EX-4.4(D)

                                                          FOURTH AMENDMENT TO
                                                           RIGHTS AGREEMENT


                  THIS FOURTH AMENDMENT TO RIGHTS  AGREEMENT (this "Fourth  Amendment") is made and entered into as of this 30th day of
May, 2001, by and between FRONTIER AIRLINES,  INC. (the "Company") and COMPUTERSHARE TRUST COMPANY,  INC., as Rights Agent (the "Rights
Agent").

                                                               Recitals

                  A.       The Company and American  Securities  Transfer & Trust,  Inc.,  predecessor in interest to the Rights Agent,
entered into a Rights Agreement dated as of February 20, 1997 (the "Rights Agreement"); and

                  B.       The Board of Directors of the Company,  by resolution duly adopted on May 30,  2001,  authorized this Fourth
Amendment to the Rights Agreement.

                                                               Agreement

                  The Company and the Rights Agent hereby amend the Rights Agreement as follows:

         1.       Section 27 of the Rights Agreement is hereby amended in its entirety to read as follows:

                  Section 27.  Supplements and  Amendments.  Prior to the  Distribution  Date, the Company may, and the Rights
                               ----------------------------
                  Agent shall if the Company so directs,  supplement  or amend any  provision  of this  Agreement  without the
                  approval  of any  holders  of  certificates  representing  shares  of  Common  Stock.  From  and  after  the
                  Distribution  Date the Company and the Rights Agent shall,  if the Company so directs,  supplement  or amend
                  this  Agreement  without the approval of any holders of Rights in order (i) to cure any  ambiguity,  (ii) to
                  correct or supplement any provision  contained  herein that may be defective or inconsistent  with any other
                  provisions  herein,  (iii) to  shorten or lengthen any time period or to change the Purchase Price hereunder
                  (which  lengthening or shortening,  or change to the Purchase  Price,  following the first  occurrence of an
                  event set forth in clauses (i) or  (ii) of the first provision to Section 23(a)  hereof,  shall be effective
                  only if there are Continuing  Directors and shall require the  concurrence of a majority of such  Continuing
                  Directors),  or (iv) to change or supplement  the provisions  hereunder in any manner that the Company deems
                  necessary  or  desirable  and that  does not  adversely  affect  the  interests  of the  holders  of  Rights
                  Certificates (other than any Acquiring Person);  provided, this Agreement may not be supplemented or amended
                  to lengthen,  pursuant to clause (iii)  of this sentence,  (A) a time period relating to when the Rights may
                  be redeemed at such time as the Rights are not then  redeemable,  or (B) any  other time period  unless such
                  lengthening  is for the purpose of  protecting,  enhancing or clarifying  the rights of, and/or the benefits
                  to, the  holders of Rights.  Without  limiting  the  foregoing,  the Company may at any time or from time to
                  time prior to such time as any  Person  becomes  an  Acquiring  Person  amend  this  Agreement  to lower the
                  thresholds set forth in  Sections 1(a)  and 1(i) to not less than 10%. Prior to the  Distribution  Date, the
                  interests of the holders of Rights shall be deemed  coincident  with the  interests of the holders of Common
                  Stock.

         2.       The remainder of the Rights  Agreement  shall remain  unchanged,  and the Rights  Agreement as amended  above,  shall
         remain in full force and effect.

                  IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be fully  executed on their behalf as of the
date first above written.

                                                          FRONTIER AIRLINES, INC.


                                                          By:
                                                             ------------------------------------------------------
                                                          Name:
                                                          Title:


                                                          COMPUTERSHARE TRUST COMPANY, INC.


                                                          By:
                                                             ------------------------------------------------------
                                                          Name:
                                                          Title:

EX-10.62

                                                CODE SHARE AGREEMENT

This Code Share Agreement is made as of May 3, 2001, by and between Frontier Airlines, Inc. ("Frontier"), a Colorado corporation and
Great Lakes Aviation, Ltd. ("Great Lakes"), an Iowa corporation.

A.       Frontier and Great Lakes are each operating, certificated air carriers providing air transportation services in their
         respective areas of operation.

B.       Frontier and Great Lakes desire to engage in joint marketing activities designed to increase the flow of air passenger
         traffic on aircraft operated by both parties.

C.       Frontier and Great Lakes desire to cooperate in the coordination of schedules by allowing Great Lakes to market its flight
         operations under the "F9*" designator.

         NOW, THEREFORE, in consideration of the premises and the mutual promises herein contained, Frontier and Great Lakes hereby
agree as follows:

Section 1.  Definitions

(1)  Code Share Service.  "Code Share Service" means the holding out and marketing to the public of F9* designated, single carrier
passenger transportation and cargo on a city pair route where the air transportation is provided via connecting flights operated by
both Great Lakes and Frontier, and where the F9* designator is applied to the flight(s) operated by Great Lakes.

(2)  Operating Carrier.  "Operating Carrier" means the party having operational control of an aircraft used for a given segment of
Code Share Service.

(3)  Ticketing Carrier.  "Ticketing Carrier" means a carrier whose traffic documents are used to issue a ticket.

(4)  Ticket Taxes.  "Ticket Taxes" means any transactional taxes or passenger facility charges, including, without limitation,
international taxes and charges, sales taxes, segment taxes and fees, use taxes, stamp taxes, excise taxes, value added taxes, gross
receipts taxes, departure taxes, surcharges and travel taxes, and all related charges, fees, licenses or assessments (and any
interest or penalty thereon) imposed on passengers (or which air carriers or their agents are required to collect from passengers) by
any authority in any country, or political subdivision thereof or public authority operating therein (including, without limitation
any national, federal, state, provincial, territorial, local, municipal, port or airport authority) or which are levied upon
passengers by operation of applicable law or industry standard.  Ticket Taxes together with the taxes referred to elsewhere in
Section 25 hereof are collectively referred to as "Taxes."

(5)  Implementation Date.  The "Implementation Date" means July 9, 2001.

(6)  Code Share Passenger.  A "Code Share Passenger" is a passenger whose air transportation is provided via connecting flights,
operated by both Great Lakes Aviation and Frontier Airlines and where the F9* designator is applied to the flight operated by Great
Lakes Aviation.

Section 2.  Code Share Service

(1)  Code Share Service.  To the extent permitted by applicable laws, and as mutually agreed, Great Lakes operated flights that
connect with Frontier operated flights, will be marketed under Frontier's F9* designator code.  Great Lakes agrees not to enter into
any additional code share agreements for markets served by Frontier with Northwest Airlines, Continental Airlines, Delta Airlines or
American Airlines.  Frontier agrees to not enter into any additional code share agreements for markets served by Great Lakes that are
listed in Exhibit A.  Exhibit A hereto sets forth the flight segments operated by Great Lakes that, when connecting with a flight
operated by Frontier will utilize the designator code F9* ("Code Share Flights").  The parties shall meet together as often as is
mutually agreed during the period this Agreement is in effect to discuss the appropriateness of expanding or contracting the list of
city pairs on Exhibit A.  Flights covering an origin and destination market that is created by an F9* Code Share Flight connecting to
a Frontier flight operated by Frontier are hereinafter referred to as "Through Flights."  Except as expressly set forth herein,
neither party shall have any obligation to extend Frontier or Great Lakes flights to other routes or to maintain operations on any
routes and no such obligation can be created by any oral statements or representations or course of dealing by a party, but only by
an express written agreement.

(2)  Procedures Manual.  As a guide to the implementation of this Agreement, the parties will prepare a Procedures Manual, which may
be modified from time to time, containing detailed procedures regarding the operation of this Agreement.  The parties agree to
complete and agree on the initial Procedures Manual no later than 45 days before the first date that a Codeshare Flight is conducted
(the "Implementation Date"), as defined in this Agreement.

(3) Conditions of Carriage.  The Terms and Conditions of Contract of Carriage of Frontier Airlines shall govern the transportation of
Code Share Passengers.

         (a)      The parties will use existing IATA procedures when handling and settling claims made by customers in connection with
         Through Flights.

Section 3.  Confidential Information

(1)  Except as set forth below, and except in any proceeding to enforce any of the provisions of this Agreement, neither Frontier nor
Great Lakes will, without prior written consent of the other, use, publicize or disclose to any third party, either directly or
indirectly, any of the following (hereinafter "Confidential Information"):

     (a)  this Agreement or its terms or conditions
     (b)  Any confidential or proprietary information or data, either oral or written, received from
          and designated as such by the disclosing carrier.

(2)  If either carrier is served with a subpoena or other legal process requiring the production or disclosure of any Confidential
Information, then that carrier, before complying, will immediately notify the non-disclosing carrier so the non-disclosing carrier
shall have a reasonable period of time to intervene and contest disclosure or production if the non-disclosing carrier so chooses.
If a governmental authority requests either Frontier or Great Lakes to produce or disclose to the authority this Agreement or any of
the terms or conditions of this Agreement, or if any governmental regulatory agency (e.g., Securities and Exchange Commission or
Department of Transportation) requires the production or disclosure of this Agreement or its terms, such carrier may produce or
disclose the requested document or information.

(3)  If any financial institution requests or requires production or disclosure of this Agreement or its terms or conditions, in
connection with a current or proposed financing, Frontier or Great Lakes may produce or disclose this Agreement provided the
financial institution agrees to keep the disclosed material and information confidential.

Section 4.  Code Sharing License

(1)  Grant of License.  Subject to the terms and conditions of this Agreement, Frontier hereby grants to Great Lakes a nonexclusive,
nontransferable, revocable license to use the F9* designator code on all its flights operated as Code Share Flights.  Frontier agrees
to not grant a license to use its F9* designation code or any other code or service marks to any other carrier for use in Code Share
Service in markets set forth in Exhibit A, hereto, as may be supplemented or amended from time to time.

(2)  Service Marks.  Great Lakes shall have a nonexclusive, nontransferable, revocable license to use the Frontier Service Marks (as
defined below) in its marketing programs for the purpose of promoting F9* Flights. All advertising programs using Frontier Service
Marks shall be subject to Frontier's prior approval.  In general, Great Lakes' use of the Frontier Service Marks shall do no more
than identify the code share relationship between Great Lakes and Frontier and advertise that schedules are coordinated to provide
convenient connections.  Any marketing program, advertising brochures, schedules, signs or information disseminated to the public or
intended to be disseminated to the public ("Advertising Material") shall reflect that Great Lakes and Frontier are operated
separately and shall comply with any DOT policy on airline designator code sharing.

(3)  Great Lakes is specifically prohibited from using any of the Frontier Service Marks on its aircraft or other equipment, on its
stationary, or elsewhere unless Great Lakes has received prior specific authorization in writing from Frontier.  Great Lakes hereby
acknowledges Frontier's exclusive ownership of the Frontier Service Marks and agrees that it will not do anything that would
infringe, abridge or adversely affect, impair or reduce the value or validity of the Frontier Service Marks.  In no event shall Great
Lakes allow the use of any Frontier Service Marks in marketing, selling, promoting or otherwise identifying or referencing any flight
which is not an F9* Flight. Frontier hereby grants to Great Lakes a nonexclusive, nontransferable, revocable license to use the name
Frontier and its service marks in Great Lakes marketing programs, for the purpose of promoting the F9* Flights.  As used herein the
term "Service Marks" shall include, without limitation the Frontier designator code, various trademarks, service marks and logos.

Section 5.  Sales and Marketing Programs

The parties will work to develop mutually agreeable joint sales and marketing programs to help promote the code share relationship
and increase revenues from same.  The parties will conduct quarterly joint sales and marketing meetings to discuss possible sales and
marketing programs and strategies.

Section 6.  Schedules and Flight Display

(1)  Schedule Filing.  Frontier and Great Lakes shall coordinate the filing of schedules with the Official Airline Guide ("OAG") (and
any other airline guide or schedule as mutually agreed) for Through Flights.  To facilitate the schedule filing process, Frontier and
Great Lakes shall supply to each other the necessary detail in writing in sufficient time to meet applicable filing deadlines, but in
no case less than 45 calendar days prior to the effective date of the schedule (or notice as far in advance as possible if 45 days is
impracticable).  A separate set of consecutive Frontier flight numbers will be assigned to Great Lakes for F9* designated flights
operated by Great Lakes.

(2)  Flight Display.  All Through Flights will be included in the availability and fare displays of all computerized reservations
systems in which Frontier and Great Lakes participate, the OAG (to the extent agreed upon) and Frontier and Great Lakes internal
reservation systems under the F9* designator code.  Frontier and Great Lakes will take the appropriate measures necessary to ensure
the display of Through Flights in accordance with the preceding sentence.

         (a)      Frontier and Great Lakes will disclose and identify the Great Lakes flights utilizing the F9* designator code to the
                  public as actually being flights of and operated by Great Lakes, in at least the following ways:

                  (i)      a symbol will be used in timetables and computer reservation systems indicating that F9* Flights are
                           actually operated by Great Lakes;

                  (ii)     to the extent reasonable, messages on airport flight information displays will identify the operator of
                           flights shown as F9* Flights;

                  (iii)    Frontier and Great Lakes advertising concerning F9* Flights and Frontier and Great Lakes reservationists will disclose the
                           operator of each flight; and,

                  (iv)     in any other manner prescribed by law.

(3)  Flight Information.  Great Lakes shall use reasonable efforts to keep current flight following information for F9* designated
flights operated by Great Lakes for display in the Frontier reservation system.  This information shall be updated regularly by Great
Lakes.

(4)  Changes of Service.  Each party shall give the other party 60 days advance written notice (or notice as far in advance as
possible if 60 days is impracticable) of any intended material changes to (a) its operating specifications, or (b) to the manner of
conducting its business or the nature of its product as it relates to its operations at Denver, Minneapolis/St. Paul, or Phoenix.  In
the event any such change has an adverse material change to the value or risk to the other party of this Code Sharing Agreement in
the other party's judgement, the other party shall be entitled to terminate this agreement if the change is implemented.

Section 7.  Pricing and Capacity Control of Code Shared Segments

(1)  Pricing.  Frontier and Great Lakes shall jointly establish and set fares for Through Flights.  Frontier shall have no authority
to establish or set fares for Great Lakes Flights.  If no fare is set for a Through Flight, the fare for such Through Flight will be
the sum of each carrier's segment fares.

(2)  Tariffs.  For F9* Code Share Service, Frontier and Great Lakes shall develop jointly (consistent with each Carrier's other
preexisting code share relationships) those conditions of carriage and tariff rules that need to be uniform in order for the Code
Share Service to be provided in a seamless manner.  Such rules governing the air transportation provided as part of a F9* Code Share
Service shall be available for public inspection at Frontier's and Great Lakes' corporate offices, at each airport ticket office, and
at each city ticket office maintained and operated by Frontier or Great Lakes in the manner required by DOT regulations.

(3)  Each Carrier will have access to the other Carrier's inventory through an automated computerized interface which both parties
will maintain throughout the term of this Agreement to expedite the sale of inventory on the Code Share Flights.

(4) The parties will map inventory classes of Frontier flights to inventory classes of Great Lakes flights on the Code Share Flights
by mutual agreement.  The parties will endeavor to map the average coupon value of Frontier's inventory classes to comparable classes
of Great Lakes to provide nondiscriminatory access for bookings made by each carrier for passengers yielding comparable revenue
values; it being understood, however, that the Operating Carrier retains ultimate control over the opening, closing, and other
management of seat inventory availability on Code Share Flights.

(5)  Each carrier will be able to book Code Share Passengers up to the same maximum seat inventory per booking class (including
authorized overbooking) available to the other carrier for a Code Share Flight, provided that such seats may be available for sale on
an equal basis under other designator code(s).

(6)  Frontier and Great Lakes will each assign one or more individuals to serve as inventory control coordinators, who will, to the
extent permitted by applicable law, exchange information routinely and conference as necessary to assure that reasonable seat
inventory on Code Share Flights is made available.

Section 8.  Quality of Service

Great Lakes shall perform its service in a timely, expert and quality manner. Great Lakes shall maintain its aircraft in an
airworthy, clean, attractive and comfortable condition and will maintain a completion factor of at least 97% (excluding cancellations
caused by air traffic control, weather, or force majeure) in its F9* operations or meet the performance standards as reported by
Frontier for the same period, whichever is lower.  Great Lakes will, in conducting F9* Flight operations, employ prudent safety and
loss prevention policies.

Section 9.  Control of F9* Flights

Great Lakes shall have sole responsibility for and control over, and Frontier shall have no responsibility for, control over or
obligations or duties with respect to, each and every aspect of Great Lakes operations including, without limitation, scheduling
(except as provided in Section 6 hereof); pricing (except as provided in Section 7 hereof); planning of flight itineraries and
routings; reservations; reservations control/yield management; dispatch; fueling; weight and balance; flight release; maintenance;
and flight operations and compliance with applicable rules and regulations.

Section 10.  Aircraft and Crews

Frontier and Great Lakes will provide the scheduled air service that is part of F9* Code Share Service in full compliance with FAA
regulations applicable to scheduled air service.  Flights operated by Frontier shall be operated by its aircraft and crews and
Flights operated by Great Lakes shall be operated by its aircraft and crews.  Each party may utilize "wet" leases if mutually agreed
upon prior to operation of the aircraft on flights using the F9* Code Share designation.

Section 11.  Ground Support for Code Share Services

(1)      Great Lakes Cities.  Great Lakes will provide to passengers traveling on Great Lakes flights using F9* Code Share Service
         passenger check-in at each of the stations specified in Exhibit A.  To the extent reasonably feasible, passenger check-in
         and handling procedures will be provided in accordance with mutually agreed operating procedures.  Frontier and Great Lakes
         will jointly develop a method of providing Great Lakes' stations with assistance in check-in and ticketing of Code Share
         Passengers.  Frontier will provide to Great Lakes, at no cost to Great Lakes, the necessary familiarization training in
         Frontier's procedures.  Great Lakes shall arrange for Frontier identification to be prominently displayed at check-in
         counters and gate areas as appropriate at each of Great Lakes' stations where F9* designated Great Lakes flights are
         operated.  Such signage shall be at least equal in prominence to that of any other airline graphics, excluding Great Lakes,
         displayed at such Great Lakes stations.  Frontier, at its cost will develop and provide standardized signage material
         subject to Great Lakes approval. Such signage may be modified as necessary to conform to local station requirements for
         display at all Great Lakes stations described in Exhibit A.  The parties agree to cooperate to accomplish the objectives set
         forth in this paragraph as quickly as is reasonably feasible; provided, however, that completion of the obligations set
         forth in this paragraph are not conditions precedent to the effective date of this Agreement and the other obligations of
         the parties hereunder.

(2)  All Other Cities.  The parties intend to work to establish a convenient connection for passengers connecting from an F9* flight
to a flight operated by Frontier (or vice versa) while traveling on a Through Flight.  Frontier and Great Lakes will cooperate to
maximize the convenience of passengers who are connecting from a Great Lakes flight segment (or vice versa) on Through Flights.  Each
party will provide the other with the airport operational assistance that is required to assure schedule compatibility for Through
Flights.

(3)  Freight.  Frontier and Great Lakes will accept air freight and small package shipments for F9* Code Share Service to and from
points served by Frontier and Great Lakes Flights.  Documentation and handling procedures for such freight shall be consistent with
Frontier, Great Lakes and standard industry procedures.

(4)  Government Contracts.

         (a)  Frontier and Great Lakes shall each independently contract with the U.S. Postal Service for carriage of mail over their
         respective route networks.  The use of the F9* designator for F9* Code Share Service does not extend to the system mail
         contract rates between each carrier and the U.S. Postal Service.

         (b)  Each airline shall independently contract with the FAA, DOT or other governmental agencies with respect to all landing,
         departure and en route slots or other operational controls.  This Agreement will not affect any rights either airline has in
         current or future slots.

(5)  Flight Irregularities.  In the event of any flight cancellation or other schedule irregularity, involuntary rerouting or denied
boarding by the operating carrier with respect to any segment of Code Share Service, the operating carrier shall ensure that all
passengers shall be handled in accordance with the same policies and procedures to avoid any discrimination against a Code Share
Passenger.  It is the intent that the offending carrier shall pay the costs of such passenger accommodation.

         (a) at its own cost and expense, accommodate and/or pay denied boarding compensation or otherwise compensate Code Share
         Passengers, in accordance with the provisions of the Procedures Manual; and

         (b)  reimburse the non-offending carrier, in accordance with the Procedures Manual, for all reasonable costs incurred in
         connection with the compensation and/or accommodation of Code Share Passengers as a result of a schedule irregularity,
         involuntary rerouting or denied boarding as contemplated by this Section.  For the purposes of this paragraph only,
         "non-offending carrier" is defined as the operating carrier who delivers a Code Share Passenger to the connecting point at
         the agreed minimum connect time prior to the scheduled departure time of the other code share partner.

(6)  Baggage Claims.  Baggage handling and settlement of baggage handling claims shall be in accordance with existing tariffs and the
Trade Practice Manual of the Air Transport Association or the IATA Resolutions and Recommended Practices Manual, whichever applies.

(7)  Emergency Situations.  Frontier or Great Lakes as the case may be shall promptly notify the other carrier of all irregularities
involving one of its flights which result in any damage to persons or property as soon as such information is available and shall
furnish to the other as much detail as practicable.  For purposes of this section, notification shall be made as follows:

         To Frontier Dispatch
         To Great Lakes Dispatch

         (a)  Public Relations.  In the event of any irregularity in Great Lakes Flight operations, including, without limitation,
any event causing damage to persons or property, Great Lakes shall identify itself as being operated independently of Frontier and as
being solely responsible for its operations.  Great Lakes may state that it holds a code sharing license from Frontier and that it
obtains certain services from Frontier if third parties inquire as to such relationship.

Section 12.  Audit

Each Carrier shall have the right, at its own cost, to inspect, review, and observe the other carriers operations of Through Flights,
and/or to conduct a full safety and/or service audit of the other carriers operations, manuals and procedures reasonably related to
Through Flights, at such intervals as each carrier shall reasonably request.  In the exercise of such right, neither carrier shall
undertake any responsibility for the performance of the others operations.  Each carrier shall coordinate its safety and service
audits with the other so as to avoid disruptions of the other carriers operations.  Any safety audit may include, without limitation,
maintenance and operation procedures, crew planning, reservations, passenger and baggage handling, customer service, personnel
records, spare parts, inventory records, training records and manuals, flight training and operational records.  If a party desires
to establish the current economic viability of the other party and its financial capability to perform under this agreement, it may,
at its sole expense, request that the independent public accountant of the other carrier perform a review, but not an audit, of that
carriers financial position and receive a report thereon.

Section 13.  Reporting Obligations

(1)  Operations.  Frontier and Great Lakes shall provide each other with monthly written reports containing the following data for
Through Flights:

     (a)  the total number of scheduled and actual flights performed and cancellations by categories for the month, by market;

     (b)  completion and on-time performance data by system and market.  In addition, designated representatives of each carrier will
     meet monthly to review such reports and initiate action to improve performance as necessary.

(2)  Notice of Complaints.  Each carrier shall furnish monthly to the other carrier a summary of complaints, notices of violation,
requests to cease activity or similar correspondence which reasonably relate to Through Flights and which are received by the air
carrier from passengers, any government authority, or other parties.  Each carrier shall comply with the other carriers reasonable
requests for actual copies of any such documents.

(3)  Correspondence from Government Authorities.  Each Carrier shall immediately provide the other any copies of any correspondence
received from any government authority, which references (a) any alleged noncompliance with rules or regulations affecting air
transportation, or (b) any investigation performed or proposed by any government authority, including without limitation, any
communication issued by a government authority concerning the airworthiness of  aircraft, the compliance of the carrier's personnel
with required operational or training procedures or any other matter relating to the safe operation of the carrier's aircraft.

Section 14.  CRS Charges

Each carrier shall be responsible for its' own computer reservation systems costs.

Section 15.  Prorate Agreement

(1)  Frontier and Great Lakes agree to divide revenues and otherwise prorate fares as set forth below:

         (a)  Prorates.  The parties agree to utilize straight rate proration by segment as defined in the Passenger Proration Rules
         Manual subject to the following condition:

                  (i)  Through fares for prorate will be determined by using published "high *" fares.  Such fares will    be
                  mutually agreed to, and set forth in Attachment B hereto.  Great Lakes minimum under such prorate however, in no
                  event shall be less than $*.

         (b)  Applicable Fares.  For fare verification purposes, the applicable published fare is that filed with the U.S. DOT or
         shown in Air Tariff or Airline Passenger Tariff in PIPPS (Passenger Interline Prorate System) in effect on the date the
         passenger's ticket is issued.

                  (i) Fare Types.  All F9* published and unpublished fares, F9* Visit USA (VUSA) fares, F9* Senior Discount fares, and
                  F9* bereavement fares.

         (c)  Place of Issue.  Worldwide.

         (d)  Routing.  The amount to be prorated must be between points in the U.S. and travel must be via Frontier and Great Lakes.

         (e)  Interline Service Charge.  All flight coupons billed under this agreement will be subject to the interline service
         charge as outlined in the ACH Manual of Procedure.

         (f)  Reservations for Travel.  For fares within TC1, all segments must be booked as per the first letter of the applicable
         fare basis code except as otherwise agreed between the Carriers Pricing/Yield Management groups.

         (g)  Applicable Flights.  Travel as specified in Exhibit A between cities served by Great Lakes on the one hand and cities
         served by Frontier on the other ("Through Flights") is permitted as defined in this Agreement.

         (h)  Rule Waivers.  The billing carrier shall recognize rule waivers granted by the other carrier and its agents with
         respect to any provisions that may apply to any fare covered under this Agreement.  Waiver of booking classes is not
         permitted.

         (i)  Situations not covered.  The provisions of the ACH Passenger Proration Rules Manual as applicable,   will govern those
         situations not specifically addressed herein.

(2)  Settlement of Accounts.  Transportation furnished hereunder shall be included in the monthly settlement of accounts in the same
manner as other transportation sales between the parties, which shall be as per the applicable clearing house rules.

(3)  Collection of Applicable Fares.  Except for Through Flights, all other charges with respect to transportation furnished
hereunder, including charges for excess baggage, shall be governed by each party's applicable tariffs, rules and regulations.

(4)  Responsibility for Compliance with Conditions.  Both Carriers agree to see that its agents comply with the terms and conditions
of this Agreement.  Should the terms and conditions of this Agreement be violated by a Carrier or its agents, the Carrier in
violation agrees to reimburse the other Carrier for any and all losses or damages incurred as a result thereof.

Section 16.  Ticket Handling

(1)  As applicable, Frontier or Great Lakes will use its own ticket documentation for ticket sales made by that carrier.

(2)  Ticket Acceptance.  For the term of this Agreement, Frontier and Great Lakes shall accept the others flight documents written
for Through Flights in accordance with applicable restrictions.  Neither Carrier shall endorse or refund any such coupons without the
others written consent, except in accordance with the other's contract of carriage.

Section 17.  Compliance with Laws and Regulations

Frontier and Great Lakes shall provide the air transportation services performed by each pursuant to this Agreement in compliance
with all applicable statutes, orders, rules and regulations of government agencies having jurisdiction over their respective
operations (including, but not limited to, FAA and DOT) including (1) rules on notification of code share, wet lease and change of
gauge operations and (2) any conditions placed on approval of this Agreement.

Section 18.  Independent Parties

(1)  Independent Contractors.  It is expressly recognized and agreed that each party, in its performance and otherwise under this
Agreement, is and shall be engaged and acting as an independent contractor and in its own independent and separate business; that
each party shall retain complete and exclusive control over its staff and operations, and the conduct of its business; and that each
party shall bear and pay all expenses, costs, risks and responsibilities incurred by it in connection with its obligations under this
Agreement.  Neither Frontier nor Great Lakes nor any officer, employee, representative, or agent of Frontier or Great Lakes shall in
any manner, directly or indirectly, expressly or by implication, be deemed to be, or make any representation or take any action which
may give rise to the existence of, any employment, agent, partnership, or any other like relationship as between Frontier and Great
Lakes but each party's relationship as respects the other party in connection with this Agreement is and shall remain that of an
independent contractor.

(2)  Status of Employees.  The employees, agents and/or independent contractors of Frontier shall be employees, agents, and
independent contractors of Frontier for all purposes, and under no circumstances shall be deemed to be employees, agents, or
independent contractors of Great Lakes.  The employees, agents and independent contractors of Great Lakes shall be employees, agents
and independent contractors of Great Lakes for all purposes, and under no circumstances shall be deemed to be employees, agents, or
independent contractors of Frontier.  In its performance under this Agreement, each party shall act as an independent contractor and
not as an agent for the other.  Frontier shall have no supervisory power or control over any employees, agents, or independent
contractors employed by Great Lakes, and Great Lakes shall have no supervisory power or control over any employees, agents and
independent contractors employed by Frontier.

(3)  Liability for Employee Costs.  Each party, with respect to its own employees (hired directly or through a third party), accepts
full and exclusive liability for the payment of worker's compensation and/or employer's liability (including insurance premiums where
required by law) and for the payment of all taxes, contributions or other payments for unemployment compensation, vacations, or old
age benefits, pensions and all other benefits now or hereafter imposed upon employers with respect to its employees by any government
or agency thereof or any other party (whether measured by the wages, salaries, compensation or other remuneration paid to such
employees or otherwise) and each party further agrees to make such payments and to make and file all reports and returns, and to do
everything necessary to comply with the laws imposing such taxes, contributions or other payments.

Section 19.  Release and Indemnification

(1)  Great Lakes Indemnity.  Great Lakes agrees to release, indemnify, hold harmless and defend Frontier, its officers, directors,
employees, agents, successors and assigns, from and against any and all claims, losses, damages, liabilities, causes of action,
suits, judgments and expenses, whether groundless or not, including, but not limited to, reasonable attorneys' fees, costs and
related expenses,

         (a)  for bodily or personal injury, including death, to any persons occurring while such persons are in the custody of, or
         being transported by Great Lakes, including, but not limited to, employees of Great Lakes, except for injury or death of
         Frontier's employees incurred in the performance of their duty and for which workers' compensation is normally recoverable.

         (b)  for any loss of, damage to, or destruction of any property occurring while such property is in the control or custody
         of, or being transported by Great Lakes, including loss of use and consequential        damage thereof (excluding, however,
         loss of, damage to, or destruction of Frontier's property),

The foregoing indemnification shall not apply to any such claims or liability resulting from the gross negligence or willful
misconduct of Frontier, its officers, directors, employees or agents.

(2)  Frontier Indemnity.  Frontier agrees to release, indemnify, hold harmless and defend Great Lakes, its officers, directors,
employees, agents, successors and assigns, from and against any and all claims, losses, damages, liabilities, causes of action,
suits, judgments and expenses, whether groundless or not, including, but not limited to, reasonable attorneys' fees, costs and
related expenses,

         (a)  for bodily or personal injury, including death, to any persons occurring while such persons are in the custody of, or
         being transported by Frontier, including, but not limited to, employees of Frontier, except for injury or death of Great
         Lakes' employees incurred in the performance of their duty and for which workers' compensation is normally recoverable.

         (b)  for any loss of, damage to, or destruction of any property occurring while such property is in the control or custody
         of, or being transported by Frontier, including loss of use and consequential damage thereof (excluding, however, loss of,
         damage to, or destruction of Great Lakes' property),

         (c)  for trademark or trade name infringement, arising out of or in any manner connected with the use of the F9* designator
         code, on flights operated by Great Lakes pursuant to this Agreement,

The foregoing indemnification shall not apply to any such claims or liability resulting from the gross negligence or willful
misconduct of Great Lakes, it officers, directors, employees or agents.

(3)  Frontier Ground Services.  To the extent that Frontier furnishes ground services to Great Lakes in connection with F9* Code
Share Service, Frontier agrees to release, indemnify, hold harmless and defend Great Lakes, its officers, directors, employees,
agents, successors and assigns, from and against any and all claims, losses, damages, liabilities, causes of action, suits, judgments
and expenses, whether groundless or not, including, but not limited to, reasonable attorneys' fees, costs and related expenses, for
bodily or personal injury, including death, to any persons, including, but not limited to, employees of Frontier, except for injury
or death of Great Lakes' employees incurred in the performance of their duties and for which workers' compensation normally is
recoverable, and for any loss of, damage to, or destruction of any property, including loss of use and consequential damage thereof
arising out of or in any manner connected with the furnishing of services, materials or facilities by Frontier hereunder, whether or
not occurring or arising out of the negligence, whether active, passive or any other type, of Frontier, its officers, directors,
employees or agents; however, the foregoing indemnification shall not apply to any such claims of liability resulting from the gross
negligence, willful misconduct of Great Lakes, its officers, directors, employees or agents.

Section 20.  Insurance

(1)  Frontier and Great Lakes each shall maintain in full force and effect at least the following insurance coverage's:

         (a)  Workers' Compensation and Occupational Disease insurance subject to the laws of the state wherein this Agreement is
         being performed.  Such coverage shall include Employers Liability up to a limit of at least $500,000 USD.

         (b)  All Risk Aircraft Hull insurance shall include endorsements that:

                  (i)  Provide that the insurer shall waive its subrogation rights against the other carrier.

                  (ii) Provide that, as respects the interest of the other carrier, this insurance shall not be invalidated by any
                  breach of warranty.

         (c)  Comprehensive Airline Liability insurance with limits no less than $300,000,000 USD combined single limit per
         occurrence, including but not limited to aircraft liability, passenger legal liability, and premises liability.  Such
         insurance shall include personal injury and contractual liability.

         (d)  The Comprehensive Airline Liability insurance referenced above shall provide that:


                  (i)  Underwriters acknowledge that the indemnification and hold harmless provisions of this Agreement are insured
                  under respective carriers' blanket contractual liability coverage.

                  (ii)  Frontier and Great Lakes are named as an additional insured on the other's policy for such insurance.

                  (iii)  Said insurance is primary with respect to the matters within such coverage, irrespective of any insurance
                  carried by the other carrier.

                  (iv)  Provide that, as respects the interests of each carrier, this insurance shall not be invalidated by any breach
                  of warranty by the other carrier.

                  (v)  Provide a severability of interest/cross liability endorsement.

(2)  Certificates.  Within thirty (30) days of the commencement of this Agreement and annually
thereafter, certificates of insurance shall be delivered to each carrier evidencing compliance by the other Carrier with the
insurance terms of this Agreement.  All of the above insurance shall be written through a company or companies reasonably
satisfactory to the carrier receiving the benefit of the certificate and the certificates of insurance shall be of a type that
unconditionally obligates the insurer to notify the carrier receiving the benefit of the certificate in writing at least thirty (30)
days in advance of effective date in the event of any material change in, nonrenewal, or cancellation of such insurance.  Except in
the case of Hull War Risk Insurance, such period of notice shall be seven (7) days or less in accordance with the applicable
Insurance policy.

Section 21.  Directors, Officers, Agents, Employees

No director, officer, agent or employee of either party shall be charged personally or held contractually liable by or to the other
party under any term or provision of this Agreement or any supplement, modification or amendment to this Agreement or because of any
breach thereof.

Section 22.  Effective Date and Term;  Termination

(1)  Effective Date and Term

(a)      This Agreement shall become effective on the date first written above, or as soon thereafter as executed by both parties
              (the "Effective Date") and shall remain in effect continuously thereafter.  Either Great Lakes or Frontier may deliver
              to the other advance written notice of termination which notice provides for a termination date for this Agreement at
              least 180 days subsequent to delivery of the notice of termination (the "Termination Date"), provided that neither party
              may deliver such notice prior to the Implementation Date.

              (i)  In the event of a change of control of either carrier, in which the carrier is not the surviving carrier ("new
              company"), the new company may deliver a notice of termination which will provide for a termination date of 360 days
              subsequent to delivery of the notice of termination.

         (b)  Code Share Services established and published in the printed and electronic media under this Agreement shall be for the
         entire forward booking period in accord with each media's policies as generally applied to forward airline schedules
         (currently approximately 331 days).  The parties agree that the forward booking period shall be truncated to the Termination
         Date if and when notice of termination is given.  The truncation shall be effected with the next normally scheduled
         transmission of schedule data to the various media.  The parties also agree that any code share passengers booked and
         ticketed for travel during the forward booking period while such code share service was published will be serviced in accord
         with operating procedures established by the parties pursuant to this Agreement, even though the Agreement may have been
         terminated subsequent to such booking and ticketing.

(2)  Termination

         (a)  In the event that either Great Lakes or Frontier (i) makes a general assignment for the benefit of creditors or becomes
         insolvent; (ii) files a voluntary petition in bankruptcy; (iii) petitions for or acquiesces in the appointment of any
         receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets; (iv)
         commences under the laws of any competent jurisdiction any proceeding involving its insolvency, bankruptcy, reorganization,
         readjustment of debt, dissolution, liquidation or any other similar proceeding for the relief of financially distressed
         debtors; (v) becomes the   object of any proceeding or action of the type described in (iii) or (iv) above and such
         proceeding or     action remains undismissed or unstayed for a period of at least sixty (60) days; or (vi) is divested of a
         substantial part of its assets so as to affect the ability to operate its business generally for a period of at least thirty
         (30) days; then the other party may by written notice terminate this Agreement immediately.

Section 23.  Default

(1)  Cure Period and Termination.  Except as otherwise provided herein, if either party shall default in performance of any of the
terms, covenants and conditions of this Agreement, the other party may give notice of such default to the party at default.  In the
event such default is not cured within (a) thirty (30) days after the giving of such notice or (b) five (5) business days in the case
of the failure to make any payments due and payable under the Agreement, the party giving notice may terminate this Agreement
effective upon such date that party specifies by further notice to the party in default, without prejudice to any other rights which
the other party may have.

(2)  No Waiver.  The waiver by either party of performance of any term, covenant or condition of this Agreement in a particular
instance shall not constitute a waiver of any subsequent breach or preclude such party from thereafter demanding performance thereof
according to the terms hereof.

Section 24.  Force Majeure, etc.

(1)  Neither party shall be liable to the other for any failure to comply with the terms of this Agreement or any loss, injury,
damage or delay whatsoever resulting, directly or indirectly, from one or more of the following: act of God; seizure under legal
process; governmental sanctions; quarantine restrictions; fire, fog, flood, or other weather-related reason; failure or refusal on
the part of any government or governmental agency to grant or issue approvals, clearances, exemptions, permits or operating
authority, or recession or revocation thereof by any government or governmental agency; damage to or destruction of aircraft or other
flight equipment; mechanical difficulties or breakdowns; unavailability of fuel; riots or civil commotion; strikes, lockouts or labor
disputes (whether resulting from disputes between either party and its employees or between other parties); U.S. military or airlift
emergency or substantially expanded U.S. military airlift requirements as determined by the U.S. government; activation of the U.S.
Civil Reserve Air Fleet; war or hazards or dangers incident to a state of war; or any other acts, matters or things, whether or not
of a similar nature, which are beyond the control of either party and which shall directly or indirectly, prevent, delay, interrupt,
or otherwise adversely affect the furnishing, operation or performance of such transportation.

(2)  Frontier or Great Lakes shall have the right to terminate this Agreement forthwith in the event of an airlift emergency as
determined by the United States Secretary of Defense or his designee or by the Commander of the United States Military Airlift
Command, or if the United States Civil Reserve Air Fleet is activated by order of the  Secretary of Defense, and, as a direct result,
Frontier scheduled service in Denver is reduced by 50%.

Section 25.  Taxes

(1)  Subject to Section 25(4), each party shall be responsible for any net or gross income or franchise taxes (or taxes of a similar
nature) on the revenues or income or any measure thereof which is attributable to it in connection with the sale of air
transportation pursuant to this Agreement.

(2)  The Ticketing Carrier, shall collect, except as otherwise prohibited by law, all Ticket Taxes relating to tickets sold or travel
documents issued by it with respect to air transport pursuant to this Agreement.  The parties hereby agree:

         (a)  The Ticketing Carrier, shall collect, report and remit to the Operating Carrier any non-interlineable Ticket Taxes
         levied in connection with sales of the Codeshare Flights.

         (b)  The Ticketing Carrier shall collect, report and credit to the account of  the Operating Carrier with ACH any
         interlineable Ticket Taxes levied in connection with the sales of the Codeshare Flights.  The Operating Carrier shall remit
         to taxing authorities all such interlineable Ticket Taxes.

         (c)  The Operating Carrier may bill the Ticketing Carrier for any Ticket Taxes due or payable on or measured by passenger
         enplanement and payable or remittable by the Operating Carrier which should have been collected at the time of ticket sale
         or travel document issue.

(3) If either party receives notice from any taxing authority with respect to any assessment or potential assessment or imposition of
any Tax (collectively, an "Assessment"), that the other party may be responsible for paying, directly or indirectly, the party so
notified shall inform the other party in writing within ten (10) days of receipt of such notice.  If the party receiving such notice
from a taxing authority is or will be required to pay any Assessment for which the other party is ultimately responsible, it shall be
entitled to be indemnified against such Assessment in accordance with Section 25(4).

(4)  Each party further agrees to indemnify, defend and hold harmless the other from and against any and all Taxes, or Assessments,
as the case may be, levied upon or advanced by the indemnified party, but that ultimately the indemnifying party would be responsible
for paying, which resulted from any transaction or activity contemplated by this Agreement.

Section 26.  Notices

All notices, requests, demands and other communications hereunder shall be in writing, transmitted by overnight, registered, or
certified mail, and shall be deemed to have been duly given when actually received.  Notices shall be transmitted:

         (a)      if to Great Lakes to the attention of:
                  Great Lakes Aviation, Ltd.
                  1022 Airport Parkway
                  Cheyenne, Wyoming 82001
                  Attention: President

         (b)      if to Frontier to the attention of:
                  Frontier Airlines, Inc.
                  Frontier Center One
                  7001 Tower Road
                  Denver, Colorado  80249-7312
                  Attn: Vice President, Market Planning & Revenue Management

         (c)      Or, in each case, to such other person and place as Frontier or Great Lakes furnish to the other party in writing.

Section 27.  Miscellaneous Provisions

(1)  Other Agreements.  Except as set forth in Section 2, nothing herein contained, shall prevent either Carrier from entering into
agreements with other carriers that provide for joint marketing of operations or code sharing.

(2)  Governing Law.  This Agreement shall be interpreted in accordance with, and performance shall be governed by, the laws of the
State of Colorado, United States of America, regardless of the laws that might be applicable under principles of conflict of law.
Each party shall attempt to mediate any disputes, which might arise from this agreement prior to filing a complaint with a court of
competent jurisdiction.  Both parties consent to the jurisdiction of such Court.

(3)  Counterparts.  This Agreement  may be executed simultaneously in counterparts each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

(4)  Entire Agreement.  This Agreement, including the Exhibits which are attached hereto and made part hereof, sets forth the entire
Agreement and understanding between the parties as to the subject matter hereof, and merges and supercedes all prior discussions,
agreements and understandings concerning the subjects covered by this Agreement.  No party shall be bound by any term, condition or
definition other than expressly set forth or provided for in this Agreement or amendments to this Agreement.  Unless expressly
provided herein, this Agreement may not be changed or modified, except by agreement in writing, signed by the party to be bound
thereby.

(5)  Waiver, Construction, Severability, No Third party Beneficiary.  No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.  This Agreement shall not be construed against the party preparing it, but
shall be construed as if both parties jointly prepared it and any uncertainty or ambiguity shall not be interpreted against either
party.  In the event that any one or more of the provisions of this Agreement shall be determined to be invalid, unenforceable, or
illegal, such invalidity, unenforceability or illegality shall not affect any other provision of this Agreement and the Agreement
shall be construed as if such invalid, unenforceable or illegal provision had never been contained herein.  No person or entity,
other than Frontier or Great Lakes, shall have any rights, claims, benefits or powers under this agreement and this agreement shall
not be construed or interpreted to confer any rights, claims, benefits or powers upon any third party.  There are no third-party
beneficiaries of this agreement.

(6)  Assignment.  This Agreement shall not be assigned by either party without the prior written consent of the  other party;
provided that either party may, without such consent, assign any of its fixed or contingent rights to receive money payments
hereunder and shall promptly notify the other party in writing of any such assignment.

(7)  Not a Partnership.  The terms of this Agreement, including its annexes and appendices, or any supplement, modification, or
amendment to this Agreement shall not be construed or interpreted at any time to mean that the business relationship between Frontier
and Great Lakes is a partnership.

The parties hereto have caused this Code Share Agreement to be executed in their names and on their behalf by their respective
officers duly authorized, on the day and year first above written.


FRONTIER AIRLINES, INC.             GREAT LAKES AVIATION, LTD


By:                                                           By:
    -------------------------------------------------            --------------------------------------------------

Its:                                                          Its:
    -------------------------------------------------             -------------------------------------------------










                                                               EXHIBIT A
                                                               ---------



                  City Pair                                City Name                              Effective Date
                  ---------                                ---------                              --------------
                  DEN-AIA                                  Alliance, NE
                  DAN-ALS                                  Alamosa, CO
                  DEN-AMA                                  Amarillo, TX                           July 9, 2001
                  DEN-BFF                                  Scottsbluff, NE
                  DEN-CDR                                  Chadron, NE
                  DEN-CEZ                                  Cortez, CO
                  DEN-CNY                                  Moab, UT
                  DEN-COD                                  Cody, WY                               July 9, 2001
                  DEN-CPR                                  Casper, WY                             July 9, 2001
                  DEN-CYS                                  Cheyenne, WY                           July 9, 2001
                  DEN-DDC                                  Dodge City, KS
                  DEN-DIK                                  Dickinson, ND
                  DEN-DRO                                  Durango, CO
                  DEN-EAR                                  Kearney, NE
                  DEN-EGE                                  Eagle/Vail, CO
                  DEN-FMN                                  Farmington, NM
                  DEN-GCC                                  Gillette, WY                           July 9, 2001
                  DEN-GCK                                  Garden City, KS
                  DEN-GJT                                  Grand Junction, CO
                  DEN-GRI                                  Grand Island, NE
                  DEN-GUC                                  Gunnison, CO
                  DEN-HDN                                  Hayden/SteamboatSprings,CO             July 9, 2001
                  DEN-HYS                                  Hays, KS
                  DEN-ISN                                  Williston, ND
                  DEN-JAC                                  Jackson, WY
                  DEN-LAR                                  Laramie, WY
                  DEN-LBF                                  North Platte, NE
                  DEN-LBL                                  Liberal, KS
                  DEN-MCK                                  McCook, NE
                  DEN-MTJ                                  Montrose, CO
                  DEN-OFK                                  Norfolk, NE
                  DEN-PGA                                  Page, AZ
                  DEN-PIR                                  Pierre, SD
                  DEN-PUB                                  Pueblo, CO
                  DEN-RAP                                  Rapid City, SD
                  DEN-RIW                                  Riverton, WY
                  DEN-RKS                                  Rock Springs, WY
                  DEN-SAF                                  Santa Fe, NM                           July 9, 2001
                  DEN-SHR                                  Sheridan, WY
                  DEN-SLN                                  Salina, KS
                  DEN-TEX                                  Telluride, CO
                  DEN-VEL                                  Vernal, UT
                  DEN-WRL                                  Worland, WY
                  MSP-BKX                                  Brookings, SD
                  MSP-DVL                                  Devils Lake, ND
                  MSP-HON                                  Huron, SD
                  MSP-IMT                                  Iron Mountain, MI
                  MSP-IWD                                  Iron Wood, MI
                  MSP-JMS                                  Jamestown, ND
                  PHX-PGA                                  Page, AZ







                  ATTACHMENT B - Prorate fares - published high y as of 4/26/01



                                    * - with tax

                  ABQ               $     *

                  ATL               $     *

                  BOS               $     *

                  BWI               $     *

                  DCA               $     *

                  DFW               $     *

                  ELP               $     *

                  IAH               $     *

                  LAS               $     *

                  LAX               $     *

                  LGA               $     *

                  MCI               $     *

                  MCO               $     *

                  MDW               $     *

                  MSP               $     *

                  OMA               $     *

                  PDX               $     *

                  PHX               $     *

                  SAN               $     *

                  SEA               $     *

                  SFO               $     *

                  SLC               $     *





                  AMA               $     *

                  CPR               $     *

                  CYS               $     *

                  COD               $     *

                  GCC               $     *

                  HDN               $     *

                  SAF               $     *

EX-10.63MATERIALCONT

                                                                                                                      EXECUTION VERSION




                                                           CREDIT AGREEMENT
                                                             [Frontier/PK]


                                                              Dated as of

                                                              May 9, 2001


                                                                 AMONG



                                                       FRONTIER AIRLINES, INC.,
                                                               Borrower,


                                                 EDISON ASSET SECURITIZATION, L.L.C.,
                                                              as Lender,

                                                 PK AIRFINANCE S.A., NEW YORK BRANCH,
                                           as Administrative Agent on behalf of the Lender,


                                                                  and


                                                 GENERAL ELECTRIC CAPITAL CORPORATION,
                                              as Collateral Agent on behalf of the Lender






                                                           Table of Contents
                                                              (continued)
                                                                                                                                   Page


                                                         ii

                                                           Table of Contents

                                                                                                                                   Page


                                                         i


Section 1..............................................................Certain Definitions and Interpretive Matters
         1


Section 2....................................................Borrower's Notice of Delivery Dates; Closing Procedure
         3


Section 3...........................................................................................Arrangement Fee
         3


Section 4................................................................................................Conditions
         4


Section 5.........................................................................................Closing Procedure
         8


Section 6..............................................................................Extent of Interest of Lender
         9


Section 7............................................................................Representations and Warranties
         9


Section 8...............................................................................................Indemnities
         13


Section 9.................................................................................Covenants of the Borrower
         20


Section 10................................................................................................The Notes
         24


Section 11................................................Events Of Default; Certain Rights of Administrative Agent
         30


Section 12.................................................................................................Remedies
         32


Section 13......................................................................................Replacement Engines
         37


Section 14...............................................................................................The Agents
         38


Section 15......................................................................................Investment Of Funds
         41


Section 16.................................Supplements and Amendments to the Mortgage and Other Operative Documents
         41


Section 17..................................................................................................Notices
         42


Section 18.............................................Governing Law; Consent to Jurisdiction; Waiver of Jury Trial
         42


Section 19.......................................................................................Costs and Expenses
         43


Section 20..................................................................................Section 1110 Compliance
         43


Section 21..........................................................................................Confidentiality
         44


Section 22...............................Covenants of the Collateral Agent, the Administrative Agent and the Lender
         44


Section 23............................................................................................Miscellaneous
         45







                                                         - 3 -

Schedules:
I.                   Notice and Account Information
II.                  Participation in Original Amount
Exhibit A -          Form of Borrowing Notice
Exhibit B -          Form of Assignment Agreement






                                                                                                       [Credit Agreement [Frontier/PK]]
                                                          48




                                                    CREDIT AGREEMENT [Frontier/PK]
                                                    ------------------------------

                  THIS  CREDIT  AGREEMENT  [Frontier/PK]  dated as of  May 9,  2001  among  (i) Frontier  Airlines,  Inc.,  a  Colorado
corporation,  (the  "Borrower"),  (ii) Edison  Asset  Securitization,  L.L.C., a Delaware  limited  liability  company,  as Lender (the
                     --------
"Lender"),  (iii) PK  AirFinance,  S.A., New York Branch, a company organized under the laws of Luxembourg,  as Administrative Agent on
behalf of the Lender (the "Administrative  Agent") and (iv) General Electric Capital Corporation,  as Collateral Agent on behalf of the
                           ---------------------
Lender (the "Collateral Agent").
             ----------------

                                                         W I T N E S S E T H:
                                                         - - - - - - - - - -

                  WHEREAS, certain terms are used herein as defined in Section 1(a) hereof; and

                  WHEREAS,  concurrently with the execution and delivery of this Agreement,  the Borrower, the Administrative Agent and
the Collateral Agent are entering into the Mortgage and Security Agreement  [Frontier/PK]  dated as of the date hereof (the "Mortgage")
                                                                                                                             --------
pursuant to which the Borrower  agrees,  among other things,  to issue one or more Notes in respect of each Aircraft as evidence of the
Borrower's  indebtedness to the Lender,  which Notes will be secured by the mortgage and security  interest  created by the Borrower in
favor of the Collateral Agent on behalf of the Lender, and the Borrower shall execute and deliver a Mortgage  Supplement  covering each
Aircraft, supplementing the Mortgage.

                  NOW THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

Section 1         Certain Definitions and Interpretive Matters.
                  --------------------------------------------

(a)      Except as otherwise defined in this Agreement, including its annexes, schedules and exhibits, terms used herein in
     capitalized form shall have the meanings attributed thereto in the Mortgage.  In addition the following terms shall have the
     following meanings:

         "Agents" means, collectively, the Administrative Agent and the Collateral Agent, acting in such capacities.
          -------

         "Aircraft 1488" means, collectively, the Airbus A319-111 airframe bearing manufacturer's serial number 1488, together with
          -------------
two (2) CFM International Model CFM 56-5B5/P Engines bearing manufacturer's serial numbers 575168 and 575169.

         "Aircraft 1560" means, collectively, the Airbus A319-111 airframe bearing manufacturer's serial number 1560, together with
          -------------
two (2) CFM International Model CFM 56-5B5/P Engines bearing the manufacturer's serial numbers set forth in the Mortgage Supplement
with respect thereto.

         "Aircraft 1583" means, collectively, the Airbus A319-111 airframe bearing manufacturer's serial number 1583, together with
          -------------
two (2) CFM International Model CFM 56-5B5/P Engines bearing the manufacturer's serial numbers set forth in the Mortgage Supplement
with respect thereto.

         Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it
may be modified, amended or supplemented from time to time in accordance with its terms and the terms of each other agreement
restricting the modification, amendment or supplement thereof.

(b)      Subject to the terms and conditions of this Agreement, the Lender agrees to make a secured loan to the Borrower in respect
     of each Aircraft (herein called, for such Aircraft, a "Loan") on a date to be designated pursuant to Section 2 hereof, on or
     about (x) in the case of Aircraft 1488, May 9, 2001 but in no event later than May 30, 2001 (the "Initial Commitment Termination
     Date"), (y) in the case of Aircraft 1560, on or about August 31, 2001, but in no event later than September 28, 2001 (the "Second
     Commitment Termination Date") and (z) in the case of Aircraft 1583, on or about September 30, 2001, but in no event later than
     October 31, 2001 (the "Third Commitment Termination Date"), in the amount in Dollars for each Aircraft set forth opposite the
     Lender's name in Schedule II hereto (its "Commitment" for such Aircraft), and to receive, as evidence of each such secured loan,
     Note(s) of the applicable Series in an amount equal to its Commitment for such Aircraft; provided that the aggregate amount of
     Loans for all Aircraft to be made by the Lender shall not exceed the amount in Dollars set forth opposite the Lender's name in
     Schedule II hereto as its Maximum Commitment (its "Maximum Commitment").  The aggregate amount of the Commitments for each
     Aircraft shall equal the Original Amount for such Aircraft.  Each Loan shall bear interest and amortize in accordance with
     Section 2.02 of the Mortgage

(c)      Certain Interpretive Matters.  For purposes of the Operative Documents and all such certificates and other documents, unless
         ----------------------------
     the context otherwise requires:  (i) unless otherwise specifically provided therein, any accounting term used in any Operative
     Document shall have the meaning customarily given such term in accordance with GAAP, and all financial computations thereunder
     shall be computed in accordance with GAAP consistently applied (that certain items or computations are explicitly modified by the
     phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing); (ii) all other undefined capitalized terms
     contained in any of the Operative Documents shall, unless the context indicates otherwise, have the meanings provided for by the
     Uniform Commercial Code as in effect in the State of New York to the extent the same are used or defined therein;
     (iii) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on
     such day; (iv) the words "herein," "hereof" and "hereunder" and other words of similar import used in any Operative Document
     refer to such Operative Documents as a whole, including all annexes, exhibits and schedules, as the same may from time to time be
     amended, restated, amended and restated, supplemented or otherwise modified, and not to any particular section, subsection or
     clause contained in such Operative Document or any such annex, exhibit or schedule; (v) references to any Section, Schedule or
     Exhibit are references to Sections, Schedules and Exhibits in or to such Operative Document (or the certificate or other document
     in which the reference is made), and references to any paragraph, subsection, clause or other subdivision within any Section or
     definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (vi) the words
     "including," "includes" and "include" shall be deemed to be followed by the words "without limitation"; the word "or" is not
     exclusive; (vii) references to any law or regulation refer to that law or regulation as amended from time to time and include any
     successor law or regulation; (viii) references to any agreement refer to that agreement as from time to time amended or
     supplemented or as the terms of such agreement are waived or modified in accordance with its terms; (ix) references to Persons
     include their respective successors and assigns (to the extent and only to the extent permitted by the Operative Document) or, in
     the case of Governmental Authorities, Persons succeeding to the relevant functions of such Persons; and all references to
     statutes and related regulations shall include any amendments of the same and any successor statutes and regulations;
     (x) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision
     hereof; and (xi) wherever from the context it appears appropriate, each term stated in either the singular or plural shall
     include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine,
     feminine and neuter genders.

Section 2         Borrower's Notice of Delivery Dates; Closing Procedure.
                  ------------------------------------------------------

         The Borrower agrees to give the Lender, the Collateral Agent and Administrative Agent at least two (2) Business Days' prior
written notice of the Delivery Date for each Aircraft, which Delivery Date shall be a Business Day not later than (i) in the case of
Aircraft 1488, the Initial Commitment Termination Date, (ii) in the case of Aircraft 1560, the Second Commitment Termination Date,
and (iii) in the case of Aircraft 1583, the Third Commitment Termination Date, by executing and delivering a borrowing notice
substantially in the form of Exhibit A hereto (the "Borrowing Notice"), which notice shall also specify any funding instructions.
                                                    ----------------
The payment by the Lender of its Commitment in respect of any Aircraft in the manner required by this Section 2 shall constitute a
waiver of such notice.

         Subject to the terms and conditions of this Agreement, and simultaneous with receipt by the Seller of the Original Amount
for any Aircraft pursuant to this Section 2, the Borrower shall authorize the delivery and filing for record at the FAA of the
Mortgage and/or the Mortgage Supplement for such Aircraft.  On the Delivery Date for each Aircraft specified in the Borrower's notice
referred to in the first paragraph of this Section 2, subject to the terms and conditions of this Agreement, the Lender agrees to pay
the amount of its Commitment for such Aircraft to the Seller by wire transferring such amounts to the Seller's account at Credit
Lyonnais, 1301 Avenue of the Americas, New York, NY 10019, ABA No. 026-008-073 Account # 0118-363-000-100, Attention  William
McIlwain, Reference Frontier MSN 1488, or to such other account as the Borrower shall direct the Administrative Agent (on behalf of
the Lender) in writing, upon closing.

Section 3         Arrangement Fee.
                  ---------------

         The Borrower agrees to pay to the Lender, on or before each Delivery Date, an arrangement fee of 0.6% (the "Arrangement
                                                                                                                     ------------
Fee") of the Original Amount of each Loan to be funded on such Delivery Date, to the following account (or such other account as
Lender or Administrative Agent may direct in writing):

                  Bankers Trust Company
                  New York, NY
                  ABA #:         021-001-033
                  Account #:     003-863-37
                  Reference:     Collection Account #31884

Section 4         Conditions.
                  ----------

(a)      Conditions Precedent to the Effectiveness of the Commitment.  It is agreed that the Commitment of the Lender is subject to
         -----------------------------------------------------------
     the satisfaction prior to or on the first Delivery Date of the following conditions precedent:

(i)      The following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto,
     shall each be satisfactory in form and substance to the Lender and shall be in full force and effect and executed counterparts
     shall have been delivered to the Lender, the Administrative Agent and the Collateral Agent or their respective counsel:

     the Mortgage; and

                                            a copy of that portion of the Purchase Agreement and Engine Agreement certified by the
                  Secretary or an Assistant Secretary of the Borrower as being a true and accurate copy of the same that relates to
                  the Assigned Warranties and the related obligations of the Borrower or a successor in interest to the Borrower which
                  has the right to exercise any such warranty.

(ii)     The Lender, the Administrative Agent and the Collateral Agent shall have received the following, in each case in form and
     substance satisfactory to each of them:

     a certified copy of the Articles of Incorporation and Bylaws of the Borrower and a copy of resolutions of the board of directors
                  of the Borrower or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the
                  Borrower, duly authorizing the execution, delivery and performance by the Borrower of this Agreement, the Mortgage
                  and each other document required to be executed and delivered by the Borrower on each Delivery Date in accordance
                  with the provisions hereof and thereof; and

                                            a certificate of the Borrower as to the Person or Persons authorized to execute and
                  deliver this Agreement, the other Operative Documents, and any other documents to be executed on behalf of the
                  Borrower in connection with the transactions contemplated hereby and as to the signature of such person or persons.

(iii)    The Lender, the Administrative Agent and the Collateral Agent shall have received an opinion addressed to the Lender, the
     Administrative Agent and the Collateral Agent from each of: (A) Art Voss, Esq., General Counsel for the Borrower and
     (B) Pillsbury Winthrop LLP, special counsel to the Borrower, each in form and substance reasonably satisfactory to the addressees
     thereof.

(b)      Conditions Precedent to the Lender's Commitment to Lend on each Delivery Date.  It is agreed that the respective obligations
         -----------------------------------------------------------------------------
     of the Lender to lend its Commitment to the Borrower in respect of each Aircraft is subject to the satisfaction prior to or on
     the Delivery Date for each Aircraft of the following conditions precedent:

(i)      The Lender, the Administrative Agent and the Collateral Agent shall have received from the Borrower a duly executed
     Borrowing Notice with respect to the Delivery Date for such Aircraft pursuant to Section 2 hereof.

(ii)     No change shall have occurred after the date of the execution and delivery of this Agreement in applicable law or
     regulations thereunder or interpretations thereof by appropriate regulatory authorities which, in the reasonable opinion of the
     Lender would make it a violation of law or regulations for the Lender to make its Commitment for such Aircraft available to fund
     the applicable Loan or to realize the benefits of the security afforded by the Mortgage in respect thereof.

(iii)    on the Delivery Date for each Aircraft, such Aircraft will have been duly certified by the FAA as to type and airworthiness,
     will have been insured by the Borrower in accordance with the terms of the Mortgage, will have suffered no Event of Loss and will
     be in the condition and state of repair required under the terms of the Mortgage.

(iv)     The following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto,
     shall each be satisfactory in form and substance to the Lender, the Administrative Agent and the Collateral Agent and shall be in
     full force and effect and executed counterparts shall have been delivered to the Lender, the Administrative Agent and the
     Collateral Agent or their respective counsel, provided that only the Lender shall receive an executed original of its Note(s):

     the Mortgage Supplement covering such Aircraft and dated the Delivery Date for such Aircraft;

                                            the Note(s) of the Series for such Aircraft;

                                            the Consent and Agreement and the Engine Consent and Agreement, in each case,  in respect
                  of such Aircraft; and

                                            the Warranty Bill of Sale and FAA Bill of Sale for such Aircraft.

(v)      A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to
     the granting clause of the Mortgage that are not covered by the recording system established by the Federal Aviation Act shall
     have been executed and delivered by the Borrower, and such financing statement or statements shall have been duly filed in all
     places deemed necessary or advisable in the opinion of counsel for the Lender, and any additional Uniform Commercial Code
     financing statements deemed advisable by the Lender shall have been executed and delivered by the Borrower and duly filed and all
     other action shall have been taken as is deemed necessary or advisable, in the opinion of counsel for the Lender, to establish
     and perfect the Collateral Agent's security interest in such Aircraft.

