UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

________________________________________

FORM 10-Q

________________________________________

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2018~~March 31, 2019 or



¨	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 1-35701

Era Group Inc.

(Exact Name of Registrant as Specified in Its Charter)

________________________________________



Delaware		72-1455213
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

818 Town & Country Blvd., Suite 200
Houston, Texas		77024
(Address of Principal Executive Offices)		(Zip Code)

713-369-4700

(Registrant’s Telephone Number, Including Area Code)

________________________________________

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

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



Large accelerated filer ¨	Accelerated filer ý	Non-accelerated filer ¨	Smaller reporting company ¨	Emerging growth company ý¨

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

ý¨

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

The total number of shares of common stock, par value $0.01 per share, outstanding as of ~~November 2, 2018~~May 3, 2019 was ~~21,761,823.~~22,220,676. The Registrant has no other class of common stock outstanding.

ERA GROUP INC.

Table of Contents



Part I.	Financial Information		2

	Item 1.	Financial Statements (Unaudited)	2

		Condensed Consolidated Balance Sheets as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018	2

		Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	3

		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	4

		Condensed Consolidated Statement of Changes in Redeemable Noncontrolling Interest and Equity for the Three Ended March 31, 2019 and ~~Nine Months Ended September 30,~~ 2018 ~~and 2017~~	5

		Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	76

		Notes to Condensed Consolidated Financial Statements	87

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2923

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4031

	Item 4.	Controls and Procedures	4031

Part II.	Other Information		4132

	Item 1A.	Risk Factors	4132

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4132

	Item 6.	Exhibits	4133

PART I—FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

ERA GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)

	March 31, 2019			December 31, 2018
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents (including $359 and $1,745 from VIEs in 2019 and 2018, respectively)⁽¹⁾	$	49,612		$	50,753
Receivables:
Trade, operating, net of allowance for doubtful accounts of $261 in 2019 and 2018, (including $9,703 and $5,565 from VIEs in 2019 and 2018, respectively)	34,732			33,306
Trade, dry-leasing	2,446			3,803
Tax receivables (including $2,843 and $3,187 from VIEs in 2019 and 2018, respectively)	2,843			3,187
Other (including $27 and $340 from VIEs in 2019 and 2018, respectively)	7,204			2,343
Inventories, net (including $35 and $40 from VIEs in 2019 and 2018, respectively)	20,893			20,673
Prepaid expenses (including $32 and $10 from VIEs in 2019 and 2018, respectively)	2,233			1,807
Total current assets	119,963			115,872
Property and equipment (including $1,455 and $1,375 from VIEs in 2019 and 2018, respectively)	918,252			917,161
Accumulated depreciation (including $525 and $485 from VIEs in 2019 and 2018, respectively)	(327,444		)	(317,967		)
Property and equipment, net	590,808			599,194
Operating lease right-of-use (including $1,143 from VIEs in 2019)	8,460			—
Equity investments and advances	24,427			27,112
Intangible assets	1,102			1,107
Other assets (including $102 and $96 from VIEs in 2019 and 2018, respectively)	21,081			21,578
Total assets	$	765,841		$	764,863
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses (including $1,534 and $1,522 from VIEs in 2019 and 2018, respectively)	$	12,643		$	13,161
Accrued wages and benefits (including $1,425 and $1,429 from VIEs in 2019 and 2018, respectively)	5,524			9,267
Accrued interest	3,376			569
Accrued income taxes	2,874			973
Accrued other taxes (including $421 and $500 from VIEs in 2019 and 2018, respectively)	1,414			1,268
Accrued contingencies (including $656 and $630 from VIEs in 2019 and 2018, respectively)	656			630
Current portion of long-term debt (including $275 and $395 from VIEs in 2019 and 2018, respectively)	1,938			2,058
Other current liabilities (including $444 and $0 from VIEs in 2019 and 2018, respectively)	3,092			878
Total current liabilities	31,517			28,804
Long-term debt	159,961			160,217
Deferred income taxes	104,824			108,357
Operating lease liabilities (including $699 from VIEs in 2019)	6,773			—
Other liabilities	721			747
Total liabilities	303,796			298,125
Commitments and contingencies (see Note 8)
Redeemable noncontrolling interest	3,160			3,302
Equity:
Era Group Inc. stockholders’ equity:
Common stock, $0.01 par value, 60,000,000 shares authorized; 22,220,676 and 21,765,404 outstanding in 2019 and 2018, respectively, exclusive of treasury shares	224			219
Additional paid-in capital	448,690			447,298
Retained earnings	12,342			18,285
Treasury shares, at cost; 157,267 and 156,737 shares in 2019 and 2018, respectively	(2,481		)	(2,476		)
Accumulated other comprehensive income, net of tax	110			110
Total equity	458,885			463,436
Total liabilities, redeemable noncontrolling interest and stockholders’ equity	$	765,841		$	764,863

ERA GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
September 30,
2018 December 31,
2017
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents (including $1,007 and $1,699 from VIEs in 2018 and 2017, respectively)⁽¹⁾
$ 47,631
$ 13,583
Receivables:
Trade, operating, net of allowance for doubtful accounts of $854 and $1,196 in 2018 and 2017, respectively (including $5,834 and $5,854 from VIEs in 2018 and 2017, respectively)
35,655
33,840
Trade, dry-leasing 3,833
5,124
Tax receivables (including $3,117 and $2,828 from VIEs in 2018 and 2017, respectively)
3,117
2,829
Other (including $51 and $257 from VIEs in 2018 and 2017, respectively)
2,701
1,623
Inventories, net (including $31 and $39 from VIEs in 2018 and 2017, respectively)
20,157
21,112
Prepaid expenses (including $130 and $40 from VIEs in 2018 and 2017, respectively)
2,367
1,203
Escrow deposits —
3,250
Total current assets 115,461
82,564
Property and equipment (including $2,477 and $1,951 from VIEs in 2018 and 2017, respectively)
927,477
972,942
Accumulated depreciation (including $443 and $487 from VIEs in 2018 and 2017, respectively)
(314,736 ) (299,028 )
Property and equipment, net 612,741
673,914
Equity investments and advances 26,600
30,056
Intangible assets 1,111
1,122
Other assets (including $84 and $61 from VIEs in 2018 and 2017, respectively)
18,421
4,441
Total assets $ 774,334
$ 792,097
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST
AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued expenses (including $1,519 and $1,807 from VIEs in 2018 and 2017, respectively)
$ 10,438
$ 16,421
Accrued wages and benefits (including $1,541 and $1,397 from VIEs in 2018 and 2017, respectively)
8,605
8,264
Accrued interest 3,404
606
Accrued income taxes 2,993
28
Accrued other taxes (including $361 and $600 from VIEs in 2018 and 2017, respectively)
2,396
1,810
Accrued contingencies (including $1,014 and $858 from VIEs in 2018 and 2017, respectively)
1,014
859
Current portion of long-term debt (including $495 and $1,073 from VIEs in 2018 and 2017, respectively)
2,158
2,736
Other current liabilities (including $0 and $8 from VIEs in 2018 and 2017, respectively)
1,033
1,720
Total current liabilities 32,041
32,444
Long-term debt (including $0 and $1,903 from VIEs in 2018 and 2017, respectively)
160,476
202,174
Deferred income taxes 108,138
106,598
Other liabilities 1,753
1,434
Total liabilities 302,408
342,650
Commitments and contingencies (see Note 8)

Redeemable noncontrolling interest 3,456
3,766
Equity:
Era Group Inc. stockholders’ equity:
Common stock, $0.01 par value, 60,000,000 shares authorized; 21,761,823 and 21,319,150 outstanding in 2018 and 2017, respectively, exclusive of treasury shares 219
215
Additional paid-in capital 447,013
443,944
Retained earnings 24,079
4,363
Treasury shares, at cost; 215,141 shares in 2018 and 2017 (2,951 ) (2,951 )
Accumulated other comprehensive income, net of tax 110
110
Total equity 468,470
445,681
Total liabilities, redeemable noncontrolling interest and stockholders’ equity $ 774,334
$ 792,097

_{(1) Refer to footnote 5 for more detail on variable interest entities (“VIE”)}

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

ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except share and per share amounts)	ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except share and per share amounts)												ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except share and per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Revenues:
Operating revenues	$	51,894		$	58,753		$	161,116		$	161,077		$	47,830		$	54,750
Dry-leasing revenues	2,716			2,632			8,544			12,713			3,463			2,572
Total revenues	54,610			61,385			169,660			173,790			51,293			57,322
Costs and expenses:
Operating	36,513			43,987			114,505			123,079			36,696			37,660
Administrative and general	8,837			10,928			35,714			31,211			8,875			12,071
Depreciation and amortization	9,541			12,103			30,011			35,635			9,450			10,354
Total costs and expenses	54,891			67,018			180,230			189,925			55,021			60,085
Gains (losses) on asset dispositions, net	(148		)	(122		)	2,269			5,048			(124		)	4,414
Litigation settlement proceeds	42,000			—			42,000			—
Loss on impairment	—			(117,018		)	—			(117,018		)
Operating income (loss)	41,571			(122,773		)	33,699			(128,105		)	(3,852		)	1,651
Other income (expense):
Interest income	732			206			1,224			641			752			146
Interest expense	(3,549		)	(4,097		)	(11,646		)	(11,620		)	(3,461		)	(4,576		)
Foreign currency gains (losses), net	(94		)	12			(1,095		)	(96		)	(126		)	74
Gain on debt extinguishment	—			—			175			—			—			175
Other, net	15			(33		)	21			(29		)	(11		)	(8		)
Total other income (expense)	(2,896		)	(3,912		)	(11,321		)	(11,104		)	(2,846		)	(4,189		)
Income (loss) before income taxes and equity earnings	38,675			(126,685		)	22,378			(139,209		)
Income tax expense (benefit)	7,861			(45,237		)	4,549			(48,066		)
Income (loss) before equity earnings	30,814			(81,448		)	17,829			(91,143		)
Equity earnings, net of tax	465			233			1,577			1,069
Net income (loss)	31,279			(81,215		)	19,406			(90,074		)
Net loss (income) attributable to noncontrolling interest in subsidiary	10			(233		)	310			219
Net income (loss) attributable to Era Group Inc.	$	31,289		$	(81,448	)	$	19,716		$	(89,855	)
Loss before income taxes and equity earnings													(6,698		)	(2,538		)
Income tax benefit													(1,588		)	(738		)
Loss before equity earnings													(5,110		)	(1,800		)
Equity earnings (losses), net of tax													(975		)	443
Net loss													(6,085		)	(1,357		)
Net loss attributable to noncontrolling interest in subsidiary													142			163
Net loss attributable to Era Group Inc.													$	(5,943	)	$	(1,194	)

Income (loss) per common share:
Basic	$	1.44		$	(3.91	)	$	0.91		$	(4.34	)
Diluted	$	1.44		$	(3.91	)	$	0.91		$	(4.34	)
Loss per common share, basic and diluted													$	(0.28	)	$	(0.06	)

Weighted average common shares outstanding:
Basic	21,215,576			20,844,376			21,139,212			20,715,686
Diluted	21,239,189			20,844,376			21,156,466			20,715,686
Weighted average common shares outstanding, basic and diluted													21,323,312			21,003,777

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

ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited, in thousands)	ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited, in thousands)												ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited, in thousands)

		Three Months Ended September 30,					Nine Months Ended September 30,							Three Months Ended March 31,
		2018		2017			2018			2017				2019			2018
Net income (loss)		$	31,279	$	(81,215	)	$	19,406		$	(90,074	)
Net loss														$	(6,085	)	$	(1,357	)
Other comprehensive loss:
Foreign currency translation adjustments		—		—			(5		)	(2		)		—			(5		)
Total other comprehensive loss		—		—			(5		)	(2		)		—			(5		)
Comprehensive income (loss)		31,279		(81,215		)	19,401			(90,076		)
Comprehensive loss (income) attributable to noncontrolling interest in subsidiary		10		(233		)	310			219
Comprehensive income (loss) attributable to Era Group Inc.		$	31,289	$	(81,448	)	$	19,711		$	(89,857	)
Comprehensive loss														(6,085		)	(1,362		)
Comprehensive loss attributable to noncontrolling interest in subsidiary														142			163
Comprehensive loss attributable to Era Group Inc.														$	(5,943	)	$	(1,199	)

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

ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
(unaudited, in thousands)

Three Months Ended September 30, 2018

Era Group Inc. Stockholders’ Equity
Redeemable Noncontrolling Interest Common
Stock Additional
Paid-In
Capital Retained Earnings Treasury
Shares Accumulated
Other
Comprehensive
Income Total
Equity
June 30, 2018 $ 3,466
$ 219
$ 445,885
$ (7,210 ) $ (2,951 ) $ 105
$ 436,048
Issuance of common stock:
Employee Stock Purchase Plan —
—
409
—
—
—
409
Share award amortization —
—
719
—
—
—
719
Net income —
—
—
31,279
—
—
31,279
Net loss attributable to redeemable noncontrolling interest (10 ) —
—
10
—
—
10
Currency translation adjustments, net of tax —
—
—
—
—
5
5
September 30, 2018 $ 3,456
$ 219
$ 447,013
$ 24,079
$ (2,951 ) $ 110
$ 468,470

ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE NONCONTROLLING INTEREST AND EQUITY (unaudited, in thousands)

Three Months Ended March 31, 2019

				Era Group Inc. Stockholders’ Equity
	Redeemable Noncontrolling Interest			Common Stock		Additional Paid-In Capital			Retained Earnings			Treasury Shares			Accumulated Other Comprehensive Income		Total Equity
December 31, 2018	$	3,302		$	219	$	447,298		$	18,285		$	(2,476	)	$	110	$	463,436
Issuance of common stock:
Restricted stock grants	—			4		(4		)	—			—			—		—
Employee Stock Purchase Plan	—			1		589			—			—			—		590
Share award amortization	—			—		807			—			—			—		807
Purchase of treasury shares	—			—		—			—			(5		)	—		(5		)
Net loss	—			—		—			(6,085		)	—			—		(6,085		)
Net loss attributable to redeemable noncontrolling interest	(142		)	—		—			142			—			—		142
March 31, 2019	$	3,160		$	224	$	448,690		$	12,342		$	(2,481	)	$	110	$	458,885

Three Months Ended September 30, 2017

Era Group Inc. Stockholders’ Equity
Redeemable Noncontrolling Interest Common
Stock Additional
Paid-In
Capital Retained Earnings Treasury
Shares Accumulated
Other
Comprehensive
Income Total
Equity
June 30, 2017 $ 3,769
$ 215
$ 441,595
$ 24,117
$ (2,968 ) $ 90
$ 463,049
Issuance of common stock:
Employee Stock Purchase Plan —
—
373
—
—
—
373
Share award amortization —
—
975
—
—
—
975
Cancellation of restricted stock —
—
5
—
(5 ) —
—
Net loss —
—
—
(81,215 ) (1 ) —
(81,216 )
Net income attributable to redeemable noncontrolling interest 233
—
—
(233 ) —
—
(233 )
September 30, 2017 $ 4,002
$ 215
$ 442,948
$ (57,331 ) $ (2,974 ) $ 90
$ 382,948

Nine Months Ended September 30, 2018

Era Group Inc. Stockholders’ Equity
Redeemable Noncontrolling Interest
Common
Stock

Additional
Paid-In
Capital
Retained Earnings
Treasury
Shares

Accumulated
Other
Comprehensive
Income

Total
Equity
December 31, 2017 $ 3,766
$ 215
$ 443,944
$ 4,363
$ (2,951 ) $ 110
$ 445,681
Issuance of common stock:
Restricted stock grants —
3
(3 ) —
—
—
—
Employee Stock Purchase Plan —
1
892
—
—
—
893
Share award amortization —
—
2,180
—
—
—
2,180
Net income (loss) —
—
—
19,406
—
—
19,406
Net loss attributable to redeemable noncontrolling interest (310 ) —
—
310
—
—
310
September 30, 2018 $ 3,456

$ 219
$ 447,013
$ 24,079
$ (2,951 ) $ 110
$ 468,470

Nine Months Ended September 30, 2017

Era Group Inc. Stockholders’ Equity
Redeemable Noncontrolling Interest Common
Stock Additional
Paid-In
Capital Retained Earnings Treasury
Shares Accumulated
Other
Comprehensive
Income Total
Equity
December 31, 2016 $ 4,221
$ 211
$ 438,489
$ 32,524
$ (2,899 ) $ 92
$ 468,417
Issuance of common stock:
Restricted stock grants —
3
(3 ) —
—
—
—
Employee Stock Purchase Plan —
1
835
—
—
—
836
Share award amortization —
—
3,604
—
—
—
3,604
Cancellation of restricted stock —
—
23
—
(23 ) —
—
Purchase of treasury shares —
—
—
—
(52 ) —
(52 )
Net loss —
—
—
(90,074 ) —
—
(90,074 )
Net loss attributable to redeemable noncontrolling interest (219 ) —
—
219
—
—
219
Currency translation adjustments, net of tax —
—
—
—
—
(2 ) (2 )
September 30, 2017 $ 4,002
$ 215
$ 442,948
$ (57,331 ) $ (2,974 ) $ 90
$ 382,948



Three Months Ended March 31, 2018

				Era Group Inc. Stockholders’ Equity
	Redeemable Noncontrolling Interest			Common Stock		Additional Paid-In Capital			Retained Earnings			Treasury Shares			Accumulated Other Comprehensive Income			Total Equity
December 31, 2017	$	3,766		$	215	$	443,944		$	4,363		$	(2,951	)	$	110		$	445,681
Issuance of common stock:
Restricted stock grants	—			3		(3		)	—			—			—			—
Employee Stock Purchase Plan	—			1		483			—			—			—			484
Share award amortization	—			—		750			—			—			—			750
Net loss	—			—		—			(1,357		)	—			—			(1,357		)
Net loss attributable to redeemable noncontrolling interest	(163		)	—		—			163			—			—			163
Currency translation adjustments, net of tax	—			—		—			—			—			(5		)	(5		)
March 31, 2018	$	3,603		$	219	$	445,174		$	3,169		$	(2,951	)	$	105		$	445,716

