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, 2020 is referred to as “fiscal year 2020”. Pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (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 the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019 (the “fiscal year 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 ~~June~~September 30, 2019, the consolidated statements of operations and comprehensive loss for the three and six months ended ~~June~~September 30, 2019 and 2018, the consolidated cash flows for the ~~three~~six months ended ~~June~~September 30, 2019 and 2018, and the consolidated statements of changes in stockholders’ investment for the three and six months ended ~~June~~September 30, 2019 and 2018.

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

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).

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 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 are largely independent from the cash flows associated with the remainder of our oil and gas related property and equipment (the “oil and gas asset group”) and should be tested for impairment as a stand-alone asset group. In accordance with 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 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 13. The inputs used in our fair value estimates were from Level 3 of the fair value hierarchy discussed in Note 6.

In September 2019, we identified a potential decline in the fair value of the H225 asset group based on market transactions for the aircraft and 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 over the remaining useful life of the H225 asset group 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, 2019. The inputs used in our fair value estimates were from Level 2 of the fair value hierarchy discussed in Note 6.

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 13. The inputs used in our fair value estimates were from Level 3 of the fair value hierarchy discussed in Note 6.

During the three and six months ended ~~June~~September 30, 2019 and 2018, 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:

Other income (expense), net, in our condensed consolidated statements of operations includes foreign currency transaction losses of ~~$2.9~~$5.8 million and ~~$3.0~~$2.3 million for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and $8.7 million and $5.3 million for the six months ended September 30, 2019 and 2018, 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 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.

Our earnings 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 ~~June~~September 30, 2019 and 2018, earnings (losses) from unconsolidated affiliates, net decreased by $1.6 million and $1.0 million, respectively, and during the six months ended September 30, 2019 and 2018, earnings from unconsolidated affiliates, net of losses, decreased by ~~$0.1~~$1.7 million and ~~$2.6~~$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:

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):

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

As of ~~June~~September 30 and March 31, 2019, the allowance for doubtful accounts for non-affiliates was $0.8 million and $1.6 million, respectively. There were no allowances for doubtful accounts related to accounts receivable due from affiliates as of ~~June~~September 30 and March 31, 2019. The allowance for doubtful accounts for non-affiliates as of ~~June~~September 30, 2019 and March 31, 2019 primarily relates to amounts due from a customer in Australia.

As of ~~June~~September 30 and March 31, 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 $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 ~~June~~September 30, 2019 and 2018, we expensed ~~$2.4~~$2.6 million and ~~$2.7~~$2.5 million, respectively, and for the six months ended September 30, 2019 and 2018, we expensed $4.7 million and $5.2 million, respectively, related to these contracts.

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 $18.2 million and $18.4 million as of June 30 and March 31, 2019, respectively,~~ related to our Asia Pacific reporting unit was as follows (in thousands):

We test goodwill for impairment on an annual basis as of March 31 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.

During the three months ended September 30, 2019, we noted an overall reduction in expected operating results for Airnorth from continued cost pressure combined with less than expected passenger and route fulfillment. We concluded the fair value of our goodwill for Airnorth 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 Airnorth as of September 30, 2019, concluding the estimated fair value of Airnorth was below its carrying value. We recorded an impairment charge of $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 the future performance of 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.

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 ~~Capiteq Limited, operating under the name~~ 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):

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

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.

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 gas asset group and changes in our forecasted cash flows for that asset group during the three months ended ~~June~~September 30, 2018 indicated the need for the performance of a recoverability analysis of our 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.

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 ~~expect to record additional depreciation expense~~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 ~~$1.4 million~~our oil and gas asset group.

Changes in our forecasted cash flows during the ~~remainder~~three months ended September 30, 2019 indicated the need for the performance of ~~fiscal year 2020.~~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 six months ended ~~June~~September 30, 2019 and 2018:

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 three months ended 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, 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 ~~$3.5~~$5.9 million was recognized during the three and six months ended ~~June~~September 30, ~~2019~~2018, respectively, and ~~2018 and $3.4~~$2.0 million was recognized during the ~~nine~~six months ended March 31, 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 ~~three~~six months ended ~~June~~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.

During the ~~three~~six months ended ~~June~~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 ~~three~~six months ended ~~June~~September 30, 2018, we recorded a $7.6 million increase in revenue and a ~~$1.1~~$2.1 million decrease in direct cost. We realized the remaining ~~$2.3~~$1.3 million 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.

Other accrued liabilities of ~~$32.8~~$58.4 million and $38.7 million as of ~~June~~September 30 and March 31, 2019, respectively, includes the following:

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. The loss on the sale of Aviashelf and BHLL for the three months ended June 30, 2019 of $9.5 million includes the loss on sale of net assets of $2.3 million and write-off of cumulative translation adjustment of $7.2 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.

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 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. Additionally, 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. The guidance was updated in March 2018 to include an amendment that would allow us to consider the beginning of the period of adoption as the effective date of initial application of the 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 for in the standard and therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year. We elected the 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 resulted in recording on our condensed consolidated balance sheet right-of-use assets of $281.0 million and an increase in lease liabilities of $285.3 million with no material impact on our consolidated statements of operations and consolidated statements of cash flows. For further information on 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 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. We adopted this accounting guidance on 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, and is applied prospectively to changes in terms or conditions of awards occurring on or after the adoption date. We adopted this accounting guidance on April 1, 2019 with no impact to our financial statements.

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

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 and accumulated benefit obligation in excess of respective plan assets. The amendment is effective beginning in our fiscal 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. The amendment is effective beginning in our fiscal year 2021 financial statements and early adoption is permitted. The guidance will be applied either

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 VIEs. This amendment is effective beginning in our fiscal 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 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” 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 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 — Airnorth 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.

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 ~~June~~September 30 and March 31, 2019, receivables related to services performed under contracts with customers were ~~$170.3~~$187.0 million and $164.7 million, respectively. All receivables from non-affiliates and affiliates are broken out further in our condensed consolidated balance sheets. During the ~~three~~six months ended ~~June~~September 30, 2019, we recognized ~~$7.4~~$8.3 million of revenue from outstanding contract liabilities as of March 31, 2019. Contract liabilities related to services performed under contracts with customers was ~~$7.3~~$5.8 million and $10.0 million as of ~~June~~September 30 and March 31, 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 ~~June~~September 30 and March 31, 2019.

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

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

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):

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.

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 U.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.

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 ~~June~~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 3 to the fiscal year 2019 Financial Statements for a description of other investments in significant affiliates.

Bristow Aviation Holdings Limited — We own 49% of Bristow 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”) owned 49%, 46% and 5%, respectively, of Bristow Aviation’s total outstanding ordinary shares, ~~as of June 30, 2019,~~ although Caledonia 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 ($14.4 million in total). We also have £91.0 million ($~~115.8~~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 $2.7 billion as of ~~June~~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 entered into a put/call agreement under which, upon giving specified prior notice, we had the right to buy all the Bristow Aviation shares held by Caledonia and the E.U. Investor, who, in turn, each 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, under our put/call agreement with this stockholder. As a result, in September 2019 and October 2019, 5% and 46%, respectively, of such shares were purchased by 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 the Bristow Aviation 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 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 shareholder (£1.0 million as of ~~June~~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 shareholder at a rate of sterling LIBOR plus 3% 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 investor has an option to put 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.