(vi)     All appropriate action required to have been taken by the Federal Aviation Administration, or any governmental or political
     agency, subdivision or instrumentality of the United States, on or prior to the Delivery Date for such Aircraft in connection
     with the transaction contemplated by this Agreement shall have been taken, and all orders, permits, waivers, authorizations,
     exemptions and approvals of such entities required to be in effect on such Delivery Date in connection with the transaction
     contemplated by this Agreement shall have been issued, and all such orders, permits, waivers, authorizations, exemptions and
     approvals shall be in full force and effect on such Delivery Date.

(vii)    On each Delivery Date the following statements shall be true, and the Lender shall have received evidence satisfactory to it
     to the effect that:

     the Borrower has good title to such Aircraft, free and clear of Liens other than (subject to filing and recording of the FAA Bill
                  of Sale with the Federal Aviation Administration if the Borrower does not already own such Aircraft) the mortgage
                  and security interests created by the Mortgage and the Mortgage Supplement for such Aircraft;

                                            the FAA Bill of Sale, the Mortgage and the Mortgage Supplement for such Aircraft have
                  been duly filed with the FAA for recordation (or are in the process of being so filed for recordation) and there
                  exist no Liens of record on such Aircraft prior to the Lien of the Mortgage;

                                            such Aircraft has been duly certified as to type and airworthiness by the FAA, and the
                  Borrower has authority to operate such Aircraft (and the Lender shall have received a copy of the airworthiness
                  certificate for such Aircraft); and

                                            the Collateral Agent is entitled to the protection of Section 1110 of the United States
                  Bankruptcy Code in connection with its right to take possession of such Aircraft in the event of a case under
                  Chapter 11 of the United States Bankruptcy Code in which the Borrower is a debtor.

(viii)   On each Delivery Date, the representations and warranties of the Borrower contained in Section 7(a) of this Agreement shall
     be true and accurate as though made on and as of each such date except to the extent that such representations and warranties
     relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such
     earlier date), including the representation and warranty that there had not occurred any event which constitutes a Default or an
     Event of Default which is presently continuing.

(ix)     The Lender, the Administrative Agent and the Collateral Agent shall have received an opinion addressed to the Lender, the
     Administrative Agent and the Collateral Agent from each of:  (A) Art Voss, Esq., General Counsel for the Borrower and
     (B) Pillsbury Winthrop LLP, special counsel to the Borrower, each in form and substance reasonably satisfactory to the addressees
     thereof.

(x)      The Lender, the Administrative Agent and the Collateral Agent shall have received an opinion addressed to the Lender, the
     Collateral Agent, the Administrative Agent and the Borrower from Daugherty, Fowler, Peregrin & Haught, FAA counsel in Oklahoma
     City, Oklahoma, in form and substance reasonably satisfactory to the addressees thereof.

(xi)     The Administrative Agent and the Collateral Agent shall have received an opinion addressed to the Collateral Agent and the
     Administrative Agent from in-house counsel to AVSA, in respect of the Bills of Sale, in form and substance reasonably
     satisfactory to the addressees thereof.

(xii)    The Lender, the Administrative Agent and the Collateral Agent shall have received a certificate signed by the President, a
     Vice President, the Chief Financial Officer or the Treasurer of the Borrower, dated the Delivery Date, addressed to the Lender,
     the Administrative Agent and the Collateral Agent and certifying as to the matters stated in paragraphs (viii) and (xiv) of this
     Section 4(b).

(xiii)   The Lender, the Administrative Agent and the Collateral Agent shall have received an independent insurance brokers' report
     and certificate(s) of insurance, in form and substance reasonably satisfactory to the Lender, the Administrative Agent and the
     Collateral Agent as to the due compliance with the terms of Article VI of the Mortgage relating to insurance with respect to such
     Aircraft.

(xiv)    On such Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event
     of Loss) with respect to such Aircraft (or constituent Airframe) or any Engine has occurred.

(xv)     No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or
     governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court or
     governmental agency at the time of such Delivery Date to set aside, restrain, enjoin or prevent the completion and consummation
     of this Agreement or the transaction contemplated hereby.

(xvi)    The Lender shall have received the Arrangement Fee pursuant to Section 3(a).

(xvii)   The Liquidity Termination Date provided for and as defined in the Liquidity Loan Agreement shall have been extended to
     provide sufficient liquidity for the applicable Loan and the commitment of the Liquidity Providers to make Liquidity Loans under
     the Liquidity Loan Agreement shall equal at least 103% of all Loans outstanding after giving effect to such Loan.

(xviii)  The Lender and Borrower shall have obtained the quotations described in Schedule III to set the Base Rate.

(xix)    The rating of the commercial paper issued by the Lender by either S&P or Moody's shall not have been reduced below "A-1+" or
     "P-1," as applicable, nor shall such rating have been withdrawn.

(xx)     The Lender shall have received from the Borrower the statement of financial position and statement of earnings and cash flow
     for the Borrower for the fiscal quarter most recently ended at least 60 days prior to each Delivery Date, and since the date of
     such statement of financial position and statement of earnings and cash flow, there shall have occurred no materially adverse
     change in the financial condition or operations of the Borrower which would affect the Borrower's ability to perform its
     obligations hereunder or under any of the Operative Documents.

Promptly upon the recording of the Mortgage and any Mortgage Supplement covering an Aircraft pursuant to the Federal Aviation Act,
the Borrower will cause Daugherty, Fowler, Peregrin & Haught, FAA counsel in Oklahoma City, Oklahoma, to deliver to the Lender, the
Administrative Agent, the Collateral Agent and the Borrower an opinion as to the due and valid registration of such Aircraft in the
name of the Borrower, the due recording of the Mortgage and the Mortgage Supplement and the lack of filing of any intervening
documents with respect to such Aircraft.  Promptly following each Delivery Date, the Borrower shall cause a huissier to serve a copy
of a notice delivered on such Delivery Date on the Manufacturer and the Seller in accordance with Article 1690 of the French Civil
Code.

Section 5         Closing Procedure.
                  -----------------

         Following the Borrower's notice of the Delivery Date for any Aircraft as provided in Section 2 hereof, the parties will
pre-position the executed Mortgage and/or Mortgage Supplement with FAA counsel in Oklahoma City, Oklahoma, together with the FAA Bill
of Sale for such Aircraft and the application for registration of such Aircraft in the name of the Borrower.  On such Delivery Date
and in sufficient time to permit the closing to occur during business hours of the FAA in Oklahoma City, Oklahoma, the Lender will
wire transfer its Commitment for such Aircraft to the Seller.  On each Delivery Date, by conference telephone call among the Seller,
the Borrower, the Lender (and/or their counsel acting on their behalf), the Collateral Agent, the Administrative Agent and FAA
counsel, the Seller will authorize the filing of the FAA Bill of Sale for the Aircraft to be delivered on such Delivery Date and the
Borrower will authorize the filing of the Mortgage and/or the Mortgage Supplement for such Aircraft upon receipt by the Seller of the
Original Amount of the Loan for such Aircraft.  The irrevocable authorization to FAA counsel to date the FAA Bill of Sale and the
Mortgage Supplement for such Aircraft and file the FAA Bill of Sale and the Mortgage and/or Mortgage Supplement for such Aircraft
will occur prior to the transfer of the Original Amount of the Loan for such Aircraft to the Seller, but the filing will not occur
until the Seller's receipt of the purchase price for such Aircraft.  The Note(s) will be delivered to the Lender and legal opinions
delivered to all parties immediately following the filing of the FAA Bill of Sale and the Mortgage and/or Mortgage Supplement for
such Aircraft at the FAA.

Section 6         Extent of Interest of Lender.
                  ----------------------------

         The Lender shall not have any further interest in, or other right with respect to, the mortgage and security interests
created by the Mortgage when and if the Original Amount of and interest on all Note(s) held by the Lender and all other sums payable
to the Lender hereunder, under the Mortgage and under such Note(s) shall have been paid in full.

Section 7         Representations and Warranties.
                  ------------------------------

(a)      Borrower's Representations and Warranties.  The Borrower represents and warrants that on the date hereof and on each
         -----------------------------------------
     Delivery Date:

(i)      the Borrower is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of
     Colorado; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of
     its business requires, except where the failure to be so qualified would not have a material adverse effect on the Borrower or
     its business; is a U.S. Air Carrier; has its chief executive office (as such term is defined in Article 9 of the Uniform
     Commercial Code) in Colorado; and has the corporate power and authority to engage in air transport and to carry on scheduled
     passenger service as presently conducted, to own the Aircraft and to enter into and perform its obligations under the Operative
     Documents;

(ii)     the execution, delivery and performance by the Borrower of the Operative Documents will, on such Delivery Date, have been
     duly authorized by all necessary corporate action on the part of the Borrower, do not require any stockholder approval, or
     approval or consent of any trustee or holders of any indebtedness or obligations of the Borrower except such as have been duly
     obtained or by such Delivery Date will have been duly obtained and will on such Delivery Date be in full force and effect, and
     none of such Operative Documents contravenes any law, judgment, government rule, regulation or order binding on the Borrower or
     the articles of incorporation or bylaws of the Borrower or contravenes the provisions of, or constitutes a default under, or
     results in the creation of any Lien (other than Permitted Liens) upon the property of the Borrower under, any indenture,
     mortgage, contract or other agreement to which the Borrower is a party or by which it or its properties may be bound or affected;

(iii)    neither the execution and delivery by the Borrower of the Operative Documents nor the performance by the Borrower of its
     obligations thereunder requires the consent or approval of, the giving of notice to, or the registration with, or the taking of
     any other action in respect of any Federal, state or foreign government authority or agency, except for (A) the orders, permits,
     waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the
     Aircraft by the Borrower, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained or
     will on or prior to such Delivery Date be duly obtained, and will on such Delivery Date be in full force and effect, (B) any
     normal periodic and other reporting requirements under the Federal Aviation Act and the regulations promulgated thereunder and
     the applicable rules, and regulations of the FAA, in each case to the extent required to be given or obtained only after such
     Delivery Date, (C) any filings, registrations or applications specifically described in this Agreement, and (D) an air operator's
     certificate with respect to Airbus Model A319 aircraft, which certificate shall be obtained and effected by Borrower in the
     ordinary course of business;

(iv)     the Operative Documents to which the Borrower is a party delivered on or prior to the date hereof or such Delivery Date, as
     the case may be, each constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in
     accordance with the terms thereof except as such may be limited by equitable principles or applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting creditors' rights generally;

(v)      there are no pending or, to the best of Borrower's knowledge, threatened actions or proceedings before any court, arbitrator
     or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to
     have a material and adverse effect on the financial condition of the Borrower or the ability of the Borrower to perform its
     obligations under the Operative Documents;

(vi)     except for (A) the filing for recording pursuant to the Federal Aviation Act of the FAA Bill of Sale for each Aircraft (and
     the application for registration of such Aircraft in the name of the Borrower) and the Mortgage with the Mortgage Supplement for
     each Aircraft, (B) the filing of financing statements (and continuation statements at periodic intervals) with respect to the
     interests created by such documents under the Uniform Commercial Code of Colorado and such other states as may be specified in
     the opinion furnished pursuant to Section 4(b)(ix) hereof and (C) the affixation of the nameplates referenced in Section 3.04 of
     the Mortgage, no further action, including any filing or recording of any document (including any financing statement in respect
     thereof under Article 9 of the Uniform Commercial Code of any applicable jurisdiction), is necessary or advisable in order to
     establish and perfect the first mortgage Lien on each Aircraft in favor of the Collateral Agent pursuant to the Mortgage in any
     applicable jurisdiction in the United States;

(vii)    there has not occurred any event which constitutes a Default or an Event of Default hereunder which is presently continuing;

(viii)   the statements of financial position of the Borrower as of March 31, 2000 and the date of the most recently concluded fiscal
     quarter of the Borrower for which a statement of financial position has been provided and the related statements of earnings and
     cash flow of the Borrower in all material respects for the year and fiscal quarter, respectively, then ended, copies of which
     have been furnished to the Lender, fairly present the financial condition of the Borrower at such date and the results of
     operations and cash flow of the Borrower for the period ended on such dates, in accordance with generally accepted accounting
     principles consistently applied, and subject, in the case of the statements pertaining to the Borrower's most recently concluded
     fiscal quarter, to normal year-end adjustments, and since the date of the most recently concluded fiscal quarter of the Borrower
     for which a statement of financial position has been provided there has been no material and adverse change in such condition or
     operations;

(ix)     on such Delivery Date the Borrower will have good title to the Mortgage Estate delivered on such Delivery Date free and
     clear of all Liens, except the Lien of the Mortgage, and Inchoate Liens;

(x)      neither the Borrower nor anyone acting on behalf of the Borrower has directly or indirectly offered any interest in the
     Notes for sale to, or solicited any offer to acquire any of the same from, anyone other than the Lender and not more than 35
     other institutions believed capable of evaluating and bearing the risks of investment in the transactions contemplated hereby;

(xi)     the Borrower has filed or caused to be filed all Federal, state, local and (to the best of Borrower's knowledge) foreign tax
     returns which are required to be filed and has paid or caused to be paid or provided adequate reserves for the payment of all
     taxes shown to be due and payable on such returns or (except to the extent being contested in good faith and by appropriate
     proceedings and for the payment of which adequate reserves have been provided in accordance with generally accepted accounting
     principles) on any assessment received by the Borrower, to the extent that such taxes have become due and payable, except such
     returns or taxes as do not materially and adversely affect the business, property or assets, operations or financial condition,
     of the Borrower and do not involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a
     Permitted Lien) on the Aircraft;

(xii)    the Borrower is not (x) in default under any indenture, mortgage, lease or Credit Agreement or under any other agreement or
     instrument of a material nature to which the Borrower is now a party or by which it is bound, and no event has occurred and is
     continuing which, under the provisions of any such indenture, mortgage, Credit Agreement or other material agreement or
     instrument, with the lapse of time or the giving of notice, or both, would constitute a default thereunder or (y) in violation of
     any law, order, injunction, decree, rule or regulation applicable to the Borrower of any court or administrative body, which
     violation (a) would reasonably be expected to materially and adversely affect the business, operations or financial condition of
     the Borrower or the Borrower's ability to execute, deliver and perform its obligations under the Operative Documents or (b) would
     involve a material risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on, any of
     the Mortgage Estate;

(xiii)   the Borrower has not engaged in any transaction in connection with which the Borrower could be subjected to either a
     material civil penalty assessed pursuant to Section 502(i) of ERISA, or a material tax imposed by Section 4975 of the Code;
     (w) no material liability to the Pension Benefit Guaranty Corporation (other than liability for premiums) has been incurred by
     the Borrower with respect to any Plan; (x) there has been no event or condition which presents a material risk of termination of
     any Plan by the Pension Benefit Guaranty Corporation; (y) no accumulated funding deficiency (as defined in Section 302 of ERISA
     and Section 412 of the Code), whether or not waived, exists with respect to any Plan; and (z) no material amount of "withdrawal
     liability," as that term is used in Section 4201 of ERISA, has been or is expected to be incurred by the Borrower nor has the
     Borrower or any affiliate of the Borrower been notified by any multi-employer plan (within the meaning of Section 3(37)(A) of
     ERISA) that such multi-employer plan is in reorganization or insolvency within the meaning of Section 4241 or Section 4245 of
     ERISA or that such multi-employer plan intends to terminate or has been terminated under Section 4041A of ERISA (for purposes of
     this subclause (z), the term "affiliate" shall mean any corporation or person which is a member of the same controlled group of
     corporations (within the meaning of Section 414(b) of the Code) as the Borrower or is under common control (within the meaning of
     Section 414(c) of the Code) with the Borrower);

(xiv)    neither the Borrower nor any Plan nor any trust created thereunder has engaged in a "prohibited transaction," within the
     meaning of Section 406 of ERISA or Section 4975 of the Code with respect to the transactions contemplated hereby which could
     subject the Borrower to any tax or penalty pursuant to Section 4975 of the Code or Section 502(i) of ERISA;

(xv)     the Borrower is not an "investment company" as defined in, or subject to regulation under, the Investment Company Act of
     1940 and the Borrower is not a "holding company" as defined in, or subject to regulation under, the Public Utility Holding
     Company Act of 1935;

(xvi)    none of the reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to
     the Administrative Agent or the Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified
     or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact
     necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

(xvii)   no part of the proceeds of any Loan hereunder will be used, whether directly or indirectly, for any purpose that entails a
     violation of any of the Regulations of the Board of Governors of the Federal Reserve, including Regulations U and X.

(b)      Representations and Warranties of Administrative Agent, Collateral Agent and Lender.
         -----------------------------------------------------------------------------------

                  Each of the Lender, the Administrative Agent and the Collateral Agent represents and warrants to each of the other
Parties hereto, as of the date hereof and as of each Delivery Date that:

(i)      It is duly organized and validly existing under the laws of its jurisdiction of incorporation and has the required power and
     authority to enter into the Operative Documents to which it is or will become a party and to carry out the transactions
     contemplated thereby;

(ii)     It has duly executed and delivered the Operative Documents to which it is a party and each of such Operative Document
     constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the
     enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
     affecting creditor's rights generally and by the application of general principles of equity (regardless of whether such
     enforceability is considered in a proceeding in equity or at law);

(iii)    The execution, delivery and performance by it of the Operative Documents to which it is a party have been duly authorized by
     all necessary action on its part, do not require any approval of its stockholders or consent of any trustee or holder of its
     indebtedness or other obligations and are not in violation of its charter, by-laws or similar instrument or any indenture,
     mortgage, deed of trust or other instrument or agreement to which it is a party or by which it is bound or to which any of its
     property or assets may be subject and will not result in a Lien upon any of the Mortgage Estate except as contemplated by the
     Operative Documents; and

(iv)     It has no present intention of distributing or reselling any interest to be acquired by it hereunder or under any of the
     other Operative Documents or any part thereof in violation of the Securities Act of 1933, as amended, and the Lender further
     represents and warrants to the Borrower and each other party hereto that no part of the funds to be used by it to purchase or
     fund, as the case may be, its Notes or its interest under any of the Operative Documents constitutes plan assets of an employee
     benefit plan which is subject to the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA") and/or
                                                                                                                      -----
     subject to Section 4975 of the United States Internal Revenue Code of 1986, as amended.  As used in this Section 7(b)(iv), the
     term "plan assets" shall have the meaning assigned to such term under ERISA and the regulations promulgated thereunder.

Section 8         Indemnities.
                  -----------

(a)      General Indemnity.  Subject to the next following paragraph but without limiting any other rights that any Indemnitee may
         -----------------
     have under the other Operative Documents or applicable law, the Borrower hereby agrees to indemnify each Indemnitee against, and
     agrees to protect, save and keep harmless each of them from any and all Expenses imposed on, incurred by or asserted against any
     Indemnitee arising out of or resulting from (i) the operation, possession, use, maintenance, overhaul, testing, registration,
     reregistration, delivery, non-delivery, lease, nonuse, modification, alteration, or sale of any Aircraft, Airframe or Engine, or
     any engine used in connection with any Airframe or any part of any of the foregoing by the Borrower, any lessee or any other
     Person whatsoever, whether or not such operation, possession, use, maintenance, overhaul, testing, registration, reregistration,
     delivery, non-delivery, lease, nonuse, modification, alteration, or sale is in compliance with the terms of the Mortgage,
     including, without limitation, claims for death, personal injury or property damage or other loss or harm to any person
     whatsoever and claims relating to any laws, rules or regulations pertaining to such operation, possession, use, maintenance,
     overhaul, testing, registration, reregistration, delivery, non-delivery, lease, non-use, modification, alteration, sale or return
     including environmental control, noise and pollution laws, rules or regulations; (ii) the manufacture, design, purchase,
     acceptance, rejection, delivery, or condition of any Aircraft, Airframe or Engine, any engine used in connection with any
     Airframe, or any part of any of the foregoing including, without limitation, latent and other defects, whether or not
     discoverable, or trademark or copyright infringement; (iii) any breach of or failure to perform or observe, or any other
     noncompliance with, any covenant or agreement to be performed, or other obligation of the Borrower under any of the Operative
     Documents, or the falsity of any representation or warranty of the Borrower in any of the Operative Documents; and (iv) any Event
     of Default hereunder or the enforcement against the Borrower of any of the terms hereof (including, without limitation, Section
     12 hereof).

                  The foregoing indemnity shall not extend to any Expense of any Indemnitee to the extent attributable to one or more
of the following:  (1) acts or omissions involving the willful misconduct or gross negligence of such Indemnitee or any Person acting
on behalf of such Indemnitee (other than gross negligence imputed to such Indemnitee solely by reason of its interest in an Aircraft,
as finally determined by a court of competent jurisdiction); (2) any Tax, or increase in tax liability under any tax law (such matter
being the subject to the indemnity in Sections 8(b) and (c) hereof); (3) a failure on the part of the Administrative Agent to
distribute in accordance with the Operative Documents any amounts received and distributable by it thereunder; (4) any breach of
undertaking or any misrepresentation contained herein or in any other Operative Document to which such Indemnitee is a party or any
agreement relating hereto or thereto by such Indemnitee and in each case not attributable directly to any breach of undertaking, any
misrepresentation or any noncompliance with any of the terms hereof or of any other Operative Document or any agreement relating
hereto or thereto by Borrower; (5) attributable to a Lender Lien; or (6) any Expenses as a result of a violation of the Securities
Act (as defined below) relating to or arising out of the offer, issuance, sale or delivery by any Indemnitee (or any person who
controls an Indemnitee within the meaning of Section 15 of the Securities Act of 1933 (the "Securities Act"), as amended) of
                                                                                            --------------
Commercial Paper or any security based upon the credit of the Borrower.

                  The Borrower further agrees that any payment or indemnity pursuant to this Section 8(a) in respect of any "Expense"
shall be in an amount which, after deduction of all Taxes required to be paid by such recipient with respect to such payment or
indemnity under the laws of any federal, state or local government or taxing authority in the United States, or under the laws of any
taxing authority or governmental subdivision of a foreign country, or any territory or possession of the United States or any
international authority, shall be equal to the excess, if any, of (A) the amount of such Expense over (B) the net reduction in Taxes
required to be paid by such recipient resulting from the accrual or payment of such Expense.

                  If a claim is made against an Indemnitee involving one or more Expenses and such Indemnitee has notice thereof, such
Indemnitee (or its agent) shall promptly after receiving such notice give notice of such claim to the Borrower; provided that the
failure to provide such notice shall not release the Borrower from any of its obligations to indemnify hereunder except to the extent
that the Borrower is prejudiced as a result of the failure to give such notice in a timely fashion, and no payment by the Borrower to
an Indemnitee pursuant to this Section 8(a) shall be deemed to constitute a waiver or release of any right or remedy which the
Borrower may have against such Indemnitee for any actual damages as a result of the failure by such Indemnitee to give the Borrower
such notice.  The Borrower shall be entitled, at its sole cost and expense, acting through a single counsel reasonably acceptable to
the respective Indemnitee, so long as the Borrower has acknowledged in writing its responsibility for such Expense hereunder (unless
such Expense is covered by the second paragraph of this Section 8(a), except that such acknowledgment does not apply if the decision
of a court or arbitrator provides that the Borrower is not liable hereunder), (A) in any judicial or administrative proceeding that
involves solely a claim for one or more Expenses, to assume responsibility for and control thereof, (B) in any judicial or
administrative proceeding involving a claim for one or more Expenses and other claims related or unrelated to the transactions
contemplated by the Operative Documents, to assume responsibility for and control of such claim for Expenses to the extent that the
same may be and is severed from such other claims (and such Indemnitee shall use its reasonable efforts to obtain such severance),
and (C) in any other case, to be consulted by such Indemnitee with respect to judicial proceedings subject to the control of such
Indemnitee and to be allowed, at the Borrower's sole expense, to participate therein.  The Indemnitee may participate at its own
expense and with its own counsel in any judicial proceeding controlled by the Borrower pursuant to the preceding provisions.
Notwithstanding any of the foregoing, the Borrower shall not be entitled to assume responsibility for and control of any such
judicial or administrative proceedings if any Event of Default shall have occurred and be continuing, if such proceedings will
involve a material risk of the sale, forfeiture or loss of an Aircraft unless the Borrower shall have posted a bond or other security
reasonably satisfactory to the relevant Indemnitee with respect to such risk or if such proceedings could entail any risk of criminal
liability being imposed on such Indemnitee.

                  The Indemnitee shall supply the Borrower with such information reasonably requested by the Borrower as is necessary
or advisable for the Borrower to control or participate in any proceeding to the extent permitted by this Section 8(a).  Such
Indemnitee shall not enter into a settlement or other compromise with respect to any Expense without the prior written consent of the
Borrower, which consent shall not be unreasonably withheld or delayed, unless such Indemnitee waives its right to be indemnified with
respect to such Expense under this Section 8(a).  In the case of any Expense indemnified by Borrower hereunder which is covered by a
policy of insurance maintained by Borrower, each Indemnitee agrees, at Borrower's expense, to cooperate reasonably with the insurers
in the exercise of their rights to investigate, defend or compromise such loss or liability as may be reasonably required to retain
the benefits of such insurance with respect to such loss or liability.

                  To the extent of any payment of any Expense pursuant to this Section 8(a), the Borrower, without any further action,
shall be subrogated to any claims the Indemnitee may have relating thereto.  The Indemnitee agrees to give such further assurances or
agreements and to cooperate with the Borrower to permit the Borrower to pursue such claims, if any, to the extent reasonably
requested by the Borrower.

                  In the event that the Borrower shall have paid an amount to an Indemnitee pursuant to this Section 8(a), and such
Indemnitee subsequently shall be reimbursed in respect of such indemnified amount from any other Person, such Indemnitee shall
promptly pay the Borrower the amount of such reimbursement, including interest received attributable thereto, provided that no
Special Default or Event of Default has occurred and is continuing.

(b)      General Tax Indemnity.
         ---------------------

(i)      Subject to the exclusions described in Section 8(b)(ii) below, any and all payments by the Borrower to the Administrative
     Agent, the Collateral Agent or the Lender (and, to the extent the Lender is a CP Conduit, such Lender's Program Support
     Providers) (each, a "Tax Indemnitee") under this Agreement or any of the other Operative Documents shall be made free and clear
     of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all
     liabilities with respect thereto, excluding taxes measured by or based on net or taxable income (all such non-excluded taxes,
     levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes").  If any Taxes shall
                                                                                                          -----
     be required by law to be deducted from or in respect of any sum payable under this Agreement to any Tax Indemnitee, then (i) the
     sum payable by the Borrower shall be increased as may be necessary so that after making all required deductions in respect of
     such Taxes (including deductions applicable to additional sums payable under this Section) such Tax Indemnitee (as the case may
     be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make
     such deductions, and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority
     in accordance with applicable law.  The Borrower shall not, however, be required to pay amounts, if any, pursuant to clause (i)
     of the preceding sentence to any Tax Indemnitee organized under the laws of a jurisdiction outside of the United States of
     America unless such Tax Indemnitee provides or has provided to the Borrower a completed Internal Revenue Service Form 4224 (or
     new Form W-8ECI) or Form 1001 (or new Form W-8BEN), or any successor form, and a completed Internal Revenue Service Form W-8 (or
     new Form W-8BEN) or W-9, or any successor form, and any other applicable form, certificate or document prescribed by the Internal
     Revenue Service of the United States certifying as to such Tax Indemnitee's entitled to an exemption from, or reduction of,
     United States withholding tax on payments to be made hereunder and any new or other forms or certificates prescribed by the
     Internal Revenue Service of the United States in the event that a lapse in time or change in circumstance renders a previous
     certification obsolete or inaccurate in any material respect.

                  The Borrower agrees to pay any present or future stamp, recording or documentary taxes or similar levies that arise
from any payment made under this Agreement or under any other Operative Document or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Operative Document (hereinafter referred to as "Other Taxes").
                                                                                                          -----------

                  The Borrower will indemnify each Tax Indemnitee for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section) paid by such Tax Indemnitee  and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted.  The Borrower shall pay any indemnification requested under this Section within 30
days from the date any Tax Indemnitee or  their respective agent (as the case may be) makes written demand therefor.

                  Within 30 days after the date of any payment of Taxes or Other Taxes, the Borrower will furnish to the relevant Tax
Indemnitee the original or a certified copy of a receipt or other documents reasonably acceptable to the relevant Tax Indemnitee
evidencing payment of such Taxes or Other Taxes.

                  If, as a result of an assignment under Section 23(c)(iii) below, a Person organized under the laws of a jurisdiction
outside of the United States becomes a Tax Indemnitee and payments to it to be made under this Agreement are exempt from United
States withholding tax, or are subject to such tax at a reduced rate under an applicable tax treaty, then such assignee shall provide
to the Borrower, promptly following the date that it became a Tax Indemnitee and from time to time thereafter, so long as it is
lawfully able to do so in its reasonable judgment, a properly completed and executed Internal Revenue Service Form 4224 (or new
Form W-8ECI) of Form 1001 (or new Form W-8BEN) or W-9, or any successor form, and any other applicable form, certificate document
prescribed by the Internal Revenue Service certifying as to such assignee's entitlement to such exemption or reduced rate with
respect to all payments to be made to such assignee under this Agreement and any new or other forms or certificates prescribed by the
Internal Revenue Service of the United States in the event that a lapse in time or change in circumstance renders a previous
certification obsolete or inaccurate in any material respect.  Unless the have received forms or other documents satisfactory to them
establishing that payments under this Agreement are not subject to United States withholding tax, or are subject to such tax at a
rate under an applicable tax treaty, the Borrower shall, subject to its obligations under Section 8(a), withhold taxes from such
payments at the applicable statutory rate in the case of payments to or for any Tax Indemnitee, if it is organized under the laws of
a jurisdiction outside the United States.

                  Within 30 days after written request from the Borrower the relevant Tax Indemnitee, as appropriate, shall execute
and deliver to the Borrower such certificates, forms or other documents which can be furnished consistent with the facts and which
are reasonably necessary to assist the Borrower in applying for refunds of Taxes indemnified by the Borrower under this Section.

                  Without prejudice to the survival of any other provision of this Agreement, the agreements and obligations of the
Borrower contained in this Section shall survive the repayment in full of the Loans.

(ii)     Exclusions.  In addition to any exclusions described in Section 8(b)(i) above, the foregoing tax indemnity shall not apply
         ----------
     to:

     Taxes imposed on a Tax Indemnitee resulting from such Tax Indemnitee not claiming any applicable exemption or rate reduction
                  under any applicable law or treaty (unless such Tax Indemnitee provides, at Borrower's expense, an opinion of
                  independent counsel, selected by such Tax Indemnitee and reasonably acceptable to Borrower, that there is no
                  reasonable basis for such claim; provided that, Borrower notifies such Tax Indemnitee in writing that any such
                                                   -------- ----
                  exemption is available and such Tax Indemnitee determines in good faith that neither it nor any Affiliate will be
                  adversely impacted by claiming any such applicable exemption);

                                            Taxes imposed on a Tax Indemnitee resulting from such Tax Indemnitee failing to comply
                  with certification, information, documentation, reporting or similar requirements concerning the nationality,
                  residence, identity or connection with the jurisdiction imposing such Taxes if such Tax Indemnitee was aware of the
                  requirement to comply and such Tax Indemnitee's compliance is required by applicable law or treaty as a precondition
                  to relief or exemption from such Taxes and such Tax Indemnitee was eligible for such relief or exemption, unless
                  such failure to comply was due to failure of Borrower timely to notify the Tax Indemnitee in writing of such
                  requirement or to provide reasonable assistance in complying with such requirement or the Tax Indemnitee determines
                  in good faith that either it or any Affiliate will be adversely impacted by so complying;

                                            Taxes imposed on a Tax Indemnitee resulting from the actual gross negligence (other than
                  gross negligence or willful misconduct imputed or attributed to such Tax Indemnitee by reason of its interest in any
                  Aircraft, Engine or Part) or willful misconduct of such Tax Indemnitee;

                                            Taxes imposed upon a Tax Indemnitee as a result of any transfer by such Tax Indemnitee of
                  any Aircraft, Engine or Part or the Lease or any other Operative Document or of such Tax Indemnitee's interest in
                  any thereof unless such transfer is requested by Borrower or occurs at a time when an Event of Default has occurred
                  and is continuing;

                                            Taxes imposed upon any Tax Indemnitee in its individual capacity based on or measured by
                  fees for services rendered under the Operative Documents; and

                                            Taxes imposed upon any Tax Indemnitee with respect to any period after (1) the
                  termination of the Mortgage, in accordance with the terms thereof and (2) payment of all amounts payable under the
                  Operative Documents having been made.

                                    (For purposes of this Agreement and the other Operative Documents, Taxes, other than those
                  exempted in Section 8(b)(i) or by virtue of clauses (A) through (F) above, are hereinafter referred to as
                  "Indemnified Taxes".)
                  ------------------

                                    In the event of a dispute between Borrower and any Tax Indemnitee regarding the applicability of
                  any of the exclusions described in Section 8(b)(i) or Section 8(b)(ii) or the amount of any Indemnified Taxes,
                  Borrower shall promptly pay to such Tax Indemnitee any amount of Tax claimed to be owed pursuant to Section 8(b)(i),
                  as the case may be.  Any payment made by Borrower pursuant to the immediately preceding sentence shall be refunded
                  by the relevant Tax Indemnitee if it subsequently is on a final and unconditional basis established that such amount
                  was not required to be paid under this Section 8(b)(i) or (b)(ii) hereof, as the case may be.

(iii)    Contest.  If a claim is made against any Tax Indemnitee for any Indemnified Taxes (a "Claim"), such Tax Indemnitee will, as
         -------
     promptly as practical after such tax Indemnitee has received written notification of such Claim, give Borrower written notice of
     such Claim; provided that, a failure to give such notice in a timely manner shall not preclude a Claim for indemnification
                 -------- ----
     hereunder.  If Borrower so requests in writing within thirty (30) calendar days after receipt of such notice, such Tax Indemnitee
     shall consult with Borrower to consider what action may be taken to resist payment of the relevant Indemnified Taxes and
     following such consultation such Tax Indemnitee may take any reasonable action in the name of such Tax Indemnitee to contest the
     Claim in the name of such Tax Indemnitee or, in such Tax Indemnitee's sole discretion, in the name of Borrower, to the extent
     permitted by law; provided that, the following conditions are met:
                       -------- ----

     such Tax Indemnitee shall have received adequate provision satisfactory to it for such Claim and any liability, expense or loss
                  arising out of or related to such contest (including without limitation indemnification for all costs, expenses,
                  losses, reasonable legal and accounting fees and disbursements, penalties and interest);

                                            the contest will not result in any danger of the sale, forfeiture or loss of, or the
                  creation of any Lien on, any Aircraft, any Engine, any Part, or any interest therein unless bonded in a manner and
                  amount acceptable to the Tax Indemnitees;

                                            if such contest shall be conducted in a manner requiring the payment of the Claim,
                  Borrower shall have paid such Claim to the extent required;

                                            no Default or Event of Default shall have occurred and be continuing;

                                            prior to commencing any administrative appeal, Borrower shall have acknowledged its
                  liability to such Tax Indemnitee hereunder for the contested amount;

                                            such Tax Indemnitee shall have received a legal opinion (at the expense of Borrower) from
                  counsel selected by such Tax Indemnitee (and reasonably satisfactory to Borrower) indicating that a reasonable basis
                  for such contest exists; and

                                            such Tax Indemnitee has not received, or does not receive, an opinion from its external
                  tax advisor concluding that the proposed actions to contest such Claim would trigger a significant possibility of
                  creating a local franchise issue of the Tax Indemnitee (e.g. adverse publicity or impairing of the Tax Indemnitee's
                  relationship with local regulators) or impairing the status of other open tax matters (e.g. tax audits) between such
                  Tax Indemnitee and the local taxing authorities.

                                    Notwithstanding the foregoing provisions of this Section 8(b)(iii), if at any time such Tax
                  Indemnitee waives its right of indemnification under this Section 8(b) in respect of a Claim, or if, after having
                  received payment of indemnification from Borrower hereunder in respect of such Claim, such Tax Indemnitee tenders
                  such payment to Borrower, then Borrower shall not be entitled to contest, or to continue to contest, any such Claim.

(iv)     If by reason of any Indemnified Taxes paid or otherwise indemnified against by the Borrower pursuant to this Section 8(b),
     any Tax Indemnitee at any time actually realizes a net reduction in any Taxes not indemnified against by the Borrower and not
     previously taken into account in computing the amount of any indemnity payable by the Borrower under this Section 8(b), such Tax
     Indemnitee shall, so long as no Default or Event of Default shall have occurred, promptly pay to the Borrower an amount that,
     after subtraction of any further Tax savings such Tax Indemnitee realizes as a result of the payment thereof, is equal to the
     amount of such net Tax reduction; provided that any subsequent loss of Tax benefit for which payment has been made to the
     Borrower under this Section 8(b)(iv) (or was taken into account in computing an amount payable by the Borrower under this Section
     8(b)) shall be treated as an indemnifiable Tax hereunder without regard to the exclusions set forth in Sections 8(b)(i) or
     8(b)(ii) hereof.

(c)      Interest.  The Borrower will pay to each Indemnitee on demand, to the extent permitted by applicable law, interest on any
         --------
     amount of indemnity not paid when due pursuant to this Section 8 until the same shall be paid, at the Past Due Rate.

Section 9         Covenants of the Borrower.
                  -------------------------

(a)      Borrower Merger.  For so long as the Mortgage remains in force, the Borrower shall not consolidate with or merge into or
         ---------------
     with any other Person, and not convey, transfer, lease or otherwise dispose of all or substantially all of its property and other
     assets to, or acquire all or any substantial part of the property or other assets or capital stock of (if such acquisition is
     analogous in either purpose or effect to a consolidation or merger), any other Person, unless:

(i)      Such transaction shall not have any material adverse effect on the rights of the Lender, the Administrative Agent or the
     Collateral Agent under or in respect of the Operative Documents or the Aircraft;

(ii)     The Person formed by or surviving such consolidation or merger or the Person which acquires by conveyance, transfer, lease
     or other disposition all or substantially all of such property and other assets or stock (the "Successor Entity"): (A) shall be a
     corporation organized and existing under the laws of the United Sates or any state thereof or the District of Columbia;
     (B) immediately after giving effect to such transaction, shall be the Borrower or shall have acquired or succeeded to all or
     substantially all of the property and other assets of the Borrower (if such assets are being transferred) as an entirety, and
     shall have a tangible net worth (determined in accordance with GAAP) of not less than the Borrower's tangible net worth
     (determined in accordance with GAAP) immediately prior to such transaction; (C) shall be a U.S. Air Carrier; and (D) shall
     execute and deliver to the Administrative Agent and Collateral Agent such recordations and filings with any Governmental
     Authority and such other documents as the Administrative Agent or Collateral Agent (at the direction of the Lender) determines
     shall be reasonably necessary or advisable to evidence, or in connection with, such consolidation, merger, sale, lease, transfer
     or other disposition and an agreement, in form and substance reasonably satisfactory to the Administrative Agent or Collateral
     Agent (at the direction of the Lender) which is a legal, valid, binding and enforceable assumption by such Successor Entity of
     the due and punctual performance and observance of each covenant and condition of the borrower under the Operative Documents to
     which the Borrower is a party, and an officer's certificate to such effect and to the effect that the other requirements of this
     Section have been satisfied, and a legal opinion from counsel to such effect and otherwise in such form and substance reasonably
     satisfactory to the Administrative Agent or Collateral Agent (at the direction of the Lender);

(iii)    Such Person shall have a credit rating of "B-" or its equivalent (as determined by S&P or Moody's, as applicable) or higher
     from S&P or the equivalent rating from Moody's; and

(iv)     No Default shall have occurred and be continuing or shall occur as a result thereof.

         Upon any consolidation or merger in accordance with this Section 9(a), the Successor Entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Borrower under this Agreement with the same effect as if such
Successor Entity had been named as the Borrower herein.

(b)      U.S. Air Carrier.  The Borrower covenants and agrees that at all times during the Term it will be an "air carrier" within
         ----------------
     the meaning of the Federal Aviation Act operating under certificates issued pursuant to Section 40102(a) of such Act and shall
     otherwise meet the standards of the definition of U.S. Air Carrier.

(c)      No Proceedings.  Each of the Borrower, the Administrative Agent, the Collateral Agent and the Lender each hereby agrees
         --------------
     that, from and after the date hereof and until the date one year plus one day following the date on which all Commercial Paper
     has been indefeasibly paid in full in cash, it will not, directly or indirectly, institute or cause to be instituted against the
     Lender or any CP Conduit that becomes a lender any proceeding of the type referred to in the definition of "Bankruptcy Event."
     This Section 9(c) shall survive termination of this Agreement.

(d)      Further Assurances.  The Borrower covenants and agrees with each party hereto as follows:
         ------------------

(i)      The Borrower will cause to be done, executed, acknowledged and delivered all and every such further acts, conveyances and
     assurances as the Lender shall reasonably require for accomplishing the purposes of this Agreement and the other Operative
     Documents; provided that any instrument or other document so executed by the Borrower will not expand any obligations or limit
     any rights of the Borrower in respect of the transactions contemplated by any Operative Documents.  The Borrower shall cause each
     Aircraft to remain duly registered, in the name of the Borrower, except as otherwise required or permitted hereunder or under the
     Mortgage, under the Federal Aviation Act.

(ii)     The Borrower, at its expense, will cause (A) the Mortgage, all Mortgage Supplements and all amendments to the Mortgage to be
     promptly filed and recorded, or filed for recording, to the extent permitted under the Federal Aviation Act, or required under
     any other applicable law and (B) the lien of the Mortgage to at all times be and remain a first priority and perfected Lien on
     the Mortgage Estate.  The Borrower agrees to furnish the Administrative Agent, the Collateral Agent and the Lender with copies of
     the foregoing documents with recording data as promptly as practicable following the issuance of same by the FAA.

(iii)    The Borrower shall pay all reasonable costs and expenses (including costs and disbursements of counsel) incurred by the
     Administrative Agent, the Collateral Agent and the Lender after the date hereof in connection with (x) any supplements or
     amendments of the Operative Documents (including, without limitation, any related recording costs) (other than any supplement or
     amendment associated with a transfer of any Note or the sale of participation interests therein not requested by Borrower),
     (y) any Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any
     restructuring or "work-out" (whether or not consummated), or (z) the enforcement of this Section 9.

(e)      Liens.  The Borrower will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to
         -----
     the Mortgage Estate, title thereto or any interest therein except (i) the rights of the Borrower as herein provided, the Lien of
     the Mortgage and any other rights existing pursuant to the Operative Documents, (ii) Liens for Taxes of the Borrower either not
     yet due or being contested in good faith by appropriate proceedings (and for which adequate reserves have been provided in
     accordance with generally accepted accounting principles), so long as the continuing existence of such Liens during such
     proceedings do not involve any material risk of the sale, forfeiture or loss of any Airframe or any Engine or any interest
     therein, (iii) mechanics', material suppliers', workers', repairers', employees' or other like Liens arising in the ordinary
     course of the Borrower's business for amounts that are not overdue or are being contested diligently and in good faith by
     appropriate proceedings (and for which adequate reserves have been provided in accordance with generally accepted accounting
     principles), so long as there is not, or the continuing existence of such Liens during such proceedings do not involve, any
     material risk of sale, forfeiture or loss of an Airframe or any Engine or any interest therein, (iv) Liens arising out of any
     judgment or award against the Borrower with respect to which an appeal or proceeding for review is being prosecuted diligently
     and in good faith, so long as such Liens do not result in a material risk of the sale, forfeiture or loss of any Airframe or any
     Engine or any interest therein, (v) the rights of others under agreements or arrangements to the extent expressly permitted by
     the terms of Sections 3.03, 4.02 and 4.04 of the Mortgage, (vi) customary salvage or similar rights of insurers under policies
     required to be maintained by the Borrower under Article VI of the Mortgage, (vii) any other Lien with respect to which the
     Borrower shall have provided a bond or other security in an amount and under terms reasonably satisfactory to the Administrative
     Agent and (viii) Lender Liens.  The Borrower will promptly, at its own expense, take (or cause to be taken) such actions as may
     be necessary duly to discharge any Lien not excepted above if the same shall arise at any time.

(f)      Inspection.  At reasonable times, the Administrative Agent or its authorized representatives on behalf of the Lender, may
         ----------
     inspect the Aircraft and FAA (or other applicable governmental authority) required books and records of the Borrower relating to
     the maintenance of the Aircraft (at the inspecting party's expense (other than in the case of an inspection occurring while an
     Event of Default has occurred and is continuing, in which case the Borrower shall bear the reasonable cost of such inspection))
     and shall keep any information obtained thereby confidential as provided in Section 21 hereof.  Any such inspection of an
     Aircraft shall be upon reasonable advance notice from such inspecting party to the Borrower, shall be during normal business
     hours and shall be a visual, walk-around inspection (including on-board inspection) and may include inspection of areas exposed
     by any open panels, bays or the like, but shall not include opening any panels, bays or the like without the express written
     consent of the Borrower; provided that, so long as no Event of Default shall have occurred and be continuing, no exercise of such
     inspection right shall interfere with the normal operation or maintenance of the Aircraft by, or the business of, the Borrower.
     The Administrative Agent shall have no duty to make any such inspection nor shall it incur any liability or obligation by reason
     of not making any such inspection.

(g)      Amendments, Supplements, Etc.  Forthwith upon the execution and delivery of each Mortgage Supplement from time to time
         -----------------------------
     required by the terms of the Mortgage and upon the execution and delivery of any amendment to the Mortgage or this Agreement, the
     Borrower will cause such Mortgage Supplement or amendment to be duly filed and recorded, and maintained of record, in accordance
     with the applicable laws of the government of registry of the Aircraft.  In addition, the Borrower will promptly and duly execute
     and deliver to the Lender, the Administrative Agent and the Collateral Agent (on behalf of the Lender) and the Ratings Agencies
     (as applicable) such further documents and take such further action as the Lender, the Administrative Agent or Collateral Agent
     (on behalf of the Lender) may from time to time reasonably request in order to more effectively carry out the intent and purpose
     of the Mortgage and to establish and protect the rights and remedies created or intended to be created in favor of the
     Administrative Agent, the Collateral Agent and the Lender hereunder and under the Mortgage, including, without limitation, if
     requested by the Administrative Agent or Collateral Agent, at the expense of Borrower, the execution and delivery of supplements
     or amendments hereto, each in recordable form, subjecting to the Mortgage any engine substituted for any Engine pursuant to the
     terms thereof and the recording or filing of counterparts hereof, in accordance with the laws of such jurisdiction as the
     Administrative Agent or Collateral Agent may reasonably request.

(h)      Access to or Furnishing of Information.  The Borrower agrees to furnish to the Administrative Agent (and the Administrative
         --------------------------------------
     Agent shall provide to the Lender):

(i)      as soon as available, but not later than 90 days after the close of each fiscal year of the Borrower occurring after the
     date hereof, an audited balance sheet and related statements of the Borrower at and as of the end of such fiscal year, together
     with an audited statement of income and cash flows of the Borrower for such fiscal year, each of which shall be prepared in
     accordance with GAAP and shall be accompanied by an unqualified opinion of a firm of independent public accountants of nationally
     recognized standing that said financial statements fairly present in all material respects the financial condition and results of
     operation of the Borrower as at the end of, and for, such period in accordance with GAAP;

(ii)     as soon as available, but not later than 60 days after the close of each of the first three quarters of each fiscal year of
     the Borrower, an unaudited balance sheet of the Borrower at and as of the end of such quarter, together with an unaudited
     statement of income and cash flows of the Borrower for such quarter, each of which shall be prepared in accordance with GAAP,
     certified by the Chief Financial Officer of the Borrower that said financial statements fairly present in all material respects
     the financial condition and results of operation of the Borrower as at the end of, and for, such period in accordance with GAAP
     (subject to normal year-end audit adjustments);

(iii)    on an annual basis, together with the financial statements delivered pursuant to the preceding paragraph (i), a certificate
     of the chief financial officer, Treasurer, any Vice President, or other officer of the Borrower elected by the Borrower's Board
     of Directors stating that such authorized officer has reviewed the activities of the Borrower and that, to the best knowledge of
     such authorized officer, there exists no Default or Event of Default hereunder;

(iv)     simultaneously with the mailing thereof to its shareholders, copies of all such financial statements, SEC Forms 10-K and
     10-Q reports, notices of proxy statements as the Borrower shall mail to its shareholders generally;

(v)      from time to time, such other information as the Administrative Agent, the Collateral Agent or the Lender may reasonably
     request; and

(vi)     promptly after the occurrence thereof and actual knowledge thereof by a responsible officer of the Borrower, notice to the
     Administrative Agent, Collateral Agent and Lender of any Default or Event of Default.

Section 10        The Notes.
                  ---------

(a)      Method of Payment.  Principal and interest and other amounts due hereunder or under the Notes or in respect hereof or
         -----------------
     thereof shall be payable in Dollars in immediately available funds prior to 11:00 a.m., New York, New York time, on the due date
     thereof, to the Administrative Agent at the Payment Office and the Administrative Agent shall, subject to the terms and
     conditions hereof and of the Mortgage, remit all such amounts so received by it to the Lender at the account set forth in
     Schedule I hereto as to such account or accounts at such financial institution or institutions as the Lender may designate to the
     Administrative Agent in writing from time to time, in immediately available funds for distribution to the Lenders, such payment
     to be made, in the case of any such designated account in New York, New York, prior to 1:00 p.m., New York time, on the due date
     thereof.  In the event the Borrower shall fail to make any such payment as provided in the immediately foregoing sentence after
     its receipt of funds at the place and prior to the time specified above, the Administrative Agent agrees to compensate the Lender
     for loss of use of funds in a commercially reasonable manner.  All such payments by the Borrower and the Administrative Agent
     shall be made free and clear of and without reduction on account of all wire and other like charges.  All amounts paid hereunder
     by Borrower shall be paid free of any taxes, levies, imposts, charges, duties or withholding of any kind, except for (i) taxes
     related to the income of the Lender, the Administrative Agent or the Collateral Agent and (ii) taxes incurred as a result of the
     gross negligence or willful misconduct of the Lender, the Administrative Agent or the Collateral Agent.  Prior to the due
     presentment for registration of transfer of any Note, the Borrower and the Administrative Agent may deem and treat the Person in
     whose name any Note is registered on the Note Register as the absolute owner of such Note for the purpose of receiving payment of
     all amounts payable with respect to such Note and for all other purposes whether or not such Note shall be overdue, and neither
     the Borrower nor the Administrative Agent shall be affected by any notice to the contrary.

(b)      Application of Payments.  Except as otherwise expressly provided herein, each payment of principal and interest or other
         -----------------------
     amounts due in respect of each Note shall be distributed to the Lender ratably, without priority of any one Note over any other
     Note, in the proportion that the amount of such payment or payments then due under each Note bears to the aggregate amount of the
     payments then due under all Notes.  Each such payment shall, except as otherwise expressly provided herein, be applied, first, to
                                                                                                                             -----
     the payment of any amount (other than the principal of or interest on such Note) due in respect of such Note, second, to the
                                                                                                                   ------
     payment of interest on such Note (as well as any interest on overdue principal and, to the extent permitted by law, interest and
     other amounts payable thereunder) due thereunder, third, to the payment of the principal of such Note then due and fourth, the
                                                       -----                                                            ------
     balance, if any, remaining thereafter, to the payment of the principal of such Note remaining unpaid (provided that such Note
     shall not be subject to prepayment without the consent of the Lender except as permitted by Sections 10(f) and 10(g) hereof).
     The amounts paid pursuant to clause fourth above shall be applied to the installments of principal of such Note in inverse order
                                         ------
     of maturity.

(c)      Registration, Transfer and Exchange of Notes.  The Administrative Agent agrees with the Borrower that the Administrative
         --------------------------------------------
     Agent shall keep a register (herein sometimes referred to as the "Note Register") in which provision shall be made for the
                                                                       -------------
     registration of Notes of each Series and the registration of transfers of Notes of such Series.  Prior to the due presentment for
     registration of the transfer of any Note, the Borrower and the Administrative Agent shall deem and treat the person in whose name
     such Note is registered on the Note Register as the absolute owner of such Note, and the Lender for the purpose of receiving
     payment of all amounts payable with respect to such Note, and for all other purposes whether or not such Note is overdue, and
     neither the Borrower nor the Administrative Agent shall be affected by notice to the contrary.  The Note Register shall be kept
     at the office of the Administrative Agent or at the office of any successor Administrative Agent, and the Administrative Agent is
     hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided.  Subject to
     Section 23(c) hereof, upon surrender for registration of transfer of any Note of any Series at the Payment Office and upon
     delivery by the Administrative Agent to the Borrower of such surrendered Note, the Borrower shall execute, and the Administrative
     Agent shall deliver, in the name of the designated transferee or transferees, one or more new Notes of a like aggregate principal
     amount and Series.  At the option of the Lender, its Notes of any Series may be exchanged for other Notes of such Series of any
     authorized denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged at the Payment
     Office.  Each new Note issued upon transfer or exchange shall be in a principal amount of at least $5,000,000 (except as may be
     necessary to evidence the entire outstanding principal amount of a Note) and dated the Delivery Date of the Aircraft of the
     related Series.  Whenever any Notes are so surrendered for exchange, the Borrower shall execute and deliver the Notes which the
     Lender making the exchange is entitled to receive.  All Notes issued upon any registration of transfer or exchange of Notes shall
     be the valid obligations of the Borrower evidencing the same respective obligations, and entitled to the same security and
     benefits under the Mortgage, as the Notes surrendered upon such registration of transfer or exchange.  Every Note presented or
     surrendered for registration of transfer or exchange, shall (if so required by the Administrative Agent) be duly endorsed, or be
     accompanied by a written instrument of transfer in form satisfactory to the Administrative Agent duly executed by the Lender or
     its attorney duly authorized in writing, and the Administrative Agent may require evidence satisfactory to it as to the
     compliance of any such transfer with the Securities Act and the securities laws of any applicable state.  The Administrative
     Agent shall make a notation on each new Note or Notes of the amount of all payments of principal previously made on the old Note
     or Notes with respect to which such new Note is issued and the date to which interest accrued on such old Note or Notes has been
     paid.  The Administrative Agent shall not be required to register the transfer of or exchange any surrendered Notes as above
     provided during the five calendar day period preceding the due date of any payment on such Notes.  The Administrative Agent shall
     give the Borrower and the Lender notice of each transfer of a Note under this Section 10(c).  Any such transferee of a Note, by
     its acceptance of a Note, agrees to the provisions of the Operative Documents applicable to the Lender, and shall be deemed to
     have covenanted to the parties to the Operative Documents as to the matters covenanted by the original Lender therein; provided
                                                                                                                            --------
     that no transferee of a Note shall be entitled to receive any greater amount pursuant to Section 10(h) of this Agreement than the
     transferor of such Note would have been entitled to receive had no such transfer occurred.

(d)      Mutilated, Destroyed, Lost or Stolen Notes.  If any Note shall become mutilated, destroyed, lost or stolen, the Borrower
         ------------------------------------------
     shall, upon the written request of the Lender, execute and deliver in replacement thereof, a new Note of a like Series, in the
     same principal amount, dated the date of such Note and designated as issued under the Mortgage.  If the Note being replaced has
     become mutilated, such Note shall be surrendered to the Administrative Agent and the original thereof shall be furnished to the
     Borrower by the Administrative Agent.  If the Note being replaced has been destroyed, lost or stolen, the Lender shall furnish to
     the Borrower and the Administrative Agent such security or indemnity as may be reasonably required by them to hold the Borrower
     and the Administrative Agent harmless and evidence satisfactory to the Borrower and the Administrative Agent of the destruction,
     loss or theft of such Note and of the ownership thereof; provided, however, that if the Lender is an original party hereto or an
                                                              --------  -------
     Affiliate thereof, the written notice of such destruction, loss or theft and such ownership and the written undertaking of the
     Lender delivered to the Borrower and the Administrative Agent to hold harmless the Borrower and the Administrative Agent in
     respect of the execution and delivery of such new Note shall be sufficient evidence, security and indemnity.

(e)      Payment of Expenses on Transfer.  Upon the issuance of a new Note or new Notes pursuant to Sections 10(c) or (d), the
         -------------------------------
     Borrower and/or the Administrative Agent may require from the party requesting such new Note or Notes payment of a sum sufficient
     to reimburse the Borrower and/or the Administrative Agent for, or to provide funds for, the payment of any tax or other
     governmental charge in connection therewith or any charges and expenses connected with such tax or other governmental charge paid
     or payable by the Borrower or the Administrative Agent.

(f)      Prepayment.  (i)  (i)      On at least five Business Days' prior written notice, the Borrower may prepay on the date
         ----------
     specified in its notice of prepayment delivered pursuant to this Section 10(f) in whole, or in part, the Notes of any Series then
     outstanding at the principal amount thereof (or portion thereof to be repaid), together with accrued interest thereon to the date
     of prepayment plus all Break Amount and Swap Breakage Amount and Additional Costs, if any, and all other amounts due to the
     Lender hereunder, thereunder and under the other Operative Documents; provided that any partial prepayment shall be in an
     aggregate original principal amount of at least $5,000,000 and in $1,000,000 multiples thereof, and the amount thereof shall be
     specified in such written notice.  The Administrative Agent will give prompt notice to the Lender of the Borrower's intent to
     prepay any Note.

(ii)     On at least five Business Days' prior written notice, the Borrower shall prepay on the date specified in its notice of
     prepayment delivered pursuant to this Section 10(f) the Notes of any Series in full, but not in part, together with accrued
     interest thereon to the date of prepayment plus all Break Amount and Swap Breakage Amount and Additional Costs, if any, and all
     other amounts due thereunder and hereunder and under the other Operative Documents to the Lender upon the occurrence of an Event
     of Loss with respect to the related Airframe; such prepayment shall, in any event, be no later than the last day permitted for
     such payment under Section 5.01 of the Mortgage.  The Administrative Agent will give notice of prepayment to the Lender under
     this Section 10(f)(ii) promptly.

(iii)    Any notice of prepayment delivered pursuant to paragraph (i) or (ii) above shall be irrevocable if not revoked within five
     Business Days of the specified date of payment and shall identify the amount to be prepaid and the Series of Notes subject to
     prepayment.

(g)      Provisions Relating to Prepayment.  (i)  (i)         Notice of prepayment having been given and not revoked as aforesaid, the
         ---------------------------------
     principal amount of the Notes so to be prepaid, plus accrued interest thereon to the date of prepayment, together with the Swap
     Breakage Amount and Break Amount and Additional Costs, if any, herein provided, shall become due and payable on the prepayment
     date.

(ii)     On the date fixed for prepayment under Section 10(f), immediately available funds in Dollars shall be deposited by the
     Borrower in the account of the Administrative Agent at the place and by the time and otherwise in the manner provided in
     Section 10(a), in an amount equal to the principal amount of Notes to be prepaid together with accrued and unpaid interest
     thereon to the date fixed for such prepayment, all Swap Breakage Amount and Break Amount and Additional Costs, if any, and all
     other amounts due to the Lender hereunder, thereunder and under the other Operative Documents.

(iii)    The Lender shall furnish to the Borrower, with a copy to the Administrative Agent, a certificate setting forth in reasonable
     detail the calculation of the amounts of Swap Breakage Amount and Break Amount due to the Lender, which certificate shall be
     presumptively correct absent manifest error.

(h)      Increased Costs.  (i)  (i) The Borrower shall pay to the Administrative Agent for the account of the Lender from time to time
         ---------------
     such amounts as the Lender (or its agent) may determine to be necessary to compensate the Lender for any increase in actual costs
     that the Lender determines are attributable to its making, funding or maintaining its Commitment or the Loans or any reduction in
     any amount receivable by the Lender hereunder in respect of any of its Commitments or the Loans (including, without limitation,
     any such increases or reductions attributable to any CP Program or other funding arrangement utilized by the Lender in funding
     the Loans) (such increases in costs and reductions in amounts receivable being herein called "Additional Costs"), resulting from
     any Regulatory Change that:

     imposes any tax that is the functional equivalent of any reserve, special deposit or similar requirement of the sort covered by
                  clause (ii) below; or

                                            imposes or modifies any reserve, special deposit or similar requirements (including any
                  Reserve Requirement) relating to any extensions of credit or other assets of, or any deposits with or other
                  liabilities of, the Lender (including, without limitation, any of such loans or any deposits referred to in the
                  definition of "LIBOR" in Section 1.01 of the Mortgage), or any such obligations; or

                                            imposes any other condition affecting the Mortgage, or its Notes (or any of such
                  extensions of credit or liabilities) or any such obligation.

(ii)     Without limiting the effect of the foregoing provisions of this Section 10(h) (but without duplication), the Borrower shall
     pay to the Administrative Agent for the account of the Lender from time to time on request such amount as the Lender may
     determine to be necessary to compensate the Lender (or, without duplication, the holding company of which the Lender is a
     subsidiary) for any increase in actual costs that it determines are attributable to the maintenance by the Lender (or any lending
     office or such holding company) of its Commitment hereunder, resulting from the implementation of any risk-based capital
     guideline, reserve requirement or other similar requirement hereafter issued by any Governmental Authority pursuant to any law or
     regulation or any interpretation, directive or request (whether or not having the force of law and whether or not failure to
     comply therewith would be unlawful so long as compliance therewith is standard banking practice in the relevant jurisdiction)
     (including, without limitation, implementing at the national level the Basel Accord), the effect of which would be to reduce the
     return on investment of capital in respect of its Commitments or Loans, including, without limitation, any such reduction
     attributable to any CP Program or other funding arrangements utilized by the Lender in connection with the Loans or funding
     arrangements utilized in connection with the Loans; such compensation shall include, without limitation, an amount equal to any
     reduction of the rate of return on assets or equity of the Lender (or any lending office or such bank holding company) could have
     achieved but for such law, regulation, interpretation, directive or request.  For purposes of this Section 10(h)(ii), "Basel
     Accord" shall mean the "New Basel Capital Accord" issued by the Basel Committee of Banking Supervision on January 16, 2001, as
     amended.

