10-Q

                                                   Form 10-Q

                                         SECURITIES AND EXCHANGE COMMISSION
                                               Washington, D.C.  20549


[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934
         For the quarterly period ended December 31, 2001


[   ]    TRANSITION  REPORT  UNDER  SECTION  13  OR 15  (d)  OF  THE  SECURITIES
         EXCHANGE ACT OF 1934


Commission file number:  0-24126



                                         FRONTIER AIRLINES, INC.  
                               (Exact name of registrant as specified in its charter)




Colorado                                                                 84-1256945
(State or other jurisdiction of incorporated or organization)  (I.R.S. Employer Identification No.)


                 7001 Tower Road,  Denver, CO                                             80249
           (Address of principal executive offices)                                     (Zip Code)


Issuer's telephone number including area code:  (720) 374-4200


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


The number of shares of the Company's  Common Stock  outstanding  as of February
10, 2002 was 29,223,580.









                                                  TABLE OF CONTENTS

                         PART I. FINANCIAL INFORMATION


                                                                                           Page

Item 1.  Financial Information

         Financial Statements                                                                1


Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                               6

Item 3:  Quantitative and Qualitative Disclosures About Market Risk                         22




                               PART II. OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K                                                   23







                         PART I. FINANCIAL INFORMATION

                                                                                  December 31,        March 31,
                                                                                     2001               2001
                                                                                ---------------    ---------------
Assets
Current assets:
    Cash and cash equivalents                                                     $ 89,834,621       $109,251,426
    Short-term investments                                                           2,000,000          2,000,000
    Restricted investments                                                          11,674,000          9,100,000
    Receivables, net of allowance for doubtful accounts of $148,000
      and $368,000 at December 31 and March 31, 2001, respectively                  22,285,354         32,380,943
    Maintenance deposits                                                            34,407,606         30,588,195
    Prepaid expenses and other assets                                                9,226,184         10,849,080
    Inventories                                                                      5,511,272          4,072,335
    Deferred tax assets                                                              1,571,458          1,506,218
    Deferred lease and other expenses                                                   74,953             45,621
                                                                                ---------------    ---------------
            Total current assets                                                   176,585,448        199,793,818

Security, maintenance and other deposits                                            49,749,457         45,680,373
Property and equipment, net                                                        147,605,839         38,100,126
Deferred lease and other expenses                                                      541,872             58,621
Restricted investments                                                              13,044,812         11,683,660
                                                                                ---------------    ---------------
                                                                                  $387,527,428       $295,316,598
                                                                                ===============    ===============

Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                                                              $ 13,557,709       $ 21,623,067
    Air traffic liability                                                           47,915,266         62,663,237
    Other accrued expenses                                                          26,287,310         18,236,479
    Deferred federal grant                                                           4,970,429              -
    Accrued maintenance expense                                                     36,842,371         33,510,531
    Current portion of long-term debt                                                3,169,914              -
    Income taxes payable                                                                 -                  -
    Current portion of obligations under capital leases                                151,937            125,552
                                                                                ---------------    ---------------
            Total current liabilities                                              132,894,936        136,158,866

Long-term debt                                                                      67,666,796              -
Accrued maintenance expense                                                         14,245,238         12,175,225
Deferred tax liability                                                               5,467,631          1,999,553
Deferred rent                                                                        2,325,430              -
Obligations under capital leases, excluding current portion                            101,313            203,863
                                                                                ---------------    ---------------
            Total liabilities                                                      222,701,344        150,537,507
                                                                                ---------------    ---------------

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
        100,000,000 and 40,000,000 shares at December 31 and
        March 31, 2001, respectively;  29,039,590 and 28,194,602 issued and
        outstanding at December 31, and March 31, 2001, respectively                    29,040             28,195
    Additional paid-in capital                                                      81,339,176         77,606,918
    Unearned ESOP shares                                                           (1,275,000)        (1,662,087)
    Retained earnings                                                               84,732,868         68,806,065
                                                                                ---------------    ---------------
      Total stockholders' equity                                                   164,826,084        144,779,091
                                                                                ---------------    ---------------
                                                                                  $387,527,428       $295,316,598
                                                                                ===============    ===============


FRONTIER AIRLINES, INC.
Statements of Income
(Unaudited)
                                                     Three Months Ended                  Nine Months Ended
                                             December 31,       December 31,      December 31,       December 31,
                                                 2001               2000              2001               2000
                                            ---------------    ---------------    --------------    ---------------
Revenues:

