject to dilution from~~Pool and (b) the ~~MIP and~~Unsecured Rights or (ii) if they are accredited investors who decline the ~~Rights Offering)~~treatment set forth in the preceding clause (i) or if they are not accredited investors, cash in an amount (the “Consensual Unsecured Notes Reorganized Equity”) to be agreed upon by the Company and the holders of at least 66 2/3% of the aggregate principal amount of the 8.75% Senior Secured Notes obligated under the RSA and which must include at least two members of the Secured

~~Notes Ad Hoc Group (as defined herein) (the “Required Consenting Noteholders”) and any other rights or recovery that may be~~ agreed upon by the Company and the Required ~~Consenting Noteholders; and if~~Backstop Parties (as defined in the ~~class of holders of Unsecured Notes Claims does not accept the Plan, the holders of Unsecured Notes Claims will receive their~~Second Amended RSA) (the “Unsecured Cash Pool”), distributed pro rata ~~share of the percentage of the Reorganized Equity determined by the Bankruptcy Court~~ to ~~satisfy the best interests test;~~

~~if the class of~~all holders of ~~general unsecured claims that rank pari passu with the Unsecured Notes Claims (“Pari General Unsecured Claims”) votes in favor of the Plan, the holders of Pari~~ General Unsecured Claims ~~will~~who opt to receive their pro rata share of the Consensual Unsecured Notes Reorganized Equity; and if the class of holders of Pari General Unsecured Claims does not vote in favor of the Plan, the holders of Pari General Unsecured Claims will receive their pro rata share of the percentage of the Reorganized Equity determined by the Bankruptcy Court to satisfy the best interests test;cash under this clause (ii);

holders of claims under the 2019 Term Loan (as defined herein) ~~will be repaid~~would either receive payment in cash in full or have their commitments with respect to the 2019 Term Loan replaced, or amended and reinstated, in any case secured by a first lien on substantially all assets of the Company, with the same maturity and interest rate as in the 2019 Term Loan, and the 2019 Term Loan will be ~~reinstated;~~cancelled and discharged;

holders of claims under the New DIP Facility ~~(as defined herein) will~~were expected to be ~~paid in cash~~satisfied and discharged in full ~~provided that,~~in exchange for New Stock;

an ad hoc group of holders of the ~~DIP Facility may be converted on a dollar-for-dollar basis into the Exit Facility (as defined herein);~~

Unsecured Notes (the “Unsecured Notes Ad Hoc Group”) and an ad hoc group of holders of the 8.75% Senior Secured Notes (the “Secured Notes Ad Hoc Group”) ~~has~~ agreed to backstop $347.5 million and $37.5 million, respectively, of a ~~$200~~total $385 million new money rights offering ~~of the Reorganized Equity~~ (the “Rights Offering”)~~, pursuant to which participants will receive rights to purchase a percentage~~ of the ~~Reorganized Equity at a discount to~~ New Stock;

the ~~Plan~~existing equity ~~value to be agreed upon by~~interests in the Company would be cancelled and discharged;

the Secured Notes Ad Hoc Group and the ~~Required Consenting Noteholders;~~Unsecured Notes Ad Hoc Group filed a statement affirmatively supporting the Company’s Fiscal Year 2020 Performance Incentive Plan and Fiscal Year 2020 Non-Executive Incentive Plan in the form presently before the Bankruptcy Court;

~~up to~~between 5% and 10% of the ~~Reorganized Equity~~New Stock on a fully diluted basis ~~will be~~were reserved for ~~the MIP Reorganized Equity pursuant to~~ a Management Incentive ~~Plan (“MIP”) acceptable~~Plan; and

the Debtors would conduct a marketing process to ~~the Required Consenting Noteholders; and~~

~~any exit financing for the Company will be~~raise a senior secured or unsecured revolving, term loan or notes facility in an aggregate principal amount ~~and structure~~of at least $75 million, provided that such facility shall be used to ~~be determined (the “Exit Facility”).~~

~~The RSA contains certain covenants on~~repay the part of each of the Company and the Supporting Secured Noteholders, including limitations on the Supporting Secured Noteholders’ ability to pursue alternative transactions, commitments by the Supporting Secured Noteholders to vote2019 Term Loan in ~~favor of the Plan and commitments of the Company and the Supporting Secured Noteholders to negotiate~~cash, in good faith to finalize the documents and agreements governing the Plan. The RSA also provides for certain conditions to the obligations of the parties and for termination upon the occurrence of certain events, including without limitation, the failure to achieve certain milestones and certain breaches by the parties under the RSA.full.

Term Loan Agreement — On May 10, 2019, ~~the Company~~we entered into a Term Loan Credit Agreement, dated the same date (the “Term Loan Agreement”), by and among the Company and Bristow Holdings Company Ltd. III (“BHC III”), as borrowers, certain subsidiaries of the Company as guarantors party thereto, the lenders from time to time party thereto (initially, certain holders of the 8.75% Senior Secured Notes), and Ankura Trust Company, LLC, as administrative agent (the “Term Loan Agent”), for a senior secured term loan of $75 million (the “2019 Term Loan”). Immediately upon entering into the Term Loan Agreement, and prior to the Petition Date, the Company and BHC III borrowed the full amount thereunder, the net proceeds of which ~~may be used only in compliance with a cash flow forecast required pursuant to the terms of the Term Loan Agreement, which the Company expects will be~~were used for general corporate purposes, including to fund the working capital and liquidity requirements of the Company during the pendency of the Chapter 11 Cases. The full principal amount of the 2019 Term Loan is due May 10, 2022. At the Company’s election, borrowings under the 2019 Term Loan will bear interest at either (x) the Eurodollar Rate (as defined in the Term Loan Agreement) plus 7% or (y) the Base Rate (as defined in the Term Loan Agreement) plus 6%. The initial borrowings under the 2019 Term Loan will be Eurodollar Rate loans with monthly interest payments. The 2019 Term Loan is secured by a first lien on certain specified collateral, including, among other things, equity pledges of 35% of the equity interests in certain of the Company’s first-tier foreign subsidiaries (the remaining 65% of such entities have been previously pledged under the 8.75% Senior Secured Notes), 100% of the equity of BHC III, ~~and~~ Bristow International Panama S. de RL, and two newly formed special-purpose vehicles, as well as a junior lien on certain collateral securing the 8.75% Senior Secured Notes. The borrowers have the option in connection with the consummation of a Reorganization Plan (as defined in the Term Loan Agreement) that is satisfactory to the lenders to require that the 2019 Term Loan be converted into equity of the Company upon consummation of such Reorganization Plan, subject to certain conditions. The Term Loan Agreement contains customary pre-payment requirements.

period by more (with respect to disbursements) or less (with respect to total receipts) than a specified percentage of the forecasted amount. The Term Loan Agreement also contains customary affirmative covenants and customary representations and warranties.

On June 6, 2019, we entered into Amendment No. 1 to the Term Loan Agreement (the “First Term Loan Amendment”), dated the same date, by and among the Company, BHC III and the lenders party thereto. Among other things, the First Term Loan Amendment extended the deadline for delivery to the administrative agent and the lenders of (i) the annual audit report of the borrower and its subsidiaries for the fiscal year ended March 31, 2019 from 90 days to 120 days after the end of such fiscal year and (ii) monthly unaudited consolidated financial statements of the borrower and its subsidiaries from 10 days to 20 business days after the end of each month.

Rejection of HeliFleet Leases —During the Chapter 11 Cases, the Company identified cost savings to be achieved through a fleet reduction by eliminating leased helicopters that were idle, carried above-market lease payments or that could be replaced with other helicopters within Bristow’s fleet. On June 14, 2019, the Bankruptcy Court entered an order (the “HeliFleet Order”) authorizing the Debtors to reject nine separate Aircraft Lease Agreements, dated as of December 20, 2005 (as amended from time to time), entered into by Bristow U.S. LLC, as lessee, and HeliFleet 2013-01, LLC (“HeliFleet”), as lessor, expiring September 1, 2023 (the “HeliFleet Leases”). Under the HeliFleet Leases, HeliFleet was the lessor of nine S-76C+ helicopters (the “HeliFleet Helicopters”) and the engines installed thereon. Under the terms of the HeliFleet Order, Bristow U.S. LLC returned the HeliFleet Helicopters to HeliFleet.

Backstop Commitment Agreement — On July 24, 2019, the Company entered into a Backstop Commitment Agreement (the “Backstop Commitment Agreement”) with the other parties thereto (the “Commitment Parties”), pursuant to which the Commitment Parties agreed to backstop the Rights Offering of New Stock of the Reorganized Company. In accordance with the Amended Plan and certain Rights Offering procedures filed as part of the Amended Plan, the Company granted the Supporting Noteholders, including certain Commitment Parties who are Unsecured Noteholders (the “Unsecured Commitment Parties”) or Secured Noteholders (the “Secured Commitment Parties”), and holders of certain other unsecured claims (collectively with the Unsecured Noteholders, the “Unsecured Claims”), the right to purchase shares of New Stock of the Reorganized Company (the “Rights Offering Shares”), which were comprised of 91.825% of New Common Stock and 8.175% of New Preferred Stock, for an aggregate purchase price of, in the case of the Unsecured Claims, $347.5 million (the “Unsecured Rights Offering Amount”) and, in the case of the Secured Noteholders, $37.5 million (the “Secured Rights Offering Amount” and, together with the Unsecured Rights Offering Amount, the “Rights Offering Amount”)). Under the Backstop Commitment Agreement, the Commitment Parties agreed to purchase any Rights Offering Shares that were not duly subscribed for pursuant to the Rights Offering (the “Unsubscribed Shares”) at the Per Equity Share Purchase Price (as defined in the Backstop Commitment Agreement).

available exemption from registration thereunder. As a condition to the closing of the transactions contemplated by the Backstop Commitment Agreement, the Reorganized Company entered into a registration rights agreement with certain Commitment Parties requiring the Reorganized Company to register the Commitment Parties’ securities under the Securities Act. As of September 30, 2019, we accrued estimated fees of $19.3 million included in other accrued liabilities on our condensed consolidated balance sheet.

Debtor-in-Possession ~~Commitment Letter~~Credit Agreement — In connection with the Chapter 11 Cases and pursuant to a ~~Commitment Letter, dated May 10, 2019, from~~commitment letter between the DIP Borrowers (as defined below) and the lenders party thereto, on July 25, 2019, the Debtors filed a motion seeking, among other things, interim and ~~agreed to by~~final approval of the proposed Superpriority Secured Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”) among the Company, ~~and~~as lead borrower, BHC III, as co-borrower (together with the Company, the “DIP Borrowers”), the other Debtors and guarantors party thereto and other guarantors from time to time party thereto, the financial institutions or other entities from time to time party thereto, and Ankura Trust Company, LLC, as administrative agent and collateral agent (the “DIP Agent”). On August 21, 2019, the Bankruptcy Court entered a final order, which, among other things, approved the DIP Credit Agreement, and on August 26, 2019, the Company entered into the DIP Credit Agreement. On August 27, 2019, the Company borrowed the full amount of the DIP Credit Agreement of $150 million at an 8.5% borrowing rate, $75 million of which was used to pay down a portion of the 8.75% Senior Secured Notes ~~Ad Hoc Group has agreed~~discussed below and the remainder of which was to ~~provide~~be used for general corporate purposes.

On September 30, 2019, we entered into Amendment No. 1 to the DIP ~~Borrowers with a superpriority senior secured debtor-in-possession credit facility~~Credit Agreement (the “DIP ~~Facility”~~Credit Agreement Amendment”), dated the same date, among the Company, BHC III and the DIP Agent. The DIP Credit Agreement Amendment amended the DIP Credit Agreement to extend the delivery dates (i) for the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2019 until October 31, 2019 and (ii) for the Company’s unaudited consolidated financial statements for each of the fiscal quarters ended June 30, 2019 and September 30, 2019 until December 31, 2019. On October 31, 2019, we repaid borrowings under the DIP Credit Agreement in exchange for New Stock of the Reorganized Company, and the DIP Credit Agreement terminated pursuant to its terms.

Tender Offer — On August 12, 2019, we commenced a tender offer (the “Tender Offer”) to purchase for cash our outstanding 8.75% Senior Secured Notes, up to an aggregate principal amount that would not result in an aggregate purchase price (including accrued and unpaid interest to, but not including, the settlement date) that exceeded $75.0 million. On September 11, 2019, we completed the Tender Offer, purchasing $74.8 million aggregate principal amount of the 8.75% Senior Secured Notes for $74.8 million, plus accrued and unpaid interest of $0.2 million, using funds borrowed under the DIP Credit Agreement.

Fiscal Year 2020 Incentive Plans — In connection with the Chapter 11 Cases, on August 22, 2019, the ~~terms~~Bankruptcy Court entered an order approving the Company’s Fiscal Year 2020 Performance Incentive Plan and Fiscal Year 2020 Non-Executive Incentive Plan. Effective as of the Effective Date, the Compensation Committee of the Board of Directors of the Company adopted the 2019 Management Incentive Plan and the Company adopted the Amended and Restated 2019 Management Severance Benefits Plan for U.S. Employees. For further details, see Note 2 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Replacement of Trustee — On May 8, 2019, pursuant to an Agreement of Resignation, Appointment and Acceptance between U.S. Bank, National Association (“U.S. Bank”) and Wilmington Trust, National Association (“Wilmington Trust”), Wilmington Trust replaced U.S. Bank as trustee, registrar, paying agent, custodian, conversion agent and bid solicitation agent under the Indenture, dated as of June 17, 2008, among the Company, the guarantors named therein and U.S. Bank (the “Base Indenture”) for both the 6¼% Senior Notes and the 4½% Convertible Senior Notes. On September 11, 2019, the Company entered into the Seventh Supplemental Indenture, dated the same date, to the Base Indenture (the “Seventh Supplemental Indenture”), pursuant to which Delaware Trust Company succeeded Wilmington Trust as trustee, registrar, paying agent, custodian, conversion agent and bid solicitation agent under the Base Indenture for the 4½% Convertible Senior Notes.

Omnibus Agreement — On October 3, 2019, the Company entered into an Omnibus Agreement (the “Omnibus Agreement”), dated the same date, among Bristow Equipment Leasing Ltd., as borrower, PK Transportation Finance Ireland Limited (“PK Transportation”), as lender, PK AirFinance S.à r.l. (“PK AirFinance”), as agent for the lender and as security trustee for the MAG Agent and the MAG Parties (each as defined in the credit agreement, dated as of July 17, 2017, among Bristow Equipment Leasing

Ltd., the several banks, other financial institutions and other lenders from time to time party thereto and PK AirFinance as agent and as security trustee (as amended, the “PK Credit Agreement”)), PK AirFinance and PK Transportation. Pursuant to the Omnibus Agreement, among other matters, the parties have agreed, effective upon satisfaction of the conditions precedent set forth in the ~~DIP Facility Term Sheet attached thereto~~Omnibus Agreement (the ~~“DIP Term Sheet”~~“Omnibus Effective Date”)., to amend the PK Credit Agreement to, among other things, extend the maturity date of the 24 loans made under the PK Credit Agreement by 18 months to January 27, 2025 and increase the principal amount of the loans in an aggregate amount of approximately $17.3 million. The ~~DIP Term Sheet provides~~Omnibus Agreement also updates the amortization schedule as of October 3, 2019 to provide that, among other things, only interest will be payable on the ~~DIP Facility shall be comprised of~~ loans ~~in an aggregate principal~~for the six months following the Omnibus Effective Date, with a balloon amount of ~~$75.0 million.~~ approximately $104.2 million due on the maturity date. If the loans are refinanced by full prepayment during the six-month period following the Effective Date, no prepayment penalty will be due. Each loan is secured by an aircraft which has been pledged as collateral for the loans.

The ~~availability~~Omnibus Agreement also provides that the Borrower Guarantee and Indemnity Cap (as defined in the PK Credit Agreement) will be reduced by the amount of increased principal when paid. In addition, the Omnibus Agreement adjusts the information covenants under the PK Credit Agreement such that the Company shall provide a copy of the ~~DIP Facility is subject~~annual audit report for each fiscal year for the Company and its subsidiaries as soon as available and in any event within 90 days after the end of such fiscal year of the Company (or, in the case of the fiscal year ended March 31, 2019, by October 31, 2019), and quarterly financial statements of the Company and its subsidiaries within 45 days after the end of each fiscal quarter of the Company (and, in the case of each of the fiscal quarters ended June 30, 2019 and September 30, 2019, by December 31, 2019). In the Omnibus Agreement, PK Transportation also agreed to waive certain ~~conditions~~events of default arising from breaches of covenants in other agreements as a result of the Chapter 11 Cases and ~~milestones, including approval~~failure to provide its financial statements by their required due dates.

Amendment of Macquarie Credit Agreement —On October 3, 2019, the Bankruptcy Court approved a term sheet (the “Macquarie Term Sheet”) among the Company, as guarantor, Bristow U.S. LLC, as borrower and lessee, BriLog Leasing Ltd., as lessee, Macquarie Bank Limited, as administrative agent and security agent, Macquarie Leasing LLC, as lender and owner participant, and Macquarie Rotorcraft Leasing Holdings Limited, as owner participant, pursuant to which, ~~has not been obtained~~among other matters, the parties agreed to enter into definitive documentation at ~~this time.~~emergence for an amendment (the “Macquarie Amendment”) to the term loan credit agreement, dated as of February 1, 2017, among Bristow U.S. LLC, the several banks, other financial institutions and other lenders from time to time party thereto and Macquarie Bank Limited, as administrative agent and as security agent (the “Macquarie Credit Agreement”).

Going Concern — The ~~Company’s liquidity outlook has recently changed resulting in~~significant risks and uncertainties related to the Chapter 11 Cases raise substantial doubt about the Company’s ability to continue as a going concern. In addition, each of the commencement of the Chapter 11 Cases and the delivery of the ~~Amended~~Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018, as amended by the amendment thereto (the “Amended 10-K”), with a going concern qualification or explanation constituted an event of default under certain of our secured equipment financings, giving those secured equipment lenders the right to accelerate repayment of the applicable debt, subject to Chapter 11 protections, and triggering cross-default and/or cross-acceleration provisions in substantially all of our other debt instruments should that right to accelerate repayment be exercised. ~~The Company expects to continue operations in the normal course during the pendency of the Chapter 11 Cases.~~ The condensed consolidated financial statements included herein have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of the going concern uncertainty.

Eastern Airways and Humberside Airport — Bristow Helicopters, ~~an indirect consolidated affiliate of the Company,~~ together with its legal and financial advisors, pursued various transactions to exit the Eastern Airways business, which made negative contributions to our operating income and Adjusted EBITDA in each of the last three fiscal years, including pursuing a sales process with several third parties over an extended period. On May 10, 2019, Bristow Helicopters completed the sale of all of the shares of Eastern Airways to Orient Industrial Holdings Limited (“OIHL”), an entity affiliated with Mr. Richard Lake, a director of Bristow Helicopters, pursuant to a Sale and Purchase Agreement (the “EAIL Purchase Agreement”). Pursuant to the EAIL Purchase Agreement and related agreements, Bristow Helicopters contributed approximately £17.1 million to Eastern Airways as working capital, OIHL acquired Eastern ~~Airways,~~Airways. Bristow Helicopters retained its controlling ownership of the shares in Humberside International Airport Limited that it previously

held through Eastern ~~Airways and certain~~Airways. Certain intercompany balances between Bristow Helicopters and Eastern Airways were also written off. As a result of the transaction, OIHL now owns and operates Eastern Airways, which had previously operated as a separate unit within Bristow Group, and Bristow Helicopters maintains its controlling interest in Humberside Airport, from which Bristow Helicopters provides U.K. ~~search and rescue services and Eastern Airways maintains its operations.~~SAR services.

The loss on the sale of Eastern Airways for the Current Period of $46.9 million includes the write-off of net assets of $35.0 million and write-off of cumulative translation adjustment of $11.9 million.

Rejection and Deferral of Purchase of H175s — On May 1, 2019, we entered into an amendment to our agreement with Airbus Helicopters S.A.S. for the purchase of 22 H175 helicopters, which includes five aircraft that can be cancelled by us prior to the delivery dates. Pursuant to the amendment, the parties mutually agreed to postpone the delivery dates for such helicopters for 18 months from the previous schedule, with the first three helicopters now scheduled for delivery in the second half of fiscal year 2022. The postponement in deliveries resulted in various amendments to the payment terms under the purchase agreement including the deferral of approximately $110.0 million in capital expenditures scheduled for fiscal years 2019 to 2023 into fiscal years 2024 and beyond. ~~Our capital commitments related to these H175 helicopters now total approximately $14.0 million for fiscal years 2020 and 2021.~~ In connection with this amendment, the overall purchase price of these helicopters ~~has been~~ increased by $18.4 million to account for inflation.

~~CEO Transition~~ — On ~~November 9, 2018,~~September 30, 2019, the ~~Company announced~~Debtors filed a motion with the ~~upcoming retirement of Jonathan E. Baliff, who served as President and Chief Executive Officer~~Bankruptcy Court to approve a settlement agreement with Airbus Helicopters S.A.S. in regards to the rejection of the ~~Company. Mr. Baliff stepped down from~~purchase contract for 22 H175 helicopters. On October 3, 2019, the ~~position of President effective November 9, 2018, while continuing~~Bankruptcy Court entered an order approving the agreement with Airbus Helicopters S.A.S. to ~~serve as Chief Executive Officer. Thomas N. Amonett, Vice-Chairman~~reject our aircraft purchase contract for the 22 H175 helicopters. As a result of the ~~Board of Directors of Bristow (the “Board”), was appointed to serve as the interim President~~rejection of the ~~Company during~~purchase contract, we recorded $31.8 million of expense to reorganization items, net included on our condensed consolidated statements of operations for the CEO transition process. On February 11, 2019, the Company entered into a Retirement and Consulting Agreement (the “Retirement and Consulting Agreement”) with Mr. Baliff. Under the Retirement and Consulting Agreement, Mr. Baliff ceased to serve as Chief Executive Officer of the Company and resigned from the Board effective February 28, 2019. Effective upon Mr. Baliff’s retirement and until the appointment of a new Chief Executive Officer, the Board named Mr. Amonett, the Vice-Chairman of the Board and interim President of the Company, to the additional role of interim Chief Executive Officer.

~~For further details, see Note 8 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.~~

~~Columbia Transaction~~ — On November 9, 2018, we entered into a definitive agreement to acquire Columbia Helicopters Inc. (“Columbia”) for $496.75 million in cash and 6.2 million shares of common stock of the Company. On February 11, 2019, we announced that Bristow and Columbia had mutually agreed to terminate our agreement to acquire Columbia. In connection with the termination, we paid $20 million to Columbia. Bristow, Columbia and Columbia’s shareholders agreed to release each other from all claims in connection with the purchase agreement and the related transactions. For further details, see Note 2 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.Current Period.

Brexit — In a referendum held on June 23, 2016, voters in the U.K. approved the exit of the U.K. from the E.U. On March 29, 2017, the U.K. government commenced the exit process under Article 50 of the Treaty ~~of the~~on European Union by notifying the European Council of the U.K.’s intention to leave the E.U. This notification started a two-year time period that ended on March 29, 2019 for the U.K. and the remaining E.U. Member States to negotiate a withdrawal agreement. The U.K. and the E.U. were unable to ~~negotiate~~conclude and ratify a formal withdrawal agreement, and the Brexit date was extended until April 12, 2019 and further extended until October 31, 2019 and extended again until January 31, 2020, although Brexit may become effective before such date under certain specified circumstances. ~~Negotiations remain ongoing~~Further negotiations are required to determine the future terms of the U.K.’s relationship with the E.U. The impact on the Company’s business as a result of Brexit will depend, in part, on the outcome of tariff, trade, regulatory and other negotiations.

As a result of the referendum and the uncertainty that has followed, the global markets and currencies have been adversely impacted, including a sharp decline in the value of the British pound sterling as compared to the U.S. dollar. Volatility in exchange rates resulting from Brexit is expected to continue in the short term as the U.K. ~~negotiates~~seeks to ratify its terms of exit from the E.U., subject to the outcome of a U.K. general election on December 12, 2019. In addition, Brexit could create uncertainty with respect to the legal and regulatory requirements to which we and our customers in the U.K. are subject and lead to potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate, and those laws and regulations may be cumbersome, difficult or costly in terms of compliance. Any of these effects of Brexit, among others, could have a material adverse effect on our current business and future growth.

~~Loss on impairment~~ — Prior to the three months ended September 30, 2018, we had been actively marketing our H225 aircraft with the expectation of a substantial return of the aircraft to oil and gas service. However, market conditions and more significantly, the recent development of alternative opportunities outside of our traditional oil and gas service for our H225 aircraft and our decision to pursue those opportunities during the three months ended September 30, 2018, indicated a substantial return to oil and gas service within our operations was not likely. Therefore, during the three months ended September 30, 2018, we concluded that cash flows associated with our H225 helicopters were largely independent from the cash flows associated with the remainder of our oil and gas related property and equipment (“oil and gas asset group”) and should be tested for impairment as a stand-alone asset group. In accordance with Accounting Standard Codification (“ASC”) 360-10, we performed an impairment analysis for our stand-alone H225 asset group and determined that the forecasted cash flows over the remaining useful life of the asset group were insufficient to recover the carrying value of the asset group. We determined the fair value of the H225 asset group to be $116.4 million and recorded an impairment charge of $87.5 million during the three months ended September 30, 2018. In addition, we performed a review of our H225 aircraft related inventory and recorded an impairment charge of $8.9 million during the three months ended September 30, 2018 to record the inventory at the lower of cost or net realizable value.

The removal of the H225 aircraft from our oil and gas asset group and changes in our forecasted cash flows for that asset group during the three months ended September 30, 2018 indicated the need for the performance of a recoverability analysis of the oil and gas asset group. In accordance with ASC 360-10, we estimate future undiscounted cash flows to test the recoverability of our oil and gas asset group, which largely consists of our oil and gas related held for use aircraft. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs, including assumptions related to projected demand for services, rates and anticipated aircraft disposal values. We determined that the estimated future undiscounted cash flows exceeded the carrying value for our oil and gas asset group as of September 30, 2018, and no impairment was recorded on these assets. Future declines in operating performance, aircraft disposal values, anticipated business outlook, or projected aircraft deliveries currently accounted for as construction in progress may reduce our estimated future undiscounted cash flows and result in impairment of our oil and gas asset group.

In addition, changes in our forecasted cash flows during the three months ended September 30, 2018 indicated the need for the performance of a recoverability analysis for the airline related assets of Eastern Airways. In accordance with ASC 360-10, we estimate future undiscounted cash flows to test the recoverability of the airline related assets of Eastern Airways for potential impairment. In accordance with ASC 360-10-35, we estimate future undiscounted cash flows to test the recoverability of the assets, which largely consists of our held for use aircraft and related rotable spare parts. The determination of estimated future undiscounted cash flows required us to use significant unobservable inputs, including assumptions related to projected demand for services and rates. We determined that the estimated future undiscounted cash flows were below the carrying value for our airline related assets of Eastern Airways as of September 30, 2018. We determined the fair value of the asset group to be $20.5 million and recorded an impairment charge of $17.5 million during the three months ended September 30, 2018. As part of our impairment review of the airline assets of Eastern Airways during the three months ended September 30, 2018, we recorded impairments of $3.0 million related to the remaining intangible assets and $0.3 million related to inventory.

~~No further triggers to review our assets for impairment exist as of December 31, 2018.~~

~~ABL Facility~~ — On April 17, 2018, two of our subsidiaries entered into the ABL Facility as discussed in Note 5 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

~~Tax Cuts and Jobs Act~~ — In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the tax legislation commonly known as the Tax Cuts and Jobs Act (the “Act”). The measurement period ends when a company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond December 22, 2018. Consistent with guidance in SAB 118, during the three months ended December 31, 2018, we made the following adjustments to the provisional amounts: (1) an additional $19.0 million of benefit from the revaluation of net deferred tax liabilities to reflect the impact of the change in the tax rate, (2) $30.7 million of additional expense related to the one-time transition tax on certain unrepatriated earnings of foreign subsidiaries, and (3) a valuation allowance against our foreign tax credits of $30.4 million resulting from unfavorable guidance recently released. As a result, we utilized $121.5 million of our existing net operating losses in lieu of foreign tax credits. We believe the provisions included in the new guidance adversely impact our ability to benefit from our existing foreign tax credit carryforwards.