(iii)    The Lender (or the Administrative Agent on its behalf) shall notify the Borrower of any event occurring after the date
     hereof entitling the Lender to compensation under paragraph (i) or (ii) of this Section 10(h) as promptly as practicable, but in
     any event within 60 days, after the Lender obtains actual knowledge thereof; provided that (A) the Lender shall, with respect to
                                                                                  --------
     compensation payable pursuant to this Section 10(h) in respect of any Additional Costs resulting from such event, only be
     entitled to payment under this Section 10(h) for Additional Costs incurred from and after the date that is 60 days prior to the
     date the Lender (or the Administrative Agent or Collateral Agent on its behalf) does give such notice and (B) the Lender will use
     commercially reasonable efforts (at the Borrower's expense) to mitigate the amount of the Additional Costs associated with such
     event, including designating a different lending office for the Notes of the Lender affected by such event if such designation
     will avoid the need for, or reduce the amount of, such compensation and will not, in the sole opinion of the Lender, result in
     any economic, legal or regulatory disadvantage to the Lender (other than economic disadvantages for which the Borrower agrees to
     indemnify the Lender and which indemnity is acceptable to the Lender in its discretion acting reasonably based on its credit
     assessment of the Borrower).  The Lender (or the Administrative Agent or Collateral Agent on its behalf) will furnish to the
     Borrower an officer's certificate setting forth in reasonable detail (x) the events giving rise to such Additional Costs, (y) the
     basis for determining and allocating such Additional Costs and (z) the amount of each request by the Lender for compensation
     under paragraph (i) or (ii) of this Section 10(h) (subject, however, to any limitations the Lender may require in respect of
     disclosure of confidential information relating to its capital structure), together with a statement that the determinations and
     allocations made in respect of the Additional Costs comply with the provisions of this Section 10(h), including as provided in
     the last proviso of this paragraph (iii).  Determinations and allocations by the Lender for purposes of this Section 10(h) of the
     effect of any Regulatory Change pursuant to paragraph (i) of this Section 10(h), or of the effect of capital maintained pursuant
     to paragraph (ii) of this Section 10(h), on its costs or rate of return of maintaining Notes or its funding, or on amounts
     receivable by it in respect of Notes, and of the amounts required to compensate the Lender under this Section 10(h), shall be
     conclusive absent manifest error, provided that such determinations and allocations are made on a reasonable basis and, in the
                                       --------
     case of allocations, are made fairly.

(iv)     If the Lender gives notice of a claim against the Borrower under this Section 10(h), the Borrower shall have the right
     (i) to require the Lender to sell its Notes to an institution designated by the Borrower in compliance with Section 23(c)(iii) of
     this Agreement for an amount equal to the outstanding principal amount thereof plus accrued interest thereon to the date of sale,
     together with the Swap Breakage Amount and Break Amount, if any, or (ii) to prepay the outstanding principal amount of Notes held
     by the Lender, together with accrued interest to the date of such prepayment and the Swap Breakage Amount and Break Amount, if
     any.

(v)      The Borrower shall not be required to make payments under this Section 10(h) to the Lender if (A) a claim hereunder arises
     solely through circumstances peculiar to the Lender and which do not affect commercial lenders similar to the Lender or CP
     Conduits, as applicable, in the United States generally or (B) the claim arises out of a voluntary relocation by the Lender of
     its lending office (it being understood that any such relocation effected pursuant to Section 10(h)(iii)(B) is not "voluntary"),
     or (C) the Lender is required by the Borrower pursuant to Section 10(h)(iv) above to sell its Notes to a purchaser designated by
     the Borrower and fails to do so.

Section 11        Events Of Default; Certain Rights of Administrative Agent.
                  ---------------------------------------------------------

(a)      Each of the following events shall constitute an Event of Default (whether any such event shall be voluntary or involuntary
     or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court
     or any order, rule or regulation of any administrative or governmental body):

(i)      The Borrower shall have failed to make a payment of any principal or interest due on any Note within two Business Days after
     the same shall have become due; or

(ii)     The Borrower shall have failed to make any payment of any amount other than principal and interest on the Loan after the
     same shall have become due and such failure shall continue for ten Business Days after the Borrower's receipt of written demand
     therefore by the party entitled thereto or the Lender or its agents; or

(iii)    The Borrower shall fail to procure and maintain (or cause to be procured and maintained), with respect to the Aircraft,
     insurance required to be maintained in accordance with the provisions of Article VI of the Mortgage or such insurance shall lapse
     or be canceled; or

(iv)     The Borrower shall have failed to perform or observe, or caused to be performed and observed, any other covenant or
     agreement to be performed or observed by it under any Operative Document, and such failure shall continue unremedied for a period
     of thirty (30) days after the Borrower's receipt of written notice thereof from the Administrative Agent or the Lender or the
     Collateral Agent; or

(v)      Any representation or warranty made by the Borrower in any Operative Document or any document or certificate furnished by
     the Borrower in connection therewith or pursuant thereto shall prove to have been incorrect in any respect that is materially
     adverse to the Lender, Administrative Agent or the Collateral Agent or the Lender in such party's reasonable judgment at the time
     made and shall remain material; or

(vi)     The commencement by the Borrower of a voluntary case under the federal bankruptcy laws, as now constituted or hereafter
     amended, or any other applicable federal or state bankruptcy, insolvency or other similar law in the United States, or the
     consent by the Borrower to the appointment of or taking possession by a receiver, liquidator, trustee, custodian, sequestrator
     (or other similar official) of the Borrower or for all or substantially all of its property, or the making by the Borrower of any
     assignment for the benefit of creditors or the Borrower shall take any corporate action to authorize any of the foregoing or to
     authorize a general payment moratorium; or

(vii)    The commencement of an involuntary case or other proceeding in respect of the Borrower in an involuntary case under the
     federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or
     other similar law in the United States or seeking the appointment of a receiver liquidator, custodian, trustee, sequestrator (or
     similar official) of the Borrower or for all or substantially all of its property, or seeking the winding-up or liquidation of
     its affairs and the continuation of any such case or other proceeding remains undismissed and unstayed for a period of sixty (60)
     consecutive days, or an order, judgment or decree shall be entered in any proceeding by any court of competent jurisdiction
     appointing, without the consent of the Borrower, a receiver, trustee or liquidator of the Borrower, or for all or substantially
     all of its property, or sequestering of all or substantially all of the property of the Borrower and any such order, judgment or
     decree or appointment or sequestration shall be final or shall remain in force undismissed, unstayed or unvacated for a period of
     sixty (60) consecutive days after the date of entry thereof; or

(viii)   The Borrower fails or ceases to be a U.S. Air Carrier or shall have been suspended as a U.S. Air Carrier or shall otherwise
     no longer have all applicable licenses (or such licenses shall be suspended) necessary to operate as a commercial airline; or

(ix)     Immediately upon such time as the Mortgage ceases to create a valid, perfected first priority mortgage on any Airframe or
     Engine in favor of the Collateral Agent on behalf of the Lender for any reason other than the failure of the Lender to cause
     continuation statements to be filed to the extent required by the Uniform Commercial Code or the filing by or on behalf of the
     Lender of a termination statement releasing such Airframe or Engine from the Lien of the Mortgage.

(b)      Certain Rights of Administrative Agent.
         --------------------------------------

(i)      In anticipation of receipt from Borrower of payment of sums due and owing hereunder or under any Operative Document, the
     Administrative Agent shall have the option, but shall not be obligated to, advance to the Lender on any Interest Payment Date, as
     provided in Section 10(a) hereof, an amount equal to that required to be paid to the Lender by the Borrower on such Interest
     Payment Date.

(ii)     The Administrative Agent shall not, as a result of exercising its option to make the advance described in Section 11(b)(i)
     above, obtain any Lien on the Mortgage Estate for or on account of costs or expenses incurred in connection with the exercise of
     such right, nor shall any claim of the Administrative Agent against the Borrower or any other party for the repayment of such
     costs or expenses impair the prior right and security interest of the Collateral Agent (on behalf of the Lender) in and to the
     Mortgage Estate.  Upon any advance by the Administrative Agent to the Lender as provided in Section 11(b)(i), the Administrative
     Agent shall be subrogated to the rights of the Lender in respect of any late payment made by Borrower and interest at the Past
     Due Rate payable by the Borrower on account of its being overdue (but shall have no rights as a secured party hereunder), and
     thereafter, the Administrative Agent shall be entitled to receive such overdue payment and such interest; provided, that the
     Administrative Agent shall not be entitled to seek recovery of any such advance (or any payment in lieu thereof) except pursuant
     to the foregoing right of subrogation.

Section 12        Remedies.
                  --------

(a)      General; Acceleration.  (i)  (i)   If an Event of Default shall have occurred and be continuing and so long as the same
         ---------------------
     shall be continuing, then and in every such case, the Lender may exercise any or all of the rights and powers and pursue any and
     all of the remedies pursuant to this Section 12 and shall have and in addition, may exercise all of the rights and remedies of a
     secured party under the Uniform Commercial Code.

(ii)     If an Event of Default referred to in Sections 11(f) or 11(g) shall have occurred, then and in every such case the unpaid
     principal of all Notes then outstanding, together with interest accrued but unpaid thereon, and all other amounts due to the
     Lender thereunder and hereunder and under the other Operative Documents, shall, unless the Administrative Agent, acting upon the
     instructions of the Lender shall otherwise direct, immediately and without further act become due and payable, without
     presentment, demand, protest or notice, all of which are hereby waived.

(iii)    If any other Event of Default shall have occurred and be continuing, then and in every such case, the Lender may at any
     time, by written notice or notices to the Borrower, declare all the Notes to be due and payable, whereupon the unpaid principal
     of all Notes then outstanding, together with interest accrued but unpaid thereon, and all other amounts due to the Lender
     thereunder, hereunder and under the other Operative Documents, shall immediately and without further act become due and payable
     without presentment, demand, protest or other notice, all of which are hereby waived.

(iv)     If the principal of the Notes shall have become due and payable pursuant to this Section 12(a), there shall also become due
     and payable, to the fullest extent permitted by law, to the Lender upon demand, without presentment, protest or notice, all of
     which are hereby waived, the Break Amount, Swap Breakage Amount and Additional Costs (if any) therefor.

(v)      The Lender shall be entitled, at any sale pursuant to this Section 12, to credit against any purchase price bid at such sale
     by the Lender all or any part of the unpaid obligations owing to the Lender and secured by the Lien of the Mortgage.  The
     Collateral Agent and the Lender shall, upon any such purchase, acquire good title to the property so purchased, to the extent
     permitted by applicable law, free of all rights of redemption.

(vi)     The Lender agrees to give to the Borrower at least ten days' prior written revocable notice of any foreclosure of the Lien
     of the Mortgage, or of any other action to cause the Borrower to lose its title in an Aircraft (which period of notice the
     parties hereto confirm is commercially reasonable).

(b)      Repossession and Sale.  At any time during the continuation of an Event of Default, the Collateral Agent, as directed by the
         ---------------------
     Lender, or the Administrative Agent on its behalf, in addition to any rights it might otherwise have at law, may do either or
     both of the following:

(i)      Upon the written demand of the Collateral Agent, and at the Borrower's expense, cause the Borrower to return promptly, and
     the Borrower shall return promptly, all or any part of any Aircraft as the Collateral Agent may so demand, to the Collateral
     Agent at a major airport on the Borrower's route system in one of the forty eight (48) contiguous states of the United States of
     America chosen by the Collateral Agent in the manner and condition required by Section 3.01 of the Mortgage, or, alternatively,
     the Collateral Agent at its option, may, to the extent permitted by law, peaceably enter upon the premises where all or any part
     of an Aircraft is located and take immediate possession of and remove the same by summary proceedings or otherwise (and, at the
     Collateral Agent's option store the same at the Borrower's premises until disposal thereof by the Collateral Agent), all without
     liability accruing to the Collateral Agent for or by reason of such entry or taking of possession or removal so long as the
     Collateral Agent has acted in accordance with the provisions of the Mortgage; provided that during any period an Aircraft is
                                                                                   -------- ----
     activated under CRAF in accordance with the provisions of Section 3.03 of the Mortgage and in the possession of the government of
     the United States of America or an instrumentality or agency thereof, the Collateral Agent shall not, on account of any Event of
     Default, be entitled to do any of the following in such manner as to limit the Borrower's control under the Mortgage of the
     associated Airframe or any Engines installed thereon, unless at least sixty (60) days' (or such lesser period as may then be
     applicable under the Military Airlift Command program of the government of the United States of America) prior written notice of
     default hereunder shall have been given by the Collateral Agent by registered or certified mail to the Borrower with a copy
     addressed to the Contracting Office Representative for the Military Airlift Command of the United States Air Force under the
     contract with the Borrower relating to such Aircraft; or

(ii)     with or without taking possession thereof, sell all or any part of any Aircraft at public or private sale, as the Collateral
     Agent may determine, or otherwise dispose of, hold, use, operate or lease to others, as the Administrative Agent, in its sole
     discretion, may determine, all free and clear of any rights of the Borrower, except as hereinafter set forth in this Section 12.

                  In addition, the Borrower shall be liable, except as otherwise provided above and without duplication of amounts
payable hereunder, for any and all reasonable and actual legal fees and other costs and expenses incurred by the Collateral Agent,
the Administrative Agent and the Lender in connection with the enforcement of any of their respective rights and remedies hereunder.

                  At any sale of an Aircraft or any part thereof pursuant to this Section 12, the Collateral Agent, at the Lender's
direction, or the Administrative Agent on the Lender's behalf, may bid for and purchase such property.  The Collateral Agent, at the
Lender's direction, or the Administrative Agent on the Lender's behalf, agrees to give the Borrower at least ten days' written notice
of the date fixed for any public sale of any Airframe or any Engine or of the date on or after which will occur the execution of any
contract providing for any private sale (together with details thereof).  Except as otherwise expressly provided above, no remedy
referred to in this Section 12 is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred
to above or otherwise available to the Collateral Agent at law or in equity; and the exercise or beginning of exercise by the
Collateral Agent of any one (1) or  more of such remedies shall not preclude the simultaneous or later exercise by the Collateral
Agent of any or all of such other remedies.  No express or implied waiver by the Collateral Agent of any Event of Default shall in
any way be, or be construed to be, a waiver of any future or subsequent Event of Default.

(c)      Taking of Aircraft.  (i)  (i)      If an Event of Default shall have occurred and be continuing, at the request of the
         ------------------
     Collateral Agent, at the direction of the Lender (or the Administrative Agent on its behalf), the Borrower shall promptly execute
     and deliver to the Collateral Agent such instruments of title and other documents as the Collateral Agent, at the direction of
     the Lender (or the Administrative Agent on its behalf), may deem necessary or advisable to enable the Collateral Agent or an
     agent or representative designated by the Collateral Agent, at such time or times and place or places as the Collateral Agent may
     specify, to obtain possession of all or any part of the Mortgage Estate to which the Collateral Agent, at the direction of the
     Lender (or the Administrative Agent on its behalf), shall at the time be entitled hereunder.  If the Borrower shall for any
     reason fail to execute and deliver such instruments and documents after such request by the Collateral Agent, the Collateral
     Agent, at the direction of the Lender (or the Administrative Agent on its behalf), may (A) obtain a judgment conferring on the
     Collateral Agent the right to immediate possession and requiring the Borrower to execute and deliver such instruments and
     documents to (or as delivered by) the Collateral Agent, to the entry of which judgment the Borrower hereby specifically consents,
     and (B) pursue all or part of the Mortgage Estate wherever such Mortgage Estate may be found and may peaceably enter any of the
     premises of the Borrower wherever it may be or be supposed to be and search for and take possession of and remove the same.  All
     expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the
     Lien of the Mortgage.

(ii)     Upon every such taking of possession, the Collateral Agent, at the direction of the Lender (or the Administrative Agent on
     its behalf), may, from time to time, at the expense of the Mortgage Estate, make all such expenditures for maintenance,
     insurance, repairs, replacements, alterations, additions and improvements to and of the Mortgage Estate, as it may deem proper.
     In each such case, the Collateral Agent shall have the right to maintain, use, operate, store, lease, control or manage the
     Mortgage Estate and to carry on the business and to exercise all rights and powers of the Borrower relating to the Mortgage
     Estate, as the Collateral Agent, at the direction of the Lender (or the Administrative Agent on its behalf), shall deem best,
     including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation,
     storage, leasing, control, management or disposition of the Mortgage Estate or any part thereof as the Collateral Agent, at the
     direction of the Lender (or the Administrative Agent on its behalf), may determine; and the Collateral Agent shall be entitled to
     collect and receive directly all tolls, rents, revenues, issues, income, products and profits of the Mortgage Estate and every
     part thereof.  Such tolls, rents, revenues, issues, income, products and profits shall be applied to pay the expenses of the use,
     operation, storage, leasing, control, management or disposition of the Mortgage Estate and of conducting the business thereof,
     and of all maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments which the
     Collateral Agent may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the
     Mortgage Estate or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports
     upon the properties and books and records of the Borrower), and all other payments which the Collateral Agent may be required or
     authorized to make under any provision of the Mortgage, as well as just and reasonable compensation for the services of the
     Collateral Agent pursuant to this Section 9.03(b), and of all persons properly engaged and employed by the Collateral Agent.

(d)      Discontinuance of Proceedings.  In case the Collateral Agent, at the direction of the Lender (or the Administrative Agent on
         -----------------------------
     its behalf), or the Administrative Agent on behalf of the Lender shall have instituted any proceeding to enforce any right, power
     or remedy under the Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned
     for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case, the Collateral Agent
     and the Borrower shall, subject to any determination in such proceedings, be restored to their former positions and rights
     hereunder with respect to the Mortgage Estate, and all rights, remedies and powers of the Collateral Agent shall continue as if
     no such proceedings had been instituted.

(e)      Waiver of Past Defaults.  The Administrative Agent, upon written instructions from the Lender, shall waive any past Default
         -----------------------
     or Event of Default hereunder and its consequences and upon any such waiver such Default or Event of Default shall cease to exist
     and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Agreement, but no such
     waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

(f)      Remedies Cumulative.  Each and every right, power and remedy given to the Collateral Agent, the Administrative Agent or the
         -------------------
     Lender specifically or otherwise herein shall be cumulative and shall be in addition to every other right, power and remedy
     herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and
     remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order
     as may be deemed expedient by the Collateral Agent, the Administrative Agent or the Lender and the exercise or the beginning of
     the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter
     any other right, power or remedy.  No delay or omission by the Collateral Agent, the Administrative Agent or the Lender in the
     exercise of any right, remedy or power or in the pursuit of any remedy shall impair any such right, power or remedy or be
     construed to be a waiver of any default on the part of the Borrower or to be an acquiescence therein.

(g)      Payment After Event of Default, etc.  All payments received and amounts held or realized by the Collateral Agent or the
         ------------------------------------
     Administrative Agent after an Event of Default shall have occurred and so long as such Event of Default shall be continuing, and
     after the Notes shall have been accelerated pursuant to Section 12(a) hereof or after the Lender, the Administrative Agent or the
     Collateral Agent shall foreclose or enforce the Mortgage or after the Notes shall have become due and payable as provided in
     Section 12(a)(ii) or (iii), as well as all payments or amounts then held by the Administrative Agent as part of the Mortgage
     Estate, shall be promptly distributed by the Administrative Agent in the following order of priority:

                  first, so much of such payments or amounts as shall be required to reimburse the Collateral Agent, Administrative
                  -----
         Agent or the Lender for any tax, expense, charge or other loss (including, without limitation, all amounts to be expended at
         the expense of, or charged upon the tolls, rents, revenues, issues, income, products and profits of, the property included
         in the Mortgage Estate pursuant to Section 12(c)(ii)) incurred by the Collateral Agent, the Administrative Agent or the
         Lender (to the extent not previously reimbursed) (including, without limitation, the expenses of any sale, taking or other
         proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or
         advances made by the Collateral Agent, in the protection, exercise or enforcement of any right, power or remedy or any
         damages sustained by the Collateral Agent, liquidated or otherwise, upon such Event of Default) shall be applied by the
         Administrative Agent in reimbursement of such expenses;

                  second, so much of such payments or amounts remaining as shall be required to pay in full to the Lender all other
                  ------
         amounts payable pursuant to the indemnification provisions hereof or pursuant to any other provision of any Operative
         Document and secured hereunder (other than amounts payable pursuant to clause "fourth" of this Section 12(g)) to the Lender
                                                                                        ------
         and remaining unpaid, including Break Amount and Swap Breakage Amount and Additional Costs, shall be distributed to such
         Persons, and if the aggregate amount remaining shall be insufficient to pay all such amounts in full, it shall be
         distributed ratably, without priority of such person over any other;

                  third, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid
                  -----
         principal amount of and all accrued but unpaid interest to the date of distribution on, the Notes shall be distributed to
         the Lender, and if the aggregate amount remaining shall be insufficient to pay all such amounts in full, it shall be
         distributed ratably, without priority of any such person over any other, in the proportion that the principal amount of and
         all accrued but unpaid interest to the date of distribution on, each Note bears to the aggregate principal amount of and all
         accrued but unpaid interest to the date of distribution on all Notes; and

                  fourth, the balance, if any, of such payments or amount remaining thereafter shall be distributed to the Borrower or
                  ------
         as a court of competent jurisdiction shall direct.

Section 13        Replacement Engines.
                  -------------------

(a)      Replacement Engines.  At any time and from time to time, any Engine which has been (or is to be treated as if the same had
         -------------------
     been) subject to an Event of Loss and may be replaced under Section 5.02 of the Mortgage by a Replacement Engine shall be
     replaced in accordance with the provisions of this Section 13(a) and the Borrower shall, from time to time, direct the Collateral
     Agent to execute and deliver to or as directed in writing by an appropriate instrument releasing such Engine from the Lien of the
     Mortgage, the Administrative Agent on behalf of the Lender shall execute and deliver such instrument as aforesaid, but only upon
     receipt by or deposit with the Administrative Agent of the following:

(i)      A written request from the Borrower, requesting such release and specifically describing the Engine(s) so to be released.

(ii)     A certificate signed by a duly authorized officer of the Borrower stating the following with respect to the replacement of
     any Engine:

     the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then
                  fair market value of the Engine requested to be released, assuming such Engine was in the condition and repair
                  required to be maintained (but without regard to hours and cycles until overhaul));

                                            the fair market value of the Engine to be released (immediately prior to the date such
                  Engine suffered an Event of Loss);

                                            that the release of the Engine so to be released will not impair the security of the
                  Mortgage or be in contravention of any of the provisions of the Mortgage; and

                                            that each of the conditions specified in Section 5.02 of the Mortgage with respect to
                  such Replacement Engine have been satisfied.

(b)      Mortgage Supplements for Replacements.  In the event of a Replacement Engine being substituted as contemplated by
         -------------------------------------
     Section 5.02 of the Mortgage, the Borrower, the Collateral Agent and the Administrative Agent agree for the benefit of the
     Lenders, subject to fulfillment of the conditions precedent and compliance by the Borrower with its obligations set forth in
     Section 5.02 of the Mortgage and the requirements of Section 13(a) with respect to such Replacement Engine, to execute and
     deliver a Mortgage Supplement with respect thereto as contemplated by Section 5.02 of the Mortgage, and, provided no Default or
     Event of Default in each case under Section 11 hereof shall have occurred and be continuing, to execute and deliver to the
     Borrower an appropriate instrument releasing the Engine being replaced from the Lien of the Mortgage (which may be the Mortgage
     Supplement that adds the Replacement Engine to the Mortgage).

(c)      Effect of Replacement.  In the event of the substitution of a Replacement Engine pursuant to Section 5.02 of the Mortgage
         ---------------------
     and Section 13(a) hereof, all provisions of this Agreement and the Mortgage relating to an Engine or Engines being replaced shall
     be applicable to such Replacement Engine or Engines with the same force and effect as if such Replacement Engine or Engines were
     the same engine or engines as the Engine or Engines being replaced but for the Event of Loss with respect to an Engine or Engines
     being replaced.

Section 14        The Agents.
                  ----------

(a)      Appointment, Powers and Immunities.  The Lender hereby appoints and authorizes PK AirFinance S.A., New York Branch ("PK") to
         ----------------------------------                                                                                   --
     act as its Administrative Agent hereunder and under the other Operative Documents, and GE Capital to act as its Collateral Agent
     hereunder and under the other Operative Documents, with such powers as are specifically delegated to the Administrative Agent and
     Collateral Agent, respectively, by the terms of this Agreement and of the other Operative Documents, together with such other
     powers as are reasonably incidental thereto.  The Administrative Agent and Collateral Agent shall be referred to collectively as
     the "Agents" for purposes of this Article.  The Agents shall take all actions delegated to them (respectively) hereunder as an
     agent solely for the benefit of the Lender.  The Agents (which term as used in this sentence and in Section 14(c) and the first
     sentence of Section 14(f) hereof shall include reference to their Affiliates and their own and their Affiliates' officers,
     directors, employees and agents, or either of them):  (i) shall have no duties or responsibilities except those expressly set
     forth in this Agreement and in the other Operative Documents, and shall not by reason of this Agreement or any other Operative
     Document be a trustee for the Lender; (ii) shall not be responsible to the Lender for any recitals, statements, representations
     or warranties contained in this Agreement or in any other Operative Document, or in any certificate or other document referred to
     or provided for in, or received by any of them under, this Agreement or any other Operative Document, or for the value, validity,
     effectiveness, genuineness, enforceability or sufficiency of this Agreement, any Note or any other Operative Document or any
     other document referred to or provided for herein or therein or for any failure by the Borrower or any other Person to perform
     any of its obligations hereunder or thereunder; (iii) shall not be required to initiate or conduct any litigation or collection
     proceedings hereunder or under any other Operative Document; (iv) shall not be responsible to the Lender for any action taken or
     omitted to be taken by either of them hereunder or under any other Operative Document or under any other document or instrument
     referred to or provided for herein or therein or in connection herewith or therewith, except for their own gross negligence or
     willful misconduct; and (v) may be removed from its role as Administrative Agent or Collateral Agent (as the case may be) by the
     Lender for cause and upon notice by Lender (or by the Administrative Agent or Collateral Agent on Lender's behalf, as applicable)
     to the Borrower and to the Ratings Agencies.  In the case of any removal of either of the Agents for cause as provided herein,
     the Lender may replace such removed Agent with another entity without obtaining the prior written consent of the Borrower so long
     as such replacement entity is GE Capital or one of its Affiliates.  The Borrower shall be required to give written consent to any
     replacement agent who is not GE Capital or one of its Affiliates, such consent not to be unreasonably withheld.  The Agents may
     employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or
     attorneys-in-fact selected by it in good faith.

(b)      Reliance by Agents.  The Agents shall be entitled to rely upon any certification, notice or other communication (including,
         ------------------
     without limitation, any thereof by telephone, telecopy, telex, telegram or cable) believed by them to be genuine and correct and
     to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel,
     independent accountants and other experts selected by the Agents.  As to any matters not expressly provided for herein or in any
     other Operative Document, the Agents shall in all cases be fully protected in acting, or in refraining from acting, hereunder or
     thereunder in accordance with instructions given by the Lender as is required in such circumstance, and such instructions of such
     Lender and any action taken or failure to act pursuant thereto shall be binding on all of the Lender.

(c)      Defaults.  The Agents shall not be deemed to have knowledge or notice of the occurrence of a Default (other than the
         --------
     non-payment of principal of or interest on Notes) unless the Agents have received notice from the Lender or the Borrower
     specifying such Default and stating that such notice is a "Notice of Default".  In the event that the Agents receive such a
     notice of the occurrence of a Default, the Agents shall give prompt notice thereof to the Lender (and shall give the Lender
     prompt notice of each such non-payment).  The Agents shall (subject to Section 16(a) hereof) take such action with respect to
     such Default as shall be directed by the Lender, provided that, unless and until the Agents shall have received such directions,
                                                      --------
     the Agents may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default
     as they shall deem advisable in the best interest of the Lender except to the extent that this Agreement expressly requires that
     such action be taken, or not be taken, only with the consent or upon the authorization of the Lender.

(d)      Rights as Agent.  PK and GE Capital (and any successor acting as Administrative Agent or Collateral Agent, as the case may
         ---------------
     be) and its affiliates may (without having to account therefor to the Lender) accept deposits from, lend money to, make
     investments in and generally engage in any kind of loan, trust or other business with the Borrower (and any of its subsidiaries
     or Affiliates) as if it were not acting as the Administrative Agent or Collateral Agent (as the case may be), and PK, GE Capital
     and their affiliates may accept fees and other consideration from the Borrower for services in connection with this Agreement or
     otherwise without having to account for the same to the Lender.

(e)      Failure to Act.  Except for action expressly required of the Agents hereunder and under the other Operative Documents, the
         --------------
     Agents shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless they shall receive
     indemnification against any and all liability and expense that may be incurred by them by reason of taking or continuing to take
     any such action.

(f)      Resignation or Removal of Administrative Agent or Collateral Agent.  Subject to the appointment and acceptance of a
         ------------------------------------------------------------------
     successor Administrative Agent or Collateral Agent as provided below, and subject further to the penultimate sentence of this
     Section 14(f), the Administrative Agent or Collateral Agent may resign at any time by giving notice thereof to the Lender, the
     Borrower and the Ratings Agencies, and the Administrative Agent or Collateral Agent may be removed at any time with cause by the
     Lender.  Upon any such resignation or removal, the Lender shall have the right to appoint a successor Administrative Agent or
     Collateral Agent.  If no successor Administrative Agent or Collateral Agent shall have been so appointed by the Lender and shall
     have accepted such appointment within 30 days after the retiring Administrative Agent's or Collateral Agent's giving of notice of
     resignation or the Lender's removal of the retiring Administrative Agent or Collateral Agent, then the retiring Administrative
     Agent or Collateral Agent may, on behalf of the Lender, appoint a successor Administrative Agent or Collateral Agent.  Upon the
     acceptance of any appointment as Administrative Agent or Collateral Agent hereunder by a successor Administrative Agent or
     Collateral Agent, such successor Administrative Agent or Collateral Agent shall thereupon succeed to and become vested with all
     the rights, powers, privileges and duties of the retiring Administrative Agent or Collateral Agent, and the retiring
     Administrative Agent shall be discharged from its duties and obligations hereunder.  After any retiring Administrative Agent's or
     Collateral Agent's resignation or removal hereunder as Administrative Agent or Collateral Agent, the provisions of this
     Section 14 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was
     acting as the Administrative Agent or Collateral Agent.  Neither Agent shall assign its interest to any replacement agent who is
     not GE Capital or one of its Affiliates without the Borrower's prior written consent, such consent not to be unreasonably
     withheld.

(g)      Consents under Operative Documents.  Except as otherwise provided in Section 16(a) hereof, the Administrative Agent and
         ----------------------------------
     Collateral Agent may, with the prior consent of the Lender (but not otherwise), consent to any modification, supplement or waiver
     under any of the Operative Documents, provided that, without the prior consent of the Lender, neither the Administrative Agent
                                           --------
     nor the Collateral Agent shall (except as provided herein) release any collateral or otherwise terminate any Lien under any
     Operative Document providing for collateral security, or agree to additional obligations being secured by such collateral
     security (unless the Lien for such additional obligations shall be junior to the Lien in favor of the other obligations secured
     by such Operative Document), except that no such consent shall be required, and the Administrative Agent and Collateral Agent are
     each hereby authorized, to release any Lien covering property which is the subject of a disposition of property permitted
     hereunder or to which the Lender has consented.

(h)      Non-Receipt of Funds by the Administrative Agent and Collateral Agent.  Unless the Administrative Agent or Collateral Agent
         ---------------------------------------------------------------------
     shall have been notified by the Lender or the Borrower (the "Payor") prior to the date on which the Payor is to make payment to
                                                                  -----
     the Administrative Agent or Collateral Agent of (in the case of the Lender) the proceeds of a Loan to be made by it hereunder or
     (in the case of the Borrower) a payment to the Administrative Agent or Collateral Agent for account of one or more of the Lender
     hereunder (such payment being herein called the "Required Payment"), which notice shall be effective upon receipt, that the Payor
                                                      ----------------
     does not intend to make the Required Payment to the Administrative Agent or Collateral Agent, the Administrative Agent or
     Collateral Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be
     required to), make the amount thereof available to the intended recipient(s) on such date and, if the Payor has not in fact made
     the Required Payment to the Administrative Agent or Collateral Agent, the recipient(s) of such payment shall, on demand, repay to
     the Administrative Agent or Collateral Agent (as the case may be) the amount so made available together with interest thereon in
     respect of each day during the period commencing on the date such amount was so made available by the Administrative Agent or
     Collateral Agent (as the case may be) until the date the Administrative Agent or Collateral Agent (as the case may be) recovers
     such amount at a rate per annum equal to the Federal Funds Rate for such day and, if such recipient(s) shall fail promptly to
     make such payment, the Administrative Agent or Collateral Agent (as the case may be) shall be entitled to recover such amount,
     from the Payor, together with interest as aforesaid.

Section 15        Investment Of Funds.  Any moneys held by the Administrative Agent as security hereunder for Borrower's obligations
                  -------------------
shall, until paid to Borrower or otherwise applied in accordance with the terms of the Operative Documents, be invested by the
Administrative Agent as Borrower may from time-to-time direct in writing (or orally and confirmed in writing), but subject to
availability at the Administrative Agent's discretion (it being understood that absent such a direction, there shall be no obligation
to invest such moneys) in (a) obligations of, or guaranteed by, the United States Government or agencies thereof, (b) open market
commercial paper of any corporation incorporated under the laws of the United States of America or any State thereof rated at least
"P-2" or its equivalent by Moody's or at least "A-2" or its equivalent by S&P, (c) certificates of deposit issued by commercial banks
organized under the laws of the United States or of any political subdivision thereof having a combined capital and surplus in excess
of $750,000,000 which banks or their holding companies have a rating of A or its equivalent by Moody's or S&P; provided, however,
that the aggregate amount at any one time so invested in certificates of deposit issued by any one bank shall not exceed five percent
(5%) of such bank's capital and surplus, (d) Dollar denominated offshore certificates of deposit issued by, or offshore time deposits
with, any commercial bank described in (c) or any subsidiary thereof, and (e) repurchase agreements with any financial institution
having combined capital and surplus of at least $750,000,000 with any of the obligations described in clauses (a) through (d) as
collateral, none of which investments (but exclusive of any underlying investment that may be subject to a repo) shall have a term to
maturity in excess of 30 days.  There shall be promptly remitted to Borrower or its order (but no more frequently than monthly) any
gain (including interest received) realized as a result of any such investment (net or any, fees, commissions and other expenses, if
any, incurred in connection with such investment) unless a Special Default or an Event of Default shall have occurred and be
continuing.  The Borrower shall be responsible for any net loss realized as a result of any such investment and shall reimburse the
Administrative Agent on demand.

Section 16        Supplements and Amendments to the Mortgage and Other Operative Documents
                  ------------------------------------------------------------------------

(a)      Instructions of Lender; Limitations.  (i) At any time and from time to time, at the request of the Borrower the
         -----------------------------------
     Administrative Agent (but only on the written request of the Lender) shall execute a supplement to the Mortgage for the purpose
     of adding provisions to, or changing or eliminating provisions of, the Mortgage as specified in such request.  This Section 16(a)
     shall not apply to any mortgage or mortgages supplemental hereto permitted by, and complying with the terms of, Section 13(b).

(b)      Administrative Agent and Collateral Agent Protected.  If, in the opinion of the institution acting as the Administrative
         ---------------------------------------------------
     Agent or Collateral Agent hereunder any document required to be executed pursuant to the terms of Section 16(a) affects any
     right, duty, immunity or indemnity with respect to it under the Mortgage, the Administrative Agent or the Collateral Agent, as
     the case may be, may in its discretion decline to execute such document.

(c)      Documents Mailed to the Lender.  Promptly after the execution by the Administrative Agent and the Lender of any document
         ------------------------------
     entered into pursuant to Section 16(a), the Administrative Agent shall mail, by certified mail, postage prepaid, a conformed copy
     thereof to Lender at its address shown on the Note Register, but the failure of the Borrower or Administrative Agent, to mail
     such conformed copies shall not impair or affect the validity of such document.

(d)      Notice to Ratings Agencies.  Either the Administrative Agent or Collateral Agent shall, prior to execution of same, provide
         --------------------------
     the Ratings Agencies with written copies of (i) any and all material amendments and material waivers to this Agreement or the
     Mortgage and (ii) any and all consents required to be given pursuant to Sections 14(a), 14(f) or 23(c) hereof or under the
     Mortgage, and shall, within two (2) Business Days of receipt of same, provide the Ratings Agencies with copies of any notices
     given by the Lender or by either of the Agents pursuant to Sections 14(a), 14(f) or 23(c) hereof or under the Mortgage.

Section 17        Notices.
                  -------

         All notices, demands, instructions and other communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by
facsimile, or by prepaid courier service, and shall be effective upon receipt.

         Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 17,
notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at
their respective addresses (or to their respective telex address or facsimile numbers) as follows:  (a) if to the Borrower, the
Administrative Agent or the Collateral Agent, to the respective addresses set forth in Section 7.06 of the Mortgage, (b) if to the
Lender or to the Ratings Agencies, to the respective addresses set forth on Schedule I hereto, or (c) if to any subsequent lender ,
addressed to such lender its address set forth in the Note Register maintained pursuant hereto.

         Notwithstanding anything to the contrary contained herein or in any of the Operative Documents, and for the avoidance of
doubt, any notice required to be given by the Lender hereunder or under any of the Operative Documents may also be given by the
Administrative Agent or the Collateral Agent on the Lender's behalf.  The Administrative Agent agrees to give any notice so received
to the Lender.

Section 18        Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
                  ------------------------------------------------------------

(a)      This Agreement shall in all respects be governed by, and construed in accordance with, the law of the State of New York
     (without giving effect to its conflicts of law provisions), including all matters of construction, validity and performance.

(b)      Each party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of
     the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern
     District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this
     Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
     unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York
     State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any
     such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
     manner provided by law.  Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action
     or proceeding relating to this Agreement against another party or its properties in the courts of any jurisdiction.

(c)      Each party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any
     objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating
     to this Agreement in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably
     waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or
     proceeding in any such court.

(d)      Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 17.
     Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by
     law.

(e)      EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
     IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
     HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
     ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
     THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
     INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 19        Costs and Expenses.  The Borrower shall reimburse the Administrative Agent and the Collateral Agent for all
                  ------------------
out-of-pocket expenses incurred in connection with the negotiation and preparation of this Agreement and the other Operative
Documents (including the reasonable fees and expenses of all of its special counsel.  The Borrower is also liable for all of its own
out-of-pocket expenses incurred in connection with the negotiation, preparation and the carrying out of its obligations under this
Agreement and the other Operative Documents (including the reasonable fees and expenses of all of its special counsel.

Section 20        Section 1110 Compliance.
                  -----------------------

         Notwithstanding any provision herein or elsewhere contained to the contrary, it is understood and agreed among the parties
hereto that the transactions contemplated by this Credit Agreement, and the other Operative Documents are expressly intended to be,
shall be and should be construed so as to be, entitled to the full benefits of 11 U.S.C. Section 1110, as amended from time to time,
and any successor provision thereto.

Section 21        Confidentiality.
                  ---------------

         Except to the extent otherwise required by applicable law or, as required to be filed publicly with S&P, Moody's or other
comparable ratings agency, the Securities and Exchange Commission, or unless the Borrower, Lender and the Administrative Agent and
the Collateral Agent shall otherwise consent in writing, each party to this Agreement agrees to maintain the confidentiality of this
Agreement (and all drafts hereof and documents ancillary hereto) in its communications with third parties other than any Indemnified
Party and not to disclose, deliver or otherwise make available to any third party (other than its directors, officers, employees,
rating agencies, accountants or counsel) the original or any copy of all or any part of this Agreement (or any draft hereof and
documents ancillary hereto) except to an Indemnified Party.

         None of the Borrower, the Collateral Agent, the Administrative Agent, or any of their respective Affiliates shall issue any
news release or make any public announcement pertaining to the transactions contemplated by this Agreement and the Operative
Documents without the prior written consent of the other (which consent shall not be unreasonably withheld) unless such news release
or public announcement is required by applicable law, in which case the parties shall consult with each other prior to the issuance
of such news release or public announcement.

         Notwithstanding anything herein, there is no restriction (either express or implied) on any disclosure or dissemination of
the tax structure or tax aspects of the transaction contemplated by the Operative Documents.  Furthermore, each party hereto
acknowledges that it has no proprietary rights to any tax matters or tax idea contemplated by the Operative Documents or to any
element of the transaction structure contemplated by the Operative Documents.

Section 22        Covenants of the Collateral Agent, the Administrative Agent and the Lender.
                  --------------------------------------------------------------------------

(a)      Quiet Enjoyment.  The Collateral Agent, the Administrative Agent and the Lender each agrees that neither it nor any of its
         ---------------
     Affiliates, nor anyone acting on behalf of any such Person will interfere in the Borrower's quiet enjoyment of the Aircraft so
     long as no Event of Default shall have occurred and be continuing.

(b)      Lender Liens.  The Administrative Agent and the Collateral Agent each hereby covenants and agrees with each of the other
         ------------
     parties hereto that so long as (i) it remains the Administrative Agent or Collateral Agent, as the case may be, and (ii) the Lien
     of the Mortgage on any Aircraft has not been released in accordance with the terms of the Operative Documents, it will (X) take
     such action as may be necessary to discharge any Lender Liens, if any, on any Aircraft attributable to it or any of its
     Affiliates and, (Y) indemnify and hold harmless the other parties hereto from and against any loss, cost or expense which may be
     suffered or incurred by any such Person as a result of its failure to discharge and satisfy any such Lender Lien.

(c)      Transfer Restrictions.  Lender covenants that (notwithstanding anything herein or in any other Operative Document to the
         ---------------------
     contrary) it will not transfer its Notes or any interest under any of the Operative Documents unless the transferee makes the
     representation and warranty contained in Section 7(b)(iv).

Section 23        Miscellaneous.
                  -------------

(a)      The representations, warranties, indemnities and agreements of the Borrower, the Administrative Agent, the Collateral Agent
     and the Lender and each party's obligations under any and all thereof, shall survive the expiration or other termination of this
     Agreement or any other Operative Document, except as expressly provided herein or therein.

(b)      This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered
     shall be an original, but all such counterparts shall together constitute but one and the same instrument.  Neither this
     Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified, except by an instrument in
     writing signed by the party or parties thereto.

(c)      (i)      (i)      This Agreement shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the
     parties hereto and their respective successors and permitted assigns.

(ii)     The Borrower may not assign any of its rights or obligations under this Agreement or the other Operative Documents except to
     the extent expressly provided thereby.

(iii)    Subject to the provisions of clause (iv) below, the Lender may assign its Notes, in whole or in part, as provided hereunder
     and in Section 10(c) hereof, to any Person (including an Affiliate, another lender or other third party) which assignment shall
     be effected pursuant to an agreement substantially in the form of Exhibit B hereto.  In addition, the Lender may, with the prior
     written consent of Borrower, assign, in whole or in part, its Commitment in respect of any Aircraft to any other Person capable
     of meeting its funding obligation in respect of the assigned Commitment, which assignment shall be effected pursuant to an
     agreement substantially in the form of Exhibit B hereto, appropriately modified to relate to the assignment of a Commitment.
     Effective upon the assignment of any Commitment in accordance with this Section 23(c), the Lender shall be relieved of its
     obligations in respect of such Commitment to the extent the assignee thereof shall have become obligated in respect thereof.

(iv)     Except as set forth in clause (v) below, any assignment or transfer by the Lender hereunder shall be subject to the
     following conditions:

     except as set forth in subclause (F) below, the transferring Lender shall have first obtained the prior written consent of the
                  Borrower, which written consent shall not be unreasonably withheld;

                                            The transferring Lender shall send the Borrower a written notice of such proposed
                  transfer, setting forth the name and address of the proposed transferee, the amount of the transferring Lender's
                  Notes proposed to be transferred and the proposed date on which such transfer will occur.  The Borrower will then
                  have three (3) Business Days to request such additional information as it may reasonably require regarding such
                  proposed transferee, or, if no such additional information is requested and such proposed transfer satisfies the
                  other requirements of this Section 23(c), the Borrower shall be deemed to have consented to such proposed transfer.
                  In the event that the Borrower requests additional information, it shall have three (3) Business Days from the time
                  such additional information is provided to reject such proposed transfer, failing which, subject to satisfaction of
                  the other requirements of this Section 23(c), the Borrower shall be deemed to have given its consent;

                                            as a result of any assignment or transfer, there shall be no more than five (5) lenders
                  in the aggregate;

                                            except as set forth in subclause (E) below, no such assignment or transfer (including,
                  without limitation and for the avoidance of doubt, any assignment or transfer to a CP Conduit) shall be in an amount
                  less than $10,000,000;

                                            so long as no Event of Default shall have occurred or be continuing, no assignment or
                  transfer shall, at the time of such assignment or transfer, increase the obligations of the Borrower under this
                  Agreement or the Mortgage;

                                            Lender shall not be required to obtain Borrower's prior written consent to transfer all
                  or a portion of its Loan and related rights under the Operative Documents to any of its Program Support Providers or
                  to any entity (including, without limitation and for the avoidance of doubt, any CP Conduit) which is administered
                  by, or is an Affiliate of, GE Capital;

                                            except as otherwise set forth herein, no participant in any Loan assigned or transferred
                  hereunder shall have any rights directly against the Borrower; and

                                            without limiting the generality of the foregoing, the Borrower shall not be liable for
                  any withholding taxes or other increased costs if such costs would arise at the time of such transfer or assignment
                  hereunder.

(v)      Notwithstanding anything herein or in any of the other Operative Documents to the contrary, the Lender may, at any time
     after the Delivery Date with respect to any Loan, upon written notice to Borrower but without the consent of Borrower, and
     without any further action or deliveries under the Operative Documents, assign or otherwise transfer all or any part of its
     right, title and interest in and to such Loan and this Agreement (to the extent related to such Loan) to (i) any Program Support
     Provider for any CP Conduit, (ii) to GE Capital or any of its Affiliates or (iii) any CP Conduit administered by GE Capital or
     any of its Affiliates (each, a "Permitted Transferee").  The assigning Lender or the Administrative Agent shall provide the
                                     --------------------
     Borrower prompt notice of such assignment (but failure to provide such notice shall not affect the validity of any such
     assignment).  The Lender may also pledge, mortgage or grant a security interest in this Agreement or the Mortgaged Estate, and
     assign this Agreement and any collateral, as collateral for the Lender's obligations under its Commercial Paper program.  Each
     such Permitted Transferee shall have any and all rights as may be assigned by the Lender to such party but none of the
     obligations of the Lender hereunder or under any other Operative Document.  Upon the written request of the Lender,  Borrower
     agrees to confirm in writing receipt of notice of assignment and to acknowledge its obligations to such Permitted Transferee; and
     fully shall cooperate with the Lender and at Lender's expense, to minimize or avoid the imposition of any adverse tax consequence
     in connection with any such conveyance, transfer, pledge, mortgage, grant of security interest or assignment.

                  In the event the Lender, in accordance with this Section 23(c), assigns its interest in any Loan, together with its
interest herein and in  the other Operative Documents, in each case to the extent relating to such Loan, then all references to "the
Lender" hereunder shall mean and refer to such assignee to the extent of such assignment, and any subsequent assignment by such
assignee shall have a corresponding effect.

                  Subject always to the foregoing, this Agreement inures to the benefit of, and is binding upon, the successors and
assigns of the parties hereto.

(vi)     Notwithstanding the foregoing, the Administrative Agent may not assign or transfer its rights or obligations hereunder or
     under the other Operative Documents without the prior written consent of the Lender, such consent not to be unreasonably withheld.

(vii)    All costs and expenses in connection with any assignment or transfer permitted by this Section 23(c) (including any legal
     fees of counsel to the parties to the Operative Documents) shall be borne by the relevant transferring/assigning lender, except
     in the case of an assignment or transfer that is effected at the request of the Borrower or if an Event of Default shall have
     occurred and be continuing, in which case such costs and expenses (including reasonable legal fees) shall be borne by the
     Borrower.

(d)      Limited Recourse.  The obligations, if any, of the Lender under this Agreement and all other Operative Documents are solely
         ----------------
     the obligations of the Lender.  No recourse shall be had for the making of any Loan under this Agreement or for any other
     obligation or claim arising out of or based upon this Agreement or any other Operative Document against any incorporator,
     shareholder, officer, manager, member or director, past, present or future, of the Lender or of any successor or of the Lender's
     constituent members or other affiliates or of J H Management Corporation, or against J H Management Corporation, either directly
     or through the Lender or any successor, whether by virtue of any constitution, statute or rule of law or by the enforcement of
     any assessment or penalty or otherwise, all such liability being, by acceptance thereof and as part of the consideration for the
     acceptance hereof, expressly waived and released.  Nothing in this Section 23(d) shall be deemed to impair or otherwise diminish
     any obligation of the Administration Agent or the Collateral Agent under this Agreement or the other Operative Documents.  The
     provisions of this Section 23(d) shall survive the termination of this Agreement.

                  Notwithstanding any provisions contained in this Agreement to the contrary, the Lender shall not, and shall not be
obligated to, pay any amount pursuant to this Agreement unless (i) the Lender has  received funds which may be used to make such
payment pursuant to the documents governing its Commercial Paper program, and (ii) after giving effect to such payment, either (A)
the Lender could issue Commercial Paper (assuming such outstanding Commercial Paper matured at such time) without violating any of
the provisions of the documents governing its Commercial Paper program, or (B) all Commercial Paper is paid in full.  Any amount
which the Lender does not pay pursuant to the operation of the preceding sentence shall not constitute a Claim (as defined inss.101 of
the Bankruptcy Code) against or an obligation of the Lender for any insufficiency unless and until the Lender satisfies the
provisions of such preceding sentence.

(e)      The Lender shall not have any obligation or duty to the Borrower, or to other Persons with respect to the transactions
     contemplated hereby except those obligations or duties of the Lender expressly set forth in this Agreement and the other
     Operative Documents and the Lender shall not be liable for performance by any other party hereto of such other party's
     obligations or duties hereunder.  Without limitation of the generality of the foregoing, under no circumstances whatsoever shall
     the Lender be liable to the Borrower for any action or inaction on the part of the Administrative Agent or the Collateral Agent
     in connection with the transactions contemplated herein, whether or not such action or inaction is caused by willful misconduct
     or gross negligence of the Administrative Agent or the Collateral Agent, as applicable.

                                                       [signature page follows]





                  IN WITNESS  WHEREOF,  the parties  hereto have caused this Credit  Agreement to be duly executed by their  respective
officers thereunto duly authorized as of the day and year first above written.

                                                           FRONTIER AIRLINES, INC.,
                                                           Borrower


                                                           By:
                                                           Its:
                                                           PK AIRFINANCE S.A., NEW YORK BRANCH
                                                           Administrative Agent


                                                           By:
                                                           Its:
                                                           GENERAL ELECTRIC CAPITAL CORPORATION,
                                                           Collateral Agent


                                                           By:
                                                           Its:
                                                           EDISON ASSET SECURITIZATION, L.L.C., as Lender


                                                           By:
                                                           Its:






                                                                                                       [Credit Agreement [Frontier/PK]]
                                                      SCHEDULE I
                                                        Page 3

                                                              Schedule I

                                                     Notice & Account Information
                                                     ----------------------------

The Lender
- ----------
Notice to:

Edison Asset Securitization, L.L.C.
c/o General Electric Capital Corporation, as operating agent
3001 Summer Street, 2nd Floor
Stamford, CT  06927
Attention:  Manager, Conduit Administration

Telephone:  (203) 357-4328
Telecopier:  (203) 357-6616
Payment Instructions
- --------------------

Bankers Trust Company
New York, New York
ABA # 021-001-033
Acct. # 003-863-37
Reference:  Collection Account #31884

Administrative Agent
- --------------------
Notice to:

PK AIRFINANCE S.A.
6d, Route de Treves
L-2633 Senningerberg
Luxembourg
Attention:        Vice-President, Contracts
Telephone:        352-34-20-30-1
Telecopier        352-34-80-50

with a copy to:
PK AIRFINANCE S.A., NEW YORK BRANCH
The Carnegie Hall Tower
152 West 57th Street
New York, NY  10019
Attention:        Vice-President, Marketing
Telephone:        (212) 245-2575
Telecopier:       (212) 397-9393

with a copy to:
Vedder, Price, Kaufman & Kammholz
222 N. LaSalle Street
Chicago, Illinois  60601
Attention:        Geoffrey R, Kass, Esq.
Telephone:        (312) 609-7553
Telecopier:       (312) 609-5005

Payment Instructions:
- --------------------
Bankers Trust Company, New York
New York, New York
Account #50-265-541
ABA #021-001-033
In favor of:  PK AirFinance New York Branch
Ref:  FTR2001-01/03

Collateral Agent:
- ----------------
General Electric Capital Corporation
3001 Summer Street, 2nd Floor
Stamford, CT  06927
Attention:  Manager, Conduit Administration
Telephone:  (203) 357-4328
Telecopier:  (203) 357-6166

Borrower:
- --------
Frontier Airlines, Inc.
Frontier Center One
7001 Tower Road
Denver, CO  80249
Attention:  Chief Financial Officer

Telephone:  (720) 374-4510
Telecopier:  (720) 374-4375

with a copy to:
Pillsbury Winthrop LLP
Financial Centre
695 East Main Street
Stamford, CT  06904-6760
Attention:  R. Jay Fortin, Esq.

Telephone:  (203) 965-8272
Telecopier:  (203) 965-8226




Ratings Agencies:
- ----------------
Standard & Poor's
55 Water Street
New York, NY  10041-0003
Attention:  Susan Carmody

Telephone:  (212) 438-2483
Telecopier:  (212) 438-2647

Moody's Investors Service, Inc.
Structured Finance Dept.
99 Church Street
New York, NY  10007
Attention:  Lisa Singman

Telephone:  (212) 553-1301
Telecopier:  (212) 553-0881






                                                                                                       [Credit Agreement [Frontier/PK]]
                                                      SCHEDULE II
                                                        Page 1

                                                              Schedule II

                                                   Participation in Original Amount
                                                   --------------------------------


                                    % of                                                               Maximum
                                    ----                                                               -------
        The Lender            Original Amount              Commitment for each Aircraft              Commitment
        ----------            ---------------              ----------------------------              ----------
                                                       1488            1560            1583
EDISON ASSET                        100%             $24,000,000     $24,000,000     $24,000,000       $72,000,000
SECURITIZATION, L.L.C.






                                                                                                       [Credit Agreement [Frontier/PK]]
                                                     SCHEDULE III
                                                        Page 1

                                                             Schedule III

                                                      Determination of Base Rate
                                                      --------------------------

                  In respect of each Loan, two Business Days before the Delivery Date of the applicable  Aircraft,  the  Administrative
Agent (at the  direction  of the  Lender)  shall  solicit  quotations  for the "fixed  rate" of  interest  in respect of the Swap.  The
Administrative  Agent (at the direction of the Lender) agrees to cooperate  with the Borrower in the  solicitation  of such  quotations
and the timing  thereof  with the intent of  obtaining  the lowest  "fixed  rate." The  Administrative  Agent (at the  direction of the
Lender) will  communicate  the results of its  solicitation  and the quoted "fixed rate" obtained  thereby (the  "Administrative  Agent
Quoted Rate") to the  Borrower.  The Borrower may, as soon  thereafter as  practicable,  but no later than on the Business Day that the
Administrative  Agent  Quoted  Rate is  communicated  to it,  accept or reject the  Administrative  Agent  Quoted  Rate and may solicit
additional  quotations  for the "fixed  rate" of interest in respect of the Swap.  If the  Borrower  accepts the  Administrative  Agent
Quoted Rate, the  Administrative  Agent Quoted Rate shall be the rate used in  determining  the Base Rate.  If,  however,  the Borrower
obtains a quotation  from a  counterparty  for a "fixed  rate" of interest in respect of a Swap (which  fixed rate which shall be based
upon the Swap Agreement  deemed to be entered into between such  counterparty  and the  Administrative  Agent, is herein referred to as
the  "Borrower  Rate")  which is lower  than the  Administrative  Agent  Quoted  Rate for the  Swap,  the  Borrower  shall  notify  the
Administrative  Agent of the Borrower Rate for that Swap and the counterparty  providing the quote. If such  counterparty is reasonably
acceptable to the  Administrative  Agent,  (at the direction of the Lender) taking into account its credit  assessment  of,  historical
experience  with and credit and country  risk  limitations  for,  that  counterparty,  and the  counterparty,  if so  requested  by the
Administrative  Agent (at the direction of the Lender),  confirms its ability and  willingness  to enter into a Swap, the Borrower Rate
shall be the rate used in  determining  the Base Rate.  Nothing set forth herein shall require the  Administrative  Agent or any Lender
to actually enter into the Swap, but if neither the Administrative  Agent nor any Lender enters into a Swap, the  Administrative  Agent
and the  Lenders  shall be deemed  to have  entered  into the Swap at the  Administrative  Agent  Quoted  Rate or (if the  counterparty
provided by the Borrower was  acceptable  to the  Administrative  Agent) the Borrower  Rate.  The Borrower may elect to forward fix the
Applicable Rate with respect to any Aircraft,  with the prior written consent of the Administrative  Agent, up to thirty (30)  calendar
days prior to the Delivery Date for such Aircraft,  in which case the  Administrative  Agent (on behalf of the Lender) may be deemed to
enter into the Swap upon two (2) Business Days' notice of the date Borrower intends to fix the Applicable Rate (the "Fixing Date").
                                                                                                                     -----------






                                                                                                       [Credit Agreement [Frontier/PK]]
                                                      SCHEDULE IV
                                                        Page 2

                                                              Schedule IV

                                                 Determination of Swap Breakage Amount
                                                 -------------------------------------

                  A.       Swap Breakage Amount,  as of any date, shall be the amount determined in good faith by the swap counterparty
and notified to the  Administrative  Agent as the amount  required to be paid to the swap  counterparty  (or deemed swap  counterparty)
under such Swap ("Swap Breakage Loss") or the amount  receivable from (and, in the case of a true third party swap,  actually  received
from) the swap  counterparty (or deemed swap  counterparty)  under such Swap ("Swap Breakage Gain"),  in either case, to settle out for
such Swap, in accordance with market practice, as of 12:00 noon, New York time, on such date (the "Settlement Date").

                  B.       On the Settlement  Date,  Borrower may designate a Reference  Market-maker (as defined in the Swap Agreement
with the "party" referred to in such definition  being the swap  counterparty) to the  Administrative  Agent and the swap  counterparty
(which Reference  Market-maker  shall be reasonably  acceptable to the swap  counterparty)  and request such Reference  Market-maker to
advise the  Borrower,  the  Administrative  Agent and the swap  counterparty  by  12:00 noon,  New York time,  on such date of the Swap
Breakage  Loss,  or the Swap  Breakage  Gain,  in either case, to assume the  obligations  of the  Administrative  Agent under the Swap
Agreement  with  respect  to the Swap but only with  respect  to the then  outstanding  principal  amount  of the Note.  In the event a
payment is to be made to the  Administrative  Agent in  consideration of the aforesaid  termination or assumption,  as the case may be,
the  greater of the amounts to be so paid (or if each of the swap  counterparty  and the  Reference  Market-maker  quote the  identical
amount, or if the Reference  Market-maker fails to quote or, having quoted,  defaults in its agreement to assume (or otherwise fails to
assume)  the  aforesaid  obligations  of the  Administrative  Agent,  the amount  quoted by the swap  counterparty)  shall be the "Swap
Breakage  Amount"  (expressed as a negative number) for all purposes of the Operative  Documents.  In the event a payment is to be made
by the  Administrative  Agent in  consideration  of the  aforesaid  termination  or  assumption,  as the case may be, the lesser of the
amounts to be so paid (or if each of the swap  counterparty  and the  Reference  Market-maker  quote the  identical  amount,  or if the
Reference  Market-maker  fails to quote or,  having  quoted,  defaults in its  agreement to assume (or  otherwise  fails to assume) the
aforesaid  obligations of the Lender, the amount quoted by the swap  counterparty)  shall be the "Swap Breakage Amount" (expressed as a
positive number) for all purposes of the Operative Agreements.

                  C.       The Administrative  Agent agrees that, except as provided above, it will not amend or terminate or permit to
be  terminated  through its own action or  inaction  the Swap in a manner  that would have a material  adverse  effect on the rights or
interests of Borrower  without the prior written consent of Borrower (such consent not to be unreasonably  withheld);  provided that if
the swap  counterparty  shall default in  performance  of its  obligations in respect of the Swap or under the Swap Agreement or if the
Swap Agreement shall otherwise terminate (other than as a result of the breach by Administrative  Agent of any of its  representations,
warranties or obligations  thereunder),  the  Administrative  Agent may enter into swap  transactions with another swap counterparty on
terms  substantially  similar to those entered into as of the Delivery Date (so long as such transactions does not materially  increase
the  economic  exposure of Borrower  with respect to any payment of Swap  Breakage  Amount which may  thereafter  be or become  payable
hereunder or under the other  Operative  Documents)  and after such time,  the "swap  transaction"  and the swap  counterparty  for the
Administrative Agent shall be such transaction and such counterparty for all purposes of the Operative Documents.

                  D.       The  Administrative  Agent agrees that,  upon notice from Borrower of the  possibility of the occurrence of:
(i) the prepayment of a Loan pursuant to Section 10(f) of the Credit Agreement,  (ii) the  prepayment of a Loan following  acceleration
pursuant to  Section 12(a)  of the Credit  Agreement or (iii) the  prepayment  of purchase of a Loan pursuant to  Section 10(h)  of the
Credit Agreement,  the  Administrative  Agent shall promptly  thereafter provide Borrower with a non-binding good faith estimate of the
Break Funding Amount.  Further,  the  Administrative  Agent will use its reasonable efforts to cause the swap counterparty to cooperate
with Borrower with respect to the  provisions  hereof and to provide in a timely  fashion such  information  as Borrower may reasonably
request to facilitate the quotation and assumption by the Reference Market-maker contemplated in paragraph B above.






                                                                                                       [Credit Agreement [Frontier/PK]]
                                                       Exhibit A
                                                        Page 2

                                                               EXHIBIT A

                                                       form of borrowing notice
                                                       ------------------------

                                                       [LETTERHEAD OF BORROWER]

                                                                  ______________________, 2001


PK AIRFINANCE S.A., NEW YORK BRANCH
The Carnegie Hall Tower
152 W. 57th Street
New York, New York  10019

Ladies and Gentlemen:

                  We refer to the Credit Agreement  [Frontier/PK],  dated as of May ___, 2001 (the "Credit Agreement"),  among Frontier
Airlines, Inc., as borrower (the "Borrower"),  Edison Asset Securitization,  L.L.C., as lender (the "Lender"), General Electric Capital
Corporation,  as  collateral  agent on behalf of the Lender (the  "Collateral  Agent") and PK  AirFinance  S.A.,  New York  Branch,  as
                                                                   ----------  -----
Administrative  Agent.  Capitalized  terms used but not  defined in this  Borrowing  Notice  shall  have the  meaning  given such terms
(whether by reference to another document or otherwise) in the Credit Agreement.

