FAIR VALUE DISCLOSURES

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


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


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


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

Recurring Fair Value Measurements

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



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

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



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

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.

Non-recurring Fair Value Measurements

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

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



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

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


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

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



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Loss for the Three Months Ended December 31, 2017			Total Loss for the Nine Months Ended December 31, 2017
Inventories ⁽¹⁾	$	—	$	—	$	1,252	$	—		$	(1,192	)
Assets held for sale ⁽²⁾	—		—		31,038		(1,560		)	(11,307		)
Total assets	$	—	$	—	$	32,290	$	(1,560	)	$	(12,499	)

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⁽¹⁾	Fair value as of June 30, 2017.


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

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

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

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

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

Fair Value of Debt

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



	December 31, 2018				March 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
8.75% Senior Secured Notes due 2023 ⁽¹⁾	$	347,205	$	250,250	$	346,610	$	353,500
4½% Convertible Senior Notes due 2023 ⁽²⁾	111,514		54,984		107,397		158,772
6¼% Senior Notes due 2022	401,535		140,537		401,535		325,243
Lombard Debt	182,388		182,388		211,087		211,087
Macquarie Debt	174,528		174,528		185,028		185,028
PK Air Debt	216,637		216,637		230,000		230,000
Airnorth Debt	11,738		11,738		13,832		13,832
Eastern Airways Debt	—		—		14,519		14,519
Other Debt	7,959		7,959		3,991		3,991
	$	1,453,504	$	1,039,021	$	1,513,999	$	1,495,972

_____________


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


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

Other

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