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):

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 ~~June~~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 ~~(International) Limited (“BHIL”). In April 2015, Bristow Helicopters purchased an additional 8% interest in BHNL and the~~

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 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.

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 ~~June~~September 30, ~~2019~~2018 was 11.0%. Interest expense related to our 4½% Convertible Senior Notes was as follows (in thousands):

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 ~~June~~September 30, 2019 was $1.6 million and $3.2 million, respectively, which is ~~$0.9~~$1.6 million and $2.5 million in excess of reported interest expense for the three and six months ended ~~June~~September 30, ~~2019.~~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

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 ~~June~~September 30, 2019 was $6.3 million and $12.5 million, respectively, which is ~~$3.5~~$6.3 million and $9.8 million in excess of reported interest expense for the three and six months ended ~~June~~September 30, ~~2019.~~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.

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:

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

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

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.

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.

~~We did not have any items~~ The following table summarizes the assets as of September 30, 2019, valued at fair value on a non-recurring basis (in thousands):

The following table summarizes the assets as of ~~June~~September 30, ~~2019~~2018, valued at fair value on a non-recurring basis (in thousands):

The fair value of goodwill, using Level 3 inputs, is determined using a combination of an income and ~~2018.~~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”.

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.

The fair value of inventories using Level 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.

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 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 provisions in our debt instruments. The carrying and fair value of our debt, excluding unamortized debt issuance costs, are as follows (in thousands):

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.

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 2019 and the ~~three~~six months ended ~~June~~September 30, 2019, we entered into foreign currency put option contracts of £5 million per month through ~~April~~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 ~~June~~September 30, 2019 (in thousands):

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, 2019 (in thousands):

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 ~~June~~September 30, 2019 (in thousands):

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 six months ended September 30, 2019 (in thousands):

We estimate that ~~$0.1~~$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.

Aircraft Purchase Contracts — As shown in the table below, we have obligations to make additional capital expenditures over the next ~~seven~~two fiscal years to purchase additional aircraft. As of ~~June~~September 30, 2019, we had 26three aircraft on order and no options to acquire additional aircraft.

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 six months ended September 30, 2019 and 2018 is as follows (in thousands):

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 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.

Other Purchase Obligations — As of ~~June~~September 30, 2019, we had ~~$25.6~~$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

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 November 6, 2017, 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. When the Company emerged from bankruptcy, all the claims against the Company were released, but the case is still proceeding against the individual defendants. Plaintiffs filed a Consolidated Amended Complaint on November 4, 2019, and defendants have until January 3, 2020 to file a response. The defendants believe that the claims are without merit and intend to vigorously defend against them.

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.

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.

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.

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 elected to adopt the “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.

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 ~~June~~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.

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.

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 ~~June~~September 30, 2019:

Rent expense incurred under all operating leases was ~~$52.2~~$38.3 million and ~~$50.1~~$49.6 million for the three months ended ~~June~~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 ~~June~~September 30, 2019, a portion of the total operating lease expense relating to short-term leases was $0.3 ~~million.~~million and $0.6 million, respectively. Rent expense incurred under operating leases for aircraft was ~~$46.4~~$32.8 million and ~~$44.1~~$43.2 million for the three months ended ~~June~~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.

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

As of ~~June~~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 5349 aircraft, are as follows (in thousands):

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 ~~$4.5~~$3.0 million and ~~$5.0~~$4.5 million during the three months ended ~~June~~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 ~~in lease fees~~and $0.1 million during ~~both~~ the three months ended ~~June~~September 30, 2019 and ~~2018.~~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. ~~We owe~~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 ~~June~~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 ~~$26.1~~$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.

Our provision for income taxes for the interim period ended ~~June~~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, excluding discrete items, for the reporting period. We determined that since small changes in estimated pre-tax income or 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 ~~June~~September 30, 2019. We will continue to evaluate income tax estimates under the historical method in subsequent quarters and employ a discrete effective tax rate method if warranted. During the three months ended ~~June~~September 30, 2019 and 2018, our effective tax rate was ~~8.4%~~11.8% and ~~8.2%~~9.8%, respectively, and during the six months ended September 30, 2019 and 2018, our effective tax rate was 10.1% and 9.6%, respectively. The effective tax rate for the three and six months ended ~~June~~September 30, 2019 and 2018 were impacted by valuation allowances against future realization of foreign tax 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 months ended ~~June~~September 30, 2019 compared to the three months ended ~~June~~September 30, 2018 primarily related to changes in the blend of earnings taxed in relatively high taxed jurisdictions versus low taxed jurisdictions. Additionally, our valuation allowance ~~decreased~~increased by ~~$0.3~~$3.6 million and ~~increased $1.0~~$9.3 million for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and our valuation allowance increased by $3.3 million and $10.3 million for the six months ended September 30, 2019 and 2018, respectively, which also impacted our effective tax rate.

As of ~~June~~September 30, 2019, there were ~~$4.0~~$4.1 million of unrecognized tax benefits, all of which would have an impact on our effective tax rate if recognized.

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. The following table provides a detail of the components of net periodic pension cost (in thousands):

Prior to May 11, 2019, stock-based awards were made under the Bristow Group Inc. 2007 Long-Term Incentive Plan (the “2007 Plan”). A maximum of 10,646,729 shares of common stock were reserved. Awards granted under the 2007 Plan 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 were made to outside directors, employees or consultants. As of ~~June~~September 30, 2019, ~~2,286,944~~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 10 to our fiscal year 2019 Financial Statements.

Total stock-based compensation expense, which includes stock options and restricted stock, totaled ~~$0.8~~$0.7 million and ~~$1.7~~$2.0 million for the three months ended ~~June~~September 30, 2019 and 2018, respectively, and $1.5 million and $3.7 million for the six months ended September 30, 2019 and 2018, 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.

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:

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

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.

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

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. Prior to the sale of BHLL and Aviashelf during the three months ended ~~June~~September 30, 2019, we had operations in Sakhalin, Russia which is included in our Asia Pacific region.

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

The Company had registered senior notes that the Guarantor Subsidiaries 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 5 to the fiscal year 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.

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, 2019 (the “fiscal year 2019 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 ~~June~~September 30, 2019 and 2018, respectively, and the terms “Current Period” and “Comparable Period” refer to the six months ended September 30, 2019 and 2018, 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, 2020 is referred to as “fiscal year 2020.”

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:

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.

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.

On May 11, 2019 (the “Petition Date”), Bristow Group Inc. and certain of its 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 were jointly administered under the caption In re: Bristow Group Inc., et al., Main Case No. 19-32713. During the pendency of the Chapter 11 Cases, the Debtors 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 Joint Chapter 11 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.