~~Fleet updates~~ — As previously reported, on April 29, 2016, another company’s EC 225LP (also known as an H225LP) model helicopter crashed near Turøy outside of Bergen, Norway resulting in the European Aviation Safety Agency issuing airworthiness directives prohibiting flight of H225LP and AS332L2 model aircraft. On July 20, 2017, the U.K. CAA and NCAA issued safety and operational directives which detail the conditions to apply for the safe return to service of H225LP and AS332L2 model aircraft, where operators wish to do so. On July 5, 2018, the Accident Investigation Board Norway issued its final investigation report on the accident. The report cited a fatigue fracture within the epicyclic module of the main gear box as the cause of the accident, and issued safety recommendations in a number of areas, including gearbox design and certification requirements, failure tolerance, and continued airworthiness of the AS332L2 and the H225LP helicopters. We continue not to operate for commercial purposes our H225LP model aircraft, and we are carefully evaluating next steps for the H225LP model aircraft in our operations worldwide, with the safety of passengers and crews remaining our highest priority. Recent third-party market transactions and the development of alternative opportunities outside of our traditional oil and gas services for our H225 aircraft indicated a substantial return to oil and gas service within our operations was not likely. See ~~Loss on Impairment~~ ~~above for further details.~~

Separately, our efforts to successfully integrate AW189 aircraft into service for the U.K. SAR contract continue with the fifth and final base operational on May 1, 2019. As a result of the delays due to a product improvement plan with the aircraft, the acceptance of four AW189 aircraft were pushed to later dates. We continue to meet our contractual obligations under the U.K. SAR contract through the utilization of other aircraft.

During fiscal year 2018, we reached agreements with OEMs to recover $136.0 million related to ongoing aircraft issues mentioned above, of which $125.0 million was recovered during fiscal year 2018 and $11.0 million was recovered during the Current Period. For further details on the accounting treatment, see Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Selected Regional Perspectives

We own an approximate 20% voting interest and a 41.9% economic interest in Líder, a provider of helicopter and executive aviation services in Brazil. Brazil represents a significant part of long term helicopter industry demand due to its concentration and size of its offshore oil reserves. However, in the short term, Brazil and, specifically, Petrobras continue to evidence uncertainty as the price of oil and Petrobras’ restructuring efforts have impacted the helicopter industry. The Brazilian government has revisited the regulations on the oil and gas industry and made significant changes to the Brazilian market, including removing the requirement that Petrobras have 30% participation on all exploratory blocks, removing the requirement that Petrobras be the operator of all pre-salt blocks and approving the next round of licensing for new exploration blocks (six years after the last successful round). In addition, the Brazilian government is currently reviewing local content requirements, which has led other operators (including international oil companies) to initiate drilling activities. Petrobras’ new management has implemented a five-year business and management plan focused on divestment, mostly of its non-core businesses. Overall, the long-term Brazilian market outlook has

improved with future opportunities for growth although Líder faces significant competition from a number of global and local helicopter service providers.

Líder’s management has significantly decreased their future financial projections as a result of recent tender awards announced by Petrobras. Petrobras represented 64% and 66% of Líder’s operating revenue in calendar years 2017 and 2016, respectively. This significant decline in future forecasted results, coupled with previous declining financial results, triggered our review of our investment in Líder for potential impairment as of March 31, 2018. Based on the estimated fair value of our investment, we recorded an $85.7 million impairment as of March 31, 2018. Our ~~remaining~~ investment in Líder as of ~~December 31, 2018~~September 30, 2019 is ~~$52.7~~$44.6 million. ~~Despite this impairment driven by an overall reduction in financial performance, Líder’s management expects to benefit from the recovery in the Brazilian market over the long-term.~~ As of ~~December 31, 2018,~~September 30, 2019, we have no aircraft on lease to Líder. In addition to uncertainty surrounding future financial performance, currency fluctuations continue to make it difficult to predict the earnings from our Líder investment. These currency fluctuations, which primarily do not impact Líder’s cash flow from operations, had a significant negative impact on Líder’s results in recent years, impacting our earnings ~~(losses)~~ from unconsolidated affiliates. Earnings ~~(losses)~~ from unconsolidated affiliates, net of losses, on our consolidated statements of operations, is included in calculating adjusted EBITDA, adjusted net income (loss) and adjusted diluted earnings (loss) per share.

We are subject to competition and the political environment in the countries where we operate. In Nigeria, we have seen an increase in competitive pressure and the application of existing local content regulations that could impact our ability to win future work at levels previously anticipated. In order to properly and fully embrace new regulations, we have made a number of key changes to our operating model in Nigeria, while maintaining safety as our number one priority at all times. The objectives of these changes being (a) enhancing the level of continued compliance by each of Bristow Helicopters Nigeria Ltd. (“BHNL”) and Pan African Airlines Nigeria Ltd. (“PAAN”) with local content regulations, (b) the streamlining of our operations in Nigeria, including an ongoing consolidation of operations of BHNL and BGI Aviation Technical Services Nigeria Limited ~~(“BATS”)~~ in order to achieve cost savings and efficiencies in our operations, and (c) each of BHNL and PAAN committing to continue to apply and use all key Bristow Group standards and policies, including without limitation our Target Zero safety program, our Code of Business Integrity and our Operations Manuals. As a result of these changes, our ability to continue to consolidate BHNL and PAAN under the current accounting requirements could change.

The operating results of Airnorth have declined during fiscal year 2019. Continuing declines or negative trends in operating results could lead to an impairment of goodwill, which as of December 31, 2018, was approximately $18.3 million. Management continues to monitor and analyze the results of Airnorth and at this time has concluded that no triggering event has occurred and will reassess as of March 31, 2019.

We conduct business in various foreign countries, and as such, our cash flows and earnings are subject to fluctuations and related risks from changes in foreign currency exchange rates. During the Current ~~Quarter,~~Period, our primary foreign currency exposure was related to the British pound sterling, the euro, the Australian dollar, the Norwegian kroner and the Nigerian naira and our unconsolidated affiliates foreign currency exposure is primarily related to the Brazilian real. For further details on this exposure and the related impact on our results of operations, see “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in ~~our~~the fiscal year ~~2018~~2019 Annual Report and Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Results of Operations

The following table presents our operating results and other statement of operations information for the applicable periods:


	Three Months Ended December 31,						Favorable (Unfavorable)					Three Months Ended September 30,						Favorable (Unfavorable)

	2018			2017								2019			2018

	(In thousands, except per share amounts, percentages and flight hours)											(In thousands, except per share amounts, percentages and flight hours)
Revenue:
Operating revenue	$	317,091		$	345,528		$	(28,437	)	(8.2	)%	$	304,684		$	333,397		$	(28,713	)	(8.6	)%
Reimbursable revenue	14,238			15,207			(969		)	(6.4	)%	13,536			15,946			(2,410		)	(15.1	)%
Total revenue	331,329			360,735			(29,406		)	(8.2	)%	318,220			349,343			(31,123		)	(8.9	)%

Operating expense:
Direct cost	262,039			271,894			9,855			3.6	%	236,655			277,217			40,562			14.6	%
Reimbursable expense	13,862			14,725			863			5.9	%	12,840			15,194			2,354			15.5	%
Depreciation and amortization	30,615			31,682			1,067			3.4	%	31,303			30,489			(814		)	(2.7	)%
General and administrative	40,742			43,366			2,624			6.1	%	37,820			38,839			1,019			2.6	%
Total operating expense	347,258			361,667			14,409			4.0	%	318,618			361,739			43,121			11.9	%

Loss on impairment												(62,101		)	(117,220		)	55,119			47.0	%
Loss on disposal of assets	(16,015		)	(4,591		)	(11,424		)	(248.8	)%	(230		)	(1,293		)	1,063			82.2	%
Earnings (losses) from unconsolidated affiliates, net	780			1,996			(1,216		)	(60.9	)%
Earnings from unconsolidated affiliates, net of losses												633			1,461			(828		)	(56.7	)%

Operating loss	(31,164		)	(3,527		)	(27,637		)	*		(62,096		)	(129,448		)	67,352			52.0	%

Interest expense, net	(27,113		)	(19,093		)	(8,020		)	(42.0	)%	(22,445		)	(26,433		)	3,988			15.1	%
Reorganization items, net												(93,943		)	—			(93,943		)	*
Gain on sale of subsidiaries												420			—			420			*
Other income (expense), net	(3,660		)	(736		)	(2,924		)	(397.3	)%	(6,637		)	(3,204		)	(3,433		)	(107.1	)%

Loss before benefit (provision) for income taxes	(61,937		)	(23,356		)	(38,581		)	(165.2	)%
Benefit (provision) for income taxes	(23,764		)	13,419			(37,183		)	*
Loss before benefit for income taxes												(184,701		)	(159,085		)	(25,616		)	(16.1	)%
Benefit for income taxes												21,782			15,655			6,127			39.1	%

Net loss	(85,701		)	(9,937		)	(75,764		)	*		(162,919		)	(143,430		)	(19,489		)	(13.6	)%
Net (income) loss attributable to noncontrolling interests	(243		)	1,664			(1,907		)	*
Net income attributable to noncontrolling interests												(55		)	(517		)	462			89.4	%
Net loss attributable to Bristow Group	$	(85,944	)	$	(8,273	)	$	(77,671	)	*		$	(162,974	)	$	(143,947	)	$	(19,027	)	(13.2	)%

Diluted loss per common share	$	(2.40	)	$	(0.23	)	$	(2.17	)	*		$	(4.54	)	$	(4.02	)	$	(0.52	)	(12.9	)%
Operating margin ⁽¹⁾	(9.8		)%	(1.0		)%	(8.8		)%	*		(20.4		)%	(38.8		)%	18.4		%	47.4	%
Flight hours ⁽²⁾	39,800			44,952			(5,152		)	(11.5	)%	35,827			42,002			(6,175		)	(14.7	)%

Non-GAAP financial measures: ⁽³⁾
Adjusted EBITDA	$	23,643		$	34,964		$	(11,321	)	(32.4	)%	$	27,704		$	21,553		$	6,151		28.5	%
Adjusted EBITDA margin ⁽¹⁾	7.5		%	10.1		%	(2.6		)%	(25.7	)%	9.1		%	6.5		%	2.6		%	40.0	%
Adjusted net loss	$	(20,259	)	$	(18,450	)	$	(1,809	)	(9.8	)%	$	(22,065	)	$	(27,761	)	$	5,696		20.5	%
Adjusted diluted loss per share	$	(0.57	)	$	(0.52	)	$	(0.05	)	(9.6	)%	$	(0.61	)	$	(0.78	)	$	0.17		21.8	%



	Nine Months Ended December 31,						Favorable (Unfavorable)					Six Months Ended September 30,						Favorable (Unfavorable)

	2018			2017								2019			2018

	(In thousands, except per share amounts, percentages and flight hours)											(In thousands, except per share amounts, percentages and flight hours)
Gross revenue:
Operating revenue	$	1,002,789		$	1,043,249		$	(40,460	)	(3.9	)%	$	621,260		$	683,158		$	(61,898	)	(9.1	)%
Reimbursable revenue	47,091			43,271			3,820			8.8	%	30,136			32,853			(2,717		)	(8.3	)%
Total gross revenue	1,049,880			1,086,520			(36,640		)	(3.4	)%	651,396			716,011			(64,615		)	(9.0	)%

Operating expense:
Direct cost	819,307			842,216			22,909			2.7	%	494,414			557,268			62,854			11.3	%
Reimbursable expense	44,960			42,365			(2,595		)	(6.1	)%	28,974			31,098			2,124			6.8	%
Prepetition restructuring charges												13,476			—			(13,476		)	*
Depreciation and amortization	92,045			94,119			2,074			2.2	%	62,642			61,430			(1,212		)	(2.0	)%
General and administrative	119,682			138,695			19,013			13.7	%	72,590			78,940			6,350			8.0	%
Total operating expense	1,075,994			1,117,395			41,401			3.7	%	672,096			728,736			56,640			7.8	%

Loss on impairment	(117,220		)	(1,192		)	(116,028		)	*		(62,101		)	(117,220		)	55,119			*
Loss on disposal of assets	(18,986		)	(12,418		)	(6,568		)	(52.9	)%	(4,017		)	(2,971		)	(1,046		)	(35.2	)%
Earnings (losses) from unconsolidated affiliates, net	(2,333		)	3,394			(5,727		)	*
Earnings from unconsolidated affiliates, net of losses												2,980			(86		)	3,066			*

Operating loss	(164,653		)	(41,091		)	(123,562		)	(300.7	)%	(83,838		)	(133,002		)	49,164			37.0	%

Interest expense, net	(80,690		)	(53,677		)	(27,013		)	(50.3	)%	(48,766		)	(53,577		)	4,811			9.0	%
Reorganization items, net												(170,299		)	—			(170,299		)	*
Loss on sale of subsidiaries												(55,883		)	—			(55,883		)	*
Other income (expense), net	(10,814		)	235			(11,049		)	*		(10,510		)	(7,154		)	(3,356		)	(46.9	)%

Loss before provision for income taxes	(256,157		)	(94,533		)	(161,624		)	(171.0	)%
Benefit (provision) for income taxes	(5,258		)	(2,546		)	(2,712		)	(106.5	)%
Loss before benefit for income taxes												(369,296		)	(193,733		)	(175,563		)	(90.6	)%
Benefit for income taxes												37,289			18,506			18,783			101.5	%

Net loss	(261,415		)	(97,079		)	(164,336		)	(169.3	)%	(332,007		)	(175,227		)	(156,780		)	(89.5	)%
Net income (loss) attributable to noncontrolling interests	(827		)	2,322			(3,149		)	*
Net income attributable to noncontrolling interests												(213		)	(584		)	371			63.5	%
Net loss attributable to Bristow Group	$	(262,242	)	$	(94,757	)	$	(167,485	)	(176.8	)%	$	(332,220	)	$	(175,811	)	$	(156,409	)	(89.0	)%

Diluted loss per common share	$	(7.34	)	$	(2.69	)	$	(4.65	)	(172.9	)%	$	(9.25	)	$	(4.93	)	$	(4.32	)	(87.6	)%
Operating margin ⁽¹⁾	(16.4		)%	(3.9		)%	(12.5		)%	(320.5	)%	(13.5		)%	(19.5		)%	6.0		%	30.8	%
Flight hours ⁽²⁾	125,005			135,124			(10,119		)	(7.5	)%	74,946			85,205			(10,259		)	(12.0	)%

Non-GAAP financial measures: ⁽³⁾
Adjusted EBITDA	$	71,722		$	82,545		$	(10,823	)	(13.1	)%	$	63,539		$	48,566		$	14,973		30.8	%
Adjusted EBITDA margin ⁽¹⁾	7.2		%	7.9		%	(0.7		)%	(8.9	)%	10.2		%	7.1		%	3.1		%	43.7	%
Adjusted net loss	$	(77,386	)	$	(59,198	)	$	(18,188	)	(30.7	)%	$	(38,778	)	$	(56,640	)	$	17,862		31.5	%
Adjusted diluted loss per share	$	(2.17	)	$	(1.68	)	$	(0.49	)	(29.2	)%	$	(1.08	)	$	(1.59	)	$	0.51		32.1	%

_____________

* percentage change too large to be meaningful or not applicable


⁽¹⁾	Operating margin is calculated as operating ~~income (loss)~~loss divided by operating revenue. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by operating revenue.

⁽²⁾

Excludes flight hours from ~~Bristow Academy and~~ unconsolidated affiliates. Includes flight hours from ~~Eastern Airways and Airnorth~~ fixed wing operations in the U.K., Nigeria and Australia for the ~~Current Quarter~~three months ended September 30, 2019 and ~~Comparable Quarter~~2018 totaling ~~8,179~~3,594 and ~~11,246,~~9,676, respectively, and totaling ~~28,508~~9,094 and ~~32,923, respectively,~~20,329 for the ~~Current Period~~six months ended September 30, 2019 and ~~Comparable Period.~~2018, respectively.

⁽³⁾

These financial measures have not been prepared in accordance with generally accepted accounting principles (“GAAP”) and have not been audited or reviewed by our independent registered public accounting firm. These financial measures are therefore considered non-GAAP financial measures. Adjusted EBITDA is calculated by taking our net income (loss) and adjusting for interest expense, depreciation and amortization, benefit (provision) for income taxes, gain (loss) on disposal of assets and any special items during the reported periods. See further discussion of our use of the adjusted EBITDA metric below. Adjusted net income (loss) and adjusted diluted earnings (loss) per share are each adjusted for gain (loss) on disposal of assets and any special items during the reported periods. As discussed below, management believes these non-GAAP financial measures provide meaningful supplemental information regarding our results of operations. A description of the adjustments to and reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures is as follows:


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018

	(In thousands, except percentages and per share amounts)												(In thousands, except percentages and per share amounts)
Net loss	$	(85,701	)	$	(9,937	)	$	(261,415	)	$	(97,079	)	$	(162,919	)	$	(143,430	)	$	(332,007	)	$	(175,227	)
Loss on disposal of assets	16,015			4,591			18,986			12,418			230			1,293			4,017			2,971
Special items ⁽ⁱ⁾	9,568			2,810			132,481			16,352			158,157			121,194			316,753			122,913
Depreciation and amortization	30,615			31,682			92,045			94,119			31,303			30,489			62,642			61,430
Interest expense	29,382			19,237			84,367			54,189			22,715			27,662			49,423			54,985
(Benefit) provision for income taxes	23,764			(13,419		)	5,258			2,546
Benefit for income taxes													(21,782		)	(15,655		)	(37,289		)	(18,506		)
Adjusted EBITDA	$	23,643		$	34,964		$	71,722		$	82,545		$	27,704		$	21,553		$	63,539		$	48,566

Benefit (provision) for income taxes	$	(23,764	)	$	13,419		$	(5,258	)	$	(2,546	)
Tax provision (benefit) on loss on disposal of assets	(3,540		)	(2,130		)	(3,840		)	8,061
Tax provision (benefit) on special items	43,642			(15,448		)	37,229			(1,272		)
Adjusted benefit (provision) for income taxes	$	16,338		$	(4,159	)	$	28,131		$	4,243
Benefit for income taxes													$	21,782		$	15,655		$	37,289		$	18,506
Tax expense (benefit) on loss on disposal of assets													(79		)	104			(179		)	(300		)
Tax benefit on special items													(19,297		)	(6,405		)	(31,672		)	(6,413		)
Adjusted benefit for income taxes													$	2,406		$	9,354		$	5,438		$	11,793

Effective tax rate ⁽ⁱⁱ⁾	(38.4		)%	57.5		%	(2.1		)%	(2.7		)%	11.8		%	9.8		%	10.1		%	9.6		%
Adjusted effective tax rate ⁽ⁱⁱ⁾	44.9		%	(26.1		)%	26.9		%	6.5		%	9.9		%	25.6		%	12.4		%	17.4		%

Net loss attributable to Bristow Group	$	(85,944	)	$	(8,273	)	$	(262,242	)	$	(94,757	)	$	(162,974	)	$	(143,947	)	$	(332,220	)	$	(175,811	)
Loss on disposal of assets ⁽ⁱⁱⁱ⁾	12,475			2,461			15,146			20,479			151			1,397			3,838			2,671
Special items ^{(i) (iii)}	53,210			(12,638		)	169,710			15,080			140,758			114,789			289,604			116,500
Adjusted net loss	$	(20,259	)	$	(18,450	)	$	(77,386	)	$	(59,198	)	$	(22,065	)	$	(27,761	)	$	(38,778	)	$	(56,640	)

Diluted loss per share	$	(2.40	)	$	(0.23	)	$	(7.34	)	$	(2.69	)	$	(4.54	)	$	(4.02	)	$	(9.25	)	$	(4.93	)
Loss on disposal of assets ⁽ⁱⁱⁱ⁾	0.35			0.07			0.42			0.58			—			0.04			0.11			0.07
Special items ^{(i) (iii)}	1.49			(0.36		)	4.75			0.43			3.92			3.21			8.06			3.26
Adjusted diluted loss per share ^(iv)	(0.57		)	(0.52		)	(2.17		)	(1.68		)	(0.61		)	(0.78		)	(1.08		)	(1.59		)

_____________


⁽ⁱ⁾	See information about special items during the Current Quarter and Comparable Quarter under “— Current Quarter Compared to Comparable Quarter” and Current Period and Comparable Period under “— Current Period Compared to Comparable Period”below.

⁽ⁱⁱ⁾

Effective tax rate is calculated by dividing benefit (provision) for income tax by pretax net loss. Adjusted effective tax rate is calculated by dividing adjusted benefit (provision) for income tax by adjusted pretax net loss. Tax provision (benefit) on loss on disposal of assets and tax provision (benefit) on special items is calculated using the statutory rate of the entity recording the loss on disposal of assets or special item.


⁽ⁱⁱⁱ⁾	These amounts are presented after applying the appropriate tax effect to each item and dividing by the weighted average shares outstanding during the related period to calculate the earnings per share impact.


^(iv)	Adjusted diluted ~~loss~~earnings per share is calculated using the diluted weighted average number of shares outstanding of ~~35,798,185~~35,918,916 and ~~35,368,212~~35,768,232 during the Current Quarter and Comparable Quarter, respectively, and of ~~35,712,735~~35,918,916 and ~~35,260,746~~35,685,388 during the Current Period and Comparable Period, respectively.

Management believes that adjusted EBITDA, adjusted benefit for income taxes, adjusted net loss and adjusted diluted loss per share (collectively, the “Non-GAAP measures”) provide relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and regional performance.

Adjusted EBITDA provides us with an understanding of one aspect of earnings before the impact of investing and financing transactions and income taxes. Adjusted EBITDA should not be considered a measure of discretionary cash available to us for investing in the growth of our business.

As prescribed by the SEC, when adjusted EBITDA is discussed in reference to performance on a consolidated basis, the most directly comparable GAAP financial measure to adjusted EBITDA is net income (loss). Management does not analyze interest expense and income taxes on a regional level; therefore, the most directly comparable GAAP financial measure to adjusted EBITDA when performance is discussed on a regional level is operating income (loss).

Adjusted net loss and adjusted diluted loss per share present our consolidated results excluding asset dispositions and special items that do not reflect the ordinary earnings of our operations. Adjusted benefit (provision) for income taxes excludes the tax impact of these items. We believe that these measures are useful supplemental measures because net loss and diluted loss per share include asset disposition effects and special items and benefit (provision) for income taxes include the tax impact of these items, and inclusion of these items does not reflect the ongoing operational earnings of our business.

The Non-GAAP measures are not calculated or presented in accordance with GAAP and other companies in our industry may calculate these measures differently than we do. As a result, these financial measures have limitations as analytical and comparative tools and you should not consider these measures in isolation, or as a substitute for analysis of our results as reported under GAAP. In calculating these financial measures, we make certain adjustments that are based on assumptions and estimates that may prove to be inaccurate. In addition, in evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in this presentation. Our presentation of the Non-GAAP measures should not be construed as an inference that our future results will be unaffected by unusual or special items.

Some of the additional limitations of adjusted EBITDA are:

Adjusted EBITDA does not reflect our current or future cash requirements for capital expenditures;

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debts; and

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacements.

The following tables present region adjusted EBITDA and adjusted EBITDA margin discussed in “— Region Operating Results,” and consolidated adjusted EBITDA and adjusted EBITDA margin for the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019 and ~~2017:~~2018:


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018

	(In thousands, except percentages)												(In thousands, except percentages)
Europe Caspian	$	14,068		$	18,614		$	62,727		$	58,716		$	16,033		$	19,865		$	37,854		$	48,659
Africa	8,639			14,206			19,063			40,206			12,392			5,105			24,910			10,424
Americas	11,892			12,689			20,446			33,430			11,471			9,204			22,245			9,041
Asia Pacific	(3,411		)	4,797			(4,325		)	502			2,159			(3,000		)	3,387			(914		)
Corporate and other	(7,545		)	(15,342		)	(26,189		)	(50,309		)	(14,351		)	(9,621		)	(24,857		)	(18,644		)
Consolidated adjusted EBITDA	$	23,643		$	34,964		$	71,722		$	82,545		$	27,704		$	21,553		$	63,539		$	48,566

Europe Caspian	7.8		%	9.8		%	10.7		%	10.3		%	9.3		%	10.2		%	10.7		%	12.0		%
Africa	20.9		%	29.6		%	16.8		%	27.4		%	27.4		%	13.7		%	26.9		%	14.4		%
Americas	20.7		%	21.0		%	12.1		%	18.7		%	18.8		%	16.2		%	18.8		%	8.3		%
Asia Pacific	(8.5		)%	9.5		%	(3.1		)%	0.3		%	8.0		%	(6.4		)%	5.5		%	(0.9		)%
Consolidated adjusted EBITDA margin	7.5		%	10.1		%	7.2		%	7.9		%	9.1		%	6.5		%	10.2		%	7.1		%

The following table presents reconciliation of adjusted EBITDA by region and adjusted EBITDA margin and rent expense by region for the three months ended ~~December 31, 2018:~~September 30, 2019:


	Europe Caspian			Africa			Americas			Asia Pacific			Corporate and other			Loss on disposal of assets				Total			Europe Caspian			Africa			Americas			Asia Pacific			Corporate and other			Loss on disposal of assets			Total

	(In thousands, except percentages)																						(In thousands, except percentages)
Operating income (loss)	$	3,342		$	5,286		$	4,412		$	(6,654	)	$	(21,535	)	$	(16,015	)		$	(31,164	)	$	11,224		$	6,528		$	3,527		$	(19,848	)	$	(63,297	)	$	(230	)	$	(62,096	)
Depreciation and amortization expense	13,041			3,732			7,108			3,812			2,922							30,615			12,395			5,007			7,590			2,970			3,341						31,303
Interest income	36			1			—			15			2,217							2,269			45			2			1			9			213						270
Other income (expense), net	(2,949		)	(380		)	320			(2,343		)	1,692							(3,660		)	(7,635		)	855			353			(1,005		)	795						(6,637		)
Special items and loss on disposal of assets	598			—			52			1,759			7,159			16,015				25,583			4			—			—			20,033			44,597			230			64,864
Adjusted EBITDA	$	14,068		$	8,639		$	11,892		$	(3,411	)	$	(7,545	)	$	—			$	23,643		$	16,033		$	12,392		$	11,471		$	2,159		$	(14,351	)	$	—		$	27,704

Adjusted EBITDA margin	7.8		%	20.9		%	20.7		%	(8.5		)%								7.5		%	9.3		%	27.4		%	18.8		%	8.0		%							9.1		%

Rent expense	$	30,262		$	2,677		$	5,641		$	7,927		$	1,648					��	$	48,155		$	26,461		$	3,024		$	3,711		$	3,370		$	1,689					$	38,255

The following table presents reconciliation of adjusted EBITDA by region and adjusted EBITDA margin and rent expense by region for the three months ended ~~December 31, 2017:~~September 30, 2018:


	Europe Caspian			Africa			Americas			Asia Pacific			Corporate and other			Loss on disposal of assets			Total			Europe Caspian			Africa			Americas			Asia Pacific			Corporate and other			Loss on disposal of assets			Total

