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COMMITMENTS AND CONTINGENCIES | 9 Months Ended
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Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Aircraft Purchase Contracts — As shown in the table below, we expect to make additional capital expenditures over the next five fiscal years to purchase additional aircraft. As of December 31, 2014, we had 37 aircraft on order and options to acquire an additional 39 aircraft. Although a similar number of our existing aircraft may be sold during the same period, the additional aircraft on order will provide incremental fleet capacity in terms of revenue and operating income. As discussed in the fiscal year 2014 Financial Statements, we were awarded a contract to provide civilian SAR services for all of the U.K. The SAR configured aircraft on order in the table below are intended to service this contract and other SAR contracts.
|  | Three Months Ending March 31, 2015 |  | Fiscal Year Ending March 31, |  |
|  | 2016 |  | 2017 |  | 2018 |  | 2019 and thereafter |  | Total
Commitments as of December 31, 2014: (1)(2) |  |  |  |  |  |  |  |  |  |  |  |
Number of aircraft: |  |  |  |  |  |  |  |  |  |  |  |
Medium |  | 3 |  |  | 7 |  |  | — |  |  | — |  |  | — |  |  | 10 |
Large (3) |  | — |  |  | 10 |  |  | 5 |  |  | 1 |  |  | — |  |  | 16 |
SAR configured |  | 5 |  |  | 6 |  |  | — |  |  | — |  |  | — |  |  | 11 |
|  | 8 |  |  | 23 |  |  | 5 |  |  | 1 |  |  | — |  |  | 37 |
Related expenditures (in thousands)(2)(4) |  |  |  |  |  |  |  |  |  |  |  |
Medium and large |  | $ | 62,809 |  |  | $ | 288,181 |  |  | $ | 68,121 |  |  | $ | 11,689 |  |  | $ | — |  |  | $ | 430,800 |
SAR configured |  | 60,423 |  |  | 100,147 |  |  | — |  |  | — |  |  | — |  |  | 160,570 |
|  | $ | 123,232 |  |  | $ | 388,328 |  |  | $ | 68,121 |  |  | $ | 11,689 |  |  | $ | — |  |  | $ | 591,370 |
Options as of December 31, 2014: |  |  |  |  |  |  |  |  |  |  |  |
Number of aircraft: |  |  |  |  |  |  |  |  |  |  |  |
Medium |  | — |  |  | — |  |  | 7 |  |  | 7 |  |  | — |  |  | 14 |
Large (3) |  | — |  |  | — |  |  | 11 |  |  | 10 |  |  | 4 |  |  | 25 |
|  | — |  |  | — |  |  | 18 |  |  | 17 |  |  | 4 |  |  | 39 |
Related expenditures (in thousands)(3) |  | $ | 7,647 |  |  | $ | 107,238 |  |  | $ | 371,133 |  |  | $ | 243,293 |  |  | $ | 47,322 |  |  | $ | 776,633 |
______
(1) | Signed client contracts are currently in place that will utilize 16 of these aircraft.
(2) | Excludes commitments related to sales leaseback advance. See Note 1 for further details.
(3) | Five large aircraft on order and seven large aircraft under options expected to enter service between fiscal years 2017 and 2019 are subject to the successful development and certification of the aircraft.
(4) | Includes progress payments on aircraft scheduled to be delivered in future periods.
The following chart presents an analysis of our aircraft orders and options during fiscal year 2015:
|  |  | Three Months Ended
|  |  | December 31, 2014 |  | September 30, 2014 |  | June 30, 2014
|  |  | Orders |  | Options |  | Orders |  | Options |  | Orders |  | Options
| Beginning of period |  | 35 |  |  | 48 |  |  | 37 |  |  | 51 |  |  | 43 |  |  | 55 |
| Aircraft delivered |  | (3 | ) |  | — |  |  | (2 | ) |  | — |  |  | (9 | ) |  | — |
| Aircraft ordered |  | 3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
| Exercised options |  | 2 |  |  | (2 | ) |  | — |  |  | — |  |  | 3 |  |  | (3 | )
| Expired options |  | — |  |  | (7 | ) |  | — |  |  | (3 | ) |  | — |  |  | (1 | )
| End of period |  | 37 |  |  | 39 |  |  | 35 |  |  | 48 |  |  | 37 |  |  | 51 |
We periodically purchase aircraft for which we have no orders. Operating Leases — We have non-cancelable operating leases in connection with the lease of certain equipment, land and facilities, including leases for aircraft. Rental expense incurred under all operating leases was $46.3 million and $28.3 million for the three months ended December 31, 2014 and 2013, respectively, and $114.8 million and $74.6 million for the nine months ended December 31, 2014 and 2013, respectively. Rental expense incurred under operating leases for aircraft was $40.1 million and $22.3 million for the three months ended December 31, 2014 and 2013, respectively, and $95.0 million and $58.4 million for the nine months ended December 31, 2014 and 2013, respectively. During the nine months ended December 31, 2014, we sold 14 aircraft for $380.7 million and entered into 14 separate agreements to lease back these aircraft. We did not enter into any sale leaseback transactions during the three months ended December 31, 2014. The aircraft leases range from base terms of up to 180 months with renewal options of up to 240 months in some cases, include purchase options upon expiration and some include early purchase options. The leases contain terms customary in transactions of this type, including provisions that allow the lessor to repossess the aircraft and require us to pay a stipulated amount if we default on our obligations under the agreements. The following is a summary of the terms related to aircraft leased under operating leases with original or remaining terms in excess of one year as of December 31, 2014:
| End of Lease Term |  | Number of Aircraft |  | Monthly Lease Payments (in thousands)
| Three months ending March 31, 2015 to fiscal year 2016 |  | 7 |  |  | $ | 706 |
| Fiscal year 2017 to fiscal year 2019 |  | 28 |  |  | 4,588 |
| Fiscal year 2020 to fiscal year 2024 |  | 46 |  |  | 6,850 |
|  |  | 81 |  |  | $ | 12,144 |