~~We expect our~~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 the Chapter 11 Cases.

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, Guyana and Trinidad. We provide commercial SAR services in Australia, Canada, Guyana, Norway, 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 ~~the Nigeria and~~ 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 a consolidated affiliate, Eastern Airways International Limited (“Eastern Airways”), until our disposal of Eastern Airways on May 10, 2019.

During the Current ~~Quarter,~~Period, we generated approximately ~~71%~~72% of our consolidated operating revenue from external customers from oil and gas operations, approximately 18% from U.K. SAR operations and approximately ~~11%~~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:

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 ~~June~~September 30, 2019, we operated ~~216~~215 aircraft (including 155 owned aircraft and 6160 leased ~~aircraft; one of the owned aircraft is held for sale~~aircraft) and our unconsolidated affiliates operated ~~111~~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 ~~June~~September 30, 2019; (2) the number of helicopters which we had on order or under option as of ~~June~~September 30, 2019; and (3) the percentage of operating revenue which each of our regions provided during the Current ~~Quarter.~~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.

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:

The following table presents the distribution of LACE helicopters owned and leased, and the percentage of LACE leased as of ~~June~~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.

Our goal is to strengthen our market position as the leading global industrial aviation services 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 SAR that do 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 23 aircraft in fiscal years 2018 and 2019 and Current ~~Quarter~~Period for proceeds of $48.3 million, $11.0 million and ~~$3.2~~$4.9 million, respectively. As of ~~June~~September 30, 2019, ~~we had one aircraft held for sale and~~ the average age of our fleet is approximately ten years. During the Current ~~Quarter,~~Period, we returned four H225s under an agreement with a lessor and rejected and returned leases under Chapter 11 protection for nine S-76C+s and one S-76D. Also, we disposed of Eastern Airways on May 10, 2019.

Our core business is providing industrial aviation services 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 ~~$58~~$54 per barrel as of ~~June~~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 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. The significant drop in the price of crude oil resulted in the rescaling, delay or cancellation of planned offshore projects and has negatively impacted our operations and could continue to negatively impact our operations in future periods.

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.

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 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.

Eastern Airways and Humberside Airport — Bristow Helicopters, 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

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. In connection with this amendment, the overall purchase price of these helicopters increased by $18.4 million to account for inflation.

On September 30, 2019, the Debtors filed a motion with the Bankruptcy Court to approve a settlement agreement with Airbus Helicopters S.A.S. in regards to the rejection of the purchase contract for 22 H175 helicopters. On October 3, 2019, the Bankruptcy Court entered an order approving the agreement with Airbus Helicopters S.A.S. to reject our aircraft purchase contract for the 22 H175 helicopters. As a result of the rejection of the purchase contract, we recorded $31.8 million of expense to reorganization items, net included on our condensed consolidated statements of operations for the 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 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 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. 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. 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.

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

Our investment in Líder as of ~~June~~September 30, 2019 is ~~$52.4~~$44.6 million. As of ~~June~~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 from unconsolidated affiliates. Earnings 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 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.

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 the fiscal year 2019 Annual Report and Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

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

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.

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:

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 six months ended ~~June~~September 30, 2019 and 2018:

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

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

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

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

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

The year-over-year decrease in operating revenue was primarily driven by decreases in fixed wing services revenue and U.K. SAR services revenue in our Europe Caspian region and unfavorable changes in foreign currency exchange rates. In May 2019, we sold Eastern Airways, resulting in a $24.0 million decrease in operating revenue for our fixed wing services in the Current Quarter. The decrease in the U.K. SAR services revenue in the Current Quarter is primarily due to a one-time benefit of $7.6 million in original equipment manufacturer (“OEM”) cost recoveries recognized in the Comparable Quarter. Oil and gas revenue decreased slightly from the Comparable Quarter primarily as a result of a decrease in our Asia Pacific region largely due to a decrease in activity, which was mostly offset by increases in our Africa, America and Europe Caspian regions. In addition to operational impacts, revenue decreased by $12.6 million compared to the Comparable Quarter due to unfavorable changes in foreign currency exchange rates, primarily related to the depreciation of the British pound sterling and Australian dollar versus the U.S. dollar.

For the Current Quarter, we reported a net loss of $169.2 million and a diluted loss per share of $4.71 compared to a net loss of $31.9 million and a diluted loss per share of $0.89 for the Comparable Quarter. The year-over-year change in net loss and diluted loss per share was primarily driven by the following special items for the Current Quarter:

~~Additionally, we realized a loss on disposal of assets of $3.8 million ($3.7 million net of tax) during the Current Quarter from the sale or disposal of aircraft and other equipment.~~

The Comparable Quarter results benefited from the realization of $12.2 million of OEM cost recoveries primarily a result of a one-time benefit of $7.6 million in U.K. SAR operating revenue as discussed above, a $3.5 million reduction in rent expense and a $1.1 million reduction in direct cost.

Excluding the organizational restructuring costs described above and the loss on disposal of assets, adjusted net loss and adjusted diluted loss per share were $17.0 million and $0.47, respectively, for the Current Quarter. These adjusted results compare to adjusted net loss and adjusted diluted loss per share of $28.9 million and $0.81, respectively, for the Comparable Quarter. Additionally, adjusted EBITDA improved to $35.8 million in the Current Quarter from $27.0 million in the Comparable Quarter. 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 Quarter.

Adjusted EBITDA, adjusted net loss and adjusted diluted loss per share benefited from an increase in activity in our Africa region and an increase in earnings from unconsolidated affiliates compared to the Comparable Quarter. These items were partially offset by OEM cost recoveries realized in the Comparable Quarter that did not recur in the Current Quarter.

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

The most significant foreign exchange impact related to a $2.5 million decrease in unfavorable foreign currency exchange rate impact from our investment in Líder in Brazil and a $0.1 million favorable impact from lower transaction losses in the Current Quarter compared to the Comparable Quarter. Partially offsetting these favorable impacts was a $1.8 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 decreased 8.0%, or $22.3 million, year-over-year primarily due to a $19.6 million decrease due to the sale of Eastern Airways in May 2019, a $4.9 million decrease in salaries and benefits primarily due to headcount reductions in our Asia Pacific region and a $1.4 million decrease in fuel costs, partially offset by an increase in lease costs of $4.6 million. The increase in lease costs is primarily due to the H225 net lease return costs of $10.8 million incurred in the Current Quarter, partially offset by lower lease costs due to return of leased aircraft and the rejection of certain leases during the Chapter 11 Cases.