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

ERA GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine Months Ended
September 30,
2018 2017
Cash flows from operating activities:
Net income (loss) $ 19,406
$ (90,074 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 30,011
35,635
Share-based compensation 2,180
3,604
Bad debt expense, net —
47
Interest income (614 ) —
Non-cash penalty and interest expenses 607
—
Gains on asset dispositions, net (2,269 ) (5,048 )
Debt discount amortization 188
174
Amortization of deferred financing costs 1,173
850
Foreign currency losses, net 1,097
47
Gain on debt extinguishment, net (175 ) —
Loss on impairment —
117,018
Deferred income tax benefit 1,541
(48,057 )
Equity earnings, net of tax (1,577 ) (1,069 )
Changes in operating assets and liabilities:
Increase in receivables (2,390 ) (5,107 )
Decrease in prepaid expenses and other assets 393
828
Increase in accounts payable, accrued expenses and other liabilities 781
9,080
Net cash provided by operating activities 50,352
17,928
Cash flows from investing activities:
Purchases of property and equipment (7,686 ) (13,121 )
Proceeds from disposition of property and equipment 29,520
5,690
Investments in and advances to equity investees —
(126 )
Dividends received from equity investees 1,000
—
Principal payments on notes due from equity investees 401
564
Principal payments on third party notes receivable 620
94
Net cash provided by (used in) investing activities 23,855
(6,899 )
Cash flows from financing activities:
Proceeds from Revolving Credit Facility —
9,000
Long-term debt issuance costs (1,295 ) —
Payments on long-term debt (42,562 ) (24,745 )
Proceeds from share award plans 893
836
Purchase of treasury shares —
(52 )
Net cash used in financing activities (42,964 ) (14,961 )
Effects of exchange rate changes on cash and cash equivalents (445 ) 101
Net increase (decrease) in cash, cash equivalents and restricted cash 30,798
(3,831 )
Cash, cash equivalents and restricted cash, beginning of period 16,833
30,727
Cash, cash equivalents and restricted cash, end of period $ 47,631

$ 26,896
Supplemental cash flow information:
Cash paid for interest $ 7,867
$ 8,249
Interest capitalized during the period $ 97
$ 451
Interest, net of amounts capitalized $ 7,770
$ 7,798
Cash paid for income taxes 63
427

ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands)

	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net loss	$	(6,085	)	$	(1,357	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	9,450			10,354
Share-based compensation	807			750
Interest income	(157		)	—
Non-cash penalty and interest expenses	—			607
Gains (losses) on asset dispositions, net	124			(4,414		)
Debt discount amortization	67			61
Amortization of deferred financing costs	239			704
Foreign currency losses (gains), net	126			(107		)
Gain on debt extinguishment, net	—			(175		)
Deferred income tax benefit	(3,533		)	(737		)
Equity (earnings) losses, net of tax	975			(443		)
Changes in operating assets and liabilities:
Decrease (increase) in receivables	493			(2,783		)
Increase in prepaid expenses and other assets	(452		)	(1,502		)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	581			(1,988		)
Net cash provided by (used in) operating activities	2,635			(1,030		)
Cash flows from investing activities:
Purchases of property and equipment	(1,312		)	(3,784		)
Proceeds from disposition of property and equipment	—			19,497
Purchase of investments	(5,000		)	—
Principal payments on notes due from equity investees	2,334			54
Principal payments on third party notes receivable	104			76
Net cash provided by (used in) investing activities	(3,874		)	15,843
Cash flows from financing activities:
Long-term debt issuance costs	—			(1,295		)
Payments on long-term debt	(542		)	(14,259		)
Proceeds from share award plans	590			484
Purchase of treasury shares	(5		)	—
Net cash provided by (used in) financing activities	43			(15,070		)
Effects of exchange rate changes on cash and cash equivalents	55			(23		)
Net increase (decrease) in cash, cash equivalents and restricted cash	(1,141		)	(280		)
Cash, cash equivalents and restricted cash, beginning of period	50,753			16,833
Cash, cash equivalents and restricted cash, end of period	$	49,612		$	16,553
Supplemental cash flow information:
Cash paid for interest	$	353		$	1,080
Interest capitalized during the period	—			97
Interest, net of amounts capitalized	$	353		$	983
Cash paid for income taxes	14			—

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

ERA GROUP INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


1.	BASIS OF PRESENTATION AND ACCOUNTING POLICY

The condensed consolidated financial statements include the accounts of Era Group Inc. and its consolidated subsidiaries. Unless the context otherwise indicates, any reference in this Quarterly Report on Form 10-Q to the “Company” refers to Era Group Inc. and its consolidated subsidiaries, and any reference to “Era Group” refers to Era Group Inc. without its subsidiaries. The condensed consolidated financial information for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017~~2018 has been prepared by the Company and has not been audited by its independent registered public accounting firm. In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made to fairly present the Company’s financial position as of ~~September 30, 2018~~March 31, 2019, its results of operations for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017~~2018, its comprehensive income for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017~~2018, its changes in equity for the ~~three and~~ ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019, and ~~2017,~~2018, and its cash flows for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 and ~~2017~~2018. Results of operations for the interim periods presented are not necessarily indicative of operating results for the full year or any future periods.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018.

Certain of the Company’s operations are subject to seasonal factors. Operations in the U.S. Gulf of Mexico are often at their highest levels from April to September, as daylight hours increase, and are at their lowest levels from ~~November to~~December through February, as daylight hours decrease. ~~The Company’s Alaskan operations also see an increase during May to September, as its firefighting operations occur during this time and daylight hours are significantly longer.~~

Basis of ~~Consolidation~~Consolidation.. The consolidated financial statements include the accounts of Era Group Inc., its wholly and majority-owned subsidiaries and entities that meet the criteria of ~~Variable Interest Entities (“VIEs”)~~VIEs of which the Company is the primary beneficiary. Aeróleo Taxi Aereo S/A (“Aeróleo”) is a VIE of which the Company is the primary beneficiary. All significant inter-company accounts and transactions are eliminated in consolidation.

Reclassification. Certain amounts reported for prior periods in the consolidated financial statements have been reclassified to conform with the current period’s presentation.

Supplemental Cash Flow Information. The following table sets forth the Company’s reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Statement of Cash Flows (in thousands):


	September 30, 2018		December 31, 2017		September 30, 2017		December 31, 2016		March 31, 2019		December 31, 2018		March 31, 2018		December 31, 2017
Cash and cash equivalents	$	47,631	$	13,583	$	26,896	$	26,950	$	49,612	$	50,753	$	16,553	$	13,583
Restricted cash ⁽¹⁾	—		3,250		—		3,777		—		—		—		3,250
Total cash, cash equivalents and restricted cash shown in the Consolidated Statement of Cash Flows	$	47,631	$	16,833	$	26,896	$	30,727	$	49,612	$	50,753	$	16,553	$	16,833

(1) Restricted cash represents amounts deposited in escrow accounts at the end of each period. Escrow deposits are shown as a separate line item in the consolidated balance sheet.

Revenue Recognition. The Company recognizes revenues for flight services and emergency response services with the passing of each day as the Company has the right to consideration from its customers in an amount that corresponds directly with the value to the Company’s customer of the performance completed to date. Therefore, the Company has elected to exercise the right to invoice practical expedient in its adoption of ASC 606. The right to invoice represents a method for recognizing revenue over time using the output measure of “value to the customer” which is an objective measure of an entity’s performance in a contract. The Company typically invoices its customers on a monthly basis for revenues earned during the prior month with payment terms of 30 days. The Company’s customer arrangements do not contain any significant financing component for its customers.

Trade ~~Receivables~~Receivables.. Customers are primarily international, independent and major integrated exploration, development and production companies, ~~international~~third party helicopter operators and the U.S. government. Customers are typically granted credit on a short-term basis, and related credit risks are considered minimal. The Company routinely reviews its trade receivables and makes provisions for probable doubtful accounts; however, those provisions are estimates. Actual results could differ from those estimates, and those differences may be material.

Leases. The Company determines if an arrangement is a lease at inception or during modification or renewal of an existing lease. Operating leases are maintained for a number of fixed assets including land, hangars, buildings, fuel tanks and tower sites.

The right-of-use (“ROU”) assets associated with these leases are reflected under long-term assets; the current portion of the long-term payables are reflected under other current liabilities; and the payables on lease agreements past one year are recorded as long-term liabilities on the Company’s consolidated balance sheets. For those contracts with terms of twelve months or less, the lease expense is recognized on a straight-line basis over the lease term and recorded in operating expenses on the consolidated statement of operations. As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate based on the information available at commencement date is used to determine the present value of future payments. Most of the Company’s lease agreements allow the option of renewal or extension, which are considered a part of the lease term. When it is reasonably certain that a lease will be extended, this is incorporated into the calculations.

New Accounting Standards - Adopted. ~~The Company adopted~~In February 2016, the ~~provisions of~~ Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers,” and its amendments issued by the provisions of ASU No. 2016-08, “Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU No. 2016-10, “Identifying Performance Obligations and Licensing,” ASU No. 2016-12, “Narrow-Scope Improvements and Practical Expedients,” and ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue From Contracts with Customers,” collectively Accounting Standards Codification (ASC) Topic 606 beginning January 1, 2018. ASC Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from all contracts with customers except where revenues are in scope of another accounting standard. The ASU superseded the revenue recognition requirements in ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. ASC Topic 606 sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods and services. The adoption of ASC Topic 606 did not have a material impact on the Company’s consolidated financial statements. See Note 10 - Revenues for additional information relating to Revenue from Contracts with Customers.

The Company adopted the provisions of FASB ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” beginning January 1, 2018. This ASU clarifies how certain cash receipts and cash payments should be classified and presented in the statement of cash flows. The Company has made an accounting policy election to classify distributions received from equity method investees using the nature of the distribution approach which classifies distributions received from investees as either cash inflows from operating activities or cash inflows from investing activities based on the nature of the activities of the investee that generated the distribution. Adoption of this ASU did not have a material impact on the Company’s historical financial statements.

~~In October 2016, the FASB issued ASU 2016-16 -~~ ~~Income Taxes~~, which requires entities to recognize income tax consequences of intra-entity transfers of assets, other than inventory, when the transfer occurs rather than when the asset is sold to a third party as is the case under current GAAP. ASU 2016-16 will be effective for annual reporting periods beginning after December 15, 2017 including interim periods within that period. The Company adopted ASU 2016-16 effective January 1, 2018, and such adoption did not have a material impact on its consolidated financial statements.

The Company adopted the provisions of FASB ASU No. 2016-18, “Restricted Cash,” beginning January 1, 2018. This ASU requires amounts deemed restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows, and presentation should permit a reconciliation when cash, cash equivalents and restricted cash are presented in more than one line item on the balance sheet. The Company had amounts deposited in escrow accounts as discussed further below in Note 3. These amounts are deemed restricted cash and are included in the “Escrow deposits” line of our consolidated balance sheet. The impact of adopting this ASU has been included as adjustments in the prior period statement of cash flows.

~~In May 2017, the FASB issued ASU 2017-09 -~~ ~~Compensation - Stock Compensation: Scope of Modification Accounting~~, which is designed to reduce diversity in practice and complexity when accounting for changes in the terms of a share-based payment award. ASU 2017-09 will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that period, and early adoption is permitted for any interim period for which financial statements have not yet been issued. The Company adopted ASU 2017-09 effective January 1, 2018, and such adoption did not have a material impact on its consolidated financial statements.

~~New Accounting Standards - Not Yet Adopted.~~ ~~In February 2016, the FASB~~(“ FASB”) issued ASU No. 2016-02, “Leases” (ASU No. 2016-02), which establishes comprehensive accounting and financial reporting requirements for leasing arrangements. This ASU supersedes the existing requirements in FASB ASC Topic 840, “Leases,” and requires lessees to recognize substantially all lease assets and lease liabilities on the balance sheet. The provisions of ASU No. 2016-02 also modify the definition of a lease and outline requirements for recognition, measurement, presentation and disclosure of leasing arrangements by both lessees and lessors. ~~The~~This ASU is effective for interim and annual periods beginning after December 15, 2018, and early adoption of the standard is permitted. Entities are required to adopt the ASU using a modified retrospective approach, subject to certain optional practical expedients, and apply the provisions of ASU No. 2016-02 to leasing arrangements existing at or entered into after the earliest comparative period presented in the financial statements. In July 2018, the ASU No. 2016-02 was further amended by the provisions of ASU No. 2018-11, “Targeted Improvements” to Topic 842 whereby the FASB decided to provide an alternate transition method by allowing entities to initially apply the new leases standard at the adoption date (such as January 1, 2019, for calendar year-end public business entities) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption consistent with preparers’ requests. The Company ~~currently plans to adopt this standard in the first quarter of~~adopted ASU No. 2016-02, as amended, effective January 1, 2019, using the current-period adjustment method and ~~will recognize~~has recognized a cumulative-effect adjustment to the opening balance of retained earnings in that period. The Company has identified the relevant lease contracts and the review and evaluation of these is substantially complete. While the Company’s evaluation of ASU 2016-02 is still ongoing, the Company expects the adoption of the ASU will have a material impact on the consolidated balance sheet. The Company will electelected an optional practical expedient

to retain its current classification of leases, and as a result, ~~anticipates that~~ the initial impact of adopting this new standard onhas not been material to its consolidated ~~statement~~financial statements. The cumulative effect of ~~income~~the adoption on retained earrings is less than $0.1 million. Additionally, the Company elected not to bifurcate and ~~consolidated statement of cash flows will not be material.~~ separately account for non lease components contained in a single contract. See note 4 - Leases for additional information related to the Company’s operating leases.

New Accounting Standards - Not Yet Adopted.In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments” (ASU No. 2016-13), which sets forth the current expected credit loss model, a new forward-looking impairment model for certain financial instruments based on expected losses rather than incurred losses. The ASU is effective for interim and annual periods beginning after December 15, 2019, and early adoption of the standard is permitted. Entities are required to adopt ASU No. 2016-13 using a modified retrospective approach, subject to certain limited exceptions. The Company is currently evaluating the potential impact of the adoption of this ASU on its consolidated financial statements.

In August 2018, the FASB issued ~~ASU-2018-15,~~ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software” (Subtopic 350-40), providing guidance addressing a customer's accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is considered a service contract. Under the new guidance, implementation costs for a CCA should be evaluated for capitalization using the same approach as implementation costs associated with internal-use software and should be expensed over the term of the hosting arrangement, which includes any reasonably certain renewal periods. The new guidance is effective for fiscal years beginning after December 15, 2019 for calendar year-end public business entities. Early adoption is permitted, including adoption in any interim period. The Company is evaluating the potential impact of the adoption of ASU-2018-15 on its consolidated financial statements.

In August 2018, the FASB issued ~~ASU-2018-13,~~ASU No. 2018-13, “Fair Value Measurements” (ASU ~~No.2018-13,~~No. 2018-13, update to topic ASC-820), providing guidance for the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. ~~ASU-2018-13~~ASU No. 2018-13 will be effective for interim and annual periods beginning after December 15, 2019. The Company has not adopted ~~ASU-2018-13~~ASU No. 2018-13 and believes such adoption will not have a material impact on its consolidated financial statements.


2.	FAIR VALUE MEASUREMENTS

The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted

prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the Company did not have any assets or liabilities that are measured at fair value on a recurring basis.

The estimated fair values of the Company’s other financial assets and liabilities as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 were as follows (in thousands):


	Carrying Amount		Level 1		Level 2		Level 3		Carrying Amount		Level 1		Level 2		Level 3
September 30, 2018
March 31, 2019
ASSETS
Investments, included in other current assets									$	5,000	$	—	$	4,648	$	—

LIABILITIES
Long-term debt, including current portion	$	162,634	$	—	$	163,638	$	—	$	161,899	$	—	$	162,766	$	—

December 31, 2017
December 31, 2018
LIABILITIES
Long-term debt, including current portion	$	204,910	$	—	$	203,938	$	—	$	162,275	$	—	$	159,367	$	—

The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value. The fair value of the Company’s long-term debt was estimated using discounted cash flow analysis based on estimated current rates for similar types of arrangements. Considerable judgment was required in developing certain of the estimates of fair value, and, accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange.


3.	~~ESCROW DEPOSITS~~

~~Prior to~~Investments. During the ~~change in the U.S. tax code at the end of 2017,~~three months ended March 31, 2019, the Company ~~periodically, entered into Qualified Exchange Accommodation Agreements with third parties to meet~~purchased $5.0 million of corporate securities. This investment is recorded on the ~~like-kind exchange requirements of Section 1031 of the Internal Revenue Code1986,~~balance sheet under other current assets as amended (the “Code”) and the provisions of Revenue Procedure 2000-37. In accordance with these provisions, the Company was permitted to deposit proceeds from the sale of assets into escrow accounts for the purpose of acquiring other assets

and qualifying for the temporary deferral of taxable gains realized. Consequently, the Company established escrow accounts with financial institutions for the deposit of funds received on sales of equipment, which were designated for replacement propertyits stated maturity date is within a specified period of time. As of December 31, 2017, the Company had $3.3 million deposited in a like-kind exchange escrow account. During the nine months ended September 30, 2018, the Company used $2.8 million of the balance to make a final payment on a S92 heavy helicopter which completed the like-kind exchange transaction, and the remaining $0.5 million was returned to the Company.year.


4.3.	ACQUISITIONS AND DISPOSITIONS

Capital Expenditures. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, capital expenditures were ~~$7.7~~$1.3 million and consisted primarily of ~~helicopter acquisitions,~~ spare helicopter parts and leasehold improvements. During the ~~nine~~three months ended ~~September 30,~~March 31, 2019, the Company did not capitalize any interest. During the three months ended March 31, 2018, ~~and 2017,~~ the Company capitalized interest of $0.1 ~~million and $0.5 million, respectively.~~million. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, construction in progress, which is a component of property and equipment, included capitalized interest of $0.7 ~~million and $1.9 million, respectively.~~million. A summary of changes to the Company’s operating helicopter fleet is as follows:

Equipment Additions - During the ~~nine~~three months ended ~~September 30,~~March 31, 2019, the Company did not place any helicopters into service. During the three months ended March 31, 2018, the Company placed ~~one S92 heavy helicopter into service. During the nine months ended September 30, 2017, the Company placed two AW189 heavy helicopters and~~ one S92 heavy helicopter into service. The Company places helicopters in service once completion work has been finalized and the helicopters are ready for use.

Equipment Dispositions - During the ~~nine~~three months ended ~~September 30,~~March 31, 2019, the Company did not sell or dispose of any material assets. During the three months ended March 31, 2018, the Company sold or otherwise disposed of ~~twenty~~twelve helicopters, two operating facilities, and related property and equipment for proceeds of ~~$29.5 million and receivables of $14.3 million, payable over a two year period, resulting in gains of $2.3~~$19.5 million.


4.	LEASES

~~Included~~The Company leases land, hangars, buildings, fuel tanks and tower sites under operating lease agreements. The Company determines if an arrangement is a lease at inception, and many of these leases offer an option for renewal or extension. The adoption of ASC 842 allows the Company to retain its current classification of leases, and the optional practical expedience rule has allowed the use of the current-period adjustment method to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the ~~proceeds~~current period rather than the restatement of ~~$29.5 million was $1.2 million related to~~prior year lease amounts. The majority of the ~~sales-type leases~~bases from which the Company operates are leased, with current remaining terms between one and sixty years. The lease expense on those contracts with initial terms of ~~five H225 heavy helicopters, for which~~twelve months or less are recognized on a ~~$3.6 million loss was recognized at~~straight-line basis over the lease ~~commencement.~~term and are not recorded on the balance sheet. The Company does not currently maintain any finance leases and is only engaged in operating lease agreements.