	(In thousands, except percentages)																					(In thousands, except percentages)
Operating income (loss)	$	5,274		$	10,470		$	5,308		$	(941	)	$	(19,047	)	$	(4,591	)	$	(3,527	)	$	(11,414	)	$	1,465		$	2,056		$	(6,988	)	$	(113,274	)	$	(1,293	)	$	(129,448	)
Depreciation and amortization expense	12,771			3,664			6,909			4,479			3,859						31,682			12,189			3,665			7,310			4,054			3,271						30,489
Interest income	3			5			26			28			82						144			18			2			1			34			1,174						1,229
Other income (expense), net	(151		)	(400		)	358			(276		)	(267		)				(736		)	(1,836		)	(27		)	(332		)	(1,123		)	114						(3,204		)
Special items and loss on disposal of assets	717			467			88			1,507			31			4,591			7,401			20,908			—			169			1,023			99,094			1,293			122,487
Adjusted EBITDA	$	18,614		$	14,206		$	12,689		$	4,797		$	(15,342	)	$	—		$	34,964		$	19,865		$	5,105		$	9,204		$	(3,000	)	$	(9,621	)	$	—		$	21,553

Adjusted EBITDA margin	9.8		%	29.6		%	21.0		%	9.5		%							10.1		%	10.2		%	13.7		%	16.2		%	(6.4		)%							6.5		%

Rent expense	$	29,499		$	2,048		$	6,295		$	2,807		$	1,971					$	42,620		$	31,179		$	2,146		$	6,334		$	8,281		$	1,651					$	49,591

The following table presents reconciliation of adjusted EBITDA by region and adjusted EBITDA margin and rent expense by region for the ~~nine~~six months ended ~~December 31, 2018:~~September 30, 2019:


	Europe Caspian			Africa			Americas			Asia Pacific			Corporate and other			Loss on disposal of assets			Total			Europe Caspian			Africa			Americas			Asia Pacific			Corporate and other			Loss on disposal of assets			Total

	(In thousands, except percentages)																					(In thousands, except percentages)
Operating income (loss)	$	13,856		$	7,892		$	(1,362	)	$	(14,613	)	$	(151,440	)	$	(18,986	)	$	(164,653	)	$	23,031		$	14,273		$	7,095		$	(32,282	)	$	(91,938	)	$	(4,017	)	$	(83,838	)
Depreciation and amortization expense	37,985			10,811			21,299			12,221			9,729						92,045			24,834			9,998			14,470			6,691			6,649						62,642
Interest income	68			4			2			67			3,536						3,677			78			17			1			24			537						657
Other income (expense), net	(11,076		)	356			249			(6,076		)	5,733						(10,814		)	(12,358		)	622			679			(1,275		)	1,822						(10,510		)
Special items and loss on disposal of assets	21,894			—			258			4,076			106,253			18,986			151,467			2,269			—			—			30,229			58,073			4,017			94,588
Adjusted EBITDA	$	62,727		$	19,063		$	20,446		$	(4,325	)	$	(26,189	)	$	—		$	71,722		$	37,854		$	24,910		$	22,245		$	3,387		$	(24,857	)	$	—		$	63,539

Adjusted EBITDA margin	10.7		%	16.8		%	12.1		%	(3.1		)%							7.2		%	10.7		%	26.9		%	18.8		%	5.5		%							10.2		%

Rent expense	$	93,437		$	6,945		$	18,573		$	24,325		$	4,547					$	147,827		$	55,292		$	6,701		$	8,288		$	17,140		$	3,023					$	90,444


	Europe Caspian			Africa			Americas			Asia Pacific			Corporate and other			Loss on disposal of assets			Total			Europe Caspian			Africa			Americas			Asia Pacific			Corporate and other			Loss on disposal of assets			Total

	(In thousands, except percentages)																					(In thousands, except percentages)
Operating income (loss)	$	19,499		$	28,353		$	11,535		$	(19,374	)	$	(68,686	)	$	(12,418	)	$	(41,091	)	$	10,514		$	2,606		$	(5,287	)	$	(7,959	)	$	(129,905	)	$	(2,971	)	$	(133,002	)
Depreciation and amortization expense	36,789			10,330			20,906			15,347			10,747						94,119			24,944			7,079			14,191			8,409			6,807						61,430
Interest income	9			88			79			72			264						512			32			3			2			52			1,319						1,408
Other income (expense), net	1,434			762			553			789			(3,303		)				235			(8,127		)	736			(71		)	(3,733		)	4,041						(7,154		)
Special items and loss on disposal of assets	985			673			357			3,668			10,669			12,418			28,770			21,296			—			206			2,317			99,094			2,971			125,884
Adjusted EBITDA	$	58,716		$	40,206		$	33,430		$	502		$	(50,309	)	$	—		$	82,545		$	48,659		$	10,424		$	9,041		$	(914	)	$	(18,644	)	$	—		$	48,566

Adjusted EBITDA margin	10.3		%	27.4		%	18.7		%	0.3		%							7.9		%	12.0		%	14.4		%	8.3		%	(0.9		)%							7.1		%

Rent expense	$	102,803		$	6,424		$	18,480		$	24,356		$	6,456					$	158,519		$	63,175		$	4,268		$	12,932		$	16,398		$	2,899					$	99,672

Current Quarter Compared to Comparable Quarter

Operating revenue from external customers by line of service was as follows:


	Three Months Ended December 31,				Favorable (Unfavorable)					Three Months Ended September 30,				Favorable (Unfavorable)
	2018		2017		Favorable (Unfavorable)					2019		2018		Favorable (Unfavorable)

	(In thousands, except percentages)									(In thousands, except percentages)
Oil and gas services	$	216,106	$	236,655	$	(20,549	)	(8.7	)%	$	222,200	$	219,766	$	2,434		1.1	%
U.K. SAR services	54,346		55,659		(1,313		)	(2.4	)%	54,499		56,928		(2,429		)	(4.3	)%
Fixed wing services	46,173		52,476		(6,303		)	(12.0	)%	27,975		55,996		(28,021		)	(50.0	)%
Corporate and other	466		738		(272		)	(36.9	)%	10		707		(697		)	(98.6	)%
Total operating revenue	$	317,091	$	345,528	$	(28,437	)	(8.2	)%	$	304,684	$	333,397	$	(28,713	)	(8.6	)%

The year-over-year decrease in operating revenue was primarily driven by a $28.1 million decrease in fixed wing services revenue in our Europe Caspian region as a result of the sale of Eastern Airways on May 10, 2019, U.K. SAR services revenue declines, primarily as a result of unfavorable foreign currency exchange rate movements, were offset by increases in oil and gas services ~~driven~~in the Current Quarter. Oil and gas revenue increased from the Comparable Quarter primarily due to increases in our Africa, America and Europe Caspian regions primarily from increases in activity partially offset by ~~decreased flight activity~~a decrease in our Asia Pacific region ~~our Canada operations within our Americas region, and our Africa region.~~primarily from fewer customer contracts driving a decrease in activity. Also, revenue from our fixed wing services in our Europe Caspian and Asia Pacific regions declined, partially offset by an increase in operating revenue from our fixed wing services in our Africa region. Additionally, revenue decreased by ~~$7.8~~$11.4 million ~~in the Current Quarter~~ compared to the Comparable Quarter due to unfavorable changes in foreign currency exchange rates, primarily ~~in our Europe Caspian and Asia Pacific regions~~ related to the ~~strengthening~~depreciation of ~~the U.S. dollar versus~~ the British pound sterling and Australian dollar versus the U.S. dollar. ~~See further discussion of operating revenue by region under “—Region Operating Results.”~~

For the Current Quarter, we reported a net loss of ~~$85.9~~$163.0 million and a diluted loss per share of ~~$2.40~~$4.54 compared to a net loss of ~~$8.3~~$143.9 million and a diluted loss per share of ~~$0.23~~$4.02 for the Comparable Quarter.

~~The net loss for the Current Quarter was significantly impacted by the following special items:~~

Organizational restructuring costs of $2.4 million ($2.4 million net of tax), or $0.07 per share, included in direct cost and general and administrative expense, resulting from separation programs across our global organization designed to increase efficiency and reduce costs,

~~Transaction costs of~~ ~~$7.2 million~~ (~~$5.7 million~~ ~~net of tax), or~~ ~~$0.16~~ ~~per share, included in general and administrative expense, resulting from the Columbia transaction and related financing transactions, and~~

~~Non-cash tax expense of $45.2 million, or $1.26 per share, including $33.5 million from valuation allowances on deferred tax assets and $11.7 million from the Act.~~

Additionally, we realized a loss on disposal of assets of $16.0 million ($12.5 million net of tax), or $0.35 per share, during the Current Quarter primarily for contract termination costs of $14.0 million for an aircraft purchase contract that was terminated in December 2018.

The year-over-year change in net loss and diluted loss per share was primarily driven by ~~lower revenue~~the following special items for the Current Quarter:

Organizational restructuring costs of $96.5 million ($83.8 million net of tax), or $2.33 per share, including the following:


◦	Professional fees of $35.5 million ($35.5 million net of tax), or $0.99 per share, of post-petition professional fees included in reorganization items, net, on the condensed consolidated statements of operations;


◦	H175 settlement charges of $31.8 million ($25.1 million net of tax), or $0.70 per share, included in reorganization items, net on the condensed consolidated statements of operations relating to the rejection of our aircraft purchase contract for the 22 H175 helicopters;


◦	Backstop Commitment Agreement estimated fees of $19.3 million ($15.2 million net of tax), or $0.42 per share, included in reorganizations items, net, on the condensed consolidated statements of operations;


◦	Lease termination costs of $4.2 million ($3.3 million net of tax), or $0.09 per share, included in reorganization items, net, on the condensed consolidated statements of operations relating to the rejection of ten aircraft leases rejected in June 2019 including nine S-76C+s and one S-76D;


◦	Debt related expenses of $4.1 million ($3.3 million net of tax), or $0.09 per share, for fees incurred related to our $150 million DIP Credit Agreement funded in August 2019 included in reorganization items, net, on the condensed consolidated statements of operations;


◦	Severance costs of $2.5 million ($2.5 million net of tax), or $0.07 per share, included in direct costs and general and administrative expense on the condensed consolidated statements of operations; and


◦	Corporate lease termination cost of $1.1 million ($0.8 million net of tax), or $0.02 per share, included in reorganization items, net, on the condensed consolidated statements of operations.


◦	A benefit of $1.9 million ($1.9 million net of tax), or $0.05 per share, included in reorganization items, net, on the condensed consolidated statements of operations, resulting from an adjustment to the allowed claim associated with our return of four H225 model aircraft in May 2019.

Loss on impairment of $62.1 million ($53.3 million net of tax), or $1.48 per share, included in loss on impairment on the condensed consolidated statements of operations resulting from:


◦	$42.0 million impairment of H225 aircraft;


◦	$17.5 million impairment of Airnorth goodwill; and


◦	$2.6 million impairment of our investment in Sky Future Partners Limited (“Sky Future Partners”).

Write-off of a portion of the deferred financing fees and discount of $1.9 million ($1.5 million net of tax), or $0.04 per share, included in interest expense on the condensed consolidated statements of operations related to a portion of our 8.75% Senior Secured Notes which were purchased in a Tender Offer in September 2019;

Gain on sale of subsidiaries of $0.4 million ($0.4 million net of tax), or $0.01 per share, included in gain (loss) on sale of subsidiaries on the condensed consolidated statements of operations, resulting from the cash received from the sale of Aviashelf in the Current ~~Quarter as discussed above, higher interest~~Quarter.

Non-cash tax expense ~~higher~~of $2.6 million, or $0.07 per share, from valuation allowances on deferred tax assets.

Additionally, we realized a loss on disposal of assets ~~higher rent expense due to less~~ of ~~a benefit from OEM cost recoveries in~~$0.2 million ($0.2 million net of tax) during the Current Quarter as discussed below, more of a negative impact from special items in the Current Quarter compared to in the Comparable Quarter, and higher tax expense primarily due to valuation allowances on deferred tax assets, partially offset by lower general and administrative expenses.

~~The Current Quarter results benefited~~ from the ~~impact~~sale or disposal of ~~$2.0 million of OEM cost recoveries resulting in a $1.0 million reduction in rent expense (included in direct cost) and a $1.0 million reduction in direct cost.~~ other equipment.

The Comparable Quarter results benefited from the impact of ~~OEM~~$3.4 million of original equipment manufacturer (“OEM”) cost recoveries ~~related to ongoing aircraft issues~~realized in the Comparable Quarter that resulted in a ~~reduction in rent expense of $13.1 million (included in direct cost). We will recognize an additional $1.0~~$2.4 million reduction in rent expense and ~~an additional $0.3~~a $1.0 million reduction in direct cost.

Excluding the organizational restructuring costs, gain on sale of subsidiaries, benefit on H225 lease returns described above and the loss on disposal of assets, adjusted net loss and adjusted diluted loss per share were $22.1 million and $0.61, respectively, for the Current Quarter. These adjusted results compare to adjusted net loss and adjusted diluted loss per share of $27.8 million and $0.78, respectively, for the Comparable Quarter. Additionally, adjusted EBITDA improved to $27.7 million in the Current Quarter from $21.6 million in the Comparable Quarter. The benefit from the OEM cost ~~over~~recoveries described above is included within adjusted net income, adjusted earnings per share and adjusted EBITDA in the ~~remainder~~Comparable Quarter.

Adjusted EBITDA, adjusted net loss and adjusted diluted loss per share benefited from the sale of ~~fiscal year 2019~~Eastern Airways and decrease in rent expense compared to the Comparable Quarter. These items were mostly offset by the increase in foreign currency transaction losses included in other income (expense), net and increased interest expense, resulting in no significant change in adjusted net loss and adjusted diluted loss per share year-over-year.

The table below presents the year-over-year impact of changes in foreign currency exchange rates.



	Three Months Ended September 30,						Favorable (Unfavorable)
	2019			2018

	(In thousands, except per share amounts)
Revenue impact							$	(11,361	)
Operating expense impact							11,025
Year-over-year income statement translation							(336		)

Transaction losses included in other income (expense), net	$	(5,816	)	$	(2,307	)	(3,509		)
Líder foreign exchange impact included in earnings from unconsolidated affiliates	(1,596		)	(1,020		)	(576		)
Total	$	(7,412	)	$	(3,327	)	(4,085		)

Pre-tax income statement impact							(4,421		)
Less: Foreign exchange impact on depreciation and amortization and interest expense							93
Adjusted EBITDA impact							$	(4,328	)

Net income impact (tax affected)							$	(3,380	)
Earnings per share impact							$	(0.09	)

The most significant foreign exchange impact related to ~~these OEM~~a $3.5 million unfavorable impact from higher transaction losses in the Current Quarter compared to the Comparable Quarter and a $0.6 million increase in unfavorable foreign currency exchange rate impact from our investment in Líder in Brazil. Additionally, the Current Quarter included a $0.3 million unfavorable impact from changes in foreign currency exchange rates in the Current Quarter primarily driven by the impact of the depreciating British pound sterling on the translation of our results in our Europe Caspian region. During the Current Quarter, the depreciation of the British pound sterling from the Comparable Quarter due to a majority of our revenue in our Europe Caspian region contracted in

British pound sterling with our expense being more evenly split between U.S. dollars and British pound sterling, resulting in a significant net revenue exposure to the British pound sterling translated into lower U.S. dollar earnings for reporting purposes.

Direct cost ~~recoveries.~~decreased 14.6%, or $40.6 million, year-over-year primarily due to a $26.5 million decrease due to the sale of Eastern Airways in May 2019, a $7.7 million decrease in lease costs due to return of leased aircraft, a $3.2 million decrease in fuel costs primarily due to decline in activity in our Asia Pacific region and a $2.7 million decrease in salaries and benefits primarily due to a reduction in headcount in our Asia Pacific region.

Reimbursable expense decreased 15.5%, or $2.4 million, primarily due to decrease in activity in our Asia Pacific region.

Depreciation and amortization expense remained mostly flat at $31.3 million for the Current Quarter compared to $30.5 million for the Comparable Quarter.

General and administrative expense decreased 2.6%, or $1.0 million, in the Current Quarter, as compared to the Comparable Quarter primarily due to a $2.7 million decrease due to the sale of Eastern Airways in May 2019, partially offset by a $1.7 million increase primarily related to salaries and benefits due to an increase in short-term incentive compensation in the Current Quarter.

Loss on impairment for the Current Quarter includes $42.0 million for the impairment of H225 aircraft, $17.5 million for the impairment of Airnorth goodwill and $2.6 million for the impairment of our investment in Sky Future Partners. Loss on impairment for the Comparable Quarter includes $87.5 million for the impairment of H225 aircraft, $8.9 million for the impairment of H225 inventory, and $20.8 million for the impairment of Eastern Airways assets including $17.5 million for aircraft and equipment, $3.0 million for intangible assets and $0.3 million for inventory. For further details, see Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Excluding the special items and the loss on disposal of assets discussed above, adjusted net loss and adjusted diluted loss per share were $20.3 million and $0.57, respectively, for the Current Quarter. These adjusted results compare to adjusted net loss and adjusted diluted loss per share of $18.5 million and $0.52, respectively, for the Comparable Quarter. Adjusted EBITDA decreased to $23.6 million in the Current Quarter from $35.0 million in the Comparable Quarter.

The year-over-year change in adjusted EBITDA was primarily driven by the decline in oil and gas revenue and higher rent expense as discussed above. These unfavorable changes were partially offset by a decrease in general and administrative expense

primarily from lower salaries and benefits in the Current Quarter. The year-over-year change in adjusted net loss and adjusted diluted loss per share was impacted by the same items that impacted adjusted EBITDA as well as higher interest expense; however, a more favorable adjusted tax rate in the Current Quarter more than offset these negative changes.

~~The table below presents the year-over-year impact of changes in foreign currency exchange rates.~~

Three Months Ended
December 31, Favorable (Unfavorable)
2018 2017

(In thousands, except per share amounts)
Revenue impact $ (7,844 )
Operating expense impact 10,452
Year-over-year income statement translation 2,608

Transaction gains (losses) included in other income (expense), net $ (2,785 ) $ 368
(3,153 )
Líder foreign exchange impact included in earnings (losses) from unconsolidated affiliates (202 ) (757 ) 555
Total $ (2,987 ) $ (389 ) (2,598 )

Pre-tax income statement impact 10
Less: Foreign exchange impact on depreciation and amortization and interest expense (73 )
Adjusted EBITDA impact $ (63 )

Net income impact (tax affected) $ 154
Earnings per share impact $ —

The most significant foreign exchange impacts related to a $3.2 million unfavorable impact from transaction losses in the Current Quarter compared to transaction gains in the Comparable Quarter. This unfavorable impact was partially offset by a $2.6 million favorable impact from changes in foreign currency exchange rates primarily driven by the impact of the British pound sterling on the translation of our results in our Europe Caspian region. Additionally, the Current Quarter includes a $0.6 million less unfavorable impact of foreign currency exchange rate changes from our investment in Líder in Brazil.

Direct cost decreased 3.6%, or $9.9 million, year-over-year primarily due to a $13.3 million decrease in salaries and benefits primarily due to a decrease in the number of employees and a $2.2 million decrease in various other direct costs, partially offset by a $5.6 million increase in rent expense primarily due to lower OEM cost recoveries, partially offset by return of leased aircraft.

~~Reimbursable expense decreased 5.9%, or $0.9 million, primarily due to a decline in activity in our Asia Pacific region.~~

~~Depreciation and amortization expense remained mostly flat at $30.6 million for the Current Quarter compared to $31.7 million for the Comparable Quarter.~~

General and administrative expense decreased 6.1%, or $2.6 million, in the Current Quarter, as compared to the Comparable Quarter primarily due to a decrease in compensation expense of $6.2 million primarily resulting from a reduction in short-term and long-term incentive compensation costs of $4.2 million and a reduction of various other general and administrative expenses of $2.8 million, including information technology, training and travel expenses, as part of continued cost reduction efforts, partially offset by a $6.4 million increase in professional fees primarily related to the Columbia transaction and related financing transactions.

Loss on disposal of assets ~~increased $11.4~~decreased $1.1 million to a loss of ~~$16.0~~$0.2 million for the Current Quarter from a loss of ~~$4.6~~$1.3 million for the Comparable Quarter. The loss on disposal of assets in the Current Quarter included ~~$14.0 million for contract termination costs for an aircraft purchase contract that was terminated in December 2018, $1.4 million for impairment of assets held for sale and~~ a loss of ~~$0.7~~$0.2 million from the sale or disposal of ~~aircraft and~~ other equipment. During the Comparable Quarter, the loss on disposal of assets included ~~impairment charges totaling $1.6 million related to assets held for sale and~~ a loss of ~~$3.0~~$1.3 million from the sale or disposal of aircraft and other equipment.

Earnings ~~(losses)~~ from unconsolidated affiliates, net of losses, decreased ~~$1.2 million to a loss of~~56.7%, or $0.8 million, ~~for the Current Quarter~~ from earnings of ~~$2.0~~$1.5 million in the Comparable Quarter to $0.6 million in the Current Quarter. ~~This~~The decrease in earnings from unconsolidated affiliates, net of losses, primarily resulted from a ~~$1.0 million~~ decrease ofin earnings from our investment in Líder in Brazil ~~in the Current Quarter primarily due~~ to ~~a decline in activity, partially offset by a $0.6~~losses of $1.7 million ~~less unfavorable impact of foreign currency exchange rates~~ in the Current Quarter compared to earnings of $0.2 million in Comparable Quarter primarily due to an unfavorable change in foreign exchange rates and an increase in earnings from our investment in Cougar in Canada from earnings of $1.4 million in the Comparable ~~Quarter.~~

Quarter to $2.0 million for the Current Quarter due to an increase in activity.

Interest expense, net, ~~increased 42.0%~~decreased 15.1%, or ~~$8.0~~$4.0 million, year-over-year primarily due to ~~an increase in borrowings~~lower interest expense of $7.9 million on our 6¼% Senior Notes due 2022 and ~~an increase in amortization~~4½% Convertible Senior Notes due 2023 as the unsecured debt was classified as liabilities subject to compromise on the Petition Date upon the filing of ~~debt discount,~~the Chapter 11 Cases and we stopped accruing interest expense, partially offset by ~~an increase~~$3.1 million of interest expense on our 2019 Term Loan which we borrowed against on May 10, 2019 and the DIP Credit Agreement which we borrowed against on August 26, 2019. Additionally, we recorded $1.9 million of expense for the write-off of a portion of the 8.75% Senior Secured Notes debt fees and discount due to the early repayment of $74.8 million of the 8.75% Senior Secured Notes in September 2019. For further details, see “— Recent Events” included elsewhere in this Quarterly Report.

Reorganization items, net represent amounts incurred directly resulting from the Chapter 11 Cases and consists of the following items for the Current Quarter:



Professional fees	$	35,462
H175 settlement agreement ⁽¹⁾	31,830
Backstop Commitment Agreement⁽²⁾	19,250
Lease termination costs ⁽³⁾	4,170
Write-off of deferred financing fees ⁽⁴⁾	4,114
Corporate lease termination cost	1,063
Milestone Omnibus Agreement allowed claim adjustment ⁽⁵⁾	(1,946		)
	$	93,943

_____________


⁽¹⁾	Relates to the rejection of our aircraft purchase contract for the 22 H175 helicopters.


⁽²⁾	Estimated fees related to the Backstop Commitment Agreement.


⁽³⁾	Relates to ten aircraft leases rejected in June 2019 including nine S-76C+s and one S-76D.


⁽⁴⁾	Fees related to the DIP Credit Agreement.


⁽⁵⁾	Relates to adjustment of the allowed claim for the Milestone Omnibus Agreement.

Gain on sale of subsidiaries of $0.4 million resulting from the cash received from the sale of our 8.5% interest ~~income as a result of an increase~~ in ~~cash and cash invested at higher rates.~~Aviashelf in the Current Quarter.

For further details on other income (expense), net and income tax expense, see “— Region Operating Results — Other Income (Expense), Net” and “— Region Operating Results — Taxes” included elsewhere in this Quarterly Report.

As discussed above, our results for the Current Quarter were impacted by special items. During the Comparable Quarter, special items that impacted our results included loss on impairment, organizational restructuring costs, transaction costs and tax items. The items noted in the Current Quarter and Comparable Quarter have been identified as special items as they are not considered by management to be part of our ongoing operations when assessing and measuring the operational and financial performance of the organization. The impact of these items on our adjusted EBITDA, adjusted net loss and adjusted diluted loss per share is as follows:


	Three Months Ended December 31, 2018									Three Months Ended September 30, 2019
	Adjusted EBITDA			Adjusted Net Loss			Adjusted Diluted Loss Per Share			Adjusted EBITDA			Adjusted Net Loss			Adjusted Diluted Loss Per Share

	(In thousands, except per share amounts)									(In thousands, except per share amounts)
Organizational restructuring costs	$	(2,409	)	$	(2,398	)	$	(0.07	)	$	(96,476	)	$	(83,787	)	$	(2.33	)
Transaction costs	(7,159		)	(5,656		)	(0.16		)
Tax items	—			(45,156		)	(1.26		)
Loss on impairment										(62,101		)	(53,276		)	(1.48		)
Gain on sale of subsidiaries										420			420			0.01
Early extinguishment of debt													(1,499		)	(0.04		)
Tax Items										—			(2,616		)	(0.07		)
Total special items	$	(9,568	)	$	(53,210	)	(1.49		)	$	(158,157	)	$	(140,758	)	(3.92		)

	Three Months Ended December 31, 2017									Three Months Ended September 30, 2018
	Adjusted EBITDA			Adjusted Net Loss			Adjusted Diluted Loss Per Share			Adjusted EBITDA			Adjusted Net Loss			Adjusted Diluted Loss Per Share

	(In thousands, except per share amounts)									(In thousands, except per share amounts)
Organizational restructuring costs	$	(2,810	)	$	(2,501	)	$	(0.07	)
Loss on impairment										$	(117,220	)	$	(101,105	)	$	(2.83	)
Organization restructuring costs										(2,727		)	(2,392		)	(0.07		)
Transaction costs										(1,247		)	(985		)	(0.03		)
Tax items	—			15,139			0.42			—			(10,307		)	(0.29		)
Total special items	$	(2,810	)	$	12,638		0.36			$	(121,194	)	$	(114,789	)	(3.21		)

Current Period Compared to Comparable Period

Operating revenue from external customers by line of service was as follows:


	Nine Months Ended December 31,				Favorable (Unfavorable)					Six Months Ended September 30,				Favorable (Unfavorable)
	2018		2017		Favorable (Unfavorable)					2019		2018		Favorable (Unfavorable)

	(In thousands, except percentages)									(In thousands, except percentages)
Oil and gas services	$	664,957	$	715,184	$	(50,227	)	(7.0	)%	$	447,114	$	446,311	$	803		0.2	%
Fixed wing services										63,293		112,703		(49,410		)	(43.8	)%
U.K. SAR services	177,594		164,306		13,288			8.1	%	110,578		123,248		(12,670		)	(10.3	)%
Fixed wing services	158,876		159,874		(998		)	(0.6	)%
Corporate and other	1,362		3,885		(2,523		)	(64.9	)%	275		896		(621		)	(69.3	)%
Total operating revenue	$	1,002,789	$	1,043,249	$	(40,460	)	(3.9	)%	$	621,260	$	683,158	$	(61,898	)	(9.1	)%

The year-over-year decrease in operating revenue ~~in the Current Period~~ was primarily driven by a decrease of $52.1 million in ~~our oil and gas~~fixed wing services ~~driven by declines~~revenue in ~~our Africa region, Canada operations within our Americas region, our Asia Pacific region, and~~ our Europe Caspian ~~region. These decreases were partially offset by an increase~~region as a result of the sale of Eastern Airways on May 10, 2019 and a decrease in U.K. SAR services ~~revenue due to additional bases coming online~~revenue. The decrease in ~~fiscal year 2018,~~ the ~~full benefit of which was received in the Current Period. The~~ U.K. SAR services revenue ~~includes~~in the Current Period is primarily due to a one-time benefit of $7.6 million in OEM cost recoveries recognized in the Comparable Period and unfavorable changes in the British pound sterling versus U.S. dollar foreign currency exchange rate from the Comparable Period to the Current Period. Additionally, oil and gas revenue improved from the Comparable Period as increases in our Africa, America and Europe Caspian regions primarily due to increases in activity were only partially offset by a decrease in our Asia Pacific region primarily due to fewer customer contracts yielding a decrease in activity. Included within the Favorable (Unfavorable) change presented above, revenue decreased by ~~$2.7~~$24.0 million ~~in the Current Period~~ compared to the Comparable Period due to unfavorable changes in foreign currency exchange rates, primarily ~~in our Asia Pacific region~~ related to the ~~weakening~~depreciation of the British pound sterling and Australian dollar versus the U.S. ~~dollar, partially offset by our Europe Caspian region related to the strengthening of the British pound sterling versus the U.S.~~ dollar. ~~See further discussion of operating revenue by region under “— Region Operating Results.”~~

For the Current Period, we reported a net loss of ~~$262.2~~$332.2 million and a diluted loss per share of ~~$7.34~~$9.25 compared to a net loss of ~~$94.8~~$175.8 million and a diluted loss per share of ~~$2.69~~$4.93 for the Comparable Period.