~~Reimbursable expense remained mostly flat at $16.1 million for the Current Quarter and $15.9 million for the Comparable Quarter.~~

~~Prepetition restructuring charges include professional fees incurred prior to the Petition Date related to our Chapter 11 Cases.~~

~~Depreciation and amortization expense remained mostly flat at $31.3 million for the Current Quarter compared to $30.9 million for the Comparable Quarter.~~

General and administrative expense decreased 13.3%, or $5.3 million, in the Current Quarter, as compared to the Comparable Quarter primarily due to a $1.8 million decrease due to the sale of Eastern Airways in May 2019, a $1.4 million decrease in professional fees and a $2.1 million decrease in various other costs including salaries, information technology and travel expenses.

Loss on disposal of assets increased $2.1 million to a loss of $3.8 million for the Current Quarter from a loss of $1.7 million for the Comparable Quarter. The loss on disposal of assets in the Current Quarter included a loss of $3.8 million from the sale or disposal of aircraft and other equipment. During the Comparable Quarter, the loss on disposal of assets included a loss of $1.7 million from the sale or disposal of aircraft and other equipment.

Earnings from unconsolidated affiliates, net of losses, changed from a loss of $1.5 million in the Comparable Quarter to earnings of $2.3 million in the Current Quarter. This improvement primarily resulted from a decrease of $1.8 million in losses from our investment in Líder in Brazil from the Comparable Quarter primarily due a $2.5 million favorable change in foreign exchange rates and a change in earnings from our investment in Cougar in Canada from earnings of $0.6 million in the Comparable Quarter to earnings of $2.4 million for the Current Quarter due to an increase in activity.

Interest expense, net, decreased 3.0%, or $0.8 million, year-over-year primarily due to lower interest expense of $4.4 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 financing fees of $2.6 million related to the DIP Credit Agreement in the Current Quarter and $1.0 million of interest expense on our 2019 Term Loan which we borrowed against on May 10, 2019. For further details, see “— Recent Events” included elsewhere in this Quarterly Report.

~~Reorganization items represent amounts incurred directly resulting from the Chapter 11 Cases and consists of the following items for the Current Quarter:~~

Loss on sale of subsidiaries includes a $46.9 million loss on the sale of Eastern Airways and a $9.5 million loss on the sale of Aviashelf and BHLL. For further details, see Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

~~For further details on income tax expense, see “— 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 organizational restructuring costs. 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:

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.~~

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

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 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 a decrease in our Asia Pacific region primarily from fewer customer contracts driving a decrease in activity. Also, revenue decreased by $11.4 million compared to the Comparable Quarter due to unfavorable changes in foreign currency exchange rates, primarily related to the depreciation of the British pound sterling and Australian dollar versus the U.S. dollar.

For the Current Quarter, we reported a net loss of $163.0 million and a diluted loss per share of $4.54 compared to a net loss of $143.9 million and a diluted loss per share of $4.02 for the Comparable Quarter. The year-over-year change in net loss and diluted loss per share was primarily driven by the following special items for the Current Quarter:

Additionally, we realized a loss on disposal of assets of $0.2 million ($0.2 million net of tax) during the Current Quarter from the sale or disposal of other equipment.

The Comparable Quarter results benefited from the impact of $3.4 million of original equipment manufacturer (“OEM”) cost recoveries realized in the Comparable Quarter that resulted in a $2.4 million reduction in rent expense and 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 recoveries described above is included within adjusted net income, adjusted earnings per share and adjusted EBITDA in the Comparable Quarter.

Adjusted EBITDA, adjusted net loss and adjusted diluted loss per share benefited from the sale of 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.

The most significant foreign exchange impact related to 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

Direct cost 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.

Loss on disposal of assets decreased $1.1 million to a loss of $0.2 million for the Current Quarter from a loss of $1.3 million for the Comparable Quarter. The loss on disposal of assets in the Current Quarter included a loss of $0.2 million from the sale or disposal of other equipment. During the Comparable Quarter, the loss on disposal of assets included a loss of $1.3 million from the sale or disposal of aircraft and other equipment.

Earnings from unconsolidated affiliates, net of losses, decreased 56.7%, or $0.8 million, from earnings of $1.5 million in the Comparable Quarter to $0.6 million in the Current Quarter. The decrease in earnings from unconsolidated affiliates, net of losses, primarily resulted from a decrease in earnings from our investment in Líder in Brazil to losses of $1.7 million 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 to $2.0 million for the Current Quarter due to an increase in activity.

Interest expense, net, decreased 15.1%, or $4.0 million, year-over-year primarily due to lower interest expense of $7.9 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 $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:

Gain on sale of subsidiaries of $0.4 million resulting from the cash received from the sale of our 8.5% interest in 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:

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

The year-over-year decrease in operating revenue was primarily driven by a decrease of $52.1 million in fixed wing services revenue in our Europe Caspian region as a result of the sale of Eastern Airways on May 10, 2019 and a decrease in U.K. SAR services revenue. The decrease in the U.K. SAR services revenue 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 $24.0 million compared to the Comparable Period due to unfavorable changes in foreign currency exchange rates, primarily related to the depreciation of the British pound sterling and Australian dollar versus the U.S. dollar.

For the Current Period, we reported a net loss of $332.2 million and a diluted loss per share of $9.25 compared to a net loss of $175.8 million and a diluted loss per share of $4.93 for the Comparable Period. The year-over-year change in net loss and diluted loss per share was primarily driven by the following special items for the Current Period:

Additionally, we realized a loss on disposal of assets of $4.0 million ($3.8 million net of tax) during the Current Period from the sale or disposal of two aircraft and other equipment.

The Comparable Period results benefited from the impact of $15.6 million of OEM cost recoveries realized in the Comparable Period that resulted in a one-time benefit of $7.6 million in U.K. SAR operating revenue as discussed above, a $5.9 million reduction in rent expense and a $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 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.

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 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 decreased 6.8%, or $2.1 million, primarily due to fewer customer contracts resulting in a decrease in activity in our Asia Pacific region.

Prepetition restructuring charges include professional fees incurred prior to May 11, 2019 related to 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.

Loss on disposal of assets decreased $1.0 million, to a loss of $4.0 million for the Current Period from a loss of $3.0 million for the Comparable Period. The loss on disposal of assets in the Current Period included a loss of $4.0 million from the sale or disposal of three aircraft and other equipment for proceeds of $5.0 million. During the Comparable Period, the loss on disposal of assets included a loss of $3.0 million from the sale or disposal of three aircraft and other equipment for proceeds of $8.5 million.

Earnings from unconsolidated affiliates, net of losses, increased $3.1 million to earnings of $3.0 million for the Current Period from losses of $0.1 million in the Comparable Period. This improvement primarily resulted from a $2.4 million increase in earnings from our investment in Cougar in Canada for the Current Period due to an increase in activity.

Interest expense, net, decreased 9.0%, or $4.8 million, year-over-year primarily due to 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 $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 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:

Loss on sale of subsidiaries includes a $46.9 million loss on the sale of Eastern Airways and $9.0 million loss on the sale of Aviashelf and BHLL. For further details, see Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere included elsewhere in this Quarterly Report.

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 Period were impacted by special items. During the Comparable Period, special items that impacted our results included loss on impairment, organizational restructuring costs, 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:

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.