The Company’s maturity analysis of lease payments under operating leases that had a remaining term in excess of one year as of December 31, 2018 were as follows (in thousands):



	Maturity of Lease Liabilities
2019	$	1,573
2020	1,530
2021	987
2022	562
2023	495
Years subsequent to 2023	7,952
Total future minimum lease payments	$	13,099

The Company’s maturity analysis of lease payments under operating leases that have a remaining term in excess of one year as of March 31, 2019 were as follows (in thousands):



	Maturity of Lease Liabilities
2019 (excluding the three months ended March 31, 2019)	$	1,591
2020	2,072
2021	1,081
2022	657
2023	633
Years subsequent to 2023	8,959
Total future minimum lease payments	14,993
Less: imputed interest	6,533
Present value of lease liabilities	$	8,460

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, the Company ~~sold or otherwise disposed~~recognized $0.9 million of ~~property and equipment~~operating lease expense. Included in this amount was $0.3 million for ~~proceeds~~contracts with remaining terms of ~~$5.7 million and recognized gains~~less than one year.



Reported balances:
Other current liabilities	$	1,687
Long-term lease liabilities	6,773
Total operating lease liabilities	$	8,460

Other information related to these leases is as follows:



	2019
Weighted average remaining lease term	11 years
Weighted average discount rate	4.46		%
Cash paid for amounts included in the measurement of lease liabilities during the three months ended March 31, 2019 (in thousands)	$	513

As of ~~$5.0~~March 31, 2019, the Company had an additional operating lease, for a new office facility that has not yet commenced, for total future minimum lease payments of $1.5 million. This lease is expected to commence during 2019, with a lease term of five years.


5.	VARIABLE INTEREST ENTITIES

Aeróleo. The Company acquired a 50% economic and 20% voting interest in Aeróleo in 2011. As a result of liquidity issues experienced by Aeróleo, it is unable to adequately finance its activities without additional financial support from the Company, making it a VIE. The Company has the ability to direct the activities that most significantly affect Aeróleo’s financial performance, making the Company the primary beneficiary. As a result, the Company consolidates Aeróleo’s financial results.

The Company’s condensed consolidated balance sheets at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 include assets of Aeróleo totaling ~~$11.4~~$15.4 million and ~~$11.5~~$11.9 million, respectively. The distribution of these assets to Era Group and its subsidiaries other than Aeróleo is subject to restrictions. The Company’s condensed consolidated balance sheets at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 include liabilities of Aeróleo of ~~$4.9~~$5.5 million and ~~$7.6~~$4.5 million, respectively. The creditors for such liabilities do not have recourse to Era Group or its subsidiaries other than Aeróleo.


6.	INCOME TAXES

During the three months ended ~~September 30,~~March 31, 2019 and 2018, the Company recorded an income tax expense of $7.9 million, of which $3.0 million is current tax expense, resulting in an effective tax rate of 20.3%. During the three months ended September 30, 2017, the Company recorded an income tax benefit of ~~$45.2~~$1.6 million and $0.7 million, respectively, resulting in an effective tax rate of ~~35.7%.~~23.7% and 29.1%, respectively.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2019, and 2018, the Company recorded an income tax expense of $4.5 million, resulting in an effective tax rate of 20.3%. During the nine months ended September 30, 2017, the Company recorded an income tax benefit of $48.1 million, resulting in an effective tax rate of 34.5%.

~~During the nine months ended September 30, 2018, and 2017,~~ there were no new uncertain tax positions identified. The Company’s 2015 federal income tax return is currently under examination by the Internal Revenue Service.

Amounts accrued for interest and penalties associated with unrecognized income tax benefits are included in other expense on the condensed consolidated statements of operations. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the gross amount of liability for accrued interest and penalties related to unrecognized tax benefits was $0.1 million.

As of September 30, 2018, the Company considers the accounting for the transition tax and other items to remain incomplete due to the forthcoming guidance and its ongoing analysis of its tax positions. As of September 30, 2018, the Company has not elected an accounting policy for the newly enacted global intangible low-taxed income (“GILTI”). Recent FASB guidance

indicates that accounting for GILTI either as part of deferred taxes or as a period cost are both applicable methods. Once further information is gathered and interpretation and analysis of the tax legislation evolves, the Company will make an appropriate accounting election. The Company expects to complete its analysis within the measurement period in accordance with SAB 118.


7.	LONG-TERM DEBT

The Company’s borrowings as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 were as follows (in thousands):


	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
7.750% Senior Notes (excluding unamortized discount)	$	144,828		$	144,828		$	144,828		$	144,828
Senior secured revolving credit facility	—			39,000			—			—
Promissory notes	20,395			21,642			19,564			19,980
Other	495			2,976			275			395
Total principal balance on borrowings	165,718			208,446			164,667			165,203
Portion due within one year	(2,158		)	(2,736		)	(1,938		)	(2,058		)
Unamortized debt issuance costs	(1,803		)	(2,067		)	(1,619		)	(1,712		)
Unamortized discount, net	(1,281		)	(1,469		)	(1,149		)	(1,216		)
Long-term debt	$	160,476		$	202,174		$	159,961		$	160,217

7.750% Senior Notes. On December 7, 2012, Era Group issued $200.0 million aggregate principal amount of its 7.750% senior unsecured notes due December 15, 2022 (the “7.750% Senior Notes”) and received net proceeds of $191.9 million. Interest on the 7.750% Senior Notes is payable semi-annually in arrears on June 15^th and December 15^th of each year.

Revolving Credit Facility. On March 31, 2014, Era Group entered into the amended and restated senior secured revolving credit facility (the “Amended and Restated Revolving Credit Facility”). On March 7, 2018, Era Group entered into a Consent and Amendment No. 4 to the Amended and Restated Senior Secured Revolving Credit Facility Agreement (the “Amendment No. 4” and the Amended and Restated Revolving Credit Facility, as amended by Amendment No. 4, is referred to herein as the “Revolving Credit Facility”) that, among other things, (a) reduced the aggregate principal amount of revolving loan commitments from $200.0 million to $125.0 million, (b) extended the agreement’s maturity until March 31, 2021, (c) revised the definition of EBITDA to permit an add-back for certain litigation expenses related to the H225 helicopters, and (d) adjusted the maintenance covenant requirements to maintain an interest coverage ratio of not less than 1.75:1.00 and a senior secured leverage ratio of not more than 3.25:1.00.

The Revolving Credit Facility provides Era Group with the ability to borrow up to $125.0 million, with a sub-limit of up to $50.0 million for letters of credit, and matures in March 2021. Subject to the satisfaction of certain conditions precedent and the agreement by the lenders, the Revolving Credit Facility includes an “accordion” feature which, if exercised, will increase total commitments by up to $50.0 million.

Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to, at Era Group’s election, either a base rate or LIBOR, each as defined in the Revolving Credit Facility, plus an applicable margin. The applicable margin is based on the Company’s ratio of funded debt to EBITDA, as defined in the Revolving Credit Facility, and ranges from 1.25% to 2.50% on the base rate margin and 2.25% to 3.50% on the LIBOR ~~margin and has increased by 50 basis points at each tier from the previous amendment.~~margin. The applicable margin as of ~~September 30, 2018~~March 31, 2019 was ~~1.50%~~1.25% on the base rate margin and ~~2.50%~~2.25% on the LIBOR margin. In addition, the Company is required to pay a quarterly commitment fee based on the unfunded portion of the committed amount at a rate based on the Company’s ratio of funded debt to EBITDA, as defined in the Revolving Credit Facility, that ranges from 0.375% to 0.500%. As of ~~September 30, 2018,~~March 31, 2019, the commitment fee was 0.375%.

The obligations under the Revolving Credit Facility are secured by a portion of the Company’s helicopter fleet and the Company’s other tangible and intangible assets and are guaranteed by Era Group’s wholly owned U.S. subsidiaries. The Revolving Credit Facility contains various restrictive covenants including an interest coverage ratio, a senior secured leverage ratio and an asset coverage ratio, each as defined in the Revolving Credit Facility, as well as other customary covenants including certain restrictions on the Company’s ability to enter into certain transactions, including those that could result in the incurrence of additional indebtedness and liens, the making of loans, guarantees or investments, sales of assets, payments of dividends or repurchases of capital stock, and entering into transactions with affiliates.

As of ~~September 30, 2018~~March 31, 2019, Era Group had no outstanding borrowings under the Revolving Credit Facility and issued letters of credit of ~~$1.1~~$0.7 million. In connection with Amendment No. 4 entered into in 2018, the Company wrote off previously incurred debt issuance costs of $0.4 million and incurred additional debt issuance costs of $1.3 million. Such costs are included

in other assets on the condensed consolidated balance sheets and are amortized to interest expense in the condensed consolidated statements of operations over the life of the Revolving Credit Facility.

Aeróleo Debt. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the Company did not enter into any new debt arrangements in Brazil. During the nine months ended September 30, 2017, the Company settled certain tax disputes for installment payments in Brazil totaling $0.2 million. Such amounts are included in other debt in the table above and bear interest at a rate equal to the overnight rate as published by the Central Bank of Brazil.

During 2017, the Company settled certain tax disputes in Brazil under the Tax Regularization Settlement Special Program (known as Programa Especial de Regularização Tributária or “PERT”) and has agreed to make installment payments on the amounts due to the applicable taxing authorities. The installments are payable in Brazilian reals, and bear interest at a rate equal to the overnight rate as published by the Central Bank of Brazil and will be paid over the next ~~ten~~four months as of ~~September 30, 2018.~~March 31, 2019. Such amounts are included in other debt in the table above. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the Company made ~~payments, including~~ scheduled payments of ~~$2.3~~$0.1 million.

Promissory Notes. During the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ the Company made scheduled payments on other long-term debt of $~~1.2~~0.4 million and ~~$1.2~~$0.6 million, respectively. During the nine months ended September 30, 2018, the Company amended the promissory notes to remove one helicopter and add two helicopters for a total of three helicopters providing cross-collateralization such that each helicopter now secures both promissory notes.


8.	COMMITMENTS AND CONTINGENCIES

Fleet. ~~During the nine months ended September 30, 2018, the Company canceled two helicopter purchase agreements and recognized $0.5 million of penalties on cancellation.~~

The Company’s unfunded capital commitments as of ~~September 30, 2018~~March 31, 2019 consisted primarily of agreements to purchase helicopters and totaled ~~$82.3~~$80.1 million, which is payable beginning in 2019 ~~and~~ through 2020. The Company also had $1.3 million of deposits paid on options not yet exercised. All of the Company’s capital commitments (inclusive of deposits paid on options not yet exercised) may be terminated without further liability other than aggregate liquidated damages of $2.1 million.

Included in these commitments are orders to purchase three AW189 heavy helicopters and five AW169 light twin helicopters. The AW189 helicopters are scheduled to be delivered in ~~2019 and~~ 2020. Delivery dates for the AW169 helicopters have yet to be determined. In addition, the Company had outstanding options to purchase up to ten additional AW189 helicopters. If these options are exercised, the helicopters would be scheduled for delivery in 2020 and 2021.

Brazilian Tax Disputes. In connection with its ownership of Aeróleo and its operations in Brazil, the Company has several ongoing legal disputes related to the local, municipal and federal taxation requirements in Brazil, including assessments associated with the import and re-export of its helicopters in Brazil. The ~~Company is disputing~~legal disputes are related to: (i) municipal tax assessments ~~of approximately $9.6 million~~arising under the authorities in ~~taxes, penalties and interest levied by the municipal authorities of~~ Rio de Janeiro (for the period between 2000 toand 2005), and Macaé (for the period between 2001 to 2006)~~, and Cabo Frio (for the period 2012)~~ (collectively, the “Municipal ~~Assessments”~~Tax Disputes”). The Company believes that, based on its interpretation of tax legislation supported by clarifying guidance provided by the Supreme Court of Brazil with respect to the issue in a 2006 ruling, it is in compliance with all applicable tax legislation, has paid all applicable taxes, penalties and interest and plans to defend these claims vigorously at the administrative levels in each jurisdiction. In the event the Municipal Assessments are upheld at the last administrative level, it may be necessary for the Company to deposit the amounts at issue as security to pursue further appeals. At September 30, 2018, it is not possible to determine the outcome of the Municipal Assessments, but the Company does not expect that the outcome would have a material adverse effect on its business, financial position or results of operations. In addition, it is not possible to reasonably estimate the likelihood or potential amount of assessments that may be issued for any subsequent periods.

~~The Company is disputing responsibility for $2.5 million of employer~~; (ii) social security contributions ~~required to have been remitted by~~that one of its customers ~~relating~~was required to ~~the period~~remit from 1995 to ~~1998. Although the Company may be deemed co-responsible for such remittances under the local regulatory regime, the customer’s payments~~1998; (iii) penalties assessed due to the Company against presented invoices were made net of the specific remittances required to have been made by the customer and at issue in the claim. As such, the Company plans to defend this claim vigorously. At September 30, 2018, it is not possible to determine the outcome of this matter, but the Company does not expect that the outcome would have a material adverse effect on its ~~business, financial position or results of operations.~~

The Company is disputing certain penalties that are being assessed by the State of Rio de Janeiro in respect of the Company’s alleged failure to submit accurate documentation and to fully comply with filing requirements with respect to certain value-added taxes. The Company elected to make payments of $0.2 million in installments over time to satisfy a portion of these penalties. Upon confirming with the asserting authority that the originally proposed penalties of $1.6 million with respect to the balance of the assessments were calculated based on amounts containing a typographical error, the aggregate penalties that remain in dispute total $0.5 million. At September 30, 2018, it is not possible to determine the outcome of this matter, but the Company does not expect that the outcome would have a material adverse effect on its business, financial position or results of operations.

~~The Company is disputing the imposition of $0.2 million in fines levied by the Brazilian customs authorities. These fines relate to the Company’s~~ alleged failure to comply with certain deadlines ~~under~~related to the ~~temporary regime pursuant to which it imports~~ helicopters ~~into Brazil. In order to dispute such fines and pursue its legal remedies within the judicial system,~~ the Company ~~deposited~~imports and exports in and out of Brazil; and (iv) fines sought by taxing authorities in Brazil related to its use of certain ~~amounts~~tax credits used to offset certain social tax liabilities (collectively, the “Tax Disputes”).

The aggregate amount at issue for the Tax Disputes is $14.8 million. The Municipal Tax Disputes are the largest contributor to the total amount being sought from Aeróleo, with approximately $10.4 million at issue.

plaintiffs’ in the U.S. (the “Civil Disputes”). With respect to the fatal accident, the plaintiffs are seeking to collect additional amounts in Brazil despite the previous settlement agreed upon by the parties in the U.S.

The Company continues to evaluate and assess various legal strategies for each of the Tax Disputes and the Civil Disputes. As is customary for certain legal matters in Brazil, Aeróleo has already deposited amounts as security into an escrow account ~~with the presiding judge~~to pursue further legal appeals in the matters who controls the release of such funds pending the outcome. The Company believes its documentation evidences its timely compliance with the relevant deadlines. As such, the Company plans to defend these claims vigorously. At September 30, 2018, it is not possible to determine the outcome of these matters, but the Company does not expect that the outcome would have a material adverse effect on its business, financial position or results of operations.

The Company is disputing fines of $0.3 million sought by taxing authorities in Brazil following the final adjudication to disallow certain tax credits applied by the Company to offset certain social tax liabilities. The fine is calculated as 50%several of the ~~incremental tax liability resulting from~~Tax Disputes and the ~~disallowance~~Civil Disputes. As of March 31, 2019, the tax credits and has been applied without taking into account the circumstances relating to the disallowance of such tax credits. The constitutionality of such fines is under review by the Supreme Court in Brazil. There are a number of cases in which taxpayers have received favorable rulings due to the lack of constitutionality of the law. As such, the Company plans to defend this claim vigorously. At September 30, 2018, it is not possible to determine the outcome, but the Company does not expect that it would have a material adverse impact on its business, financial position or results of operations.

The Company is disputing contingent fees of $0.5 million sought by its former tax consultant that have been calculated based on unrealized tax savings attributed to the consultant’s suggested tax strategies. The Company contends that fees are due only upon realized tax savings. At September 30, 2018, it is not possible to determine the outcome of these matters, but the Company does not expect that the outcome would have a material adverse effect on its business, financial position or results of operations.

In the normal course of business, the Company may become involved in various employment-related litigation matters. At September 30, 2018, it is not possible to determine the outcome of several of these claims wherein an aggregate amount equal to the Company’s established accrual is being sought. The Company does not expect that the outcome with respect to such claims would have a material adverse effect on its business, financial position or results of operations.

The Company is also disputing claims from the Brazilian tax authorities with respect to federal customs taxes levied upon the helicopters leased by the Company and imported into Brazil under a temporary regime and subject to reexport. In order to dispute such assessments and pursue its available legal remedies within the judicial system, the Company deposited the amounts at issue as security into an escrow account that serves as security and with the presiding judge in the matters controlling the release of such funds. The Company believes that, based on its interpretation of tax legislation and well established aviation industry practice, it is not required to pay such taxes and plans to defend these claims vigorously. At September 30, 2018, it is not possible to determine the outcome of this matter, but the Company does not expect that the outcome would have a material adverse effect on its business, financial position or results of operations.

As it relates to the specific cases referred to above, the Company currently anticipates that any administrative fine or penalty ultimately would not have a material effect on its business, financial position or results of operations. The Company has deposited ~~$6.7~~$5.4 million into escrow accounts controlled by the court with respect to ~~certain of~~ the ~~cases described above~~Tax Disputes and the Civil Disputes, and the Company has fully reserved such amounts subject to final determination and the judicial release of such escrow deposits. These ~~estimated liabilities~~estimates are based on ~~the Company’s~~its assessment of the nature of these matters, their progress toward resolution, the advice of legal counsel and outside experts as well as management’s intentions and experience.

~~Other.~~ ~~On November 21, 2016,~~ Aeróleo plans to defend the cases vigorously. As of March 31, 2019, it is not possible to determine the outcome of the Tax Disputes or the Civil Disputes, but the Company ~~filed~~does not expect that an outcome would have a ~~lawsuit in~~material adverse effect on its business, financial position or results of operations.

General Litigation and Disputes

In the ~~District Court~~normal course of Dallas County, Texas against Airbus Helicopters, Inc. and Airbus Helicopters S.A.S. (collectively, “Airbus”) alleging breaches of various contracts between us, fraudulent inducement and unjust enrichment in connection with the sale by Airbus of H225 model helicopters to the Company. On October 26, 2017,business, the Company ~~added~~is involved in various litigation matters including, among other things, claims ~~against Airbus~~by third parties for ~~fraud~~alleged property damages and negligent misrepresentation, and on December 28, 2017, the Company amended its complaint to seek damages attributable to the impact of Airbus’ unlawful acts on the value of a H225 that the Company purchasedpersonal injuries. In addition, from ~~another helicopter operator.~~

On July 3, 2018, the Company entered into a litigation settlement agreement (the “Settlement Agreement”) with Airbus to settle all claims made by the Company against Airbus related to Airbus' marketing and sale, and the Company's purchase, of eleven H225 model helicopters. Pursuant to the Settlement Agreement, Airbus has agreed to pay the Company $42.0 million in cash and provide it with certain trade account credits that the Company may use for up to five years. The Company has agreed to release Airbus from any and all liabilities, claims, counterclaims, demands, complaints, costs, losses and expenses relating to the action and to dismiss the action with prejudice without any party admitting fault.