                  In accordance with Section 2 of the Credit Agreement,  Borrower hereby requests that a Loan be advanced by the Lender
on  __________________  (the  "Closing  Date").  The Lender is directed to pay  $__________  of the proceeds of the  Commitment by wire
transfer to the following account:

                                                            Credit Lyonnais
                                                             New York, NY
                                                          ABA #: 026-008-073
                                                      Account #: 0118-363-000-100
                                                      Attention: William McIlwain
                                                     Reference: Frontier MSN 1488

                  Borrower  agrees that it shall not  postpone  the  Closing  Date except as  expressly  agreed  between the parties in
writing.  In the event of a postponement  of the Closing Date or other  reduction or  modification  or termination of the related Loan,
Borrower  shall  compensate  Lender upon  written  request by Lender for all  losses,  damages,  liabilities  and  reasonable  expenses
(including  any losses and expenses  incurred on account of funds  borrowed,  contracted  for or utilized for purposes  relating to the
Loan or in connection  with the  re-employment  or reinvestment of such funds or an interruption of the use of such funds and including
interest  or other such costs on funds  borrowed  until such funds are  returned to their  funding  source)  that Lender  sustains as a
result of (a) the  failure of Borrower to borrow any part of the Commitment of the Lender,  (b) the  repayment or voluntary  prepayment
of any portion of the Loan,  (c) the failure of Borrower to prepay the Loan on a prepayment  date,  (d) the  repayment or prepayment of
any portion of the Loan as a result of the exercise by Collateral  Agent or the Lender of its remedies  following the  occurrence of an
Event of Default,  or (e) the  repayment or  prepayment  of any portion of the Loan.  Compensation  to the Lender under this  Borrowing
Notice shall include  interest at the Applicable  Rate on the Lender's  Commitment from the Closing Date and any Break Amounts and Swap
Breakage Amounts and Additional  Costs or and other amounts (other than interest)  payable by the Lender to providers of funds obtained
by the Lender in order to make its  Commitment,  and costs  incurred by the Lender in  redeploying  funds that were to be used by it to
make its Commitment.

                                                              Very truly yours,

                                                           FRONTIER AIRLINES, INC.


                                                           By:
                                                           Name:
                                                           Title






                                                                                                       [Credit Agreement [Frontier/PK]]
                                                       EXHIBIT B
                                                        Page 4

                                                               EXHIBIT B

                                                     FORM OF ASSIGNMENT AGREEMENT
                                                     ----------------------------

                  ASSIGNMENT  AGREEMENT  [Frontier/PK]  dated as of __________ __, ____ between  ________________________________  (the
"Assignee") and _____________________________ (the "Assignor").
- ---------                                           --------

                                                               RECITALS

                  WHEREAS,  the Assignor is the holder of the Note No. ____ dated  __________ __, ____ (the  "Assignor's  Note") issued
                                                                                                              ----------------
under the Credit  Agreement  [Frontier/PK],  dated as of May __,  2001 (the "Credit  Agreement")  between Frontier  Airlines,  Inc., as
                                                                             -----------------
Borrower,  Edison Asset  Securitization,  L.L.C.,  as Lender,  and PK AirFinance  S.A., New York Branch,  as  Administrative  Agent and
General Electric Capital Corporation, as Collateral Agent;

                  WHEREAS,  the Assignor proposes to assign to the Assignee  $____________ of the $_____________  Assignor's Note and a
pro rata portion of all of the rights and  obligations of the Assignor  under the Credit  Agreement and the other  Operative  Documents
(as defined  below) in respect  thereof,  on the terms and subject to the  conditions  set forth herein,  and the Assignee  proposes to
accept the assignment of such rights and obligations from the Assignor on such terms and subject to such conditions;

                  NOW,  THEREFORE,  in consideration of the foregoing and the mutual agreements  contained  herein,  the parties hereto
agree as follows:

                  Section 1.  Definitions.  Unless otherwise  defined herein,  terms defined in the Credit Agreement are used herein as
                              -----------
therein defined.

                  Section 2.  Assignment.  On  __________  __,  ____  (the  "Effective  Date"),  and on the terms  and  subject  to the
                              ----------                                     ---------------
conditions  set forth herein,  the Assignor  will sell,  assign and transfer to the Assignee,  without  recourse to or  representation,
express or implied,  by the Assignor  (except as expressly set forth in Section 5  hereof),  a  $___________  portion of the Assignor's
Note and a pro rata  portion of the  rights  and  obligations  of the  Assignor  under the  Credit  Agreement  and the other  Operative
Documents in respect  thereof (but not with respect to any  indemnity or other claim,  interest  thereon at the Past Due Rate and Break
Amounts or Swap  Breakage  Amounts,  if any,  accrued and unpaid as of the  Effective  Date or  thereafter  payable to the  Assignor in
respect of the period prior to the Effective  Date),  and the Assignee shall accept such assignment from the Assignor and assume all of
the  obligations  of the  Assignor  accruing  from and after the  Effective  Date under the Credit  Agreement  and the other  Operative
Documents  relating to the Assignor's Note on such terms and subject to such  conditions.  Upon the  satisfaction of the conditions set
forth in Section 4  hereof,  (A) the  Assignee  shall,  on the  Effective  Date,  succeed to the rights and be obligated to perform the
obligations of the Lender under the Credit  Agreement and the other Operative  Documents,  and (B) the  Assignor shall be released from
its obligations  under the Credit Agreement and the other Operative  Documents  accrued from and after the Effective Date, in each case
to the extent such obligations have been assumed by the Assignee.

                  Section 3.  Payments.  As consideration for the sale,  assignment and transfer  contemplated in Section 2 hereof, the
                              --------
Assignee  shall pay to the Assignor,  on the  Effective  Date, in lawful  currency of the United  States and in  immediately  available
funds, to the account specified below its signature on the signature pages hereof, an amount equal to $_______________.

                  Section 4.  Conditions.  This  Assignment  Agreement  shall be effective  upon the due execution and delivery of this
                              ----------
Assignment  Agreement by the Assignor and the Assignee and the  effectiveness  of the assignment  contemplated  by Section 2  hereof is
subject to (a) the  receipt by the  Assignor of the payment  provided  for in  Section 3  hereof [and the receipt by the Assignee of an
up-front fee in the amount of $_______] and (b) the  delivery to the  Administrative  Agent of the Assignor's  Note,  duly endorsed for
[partial]  transfer to the Assignee,  together with a request in the form attached hereto as Exhibit A that a new Note be issued to the
Assignee and Assignor.

                  Section 5.  Representations  and  Warranties  of the  Assignor.  The  Assignor  represents  and  warrants as follows:
                              ----------------------------------------  --------
(a) the Assignor has full power and authority,  and has taken all action necessary to execute and deliver this Assignment Agreement and
any other  documents  required or permitted  to be executed or delivered by it in  connection  with this  Assignment  Agreement  and to
fulfill its obligations  under, and to consummate the  transactions  contemplated  by, this Assignment  Agreement,  and no governmental
authorizations or other  authorizations are required in connection  therewith,  (b) the  Assignor's  interest in the Assignor's Note is
free and clear of any and all Liens created by or through the Assignor,  (c) this  Assignment  Agreement  constitutes the legal,  valid
and binding  obligation  of the  Assignor,  enforceable  against the Assignor in accordance  with its terms,  and (d) the  Assignor has
received no written notice of any Default having occurred and continuing on the date of execution hereof.

                  Section 6.  Representations  and  Warranties  of the Assignee.  The Assignee  hereby  represents  and warrants to the
                              ---------------------------------------- --------
Assignor  that  (a) the  Assignee  has full  power and  authority,  and has taken all action  necessary  to execute  and  deliver  this
Assignment  Agreement and any and all other  documents  required or permitted to be executed or delivered by it in connection with this
Assignment  Agreement and to fulfill its  obligations  under,  and to consummate  the  transactions  contemplated  by, this  Assignment
Agreement,  and no governmental  authorizations  or other  authorizations  are required in connection  therewith,  (b) this  Assignment
Agreement  constitutes the legal,  valid and binding  obligation of the Assignee,  enforceable  against the Assignee in accordance with
its terms,  and (c) the  Assignee has fully reviewed the terms of the Operative  Documents and has  independently  and without reliance
upon the Assignor and based on such  information as the Assignee has deemed  appropriate,  made its own credit analysis and decision to
enter into this Assignment Agreement.

                  Section 7.  Further  Assurances.  The  Assignor  and the  Assignee  hereby  agree to execute and  deliver  such other
                              -------------------
instruments,  and take such other action,  as either party may reasonably  request in connection with the transactions  contemplated by
this Assignment Agreement.

                  Section 8.  Governing  Law. This  Assignment  Agreement  shall be governed by, and construed in accordance  with, the
                              --------------
law of the State of New York.

                  Section 9.  Notices.  All communications  between the parties or notices in connection  herewith shall be in writing,
                              -------
hand-delivered  or sent by ordinary mail,  telex or facsimile  transmitter,  addressed as set forth on the signature pages hereof.  All
such communications and notices shall be effective upon receipt.

                  Section 10.  Binding  Effect.  This  Assignment  Agreement  shall be  binding  upon and inure to the  benefit  of the
                               ---------------
parties hereto and their respective successors and assigns.

                  Section 11.  Interpretation.  The headings of the various  sections  hereof are for convenience of reference only and
                               --------------
shall not affect the meaning or construction of any provision hereof.

                  Section 12.  Integration  of Terms.  This  Assignment  Agreement  contains the entire  agreement  between the parties
                               ---------------------
relating to the subject matter hereof and supersedes all oral statements and other writings with respect to the subject matter hereof.

                  Section 13.  Counterparts.  This  Assignment  Agreement  may be executed in one or more  counterparts,  each of which
                               ------------
shall be an original but all of which, taken together, shall constitute one and the same instrument.





                  IN WITNESS  WHEREOF,  the parties have caused this  Assignment  Agreement to be executed and  delivered by their duly
authorized officers as of the date first above written.

                                                           [ASSIGNEE]


                                                           By:
                                                                Name:
                                                                Title:
                                                           Address for Notices:
                                                           Wire Instructions:
                                                           [ASSIGNOR]


                                                           By:
                                                                Name:
                                                                Title:
                                                           Address for Notices:
                                                           Wire Instructions:









                                                                                                                              Exhibit A




                                                                                                                to Assignment Agreement

                                                   Request for Note and Registration

                                                                  --------- --, ----


To:      PK AirFinance S.A., New York Branch
         as Administrative Agent

Ladies and Gentlemen:

                  We  refer  to the  assignment  by  ____________________________  (the  "Assignor"),  of  certain  of its  rights  and
                                                                                          --------
obligations   with  respect  to  Note   No. ______   in  the   principal   amount  of   $____________   (the   "Assignor's   Note")  to
                                                                                                                -----------------
___________________________  (the "Assignee"),  pursuant to an Assignment Agreement  [Frontier/PK] dated as of _______ __, ____ between
                                   --------
the Assignor and the  Assignee.  Capitalized  terms not  otherwise  defined  herein  shall have the meanings  assigned  thereto in such
Assignment  Agreement.  The Assignor  hereby delivers the Assignor's  Note to PK AirFinance  S.A., New York Branch,  in its capacity as
Administrative  Agent.  The  Assignor  requests  Borrower  to issue to (i) the  Assignee a new Note (the "New  Note") in the  principal
                                                                                                          ---------
amount of $____________  and (ii) to the Assignor a new Note (the  "Assignor's New Note") in the principal  amount of  $______________,
                                                                    -------------------
each, with a [Delivery Date] issue date.

                  The  Administrative  Agent is hereby  instructed  to pay all  interest  on the portion of the  Assignor's  Note being
assigned  hereunder  accrued  through the date hereof  directly to Assignor on the Interest  Payment Date such  interest is payable and
paid.

                  The  Assignor  requests  the  Administrative  Agent to deliver the New Note to the  Assignee at its address set forth
below and to deliver the Assignor's New Note to the undersigned.

                                                           Very truly yours,

                                                           [ASSIGNOR]


                                                           By:
                                                                Name:
                                                                Title:




                                                           [ASSIGNEE]








                                                           By:
                                                                Name
                                                                Title:




                                                           Address for Notices:
                                                           Wire Instructions
Accepted and Agreed

PK AIRFINANCE S.A., NEW YORK BRANCH,

as Administrative Agent


By:
     Title:






                                                                                                                      EXECUTION VERSION

EX-10.64MATERIALCONT

                                                    MORTGAGE AND SECURITY AGREEMENT
                                                             [Frontier/PK]

                                                              Dated as of

                                                              May 9, 2001

                                                                 AMONG

                                                       FRONTIER AIRLINES, INC.,

                                                               Borrower,

                                                 PK AIRFINANCE S.A., NEW YORK BRANCH,
                         as Administrative Agent on behalf of the Lender, Edison Asset Securitization, L.L.C.

                                                                  AND

                                                 GENERAL ELECTRIC CAPITAL CORPORATION,
                           as Collateral Agent on behalf of the Lender, Edison Asset Securitization, L.L.C.

                                                    -------------------------------

                                               Three (3) Airbus Model A319-111 Aircraft






                                                           Table of Contents
                                                              (continued)
                                                                                                                                   Page
                                                                                                                                   ----


                                                         ii

                                                           Table of Contents

                                                                                                                                   Page
                                                                                                                                   ----


                                                         i


Article I......................................................................DEFINITIONS AND INTERPRETIVE MATTERS
         3

         Section 1.01...................................................................................Definitions
                  3

         Section 1.02..................................................................Certain Interpretive Matters
                  13


Article II................................................................................................THE NOTES
         15

         Section 2.01.................................................................................Form of Notes
                  15

         Section 2.02................................................................................Terms of Notes
                  20

         Section 2.03....................................................Termination of Interest in Mortgage Estate
                  20


Article III................................REGISTRATION AND MAINTENANCE; OPERATION; POSSESSION AND LEASES; INSIGNIA
         21

         Section 3.01..................................................................Registration and Maintenance
                  21

         Section 3.02.....................................................................................Operation
                  21

         Section 3.03.........................................................................Possession and Leases
                  21

         Section 3.04......................................................................................Insignia
                  24


Article IV...............................REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS
         24

         Section 4.01..........................................................................Replacement of Parts
                  24

         Section 4.02.................................................Pooling of Parts; Temporary Replacement Parts
                  24

         Section 4.03......................................................Alterations, Modifications and Additions
                  25

         Section 4.04..................................................................Improvements Owned by Others
                  25

         Section 4.05.......................................................................Substitution of Engines
                  25


Article V......................................................................LOSS, DESTRUCTION, REQUISITION, ETC.
         26

         Section 5.01....................................................Event of Loss With Respect to the Aircraft
                  26

         Section 5.02.......................................................Event of Loss With Respect to an Engine
                  26

         Section 5.03..........Application of Payments From Governmental Authorities for Requisition of Title, Etc.
                  27

         Section 5.04Requisition for Use of the Aircraft by the United States Government or the Government of Registry of the Aircraft
                  27

         Section 5.05.............Application of Payments During Existence of Special Defaults or Events of Default
                  28


Article VI................................................................................................INSURANCE
         28

         Section 6.01...............................Bodily Injury Liability and Property Damage Liability Insurance
                  28

         Section 6.02..............................................Insurance Against Loss or Damage to the Aircraft
                  29

         Section 6.03.................................................................................Reports, Etc.
                  30

         Section 6.04................................................................................Self-Insurance
                  31

         Section 6.05..............................................................Additional Insurance by Borrower
                  31

         Section 6.06............................................Indemnification by Government in Lieu of Insurance
                  31

         Section 6.07..........Application of Payments During Existence of a Special Default or an Event of Default
                  31

         Section 6.08...................................................................Terms of Insurance Policies
                  32


Article VII...........................................................................................MISCELLANEOUS
         33

         Section 7.01.......................................................................Termination of Mortgage
                  33

         Section 7.02...............................................No Legal Title to Mortgage Estate in the Lender
                  33

         Section 7.03...............................................Sale of Aircraft by Collateral Agent is Binding
                  34

         Section 7.04.....................Mortgage for Benefit of Administrative Agent, Collateral Agent and Lender
                  34

         Section 7.05......................................No Action Contrary to Borrower's Rights; Quiet Enjoyment
                  34

         Section 7.06.......................................................................................Notices
                  34

         Section 7.07..........................................Administrative Agent's Right to Perform for Borrower
                  35

         Section 7.08..................................................................................Severability
                  35

         Section 7.09...................................................No Oral Modifications or Continuing Waivers
                  35

         Section 7.10........................................................................Successors and Assigns
                  35

         Section 7.11......................................................................................Headings
                  35

         Section 7.12...................................................................GOVERNING LAW; Counterparts
                  35

         Section 7.13................................................................................No Proceedings
                  36

         Section 7.14..............................................................................Limited Recourse
                  36







                                                         - 1 -

EXHIBIT A           -  Form of Mortgage Supplement






                                                                                        [Mortgage and Security Agreement [Frontier/PK]]
                                                          37




                                             MORTGAGE AND SECURITY AGREEMENT [Frontier/PK]

                  MORTGAGE AND SECURITY AGREEMENT  [Frontier/PK],  dated as of May 9, 2001, among FRONTIER  AIRLINES,  INC., a Colorado
corporation  (the  "Borrower"),  PK  AIRFINANCE  S.A.,  NEW  YORK  BRANCH,  a  company  organized  under  the  laws of  Luxembourg,  as
                    --------
Administrative  Agent on behalf of the Lender (together with its successors  hereunder in such capacity,  the "Administrative  Agent"),
                                                                                                               ---------------------
and GENERAL ELECTRIC CAPITAL  CORPORATION,  as Collateral Agent on behalf of the Lender (together with its successors hereunder in such
capacity, the "Collateral Agent").
               ----------------

                  WHEREAS,  all capitalized terms used herein shall have the respective  meanings set forth or referred to in Article I
hereof;

                  WHEREAS,  the Borrower  desires by this Mortgage,  among other things (i) to provide for the issuance by the Borrower
to the Lender of Notes  evidencing  participation by the Lender in each Loan as provided in the Credit  Agreement,  and (ii) to provide
for the  assignment,  mortgage and pledge by the Borrower to the Collateral  Agent, as the Mortgage  Estate  hereunder,  the Borrower's
right,  title and interest in and to each Aircraft and the payments and other amounts  received in respect  thereof in accordance  with
the terms hereof, as security for, among other things,  the Borrower's  obligations to the Lender,  and for the benefit and security of
the Lender;

                  WHEREAS,  all  things  have been done to make the Notes,  when  executed  by the  Borrower  and issued and  delivered
hereunder, the valid obligations of the Borrower; and

                  WHEREAS, all things necessary to make this Mortgage the valid, binding and legal obligation of the Borrower,  for the
uses and purposes herein set forth and in accordance with its terms, have been done and performed and have happened;

                                                         -- GRANTING CLAUSE --

                  NOW, THEREFORE, THIS MORTGAGE AND SECURITY AGREEMENT WITNESSETH,  that, to secure the prompt payment of the principal
of and Break Amount and Swap  Breakage  Amount (if any) and interest on, and all other amounts due under and with respect to, all Notes
from time to time  outstanding  hereunder  and the  performance  and  observance by the Borrower of all the  agreements,  covenants and
provisions  for the benefit of the Lender herein and in the Credit  Agreement and the Notes  contained,  and the prompt  payment of any
and all amounts from time to time owing hereunder and under the Credit  Agreement and the other Operative  Documents by the Borrower to
the Lender,  and for the uses and purposes and subject to the terms and provisions  hereof, and in consideration of the premises and of
the covenants  herein  contained,  and of the  acceptance  of the Notes by the Lender,  and of the sum of $1 paid to the Borrower at or
before the  delivery  hereof,  the receipt  whereof is hereby  acknowledged,  the  Borrower has  granted,  bargained,  sold,  assigned,
transferred,  conveyed,  mortgaged,  pledged and confirmed, and does hereby grant, bargain, sell, assign,  transfer,  convey, mortgage,
pledge and  confirm,  unto the  Collateral  Agent and its  successors  and  assigns,  for the  security  and benefit of the Lender,  as
aforesaid,  a security  interest  in and  mortgage  lien upon,  all right,  title and  interest  of the  Borrower  in, to and under the
following described property,  rights and privileges (which collectively,  including all property hereafter  specifically  subjected to
the Lien of this  Mortgage by a Mortgage  Supplement  or any other  mortgage  supplemental  hereto,  shall  constitute  the  "Mortgage
                                                                                                                              ---------
Estate"), to wit:

                  1.       each Aircraft  (including the Airframe and the  associated  Engines) as more  particularly  described in the
relevant  Mortgage  Supplement and all replacements  thereof and  substitutions  therefor to which the Borrower shall from time to time
acquire title as provided herein or any such  replacements or substitutions  therefor,  as provided in this Mortgage,  and all records,
logs and other documents at any time maintained with respect to the foregoing property;

                  2.       the FAA Bill of Sale and Warranty Bill of Sale issued by AVSA,  S.A.R.L.  to the Borrower in respect of each
Aircraft;

                  3.       Clause 12  (Warranties and Service Life Policy) and Clause 13 (Patent  Indemnity) of the Purchase  Agreement
insofar as they relate to the Aircraft or any element  thereof,  the warranties and  indemnities,  including all  limitations  thereto,
provided in Section 2 of Exhibit B in the Engine  Agreement and all claims arising under such  provisions in respect of the Engines and
the Bills of Sale  (reserving  to the  Borrower,  however,  all of the  Borrower's  other  rights and  interest in and to the  Purchase
Agreement  and the Engine  Agreement)  together  with all rights,  powers,  privileges,  options and other  benefits of the Borrower in
respect of such provisions (subject to such reservation) with respect to the Airframes or the Engines,  including,  without limitation,
the right to make all waivers and  agreements,  to give and receive all notices and other  instruments or  communications,  and to take
such action upon the occurrence of a default in respect of such  provisions,  including the  commencement,  conduct and consummation of
legal,  administrative  or other  proceedings,  as shall be  permitted  thereby or by law, and to do any and all other things which the
Borrower  is or may be  entitled  to do in respect of such  provisions  (subject to such  reservation),  subject,  with  respect to the
Purchase  Agreement,  to the terms and  conditions of the Consent and Agreement and, with respect to the Engine  Agreement,  the Engine
Consent and Agreement;

                  4.       all payments or proceeds  payable to the Borrower  with respect to each  Aircraft or any part thereof as the
result of the sale, lease or other disposition  thereof,  and all estate,  right,  title and interest of every nature whatsoever of the
Borrower in and to the same and every part thereof;

                  5.       all  insurance  and  requisition  proceeds and all other  payments of any kind with respect to the Aircraft,
including but not limited to the insurance  required  hereunder but excluding any credits provided to the Borrower by any manufacturer,
seller or supplier of the Aircraft or any Engine or Part;

                  6.       all monies and  securities  deposited  or  required to be  deposited  with the  Administrative  Agent or the
Collateral  Agent or the Lender  pursuant to any term of this Mortgage or required to be held by the  Administrative  Agent in the name
of the Collateral Agent or by the Collateral Agent or the Lender hereunder; and

                  7.       all proceeds of any of the foregoing.

Any and all properties referred to in this Granting Clause which are hereafter acquired by the Borrower, shall, without further
conveyance, assignment or act by the Borrower or the Collateral Agent or the Lender thereby become and be subject to the security
interest hereby granted as fully and completely as though specifically described herein.

                  Notwithstanding  any of the foregoing  provisions of this Granting Clause,  but subject to the express  provisions of
the other  articles of this  Mortgage,  so long as no Event of Default shall have occurred and be  continuing,  the Borrower shall have
the right,  to the  exclusion  of the  Administrative  Agent and  Collateral  Agent and any others  claiming  by,  through or under the
Administrative  Agent and Collateral Agent, (i) to quiet enjoyment of each Aircraft,  Airframe and Engine, and to possess,  use, retain
and control each Aircraft,  Airframe and Engine and all revenues,  income and profits  derived  therefrom and (ii) with  respect to the
Assigned  Warranties,  to  exercise  in the  Borrower's  name all rights and powers  under the  Assigned  Warranties  and to retain any
recovery or benefit resulting from the enforcement of any warranty or indemnity or other obligation under the Assigned Warranties.

                                                         -- HABENDUM CLAUSE --

                  TO HAVE AND TO HOLD all and singular the aforesaid  property unto the Collateral  Agent,  its successors and assigns,
in trust for the benefit and security of the Lender,  and for the uses and purposes and subject to the terms and  provisions  set forth
in this Mortgage.

                  The  Borrower  does hereby  constitute  the  Collateral  Agent the true and lawful  attorney of the  Borrower  (which
appointment  is coupled with an interest),  irrevocably,  with full power (in the name of the Borrower or  otherwise) to ask,  require,
demand,  receive,  compound and give  acquittance  for any and all monies and claims for monies (in each case  including  insurance and
requisition  proceeds)  due and to become due under or arising  out of the  Operative  Documents  and all other  property  which now or
hereafter  constitutes part of the Mortgage Estate,  to endorse any checks or other  instruments or orders in connection  therewith and
to file any claims or to take any action or to  institute  any  proceedings  which the  Collateral  Agent may deem to be  necessary  or
advisable  in the  premises;  provided  that the  Collateral  Agent  agrees not to exercise  such power of attorney  unless an Event of
Default shall be continuing.

                  The Borrower does hereby warrant and represent  that (except as permitted  herein) it has not assigned or pledged any
of its right, title, and interest hereby assigned to anyone other than the Administrative Agent and the Collateral Agent.

                  IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows:

Article I.........
- ------------------

                                                 DEFINITIONS AND INTERPRETIVE MATTERS
                                                 ------------------------------------

Section 1.01......Definitions.  For all purposes of this Mortgage the following terms shall have the following meanings (such
                  -----------
definitions to be equally applicable to both the singular and plural forms of the terms defined).  Any agreement referred to below
shall mean such agreement as amended, supplemented and modified from time to time in accordance with the applicable provisions
thereof and of the other Operative Documents.  Unless otherwise specified, Section and Article references are to Sections and
Articles of this Mortgage:

         "Additional Costs" is defined in Section 10(h) of the Credit Agreement.
          ----------------

         "Additional Insured(s)" means, collectively, the Administrative Agent, the Collateral Agent, any Program Support Provider
          ---------------------
and the Lender.

         "Administrative Agent" means PK AirFinance S.A., New York Branch, solely in its capacity as Administrative Agent on behalf
          --------------------
of the Lender, and any successor thereto in such capacity.

          "Affiliate" means, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or
           ---------
under common control with, such Person.  The term "control" means the possession, directly or indirectly of the power to direct or
cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or
otherwise.

         "Aircraft" means each Airframe together with the two (2) Engines referenced in the Mortgage Supplement relating to such
          --------
Airframe, whether or not such Engines are installed on such Airframe or any other airframe, and, where the context permits, all logs,
manuals and data and inspection, modification and overhaul records required to be maintained with respect to the foregoing property.

         "Airframe" means:  (i) each Airbus A319-111 aircraft (excluding Engines or engines from time-to-time installed thereon)
          --------
specified by United States Registration Number and Manufacturer's Serial Number in the related Mortgage Supplement; and (ii) any and
all related Parts.

         "Applicable Margin" means 1.00% per annum.
          -----------------

         "Applicable Rate" means, with respect to each Loan, the Base Rate for such Loan plus the Applicable Margin.
          ---------------

         "Assigned Warranties" means all right, title and interest of the Borrower in, to and under the warranties covered in
          -------------------
clause 3 of the Granting Clause.

         "Balloon Amount" means, with respect to each Loan, the amount set forth in Annex A to the applicable Note issued by Borrower
          --------------
with respect to such Loan.

         "Bankruptcy Code" means the provisions of title 11 of the United States Code, 11 U.S.C.ss.ss. 101 et seq.
          ---------------                                                                                  -- ---

         "Bankruptcy Event" means, as to any Person, any of the following events:  (a) a case or proceeding shall have been commenced
          ----------------
against such Person seeking a decree or order in respect of such Person (i) under the Bankruptcy Code or any other applicable
federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for any such Person or for any substantial part of such Person's assets, or (iii) ordering the
winding-up or liquidation of the affairs of any such Person; or (b) such Person shall (i) file a petition seeking relief under the
Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consent or fail to object in
a timely and appropriate manner to the institution of proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for
such Person or for any substantial part of such Persons' assets, (iii) make an assignment for the benefit of creditors, or (iv) take
any corporate action in furtherance of any of the foregoing.

         "Base Rate" means, with respect to each Loan, a rate of interest per annum equal to the lower of the Administrative Agent
          ---------
Quoted Rate (as defined in Schedule III to the Credit Agreement) for such Loan and the Borrower Rate (as defined in Schedule III to
the Credit Agreement) for such Loan, if applicable, in respect of the Swap for such Loan.

         "Bills of Sale" means, collectively, an FAA Bill of Sale and a Warranty Bill of Sale in favor of Borrower.
          -------------

         "Break Amount" means the amount or amounts, if any, required to compensate the Lender for any losses, costs or expenses
          ------------
(excluding loss of profit and Swap Breakage Amount) which it may incur as the result of the prepayment (including a prepayment
following acceleration) (or the failure to make any such prepayment on the date irrevocably scheduled therefor) of any Note (or
interest thereon) held by it on a date other than the immediately succeeding Interest Payment Date or in an amount different than the
amount to be paid on such date pursuant to the terms of the Operative Documents, including, without limitation, losses, costs or
expenses incurred in connection with unwinding or liquidating any deposits or funding or financing arrangement with its funding
sources, as determined by the Lender absent manifest error.  Without limiting the effect of the preceding sentence, such compensation
shall include an amount equal to the excess, if any, of (i) the amount of interest which otherwise would have accrued on the
principal amount so prepaid from the date of prepayment to the immediately succeeding Interest Payment Date (the "Break Period") over
                                                                                                                  ------------
(ii) the amount of interest component of the amount the Lender would have obtained from leading banks in the London interbank market
for Dollar deposits of leading banks in an amount comparable to such principal amount and with a maturity comparable to the Break
Period (as determined by the Lender absent manifest error.)

         "Business Day" means any day other than a Saturday or Sunday or a day on which commercial banks are required or authorized
          ------------
to close in New York, New York and Denver, Colorado and, if such day relates to the advance of a Loan or setting of the Applicable
Rate, in New York, New York, Stamford, Connecticut, Denver, Colorado and London, England.

         "Civil Reserve Air Fleet Program" or "CRAF" means the Civil Reserve Air Fleet Program administered by the United States
          -------------------------------      ----
Government or any substantially similar program.

         "Collateral Agent" means General Electric Capital Corporation, solely in its capacity as Collateral Agent hereunder, and any
          ----------------
successor thereto in such capacity.

         "Commercial Paper" means those certain short-term promissory notes issued by a CP Conduit denominated in U.S. Dollars or
          ----------------
other currencies issued and sold from time to time in the United States of America or in other jurisdictions.

         "Commitment" in respect of any Aircraft has the meaning specified in Section 1(b) of the Credit Agreement.
          ----------

         "Consent and Agreement" means, for any Aircraft, the Manufacturer Consent and Agreement [Frontier/PK], dated as of the
          ---------------------
Delivery Date for such Aircraft, of AVSA in respect of such Aircraft.

         "CP Conduit" means any special purpose entity which issues Commercial Paper.
          ----------

         "Credit Agreement" means that certain Credit Agreement [Frontier/PK], dated as of the date hereof, among the Borrower, the
          ----------------
Lender, the Administrative Agent and the Collateral Agent, as such Credit Agreement may be amended or supplemented from time to time
pursuant to the applicable provisions thereof.

         "Delivery Date" means, for each Aircraft, the date of the initial Mortgage Supplement for such Aircraft, which date shall be
          -------------
the date the Lender delivers the Loan in respect of such Aircraft to Borrower.

         "Default" means any event which with the giving of notice or the lapse of time or both if not timely cured or remedied would
          -------
become an Event of Default pursuant to Section 11 of the Credit Agreement.

         "Dollars", "Dollar" and "$" means the lawful currency of the United States of America.
          -------    ------       -

         "Engine" means (i) each of the two (2) CFM International, Inc. Model CFM56-5B5/P engines listed by Manufacturer's Serial
          ------
Numbers in the initial Mortgage Supplement for each Aircraft, whether or not from time to time installed on such Airframe or any
other airframe; (ii) any Replacement Engine which may from time to time be substituted for any Engine pursuant to the terms hereof;
and (iii) in each case, any and all related Parts.  The term "Engines" means, as of any date of determination, both Engines then
                                                              -------
subject to the lien hereof.  Except as otherwise set forth herein, at such time as a Replacement Engine shall be substituted for an
Engine pursuant to the terms hereof, such replaced Engine shall cease to be an Engine hereunder.

         "Engine Agreement" means General Terms Agreement No. 6-13616 dated as of June 30, 2000 between CFM International, Inc. and
          ----------------
Societe Nationale D'Etude et de construction de Moteurs iAviation and the Borrower.

         "Engine Consent and Agreement" means, for any Aircraft, the Engine Consent and Agreement [Frontier/PK] dated as of the
          ----------------------------
Delivery Date of such Aircraft of the Engine Manufacturer in respect of such Aircraft.

         "Engine Manufacturer" means CFM International, Inc.
          -------------------

         "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.
          -----

         "Event of Default" has the meaning specified in Section 11 of the Credit Agreement.
          ----------------

         "Event of Loss" with respect to any Aircraft, Airframe or Engine means any of the following events with respect to such
          -------------
property:  (i) the loss of such property, or of the use thereof, due to the destruction of or damage to such property which renders
repair uneconomical or which renders such property permanently unfit for normal use by the Borrower for any reason whatsoever;
(ii) any damage to such property which results in the receipt of insurance proceeds with respect to such property on the basis of an
actual, constructive or compromised total loss; (iii) theft, hijacking or disappearance of such property for a period in excess of
90 days (or, if earlier, the date on which the Borrower has confirmed to the Administrative Agent in writing that it cannot recover
such property); (iv) the confiscation, condemnation, or seizure of, or requisition of (x) title to, or use of, such property by any
governmental or purported governmental authority (other than a requisition of use by the government of the United States of America
or any agency or instrumentality thereof which bears the full faith and credit of the government of the United States of America) or
(y) use by any other government or governmental authority for a period in excess of 60 consecutive days; (v) as a result of any law,
rule, regulation, order or other action by the FAA or other similar governmental body of the government of registry of such Aircraft
having jurisdiction, use of such type of property in the normal course of the business of air transportation shall have been
prohibited for a period of six consecutive months, unless the Borrower, prior to the expiration of such six-month period, shall have
undertaken and shall be diligently carrying forward all steps which are necessary and desirable to permit the normal use of such
property by the Borrower, but in any event if such use shall have been prohibited for a period of 12 months; and (vi) any event
treated as an Event of Loss pursuant to Section 3.03(d) hereof.

         An Event of Loss with respect to an Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the
related Airframe.

         "Expense" or "Expenses" means any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, out
          -------      --------
of pocket costs, expenses and disbursements (including reasonable legal fees and expenses) of whatever kind and nature but excluding
internal costs and expenses such as salaries, any amounts that would be included in Break Amount and Swap Breakage Amount, and
overhead of whatsoever kind and nature.

         "FAA Bill of Sale" means, for each Aircraft, a bill of sale on AC Form 8050-2 or such other form as may be approved by the
          ----------------
FAA in favor of the Borrower from Seller in respect of such Aircraft.

         "Federal Aviation Act" means subtitle VII of Title 49 of the United States Code, or any successor provision.
          --------------------

         "Federal Aviation Administration" and "FAA" mean the United States Federal Aviation Administration and any successor agency
          -------------------------------       ---
or agencies thereto.

         "FedWire" means the funds transfer system used to transfer reserve balances for immediately available credit among the
          -------
member banks of the United States Federal Reserve System.

         "Final Maturity Date" means with respect to each Loan, the date corresponding to the 120-month anniversary date of the
          -------------------
Delivery Date of the applicable Aircraft (or, if such date is not a Business Day, the next succeeding Business Day).

         "Fixing Date" is defined in Schedule III to the Credit Agreement.
          -----------

         "GAAP" means generally accepted accounting principles, consistently applied.
          ----

         "GE Capital" means General Electrical Capital Corporation.
          ----------

         "Governmental Authority" means any nation or government, any state, county, city, town, district, board, bureau, office,
          ----------------------
commission, any other municipality or other political subdivision thereof (including any educational facility, utility or other
Person operated thereby), and any court, agency, department, authority or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

         "Inchoate Liens" mean inchoate Liens of the type described in Section 9(e)(ii) of the Credit Agreement for taxes not yet due
          --------------
and Section 9(e)(iii) of the Credit Agreement (other than, in the case of said clause (iii), contested Liens).

         "Indemnified Amounts" means, with respect to any Person, any and all claims, losses, liabilities, obligations, damages,
          -------------------
penalties, actions, judgments, suits, proceedings in contract or tort including such Person's strict liability in tort, and related
costs and expenses of any nature whatsoever (including reasonable attorneys' fees and disbursements and other costs of investigation
or defense, including those incurred upon any appeal).

         "Indemnified Party," "Indemnitee," or "Indemnitees" means, collectively, the Collateral Agent, the Administrative Agent, the
          -----------------    ----------       -----------
Lender (and, to the extent the Lender is a CP Conduit, its Program Support Providers) and each of their respective successors,
permitted assigns (and, to the extent such permitted assignee is a CP Conduit, its Program Support Providers), directors, officers,
and employees.

         "Interest Payment Date" means, with respect to each Loan, the one month anniversary date of the Delivery Date of the
          ---------------------
applicable Aircraft and thereafter on the corresponding date of each succeeding month; provided that, if any such date shall not be a
                                                                                       --------
Business Day, then the relevant Interest Payment Date shall be the next succeeding Business Day unless by virtue of such extension
such date would fall in the next succeeding calendar month, in which case the relevant Interest Payment Date shall be the next
preceding Business Day.

         "Lender" means Edison Asset Securitization, L.L.C., a limited liability company organized under the laws of the State of
          ------
Delaware, together with its successors and permitted transferees and assigns.

         "Lender Lien" means any Lien on any part of the Mortgage Estate arising as a result of or in connection with (a) claims
          -----------
against or affecting the Administrative Agent, the Collateral Agent or the Lender and that are not related to the transactions
contemplated by the Operative Documents, (b) any act or omission of any such party (including, in the case of the Collateral Agent or
the Administrative Agent, such Person in its individual capacity or in its capacity as agent) that is not related to the transactions
contemplated by the Operative Documents, or (c) Taxes (including claims therefor) or other losses, costs or expenses imposed on any
such party (including, in the case of the Collateral Agent or the Administrative Agent, such Person in its individual capacity or in
its capacity as agent) for which Borrower is not obligated to indemnify pursuant to the Credit Agreement or any other Operative
Document.

          "LIBOR" means, in relation to any period, the rate for deposits in United States Dollars for that period quoted on Telerate
           -----
page 3750 (British Bankers' Association Interest Settlement Rates) (or such other page as may replace such Page 3750 on such system)
as being the rate at which deposits in United States Dollars are offered in the London Interbank Market for the same or substantially
similar period at, or about, 11:00 a.m. (London time) on the second Business Day before the first day of the relevant period on which
any amount is required to be funded for the purpose of this Agreement, or if, on such date, no rate is displayed, LIBOR shall mean
the rate for deposits of an amount comparable to the Loan in United States Dollars for that period determined by the Agent to be the
arithmetic mean of the rates offered by Citibank N.A., Barclays Bank plc and Bankers Trust Company at 11:00 a.m. London time on the
second Business Day before the first day of the relevant period for that relevant period.

         "Lien" means any mortgage, pledge, lien, claim, encumbrance, lease, security interest or other lien of any kind on property.
          ----

         "Liquidity Agent" means GE Capital, in its capacity as agent for the Liquidity Providers pursuant to the Liquidity Loan
          ---------------
Agreement.

         "Liquidity Loan Agreement" means the Liquidity Loan Agreement dated as of May 9, 2001, among the initial Lender, as
          ------------------------
borrower, the Liquidity Providers from time to time party thereto and GE Capital, in its capacities as (a) the operating agent for
the initial Lender, (b) the "Collateral Agent" thereunder, (c) the initial Liquidity Provider and (d) the Liquidity Agent.

         "Liquidity Loans" means any and all borrowings by the initial Lender under the Liquidity Loan Agreement.
          ---------------

         "Liquidity Providers" means, collectively, GE Capital and any other provider of Liquidity Loans under the Liquidity Loan
          -------------------
Agreement.

         "Litigation" means, with respect to any Person, any action, claim, lawsuit, demand, investigation or proceeding pending or
          ----------
threatened against such Person before any Governmental Authority or before any arbitrator or panel of arbitrators.

         "Loan" in respect of each Aircraft means the money borrowed on the Delivery Date for such Aircraft by the Borrower from the
          ----
Lender.

         "Maintenance Program" means the maintenance program for the Aircraft of the Borrower which is approved by the government of
          -------------------
registry of the Aircraft.

         "Manufacturer" means Airbus Industries GIE, in its capacity as manufacturer of the Aircraft, and its successors and assigns.
          ------------

         "Moody's" means Moody's Investors Service.
          -------

         "Mortgage" and "this Mortgage" mean this Mortgage and Security Agreement [Frontier/PK], including any Mortgage Supplement
          --------       -------------
and each other supplement from time to time entered into pursuant hereto.

         "Mortgage Estate" means the "Mortgage Estate" as defined in the Granting Clause hereof.
          ---------------             ---------------

         "Mortgage Supplement" means a supplement to this Mortgage substantially in the form of Exhibit A, which shall particularly
          -------------------
describe each Airframe and associated Engines, or any Replacement Engine, included in the property of the Borrower covered by this
Mortgage, or any other supplement hereto.

         "Non-U.S. Person" means any Person other than (i) a citizen or resident of the United States of America (for purposes of
          ---------------
this definition, the "United States"), (ii) a corporation, partnership, limited liability company or other entity created or
organized under the laws of the United States or any political subdivision thereof or therein or (iii) an estate or trust that is
subject to United States federal income taxation regardless of the source of its income.

         "Notes" or "Promissory Notes" means the promissory notes issued pursuant to Section 2.02(a) and any such notes issued in
          -----      ----------------
exchange or replacement therefore pursuant to Section 10 of the Credit Agreement.

         "Note Register" has the meaning specified in Section 10(c) of the Credit Agreement.
          -------------

         "Operative Documents" means the Credit Agreement, the Mortgage, any Mortgage Supplement, the Notes, each Consent and
          -------------------
Agreement and each Engine Consent and Agreement, and any amendments, of supplements of any of the foregoing.

         "Original Amount," with respect to a Note, means the stated original amount (that is, principal) of such Note, and, with
          ---------------
respect to all the Notes of any Series, means the aggregate stated original amounts of such Notes, which shall, on the Delivery Date
for the Aircraft of the related Series, equal the amount of the Loan for such Aircraft.  The Original Amount for each Series of Notes
shall be $24,000,000 with respect to each Aircraft.

         "Parts" means all appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever
          -----
nature (other than complete Engines or engines), which are from time to time incorporated or installed in or attached to an Airframe
or any Engine and all such items which are subsequently removed therefrom so long as the Lien of this Mortgage shall cover the same
pursuant to the terms hereof; provided, however, that improvements described in Section 4.04 hereof shall not fall within the
definition of Parts.

         "Past Due Rate" means a per annum rate equal to the Applicable Rate plus 4.0% calculated on the basis of a year of 360 days
          -------------
and actual number of days elapsed.

         "Payment Office" means the bank and account number referred to in Schedule I to the Credit Agreement.
          --------------

         "Permitted Investments" means those investments described in Section 15 of the Credit Agreement.
          ---------------------

         "Permitted Transferee" is defined in Section 23(c)(v) of the Credit Agreement.
          --------------------

         "Permitted Lien" means any Lien permitted under Section 9(e) of the Credit Agreement.
          --------------

         "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock
          ------
company, trust, unincorporated organization or government or any agency or political subdivision thereof.

         "Plan" means an "employee benefit plan" (as such term is defined in Section 3(3) of the Employee Retirement Income Security
          ----
Act of 1974, as amended) or any "plan" (as such term is defined in Section 4975(e)(1) of the Code) which has been established or
maintained or contributed to by the Borrower or an Affiliate that, together with the Borrower, is treated as a single employer under
Section 414(b), (c) or (m) of the Code.

          "Program Support Provider" means any Person now or hereafter extending credit or having a commitment to extend credit to or
           ------------------------
for the account of, or to make purchases from, a CP Conduit that is the Lender or a Permitted Transferee or issuing a letter of
credit, surety bond or other instrument to support any obligations arising under or in connection with such CP Conduit's Commercial
Paper program (including the Liquidity Providers with respect to the Lender), as well as any Person now or hereafter acting as agent
for such CP Conduit or for any of the foregoing Persons (including the Liquidity Agent with respect to the Lender).

         "Purchase Agreement" means the Airbus A318/A319 Purchase Agreement dated as of March 10, 2000 between AVSA S.A.R.L. and
          ------------------
Borrower, relating to the purchase by the Borrower of the Aircraft, as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the foregoing relates to the Aircraft.

         "Ratings Agencies" means S&P and Moody's.
          ----------------

         "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as the same
          ------------
may be modified and supplemented and in effect from time to time.

         "Regulatory Change" means any change after the date hereof in any Federal, state or foreign law or regulation (including
          -----------------
Regulation D of the Federal Reserve Board) or the adoption or making after such date of any interpretation, directive or request
under any Federal, state or foreign law or regulation (whether or not having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof that, in each case, is applicable to the Lender.

         "Replacement Engine" means any engine substituted for an Engine pursuant to Section 13(a) of the Credit Agreement.
          ------------------

         "Reserve Requirement" means, for any Lender with respect to any Note, the average maximum rate at which reserves (including,
          -------------------
without limitation, any marginal, supplemental or emergency reserves) are required to be maintained by the Lender in respect of such
Note under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D or as otherwise applicable under other requirements
applicable to such Lender).  Without limiting the effect of the foregoing, the Reserve Requirement includes any other reserves
required to be maintained by such member banks or the Lender by reason of any Regulatory Change with respect to any category of
extensions of credit or other assets that includes the Notes.

         "S&P" means Standard & Poors Ratings Service .
          ---

         "Securities Act" means the Securities Act of 1933, as amended.
          --------------

         "Seller" means AVSA, S.A.R.L., a wholly-owned subsidiary of the Manufacturer.
          ------

         "Series" has the meaning specified in Section 2.02(a) hereof.
          ------

         "Special Default" means a Default under any of Sections 11(a), 11(b), 11(f) or 11(g) of the Credit Agreement.
          ---------------

         "Stipulated Insured Amount" for any Aircraft as of any date of determination means an amount equal to 110% of the aggregate
          -------------------------
principal amount then outstanding on the Notes of the Series issued in respect of such Aircraft.

         "Swap" means, with respect to each Loan, a notional interest rate swap which the Administrative Agent shall be deemed to
          ----
have entered into, on either the Swap Date or the Fixing Date, as applicable in accordance with the provisions of Schedule III to the
Credit Agreement, pursuant to the terms of a Swap Agreement, the provisions of which provide, inter alia, for the exchange on each
Interest Payment Date during the term of such Loan of (i) an amount equal to one-month USD LIBOR-BBA (as defined in the Swap
Agreement), calculated on an actual over 360-day basis, from and including the applicable Swap Date or Fixing Date and each Interest
Payment Date to but excluding the following Interest Payment Date, in respect of a notional amount equal to the principal amount of
such Loan scheduled to be outstanding on each such Interest Payment Date (such amount to be paid by the swap counterparty as floating
rate payor or which amount would be paid thereby had an interest rate swap actually been entered into) for (ii) a fixed rate of
interest calculated on the basis of a 360-day year and the actual number of days elapsed in respect of such notional amount (such
amount to be paid by the Administrative Agent as fixed rate payor or which amount would be paid thereby had an interest rate swap
actually been entered into).

         "Swap Agreement" means a notional interest rate exchange agreement, deemed entered into by the Administrative Agent and a
          --------------
counterparty in connection with the transactions contemplated by the Operative Documents, which agreement will be deemed to be
comprised of the ISDA Master Agreement and the related confirmation.

         "Swap Breakage Amount" means, with respect to each Loan, in the event of a prepayment of such Loan pursuant to Section 10(f)
          --------------------
of the Credit Agreement, the prepayment of such Loan following acceleration pursuant to Section 12(a) of the Credit Agreement or the
prepayment or purchase of such Loan pursuant to Section 10(h) of the Credit Agreement the amount payable in connection with the early
termination of the applicable Swap, as determined pursuant to Schedule IV of the Credit Agreement.

         "Swap Date" means the date on which the Swap described in Schedule III to the Credit Agreement is entered into (or would
          ---------
have been entered into, in the case of a notional Swap).

         "Tax" or "Taxes" means any and all fees (including, without limitation, license, documentation and registration fees), taxes
          ---      -----
(including, without limitation, income, gross receipts, sales, rental, use, turnover, value added, property (tangible and
intangible), excise and stamp taxes), licenses, levies, imposts, duties, recording charges or fees, charges, assessments, or
withholdings of any nature whatsoever, together with any assessments, penalties, fines, additions to tax and interest thereon.

         "U.S. Air Carrier" means any United States air carrier as to which there is in force a certificate issued pursuant to
          ----------------
Section 41102(a) of the Federal Aviation Act, and which is a citizen of the United States (as defined in 49 U.S.C.ss. 40102(a)(15))
holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of title 49 (or the
equivalent authority issued by the Civil Aeronautics Board under the predecessor regulatory laws, rules and regulations) for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of cargo or which may operate as an air carrier by certification
or otherwise under any successor or substitute provisions therefor or in the absence thereof.

         "War Risk Insurance" has the meaning assigned to such term in Section 6.02 hereof.
          ------------------

         "Warranty Bill of Sale" means, for any Aircraft, a full warranty bill of sale in favor of the Borrower from AVSA, S.A.R.L.
          ---------------------
in respect of such Aircraft.

         "Wet Lease" means any arrangement whereby the Borrower agrees to furnish an Airframe and associated Engines or engines
          ---------
installed thereon to a third party pursuant to which such Airframe and Engines or engines (i) are operated by pilots who are regular
employees of the Borrower, and (ii) such property is maintained by the Borrower.

(f)      Certain Interpretive Matters.  For purposes of the Operative Documents and all such Notes and other documents, unless the
         ----------------------------
     context otherwise requires:  (a) unless otherwise specifically provided therein, any accounting term used in any Operative
     Document shall have the meaning customarily given such term in accordance with GAAP, and all financial computations thereunder
     shall be computed in accordance with GAAP consistently applied (that certain items or computations are explicitly modified by the
     phrase "in accordance  with GAAP" shall in no way be construed to limit the foregoing); (b) all other undefined capitalized terms
     contained in any of the Operative Documents shall, unless the context indicates otherwise, have the meanings provided for by the
     Uniform Commercial Code as in effect in the State of New York to the extent the same are used or defined therein; (c) references
     to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day; (d) the
     words "herein," "hereof" and "hereunder" and other words of similar import used in any Operative Document refer to such Operative
     Documents as a whole, including all annexes, exhibits and schedules, as the same may from time to time be amended, restated,
     amended and restated, supplemented or otherwise modified, and not to any particular section, subsection or clause contained in
     such Operative Document or any such annex, exhibit or schedule; (e) references to any Section, Schedule or Exhibit are references
     to Sections, Schedules and Exhibits in or to such Operative Document (or the Note or other document in which the reference is
     made), and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such
     paragraph, subsection, clause or other subdivision of such Section or definition; (f) the words "including," "includes" and
     "include" shall be deemed to be followed by the words "without limitation"; the word "or" is not exclusive; (g) references to any
     law or regulation refer to that law or regulation as amended from time to time and include any successor law or regulation; (h)
     references to any agreement refer to that agreement as from time to time amended or supplemented or as the terms of such
     agreement are waived or modified in accordance with its terms; (i) references to Persons include their respective successors and
     assigns (to the extent and only to the extent permitted by the Operative Document) or, in the case of Governmental Authorities,
     Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall
     include any amendments of the same and any successor statutes and regulations; (j) headings are for purposes of reference only
     and shall not otherwise affect the meaning or interpretation of any provision hereof; and (k) wherever from the context it
     appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns
     stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter genders.

Article II........
- ------------------






                                                               THE NOTES
                                                               ---------

Section 2.01......Form of Notes.  The Notes shall each be substantially in the form set forth below, as follows:
                  -------------

                                                             -------------

                                                        FRONTIER AIRLINES, INC.

                                                       PROMISSORY NOTE DUE 2011
                                     ISSUED IN CONNECTION WITH ONE AIRBUS MODEL A319-111 AIRCRAFT
                                     WITH MANUFACTURER'S SERIAL NUMBER ____ AND INITIALLY BEARING
     UNITED STATES FEDERAL AVIATION ADMINISTRATION REGISTRATION NUMBER _______ AND TWO CFM INTERNATIONAL MODEL CFM56-5B5/P ENGINES
                                     BEARING MANUFACTURER'S SERIAL NUMBERS ________ AND _________

New York, New York
No. R-
Series:  ______

$                                                                                                  [Delivery Date]

                  Frontier  Airlines,  Inc.  (the  "Borrower")  hereby  promises  to pay to Edison  Asset  Securitization,  L.L.C.,  or
                                                    --------
registered transferees,  the principal sum of ______________________  Dollars, in 120 consecutive  installments,  equal to the amounts,
and payable on the Interest  Payment Dates,  set forth in Annex A hereto,  together with interest payable on each such Interest Payment
Date on the unpaid  principal  amount  hereof from the date  hereof,  or the  immediately  preceding  Interest  Payment  Date,  to (but
excluding)  such Interest  Payment Date until such principal  amount is paid in full. If any sum payable under this Note falls due on a
day which is not a Business Day,  then such sum shall be payable on the next  succeeding  Business Day,  unless such Business Day falls
in the following  month, in which case such sum shall be payable on the Business Day immediately  prior thereto.  Interest on this Note
shall be  payable  at a rate equal to  [_____]%  per annum  (calculated  on the basis of a 360-day  year and the actual  number of days
elapsed).  In no  contingency  or event  whatsoever  shall the rate or amount of interest  paid by Borrower  under this Note exceed the
maximum amount  permissible  under any law which a court of competent  jurisdiction  shall, in a final  determination,  deem applicable
hereto.  In the event  that a court  determines  that the  Lender has  received  interest  hereunder  in excess of the  maximum  amount
permitted  by such law,  (i) the  Lender  shall  apply such  excess to any unpaid  principal  owed by Borrower to the Lender or, if the
amount of such excess exceeds the unpaid balance of such  principal,  the Lender shall promptly refund such excess interest to Borrower
and (ii) the provisions  hereof shall be deemed amended to provide for such  permissible  rate. All sums paid, or agreed to be paid, by
Borrower which are, or hereafter may be construed to be,  compensation  for the use,  forbearance  or detention of money shall,  to the
extent  permitted by applicable law, be amortized,  prorated,  spread and allocated  throughout the full term of all such  indebtedness
until the  indebtedness is paid in full. This Note shall bear interest at the applicable  Past Due Rate on any principal  hereof,  and,
to the extent  permitted by applicable law,  interest and other amounts due hereunder,  not paid when due (whether at stated  maturity,
by  acceleration  or otherwise),  for any period during which the same shall be overdue,  payable on demand by the Lender given through
the Administrative Agent.

                  All payments of principal,  Break Amount and Swap Breakage Amount and Additional  Costs, if any, and interest and all
other amounts to be made to the Lender hereunder or under the Mortgage and Security  Agreement  [Frontier/PK]  dated as of May 9,  2001
(as amended or  supplemented  from time to time,  herein called the  "Mortgage",  the terms defined  therein and not otherwise  defined
                                                                      --------
herein being used herein with the same meanings)  among the Borrower,  PK AirFinance  S.A., New York Branch,  as  Administrative  Agent
thereunder and General Electric Capital Corporation,  as Collateral Agent thereunder or under the other Operative  Documents,  shall be
made in accordance with the terms of the Mortgage and the other Operative Documents.

                  Principal  and interest and all other  amounts due  hereunder  shall be payable in Dollars in  immediately  available
funds prior to 11:00 a.m.,  New York,  New York time, on the due date thereof,  to the  Administrative  Agent at the Payment Office and
the Administrative  Agent shall,  subject to the terms and conditions of the Mortgage,  remit all such amounts so received by it to the
Lender hereof in accordance with the terms of the Mortgage at the account set forth in Schedule I to the Credit  Agreement,  or to such
account or accounts at such financial  institution or institutions as the Lender may designate to the  Administrative  Agent in writing
from time to time, in immediately  available  funds,  such payment to be made, in the case of any such designated  account in New York,
New York,  prior to 1:00 p.m.,  New York time, on the due date thereof.  In the event the  Administrative  Agent shall fail to make any
such  payment  as  provided  in the  immediately  foregoing  sentence  after  its  receipt  of funds at the place and prior to the time
specified  above,  the  Administrative  Agent agrees to  compensate  the Lender for loss of use of funds in a  commercially  reasonable
manner.  All such payments by the Borrower and the  Administrative  Agent shall be made free and clear of and without  reduction for or
on account of all wire or other like charges.

                  The Lender,  by its acceptance of this Note,  agrees that,  except as otherwise  expressly  provided in the Mortgage,
each payment  received by it in respect  hereof shall be applied,  first,  to the payment of any amount (other than the principal of or
                                                                   -----
interest  on this Note) due in respect of this Note,  second,  to the payment of  interest  hereon (as well as any  interest on overdue
                                                      ------
principal and, to the extent permitted by law, interest and other amounts payable hereunder) due and payable  hereunder,  third, to the
                                                                                                                          -----
payment of the principal of this Note then due and fourth, the balance, if any, remaining  thereafter,  to the payment of the principal
                                                   ------
of this Note remaining unpaid, in the manner set forth in the last sentence of Section 10(b) of the Credit Agreement.

                  This  Note is one of the Notes  referred  to in the  Mortgage  which  have  been or are to be issued by the  Borrower
pursuant  to the terms of the  Mortgage.  The  Mortgage  Estate is held by the  Collateral  Agent as  security  for the  benefit of the
Lender,  in part,  for the  Notes.  Reference  is hereby  made to the  Mortgage  and the Credit  Agreement  referred  to therein  for a
statement of the rights and  obligations  of the Lender,  and the nature and extent of the  security for this Note,  and the nature and
extent of the  security  for the other  Notes,  as well as for a statement  of the terms and  conditions  of the trusts  created by the
Mortgage,  to all of which terms and  conditions in the Mortgage and such Credit  Agreement the Lender agrees by its acceptance of this
Note.

                  There shall be  maintained a Note  Register for the purpose of  registering  transfers  and exchanges of Notes at the
office of the Administrative  Agent or at the office of any successor  administrative  agent in the manner provided in Section 10(c) of
the Credit  Agreement.  As provided in the Credit  Agreement and subject to certain  limitations  set forth  therein,  this Note or any
interest herein may,  subject to the next following  paragraph,  be assigned or transferred,  and the Notes are exchangeable for a like
aggregate original principal amount of Notes of a like Series of any authorized  denomination,  as requested by the Lender surrendering
the same.

                  Prior to the due presentment for  registration of transfer of this Note, the Borrower,  the Collateral  Agent and the
Administrative  Agent shall deem and treat the person in whose name this Note is registered on the Note Register as the absolute  owner
of this Note and the Lender for the purpose of  receiving  payment of all amounts  payable  with respect to this Note and for all other
purposes  whether or not this Note is overdue,  and neither the  Borrower nor the  Administrative  Agent shall be affected by notice to
the contrary.

                  This Note is  subject  to  prepayment  as  permitted  by  Sections 10(f)  and 10(g) of the  Credit  Agreement  and to
acceleration by the  Administrative  Agent as provided in Section 12(a) of the Credit  Agreement,  and the Lender, by its acceptance of
this Note, agrees to be bound by said provisions.

                  The Borrower agrees to be bound by the provisions set forth in Sections 9(b) and 23(d) of the Credit  Agreement as if
they were set forth in their entirety herein.

                  This Note shall be governed by and construed in accordance with the law of the State of New York.





                  IN WITNESS WHEREOF,  the Borrower has caused this Note to be executed in its corporate name by its officer  thereunto
duly authorized, as of the date hereof.

                                                           FRONTIER AIRLINES, INC.


                                                           By:
                                                           Its:





                                                            Annex A to Note






                                                    SCHEDULE OF PRINCIPAL PAYMENTS

Interest Payment Date
(falling on or closest to)               Principal Amount to be paid1
- --------------------------               ---------------------------



Section 2.02      Terms of Notes.  (a)  (a) On the Delivery Date of each Aircraft the Borrower shall issue Notes in respect of such
                  --------------
Aircraft (the Notes issued in respect of each Aircraft shall be referred to as a "Series") in an aggregate original principal amount
                                                                                  ------
of $24,000,000 to the Lender (or its respective nominees) in such amounts as shall be set forth in Schedule II to the Credit
Agreement for such Aircraft.

(b)      Each Note shall bear interest payable on each Interest Payment Date at the Applicable Rate on the unpaid principal amount
thereof from the date thereof in the case of the first Interest Payment Date, or otherwise from the immediately preceding Interest
Payment Date, to (but excluding) the following Interest Payment Date until such principal amount is paid in full.  Interest hereunder
and under the Notes shall be calculated on the basis of a year of 360 days and actual number of days elapsed.  If any sum payable
under the Notes or under this Mortgage falls due on a day which is not a Business Day, then such sum shall be payable on the next
succeeding Business Day, unless such Business Day falls in the following month, in which case such sum shall be payable on the
Business Day immediately prior thereto.

(c)      The principal of the Notes of each Series shall be due and payable in 120 consecutive installments as set forth in
Schedule 1 to the Mortgage Supplement for such Series, the first such installment to be due on the first Interest Payment Date
following the date of issuance of such Series of Notes.  The principal of the Notes shall be amortized on an annuity basis (using, as
the discount rate, the Applicable Rate for the Loan relating to such Note) down to the applicable Balloon Amount, payable on the
Final Maturity Date for such Notes.  The Administrative Agent shall prepare the amortization schedule for each Note based on the
methodology described in the preceding sentence.

(d)      Each Note shall bear interest at the Past Due Rate on any principal thereof and, to the extent permitted by applicable law,
interest and other amounts due thereunder and hereunder, not paid when due (whether at stated maturity, by acceleration or
otherwise), for any period during which the same shall be overdue, payable on demand by the Lender given through the Administrative
Agent.  Any such late payment shall bear interest at the Past Due Rate and shall also be subject to a late fee of $150.

(e)      The Notes shall be executed on behalf of the Borrower by one of its authorized officers.  Notes bearing the signatures of
individuals who were at any time the proper officers of the Borrower shall bind the Borrower, notwithstanding that such individuals
or any of them have ceased to hold such offices prior to the delivery of such Notes or did not hold such offices at the respective
dates of such Notes.  No Notes shall be issued hereunder except those provided for in Section 2.02(a) and any Notes issued in
exchange or replacement therefor pursuant to the terms of this Mortgage.  Each Note of any Series issued under this Section 2.02
shall be dated the Delivery Date of the related Aircraft.

Section 2.03      Termination of Interest in Mortgage Estate.  The Lender shall not, as such, have any further interest in, or other
                  ------------------------------------------
right with respect to, the Mortgage Estate relating to any Aircraft when and if the principal amount of and Break Amount, Swap
Breakage Cost, and Additional Costs, if any, and interest on and other amounts due under all Notes held by the Lender and all other
sums due to the Lender hereunder and under the other Operative Documents in respect of such Aircraft shall have been paid in full.