Employee Agreements — Approximately 51% of our employees are represented by collective bargaining agreements and/or unions. These agreements generally include annual escalations of up to 8%. Periodically, certain groups of our employees who are not covered by a collective bargaining agreement consider entering into such an agreement. During the nine months ended December 31, 2014 and 2013, we recognized $0.9 million and $1.7 million, respectively, in severance expense included in direct costs and general administrative expense in our North America business unit, primarily as a result of our planned closure of our Alaska operations. Additionally, we have employee agreements with members of senior management. For further details on the retirement of our former President and Chief Executive Officer, see Note 7. Environmental Contingencies — The U.S. Environmental Protection Agency, also referred to as the EPA, has in the past notified us that we are a potential responsible party, or PRP, at three former waste disposal facilities that are on the National Priorities List of contaminated sites. Under the federal Comprehensive Environmental Response, Compensation and Liability Act, also known as the Superfund law, persons who are identified as PRPs may be subject to strict, joint and several liability for the costs of cleaning up environmental contamination resulting from releases of hazardous substances at National Priorities List sites. Although we have not yet obtained a formal release of liability from the EPA with respect to any of the sites, we believe that our potential liability in connection with the sites is not likely to have a material adverse effect on our business, financial condition or results of operations. Other Purchase Obligations — As of December 31, 2014, we had $318.6 million of other purchase obligations representing unfilled purchase orders for aircraft parts, commitments associated with upgrading facilities at our bases and non-cancelable power-by-the-hour maintenance commitments. Other Matters — Although infrequent, aircraft accidents have occurred in the past, and the related losses and liability claims have been covered by insurance subject to deductible, self-insured retention and loss sensitive factors. On February 20, 2014, the U.K. CAA issued a report detailing the findings and recommendations from its review of helicopter transport operations serving offshore installations in the U.K. The report, commonly referred to as CAP 1145, contains more than 60 safety actions and recommendations to improve the safety of offshore helicopter transport. Ten of the recommendations are designed to improve the survivability of passengers and crew following a ditching or impact in water. One safety directive, which went into effect on September 1, 2014, restricts seating capacity on some aircraft in the North Sea unless passengers are equipped with new emergency breathing systems or side floats are installed on the aircraft. Operational restrictions when sea states are above a certain prescribed level were effective on June 1, 2014 and further requirements will be implemented over the next 12 months, including the flight prohibition of individuals whose size exceeds the dimensions of emergency egress windows. Training of the North Sea offshore workforce on the new breathing systems and roll-out of the new breathing systems and supporting passenger life jackets incorporating this system commenced over the summer months with minimal impact to our operations. We believe CAP 1145 may make our industry safer. We are cooperating with the CAA, HeliOffshore and our clients in the North Sea to evaluate and deploy technologies that meet these new safety standards. We remain committed to ensuring that any impact to our operations is managed through our existing safety policies and programs and does not result in an elevated safety risk in the near term. The requirements could present North Sea operators, including us, with significant operational challenges, and it remains to be seen which of the new requirements, if any, will be adopted by regulatory authorities in other parts of the world in which we operate. We operate in jurisdictions internationally where we are subject to risks that include government action to obtain additional tax revenue. In a number of these jurisdictions, political unrest, the lack of well-developed legal systems and legislation that is not clear enough in its wording to determine the ultimate application, can make it difficult to determine whether legislation may impact our earnings until such time as a clear court or other ruling exists. We operate in jurisdictions currently where amounts may be due to governmental bodies that we are not currently recording liabilities for as it is unclear how broad or narrow legislation may ultimately be interpreted. We believe that payment of amounts in these instances in not probable at this time, but is reasonably possible. A loss contingency is reasonably possible if it has a more than remote but less than probable chance of occurring. Although management believes that there is no clear requirement to pay amounts at this time and that positions exist suggesting that no further amounts are currently due, it is reasonably possible that a loss could occur, for which we have estimated a maximum loss at December 31, 2014 to be approximately $5 million to $8 million. We are a defendant in certain claims and litigation arising out of operations in the normal course of business. In the opinion of management, uninsured losses, if any, will not be material to our financial position, results of operations or cash flows.

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