~~From~~ time to time, the Company is involved in tax and other disputes with various ~~legal actions incidental~~government agencies. Management has used estimates in determining the Company’s potential exposure to these matters and has recorded reserves in its ~~business, including actions relating~~financial statements related thereto as appropriate. It is possible that a change in its estimates related to ~~employee claims, actions relating to medical malpractice claims, various tax issues, grievance hearings before labor regulatory agencies, and miscellaneous third party tort actions. The outcome of~~ these ~~proceedings is not predictable. However, based on current circumstances,~~exposures could occur, but the Company does not ~~believe that the ultimate resolution of these proceedings, after considering available~~

~~defenses and any insurance coverage or indemnification rights, will~~expect such changes in estimated costs would have a material ~~adverse~~ effect on its business, consolidated financial position or results of ~~operations or cash flows.~~operations.


9.	EARNINGS (LOSS) PER COMMON SHARE

Basic earnings per common share of the Company are computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings per common share of the Company are computed based on the weighted average number of common shares issued and outstanding plus the effect of potentially dilutive securities through the application of the if-converted method and/or treasury method. Dilutive securities for this purpose assume all common shares have been issued and outstanding during the relevant periods pursuant to the exercise of outstanding stock options.

Computations of basic and diluted earnings per common share of the Company for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ were as follows (in thousands, except share and per share data):


	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended March 31,
	2018		2017			2018		2017			2019			2018
Net income (loss) attributable to Era Group Inc.	$	31,289	$	(81,448	)	$	19,716	$	(89,855	)
Net loss attributable to Era Group Inc.											$	(5,943	)	$	(1,194	)
Less: Net income attributable to participating securities	714		—			425		—			—			—
Net income (loss) attributable to fully vested common stock	$	30,575	$	(81,448	)	$	19,291	$	(89,855	)	$	(5,943	)	$	(1,194	)

Weighted average common shares outstanding:
Basic	21,215,576		20,844,376			21,139,212		20,715,686			21,323,312			21,003,777
Diluted⁽¹⁾	21,239,189		20,844,376			21,156,466		20,715,686			21,323,312			21,003,777
Income (loss) per common share:
Basic	$	1.44	$	(3.91	)	$	0.91	$	(4.34	)
Diluted	$	1.44	$	(3.91	)	$	0.91	$	(4.34	)
Loss per common share:
Loss per common share, basic and diluted											$	(0.28	)	$	(0.06	)

____________________


(1)	Excludes weighted average common shares of ~~224,769~~203,612 and ~~275,824~~235,900 for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and 223,921 and 278,740 for the nine months ended September 30, 2018 and 2017,~~ respectively, for certain share awards as the effect of their inclusion would have been antidilutive.


10.	REVENUES

The Company derives its revenues primarily from oil and gas flight services, emergency response services and leasing activities. Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration to which the ~~entity~~Company expects to be entitled in exchange for those goods or services.

The following table presents the Company’s operating revenues disaggregated by geographical region in which services are provided:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Operating revenues:
United States	$	38,229	$	41,989	$	117,673	$	112,862	$	34,214	$	39,133
Foreign	13,665		16,764		43,443		48,215
International									13,616		15,617
Total operating revenues	$	51,894	$	58,753	$	161,116	$	161,077	$	47,830	$	54,750

The following table presents the Company’s total revenues earned by service line:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Revenues:
Oil and gas flight services:
U.S.	$	35,473	$	36,567	$	109,778	$	98,914	$	32,466	$	36,536
International	13,665		16,764		43,443		48,215		13,616		15,617
Total oil and gas	49,138		53,331		153,221		147,129		46,082		52,153
Emergency response services	2,756		2,487		7,895		8,877		1,748		2,597
Flightseeing	—		2,935		��		5,071
Total operating revenues	$	51,894	$	58,753	$	161,116	$	161,077	$	47,830	$	54,750
Dry-leasing revenues:
U.S.	1,142		486		2,984		1,015		451		571
International	1,574		2,146		5,560		11,698		3,012		2,001
Total revenues	$	54,610	$	61,385	$	169,660	$	173,790	$	51,293	$	57,322

The Company determines revenue recognition by applying the following steps:


1.	Identify the contract with a customer;


2.	Identify the performance obligations in the contract;


3.	Determine the transaction price;


4.	Allocate the transaction price to the performance obligations; and


5.	Recognize revenue as the performance obligations are satisfied.

The Company earns the majority of its revenue through master service agreements or subscription agreements, which typically include a fixed monthly or daily fee, incremental fees based on hours flown and fees for ancillary items such as fuel, security, charter services, etc. The Company’s arrangements to serve its customers represent a promise to ~~stand-ready~~stand ready to provide services at the customer’s discretion.

The Company recognizes revenue for flight services and emergency response services with the passing of each day as the Company has the right to consideration from its customers in an amount that corresponds directly with the value to the customer of performance completed to date. Therefore, the Company has elected to exercise the right to invoice practical expedient in its adoption of ASC 606. The right to invoice represents a method for recognizing revenue over time using the output measure of “value to the customer” which is an objective measure of an entity’s performance in a contract. The Company typically invoices customers on a monthly basis for revenues earned during the prior month, with payment terms of 30 days. The Company’s customer arrangements do not contain any significant financing component for customers. Amounts for taxes collected from customers and remitted to governmental authorities are reported on a net basis.

~~Practical Expedients and Exemptions~~

The Company does not incur any material incremental costs to obtain or fulfill customer contracts that require capitalization under the new revenue standard and has elected the practical expedient afforded by the new revenue standard to expense such costs as incurred upon adoption. These costs are included as operating expenses in the consolidated statements of operations.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.


11.	RELATED PARTY TRANSACTIONS

Mr. Charles Fabrikant, Chairman of the Board and Director of the Company, is also the Executive Chairman and Chief Executive Officer of SEACOR Holdings Inc. (“SEACOR”). The Company leases office space from ~~SEACOR Holdings Inc. (“SEACOR”) whose CEO is Chairman of the Company’s board of directors. During~~SEACOR. For each of the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ the Company incurred $0.1 ~~million in rent and utilities, and during each of the nine months ended September 30, 2018 and 2017, the Company incurred $0.3~~ million in rent and utilities. Such costs are included in administrative and general expense in the condensed consolidated statements of operations.

The Company purchased products and services from its Dart Holding Company Ltd. (“Dart”) joint venture totaling ~~$0.4~~$0.6 million and ~~$0.1~~$0.7 million during the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively. The Company purchased products from Dart totaling $1.7 million and $0.4 million during the nine months ended September 30, 2018 and 2017,~~ respectively. The Company also ~~has~~had a note receivable from Dart, which had ~~balances~~a balance of ~~$2.4 million and $2.9~~$2.3 million as of ~~September 30, 2018 and~~ December 31, ~~2017, respectively.~~2018. The note was paid in full during the three months ended March 31, 2019 in preparation for the sale of Dart. Purchases from Dart are included in operating expenses on the consolidated statements of income, and the note receivable iswas included in equity investments and advances on the consolidated balance sheets.

During the three months ended ~~September 30, 2018,~~March 31, 2019, the Company ~~received dividends of $1.0 million from~~in conjunction with its 50% joint venture partner entered into an agreement to sell Dart. The transaction closed on April 1, 2019.

During the three months ended ~~September 30,~~March 31, 2018, ~~and 2017,~~ the Company incurred fees of ~~less than~~ $0.1 million ~~and $0.1 million, respectively,~~ for simulator services from its Era Training Center, LLC (“ETC”) joint venture, and during ~~each of~~ the three months ended ~~September 30,~~March 31, 2018, ~~and 2017,~~ the Company provided helicopter, management and other services to ETC of less than $0.1 million. During the nine months ended September 30, 2018 and 2017, the Company incurred fees of $0.2 million and $0.5 million, respectively, for simulator services from ETC, and during each of the nine months ended September 30, 2018 and 2017 the Company provided helicopter, management and other services to ETC of $0.1 million and $0.2 million, respectively. Revenues from ETC ~~are~~were recorded in operating revenues, and expenses incurred ~~are~~were recorded in operating expenses on the consolidated statements of operations.

~~During~~ ETC was dissolved in the ~~three months ended September 30, 2018, the Company entered into an agreement to dissolve ETC in exchange for the settlement~~third quarter of an existing promissory note with an outstanding principal amount of $3.6 million by acquiring the assets of the joint venture. The agreement included the sale of three simulators to the Company for $2.9 million, partial ownership in a fourth simulator for $0.4 million and a note receivable from the Company’s partner in ETC for $0.4 million.2018.


12.	SHARE-BASED COMPENSATION

Restricted Stock Awards. The number of shares and weighted average grant price of restricted stock awards during the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 were as follows:


	Number of Shares		Weighted Average Grant Price		Number of Shares		Weighted Average Grant Price
Non-vested as of December 31, 2017	382,873		$	12.68
Non-vested as of December 31, 2018					513,766		$	10.28
Restricted stock awards granted:
Non-employee directors	37,272		$	9.00	34,488		$	10.35
Employees	291,599		$	9.00	361,056		$	10.35
Vested	(201,059	)	$	14.05	(242,850	)	$	10.36
Forfeited	(500	)	$	9.66	—		$	—
Non-vested as of September 30, 2018	510,185		$	9.77
Non-vested as of March 31, 2019					666,460		$	10.29

The total fair value of shares vested during the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ determined using the closing price on the grant date, was ~~$2.8~~$2.5 million and ~~$4.7~~$2.8 million, respectively.

Stock Options. The Company did not grant any stock options during the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019.

Employee Stock Purchase Plan (“ESPP”). During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the Company issued ~~114,385~~60,258 shares under the ESPP. As of ~~September 30, 2018, 222,378~~March 31, 2019, 162,120 shares remain available for issuance under the ESPP.

Total share-based compensation expense, which includes stock options, restricted stock and the ESPP, was ~~$2.2 million and $3.6~~$0.8 million for each of the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 and ~~2017~~2018~~, respectively.~~.


13.	GUARANTORS OF SECURITIES

~~On December 7, 2012, Era Group issued the 7.750% Senior Notes.~~ Era Group’s payment obligations under the 7.750% Senior Notes are jointly and severally guaranteed by all of its existing 100% owned U.S. subsidiaries that guarantee the Revolving Credit Facility and any future U.S. subsidiaries that guarantee the Revolving Credit Facility or other material indebtedness Era

Group may incur in the future (the “Guarantors”). All the Guarantors currently guarantee the Revolving Credit Facility, and the guarantees of the Guarantors are full and unconditional and joint and several.

As a result of the agreement by ~~these subsidiaries~~the Guarantors to guarantee the 7.750% Senior Notes, the Company ~~is presenting~~presents the following condensed consolidating balance sheets and statements of operations, comprehensive income and cash flows for Era Group (“Parent”), the Guarantors and the Company’s other subsidiaries (“Non-guarantors”). These statements should be read in conjunction with the ~~unaudited condensed~~accompanying consolidated financial statements and notes of the Company. 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.

Supplemental Condensed Consolidating Balance Sheet as of ~~September 30, 2018~~March 31, 2019


	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated			Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
	(in thousands, except share data)															(in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	46,351		$	—		$	1,280		$	—		$	47,631		$	48,876		$	—		$	736		$	—		$	49,612
Receivables:
Trade, operating, net of allowance for doubtful accounts of $854	—			29,135			6,520			—			35,655
Trade, operating, net of allowance for doubtful accounts of $261																—			24,741			9,991			—			34,732
Trade, dry-leasing	—			3,833			—			—			3,833			—			2,446			—			—			2,446
Tax receivable	—			—			3,117			—			3,117			—			6			2,837			—			2,843
Other	—			2,154			547			—			2,701			5,000			1,863			341			—			7,204
Inventories, net	—			20,124			33			—			20,157			—			20,858			35			—			20,893
Prepaid expenses	501			1,560			306			—			2,367			726			1,292			215			—			2,233
Total current assets	46,852			56,806			11,803			—			115,461			54,602			51,206			14,155			—			119,963
Property and equipment	—			910,730			16,747			—			927,477			—			901,547			16,705			—			918,252
Accumulated depreciation	—			(311,342		)	(3,394		)	—			(314,736		)	—			(323,733		)	(3,711		)	—			(327,444		)
Property and equipment, net	—			599,388			13,353			—			612,741			—			577,814			12,994			—			590,808
Operating lease right-of-use																—			7,317			1,143			—			8,460
Equity investments and advances	—			26,600			—			—			26,600			—			24,427			—			—			24,427
Investments in consolidated subsidiaries	165,005			—			—			(165,005		)	—			171,671			—			—			(171,671		)	—
Intangible assets	—			—			1,111			—			1,111			—			—			1,102			—			1,102
Deferred income taxes	21,185			—			—			(21,185		)	—			11,513			—			—			(11,513		)	—
Intercompany receivables	375,131			—			—			(375,131		)	—			358,653			—			—			(358,653		)	—
Other assets	1,398			16,939			84			—			18,421			1,106			19,873			102			—			21,081
Total assets	$	609,571		$	699,733		$	26,351		$	(561,321	)	$	774,334		$	597,545		$	680,637		$	29,496		$	(541,837	)	$	765,841
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	130		$	8,606		$	1,702		$	—		$	10,438		$	584		$	10,378		$	1,681		$	—		$	12,643
Accrued wages and benefits	—			7,008			1,597			—			8,605			5			4,060			1,459			—			5,524
Accrued interest	3,337			67			—			—			3,404			3,307			69			—			—			3,376
Accrued income taxes	2,970			—			23			—			2,993			69			2,800			5			—			2,874
Accrued other taxes	244			1,791			361			—			2,396			306			687			421			—			1,414
Accrued contingencies	—			—			1,014			—			1,014			—			—			656			—			656
Current portion of long-term debt	—			1,663			495			—			2,158			—			1,663			275			—			1,938
Other current liabilities	817			199			17			—			1,033			469			2,167			456			—			3,092
Total current liabilities	7,498			19,334			5,209			—			32,041			4,740			21,824			4,953			—			31,517
Long-term debt	133,743			26,733			—			—			160,476			134,060			25,901			—			—			159,961
Deferred income taxes	—			128,073			1,250			(21,185		)	108,138			—			115,091			1,245			(11,512		)	104,824
Intercompany payables	—			322,117			53,047			(375,164		)	—			—			298,659			60,026			(358,685		)	—
Operating lease liabilities																—			6,074			699			—			6,773
Other liabilities	—			1,753			—			—			1,753			—			721			—			—			721
Total liabilities	141,241			498,010			59,506			(396,349		)	302,408			138,800			468,270			66,923			(370,197		)	303,796
Redeemable noncontrolling interest	—			3			3,453			—			3,456			—			3			3,157			—			3,160
Equity:
Common stock, $0.01 par value, 60,000,000 shares authorized; 21,761,823 outstanding, exclusive of treasury shares	219			—			—			—			219
Common stock, $0.01 par value, 60,000,000 shares authorized; 22,220,676 outstanding, exclusive of treasury shares																224			—			—			—			224
Additional paid-in capital	447,014			100,305			4,562			(104,868		)	447,013			448,692			100,306			4,561			(104,869		)	448,690
Retained earnings	24,048			101,305			(41,170		)	(60,104		)	24,079			12,310			111,948			(45,145		)	(66,771		)	12,342
Treasury shares, at cost, 215,141 shares	(2,951		)	—			—			—			(2,951		)
Treasury shares, at cost, 157,267 shares																(2,481		)	—			—			—			(2,481		)
Accumulated other comprehensive income, net of tax				110			—			—			110						110			—			—			110
Total equity	468,330			201,720			(36,608		)	(164,972		)	468,470			458,745			212,364			(40,584		)	(171,640		)	458,885
Total liabilities, redeemable noncontrolling interest and stockholders’ equity	$	609,571		$	699,733		$	26,351		$	(561,321	)	$	774,334		$	597,545		$	680,637		$	29,496		$	(541,837	)	$	765,841

Supplemental Condensed Consolidating Balance Sheet as of December 31, ~~2017~~2018


	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated			Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
	(in thousands, except share data)															(in thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	10,800		$	—		$	2,783		$	—		$	13,583		$	48,396		$	—		$	2,357		$	—		$	50,753
Receivables:
Trade, operating, net of allowance for doubtful accounts of $1,196	—			27,968			5,872			—			33,840
Trade, operating, net of allowance for doubtful accounts of $261																—			27,509			5,797			—			33,306
Trade, dry-leasing	—			5,124			—			—			5,124			—			3,803			—			—			3,803
Tax receivables	—			—			2,829			—			2,829			—			6			3,181			—			3,187
Other	—			1,126			497			—			1,623			—			1,949			394			—			2,343
Inventories, net	—			20,746			366			—			21,112			—			20,633			40			—			20,673
Prepaid expenses	349			721			133			—			1,203			398			1,219			190			—			1,807
Escrow deposits	—			3,250			—			—			3,250
Total current assets	11,149			58,935			12,480			—			82,564			48,794			55,119			11,959			—			115,872
Property and equipment	—			956,918			16,024			—			972,942			—			900,611			16,550			—			917,161
Accumulated depreciation	—			(296,573		)	(2,455		)	—			(299,028		)	—			(314,567		)	(3,400		)	—			(317,967		)
Net property and equipment	—			660,345			13,569			—			673,914			—			586,044			13,150			—			599,194
Equity investments and advances	—			30,056			—			—			30,056			—			27,112			—			—			27,112
Investments in consolidated subsidiaries	161,350			—			—			(161,350		)	—			172,950			—			—			(172,950		)	—
Intangible assets	—			—			1,122			—			1,122			—			—			1,107			—			1,107
Deferred income taxes	19,600			—			—			(19,600		)	—			9,904			—			—			(9,904		)	—
Intercompany receivables	426,806			—			—			(426,806		)	—			366,541			—			—			(366,541		)	—
Other assets	1,011			3,370			60			—			4,441			1,251			20,231			96			—			21,578
Total assets	$	619,916		$	752,706		$	27,231		$	(607,756	)	$	792,097		$	599,440		$	688,506		$	26,312		$	(549,395	)	$	764,863
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	638		$	13,655		$	2,128		$	—		$	16,421		$	136		$	11,357		$	1,668		$	—		$	13,161
Accrued wages and benefits	—			6,804			1,460			—			8,264			43			7,743			1,481			—			9,267
Accrued interest	549			57			—			—			606			500			69			—			—			569
Accrued income taxes	—			24			4			—			28			918			6			49			—			973
Accrued other taxes	18			1,192			600			—			1,810			—			768			500			—			1,268
Accrued contingencies	—			—			859			—			859			—			—			630			—			630
Current portion of long-term debt	—			1,663			1,073			—			2,736			—			1,663			395			—			2,058
Other current liabilities	848			835			37			—			1,720			647			220			11			—			878
Total current liabilities	2,053			24,230			6,161			—			32,444			2,244			21,826			4,734			—			28,804
Long-term debt	172,292			27,979			1,903			—			202,174			133,900			26,317			—			—			160,217
Deferred income taxes	—			124,948			1,250			(19,600		)	106,598			—			117,015			1,245			(9,903		)	108,357
Intercompany payables	—			381,660			45,146			(426,806		)	—			—			310,727			55,847			(366,574		)	—
Other liabilities	—			1,435			(1		)	—			1,434			—			720			27			—			747
Total liabilities	174,345			560,252			54,459			(446,406		)	342,650			136,144			476,605			61,853			(376,477		)	298,125
Redeemable noncontrolling interest	—			4			3,762			—			3,766			—			3			3,299			—			3,302
Equity:
Common stock, $0.01 par value, 60,000,000 shares authorized; 21,319,150 shares outstanding, exclusive of treasury shares	215			—			—			—			215
Common stock, $0.01 par value, 60,000,000 shares authorized; 21,765,404 shares outstanding, exclusive of treasury shares																219			—			—			—			219
Additional paid-in capital	443,944			100,306			4,562			(104,868		)	443,944			447,299			100,306			4,562			(104,869		)	447,298
Retained earnings	4,363			92,034			(35,552		)	(56,482		)	4,363			18,254			111,482			(43,402		)	(68,049		)	18,285
Treasury shares, at cost, 215,141 shares	(2,951		)	—			—			—			(2,951		)
Treasury shares, at cost, 156,737 shares																(2,476		)	—			—			—			(2,476		)
Accumulated other comprehensive income, net of tax	—			110			—			—			110			—			110			—			—			110
Total equity	445,571			192,450			(30,990		)	(161,350		)	445,681			463,296			211,898			(38,840		)	(172,918		)	463,436
Total liabilities, redeemable noncontrolling interest and stockholders’ equity	$	619,916		$	752,706		$	27,231		$	(607,756	)	$	792,097		$	599,440		$	688,506		$	26,312		$	(549,395	)	$	764,863

