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_________
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 (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



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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
                                           ==================================== ================= =================