Article III
- ------------------

                               REGISTRATION AND MAINTENANCE; OPERATION; POSSESSION AND LEASES; INSIGNIA
                               ------------------------------------------------------------------------

Section 3.01      Registration and Maintenance.  The Borrower shall:  (1) (a) on the Delivery Date for each Aircraft, cause such
                  ----------------------------
Aircraft to be duly registered in its name (if not so registered) and, at all times thereafter, to remain duly registered in the
United States of America in its name under the Federal Aviation Act and (b) on the Delivery Date for each Aircraft, cause this
Mortgage to be duly recorded in the name of the Collateral Agent for the benefit of the Lender and, at all times thereafter, so long
as any Note shall be outstanding or any amount shall be owing to the Lender (but subject to Section 15.01(b)), cause this Mortgage to
be so maintained of record as a first priority and perfected mortgage on the Aircraft; (2) maintain, service, repair, and overhaul
(or cause to be maintained, serviced, repaired, and overhauled) each Aircraft (and any engine which is not an Engine but which is
installed on an Aircraft) (a) so as to keep such Aircraft in as good condition as when delivered to the Borrower by the Manufacturer
(ordinary wear and tear excepted) and so as to keep such Aircraft in good operating condition and in such condition as may be
necessary to enable the airworthiness certification for such Aircraft to be maintained in good standing at all times under the
Federal Aviation Act except when (i) such Aircraft is being serviced, repaired, maintained, overhauled, tested or modified as
permitted or required by the terms of this Mortgage or (ii) all Airbus A319-111 aircraft of comparable vintage and/or configuration
have been grounded by the FAA, and (b) in accordance with the Maintenance Program for such Aircraft and without in any way
discriminating against such Aircraft, and (3) maintain or cause to be maintained in English all records, logs and other materials
required to be maintained in respect of the Aircraft by the FAA.

Section 3.02      Operation.  The Borrower will not maintain, use, service, repair, overhaul or operate the Aircraft in violation of
                  ---------
any law, rule, regulation, treaty, or order of any government or governmental authority (domestic or foreign) having jurisdiction, or
in violation of any airworthiness certificate, license or registration relating to the Aircraft issued by any such authority except
the Borrower may contest in good faith the validity or application of any such law, rule, regulation, treaty, order, certificate,
license or registration, so long as there is no material risk of the sale, forfeiture or loss of any Aircraft, any Airframe or any
Engine, or the Collateral Agent's interest therein.  The Borrower will not operate or fly any Aircraft in or to any war zone or any
area of threatened or recognized hostility or in any area excluded from coverage by any insurance required to be maintained by the
terms of Article VI (or any indemnity issued in lieu thereof); provided, however, that the failure of the Borrower to comply with the
provisions of this sentence shall not give rise to an Event of Default hereunder where such failure is an extraordinary occurrence
attributable to a hijacking, medical emergency, equipment malfunction, weather condition, navigational error or similar event.

Section 3.03      Possession and Leases.  The Borrower will not, without the prior written consent of the Administrative Agent at the
                  ---------------------
direction of the Lender, which consent (and direction) will not be unreasonably withheld or delayed, lease or otherwise in any manner
deliver, transfer or relinquish possession of any Airframe or any Engine or install or permit any Engine to be installed on any
airframe other than an Airframe; provided that so long as no Event of Default shall have occurred and be continuing at the time of
such delivery, transfer or relinquishment of possession or installation and the Borrower shall continue to comply with the provisions
of Section 3.01 and Article VI, the Borrower may, without the prior written consent of the Administrative Agent:

(a)      subject any Engine to normal pooling or similar arrangements customary in the airline industry and entered into by the
Borrower in the ordinary course of its business with a U.S. Air Carrier or any other air carrier approved in writing by the
Administrative Agent at the direction of the Lender (which approval will not be unreasonably withheld or delayed); provided that
(i) no such agreement or arrangement contemplates or requires the transfer of title to any Engine and (ii) if the Borrower's title to
any Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with
respect to such Engine and the Borrower shall comply with Section 5.02 hereof in respect thereof;

(b)      deliver possession of any Airframe or any Engine to the Manufacturer or the Engine Manufacturer, or to any Person for
testing, service, repair, maintenance or overhaul work on any Airframe or any Engine or for alterations or modifications in or
additions to the Airframe(s) or Engine(s);

(c)      install an Engine on an airframe owned by the Borrower, leased to the Borrower, or owned or purchased by the Borrower
subject to a conditional sale or other security agreement, provided that (a) such airframe is free and clear of all Liens, except
(i) in the case of airframes leased to the Borrower or owned or purchased by the Borrower subject to a conditional sale or other
security agreement, the rights of the parties to the lease or conditional sale agreement or other security agreement covering such
airframe, or their assignee, (ii) Permitted Liens, and (iii) the rights of other air carriers under normal interchange agreements
which are customary in the airline industry and do not contemplate, permit or require the transfer of title to the airframe or
engines installed thereon, and (b) any such lease, conditional sale or other security agreement provides that such Engine shall not
become subject to the lien of such lease, conditional sale or other security agreement, notwithstanding the installation thereof on
such airframe, and the inclusion in such agreement of a provision similar to the last paragraph of this Section 3.03 shall satisfy
such requirement;

(d)      install an Engine on an airframe owned by the Borrower, leased to the Borrower or purchased by the Borrower subject to a
conditional sale or other security agreement under circumstances where paragraph 3.03(c) above is inapplicable, provided that such
installation shall be deemed an Event of Loss with respect to such Engine and the Borrower shall comply with Section 5.02 hereof in
respect thereof, the Administrative Agent not intending hereby to waive any right or interest it may have to or in such Engine under
applicable law until compliance by the Borrower with such Section 5.02;

(e)      transfer possession of any Airframe or any Engine to the United States of America or any instrumentality or agency thereof
pursuant to CRAF so long as the Borrower shall promptly notify the Administrative Agent upon transferring possession of such Airframe
or any Engine to the United States of America or any agency or instrumentality thereof pursuant to such program and provide the
Administrative Agent with the name and address of the Contracting Office Representative for the Military Aircraft Command of the
United States Air Force to whom notice must be given in the event the Administrative Agent desires to give notice as provided in
Section 12 of the Credit Agreement;

(f)      transfer possession of any Airframe or any Engine to the United States of America or any instrumentality or agency thereof
which bears the full faith and credit of the United States of America; and

(g)      enter into a lease with (i) any U.S. Air Carrier approved in writing by the Administrative Agent at the direction of the
Lender, which approval (or direction) shall not be unreasonably withheld, and which is authorized by an applicable Governmental
Authority to conduct commercial airline operations and to operate A319-100 aircraft, or (ii) any other Person approved in writing by
the Administrative Agent at the direction of Lender.

         The rights of any transferee who receives possession by reason of a transfer permitted by this Section 3.03 (other than the
transfer of an Engine deemed an Event of Loss) shall be subject and subordinate to (and, in the case of any lease, shall be expressly
subject and subordinate to) all the terms of this Mortgage; provided that in the case of the use of an Aircraft in CRAF the subject
and subordinate requirements herein shall be subject to the notice specified in Section 12 of the Credit Agreement and other
requirements of the CRAF program.  In the case of any lease, the Borrower shall remain primarily liable hereunder for the performance
of all of the terms of this Mortgage, and the terms of any such lease shall not permit any lessee to take any action not permitted to
be taken by the Borrower hereunder with respect to the Aircraft and may permit the Borrower to cure any default by the lessee and to
terminate the lease upon such default.

         Any Wet Lease or similar arrangement under which the Borrower maintains operational control of an Aircraft shall not
constitute a delivery, transfer or relinquishment of possession for purposes of this Section 3.03 so long as such Wet Lease shall be
for a term (including any renewals) not in excess of three months and is wet leased to a U.S. Air Carrier.

         The Collateral Agent agrees, for the benefit of the Borrower, and for the benefit of any mortgagee or other Lender of a
security interest in any engine owned by the Borrower, any lessor of any engine leased to the Borrower and any conditional vendor of
any engine purchased by the Borrower subject to a conditional sale agreement or any other security agreement, that no interest shall
be created hereunder in any engine so owned, leased or purchased and that neither the Collateral Agent nor its successors or assigns
will acquire or claim, as against the Borrower or any such mortgagee, lessor or conditional vendor or other Lender of a security
interest or interest in such engine as the result of such engine being installed on an Airframe; provided, however, that such
agreement of the Collateral Agent shall not be for the benefit of any lessor or secured party of any airframe leased to the Borrower
or purchased by the Borrower subject to a conditional sale or other security agreement or for the benefit of any mortgagee of or any
other Lender of a security interest in an airframe owned by the Borrower, unless such lessor, conditional vendor, other secured party
or mortgagee has agreed (which agreement may be contained in such lease, conditional sale or other security agreement or mortgage and
may consist of a paragraph similar to this paragraph) that neither it nor its successors or assigns will acquire, as against the
Collateral Agent, any right, title or interest in an Engine as a result of such Engine being installed on such airframe.

Section 3.04      Insignia.  On or prior to the Delivery Date, or as soon thereafter as practicable, the Borrower agrees to affix and
                  --------
maintain (or cause to be affixed and maintained) in the cockpit of each Airframe and on each Engine a nameplate bearing the
inscription:

                  Mortgaged To

                  General Electric Capital Corporation, as Collateral Agent

(such nameplate to be replaced, if necessary, with a nameplate reflecting the name of any successor to the Collateral Agent as
permitted under the Operative Documents).

         Nothing herein contained shall prohibit the Borrower from placing its customary colors and insignia on each Airframe or any
Engine or from otherwise operating the Aircraft in its livery.

Article IV
- ------------------

                              REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS
                              --------------------------------------------------------------------------

Section 4.01      Replacement of Parts.  The Borrower will promptly replace or cause to be replaced all Parts which may from time to
                  --------------------
time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for
any reason whatsoever, except as otherwise provided in Section 4.03.  All replacement parts (other than replacement parts temporarily
installed as provided in Section 4.02) shall be free and clear of all Liens (except Permitted Liens), and shall be in as good an
operating condition, and shall have a value and utility substantially equal to, the Parts replaced, assuming such replaced Parts were
in the condition and repair required to be maintained by the terms hereof.  All Parts at any time removed from any Airframe or any
Engine shall remain subject to the Lien of this Mortgage, no matter where located, until such time as such Parts shall be replaced by
parts which meet the requirements for replacement parts specified above.  Upon any replacement part becoming incorporated or
installed in or attached to any Airframe or any Engine, without further act (subject only to Permitted Liens and any arrangement
permitted by Section 4.02 hereof), (i) such replacement part shall become subject to the Lien of this Mortgage and be deemed a Part
for all purposes hereof to the same extent as the Parts originally incorporated or installed in or attached to such Airframe or such
Engine and (ii) the replaced Part shall no longer be deemed a Part hereunder.

Section 4.02      Pooling of Parts; Temporary Replacement Parts.  Any Part removed from any Airframe or any Engine as provided in
                  ---------------------------------------------
Section 4.01 hereof may be subjected by the Borrower to a pooling arrangement of the type which is permitted for Engines by
Section 3.03(a) hereof; provided that the Part replacing such removed Part shall be incorporated or installed in or attached to such
Airframe or Engine in accordance with Section 4.01 as promptly as practicable after the removal of such removed Part.  In addition,
the Borrower may use temporary parts or pooled parts on an Aircraft as temporary replacements for Parts, provided that the Borrower
as promptly thereafter as practicable, either (1) causes such pooled or temporary replacement part to become subject to the Lien of
this Mortgage free and clear of all Liens other than Permitted Liens or (2) replaces such replacement part with a further replacement
part owned by the Borrower which meets the requirements of Section 4.01 and which shall become subject to the Lien of this Mortgage,
free and clear of all Liens other than Permitted Liens.

Section 4.03      Alterations, Modifications and Additions.  The Borrower will make (or cause to be made) such alterations,
                  ----------------------------------------
modifications and additions to the Airframes and Engines as may be required to meet the applicable standards of the FAA, subject to
clauses (2)(a)(i) and (ii) of Section 3.01.  In addition, the Borrower may from time to time make such alterations and modifications
in and additions to any Airframe or any Engine as the Borrower may deem desirable in the proper conduct of its business, including
removal of Parts which the Borrower deems to be obsolete or no longer suitable or appropriate for use on such Airframe or such
Engine; provided that no such alteration, modification, removal or addition impairs the condition or airworthiness of such Airframe
or such Engine, or diminishes the value, utility and remaining useful life of such Airframe or such Engine below the value, utility
or remaining useful life thereof immediately prior to such alteration, modification, removal or addition, assuming that such Airframe
or such Engine is in the condition required hereunder.  All parts incorporated or installed in or attached or added to an Airframe or
an Engine as the result of such alteration, modification or addition (except those parts which the Borrower has leased from others
and Parts which may be removed by the Borrower pursuant to the next sentence) (the "Additional Part" or "Additional Parts") shall,
                                                                                    ---------------      ----------------
without further act, become subject to the Lien of this Mortgage.  Notwithstanding the foregoing, the Borrower may remove any
Additional Part, provided that such Additional Part (i) is in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to any Airframe or any Engine at the time of delivery thereof hereunder or any
Part in replacement of or substitution for any such Part, (ii) is not required to be incorporated or installed in or attached or
added to any Airframe or any Engine pursuant to the terms of Article III hereof or the first sentence of this Section 4.03, and
(iii) can be removed from such Airframe or such Engine without impairing the airworthiness of such Airframe or such Engine or
diminishing the value, utility and remaining useful life of such Airframe or such Engine which such Airframe or such Engine would
have had at such time had such alteration, modification or addition not occurred.  Upon the removal thereof as provided above, such
Additional Parts shall be deemed free of Lien of this Mortgage.

Section 4.04      Improvements Owned by Others.  Notwithstanding any other provision of this Mortgage, the Borrower may install or
                  ----------------------------
permit to be installed in an Aircraft audio-visual, entertainment, telephonic or other equipment owned by third parties (or owned
jointly by the Borrower and others) and leased or otherwise furnished to the Borrower in the ordinary course of business, provided
that such equipment meets all requirements for removal of Additional Parts as specified in Section 4.03, and the Lien of this
Mortgage shall not attach thereto and the rights of the owners therein shall not constitute a default under the Operative Documents.

Section 4.05      Substitution of Engines.  So long as no Default or Event of Default shall have occurred and be continuing, Borrower
                  -----------------------
shall have the right at its option at any time on at least five Business Days' prior written notice, to terminate the Lien of this
Mortgage with respect to any Engine.  In such event, and at the time of such termination, the Borrower shall replace such Engine
hereunder by complying with the terms of Section 5.02 hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine (other than the time periods allowed for such replacement), and the Collateral Agent (at the direction of the Lender or
the Administrative Agent on its behalf) shall release the replaced Engine from the Lien of this Mortgage as provided in Section 5.02.

Article V
- ------------------

                                                 LOSS, DESTRUCTION, REQUISITION, ETC.
                                                 ------------------------------------

Section 5.01      Event of Loss With Respect to the Aircraft.  Upon the occurrence of an Event of Loss with respect to an Airframe or
                  ------------------------------------------
an Airframe and the Engines and/or engines then installed thereon, the Borrower shall forthwith give the Administrative Agent, the
Collateral Agent and the Lender written notice of such Event of Loss but in any event within five days of such occurrence.  On the
earlier of (x) the 90th day following the occurrence of such Event of Loss or (y) the fifth Business Day following the receipt of the
insurance proceeds in respect of such Event of Loss, the Borrower shall pay or cause to be paid to the Administrative Agent an amount
equal to the aggregate amount of the payment or payments of principal, Break Amount and Swap Breakage Amount (if any), Additional
Costs, interest and other amounts then due on or in respect of the Notes of the Series issued with respect to such Airframe and all
other amounts due under the Operative Documents.

Section 5.02      Event of Loss With Respect to an Engine.  Upon the occurrence of an Event of Loss with respect to an Engine under
                  ---------------------------------------
circumstances in which there has not occurred an Event of Loss with respect to an Airframe, the Borrower shall forthwith give the
Administrative Agent, the Collateral Agent and the Lender written notice thereof (but in any event within ten days of such
occurrence) and shall, within 60 days after the occurrence of such Event of Loss (or, in the case of an Event of Loss described in
clause (vi) of the definition thereof, within 90 days after the Chief Financial Officer, Treasurer, any Vice President or other
officer of the Borrower elected by the Borrower's Board of Directors has received actual knowledge of such Event of Loss), as
replacement for the Engine with respect to which such Event of Loss occurred, subject to the Lien of this Mortgage another CFM
International, Inc. Model CFM56-5B5/P engine (or an engine of the same manufacturer of an equivalent or an improved model and
suitable for installation and use on the Airframes and compatible with the other Engines mortgaged hereunder) free and clear of all
Liens (other than Inchoate Liens) and having a value and utility at least equal to, and being in as good an operating condition, as
the Engine subject to such Event of Loss, assuming such Engine was maintained in accordance with the provisions of this Mortgage.
Prior to or at the time of any such conveyance, the Borrower will (i) cause a Mortgage Supplement with respect to such Replacement
Engine to be duly executed and filed for recording pursuant to the Federal Aviation Act, (ii) furnish the Administrative Agent and
Collateral Agent with an opinion of the Borrower's counsel to the effect that such Replacement Engine is owned by Borrower free and
clear of all Liens (other than Inchoate Liens), and that upon execution and filing of the Mortgage Supplement or other required
document the Replacement Engine will be subject to the Lien of the Mortgage on a first priority and perfected basis; provided that,
in the case of any such Lien which ranks on par with or ahead in priority to the Lien of the Mortgage, the Borrower may satisfy the
foregoing requirement if the Borrower shall have provided a bond or other security in respect of such Lien in an amount and under
terms reasonably satisfactory to the Administrative Agent at the direction of the Lender, (iii) furnish a certificate signed by a
duly authorized officer of the Borrower stating with respect to any Replacement Engine:  (1) a description of the Engine suffering
the Event of Loss, which shall be identified by manufacturer's serial number; (2) a description of the Replacement Engine (including
the manufacturer's name and serial number); (3) that on the date of the Mortgage Supplement relating to the Replacement Engine the
Borrower will be the owner of such Replacement Engine free and clear of all Liens except Permitted Liens, that such Replacement
Engine will be on such date in good working order (subject to maintenance permitted or required by this Mortgage) and condition and
that such Replacement Engine is of the same or an improved model of the Engine; and (4) that each of the conditions specified in this
Section 5.02 and Section 10.01 with respect to such Replacement Engine has been satisfied and (iv) furnish the Administrative Agent
and the Collateral Agent with such evidence of compliance with the insurance provisions of Article VI hereof with respect to such
Replacement Engine as the Administrative Agent or the Collateral Agent may reasonably request.  Upon compliance by the Borrower with
all of the terms of this Section 5.02 and Section 13(a) of the Credit Agreement such Engine shall thereupon cease to be an Engine
secured hereunder.  For all purposes hereof, each such Replacement Engine shall, after such conveyance, be deemed an "Engine"
hereunder.

Section 5.03      Application of Payments From Governmental Authorities for Requisition of Title, Etc.  Any payments (other than
                  ------------------------------------------------------------------------------------
insurance proceeds the application of which is provided for in Article VI) received at any time by the Borrower or the Administrative
Agent from any governmental authority or other Person with respect to an Event of Loss (other than a requisition for use by the
government of the United States of America not constituting an Event of Loss) will be applied as follows:

                  1.       If  payments  are  received  with  respect to an Airframe  (or an  Airframe  or any Engines or engines  then
installed  thereon),  after  reimbursement  of the  Administrative  Agent,  Collateral  Agent and the Lender for  reasonable  costs and
expenses,  so much of such  payments  remaining  as shall not  exceed the  amounts  required  to be paid by the  Borrower  pursuant  to
Section 5.01  shall be paid to the  Administrative  Agent and  applied in  reduction  of the  Borrower's  obligation  to pay such other
amounts, if not already paid by the Borrower,  or, if already paid by the Borrower,  shall be applied to reimburse the Borrower for its
payment of such  amounts,  and  following  the  foregoing  application,  the  balance,  if any, of such  payments  shall be paid to the
Borrower; and

                  2.       If such payments are received with respect to an Engine under  circumstances  contemplated  by  Section 5.02
hereof,  so much of such payments  remaining after  reimbursement  of the  Administrative  Agent,  Collateral  Agent and the Lender for
reasonable  costs and  expenses  shall be paid over to, or retained  by, the  Borrower,  provided  that the  Borrower  shall have fully
performed, or will perform, the terms of Section 5.02 with respect to the Event of Loss for which such payments are made.

Section 5.04      Requisition for Use of the Aircraft by the United States Government or the Government of Registry of the Aircraft.
                  -----------------------------------------------------------------------------------------------------------------
In the event of the requisition for use of an Airframe or the Engines or engines installed on such Airframe by the government of the
United States of America or any other government of registry of an Aircraft or any instrumentality or agency of any thereof or a CRAF
activation, in either case not constituting an Event of Loss, the Borrower shall promptly notify the Administrative Agent and
Collateral Agent of such requisition or activation, and all of the Borrower's obligations under this Mortgage with respect to such
Aircraft shall continue to the same extent as if such requisition or activation had not occurred.  All payments received by the
Administrative Agent, Collateral Agent or the Borrower from such government for the use of such Airframe and Engines or engines shall
be paid over to, or retained by, the Borrower.

Section 5.05      Application of Payments During Existence of Special Defaults or Events of Default.  Any amount referred to in this
                  ---------------------------------------------------------------------------------
Article V which is payable to or retainable by the Borrower shall not be paid to or retained by the Borrower if at the time of such
payment or retention a Special Default or an Event of Default shall have occurred and be continuing, but shall be held by or paid
over to the Administrative Agent as security for the obligations of the Borrower under this Mortgage and, if the Collateral Agent
declares this Mortgage to be in default pursuant to Section 12 of the Credit Agreement, applied against the Borrower's obligations
hereunder as and when due.  At such time as there shall not be continuing any such Special Default or Event of Default, such amount
shall be paid to the Borrower to the extent not previously applied in accordance with the preceding sentence.

Article VI
- ------------------

                                                               INSURANCE
                                                               ---------

Section 6.01      Bodily Injury Liability and Property Damage Liability Insurance.
                  ---------------------------------------------------------------

(a)      Except as provided in paragraph (b) of this Section 6.01, and subject to the self insurance to the extent permitted by
Section 6.04 and the provisions of Section 6.08, the Borrower will at all times carry and maintain or cause to be carried and
maintained, on a non-discriminatory basis and with insurers of internationally recognized responsibility acceptable to the
Administrative Agent (which acceptability not to be unreasonably withheld or delayed), airline liability insurance, including
passenger legal liability, bodily injury liability, war risk and allied perils liability, property damage liability, and contractual
liability (exclusive of manufacturer's product liability insurance) with respect to each Aircraft in an amount per occurrence not
less than $500,000,000.  The Borrower shall maintain cargo liability insurance in an amount not less than the amount of cargo
liability insurance maintained for other aircraft operated by the Borrower.

(b)      During any period that an Aircraft is on the ground and not in operation, the Borrower may carry or cause to be carried, in
lieu of the insurance required by paragraph (a) above, and subject to the self-insurance to the extent permitted by Section 6.04,
insurance otherwise conforming to the provisions of said paragraph (a) except that (i) the amounts of coverage shall not be required
to exceed the amounts of bodily injury liability and property damage liability insurance from time to time applicable to aircraft
owned or leased by major U.S. carriers of the same or similar type as such Aircraft which are on the ground and not in operation and
(ii) the scope of the risks covered and the type of insurance shall be consistent with industry practice and the same as from time to
time shall be applicable to aircraft owned or leased by major U.S. carriers of the same or similar type which are on the ground and
not in operation and will be consistent with industry practice.

Section 6.02      Insurance Against Loss or Damage to the Aircraft.
                  ------------------------------------------------

(a)      Except as provided in paragraph (b) of this Section 6.02 and the provisions of Section 6.08, and subject to the provisions
of Section 6.04 permitting self-insurance, the Borrower shall at all times carry and maintain or cause to be carried and maintained,
on a non-discriminatory basis, in effect with insurers of internationally recognized responsibility acceptable to the Administrative
Agent (which acceptability not to be unreasonably withheld or delayed) (i) "all risk" aircraft hull insurance covering each Aircraft
(with flight, taxiing and ingestion coverages), (ii) fire, transit and extended coverage of Engines and Parts while removed from an
Aircraft (providing insurance for replacement value), and (iii) war risk and allied perils insurance, including governmental
confiscation and expropriation (other than by the government of registry of an Aircraft) and hijacking insurance (collectively, "War
                                                                                                                                 ----
Risk Insurance"); provided that, in the case of War Risk Insurance, such insurance shall only be required to be maintained (x) with
- --------------
respect to the buy-backs covering strikes, sabotage, confiscation and hijacking contained in London Form LSW 555B and (y) with
respect to terms and provisions of War Risk Insurance in addition to those covered by the preceding clause (x), (A) if and to the
extent the same is maintained by the Borrower with respect to other aircraft owned or operated by the Borrower on the same routes or
(B) if an Aircraft is operated in a war zone (unless the Borrower obtains indemnification in lieu thereof pursuant to Section 6.06
hereof) or (C) if and to the extent the same is industry standard for major U.S. carriers operating similarly-sized aircraft on
similar routes; provided, further, that the foregoing insurance shall at all times while an Aircraft is subject to this Mortgage be
for an amount (taking into account self-insurance to the extent permitted by Section 6.04) not less than the Stipulated Insured
Amount.  In the case of a loss with respect to an engine (other than an Engine) installed on an Airframe, the Administrative Agent
shall hold any payment received by it of any hull insurance proceeds in respect of such loss for account of the Borrower or any other
third party to the extent the Borrower or such third party is entitled to receive such proceeds.

         Except during a period when a Special Default or an Event of Default has occurred and is continuing (in which case all
losses will be adjusted by the loss payee), all losses will be adjusted with the insurers by the Borrower (giving due regard to the
interest of the Collateral Agent and Administrative Agent).  It is agreed that all insurance payments received under insurance
policies required to be maintained by the Borrower pursuant to this Section 6.02 as the result of the occurrence of an Event of Loss
will be applied as follows:

                  1.       if such  payments are  received  with  respect to an Airframe  (or such  Airframe and the Engines  installed
thereon),  payments as shall not exceed the amounts due  pursuant to  Section 10(f)  of the Credit  Agreement  shall be applied,  after
reimbursement  of the  Administrative  Agent for reasonable costs and expenses,  in reduction of the Borrower's  obligation to pay such
amounts, if not already paid by the Borrower,  or, if already paid by the Borrower,  shall be applied to reimburse the Borrower for its
payment of such  amounts and the  balance,  if any, of such  payments  remaining  thereafter  will be paid over to, or retained by, the
Borrower; and

                  2.       if  such  payments  are  received  with  respect  to an  Engine  under  the  circumstances  contemplated  by
Section 5.02  hereof,  such payments  shall be paid over to, or retained by, the Borrower,  provided that the Borrower shall have fully
performed or,  concurrently  therewith,  will fully perform the terms of Section 5.02  with respect to the Event of Loss for which such
payments are made.

         The insurance payments for any property damage loss to any Airframe or any Engine not constituting an Event of Loss with
respect thereto or with respect to an Event of Loss of an Engine shall be paid as follows:  all payments in respect of losses less
than or equal to $750,000 shall be paid to the Borrower, and all payments with respect to losses greater than $750,000 shall be paid
to the Administrative Agent, to be held as collateral security for the Borrower's obligations hereunder, and applied to reimburse the
Borrower for accomplishing repairs and/or replacements as required, or to pay suppliers directly for such repairs and/or replacements
as directed by the Borrower.  In the case of any payment to the Administrative Agent (other than in respect of an Event of Loss of an
Aircraft), the Administrative Agent shall, upon receipt of evidence reasonably satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then be required to pay for repairs then being made or the replacement of
the Engine suffering the Event of Loss, pay the amount of such payment, and any interest or income earned thereon, to the Borrower or
its order.

(b)      During any period that an Aircraft is on the ground and not in operation, the Borrower may carry or cause to be carried, in
lieu of the insurance required by paragraph (a) above, and subject to the self-insurance to the extent permitted by Section 6.04,
insurance otherwise conforming with the provisions of said paragraph (a), except that the scope of the risks and the type of
insurance shall be the same as from time to time applicable to aircraft owned or leased and operated by major U.S. carriers of the
same or similar type similarly on the ground and not in operation, provided that, subject to the self-insurance to the extent
permitted by Section 6.04, the Borrower shall maintain insurance against risk of loss or damage to such Aircraft in an amount at
least equal to the Stipulated Insured Amount during such period that such Aircraft is on the ground and not in operation.

Section 6.03      Reports, Etc.  The Borrower will furnish, or cause to be furnished, to the Collateral Agent and the Administrative
                  -------------
Agent on or before each Delivery Date and annually on or before the renewal dates of the Borrower's relevant insurance policies, a
report, signed by a recognized independent firm of insurance brokers, which brokers may be regularly retained by the Borrower (the
"Insurance Brokers"), describing in reasonable detail the hull and liability insurance then carried and maintained with respect to
- ------------------
each Aircraft and stating the opinion of such firm that, to the best of its knowledge, such insurance complies with the terms of
Article VI.  Such information shall remain confidential as provided in Section 21 of the Credit Agreement.  The Borrower will cause
the Insurance Brokers to agree to advise the Collateral Agent and the Administrative Agent in writing (a) of any default in the
payment of premium and of any other act or omission on the part of the Borrower of which it has actual knowledge and which will
invalidate or render unenforceable, in whole or in part, any insurance as required by the terms hereof, (b) at least thirty (30) days
(seven (7) days in the case of War Risk Insurance) prior to the cancellation (but not scheduled expiration) or material adverse
change of any insurance maintained pursuant to this Article VI, provided that, in respect of the War Risk Insurance, if the notice
period specified above is not obtainable, the Insurance Brokers shall provide for as long a period of prior notice as shall then be
obtainable and (c) if any of the insurance required by this Article VI are not renewed on the same terms (save as to premium and
period of cover and as the Administrative Agent might otherwise have notified to the Insurance Brokers to be acceptable to the
Administrative Agent and Collateral Agent) seven (7) days prior to expiry thereof.  In the event that the Borrower shall fail to
maintain or cause to be maintained insurance as herein provided, the Administrative Agent may, at its sole option, provide such
insurance and, in such event, the Borrower shall, upon demand, reimburse the Administrative Agent for the cost thereof.

Section 6.04      Self-Insurance.  The Borrower may self-insure, by way of deductible, premium adjustment provisions in insurance
                  --------------
policies, or otherwise, under a program applicable to all aircraft in the Borrower's fleet, the risks required to be insured against
pursuant to Sections 6.01 and 6.02 but in no case shall the self-insurance with respect to an Aircraft exceed $750,000 per
occurrence; provided that no deductible shall be applicable in the case of a total loss of an Airframe.  In the event the prevailing
industry minimum deductible for aircraft similar to the Aircraft increases, the Borrower and Administrative Agent shall consult one
another toward a mutually agreeable modified deductible, such modified deductible to be effective only upon the written consent of
the Administrative Agent (on behalf of the Lender).

Section 6.05      Additional Insurance by Borrower.  The Borrower may carry for its own account at its sole cost and expense insurance
                  --------------------------------
with respect to its interest in the Aircraft, provided that such insurance does not prevent the Borrower from carrying the insurance
required or permitted by this Article VI or adversely affect such insurance provided hereunder or the cost thereof.

Section 6.06      Indemnification by Government in Lieu of Insurance.  Notwithstanding any provisions of this Article VI requiring
                  --------------------------------------------------
insurance, the Administrative Agent on behalf of the Lender agrees to accept, in lieu of insurance against any risk with respect to
the Aircraft, indemnification from, or insurance provided by, the government of the United States of America or any agency or
instrumentality thereof the obligations of which are supported by the full faith and credit of the government of the United States of
America, against such risk in an amount which, when added to the amount of insurance against such risk maintained by the Borrower
shall be at least equal to the amount of insurance against such risk otherwise required by this Article VI (taking into account self
insurance permitted by Section 6.04).  The Borrower shall furnish, in advance of attachment of such indemnity or insurance, if
practical to do so, a certificate of a responsible financial or legal officer of the Borrower confirming in reasonable detail the
amount and scope of such indemnification or insurance and that such indemnification or insurance complies with the preceding sentence.

Section 6.07      Application of Payments During Existence of a Special Default or an Event of Default.  Any amount referred to in
                  ------------------------------------------------------------------------------------
this Article VI which is payable to or retainable by or to be held for the benefit of the Borrower shall not be paid to or retained
by or held for the benefit of the Borrower if at the time of such payment or retention a Special Default or an Event of Default shall
have occurred and be continuing, but shall be held by or paid over to the Administrative Agent, as security for the obligations of
the Borrower under this Mortgage and, if the Collateral Agent, Administrative Agent or Lender, as applicable, shall have declared
this Mortgage or the Credit Agreement to be in default, applied against the Borrower's obligations hereunder as and when due.  At
such time as there shall not be continuing any such Special Default or Event of Default, such amount shall be paid to the Borrower to
the extent not previously applied in accordance with the preceding sentence.

Section 6.08      Terms of Insurance Policies.  Any policies carried in accordance with Sections 6.01 and 6.02 covering the Aircraft,
                  ---------------------------
and any policies taken out in substitution or replacement for any such policies, as applicable, (1) shall name the Additional
Insureds as additional insureds, as their interests may appear, (2) shall name the Administrative Agent (on behalf of the Lender) as
sole loss payee to the extent provided in clause (12) below, (3) may provide for self-insurance to the extent permitted in
Section 6.04, (4) shall provide that if the insurers cancel such insurance for any reason whatsoever, or if any material change is
made in the insurance which adversely affects the interest of any Additional Insured, such cancellation or change shall not be
effective as to the Additional Insureds for thirty (30) days after receipt by (but, in the case of War Risk Insurance, seven (7) days
after sending to) the Additional Insureds of written notice by such insurers of such cancellation or change, provided, however, that
                                                                                                             --------  -------
if, in respect of the War Risk Insurance, any notice period specified above is not obtainable, such policies shall provide for as
long a period of prior notice as shall then be obtainable, (5) shall provide that in respect of the Additional Insureds' respective
interests in such policies the insurance shall not be invalidated by any action or inaction of the Borrower and shall insure the
respective interests of the Additional Insureds regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Borrower, (6) shall be primary without any right of contribution from any other insurance which is
carried by any Additional Insured, (7) shall expressly provide that all of the provisions thereof, except the limits of liability,
shall operate in the same manner as if a separate policy covered each insured,  (8) shall waive any right of subrogation of the
insurers or any right of the insurers to set-off or counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of any Additional Insured but only to the extent of the indemnities provided under the Credit Agreement,
(9) shall provide that losses (other than for total loss of an Aircraft) shall be adjusted with the Borrower (or, if an Event of
Default shall have occurred which is continuing, with the Administrative Agent), (10) shall provide that the Additional Insureds are
not liable for any insurance premiums, (11) shall be effective with respect to both domestic and international operations, (12) shall
provide that (i) except as specified in clause (iii) of this sub-section, in the event of a loss involving payments in excess of
$750,000, all payments in respect of such loss up to the amount of Stipulated Insured Amount (whether such payment is made to the
Borrower or any third party) shall be paid to the Administrative Agent on behalf of the Lender, it being understood and agreed that
in the case of any payment to the Administrative Agent otherwise than in respect of an Event of Loss of an Aircraft, the
Administrative Agent shall, upon receipt of evidence reasonably satisfactory to it that the damage giving rise to such payment shall
have been repaired or that such payment shall then be required to pay for repairs then being made or the replacement of the Engine
suffering the Event of Loss, pay the amount of such payment, and any interest or income earned thereon, to the Borrower or its order,
(ii) except as specified in clause (iii) of this sub-section, all proceeds of $750,000 or less (regardless of the total amount of
proceeds resulting from such loss) and any payments of any loss in excess of Stipulated Insured Amount for an Aircraft shall be paid
to the Borrower or its order and (iii) notwithstanding anything to the contrary contained in the preceding clauses (i) and (ii), if a
Special Default or an Event of Default shall have occurred and be continuing and the insurers have been notified thereof by the
Administrative Agent, all payments of loss shall be paid to the Administrative Agent, (13) if war risk coverage is maintained, shall
contain a 50/50 clause as per AVS 103, and (14) if the policy (or policies) contains (or contain) an electronic date recognition
exclusion such as AVN 2000, to include AVN 2001 and AVN 2002 or such other writebacks for hull and liability coverage as are
customary for commercial airlines in the United States.

Article VII
- ------------------

                                                             MISCELLANEOUS
                                                             -------------

Section 7.01      Termination of Mortgage.  (a) (a)  Upon (or at any time after) payment in full of the principal of and interest on
                  -----------------------
and Break Amount and Swap Breakage Amount, if any, and Additional Costs and all other amounts due under, or otherwise due to the
Lender hereunder and under the other Operative Documents and provided that there shall then be no other amounts due to the Lender,
                                                             --------
the Administrative Agent and the Collateral Agent hereunder or under the Credit Agreement or the other Operative Documents or
otherwise secured hereby, the Collateral Agent, at the Administrative Agent's direction shall execute and deliver to or as directed
in writing by the Borrower an appropriate instrument releasing the Aircraft from the Lien of this Mortgage, and the Collateral Agent,
at the Administrative Agent's direction, shall execute and deliver such instrument as aforesaid and, at the Borrower's expense, will
execute and deliver such other instruments or documents as may be reasonably requested by the Borrower to give effect to such
release; provided, however, that this Mortgage and the trusts created hereby shall earlier terminate and this Mortgage shall be of no
         --------  -------
further force or effect and the rights of the Lender and the Administrative Agent shall terminate (and the Collateral Agent, at the
Administrative Agent's direction, shall release, by an appropriate instrument, the Mortgage Estate and the Aircraft from the Lien of
this Mortgage) upon any sale or other final disposition by the Collateral Agent, at the Administrative Agent's direction, of all
property part of the Mortgage Estate and the final distribution by the Administrative Agent of all monies or other property or
proceeds constituting part of the Mortgage Estate in accordance with the terms hereof.  Except as aforesaid otherwise provided, this
Mortgage and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof.

(b)      In addition, upon (or at any time after) payment in full of the principal of and interest on and Break Amount and Swap
Breakage Amount and Additional Cost, if any, and all other amounts due under, or otherwise due to the Lender hereunder and under the
other Operative Documents with respect to any Aircraft and provided that no Default shall be continuing and there shall then be no
                                                           --------
other amounts due to the Lender, the Administrative Agent and the Collateral Agent hereunder or under the Loan Agreement or the other
Operative Documents or otherwise secured hereby in respect of such Series of Notes with respect to any Aircraft, the Collateral
Agent, at the Administrative Agent's direction, shall execute and deliver to or as directed in writing by the Borrower an appropriate
instrument releasing such Aircraft relating to such Series from the Lien of this Mortgage, and the Collateral Agent, at the
Administrative Agent's direction, shall execute and deliver such instrument as aforesaid and, at the Borrower's expense, will execute
and deliver such other instruments or documents as may be reasonably requested by the Borrower to give effect to such release.

Section 7.02      No Legal Title to Mortgage Estate in the Lender.  The Lender shall not have legal title to any part of the Mortgage
                  -----------------------------------------------
Estate.  No transfer, by operation of law or otherwise, of any Note or other right, title and interest of the Lender in and to the
Mortgage Estate or hereunder shall operate to terminate this Mortgage or entitle the Lender or any successor or transferee of the
Lender to an accounting or to the transfer to it of legal title to any part of the Mortgage Estate.

Section 7.03      Sale of Aircraft by Collateral Agent is Binding.  Any sale or other conveyance of any Aircraft by the Collateral
                  -----------------------------------------------
Agent at the Lender's (or, on behalf of the Lender, the Administrative Agent's) direction, made pursuant to the terms of this
Mortgage shall bind the Lender and shall be effective to transfer or convey all right, title and interest of the Collateral Agent,
the Borrower and the Lender in and to such Aircraft.  No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds
with respect thereto by the Administrative Agent.

Section 7.04      Mortgage for Benefit of Administrative Agent, Collateral Agent and Lender.  Nothing in this Mortgage, whether
                  -------------------------------------------------------------------------
express or implied, shall be construed to give to any person other than the Borrower, the Collateral Agent, and the Lender (or the
Administrative Agent on its behalf) any legal or equitable right, remedy or claim under or in respect of this Mortgage.

Section 7.05      No Action Contrary to Borrower's Rights; Quiet Enjoyment.  Notwithstanding any of the provisions of this Mortgage to
                  --------------------------------------------------------
the contrary, so long as no Event of Default shall have occurred and be continuing, each of the Collateral Agent, the Administrative
Agent and Lender agrees that neither it nor any Person claiming by, through or under it, will not take any action in violation of the
Borrower's rights, including the right to quiet enjoyment, possession and use of the Aircraft in accordance with the terms of this
Mortgage by Borrower.

Section 7.06      Notices.  Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands,
                  -------
authorizations, directions, consents, waivers or documents provided or permitted by this Mortgage to be made, given, furnished or
filed shall be in writing, mailed by certified mail, postage prepaid, or by confirmed telex, or by confirmed telecopy or electronic
mail and (i) if to the Administrative Agent, addressed to it at its office at PK AirFinance S.A., 6d, Route de Treves, L-2633
Senningerberg, Luxembourg, Attention:  Vice President, Contracts, telephone:  (352) 34-20-30-1, telecopier:  (352) 34-80-50, with a
copy to:  PK AirFinance S.A., New York Branch, The Carnegie Hall Tower, 152 West 57th Street, New York, NY 10019, Attention:
Vice-President, Marketing, telephone:  (212) 245-2575, telecopier:  (212) 397-9393, with a copy to:  Vedder, Price, Kaufman &
Kammholz, 222 N. LaSalle Street, Chicago, Illinois 60601, Attention:  Geoffrey R. Kass, Esq., telephone:  (312) 609-7553,
telecopier:  (312) 609-5005 or (ii) if the Borrower, addressed to it at its office at Frontier Center One, 7001 Tower Road, Denver,
CO 80249, Attention: Chief Financial Officer, telecopy: (720) 374-4375, with a copy to:  Pillsbury Winthrop LLP, Financial Centre,
695 East Main Street, Stamford, CT 06904, Attn:  R. Jay Fortin, Esq., telephone:  (203) 965-8272, telecopier:  (203) 965-8226 or
(iii)  to the Collateral Agent, to General Electric Capital Corporation, 3001 Summer Street, 2nd floor, Stamford, CT  06927, Attn:
Manager, Conduit Administration, telephone: (203) 357-4328, telecopier: (203) 357-6166, (iv) if to the Lender, addressed to such
party at such address as such party shall have furnished by notice to the Borrower and the Administrative Agent, or, until an address
is so furnished, addressed to the address of such party (if any) set forth on Schedule I to the Credit Agreement.  Whenever any
notice in writing is required to be given by the Borrower, the Administrative Agent or the Administrative Agent or the Lender to any
of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, if such notice
is received, if such notice is mailed by certified mail, postage prepaid, or is sent by confirmed telex, or by confirmed telecopy
addressed as provided above.  Any party hereto may change the address to which notices to such party will be sent by giving notice of
such change to the other parties to this Mortgage.

Section 7.07      Administrative Agent's Right to Perform for Borrower.  If the Borrower fails to make any payment or to perform or
                  ----------------------------------------------------
comply with any of its agreements contained herein, then (but in each case, other than in the case of failure to maintain insurance
as required hereunder, no earlier than five Business Days after notice to Borrower as to the occurrence of such failure, whether or
not it shall yet constitute an Event of Default hereunder) the Administrative Agent may itself make such payment or perform or comply
with such agreement but shall not be obligated hereunder to do so, and the amount of such payment and the amount of the reasonable
expenses of the Collateral Agent and Administrative Agent incurred in connection with such payment or the performance of or
compliance with such agreement, as the case may be, together with interest thereon at the Past Due Rate, shall be payable by Borrower
upon demand.

Section 7.08      Severability.  Any provision of this Mortgage which is prohibited or unenforceable in any jurisdiction shall, as to
                  ------------
such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.

Section 7.09      No Oral Modifications or Continuing Waivers.  No terms or provisions of this Mortgage or the Notes may be changed,
                  -------------------------------------------
waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom
enforcement of the change, waiver, discharge or termination is sought and any other party or other Person whose consent is required
pursuant to this Mortgage; and any waiver of the terms hereof or of any Note shall be effective only in the specific instance and for
the specific purpose given.

Section 7.10      Successors and Assigns.  All covenants and agreements contained herein shall be binding upon, and inure to the
                  ----------------------
benefit of, each of the parties hereto and the successors and assigns of each, all as herein provided.  Any request, notice,
direction, consent, waiver or other instrument or action by the Lender shall bind the successors and assigns of the Lender.

Section 7.11      Headings.  The headings of the various Articles and Sections herein and in the table of contents hereto are for the
                  --------
convenience of reference only and shall not define or limit any of the terms or provisions hereof.

Section 7.12      GOVERNING LAW; Counterparts.  THIS MORTGAGE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
                  ---------------------------
THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAW PROVISIONS), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.  This Mortgage may be executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 7.13      No Proceedings.  Each of the Borrower, Administrative Agent, the Collateral Agent and the Lender each hereby agrees
                  --------------
that, from and after the date hereof and until the date one year plus one day following the date on which all Commercial Paper has
been indefeasibly paid in full in cash, it will not, directly or indirectly, institute or cause to be instituted against the Lender
or any CP Conduit that becomes a lender any proceeding of the type referred to in the definition of "Bankruptcy Event."  The
provisions of this Section 7.13 shall survive the termination of this Agreement.

Section 7.14      Limited Recourse.  The obligations, if any, of the Lender under this Agreement and all other Operative Documents are
                  ----------------
solely the obligations of the Lender.  No recourse shall be had for the making of any Loan or for any other obligation or claim
arising out of or based upon any Operative Document against any incorporator, shareholder, officer, manager, member or director,
past, present or future, of the Lender or of any successor or of the Lender's constituent members or other affiliates or of JH
Management Corporation, or against JH Management Corporation, either directly or through the Lender or any successor, whether by
virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by acceptance thereof and as part of the consideration for the acceptance hereof, expressly waived and released.
Nothing in this Section 7.14 shall be deemed to impair or otherwise diminish any obligation of the Administrative Agent or the
Collateral Agent under this Mortgage or the other Operative Documents.  The provisions of this Section 7.14 shall survive the
termination of this Agreement.

                  Notwithstanding  any  provisions  contained in this Mortgage to the contrary,  the Lender shall not, and shall not be
obligated  to, pay any amount  pursuant  to this  Mortgage  unless (i) the  Lender has  received  funds  which may be used to make such
payment  pursuant to the documents  governing its Commercial  Paper program,  and (ii) after giving effect to such payment,  either (A)
the Lender could issue  Commercial  Paper)(assuming  such outstanding  Commercial Paper matured at such time) without  violating any of
the  provisions of the documents  governing its  Commercial  Paper  program,  or (B) all  Commercial  Paper is paid in full. Any amount
which the Lender does not pay pursuant to the operation of the preceding  sentence  shall not constitute a Claim (as defined inss.101 of
the  Bankruptcy  Code)  against or an  obligation  of the  Lender for any  insufficiency  unless  and until the  Lender  satisfies  the
provisions of such preceding sentence.

                                                                [SIGNATURE PAGE FOLLOWS]






                  IN WITNESS  WHEREOF,  the parties hereto have caused this Mortgage to be duly executed by their  respective  officers
thereunto duly authorized,  as of the day and year first above written,  and acknowledge that this Mortgage has been made and delivered
in the City of New York, and this Mortgage having become effective only upon such execution and delivery.

                                                           FRONTIER AIRLINES, INC.,
                                                           as Borrower


                                                           By:
                                                           Name:
                                                           Title:
                                                           PK AIRFINANCE S.A., NEW YORK BRANCH,
                                                           as Administrative Agent


                                                           By:
                                                           Name:
                                                           Title:
                                                           GENERAL ELECTRIC CAPITAL CORPORATION,
                                                           as Collateral Agent


                                                           By:
                                                           Name:
                                                           Title:






                                                                                        [Mortgage and Security Agreement [Frontier/PK]]
                                                       EXHIBIT A
                                                        Page 4

                                                               EXHIBIT A
                                                                  to
                                                               Mortgage


                                                          MORTGAGE SUPPLEMENT

                  MORTGAGE  SUPPLEMENT  [Frontier/PK]  No.  _____ dated  ___________,  ____ (this  "Mortgage  Supplement")  of Frontier
                                                                                                    --------------------
Airlines, Inc. (herein called the "Borrower").
                                   --------

                                                         W I T N E S S E T H:
                                                         - - - - - - - - - -

                  WHEREAS, the Mortgage and Security Agreement  [Frontier/PK] dated as of ___________,  2001 (the "Mortgage") among the
                                                                                                                   --------
Borrower,  PK AirFinance  S.A., New York Branch,  as  Administrative  Agent (the  "Administrative  Agent") and General Electric Capital
                                                                                   ---------------------
Corporation,  as  Collateral  Agent (the  "Collateral  Agent"),  provides  for the  execution  and  delivery  of a  supplement  thereto
                                           -----------------
substantially  in the form hereof which shall  particularly  describe the Aircraft  (such term and other  defined terms in the Mortgage
being herein used with the same meanings) and any Replacement Engine included in the Mortgage Estate,  and shall specifically  mortgage
such Aircraft or Replacement Engine, as the case may be, to the Collateral Agent.

                  WHEREAS2, the Mortgage  relates to the  Airframe and Engines  described  below and a  counterpart  of the Mortgage is
attached hereto and made a part hereof and this Mortgage  Supplement,  together with such  counterpart of the Mortgage,  is being filed
for recordation on the date hereof with the Federal Aviation Administration as one document.

                  WHEREAS3, the Mortgage and Mortgage Supplement  [Frontier/PK] dated  _______________ have been duly recorded pursuant
to Subtitle VII of Title 49 of the United  States Code on  __________,  ____,  as one document and have been  assigned  Conveyance  No.
- ---------;

                  NOW,  THEREFORE,  this Mortgage  Supplement  witnesseth,  that, to secure the prompt  payment of the principal of and
Break  Amount and Swap  Breakage  Amount (if any) and  interest  on, and all other  amounts due with respect to, all Notes from time to
time  outstanding  under the  Mortgage  and the  performance  and  observance  by the  Borrower of all the  agreements,  covenants  and
provisions for the benefit of the Lender in the Mortgage and in the Credit  Agreement and the Notes  contained,  and the prompt payment
of any and all amounts  from time to time owing under the  Mortgage or the Credit  Agreement  or the other  Operative  Documents by the
Borrower to the Lender,  and for the uses and purposes and subject to the terms and  provisions of the Mortgage,  and in  consideration
of the premises and of the covenants  contained in the Mortgage,  and of the  acceptance of the Notes by the Lender,  and of the sum of
$1 paid to the  Borrower at or before the  delivery  hereof,  the receipt  whereof is hereby  acknowledged,  the  Borrower has granted,
bargained,  sold, assigned,  transferred,  conveyed,  mortgaged,  pledged and confirmed,  and does hereby grant, bargain, sell, assign,
transfer,  convey,  mortgage,  pledge and confirm,  unto the  Collateral  Agent and its  successors  and assigns,  for the security and
benefit of the Lender,  in the trust  created by the Mortgage,  a security  interest in and mortgage  lien upon,  all right,  title and
interest of the Borrower in, to and under the following described property:

                                                               AIRFRAME
                                                  One airframe identified as follows:

                                                                  FAA                      Manufacturer's
        Manufacturer                  Model               Registration Number               Serial Number
        ------------                  -----               -------------------               -------------
Airbus Industrie G.I.E.             A319-111

together with all Parts, appliances, equipment, instruments and accessories (including, without limitation, radio and radar) from
time to time thereto belonging, owned by the Borrower and installed in or appurtenant to said aircraft.

                                                           AIRCRAFT ENGINES
                                              Two (2) aircraft engines, each such engine
                                              having 750 or more rated takeoff horsepower
                                           or the equivalent thereof, identified as follows:

                                                                                          Manufacturer's
Manufacturer                                            Model                             Serial Number
- ------------                                            -----                             -------------
CFM International, Inc.                              CFM56-5B5/P

together with all Parts, equipment and accessories thereto belonging, by whomsoever manufactured, owned by the Borrower and installed
in or appurtenant to said aircraft engines.

                  Together with all  substitutions,  replacements and renewals of the property above described,  and all property owned
by the Borrower which shall hereafter become physically  attached to or incorporated in the property above described,  whether the same
are now owned by the Borrower or shall hereafter be acquired by it.

                  TO HAVE AND TO HOLD all and singular the aforesaid  property unto the Collateral  Agent,  its successors and assigns,
for the  benefit  and  security  of the Lender for the uses and  purposes  and  subject  to the terms and  provisions  set forth in the
Mortgage.

                  AND,  FURTHER,  the Borrower  hereby  acknowledges  that the Airframe  and/or  Engines  referred to in this  Mortgage
Supplement  have been  delivered  to the  Borrower  and are included in the property of the Borrower and are subject to the Lien of the
Mortgage.

                  The principal of the Notes of the Series issued in respect of the Aircraft  identified above shall be due and payable
in 120 equal monthly installments down to the Balloon Amount, as set forth on Schedule 1 hereto.

                  This Mortgage  Supplement  shall be construed as supplemental to the Mortgage and shall form a part thereof,  and the
Mortgage is hereby incorporated by reference herein and is hereby ratified, approved and confirmed.

                  This Mortgage Supplement is being delivered in the State of New York.





                  IN WITNESS  WHEREOF,  the Borrower has caused this  Mortgage  Supplement  to be duly  executed by one of its officers
thereunto authorized, this ____ day of ________, ____.

                                                           FRONTIER AIRLINES, INC.


                                                           By:
                                                           Name:
                                                           Title:







DNVR1:60165235.02                                    7

DNVR1:60165235.02
                                                              SCHEDULE 1

                                                    SCHEDULE OF PRINCIPAL PAYMENTS

Interest Payment Date                                                          Principal Amount to
(falling on or closest to)                                                           be Paid
- --------------------------                                                           -------

                                               [OMITTED FROM COUNTERPART FILED WITH FAA
                                                     FOR CONFIDENTIALITY PURPOSES]






- --------
                                         1 The amounts in this column for any Note shall be equal,  for any Interest Payment Date, to the product of (a) the  "Principal  Amount
                                         to be Paid"  for such  Interest  Payment  Date as set forth in the  Schedule  of  Principal  Payments  in  Schedule 1  to the  Mortgage
                                         Supplement for the Aircraft of the Series of this Note and (b) a fraction,  the numerator of which is the original  principal amount of
                                         such Note and the denominator of which is aggregate original principal amount of all Notes.
2        This recital to be included only in the first Mortgage Supplement.

3        This recital not to be included in the first Mortgage Supplement.

EX-23.1CONSENTSOFEXP

                        Consent of Independent Auditors

The Board of Directors
Frontier Airlines, Inc.:

We consent to the  incorporation by reference in the registration  statements Nos.
333-13333, 333-31389, 333-83811, and 333-42746  on Forms S-8 of our report dated
May 30, 2001,  with  respect to the balance sheets of Frontier Airlines, Inc. as
of March 31, 2001 and 2000, and the related statements of income,  stockholders'
equity, and cash flows for each of the years in the three-year period ended
March 31, 2001, which report appears in the March 31, 2001 Form 10-K of
Frontier Airlines, Inc.

KPMG LLP

Denver, Colorado
June 5, 2001

10-K

                                                     FORM 10-K

                                         SECURITIES AND EXCHANGE COMMISSION
                                               Washington, D.C.  20549

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
         For the fiscal year ended March 31, 2001

[   ]    TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:  0-24126

                                               FRONTIER AIRLINES, INC.
                                               -----------------------
                               (Exact name of registrant as specified in its charter)

                                      Colorado                                                            84-1256945_________
- --------------------------------------------------------------------------------------------------------------------------------------------
 (State or other jurisdiction of incorporated or organization)               (I.R.S. Employer Identification No.)

                  7001 Tower Road, Denver, CO                                                80249
                -------------------------------                                           -----------
           (Address of principal executive offices)                                       (Zip Code)

Registrant's telephone number including area code:  (720) 374-4200

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

                                             Common Stock, No Par Value
                                             --------------------------
                                                   Title of Class

Indicate by check mark  whether the  Registrant  (1) filed all reports  required to be filed by Section 13 or 15(d) of the Exchange Act
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  X   No
                                                               ---     -----

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405 of Regulation  S-K is not contained  herein,  and will
not be contained,  to the best of registrant's  knowledge,  in definitive proxy or information statements  incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Aggregate  market value of common stock held by  non-affiliates  of the Company computed by reference to the last quoted price at which
such stock sold on such date as reported by the Nasdaq National Market as of June 1, 2001:  $356,124,628.

The number of shares of the Company's common stock outstanding as of June 1, 2001 is 28,292,102.

Documents  incorporated  by reference -  Information  required by Part III is  incorporated  by reference to the  Company's  2001 Proxy
Statement.






                                                  TABLE OF CONTENTS



                                                                                                     Page
                                                                                                     ----

PART I

         Item 1:  Business..............................................................................3
         Item 2:  Properties ..........................................................................13
         Item 3:  Legal Proceedings....................................................................14
         Item 4:  Submission of Matters to a Vote of Security Holders..................................14

PART II

         Item 5:  Market for Common Equity and Related Stockholder Matters.............................14
         Item 6:  Selected Financial Data..............................................................17
         Item 7:  Management's Discussion and Analysis of Financial Condition and
                  Results of Operations................................................................19
         Item 7A: Quantitative and Qualitative Disclosures About Market Risk ..........................31
         Item 8:  Financial Statements.................................................................32

PART III

         Item 10: Directors and Executive Officers of the Registrant...................................32
         Item 11: Executive Compensation...............................................................32
         Item 12: Security Ownership of Certain Beneficial Owners and Management.......................32
         Item 13: Certain Relationships and Related Transactions.......................................32
PART IV

         Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K......................32










                                                                PART I

This  report  contains  forward-looking  statements  within the  meaning of Section  21E of the  Securities  Exchange  Act of 1934 that
describe the business and prospects of Frontier  Airlines,  Inc.  ("Frontier" or the "Company") and the expectations of our Company and
management.  All statements,  other than statements of historical  facts,  included in this report that address  activities,  events or
developments that we expect, believe, intend or anticipate will or may occur in the future, are forward-looking  statements.  When used
in this document,  the words  "estimate,"  "anticipate,"  "project" and similar  expressions  are intended to identify  forward-looking
statements.  Forward-looking  statements  are  inherently  subject to risks and  uncertainties,  many of which cannot be predicted with
accuracy and some of which might not even be anticipated.  These risks and  uncertainties  include,  but are not limited to: the timing
of, and expense  associated with,  expansion and modification of our operations in accordance with our business strategy or in response
to  competitive  pressures or other  factors;  general  economic  factors and behavior of the  fare-paying  public;  increased  federal
scrutiny of low-fare  carriers  generally that may increase our operating costs or otherwise  adversely affect us; actions of competing
airlines,  such as increasing  capacity and pricing  actions of United  Airlines and other  competitors;  the  availability of suitable
aircraft,  which may inhibit our ability to achieve operating economies and implement our business strategy;  the unavailability of, or
inability to secure upon  acceptable  terms,  financing  necessary to purchase  aircraft which we have ordered;  issues relating to our
transition to an Airbus  aircraft fleet;  and  uncertainties  regarding  aviation fuel prices.  Because our business,  like that of the
airline  industry  generally,  is characterized  by high fixed costs relative to revenues,  small  fluctuations in our yield per RPM or
expense per ASM can significantly affect operating results.

Share,  per share and common stock  information  contained  in this report has been  adjusted to reflect a fifty  percent  common stock
dividend to shareholders of record on February 19, 2001, which we paid on March 5, 2001.


Item 1:  Business

General

       We are a  scheduled  airline  based in Denver,  Colorado.  As of June 1, 2001,  we operate  routes  linking our Denver hub to 22
cities in 18 states  spanning the nation from coast to coast.  We were  organized in February  1994 and we began flight  operations  in
July 1994 with two leased Boeing  737-200 jets. We have since expanded our fleet to 25 leased jets and one purchased  Airbus  aircraft,
including seven Boeing 737-200s,  18 larger Boeing 737-300s,  and one Airbus A319.  Beginning in May 2001, we began a fleet replacement
plan by which we will replace our Boeing  aircraft  with new  purchased  and leased  Airbus jet  aircraft,  a  transition  we expect to
complete by approximately the first quarter of calendar year 2005.

        We currently use up to nine gates at our hub, Denver International  Airport ("DIA"),  where we operate  approximately 124 daily
system flight departures and arrivals.  We added Houston, Texas to our route system on May 16, 2001.






       The following table lists the cities we serve as of June 1, 2001, as well as the dates we commenced service to those cities:

                  El Paso, Texas                                  October 13, 1994
                  Albuquerque, New Mexico                         October 13, 1994
                  Omaha, Nebraska                                 January 16, 1995
                  Chicago/Midway, Illinois                        September 25, 1995
                  Phoenix, Arizona                                September 25, 1995
                  Los Angeles, California                         November 3, 1995
                  Minneapolis/St. Paul, Minnesota                 November 13, 1995
                  Salt Lake City, Utah                            November 13. 1995
                  San Francisco, California                       November 17, 1995
                  Seattle, Washington                             May 1, 1996
                  Boston, Massachusetts                           September 16, 1997
                  Baltimore, Maryland                             November 16, 1997
                  New York/LaGuardia, New York                    December 3, 1997
                  San Diego, California                           July 23, 1998
                  Atlanta, Georgia                                December 17, 1998
                  Dallas/Fort Worth, Texas                        December 17, 1998
                  Las Vegas, Nevada                               December 17, 1998
                  Portland, Oregon                                June 14, 1999
                  Orlando, Florida                                September 9, 1999
                  Kansas City, Missouri                           June 15, 2000
                  Washington, D.C.                                September 7, 2000
                  Houston, Texas                                  May 16, 2001

       In 1998, we initiated  complimentary  shuttle service between Boulder,  Colorado and DIA. In March 2001 we added an intermediate
stop in Broomfield,  Colorado to this service.  We currently  operate six daily round trip bus service between  Boulder/Broomfield  and
DIA.

       In addition to implementing  service to three new cities between April 1, 2000 and June 1, 2001, we also added additional flight
frequencies in the following markets: Albuquerque, New Mexico; Boston,  Massachusetts;  Dallas/Fort Worth, Texas; Orlando, Florida; San
Diego,  California;  and San Francisco,  California.  During the fiscal year ended March 31, 2001, we decreased our flight  frequencies
between DIA and New York's LaGuardia Airport from 3 to 2 round trip flights per day.

       During the past 12 months we have added new executive  officers to our  management,  including our Executive  Vice President and
Chief Operating Officer (May 2001); our Vice  President-Maintenance  and Engineering (July 2000); our Vice President - Customer Service
and Station  Operations  (August  2000);  and our Vice  President - Flight  Operations  (April  2001).  Each of these  individuals  has
significant prior airline and aviation industry experience.

       Our corporate  headquarters are located at 7001 Tower Road, Denver,  Colorado 80249. Our administrative  office telephone number
is 720-374-4200; our reservations telephone number is 800-432-1359; and our world wide Web site address is www.frontierairlines.com.