Supplemental Condensed Consolidating Statements of Operations for the Three Months Ended ~~September 30, 2018~~March 31, 2019


	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated			Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
	(in thousands)															(in thousands)
Revenues	$	—		$	48,631		$	13,623		$	(7,644	)	$	54,610		$	—		$	45,314		$	13,617		$	(7,638	)	$	51,293
Costs and expenses:
Operating	—			29,888			14,302			(7,677		)	36,513			—			30,049			14,285			(7,638		)	36,696
Administrative and general	901			6,957			979			—			8,837			1,242			6,672			961			—			8,875
Depreciation	—			9,316			225			—			9,541			—			9,197			253			—			9,450
Total costs and expenses	901			46,161			15,506			(7,677		)	54,891			1,242			45,918			15,499			(7,638		)	55,021
Losses on asset dispositions, net	—			(148		)	—			—			(148		)	—			(124		)	—			—			(124		)
Litigation settlement proceeds	42,000			—			—			—			42,000
Operating income (loss)	41,099			2,322			(1,883		)	33			41,571			(1,242		)	(728		)	(1,882		)	—			(3,852		)
Other income (expense):
Interest income	171			448			113			—			732			196			504			52			—			752
Interest expense	(3,330		)	(204		)	(15		)	—			(3,549		)	(3,241		)	(213		)	(7		)	—			(3,461		)
Foreign currency losses, net	(10		)	(16		)	(68		)	—			(94		)	(40		)	(49		)	(37		)	—			(126		)
Other, net	—			21			(6		)	—			15			—			(1		)	(10		)	—			(11		)
Total other income (expense)	(3,169		)	249			24			—			(2,896		)	(3,085		)	241			(2		)	—			(2,846		)
Income (loss) before income taxes and equity earnings	37,930			2,571			(1,859		)	33			38,675			(4,327		)	(487		)	(1,884		)	—			(6,698		)
Income tax expense	3,928			3,933			—			—			7,861			336			(1,924		)	—			—			(1,588		)
Income (loss) before equity earnings	34,002			(1,362		)	(1,859		)	33			30,814			(4,663		)	1,437			(1,884		)	—			(5,110		)
Equity in earnings (losses) of subsidiaries	(2,747		)	465			—			2,747			465			(1,280		)	(975		)	—			1,280			(975		)
Net income (loss)	31,255			(897		)	(1,859		)	2,780			31,279			(5,943		)	462			(1,884		)	1,280			(6,085		)
Net loss attributable to noncontrolling interest in subsidiary	—			—			10			—			10			—			—			142			—			142
Net income (loss) attributable to Era Group Inc.	$	31,255		$	(897	)	$	(1,849	)	$	2,780		$	31,289		$	(5,943	)	$	462		$	(1,742	)	$	1,280		$	(5,943	)

Supplemental Condensed Consolidating Statements of Operations for the Three Months Ended ~~September 30, 2017~~

Parent Guarantors Non-guarantors Eliminations Consolidated
(in thousands)
Revenues $ —
$ 51,919
$ 16,729
$ (7,263 ) $ 61,385
Costs and expenses:
Operating —
35,826
15,424
(7,263 ) 43,987
Administrative and general 2,305
7,306
1,317
—
10,928
Depreciation —
11,851
252
—
12,103
Total costs and expenses 2,305
54,983
16,993
(7,263 ) 67,018
Gains on asset dispositions, net —
(122 ) —
—
(122 )
Loss on impairment —
(116,586 ) (432 ) —
(117,018 )
Operating income (loss) (2,305 ) (119,772 ) (696 ) —
(122,773 )
Other income (expense):
Interest income 47
102
57
—
206
Interest expense (3,838 ) (170 ) (89 ) —
(4,097 )
Foreign currency gains (losses), net 66
85
(139 ) —
12
Other, net —
(1 ) (32 ) —
(33 )
Total other income (expense) (3,725 ) 16
(203 ) —
(3,912 )
Income (loss) before income taxes and equity earnings (6,030 ) (119,756 ) (899 ) —
(126,685 )
Income tax expense (benefit) (2,114 ) (43,276 ) 153
—
(45,237 )
Income (loss) before equity earnings (3,916 ) (76,480 ) (1,052 ) —
(81,448 )
Equity earnings, net of tax —
233
—
—
233
Equity in earnings (losses) of subsidiaries (77,532 ) —
—
77,532
—
Net income (loss) (81,448 ) (76,247 ) (1,052 ) 77,532
(81,215 )
Net loss attributable to noncontrolling interest in subsidiary —
—
(233 ) —
(233 )
Net income (loss) attributable to Era Group Inc. $ (81,448 ) $ (76,247 ) $ (1,285 ) $ 77,532
$ (81,448 )

~~Supplemental Condensed Consolidating Statements of Operations for the Nine Months Ended September 30,~~March 31, 2018

Parent Guarantors Non-guarantors Eliminations Consolidated
(in thousands)
Revenues $ —
$ 148,512
$ 42,252
$ (21,104 ) $ 169,660
Costs and expenses:
Operating —
92,317
43,325
(21,137 ) 114,505
Administrative and general 14,087
18,182
3,445
—
35,714
Depreciation —
29,283
728
—
30,011
Total costs and expenses 14,087
139,782
47,498
(21,137 ) 180,230
Gains on asset dispositions, net —
2,269
—
—
2,269
Litigation settlement proceeds 42,000
—
—
—
42,000
Operating income (loss) 27,913
10,999
(5,246 ) 33
33,699
Other income (expense):
Interest income 180
878
166
—
1,224
Interest expense (10,925 ) (595 ) (126 ) —
(11,646 )
Foreign currency losses, net (66 ) (141 ) (888 ) —
(1,095 )
Gain on debt extinguishment —
—
175
—
175
Other, net —
31
(10 ) —
21
Total other income (expense) (10,811 ) 173
(683 ) —
(11,321 )
Income (loss) before income taxes and equity earnings 17,102
11,172
(5,929 ) 33
22,378
Income tax expense 1,075
3,474
—
—
4,549
Income (loss) before equity earnings 16,027
7,698
(5,929 ) 33
17,829
Equity in earnings (losses) of subsidiaries 3,655
1,577
—
(3,655 ) 1,577
Net income (loss) 19,682
9,275
(5,929 ) (3,622 ) 19,406
Net loss attributable to noncontrolling interest in subsidiary —
—
310
—
310
Net income (loss) attributable to Era Group Inc. $ 19,682
$ 9,275
$ (5,619 ) $ (3,622 ) $ 19,716

~~Supplemental Condensed Consolidating Statements of Operations for the Nine Months Ended September 30, 2017~~


	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated			Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
	(in thousands)															(in thousands)
Revenues	$	—		$	151,550		$	46,132		$	(23,892	)	$	173,790		$	—		$	49,832		$	14,467		$	(6,977	)	$	57,322
Costs and expenses:
Operating	—			98,117			48,854			(23,892		)	123,079			—			29,770			14,867			(6,977		)	37,660
Administrative and general	5,280			21,648			4,283			—			31,211			4,313			6,373			1,385			—			12,071
Depreciation	—			34,898			737			—			35,635			—			10,094			260			—			10,354
Total costs and expenses	5,280			154,663			53,874			(23,892		)	189,925			4,313			46,237			16,512			(6,977		)	60,085
Gains on asset dispositions, net	—			5,048			—			—			5,048			—			4,414			—			—			4,414
Loss on impairment	—			(116,586		)	(432		)				(117,018		)
Operating income (loss)	(5,280		)	(114,651		)	(8,174		)	—			(128,105		)	(4,313		)	8,009			(2,045		)	—			1,651
Other income (expense):
Interest income	96			320			225			—			641			4			96			46			—			146
Interest expense	(10,800		)	(627		)	(193		)	—			(11,620		)	(4,303		)	(182		)	(91		)	—			(4,576		)
Foreign currency gains (losses), net	220			253			(569		)	—			(96		)	55			30			(11		)	—			74
Gain on debt extinguishment																—			—			175			—			175
Other, net	—			—			(29		)	—			(29		)	—			—			(8		)	—			(8		)
Total other income (expense)	(10,484		)	(54		)	(566		)	—			(11,104		)	(4,244		)	(56		)	111			—			(4,189		)
Income (loss) before income taxes and equity earnings	(15,764		)	(114,705		)	(8,740		)	—			(139,209		)	(8,557		)	7,953			(1,934		)	—			(2,538		)
Income tax expense (benefit)	(5,297		)	(43,282		)	513			—			(48,066		)	(1,536		)	798			—			—			(738		)
Income (loss) before equity earnings	(10,467		)	(71,423		)	(9,253		)	—			(91,143		)	(7,021		)	7,155			(1,934		)	—			(1,800		)
Equity earnings, net of tax	—			1,069			—			—			1,069			—			443			—			—			443
Equity in earnings (losses) of subsidiaries	(79,388		)	—			—			79,388			—			5,827			—			—			(5,827		)	—
Net income (loss)	(89,855		)	(70,354		)	(9,253		)	79,388			(90,074		)	(1,194		)	7,598			(1,934		)	(5,827		)	(1,357		)
Net loss attributable to noncontrolling interest in subsidiary	—			—			219			—			219			—			—			163			—			163
Net income (loss) attributable to Era Group Inc.	$	(89,855	)	$	(70,354	)	$	(9,034	)	$	79,388		$	(89,855	)	$	(1,194	)	$	7,598		$	(1,771	)	$	(5,827	)	$	(1,194	)

Supplemental Condensed Consolidating Statements of Comprehensive Income for the Three Months Ended ~~September 30, 2018~~March 31, 2019


	Parent		Guarantors			Non-guarantors			Eliminations		Consolidated		Parent			Guarantors		Non-guarantors			Eliminations		Consolidated
	(in thousands)												(in thousands)
Net income (loss)	$	31,255	$	(897	)	$	(1,859	)	$	2,780	$	31,279	$	(5,943	)	$	462	$	(1,884	)	$	1,280	$	(6,085	)
Comprehensive income (loss)	31,255		(897		)	(1,859		)	2,780		31,279		(5,943		)	462		(1,884		)	1,280		(6,085		)
Comprehensive income attributable to noncontrolling interest in subsidiary	—		—			10			—		10
Comprehensive loss attributable to noncontrolling interest in subsidiary													—			—		142			—		142
Comprehensive income (loss) attributable to Era Group Inc.	$	31,255	$	(897	)	$	(1,849	)	$	2,780	$	31,289	$	(5,943	)	$	462	$	(1,742	)	$	1,280	$	(5,943	)

Supplemental Condensed Consolidating Statements of Comprehensive Income for the Three Months Ended ~~September 30, 2017~~

Parent Guarantors Non-guarantors Eliminations Consolidated
(in thousands)
Net income (loss) $ (81,448 ) $ (76,247 ) $ (1,052 ) $ 77,532
$ (81,215 )
Comprehensive income (loss) (81,448 ) (76,247 ) (1,052 ) 77,532
(81,215 )
Comprehensive loss attributable to noncontrolling interest in subsidiary —
—
(233 ) —
(233 )
Comprehensive income (loss) attributable to Era Group Inc. $ (81,448 ) $ (76,247 ) $ (1,285 ) $ 77,532
$ (81,448 )

~~Supplemental Condensed Consolidating Statements of Comprehensive Income for the Nine Months Ended September 30,~~March 31, 2018

Parent Guarantors Non-guarantors Eliminations Consolidated
(in thousands)
Net income (loss) $ 19,682
$ 9,275
$ (5,929 ) $ (3,622 ) $ 19,406
Other comprehensive loss:
Foreign currency translation adjustments —
(5 ) —
—
(5 )
Total other comprehensive loss —
(5 ) —
—
(5 )
Comprehensive income (loss) 19,682
9,270
(5,929 ) (3,622 ) 19,401
Comprehensive loss attributable to noncontrolling interest in subsidiary —
—
310
—
310
Comprehensive income (loss) attributable to Era Group Inc. $ 19,682
$ 9,270
$ (5,619 ) $ (3,622 ) $ 19,711

~~Supplemental Condensed Consolidating Statements of Comprehensive Income for the Nine Months Ended September 30, 2017~~


	Parent			Guarantors			Non-guarantors			Eliminations		Consolidated			Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
	(in thousands)														(in thousands)
Net income (loss)	$	(89,855	)	$	(70,354	)	$	(9,253	)	$	79,388	$	(90,074	)	$	(1,194	)	$	7,598		$	(1,934	)	$	(5,827	)	$	(1,357	)
Other comprehensive loss:
Other comprehensive income (loss):
Foreign currency translation adjustments	—			(2		)	—			—		(2		)	—			(5		)	—			—			(5		)
Total other comprehensive loss	—			(2		)	—			—		(2		)	—			(5		)	—			—			(5		)
Comprehensive income (loss)	(89,855		)	(70,356		)	(9,253		)	79,388		(90,076		)	(1,194		)	7,593			(1,934		)	(5,827		)	(1,362		)
Comprehensive loss attributable to noncontrolling interest in subsidiary	—			—			219			—		219			—			—			163			—			163
Comprehensive income (loss) attributable to Era Group Inc.	$	(89,855	)	$	(70,356	)	$	(9,034	)	$	79,388	$	(89,857	)	$	(1,194	)	$	7,593		$	(1,771	)	$	(5,827	)	$	(1,199	)

Supplemental Condensed Consolidating Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2018~~March 31, 2019


	Parent		Guarantors			Non-guarantors			Eliminations			Consolidated			Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
	(in thousands)														(in thousands)
Net cash provided by provided by operating activities	$	35,550	$	13,319		$	1,483		$	—		$	50,352		$	5,477		$	(1,386	)	$	(1,456	)	$	—		$	2,635
Cash flows from investing activities:
Purchases of property and equipment	—		(7,461		)	(225		)	—			(7,686		)	—			(1,221		)	(91		)	—			(1,312		)
Proceeds from disposition of property and equipment	—		29,520			—			—			29,520
Dividends received from equity investees	—		1,000			—			—			1,000
Purchase of investments															(5,000		)	—			—			—			(5,000		)
Principal payments on notes due from equity investees	—		401			—			—			401			—			2,334			—			—			2,334
Principal payments on third party notes receivable	—		620			—			—			620			—			104			—			—			104
Net cash used in investing activities	—		24,080			(225		)	—			23,855			(5,000		)	1,217			(91		)	—			(3,874		)
Cash flows from financing activities:
Long-term debt issuance costs	—		—			—			(1,295		)	(1,295		)
Payments on long-term debt	—		(1,247		)	(2,315		)	(39,000		)	(42,562		)	—			(416		)	(126		)	—			(542		)
Proceeds from share award plans	—		—			—			893			893			—			—			—			590			590
Purchase of treasury shares															—			—			—			(5		)	(5		)
Borrowings and repayments of intercompany debt	—		(39,402		)	—			39,402			—			—			585			—			(585		)	—
Net cash used in financing activities	—		(40,649		)	(2,315		)	—			(42,964		)	—			169			(126		)	—			43
Effects of exchange rate changes on cash and cash equivalents	—		—			(445		)	—			(445		)	—			—			55			—			55
Net increase (decrease) in cash and cash equivalents	35,550		(3,250		)	(1,502		)	—			30,798			477			—			(1,618		)	—			(1,141		)
Cash, cash equivalents and restricted cash, beginning of period	10,800		3,250			2,783			—			16,833			48,396			—			2,357			—			50,753
Cash, cash equivalents and restricted cash, end of period	$	46,350	$	—		$	1,281		$	—		$	47,631		$	48,873		$	—		$	739		$	—		$	49,612

Supplemental Condensed Consolidating Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2018


	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated			Parent		Guarantors			Non-guarantors			Eliminations			Consolidated
	(in thousands)															(in thousands)
Net cash provided by (used in) operating activities	$	(267	)	$	17,477		$	718		$	—		$	17,928		$	3,387	$	(5,761	)	$	1,344		$	—		$	(1,030	)
Cash flows from investing activities:
Purchases of property and equipment	—			(13,013		)	(108		)	—			(13,121		)	—		(3,746		)	(38		)	—			(3,784		)
Proceeds from disposition of property and equipment	—			5,690			—			—			5,690			—		19,497			—			—			19,497
Investments in and advances to equity investees	—			(126		)	—			—			(126		)
Principal payments on notes due from equity investees	—			564			—			—			564			—		54			—			—			54
Principal payments on third party notes receivable	—			94			—			—			94			—		76			—			—			76
Net cash provided by (used in) investing activities	—			(6,791		)	(108		)	—			(6,899		)
Net cash used in investing activities																—		15,881			(38		)	—			15,843
Cash flows from financing activities:
Proceeds from Revolving Credit Facility	—			—			—			9,000			9,000
Payments on long-term debt	—			(1,247		)	(498		)	(23,000		)	(24,745		)	—		(554		)	(1,705		)	(12,000		)	(14,259		)
Revolving Credit Facility issuance costs																—		—			—			(1,295		)	(1,295		)
Proceeds from share award plans	—			—			—			836			836			—		—			—			484			484
Purchase of treasury shares	—			—			—			(52		)	(52		)
Borrowings and repayments of intercompany debt	—			(13,216		)	—			13,216			—			—		(12,811		)	—			12,811			—
Net cash used in financing activities	—			(14,463		)	(498		)	—			(14,961		)	—		(13,365		)	(1,705		)	—			(15,070		)
Effects of exchange rate changes on cash and cash equivalents	27			—			74			—			101			8		(5		)	(26		)	—			(23		)
Net increase (decrease) in cash and cash equivalents	(240		)	(3,777		)	186			—			(3,831		)	3,395		(3,250		)	(425		)	—			(280		)
Cash, cash equivalents and restricted cash, beginning of period	25,474			3,777			1,476			—			30,727			10,800		3,250			2,783			—			16,833
Cash, cash equivalents and restricted cash, end of period	$	25,234		$	—		$	1,662		$	—		$	26,896		$	14,195	$	—		$	2,358		$	—		$	16,553