~~The net loss for the Current Period was significantly impacted by the following special items:~~

~~Loss on impairment of $117.2 million ($101.1 million net of tax), or $2.83 per share, including:~~


◦	~~$87.5 million impairment of H225 aircraft and $8.9 million impairment of H225 inventory, and~~


◦	~~$20.8 million impairment of Eastern Airways assets including $17.5 million for aircraft and equipment, $3.0 million for intangible assets and $0.3 million for inventory,~~

Organizational restructuring costs of $6.9 million ($6.5 million net of tax), or $0.18 per share, included in direct cost and general and administrative expense, resulting from separation programs across our global organization designed to increase efficiency and reduce costs,

Transaction costs of $8.4 million ($6.6 million net of tax), or $0.19 per share, included in general and administrative expense, resulting from the Columbia transaction and related financing transactions, and

~~Non-cash tax expense of $55.5 million, or $1.55 per share, including $43.8 million from valuation allowances on deferred tax assets and $11.6 million from the Act.~~

The year-over-year change in net loss and diluted loss per share was primarily driven by ~~a significant increase~~the following special items for the Current Period:

Organizational restructuring costs of $187.9 million ($162.5 million net of tax), or $4.52 per share, including the following:


◦	Professional fees of $64.4 million ($64.4 million net of tax), or $1.79 per share including $13.5 million of prepetition professional fees included in prepetition restructuring charges on the condensed consolidated statements of operations and $51.0 million of post-petition professional fees included in reorganization items, net, on the condensed consolidated statements of operations;


◦	H175 settlement charges of $31.8 million ($25.1 million net of tax), or $0.70 per share, included in reorganization items, net on the condensed consolidated statements of operations relating to the rejection of our aircraft purchase contract for the 22 H175 helicopters;


◦	Lease termination costs of $30.2 million ($23.9 million net of tax), or $0.66 per share, included in reorganization items, net, on the condensed consolidated statements of operations relating to the rejection of ten aircraft leases rejected in June 2019 including nine S-76C+s and one S-76D;

◦

Debt related expenses of $38.9 million ($30.7 million net of tax), or $0.86 per share included in reorganization items, net, on the condensed consolidated statements of operations including the write-off of $30.2 million of discount on the 4½% Convertible Senior Notes, the write-off of $4.6 million of deferred financing fees related to the 6¼% Senior Notes and 4½% Convertible Senior Notes and $4.1 million incurred for fees related to the DIP Credit Agreement funded in August 2019;


◦	Backstop Commitment Agreement estimated fees of $19.3 million ($15.2 million net of tax), or $0.42 per share, included in reorganizations, net, on the condensed consolidated statements of operations;


◦	Severance costs of $4.2 million ($4.2 million net of tax), or $0.12 per share, included in direct costs and general and administrative expense on the condensed consolidated statements of operations; and


◦	Corporate lease termination cost of $1.1 million ($0.8 million net of tax), or $0.02 per share, included in reorganization items, net, on the condensed consolidated statements of operations.


◦	A benefit of $1.9 million ($1.9 million net of tax), or $0.05 per share, included in direct cost on the condensed consolidated statements of operations, resulting from an adjustment to the allowed claim associated with our return of four H225 model aircraft in May 2019.

Loss on impairment of $62.1 million ($53.3 million net of tax), or $1.48 per share, included in loss on impairment on the condensed consolidated statements of operations resulting from:


◦	$42.0 million impairment of H225 aircraft;


◦	$17.5 million impairment of Airnorth goodwill; and


◦	$2.6 million impairment of our investment in Sky Future Partners.

Loss on sale of subsidiaries of $55.9 million ($55.9 million net of tax), or $1.56 per share, included in loss on sale of subsidiaries on the condensed consolidated statements of operations, resulting from the sale of Eastern Airways, Bristow Helicopters Leasing Limited (“BHLL”) and Aviashelf.

H225 lease return costs of $10.8 million ($10.8 million net of tax), or $0.30 per share, included in direct cost on the condensed consolidated statements of operations, resulting from costs associated with our return of four H225 model aircraft in May 2019 including $4.3 million paid in lease return costs in the ~~negative impact~~Current Period and $10.6 million in future rent and return costs, partially offset by the write-off of ~~special items mostly from asset impairments, lower revenue as discussed above, higher~~$6.0 million of deferred credits for OEM settlements that were being recognized over the remaining life of the leases.

Financing fees of $2.6 million ($2.3 million net of tax), or $0.07 per share, included in interest expense ~~foreign currency impact, higher~~on the condensed consolidated statements of operations related to the DIP Credit Agreement;

Write-off of a portion of deferred financing fees and discount of $1.9 million ($1.5 million net of tax), or $0.04 per share, included in interest expense on the condensed consolidated statements of operations related to a portion of our 8.75% Senior Secured Notes which were purchased in a Tender Offer in September 2019;

Non-cash tax expense of $3.3 million, or $0.09 per share, from valuation allowances on deferred tax assets.

Additionally, we realized a loss on disposal of assets ~~and lower earnings from unconsolidated affiliates in~~of $4.0 million ($3.8 million net of tax) during the Current ~~Period. These unfavorable changes were partially offset by a decrease in salaries~~Period from the sale or disposal of two aircraft and ~~benefits, rent expense and general and administrative expense.~~other equipment.

The ~~Current~~Comparable Period results benefited from the impact of ~~$17.6~~$15.6 million of OEM cost recoveries realized in the ~~Current~~Comparable Period ~~resulting~~that resulted in a one-time benefit of $7.6 million in U.K. SAR operating revenue as discussed above, a ~~$6.9~~$5.9 million reduction in rent expense ~~(included in direct cost)~~ and a ~~$3.1~~$2.1 million reduction in direct cost.

Excluding the organizational restructuring costs, loss on sale of subsidiaries, H225 lease return costs, financing fees and the loss on disposal of assets discussed above, adjusted net loss and adjusted diluted loss per share were $38.8 million and $1.08, respectively, for the Current Period. These adjusted results compare to adjusted net loss and adjusted diluted loss per share of $56.6 million and $1.59, respectively, for the Comparable Period. Additionally, adjusted EBITDA improved to $63.5 million in the Current Period from $48.6 million in the Comparable Period. The benefit from the OEM cost recoveries described above is included within adjusted net income, adjusted earnings per share and adjusted EBITDA in the Comparable Period.

Adjusted EBITDA, adjusted net loss and adjusted diluted loss per share benefited from the sale of Eastern Airways, decrease in salaries and benefits, rent and general and administrative expense, and increase in earnings from unconsolidated affiliates compared to the Comparable Period. These items were partially offset by OEM cost recoveries realized in the Comparable Period ~~benefited~~that did not recur in the Current Period resulting in decrease in adjusted net loss and adjusted diluted loss per share year-over-year.

The table below presents the year-over-year impact of changes in foreign currency exchange rates.



	Six Months Ended September 30,						Favorable (Unfavorable)
	2019			2018

	(In thousands, except per share amounts)
Revenue impact							$	(23,964	)
Operating expense impact							21,855
Year-over-year income statement translation							(2,109		)

Transaction losses included in other income (expense), net	$	(8,746	)	$	(5,336	)	(3,410		)
Líder foreign exchange impact included in earnings from unconsolidated affiliates	(1,710		)	(3,598		)	1,888
Total	$	(10,456	)	$	(8,934	)	(1,522		)

Pre-tax income statement impact							(3,631		)
Less: Foreign exchange impact on depreciation and amortization and interest expense							(6		)
Adjusted EBITDA impact							$	(3,637	)

Net income impact (tax affected)							$	(3,217	)
Earnings per share impact							$	(0.09	)

The most significant foreign exchange impact related to a $3.4 million unfavorable impact from higher transaction losses in the Current Period compared to the Comparable Period and $2.1 million unfavorable impact from changes in foreign currency exchange rates in the Current Period primarily driven by the impact of the depreciating British pound sterling on the translation of our results in our Europe Caspian region. During the Current Period, the depreciation of the British pound sterling from the Comparable Period due to a majority of our revenue in our Europe Caspian region contracted in British pound sterling with our expense being more evenly split between U.S. dollars and British pound sterling, resulting in a significant net revenue exposure to the British pound sterling translated into lower U.S. dollar earnings for reporting purposes. Partially offsetting these unfavorable impacts was a $1.9 million decrease in unfavorable foreign currency exchange rate impact from our investment in Líder in Brazil.

Direct costs decreased 11.3%, or $62.9 million, year-over-year primarily due to a $46.1 million decrease due to the sale of Eastern Airways on May 10, 2019, a $7.6 million decrease in salaries and benefits primarily due to a reduction in ~~rent~~headcount as a result of fewer customer contracts driving lower activity in our Asia Pacific region, a $3.0 million decrease in lease costs primarily due to the return or rejection in Chapter 11 of leased aircraft and a $4.6 million decrease in fuel costs primarily due to fewer customer contracts driving lower activity in our Asia Pacific region.

Reimbursable expense ~~of $13.1~~decreased 6.8%, or $2.1 million, ~~included~~primarily due to fewer customer contracts resulting in ~~direct costs~~a decrease in activity in our Asia Pacific region.

Prepetition restructuring charges include professional fees incurred prior to May 11, 2019 related to ~~OEM cost recoveries.~~our Chapter 11 Cases.

Depreciation and amortization expense remained mostly flat at $62.6 million for the Current Period compared to $61.4 million for the Comparable Period.

General and administrative expense decreased 8.0%, or $6.4 million, in the Current Period, as compared to the Comparable Period primarily due to a $4.5 million decrease due to the sale of Eastern Airways in May 2019 and a $1.9 million decrease in various other costs including salaries, information technology and travel expenses.

Loss on impairment for the Current Period includes impairment charges of $42.0 million for H225 aircraft, $17.5 million for Airnorth goodwill and $2.6 million for our investment in Sky Future Partners. Loss on impairment for the Comparable Period includes impairment charges of $87.5 million for H225 aircraft, $8.9 million for H225 inventory, and $20.8 million for Eastern Airways assets, including $17.5 million for aircraft and equipment, $3.0 million for intangible assets and $0.3 million for inventory. For further details, see Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Excluding the special items described above and the loss on disposal of assets, adjusted net loss and adjusted diluted loss per share were $77.4 million and $2.17, respectively, for the Current Period. These adjusted results compare to adjusted net loss and adjusted diluted loss per share of $59.2 million and $1.68, respectively, for the Comparable Period. Additionally, adjusted EBITDA decreased to $71.7 million in the Current Period from $82.5 million in the Comparable Period.

The year-over-year change in adjusted EBITDA was primarily driven by the decline in oil and gas revenue discussed above, foreign currency impact and lower earnings from unconsolidated affiliates in the Current Period. These unfavorable changes were mostly offset by a decrease in general and administrative expense primarily from lower salaries and benefits in the Current Period and lower rent expense. The year-over-year change in adjusted net loss and adjusted diluted loss per share was impacted by the same items that impacted adjusted EBITDA as well as higher interest expense; however, a more favorable adjusted tax rate in the Current Period more than offset these negative changes.

~~The table below presents the year-over-year impact of changes in foreign currency exchange rates.~~

Nine Months Ended
December 31, Favorable (Unfavorable)
2018 2017

(in thousands, except per share amounts)
Revenue impact $ (2,652 )
Operating expense impact 10,178
Year-over-year income statement translation 7,526

Transaction gains (losses) included in other income (expense), net $ (8,121 ) $ 1,214
(9,335 )
Líder foreign exchange impact included in earnings (losses) from unconsolidated affiliates (3,800 ) (1,637 ) (2,163 )
Total $ (11,921 ) $ (423 ) (11,498 )

Pre-tax income statement impact (3,972 )
Less: Foreign exchange impact on depreciation and amortization and interest expense 488
Adjusted EBITDA impact $ (3,484 )

Net income impact (tax affected) $ (2,634 )
Earnings per share impact $ (0.07 )

The most significant foreign exchange impact related to a $9.3 million unfavorable impact from transaction losses in the Current Period compared to transaction gains in the Comparable Period. Additionally, results for the Current Period were impacted by a $2.2 million increase in unfavorable foreign currency exchange rate impact from our investment in Líder in Brazil. Partially offsetting these unfavorable impacts was a $7.5 million favorable impact from changes in foreign currency exchange rates in the Current Period primarily driven by the impact of the appreciating British pound sterling on the translation of our results in our Europe Caspian region, partially offset by the impact of the depreciating Australian dollar on the translation of our results in our Asia Pacific region.

Direct costs decreased 2.7%, or $22.9 million, year-over-year primarily due to lower headcount across all regions due to the benefit of organizational restructuring efforts reflected in a $28.9 million decrease in salaries and benefits and a $10.1 million decrease in rent expense primarily due to return of leased aircraft, partially offset by a $12.8 million increase in fuel primarily due to an increase in fuel prices and a $3.3 million increase in various other direct costs.

~~Reimbursable expense increased 6.1%, or $2.6 million, primarily due to new contracts in our Africa region.~~

~~Depreciation and amortization expense remained mostly flat at $92.0 million for the Current Period compared to $94.1 million for the Comparable Period.~~

General and administrative expense decreased 13.7%, or $19.0 million, in the Current Period, as compared to the Comparable Period primarily due to a $16.6 million decrease in compensation expense (primarily due to a decrease in severance costs of $6.6 million, a $8.8 million decrease in short-term and long-term incentive compensation costs and $1.2 million lower salaries and benefits due to a reduction in headcount across all regions) and a $7.2 million decrease in information technology, travel, training and various other expenses, partially offset by a $4.8 million increase in professional fees primarily related to the Columbia transaction and related financing transactions.

Loss on impairment for the Current Period includes $87.5 million for the impairment of H225 aircraft, $8.9 million for the impairment of H225 inventory, and $20.8 million for the impairment of Eastern Airways assets (including $17.5 million for aircraft and equipment, $3.0 million for intangible assets and $0.3 million for inventory). For further details, Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report. Loss on impairment for the Comparable Period includes a $1.2 million impairment charge on inventory used on our training fleet.

Loss on disposal of assets ~~increased $6.6~~decreased $1.0 million, to a loss of ~~$19.0~~$4.0 million for the Current Period from a loss of ~~$12.4~~$3.0 million for the Comparable Period. The loss on disposal of assets in the Current Period included ~~$14.0 million of contract termination costs for an aircraft purchase contract that was terminated in December 2018, $1.4 million for impairment of assets held for sale and~~ a loss of ~~$3.7~~$4.0 million from the sale or disposal of three aircraft and other ~~equipment.~~equipment for proceeds of $5.0 million. During the Comparable Period, the loss on disposal of assets included ~~impairment charges totaling $11.3 million related to assets held for sale (including a $7.2 million impairment and loss on disposal related to the Bristow Academy disposal group), and~~ a loss of ~~$1.1~~$3.0 million ~~related to~~from the sale or disposal of three aircraft and other ~~equipment.~~equipment for proceeds of $8.5 million.

Earnings ~~(losses)~~ from unconsolidated affiliates, net ~~decreased $5.7~~of losses, increased $3.1 million to ~~a loss~~earnings of ~~$2.3~~$3.0 million for the Current Period from ~~earnings~~losses of ~~$3.4~~$0.1 million in the Comparable Period. ~~The decrease in earnings (losses) from unconsolidated affiliates, net~~This improvement primarily resulted from a ~~decrease~~$2.4 million increase in earnings from our investment in ~~Líder~~Cougar in ~~Brazil to a loss of $0.1 million in~~Canada for the Current Period ~~from earnings of $5.7 million in the Comparable Period primarily~~ due to ~~a decline~~an increase in ~~activity and a $2.2 million unfavorable impact of foreign currency exchange rates.~~activity.

Interest expense, net, ~~increased 50.3%~~decreased 9.0%, or ~~$27.0~~$4.8 million, year-over-year primarily due to ~~an increase in borrowings~~lower interest expense of $12.3 million on our 6¼% Senior Notes due 2022 and ~~an increase in amortization~~4½% Convertible Senior Notes due 2023 as the unsecured debt was classified as liabilities subject to compromise on the Petition Date upon the filing of ~~debt discount,~~the Chapter 11 Cases and we stopped accruing interest expense, partially offset by ~~an increase~~$4.1 million of interest expense on our 2019 Term Loan which we borrowed against on May 10, 2019 and the DIP Credit Agreement which we borrowed against on August 26, 2019. Also, we incurred $2.6 million of financing fees for the DIP Credit Agreement. Additionally, we recorded $1.9 million of expense for the write-off of a portion of the 8.75% Senior Secured Notes debt fees and discount due to the early repayment of $74.8 million of the 8.75% Senior Secured Notes in ~~interest income as~~September 2019. For further details, see “— Recent Events” included elsewhere in this Quarterly Report.

Reorganization items, net represent amounts incurred directly resulting from the Chapter 11 Cases and consists of the following items for the Current Period:



Professional fees	$	50,965
H175 settlement agreement ⁽¹⁾	31,830
Lease termination costs ⁽²⁾	30,221
Write-off of discount on 4½% Convertible Senior Notes due 2023	30,158
Backstop Commitment Agreement ⁽³⁾	19,250
Write-off of deferred financing fees⁽⁴⁾	8,758
Corporate lease termination cost	1,063
Milestone Omnibus Agreement allowed claim adjustment ⁽⁵⁾	(1,946		)
	$	170,299

_____________


⁽¹⁾	Relates to the rejection of our aircraft purchase contract for the 22 H175 helicopters.


⁽²⁾	Relates to ten aircraft leases rejected in June 2019 including nine S-76C+s and one S-76D.


⁽³⁾	Estimated fees related to the Backstop Commitment Agreement.


⁽⁴⁾	Includes $2.4 million related to the 6¼% Senior Notes, $2.3 million related to deferred financing fees related to the 4½% Convertible Senior Notes and $4.1 million incurred for fees related to the DIP Credit Agreement.


⁽⁵⁾	Relates to adjustment of the allowed claim for the Milestone Omnibus Agreement.

Loss on sale of subsidiaries includes a ~~result~~$46.9 million loss on the sale of ~~an increase~~Eastern Airways and $9.0 million loss on the sale of Aviashelf and BHLL. For further details, see Note 1 in ~~cash and cash invested at higher rates.~~the “Notes to Condensed Consolidated Financial Statements” included elsewhere included elsewhere in this Quarterly Report.

As discussed above, our results for the Current Period were impacted by special items. During the Comparable Period, special items that impacted our results included loss on impairment, organizational restructuring costs, ~~loss on impairment~~transaction costs and tax items. The items noted in the Current Period and Comparable Period have been identified as special items as they are not considered by management to be part of our ongoing operations when assessing and measuring the operational and financial performance of the organization. The impact of these items on our adjusted EBITDA, adjusted net loss and adjusted diluted loss per share is as follows:


										Six Months Ended September 30, 2019
										Adjusted EBITDA			Adjusted Net Loss			Adjusted Diluted Loss Per Share

										(In thousands, except per share amounts)
Organizational restructuring costs										$	(187,925	)	$	(162,458	)	$	(4.52	)
Loss on impairment										(62,101		)	(53,276		)	(1.48		)
Loss on sale of subsidiaries										(55,883		)	(55,883		)	(1.56		)
H225 Lease Return										(10,844		)	(10,844		)	(0.30		)
DIP financing fee write-off										—			(2,349		)	(0.07		)
Early extinguishment of debt										—			(1,499		)	(0.04		)
Tax Items										—			(3,295		)	(0.09		)
Total special items										$	(316,753	)	$	(289,604	)	(8.06		)

	Nine Months Ended December 31, 2018									Six Months Ended September 30, 2018
	Adjusted EBITDA			Adjusted Net Loss			Adjusted Diluted Loss Per Share			Adjusted EBITDA			Adjusted Net Loss			Adjusted Diluted Loss Per Share

	(In thousands, except per share amounts)									(In thousands, except per share amounts)
Loss on impairment	$	(117,220	)	$	(101,105	)	$	(2.83	)	$	(117,220	)	$	(101,105	)	$	(2.83	)
Organizational restructuring costs	(6,855		)	(6,501		)	(0.18		)	(4,446		)	(4,103		)	(0.11		)
Transaction costs	(8,406		)	(6,641		)	(0.19		)	(1,247		)	(985		)	(0.03		)
Tax items	—			(55,463		)	(1.55		)	—			(10,307		)	(0.29		)
Total special items	$	(132,481	)	$	(169,710	)	(4.75		)	$	(122,913	)	$	(116,500	)	(3.26		)

	Nine Months Ended December 31, 2017
	Adjusted EBITDA			Adjusted Net Loss			Adjusted Diluted Loss Per Share

	(In thousands, except per share amounts)
Organizational restructuring costs	$	(15,160	)	$	(11,337	)	$	(0.32	)
Loss on impairment	(1,192		)	(775		)	(0.02		)
Tax items	—			(2,968		)	(0.08		)
Total special items	$	(16,352	)	$	(15,080	)	(0.43		)

Region Operating Results

The following tables set forth certain operating information for the regions comprising our industrial aviation services segment. Intercompany lease revenue and expense are eliminated from our segment reporting, and depreciation expense of aircraft is presented in the region that operates the aircraft.

Set forth below is a discussion of the operations of our regions. Our consolidated results are discussed under “Results of Operations” above.

Europe Caspian


	Three Months Ended December 31,						Nine Months Ended December 31,						Favorable (Unfavorable)										Three Months Ended September 30,						Six Months Ended September 30,						Favorable (Unfavorable)
	Three Months Ended December 31,						Nine Months Ended December 31,						Favorable (Unfavorable)										Three Months Ended September 30,						Six Months Ended September 30,						Favorable (Unfavorable)
	2018			2017			2018			2017			Quarter vs Quarter					Period vs Period					2019			2018			2019			2018			Quarter vs Quarter					Period vs Period

	(In thousands, except percentages)																						(In thousands, except percentages)
Operating revenue	$	180,829		$	189,910		$	587,264		$	570,983		$	(9,081	)	(4.8	)%	$	16,281		2.9	%	$	172,821		$	195,449		$	352,689		$	406,435		$	(22,628	)	(11.6	)%	$	(53,746	)	(13.2	)%
Operating income	$	3,342		$	5,274		$	13,856		$	19,499		$	(1,932	)	(36.6	)%	$	(5,643	)	(28.9	)%
Operating income (loss)																							$	11,224		$	(11,414	)	$	23,031		$	10,514		$	22,638		198.3	%	$	12,517		119.1	%
Operating margin	1.8		%	2.8		%	2.4		%	3.4		%	(1.0		)%	(35.7	)%	(1.0		)%	(29.4	)%	6.5		%	(5.8		)%	6.5		%	2.6		%	12.3		%	212.1	%	3.9		%	150.0	%
Adjusted EBITDA	$	14,068		$	18,614		$	62,727		$	58,716		$	(4,546	)	(24.4	)%	$	4,011		6.8	%	$	16,033		$	19,865		$	37,854		$	48,659		$	(3,832	)	(19.3	)%	$	(10,805	)	(22.2	)%
Adjusted EBITDA margin	7.8		%	9.8		%	10.7		%	10.3		%	(2.0		)%	(20.4	)%	0.4		%	3.9	%	9.3		%	10.2		%	10.7		%	12.0		%	(0.9		)%	(8.8	)%	(1.3		)%	(10.8	)%
Rent expense	$	30,262		$	29,499		$	93,437		$	102,803		$	(763	)	(2.6	)%	$	9,366		9.1	%	$	26,461		$	31,179		$	55,292		$	63,175		$	4,718		15.1	%	$	7,883		12.5	%

The Europe Caspian region comprises all of our operations and affiliates in Europe, including oil and gas operations in the U.K. and Norway, ~~Eastern Airways fixed wing operations~~ and public sector SAR operations in the U.K. and our operations in Turkmenistan. Additionally, the Europe Caspian region included Eastern Airways fixed wing operations until the sale on May 10, 2019.

Current Quarter Compared to Comparable Quarter

~~Operating~~The decrease in operating revenue ~~for our Europe Caspian region decreased~~ in the Current Quarter ~~compared to the Comparable Quarter~~ primarily ~~due to~~resulted from a decrease of ~~$6.7~~$28.1 million ~~in U.K. oil and gas~~for fixed wing services revenue due to ~~a decrease in activity~~the sale of Eastern Airways on May 10, 2019, and ~~unfavorable changes in foreign currency exchange rates,~~ a decrease of ~~$5.0~~$2.4 million ~~in fixed wing revenue from Eastern Airways due to a decrease in activity and unfavorable changes in foreign currency exchange rates and a decrease in~~for U.K. SAR revenue ~~of $1.3 million~~ primarily due to unfavorable changes in foreign ~~currency~~ exchange ~~rates. Partially offsetting these decreases is an~~rates, partially offset by a $7.9 million increase in U.K. and Norway ~~operating revenue of $3.9 million driven by~~oil and gas services due to an increase in activity. Additionally, revenue ~~decreased~~in this region was impacted by ~~$5.2 million in the Current Quarter compared to the Comparable Quarter due to~~an unfavorable year-over-year impact of changes in foreign currency exchange ~~rates. Eastern Airways contributed $24.4 million and $29.5 million in operating revenue for the Current Quarter and Comparable Quarter, respectively.~~rates of $9.2 million.

A substantial portion of our operations in the Europe Caspian region ~~are~~is contracted in the British pound sterling, which depreciated against the U.S. dollar in the Current Quarter. We recorded foreign exchange losses of ~~$2.1~~$6.9 million in the Current Quarter and foreign exchange ~~gains~~losses of ~~$1.3~~$1.0 million in the Comparable Quarter from the revaluation of assets and liabilities on pound sterling functional currency entities as of ~~December 31,~~September 30, 2019 and 2018, and 2017, respectively, which is recorded in other income (expense), net and included in adjusted EBITDA. The Current Quarter benefited from a $1.4 million impact from foreign currency hedging, which partially offset the negative impact from exchange rate changes. A further weakening or strengthening of the British pound sterling could result in additional foreign exchange volatility in future quarters.

The Current Quarter results benefited from OEM cost recoveries in prior periods that resulted in a $1.2 million reduction in direct cost. The Comparable Quarter benefited from OEM cost recoveries that resulted in a $7.1 million reduction in rent expenses (included in direct cost). We will recognize an additional $0.5 million reduction in direct cost over the remainder of fiscal year 2019 related to these OEM cost recoveries in our Europe Caspian region results. These items are included in operating income and adjusted EBITDA in the Current Quarter and Comparable Quarter. For further details, see Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

The decrease in operating income and operating margin from the Comparable Quarter was primarily due to lower revenue discussed above and lower OEM cost recoveries of $5.9 million, partially offset by lower salaries and benefits of $5.3 million. In addition to the items impacting operating income and operating margin, adjusted EBITDA and adjusted EBITDA margin decreased due to the foreign exchange losses from revaluation of assets and liabilities included in other income (expense), net in the Current Quarter compared to gains recorded in the Comparable Quarter. As discussed above, other income (expense) is included in adjusted EBITDA, but not in operating income. Eastern Airways contributed a negative $5.4 million and negative $4.1 million in adjusted EBITDA for the Current Quarter and Comparable Quarter, respectively.