The Europe Caspian region comprises all of our operations and affiliates in Europe, including oil and gas operations in the U.K. and Norway, 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.

The decrease in operating revenue in the Current Quarter primarily resulted from a decrease of ~~$24.0~~$28.1 million infor fixed wing services revenue due to the sale of Eastern Airways on May 10, 2019, and a decrease of ~~$10.2~~$2.4 million infor U.K. SAR revenue primarily due to unfavorable changes in foreign exchange rates, partially offset by ana $7.9 million increase ~~of $4.6 million~~ in ~~Norway. In May 2019, we sold Eastern Airways, resulting in the $24.0 million decrease in operating revenue for our fixed wing~~U.K. and Norway oil and gas services in the Current Quarter. The decrease in the U.K. SAR services revenue in the Current Quarter is primarily due to a one-time benefit of $7.6 million in OEM cost recoveries recognized in the Comparable Quarter. Operating revenue in Norway improved in the Current Quarter primarily due to an increase in ~~activity and short-term contracts.~~activity. Additionally, revenue in this region was impacted by an unfavorable year-over-year impact of changes in foreign currency exchange rates of ~~$10.1~~$9.2 million. ~~Eastern Airways contributed $10.9 million and $34.8 million in operating revenue for the Current Quarter and Comparable Quarter, respectively.~~

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 ~~$3.8~~$6.9 million in the Current Quarter and foreign exchange losses of ~~$5.4~~$1.0 million in the Comparable Quarter from the revaluation of assets and liabilities on pound sterling functional currency entities as of ~~June~~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 ~~$4.2~~$6.5 million and $0.6 million resulting from the change in exchange rates during the Current ~~Quarter.~~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.

~~As discussed above,~~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 ~~realized~~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.

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 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. 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 ~~$2.7~~$4.3 million reduction in rent expense and a ~~$1.1~~$2.1 million reduction in direct cost.

~~Operating income, operating margin,~~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.

Operating income and operating margin ~~were lower~~improved in the Current ~~Quarter~~Period primarily due to lower impairment charges, partially offset by unfavorable changes in foreign currency exchange rates. Adjusted EBITDA and adjusted EBITDA margin decreased in the Current Period primarily due to unfavorable foreign exchange rates changes and the OEM cost recoveries ~~realized in~~which benefited the Comparable Quarter and unfavorable foreign exchange rates changes. Eastern Airways contributed a negative $2.3 million and negative $0.1 million in adjusted EBITDA for the Current Quarter and Comparable Quarter, respectively.

The Africa region comprises all our operations and affiliates on the African continent, including Nigeria and Egypt.

Operating revenue for helicopter services in Africa increased $6.4 million in the Current Quarter due to an overall increase in activity and additional aircraft on contract compared to the Comparable ~~Quarter and an increase in~~Quarter. Additionally, operating revenue from fixed wing services in Africa ~~of $2.1~~increased $1.6 million to $4.4 million in the Current Quarter from $2.8 million in operating revenue for the Comparable ~~Quarter to the Current~~ Quarter.

Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin increased as a result of the increase in operating revenue in the Current Quarter discussed above, which was only partially offset by an increase in direct cost and general and administrative ~~expenses. Additionally, during~~expenses due to the increase in activity and additional aircraft on contract in the Current Quarter.

Operating revenue for helicopter services in Africa increased $16.7 million in the Current Period due to an overall increase in activity and additional aircraft on contract compared to the Comparable ~~Quarter, we incurred $1.5~~Period. Additionally, operating revenue from fixed wing services in Africa increased $3.7 million to $8.7 million in the Current Period from $5.0 million in the Comparable Period.

Operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin increased as a result of ~~demobilization costs related~~the increase in operating revenue in the Current Period discussed above, which was only partially offset by an increase in direct cost and general and administrative expenses due to ~~a significant~~the increase in activity and additional aircraft on contract ~~that expired on March 31, 2018.~~in the Current Period.

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.

Operating revenue increased in the Current Quarter primarily due to ~~an increase in operating revenue of $2.4 million in Trinidad, primarily resulting from~~ additional aircraft on contract ~~and $2.2 million~~ 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 ~~additional aircraft on contract.~~

Earnings from unconsolidated affiliates, net of losses, ~~increased $3.6~~decreased $1.3 million primarily due to ~~an increase~~a decrease in earnings from our investment in Líder in Brazil, ~~due to a favorable change in exchange rates and~~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 activity and an unfavorable change in foreign currency exchange rates. Changes in foreign currency exchange rates ~~negatively impacted~~decreased our earnings from our investment in Líder by ~~$0.1~~$1.6 million in the Current Quarter and ~~$2.6~~$1.0 million in the Comparable Quarter. Additionally, earnings from our investment in Cougar ~~in Canada changed~~increased from earnings of ~~$0.6~~$1.4 million in the Comparable Quarter to ~~earnings of $2.4~~$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.

The increases in operating income, operating margin, adjusted EBITDA and adjusted EBITDA margin were driven by the 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.

Operating revenue increased in 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 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 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 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.

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.

Operating revenue decreased in the Current Quarter primarily due to a decrease in Australia of ~~$19.7~~$12.7 million due to contracts ending and decreased activity with oil and gas customers, ~~and~~ a ~~$0.9~~$5.4 million decrease in Sakhalin due to the sale of Aviashelf induring the ~~Current Quarter, partially offset by~~three months ended June 30, 2019 and a ~~$0.4 increase~~$1.5 million decrease from our fixed wing operations at ~~Airnorth.~~Airnorth primarily resulting from unfavorable changes in foreign currency exchange rates. Airnorth contributed ~~$20.1~~$20.3 million and ~~$19.7~~$21.8 million in operating revenue for the Current Quarter and Comparable Quarter, respectively.

Operating ~~income~~loss increased 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 ~~operating~~adjusted EBITDA margin. Adjusted EBITDA and adjusted EBITDA margin ~~declined~~increased in the Current Quarter primarily due to ~~the decrease in operating revenue discussed above and~~ a ~~$5.7 million increase to rent expense primarily related to lease return and termination costs for three H225 leased aircraft of $8.9 million in the Current Quarter, partially offset by a $12.2~~$15.9 million decrease in salaries and benefits, maintenance expense, fuel costs, travel and ~~fuel costs. Adjusted EBITDA~~meals and ~~adjusted EBITDA margin decreased due~~training costs, a $4.9 million decrease to rent expense primarily from the ~~items impacting~~return of leased aircraft, and a $1.1 million decrease in depreciation expense, partially offset by a decrease in operating ~~income and operating margin excluding the H225 lease return costs. Adjusted EBITDA and adjusted EBITDA margin benefited from a $2.2 million favorable impact of foreign currency exchange rate changes.~~revenue discussed above. Airnorth contributed ~~$2.3~~a positive $3.1 million and ~~$0.2~~a negative $1.9 million in adjusted EBITDA for the Current Quarter and Comparable Quarter, respectively.