Business Strategy and Markets

     Our business  strategy is to provide air service at affordable  fares to high volume  markets from our Denver hub. Our strategy is
based on the following factors:

     o   Stimulate  demand by offering a combination  of low fares,  quality  service and frequent  flyer credits in our frequent flyer
         program, EarlyReturns.
     o   Expand our Denver hub  operations  and increase  connecting  traffic by adding  additional  high volume markets to our current
         route system, as well as from a recent code sharing agreement with a commuter carrier.
     o   Continue filling gaps in flight frequencies to high volume markets from our Denver hub.

       In April 1999,  we were named "Best  Domestic  Low Fare  Carrier" by  Entrepreneur  Magazine in the  publication's  sixth annual
Business  Travel Awards.  During our fiscal year 2000, we were also named  Entrepreneur  of the Year for the services sector at Ernst &
Young's 1999 Rocky  Mountain  Entrepreneur  of the Year awards.  In 2000,  Zagat's  Airline Survey ranked our airline as one of the top
ten domestic air carriers based on comfort,  service and food. In 1999 and 2000, our maintenance and  engineering  department  received
the FAA's highest award for  maintenance  training,  the Diamond  Certificate of Excellence,  with 100 percent of our  maintenance  and
engineering employees completing advanced aircraft maintenance training programs.

Route System Strategy

         Our route  system  strategy  encompasses  connecting  our Denver hub to top business  and leisure  destinations.  We currently
serve 18 of the top 25 destinations from Denver, as defined by the U.S.  Department of  Transportation's  Origin and Destination Market
Survey.  In  addition,  as we  bring  additional  aircraft  into  our  fleet  and add  new  markets  to our  route  system,  connection
opportunities  increase.  During the year ended March 31, 2001,  connection  opportunities  for our passengers  connecting  through DIA
increased from an average of 5.9 flights to 7.5 flights.

Marketing and Sales

         Our sales  efforts are  targeted to  price-sensitive  passengers  in both the leisure and  corporate  travel  markets.  In the
leisure market,  we offer  discounted  fares marketed  through the Internet,  newspaper,  radio and television  advertising  along with
special promotions.  We market these activities in Denver and in cities throughout our route system.

         In order to increase connecting  traffic, we entered into a code share agreement in May 2001 with Great Lakes Aviation,  Ltd.,
a commuter  air  carrier,  with the first  joint  flights  scheduled  to  commence  in July  2001.  We have also  negotiated  interline
agreements  with  approximately  130  domestic  and  international  airlines  serving  cities on our  route  system.  Generally,  these
agreements include joint ticketing and baggage services and other conveniences designed to expedite the connecting process.

         To balance the seasonal  demand  changes that occur in the leisure  market,  we have  introduced  programs  over the past four
years that are designed to capture a larger share of the corporate  market,  which tends to be less  seasonal than the leisure  market.
These programs  include  negotiated fares for large companies that sign contracts  committing to a specified  volume of travel,  future
travel  credits for small and medium  size  businesses  contracting  with us, and special  discounts  for members of various  trade and
nonprofit associations. As of June 1, 2001, we had signed contracts with over 6,000 companies.

         We also pursue sales opportunities with meeting and convention  arrangers and government travel offices.  The primary tools we
use to attract this business include personal sales calls,  direct mail and telemarketing.  In addition,  we offer air/ground  vacation
packages to many destinations on our route system under contracts with various tour operators.

        In January 2001, we announced  EarlyReturns,  our own frequent flyer program,  which was effective February 1, 2001. We believe
that our  frequent  flyer  program  offers  some of the most  generous  benefits  in the  industry,  including  a free round trip after
accumulating  only  15,000  miles.  Members  earn one mile for every  mile flown on  Frontier  plus  additional  mileage  with  program
partners, which presently include Continental Airlines,  Midwest Express Airlines,  Virgin Atlantic Airways, Alamo, Hertz, National and
Payless Car Rentals,  Kimpton Group Hotels and Citicorp Diners Club Inc.  Members who earn 25,000 or more annual credited  EarlyReturns
flight miles attain  Summit Level  status,  which  includes a 25% mileage bonus on each paid  Frontier  flight,  priority  check-in and
boarding,  complimentary  on-board alcoholic  beverages,  extra allowance on checked baggage and priority baggage handling,  guaranteed
reservations  on any Frontier  flight when  purchasing an  unrestricted  coach class ticket at least 72 hours prior to  departure,  and
access to an exclusive Summit customer  service  toll-free phone number.  To apply for the program  customers may visit our Web site at
www.frontierairlines.com,  obtain an  EarlyReturns  enrollment  form at any of our airport  counters or call our  EarlyReturns  Service
Center toll-free hotline at 866-26-EARLY, or our reservations at 800-4321-FLY.

         Our  relationship  with travel  agencies is  important  to us and other  airlines.  In November  1999,  we matched an industry
initiative and lowered travel agent commissions from eight to five percent.  However,  unlike some other airlines,  we do not limit the
earnings  potential of travel  agents  through a commission  cap. We have  implemented  marketing  strategies  designed to maintain and
encourage  relationships  with travel agencies  throughout our route system.  We communicate with travel agents through personal visits
by Company  executives and sales managers,  sales literature  mailings,  trade shows,  telemarketing  and advertising in various travel
agent trade publications.

         We participate in the four major computer  reservation  systems used by travel agents to make airline  reservations:  Amadeus,
Galileo,  Worldspan  and Sabre.  We maintain  reservations  centers in Denver,  Colorado  and Las Cruces,  New Mexico,  operated by our
employees.  We opened the Las Cruces  call  center in August  2000,  replacing  a Miami,  Florida  contractor  that had been  providing
reservations services for us.

         In January 1999, we renewed an agreement with  Electronic  Data Systems  ("EDS") for continued and enhanced  airline  customer
information services, including computerized reservations, passenger processing and telecommunications services.

         Our  agreement  with EDS enhances  our ability to provide  Internet  bookings  through the EDS SHARES web booking  engine.  In
April  1999,  we began  offering  "Spirit of the Web" fares via our Web site,  which  permits  customers  to make  "close in"  bookings
beginning on Wednesdays for the following  weekend.  This is intended to fill seats that might otherwise remain unused.  Our percentage
of  Internet-related  revenue,  which includes our own Web site and other Internet  travel  distributors,  increased from 12.7% for the
month of March 2000 to 30.9% for the month of March 2001.

         Since early 1997, we have made greater use of electronic  or  "paperless"  ticketing,  a lower cost  alternative  to ticketing
passengers on relatively  expensive  ticket stock.  During fiscal year 2000, we enabled all four computer  reservation  systems used by
travel agents to offer e-ticketing capabilities on our flights.

         In May 2000, we unveiled a newly designed and enhanced Web site that  incorporates  booking  capabilities  on each page of the
site, an expanded "About Frontier" section,  exclusive partner offers, a new "Frequently  Answered Questions" section and new real time
flight  information.  During fiscal year 2001, we purchased EDS' VIBE,  Versatile Internet Booking Engine,  which permits us to perform
more advanced  online booking  capabilities,  such as online  discounts,  and explore a  business-to-business  corporate  strategy.  We
implemented VIBE in November 2000.

Product Pricing

         We  generally  offer our seats at discount  fares on flights  booked  within 21 days of travel , and  consider  our service an
affordable  alternative to the higher fare,  larger  carriers.  Seat  inventories on each flight are managed through a yield management
system.  We generally  provide  discounts with five levels of advance purchase  requirements.  In contrast to most carriers,  our fares
usually do not require  travelers to include a Saturday  overnight stay in order to take advantage of these discount  rates. We also do
not charge a premium for one-way fares and, generally, our fares do not require a round-trip purchase.

Competition

       The Airline  Deregulation Act of 1978 (the "Deregulation Act") produced a highly competitive airline industry,  freed of certain
government  regulations  that for 40 years prior to the  Deregulation  Act had dictated where domestic  airlines could fly and how much
they could charge for their services.  Since then, we and other smaller  carriers have entered markets long dominated by large airlines
with substantially greater resources, such as United Airlines, American Airlines, Northwest Airlines and Delta Air Lines.

       We compete  principally  with United  Airlines,  the dominant  carrier at DIA.  United and its commuter  affiliates have a total
market share at DIA of  approximately  69%. This gives United a significant  competitive  advantage  compared to us and other  carriers
serving DIA. We believe our current  market share at DIA  approximates  8.3%.  We compete with United  primarily on the basis of fares,
fare flexibility and the quality of our customer service.

       At the present time, four airports,  including New York's LaGuardia Airport  ("LaGuardia") and Washington,  D.C.'s Ronald Reagan
International  Airport ("DCA"), are regulated by means of "slot" allocations,  which represent government  authorization to take off or
land at a particular  airport within a specified  time period.  FAA  regulations  require the use of each slot at least 80% of the time
and provide for  forfeiture  of slots in certain  circumstances.  We were  originally  awarded six slots at  LaGuardia.  At the present
time,  we utilize  four of those  slots to operate two daily  round-trip  flights  between  Denver and  LaGuardia.  In addition to slot
restrictions,  DCA is limited by a perimeter  rule,  which limits flights to and from DCA to 1,250 miles. In April 2000, the Wendell H.
Ford  Aviation  Investment  and  Reform  Act for the  21st  Century  ("AIR  21") was  enacted.  AIR 21  authorizes  the  Department  of
Transportation  ("DOT") to grant up to 12 slot exemptions  beyond the 1,250 mile DCA perimeter,  provided  certain  specifications  are
met. These include that the new service will provide air  transportation  with domestic network benefits in areas beyond the perimeter;
increase  competition by new entrant air carriers or in multiple  markets;  not reduce travel options for  communities  served by small
hub airports and medium hub airports within the perimeter;  and not result in meaningfully  increased  travel delays.  We are presently
authorized  to and we operate  one daily  round-trip  flight  between  Denver and DCA.  We are  seeking  authority  to operate a second
round-trip flight in this market but are unable to predict whether such authority will be granted.

Aircraft

       As of June 1, 2001, we operate 25 leased Boeing 737 and one Airbus A319 in all-coach  seating  configurations.  The age of these
aircraft, their passenger capacities and their lease expirations are shown in the following table:

                                                                        Approximate
                                                                         Number of
        Aircraft               No. of                Year of              Passenger                 Lease
         Model               Aircraft             Manufacture               Seats                Expiration
B-737-200A                       7                 1978-1983                119                  2001-2005
B-737-300                       18                 1985-1998                136                  2002-2006
A319                             1                   2001                   132                    owned

       In March 2000, we entered into an agreement,  as subsequently  amended, to purchase up to 29 new Airbus aircraft. We have agreed
to firm  purchases of 12 of these  aircraft,  and have options to purchase up to an additional 17 aircraft.  This order  contemplates a
fleet  replacement  plan by which we will phase out of our Boeing 737 aircraft and replace them with a  combination  of Airbus A319 and
A318 aircraft. As a complement to this purchase,  in April and May 2000 we signed two agreements to lease 16 new Airbus aircraft.  Upon
completion of our fleet  transition,  we expect our owned and leased fleet to be comprised of  approximately  two-thirds  A319 aircraft
and one-third  A318  aircraft.  We took delivery of our first  purchased  Airbus A319 aircraft in May 2001,  expect to take delivery of
our first leased  Airbus  aircraft in June 2001,  and plan to be operating  up to 37 Airbus  aircraft by the first  quarter of calendar
year 2005. The A319 and A318 aircraft are configured  with 132 and 114 passenger  seats,  respectively,  with a 33-inch seat pitch.  We
believe  that  operating  new Airbus  aircraft  will result in  significant  operating  cost  savings  and an improved  product for our
customers.

Maintenance and Repairs

       All of our aircraft  maintenance and repairs are accomplished in accordance with our maintenance  program approved by the United
States  Federal  Aviation  Administration  ("FAA").  Spare or replacement  parts are maintained by us primarily in Denver.  Spare parts
vendors supply us with certain of these parts, and we purchase or lease others from other airline or vendor sources.

       Since  mid-1996,  we have trained,  staffed and supervised our own  maintenance  work force at Denver.  We sublease a portion of
Continental  Airlines'  hangar  at DIA where we  presently  perform  our own  maintenance  through  the "D" check  level.  Other  major
maintenance,  such as major engine  repairs,  is  performed by outside FAA approved  contractors.  We also  maintain  line  maintenance
facilities at El Paso, Texas and Phoenix, Arizona.

       Under our aircraft lease agreements,  we pay all expenses relating to the maintenance and operation of our aircraft,  and we are
required to pay monthly  maintenance  reserve deposits to the lessors based on usage.  Maintenance reserve deposits are applied against
the cost of scheduled major  maintenance.  To the extent not used for major  maintenance  during the lease terms,  maintenance  reserve
deposits remain with the aircraft lessors upon redelivery of the aircraft.

       Our monthly  completion  factors for the years ending March 31, 2001,  2000, and 1999 ranged from 98.6% to 99.8%,  from 96.7% to
99.7%, and from 97.6% to 99.8%,  respectively.  The completion  factor is the percentage of our scheduled flights that were operated by
us (i.e.,  not canceled).  Canceled  flights were  principally as a result of mechanical  problems,  and, to a lesser extent,  weather.
Maintenance  management has recently implemented  processes and procedures that will assist in ensuring that our aircraft will continue
to be  sufficiently  reliable  over longer  periods of time.  These include the  implementation  of a  multi-departmental  product team
designed to provide the  leadership  and  direction  necessary to maintain and improve  fleet costs and  performance.  The product team
consists of four core  departments;  engineering,  quality  control,  reliability and  production.  In addition,  base  maintenance has
established  flowcharts  to more  efficiently  utilize "C" check  manpower  and part  resources  to ensure  maintenance  schedules  are
maintained in a cost effective manner.  We also expect that our new Airbus aircraft will improve aircraft reliability.

       In 1999 and 2000, our maintenance  and engineering  department  received the FAA's highest award for maintenance  training,  the
Diamond  Certificate  of Excellence,  with 100 percent of our  maintenance  and  engineering  employees  completing  advanced  aircraft
maintenance training programs. The Diamond Award,  recognizes advanced training for aircraft maintenance  professionals  throughout the
airline  industry.  We are the first and only part 121  domestic  air  carrier to achieve 100 percent  participation  in this  training
program by our maintenance employees.

Fuel

       During the years ending March 31, 2001,  2000,  and 1999, jet fuel accounted for 18.1%,  15.3% and 11.6%,  respectively,  of our
operating expenses.  We have arrangements with major fuel suppliers for substantial  portions of our fuel requirements,  and we believe
that such arrangements  assure an adequate supply of fuel for current and anticipated future operations.  However,  we have not entered
into any  agreements  that fix the price of fuel over any period of time. Jet fuel costs are subject to wide  fluctuations  as a result
of sudden  disruptions in supply beyond our control.  Therefore,  we cannot predict the future  availability  and cost of jet fuel with
any degree of certainty.  Fuel prices  increased  significantly  in fiscal 2001. Our average fuel price per gallon  including taxes and
into-plane fees was $1.07 for the year ended  March 31,  2001, with the monthly average price per gallon during the same period ranging
from a low of 91.3(cent)to a high of $1.24.  As of June 1,  2001,  the price per  gallon  was  $1.00.  Our  average  fuel  price per gallon
including taxes and into-plane  fees was 79.9(cent)for the year ended March 31,  2000, with the monthly average price per gallon during the
same period ranging from a low of 57.9(cent)to a high of $1.02.

       Increases in fuel prices or a shortage of supply could have a material  adverse effect on our operations and financial  results.
Our ability to pass on increased  fuel costs to passengers  through price  increases or fuel  surcharges  may be limited,  particularly
given our affordable fare strategy.

Insurance

       We carry $800 million per aircraft per occurrence in property  damage and passenger and  third-party  liability  insurance,  and
insurance for aircraft loss or damage with  deductible  amounts as required by our aircraft lease  agreements,  and customary  coverage
for other  business  insurance.  While we believe such  insurance  is  adequate,  there can be no  assurance  that such  coverage  will
adequately  protect us against  all  losses  that we might  sustain.  Our  property  damage and  passenger  and  third-party  liability
insurance coverage exceeds the minimum amounts required by the DOT regulations.

Employees

       As of June 1, 2001, we had 2,479 employees,  including 2,058 full-time and 421 part-time  personnel.  Our employees included 327
pilots,  408 flight  attendants,  412 customer  service agents,  336 ramp service agents,  243 reservations  agents,  351 mechanics and
related personnel, and 402 general management and administrative personnel.  We consider our relations with our employees to be good.

       We have established a compensation  philosophy that we will pay competitive wages compared to other airlines of similar size and
other employers with whom we compete for our labor supply.  Employees have the  opportunity to earn above our established  market rates
through the payment of performance bonuses.

       Two of our employee  groups have voted for union  representation:  our pilots  voted in November  1998 to be  represented  by an
independent union, the Frontier Airline Pilots Association  ("FAPA"),  and our dispatchers voted in September 1999 to be represented by
the  Transport  Workers  Union.  The first  bargaining  agreement  for the pilots,  which has a 5-year  term,  was  ratified and became
effective  in May 2000.  The first  bargaining  agreement  for the  dispatchers,  which has a 3-year  term,  was  ratified  and  became
effective  in  September  2000.  In  addition  since  1997 we have had union  organizing  attempts  that were  defeated  by our  flight
attendants,  ramp  service  agents,  mechanics,  and stock  clerks.  We  recently  received  a letter  signed by  certain of our flight
attendants  indicating that they are pursuing union  representation.  We have not received an official  notification  from the National
Mediation Board ("NMB") of a  representation  application for flight  attendants.  In May 2001, the NMB advised us that it had received
an application from the  International  Brotherhood of Teamsters seeking to represent our mechanics and related  employees.  The NMB is
currently determining if and when a representation election should be held with respect to this application.

       We have enhanced our 401(k) Retirement Savings Plan by announcing an increased matching  contribution by the Company.  Effective
May 2000,  participants may receive a 50% Company match for  contributions  up to 10%. This match is  discretionary  and approved on an
annual basis by our Board of  Directors.  The Board of Directors  has approved the  continuation  of the match which was  effective May
2000 for the plan year ended  December 31, 2001. We anticipate  that the match and related  vesting  schedule of 20% per year may serve
to reduce our employee turnover rates.

       All new employees are subject to pre-employment  drug testing.  Those employees who perform safety sensitive  functions are also
subject to random drug and alcohol testing, and testing in the event of an accident.

       Training,  both initial and recurring,  is required for many employees.  We train our pilots, flight attendants,  ground service
personnel,  reservations  personnel and mechanics.  FAA regulations  require pilots to be licensed as commercial pilots,  with specific
ratings for aircraft to be flown, to be medically  certified or physically fit, and have recent flying experience.  Mechanics,  quality
control  inspectors and flight  dispatchers must be licensed and qualified for specific  aircraft.  Flight attendants must have initial
and periodic  competency,  fitness  training and  certification.  The FAA  approves  and  monitors  our training  programs.  Management
personnel  directly  involved in the  supervision  of flight  operations,  training,  maintenance  and  aircraft  inspection  must meet
experience standards prescribed by FAA regulations.

Government Regulation

       All  interstate  air  carriers  are subject to  regulation  by the DOT and the FAA under the  Federal  Aviation  Act.  The DOT's
jurisdiction  extends primarily to the economic aspects of air transportation,  while the FAA's regulatory  authority relates primarily
to air safety,  including  aircraft  certification and operations,  crew licensing and training,  maintenance  standards,  and aircraft
standards.  In  general,  the  amount of  regulation  over  domestic  air  carriers  in terms of market  entry  and exit,  pricing  and
inter-carrier agreements has been greatly reduced subsequent to enactment of the Deregulation Act.

       U.S.  Department of  Transportation.  We hold a Certificate of Public Convenience and Necessity issued by the DOT that allows us
to engage in air  transportation.  Pursuant to law and DOT  regulation,  each United  States  carrier must  qualify as a United  States
citizen,  which requires that its President and at least two-thirds of its Board of Directors and other managing  officers be comprised
of United States citizens;  that not more than 25% of its voting stock may be owned by foreign  nationals,  and that the carrier not be
otherwise subject to foreign control.

       U.S.  Federal  Aviation  Administration.  We also hold an  operating  certificate  issued by the FAA pursuant to Part 121 of the
Federal Aviation  Regulations.  The FAA has jurisdiction over the regulation of flight operations including the licensing of pilots and
maintenance  personnel,  the  establishment  of minimum  standards for training and  maintenance,  and technical  standards for flight,
communications  and ground  equipment.  We must have and we maintain FAA  certificates of  airworthiness  for all of our aircraft.  Our
flight personnel,  flight and emergency procedures,  aircraft and maintenance facilities and station operations are subject to periodic
inspections and tests by the FAA.

       At the present time, four airports,  including LaGuardia and DCA, are regulated by means of "slot" allocations,  which represent
government  authorization to take off or land at a particular airport within a specified time period.  FAA regulations  require the use
of each slot at least 80% of the time and  provide for  forfeiture  of slots in certain  circumstances.  The  Company  currently  holds
slots to serve the  Denver-LaGuardia  and  Denver-DCA  market  and  provides  two and one daily  round trip  flights in those  markets,
respectively.

       The DOT and FAA also have authority  under the Aviation  Safety and Noise  Abatement Act of 1979, the Airport Noise and Capacity
Act of 1990 ("ANCA") and Clean Air Act of 1963 to monitor and regulate  aircraft  engine noise and exhaust  emissions.  We are required
to comply with all applicable FAA noise control  regulations and with current exhaust emissions  standards.  Our fleet is in compliance
with the FAA's Stage 3 noise level requirements.

       Railway Labor  Act/National  Mediation  Board. Our pilots  organized in 1998 under an independent  union, the Frontier  Airlines
Pilots  Association,  and our  dispatchers  organized in 1999 and are represented by the Transport  Workers Union.  Our labor relations
with  respect  to the  pilots  and  dispatchers  are now  covered  under  Title II of the  Railway  Labor  Act and are  subject  to the
jurisdiction of the National Mediation Board.

       Miscellaneous.  All air carriers are subject to certain  provisions of the Communications Act of 1934 because of their extensive
use of radio  and other  communication  facilities,  and are  required  to  obtain  an  aeronautical  radio  license  from the  Federal
Communications  Commission ("FCC"). To the extent that we are subject to FCC requirements,  we believe that we take all necessary steps
to comply with those requirements.

Risk Factors

       In addition to the other information  contained in this Form 10-K, the following risk factors should be considered  carefully in
evaluating us and our business.

We may not be able to obtain or secure new aircraft financing.

         We have agreed to purchase  various new Airbus A319 and A318  aircraft.  We have secured a financing  commitment for the first
three  purchased  aircraft,  which are scheduled to have been delivered to us by the end of September 2001. To complete the purchase of
the remaining  aircraft,  we must secure acceptable  aircraft  financing,  which we may not be able to obtain.  The amount of financing
required  will depend on the number of aircraft  purchase  options we exercise and the amount of cash  generated by  operations  before
delivery of the aircraft.  We are exploring various financing  alternatives,  including,  but not limited to, domestic and foreign bank
financing,  public debt financing such as enhanced  equipment trust  certificates,  and leveraged lease  arrangements.  There can be no
guaranty that  additional  financing  will be available  when required or on  acceptable  terms.  The inability to secure the financing
could have a material  adverse  effect on us and result in delays in or our inability to take delivery of Airbus  aircraft that we have
agreed to purchase.

The airline industry is seasonal and cyclical, resulting in unpredictable liquidity and earnings.

         Because the airline  industry is seasonal and cyclical,  our liquidity and earnings will fluctuate and be  unpredictable.  Our
operations  primarily  depend on passenger travel demand and seasonal  variations.  Our weakest travel periods are generally during the
quarters ending in June and December.  The airline industry is also a highly cyclical  business with substantial  volatility.  Airlines
frequently  experience  short-term cash requirements.  These requirements are caused by seasonal  fluctuations in traffic,  which often
reduce cash during  off-peak  periods,  and various other  factors,  including  price  competition  from other  airlines,  national and
international  events, fuel prices, and general economic  conditions  including  inflation.  A substantial portion of our customers use
our services on a discretionary  basis.  Accordingly,  our operating and financial results are likely to be negatively  impacted by any
downturn  in  national  or  regional  economic  conditions  in the United  States,  and  particularly  in  Colorado.  Airlines  require
substantial  liquidity to continue  operating under most  conditions.  The airline  industry also has low operating  profit margins and
revenues that vary to a  substantially  greater  degree than do the related  costs.  Working  capital  deficits are not uncommon in the
airline  industry  since  airlines  typically  have no product  inventories  and ticket sales to passengers  who have not yet flown are
reflected as current  liabilities.  Therefore,  a significant  shortfall  from expected  revenue  levels could have a material  adverse
effect on our operations.

         We, like many in the industry,  are seeing a negative impact to passenger  traffic caused by the slowing  economy.  The impact
has been more  prevalent  with our business  traffic,  which is higher yield traffic that books closer to the date of  departure,  than
with our leisure  customers.  Even though the slowing economy has impacted us, we believe that the larger,  more  established  carriers
are being  impacted to a greater  extent as the  discretionary  business  travelers who  typically  fly these  carriers are looking for
affordable  alternatives  similar to the service we provide.  The larger  carriers may reduce their  "close-in"  fare structure to more
aggressively  compete for this traffic.  Our larger leisure component has remained  relatively  stable. We believe that unless there is
a major shift in consumer  confidence  and  spending  that the leisure  component  will remain  relatively  stable for the  foreseeable
future.   Aggressive pricing tactics by our major competitors could also have an impact on the leisure component.

The increasing number of consolidations and alliances has increased competition, and we may not be able to effectively compete.

         Competition  in the airline  industry is constantly  intensifying,  which could  decrease our market share.  The U.S.  airline
industry has consolidated in recent years, and there are additional  consolidations  presently  proposed.  Consolidations  have enabled
various carriers to expand their  international  operations and increase their presence in the U.S. domestic market. In addition,  many
major  domestic  carriers  have formed  alliances  with  domestic  regional  carriers and foreign  carriers.  As a result,  many of the
carriers  with  which we  compete  in our  markets  are  larger  and have  substantially  greater  resources  than we have.  Continuing
developments in the industry may affect our ability to effectively compete in the markets we serve.

We are in a high fixed cost business, and any unexpected decrease in revenues could harm us.

         The airline  industry is  characterized  by fixed costs that are high in relation to revenues.  Accordingly,  a shortfall from
expected revenue levels can have a material adverse effect on our profitability and liquidity.

Increases in fuel costs affect our operating costs and competitiveness.

         We cannot predict our future cost and  availability of fuel,  which affects our ability to compete.  Fuel is a major component
of our operating  expenses.  Both the cost and  availability  of fuel are influenced by many economic and political  factors and events
occurring  throughout the world,  and fuel costs fluctuate  widely.  Fuel accounted for 18.1% of our total  operating  expenses for the
year ended  March 31,  2001.  Substantial  sustained  price  increases  have  prevailed  during the year ended  March 31, 2001 and have
continued  since that date. The  unavailability  of adequate fuel supplies  could have a material  adverse effect on our operations and
profitability.  In  addition,  larger  airlines may have a  competitive  advantage  because  they pay lower prices for fuel.  We intend
generally to follow industry trends by raising fares in response to significant fuel price increases.  However,  our ability to pass on
increased fuel costs through fare increases may be limited by economic and competitive conditions.

We are governed under federal regulations, and compliance with federal regulations increases our costs and decreases our revenues.

         Compliance with federal  regulations  increases our costs.  Although we have obtained the necessary authority from the DOT and
the FAA to conduct flight  operations and are currently  obtaining such authority from the FAA with respect to our Airbus aircraft,  we
must maintain this authority by our continued  compliance with applicable  statutes,  rules, and regulations  pertaining to the airline
industry,  including  any new rules and  regulations  that may be adopted in the future.  We believe that the FAA strictly  scrutinizes
small airlines like ours,  thereby making us susceptible to regulatory  demands that can negatively  impact our operations.  We may not
be able to  continue  to comply  with all  present  and future  rules and  regulations.  In  addition,  we cannot  predict the costs of
compliance with these  regulations  and the effect of compliance on our  profitability.  We also expect  substantial FAA scrutiny as we
transition from our Boeing fleet to an all Airbus fleet.

         In 1996 a relatively  new domestic  airline  sustained an accident in which one of its aircraft was  destroyed and all persons
on board were fatally  injured.  Shortly  thereafter,  that airline agreed at the FAA's request to cease all of its flight  operations.
Although the FAA, after an intensive and lengthy investigation,  allowed that airline to resume its operations,  should we experience a
similar accident, it is probable that there would be a material adverse effect on our business and results of operations.

We experience high costs at Denver International Airport, which may impact our results of operations.

         We operate our flight hub from DIA where we  experience  high costs.  DIA opened in March 1995,  and  Stapleton  International
Airport was closed.  Financed  through revenue bonds,  DIA depends on landing fees, gate rentals,  income from airlines,  the traveling
public,  and other fees to generate income to service its debt and to support its  operations.  Our cost of operations at DIA will vary
as traffic increases or diminishes at that airport.  We believe that our operating costs at DIA  substantially  exceed those that other
airlines incur at most hub airports in other cities, which decreases our competitiveness.

We have a limited number of routes, which limits our market share and ability to compete.

         Because of our relatively  small fleet size and limited  number of routes,  we are at a competitive  disadvantage  compared to
other airlines,  such as United Airlines,  that can spread their operating costs across more equipment and routes and retain connecting
traffic (and revenue) within their much more extensive route networks.

We face intense competition and market dominance by United Airlines.

         The airline  industry is highly  competitive,  primarily due to the effects of the Deregulation  Act, which has  substantially
eliminated  government  authority  to regulate  domestic  routes and fares and has  increased  the ability of airlines to compete  with
respect to flight  frequencies  and fares.  We compete  with  United  Airlines  in our hub in Denver,  and we  anticipate  that we will
compete  principally  with United Airlines in our future market entries.  United Airlines and its commuter  affiliates are the dominant
carriers out of DIA,  accounting for  approximately  69% of all passenger  boardings for the month of March 2001. Fare wars,  "capacity
dumping" in which a competitor  places  additional  aircraft on selected  routes,  and other  activities could adversely affect us. The
future  activities  of  United  Airlines  and other  carriers  may have a  material  adverse  effect on our  revenues  and  results  of
operations.  Most of our current and potential competitors have significantly greater financial resources,  larger route networks,  and
superior market identity than we have.

We are dependent on Samuel D. Addoms,  and we may not be able to adequately  replace the loss of him, which would harm our business and
reputation.

         We are dependent on the active  participation  of Samuel D. Addoms,  our president and chief  executive  officer.  The loss of
his services could  materially and adversely  affect our business and future  prospects.  The loss of Mr. Addoms could result in a loss
of investor  confidence  and a reduction in our ability to attract  personnel and talent to the company.  Mr. Addoms  has been involved
in the  airline  industry  for the past  seven  years and  managed  various  companies  for 39  years.  While we employ a number of key
personnel,  we are dependent on the managerial  services of Mr. Addoms.  Additionally,  we do not maintain key person life insurance on
Mr. Addoms or on any of our officers.

We could lose airport and gate access thereby decreasing our competitiveness.

         We could  encounter  barriers to airport or airport  gate access that would deny or limit our access to the  airports  that we
intend to utilize in the  future or that  diminishes  the desire or ability  of  potential  customers  to travel  between  any of those
cities.  The number of gates also may be limited at some airports,  which could  adversely  affect our  operations.  These barriers may
materially adversely affect our business and competitiveness.

Our maintenance expenses may be higher than we anticipate.

         We may incur higher than anticipated  maintenance expenses.  Under our aircraft lease agreements,  we are required to bear all
routine and major maintenance  expenses.  Maintenance  expenses comprise a significant portion of our operating expenses.  In addition,
we are required  periodically to take aircraft out of service for heavy  maintenance  checks,  which can adversely affect revenues.  We
also may be required to comply with  regulations and  airworthiness  directives the FAA issues,  the cost of which our aircraft lessors
may only partially  assume  depending upon the magnitude of the expense.  Although we believe that our leased aircraft are currently in
compliance with all FAA issued  Airworthiness  Directives ("ADs"),  there is a high probability that additional ADs will be required in
the future necessitating additional expense.

Our landing fees may increase because of local noise abatement procedures.

         Compliance  with local noise abatement  procedures may lead to increased  landing fees. As a result of litigation and pressure
from airport area residents,  airport  operators have taken local actions over the years to reduce  aircraft noise.  These actions have
included  regulations  requiring  aircraft to meet  prescribed  decibel  limits by designated  dates,  curfews during night time hours,
restrictions  on frequency of aircraft  operations,  and various  operational  procedures  for noise  abatement.  The Airport Noise and
Capacity  Act of 1990  ("ANCA")  recognized  the right of airport  operators  with  special  noise  problems to  implement  local noise
abatement  procedures as long as the procedures do not interfere  unreasonably with the interstate and foreign commerce of the national
air transportation system.

         An agreement  between the City and County of Denver and another county  adjacent to Denver  specifies  maximum  aircraft noise
levels at  designated  monitoring  points in the vicinity of DIA with  significant  payments  payable by Denver to the other county for
each  substantiated  noise  violation  under the  agreement.  DIA has  incurred  such  payment  obligations  and likely will incur such
obligations in the future,  which it will pass on to us and other air carriers  serving DIA by increasing  landing fees.  Additionally,
noise  regulations  could be  enacted in the future  that  would  increase  our  expenses  and have a  material  adverse  effect on our
operations.

We have a limited number of aircraft, and any unexpected loss of any aircraft could disrupt and harm our operations.

       Because we have a limited number of aircraft,  if any of our aircraft  unexpectedly are taken out of service, our operations may
be disrupted.  We schedule all of our aircraft for regular  passenger  service and only  maintain  limited  spare  aircraft  capability
should one or more aircraft be removed from scheduled  service for unplanned  maintenance  repairs or for other reasons.  The unplanned
loss of use of one or more of our aircraft for a significant  period of time could have a materially  adverse  effect on our operations
and  operating  results.  A  replacement  aircraft  may  not be  available  or we may  not be  able to  lease  additional  aircraft  on
satisfactory  terms or when  needed.  The market for leased  aircraft  fluctuates  based on worldwide  economic  factors that we cannot
control.

Our labor costs may increase.

       We believe we operate with lower  personnel  costs than many  established  airlines,  principally due to lower base salaries and
greater  flexibility  in the  utilization of personnel,  but these costs may increase.  We may not be able to continue to realize these
advantages  over other air carriers for an extended  period of time.  Our pilots are  represented by an  independent  labor union,  the
Frontier  Airline Pilots  Association,  and our dispatchers are represented by the Transport  Workers Union. In addition since 1997, we
have had union organizing attempts that were defeated by our flight attendants,  ramp service agents,  mechanics, and stock clerks, but
future attempts may result in  representation  of one or more of our employee groups.  We understand that  unionization  activities for
our flight  attendants  and mechanics are  continuing.  The  collective  bargaining  agreement we have entered into with our pilots has
increased our labor and benefit costs  effective in May 2000, and additional  unionization  of our employees could increase our overall
costs.

We have not paid cash dividends and do not expect to pay any in the foreseeable future.

         We have never  declared or paid cash  dividends  on our common  stock.  We currently  intend to retain any future  earnings to
fund  operations  and to continue  development  of our business and do not expect to pay any cash  dividends on our common stock in the
foreseeable future.

Shares eligible for future sale could impact our stock price.

       The market price of our common stock could be adversely  impacted by the  availability of shares for future sale.  Substantially
all of our outstanding  shares of common stock, other than shares held by officers,  directors and other of our affiliates,  are freely
tradable.  Shares of common stock held by our  affiliates  are subject to  limitations  on the number of shares that may be sold unless
the sale of the shares is registered or is exempt from registration under the Securities Act of 1933.

       In addition,  as of March 31, 2001 there were 2,203,444  options  outstanding  or which may be exercised  under our stock option
plan.  Sales of these shares, depending on the volume, could adversely affect the trading prices of the common stock.

Our stock price has been volatile.

       The price range of our common stock has varied widely.  The price of our common stock may be subject to significant  fluctuation
in the future.  The possibility that selling  shareholders  may sell  substantial  amounts of shares in the public market may adversely
affect  prevailing  market  prices for the common  stock.  It could also  impair our ability to raise  capital  through the sale of our
stock.

Item 2:  Properties

       In January  2001,  we moved our general and  administrative  offices to a new  headquarters  facility  near DIA,  where we lease
approximately  70,000  square feet of space for a lease term of 12 years at an average  annual  rental of  approximately  $965,000 plus
operating and maintenance expenses.

       We lease  approximately  11,000  square  feet of office  space in Denver  with a term  ending  June 2001 at an annual  rental of
approximately  $200,000.  This facility provides space for our reservations center and related  administrative  activities.  The Denver
reservations  facility  will  relocate in July 2001 to a 16,000 square foot  facility,  also in Denver,  which we have leased for a ten
year lease term at an average annual rental of  approximately  $140,000 plus  operating and  maintenance  expenses.  In August 2000, we
established a second  reservations  center facility in Las Cruces,  New Mexico.  This facility is approximately  12,000 square feet and
is leased for a term of 122 months at an average annual rental of approximately $129,000 plus operating and maintenance expenses.

       We have entered into an airport lease and  facilities  agreement  expiring in 2010 with the City and County of Denver at DIA for
ticket counter space,  nine gates and associated  operations at a current  annual rental rate of  approximately  $11,300,000  for these
facilities.  We also sublease a portion of Continental Airlines' hangar at DIA until January 1, 2004.

       Each of our airport  locations  requires leased space  associated with gate  operations,  ticketing and baggage  operations.  We
either lease the ticket  counters,  gates and airport office  facilities at each of the airports we serve from the appropriate  airport
authority or sublease them from other airlines.  Additionally,  we lease maintenance facilities in El Paso, Texas and Phoenix,  Arizona
at a current annual rental of approximately $201,000 for these facilities

Item 3:  Legal Proceedings

       From time to time, we are engaged in routine  litigation  incidental to our business.  We believe there are no legal proceedings
pending  in which  we are a party or of which  any of our  property  is the  subject  that  are not  adequately  covered  by  insurance
maintained by us, or which, if adversely decided, would have a material adverse effect upon our business or financial condition.

Item 4:  Submission of Matters to a Vote of Security Holders

       During the fourth  quarter of the year covered by this report,  we did not submit any matters to a vote of our security  holders
through the solicitation of proxies or otherwise.


                                                                PART II

Item 5:  Market for Common Equity and Related Stockholder Matters

Price Range of Common Stock

       Until May 26, 1999, our common stock was traded on the Nasdaq SmallCap  Market under the symbol "FRNT."  Effective May 26, 1999,
our common stock began trading on the Nasdaq National Market, also under the symbol "FRNT."

       The following  table shows the range of high and low bid prices per share for our common stock for the periods  indicated and as
reported by Nasdaq  through June 1, 2001.  Market  quotations  listed here represent  prices between  dealers and do not reflect retail
mark-ups, mark-downs or commissions. As of June 1, 2001, there were 854 holders of record of our common stock.

                                                                       Price Range of
                                                                        Common Stock
                                                                        ------------
                     Quarter Ended                                    High         Low
                     -------------                                    ----         ---

                     June 30, 1999                                $     11.46 $      6.33
                     September 30, 1999                                 12.42        5.50
                     December 31, 1999                                   9.00        5.94
                     March 31, 2000                                      7.54        6.25

                     June 30, 2000                                      10.34        7.49
                     September 30, 2000                                 12.96        9.71
                     December 31, 2000                                  20.63       12.92
                     March 31, 2001                                     25.50        9.94

                     June 30, 2001 (through June 1, 2001)               16.48       10.31








Recent Sales of  Securities

       During the period April 1, 2000 through June 1, 2001,  holders of warrants to purchase our common stock exercised their warrants
and we issued common stock as described below:

                                                                             Warrant
                                                      Number of             Exercise
       Warrant Holder                               Shares Issued             Price          Dates of Exercise
       --------------                               -------------             -----          -----------------


       Private placement warrant holder                 550,393               $2.50          January 23, 2001

       Secondary offering underwriters
        (and affiliates)                                 32,637               $3.70          April 26, 2000 -
                                                                                             November 8, 2000

       As of June 1, 2001, we have granted  stock  options to our employees and directors to purchase up to 5,012,625  shares of common
stock,  2,674,181 of which options have been  previously  exercised and 911,445 of which are currently  exercisable at exercise  prices
ranging from .67(cent)to $13.89 per share.

Dividend Policy

       We have not declared or paid cash  dividends on our common  stock.  We  currently  intend to retain any future  earnings to fund
operations  and the continued  development  of our business,  and, thus, do not expect to pay any cash dividends on our common stock in
the  foreseeable  future.  Future cash  dividends,  if any,  will be  determined  by our Board of Directors  and will be based upon our
earnings,  capital  requirements,  financial  condition and other factors deemed relevant by the Board of Directors.  On March 5, 2001,
we paid a fifty percent stock dividend to shareholders of record of common stock on February 19, 2001.

Rights Dividend Distribution

       In February 1997, our Board of Directors  declared a dividend  distribution of one right (a "Right") for each outstanding  share
of our common stock to  shareholders  of record at the close of business on March 15,  1997.  Except as  described  below,  each Right,
when  exercisable,  entitles the  registered  holder to purchase  from us one share of common  stock at a purchase  price of $65.00 per
share (the  "Purchase  Price"),  subject to  adjustment.  The Rights  expire at the close of business on February 20,  2007,  unless we
redeem or exchange them earlier as described  below.  The description and terms of the Rights are set forth in a Rights  Agreement,  as
amended (as so amended,  the "Rights  Agreement").  As a result of the fifty percent stock dividend we paid on March 5, 2001, there are
currently 0.67 Rights associated with each outstanding share of common stock.

       The Rights are exercisable upon the earlier of (i) 10 days following a public  announcement that a person or group of affiliated
or associated persons other than us, our subsidiaries or any person receiving  newly-issued  shares of common stock directly from us or
indirectly via an underwriter in connection  with a public offering by us (an "Acquiring  Person") has acquired,  or obtained the right
to acquire,  beneficial  ownership of 20% or more of the outstanding shares of common stock (the "Stock Acquisition  Date"), or (ii) 10
business  days  following  the  commencement  of a tender offer or exchange  offer that would result in a person or group  beneficially
owning 20% or more of such outstanding shares of  common stock.

       If any person becomes an Acquiring Person other than pursuant to a Qualifying  Offer (as defined below),  each holder of a Right
has the right to receive,  upon  exercise,  common  stock (or, in certain  circumstances,  cash,  property or other  securities  of the
Company) having a value equal to two times the exercise price of the Right.  Notwithstanding any of the foregoing,  all Rights that are
beneficially  owned by any Acquiring  Person will be null and void.  However,  Rights are not  exercisable in any event until such time
as the Rights are no longer redeemable by us as set forth below.

       A "Qualifying Offer" means a tender offer or exchange offer for, or merger proposal involving,  all outstanding shares of common
stock at a price and on terms  determined  by at least a majority of the Board of Directors  who are not our officers or employees  and
who are not related to the Person making such offer, to be fair to and in the best interests of the Company and our shareholders.

       If after the Stock  Acquisition Date we are acquired in a merger or other business  combination  transaction in which the common
stock is changed or exchanged or in which we are not the surviving  corporation  (other than a merger that follows a Qualifying  Offer)
or 50% or more of the  Company's  assets or  earning  power is sold or  transferred,  each  holder of a Right  shall  have the right to
receive, upon exercise, common stock of the acquiring company having a value equal to two times the exercise price of the Right.

       The Purchase Price payable, and the number of shares of common stock or other securities or property issuable,  upon exercise of
the Right,  and the number of Rights  associated  with each share of common stock,  are all subject to adjustment  from time to time to
prevent  dilution (i) in the event of a stock dividend on, or a  subdivision,  combination  or  reclassification  of, the common stock,
(ii) if holders of the common stock are granted  certain rights or warrants to subscribe for common stock or convertible  securities at
less than the current market price of the common stock,  or (iii) upon the  distribution to holders of the common stock of evidences of
indebtedness or assets or of subscription rights or warrants.

       At any time  until ten days  following  the Stock  Acquisition  Date,  we may  redeem the Rights in whole at a price of $.01 per
Right.  Upon the action of the Board of Directors  ordering  redemption of the Rights,  the Rights will terminate and the only right of
the holders of Rights will be to receive the $.01 redemption price.

       While the distribution,  if any, of the Rights will not be taxable to shareholders or to us,  shareholders  may,  depending upon
the circumstances,  recognize taxable income if the Rights become exercisable for common stock (or other  consideration) of the Company
or for common stock of the acquiring company.






Item 6:  Selected Financial Data

       The following  selected financial and operating data as of and for each of the years ended March 31, 2001, 2000, 1999, 1998, and
1997 are derived from our audited  financial  statements.  This data should be read in conjunction  with  "Management's  Discussion and
Analysis of Financial  Condition and Results of  Operations,"  and the  financial  statements  and the related  notes thereto  included
elsewhere in this report.


                                                                    Year Ended March 31,
                                                  2001         2000         1999         1998        1997
                                              -----------------------------------------------------------------
                                                      (Amounts in thousands except per share amounts)
Statement of Operations Data:
Total operating revenues                    $ 472,876    $ 329,820    $ 220,608    $ 147,142   $ 116,501
Total operating expenses                      392,155      290,511      195,928      165,697     129,662
Operating income (loss)                        80,721       39,309       24,680      (18,554)    (13,161)
Income (loss) before income tax expense
  (benefit) and cumulative effect of change
  in accounting principle                      88,332       43,415       25,086      (17,746)    (12,186)
Income tax expense (benefit)                   33,465       16,954       (5,480)           -            -
Income (loss) before cumulative effect of
  change in accounting principle               54,868       26,460       30,566      (17,746)    (12,186)
Cumulative effect of change of method of
  change in accounting for maintenance checks      -           549           -           -            -
Net income (loss)                              54,868       27,010       30,566      (17,746)    (12,186)
Income (loss) per share befor
  cumulative effect of a change in accounting
  principle:
    Basic                                        2.02         1.02         1.43        (1.30)      (1.00)
    Diluted                                      1.90         0.94         1.32        (1.30)      (1.00)
Net income (loss) per share:
    Basic                                        2.02         1.04         1.43        (1.30)      (1.00)
    Diluted                                      1.90         0.95         1.32        (1.30)      (1.00)

Balance Sheet Data:
Cash and cash equivalents                     109,251       67,851       47,289        3,641      10,286
Current assets                                199,794      140,361       94,209       33,999      31,470
Total assets                                  295,317      187,546      119,620       50,598      44,093
Current liabilities                           136,159       98,475       68,721       50,324      32,745
Long-term debt                                    204          329          435        3,566          56
Total liabilities                             150,538      106,501       75,230       56,272      34,210
Stockholders' equity (deficit)                144,779       81,045       44,391       (5,673)      9,883
Working capital (deficit)                      63,635       41,886       25,488      (16,325)     (1,275)








                                                                    Year Ended March 31,
                                                  2001         2000         1999         1998         1997
                                              -----------------------------------------------------------------
Selected Operating Data:
Passenger revenue (000s) (2)                $ 462,609    $ 320,850    $ 214,311    $ 142,018   $ 113,758
Revenue passengers carried (000s)               3,017        2,284        1,664        1,356       1,180
Revenue passenger miles (RPMs) (000s) (3)   2,773,833    2,104,460    1,506,597    1,119,378     839,939
Available seat miles (ASMs) (000s) (4)      4,260,461    3,559,595    2,537,503    1,996,185   1,419,720
Passenger load factor (5)                       65.1%        59.1%        59.4%        56.1%       59.2%
Break-even load factor (6)                      52.7%        51.1%        52.4%        63.1%       65.5%
Block hours (7)                                83,742       71,276       52,789       42,767      32,459
Departures                                     38,556       33,284       25,778       22,257      18,910
Average seats per departure                       132          129          125          124         118
Average stage length                              837          829          787          723         636
Average length of haul                            919          921          905          826         712
Aircraft miles (000s)                          32,276       27,594       20,300       16,098      12,032
Average daily block hour utilization (8)          9.4          9.9          9.6          9.5        10.3
Yield per RPM (cents) (9)                       16.68        15.25        14.22        12.69       13.54
Total yield per RPM (cents) (10)                17.05        15.67        14.64        13.14       13.87
Total yield per ASM (cents) (11)                11.10         9.27         8.69         7.37        8.21
Expense per ASM (cents)                          9.20         8.16         7.72         8.30        9.13
Expense per ASM excluding fuel (cents)           7.54         6.91         6.82         7.13        7.61
Passenger revenue per block hour               $5,524       $4,502       $4,060       $3,321      $3,505
Average fare (12)                                 146          134          123          100          92
Average aircraft in service                      24.5         19.7         15.0         12.3         9.6
Aircraft in service at end of year               25.0         23.0         17.0         14.0        10.0
Average age of aircraft at end of year           11.4         10.5         14.7         16.2        22.0
EBITDAR (000s) (13)                          $147,179      $90,583      $58,848       $7,437      $4,576
EBITDAR as a % of revenue                       31.1%        27.5%        26.7%         5.1%        3.9%


(1)  Fiscal 2000 includes  income of $549,000  ($.02 per share) from the  cumulative  effect of the change in method of accounting  for
     maintenance checks.
(2)  "Passenger revenue" includes revenues for non-revenue  passengers,  administrative fees, and revenue recognized for unused tickets
     that are greater than one year from issuance date.
(3)  "Revenue  passenger  miles," or RPMs, are determined by multiplying the number of fare-paying  passengers  carried by the distance
     flown.
(4)  "Available  seat miles," or ASMs,  are  determined by  multiplying  the number of seats  available for passengers by the number of
     miles flown.
(5)  "Passenger load factor" is determined by dividing revenue passenger miles by available seat miles.
(6)  "Break-even  load factor" is the passenger load factor that will result in operating  revenues being equal to operating  expenses,
     assuming constant revenue per passenger mile and expenses.
(7)  "Block hours" represent the time between aircraft gate departure and aircraft gate arrival.
(8)  "Average daily block hour  utilization"  represents the total block hours divided by the weighted  average number of aircraft days
         in service.
(9)  "Yield per RPM" is determined by dividing passenger revenues by revenue passenger miles.
(10) "Total Yield per RPM" is determined by dividing total revenues by revenue passenger miles.
(11) "Total Yield per ASM" is determined by dividing passenger revenues by available seat miles.
(12) "Average fare" excludes revenue included in passenger revenue for non-revenue passengers, administrative fees, and revenue recognized for
     unused tickets that are greater than one year from issuance date.
(13) "EBITDAR",  or "earnings  before  interest,  income taxes,  depreciation,  amortization  and aircraft  rentals," is a supplemental
     financial  measurement we and many airline industry analysts use in the evaluation of our business.  However,  EBITDAR should only
     be read in  conjunction  with all of our  financial  statements  appearing  elsewhere  herein,  and should not be  construed as an
     alternative  either to operating  income (as  determined  in accordance  with  generally  accepted  accounting  principles)  as an
     indicator of our operating  performance  or to cash flows from operating  activities  (as determined in accordance  with generally
     accepted  accounting  principles) as a measure of liquidity.  Our calculation of EBITDAR may not be comparable to similarly titled
     measures reported by other companies.





Item 7:         Management's Discussion and Analysis of Financial Condition and Results of Operations

Selected Operating Statistics

       The following table provides our operating  revenues and expenses  expressed as cents per total available seat miles ("ASM") and
as a percentage of total operating  revenues,  as rounded,  for the years ended March 31, 2001,  2000, and 1999. Pro forma amounts have
been  provided for the year ended March 31, 1999  assuming the new method of  accounting  for  maintenance  checks we adopted in fiscal
2000 is applied retroactively.

                                               2001                      2000                       1999
                                   ------------------------------------------------------ --------------------------
                                        Per             %           Per           %            Per           %
                                       total           of          total         of           total          of
                                        ASM          Revenue        ASM        Revenue         ASM        Revenue
                                        ---          -------        ---        -------         ---        -------


Revenues:

    Passenger                               10.86        97.8%          9.02       97.3%           8.44       97.1%
    Cargo                                    0.18         1.6%          0.19        2.1%           0.19        2.2%
    Other                                    0.06         0.6%          0.06        0.6%           0.06        0.7%
                                   --------------- -------------------------------------- -------------- -----------
Total revenues                              11.10       100.0%          9.27      100.0%           8.69      100.0%

Operating expenses:

    Flight operations                        4.21        37.9%          3.53       38.1%           3.12       35.9%
    Aircraft and traffic servicing           1.42        12.8%          1.38       14.8%           1.36       15.6%
    Maintenance                              1.54        13.9%          1.41       15.2%           1.42       16.4%
    Promotion and sales                      1.31        11.8%          1.29       14.0%           1.39       16.0%
    General and administrative               0.59         5.4%          0.46        5.0%           0.37        4.2%
    Depreciation and amortization            0.13         1.2%          0.10        1.0%           0.07        0.8%
                                   --------------- -------------------------------------- -------------- -----------
Total operating expenses                     9.20        82.9%          8.16       88.1%           7.72       88.8%
                                   =============== ====================================== ============== ===========

Total ASMs (000s)                       4,260,461                  3,559,595                  2,537,503

Pro forma amounts:

  Maintenance                                                                                      1.49      17.1%
  Total operating expenses                                                                         7.79      89.6%







       The following  selected  financial  and operating  data for the year ended March 31, 1999 has been adjusted on a pro forma basis
assuming the new method of accounting for maintenance checks is applied retroactively.


                          Statement of Operations Data:
                          Maintenance expenses (000s)                       $  37,821
                          Total operating expenses (000s)                   $ 197,659
                          Net income (000s)                                 $  29,510
                          Net income per share:
                              basic                                         $    1.38
                              diluted                                       $    1.28

                          Selected Operating Data:
                          Break-even load factor                                 52.9%
                          Expense per ASM (cents)                                7.79
                          Expense per ASM excluding fuel (cents)                 6.89


Results of Operations - Year Ended March 31, 2001 Compared to Year Ended March 31, 2000

General

       We are a  scheduled  airline  based in Denver,  Colorado.  As of June 1, 2001,  we operate  routes  linking our Denver hub to 22
cities in 18 states  spanning the nation from coast to coast.  We were  organized in February  1994 and we began flight  operations  in
July 1994 with two leased Boeing 737-200 jets. We have since  expanded our fleet to 25 leased jets  comprised of seven Boeing  737-200s
and 18 larger Boeing 737-300s and one purchased Airbus A319 aircraft.

       Beginning  in May 2001,  we began a fleet  replacement  plan by which we  expect to be  operating  up to 37 Airbus  aircraft  by
approximately  the first  quarter of the  calendar  year 2005.  We  currently  use up to nine  gates at our hub,  Denver  International
Airport  ("DIA"),  where we operate  approximately  124 daily system flight  departures and arrivals.  We added  Houston,  Texas to our
route system on May 16, 2001.

       Small  fluctuations in our yield per revenue passenger mile ("RPM") or expense per available seat mile ("ASM") can significantly
affect  operating  results  because we, like other  airlines,  have high fixed costs in relation to revenues.  Airline  operations  are
highly sensitive to various factors,  including the actions of competing  airlines and general  economic  factors,  which can adversely
affect our liquidity, cash flows and results of operations.

       As a result of the  expansion  of our  operations  during the year ended  March 31,  2001,  our  results of  operations  are not
necessarily indicative of future operating results or comparable to the prior year ended March 31, 2000.

Results of Operations

       We had net income of  $54,868,000  or $1.90 per  diluted  share for the year ended  March 31,  2001 as compared to net income of
$27,009,000  or 95(cent)per diluted  share for the year ended March 31,  2000.  During the year ended  March 31,  2001,  as compared to the
prior  comparable  period,  we  experienced  higher  average  fares and load factors as a result of increases in the number of business
travelers,  a general  increase in fare levels  including  increases  intended to offset  increased fuel costs,  and an increase in the
number of  passengers  that a major  competitor  directed to us because of an increase in the number of delays and  cancellations  that
airline  experienced.  We believe that our passenger  traffic and related  revenues during the year ended March 31, 2000 were adversely
affected by late deliveries of aircraft and consumer concerns over the Year 2000 issue.

       Our costs per ASM for the years  ended March 31,  2001 and 2000 were 9.20(cent)and 8.16(cent),  respectively,  or an increase of 1.04(cent)or
12.7%.  Costs per ASM  excluding  fuel for the years ended March 31, 2001 and 2000 were 7.54(cent)and 6.91(cent),  respectively,  or an increase
of .63(cent)or 9.1%.  Our cost per ASM  increased  during the year ended March 31, 2001  principally  because of  increases  in the cost of
fuel which accounted for .42(cent)per ASM,  aircraft  rentals for newer and larger aircraft of .09(cent)per ASM,  maintenance  expense of .13(cent),
and general and administrative  expenses primarily due to accrued bonuses for all employees resulting from increased  profitability and
a higher  level of  employee  benefits  of .13(cent)per ASM. A general  wage rate  increase  effective  in January  2000 and an increase in
pilots' salaries  effective in May 2000 also  contributed to the increase in cost per ASM during the year ended March 31, 2001.  During
the year ended March 31, 2001, two of our aircraft underwent  unusually  extensive  maintenance checks. This was the first time we were
required  to perform an annual  maintenance  check on these  aircraft  since they  entered  our fleet.  During the year ended March 31,
2001,  we also  performed  "D" checks on two of our aircraft for which  reserves  paid to the lessor were not adequate to fully recover
the expenses.

       An  airline's  break-even  load  factor is the  passenger  load factor that will  result in  operating  revenues  being equal to
operating  expenses,  assuming  constant  revenue per passenger  mile and expenses.  For the year ended March 31, 2001,  our break-even
load factor was 52.7%  compared to our  achieved  passenger  load factor of 65.1%.  For the year ended March 31, 2000,  our  break-even
load factor was 51.1% compared to the passenger load factor  achieved of 59.1%.  Our  break-even  load factor  increased over the prior
comparable  period  largely as a result of an  increase  in our cost per ASM to 9.20(cent)for the year ended  March 31, 2001 from 8.16(cent)for
the year ended  March 31,  2000,  offset by an  increase  in our  average  fare to $146  during the year ended March 31, 2001 from $134
during the year ended  March 31,  2000,  and an  increase  in our total  yield per RPM from 15.67(cent)for the year ended March 31, 2000 to
17.05(cent)for the year ended March 31, 2001.

Revenues

       Our revenues are highly sensitive to changes in fare levels.  Fare pricing  policies have a significant  impact on our revenues.
Because of the  elasticity  of passenger  demand,  we believe that  increases  in fares may at certain  levels  result in a decrease in
passenger  demand in many  markets.  We cannot  predict  future  fare  levels,  which  depend to a  substantial  degree on  actions  of
competitors.  When sale prices or other price changes are  initiated by  competitors  in our markets,  we believe that we must, in most
cases,  match those competitive fares in order to maintain our market share.  Passenger revenues are seasonal in leisure travel markets
depending on the markets' locations and when they are most frequently patronized.

       Our average fares for the years ended March 31, 2001 and 2000 were $146 and $134, respectively.  We believe that the increase in
the  average  fare during the year ended March 31, 2001 over the prior  comparable  period was a result of  increases  in the number of
business  travelers,  a general increase in fare levels including increases intended to offset increased fuel costs, and an increase in
the number of passengers that a major competitor  directed to us because of an increase in the number of delays and cancellations  that
airline  experienced.  We estimate that the additional  passenger  traffic received from that airline had the effect of increasing each
of our average fare and load factor by approximately .9% and .6%, respectively, for the year ended March 31, 2001.

       Passenger Revenues.  Passenger revenues totaled  $462,609,000 for the year ended March 31, 2001 compared to $320,850,000 for the
year ended March 31, 2000, or an increase of 44.2%,  which  exceeded the 19.7% increase in ASMs of  700,866,000.  The number of revenue
passengers  carried  was  3,017,000  for the year ended March 31, 2001  compared to  2,284,000  for the year ended March 31, 2000 or an
increase  of 32.1%.  We had an average of 24.5  aircraft in our fleet  during the year ended  March 31, 2001  compared to an average of
19.7  aircraft  during the year ended March 31,  2000,  an increase  24.4%.  RPMs for the year ended March 31, 2001 were  2,773,833,000
compared to  2,104,460,000  for the year ended March 31, 2000, an increase of 31.8%. We believe that our passenger  traffic and related
revenues  during the year ended March 31, 2000 were adversely  affected by late  deliveries of aircraft and consumer  concerns over the
Year 2000 issue.

       Cargo  revenues,  consisting of revenues from freight and mail service,  totaled  $7,517,000  and $6,856,000 for the years ended
March 31, 2001 and 2000,  respectively,  representing  1.6% and 2.1% of total operating  revenues,  respectively,  an increase of 9.6%.
During July 2000 we performed  an audit of our contract  cargo sales and services  provider.  The audit  disclosed  that for a 15 month
period between  January 1, 1999 and March 31, 2000 both cash and credit card sales were remitted to us by our services  provider,  even
though we had collected for the cash sales directly from our customer.  We therefore  adjusted cargo revenue  downward  $423,000 during
the year ended March 31, 2001.  Had the adjustment  been recorded  during the year ended March 31, 2000 instead of the year ended March
31, 2001,  cargo  revenue would have been  $7,940,000  and  $6,433,000  for the years ended March 31, 2001 and 2000,  respectively,  an
increase of 23.4%. This adjunct to the passenger  business is highly competitive and is significantly  related to aircraft  scheduling,
alternate competitive means of same day delivery service and schedule reliability.

       Other revenues,  comprised  principally of interline handling fees, liquor sales and excess baggage fees, totaled $2,751,000 and
$2,114,000 or .6% of total operating revenues for each of the years ended March 31, 2001 and 2000, respectively.

Operating Expenses

       Operating  expenses  include those related to flight  operations,  aircraft and traffic  servicing,  maintenance,  promotion and
sales,  general and  administrative  and depreciation and  amortization.  Total operating  expenses were $392,155,000 and $290,511,000,
respectively,  for the years ended March 31, 2001 and 2000, and represented 82.9% and 88.1% of total revenue,  respectively.  Operating
expenses  decreased  as a  percentage  of revenue  during the year ended March 31, 2001 as a result of the 44.2%  increase in passenger
revenues  attributable  to a 32.1%  increase in passengers  and a 9.0%  increase in the average fare offset by a 33.9%  increase in the
average cost per gallon of fuel, a general wage rate increase which became  effective in January 2000, an increase in pilots'  salaries
effective in May 2000, and an increase in accrued bonuses based on increased profitability.

       Flight  Operations.  Flight  operations  expenses of $179,453,000 and  $125,536,000  were 38% and 38.1% of total revenue for the
years ended March 31, 2001 and 2000,  respectively.  Flight operations  expenses include all expenses related directly to the operation
of the aircraft  including fuel,  lease and insurance  expenses,  pilot and flight attendant  compensation,  in-flight  catering,  crew
overnight expenses, flight dispatch and flight operations administrative expenses.