~~Current Period Compared to Comparable Period~~

The increase in operating revenue in the Current Period compared to the Comparable Period primarily resulted from an increase of $13.3 million for U.K. SAR revenue including a one-time benefit of OEM cost recovery of $7.6 million, an increase of $3.0 million in fixed wing revenue from Eastern Airways and an increase of $6.3 million in Norway operating revenue resulting from an increase in activity, partially offset by a $6.3 million decrease in U.K. oil and gas activity due to a decline in activity. Additionally, revenue increased by $3.8 million in the Current Period compared to the Comparable Period due to favorable changes in foreign currency exchange rates. Eastern Airways contributed $90.8 million and $87.8 million in operating revenue for the Current Period and Comparable Period, respectively.

The Current Period results benefited from OEM cost recoveries realized in the Current Period related to ongoing aircraft issues that resulted in a one-time benefit of $7.6 million in U.K. SAR operating revenue, a $4.5 million reduction in rent expense and a $3.1 million reduction in direct cost. The Comparable Period benefited from OEM cost recoveries that resulted in a $7.1 million reduction in rent expense (included in direct cost).

A substantial portion of our operations in the Europe Caspian region are contracted in the British pound sterling, which depreciated against the U.S. dollar in the Current Period. We recorded foreign exchange losses of $8.4 million in the Current Period and foreign exchange gains of $2.8 million in the Comparable Period from the revaluation of assets and liabilities on British pound sterling functional currency entities as of December 31, 2018 and 2017, respectively, which is recorded in other income (expense), net and included in adjusted EBITDA. Net of the translation and revaluation impacts, adjusted EBITDA was ~~negatively~~unfavorably impacted by ~~$9.4~~$6.5 million and ~~positively~~$0.6 million resulting from the change in exchange rates during the Current Quarter and Comparable Quarter, respectively. A further weakening or strengthening of the British pound sterling could result in additional foreign exchange volatility in future quarters.

During the Current Quarter, we recorded $2.6 million for impairment of Sky Future Partners. During the Comparable Quarter, we recorded $20.8 million for impairment of Eastern Airways assets, including $17.5 million for aircraft and equipment, $3.0 million for intangible assets and $0.3 million for inventory. For further details, see Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Additionally, the Comparable Quarter results benefited from OEM cost recoveries in prior periods that resulted in a $1.6 million reduction in rent expense and $1.0 million reduction in direct costs.

Operating income and operating margin improved in the Current Quarter primarily due to the Eastern Airways impairments discussed above recorded in the Comparable Quarter, partially offset by the Sky Futures Partners impairment recorded in the Current Quarter. Adjusted EBITDA and adjusted EBITDA margin decreased in the Current Quarter primarily due to unfavorable foreign currency exchange rates changes and the OEM cost recoveries which benefited the Comparable Quarter, partially offset by an increase in activity.

Current Period Compared to Comparable Period

The decrease in operating revenue in the Current Period primarily resulted from a decrease of $52.1 million for fixed wing services revenue due to the sale of Eastern Airways on May 10, 2019, and a decrease of $12.7 million for U.K. SAR revenue. The decrease in U.K. SAR revenue was primarily due to a one-time benefit of $7.6 million in OEM cost recoveries recognized in the Comparable Period and unfavorable changes in the British pound sterling versus U.S. dollar foreign currency exchange rate from the Comparable Period to the Current Period. These decreases were partially offset by an $11.1 million increase in U.K. and Norway oil and gas services primarily due to an increase in activity and short-term contracts. Additionally, revenue in this region was impacted by ~~$4.8~~an unfavorable year-over-year impact of changes in foreign currency exchange rates of $19.3 million.

A substantial portion of our operations in the Europe Caspian region is contracted in the British pound sterling, which depreciated against the U.S. dollar in the Current Quarter. We recorded foreign exchange losses of $10.7 million in the Current Period and foreign exchange losses of $6.3 million in the Comparable Period from the revaluation of assets and liabilities on pound sterling functional currency entities as of September 30, 2019 and 2018, respectively, which is recorded in other income (expense), net and included in adjusted EBITDA. Net of the translation and revaluation impacts, adjusted EBITDA was unfavorably impacted by $12.0 million and $7.9 million resulting from the change in exchange rates during the Current Period and Comparable Period, respectively. ~~The Current Period results benefited from a $2.2 million impact from foreign currency hedging, which partially offset the negative impact from exchange rate changes.~~ A further weakening or strengthening of the British pound sterling could result in additional foreign exchange volatility in future periods.

As discussed above, the Comparable Period benefited from OEM cost recoveries related to ongoing aircraft issues that resulted in a one-time benefit of $7.6 million in U.K. SAR operating revenue, a $4.3 million reduction in rent expense and a $2.1 million reduction in direct cost.

During the Current Period, we recorded $2.6 million for impairment of Sky Future Partners. During the Comparable Period, we recorded $20.8 million for impairment of Eastern Airways assets, including $17.5 million for aircraft and equipment, $3.0 million for intangible assets and $0.3 million for inventory. For further details, see Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report. The impairments are excluded from adjusted EBITDA and adjusted EBITDA margin.

~~The decrease in operating~~Operating income and operating margin ~~from~~improved in the ~~Comparable~~Current Period ~~was~~ primarily due to ~~the $20.8 million of impairments of Eastern Airways assets mentioned above,~~lower impairment charges, partially offset by ~~the increase~~unfavorable changes in ~~revenue discussed above and the larger benefit from OEM cost recoveries in the Current Period.~~foreign currency exchange rates. Adjusted EBITDA and adjusted EBITDA margin decreased in the Current Period primarily due to ~~the~~ unfavorable ~~year-over-year impacts from changes in~~ foreign ~~currency~~ exchange rates ~~partially offset by~~changes and the ~~increase in operating revenue and larger benefit from~~ OEM cost recoveries inwhich benefited the ~~Current~~Comparable Period. ~~Eastern Airways contributed a negative $6.3 million and a negative $3.7 million in adjusted EBITDA for the Current Period and Comparable Period, respectively.~~

Africa


	Three Months Ended December 31,						Nine Months Ended December 31,						Favorable (Unfavorable)										Three Months Ended September 30,						Six Months Ended September 30,						Favorable (Unfavorable)
	2018			2017			2018			2017			Quarter vs Quarter					Period vs Period					2019			2018			2019			2018			Quarter vs Quarter					Period vs Period

	(In thousands, except percentages)																						(In thousands, except percentages)
Operating revenue	$	41,394		$	47,915		$	113,545		$	146,523		$	(6,521	)	(13.6	)%	$	(32,978	)	(22.5	)%	$	45,275		$	37,236		$	92,551		$	72,151		$	8,039		21.6	%	$	20,400		28.3	%
Operating income	$	5,286		$	10,470		$	7,892		$	28,353		$	(5,184	)	(49.5	)%	$	(20,461	)	(72.2	)%	$	6,528		$	1,465		$	14,273		$	2,606		$	5,063		*		$	11,667		*
Operating margin	12.8		%	21.9		%	7.0		%	19.4		%	(9.1		)%	(41.6	)%	(12.4		)%	(63.9	)%	14.4		%	3.9		%	15.4		%	3.6		%	10.5		%	*		11.8		%	*
Adjusted EBITDA	$	8,639		$	14,206		$	19,063		$	40,206		$	(5,567	)	(39.2	)%	$	(21,143	)	(52.6	)%	$	12,392		$	5,105		$	24,910		$	10,424		$	7,287		142.7	%	$	14,486		139.0	%
Adjusted EBITDA margin	20.9		%	29.6		%	16.8		%	27.4		%	(8.7		)%	(29.4	)%	(10.6		)%	(38.7	)%	27.4		%	13.7		%	26.9		%	14.4		%	13.7		%	100.0	%	12.5		%	86.8	%
Rent expense	$	2,677		$	2,048		$	6,945		$	6,424		$	(629	)	(30.7	)%	$	(521	)	(8.1	)%	$	3,024		$	2,146		$	6,701		$	4,268		$	(878	)	(40.9	)%	$	(2,433	)	(57.0	)%

_____________

* percentage change too large to be meaningful or not applicable

The Africa region comprises all our operations and affiliates on the African continent, including Nigeria and Egypt.

Current Quarter Compared to Comparable Quarter

Operating revenue for helicopter services in Africa ~~decreased~~increased $6.4 million in the Current Quarter due to an overall ~~decrease~~increase in activity and additional aircraft on contract compared to the Comparable Quarter. ~~Activity declined with certain customers and certain contracts ended, including a contract that expired on March 31, 2018, reducing~~Additionally, operating revenue ~~by $15.4 million, which was partially offset by an increase in activity with other customers increasing revenue by $7.4 million and an increase in~~from fixed ~~wing services revenue of $1.4 million. Fixed~~ wing services in Africa ~~generated $3.4~~increased $1.6 million ~~and $2.0~~to $4.4 million in the Current Quarter from $2.8 million in operating revenue for the ~~Current Quarter and~~ Comparable ~~Quarter, respectively.~~Quarter.

Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin ~~decreased~~increased as a result of the ~~decrease~~increase in operating revenue in the Current Quarter discussed above, which was only partially offset by ~~a decrease~~an increase in direct cost and general and administrative ~~expenses. Additionally, during~~expenses due to the ~~Comparable Quarter, we recorded $0.5 million~~increase in ~~severance expense related to organizational restructuring efforts, which is excluded from adjusted EBITDA~~activity and ~~adjusted EBITDA margin.~~

~~With the conclusion of the recent elections, we anticipate a measure of stability~~additional aircraft on contract in the political environment through the medium term and increased drilling activities; however, we are also seeing increased pressure to benchmark and standardize commercial rates across multiple contracts, which may affect the profitability of contracts in Nigeria.Current Quarter.

Current Period Compared to Comparable Period

Operating revenue for helicopter services in Africa ~~decreased~~increased $16.7 million in the Current Period due to an overall ~~decrease~~increase in activity and additional aircraft on contract compared to the Comparable Period. ~~Activity declined with certain customers and certain contracts ended, including a contract that expired on March 31, 2018, reducing~~Additionally, operating revenue ~~by $53.3 million, which was partially offset by an increase in activity with other customers increasing revenue by $17.4 million and an increase in~~from fixed ~~wing services revenue of $2.9 million. Fixed~~ wing services in Africa ~~generated $8.4~~increased $3.7 million ~~and $5.5~~to $8.7 million ~~of operating revenue for~~in the Current Period ~~and~~from $5.0 million in the Comparable ~~Period, respectively.~~Period.

Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin ~~decreased~~increased as a result of the ~~decrease~~increase in operating revenue in the Current Period discussed above, which was only partially offset by ~~a decrease~~an increase in direct cost and general and administrative ~~expenses. Additionally, during~~expenses due to the ~~Comparable Period, we recorded $0.7 million~~increase in ~~severance expense related to organizational restructuring efforts, which is excluded from adjusted EBITDA~~activity and ~~adjusted EBITDA margin.~~additional aircraft on contract in the Current Period.

Americas


	Three Months Ended December 31,						Nine Months Ended December 31,						Favorable (Unfavorable)										Three Months Ended September 30,						Six Months Ended September 30,						Favorable (Unfavorable)
	2018			2017			2018			2017			Quarter vs Quarter					Period vs Period					2019			2018			2019			2018			Quarter vs Quarter					Period vs Period

	(In thousands, except percentages)																						(In thousands, except percentages)
Operating revenue	$	57,502		$	60,345		$	169,270		$	178,884		$	(2,843	)	(4.7	)%	$	(9,614	)	(5.4	)%	$	60,867		$	56,644		$	118,214		$	109,228		$	4,223		7.5	%	$	8,986		8.2	%
Earnings (losses) from unconsolidated affiliates, net	$	839		$	2,097		$	(2,052	)	$	3,712		$	(1,258	)	(60.0	)%	$	(5,764	)	*
Earnings from unconsolidated affiliates, net of losses																							$	315		$	1,573		$	2,490		$	136		$	(1,258	)	*		$	2,354		*
Operating income (loss)	$	4,412		$	5,308		$	(1,362	)	$	11,535		$	(896	)	(16.9	)%	$	(12,897	)	*		$	3,527		$	2,056		$	7,095		$	(5,287	)	$	1,471		71.5	%	$	12,382		234.2	%
Operating margin	7.7		%	8.8		%	(0.8		)%	6.4		%	(1.1		)%	(12.5	)%	(7.2		)%	*		5.8		%	3.6		%	6.0		%	(4.8		)%	2.2		%	61.1	%	10.8		%	225.0	%
Adjusted EBITDA	$	11,892		$	12,689		$	20,446		$	33,430		$	(797	)	(6.3	)%	$	(12,984	)	(38.8	)%	$	11,471		$	9,204		$	22,245		$	9,041		$	2,267		24.6	%	$	13,204		146.0	%
Adjusted EBITDA margin	20.7		%	21.0		%	12.1		%	18.7		%	(0.3		)%	(1.4	)%	(6.6		)%	(35.3	)%	18.8		%	16.2		%	18.8		%	8.3		%	2.6		%	16.0	%	10.5		%	126.5	%
Rent expense	$	5,641		$	6,295		$	18,573		$	18,480		$	654		10.4	%	$	(93	)	(0.5	)%	$	3,711		$	6,334		$	8,288		$	12,932		$	2,623		41.4	%	$	4,644		35.9	%

_____________

* percentage change too large to be meaningful or not applicable.

The Americas region comprises all our operations and affiliates in North America and South America, including Brazil, Canada, Guyana, Trinidad and the U.S. Gulf of Mexico.

Current Quarter Compared to Comparable Quarter

Operating revenue increased in the Current Quarter primarily due to additional aircraft on contract in Guyana, which increased operating revenue by $5.4 million, partially offset by a $1.8 million decrease in operating revenue from our U.S. Gulf of Mexico oil and gas operations primarily due to a decrease in activity.

Earnings from unconsolidated affiliates, net of losses, decreased $1.3 million primarily due to a decrease in earnings from our investment in Líder in Brazil, partially offset by an increase in earnings from our investment in Cougar in Canada. Earnings from our investment in Líder changed from earnings of $0.2 million in the Comparable Quarter to losses of $1.7 million during the Current Quarter primarily due to a decrease in ~~operating revenue of $2.8 million in Canada~~activity and ~~$0.6 million in the U.S. Gulf of Mexico resulting from lower activity, partially offset by~~ an ~~increase in activity with our Trinidad oil and gas customers, which increased operating revenue by $1.2 million.~~

Earnings (losses) from unconsolidated affiliates, net decreased $1.3 million primarily due to a reduction in earnings from our investment in Líder in Brazil resulting from a decline in activity, partially offset by a less unfavorable change in foreign currency exchange rates. Changes in foreign currency exchange rates decreased our earnings from our investment in Líder by ~~$0.2~~

$1.6 million ~~and $0.8 million, respectively,~~ in the Current Quarter and $1.0 million in the Comparable Quarter. Additionally, earnings from our investment in Cougar increased from earnings of $1.4 million in the Comparable Quarter to $2.0 million for the Current Quarter primarily due to an increase in activity.

See further discussion about our investment in Líder and the Brazil market in “— Executive Overview — Market Outlook” included elsewhere in this Quarterly Report.

Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin were all mostly flat as the decreases in earnings from unconsolidated affiliates and operating revenue discussed above were mostly offset by a $2.0 million decrease in salaries and benefits due to lower headcount and a $0.7 million decrease in rent expense. Additionally, we recorded severance expense, related to organizational restructuring efforts, of $0.1 million and $0.1 million for the Current Quarter and Comparable Quarter, respectively, which is excluded from adjusted EBITDA and adjusted EBITDA margin.

~~Current Period Compared to Comparable Period~~

Operating revenue decreased in the Current Period primarily due to a decrease in operating revenue of $10.8 million in Canada, $1.2 million in Trinidad due to lower activity and a decrease in intra-region operating revenue of $3.5 million primarily due to a decrease in activity in Africa, partially offset by an increase in activity with our U.S. Gulf of Mexico oil and gas customers, which increased operating revenue by $6.4 million.

Earnings (losses) from unconsolidated affiliates, net decreased $5.8 million in the Current Period primarily due to a reduction in earnings from our investment in Líder in Brazil resulting from a decrease in activity and more of an unfavorable impact of foreign currency exchange rates. Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin were negatively impacted by unfavorable foreign currency exchange rate changes, which decreased our earnings from our investment in Líder by $3.8 million in the Current Period and $1.6 million in the Comparable Period.

The ~~decreases~~increases in operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin were ~~primarily~~ driven by the ~~decreases~~increases in operating revenue and a decrease in rent expense due to the return of leased aircraft or rejection of leased aircraft during the Chapter 11 Cases, partially offset by a decrease in earnings from unconsolidated ~~affiliates and operating~~affiliates.

Current Period Compared to Comparable Period

Operating revenue ~~discussed above, which was partially offset by a $2.0 million decrease~~increased in ~~salaries and benefits. Additionally, we recorded severance expense, related to organizational restructuring efforts, of $0.3 million and $0.4 million for~~ the Current Period primarily due to additional aircraft on contract in Guyana, which increased operating revenue by $7.6 million, an increase in activity in Trinidad resulting in an increase in operating revenue of $1.7 million, $1.6 million in additional operating revenue from the SAR services to oil and ~~Comparable~~gas customers in the U.S. Gulf of Mexico and a $1.2 million increase in operating revenue from Canada. Partially offsetting these increases in operating revenue was a decrease from our U.S. Gulf of Mexico oil and gas operations, which decreased operating revenue by $3.1 million from lower activity.

Earnings from unconsolidated affiliates, net of losses, increased $2.4 million in the Current Period ~~respectively, which is excluded~~primarily due to an increase in earnings from our investment in Cougar due to an increase in activity.

The increases in operating income, operating margin, adjusted EBITDA and adjusted EBITDA ~~margin.~~margin were driven by the increases in operating revenue and earnings from unconsolidated affiliates discussed above and a decrease in rent expense due to the return of leased aircraft or rejection of leased aircraft during the Chapter 11 Cases.

Asia Pacific


	Three Months Ended December 31,						Nine Months Ended December 31,						Favorable (Unfavorable)										Three Months Ended September 30,						Six Months Ended September 30,						Favorable (Unfavorable)
	2018			2017			2018			2017			Quarter vs Quarter					Period vs Period					2019			2018			2019			2018			Quarter vs Quarter					Period vs Period

	(In thousands, except percentages)																						(In thousands, except percentages)
Operating revenue	$	40,077		$	50,248		$	141,106		$	153,365		$	(10,171	)	(20.2	)%	$	(12,259	)	(8.0	)%	$	26,849		$	46,625		$	61,190		$	101,029		$	(19,776	)	(42.4	)%	$	(39,839	)	(39.4	)%
Operating loss	$	(6,654	)	$	(941	)	$	(14,613	)	$	(19,374	)	$	(5,713	)	*		$	4,761		24.6	%	$	(19,848	)	$	(6,988	)	$	(32,282	)	$	(7,959	)	$	(12,860	)	*		$	(24,323	)	*
Operating margin	(16.6		)%	(1.9		)%	(10.4		)%	(12.6		)%	(14.7		)%	*		2.2		%	17.5	%	(73.9		)%	(15.0		)%	(52.8		)%	(7.9		)%	(58.9		)%	*		(44.9		)%	*
Adjusted EBITDA	$	(3,411	)	$	4,797		$	(4,325	)	$	502		$	(8,208	)	*		$	(4,827	)	*		$	2,159		$	(3,000	)	$	3,387		$	(914	)	$	5,159		172.0	%	$	4,301		*
Adjusted EBITDA margin	(8.5		)%	9.5		%	(3.1		)%	0.3		%	(18.0		)%	*		(3.4		)%	*		8.0		%	(6.4		)%	5.5		%	(0.9		)%	14.4		%	225.0	%	6.4		%	*
Rent expense	$	7,927		$	2,807		$	24,325		$	24,356		$	(5,120	)	(182.4	)%	$	31		0.1	%	$	3,370		$	8,281		$	17,140		$	16,398		$	4,911		59.3	%	$	(742	)	(4.5	)%

_____________

* percentage change too large to be meaningful or not applicable.

The Asia Pacific region comprises all our operations and affiliates in Australia and Southeast Asia, including Malaysia, Sakhalin, and our fixed wing operations through Airnorth in Australia.

Current Quarter Compared to Comparable Quarter

Operating revenue decreased in the Current Quarter primarily due to a decrease in Australia of $12.7 million due to contracts ending and decreased activity with oil and gas ~~services revenue of $7.6~~customers, a $5.4 million ~~primarily~~decrease in Sakhalin due to the ~~end~~sale of ~~short-term contracts in Australia~~Aviashelf during the three months ended June 30, 2019 and a ~~$2.6~~$1.5 million decrease from our fixed wing operations at ~~Airnorth.~~Airnorth primarily resulting from unfavorable changes in foreign currency exchange rates. Airnorth contributed ~~$18.4~~$20.3 million and ~~$21.0~~$21.8 million in operating revenue for the Current Quarter and Comparable Quarter, respectively. ~~Additionally, revenue decreased by $2.6 million in the Current Quarter compared to the Comparable Quarter due to unfavorable changes in foreign currency exchange rates.~~

Operating loss increased ~~and operating margin,~~for the Current Quarter primarily because the Current Quarter includes the $17.5 million impairment of Airnorth goodwill that is not included in adjusted EBITDA and adjusted EBITDA margin. Adjusted EBITDA and adjusted EBITDA margin ~~decreased~~increased in the Current Quarter primarily due to a $15.9 million decrease in salaries and benefits, maintenance expense, fuel costs, travel and meals and training costs, a $4.9 million decrease to rent expense primarily from the return of leased aircraft, and a $1.1 million decrease in depreciation expense, partially offset by a decrease in operating revenue discussed above. Additionally, rent expense increased $5.1 million primarily due to a decrease in OEM credits. We realized OEM credits of $0.8 million and $6.0 million, respectively, in the Current Quarter and Comparable Quarter. These unfavorable changes were partially offset by a $5.1 million decrease in salaries and benefits due to headcount reductions. Additionally, changes in foreign exchange rates negatively impacted adjusted EBITDA results by $2.1 million compared to the Comparable Quarter primarily due to foreign exchange rate losses of $2.3 million and $0.3 million,

~~respectively, for the Current Quarter and Comparable Quarter.~~ Airnorth contributed a ~~negative $1.2~~positive $3.1 million and ~~positive $2.2~~a negative $1.9 million in adjusted EBITDA for the Current Quarter and Comparable Quarter, respectively.

~~Additionally, during~~During the Current Quarter and Comparable Quarter, we recorded ~~$1.8~~$2.5 million and ~~$1.5~~$1.0 million, respectively, in severance expense related to organizational restructuring ~~efforts, which~~efforts. The severance expense is ~~excluded from~~not included in adjusted EBITDA ~~and~~or adjusted EBITDA ~~margin.~~margin for the Current or Comparable Quarters.

Current Period Compared to Comparable Period

Operating revenue decreased in the Current Period primarily due to a decrease in ~~oil and gas services revenue~~Australia of ~~$6.7~~$32.4 million primarily due to contracts ending and decreased activity with oil and gas customers and a $0.9 million unfavorable foreign exchange rate impact, a $6.3 million decrease in Sakhalin due to the ~~end~~sale of ~~short-term contracts~~Aviashelf in ~~Australia~~the Current Period, and a decrease of ~~$6.8~~$1.1 million from our fixed wing operations at Airnorth primarily due to a $2.9 million unfavorable foreign exchange rate impact, partially offset by an increase ~~of $1.2 million~~

in ~~Sakhalin.~~activity. Airnorth contributed ~~$59.8~~$40.4 million and ~~$66.6~~$41.5 million in operating revenue for the Current Period and Comparable Period, respectively. ~~Additionally, revenue decreased by $5.9 million in the Current Period compared to the Comparable Period due to unfavorable changes in foreign currency exchange rates.~~

Operating loss ~~decreased~~increased in the Current Period primarily due to ~~a decrease in salaries and benefits of $13.6 million due to organizational restructuring efforts, partially offset by~~ the decrease in operating revenue discussed above and the $17.5 million impairment of Airnorth goodwill recorded in the Current Period that is not included in adjusted EBITDA and adjusted EBITDA margin, partially offset by a ~~$2.6~~$29.1 million ~~increase~~decrease in salaries and benefits, maintenance expense, ~~at Airnorth.~~fuel costs, travel and meals and training costs, $1.7 million decrease in depreciation expense and $0.7 million decrease to rent expense. Rent expense for the Current Period includes H225 lease return costs of $7.4 million that is not included in adjusted EBITDA or adjusted EBITDA margin. Adjusted EBITDA and adjusted EBITDA margin ~~decreased~~increased due to the items impacting operating income and operating margin excluding the H225 lease return costs. Also, adjusted EBITDA and adjusted EBITDA margin in the Current Period ~~primarily due to an~~benefited from a $2.3 million less unfavorable ~~year-over-year~~ impact ~~from changes in exchange rates. Changes in~~of foreign ~~exchange rates negatively impacted adjusted EBITDA results by $7.0 million compared to the Comparable Period primarily due to foreign~~currency exchange rate ~~losses of $6.1 million for the Current Period compared to foreign exchange rate gains of $0.8 million for the Comparable Period.~~changes. Airnorth contributed $5.5 million and a negative ~~$2.9 million and positive $8.6~~$1.6 million in adjusted EBITDA for the Current Period and Comparable Period, respectively.

Additionally, during the Current Period and Comparable Period, we recorded ~~$4.1~~$3.8 million and ~~$3.7~~$2.3 million, respectively, in severance expense related to organizational restructuring ~~efforts, which~~efforts. The severance expense is ~~excluded from~~not included in adjusted EBITDA ~~and~~or adjusted EBITDA ~~margin.~~margin for the Current Period and Comparable Period.

Corporate and Other


	Three Months Ended December 31,						Nine Months Ended December 31,						Favorable (Unfavorable)										Three Months Ended September 30,						Six Months Ended September 30,						Favorable (Unfavorable)
	2018			2017			2018			2017			Quarter vs Quarter					Period vs Period					2019			2018			2019			2018			Quarter vs Quarter					Period vs Period

	(In thousands, except percentages)																						(In thousands, except percentages)
Operating revenue	$	465		$	743		$	1,363		$	3,912		$	(278	)	(37.4	)%	$	(2,549	)	(65.2	)%	$	10		$	708		$	275		$	898		$	(698	)	(98.6	)%	$	(623	)	(69.4	)%
Operating loss	$	(21,535	)	$	(19,047	)	$	(151,440	)	$	(68,686	)	$	(2,488	)	(13.1	)%	$	(82,754	)	(120.5	)%	$	(63,297	)	$	(113,274	)	$	(91,938	)	$	(129,905	)	$	49,977		44.1	%	$	37,967		29.2	%
Adjusted EBITDA	$	(7,545	)	$	(15,342	)	$	(26,189	)	$	(50,309	)	$	7,797		50.8	%	$	24,120		47.9	%	$	(14,351	)	$	(9,621	)	$	(24,857	)	$	(18,644	)	$	(4,730	)	(49.2	)%	$	(6,213	)	(33.3	)%
Rent expense	$	1,648		$	1,971		$	4,547		$	6,456		$	323		16.4	%	$	1,909		29.6	%	$	1,689		$	1,651		$	3,023		$	2,899		$	(38	)	(2.3	)%	$	(124	)	(4.3	)%

Corporate and other includes our supply chain management and corporate costs that have not been allocated out to other ~~regions and our Bristow Academy operations prior to the sale of Bristow Academy on November 1, 2017.~~regions.

Current Quarter Compared to Comparable Quarter

Operating ~~revenue decreased in the Current Quarter primarily due to the sale of Bristow Academy.~~

Operating loss increased in the Current Quarter primarily due to a $2.2 million increase in general and administrative expenses primarily due to a $6.0 million increase in professional fees primarily related to the Columbia transaction and related financing transactions, partially offset by a $3.3 million decrease in compensation expense resulting from a reduction in short-term and long-term incentive compensation costs of $2.6 million. Adjusted EBITDA improved primarily due to the reduction in general and administrative expenses excluding organizational restructuring and transaction costs, and foreign currency transaction gains of $1.7 million in the Current Quarter compared to foreign currency transaction losses of $0.3 million in the Comparable Quarter.