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited consolidated financial statements as of ~~September 30, 2018~~March 31, 2019 and for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017~~2018, included elsewhere herein, and with our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements concerning management’s expectations, strategic objectives, business prospects, anticipated performance and financial condition and other similar matters involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others:

the Company’s dependence on, and the cyclical and volatile nature of, offshore oil and gas exploration, development and production activity, and the impact of general economic conditions and fluctuations in worldwide prices of, and demand for, oil and natural gas on such activity levels;

the Company’s reliance on a ~~small~~limited number of customers and the reduction of its customer base ~~resulting from~~as a result of bankruptcies or consolidation;

risks that the Company’s customers reduce or cancel contracted services or tender processes or obtain comparable services through other forms of transportation;

the Company’s dependence on U.S. government agency contracts that are subject to budget appropriations;

cost savings initiatives implemented by the Company’s customers;

risks inherent in operating helicopters;

the Company’s ability to maintain an acceptable safety record and level of reliability;

the impact of increased ~~United States (“~~U.S.”) and foreign government regulation and legislation, including potential government implemented moratoriums on drilling activities;

the impact of a grounding of all or a portion of the Company’s fleet for extended periods of time or indefinitely on the Company’s business, including its operations and ability to service customers, results of operations or financial condition and/or the market value of the affected ~~helicopter(s);~~helicopters;

the Company’s ability to successfully expand into other geographic and aviation service markets;

risks associated with political instability, governmental action, war, acts of terrorism and changes in the economic condition in any foreign country where the Company does business, which may result in expropriation, nationalization, confiscation or deprivation of the Company’s assets or result in claims of a force majeure situation;

the impact of declines in the global economy and financial markets;

the impact of fluctuations in foreign currency exchange rates on the Company’s asset values and cost to purchase helicopters, spare parts and related services;

risks related to investing in new lines of aviation service without realizing the expected benefits;

risks of engaging in competitive processes or expending significant resources for strategic opportunities, with no guaranty of recoupment;

the Company’s reliance on a ~~small~~limited number of helicopter manufacturers and suppliers;

the Company’s ongoing need to replace aging helicopters;

the Company’s reliance on the secondary helicopter market to dispose of used helicopters and parts;

~~the Company’s reliance on~~ information ~~technology;~~technology related risks;

the impact of allocation of risk between the Company and its customers;

the liability, legal fees and costs in connection with providing emergency response services;

adverse weather conditions and seasonality;

risks associated with the Company’s debt structure;

the Company’s counterparty credit risk exposure;

the impact of operational and financial difficulties of the Company’s joint ventures and partners and the risks associated with identifying and securing joint venture partners when needed;

conflict with the other owners of the Company’s non-wholly owned subsidiaries and other equity investees;

adverse results of legal proceedings;

~~the incurrence of significant costs in connection with the Company’s pursuit of legal remedies;~~

risks associated with significant increases in fuel costs;

the Company’s ability to obtain insurance coverage and the adequacy and availability of such coverage;

the Company’s ability to remediate the material weaknesses it has identified in its internal controls over financial reporting described herein and in its Annual Report on Form 10-K for the year ended December 31, 2017;

~~the~~ possibility of labor problems;

the attraction and retention of qualified personnel;

restrictions on the amount of foreign ownership of the Company’s common stock; and

various other matters and factors, many of which are beyond the Company’s control.

It is not possible to predict or identify all such factors. Consequently, the foregoing should not be considered a complete discussion of all potential risks or uncertainties. The words “estimate,” “project,” “intend,” “believe,” “plan” and similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. The forward-looking statements in this Quarterly Report on Form 10-Q should be evaluated together with the many uncertainties that affect the Company’s businesses, particularly those discussed in greater detail ~~elsewhere herein and~~ in Part I, Item 1A, “Risk Factors” of Era Group’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 and Era Group’s subsequent Quarterly Reports on Form 10-Q and periodic reporting on Form 8-K (if any).

Overview

We are one of the largest helicopter operators in the world and the longest serving helicopter transport operator in the U.S., which is our primary area of operations. Our helicopters are primarily used to transport personnel to, from and between offshore oil and gas production platforms, drilling rigs and other installations. In addition to serving the oil and gas industry, we provide emergency response services and utility services, among other activities. We also provide helicopters and related services to third-party helicopter operators. We currently have customers in the U.S., ~~Argentina,~~ Brazil, Colombia, ~~the Dominican Republic,~~ India, Mexico, Spain, and ~~Spain.~~Suriname.

We charter the majority of our helicopters through master service agreements, subscription agreements, long-term contracts, day-to-day charter arrangements and dry-leases. Master service agreements and subscription agreements typically require a fixed monthly fee plus incremental payments based on hours flown. These agreements have fixed terms ranging from one month to five years and generally may be canceled without penalty upon 30-90 days’ notice. Generally, these contracts do not commit our customers to acquire specific amounts of services or minimum flight hours and permit our customers to decrease the number of helicopters under contract with a corresponding decrease in the fixed monthly payments without penalty. Day-to-day charter arrangements call for either a combination of a daily fixed fee plus a charge based on hours flown or an hourly rate with a minimum number of hours to be charged. Dry-leases require a fixed monthly fee for the customer’s right to use the helicopter and, where applicable, ~~a charge based on hours flown~~additional charges as compensation for any maintenance, parts, and/or personnel support that we may provide to the customer. Dry-leases have fixed terms from several months to five years and, in limited circumstances, may be canceled without penalty upon written notice. Emergency response services consist of services provided ~~under contracts with hospitals or under~~on a subscription basis directly with the end ~~users.~~users as well as charter services on an ad hoc basis.

Certain of our operations are subject to seasonal factors. Operations in the U.S. Gulf of Mexico are often at their highest levels from April to September, as daylight hours increase, and are at their lowest levels from ~~November~~December to February, as daylight hours decrease. ~~Our Alaskan operations also see an increase during May to September, as our firefighting activities occur during this time and daylight hours are significantly longer.~~

~~Recent Developments~~

On September 12, 2018, the Company entered into a new teaming agreement for the North Sea region in Europe with Bel Air Aviation, the only Danish owned offshore helicopter company servicing the oil and gas and offshore wind markets. The cooperation will combine Bel Air Aviation’s operating expertise in the North Sea Region with more flexible fleet solutions afforded by our large and diverse helicopter fleet.

Results of Operations


	Three Months Ended September 30,										Nine Months Ended September 30,										Three Months Ended March 31,
	2018					2017					2018					2017					2019					2018
	(in thousands)			%		(in thousands)			%		(in thousands)			%		(in thousands)			%		(in thousands)			%		(in thousands)			%
Revenues:
United States	$	39,371		72		$	42,475		69		$	120,657		71		$	113,877		66		$	34,665		68		$	39,704		69
Foreign	15,239			28		18,910			31		49,003			29		59,913			34
International																					16,628			32		17,618			31
Total revenues	54,610			100		61,385			100		169,660			100		173,790			100		51,293			100		57,322			100
Costs and Expenses:
Operating:
Personnel	13,935			26		16,096			26		41,716			25		47,195			27		13,029			25		14,134			25
Repairs and maintenance	10,823			20		15,296			25		36,125			21		39,309			23		12,710			25		10,761			19
Insurance and loss reserves	1,244			2		1,303			2		3,893			2		3,723			2		1,204			2		1,307			2
Fuel	3,695			7		3,219			5		11,056			7		8,880			5		3,402			7		3,671			6
Leased-in equipment	51			—		272			—		584			—		846			—		50			—		285			—
Other	6,765			12		7,801			13		21,131			12		23,126			13		6,301			12		7,502			13
Total operating expenses	36,513			67		43,987			71		114,505			67		123,079			70		36,696			72		37,660			66
Administrative and general	8,837			16		10,928			18		35,714			21		31,211			18		8,875			17		12,071			21
Depreciation and amortization	9,541			17		12,103			20		30,011			18		35,635			21		9,450			18		10,354			18
Total costs and expenses	54,891			100		67,018			109		180,230			106		189,925			109		55,021			107		60,085			105
Gains (losses) on asset dispositions, net	(148		)	—		(122		)	—		2,269			1		5,048			3		(124		)	—		4,414			8
Litigation settlement proceeds	42,000			77		—			—		42,000			25		—			—
Loss on impairment	—			—		(117,018		)	(191	)	—			—		(117,018		)	(67	)
Operating income (loss)	41,571			76		(122,773		)	(200	)	33,699			20		(128,105		)	(74	)	(3,852		)	(8	)	1,651			3
Other income (expense):
Interest income	732			1		206			—		1,224			1		641			—		752			1		146			—
Interest expense	(3,549		)	(6	)	(4,097		)	(7	)	(11,646		)	(7	)	(11,620		)	(7	)	(3,461		)	(7	)	(4,576		)	(8	)
Foreign currency gains (losses), net	(94		)	—		12			—		(1,095		)	(1	)	(96		)	—		(126		)	—		74			—
Gain on debt extinguishment	—			—		—			—		175			—		—			—		—			—		175			—
Other, net	15			—		(33		)	—		21			—		(29		)	—		(11		)	—		(8		)	—
Total other income (expense)	(2,896		)	(5	)	(3,912		)	(7	)	(11,321		)	(7	)	(11,104		)	(7	)	(2,846		)	(6	)	(4,189		)	(7	)
Income (loss) before income taxes and equity earnings	38,675			71		(126,685		)	(206	)	22,378			13		(139,209		)	(80	)
Income tax expense (benefit)	7,861			14		(45,237		)	(74	)	4,549			3		(48,066		)	(28	)
Income (loss) before equity earnings	30,814			57		(81,448		)	(132	)	17,829			10		(91,143		)	(52	)
Equity earnings, net of tax	465			1		233			—		1,577			1		1,069			1
Net income (loss)	31,279			58		(81,215		)	(132	)	19,406			11		(90,074		)	(51	)
Net loss (income) attributable to noncontrolling interest in subsidiary	10			—		(233		)	—		310			—		219			—
Net income (loss) attributable to Era Group Inc.	$	31,289		57		$	(81,448	)	(133	)	$	19,716		12		$	(89,855	)	(52	)
Loss before income taxes and equity earnings																					(6,698		)	(13	)	(2,538		)	(4	)
Income tax benefit																					(1,588		)	(3	)	(738		)	(1	)
Loss before equity earnings																					(5,110		)	(10	)	(1,800		)	(3	)
Equity earnings (losses), net of tax																					(975		)	(2	)	443			1
Net loss																					(6,085		)	(12	)	(1,357		)	(2	)
Net loss attributable to noncontrolling interest in subsidiary																					142			—		163			—
Net loss attributable to Era Group Inc.																					$	(5,943	)	(12	)	$	(1,194	)	(2	)

Revenues by Service Line. The table below sets forth the revenues earned by service line for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
	(in thousands)		%	(in thousands)		%	(in thousands)		%	(in thousands)		%	(in thousands)		%	(in thousands)		%
Revenues:
Oil and gas: ⁽¹⁾
U.S.	$	35,473	65	$	36,567	60	$	109,778	65	$	98,914	57	$	32,466	63	$	36,536	64
International	13,665		25	16,764		27	43,443		25	48,215		28	13,616		27	15,617		27
Total oil and gas	49,138		90	53,331		87	153,221		90	147,129		85	46,082		90	52,153		91
Dry-leasing ⁽²⁾	2,716		5	2,632		4	8,544		5	12,713		7	3,463		7	2,572		4
Emergency response services⁽³⁾	2,756		5	2,487		4	7,895		5	8,877		5	1,748		3	2,597		5
Flightseeing	—		—	2,935		5	—		—	5,071		3
	$	54,610	100	$	61,385	100	$	169,660	100	$	173,790	100	$	51,293	100	$	57,322	100

____________________


(1)	Primarily oil and gas activities, but also includes revenues from utility services, such as ~~firefighting, and VIP transport.~~firefighting.


~~(2)~~	Includes property rental income for the three and nine months ended September 30, 2017 of approximately $0.1 million and $0.3 million, respectively, that was previously included in emergency response services and oil and gas service lines.


~~(3)~~	~~Includes search and rescue and air medical services.~~

Current Quarter compared to Prior Year Quarter

Operating Revenues. Operating revenues were ~~$6.8~~$6.0 million lower in the three months ended ~~September 30, 2018~~March 31, 2019 (the “Current Quarter”) compared to the three months ended ~~September 30, 2017~~March 31, 2018 (the “Prior Year Quarter”).

Operating revenues from U.S. oil and gas operations were ~~$1.1~~$4.1 million lower in the Current Quarter. Operating revenues from ~~single engine,~~medium, light twin, and ~~medium~~single engine helicopters were ~~$1.6~~$2.9 million, $1.1 million, and ~~$0.6~~$0.9 million lower, respectively, primarily due to lower utilization. These decreases were partially offset by a ~~$2.2~~$0.9 million increase in operating revenues from heavy helicopters primarily due to higher utilization.

Operating revenues from international oil and gas operations were ~~$3.1~~$2.0 million lower in the Current Quarter. Operating revenues in ~~Colombia~~Suriname were ~~$1.5~~$1.1 million lower primarily due to ~~lower utilization.~~the end of a contract. Operating revenues in Brazil were ~~$1.5~~$0.7 million lower primarily due to the weakening of the Brazilian real relative to the U.S. ~~dollar and~~dollar. Operating revenues in Colombia were $0.2 million lower primarily due to lower utilization.

Revenues from dry-leasing activities were ~~consistent with~~$0.9 million higher primarily due to the commencement of new contracts subsequent to the Prior Year Quarter.

Operating revenues from emergency response services were ~~$0.3~~$0.9 million ~~higher in the Current Quarter~~lower primarily due to ~~increased charter flights.~~

~~Operating revenues from flightseeing activities were $2.9 million lower than~~the conclusion of a contract subsequent to the Prior Year ~~Quarter due to the sale of flightseeing assets in the current year.~~Quarter.

Operating Expenses. Operating expenses were ~~$7.5~~$1.0 million lower in the Current Quarter. Repairs and maintenance expenses were $4.5 million lower primarily due to a $2.8 million decrease related to the timing of repairs, a $0.8 million decrease related to the return of leased-in helicopters, the recognition of $0.7 million in vendor credits in the Current Quarter, and a $0.2 million decrease in power-by-the-hour (“PBH”) expense. Personnel costs were ~~$2.2~~$1.1 million lower primarily due to a reduction in headcount. ~~Other operating~~Fuel expense was $0.3 million lower primarily due to a decrease in flight hours. Leased-in equipment expenses were ~~$1.0~~$0.2 million lower primarily due to the ~~absence~~end of ~~costs~~helicopter leases. Other operating expenses were $1.2 million lower primarily due to the recognition of $0.5 million in penalties on the cancellation of two helicopter purchase agreements in the Prior Year Quarter and a decrease of $0.5 million related to ~~flightseeing activities and~~part sales in the ~~reversal of a previously reserved deposit following a favorable decision on a Brazilian tax dispute.~~Prior Year Quarter. These decreases were partially offset by an increase in repairs and maintenance expense of $1.9 million primarily due to a ~~$0.5~~$1.8 million increase in ~~fuel~~power-by-the-hour (“PBH”) expense and a $0.8 million increase related to the timing of repairs, partially offset by a net increase in the recognition of vendor credits of $0.6 million. The increase in PBH expense was primarily due to ~~an increase~~the recognition of credits in the ~~average fuel price.~~Prior Year Quarter related to the removal of helicopters from PBH programs following their sale.

Administrative and General. Administrative and general expenses were ~~$2.1~~$3.2 million lower in the Current Quarter primarily due to ~~a $2.0 million decrease in~~the absence of professional services fees ~~and a $0.7 million decrease in other taxes~~ related to ~~the correction of immaterial errors in the Prior Year Quarter. These decreases were partially offset by a $0.7 million increase in personnel expenses.~~litigation that has now been settled.

Depreciation and Amortization. Depreciation and amortization expense was ~~$2.6~~$0.9 million lower in the Current Quarter primarily due to ~~the sale of helicopters~~assets that became fully depreciated subsequent to the Prior Year Quarter.

~~Litigation Settlement Proceeds.~~ Gains (Losses) on Asset Dispositions, Net.~~Litigation settlement proceeds of $42.0 million related to a settlement~~ There were no significant asset dispositions in the Current Quarter.

~~Loss on Impairment.~~ In the Prior Year Quarter, ~~the Company recorded a loss on impairment of $117.0 million related to the Company’s H225 helicopters.~~

~~Operating Income (Loss).~~ Operating income as a percentage of revenues was 76% in the Current Quarter compared to operating loss as a percentage of revenues of 200% in the Prior Year Quarter. The increase in operating income as a percentage of revenues was primarily due to the recognition of litigation settlement proceeds in the Current Quarter and the absence of the loss on impairment recorded in the Prior Year Quarter.

~~Interest Income.~~ ~~Interest income was $0.5 million higher in the Current Quarter primarily due to interest earned on the Company’s sales-type leases.~~

~~Interest Expense.~~ ~~Interest expense was $0.5 million lower in the Current Quarter due to lower debt balances.~~

~~Income Tax Benefit (Expense).~~ Income tax expense was $7.9 million in the Current Quarter primarily due to the recognition of litigation settlement proceeds. Income tax benefit was $45.2 million in the Prior Year Quarter primarily due to the recognition of the loss on impairment.

~~Current Nine Months compared to Prior Nine Months~~

~~Operating Revenues.~~ Operating revenues were $4.1 million lower in the nine months ended September 30, 2018 (the “Current Nine Months”) compared to the nine months ended September 30, 2017 (the “Prior Nine Months”).

Operating revenues from oil and gas operations in the U.S. were $10.9 million higher in the Current Nine Months. Operating revenues from heavy and medium helicopters were $10.7 million and $4.6 million higher, respectively, primarily due to higher utilization. Operating revenues from single engine and light twin helicopters were $2.5 million and $1.8 million lower, respectively, primarily due to lower utilization.

Operating revenues from international oil and gas operations were $4.8 million lower in the Current Nine Months. Operating revenues in Brazil were $2.7 million lower primarily due to the weakening of the Brazilian real relative to the U.S. dollar and lower utilization. Operating revenues from Colombia were $1.1 million lower primarily due to a short term contract in the Prior Nine Months. Operating revenues in Suriname were $0.9 million lower due to the end of contracts.

Revenues from dry-leasing activities were $4.2 million lower in the Current Nine Months primarily due to $3.7 million of lease return charges on helicopters returned to the Company upon the conclusion of lease contracts in the Prior Nine Months and contracts that have ended. These decreases were partially offset by the recognition of a bankruptcy settlement during the Current Nine Months.