       Aircraft  fuel expenses  include both the direct cost of fuel  including  taxes as well as the cost of delivering  fuel into the
aircraft.  Aircraft fuel costs of $71,083,000 for 66,724,000  gallons used and  $44,402,000 for 55,568,000  gallons used resulted in an
average  fuel cost of $1.07 and 79.9(cent)per gallon and  represented  39.6% and 35.4% of total  flight  operations  expenses for the years
ended March 31, 2001 and 2000,  respectively.  The average  fuel cost per gallon  increased  for the year ended March 31, 2001 from the
comparable  prior  period due to an overall  increase in the market  price of fuel.  Fuel prices are subject to change  weekly as we do
not purchase  supplies in advance for  inventory.  Fuel  consumption  for the years ended March 31, 2001 and 2000  averaged 797 and 780
gallons per block hour,  respectively.  Fuel consumption  increased over the prior comparable period because of an increase in our load
factor from 59.1% to 65.1%.  Additionally,  we returned  five  aircraft to the lessor during the year ended March 31, 2000 and replaced
them with four aircraft that are larger and have a greater fuel burn rate.

       Aircraft lease expenses totaled  $61,194,000 (13% of total revenue) and $47,945,000 (14.5% of total revenue) for the years ended
March 31, 2001 and 2000,  respectively,  or an increase of 27.6%.  The increase is principally due to an increase in the average number
of aircraft to 24.5 from 19.7, or 24.4%, during the year ended March 31, 2001 compared to the same period in 2000.

Aircraft insurance expenses totaled $3,241,000 (.7% of total revenue) for the year ended March 31, 2001.  Aircraft insurance expenses for
the year ended March 31, 2000 were $2,689,000 (.8% of total revenue).  Aircraft insurance expenses were .12(cent)and .13(cent)per RPM for the
years ended March 31, 2001 and 2000, respectively.  Aircraft insurance expenses decreased per RPM as a result of competitive pricing
in the aircraft insurance industry and our favorable experience rating since we began flight operations in July 1994.

       Pilot and flight attendant  salaries before payroll taxes and benefits  totaled  $22,475,000 and $15,392,000 or 4.9% and 4.8% of
passenger  revenue  for each of the  years  ended  March  31,  2001 and  2000,  or an  increase  of 46%.  Pilot  and  flight  attendant
compensation  increased  principally as a result of a 24.4%  increase in the average  number of aircraft in service,  general wage rate
increases,  and a 17.5% increase in block hours.  In November 1998,  our pilots voted to be  represented by an independent  union,  the
Frontier  Airline Pilots  Association.  The first bargaining  agreement for the pilots,  which has a 5-year term, was ratified and made
effective in May 2000. We pay pilot and flight  attendant  salaries for  training,  consisting  of  approximately  six and three weeks,
respectively,  prior to scheduled  increases in service which can cause the compensation  expense during such periods to appear high in
relationship  to the average  number of  aircraft in service.  With a scheduled  passenger  operation,  and with  salaried  rather than
hourly crew  compensation,  our expenses for flight  operations are largely fixed, with fuel expenses and flight catering the principal
exception.  We expect pilot and flight  attendant salary expense to increase over  approximately  the next two years as a result of the
Airbus transition and related training required for that transition.

       Aircraft and Traffic  Servicing.  Aircraft and traffic  servicing  expenses were  $60,408,000  and  $48,955,000  (an increase of
23.4%) for the years ended March 31, 2001 and 2000,  respectively,  and  represented  12.8% and 14.8% of total  revenue.  Aircraft  and
traffic  servicing  expenses include all expenses  incurred at airports,  including  landing fees,  facilities  rental,  station labor,
ground handling expenses,  and interrupted trip expenses  associated with delayed or cancelled  flights.  Interrupted trip expenses are
amounts  paid to other  airlines to  reaccommodate  passengers  as well as hotel,  meal and other  incidental  expenses.  Aircraft  and
traffic  servicing  expenses  increase with the addition of new cities and departures to our route system.  During the year ended March
31,  2001,  we served 23 cities  compared to 21 during the year ended  March 31,  2000,  or an increase of 9.5%.  During the year ended
March 31, 2001,  our  departures  increased to 38,556 from 33,284 or 15.8%.  Aircraft and traffic  servicing  expenses  were $1,567 per
departure  for the year ended March 31, 2001 as compared to $1,471 per  departure  for the year ended March 31, 2000, or an increase of
$96 per  departure.  Aircraft  and traffic  servicing  expenses  increased  as a result of a general  wage rate  increase  effective in
January 2000,  contract  ground  handling  services in certain of the cities we serve as a result of increased  frequencies in existing
markets  and  introduction  of service to new  cities,  and  increased  per  passenger  charges  as a result of the  greater  number of
passengers we carried.  These  increases  were offset by a decrease in  interrupted  trip expenses as a result of an improvement in our
completion factor from 98.6% for the year ended March 31, 2000 to 99.2% for the year ended March 31, 2001.

       Maintenance.  Maintenance  expenses for the years ended March 31, 2001 and 2000 of $65,529,000  and  $50,239,000,  respectively,
were 13.9% and 15.2% of total  revenue.  These  include  all labor,  parts and  supplies  expenses  related to the  maintenance  of the
aircraft.  Routine  maintenance is charged to maintenance  expense as incurred while major engine overhauls and heavy maintenance check
expense  are  accrued  monthly.  Maintenance  costs per block hour for the years  ended  March 31, 2001 and 2000 were $783 and $705 per
block  hour,  respectively.  Maintenance  cost per block  hour  increased  as a result  of  increased  facilities  rentals  to  satisfy
additional space  requirements for the increase in aircraft  coupled with an increase in the number of aircraft  simultaneously  out of
service for heavy  maintenance,  and a general wage rate  increase  effective  January  2000.  Because of the increase in the number of
aircraft out of service for heavy  maintenance,  our average daily block hour  utilization  decreased from 9.9 for the year ended March
31, 2000 to 9.4 for the year ended March 31, 2001.  During the year ended March 31, 2001,  two of our  aircraft  experienced  unusually
extensive  maintenance  checks.  During the year ended March 31, 2001,  we also  performed  "D" checks on two of our aircraft for which
maintenance  reserves paid to the lessor for reimbursement of these events did not cover the associated  expense.  These were the first
occasions we were required to perform annual  maintenance checks on these aircraft since they entered our fleet.  Additionally,  during
the year ended March 31, 2001,  we accrued an  additional  $1,276,000  ($15 per block hour) for engine  reserves  based on revised cost
estimates  and a revised  schedule of engine  overhauls.  We also  incurred  increased  costs in  personnel,  training and  information
technology  expenses for  implementation  of new  maintenance  and  engineering  software and in  preparation  for the Airbus  aircraft
transition.  In January 2001, a lease for spare aircraft parts expired,  and we purchased these parts for  $2,500,000.  During the year
ended March 31, 2001, we incurred $1,241,000 of lease expenses  associated with this lease,  included in maintenance  expenses,  or $15
per block hour.

       Promotion  and Sales.  Promotion  and sales  expenses  totaled  $55,881,000  and  $46,014,000  and were 11.8% and 14.0% of total
revenue for the years ended March 31, 2001 and 2000,  respectively.  These include advertising expenses,  telecommunications  expenses,
wages and benefits for  reservationists  and reservations  supervision,  marketing  management and sales  personnel,  credit card fees,
travel agency commissions and computer  reservations  costs.  Promotion and sales expenses decreased as a percentage of revenue for the
nine months ended December 31, 2000 over the prior  comparable  period largely as a result of the increase in revenue and a decrease in
travel agency commissions.

       During the year ended March 31, 2001,  promotion and sales  expenses per passenger  decreased to $18.52 from $20.15 for the year
ended March 31, 2000.  Promotion and sales expenses  decreased  largely as a result of a decrease in travel agency  commissions from 8%
to 5% effective in November  1999,  matching the decrease  instituted  by our  competitors.  Travel  agency  commissions  and interline
service  charges and handling  fees, as a percentage of passenger  revenue,  before  non-revenue  passengers,  administrative  fees and
breakage  (revenue  from expired  tickets),  decreased  to 3.5% for the year ended March 31, 2001,  compared to 4.4% for the year ended
March 31, 2000. The decrease in travel agency  commissions was offset by increased  commission  expense associated with the increase in
our average fares as we do not cap  commissions.  With  increased  activity on our web site,  our calls per passenger  have  decreased.
Because  of the  increase  in web  site  activity,  as well as a  decrease  in long  distance  rates,  we  experienced  a  decrease  in
communications  expense.  In July 2000,  we opened an additional  reservations  facility in Las Cruces,  New Mexico and  simultaneously
terminated an outsourcing  agreement,  which reduced our cost of reservations.  These cost savings were offset by an increase in credit
card fees  associated  with the  increase in our average  fare from $134 for the year ended March 31, 2000 to $146 for year ended March
31, 2001.

       General  and  Administrative.  General  and  administrative  expenses  for the  years  ended  March 31,  2001 and ,2000  totaled
$25,429,000 and $16,327,000,  and were 5.4% and 5.0% of total revenue,  respectively.  During the years, ended March 31, 2001 and 2000,
we accrued for  employee  performance  bonuses  totaling  $7,009,000  and  $2,605,000,  respectively,  which were 1.5% and .8% of total
revenue,  an increase of 169.1%.  Employee  performance bonuses increased over the prior comparable period as a result of our increased
profitability  and an  enhancement  to the bonus  program.  General and  administrative  expenses  include the wages and  benefits  for
several of our executive officers and various other  administrative  personnel  including legal,  accounting,  information  technology,
aircraft  procurement,  corporate  communications,  training and human resources and other expenses  associated with these departments.
Employee health benefits,  accrued  vacation and bonus expenses,  general  insurance  expense,  including  worker's  compensation,  and
write-offs  associated with credit card chargebacks are also included in general and administrative  expenses. We experienced increases
in our human resources,  training and information  technology expenses as a result of an increase in employees from approximately 2,067
in March 2000 to 2,362 in March 2001, an increase of 14.3%.  We also  experienced  personnel  increases for aircraft  procurement  as a
result of the purchase and lease agreements for Airbus  aircraft.  Because of the increase in personnel,  our health insurance  benefit
expenses and accrued  vacation  expense  increased  accordingly.  During the year ended March 31, 2001,  our accrued  vacation  expense
increased as a result of the increase in pilot salaries and vacation benefits due to a collective  bargaining  agreement concluded with
the pilots' union effective in May 2000.

       Depreciation and Amortization.  Depreciation and amortization expenses of $5,455,000 and $3,440,000,  an increase of 58.6%, were
approximately  1.2% and 1.0% of total  revenue  for the years  ended  March 31, 2001 and 2000,  respectively.  These  expenses  include
depreciation of office  equipment,  station ground  equipment,  and other fixed assets.  Amortization of start-up and route development
costs are not included as these expenses have been expensed as incurred.  Depreciation  and  amortization  expenses  increased over the
prior year as a result of an increase in our spare parts inventory  including a spare engine,  leasehold  improvements  associated with
14 aircraft  (eight  additional and six  replacement)  added to our fleet during the past 21 months,  ground  handling  equipment,  and
computers to support new employees as well as replacement computers for those with dated technology.

       Nonoperating  Income  (Expense).  Net  nonoperating  income  totaled  $7,611,000  for the year ended March 31, 2001  compared to
$4,105,000  for the year ended March 31, 2000.  Interest  income  increased from  $4,335,000 to $7,897,000  during the year ended March
31,  2001 from the prior  period  due to an  increase  in cash  balances  as a result of an  increase  in cash  provided  by  operating
activities and proceeds from stock option and warrant exercises.

       Income Tax Expense  (Benefit).  We accrued  income taxes of  $33,465,000  and  $16,954,000  at 39% of taxable  income during the
years ended March 31, 2001 and 2000, respectively

       Cumulative  Effect of Change in Method of Accounting  for Overhaul  Costs.  During the year ended March 31, 2000, we changed our
method of  accounting  for routine  maintenance  checks from the accrual to the direct  expense  method  which  resulted in a credit of
$549,000 net of income taxes of $351,000.

Results of Operations - Year Ended March 31, 2000 Compared to Year Ended March 31, 1999

General

         During the year ended  March 31,  2000,  we operated  routes  linking  our Denver hub to 21 cities in 17 states  spanning  the
nation from coast to coast and added Portland,  Oregon and Orlando,  Florida to our route system.  During the year ended March 31, 2000
we added seven  additional  leased  Boeing  737-300  aircraft and four Boeing  737-200s to our fleet and returned  five Boeing  737-200
aircraft to the lessor.  At March 31, 2000, our fleet  consisted of 23 leased  aircraft  including  seven Boeing 737-200s and 16 larger
Boeing 737-300s.

       During the fourth  quarter ended March 31, 2000, we changed our method of accounting for  maintenance  checks from the accrue in
advance  method to the  direct  expensing  method.  We  believe  that the newly  adopted  accounting  principle  is  preferable  in the
circumstances  because there has not been an obligating  event prior to the  maintenance  checks  actually being  performed and the new
method is the predominant  method used in the airline  industry.  Fluctuations in these maintenance costs from period to period are not
expected to be significant  given the maturity and current size of our fleet. For purposes of  comparability,  the amounts for the year
ended March 31, 1999 used in our  discussion  and  analysis of financial  condition  and results of  operations  use the pro forma data
included in the Selected Operating Statistics tables.

       As a result of the  expansion  of our  operations  during the year ended  March 31,  2000,  our  results of  operations  are not
necessarily indicative of future operating results or comparable to the prior year ended March 31, 1999.

Results of Operations

       We had net income of  $27,009,000  or $.95 per  diluted  share for the year ended  March 31,  2000 as  compared to pro forma net
income of  $29,510,000  or $1.28 per  diluted  share for the year  ended  March 31,  1999.  During the year ended  March 31,  2000,  we
reported a provision for income taxes, which totaled  $16,954,000,  or 60(cent)per diluted share.  During the year ended March 31, 1999, we
eliminated the valuation  allowance  that offset tax loss  carryforwards  and recognized an income tax benefit.  The income tax benefit
totaled  $5,480,000  or 24(cent)per  share.  During the year  ended  March 31,  2000,  as  compared  to the prior  comparable  periods,  we
experienced  higher fares as a result of  increases  in the number of business  travelers,  and a general  increase in fare levels.  We
also increased fares to partially offset increased fuel costs.

       Our cost per ASM for the year ended  March 31,  2000 and pro forma cost per ASM for the year ended March 31, 1999 were 8.16(cent)and
7.79(cent),  respectively,  or an increase of .37(cent)or 4.8%.  Costs per ASM  excluding  fuel for the years ended March 31, 2000 and pro forma
costs per ASM for the year  ended  March  31,  1999 were  6.91(cent)and  6.89(cent),  respectively,  or an  increase  of .3%.  Our cost per ASM
increased  during the year  ended  March 31,  2000 from  7.79(cent)principally  because  of  overall  increases  in the cost of fuel which
accounted  for .35(cent)per ASM,  aircraft  rentals  because  for newer and larger  aircraft of .05(cent)per ASM,  general  and  administrative
expenses to support  increased  levels of operations  and the number of personnel of .09(cent)per ASM,  offset by a .08(cent)reduction in cost
per ASM in  maintenance  as a result of conducting  certain heavy  maintenance  checks  in-house and a .10(cent)decrease in cost per ASM in
promotion and sales expense as a result of a decrease in the travel agency  commission  rate from 8% to 5% in November 1999,  decreased
advertising and communication expenses offset by an increase in credit card fees associated with the increase in our average fare.

       For the year ended March 31, 2000,  our  break-even  load factor was 51.1%  compared to the  passenger  load factor  achieved of
59.1%.  For the year ended March 31, 1999,  our pro forma  break-even  load factor was 52.9%  compared to the achieved  passenger  load
factor of 59.4%.  Our  break-even  load factor  decreased  from the prior  comparable  period largely as a result of an increase in our
average  fare to $134 during the year ended March 31,  2000 from $123  during the year ended March 31,  1999,  an increase in our total
yield per RPM from  14.64(cent)for the year ended  March 31,  1999 to 15.67(cent)for the year ended March 31, 2000 offset by an increase in our
expense per ASM to 8.16(cent)for the year ended March 31, 2000 from 7.79(cent)for the year ended March 31, 1999.

Revenues

       Our average  fares for the years ended March 31, 2000 and 1999 were $134 and $123,  respectively.  We believe  that the increase
in the  average  fare  during the year ended  March 31,  2000 over the prior  comparable  periods  was largely a result of our focus on
increasing  the number of business  travelers,  an increase in fares to offset  increased  fuel costs,  and a general  increase in fare
levels.

       Passenger Revenues.  Passenger revenues totaled  $320,850,000 for the year ended March 31, 2000 compared to $214,311,000 for the
year ended  March 31,  1999,  or an  increase  of 49.7%.  We carried  2,284,000  revenue  passengers  for the year ended March 31, 2000
compared to  1,664,000  for the year ended March 31,  1999 or an  increase  of 37.3%.  We had an average of 19.7  aircraft in our fleet
during the year ended  March 31,  2000  compared to an average of 15  aircraft  during the year ended  March 31,  1999,  an increase of
31.3%,  and ASMs  increased by  1,022,092,000  or 40.3%.  We believe that our passenger  traffic and related  revenues  during the year
ended March 31, 2000 were adversely affected by late deliveries of aircraft and consumer concerns over the Year 2000 issue.

       Cargo  revenues,  consisting of revenues from freight and mail service,  totaled  $6,856,000  and $4,881,000 for the years ended
March 31, 2000 and 1999,  respectively,  representing 2.1% and 2.2% of total operating  revenues,  respectively,  an increase of 40.5%.
This adjunct to the passenger business is highly competitive and depends heavily on aircraft  scheduling,  alternate  competitive means
of same day delivery service and schedule reliability.

       Other revenues,  comprised  principally of interline handling fees, liquor sales and excess baggage fees, totaled $2,114,000 and
$1,415,000 or .6% of total operating revenues for each of the years ended March 31, 2000 and 1999, respectively.

Operating Expenses

       Operating  expenses  include those related to flight  operations,  aircraft and traffic  servicing,  maintenance,  promotion and
sales,  general and administrative  and depreciation and amortization.  Total operating expenses and pro forma total operating expenses
were  $290,511,000  and  $197,659,000,  respectively,  for the years ended March 31, 2000 and 1999, and represented  88.1% and 89.6% of
total  revenue,  respectively.  Operating  expenses  decreased  as a  percentage  of revenue  during the year ended March 31, 2000 as a
result of the 49.7% increase in passenger  revenues  attributable  to a 37.3% increase in passengers and a 8.9% increase in the average
fare offset by a 44.2%  increase  in the average  cost per gallon of fuel and a general  wage rate  increase  which went into effect in
January 2000.

       Flight  Operations.  Flight  operations  expenses of $125,536,000  and $79,247,000 were 38.1% and 35.9% of total revenue for the
years ended March 31, 2000 and 1999,  respectively.  Flight operations  expenses include all expenses related directly to the operation
of the aircraft,  including fuel, lease and insurance  expenses,  pilot and flight attendant  compensation,  in-flight  catering,  crew
overnight expenses, flight dispatch and flight operations administrative expenses.

       Aircraft  fuel expenses  include both the direct cost of fuel  including  taxes as well as the cost of delivering  fuel into the
aircraft.  Aircraft fuel costs of $44,402,000 for 55,568,000  gallons used and  $22,758,000 for 41,082,000  gallons used resulted in an
average  fuel cost of 79.9(cent)and 55.4(cent)per gallon and  represented  35.4% and 28.7% of total  flight  operations  expenses for the years
ended March 31, 2000 and 1999,  respectively.  The average  fuel cost per gallon  increased  for the year ended March 31, 2000 from the
comparable  prior  period due to an overall  increase in the market  price of fuel.  Fuel prices are subject to change  weekly as we do
not purchase  supplies in advance for  inventory.  Fuel  consumption  for each of the years ended March 31, 2000 and 1999  averaged 780
and 778 gallons per block hour,  respectively.  Fuel consumption  increased over the prior comparable  period because of increased flap
speed settings  mandated by the FAA, which required more fuel to maintain air speed at normal  operating  levels.  The  requirement for
increased flap speed settings will be lifted when a fleet  modification  is completed,  which was required to be accomplished by August
1, 2001.  Approximately  65% of our fleet  incorporated  this  modification  as of March 31, 2000.  Additionally,  five  aircraft  were
returned to their lessor during the year ended March 31, 2000 and replaced  with four  aircraft with higher thrust  engines that have a
greater fuel burn rate.

       Aircraft lease expenses  totaled  $47,945,000  (14.5% of total revenue) and  $32,958,000  (14.9% of total revenue) for the years
ended March 31,  2000 and 1999,  respectively,  or an increase of 45.5%.  The  increase  is largely due to higher  lease  expenses  for
larger and newer Boeing  737-300  aircraft  added to the fleet which resulted in the increase in the average number of aircraft to 19.7
from 15, or 31.3%,  for the year ended March 31, 2000.  The average age of our fleet  decreased from 14.7 years as of March 31, 1999 to
10.5 years as of March 31, 2000.

Aircraft insurance expenses totaled $2,689,000 (.8% of total revenue) for the year ended March 31, 2000.  Aircraft insurance expenses for
the year ended March 31, 1999 were $2,425,000 (1.1% of total revenue).  Aircraft insurance expenses were .13(cent)and .16(cent)per RPM for
the years ended March 31, 2000 and 1999, respectively.  Aircraft insurance expenses decreased per RPM as a result of competitive
pricing in the aircraft insurance industry and our favorable experience rating since we began flight operations in July 1994.

       Pilot and flight  attendant  salaries  before payroll taxes and benefits  totaled  $15,392,000  and $10,653,00 or 4.8% and 5% of
passenger  revenue  for each of the years  ended  March  31,  2000 and 1999,  or an  increase  of  44.5%.  Pilot and  flight  attendant
compensation  increased  principally as a result of a 31.3%  increase in the average  number of aircraft in service,  general wage rate
increases,  and a 35% increase in block hours.  We pay pilot and flight  attendant  salaries for training  consisting of  approximately
six and three  weeks,  respectively,  prior to scheduled  increases in service  which can cause the  compensation  expense  during such
periods to appear  high in  relationship  to the  average  number of  aircraft  in  service.  When we are not in the  process of adding
aircraft to our system,  pilot and flight attendant expense per aircraft  normalizes.  With a scheduled passenger  operation,  and with
salaried  rather than hourly crew  compensation,  our expenses for flight  operations are largely fixed,  with flight catering and fuel
expenses the principal exception.

       Aircraft and Traffic Servicing.  Aircraft and traffic servicing expenses were $48,955,000 and $34,451,000 (an increase of 42.1%)
for the years ended March 31, 2000 and 1999,  respectively,  and  represented  14.8% and 15.6% of total  revenue.  Aircraft and traffic
servicing  expenses  include all expenses  incurred at airports  including  landing fees,  facilities  rental,  station  labor,  ground
handling expenses,  and interrupted trip expenses  associated with delayed or cancelled flights.  Interrupted trip expenses are amounts
paid to other airlines to protect  passengers as well as hotel,  meal and other  incidental  expenses.  Aircraft and traffic  servicing
expenses  increase  with the  addition  of new cities to our route  system.  During the year ended  March 31,  2000 we served 21 cities
compared to 19 cities  during the year ended March 31,  1999,  or an increase of 10.5%.  Three of the four cities added during the year
ended March 31, 1999 were not added until  mid-December  1998.  Aircraft and traffic  servicing  expenses were $1,471 per departure for
the year ended March 31,  2000 as  compared to $1,336 per  departure  for the year ended  March 31,  1999,  or an increase of $135.  An
additional DIA revenue  credit,  above amounts  previously  estimated and accrued,  for its fiscal year ended December 31, 1997 totaled
$371,000 (or $11 per departure) and was included as an offset to aircraft and traffic  servicing  expenses  during the year ended March
31, 1999.  After  adjusting the cost per departure  for these credits for the year ended March 31, 1999,  the cost per departure  would
have been  $1,347  and the cost per  departure  for the year  ended  March 31,  2000  would  have been a $124  increase  over the prior
comparable  period.  Aircraft and traffic servicing  expenses  increased as a result of a decline in the completion factor for the year
ended March 31, 2000 to 98.6% from 99% for the year ended March 31, 1999, and late deliveries of aircraft which  increased  interrupted
trip expenses. We also incurred expenses associated with the Boulder,  Colorado-DIA shuttle bus service,  which is complimentary to our
passengers, and a general wage rate increase which was effective in January 2000.

       Maintenance.  Maintenance  expenses  for the year ended March 31,  2000 and pro forma  maintenance  expenses  for the year ended
March 31, 1999 of $50,239,000 and  $37,821,000,  respectively,  were 15.2% and 17.1% of total revenue.  These include all labor,  parts
and supplies  expenses related to the maintenance of the aircraft.  Routine  maintenance is charged to maintenance  expense as incurred
while major engine  overhauls and heavy  maintenance  check expense are accrued  monthly.  Maintenance cost per block hour for the year
ended  March 31,  2000 and pro forma  maintenance  cost per block  hour for the year ended  March 31,  1999 was $704 and $717 per block
hour,  respectively.  Maintenance  cost per block hour decreased  during the year ended March 31, 2000 as a result of a decrease in the
average  age of our  aircraft  and  conducting  certain  heavy  maintenance  checks  in-house,  which,  prior to March  1999,  had been
outsourced.  Additionally,  maintenance  costs per block hour have  decreased  as certain  fixed costs are spread over a larger  fleet.
These cost savings  were offset by higher than usual  borrowed  parts fees during the year ended March 31, 2000.  During the year ended
March 31, 2000 these fees were  approximately  $1,439,000  compared to $349,000  during the year ended March 31, 1999 or $20 and $7 per
block hour,  respectively.  During the year ended March 31, 2000, we increased our spare parts  inventory in an effort to mitigate this
expense in the future.

       Promotion and Sales.  Promotion and sales expenses  totaled  $46,014,000  and  $35,217,000 and were 14% and 16% of total revenue
for the years ended March 31, 2000 and 1999,  respectively.  These include advertising  expenses,  telecommunications  expenses,  wages
and benefits for  reservationists  and reservations  supervision,  marketing  management and sales personnel,  credit card fees, travel
agency  commissions and computer  reservations  costs.  Promotion and sales expenses  decreased as a percentage of revenue for the year
ended March 31, 2000 over the prior  comparable  period  largely as a result of the increase in revenue and a decrease in travel agency
commissions.

       During the year ended March 31, 2000,  promotion and sales  expenses per passenger  decreased to $20.15 from $21.16 for the year
ended March 31, 1999.  Promotion and sales expenses  decreased largely as a result of a decrease in our travel agency  commissions from
8% to 5% effective in November 1999,  matching the decrease  instituted by our  competitors.  Travel agency  commissions  and interline
service  charges and handling  fees, as a percentage of passenger  revenue,  before  non-revenue  passengers,  administrative  fees and
breakage  (revenue  from expired  tickets),  decreased to 4.4% for the year ended March 31, 2000 from 5.6% for the year ended March 31,
1999.  The  decrease in travel  agency  commissions  was offset by increased  commission  expense  associated  with the increase in our
average fare.  During the years ended March 31, 1999 and 2000, we added four and two new markets,  respectively,  thereby  experiencing
a decrease in advertising  expenses per  passenger,  which are generally  higher when opening new markets.  During the year ended March
31, 2000 we had an increase in computer  reservations  costs  associated with the expansion of our travel agency  electronic  ticketing
capabilities.  With increased  activity on our web site, our calls per passenger have  decreased.  Because of this web site activity as
well as a decrease in long distance rates, we experienced a decrease in  communications  expense.  These cost savings were offset by an
increase in credit card fees  associated  with the increase in our average fare from $123 for the year ended March 31, 1999 to $134 for
the year ended March 31, 2000.

       General  and  Administrative.  General  and  administrative  expenses  for the  years  ended  March  31,  2000 and 1999  totaled
$16,327,000  and  $9,264,000,  respectively,  and were  5.0%  and  4.2% of total  revenue,  respectively.  General  and  administrative
expenses  include the wages and benefits for several of our executive  officers and various other  administrative  personnel  including
legal,  accounting,  information  technology  (including costs associated with Y2K), aircraft  procurement,  corporate  communications,
training and human resources and other expenses  associated with these  departments.  Employee health  benefits,  accrued  vacation and
bonus expenses,  general insurance  expenses  including  worker's  compensation,  and write-offs  associated with credit card and check
fraud are also  included in general and  administrative  expenses.  We  experienced  increases  in our human  resources,  training  and
information  technology  expenses as a result of an increase in employees from approximately 1,502 in March 1999 to approximately 2,067
in March 2000, or an increase of 37.6%.  In addition to the usual  increases in crew and station  personnel  associated with additional
aircraft and cities,  we experienced  significant  increases in maintenance  personnel as a result of bringing major heavy  maintenance
checks in-house which began in March 1999. We increased general and  administrative  personnel as we considered  certain of these areas
to be under staffed in prior years as we strived for profitability.  We also experienced  personnel increases for aircraft  procurement
as a result of the purchase and lease  agreements for Airbus  aircraft and the number of aircraft we added to our fleet during the year
ended March 31, 2000.  Because of the increase in  personnel,  our health  insurance  benefit  expenses  and accrued  vacation  expense
increased  accordingly.  During the years  ended  March 31,  2000 and 1999,  we  accrued  for  employee  performance  bonuses  totaling
$2,605,000 and $1,829,000, respectively, or .8% of total revenue for each of these years.

       Depreciation and Amortization.  Depreciation and amortization expenses of $3,440,000 and $1,659,000, an increase of 107.4%, were
approximately  1.0% and .9% of total  revenue  for the years  ended  March 31,  2000 and 1999,  respectively.  These  expenses  include
depreciation of office  equipment,  station ground  equipment,  and other fixed assets.  Amortization of start-up and route development
costs are not included as these  expenses  have been  expensed as incurred.  Depreciation  expense  increased  over the prior year as a
result of an  increase  in our  spare  parts  inventory  including  a spare  engine,  leasehold  improvements  associated  with 11 (six
additional and five replacement)  aircraft brought into our fleet during the year, ground handling equipment,  and computers to support
new employees as well as replacement computers for those with outdated technology.

       Nonoperating  Income  (Expense).  Net  nonoperating  income  totaled  $4,105,000  for the year ended March 31, 2000  compared to
$406,000 for the year ended March 31, 1999.  Interest income  increased from  $1,556,000 to $4,335,000  during the year ended March 31,
2000 from the prior  period due to an increase in cash  balances as a result of an increase in cash  provided by  operating  activities
and proceeds  from stock option and warrant  exercises.  Interest  expense  decreased to $119,000  during the year ended March 31, 2000
from $701,000 in the prior period.  In December 1997, we sold $5,000,000 of 10% senior notes. In connection with this  transaction,  we
issued  warrants to purchase  1,750,000  shares of common stock to the lender.  Interest  expense paid in cash and the accretion of the
warrants and deferred  loan expenses  associated  with these notes  totaled  $568,000  during the year ended March 31, 1999. In January
1999, we paid these notes in full.  Other, net  nonoperating  expense was $110,000 for the year ended March 31, 2000 compared to other,
net nonoperating  income of $449,000 for the year ended March 31, 1999.  Other,  net nonoperating  expense for the year ended March 31,
1999  includes  $486,000 of  unamortized  deferred  loan costs  associated  with the senior  secured notes that remained at the time we
prepaid the debt.

       Income Tax Expense (benefit).  During the year ended March 31, 2000, we had income tax expense totaling  $16,954,000,  or 39% of
income before  income tax expense and  cumulative  effect of change in method of accounting  for  maintenance  checks.  During the year
ended March 31, 1999 we  recognized an income tax benefit of  $5,480,000  primarily  attributable  to the probable  realization  of our
remaining  income  tax  loss  carryforwards  for  which a  valuation  allowance  had  been  previously  recorded.  As a  result  of our
profitability for the year ended March 31, 1999, we no longer considered a valuation allowance to be necessary.

       Cumulative  Effect of Change in Method of Accounting  for Overhaul  Costs.  During the year ended March 31, 2000, we changed our
method of  accounting  for routine  maintenance  checks from the accrual to the direct  expense  method  which  resulted in a credit of
$549,000  net of income  taxes of  $351,000.  Assuming  this method was used during the year ended  March 31,  1999,  we would have had
$1,731,000 of additional maintenance expense, and net income would have decreased by $1,056,000, or $.04 per diluted share.

Liquidity and Capital Resources

       Our balance sheet reflected cash and cash  equivalents and short-term  investments of $111,251,000  and $83,611,000 at March 31,
2001 and 2000,  respectively.  At March 31, 2001,  total current assets were  $199,794,000 as compared to $136,159,000 of total current
liabilities,  resulting in working capital of  $63,635,000.  At March 31, 2000,  total current assets were  $140,361,000 as compared to
$98,475,000  of total  current  liabilities,  resulting  in working  capital of  $41,886,000.  The  increase in our working  capital is
largely a result of cash flows  provided by operating  activities  and  proceeds  from  exercises of common stock  options and warrants
during the year ended March 31, 2001.

       Cash  provided by  operating  activities  for the year ended March 31, 2001 was  $72,526,000.  This is  attributable  to our net
income for the period,  decreases in  receivables  and  increases in accrued  expenses,  income taxes  payable and accrued  maintenance
expense,  offset by increases in restricted  investments,  security,  maintenance and other deposits,  and inventories and decreases in
accounts  payable  and air  traffic  liability.  Cash  provided  by  operating  activities  for the  year  ended  March  31,  2000  was
$55,207,000.  This was primarily  attributable  to our net income for the period  adjusted for non-cash  charges,  the  utilization  of
deferred tax assets, increases in air traffic liability,  other accrued expenses and accrued maintenance expenses,  offset by increases
in trade receivables, security, maintenance and other deposits, prepaid expenses and inventories.

       Cash used by investing  activities  for the year ended March 31, 2001 was  $34,339,000.  We had  maturities  of  $13,760,000  in
short-term investments,  net of purchases,  comprised of certificates of deposit and government-backed  agencies with maturities of one
year or less.  During the year ended March 31,  2001,  we made cash  security  deposits  and aircraft  pre-delivery  payments  totaling
$22,811,000 and increased  restricted  investments by $3,331,000  associated with two leased Boeing 737-300  aircraft  delivered during
the year ended March 31, 2001, the 16 Airbus  aircraft we have agreed to lease with delivery  dates  beginning in June 2001, and the 12
Airbus  aircraft we have agreed to purchase  with  delivery  dates which began in May 2001.  During the year ended March 31,  2001,  we
used $21,957,000 for capital  expenditures for rotable aircraft components  including initial  provisioning for aircraft components and
certain buyer furnished  equipment for the Airbus aircraft  deliveries in 2001,  maintenance  equipment and tools,  aircraft  leasehold
costs and  improvements,  computer  equipment and software for  enhancements to our internet  booking site, our reservation  system,  a
replacement  maintenance  system,  and leasehold  improvements to our new reservations  center in Las Cruces,  New Mexico,  and our new
headquarters  in Denver,  Colorado.  Cash used by  investing  activities  for year ended  March 31, 2000 was  $39,870,000.  We invested
$15,760,000  in  short-term  investments,  net of  maturities,  comprised  of  government-backed  agencies  and  commercial  paper with
maturities of one year or less.  During the year ended March 31, 2000,  cash security  deposits for aircraft  totaling  $2,491,000 were
returned to us or replaced  with  letters of credit.  During the year ended March 31, 2000,  we made cash  security  deposits  totaling
$200,000 in connection with an Airbus aircraft lease and $6,400,000 in down payments  associated with a purchase  agreement to purchase
Airbus  aircraft.  We had issued to certain of our  aircraft  lessors  warrants to purchase  395,000  shares of our common  stock at an
aggregate  purchase  price of  $2,391,600.  During May 1999 and June 1999,  aircraft  lessors  exercised  all of these  warrants and we
received  $2,391,600.  To the extent that the aircraft  lessors were able to realize certain profit margins on their subsequent sale of
our common stock,  they were required to refund a portion of the cash security  deposits they were holding.  As a result of their sales
of our common  stock,  $1,206,000  in cash  security  deposits  were  returned to us during the year ended March 31,  2000.  Other cash
security  deposits  were replaced  with letters of credit and these  deposits  were  returned to us. We also received  $625,000 in cash
security  deposits  for aircraft  returned to the lessor  during the year ended March 31,  2000.  Additionally,  we secured 10 aircraft
delivered  during the year ended March 31, 2000 with letters of credit  totaling  $3,640,000  and restricted  investments  increased by
this amount to  collateralize  the letters of credit.  We used $16,361,000 for capital  expenditures  for rotable  aircraft  components
including a spare CFM engine,  maintenance  equipment and tools,  aircraft  leasehold  improvements,  and computer equipment during the
year ended March 31, 2000.

       Cash  provided by  financing  activities  for the year ended March 31, 2001 was  $3,213,000  from the  exercise of common  stock
options and  warrants,  offset by  principal  payments on  obligations  under  capital  leases.  In April 1998,  we issued a warrant to
purchase  1,075,393  shares of our common stock at a purchase price of $2.50 per share.  In January 2001, the warrant holder  purchased
550,393  shares of our common  stock under this  warrant  resulting in net  proceeds to us of  $1,376,000.  Cash  provided by financing
activities  for the year ended March 31, 2000 was  $5,224,000.  During the year ended March 31, 2000, we received  $5,324,000  from the
exercise of common stock options and warrants.

       As of March 31, 2001, we lease 25 Boeing 737 type aircraft under  operating  leases with  expiration  dates ranging from 2002 to
2006.  Under  these  leases,  we were  required  to make cash  security  deposits  or issue  letters  of  credit  to  secure  our lease
obligations.  At March 31,  2001,  we had made cash  security  deposits  and had  arranged  for issuance of letters of credit for these
aircraft  totaling  $3,658,000  and  $7,526,000,  respectively.  Accordingly,  our restricted  cash balance  includes  $7,526,000  that
collateralize the outstanding letters of credit.  Additionally,  we make deposits for maintenance of these aircraft.  At March 31, 2001
and 2000, we had made maintenance deposits of $42,255,000 and $26,912,000, respectively.

       We have adopted a fleet  replacement  plan to phase out our Boeing 737 aircraft  and replace them with a  combination  of Airbus
A319 and A318  aircraft.  In March  2000,  we entered  into an  agreement,  as  subsequently  amended,  to purchase up to 29 new Airbus
aircraft.  We have agreed to firm  purchases of 12 of these  aircraft,  and have options to purchase up to an  additional  17 aircraft.
Under the terms of the purchase agreement,  we are required to make scheduled pre-delivery payments.  These payments are non-refundable
with certain  exceptions.  As of March 31, 2001, we have made pre-delivery  payments totaling  $28,511,000 to secure these aircraft and
option aircraft.  As a complement to this purchase,  in April and May 2000 we signed two agreements to lease 16 new Airbus aircraft. As
of March 31, 2001,  we have made cash  security  deposits and had  arranged  for  issuance of letters of credit  totaling  $300,000 and
$3,089,000,  respectively,  to secure  these  aircraft.  The  aggregate  additional  amounts  due under this  purchase  commitment  and
estimated  amounts  for  buyer-furnished  equipment  and spare  parts for both the  purchased  and leased  aircraft  was  approximately
$373,500,000  as of March 31,  2001.  We took  delivery of our first  purchased  Airbus  aircraft in May 2001,  are  scheduled  to take
delivery of our first leased Airbus  aircraft in June 2001,  and plan to be operating up to 37 purchased and leased Airbus  aircraft by
the first quarter of calendar 2005. We have secured a financing  commitment for the first three purchased  aircraft as discussed in the
following  paragraph.  To  complete  the  purchase of the  remaining  aircraft we must secure  acceptable  aircraft  financing.  We are
exploring various financing  alternatives,  including,  but not limited to, domestic and foreign bank financing,  public debt financing
such as enhanced  equipment trust  certificates,  and leveraged lease  arrangements.  The additional amount of financing  required will
depend on the number of aircraft  purchase  options we exercise and the amount of cash generated by operations prior to delivery of the
aircraft.  While we believe that such  financing  will be available to us, there can be no assurance  that  financing will be available
when  required,  or on  acceptable  terms.  The inability to secure such  financing  could result in delays in or our inability to take
delivery of Airbus aircraft we have agreed to purchase, which would have a material adverse effect on us.

       Additionally,  in order to maximize the efficiency of our fleet replacement plan, we will endeavor to return certain leased B737
aircraft to their owners on dates other than the currently  scheduled lease  expiration  dates for these aircraft.  If we are unable to
negotiate such different return dates with the aircraft owners,  or sublease these aircraft to third parties,  we will incur additional
expense which may have a material adverse effect on us.

       In May 2001, we entered into a credit  agreement to borrow up to  $72,000,000  for the purchase of three Airbus  aircraft with a
maximum  borrowing  of  $24,000,000  per  aircraft.  Each  aircraft  loan will have a term of 120  months  and will be payable in equal
monthly  installments,  including  interest,  payable in arrears.  At the end of the term, there is a balloon payment for each aircraft
loan  that is not to exceed  $10,200,000.  As of May 9,  2001,  we have  borrowed  $24,000,000  for the  purchase  of the first  Airbus
aircraft.  The note for this  borrowing  has monthly  payments of $209,110,  bears  interest at 6.714%,  and matures in May 2011 with a
balloon payment of $10,200,000.

       In May 2001, we agreed to reconsider the current rates of pay under our collective  bargaining  agreement with our pilots, which
has a five year term  commencing  in May 2000.  During  the past  year,  several  pilot  unions  at other air  carriers  received  wage
increases  which caused our pilot salaries to be  substantially  below those paid by certain of our  competitiors.  We have submitted a
revised pilot pay proposal to FAPA,  and its members are  scheduled to vote on this  proposal on or about June 21, 2001.  The estimated
additional  annual  expense  to us as a result of this  proposal,  scheduled  to become  effective  on May 1,  2001,  is  approximately
$3,800,000.

       We also expect to incur  significant  costs, as well as realize  certain cost savings,  in connection with our transition from a
Boeing to an Airbus  fleet.  Incident  to our  transition  in fleet  type,  we will  incur  costs in  excess of our  normal  operations
including  additional  crew and mechanics to replace these  employees while attending  Airbus  training.  Simulator  training for pilot
training will be provided by Airbus,  at its expense,  and accounting rules require that we treat this as a non-cash expense and reduce
the  capitalized  value of the aircraft.  We will incur travel and other training  expenses as we train our  employees,  as well as for
aircraft  deliveries.  As the Airbus enter scheduled service,  we expect to realize savings associated with improved fuel efficiency of
these aircraft compared to our current Boeing fleet, as well as reduced  maintenance  expenses  associated with newer aircraft compared
to our present more mature fleet. We will pay maintenance  reserves to lessors to cover long-term  maintenance  events on the airframe,
engines,  and landing gear under our Airbus leases at lower rates than under our current  Boeing fleet.  These cost savings are reduced
by  increased  costs for landing fees as the Airbus  aircraft  weigh more than the Boeing  aircraft.  Reference is made to Exhibit 99.1
filed with our Report on Form 10-Q for the quarter ended December 31, 2000.

       We believe  that our  existing  cash  balances  coupled  with  improved  operating  results are and will be adequate to fund our
operations for the foreseeable  future.  However,  as discussed  above, we will require  financing in order to fund future purchases of
Airbus A319 and A318 aircraft.  Cash necessary to finance aircraft  acquisitions are expected to be obtained from internally  generated
funds from operations and external financing arrangements.

Item 7A:  Quantitative and Qualitative Disclosures About Market Risk

       The risk inherent in our market risk  sensitive  position is the potential  loss arising from an adverse  change in the price of
fuel as described  below. The sensitivity  analysis  presented does not consider either the effect that such an adverse change may have
an overall economic  activity or additional  action  management may take to mitigate our exposure to such a change.  Actual results may
differ from the amounts  disclosed.  At the present time, we do not utilize fuel price  hedging  instruments  to reduce our exposure to
fluctuations in fuel prices.

       Our  earnings  are  affected  by  changes  in the price and  availability  of  aircraft  fuel.  Market  risk is  estimated  as a
hypothetical  10 percent  increase in the average cost per gallon of fuel for the year ended March 31, 2001.  Based on fiscal year 2001
actual fuel usage,  such an increase would have resulted in an increase to aircraft fuel expense of approximately  $7,104,000 in fiscal
year 2001.  Comparatively,  based on projected  fiscal year 2002 fuel usage,  such an increase  would result in an increase to aircraft
fuel  expense of  approximately  $8,608,000  in fiscal year 2002.  The increase in exposure to fuel price  fluctuations  in fiscal year
2002 is due to the increase of our average aircraft fleet size during the year ended March 31, 2001,  projected  increases to our fleet
during the year ended March 31, 2002 and related gallons purchased.

       The price of our aircraft fuel has recently increased at a substantially  greater rate than the foregoing  hypothetical example.
Our  average  cost per gallon of fuel for the period  ended  March 31, 2001  increased  33.9% over the average  cost for the year ended
March 31, 2000.

       We will be susceptible to market risk associated with changes in interest rates on expected  future  long-term debt  obligations
to fund the purchases of our Airbus aircraft.

Item 8:  Financial Statements

       Our financial statements are filed as a part of this report immediately following the signature page.


                                                               PART III

Item 10:  Directors and Executive Officers of the Registrant.

       The  information  required  by this Item is  incorporated  herein  by  reference  to the data  under the  heading  "Election  of
Directors" in the Proxy Statement to be used in connection  with the  solicitation of proxies for our annual meeting of shareholders to
be held on September 6, 2001. We will file the definitive Proxy Statement with the Commission on or before July 31, 2001.


Item 11.  Executive Compensation.

       The  information  required  by this  Item is  incorporated  herein  by  reference  to the  data  under  the  heading  "Executive
Compensation"  in the Proxy Statement to be used in connection with the  solicitation of proxies for our annual meeting of shareholders
to be held on September 6, 2001. We will file the definitive Proxy Statement with the Commission on or before July 31, 2001.


Item 12.  Security Ownership of Certain Beneficial Owners and Management.

       The information  required by this Item is incorporated  herein by reference to the data under the heading "Voting Securities and
Principal  Holders  Thereof" in the Proxy Statement to be used in connection with the solicitation of proxies for our annual meeting of
shareholders  to be held on September 6, 2001. We will file the  definitive  Proxy  Statement with the Commission on or before July 31,
2001.

Item 13.  Certain Relationships and Related Transactions.

       The information  required by this Item is incorporated herein by reference to the data under the heading "Related  Transactions"
in the Proxy Statement to be used in connection  with the  solicitation of proxies for our annual meeting of shareholders to be held on
September 6, 2001.  We will file the definitive Proxy Statement with the Commission on or before July 31, 2001.


                                                                PART IV

Item 14(a):  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

Exhibit
Numbers           Description of Exhibits
- -------           -----------------------

    3.1           Restated Articles of Incorporation of the Company. (12)

    3.2           Amended and restated Bylaws of the Company (September 9, 1999). (14)

    4.1           Specimen common stock certificate of the Company. (1)

    4.2           The Amended and Restated  Articles of  Incorporation  and Amended  Bylaws of the Company are included as Exhibits 3.1
                  and 3.2.

    4.3           Form of Warrant. (1)

    4.4           Rights Agreement,  dated as of February 20, 1997, between Frontier Airlines,  Inc. and American Securities Transfer &
                  Trust, Inc,  including the form of Rights Certificate and the Summary of Rights attached thereto as Exhibits A and B,
                  respectively,  incorporated by reference to Frontier Airlines,  Inc.  Registration  Statement on Form 8-A dated March
                  11, 1997. (6)

    4.4(a)        Amendment to Rights Agreement dated June 30, 1997. (5)

    4.4(b)        Amendment to Rights Agreement dated December 5, 1997. (13)

    4.4(c)        Third Amendment to Rights Agreement dated September 9, 1999. (7)

    4.4(d)        Fourth Amendment to Rights Agreement dated May 30, 2001. (19)

   10.1           Office Lease. (1)

   10.2           Office Lease Supplements and Amendments. (5)

   10.2(a)        Addendum to Office Lease (10)

   10.2(b)        Office Lease Supplements and Amendments (13)

   10.2(c)        Lease Amendment dated as of January 12, 2000 between Highline Group, LLC,  landlord,  and Frontier,  Airlines,  Inc.,
                  tenant.  Portions of this  exhibit have been  excluded  from the publicly  available  document and an order  granting
                  confidential treatment of the excluded material has been received. (16)

   10.2(d)        Lease Amendment  dated as of April 1, 2000 between  Highline  Group,  LLC,  landlord,  and Frontier  Airlines,  Inc.,
                  tenant.  Portions of this  exhibit have been  excluded  from the publicly  available  document and an order  granting
                  confidential treatment of the excluded material has been received.  (16)

   10.3           1994 Stock Option Plan. (1)

   10.4           Amendment No. 1 to 1994 Stock Option Plan. (2)

   10.4(a)        Amendment No. 2 to 1994 Stock Option Plan (5)

   10.5           Registration Rights Agreement. (1)

   10.6           Sales Agreement. (1)

   10.7           Airport Use and Facilities Agreement, Denver International Airport (2)

   10.8           Aircraft Lease Agreement dated as of July 26, 1994. (2)

   10.8(a)        Assignment and Assumption Agreements dated as of March 28, 1997 and March 20, 1997 between USAirways,  Inc. and First
                  Security Bank, National Association ("Trustee") and Frontier Airlines, Inc. (5)

   10.8(b)        Amendment No. 1, dated June 5, 1997, to Lease Agreement  dated as of July 26, 1994 between  Frontier  Airlines,  Inc.
                  and First Security Bank, National Association. (5)

   10.9           Code Sharing Agreement. (5)

   10.10          Aircraft Lease Agreement dated as of October 20, 1995 (MSN 23177). (3)

   10.10(a)       Aircraft  Lease  Extension and Amendment  Agreement  dated as of October 1, 1999.  Portions of this Exhibit have been
                  excluded  from the  publicly  available  document  and an  order  granting  confidential  treatment  of the  excluded
                  material has been received. (15)

   10.11          Aircraft Lease Agreement dated as of October 20, 1995 (MSN 23257). (3)

   10.11(a)       Aircraft Lease Extension and Amendment Agreement dated as of October 1, 1999. (15)

   10.11(b)       Aircraft  Lease  Extension  and  Amendment  Agreement  (MSN 23257) dated as of September  29, 2000,  between  General
                  Electric Capital Corporation and Frontier Airlines, Inc. (17)

   10.12          Aircraft Lease Agreement dated as of May 1, 1996. (3)

   10.12(a)       Aircraft Lease Extension and Amendment  Agreement (MSN 22733) dated as of September 29, 2000, between Polaris Holding
                  Company and Frontier Airlines, Inc. (17)

   10.13          Aircraft Lease Agreement dated as of June 3, 1996. (3)

   10.13(a)       Amendment No. 1 to Aircraft Lease Agreement dated as of June 3, 1996.(10)

   10.13(b)       Aircraft Lease Extension and Amendment  Agreement (MSN 22734) dated as of September 29, 2000, between Polaris Holding
                  Company and Frontier Airlines, Inc. (17)

   10.14          Aircraft  Lease  Agreement  dated as of June 12, 1996.  Portions of this Exhibit have been excluded from the publicly
                  available document and an order granting confidential treatment of the excluded material has been received.  (3)

   10.15          Operating Lease Agreement dated November 1, 1996 between the Company and First Security Bank,  National  Association.
                  Portions of this Exhibit have been excluded from the publicly available  document and an order granting  confidential
                  treatment of the excluded material has been received.  (4)

   10.16          Aircraft Lease Agreement (MSN 28760) dated as of December 12, 1996 between the Company and Boullion  Aircraft Holding
                  Company,  Inc. Portions of this Exhibit have been excluded from the publicly available document and an order granting
                  confidential treatment of the excluded material has been received.  (4)

   10.16(a)       Amendment  No. 1 to Aircraft  Lease  Agreement  (MSN 28760)  dated May 20,  1997.  Portions of this Exhibit have been
                  excluded from the publicly available document and an order granting  confidential  treatment of the excluded material
                  has been received.  (5)

   10.17          Aircraft Lease Agreement (MSN 28662) dated as of December 12, 1996 between the Company and Boullion  Aircraft Holding
                  Company,  Inc.  Portions of this  Exhibit  have been  excluded  from the  publicly  available  document  and an order
                  granting confidential treatment of the excluded material has been received.  (4)

   10.17(a)       Amendment  No. 1 to Aircraft  Lease  Agreement  (MSN 28662)  dated May 20,  1997.  Portions of this Exhibit have been
                  excluded from the publicly available document and an order granting  confidential  treatment of the excluded material
                  has been received.  (5)

   10.18          Aircraft  Lease  Agreement  (MSN 28563) dated as of March 25, 1997 between the Company and General  Electric  Capital
                  Corporation.  Portions of this Exhibit have been excluded from the publicly  available document and an order granting
                  confidential treatment of the excluded material has been received.  (5)

   10.19          Space and Use Agreement with Continental Airlines,  as amended.  Portions of this Exhibit have been excluded from the
                  publicly  available  document  and an  order  granting  confidential  treatment  of the  excluded  material  has been
                  received.  (5)

   10.19(a)       Space and Use  Agreement  with  Continental  Airlines.  Portions of this exhibit have been excluded from the publicly
                  available document and an application for an order granting confidential  treatment of the excluded material has been
                  made.  (16)

   10.20          Letter of  Understanding  with  Continental  Airlines  dated  August 16,  1996.  Portions of this  Exhibit  have been
                  excluded from the publicly available document and an order granting  confidential  treatment of the excluded material
                  has been received.  (5)

   10.21          Service Agreement between Frontier Airlines,  Inc. and Greenwich Air Services,  Inc. dated May 19, 1997.  Portions of
                  this Exhibit have been excluded from the publicly available document and an order granting confidential  treatment of
                  the excluded material has been received.  (5)

   10.22          Agreement between Frontier Airlines,  Inc. and Dallas Aerospace,  Inc. dated April 17, 1997. Portions of this Exhibit
                  have been excluded from the publicly available document and an order granting confidential  treatment of the excluded
                  material has been received.  (5)

   10.23          General Services Agreement between Frontier Airlines, Inc. and Tramco, Inc. dated as of August 6, 1996. (5)

   10.24          General Terms Engine Lease Agreement  between Frontier  Airlines,  Inc. and Terandon Leasing  Corporation dated as of
                  August 15, 1996, as assigned to U.S.  Bancorp  Leasing and  Financial on February 19, 1997.  Portions of this Exhibit
                  have been excluded from the publicly available document and an order granting confidential  treatment of the excluded
                  material has been received. (5)

   10.25          Lease Agreement between Frontier Airlines,  Inc. and Aircraft  Instrument and Radio Company,  Inc. dated December 11,
                  1995.  Portions of this  Exhibit  have been  excluded  from the publicly  available  document  and an order  granting
                  confidential treatment of the excluded material has been received.  (5)

   10.26          Agreement and Plan of Merger  between  Western  Pacific  Airlines,  Inc. and Frontier  Airlines,  Inc. dated June 30,
                  1997.  (5)

   10.26(a)       Agreement dated as of September 29, 1997 between Western Pacific Airlines, Inc. and Frontier Airlines, Inc. (7)

   10.27          Security Agreement with Wexford Management LLC dated December 2, 1997. (8)

   10.28          Amended and Restated Warrant Agreement with Wexford Management LLC dated as of February 27, 1998. (12)

   10.29          Amended and Restated Registration Rights Agreement with Wexford Management LLC dated as
                  of February 27, 1998. (12)

   10.30          Securities Purchase Agreement with B III Capital Partners, L.P. dated as of April 24, 1998. (9)

   10.31          Registration Rights Agreement with B III Capital Partners, L.P. dated as of April 24, 1998. (12)

   10.32          Warrant Agreement with The Seabury Group, LLC dated as of May 26, 1998. (12)

   10.33          Registration Rights Agreement with The Seabury Group, LLC dated as of May 26, 1998. (12)

   10.34          Aircraft  Lease  Agreement  (MSN 21613)  dated as of August 10, 1998  between  the  Company and  Interlease  Aviation
                  Investors, L.L.C. (10)

   10.35          Aircraft Lease Agreement (MSN 28738) dated as of November 23, 1998 among first Security Bank,  National  Association,
                  Lessor, Heller Financial Leasing, Inc., Owner participant, and the Company, Lessee. (11).

   10.36          Aircraft Sublease  Agreement (MSN 28734) dated as of December 14, 1998 between Indigo pacific AB, Sublessor,  and the
                  Company, Sublessee. (11)

   10.37          Aircraft Lease  Agreement (MSN 23004) dated as of February 26, 1999 between First Security Bank,  N.A.,  Lessor,  and
                  Frontier  Airlines,  Inc.,  Lessee.  Portions of this exhibit have been excluded from the publicly available document
                  and an order granting confidential treatment of the excluded material has been received. (13)

   10.38          Aircraft  Lease  Agreement (MSN 23007) dated as of February 26, 1999 between First  Security  Bank,  N.A.  Lessor and
                  Frontier  Airlines,  Inc.,  Lessee.  Portions of this exhibit have been excluded from the publicly available document
                  and an order granting confidential treatment of the excluded material has been received. (13)

   10.39          Aircraft  Lease  Agreement  (MSN 26440) dated as of March 15, 1999 between  Indigo  Aviation AB (publ),  Lessor,  and
                  Frontier  Airlines,  Inc.,  Lessee.  Portions of this exhibit have been excluded from the publicly available document
                  and an order granting confidential treatment of the excluded material has been received. (13)

   10.40          Aircraft Lease  Agreement  (MSN 24569) dated as of April 16, 1999 between C.I.T.  Leasing  Corporation,  Lessor,  and
                  Frontier  Airlines,  Inc.,  Lessee.  Portions of this exhibit have been excluded from the publicly available document
                  and an order granting confidential treatment of the excluded material has been received. (13)

   10.41          Aircraft Lease Agreement (MSN 24856) dated as of June 2, 1999 between Indigo Aviation AB (publ),  Lessor and Frontier
                  Airlines,  Inc.,  Lessee.  Portions of this exhibit have been  excluded from the publicly  available  document and an
                  order granting confidential treatment of the excluded material has been received. (13)

   10.42          Severance Agreement dated March 10, 1999 between the Company and Samuel D. Addoms. (13)

   10.43          Space and Use Agreement between Continental Airlines, Inc. and the Company. (13)

   10.44          Aircraft  Sublease  Agreement  (MSN  23039)  dated as of July  21,  1999  between  Kommanditbolaget  Flygplanet  XIV,
                  Sublessor,  and Frontier  Airlines,  Inc.,  Sublessee.  Portions of this exhibit have been excluded from the publicly
                  available document and an order granting confidential treatment of the excluded material has been received. (14)

   10.45          Aircraft  Sublease  Agreement  (MSN  23040)  dated as of July  21,  1999  between  Kommanditbolaget  Flygplanet  XII,
                  Sublessor,  and Frontier  Airlines,  Inc.,  Sublessee.  Portions of this exhibit have been excluded from the publicly
                  available document and an order granting confidential treatment of the excluded material has been received. (14)

   10.46          Aircraft Sublease  Agreement (MSN 26442) dated as of October 11, 1999 between Indigo Aviation AB (publ),  Lessor, and
                  Frontier  Airlines,  Inc.,  Lessee.  Portions of this exhibit have been excluded from the publicly available document
                  and an order granting confidential treatment of the excluded material has been received. (15)

   10.47          Aircraft Lease Agreement (MSN 25256) dated as of January 7, 2000 between Aviation  Financial  Services,  Inc. Lessor,
                  and  Frontier  Airlines,  Inc.,  Lessee.  Portions of this  exhibit have been  excluded  from the publicly  available
                  document and an order granting confidential treatment of the excluded material has been received. (16)

   10.48          Aircraft Lease Agreement (MSN 25159) dated as of January 7, 2000 between Aviation  Financial  Services,  Inc. Lessor,
                  and  Frontier  Airlines,  Inc.,  Lessee.  Portions of this  exhibit have been  excluded  from the publicly  available
                  document and an order granting confidential treatment of the excluded material has been received. (16)

   10.49          Aircraft Lease Agreement (MSN 25264) dated as of January 7, 2000 between Aviation  Financial  Services,  Inc. Lessor,
                  and  Frontier  Airlines,  Inc.,  Lessee.  Portions of this  exhibit have been  excluded  from the publicly  available
                  document and an order granting confidential treatment of the excluded material has been received. (16)

   10.50          Aircraft Lease Agreement (MSN 25263) dated as of January 7, 2000 between Aviation  Financial  Services,  Inc. Lessor,
                  and  Frontier  Airlines,  Inc.,  Lessee.  Portions of this  exhibit have been  excluded  from the publicly  available
                  document and an order granting confidential treatment of the excluded material has been received. (16)

   10.51          Airbus A318/A319 Purchase Agreement dated as of March 10, 2000 between AVSA,  S.A.R.L.,  Seller, and Frontier Airlines,  Inc.,
                  Buyer.  Portions of this  exhibit  have been  excluded  from the publicly  available  document and an order  granting
                  confidential treatment of the excluded material has been received. (16)

   10.51(a)       Amendment No. 1 to Airbus A318/319 Purchase Agreement dated as of March 10, 2000 between AVSA, S.A.R.L.,  Seller, and
                  Frontier  Airlines,  Inc., Buyer.  Portions of this exhibit have been excluded from the publicly  available  document
                  and an order granting confidential treatment of the excluded material has been received. (17)

   10.51(b)       Amendment No. 1 to Airbus A318/319 Purchase Agreement dated as of March 10, 2000 between AVSA, S.A.R.L.,  Seller, and
                  Frontier  Airlines,  Inc., Buyer.  Portions of this exhibit have been excluded from the publicly  available  document
                  and an order granting confidential treatment of the excluded material has been received. (18)

   10.52          Aircraft Lease Common Terms  Agreement dated as of April 20, 2000 between General  Electric  Capital  Corporation and
                  Frontier  Airlines,  Inc.  Portions of this exhibit have been  excluded from the publicly  available  document and an
                  order granting confidential treatment of the excluded material has been received. (16)

   10.53          Aircraft Lease Agreement dated as of April 20, 2000 between Aviation Financial  Services,  Inc., Lessor, and Frontier
                  Airlines,  Inc., Lessee, in respect of 15 Airbus A319 Aircraft.  Portions of this exhibit have been excluded from the
                  publicly available document and an order granting confidential  treatment of the excluded material has been received.
                  (16)

   10.54          Aircraft Lease Agreement dated as of May 25, 2000 between Frontier Airlines,  Inc.,  Lessee, and International  Lease
                  Finance  Corporation,  Lessor,  in respect to one Airbus A318  aircraft.  Portions of this exhibit have been excluded
                  from the publicly available document and an order granting  confidential  treatment of the excluded material has been
                  received. (16)

   10.55          Lease dated as of May 5, 2000 for Frontier  Center One,  LLC, as landlord,  and Frontier  Airlines,  Inc., as tenant.
                  Portions of this exhibit have been excluded from the publicly available  document and an order granting  confidential
                  treatment of the excluded material has been received. (16)

   10.56          Operating  Agreement of Frontier  Center One, LLC,  dated as of May 10, 2000 between Shea Frontier  Center,  LLC, and
                  7001 Tower,  LLC,  and  Frontier  Airlines,  Inc.  Portions of this  exhibit  have been  excluded  from the  publicly
                  available document and an order granting confidential treatment of the excluded material has been received. (16)

   10.57          Standard  Industrial Lease dated April 27, 2000,  between Mesilla Valley Business Park, LLC,  landlord,  and Frontier
                  Airlines,  Inc.,  tenant.  Portions of this exhibit have been  excluded from the publicly  available  document and an
                  order granting confidential treatment of the excluded material has been received. (16)

   10.58          Aircraft Lease Agreement dated as of May 25, 2000 between Frontier Airlines,  Inc.,  Lessee,  and International  Lease Finance
                  Corporation,  Lessor,  in respect to one Boeing 737  aircraft.  Portions of this exhibit have been  excluded from the
                  publicly available document and an order granting confidential  treatment of the excluded material has been received.
                  (16)

   10.59          Aircraft Lease  Agreement  dated as of August 14, 2000 between  Frontier  Airlines,  Inc.,  Lessee,  and  International  Lease
                  Finance  Corporation,  Lessor,  in respect to one Boeing 737-300 aircraft (MSN 26301).  Portions of this exhibit have
                  been excluded  from the publicly  available  document and an order  granting  confidential  treatment of the excluded
                  material has been received. (17)

   10.60          General Terms  Agreement No. 6-13616  between CFM  International  and Frontier  Airlines,  Inc.  Portions of this exhibit have
                  been excluded  from the publicly  available  document and an order  granting  confidential  treatment of the excluded
                  material has been received. (17)

   10.61          Lease Agreement dated as of December 15, 2000 between Gateway Office Four, LLC, Lessor, and Frontier  Airlines,  Inc., Lessee.
                  (18)

   10.62          Code Share Agreement  dated as of May 3, 2001 between  Frontier  Airlines,  Inc. and Great Lakes  Aviation,  Ltd.  Portions of
                  this exhibit have been  excluded  from the publicly  available  document  and an  application  for an order  granting
                  confidential treatment of the excluded material has been made. (19)

   10.63          Credit  Agreement Dated as of May 9, 2001 between PK Finance and Frontier  Airlines,  Inc.  Portions of this exhibit have been
                  excluded form the publicly available document and an application for an order granting confidential  treatment of the
                  excluded material has been made. (19)

   10.64          Mortgage and Security Agreement dated as of May 9, 2001 between PK Finance and Frontier Airlines, Inc.  (19)

   18.1           Letter re:  change in accounting principle.  (16)

   23.1           Consent of KPMG LLP  (19)


   (1)   Incorporated by reference from the Company's  Registration  Statement on Form SB-2,  Commission File No. 33-77790-D,  declared
         effective May 20, 1994.
   (2)   Incorporated  by reference from the Company's  Annual Report on Form 10-KSB,  Commission  File No.  0-4877,  filed on June 29,
         1995.
   (3)   Incorporated  by reference from the Company's  Annual Report on Form 10-KSB,  Commission  File No.  0-4877,  filed on June 24,
         1996.
   (4)   Incorporated by reference from the Company's  Quarterly Report on Form 10-QSB,  Commission File No. 0-4877,  filed on February
         13, 1997.
   (5)   Incorporated by reference from the Company's Annual Report on Form 10-KSB, Commission File No. 0-24126, filed July 14, 1997.
   (6)   Incorporated by reference from the Company's Report on Form 8-K filed on March 12, 1997.
   (7)   Incorporated by reference from the Company's Report on Form 8-K filed on October 1, 1997.
   (8)   Incorporated by reference from the Company's Report on Form 8-K filed on December 12, 1997.
   (9)   Incorporated by reference from the Company's Report on Form 8-K filed on May 4, 1998.
   (10)  Incorporated by reference from the Company's Report on Form 10-Q, Commission File No. 0-24126, filed on November 13, 1998.
   (11)  Incorporated by reference from the Company's Report on Form 10-Q, Commission File No. 0-24126, filed on February 12, 1999.
   (12)  Incorporated by reference from the Company's Report on Form 10-K/A, Commission file No. 0-24126, filed on July 9, 1998.
   (13)  Incorporated  by reference from the Company's  Annual Report on Form 10-K,  Commission  File No.,  0-24126,  filed on June 22,
         1999.
   (14)  Incorporated by reference from the Company's Quarterly Report on Form 10-Q,  Commission File No. 0-24126,  filed on August 10,
         1999.
   (15)  Incorporated by reference from the Company's  Quarterly  Report on Form 10-Q,  Commission File No. 0-24126,  filed on November
         10, 1999.
   (16)  Incorporated by reference from the Company's Report on Form 10-K, Commission File No. 0-24126, filed on June 26, 2000.
   (17)  Incorporated by reference from the Company's  Quarterly Report on Form 10-Q,  Commission File No. 0-24126 filed on November 2,
         2000.
   (18)  Incorporated by reference from the Company's  Quarterly  Report on Form 10-Q,  Commission File No. 0-24126,  filed on February
         7, 2001.
   (19)  Filed herewith.