During the Current Quarter and Comparable Quarter, we recorded ~~$1.3~~$2.5 million and ~~$1.3~~$1.0 million, respectively, in severance expense related to organizational restructuring efforts. The severance expense ~~and H225 lease return and termination costs are~~is not included in adjusted EBITDA or adjusted EBITDA margin for the Current or Comparable Quarters.

Operating revenue decreased in the Current Period primarily due to a decrease in Australia of $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 sale of Aviashelf in the Current Period, and a decrease of $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

Operating loss increased in the Current Period primarily due to 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 $29.1 million decrease in salaries and benefits, maintenance expense, 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 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 benefited from a $2.3 million less unfavorable impact of foreign currency exchange rate changes. Airnorth contributed $5.5 million and a negative $1.6 million in adjusted EBITDA for the Current Period and Comparable Period, respectively.

Additionally, during the Current Period and Comparable Period, we recorded $3.8 million and $2.3 million, respectively, in severance expense related to organizational restructuring efforts. The severance expense is not included in adjusted EBITDA or adjusted EBITDA margin for the Current Period and Comparable Period.

Corporate and other includes our supply chain management and corporate costs that have not been allocated out to other regions.

Operating loss ~~was higher~~ for the Current Quarter includes $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 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 decreased in the Current Quarter primarily due to the ~~inclusion~~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.

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 ~~organizational restructuring costs, which is excluded from adjusted EBITDA. The prepetition professional fees are~~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 recorded in the Comparable Period, partially offset by the prepetition professional fees incurred in the Current Period. Adjusted EBITDA 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 $2.2 million.

Other income (expense), net for the Current Quarter and Comparable Quarter were ~~primarily~~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 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.

Our provision for income taxes for the interim period ended ~~June~~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, excluding discrete items, for the reporting period. We determined that since small changes in estimated pre-tax income or 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 ~~June~~September 30, 2019. We will continue to evaluate income tax estimates under the historical method in 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 ~~decreased~~increased our valuation allowance by ~~$0.3~~$3.6 million and during the Comparable Quarter we increased our valuation allowance by ~~$1.0~~$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 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 foreign tax credits and certain foreign net operating losses.

Net cash flows used in operating activities were $~~36.8~~57.2 million and ~~$44.1~~$26.9 million during the Current ~~Quarter~~Period and Comparable ~~Quarter,~~Period, respectively. Changes in non-cash working capital ~~generated~~provided $~~5.4~~22.0 million and used $~~41.5~~13.1 million in cash flows from operating activities for the Current ~~Quarter~~Period and Comparable ~~Quarter,~~Period, respectively. The ~~decrease in~~ changes in non-cash working capital used from the Comparable Quarter ~~to non-cash working capital generated in the Current Quarter is~~are primarily due to the Chapter 11 Cases in the Current ~~Quarter~~Period resulting in lower payments for interest, leases and other miscellaneous accrued liabilities pending emergence from Chapter 11.

Cash flows used in investing activities were $~~27.1~~43.4 million and ~~$1.1~~$8.8 million during the Current ~~Quarter~~Period and Comparable ~~Quarter,~~Period, respectively. Cash ~~was~~ used ~~primarily~~ for capital expenditures as follows:

During the Current ~~Quarter,~~Period, we received proceeds of ~~$3.2~~$5.0 million primarily from the sale or disposal of ~~two~~three aircraft and certain other equipment. During the Comparable ~~Quarter,~~Period, we received ~~$7.8~~$8.5 million in proceeds from the sale or disposal of three aircraft and certain other equipment. In the Current ~~Quarter,~~Period, we transferred, net of cash received, ~~$22.9~~$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 ~~Current Quarter or~~ Comparable ~~Quarter.~~Period.

The following table summarizes our significant contractual obligations and other commercial commitments on an undiscounted basis as of ~~June~~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 ~~June~~September 30, 2019 based on the contractual terms and has not been amended to reclassify substantially all of our long-term debt as current for any possible accelerations as discussed in Note 5 in the “Notes to Consolidated Financial Statements” included elsewhere in this Quarterly Report. Additional details regarding these obligations are provided in Notes 5, 8 and 10 in the “Notes to Consolidated Financial Statements” included in the fiscal year 2019 Annual Report and in Notes 5, 8 and 9 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

We have commitments and options to make capital expenditures over the next fiscal year to purchase additional aircraft, including aircraft associated with the commitments reflected in the table above. 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.

See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in the fiscal year 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 2019 Annual Report.

See Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report for a discussion of recent accounting pronouncements.

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 2019 Annual Report and Note 1 in the “Notes to Condensed Consolidated Financial Statements” included elsewhere in this Quarterly Report.

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 2019 Annual 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.

None.

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.



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

3151 Briarpark Drive, Suite 700 Houston, Texas		77042 (Zip Code)
(Address of principal executive offices)



			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)	Name of each exchange on which registered
	None		None	None



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



		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	87106
Item 4.	Controls and Procedures	87106
PART II
Item 1.	Legal Proceedings	90109
Item 1A.	Risk Factors	90109
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90109
Item 3.	Defaults Upon Senior Securities	90109
Item 4.	Mine Safety Disclosures	90109
Item 5.	Other Information	90109
Item 6.	Exhibits	91110
Signatures		94113


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

	(Unaudited) (In thousands, except per share amounts)						(Unaudited) (In thousands, except per share amounts)
Revenue:
Operating revenue from non-affiliates	$	304,130		$	338,466		$	291,348		$	321,580		$	595,478		$	660,046
Operating revenue from affiliates	12,446			11,295			13,336			11,817			25,782			23,112
Reimbursable revenue from non-affiliates	16,600			16,907			13,536			15,946			30,136			32,853
	333,176			366,668			318,220			349,343			651,396			716,011
Operating expense:
Direct cost	257,759			280,051			236,655			277,217			494,414			557,268
Reimbursable expense	16,134			15,904			12,840			15,194			28,974			31,098
Prepetition restructuring charges	13,476			—			—			—			13,476			—
Depreciation and amortization	31,339			30,941			31,303			30,489			62,642			61,430
General and administrative	34,770			40,101			37,820			38,839			72,590			78,940
	353,478			366,997			318,618			361,739			672,096			728,736

Loss on impairment							(62,101		)	(117,220		)	(62,101		)	(117,220		)
Loss on disposal of assets	(3,787		)	(1,678		)	(230		)	(1,293		)	(4,017		)	(2,971		)
Earnings from unconsolidated affiliates, net of losses	2,347			(1,547		)	633			1,461			2,980			(86		)
Operating loss	(21,742		)	(3,554		)	(62,096		)	(129,448		)	(83,838		)	(133,002		)