Operating revenues from emergency response services were $1.0 million lower in the Current Nine Months primarily due to the end of air medical contracts in the Prior Nine Months, partially offset by increased charter flights.

~~Operating revenues from flightseeing activities were $5.1 million lower in the Current Nine Months due to the sale of flightseeing assets.~~

~~Operating Expenses.~~ Operating expenses were $8.6 million lower in the Current Nine Months. Personnel costs were $5.5 million lower primarily due to a reduction in headcount. Repairs and maintenance expenses were $3.2 million lower primarily due to a $1.7 million decrease related to the timing of repairs, the recognition of $0.7 million in vendor credits, a $0.4 million credit related to the return of leased-in helicopters, and a $0.4 million decrease in PBH expense. Other operating expenses were $2.0 million lower primarily due to the absence of costs related to flightseeing activities and the reversal of previously reserved deposits following a favorable decision on Brazilian customs and tax disputes during the Current Nine Months. These decreases were partially offset by an increase in fuel expense of $2.2 million primarily due to a higher average fuel price and increased flight hours in oil and gas operations.

~~Administrative and General.~~ Administrative and general expenses were $4.5 million higher in the Current Nine Months primarily due to an increase of $7.0 million in professional services fees. This increase was partially offset by a $1.1 million decrease in personnel costs primarily due to reductions in headcount and changes in senior management in the Prior Nine Months, a $0.7 million decrease in other taxes related to the correction of immaterial errors in the Prior Nine Months, a $0.3 million decrease related to changes in allowance for doubtful accounts and a $0.4 million decrease related to other expenses.

~~Depreciation and Amortization.~~ ~~Depreciation and amortization expense was $5.6 million lower in the Current Nine Months primarily due to the sale of helicopters subsequent to the Prior Nine Months.~~

~~Gains/(losses) on Asset Dispositions, Net.~~ ~~In the Current Nine Months,~~ the Company sold its flightseeing assets in Alaska (which consisted of eight single engine helicopters, two operating facilities, and related property and equipment), two additional single engine helicopters, two light twin helicopters ~~seven heavy helicopters, one medium helicopter~~ and other equipment for proceeds of ~~$29.5 million and receivables of $14.3~~$19.5 million, resulting in net gains of ~~$2.3~~$4.4 million. ~~During the Prior Nine Months, the Company sold or otherwise disposed of a hangar in Alaska, two helicopters, capital parts and other assets for gains of $5.0 million.~~

~~Litigation Settlement Proceeds.~~ ~~Litigation settlement proceeds of $42.0 million related to a settlement in the Current Nine Months.~~

~~Loss on Impairment.~~ ~~In the Prior Nine Months, the Company recorded a loss on impairment of $117.0 million related to the Company’s H225 helicopters.~~

Operating Income (Loss). Operating loss as a percentage of revenues was 8% in the Current Quarter compared to operating income as a percentage of revenues ~~was 20% in the Current Nine Months compared to operating loss as a percentage~~ of ~~revenues of 74%~~3% in the Prior ~~Nine Months.~~Year Quarter. The ~~increase~~decrease in operating income as a percentage of revenues was primarily due to gains on asset dispositions recognized in the ~~recognition of litigation settlement proceeds~~Prior Year Quarter and higher repairs and maintenance expenses in the Current ~~Nine Months and the absence of the loss on impairment recorded in the Prior Nine Months.~~Quarter.

Interest Income. Interest income was $0.6 million higher in the Current ~~Nine Months~~Quarter primarily due to interest earned on the Company’s sales-type leases.

~~Foreign Currency Gains (Losses), net.~~Interest Expense. ~~Foreign currency losses were~~Interest expense was $1.1 million lower in the Current ~~Nine Months primarily~~Quarter due to lower debt balances and the ~~weakening~~write-off of deferred debt issuance costs related to the amendment of the ~~Brazilian real relative to~~Company’s Amended and Restated Senior Secured Revolving Credit Facility in the ~~U.S. dollar.~~Prior Year Quarter.

Income Tax Benefit (Expense).Income tax ~~expense~~benefit was ~~$4.5~~$1.6 million in the Current ~~Nine Months primarily due~~Quarter compared to ~~the recognition of litigation settlement proceeds. Income tax benefit was $48.1~~$0.7 million in the Prior ~~Nine Months~~Year Quarter primarily due to lower pre-tax income.

Equity Earnings (Losses), net of tax. Equity earnings were $1.4 million lower in the ~~recognition of~~Current Quarter primarily due to losses from the ~~loss on impairment.~~Dart joint venture.

Fleet Count

The following shows details of our helicopter fleet as of ~~September 30, 2018.~~March 31, 2019. We own and control all 108 of our helicopters.


	Owned	Leased-in	Total	Max. Pass.⁽¹⁾	Cruise Speed (mph)	Approx. Range (miles)	Average Age⁽²⁾(years)	Helicopters	Max. Pass.⁽¹⁾	Cruise Speed (mph)	Approx. Range (miles)	Average Age(years)
Heavy:
S92	4	—	4	19	175	620	2	4	19	175	620	3
H225	2	—	2	19	162	582	9	1	19	162	582	11
AW189	4	—	4	16	173	490	2	4	16	173	490	3
	10	—	10					9

Medium:
AW139	36	—	36	12	173	426	9	36	12	173	426	9
S76 C+/C++	5	—	5	12	161	348	12	5	12	161	348	12
B212	5	—	5	11	115	299	39	5	11	115	299	40
	46	—	46					46

Light—twin engine:
A109	7	—	7	7	161	405	12	7	7	161	405	13
EC135	13	2	15	7	138	288	10	13	7	138	288	11
BO105	3	—	3	4	138	276	29	3	4	138	276	30
	23	2	25					23

Light—single engine:
A119	13	—	13	7	161	270	12	13	7	161	270	12
AS350	17	—	17	5	138	361	21	17	5	138	361	21
	30	—	30					30
Total Fleet	109	2	111				13	108				13

____________________


(1)	In typical configuration for our operations.


~~(2)~~	~~Reflects the average age of helicopters that are owned by us.~~

Liquidity and Capital Resources

General

Our ongoing liquidity requirements arise primarily from working capital needs, meeting our capital commitments (including the purchase of helicopters and other equipment) and the repayment of debt obligations. In addition, we may use our liquidity to fund acquisitions, repurchase shares or debt securities or make other investments. Sources of liquidity are cash balances and cash flows from operations and, from time to time, we may obtain additional liquidity through the issuance of equity or debt or through borrowings under the amended and restated senior secured revolving credit facility (the “Revolving Credit Facility”). or through asset sales.

Summary of Cash Flows



	Three Months Ended March 31,
	2019			2018
	(in thousands)
Cash flows provided by or (used in):
Operating activities	$	2,635		$	(1,030	)
Investing activities	(3,874		)	15,843
Financing activities	43			(15,070		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	55			(23		)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(1,141	)	$	(280	)

Operating Activities

Cash flows provided by operating activities increased by $3.7 million in the Current Quarter compared to the Prior Year Quarter. The components of cash flows provided by operating activities during the Current Quarter and Prior Year Quarter were as follows (in thousands):



	Three Months Ended March 31,
	2019			2018
Operating income before depreciation, gains on asset dispositions and impairment, net	$	5,722		$	7,591
Changes in operating assets and liabilities before interest and income taxes	(4,160		)	(9,181		)
Interest paid, net of capitalized interest of $0 and $97 in 2019 and 2018, respectively	(353		)	(983		)
Other	1,426			1,543
Total cash flows provided by operating activities	$	2,635		$	(1,030	)

Operating income before depreciation and gains on asset dispositions, net was $1.9 million lower in the Current Quarter compared to the Prior Year Quarter primarily due to a decrease in operating revenues, partially offset by lower general and administrative expenses and lower operating expenses.

During the Current Quarter, changes in operating assets and liabilities before interest and income taxes used cash flows of $4.2 million primarily due to a decrease in payables. During the Prior Year Quarter, changes in operating assets and liabilities before interest and income taxes used cash flows of $9.2 million primarily due to a decrease in accounts payables and an increase in prepaid expenses and other receivables.

Interest paid, net of capitalized interest, was $0.6 million lower in the Current Quarter.

Investing Activities

During the Current Quarter, net cash used in investing activities was $3.9 million primarily as follows:

Net principal payments received from equity investees and third parties were $2.4 million.

Capital expenditures were $1.3 million, which consisted primarily of spare helicopter parts and leasehold improvements.

Purchase of investments was $5.0 million.

During the Prior Year Quarter, net cash provided by investing activities was $15.8 million primarily as follows:

Proceeds from the disposition of property and equipment were $19.5 million.

Net principal payments received from equity investees and third parties were $0.1 million.

Capital expenditures were $3.8 million, which consisted primarily of helicopter acquisitions, spare helicopter parts, and capitalized interest.

Financing Activities

During the Current Quarter, net cash provided by financing activities was less than $0.1 million primarily as follows:

Proceeds from share award plans were $0.6 million.

Principal payments on long-term debt were $0.5 million.

During the Prior Year Quarter, net cash used in financing activities was $15.1 million primarily as follows:

Proceeds from share award plans were $0.5 million.

Principal payments on long-term debt, including our Revolving Credit Facility, were $14.3 million.

Long-term debt issuance costs were $1.3 million incurred in connection with the amendment of the Revolving Credit Facility.

Unfunded Capital Commitments

As of ~~September 30, 2018,~~March 31, 2019, we had unfunded capital commitments of ~~$82.3~~$80.1 million, consisting primarily of agreements to purchase helicopters, including three AW189 heavy helicopters and five AW169 light twin helicopters. The AW189 helicopters are scheduled to be delivered in ~~2019 and~~ 2020. Delivery dates for the AW169 helicopters have yet to be determined. These commitments are payable beginning in 2019 ~~and~~ through 2020, and all of the commitments (inclusive of deposits paid on options not yet exercised) may be terminated without further liability to us other than aggregate liquidated damages of $2.1 million. In addition, we had outstanding options to purchase up to ten additional AW189 helicopters. If these options are exercised, the helicopters would be scheduled for delivery in 2020 and 2021.

If we do not exercise our rights to cancel these capital commitments, we expect to finance the remaining acquisition costs for these helicopters through a combination of cash on hand, cash provided by operating activities, asset sales and borrowings under our Revolving Credit Facility.

~~Summary of Cash Flows~~

Nine Months Ended
September 30,
2018 2017
(in thousands)
Cash flows provided by or (used in):
Operating activities $ 50,352
$ 17,928
Investing activities 23,855
(6,899 )
Financing activities (42,964 ) (14,961 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash (445 ) 101
Net increase (decrease) in cash, cash equivalents and restricted cash $ 30,798
$ (3,831 )

~~Operating Activities~~

Cash flows provided by operating activities increased by $32.4 million in the Current Nine Months compared to the Prior Nine Months. The components of cash flows provided by operating activities during the Current Nine Months and Prior Nine Months were as follows (in thousands):

Nine Months Ended
September 30,
2018 2017
Operating income before depreciation, gains on asset dispositions and impairment, net $ 61,441
$ 19,500
Changes in operating assets and liabilities before interest and income taxes (6,593 ) 2,440
Interest paid, net of capitalized interest of $97 and $451 in 2018 and 2017, respectively (7,770 ) (7,798 )
Income taxes paid (63 ) (427 )
Other 3,337
4,213
Total cash flows provided by operating activities $ 50,352
$ 17,928

Operating income before depreciation and gains on asset dispositions, net was $41.9 million higher in the Current Nine Months compared to the Prior Nine Months primarily due to litigation settlement proceeds of $42.0 million.

During the Current Nine Months, changes in operating assets and liabilities before interest and income taxes used cash flows of $6.6 million primarily due to a decrease in accounts payables. During the Prior Nine Months, changes in operating assets and liabilities before interest and income taxes provided cash flows of $2.4 million primarily due to an increase in accounts payable and accrued expenses partially offset by an increase in receivables.

~~Net non-cash expenses decreased by $0.9 million compared to the Prior Nine Months primarily due to a decrease in equity award amortization.~~

~~Investing Activities~~

~~During the Current Nine Months, net cash provided by investing activities was $23.9 million primarily as follows:~~

~~Proceeds from the disposition of property and equipment were $29.5 million.~~

~~Net principal payments received from equity investees and third parties were $1.0 million.~~

~~Dividends received from equity investees were~~ ~~$1.0 million~~.

~~Capital expenditures were $7.7 million, which consisted primarily of helicopter acquisitions, spare helicopter parts, and leasehold improvements.~~

~~During the Prior Nine Months, net cash used in investing activities was $6.9 million primarily as follows:~~

~~Proceeds from the disposition of property and equipment were $5.7 million.~~

~~Net principal payments received from equity investees and third parties were $0.7 million.~~

~~Capital expenditures were $13.1 million, which consisted primarily of helicopter acquisitions, deposits on future helicopter deliveries, spare helicopter parts and capitalized interest.~~

~~Investments in and advances to equity method investees were $0.1 million.~~

~~Financing Activities~~

~~During the Current Nine Months, net cash used in financing activities was $43.0 million primarily as follows:~~

~~Principal payments on long-term debt, including our Revolving Credit Facility, were $42.6 million.~~

~~Long-term debt issuance costs were~~ ~~$1.3 million~~ ~~incurred in connection with the amendment of the Revolving Credit Facility.~~

~~Proceeds from share award plans were $0.9 million.~~

~~During the Prior Nine Months, net cash used in financing activities was $15.0 million primarily as follows:~~

~~Proceeds from additional borrowings under our Revolving Credit Facility were $9.0 million.~~

~~Proceeds from share award plans were $0.8 million.~~

~~Principal payments on long-term debt, including our Revolving Credit Facility, were $24.7 million.~~

~~Revolving Credit Facility~~

As of September 30, 2018, our Revolving Credit Facility provided us with the ability to borrow up to $125.0 million, with a sub-limit of up to $50.0 million for letters of credit. The Revolving Credit Facility includes an “accordion” feature which, if exercised and subject to agreement by the lenders and the satisfaction of certain conditions, will increase total commitments by up to $50.0 million. Our availability under the Revolving Credit Facility may be limited by certain maintenance covenants specified under the Revolving Credit Facility. As of September 30, 2018, the Company had no outstanding borrowings under the Revolving Credit Facility, and based on our operating results through September 30, 2018, we have the ability to borrow up to $123.9 million under the Revolving Credit Facility.

~~Senior Notes~~

On December 7, 2012, we completed an offering of $200.0 million aggregate principal amount of our 7.750% Senior Notes due December 15, 2022. Interest on the notes is payable semi-annually in arrears on June 15^th ~~and December 15~~^th of each year. From time to time, we may opportunistically repurchase our 7.750% Senior Notes in open market or privately negotiated transactions on terms we believe to be favorable. As of September 30, 2018, $144.8 million in aggregate principal amount of the 7.750% Senior Notes remains outstanding. We may also redeem the 7.750% Senior Notes at any time and from time to time at a premium as specified in the indenture governing the 7.750% Senior Notes.

~~Promissory Notes~~

In December 2010, we entered into two promissory notes to purchase a heavy and a medium helicopter. We refinanced the notes upon their maturity in December 2015. The notes bear interest at the one-month LIBOR rate plus 181 basis points and require monthly principal and interest payments of $0.2 million with final payments totaling $16.8 million due in December 2020.

~~Aeróleo Debt~~

During the nine months ended September 30, 2018, the Company did not enter into any new debt arrangements in Brazil. During the nine months ended September 30, 2017, the Company settled certain tax disputes for installment payments in Brazil totaling $0.2 million. Such amounts bear interest at a rate equal to the overnight rate as published by the Central Bank of Brazil.

For additional information about our long-term debt, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Amended and Restated Senior Secured Revolving Credit Facility”, “-7.750% Senior Notes”, “-Promissory Notes”, and “-Aeróleo Debt” contained in our Annual Report on Form 10-K for the year ended December 31, 2017.

Short and Long-Term Liquidity Requirements

We anticipate that we will generate positive cash flows from operating activities and that these cash flows will be adequate to meet our working capital requirements. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, our cash provided by operating activities was ~~$50.4~~$2.6 million. To support our capital expenditure program and/or other liquidity requirements, we may use any combination of operating cash flow, cash balances or proceeds from sales of assets, issue debt or equity, or borrowings under our Revolving Credit Facility.

Our availability of long-term liquidity is dependent upon our ability to generate operating profits sufficient to meet our requirements for working capital, debt service, capital expenditures and a reasonable return on investment. Management will continue to closely monitor our liquidity and the credit markets.

Off-Balance Sheet Arrangements

On occasion, we and our partners will guarantee certain obligations on behalf of our joint ventures. As of ~~September 30, 2018,~~March 31, 2019, we had no such guarantees in place. As of ~~September 30, 2018,~~March 31, 2019, we had standby letters of credit totaling ~~$1.1~~$0.7 million.

Contingencies

Brazilian Tax Disputes

WeIn connection with our ownership of Aeróleo and its operations in Brazil, we have several ongoing legal disputes related to the local, municipal and federal taxation requirements in Brazil, including assessments associated with the import and re-export of our helicopters in Brazil. The legal disputes are ~~disputing~~related to: (i) municipal tax assessments ~~of approximately $9.6 million~~arising under the authorities in ~~taxes, penalties and interest levied by the municipal authorities of~~ Rio de Janeiro (for the period between 2000 toand 2005), and Macaé (for the period between 2001 to 2006)~~, and Cabo Frio (for the period 2012)~~ (collectively, the “Municipal ~~Assessments”~~Tax Disputes”). We believe that, based on our interpretation of tax legislation supported by clarifying guidance provided by the Supreme Court of Brazil with respect to the issue in a 2006 ruling, we are in compliance with all applicable tax legislation, have paid all applicable taxes, penalties and interest and plan to defend these claims vigorously at the administrative levels in each jurisdiction. In the event the Municipal Assessments are upheld at the last administrative level, it may be necessary for us to deposit the amounts at issue as security to pursue further appeals. At September 30, 2018, it is not possible to determine the outcome of the Municipal Assessments, but we do not expect that the outcome would have a material effect on our business, financial position or results of operations. In addition, it is not possible to reasonably estimate the likelihood or potential amount of assessments that may be issued for any subsequent periods.

~~We are disputing responsibility for $2.5 million of employer~~; (ii) social security contributions ~~required to have been remitted by~~that one of our customers ~~relating~~was required to ~~the period~~remit from 1995 to 1998. Although we may be deemed co-responsible for such remittances under the local regulatory regime, the customer’s payments to us against presented invoices were made net of the specific remittances required to have been made by the customer and at issue in the claim. As such, we plan to defend this claim vigorously. At September 30, 2018, it is not possible to determine the outcome of this matter, but we do not expect that the outcome would have a material adverse effect on our business, financial position or results of operations.

~~We are disputing certain~~1998; (iii) penalties ~~that are being~~ assessed by the State of Rio de Janeiro in respect of our alleged failure to submit accurate documentation and to fully comply with filing requirements with respect to certain value-added taxes. We elected to make payments of $0.2 million in installments over time to satisfy a portion of these penalties. Upon confirming with the asserting authority that the originally proposed penalties of $1.6 million with respect to the balance of the assessments were calculated based on amounts containing a typographical error, the aggregate penalties that remain in dispute total $0.5 million. At September 30, 2018, it is not possible to determine the outcome of this matter, but we do not expect that the outcome would have a material adverse effect on our business, financial position or results of operations.