Item 14(b):  Reports on Form 8-K.

       During the quarter ended March 31, 2001, a report on Form 8-K was filed on January 22, 2001.









                                                              SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) 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.


                                                     FRONTIER AIRLINES, INC.


Date:  June 1 , 2001                                 By: /s/ Steve B. Warnecke
                                                     ---------------------------------------
                                                     Steve B. Warnecke, Vice President and
                                                     Chief Financial Officer


Date:  June 1 , 2001                                 By: /s/ Elissa A. Potucek
                                                     ---------------------------------------
                                                     Elissa A. Potucek, Vice President, Controller,
                                                     Treasurer and Principal Accounting Officer

       Pursuant to the requirements of the Securities  Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.


Date:  June 1, 2001                                  /s/ Samuel D. Addoms, Director
                                                     ---------------------------------------
                                                     Samuel D. Addoms, Director


Date:  June 1 , 2001                                 /s/ William B. McNamara, Director
                                                     ---------------------------------------
                                                     William B. McNamara, Director


Date: June 1, 2001                                   /s/ Paul Stephen Dempsey, Director
                                                     ---------------------------------------
                                                     Paul Stephen Dempsey, Director


Date: June 1 , 2001                                  /s/ B. LaRae Orullian, Director
                                                     ---------------------------------------
                                                     B. LaRae Orullian, Director


Date: June 1, 2001                                   /s/  D. Dale Browning, Director
                                                     ---------------------------------------
                                                     D.   Dale Browning, Director


Date: June 1, 2001                                   /s/  James B. Upchurch, Director
                                                     ---------------------------------------
                                                     James B. Upchurch, Director

                                                     Independent Auditors' Report



The Board of Directors and
   Stockholders
Frontier Airlines, Inc.:


We have audited the accompanying  balance sheets of Frontier Airlines,  Inc. as of March 31,  2001 and 2000, and the related statements
of income,  stockholders'  equity,  and cash flows for each of the years in the three-year period ended March 31, 2001. These financial
statements  are the  responsibility  of the  Company's  management.  Our  responsibility  is to express  an opinion on these  financial
statements based on our audits.

We conducted our audits in accordance  with auditing  standards  generally  accepted in the United States of America.  Those  standards
require that we plan and perform the audit to obtain reasonable  assurance about whether the financial  statements are free of material
misstatement.  An audit  includes  examining,  on a test  basis,  evidence  supporting  the amounts and  disclosures  in the  financial
statements.  An audit also includes assessing the accounting principles used and significant  estimates made by management,  as well as
evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above  present  fairly,  in all material  respects,  the financial  position of
Frontier  Airlines,  Inc., as of March 31, 2001 and 2000, and the results of its operations and its cash flows for each of the years in
the  three-year  period ended March 31, 2001, in  conformity  with  accounting  principles  generally  accepted in the United States of
America.

As discussed in Note 1 to the financial statements, the Company changed its method of accounting for maintenance checks in 2000.




                                                            KPMG LLP

Denver, Colorado
May 30, 2001





FRONTIER AIRLINES, INC.
Balance Sheets
March 31, 2001 and 2000


                                                                                  March 31,        March 31,
                                                                                    2001             2000
                                                                                -------------     -----------
Assets

Current assets:
    Cash and cash equivalents                                                  $  109,251,426   $  67,850,933
    Short-term investments                                                          2,000,000      15,760,000
    Restricted investments                                                          9,100,000       4,000,000
    Receivables,  net of allowance  for  doubtful  accounts of
      $368,000 and $171,000 at March 31, 2001 and 2000, respectively               32,380,943      22,190,835
    Maintenance deposits (note 5)                                                  30,588,195      19,637,128
    Prepaid expenses (note 2)                                                      10,849,080       7,386,851
    Inventories                                                                     4,072,335       2,235,183
    Deferred tax asset (note 7)                                                     1,506,218       1,136,194
    Other current assets                                                               45,621         163,527
                                                                               ---------------- ----------------
            Total current assets                                                  199,793,818     140,360,651

Security, maintenance and other deposits (note 5)                                  45,680,373      17,613,122
Property and equipment, net (note 3)                                               38,100,126      21,654,262
Restricted investments                                                             11,683,660       7,813,760
Other assets                                                                           58,621         104,243
                                                                               ---------------- ----------------
                                                                               $  295,316,598   $ 187,546,038
                                                                               ================ ================

Liabilities and Stockholders' Equity

Current liabilities:
    Accounts payable                                                           $   21,623,067    $ 14,407,913
    Air traffic liability                                                          62,663,237      44,518,837
    Other accrued expenses (note 4)                                                18,236,479      17,542,019
    Accrued maintenance expense (note 5)                                           33,510,531      21,893,316
    Current  portion of  obligations  under  capital  leases (note 5)                 125,552         113,029
                                                                               ---------------- ----------------
            Total current liabilities                                             136,158,866      98,475,114

Accrued maintenance expense (note 5)                                               12,175,225       7,214,167
Deferred tax liability (note 7)                                                     1,999,553         483,514
Obligations under capital leases,  excluding current portion (note 5)                 203,863         328,702
                                                                               ---------------- ----------------
            Total liabilities                                                     150,537,507     106,501,497
                                                                               ---------------- ----------------

Stockholders' equity:
    Preferred  stock,  no par  value,  authorized  1,000,000 shares;
        none issued                                                                   -                -
    Common  stock,  no par value,  stated value of $.001 per share,
        authorized 40,000,000 shares;   28,194,602 and 26,598,410
        shares issued and  outstanding at March 31, 2001 and 2000,
        respectively                                                                   28,195          26,599
    Additional paid-in capital                                                     77,606,918      67,937,363
    Unearned ESOP shares (note 10)                                                 (1,662,087)       (857,713)
    Retained earnings                                                              68,806,065      13,938,292
                                                                               ---------------- ----------------
            Total stockholders' equity                                            144,779,091      81,044,541
                                                                               ---------------- ----------------

Commitments and contingencies (notes 5, 8, 13 and 14)
                                                                               $  295,316,598   $ 187,546,038
                                                                               ================ ================
See accompanying notes to financial statements.



FRONTIER AIRLINES, INC.
Statements of Income
Years Ended March 31, 2001, 2000 and 1999


                                                                   2001             2000             1999
                                                                   ----             ----             ----
Revenues:
    Passenger                                                 $  462,608,847   $  320,850,271   $ 214,311,312
    Cargo                                                          7,516,867        6,855,882       4,881,066
    Other                                                          2,750,713        2,113,802       1,415,332
                                                              ---------------- ---------------- ----------------
            Total revenues                                       472,876,427      329,819,955     220,607,710
                                                              ---------------- ---------------- ----------------

Operating expenses:
    Flight operations                                            179,453,300      125,536,174      79,247,347
    Aircraft and traffic servicing                                60,408,236       48,954,728      34,450,562
    Maintenance                                                   65,529,428       50,238,538      36,090,052
    Promotion and sales                                           55,880,717       46,013,812      35,216,787
    General and administrative                                    25,428,753       16,327,410       9,263,538
    Depreciation and amortization                                  5,454,673        3,440,069       1,659,429
                                                              ---------------- ---------------- ----------------
            Total operating expenses                             392,155,107      290,510,731     195,927,715
                                                              ---------------- ---------------- ----------------
            Operating income                                      80,721,320       39,309,224      24,679,995
                                                              ---------------- ---------------- ----------------

Nonoperating income (expense):

    Interest income                                                7,897,282        4,334,688       1,556,047
    Interest expense                                                 (94,393)        (119,496)       (700,635)
    Other, net                                                      (191,771)        (109,798)       (448,917)
                                                              ---------------- ---------------- ----------------
            Total nonoperating income, net                         7,611,118        4,105,394         406,495
                                                              ---------------- ---------------- ----------------

Income before income tax expense (benefit) and
    cumulative effect of change in accounting principle           88,332,438       43,414,618      25,086,490

Income tax expense (benefit)                                      33,464,665       16,954,374      (5,479,570)
                                                              ---------------- ---------------- ----------------

Income before cumulative effect of
  change in accounting principle                                  54,867,773       26,460,244      30,566,060

Cumulative effect of change in method of
  accounting for maintenance checks                                 -                 549,009         -

                                                              ---------------- ---------------- ----------------
Net income                                                    $   54,867,773   $   27,009,253   $  30,566,060
                                                              ================ ================ ================

(continued)








FRONTIER AIRLINES, INC.
Statements of Income, continued
Years Ended March 31, 2001, 2000 and 1999


                                                                       2001             2000             1999
                                                                       ----             ----             ----

Earnings per share:
  Basic:
    Income before cumulative effect of a
      change in accounting principle                                   $2.02            $1.02           $1.43
    Cumulative effect of change in method of
      accounting for maintenance checks                                   -              0.02              -
                                                              ---------------- ---------------- ----------------
    Net income                                                         $2.02            $1.04           $1.43
                                                              ================ ================ ================

  Diluted:
    Income before cumulative effect of a
      change in accounting principle                                   $1.90            $0.93           $1.32
    Cumulative effect of change in method of
      accounting for maintenance checks                                   -              0.02              -
                                                              ---------------- ---------------- ----------------
    Net income                                                         $1.90            $0.95           $1.32
                                                              ================ ================ ================

  Pro forma amounts assuming the new
    method of accounting for maintenance
    checks is applied retroactively:

      Net income                                                                              $    29,510,374
        Earnings per share:
            Basic                                                                                       $1.38
                                                                                                ================
            Diluted                                                                                     $1.28
                                                                                                ================

Weighted average shares of
  common stock outstanding:

            Basic                                                 27,152,099       25,994,100      21,386,492
                                                              ================ ================ ================
            Diluted                                               28,842,783       28,285,032      23,102,153
                                                              ================ ================ ================

See accompanying notes to financial statements.








FRONTIER AIRLINES, INC.
Statements of Stockholders' Equity
Years Ended March 31, 2001, 2000 and 1999

                                                                    Retained
                                         Common Stock         Additional    Unearned      earnings        Total
                                                  Stated      paid-in        ESOP      (accumulated  stockholders'
                                      Shares       value       capital       shares       deficit)       equity
                                   ----------------------------------------------------------------------------------

                                   ----------------------------------------------------------------------------------
Balances, March 31, 1998           13,880,344  $ 13,880      $37,949,957        -       $(43,637,021)   $ (5,673,184)
Sale of common stock, net of
  offering costs of $525,059        6,544,502     6,545       13,648,149                                  13,654,694
Contribution of common stock to
  to employees stock ownership plan   412,500       412        1,457,838   (1,458,250)
Amortization of employee stock
  compensation                                                                848,875                        848,875
Exercise of common stock
  warrants                           694,600     2,695        4,359,124                                   4,361,819
Exercise of common stock
  options                             679,812       680          631,705                                     632,385
Net income                                                                                30,566,060      30,566,060
                                   ----------------------------------------------------------------------------------
Balances, March 31, 1999           24,211,758  $ 24,212      $58,046,773   $ (609,375)  $(13,070,961) $   44,390,649
Exercise of common stock
  warrants                          1,721,589     1,722        4,758,395                                   4,760,117
Exercise of common stock
  options                             515,063       515          563,540                                     564,055
Tax benefit from exercises of
  common stock options and
  warrants                                                     3,425,055                                   3,425,055
Contribution of common stock to
  employees stock ownership plan      150,000       150        1,143,600   (1,143,750)
Amortization of employee stock
  compensation                                                                895,412                        895,412
Net income                                                                                27,009,253      27,009,253
                                   ----------------------------------------------------------------------------------
Balances, March 31, 2000           26,598,410  $ 26,599      $67,937,363   $ (857,713)  $ 13,938,292   $  81,044,541
Exercise of common stock
  warrants                            583,030       583        1,450,570                                   1,451,153
Exercise of common stock
  options                             879,025       879        1,884,366                                   1,885,245
Tax benefit from exercises of
  common stock options and
  warrants                                                     4,129,336                                   4,129,336
Contribution of common stock to
  employees stock ownership plan      135,000       135        2,216,115   (2,216,250)
Amortization of employee stock
  compensation                             -           -                    1,411,876                      1,411,876
Adjustment for fractional shares
  from stock dividend                    (863)       (1)        (10,832)                                     (10,833)
Net income                                                                                54,867,773      54,867,773
                                   ----------------------------------------------------------------------------------
Balances, March 31, 2001            28,194,602   $ 28,195      $77,606,918  $(1,662,087)  $ 68,806,065   $ 144,779,091
                                   ==================================================================================

See accompanying notes to financial statements.


FRONTIER AIRLINES, INC.
Statements of Cash Flows
Years ended March 31, 2001, 2000, and 1999

                                                                   2001             2000             1999

Cash flows from operating activities:
    Net income                                                  $ 54,867,773     $ 27,009,253    $ 30,566,060
    Adjustments to reconcile net income to net cash
      provided by operating activities:
            Employee stock ownership plan compensation
            expense                                                1,411,876          895,412         848,875
            Depreciation and amortization                          5,618,200        3,725,697       2,705,255
            Loss on sale of equipment                                 56,800          -                 3,867
            Deferred tax expense (benefit)                         1,146,015        5,459,468      (6,010,648)
            Changes in operating assets and liabilities:
                Restricted investments                            (5,639,400)         402,000        (425,301)
                Trade receivables                                 (6,060,773)      (5,260,797)     (5,268,715)
                Security, maintenance and other deposits         (16,207,351)      (8,288,288)     (6,968,057)
                Prepaid expenses                                  (3,462,229)      (1,947,017)     (1,596,140)
                Inventories                                       (1,837,152)      (1,031,267)        (39,606)
                Accounts payable                                   7,215,154          396,675         346,488
                Air traffic liability                             18,144,400       15,631,145       9,977,251
                Other accrued expenses                               694,460       10,084,065       5,758,840
                Accrued maintenance expense                       16,578,273        8,130,957       6,057,944
                                                              ---------------- ---------------- ----------------
                     Net cash provided by operating activities    72,526,046       55,207,303      35,956,113
                                                              ---------------- ---------------- ----------------

Cash flows from investing activities:
    Decrease (increase) in short-term investments, net            13,760,000      (15,760,000)         -
    Increase in aircraft lease and purchase deposits             (22,810,967)      (5,940,000)       (944,000)
    Decrease in aircraft lease deposits                               -             1,830,961          -
    Increase in restricted investments                            (3,330,500)      (3,640,000)     (1,544,000)
    Capital expenditures                                         (21,957,336)     (16,360,553)     (4,313,065)
                                                              ---------------- ---------------- ----------------
                     Net cash used in investing activities       (34,338,803)     (39,869,592)     (6,801,065)
                                                              ---------------- ---------------- ----------------

Cash flows from financing activities:
    Net proceeds from issuance of common stock and warrants        3,325,566        5,324,172      15,549,810
    Principal payments on sale of senior secured notes               -                -              (941,841)
    Proceeds from short-term borrowings                              -                -               179,664
    Principal payments on short-term borrowings                      -                -              (179,664)
    Principal payments on obligations under capital leases          (112,316)        (100,022)       (115,340)
                                                              ---------------- ---------------- ----------------
                     Net cash provided by financing activites      3,213,250        5,224,150      14,492,629
                                                              ---------------- ---------------- ----------------

                     Net increase in cash and cash equivalents    41,400,493       20,561,861      43,647,677

Cash and cash equivalents, beginning of period                    67,850,933       47,289,072       3,641,395
                                                              ---------------- ---------------- ----------------

                                                              $  109,251,426   $   67,850,933   $  47,289,072
                                                              ================ ================ ================

See accompanying notes to financial statements.


FRONTIER AIRLINES, INC.
Notes to Financial Statements
March 31, 2001


(1)    Nature of Business and Summary of Significant Accounting Policies

        Nature of Business

        Frontier  Airlines,  Inc.  ("Frontier" or the  "Company")  provides air  transportation  for passengers and
        freight.  Frontier was  incorporated in the State of Colorado on February 8, 1994 and commenced  operations
        on July 5, 1994.  Denver-based  Frontier serves 23 cities coast to coast with a fleet of 25 Boeing 737 jets
        and employs approximately 2,400 aviation professionals.

        Airline  operations have high fixed costs relative to revenues and are highly  sensitive to various factors
        including the actions of competing  airlines and general  economic  factors.  Small  fluctuations  in yield
        per revenue passenger mile or expense per available seat mile can significantly affect operating results.

        Preparation of Financial Statements

        The  preparation of financial  statements in conformity with accounting  principles  generally  accepted in
        the United  States of America  requires  management  to make  estimates  and  assumptions  that  affect the
        reported  amounts of assets and  liabilities  and  disclosure of contingent  assets and  liabilities at the
        date of the financial  statements  and the reported  amounts of revenues and expenses  during the reporting
        period.  Actual results could differ from those estimates.

        Cash and Cash Equivalents

        For financial  statement purposes,  the Company considers cash and short-term  investments with an original
        maturity  of three  months or less to be cash  equivalents.  These  investments  are stated at cost,  which
        approximates fair value.

        Short-term investments

        Short-term  investments  consist of  government-backed  agencies with maturities of one year or less. These
        investments are classified as  held-to-maturity  and are carried at amortized cost which  approximates fair
        value.  Held-to-maturity  securities  are those  securities in which the Company has the ability and intent
        to hold the security until maturity.  Interest income is recognized when earned.

        Supplemental Disclosure of Cash Flow Information

        Noncash Financing and Investing Activities - During the  year  ended  March  31,  1999, the  Company
        entered   into  capital  lease agreements totaling $504,900.



FRONTIER AIRLINES, INC.

Notes to Financial Statements, continued


        Cash Paid During the Year for:

                                                2001              2000              1999
                                                ----              ----              ----
                             Interest     $     94,393     $     119,496     $     302,503
                             Taxes        $ 21,926,000      $  3,005,000                -

        Restricted Investments

        Restricted  investments  include  certificates  of deposit  which secure  certain  letters of credit issued
        primarily to companies  which  process  credit card sale  transactions,  certain  airport  authorities  and
        aircraft  lessors.  Restricted  investments are carried at cost,  which  management  believes  approximates
        market value.  Maturities are for one year or less and the Company intends to hold  restricted  investments
        until maturity.

        Valulation and Qualifying Accounts

        The allowance  for doubtful  accounts was  approximately  $368,000 and $171,000 at March 31, 2001 and 2000,
        respectively.  Provisions for bad debts net of recoveries totaled  $1,179,000,  $873,000,  and $386,000 for
        the  years  ended  March 31,  2001,  2000 and  1999,  respectively.  Deductions  from the  reserve  totaled
        $982,000, $902,000, and $330,000 for the years ended March 31, 2001, 2000, and 1999, respectively.

        Maintenance  reserves  were  approximately  $45,686,000  and  $29,107,000  at  March  31,  2001  and  2000,
        respectively.  Provisions for maintenance  reserves totaled $24,970,000,  $22,811,000,  and $25,220,000 for
        the years  ended  March 31,  2001,  2000 and  1999,  respectively.  Deductions  from the  reserves  totaled
        $8,391,000, $14,681,000, and $19,162,000 for the years ended March 31, 2001, 2000 and 1999, respectively.

        Inventories

        Inventories  consist of  expendable  parts,  supplies and aircraft fuel and are stated at the lower of cost
        or market.  Inventories  are  accounted  for on a first-in,  first-out  basis and are charged to expense as
        they are used.

        At March 31,  2000,  the  Company had an  aircraft  parts  agreement  for its Boeing 737  aircraft  with an
        aircraft parts  supplier.  The Company is required to pay a monthly  consignment  fee to the lessor,  based
        on the value of the consigned  parts,  and to replenish any such parts when used with a like part. At March
        31, 2000, the Company held consigned  parts and supplies in the amount of  approximately  $5,788,000  which
        are not  included in the  Company's  balance  sheet.  This  agreement  terminated  in January  2001 and the
        Company no longer has an aircraft parts agreement.





        Property and Equipment

        Property and equipment are carried at cost.  Major  additions,  betterments  and renewals are  capitalized.
        Depreciation  and amortization is provided for on a straight-line  basis to estimated  residual values over
        estimated depreciable lives as follows:

                  Capitalized software                        3 years
                  Flight equipment                            5-10 years
                  Improvements to leased aircraft             Life of improvements or term of lease,
                                                              whichever is less
                  Ground property, equipment, and
                    leasehold improvements                    3-5 years or term of lease


        Residual  values for engines range in amount up to 48% of the engine's  cost and residual  values for major
        rotable  parts are  generally 10% of the asset's  cost,  except when a guaranteed  residual  value or other
        agreements  exist to better  estimate  the  residual  value.  Assets  utilized  under  capital  leases  are
        amortized  over  the  lesser  of the  lease  term or the  estimated  useful  life of the  asset  using  the
        straight-line method.  Amortization of capital leases is included in depreciation expense.

        Manufacturers' Credits

        The Company  receives  credits in  connection  with its  purchase of  aircraft,  engines and other  rotable
        parts.  These credits are deferred  until the  aircraft,  engines and other rotable parts are delivered and
        then applied on a pro-rata basis as a reduction to the cost of the related equipment.

        Maintenance

        Routine maintenance and repairs are charged to operations as incurred.

        Under the terms of its  aircraft  lease  agreements,  the Company is required to make  monthly  maintenance
        deposits and a liability for accrued  maintenance is established  based on usage.  The deposits are applied
        against  the cost of  major  airframe  maintenance  checks,  landing  gear and  engine  overhauls.  Deposit
        balances  remaining  at  lease  termination  remain  with  the  lessor  and  any  remaining  liability  for
        maintenance  checks is reversed  against the deposit  balance.  Additionally,  a provision  is made for the
        estimated  costs of scheduled  major  overhauls  required to be performed on leased aircraft and components
        under the  provisions of the aircraft  lease  agreements if the required  monthly  deposit  amounts are not
        adequate to cover the entire cost of the scheduled  maintenance.  Accrued  maintenance  expense expected to
        be incurred beyond one year is classified as long-term.

        Effective  April 1, 1999, the Company  changed its method of accounting for required  periodic  maintenance
        checks from the  accrue-in-advance  method to the direct  expensing  method.  The Company believes that the
        newly  adopted  accounting  principle is  preferable  in the  circumstances  because  there has not been an
        obligating  event prior to the  maintenance  checks  actually  being  performed,  and the new method is the
        predominant  method used in the airline  industry.  Fluctuations in these  maintenance costs from period to
        period are not expected to be  significant  given the maturity  and current  size of the  Company's  fleet.
        Previously,  the Company  accrued-in-advance  for  maintenance  checks and major  overhauls,  including the
        costs for  scheduled  major  airframe,  landing  gear,  and engine  overhauls.  The  Company  continues  to
        utilize the  accrue-in-advance  method for  scheduled  major  airframe,  landing gear and engine  overhauls
        because  the  Company's  aircraft  lease  agreements  require the  Company to make  non-refundable  monthly
        deposits with the lessors for such costs.

        The  cumulative  effect of the  change,  calculated  as of April 1,  1999,  was to  increase  net income by
        $549,009  or $.02 per  diluted  share.  The effect of the change  was to  decrease  net income for the year
        ended March 31, 2000 by $247,713 or $.01 per diluted  share.  Had the new method of  accounting  been used,
        net income for the year ended March 31, 1999 would have been $29,510,374 or $1.28 per diluted share.

        Advertising Costs

        The Company  expenses the costs of  advertising  as promotion and sales in the year  incurred.  Advertising
        expense was  $6,076,501,  $4,437,149,  and $3,900,275  for the years ended March 31, 2001,  2000, and 1999,
        respectively.

        Development Costs

        Development costs related to the preparation of operations for new routes are expensed as incurred.

        Revenue Recognition

        Passenger,  cargo,  and other  revenues are  recognized  when the  transportation  is provided or after the
        tickets  expire,  and are net of excise  taxes.  Revenues  which have been  deferred  are  included  in the
        accompanying balance sheet as air traffic liability.

        Passenger Traffic Commissions and Related Expenses

        Passenger  traffic  commissions and related expenses are expensed when the  transportation  is provided and
        the related revenue is recognized.  Passenger  traffic  commissions and related expenses not yet recognized
        are included as a prepaid expense.





        Frequent Flyer Awards

        In February 2001, the Company  established  EarlyReturns,  a frequent flyer program to encourage  travel on
        its airline and customer  loyalty.  Members earn one mile for every mile flown on Frontier plus  additional
        mileage with program partners,  which presently  include  Continental  Airlines,  Midwest Express Airlines,
        Virgin  Atlantic  Airways,  Alamo,  Hertz,  National  and Payless Car  Rentals,  Kimpton  Group  Hotels and
        Citicorp  Diners Club Inc.  Through the  EarlyReturns  program,  mileage  credits can be redeemed  for free
        travel on Frontier  Airlines and partner  airlines.  Use of mileage credits is subject to industry standard
        restrictions  including  blackout  dates.  Miles  earned in the  EarlyReturns  program do not  expire.  The
        Company must  purchase  space on other  airlines to  accommodate  EarlyReturns  redemption  travel on those
        airlines.

        The Company accounts for the  EarlyReturns  program under the incremental cost method whereby travel awards
        are  valued at the  incremental  cost of  carrying  one  passenger  based on  expected  redemptions.  Those
        incremental  costs are based on  expectations  of  expenses to be  incurred  on a per  passenger  basis and
        include food and beverages,  fuel, liability  insurance,  and ticketing costs. The incremental costs do not
        include a  contribution  to overhead,  aircraft  cost or profit.  Non-revenue  EarlyReturns  travel did not
        account for any revenue passenger miles for the years ended March 31, 2001, 2000 and 1999.

        As of March 31, 2001, the Company  estimated  that less than 20 round-trip  flight awards were eligible for
        redemption by  EarlyReturns  members who have mileage  credits  exceeding the  15,000-mile  free round-trip
        domestic ticket award threshold.

        Common Stock

        On March 5, 2001,  the Company paid a fifty percent stock  dividend to  shareholders  of record on February
        19, 2001.  All share and per share data  presented in the financial  statements and notes thereto have been
        restated to give effect to this stock dividend.

        Income  Per Common Share

        Basic  earnings  per share  excludes  the effect of  potentially  dilutive  securities  and is  computed by
        dividing  income by the  weighted-average  number of common  shares  outstanding  for the  period.  Diluted
        earnings per share reflects the potential dilution of securities that could share in earnings.

        Income Taxes

        The Company  accounts for income taxes using the asset and liability  method.  Under that method,  deferred
        income taxes are  recognized  for the tax  consequences  of  "temporary  differences"  by applying  enacted
        statutory tax rates  applicable to future years to  differences  between the financial  statement  carrying
        amounts and tax bases of existing  assets and  liabilities.  A valuation  allowance  for net  deferred  tax
        assets is provided  unless  realizability  is judged by  management  to be more likely than not. The effect
        on  deferred  taxes from a change in tax rates is  recognized  in income in the period  that  includes  the
        enactment date.

        Fair Value of Financial Instruments

        The Company  estimates the fair value of its monetary assets and liabilities  based upon existing  interest
        rates related to such assets and liabilities  compared to current rates of interest for instruments  with a
        similar  nature and degree of risk.  The Company  estimates  that the carrying value of all of its monetary
        assets and liabilities approximates fair value as of March 31, 2001.

        Stock Based Compensation

        The Company  follows  Accounting  Principles  Board Opinion No. 25 Accounting for Stock Issued to Employees
        ("APB 25") and  related  Interpretations  in  accounting  for its  employee  stock  options and follows the
        disclosure  provisions of Statement of Financial  Accounting  Standards  No. 123 (SFAS No. 123).  Under APB
        25,  because the exercise  price of the Company's  employee  stock  options  equals the market price of the
        underlying  Common  Stock on the date of grant,  no  compensation  expense is  recognized.  The Company has
        included the pro forma disclosures required by SFAS No. 123 in Note 9.

        Impairment of Long-Lived Assets

        The  Company  records  impairment  losses on  long-lived  assets  used in  operations  when  indicators  of
        impairment  are present and the  undiscounted  future cash flows  estimated to be generated by those assets
        are less than the assets' carrying amount.

        Reclassifications

        Certain prior year amounts have been reclassified to conform to the current year presentation.



(2)     Prepaid Expenses

        The March 31, 2001 and 2000 prepaid expenses is comprised of the following:

                                                                           2001                2000
                                                                           ----                ----

                   Prepaid aircraft rentals                               $2,664,570         $ 2,652,672
                   Prepaid passenger traffic commissions                   1,986,443           1,529,129
                   Prepaid fuel                                              371,982             929,940
                   Other prepaid expenses and other assets                 5,826,085           2,275,110
                                                                     -----------------   -----------------
                                                                         $10,849,080         $ 7,386,851
                                                                     =================   =================

(3)     Property and Equipment, Net

        As of March 31, 2001 and 2000 property and equipment consisted of the following:

                                                                            2001                2000
                                                                            ----                ----

          Flight equipment and improvements to leased aircraft      $     32,770,377     $   20,891,239
          Ground property, equipment and leasehold improvements           12,704,749          6,571,776
          Construction in progress                                         3,665,614               -
                                                                       ---------------      --------------
                                                                          49,140,740          27,463,015
          Less accumulated depreciation and amortization                  11,040,614           5,808,753
                                                                       ---------------      --------------

                 Property and equipment, net                        $     38,100,126     $    21,654,262
                                                                       ===============      ==============

        Property and equipment  includes certain office  equipment and software under capital leases.  At March 31,
        2001 and 2000,  office  equipment and software  recorded under capital leases were $602,149 and accumulated
        amortization  was  $302,204 and  $163,428,  respectively.  Construction  in progress  includes  capitalized
        software  totaling  approximately  $900,000 and Airbus flight  equipment not yet placed in service totaling
        approximately $2,800,000.






(4)      Other Accrued Expenses

        The March 31, 2001 and 2000 other accrued expenses is comprised of the following:

                                                              2001                2000
                                                              ----                ----

                  Accrued salaries and benefits              $11,769,806      $  5,505,449
                  Income taxes payable                         -                 5,483,264
                  Federal excise taxes payable                 2,720,977         3,664,429
                  Other                                        3,745,696         2,888,877
                                                        -----------------   ------------------

                                                             $18,236,479      $ 17,542,019
                                                        =================   ==================

(5)     Lease Commitments

        Aircraft Leases

        At March 31, 2001,  the Company  operated 25 aircraft which are accounted for under  operating  lease  agreements  with initial
        terms  ranging  from 2.7 years to 8 years.  Certain  leases  allow for renewal  options.  Security  deposits  related to leased
        aircraft at March 31, 2001 and 2000 totaled  $3,957,789  and  $3,257,789  and are included in security,  maintenance  and other
        deposits on the balance  sheet.  Letters of credit  issued to certain  aircraft  lessors in lieu of cash  deposits  and related
        restricted  investments  to secure  these  letters of credit at March 31,  2001 and 2000  totaled  $7,526,000  and  $7,284,000,
        respectively.

        During the year ended March 31, 2001,  the Company  entered into  aircraft  leases for 16 Airbus  aircraft  with lease terms of
        approximately  12 years.  Delivery dates begin in June 2001 and end in October 2004. At March 31, 2001,  security  deposits and
        letters of credit  issued to an  aircraft  lessor in lieu of cash  deposits  totaled  $250,000  and  $3,088,500,  respectively.
        Restricted investments to secure these letters of credit at March 31, 2001 totaled $3,088,500.

        In addition to scheduled  future minimum lease  payments,  the Company is required to make monthly  maintenance  deposits and a
        liability  for accrued  maintenance  is  established  based on usage.  The lease  agreements  require the Company to pay taxes,
        maintenance,  insurance,  and other operating expenses applicable to the leased property. At March 31,  2001 and 2000, aircraft
        maintenance  deposits  totaled  $42,255,002  and  $26,911,635,  respectively,  and are  reported  as a component  of  security,
        maintenance and other deposits on the balance sheet.

        Any cash  deposits  paid to aircraft  lessors for future  scheduled  maintenance  costs to the extent not used during the lease
        term remain with the lessors,  and any remaining  liability for  maintenance  checks is reversed  against the deposit  balance.
        Maintenance  deposits  are  unsecured  and may be subject to the risk of loss in the event the  lessors are not able to satisfy
        their obligations under the lease agreements.

        Other Leases

        The Company  leases an office,  hangar  space,  spare engines and office  equipment  for its  headquarters,
        airport  facilities,  and certain other equipment.  The Company also leases certain airport gate facilities
        on a month-to-month basis.

        At March 31, 2001,  commitments under capital and noncancelable  operating leases (excluding  maintenance deposit requirements)
        with terms in excess of one year were as follows:

                                                                         Capital          Operating
                                                                         Leases            Leases
                                                                         -------           ------
                        Year ended March 31:
                            2002                                        $153,320         $73,686,103
                            2003                                         153,320          76,398,616
                            2004                                          44,322          77,206,098
                            2005                                           -              69,403,130
                            2006                                           -              53,539,139
                            Thereafter                                                   413,585,032
                                                                     ---------------  ------------------

                              Total minimum lease payments               350,962       $ 763,818,118
                                                                                      ==================

                        Less amount representing interest                 21,547
                                                                     ---------------

                            Present value of obligations
                              under capital leases                       329,415

                        Less current portion of obligations
                            under capital leases                         125,552
                                                                     ---------------

                            Obligations under capital leases,
                              excluding current portion                 $203,863
                                                                     ===============

        The obligations under capital leases have been discounted at imputed interest rates ranging from 10% to 13%.

        Rental expense under operating leases,  including  month-to-month leases, for the years ended March 31, 2001, 2000 and 1999 was
        $80,781,897, $65,201,876 and $46,099,140, respectively.






 (6)    Senior Secured Notes

        In December 1997,  the Company sold  $5,000,000 of 10% senior secured notes to Wexford  Management LLC  ("Wexford").  The notes
        were due and payable in full on  December  15, 2001 with  interest  payable  quarterly  in arrears.  The notes were  secured by
        substantially all of the assets of the Company.  The Wexford  agreement  contained  restrictions  primarily related to liens on
        assets and required prior written consent for  expenditures  outside the ordinary  course of business.  In connection with this
        transaction,  the Company  issued  Wexford  warrants  to  purchase  2,625,000  shares of Common  Stock at $2.00 per share.  The
        Company  determined  the value of the warrants to be  $1,645,434  and recorded the value as a discount on notes  payable and as
        equity in  additional  paid-in  capital.  The  balance of the notes were to be  accreted to its face value over the term of the
        notes and included as interest  expense.  The effective  interest rate on the notes was  approximately  18.2%  considering  the
        value of the warrants

        During the year ended March 31, 1999,  Wexford  exercised all of the warrants  described above. As permitted under the terms of
        the agreement,  Wexford  elected to tender debt for the warrant  exercise price first by application of accrued unpaid interest
        and the  remainder  by reducing  the  principal  balance of the notes.  The total  amount of  $5,250,000  from the exercise was
        comprised  of the  following:  payment of  accrued  interest  totaling  $134,971,  then to the  outstanding  principal  balance
        totaling $4,058,159,  and the remaining balance in cash to the Company totaling  $1,056,870.  In January 1999, the Company paid
        the remaining balance of the note in full which totaled $941,841,  thereby  terminating all of Wexford's  security interests in
        the Company's assets.

        The discount  amortized to interest  expense prior to the pay-off of the notes totaled  $199,975 year ended March 31, 1999. Upon the
        exercise of the  warrants by Wexford,  $1,094,042  of  unamortized  discount was charged to  additional  paid-in  capital.  The
        remaining  unamortized  discount and other deferred loan costs totaled $485,846 at the repayment date and were charged to other
        nonoperationg expense.






 (7)    Income Taxes

        Income tax expense (benefit) for the years ended March 31, 2001, 2000 and 1999 consists of:

                                                           Current            Deferred             Total
                                                           --------           ---------           ------

                   Year ended March 31, 2001:
                     U.S. Federal                        $28,441,039         $ 1,008,515        $29,449,554
                     State and local                       3,877,611             137,500          4,015,111
                                                       -----------------  ------------------  ------------------
                                                         $32,318,650       $   1,146,015       $ 33,464,665
                                                       =================  ==================  ==================

                   Year ended March 31, 2000:
                     U.S. Federal                       $  9,785,064         $ 4,726,153        $14,511,217
                     State and local                       1,811,343             631,814          2,443,157
                                                       -----------------  ------------------  ------------------
                                                         $11,596,407        $  5,357,967        $16,954,374
                                                       =================  ==================  ==================

                   Year ended March 31, 1999:
                     U.S. Federal                      $     531,077       $ (5,244,134)       $ (4,713,057)
                     State and local                             -             (766,513)           (766,513)
                                                       -----------------  ------------------  ------------------
                                                           $ 531,077       $ (6,010,647)       $ (5,479,570)
                                                       =================  ==================  ==================

        The  differences  between  the  Company's  effective  rate for income  taxes and the  federal  statutory  rate are shown in the
        following table:

                                                            2001               2000               1999
                                                            ----               ----               ----

             Income tax expense
               at the statutory rate                        (35%)              (35%)              (35%)
             Decrease in valuation
               allowance                                      -                  -                 60%
             State and local income tax, net of
               federal income tax benefit                    (3%)               (3%)               (3%)
             Nondeductible expenses                           -                 (1%)                 -
                                                      -----------------  -----------------  ------------------
                                                            (38%)              (39%)               22%
                                                      =================  =================  ==================







        The tax effects of temporary  differences  that give rise to significant  portions of the deferred tax assets  (liabilities) at
        March 31, 2001 and 2000 are presented below:

                                                                     2001                2000
                                                                     ----                ----
                   Deferred tax assets:
                       Accrued vacation and
                         insurance liabilities not
                         deductible for tax purposes            $  1,355,226        $  1,041,000
                       Inventory reserves                                856             134,000
                       Other                                         150,136             136,000
                                                             ------------------  ------------------

                          Total gross deferred tax assets          1,506,218           1,311,000


                   Deferred tax liabilities:
                   Equipment depreciation and
                         amortization                             (1,999,553)           (556,000)
                   Book/tax difference on warrant
                         treatment                                                      (102,000)
                                                             ------------------  ------------------

                          Total gross deferred tax liabilities    (1,999,553)           (658,000)

                                                             ------------------  ------------------
                       Net deferred tax asset (liability)        $  (493,335)         $  653,000
                                                             ==================  ==================


        The net deferred tax asset (liability) are reflected in accompanying balance sheet as follows:

                                                                     2001                2000
                                                                     ----                ----

                Current deferred tax assets                       $1,506,218          $1,136,194
                Non-current deferred tax liability                (1,999,553)           (483,514)
                                                              -------------------  ------------------

                  Net deferred tax asset (liability)              $ (493,335)         $  652,680
                                                              ===================  ==================

        The  Company  recognized  an  income  tax  benefit  of  $5,479,570  in 1999  attributable  to the  probable
        realization of its remaining income tax loss  carryforwards for which a valuation  allowance had previously
        been  recorded.   The  Company's  net  operating  loss  carryforwards  of  approximately   $11,891,000  and
        alternative  minimum tax credits of approximately  $525,000 at March 31, 1999 were fully utilized to reduce
        federal regular income taxes during the year ended March 31, 2000.

 (8)    Warrants and Stock Purchase Rights

        In October 1995,  the Company  issued to each of two Boeing 737-300  aircraft  lessors a warrant to purchase  150,000 shares of
        Common Stock for an aggregate  purchase  price of $500,000.  In June 1996,  the Company issued two warrants to a Boeing 737-200
        lessor,  each  warrant  entitling  the lessor to purchase  105,000  shares of Common Stock at an  aggregate  exercise  price of
        $503,300 per warrant.  In connection with a Boeing 737-300 aircraft  delivered in August 1997, the Company issued to the lessor
        a warrant to purchase  82,500  shares of Common Stock at an  aggregate  purchase  price of $385,000.  During May and June 1999,
        aircraft lessors  exercised all 592,500 warrants with net proceeds to the Company totaling  $2,391,600.  To the extent that the
        aircraft  lessors were able to realize  certain profit  margins on their  subsequent  sale of the stock,  they were required to
        refund a portion of the cash  security  deposits they were  holding.  As a result of their sale of the Company's  Common Stock,
        $1,024,000 in cash security deposits were returned to the Company during the year ended March 31, 2000.

        In February 1998, in connection  with the  $5,000,000  senior notes as discussed in Note 6, the Company issued a warrant to the
        lender to purchase  2,625,000  shares of the  Company's  Common Stock at a purchase  price of $2.00 per share.  During the year
        ended March 31, 1999, this warrant was exercised in its entirety.

        In May 1998, the Company issued to its financial advisor, in connection with debt and equity financings,  a warrant to purchase
        822,000  shares of the Company's  Common Stock at a purchase  price of $2.00 per share,  which warrant  expires in May 2003. Of
        the 822,000  warrants  issued,  174,675 were  attributable to the issuance of the senior secured notes discussed in Note 6. The
        Company  recorded a value of $109,492 for these  warrants and  recorded the value as equity in  additional  paid in capital and
        deferred loan costs.  During the year ended March 31, 2000,  the financial  advisor  exercised the warrant with net proceeds to
        the Company totaling $1,644,000.

        In April 1998, in connection with a private  placement of 6,544,501 shares of its Common Stock, the Company issued a warrant to
        an  institutional  investor to purchase  1,075,393  shares of its Common  Stock at a purchase  price of $2.50 per share,  which
        warrant expires in April 2002.  During the year ended March 31, 2001, the  institutional  investor  exercised  550,394 warrants
        with net proceeds to the Company totaling $1,375,984.

        In February  1997,  the Board of Directors  declared a dividend  distribution  of one Common Stock purchase
        right for each share of the Company's  Common Stock  outstanding  on March 15, 1997.  Each right entitles a
        shareholder  to purchase one share of the  Company's  Common  Stock at a purchase  price of $65.00 per full
        common share,  subject to adjustment.  There are currently  0.67 rights  associated  with each  outstanding
        share of Common Stock. The rights are not currently  exercisable,  but would become  exercisable if certain
        events  occurred  relating to a person or group  acquiring or  attempting  to acquire 20 percent or more of
        the  outstanding  shares of the  Company's  Common Stock.  The rights  expire on February 20, 2007,  unless
        redeemed by the  Company  earlier.  Once the rights  become  exercisable,  each holder of a right will have
        the right to receive, upon exercise,  Common Stock (or, in certain  circumstances,  cash, property or other
        securities of the Company) having a value equal to two times the exercise price of the right.

 (9)    Stock Option Plan

        The Company has a stock option plan whereby the Board of Directors or its Compensation  Committee may grant options to purchase
        shares of the Company's Common Stock to employees, officers, and directors of the Company.

        Under the plan,  the Company has  reserved an  aggregate  of  6,375,000  shares of Common  Stock for  issuance  pursuant to the
        exercise of options.  With certain  exceptions,  options issued through  March 31,  2001 generally vest over a five-year period
        from the date of grant and expire from March 9,  2004 to March 4, 2011. At March 31, 2001,  1,497,375 options are available for
        grant under the plan.

        A summary of the Plan's stock option  activity and related  information for the years ended March 31, 2001, 2000 and 1999 is as
        follows:

                                                  2001                    2000                   1999
                                        ------------------------------------------------------------------------
                                                       Weight-                 Weight-                Weight-
                                                       Average                 Average                Average
                                                       Exercise               Exercise                Exercise
                                           Options      Price      Options      Price      Options     Price
                                        ------------------------------------------------------------------------
        Outstanding-beginning of year       2,629,469   $3.61    2,694,531      $2.23    2,298,093     $1.04
        Granted                               517,500  $11.56      450,000      $8.94    1,076,250     $3.96
        Exercised                            (865,525)  $2.18     (515,065)     $1.09     (679,812)    $0.89
        Surrendered                           (78,000)  $5.95           -          -            -         -
                                        ------------------------------------------------------------------------
                                            2,203,444   $6.07    2,629,469      $3.61    2,694,531     $2.23
                                        ========================================================================

        Exercisable at end of year           911,945    $3.16    1,459,469      $1.85    1,654,530     $1.13

        Exercise  prices for options  outstanding  under the plan as of March 31,  2001 ranged from $.667 to $24.168 per option  share.
        The  weighted-average  remaining  contractual  life of those options is 7 years. A summary of the  outstanding  and exercisable
        options at March 31, 2001, segregated by exercise price ranges, is as follows:

           ------------------------------------------------------------------------------------------------------
                                                                  Weighted-
                                                                   Average
                                                  Weighted-       Remaining                         Weighted-
             Exercise Price        Options         Average       Contractual       Exercisable       Average
                 Range           Outstanding   Exercise Price  Life (in years)       Options     Exercise Price
           ------------------------------------------------------------------------------------------------------

           $ 0.667 - $ 1.667      371,468           $0.80            3.0            371,468           $0.80
           $ 2.000 - $ 3.374      513,476            2.37            7.1            247,977            2.23
           $ 5.417 - $ 8.834      855,000            6.71            8.4            244,500            6.07
           $10.000 - $24.168      463,500           13.23            9.1             48,000           11.51
                              -----------------------------------------------------------------------------------
                                2,203,444           $6.07            7.3            911,945           $3.16
                              ===================================================================================

        The Company applies APB Opinion 25 and related  Interpretations  in accounting for its plans.  Accordingly,
        no  compensation  cost is recognized  for options  granted at a price equal to the fair market value of the
        Common  Stock.  Pro forma  information  regarding net income and earnings per share is required by SFAS No.
        123,  which also  requires  that the  information  be  determined  as if the Company has  accounted for its
        employee  stock  options  under the fair value method of that  Statement.  The fair value for these options
        was  estimated  at the date of  grant  using a  Black-Scholes  option  pricing  model  with  the  following
        weighted-average  assumptions for 2001,  2000 and 1999,  respectively:  risk-free  interest rates of 6.02%,
        5.98% and 5.36%,  dividend yields of 0%, 0% and 0%; volatility  factors of the expected market price of the
        Company's common stock of 56.78%,  61.38% and 69.25%, and a  weighted-average  expected life of the options
        of 2.7 years, 3.5 years, and 3.7 years. Had compensation  cost for the Company's  stock-based  compensation
        plan been  determined  using the fair value of the options at the grant date,  the  Company's pro forma net
        income and earnings per share would be as follows:

                                                      2001                 2000                 1999
                                                      ----                 ----                 ----
        Net Income:
          As reported                           $    54,867,773      $    27,009,253      $    30,566,060
          Pro forma                             $    55,530,524      $    26,230,907      $    30,263,570
        Earnings per share, basic:
          As reported                           $          2.02      $          1.04      $          1.43
          Proforma                              $          1.97      $          1.01      $          1.42
        Earnings per share, diluted:
          As reported                           $          1.90      $          0.95      $          1.32
          Proforma                              $          1.86      $          0.93      $          1.31







 (10)   Retirement Plans

        Employee Stock Ownership Plan

        The Company has  established  an Employee  Stock  Ownership Plan (ESOP) which inures to the benefit of each
        employee of the Company,  except those  employees  covered by a collective  bargaining  agreement that does
        not provide for  participation in the ESOP.  Company  contributions to the ESOP are  discretionary  and may
        vary from year to year.  In order for an employee to receive an  allocation  of Company  Common  Stock from
        the  ESOP,  the  employee  must  be  employed  on the  last  day of the  ESOP's  plan  year,  with  certain
        exceptions.  The Company's  annual  contribution  to the ESOP, if any, will be allocated among the eligible
        employees of the Company as of the end of each plan year in  proportion  to the relative  compensation  (as
        defined in the ESOP)  earned that plan year by each of the  eligible  employees.  The ESOP does not provide
        for  contributions  by  participating  employees.  Employees  will vest in  contributions  made to the ESOP
        based upon their years of service  with the  Company.  A year of service is an ESOP plan year during  which
        an employee  has at least 1,000 hours of  service.  Vesting  generally  occurs at the rate of 20% per year,
        beginning  after the first year of service,  so that a  participating  employee  will be fully vested after
        five  years of  service.  Distributions  from the ESOP  will not be made to  employees  during  employment.
        However,  upon  termination of employment  with the Company,  each employee will be entitled to receive the
        vested portion of his or her account balance.

        During the years ended  March 31,  2001 and 2000,  the  Company  contributed  135,000  and 150,000  shares,
        respectively to the plan.  Total Company  contributions  to the ESOP from inception  through March 31, 1999
        totaled  736,813  shares.  The Company  recognized  compensation  expense during the years ended  March 31,
        2001,  2000 and 1999 of $1,411,876,  $895,412 and $848,875,  respectively,  related to its  contribution to
        the ESOP.

        Retirement Savings Plan

        The Company has  established a Retirement  Savings Plan (401(k)).  Participants  may contribute  from 1% to
        15% of pre-tax annual  compensation.  Annual individual  pre-tax  participant  contributions are limited to
        $10,500 for  calendar  year 2001 and 2000,  and $10,000 for calendar  year 1999 under the Internal  Revenue
        Code.  Participants are immediately vested in their voluntary contributions.

        Effective May 2000, for the plan year ending  December 31, 2000, the Company's  Board of Directors  elected
        to match 50% of  participant  contributions  up to 10% of salaries  from May 2000  through  December  2000.
        Effective  November 2000, the Company's Board of Directors  elected to continue to match 50% of participant
        contributions  up to 10% of salaries for the plan year ended December 31, 2001.  Effective  April 1999, for
        the plan  year  ending  December  31,  1999,  the  Company's  Board of  Directors  elected  to match 25% of
        participant  contributions  from April 1999 through  April 2000.  During the years ended March 31, 2001 and
        2000, the Company  recognized  compensation  expense  associated with the matching  contributions  totaling
        $1,286,611 and $513,758,  respectively.  The Company had not matched any contributions  made prior to April
        1999.  Future matching  contributions,  if any, will be determined  annually by the Board of Directors.  In
        order to receive  the  matching  contribution,  Participants  must be  employed on the last day of the plan
        year.  Participants  will vest in  contributions  made to the 401(k) upon their  years of service  with the
        Company.  A year of service is a 401(k) plan year during  which a  participant  has at least 1,000 hours of
        service.  Vesting  generally  occurs  at the  rate of 20% per  year,  beginning  after  the  first  year of
        service,  so that a  Participant  will be fully vested  after five years of service.  Upon  termination  of
        employment  with the Company,  each  participant  will be entitled to receive the vested  portion of his or
        her account balance.

        Retirement Health Benefits

        Effective May 2000 in conjunction with the Company's first collective bargaining agreement with its pilots, a retired Pilot and
        their dependents may retain medical benefits under the terms and conditions of the Plan until age 65.  The cost of retiree
        medical benefits  are  continued  under the same  contribution  schedule  as active  employees.  The following  table provides
        a reconciliation  of the changes in the plans' benefit  obligations and fair value of assets for the year ended March 31, 2001,
        and a statement of funded status as of March 31, 2001:


                                Reconciliation of benefit obligation:

                                Obligation at March 31, 2000             $     -
                                  Service cost                              327,073
                                  Interest cost                              24,273
                                  Net actuarial gain                         (6,998)
                                                                        ---------------
                                Obligation at March 31, 2001             $  344,348
                                                                        ===============


                                Funded status at March 31, 2001          $ (344,348)
                                  Unrecognized net actuarial gain            (6,998)
                                                                        ---------------
                                Accrued benefit liability                $ (351,346)
                                                                        ===============









   (11) Earnings Per Share

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

                                                                  2001              2000               1999
                                                             ---------------- ------------------ -----------------
          Numerator:
            Income before cumulative effect
              of accounting changes                           $54,867,773        $26,460,244      $30,566,060
            Cumulative effect of accounting
              change, net                                           -                549,009            -
                                                             ---------------- ------------------ -----------------
            Net income                                        $54,867,773        $27,009,253      $30,566,060
                                                             ================ ================== =================

          Denominator:
            Weighted average shares outstanding,
              basic                                            27,152,099         25,994,100       21,386,492
            Dilutive effect of employee stock options           1,260,094          1,521,439        1,164,174
            Dilutive effect of warrants                           430,590            769,493          551,487
                                                             ---------------- ------------------ -----------------

            Weighted-average shares
              outstanding, diluted                             28,842,783         28,285,032       23,102,153
                                                             ================ ================== =================

          Basic earnings per share:
            Before cumulative effect of
              change in accounting principle                  $      2.02      $        1.02      $      1.43
            Cumulative effect of change in
              accounting principle                                     -                0.02               -
                                                             -----------------------------------------------------

          Basic earnings per share                            $      2.02      $        1.04      $      1.43
                                                             ================ ================== =================
          Diluted earnings per share:
          Before cumulative effect of
              change in accounting principle                  $      1.90      $        0.93      $      1.32
          Cumulative effect of change in
              accounting principle                                     -                0.02               -
                                                             -----------------------------------------------------

          Diluted earnings per share                          $      1.90      $        0.95      $      1.32
                                                             ================ ================== =================

        For the years ending March 31, 2001,  2000 and 1999,  the Company has  excluded  from its  calculations  of
        diluted  earnings per share,  97,500,  247,500 and  1,548,150  options and warrants,  with exercise  prices
        ranging from $15.19 to $24.17,  $8.55 to $11.05, and $3.34 to $6.00,  respectively,  because the option and
        warrant's  exercise  price was less than the average  market price of the common shares for the  respective
        year.

(12)    Concentration of Credit Risk

        The Company does not believe it is subject to any significant  concentration  of credit risk relating to receivables.  At March
        31, 2001 and 2000, 79.5% and 69.7% of the Company's  receivables  relate to tickets sold to individual  passengers  through the
        use of major credit cards, travel agencies approved by the Airlines Reporting  Corporation,  tickets sold by other airlines and
        used by passengers on Company flights,  the United States Postal Service, or the Internal Revenue Service.  Receivables related
        to tickets sold are short-term, generally being settled shortly after sale or in the month following ticket usage.

 (13)   Commitments and Contingencies

        The Company is party to legal  proceedings  and claims which arise during the ordinary  course of business.
        In the opinion of  management,  the  ultimate  outcome of these  matters  will not have a material  adverse
        effect upon the Company's financial position or results of operations.

        In March 2000, the Company  entered into an agreement with AVSA,  S.A.R.L.,  as  subsequently  amended,  to
        purchase  up to 29 new Airbus  aircraft.  We have agreed to firm  purchases  of 12 of these  aircraft,  and
        have  options to purchase up to an  additional  17  aircraft.  The 12 firm  aircraft  are  scheduled  to be
        delivered in calendar  years 2001 through 2005.  The aggregate  additional  amounts due under this purchase
        commitment and estimated amounts for  buyer-furnished  equipment and spare parts for both the purchased and
        leased  aircraft  was  approximately  $373,500,000  at March 31,  2001.  Under  the  terms of the  purchase
        agreement,   the  Company  is  required  to  make  scheduled  pre-delivery  payments.  These  payments  are
        non-refundable  with certain exceptions.  As of March 31, 2001, the Company has made pre-delivery  payments
        totaling  $28,511,000 to secure these  aircraft and option  aircraft.  Pre-delivery  payments due in fiscal
        year 2002 approximate  $15,985,000.  After pre-delivery  payments,  the balance of the total purchase price
        must be paid upon  delivery of each  aircraft.  In order to complete  the  purchase of these  aircraft,  it
        will be necessary  for the Company to secure  financing.  The amount of financing  required  will depend on
        the number of aircraft  purchase options  exercised and the amount of cash generated by operations prior to
        delivery of the  aircraft.  At this time,  the type of  financing  has not been  determined  except for the
        three initial Airbus aircraft (see Note 14).






 (14)   Subsequent Events

        In May 2001,  we entered  into a credit  agreement  to borrow up to  $72,000,000  for the purchase of three
        Airbus  aircraft  together with a maximum  borrowing of $24,000,000  per aircraft.  Each aircraft loan will
        have a term of 120 months and will be payable in equal monthly  installments,  including interest,  payable
        in  arrears.  As of May 30,  2001,  we have  borrowed  $24,000,000  for the  purchase  of the first  Airbus
        aircraft.  The note for this  borrowing has monthly  payments of $209,110,  bears  interest at 6.714%,  and
        matures in May 2011 with a balloon payment of $10,200,000.




(15)    Selected Quarterly Financial Data (Unaudited)

                                                 First            Second             Third             Fourth
                                                Quarter           Quarter           Quarter           Quarter
2001
- ----
Revenues                                    $ 112,808,744     $ 131,082,878     $  114,212,036     $ 114,772,769
                                           ==================================== ================= =================
Operating Expenses                          $  87,435,488     $ 100,489,658     $   99,549,616     $ 104,680,345
                                           ==================================== ================= =================
Net Income                                  $  16,448,242     $  20,193,576     $   10,284,653     $   7,941,302
                                           ==================================== ================= =================

Earnings per share:
  Basic                                    $         0.62     $        0.75     $         0.38     $        0.28
                                           ==================================== ================= =================
  Diluted                                  $         0.57     $        0.69     $         0.35     $        0.27
                                           ==================================== ================= =================

2000
- ----
Revenues                                    $  77,886,197     $  85,453,265     $   73,973,909     $  92,506,584
                                           ==================================== ================= =================
Operating Expenses                          $  66,120,957     $  72,350,177     $   69,964,227     $  82,075,370
                                           ==================================== ================= =================
Income before cumulative effect of
  change in accounting principle            $   7,728,564     $   8,752,522     $    3,095,381     $   6,883,777
Cumulative effect of change in method of
  accounting for maintenance checks               549,009           -                  -                 -
                                           ------------------------------------ ----------------- -----------------
Net income                                  $   8,277,573     $   8,752,522     $    3,095,381     $   6,883,777
                                           ==================================== ================= =================

  Basic earning per share:
    Before cumulative effect
       of change in accounting principle   $         0.31     $        0.33     $         0.12     $        0.26
    Cumulative effect of change in method
      of accounting for maintenace checks            0.02              -                  -                 -
                                           ------------------------------------ ----------------- -----------------
    Net income                             $         0.33     $        0.33     $         0.12     $        0.26
                                           ==================================== ================= =================

  Diluted earnings per share:
    Before cumulative effect
      of change in accounting principle    $         0.27     $        0.31     $         0.11     $        0.24
    Cumulative effect of change in method
      of accounting for maintenance checks           0.02              -                  -                 -
                                           ------------------------------------ ----------------- -----------------
    Net income                             $         0.29     $        0.31     $         0.11     $        0.24
                                           ==================================== ================= =================