Interest expense, net	(26,321		)	(27,144		)	(22,445		)	(26,433		)	(48,766		)	(53,577		)
Reorganization items	(76,356		)	—
Loss on sale of subsidiaries	(56,303		)	—
Reorganization items, net							(93,943		)	—			(170,299		)	—
Gain (loss) on sale of subsidiaries							420			—			(55,883		)	—
Other expense, net	(3,873		)	(3,950		)	(6,637		)	(3,204		)	(10,510		)	(7,154		)
Loss before benefit for income taxes	(184,595		)	(34,648		)	(184,701		)	(159,085		)	(369,296		)	(193,733		)
Benefit for income taxes	15,507			2,851			21,782			15,655			37,289			18,506
Net loss	(169,088		)	(31,797		)	(162,919		)	(143,430		)	(332,007		)	(175,227		)
Net income attributable to noncontrolling interests	(158		)	(67		)	(55		)	(517		)	(213		)	(584		)
Net loss attributable to Bristow Group	$	(169,246	)	$	(31,864	)	$	(162,974	)	$	(143,947	)	$	(332,220	)	$	(175,811	)

Loss per common share:
Basic	$	(4.71	)	$	(0.89	)	$	(4.54	)	$	(4.02	)	$	(9.25	)	$	(4.93	)
Diluted	$	(4.71	)	$	(0.89	)	$	(4.54	)	$	(4.02	)	$	(9.25	)	$	(4.93	)



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended ~~June~~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)



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


	June 30, 2019			March 31, 2019			September 30, 2019			March 31, 2019
	(Unaudited)						(Unaudited)
	(In thousands)						(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	172,534		$	178,055		$	153,885		$	178,055
Restricted cash	3,234			—			38,910			—
Accounts receivable from non-affiliates	213,515			203,631			211,058			203,631
Accounts receivable from affiliates	13,558			13,160			17,735			13,160
Inventories	114,997			121,308			113,514			121,308
Assets held for sale	1,675			5,350			—			5,350
Prepaid expenses and other current assets	42,803			44,009			42,545			44,009
Total current assets	562,316			565,513			577,647			565,513
Investment in unconsolidated affiliates	120,494			118,203			109,986			118,203
Property and equipment – at cost:
Land and buildings	241,737			244,273			238,208			244,273
Aircraft and equipment	2,427,435			2,497,622			2,403,726			2,497,622
	2,669,172			2,741,895			2,641,934			2,741,895
Less – Accumulated depreciation and amortization	(894,350		)	(907,715		)	(963,634		)	(907,715		)
	1,774,822			1,834,180			1,678,300			1,834,180
Right-of-use assets	187,961			—			331,743			—
Goodwill	18,212			18,436			—			18,436
Other assets	104,150			116,267			94,899			116,267
Total assets	$	2,767,955		$	2,652,599		$	2,792,575		$	2,652,599

LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable	$	85,894		$	99,573		$	93,433		$	99,573
Accrued wages, benefits and related taxes	34,834			48,151			45,774			48,151
Income taxes payable	11,762			3,646			3,234			3,646
Other accrued taxes	6,932			6,729			7,775			6,729
Deferred revenue	7,917			11,932			6,161			11,932
Accrued maintenance and repairs	25,788			24,337			24,932			24,337
Accrued interest	11,201			17,174			2,649			17,174
Current portion of operating lease liabilities	90,946			—			83,630			—
Other accrued liabilities	32,773			38,679			58,434			38,679
Short-term borrowings and current maturities of long-term debt	892,092			1,418,630			947,041			1,418,630
Total current liabilities	1,200,139			1,668,851			1,273,063			1,668,851
Long-term debt, less current maturities	75,789			8,223			75,611			8,223
Accrued pension liabilities	22,472			25,726			18,706			25,726
Other liabilities and deferred credits	8,080			26,229			7,905			26,229
Deferred taxes	84,075			111,203			59,862			111,203
Long-term operating lease liabilities	103,567			—			251,399			—
Total liabilities not subject to compromise	1,494,122			1,840,232			1,686,546			1,840,232
Liabilities subject to compromise	617,991			—			624,867			—
Total liabilities	2,112,113			1,840,232			2,311,413			1,840,232
Commitments and contingencies (Note 8)
Stockholders’ investment:
Common stock, $.01 par value, authorized 90,000,000; outstanding: 35,918,916 as of June 30 and March 31 (exclusive of 1,291,441 treasury shares)	386			386
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	862,844			862,020			863,546			862,020
Retained earnings	286,352			455,598			123,378			455,598
Accumulated other comprehensive loss	(310,627		)	(327,989		)	(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	654,159			805,219			480,712			805,219
Noncontrolling interests	1,683			7,148			450			7,148
Total stockholders’ investment	655,842			812,367			481,162			812,367
Total liabilities and stockholders’ investment	$	2,767,955		$	2,652,599		$	2,792,575		$	2,652,599


	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, 2019	$	386	35,918,916	$	862,020	$	455,598		$	(327,989	)	$	(184,796	)	$	7,148		$	812,367		$	386	35,918,916	$	862,020	$	455,598		$	(327,989	)	$	(184,796	)	$	7,148		$	812,367
Issuance of common stock	—		—	824		—			—			—			—			824			—		—	824		—			—			—			—			824
Sale of subsidiaries	—		—	—		—			—			—			(5,612		)	(5,612		)	—		—	—		—			—			—			(5,612		)	(5,612		)
Currency translation adjustments	—		—	—		—			—			—			(11		)	(11		)	—		—	—		—			—			—			(11		)	(11		)
Net income (loss)	—		—	—		(169,246		)	—			—			158			(169,088		)	—		—	—		(169,246		)	—			—			158			(169,088		)
Other comprehensive income	—		—	—		—			17,362			—			—			17,362			—		—	—		—			17,362			—			—			17,362
June 30, 2019	$	386	35,918,916	$	862,844	$	286,352		$	(310,627	)	$	(184,796	)	$	1,683		$	655,842		$	386	35,918,916	$	862,844	$	286,352		$	(310,627	)	$	(184,796	)	$	1,683		$	655,842
Issuance of common stock																					—		—	702		—			—			—			—			702
Distributions paid to noncontrolling interests																					—		—	—		—			—			—			(1,323		)	(1,323		)
Currency translation adjustments																					—		—	—		—			—			—			35			35
Net income (loss)																					—		—	—		(162,974		)	—			—			55			(162,919		)
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


⁽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.



	Three and six months ended September 30, 2019		Three and six months ended September 30, 2018
Impairment of property and equipment ⁽¹⁾	$	42,022	$	104,939
Impairment of goodwill	17,504		—
Impairment of inventories	—		9,276
Impairment of investment in unconsolidated affiliates	2,575		—
Impairment of intangible assets	—		3,005
	$	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 for the three and six months ended September 30, 2018.