~~We are disputing the imposition of $0.2 million in fines levied by the Brazilian customs authorities. These fines relate~~due to our alleged failure to comply with certain deadlines ~~under~~related to the ~~temporary regime pursuant to which~~helicopters we import ~~helicopters into Brazil. In order~~and export in and out of Brazil; and (iv) fines sought by taxing authorities in Brazil related to ~~dispute such fines and pursue~~ our ~~legal remedies within~~use of certain tax credits used to offset certain social tax liabilities (collectively, the ~~judicial system, we deposited certain amounts~~“Tax Disputes”).

In addition to the foregoing Tax Disputes (and unrelated thereto), Aeróleo is engaged in two additional civil litigation matters relating to: (i) a dispute with its former tax consultant who has alleged that $0.5 million is due and payable as a contingency fee related to execution of certain tax strategies; and (ii) a fatal accident that occurred in 1983 and was previously settled with the plaintiffs’ in the U.S. (the “Civil Disputes”). With respect to the fatal accident, the plaintiffs are seeking to collect additional amounts in Brazil despite the previous settlement agreed upon by the parties in the U.S.

We continue to evaluate and assess various legal strategies for each of the Tax Disputes and the Civil Disputes. As is customary for certain legal matters in Brazil, Aeróleo has already deposited amounts as security into an escrow account ~~with the presiding judge~~to pursue further legal appeals in the matters who controls the release of such funds pending the outcome. We believe our documentation evidences our timely compliance with the relevant deadlines. As such, we plan to defend this case vigorously. At September 30, 2018, it is not possible to determine the outcome of these matters, but we do not expect that the outcome would have a material adverse effect on our business, financial position or results of operations.

We are disputing fines of $0.3 million sought by taxing authorities in Brazil following the final adjudication to disallow certain tax credits we applied to offset certain social tax liabilities. The fine is calculated as 50%several of the ~~incremental tax liability resulting from~~Tax Disputes and the ~~disallowance~~Civil Disputes. As of the tax credits and has been applied without taking into account the circumstances relating to the disallowance of such tax credits. The constitutionality of such fines is under review by the Supreme Court in Brazil. There are a number of cases in which taxpayers have received favorable rulings due to the lack of constitutionality of the law. As such,March 31, 2019, we plan to defend this claim vigorously. At September 30, 2018, it is not possible to determine the outcome, but we do not expect that it would have a material adverse impact on our business, financial position or results of operations.

We are disputing contingent fees of $0.5 million sought by our former tax consultant that have been calculated based on unrealized tax savings attributed to the consultant’s suggested tax strategies. Our contention is that fees are due only upon realized tax savings. At September 30, 2018, it is not possible to determine the outcome of these matters, but we do not expect that the outcome would have a material adverse effect on our business, financial position or results of operations.

In the normal course of business, we become involved in various employment-related litigation matters. At September 30, 2018, it is not possible to determine the outcome of several of these claims wherein an aggregate amount equal to the Company’s established accrual is being sought. We do not expect that the outcome with respect to such claims would have a material adverse effect on our business, financial position or results of operations.

We are also disputing claims from the Brazilian tax authorities with respect to federal customs taxes levied upon the helicopters imported into Brazil under a temporary regime and subject to re-export. In order to dispute such assessments and pursue our available legal remedies within the judicial system, we deposited the amounts at issue as security into an escrow account

with the presiding judge in the matter controlling the release of such funds. We believe that, based on our interpretation of tax legislation and well established aviation industry practice, we are not required to pay such taxes and plan to defend this claim vigorously. At September 30, 2018, it is not possible to determine the outcome of this matter, but we do not expect that the outcome would have a material adverse effect on our business, financial position or results of operations.

In the normal course of our business, we become involved in various litigation matters including, among other things, claims by third parties for alleged property damages and personal injuries. In addition, from time to time, we are involved in tax and other disputes with various government agencies. Management has used estimates in determining our potential exposure to these matters and has recorded reserves in our financial statements related thereto as appropriate. It is possible that a change in our estimates related to these exposures could occur, but we do not expect such changes in estimated costs would have a material effect on our business, consolidated financial position or results of operations. As it relates to the specific cases referred to above, we currently anticipate that any administrative fine or penalty ultimately would not have a material effect on our business, financial position or results of operations. We have deposited ~~$6.7~~$5.4 million into escrow accounts controlled by the court with respect to ~~certain of~~ the ~~cases described above~~Tax Disputes and the Civil Disputes, and we have fully reserved such amounts subject to final determination and the judicial release of such escrow deposits. These estimates are based on our assessment of the nature of these matters, their progress toward resolution, the advice of legal counsel and outside experts as well as management’s intentions and experience. Aeróleo plans to defend the cases vigorously. As of March 31, 2019, it is not possible to determine the outcome of the Tax Disputes or the Civil Disputes, but we do not expect that an outcome would have a material adverse effect on our business, financial position or results of operations.

~~Airbus Lawsuit~~

On November 21, 2016, we filed a lawsuit in the District Court of Dallas County, Texas against Airbus Helicopters, Inc. and Airbus Helicopters S.A.S. (collectively, “Airbus”) alleging breaches of various contracts between us, fraudulent inducement and unjust enrichment in connection with the Airbus marketing and sale of H225 model helicopters to us. On October 26, 2017, we added claims against Airbus for fraud and negligent misrepresentation, and on December 28, 2017, we amended our complaint to seek damages attributable to the impact of Airbus’ unlawful acts on the value of a H225 that we purchased from another helicopter operator.

For additional information about our contractual obligations and commercial commitments, refer to “Liquidity and Capital Resources—Contractual Obligations and Commercial Commitments” contained in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. There have been no material changes since such date.

Critical Accounting Policies

The preparation of our financial statements is in conformity with U.S. generally accepted accounting principles (“GAAP”). In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP, whereas, in other circumstances, GAAP requires us to make estimates, judgments and assumptions that we believe are reasonable based upon information available. We base our estimates and judgments on historical experience, professional advice and various other sources that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions. In addition to the policies discussed in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, the following involves a high degree of judgment and complexity.

~~Revenue recognition.~~ Leases. We have elected ~~to exercise the right to invoice~~an optional practical expedient to retain our current classification of leases and adopted ASU 2016-02 using the current-period adjustment method thus recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the current period. We currently maintain operating leases for a number of fixed assets and determine if an arrangement is considered a lease at inception or during modification or renewal of an existing lease. The right-of-use (“ROU”) assets associated with these leases are reflected under long-term assets, and the payables on lease agreements recorded as liabilities, with amounts due within one year recorded in other current liabilities on our adoption of ASC 606. We recognize revenue for flight services and emergency response services with the passing of each day as we have the right to consideration from our customers in an amount that corresponds directly with the value to our customerconsolidated balance sheets. The majority of our performance completed to date. The right to invoice represents a method for recognizing revenue over time using the output measure of “value to the customer” which is an objective measure of an entity’s performance in a contract. We typically invoice our customers on a monthly basis for revenues earned during the prior month with payment terms of 30 days. Our customer arrangementsoperating leases do not ~~contain any significant financing component for our customers.~~provide an implicit rate, so the incremental borrowing rate is based on the information available at commencement date to determine the present value of future payments.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For additional information about our exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, contained in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. There has been no material change in our exposure to market risk during the Current Quarter, except as described below.

As of ~~September 30, 2018,~~March 31, 2019, we had non-U.S. dollar denominated capital purchase commitments of ~~€70.9~~€71.5 million ($~~82.3~~80.1 million). An adverse change of 10% in the underlying foreign currency exchange rate would increase the U.S. dollar equivalent of the non-hedged purchase commitments by ~~$8.2~~$8.0 million. As of ~~September 30, 2018,~~March 31, 2019, our Brazilian subsidiary maintained a non-U.S. dollar denominated working capital balance of R$~~24.2~~36.3 million ($~~6.0~~9.3 million). An adverse change of 10% in the underlying foreign currency exchange rate would reduce our working capital balance by ~~$0.5~~$0.8 million.


ITEM 4.	CONTROLS AND PROCEDURES

With the participation of our Chief Executive Officer and Chief Financial Officer, management evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of ~~September 30, 2018.~~March 31, 2019. Based on their evaluation, our principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were ~~not~~ effective in providing reasonable assurance that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required ~~disclosure, as of September 30, 2018 solely because of the existence of the material weaknesses in internal controls over financial reporting described below.~~disclosure.

Material Weaknesses in Internal Control Over Financial Reporting

In connection with our evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017, management determined that review controls over the accrual of interest relating to tax installment agreements entered into by Aeróleo, our subsidiary in Brazil, were not designed effectively to ensure the accuracy of the accrual of variable interest.

While this deficiency in controls did not result in a material misstatement of our 2017 consolidated financial statements, we determined this deficiency represents a material weakness in internal control over financial reporting as of December 31, 2017 and resulted in the correction of errors in our fourth quarter 2017 financial results prior to publication of the results. As noted below, this material weakness was remedied in the first quarter of 2018.

Management also identified a material weakness in the third and fourth quarters of 2017 related to the design and operation of controls over preparation and review of the Company’s calculation of its tax provisions (income and other).

~~Remediation Process~~

In order to remediate the material weaknesses in internal control related to our subsidiary in Brazil, management implemented additional controls. These new controls include validation of monthly interest accruals on tax installments including review of the terms of any new installment arrangements. The implementation of the additional controls were completed by the end of first quarter 2018. Accordingly, management concluded this material weakness was remediated as of March 31, 2018.

Management is in the process of remediating the material weakness related to the design and operation of controls over the preparation and review of the Company’s tax provision calculation by enhancing the precision of the review and reconciliation controls over each significant component of the income tax and other tax accrual processes. These controls were enhanced in the first quarter of 2018. However, management is continuing to enhance further controls and assess the effectiveness of these controls; therefore, our remediation efforts are ongoing.None.

Changes in Internal Controls Over Financial Reporting

~~Other than as noted above with respect to~~During the ~~above remedied and existing material weaknesses, during the quarter~~three months ended ~~September 30, 2018,~~March 31, 2019, there were no changes in our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1A. RISK FACTORS

For additional information about our risk factors, see “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. There have been no material changes to this Item from the disclosure included in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents information regarding our repurchases of shares of our Common Stock on a monthly basis during the three months ended ~~September 30, 2018:~~March 31, 2019:

Total Number of Shares Repurchased
Average Price Paid Per
Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Value of Shares that May Yet be Purchased Under the Plans or Programs
July 1, 2018 - July 31, 2018 —
$ —
—
$ 22,934,076
August 1, 2018 - August 31, 2018 —
$ —
—
$ 22,934,076
September 1, 2018 - September 30, 2018 —
$ —
—
$ 22,934,076



	Total Number of Shares Repurchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Value of Shares that May Yet be Purchased Under the Plans or Programs
January 1, 2019 - January 31, 2019	—	$	—	—	$	22,934,076
February 1, 2019 - February 28, 2019	530	$	9.62	—	$	22,928,977
March 1, 2019 - March 31, 2019	—	$	—	—	$	22,928,977


ITEM 6.	EXHIBITS



~~3.1~~		~~Amended and Restated Certificate of Incorporation~~
~~3.2~~		~~Amended and Restated Bylaws~~
10.1		~~Settlement~~Amendment No. 6, dated March 8, 2019 to the Amended and Restated Credit Agreement dated March 31, 2014by and ~~General Release of Claims~~among Era Group Inc. and its subsidiaries a security party thereto, Suntrust Bank, as AdministrativeAgent, and the lenders signatories thereto.
31.1		Certification by the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act.
31.2		Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act.
32.1		Certification by the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification by the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			Era Group Inc. (Registrant)


DATE:	~~November 6, 2018~~May 7, 2019	By:	/s/ Jennifer D. Whalen
			Jennifer D. Whalen, Senior Vice President, Chief Financial Officer

4234

ERA GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)

	September 30, 2018			December 31, 2017
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents (including $1,007 and $1,699 from VIEs in 2018 and 2017, respectively)⁽¹⁾	$	47,631		$	13,583
Receivables:
Trade, operating, net of allowance for doubtful accounts of $854 and $1,196 in 2018 and 2017, respectively (including $5,834 and $5,854 from VIEs in 2018 and 2017, respectively)	35,655			33,840
Trade, dry-leasing	3,833			5,124
Tax receivables (including $3,117 and $2,828 from VIEs in 2018 and 2017, respectively)	3,117			2,829
Other (including $51 and $257 from VIEs in 2018 and 2017, respectively)	2,701			1,623
Inventories, net (including $31 and $39 from VIEs in 2018 and 2017, respectively)	20,157			21,112
Prepaid expenses (including $130 and $40 from VIEs in 2018 and 2017, respectively)	2,367			1,203
Escrow deposits	—			3,250
Total current assets	115,461			82,564
Property and equipment (including $2,477 and $1,951 from VIEs in 2018 and 2017, respectively)	927,477			972,942
Accumulated depreciation (including $443 and $487 from VIEs in 2018 and 2017, respectively)	(314,736		)	(299,028		)
Property and equipment, net	612,741			673,914
Equity investments and advances	26,600			30,056
Intangible assets	1,111			1,122
Other assets (including $84 and $61 from VIEs in 2018 and 2017, respectively)	18,421			4,441
Total assets	$	774,334		$	792,097
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses (including $1,519 and $1,807 from VIEs in 2018 and 2017, respectively)	$	10,438		$	16,421
Accrued wages and benefits (including $1,541 and $1,397 from VIEs in 2018 and 2017, respectively)	8,605			8,264
Accrued interest	3,404			606
Accrued income taxes	2,993			28
Accrued other taxes (including $361 and $600 from VIEs in 2018 and 2017, respectively)	2,396			1,810
Accrued contingencies (including $1,014 and $858 from VIEs in 2018 and 2017, respectively)	1,014			859
Current portion of long-term debt (including $495 and $1,073 from VIEs in 2018 and 2017, respectively)	2,158			2,736
Other current liabilities (including $0 and $8 from VIEs in 2018 and 2017, respectively)	1,033			1,720
Total current liabilities	32,041			32,444
Long-term debt (including $0 and $1,903 from VIEs in 2018 and 2017, respectively)	160,476			202,174
Deferred income taxes	108,138			106,598
Other liabilities	1,753			1,434
Total liabilities	302,408			342,650
Commitments and contingencies (see Note 8)
Redeemable noncontrolling interest	3,456			3,766
Equity:
Era Group Inc. stockholders’ equity:
Common stock, $0.01 par value, 60,000,000 shares authorized; 21,761,823 and 21,319,150 outstanding in 2018 and 2017, respectively, exclusive of treasury shares	219			215
Additional paid-in capital	447,013			443,944
Retained earnings	24,079			4,363
Treasury shares, at cost; 215,141 shares in 2018 and 2017	(2,951		)	(2,951		)
Accumulated other comprehensive income, net of tax	110			110
Total equity	468,470			445,681
Total liabilities, redeemable noncontrolling interest and stockholders’ equity	$	774,334		$	792,097

ERA GROUP INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE NONCONTROLLING INTEREST AND EQUITY (unaudited, in thousands)

Three Months Ended September 30, 2018

				Era Group Inc. Stockholders’ Equity
	Redeemable Noncontrolling Interest			Common Stock		Additional Paid-In Capital		Retained Earnings			Treasury Shares			Accumulated Other Comprehensive Income		Total Equity
June 30, 2018	$	3,466		$	219	$	445,885	$	(7,210	)	$	(2,951	)	$	105	$	436,048
Issuance of common stock:
Employee Stock Purchase Plan	—			—		409		—			—			—		409
Share award amortization	—			—		719		—			—			—		719
Net income	—			—		—		31,279			—			—		31,279
Net loss attributable to redeemable noncontrolling interest	(10		)	—		—		10			—			—		10
Currency translation adjustments, net of tax	—			—		—		—			—			5		5
September 30, 2018	$	3,456		$	219	$	447,013	$	24,079		$	(2,951	)	$	110	$	468,470



Three Months Ended September 30, 2017

			Era Group Inc. Stockholders’ Equity
	Redeemable Noncontrolling Interest		Common Stock		Additional Paid-In Capital		Retained Earnings			Treasury Shares			Accumulated Other Comprehensive Income		Total Equity
June 30, 2017	$	3,769	$	215	$	441,595	$	24,117		$	(2,968	)	$	90	$	463,049
Issuance of common stock:
Employee Stock Purchase Plan	—		—		373		—			—			—		373
Share award amortization	—		—		975		—			—			—		975
Cancellation of restricted stock	—		—		5		—			(5		)	—		—
Net loss	—		—		—		(81,215		)	(1		)	—		(81,216		)
Net income attributable to redeemable noncontrolling interest	233		—		—		(233		)	—			—		(233		)
September 30, 2017	$	4,002	$	215	$	442,948	$	(57,331	)	$	(2,974	)	$	90	$	382,948



Nine Months Ended September 30, 2018

				Era Group Inc. Stockholders’ Equity
	Redeemable Noncontrolling Interest			Common Stock		Additional Paid-In Capital			Retained Earnings		Treasury Shares			Accumulated Other Comprehensive Income		Total Equity
December 31, 2017	$	3,766		$	215	$	443,944		$	4,363	$	(2,951	)	$	110	$	445,681
Issuance of common stock:
Restricted stock grants	—			3		(3		)	—		—			—		—
Employee Stock Purchase Plan	—			1		892			—		—			—		893
Share award amortization	—			—		2,180			—		—			—		2,180
Net income (loss)	—			—		—			19,406		—			—		19,406
Net loss attributable to redeemable noncontrolling interest	(310		)	—		—			310		—			—		310
September 30, 2018	$	3,456		$	219	$	447,013		$	24,079	$	(2,951	)	$	110	$	468,470



Nine Months Ended September 30, 2017

				Era Group Inc. Stockholders’ Equity
	Redeemable Noncontrolling Interest			Common Stock		Additional Paid-In Capital			Retained Earnings			Treasury Shares			Accumulated Other Comprehensive Income			Total Equity
December 31, 2016	$	4,221		$	211	$	438,489		$	32,524		$	(2,899	)	$	92		$	468,417
Issuance of common stock:
Restricted stock grants	—			3		(3		)	—			—			—			—
Employee Stock Purchase Plan	—			1		835			—			—			—			836
Share award amortization	—			—		3,604			—			—			—			3,604
Cancellation of restricted stock	—			—		23			—			(23		)	—			—
Purchase of treasury shares	—			—		—			—			(52		)	—			(52		)
Net loss	—			—		—			(90,074		)	—			—			(90,074		)
Net loss attributable to redeemable noncontrolling interest	(219		)	—		—			219			—			—			219
Currency translation adjustments, net of tax	—			—		—			—			—			(2		)	(2		)
September 30, 2017	$	4,002		$	215	$	442,948		$	(57,331	)	$	(2,974	)	$	90		$	382,948