During the Current Quarter, we recorded $7.2 million of transaction costs and during the Comparable Quarter, we recorded $0.1 million of organizational restructuring costs, both of which are excluded from adjusted EBITDA and adjusted EBITDA margin.

~~Current Period Compared to Comparable Period~~

~~Operating revenue decreased in the Current Period primarily due to the sale of Bristow Academy.~~

~~Operating~~ loss for the Current ~~Period~~Quarter includes ~~impairments of $87.5~~$42.0 million for the impairment of H225 aircraft. Operating loss for the Comparable Quarter includes $87.5 million of impairments for H225 aircraft and $8.9 million of impairments for the ~~impairment of~~related H225 inventory. For further details, see Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report. The impairments are excluded from adjusted EBITDA and adjusted EBITDA margin.

Operating loss ~~increased~~decreased in the Current Quarter primarily due to the H225 aircraft impairment being lower in the Current Quarter than the H225 aircraft and inventory impairments recorded in the Comparable Quarter. Adjusted EBITDA decreased primarily due to an increase of $4.1 million of salaries and benefits due to an increase in short-term incentive compensation in the Current Quarter.

Current Period Compared to Comparable Period

Operating loss for the Current Period includes $42.0 million for the impairment of H225 aircraft and prepetition professional fees of $13.5 million related to the filing of the Chapter 11 Cases included in prepetition restructuring charges on the condensed consolidated statements of operations. Both the impairment of H225 aircraft and prepetition professional fees are not included in adjusted EBITDA. Operating loss decreased in the Current Period primarily due to the lower H225 aircraft impairment in the Current Period than the H225 aircraft and inventory impairments ~~and decline~~recorded in ~~revenue,~~the Comparable Period, partially offset by ~~a $9.0 million reduction~~the prepetition professional fees incurred in ~~general and administrative expenses, including an $8.1 million decrease in organizational restructuring costs. Additionally, during~~ the ~~Comparable Period, we recorded $1.2 million of inventory impairment charges related to Bristow Academy.~~Current Period. Adjusted EBITDA ~~improved~~decreased primarily due to an increase of $3.0 million in salaries and benefits due to an increase in short-term incentive compensation in the Current Period and decrease in foreign currency transaction gains of $5.8 million for the Current Period compared to foreign currency transaction losses of $3.3 million for the Comparable Period, the sale of Bristow Academy, which generated negative adjusted EBITDA of $3.6 million in the Comparable Period, and the $9.4 million decrease in general and administrative expenses excluding organizational restructuring and transaction costs.$2.2 million.

During the Current Period and Comparable Period, we recorded $1.4 million and $9.5 million, respectively, of organizational restructuring costs and during the Current Period, we recorded $8.4 million of transaction costs, which along with the impairment charges discussed above, are excluded from adjusted EBITDA and adjusted EBITDA margin.

Interest Expense, Net

Three Months Ended
December 31, Nine Months Ended
December 31,
Favorable
(Unfavorable)
2018 2017 2018 2017 Quarter vs Quarter Period vs Period

(In thousands, except percentages)
Interest income $ 2,269
$ 144
$ 3,677
$ 512
$ 2,125
*
$ 3,165
*
Interest expense (26,416 ) (17,840 ) (76,400 ) (51,707 ) (8,576 ) (48.1 )% (24,693 ) (47.8 )%
Amortization of debt discount (1,612 ) (242 ) (4,713 ) (343 ) (1,370 ) *
(4,370 ) *
Amortization of debt fees (1,883 ) (1,851 ) (5,239 ) (4,791 ) (32 ) (1.7 )% (448 ) (9.4 )%
Capitalized interest 529
696
1,985
2,652
(167 ) (24.0 )% (667 ) (25.2 )%
Interest expense, net $ (27,113 ) $ (19,093 ) $ (80,690 ) $ (53,677 ) $ (8,020 ) (42.0 )% $ (27,013 ) (50.3 )%

~~_____________~~

* percentage change too large to be meaningful or not applicable.



	Three Months Ended September 30,						Six Months Ended September 30,						Favorable (Unfavorable)
	2019			2018			2019			2018			Quarter vs Quarter					Period vs Period

	(In thousands, except percentages)
Interest income	$	270		$	1,229		$	657		$	1,408		$	(959	)	(78.0	)%	$	(751	)	(53.3	)%
Interest expense	(18,804		)	(25,015		)	(40,401		)	(49,984		)	6,211			24.8	%	9,583			19.2	%
Amortization of debt discount	(670		)	(1,591		)	(1,520		)	(3,101		)	921			57.9	%	1,581			51.0	%
Amortization of debt fees	(3,241		)	(1,711		)	(7,652		)	(3,356		)	(1,530		)	(89.4	)%	(4,296		)	(128.0	)%
Capitalized interest	—			655			150			1,456			(655		)	(100.0	)%	(1,306		)	(89.7	)%
Interest expense, net	$	(22,445	)	$	(26,433	)	$	(48,766	)	$	(53,577	)	$	3,988		15.1	%	$	4,811		9.0	%

Interest expense, net ~~increased~~decreased in the Current Quarter compared to the Comparable Quarter primarily due to lower interest expense of $7.9 million on our 6¼% Senior Notes and 4½% Convertible Senior Notes as the unsecured debt was classified as liabilities subject to compromise on the Petition Date upon the filing of the Chapter 11 Cases and we stopped accruing interest expense, partially offset by $3.1 million of interest expense on our 2019 Term Loan which we borrowed against on May 10, 2019 and the DIP Credit Agreement which we borrowed against on August 26, 2019. Additionally, we recorded $1.9 million of expense for the write-off of a portion of the 8.75% Senior Secured Notes debt fees and discount due to the early repayment of $74.8 million of the 8.75% Senior Secured Notes in September 2019.

Interest expense, net decreased in the Current Period compared to the Comparable Period primarily due to ~~an increase in borrowings,~~lower interest expense of $12.3 million on our 6¼% Senior Notes due 2022 and 4½% Convertible Senior Notes due 2023 as the unsecured debt was classified as liabilities subject to compromise on the Petition Date upon the filing of the Chapter 11 Cases and we stopped accruing interest expense, partially offset by ~~an increase in~~$4.1 million of interest ~~income as a result an increase in cash~~expense on our 2019 Term Loan which we borrowed against on May 10, 2019 and ~~cash invested at higher rates.~~the DIP Credit Agreement which we borrowed against on August 26, 2019. Also, we ~~issued convertible debt in December 2017 resulting in an increase in amortization~~incurred $2.6 million of ~~debt discount~~financing fees for the ~~Current Quarter compared~~DIP Credit Agreement. Additionally, we recorded $1.9 million of expense for the write-off of a portion of the 8.75% Senior Secured Notes debt fees and discount due to the ~~Comparable Quarter~~early repayment of $74.8 million of the 8.75% Senior Secured Notes in September 2019.

For further details on debt and ~~for~~liabilities subject to compromise, see Notes 2 and 5 in the ~~Current Period compared~~“Notes to the Comparable Period. Additionally, during the Comparable Quarter and Comparable Period, we wrote-off $0.5 million and $1.1 million, respectively, of deferred financing fees related to early extinguishment of debt.

Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Other Income (Expense), Net


	Three Months Ended December 31,						Nine Months Ended December 31,						Favorable (Unfavorable)										Three Months Ended September 30,						Six Months Ended September 30,						Favorable (Unfavorable)
	2018			2017			2018			2017			Quarter vs Quarter					Period vs Period					2019			2018			2019			2018			Quarter vs Quarter					Period vs Period

	(In thousands, except percentages)																						(In thousands, except percentages)
Foreign currency gains (losses) by region:
Europe Caspian	$	(2,084	)	$	1,325		$	(8,416	)	$	2,770		$	(3,409	)	(257.3	)%	$	(11,186	)	*		$	(6,857	)	$	(951	)	$	(10,681	)	$	(6,332	)	$	(5,906	)	*		$	(4,349	)	(68.7	)%
Africa	(380		)	(400		)	356			762			20			5.0	%	(406		)	(53.3	)%	855			(27		)	622			736			882			*		(114		)	(15.5	)%
Americas	320			(22		)	249			173			342			*		76			43.9	%	353			(332		)	679			(71		)	685			*		750			*
Asia Pacific	(2,343		)	(276		)	(6,076		)	789			(2,067		)	*		(6,865		)	*		(1,006		)	(1,123		)	(1,276		)	(3,733		)	117			10.4	%	2,457			65.8	%
Corporate and other	1,702			(259		)	5,766			(3,280		)	1,961			*		9,046			*		839			126			1,910			4,064			713			*		(2,154		)	(53.0	)%
Foreign currency gains (losses)	(2,785		)	368			(8,121		)	1,214			(3,153		)	*		(9,335		)	*
Foreign currency losses																							(5,816		)	(2,307		)	(8,746		)	(5,336		)	(3,509		)	(152.1	)%	(3,410		)	(63.9	)%
Pension-related costs																							(893		)	(934		)	(1,845		)	(1,891		)	41			4.4	%	46			2.4	%
Other	(875		)	(1,104		)	(2,693		)	(979		)	229			20.7	%	(1,714		)	(175.1	)%	72			37			81			73			35			94.6	%	8			11.0	%
Other income (expense), net	$	(3,660	)	$	(736	)	$	(10,814	)	$	235		$	(2,924	)	*		$	(11,049	)	*		$	(6,637	)	$	(3,204	)	$	(10,510	)	$	(7,154	)	$	(3,433	)	(107.1	)%	$	(3,356	)	(46.9	)%

_____________

* percentage change too large to be meaningful or not applicable.

Other income (expense), net for the Current Quarter and Comparable ~~Quarters and Current and Comparable Periods~~Quarter were most significantly impacted by foreign currency gains (losses). The foreign currency gains (losses) within other income (expense), net are reflected within the results (below operating income) of the regions shown in the table above.

Transaction gains and losses represent the revaluation of monetary assets and liabilities from the currency that will ultimately be settled into the functional currency of the legal entity holding the asset or liability. The most significant items revalued are denominated in U.S. dollars on entities with British pound sterling ~~Australian dollar~~ and Nigerian naira functional currencies and denominated in British pound sterling on entities with U.S. dollar functional currencies with transaction gains or losses primarily resulting from the strengthening or weakening of the U.S. dollar versus those other currencies.

Taxes


	Three Months Ended December 31,						Nine Months Ended December 31,						Favorable (Unfavorable)										Three Months Ended September 30,						Six Months Ended September 30,						Favorable (Unfavorable)
	2018			2017			2018			2017			Quarter vs Quarter					Period vs Period					2019			2018			2019			2018			Quarter vs Quarter					Period vs Period

	(In thousands, except percentages)																						(In thousands, except percentages)
Effective tax rate	(38.4		)%	57.5		%	(2.1		)%	(2.7		)%	95.9		%	*		(0.6		)%	(22.2	)%	11.8		%	9.8		%	10.1		%	9.6		%	(2.0		)%	(20.4	)%	(0.5		)%	(5.2	)%
Net foreign tax expense (benefit) on non-U.S. earnings	$	(607	)	$	(2,433	)	$	(5,196	)	$	2,747		$	(1,826	)	(75.1	)%	$	7,943		*
Expense (benefit) of foreign earnings indefinitely reinvested abroad	$	2,091		$	2,484		$	10,908		$	(11,511	)	$	393		15.8	%	$	(22,419	)	*
Net foreign tax on non-U.S. earnings																							$	655		$	(6,304	)	$	5,013		$	(4,590	)	$	(6,959	)	(110.4	)%	$	(9,603	)	(209.2	)%
Expense of foreign earnings indefinitely reinvested abroad																							$	1,405		$	9,043		$	4,837		$	8,817		$	7,638		84.5	%	$	3,980		45.1	%
Expense from change in tax contingency	$	(2,434	)	$	180		$	(2,374	)	$	4,874		$	2,614		*		$	7,248		*		$	21		$	30		$	(277	)	$	60		$	9		30.0	%	$	337		561.7	%
Sale of subsidiaries																							$	—		$	—		$	9,824		$	—		$	—		*		$	(9,824	)	*
Impairment of foreign assets																							$	4,216		$	—		$	4,216		$	—		$	(4,216	)	*		$	(4,216	)	*
Impact of stock based compensation	$	8		$	78		$	1,182		$	2,314		$	70		89.7	%	$	1,132		48.9	%	$	—		$	12		$	—		$	1,174		$	12		100.0	%	$	1,174		100.0	%
Deduction for foreign taxes	$	(158	)	$	501		$	(228	)	$	(643	)	$	659		*		$	(415	)	(64.5	)%	$	(124	)	$	(49	)	$	(173	)	$	(71	)	$	75		153.1	%	$	102		143.7	%
Change in valuation allowance	$	33,518		$	2,085		$	43,824		$	13,402		$	(31,433	)	*		$	(30,422	)	(227.0	)%	$	3,640		$	9,313		$	3,296		$	10,306		$	5,673		60.9	%	$	7,010		68.0	%
U.S. statutory rate reduction	$	(19,033	)	$	(75,636	)	$	(19,033	)	$	(75,636	)	$	(56,603	)	(74.8	)%	$	(56,603	)	(74.8	)%
One-time repatriation tax	$	30,671		$	61,478		$	30,671		$	61,478		$	30,807		50.1	%	$	30,807		50.1	%

_____________

* percentage change too large to be meaningful or not applicable

~~We estimate~~Our provision for income taxes for the ~~full-year~~interim period ended September 30, 2019 was prepared using a discrete effective tax rate method. Historically, we calculated our provision for income taxes during interim reporting periods by applying the estimated annual income tax rate for the full fiscal year to income from continuing operations, ~~and apply this rate to our year-to-date~~excluding discrete items, for the reporting period. We determined that since small changes in estimated pre-tax income ~~from continuing operations. In addition, we separately calculate the tax impact of unusual~~ or ~~infrequent items, if any. The tax impact of such unusual or infrequent items is treated discretely~~loss would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate of income taxes for the quarter ended September 30, 2019. We will continue to evaluate income tax estimates under the historical method in ~~which they occur.~~subsequent quarters and employ a discrete effective tax rate method if warranted.

The relationship between our provision for or benefit from income taxes and our pre-tax book income can vary significantly from period to period considering, among other factors, (a) the overall level of pre-tax book income, (b) changes in the blend of income that is taxed based on gross revenues or at high effective tax rates versus pre-tax book income or at low effective tax rates and (c) our geographical blend of pre-tax book income. Consequently, our income tax expense or benefit does not change proportionally with our pre-tax book income or loss. Significant decreases in our pre-tax book income typically result in higher effective tax rates, while significant increases in pre-tax book income can lead to lower effective tax rates, subject to the other factors impacting income tax expense noted above. The change in our effective tax rate excluding discrete items for the Current Quarter compared to the Comparable Quarter primarily related to changes in the blend of earnings taxed in relatively high taxed jurisdictions versus low taxed jurisdictions. Additionally, during the Current Quarter we increased our valuation allowance by $3.6 million and during the Comparable Quarter we increased our valuation allowance by $9.3 million, respectively, which also impacted our effective tax rate.

Valuation allowances represent the reduction of our deferred tax assets. We evaluate our deferred tax assets quarterly which requires significant management judgment to determine the recoverability of these deferred tax assets by assessing whether it is more likely than not that some or all of the deferred tax ~~assets~~asset will be realized before expiration. After considering all available positive and negative evidence using a “more likely than not” standard, we believe it is appropriate to value against deferred tax assets related to certain foreign net operating losses and certain foreign tax credits. As a result, we recorded a valuation allowance of $30.4 million against foreign tax credits for the Current Quarter and $3.1 million and $2.1 million against net operating losses in certain foreign jurisdictions for the Current Quarter and Comparable Quarter, respectively. During the Current Period and Comparable Period, we recorded a valuation allowance of $30.4 million and $7.6 million, respectively, against foreign tax credits and ~~$13.4 million and $5.8 million, respectively, against net operating losses in~~ certain foreign ~~jurisdictions.~~

On December 22, 2017, the president of the United States signed into law the Act. The Act includes numerous changes in existing U.S. tax law, including a permanent reduction in the U.S. federal corporate income tax rate from 35% to 21%. The rate reduction takes effect on January 1, 2018. Further, the Act provides for a one-time “deemed repatriation” of accumulated foreign earnings of certain foreign corporations. Under U.S. generally accepted accounting principles, our net deferred tax liabilities are required to be revalued during the period in which the new tax legislation is enacted. We have completed our analysis of the income tax implications of the Act during the Current Quarter and recorded adjustments accordingly to previously reported provisional amounts.

Certain provisions under the Act became applicable to us on April 1, 2018 and our income tax provision for the Current Period includes the tax implications of these provisions. These provisions include Global Intangible Low-Taxed Income (“GILTI”), Base Erosion and Anti-Avoidance Tax (“BEAT”), Foreign Derived Intangible Income (“FDII”), and certain limitations on the deduction of interest expense and utilization of net operating losses.

Liquidity and Capital Resources

Cash Flows

Operating Activities

Net cash flows used in operating activities were $~~68.9~~57.2 million and ~~$9.3~~$26.9 million during the Current Period and Comparable Period, respectively. The increase in net cash flows used in operating activities in the Current Period primarily resulted from OEM cost recoveries in the Comparable Period that did not recur in the Current Period and an increase in cash flow used in working capital changes. Changes in non-cash working capital ~~used~~provided $~~37.9~~22.0 million and used $~~18.2~~13.1 million in cash flows from operating activities for the Current Period and Comparable Period, respectively. ~~Cash flows~~The changes in non-cash working capital used from ~~operations for~~ the Comparable Quarter are primarily due to the Chapter 11 Cases in the Current Period ~~includes $30.5 million related to OEM cost recoveries of which $20.1 million is included~~resulting in ~~cash flows~~lower payments for interest, leases and other miscellaneous accrued liabilities pending emergence from ~~operations before working capital changes and $10.4 million is included in working capital changes.~~Chapter 11.

Investing Activities

Cash flows used in investing activities were $~~24.6~~43.4 million and $8.8 million during the Current Period and ~~cash flows provided by investing activities were~~ ~~$106.6 million~~ ~~during the~~ Comparable ~~Period.~~Period, respectively. Cash ~~was~~ used ~~primarily~~ for capital expenditures as follows:

Nine Months Ended
December 31,
2018 2017
Number of aircraft delivered:
Medium 1
5

Total aircraft 1
5

Capital expenditures (in thousands):
Aircraft and equipment $ 28,570
$ 26,800

Land and building 5,141
9,641

Total capital expenditures $ 33,711
$ 36,441



	Six Months Ended September 30,
	2019		2018
Capital expenditures (in thousands):
Aircraft and equipment	$	22,762	$	12,731
Land and building	3,188		4,571
Total capital expenditures	$	25,950	$	17,302

During the Current Period, we received proceeds of ~~$9.1~~$5.0 million primarily from the sale or disposal of three aircraft and certain other equipment. During the Comparable Period, we received ~~$48.5~~$8.5 million in proceeds from the sale or disposal of 11three aircraft and certain other equipment. In the Current Period, we transferred, net of cash received, $22.5 million as part of the sales of Eastern Airways, BHLL and Aviashelf. We took delivery of one AW189 aircraft in August 2019. We did not make any progress payments for aircraft or take delivery of any aircraft during the Comparable Period.

Financing Activities

Cash flows provided by financing activities was $110.9 million during the Current Period and cash flows used in financing activities was ~~$50.6 million~~ ~~and $85.8~~$31.4 million during the ~~Current Period and~~ Comparable Period, respectively. During the Current Period, we received $75.0 million in proceeds for the Term Loan Agreement and $150 million in proceeds from the DIP Credit Agreement. During the Current Period, we used $99.2 million for debt repayments, including purchasing $74.8 million aggregate principal amount of the 8.75% Senior Secured Notes, and paid $14.1 million for debt issuance costs. During the Comparable Period, we used cash to make principal payments on our debt of ~~$49.1~~$30.0 million. During the Comparable Period, we received $174.8 million from borrowings on our $400 million revolving credit facility (the “Revolving Credit Facility”), $230 million from borrowings on our term loan credit agreement with PK AirFinance S.à.r.l., as agent, and PK Transportation Finance Ireland Limited, as lender, and $143.8 million from the issuance of our 4½% Convertible Senior Notes. During the Comparable Period, we used cash to repay debt of $609.7 million (including $313.9 million related to our Revolving Credit Facility and $295.8 million related to other principal payments on debt) and pay dividends of $2.5 million on our common stock. Additionally, during the Comparable Period, we paid $40.4 million for the purchase of the 4½% Convertible Senior Notes call option, and simultaneously received $30.3 million for the issuance of warrants.

Future Cash Requirements

Contractual Obligations, Commercial Commitments and Off Balance Sheet Arrangements

We have various contractual obligations that are recorded as liabilities on our condensed consolidated balance sheet. Other items, such as certain purchase commitments, interest payments and other executory contracts are not recognized as liabilities on our condensed consolidated balance sheet but are included in the table below or are recognized as liabilities but are discounted to present value for accounting purposes but are included in the table below. For example, we are contractually committed to make certain minimum lease payments for the use of property and equipment under operating lease agreements. These minimum lease payments are recorded at present value in accordance with applicable lease accounting guidance.

The following table summarizes our significant contractual obligations and other commercial commitments on an undiscounted basis as of ~~December 31, 2018~~September 30, 2019 and the future periods in which such obligations are expected to be settled in cash. In addition, the table reflects the timing of principal and interest payments on outstanding borrowings as of ~~December 31, 2018~~September 30, 2019 based on the contractual terms and has not been amended to ~~classify~~reclassify substantially all of our long-term debt as current for any possible accelerations as discussed in Note 45 in the “Notes to ~~Condensed~~ Consolidated Financial Statements” included elsewhere in this Quarterly ~~Report and does not reflect the impact of Chapter 11 Cases and the resulting acceleration of substantially all of our long-term debt.~~Report. Additional details regarding these obligations are provided in Notes 4, 5, 78 and 910 in the “Notes to Consolidated Financial Statements” included in the fiscal year ~~2018~~2019 Annual Report and in Notes 5, 6, 8 and 109 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.


	Payments Due by Period										Payments Due by Period
			Three Months Ending March 31, 2019		Fiscal Year Ending March 31,								Six Months Ending March 31, 2020		Fiscal Year Ending March 31,
	Total		Three Months Ending March 31, 2019		2020— 2021		2022— 2023		2024 and beyond		Total		Six Months Ending March 31, 2020		2021— 2022		2023— 2024		2025 and beyond

	(In thousands)										(In thousands)
Contractual obligations:
Long-term debt and short-term borrowings:
Principal ⁽¹⁾	$	1,490,412	$	11,864	$	106,428	$	969,880	$	402,240	$	1,598,785	$	27,420	$	383,871	$	1,187,476	$	18
Interest ⁽²⁾	390,309		24,334		190,208		166,586		9,181		319,910		54,041		186,780		79,089		—
Aircraft operating leases ⁽³⁾	260,938		36,399		174,063		45,800		4,676		346,385		47,496		164,641		101,848		32,400
Other operating leases ⁽⁴⁾	65,400		2,190		16,333		15,583		31,294		48,666		4,254		12,574		8,444		23,394
Pension obligations ⁽⁵⁾	41,393		3,668		32,376		5,349		—		28,593		8,069		20,524		—		—
Aircraft purchase obligations ⁽⁶⁾⁽⁷⁾	432,995		2,197		159,202		163,139		108,457		43,121		28,747		14,374		—		—
Other purchase obligations ⁽⁸⁾	52,019		52,019		—		—		—		28,345		28,345		—		—		—
Total contractual cash obligations	$	2,733,466	$	132,671	$	678,610	$	1,366,337	$	555,848	$	2,413,805	$	198,372	$	782,764	$	1,376,857	$	55,812
Other commercial commitments:
Letters of credit	$	16,160	$	10,081	$	6,079	$	—	$	—	$	14,965	$	14,965	$	—	$	—	$	—
Total commercial commitments	$	16,160	$	10,081	$	6,079	$	—	$	—	$	14,965	$	14,965	$	—	$	—	$	—

_____________


⁽¹⁾	Excludes unamortized discount of ~~$35.0~~$1.7 million and unamortized debt issuance costs of ~~$23.3~~$19.7 million.


⁽²⁾	Interest payments for variable interest debt are based on interest rates as of ~~December 31, 2018.~~September 30, 2019.


⁽³⁾	Represents separate operating leases for aircraft.


⁽⁴⁾	Represents minimum rental payments required under non-aircraft operating leases that have initial or remaining non-cancelable lease terms in excess of one year.

⁽⁵⁾

Represents expected funding for defined benefit pension plans in future periods. These amounts are undiscounted and are based on the expectation that the U.K. pension plan will be fully funded in approximately five years. As of ~~December 31, 2018,~~September 30, 2019, we had recorded on our balance sheet a ~~$28.0~~$18.7 million pension liability associated with these obligations. The timing of the funding is dependent on actuarial valuations and resulting negotiations with the plan trustees.


⁽⁶⁾	~~Includes $91.1 million for five aircraft orders that can be cancelled prior to delivery dates. As of December 31, 2018, we have made non-refundable deposits of $4.5 million related to these aircraft.~~

⁽⁷⁾

On ~~May 1,~~July 25, 2019, we entered into an amendment to our agreement ~~with Airbus Helicopters~~ for the purchase of ~~22 H175 helicopters which includes five aircraft that can be cancelled by us prior to the delivery dates.~~four AW189 U.K. SAR configuration helicopters. Pursuant to the amendment, the parties mutually agreed to postpone the delivery dates for ~~such helicopters for 18 months from the previous schedule with the first~~ three helicopters ~~now scheduled for delivery~~ in the second half of fiscal year ~~2022.~~2020 and first quarter of fiscal year 2021. The postponement in deliveries resulted in ~~various amendments to the payment terms under the purchase agreement including the~~ deferral of approximately ~~$110.0~~$14.4 million in capital expenditures scheduled for fiscal ~~years 2019 to 2023~~year 2020 into fiscal ~~years 2024 and beyond. In connection with this amendment, the overall purchase price of these helicopters has been increased by $18.4 million to account for inflation.~~year 2021. The impact of this amendment is ~~not~~included in the table above. One of the four aircraft was purchased in August 2019 and a second aircraft was purchased in October 2019.


⁽⁷⁾	On October 3, 2019, the Bankruptcy Court entered an order approving an agreement with Airbus Helicopters S.A.S. to reject our aircraft purchase contract for the 22 H175 helicopters totaling $390.3 million. The impact of this agreement is included in the table above.


⁽⁸⁾	Other purchase obligations primarily represent unfilled purchase orders for aircraft parts and non-cancelable power-by-the-hour maintenance commitments. For further details on the non-cancelable power-by-the-hour maintenance commitments, see Note 1 in the “Notes to Consolidated Financial Statements” included in the fiscal year ~~2018~~2019 Annual Report.

Subject to certain exceptions, under the Bankruptcy Code, we may assume, assign or reject certain executory contracts and unexpired leases, subject to the approval of the Bankruptcy Court and satisfaction of certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves us of performing our future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed

breach. Generally, the assumption of an executory contract or unexpired lease will require us to cure existing monetary and non-monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease in this Quarterly Report, including where applicable a quantification of the obligations under any such executory contract or unexpired lease, is qualified by any overriding assumption or rejection rights we have under the Bankruptcy Code. Further, nothing herein is or shall be deemed to be an admission with respect to any claim amounts or calculations arising from the rejection of any executory contract or unexpired lease and we expressly reserve all our rights with respect thereto.

As of the date of this Quarterly Report, we have filed motions to reject certain leases and we continue to evaluate if we will seek to assume or reject additional leases or purchase contracts in connection with the Chapter 11 Cases. Any decision to assume or reject any leases or purchase contracts will be made by our management in consideration of then-existing economic, market and legal conditions and other relevant considerations, subject to the Bankruptcy Court and potentially other approvals.