	Three Months Ended June 30, 2019			Three Months Ended September 30, 2019			Six Months Ended September 30, 2019
Revenue	$	(12,603	)	$	(11,361	)	$	(23,964	)
Operating expense	10,830			11,025			21,855
Earnings from unconsolidated affiliates, net of losses	2,478			(576		)	1,888
Other income (expense), net	99			(3,509		)	(3,411		)
Income before provision for income taxes	804			(4,421		)	(3,632		)
Provision for income taxes	(630		)	1,041			415
Net income	174			(3,380		)	(3,217		)
Cumulative translation adjustment	16,888			(12,299		)	4,589
Total stockholders’ investment	$	17,062		$	(15,679	)	$	1,372



		Form 10-Q


	Three Months Ended June 30,		Three Months Ended September 30,		Six Months Ended September 30,
	2019	2018	2019	2018	2019	2018
One British pound sterling into U.S. dollars
High	1.32	1.43	1.27	1.33	1.32	1.43
Average	1.29	1.36	1.23	1.30	1.26	1.33
Low	1.25	1.31	1.21	1.27	1.21	1.27
At period-end	1.27	1.32	1.23	1.30	1.23	1.30
One euro into U.S. dollars
High	1.14	1.24	1.13	1.18	1.14	1.24
Average	1.12	1.19	1.11	1.16	1.12	1.18
Low	1.11	1.16	1.09	1.13	1.09	1.13
At period-end	1.14	1.17	1.09	1.16	1.09	1.16
One Australian dollar into U.S. dollars
High	0.72	0.78	0.70	0.75	0.72	0.78
Average	0.70	0.76	0.69	0.73	0.69	0.74
Low	0.69	0.73	0.67	0.71	0.67	0.71
At period-end	0.70	0.74	0.67	0.72	0.67	0.72
One Norwegian kroner into U.S. dollars
High	0.1179	0.1290	0.1172	0.1249	0.1179	0.1290
Average	0.1157	0.1247	0.1129	0.1214	0.1143	0.1230
Low	0.1139	0.1209	0.1097	0.1179	0.1097	0.1179
At period-end	0.1173	0.1227	0.1101	0.1228	0.1101	0.1228
One Nigerian naira into U.S. dollars
High	0.0028	0.0028	0.0028	0.0028	0.0028	0.0028
Average	0.0028	0.0028	0.0028	0.0028	0.0028	0.0028
Low	0.0028	0.0028	0.0028	0.0027	0.0028	0.0027
At period-end	0.0028	0.0028	0.0028	0.0027	0.0028	0.0027


	Three Months Ended June 30,		Three Months Ended September 30,		Six Months Ended September 30,
	2019	2018	2019	2018	2019	2018
One Brazilian real into U.S. dollars
High	0.2620	0.3020	0.2675	0.2699	0.2675	0.3020
Average	0.2552	0.2778	0.2524	0.2537	0.2538	0.2657
Low	0.2434	0.2571	0.2393	0.2390	0.2393	0.2390
At period-end	0.2609	0.2599	0.2401	0.2504	0.2401	0.2504


	Customer relationships			Trade name and trademarks			Total			Customer relationships			Trade name and trademarks			Total

	Gross Carrying Amount									Gross Carrying Amount
March 31, 2019	$	2,143		$	331		$	2,474		$	2,143		$	331		$	2,474
Foreign currency translation	(15		)	(4		)	(19		)	(54		)	(16		)	(70		)
June 30, 2019	$	2,128		$	327		$	2,455
September 30, 2019										$	2,089		$	315		$	2,404

	Accumulated Amortization									Accumulated Amortization
March 31, 2019	$	(1,070	)	$	—		$	(1,070	)	$	(1,070	)	$	—		$	(1,070	)
Amortization expense	(39		)	—			(39		)	(75		)	—			(75		)
June 30, 2019	$	(1,109	)	$	—		$	(1,109	)
September 30, 2019										$	(1,145	)	$	—		$	(1,145	)

Weighted average remaining contractual life, in years	6.5			*			6.5			6.3			*			6.3



	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.


2020	$	117	$	75
2021	156		150
2022	156		150
2023	156		150
2024	156		150
Thereafter	605		584
	$	1,346	$	1,259


⁽¹⁾	Includes proceeds received for sale of property and equipment (including aircraft) during each period.


⁽²⁾	Included in loss on disposal of assets on our condensed consolidated statements of operations. Includes gain (loss), net for sale or disposal of property and equipment (including aircraft) during each period.


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


6¼% Senior Notes due 2022 principal and accrued interest⁽¹⁾	$	415,894	$	415,894
4½% Convertible Senior Notes due 2023 principal and accrued interest⁽²⁾	146,627		146,627
Accrued lease termination costs ⁽³⁾	30,830		35,000
Milestone Omnibus Agreement ⁽⁴⁾	22,009		20,063
Corporate lease termination ⁽⁵⁾			5,300
Deferred compensation plan	2,631		1,983
	$	617,991	$	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 ~~$9.7 million of~~ lease termination costs, ~~$9.4 million of~~ deferred lease costs previously included as short-term debt on our condensed consolidated balance sheet ~~$2.8 million of~~and additional lease return ~~costs and $0.1 million of accrued interest.~~costs. See Note 9 for further details.



Professional fees	$	15,503
Lease termination costs ⁽¹⁾	26,051
Write-off of discount on 4½% Convertible Senior Notes due 2023	30,158
Write-off of deferred financing fees⁽²⁾	4,644
	$	76,356



	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⁾⁽³⁾	~~Includes~~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.


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


	Three Months Ended June 30,				Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018		2019		2018
Revenue:
Operating revenue from non-affiliates	$	303,733	$	325,356	$	290,939	317,369		$	594,672	$	642,725
Operating revenue from affiliates	4,475		4,568		5,365		3,819		9,840		8,387
Reimbursable revenue from non-affiliates	16,600		16,907		13,536		15,946		30,136		32,853
Revenue from Contracts with Customers	324,808		346,831		309,840		337,134		634,648		683,965
Other revenue from non-affiliates	397		13,110		409		4,211		806		17,321
Other revenue from affiliates	7,971		6,727		7,971		7,998		15,942		14,725
Total Revenue	$	333,176	$	366,668	$	318,220	$	349,343	$	651,396	$	716,011


	Remaining Performance Obligations																Remaining Performance Obligations
	Nine Months Ending March 31, 2020			Fiscal Year Ending March 31,										Total			Six Months Ending March 31, 2020		Fiscal Year Ending March 31,							Total
			2021			2022			2023			2024 and thereafter				2021			2022		2023		2024 and thereafter			Total
	Nine Months Ending March 31, 2020													Total
Outstanding Service Revenue:																	Six Months Ending March 31, 2020
Helicopter contracts	$	339,665		$	229,327		$	192,800		$	186,633		285,269	$	1,233,694		$	249,470	$	240,042	$	186,194	$	176,615	268,028	$	1,120,349
Fixed-wing contracts	743			—			—			—			—	743			1,549		378		—		—		—	1,927
Total remaining performance obligation revenue	$	340,408		$	229,327		$	192,800		$	186,633		285,269	$	1,234,437		$	251,019	$	240,420	$	186,194	$	176,615	268,028	$	1,122,276


⁽¹⁾	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.