Capital Commitments and Other Uses of Cash

We have commitments and options to make capital expenditures over the next ~~seven~~ fiscal ~~years~~year to purchase additional aircraft, including aircraft associated with the commitments reflected in the table above. Although a similar number of our existing aircraft may be sold during the same period, the additional aircraft on order are expected to provide incremental fleet capacity in terms of revenue, operating margin and adjusted EBITDA margin. See Note 8 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report for a detail of the number of aircraft under commitments and options expected to be delivered in the current and subsequent fiscal years by aircraft size along with the related expenditures.

As discussed under “— Executive Overview — Our Strategy”, cash may also be used in future periods to repurchase or otherwise retire debt or for any acquisition opportunities we believe are aligned with our long-term strategy.

Financial Condition and Sources of Liquidity

We manage our liquidity through generation of cash from operations while assessing our funding needs on an ongoing basis. Historically, while we have generated cash from operations, financing cash flows also have been a significant source of liquidity over the past several years. The significant factors that affect our overall liquidity include cash from or used to fund operations, capital expenditure commitments, debt service, pension funding, adequacy of bank lines of credit and our ability to attract capital on satisfactory terms.

As of ~~December 31, 2018,~~September 30, 2019, approximately ~~34%~~80% of our cash balances are held outside the U.S. and are generally used to meet the liquidity needs of our non-U.S. operations. Most of our cash held outside the U.S. could be repatriated to the U.S., and any such repatriation could be subject to additional foreign taxes. As a result of the Tax Cuts and Jobs Act, we have provided for U.S. federal income taxes on undistributed foreign earnings. If cash held by non-U.S. operations is required for funding operations in the U.S., we may make a provision for additional tax in connection with repatriating this cash, which is not expected to have a significant impact on our results of operations.

The Company’s liquidity outlook has recently ~~changed resulting~~changed. Given the continuing challenges in ~~substantial doubt about~~the offshore oil and gas industry and other matters impacting liquidity, the rate at which the Company’s ~~ability~~cash position was declining began to ~~continue as a going concern.~~increase. It became necessary for the Company to evaluate all our strategic alternatives. On May 11, 2019, the Debtors filed Chapter 11 Cases in the Bankruptcy Court seeking relief under the Bankruptcy Code. The Debtors’ Chapter 11 Cases ~~are~~were jointly administered under the caption In re: Bristow Group Inc., et al., Main Case No. 19-32713. The Debtors ~~continue~~continued to operate their businesses and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The significant risks and uncertainties related to the Chapter 11 Cases raised substantial doubt about the Company’s ability to continue as a going concern. In addition, each of the commencement of the Chapter 11 Cases and the delivery of the Amended 10-K with a going concern qualification or explanation constituted an event of default under certain of our secured equipment financings, giving those secured equipment lenders the right to accelerate repayment of the applicable debt, subject to Chapter 11 protections, and triggering cross-default and/or cross-acceleration provisions in substantially all of our other debt instruments should that right to accelerate repayment be exercised.

As a result of the facts and circumstances discussed above, the Company ~~has~~ classified substantially all debt balances of approximately ~~$1.4 billion~~$947.0 million as of ~~December 31, 2018~~September 30, 2019 as short-term borrowings and current maturities of long-term debt on our ~~condensed~~ consolidated balance ~~sheet.~~sheet, except for amounts included in liabilities subject to compromise as of September 30, 2019.

On May 10, 2019, we entered into the Initial RSA with (i) ~~Supporting Secured Noteholders and (ii) the guarantors~~certain holders of the 8.75% Senior Secured Notes and (ii) the Secured Guarantors, to support the Restructuring. On July 24, 2019, we entered into the Second Amended RSA, which amended and restated the Initial RSA, with the Supporting Secured Noteholders, the Secured Guarantors and the Supporting Unsecured Noteholders. The Second Amended RSA contemplated implementation of the Restructuring on the amended terms set forth in the Restructuring Term ~~Sheet. The RSA contemplates the filing of the~~Sheet pursuant to a Chapter 11 ~~Cases to implement the Restructuring pursuant to the Plan~~plan of reorganization and the various related transactions set forth in or contemplated by the Restructuring Term Sheet, the term sheet for the DIP ~~Term Sheet~~Credit Agreement and the other restructuring documents attached to the ~~RSA.~~

The RSA contains certain covenants on the part of each of the Company and the Supporting Secured Noteholders, including limitations on the Supporting Secured Noteholders’ ability to pursue alternative transactions, commitments by the Supporting Secured Noteholders to vote in favor of the Plan and commitments of the Company and the Supporting Secured Noteholders to

negotiate in good faith to finalize the documents and agreements governing the Plan. The RSA also provides for certain conditions to the obligations of the parties and for termination upon the occurrence of certain events, including without limitation, the failure to achieve certain milestones and certain breaches by the parties under theSecond Amended RSA.

On May 10, 2019, we entered into the Term Loan Agreement for the $75 million 2019 Term Loan. Immediately upon entering into the Term Loan Agreement, and prior to the Petition Date, the Company and BHC III borrowed the full amount thereunder, the net proceeds of which ~~may be used only in compliance with a cash flow forecast required pursuant to the terms of the Term Loan Agreement, which the Company expects will be~~were used for general corporate purposes, including to fund the working capital and liquidity requirements of the Company during the pendency of the Chapter 11 Cases. For further details, see “— Recent Events — Term Loan Agreement” above.

~~On February 11, 2019,~~Pursuant to our Amended Plan, we ~~announced that Bristow~~received $385.0 million in cash on the Effective Date of which $270.9 million was used to pay off principal and ~~Columbia have mutually agreed to terminate~~interest on our agreement to acquire Columbia. In connection with the termination, we paid $20 million to Columbia in February 2019. Bristow, Columbia and Columbia’s shareholders have agreed to release each other from all claims in connection with the purchase agreement and the related transactions. For further details, see Note 2 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.8.75% Senior Secured Notes.

Critical Accounting Policies and Estimates

See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in the fiscal year ~~2018~~2019 Annual Report for a discussion of our critical accounting policies. There have been no material changes to our critical accounting policies and estimates provided in the fiscal year ~~2018~~2019 Annual Report.

Recent Accounting Pronouncements

See Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report for a discussion of recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are subject to certain market risks arising from the use of financial instruments in the ordinary course of business. This risk arises primarily as a result of potential changes in the fair market value of financial instruments that would result from adverse fluctuations in foreign currency exchange rates, credit risk, and interest rates as discussed in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the fiscal year ~~2018~~2019 Annual Report and Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Item 4. Controls and Procedures.

~~Material Weakness Previously Disclosed~~

As disclosed in an amendment (the “Amendment”) to our Annual Report on Form 10-K for the year ended March 31, 2018 (the “2018 Form 10-K” or “Amended 10-K”), we identified a material weakness in our internal controls over financial reporting for monitoring of compliance with non-financial covenants within certain secured financing and lease agreements in connection with the evaluation and procedures carried out in connection with this Quarterly Report on Form 10-Q for the quarter ended December 31, 2018. As a result of commencing Chapter 11 Cases and updating our going concern assessment and the delivery of the Amended 10-K with such a going concern qualification or explanation, an event of default will exist under certain secured equipment financings and trigger cross-default and cross-acceleration provisions in substantially all of our debt instruments. As a result, we reclassified $1.4 billion as of March 31, 2018 from long-term to short-term on our consolidated balance sheets.

In light of this material weakness, in preparing our condensed consolidated financial statements as of and for the quarter ended December 31, 2018, we performed additional procedures including a comprehensive review of our compliance with our various debt and lease agreements designed to ensure that our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for the quarter ended December 31, 2018, have been prepared in accordance with generally accepted accounting principles.

~~Remediation Plan~~

Although certain procedures have been undertaken as a result of the material weakness, to assess compliance with non-financial covenants of certain of our secured equipment financing and lease agreements to remediate the material weakness, we will continue the implementation of our remediation plan by establishing a debt and lease compliance program with the specific objective of creating a sustainable and executable compliance process that can be repeated on a recurring basis to ensure timely monitoring of compliance with covenants and provisions. We intend to implement such compliance program by executing the following:

Implementation of new or redesigned processes, where necessary, for compliance with collateral maintenance requirements under our debt and lease agreements, specifically, tracking the movement of collateral throughout our operations.

~~Establishment of procedures for reassessment of our debt and lease compliance program to ensure timely actions are taken when necessary.~~

We anticipate the actions to be taken, and resulting process improvements, will generally strengthen our internal controls over financial reporting, as well as our disclosure controls and procedures, and over time, will address the material weakness. The material weakness will be considered remediated once these controls have operated for a sufficient period of time for management to conclude, through testing, that these controls are operating effectively.

~~Evaluation of Disclosure Controls and Procedures~~EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

At the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision of and with the participation of our management, including L. Don Miller, our Chief Executive Officer (“CEO”), and Brian J. Allman, our Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ~~(“Exchange~~(the “Exchange Act”)). Based upon that evaluation and the ~~evaluation of the previously identified~~resulting material ~~weakness in our internal controls over financial reporting for monitoring of~~

~~compliance with non-financial covenants within certain secured financing and lease agreements disclosed in the Amendment,~~weaknesses described below, our CEO and CFO have concluded our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were not effective to provide reasonable assurance that the information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission’s rules and forms and that information relating to us (including our consolidated subsidiaries) required to be disclosed is accumulated and communicated to management, including the CEO and CFO, to allow timely decisions regarding required disclosure.

~~Changes~~MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Exchange Act Rules13a-15(f) and 15d-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. A company’s internal control over financial reporting includes those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Our management, including our CEO and CFO, with the oversight of our Board of Directors, evaluated the effectiveness of the design and operation of our internal control over financial reporting as of September 30, 2019 based on criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 in Internal Control ~~Over Financial Reporting~~— Integrated Framework. Based on this evaluation, our management concluded that we did not maintain effective internal control over financial reporting as of September 30, 2019 due to the material weaknesses described below.

Control Environment. We did not maintain an effective control environment as we had an insufficient complement of resources with an appropriate level of knowledge, expertise and skills commensurate with our financial reporting requirements in certain areas. The material weakness contributed to additional control deficiencies, as we did not maintain effective internal controls over monitoring of debt covenant compliance as described below and certain areas of asset impairment testing including the review of certain key assumptions and asset grouping determinations, none of which resulted in a misstatement of the financial statements. In addition, we determined the insufficient complement of resources, resulted in an additional material weakness within

our Risk Assessment process as described further below. This deficiency was originally disclosed in the Annual Report on Form 10-K for the year ended March 31, 2019 (the “fiscal year 2019 Annual Report”) and continues as of September 30, 2019.

Risk Assessment. We concluded, as a result of the control environment deficiency above, there exists a material weakness within our risk assessment process, specifically, the process to identify the potential for management override of controls at locations not operating on our centralized enterprise resource planning (“ERP”) system and the process to identify and assess changes that could significantly impact our system of internal control, specifically, changes within our capital structure which resulted in more onerous non-financial debt covenants. This material weakness contributed to additional control deficiencies, as the Company did not maintain effective internal controls over (i) debt covenant compliance monitoring as described above, (ii) verification of the review of journal entries are performed by individuals separate from the preparer as described further below in certain locations, and (iii) the reassessment of accounting for certain elements of our accounting for investments in unconsolidated affiliates which resulted in immaterial adjustments to certain historical balances as described elsewhere herein. This deficiency was originally disclosed in the fiscal year 2019 Annual Report and continues as of September 30, 2019.

Debt Covenant Compliance. We identified a material weakness in our internal controls over financial reporting for monitoring of compliance with non-financial covenants within certain secured financing and lease agreements. This deficiency was originally disclosed in the amendment to the Annual Report on Form 10-K for the year ended March 31, 2018 (the “Amended 10-K”) and continues as of September 30, 2019.

Journal Entries. The Company failed to design and maintain effective controls over the review, approval, and documentation of manual journal entries at two of our subsidiaries, Airnorth and Eastern Airways, which are not operating on our centralized ERP system. There were ineffective internal controls over the review of journal entries at these locations by individuals separate from the preparer. Management concluded this represented a material weakness in our internal controls over financial reporting. This deficiency was originally disclosed in the fiscal year 2019 Annual Report and continues as of September 30, 2019.

REMEDIATION PLAN FOR MATERIAL WEAKNESSES

We are continuing to evaluate the material weaknesses and develop a plan of remediation to strengthen our internal controls related to our control environment and risk assessment components of internal control over financial reporting and related deficiencies described herein.

Control Environment. In response to the material weakness described above, we are evaluating certain organizational enhancements, including: (i) augmenting our treasury and legal teams with additional internal or external professionals with the appropriate levels of knowledge, expertise, and skills in the area of non-financial debt covenant compliance monitoring, (ii) augmenting our financial planning and analysis team with additional internal or external professionals with the appropriate level of knowledge, expertise and skills to enhance the level of precision at which our internal controls over financial reporting related to asset impairment assessments are performed and (iii) augmenting our technical accounting team with additional internal or external professionals with the appropriate levels of knowledge, expertise and skills to assist in the evaluation of asset impairment assessments. In order to consider this material weakness remediated, we believe additional time is needed to evaluate and implement the organizational enhancements and demonstrate sustainability as it relates to the revised controls.

Risk Assessment. In response to the material weakness described above, we are enhancing our risk assessment process to better identify, evaluate and monitor changes that could significantly impact our system of internal control. These enhancements are expected to include the formation of a formal Enterprise Risk Assessment Committee responsible for defining and continually evaluating our enterprise risk assessment objectives, overseeing the Company’s enterprise risk assessment process and ensuring the Company responds appropriately to identified risks through the selection and development of control activities responsive to the identified risks. In order to consider this material weakness remediated, we believe additional time is needed to finalize and implement the enhanced procedures and demonstrate sustainability as it relates to the revised controls.

Debt Compliance. In response to the material weakness described above, we will continue the implementation of our remediation plan originally described in the Amended 10-K, by establishing a debt and lease compliance program with the specific objective of creating a sustainable and executable compliance process that can be repeated on a recurring basis to ensure timely monitoring of compliance with covenants and provisions. We intend to implement such compliance program by executing the following:

Development of a more complete reporting process to ensure information gathered or created by our separate control processes throughout the business are reported to the appropriate level of management with the responsibility for reporting on debt and lease agreement compliance. We are currently evaluating the use of third-party compliance services providers to assist with the development of our reporting process.

Establishment of procedures for reassessment of our debt and lease compliance program in response to changes in operations or agreements, to ensure timely actions are taken when risks change.

Evaluation of the current process and expected changes to ensure a sufficient complement of resources with an appropriate level of knowledge, expertise and skills commensurate with our non-financial debt covenant compliance monitoring requirements. We expect the changes to necessitate the need to augment certain of our teams with additional internal or external professionals with the appropriate levels of knowledge, expertise, and skills in the area of non-financial debt covenant compliance monitoring.

We anticipate the actions to be taken will address the material weakness. In order to consider this material weakness remediated, we believe additional time is needed to finalize and implement the enhanced procedures and demonstrate sustainability as it relates to the revised controls.

Journal Entries. In response to the material weakness described above, we are developing enhanced procedures to be implemented at Airnorth to ensure that manual journal entries recorded in our financial records are properly reviewed and approved preventing the potential for management override of controls. In order to consider this material weakness remediated, we believe additional time is needed to finalize and implement the enhanced procedures and demonstrate sustainability as it relates to the revised controls. We expect this control to be remediated by March 31, 2020. Eastern Airways was sold May 10, 2019 and as such, there is no remediation planned for that location.

CHANGES IN INTERNAL CONTROL OVER FINACIAL REPORTING

Other than the changes resulting from the ~~debt and lease compliance remediation activities~~material weaknesses described above, our management, including the CEO and CFO, identified no change in our internal control over financial reporting that occurred during ~~our fiscal~~the quarter ended ~~December 31, 2018,~~September 30, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

We have certain actions or claims pending that have been discussed and previously reported in Part I. Item 3. “Legal Proceedings” in the fiscal year ~~2018~~2019 Annual ~~Report, other than the item discussed below.~~Report. Developments in these previously reported matters, if any, are described in Note 8 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

~~Sikorsky Lawsuit~~

On January 8, 2019, Bristow filed suit in the District Court of Harris County, Texas against Sikorsky Aircraft Corporation (“Sikorsky”) for breach of contract, unjust enrichment and conversion as a result of Sikorsky terminating a sales agreement after we sought to delay delivery of a helicopter and retaining our $11.7 million deposit as liquidated damages. We are seeking a ruling that Sikorsky be required to return the deposit and provide an accurate calculation of its damages under the sales agreement. Sikorsky has challenged venue, and discovery related thereto is underway. With the advice of counsel, we are evaluating the feasibility of transferring the matter to the Bankruptcy Court for disposition.

~~Huntington Lawsuit~~

The Huntington National Bank (“Huntington”) filed suit against the Company and Bristow U.S. LLC in the U.S. District Court for the Southern District of New York (the “Southern District of New York Court”). Huntington alleges violation of an addendum of a lease agreement for failure to arrange for the enrollment of the aircraft engines in a maintenance agreement and seeks approximately $2.5 million in damages. We submitted a counterclaim for approximately $100,000 of costs related to storage, maintenance and insurance of the aircraft following the expiration of the lease. On March 1, 2019, the Southern District of New York Court denied Huntington’s motion for summary judgment. We initiated discovery; however, on May 16, 2019, the proceedings were stayed as a result of the Chapter 11 Cases.

~~Federal Securities Class Action~~

Two purported class action complaints, Kokareva v. Bristow Group Inc., Case No. 4:19-cv-0509 and Lilienfield v. Bristow Group Inc., Case No. 4:19-cv-1064, were filed in the U.S. District Court for the Southern District of Texas (the “Southern District of Texas Court”) on February 14, 2019 and March 21, 2019, respectively. The complaints, which also name Jonathan E. Baliff and L. Don Miller as defendants, allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 arising out of the Company’s disclosures and alleged failure to make timely disclosure of inadequate monitoring control processes related to non-financial covenants within certain of its secured financing and lease agreements. On May 17, 2019, the Southern District of Texas Court appointed BRS Investor Group as Lead Plaintiff and consolidated both actions under Kokareva v. Bristow Group Inc., Case No. 4:19-cv-0509.

When the Company filed the Chapter 11 Cases on May 11, 2019, the litigation against the Company was automatically stayed. The case was not automatically stayed against the individual defendants, but the Company intends to request that the stay also extend to the individual defendants. On May 31, 2019, the Lead Plaintiff requested that the Southern District of Texas Court schedule an initial conference, and the defendants requested that any conference be postponed until after the Bankruptcy Court decides whether the stay should extend to the individual defendants. The Southern District of Texas Court has not yet set a date for an initial conference. The defendants believe that the claims are without merit and intend to vigorously defend against them.

~~Stockholder Derivative Complaint~~

On June 7, 2019, Marilyn DeVault filed a Stockholder Derivative Complaint against Thomas N. Amonett, Gaurdie Banister Jr., Ian A. Godden, Lori A. Gobillot, A. William Higgins, Thomas C. Knudson, Biggs C. Porter, Jonathan E. Baliff, Stephen A. King, Matthew Masters, David C. Gompert, Bruce H. Stover, L. Don Miller, and Brian J. Allman (the “Derivative Defendants”) in the United States District Court for the District of Delaware. The complaint alleges breaches of fiduciary duties and violations of Section 10(b) of the Securities Exchange Act of 1934 arising out of Company disclosures and failing to have adequate monitoring control processes related to non-financial covenants within certain of our secured financing and lease agreements. The complaint also alleges waste of corporate assets, gross mismanagement, and unjust enrichment. The Derivative Defendants believe that the claims are without merit and intend to vigorously defend against them.

Item 1A. Risk Factors.

There have been no material changes during the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019 in our “Risk Factors” as discussed in the fiscal year ~~2018~~2019 Annual Report, originally filed with the SEC on May 23, 2018, or in our Quarterly Report on Form 10-Q for the three months ended September 30, 2018, originally filed with the SEC on November 9, 2018, other than the following:

~~Risks Related to Our Chapter 11 Cases~~

On May 11, 2019, Bristow and certain of its subsidiaries filed voluntary petitions commencing the Chapter 11 Cases under the Bankruptcy Code. The Chapter 11 Cases and the Restructuring may have a material adverse impact on our business, financial condition, results of operations, and cash flows. In addition, the Chapter 11 Cases and the Restructuring may have a material adverse impact on the trading price and may result in the cancellation and discharge of our securities, including our common stock. If approved by the Bankruptcy Court, the Plan will govern distributions to and the recoveries of holders of our securities.

As previously disclosed in our Current Report on Form 8-K filed with the SEC on April 15, 2019, we engaged financial and legal advisors to assist us in, among other things, analyzing various strategic financial alternatives to address our liquidity and capital structure, including strategic financial alternatives to restructure our indebtedness. These efforts led to the execution of the RSA on May 10, 2019 and the commencement of the Chapter 11 Cases in the Bankruptcy Court on May 11, 2019.

The Chapter 11 Cases could have a material adverse effect on our business, financial condition, results of operations and liquidity. So long as the Chapter 11 Cases continue, our management may be required to spend a significant amount of time and effort dealing with the restructuring instead of focusing on our business operations. Bankruptcy Court protection and operating as debtors in possession also may make it more difficult to retain management and the key personnel necessary to the success and growth of our business. In addition, during the pendency of the Chapter 11 Cases, our customers and suppliers might lose confidence in our ability to reorganize our business successfully and may seek to establish alternative commercial relationships, which may cause, among other things, our suppliers, vendors, counterparties and service providers to renegotiate the terms of our agreements, attempt to terminate their relationship with us or require financial assurances from us. Although we remain committed to providing safe, reliable operations and we believe that we have sufficient resources to do so, customers may lose confidence in our ability to provide them the level of service they expect, resulting in a significant decline in our revenues, profitability and cash flow.

~~Other significant risks include or relate to the following:~~

our ability to obtain the Bankruptcy Court’s approval with respect to motions or other requests made to the Bankruptcy Court in the Chapter 11 Cases, including maintaining strategic control as debtor-in-possession;

~~our ability to consummate a Chapter 11 plan and emerge from bankruptcy protection;~~

~~the effects of the filing of the Chapter 11 Cases on our business and the interest of various constituents, including our stockholders;~~

~~increased advisory costs to execute our reorganization;~~

~~our ability to maintain relationships with suppliers, customers, employees and other third parties as a result of the Chapter 11 Cases;~~

~~Bankruptcy Court rulings in the Chapter 11 Cases as well as the outcome of other pending litigation and the outcome of the Chapter 11 Cases in general;~~

~~the length of time that we will operate with Chapter 11 protection and the continued availability of operating capital during the pendency of the proceedings;~~

~~third-party motions in the Chapter 11 Cases, which may interfere with our ability to consummate a Chapter 11 plan; and~~

~~the potential adverse effects of the Chapter 11 Cases on our liquidity and results of operations.~~

Further, under Chapter 11, transactions outside the ordinary course of business are subject to the prior approval of the Bankruptcy Court, which may limit our ability to respond in a timely manner to certain events or take advantage of certain opportunities or to adapt to changing market or industry conditions.

Because of the risks and uncertainties associated with the Chapter 11 Cases, we cannot predict or quantify the ultimate impact that events occurring during the Chapter 11 Cases may have on our business, cash flows, liquidity, financial condition and results of operations, nor can we predict the ultimate impact that events occurring during the Chapter 11 Cases may have on our corporate or capital structure.

~~Delays in the Chapter 11 Cases may increase the risks of our being unable to reorganize our business and emerge from bankruptcy and increase our costs associated with the bankruptcy process.~~

The RSA contemplates the filing and confirmation of a Chapter 11 plan that implements the Restructuring (the “Plan”); however, certain terms of the Plan have not yet been specified and there can be no assurance that the Plan will be accepted by stakeholders that are entitled to vote or approved by the Bankruptcy Court, or that the Plan will become effective in accordance with its terms. Prolonged Chapter 11 proceedings could adversely affect our relationships with customers, suppliers and employees, among other parties, which in turn could adversely affect our business, competitive position, financial condition, liquidity and results of operations and our ability to continue as a going concern. A weakening of our financial condition, liquidity and results of operations could adversely affect our ability to implement the Plan (or any other Chapter 11 plan). If we are unable to consummate the Plan, we may be forced to liquidate our assets.

~~Trading in our common stock during the pendency of our Chapter 11 Cases is highly speculative and poses substantial risks.~~

All of our indebtedness is senior to the existing common stock in our capital structure. The treatment of holders of our existing common stock under the transactions contemplated by the RSA has not been determined; however, our common stock is likely to be cancelled under the Plan or otherwise in connection with the Chapter 11 Cases. Trading prices for our common stock may bear little or no relationship to the actual recovery, if any, by holders of our common stock in the Chapter 11 Cases. Accordingly, any trading in our common stock during the pendency of our Chapter 11 Cases is highly speculative and poses substantial risks to purchasers of our common stock.

~~The RSA is subject to significant conditions and milestones that may be difficult for us to satisfy.~~

There are certain material conditions we must satisfy under the RSA, including the timely satisfaction of milestones in the Chapter 11 Cases, which include the consummation of the Plan. Our ability to timely complete such milestones is subject to risks and uncertainties, many of which are beyond our control.

~~We may not be able to obtain confirmation of the Plan.~~

In order to emerge successfully from the Chapter 11 Cases as a reorganized entity, we must meet certain statutory disclosure requirements with respect to adequacy of disclosure with respect to the Plan, solicit and obtain the requisite acceptances of the Plan and fulfill other statutory conditions for confirmation of the Plan, most of which have not occurred to date. The confirmation process is subject to numerous, unanticipated potential delays, including a delay in the Bankruptcy Court’s commencement of the confirmation hearing regarding the Plan. There is no assurance that the Plan, when filed, or any subsequent amendments thereto, will be confirmed and become effective.

If the Plan is not confirmed by the Bankruptcy Court, it is unclear whether we would be able to reorganize our business and what, if anything, holders of claims and equity interests against us would ultimately receive with respect thereto.

~~Even if a Chapter 11 plan of reorganization is consummated, we may not be able to achieve our stated goals and there is substantial doubt regarding our ability to continue as a going concern.~~

Even if the Plan or any other Chapter 11 plan of reorganization is consummated, we may continue to face a number of risks, such as changes in economic conditions, changes in our industry, changes in demand for our services and increasing expenses. Some of these risks become more acute when a case under the Bankruptcy Code continues for a protracted period without indication of how or when the case may be completed. As a result of these risks and others, we cannot guarantee that any Chapter 11 plan of reorganization will achieve our stated goals.

Furthermore, even if our debts are reduced or discharged through a plan of reorganization, we may need to raise additional funds through public or private debt or equity financing or other various means to fund our business after the completion of the Chapter 11 Cases. Our access to additional financing may be limited, if it is available at all. Therefore, adequate funds may not be available when needed or may not be available on favorable terms, or at all.

As a result of the Chapter 11 Cases, even with certain creditor support for the restructuring under the RSA, there is substantial doubt regarding our ability to continue as a going concern. As a result, we cannot assure you of our ability to continue as a going concern.

~~Our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict at this time.~~

We face uncertainty regarding the adequacy of our liquidity and capital resources and have extremely limited, if any, access to additional financing. In addition to the cash requirements necessary to fund ongoing operations, we have incurred significant professional fees and other costs in connection with preparation for the Chapter 11 Cases and expect that we will continue to incur significant professional fees and costs throughout our Chapter 11 Cases. We cannot assure you that cash on hand and cash flow from operations will be sufficient to continue to fund our operations and allow us to satisfy our obligations related to the Chapter 11 Cases until we are able to emerge from our Chapter 11 Cases. Although we entered into the Term Loan Agreement prior to our Chapter 11 Cases and have received commitments for a $75.0 million DIP Facility in connection with the Chapter 11 Cases and the RSA contemplates $200 million of new equity financing through the Rights Offering, we cannot assure you that such financing sources will be sufficient, that the DIP Facility will be approved by the Bankruptcy Court, that we will be able to secure additional interim financing or adequate exit financing sufficient to meet our liquidity needs (or if sufficient funds are available, that they will be offered to us on acceptable terms) or that we will successfully complete the Rights Offering.

Our liquidity, including our ability to meet our ongoing operational obligations, is dependent upon, among other things: (i) our ability to comply with the terms and conditions of any order governing the use of cash collateral that may be entered by the Bankruptcy Court in connection with the Chapter 11 Cases, (ii) our ability to maintain adequate cash on hand, (iii) our ability to generate cash flow from operations, (iv) our ability to enter into and borrow under the DIP Facility, (v) our ability to develop, confirm and consummate the Plan or other alternative restructuring transaction, and (vi) the cost, duration and outcome of the Chapter 11 Cases.

~~In certain instances, a Chapter 11 case may be converted to a case under Chapter 7 of the Bankruptcy Code.~~

Upon a showing of cause, the Bankruptcy Court may convert our Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code. In such event, a Chapter 7 trustee would be appointed or elected to liquidate our assets for distribution in accordance with the priorities established by the Bankruptcy Code. We believe that liquidation under Chapter 7 would result in significantly smaller distributions being made to our creditors than those provided for in the Plan because of (i) the likelihood that the assets would have to be sold or otherwise disposed of in a distressed fashion over a short period of time rather than in a controlled manner and as a going concern, (ii) additional administrative expenses involved in the appointment of a Chapter 7 trustee, and (iii) additional expenses and claims, some of which would be entitled to priority, that would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of operations.

~~As a result of the Chapter 11 Cases, our historical financial information may not be indicative of our future performance, which may be volatile.~~

During the Chapter 11 Cases, we expect our financial results to continue to be volatile as restructuring activities and expenses, contract terminations and rejections, and claims assessments significantly impact our consolidated financial statements. As a result, our historical financial performance is likely not indicative of our financial performance after the date of the filing of the Chapter 11 Cases. In addition, if we emerge from Chapter 11, the amounts reported in subsequent consolidated financial statements may materially change relative to our historical consolidated financial statements. We also may be required to adopt fresh start accounting, in which case our assets and liabilities will be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on our consolidated balance sheets. Our financial results after the application of fresh start accounting may be different from historical trends.

~~We may be subject to claims that will not be discharged in the Chapter 11 Cases, which could have a material adverse effect on our financial condition and results of operations.~~

The Bankruptcy Court provides that the confirmation of a plan of reorganization discharges a debtor from, among other things, substantially all debts arising prior to consummation of a plan of reorganization. With few exceptions, all claims against the Debtors that arose prior to May 11, 2019 or before consummation of the Plan (i) would be subject to compromise and/or treatment under the Plan and/or (ii) would be discharged in accordance with the Bankruptcy Code and the terms of the Plan. Subject to the terms of the Plan and orders of the Bankruptcy Court, any claims not ultimately discharged pursuant to the Plan could be asserted against the reorganized entities and may have an adverse effect on our financial condition and results of operations on a post-reorganization basis.

~~We may experience employee attrition as a result of the Chapter 11 Cases.~~

As a result of the Chapter 11 Cases, we may experience employee attrition, and our employees may face considerable distraction and uncertainty. A loss of key personnel or material erosion of employee morale could adversely affect our business and results of operations. Our ability to engage, motivate and retain key employees or take other measures intended to motivate and incentivize key employees to remain with us through the pendency of the Chapter 11 Cases is limited by restrictions on implementation of incentive programs under the Bankruptcy Code. The loss of services of members of our senior management team could impair our ability to execute our strategy and implement operational initiatives, which would be likely to have a material adverse effect on our financial condition, liquidity and results of operations.

~~Risks Related to Our Business~~

We have identified a material weakness in our internal control over financial reporting, which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, investor confidence in our company and the value of our common stock.

As described in Part I. Item 4. “Controls and Procedures” of this Quarterly Report, management has concluded that the Company did not have adequate monitoring control processes in place related to non-financial covenants within certain of its secured financing and lease agreements, and this control deficiency identified represents a “material weakness” in internal controls over financial reporting. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. As a result of such material weakness, our management concluded that our disclosure controls and procedures and internal control over financial reporting were not effective at a reasonable assurance level as of March 31, 2018 and the reporting periods thereafter.

The determination of the existence of a control deficiency related to these matters, which has been classified as a material weakness in our internal controls over financial reporting, and the need to assess possible non-compliance with all non-financial covenants commenced when our senior management became aware that certain pledged and leased helicopter engines were not matched to specific pledged or leased helicopter airframes or returned to such airframes within specified periods, as required under certain of the secured financing and helicopter lease agreements. The removal and replacement of engines and components from helicopters is part of our normal ongoing maintenance activities; however, since certain of those helicopter engines and airframes are pledged to lenders or leased from lessors, the removal of a pledged or leased engine from a pledged or leased airframe can create issues of non-compliance with certain of the secured financing and helicopter lease agreements. All issues related to this matter were cured prior to December 31, 2018 for all but nine helicopter engines (relating to three agreements) where the pledged or leased engines were not returned to the pledged or leased airframes within specified periods due to delays with certain of our maintenance service providers. We have obtained waivers of such non-compliance under the applicable agreements related to such helicopter engines. We are in the process of remediating this material weakness, but our remediation efforts are not yet complete. There can be no assurance as to when the remediation plan will be fully implemented or whether the remediation efforts will be successful.

Until our remediation plan is fully implemented, our management will continue to devote time and attention to these efforts. If we do not complete our remediation in a timely fashion, or at all, or if our remediation plans are inadequate, our future consolidated financial statements could contain errors that may be undetected. The existence of a material weakness in the effectiveness of our internal controls could also affect our ability to obtain financing or could increase the cost of any financing we obtain. The identification of the material weakness could also cause investors to lose confidence in the reliability of our financial statements and could result in a decrease in the value of our common stock.

The consolidated financial statements included in our Amended 10-K and in this Quarterly Report do, and the consolidated financial statements to be included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019 will, contain disclosures that express substantial doubt about our ability to continue as a going concern, indicating the possibility that we may not be able to operate in the future.

The consolidated financial statements included in the Amended 10-K and in this Quarterly Report have been, and the consolidated financial statements to be included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019 will be, prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and other commitments in the normal course of business and does not include any adjustments that might result from uncertainty about our ability to continue as a going concern. Such assumption may not be justified. Our liquidity has been negatively impacted by the prolonged downturn in the offshore oil and gas market, our levels of indebtedness, lease and aircraft purchase commitments and certain other commercial contracts. In addition, we have substantial interest payment obligations related to our debt and substantial lease and aircraft purchase commitments over the next twelve months. If we are unable to execute transactions to improve our financial condition, we do not believe we will have sufficient liquidity to conduct our business operations based on existing conditions and estimates during the next twelve months. If we become insolvent, investors in our common stock may lose the entire value of their investment in our business. The inclusion of disclosures that express substantial doubt about our ability to continue as a going concern may negatively impact the trading price of our common stock and have an adverse impact on our relationship with third parties with whom we do business, including our customers, vendors and employees, and could make it challenging and difficult for us to raise additional debt or equity financing to the extent needed, on attractive terms or at all, all of which could have a material adverse impact on our business, financial condition and results of operations.

~~Our common stock has been delisted from the New York Stock Exchange.~~

Our common stock was previously listed on the New York Stock Exchange (the “NYSE”) under the symbol “BRS.” As a result of our failure to satisfy the continued listing requirements of the NYSE, on May 13, 2019, our common stock was delisted from the NYSE. Since May 14, 2019, our common stock has been trading on the OTC Pink Marketplace maintained by the OTC Markets Group, Inc. under the symbol “BRSWQ.” We can provide no assurance that our common stock will continue to trade on this market, whether broker-dealers will continue to provide public quotes of our common stock on this market, whether the trading volume of our common stock will be sufficient to provide for an efficient trading market or whether quotes for our common stock will continue on this market in the future. See “— Risks Related to Our Chapter 11 Cases — Trading in our common stock during the pendency of our Chapter 11 Cases is highly speculative and poses substantial risks.”

~~If certain transactions occur with respect to our capital stock, limitations may be imposed on our ability to utilize net operating loss carryforwards to reduce our income taxes.~~

Under federal income tax law, a corporation generally is permitted to carry forward net operating losses from prior tax years to offset taxable income, and correspondingly reduce federal income tax liability, in later tax years. We estimate having net operating loss carryforwards for federal income tax purposes of approximately $145.0 million as of March 31, 2019. Our ability to utilize our net operating loss carryforwards to offset future taxable income and reduce federal income tax liability is subject to certain requirements and restrictions. In particular, if we experience an “ownership change,” as defined in section 382 of the U.S. Internal Revenue Code, then our ability to use our net operating loss carryforwards may be substantially limited, which could have a negative impact on our financial position and results of operations. Generally, there is an “ownership change” if one or more shareholders owning 5% or more of a corporation’s common stock have aggregate increases in their ownership of such stock of more than 50% over a rolling three-year period. Thus, if certain transactions occur with respect to our capital stock (including issuances, redemptions, recapitalizations, exercises of options, conversions of convertible debt, purchases or sales by 5%-or-greater shareholders and similar transactions) that result in a cumulative change of more than 50% of the ownership of capital stock over the relevant three-year period, an annual limitation would be imposed with respect to the ability to utilize our net operating loss carryforwards that existed at the time of the ownership change.

Under section 382 of the U.S. Internal Revenue Code, absent an application exception (including any exception available for ownership changes occurring in connection with a bankruptcy reorganization), if a corporation undergoes an “ownership change,” the amount of its net operating losses existing as of the time of the ownership change that may be utilized to offset future taxable income generally will be subject to an annual limitation equal to the value of its stock immediately prior to the ownership change multiplied by the long-term tax-exempt rate (plus an additional amount calculated based on certain “built in gains” in our assets that may be deemed to be realized within a 5-year period following any ownership change). Because the value of our stock can be subject to significant fluctuations in value, it is possible an ownership change would materially limit our ability to utilize our substantial net operating loss carryforwards in the future. As such, there can be no assurance that we will be able to utilize our net operating loss carryforwards to offset future taxable income.

On May 14, 2019, in connection with our Chapter 11 Cases, the Bankruptcy Court entered an order approving certain notification and hearing procedures for transfers of, and declarations of worthlessness with respect to, beneficial ownership of common stock (the “Order”). The Order is designed to protect our net operating loss carryforwards from the effect of a premature ownership change under section 382 of the Internal Revenue Code, and to preserve our ability to rely on certain favorable rules that can apply to ownership changes occurring in connection with the implementation of a bankruptcy plan of reorganization. The Order requires “substantial shareholders” and “50-percent shareholders” (each as defined therein), and certain persons that might become a substantial shareholder or 50-percent shareholder, to provide notice before making certain transfers of beneficial ownership of common stock or declaring its beneficial ownership of stock worthless for U.S. federal income tax purposes, respectively. After receiving notice, we are permitted to object, whereupon such action remains ineffective pending final resolution. Any action taken in violation of such procedures is void ab initio.Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities

~~Not applicable.~~There were no unregistered sales of the Company’s equity securities during the three months ended September 30, 2019.

Item 3. Defaults Upon Senior Securities

For details on defaults of senior securities, see Note 5 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed as part of this Quarterly Report:



Exhibit Number		Description of Exhibit


2.1		~~Stock Purchase Agreement,~~Amended Joint Chapter 11 Plan of Reorganization, dated as of November 9, 2018, by and among Bear Acquisition I, LLC, Bristow Group Inc. (solely for the limited purposes set forth therein), Columbia Helicopters, Inc., the Shareholders (as defined therein), and Nancy C. Lematta (solely in her capacity as the Shareholder Representative)September 30, 2019 (incorporated herein by reference to Exhibit 2.1 into the Company’s Form 8-K filed on ~~November~~October 9, ~~2018)~~2019).

~~2.2~~3.1		~~Termination Agreement, dated as~~Amended and Restated Certificate of ~~February 11, 2019, by and among~~Incorporation of Bristow Group Inc.~~, Bear Acquisition I, LLC, Columbia Helicopters, Inc., the Shareholders (as defined therein) and Nancy C. Lematta (solely in her capacity as the Shareholder Representative)~~ (incorporated herein by reference to Exhibit ~~10.1~~3.1 to the Company’s Form 8-K filed on ~~February 12,~~November 6, 2019).

3.2		Amended and Restated Bylaws of Bristow Group Inc. (incorporated herein by reference to Exhibit 3.2 to the Company’s Form 8-K filed on November 6, 2019).

3.3		Certificate of Designations of 10.000% Series A Convertible Preferred Stock of Bristow Group Inc., dated October 31, 2019 (incorporated herein by reference to Exhibit 3.3 to the Company’s Form 10-Q for the three months ended June 30, 2019 filed on December 27, 2019).

4.1		~~First~~Seventh Supplemental Indenture, dated as of ~~November 21, 2018, by and among Bristow Group Inc.,~~September 11, 2019, to the ~~guarantors named therein and U.S. Bank National Association, as the trustee and collateral agent~~2008 Base Indenture (incorporated herein by reference to Exhibit ~~4.2 to~~4.10 for the Company’s Form ~~8-K~~10-K filed on ~~November 23, 2018)~~October 28, 2019).

4.2*		Agreement of Resignation, Appointment and Acceptance, dated as of May 8, 2019, by and among Bristow Group Inc., Wilmington Trust, National Association, as successor trustee, and U.S. Bank National Association.

10.1		~~Stockholders~~First Amendment to Amended and Restated Restructuring Support Agreement, dated as of November 9, 2018, by and among Bristow Group Inc. and the stockholders that are party to such agreement (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on November 9, 2018).

~~10.2~~		Commitment Letter, dated as of November 9, 2018, by and among Bristow Group Inc., Bear Acquisition I, LLC and Jefferies Finance LLC (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on November 9, 2018).

~~10.3~~		Commitment Letter, dated as of November 9, 2018, by and among Bristow Group Inc. and certain private investors (incorporated herein by reference to Exhibit 10.3 to the Company’s Form 8-K filed on November 9, 2018).

~~10.4~~		~~Form of Subscription Agreement, Form A (incorporated herein by reference to Exhibit 10.4 to the Company’s Form 8-K filed on November 9, 2018).~~

~~10.5~~		~~Form of Subscription Agreement, Form B (incorporated herein by reference to Exhibit 10.5 to the Company’s Form 8-K filed on November 9, 2018).~~

~~10.6~~		~~Amendment, dated as of November 7, 2018, to ABL Facilities Agreement (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on November 14, 2018).~~

~~10.7~~		Securities Purchase Agreement, dated as of November 27, 2018, by and between Bristow Group Inc. and the purchasers listed therein (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on November 28, 2018).

~~10.8†~~		First Amendment to the Bristow Group Inc. Deferred Compensation Plan, effective as of December 31, 2018 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on December 26, 2018).

~~10.9~~		Retirement and Consulting Agreement, dated as of February 11, 2019, between Bristow Group Inc. and Jonathan E. Baliff (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on February 12, 2019).

~~10.10~~		~~Amendment to ABL Facilities Agreement, effective as of February 19, 2019 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on February 19, 2019).~~

~~10.11~~		Waiver Letter, effective as of February 14, 2019, by and among Bristow Equipment Leasing Ltd., as borrower, Bristow Group Inc., as guarantor, and PK AirFinance S.à r.l., as agent and security trustee (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on March 18, 2019).

~~10.12~~		Limited Waiver, effective as of February 14, 2019, by and among Bristow U.S. LLC, as borrower, the lenders party thereto and Macquarie Bank Limited, as administrative agent (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on March 18, 2019).

~~10.13~~		~~Restructuring Support Agreement, dated May 10,~~July 24, 2019, by and among Bristow Group Inc., certain subsidiaries of Bristow Group Inc. party thereto and the holders of the 8.75% Senior Secured Notes due 2023, the 6.25% Senior Notes due 2022 and the.4.50% Convertible Senior Notes due 2023 party thereto (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on ~~May 13,~~July 26, 2019).

~~10.14~~10.2		~~Term Loan~~Backstop Commitment Agreement, dated as of July 24, 2019, among Bristow Group Inc. and the commitment parties party thereto (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on July 26, 2019).

10.3		Amendment No. 2 to Credit Agreement, dated ~~May 10,~~August 22, 2019, by and among Bristow Group Inc. and Bristow Holdings Company Ltd. III, as borrowers, ~~certain subsidiary~~and Ankura Trust Company, LLC, as administrative agent (incorporated herein by reference to Exhibit 10.88 to the Company’s Form 10-K filed on October 28, 2019).

10.4†		Fiscal Year 2020 Performance Incentive Plan, dated August 22, 2019 (incorporated herein by reference to Exhibit 10.89 to the Company’s Form 10-K filed on October 28, 2019).

10.5†		Fiscal Year 2020 Non-Executive Incentive Plan, dated August 22, 2019 (incorporated herein by reference to Exhibit 10.90 to the Company’s Form 10-K filed on October 28, 2019).

10.6		Superpriority Secured Debtor-in-Possession Credit Agreement, dated as of August 26, 2019, among Bristow Group Inc., as lead borrower, Bristow Holdings Company Ltd. II, as co-borrower, the other debtors and guarantors party thereto, the financial institutions or other entities party thereto, and Ankura Trust Company, LLC, as administrative agent and collateral agent (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 28, 2019).

10.7		Amendment No. 3 to Credit Agreement, dated August 26, 2019, by and among Bristow Group Inc. and Bristow Holdings Company Ltd. III, as borrowers, the lenders from time to time party thereto, and Ankura Trust Company, LLC, as administrative agent (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on ~~May 13,~~August 28, 2019).



~~Exhibit~~ ~~Number~~		~~Description of Exhibit~~

~~10.15~~10.8		~~Commitment Letter,~~Amendment No. 4 to Term Loan Credit Agreement, dated ~~May 10,~~as of September 30, 2019, by and among Bristow Group Inc., and Bristow Holdings Company Ltd. III, as borrowers, the lenders from time to time party thereto, and Ankura Trust Company, LLC, as administrative agent (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 2, 2019).

10.9		Amendment No. 1 to Superpriority Secured Debtor-In-Possession Credit Agreement, dated as of September 30, 2019, by and among Bristow Group Inc. and Bristow Holdings Company Ltd. III, as borrowers, the lenders from time to time party thereto, and Ankura Trust Company, LLC, as administrative agent (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on October 2, 2019).

10.10		Limited Waiver and Amendment to Backstop Commitment Agreement, dated as of September 30, 2019, among Bristow Group Inc. and the ~~lenders~~commitment parties party thereto (incorporated herein by reference to Exhibit 10.3 to the Company’s Form 8-K filed on October 2, 2019).



10.11		Omnibus Agreement, dated as of October 3, 2019, among Bristow Equipment Leasing Ltd., as borrower, Bristow Group Inc., PK Transportation Finance Ireland Limited, as lender, PK AirFinance S.à r.l., in its capacity as agent, and PK AirFinance S.à r.l., in its capacity as security trustee (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 9, 2019).

10.12		Amendment No. 5 to the Term Loan Credit Agreement, dated May ~~13,~~10, 2019, by and among Bristow Group Inc. and Bristow Holdings Company Ltd. III, as borrowers, certain subsidiaries of Bristow Group Inc. as guarantors party thereto, the lenders from time to time party thereto and Ankura Trust Company, LLC, as administrative agent (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on November 6, 2019).

10.13		Amendment to the Term Loan Credit Agreement, dated as of February 1, 2017, among the Company, as guarantor, Bristow U.S. LLC, as borrower and lessee, BriLog Leasing Ltd., as lessee, Macquarie Bank Limited, as administrative agent and security agent, Macquarie Leasing LLC, as lender and owner participant, and Macquarie Rotorcraft Leasing Holdings Limited, as owner participant (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on November 6, 2019).

10.14		Amendment and Restatement, Confirmation and Waiver Agreement to the ABL Facilities Agreement dated April 17, 2018, by and among Bristow Norway AS and Bristow Helicopters Limited, as borrowers and guarantors, Bristow Group Inc., the financial institutions from time to time party thereto as lenders and Barclays Bank PLC, in its capacity as agent and security trustee (incorporated herein by reference to Exhibit 10.3 to the Company’s Form 8-K filed on November 6, 2019).

10.15		Stockholders Agreement, dated as of October 31, 2019, by and among Bristow Group Inc. and the stockholders listed therein (incorporated herein by reference to Exhibit 10.4 to the Company’s Form 8-K filed on November 6, 2019).

10.16		Registration Rights Agreement, dated as of October 31, 2019, by and among Bristow Group Inc. and the other parties signatory thereto (incorporated herein by reference to Exhibit 10.5 to the Company’s Form 8-K filed on November 6, 2019).

10.17†		Bristow Group Inc. Amended and Restated 2019 Management Severance Benefits Plan for U.S. Employees, dated as of October 31, 2019 (incorporated herein by reference to Exhibit 10.7 to the Company’s Form 8-K filed on November 6, 2019).

31.1**		Rule 13a-14(a) Certification by Chief Executive Officer of Registrant.

31.2**		Rule 13a-14(a) Certification by Chief Financial Officer of ~~Registrant~~Registrant.

32.1**		Certification of Chief Executive Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1		Joint Chapter 11 Plan of Reorganization, dated August 1, 2019 (incorporated herein by reference to Exhibit 99.2 to the Company’s Form 8-K filed on August 2, 2019).

99.2		Disclosure Statement, dated August 1, 2019 (incorporated herein by reference to Exhibit 99.3 to the Company’s Form 8-K filed on August 2, 2019).

99.3		Amended Joint Chapter 11 Plan of Reorganization, dated August 20, 2019 (incorporated herein by reference to Exhibit 99.1 to the Company’s Form 8-K filed on August 26, 2019).

99.4		Amended Disclosure Statement, dated August 20, 2019 (incorporated herein by reference to Exhibit 99.2 to the Company’s Form 8-K filed on August 26, 2019).

99.5		Order Confirming Amended Joint Chapter 11 Plan of Reorganization, dated October 8, 2019 (incorporated herein by reference to Exhibit 99.1 to the Company’s Form 8-K filed on October 9, 2019).

99.6		Amended Plan Supplement, filed with the Bankruptcy Court on October 2, 2019 (incorporated herein by reference to Exhibit 99.2 to the Company’s Form 8-K filed on October 9, 2019).

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document.



101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

*†		~~Filed herewith.~~Compensatory Plan or Arrangement.

**		Furnished herewith.

†		~~Compensatory Plan or Arrangement~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	BRISTOW GROUP INC.

	By:	/s/ Brian J. Allman
		Brian J. Allman Senior Vice President and Chief Financial Officer



	By:	/s/ Chris Gillette
		Chris Gillette Chief Accounting Officer

~~June 19,~~December 27, 2019

~~104~~113



				Total Bristow Group Stockholders’ Investment
	Redeemable Noncontrolling Interest			Common Stock		Common Stock (Shares)	Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Noncontrolling Interests			Total Stockholders’ Investment
March 31, 2017	$	6,886		$	379	35,213,991	$	809,995		$	986,957		$	(328,277	)	$	(184,796	)	$	5,025		$	1,289,283
Issuance of common stock	—			1		89,849	3,862			—			—			—			—			3,863
Distributions paid to noncontrolling interests	—			—		—	—			—			—			—			(12		)	(12		)
Common stock dividends ($0.07 per share)	—			—		—	—			(2,465		)	—			—			—			(2,465		)
Currency translation adjustments	258			—		—	—			—			—			—			52			52
Net income (loss)	(795		)	—		—	—			(55,275		)	—			—			325			(54,950		)
Other comprehensive income	—			—		—	—			—			10,070			—			—			10,070
June 30, 2017	6,349			380		35,303,840	813,857			929,217			(318,207		)	(184,796		)	5,390			1,245,841
Issuance of common stock	—			1		57,696	2,133			—			—			—			—			2,134
Distributions paid to noncontrolling interests	—			—		—	—			—			—			—			(11		)	(11		)
Currency translation adjustments	194			—		—	—			—			—			—			43			43
Net income (loss)	(541		)	—		—	—			(31,209		)	—			—			353			(30,856		)
Other comprehensive income	—			—		—	—			—			10,928			—			—			10,928
September 30, 2017	6,002			381		35,361,536	815,990			898,008			(307,279		)	(184,796		)	5,775			1,228,079
Issuance of common stock	—			—		13,844	2,191			—			—			—			—			2,191
Equity component 4½% Convertible Senior Notes issued	—			—		—	36,778			—			—			—			—			36,778
Purchase of 4½% Convertible Senior Notes call option	—			—		—	(40,393		)	—			—			—			—			(40,393		)
Proceeds from issuance of warrants	—			—		—	30,259			—			—			—			—			30,259
Distributions paid to noncontrolling interests	—			—		—	—			—			—			—			(13		)	(13		)
Currency translation adjustments	37			—		—	—			—			—			—			(54		)	(54		)
Net income (loss)	(2,180		)	—		—	—			(8,273		)	—			—			516			(7,757		)
Other comprehensive loss	—			—		—	—			—			(74		)	—			—			(74		)
December 31, 2017	$	3,859		$	381	35,375,380	$	844,825		$	889,735		$	(307,353	)	$	(184,796	)	$	6,224		$	1,249,016



	Customer relationships			Trade name and trademarks			Internally developed software			Licenses			Total

	Gross Carrying Amount
March 31, 2018	$	12,777		$	4,878		$	1,107		$	755		$	19,517
Foreign currency translation	(213		)	(263		)	(13		)	(2		)	(491		)
December 31, 2018	$	12,564		$	4,615		$	1,094		$	753		$	19,026

	Accumulated Amortization
March 31, 2018	$	(11,372	)	$	(1,213	)	$	(915	)	$	(719	)	$	(14,219	)
Impairments	—			(2,933		)	(72		)	—			(3,005		)
Amortization expense	(89		)	(142		)	(107		)	(34		)	(372		)
December 31, 2018	$	(11,461	)	$	(4,288	)	$	(1,094	)	$	(753	)	$	(17,596	)

Weighted average remaining contractual life, in years	7.0			*			0.0			0.0			7.0



	Three Months Ended December 31, 2018							Nine Months Ended December 31, 2018
	Balances After Adoption		Balances without Adoption		Effect of change			Balances After Adoption		Balances without Adoption		Effect of change
Revenue:
Operating revenue from non-affiliates	$	301,439	$	303,206	$	(1,767	)	$	944,164	$	963,252	$	(19,088	)
Operating revenue from affiliates	5,895		13,885		(7,990		)	16,822		39,537		(22,715		)
Reimbursable revenue from non-affiliates	14,238		14,238		—			47,091		47,091		—
Revenue from Contracts with Customers	321,572		331,329		(9,757		)	1,008,077		1,049,880		(41,803		)
Other revenue from non-affiliates	1,767		—		1,767			19,088		—		19,088
Other revenue from affiliates	7,990		—		7,990			22,715		—		22,715
Total Revenue	$	331,329	$	331,329	$	—		$	1,049,880	$	1,049,880	$	—



	December 31, 2018			March 31, 2018
8.75% Senior Secured Notes due 2023	$	347,205		$	346,610
4½% Convertible Senior Notes due 2023	111,514			107,397
6¼% Senior Notes due 2022	401,535			401,535
Lombard Debt	182,388			211,087
Macquarie Debt	174,528			185,028
PK Air Debt	216,637			230,000
Airnorth Debt	11,738			13,832
Eastern Airways Debt	—			14,519
Other Debt	7,959			3,991
Unamortized debt issuance costs	(23,280		)	(27,465		)
Total debt	1,430,224			1,486,534
Less short-term borrowings and current maturities of long-term debt	(1,421,050		)	(1,475,438		)
Total long-term debt	$	9,174		$	11,096

Financial statement location

Amount of gain recognized in accumulated other comprehensive loss

Accumulated other comprehensive loss

Amount of gain reclassified from accumulated other comprehensive loss into earnings

Statement of operations