    Passenger                                  $90,620,523       $111,318,875      $325,092,337       $350,690,244

    Cargo                                        1,268,503          2,102,347         4,806,967          5,374,595

    Other                                          667,830            790,814         1,980,120          2,038,819
                                            ---------------    ---------------    --------------    ---------------


            Total revenues                      92,556,856        114,212,036       331,879,424        358,103,658
                                            ---------------    ---------------    --------------    ---------------

Operating expenses:

    Flight operations                           41,000,078         48,003,293       141,695,871        132,090,129

    Aircraft and traffic servicing              16,492,448         15,279,898        52,293,101         43,768,413

    Maintenance                                 17,319,910         15,926,512        55,683,809         48,517,172

    Promotion and sales                         12,526,189         13,220,744        45,437,169         41,041,610

    General and administrative                   5,390,015          5,738,402        18,598,935         18,383,889

    Depreciation and amortization                3,120,702          1,380,767         8,187,111          3,673,549
                                            ---------------    ---------------    --------------    ---------------


            Total operating expenses            95,849,342         99,549,616       321,895,996        287,474,762
                                            ---------------    ---------------    --------------    ---------------


            Operating (loss) income            (3,292,486)         14,662,420         9,983,428         70,628,896
                                            ---------------    ---------------    --------------    ---------------

Nonoperating income (expense):

    Interest income                                826,464          2,229,031         3,473,444          6,001,629

    Interest expense                           (1,191,648)           (20,856)       (2,118,074)           (55,806)

    Federal grant                                3,765,724              -            12,567,959              -

    Other, net                                    (71,028)           (10,508)         (267,836)           (47,709)
                                            ---------------    ---------------    --------------    ---------------

            Total nonoperating income, net       3,329,512          2,197,667        13,655,493          5,898,114
                                            ---------------    ---------------    --------------    ---------------


Income before income taxes                          37,026         16,860,087        23,638,921         76,527,010

Income tax (benefit) expense                     (871,597)          6,575,434         7,712,118         29,600,539
                                            ---------------    ---------------    --------------    ---------------


Net income                                       $ 908,623       $ 10,284,653       $15,926,803       $ 46,926,471
                                            ===============    ===============    ==============    ===============

Earnings per share:

            Basic                                    $0.03              $0.38             $0.56              $1.74
                                            ===============    ===============    ==============    ===============
            Diluted                                  $0.03              $0.35             $0.54              $1.61
                                            ===============    ===============    ==============    ===============

Weighted average shares of
  common stock outstanding
            Basic                               28,573,706         27,186,171        28,408,056         26,894,223
                                            ===============    ===============    ==============    ===============
            Diluted                             29,610,062         29,768,079        29,442,019         29,151,668
                                            ===============    ===============    ==============    ===============







FRONTIER AIRLINES, INC.
Statements of Cash Flows
For the Nine Months Ended December 31, 2001 and 2000
(Unaudited)

                                                                                          2001               2000
                                                                                     ----------------   ----------------
Cash flows from operating activities:

    Net income                                                                           $15,926,803        $46,926,471
    Adjustments to reconcile net income to net cash
        provided by operating activities:
            Employee stock ownership plan compensation expense                             1,662,087            857,713
            Depreciation and amortization                                                  8,252,487          3,796,195
            Deferred tax (benefit) expense                                                 3,402,838          (484,083)
            Loss on disposal of equipment                                                  1,765,746              -
            Changes in operating assets and liabilities:
                Restricted investments                                                   (4,866,952)        (1,632,400)
                Trade receivables                                                         10,638,154          3,798,564
                Security, maintenance and other deposits                                 (4,893,409)       (12,131,674)
                Prepaid expenses and other assets                                          1,044,937            172,808
                Inventories                                                              (1,438,937)        (1,132,929)
                Accounts payable                                                         (8,065,358)         3,972,582)
                Air traffic liability                                                   (14,747,971)        (4,802,797)
                Other accrued expenses                                                     8,050,831          3,756,720
                Deferred federal grant                                                     4,970,429              -
                Income taxes payable                                                           -              4,877,382
                Accrued maintenance expense                                                5,401,853         12,329,447
                Deferred rent                                                              2,325,430              -
                                                                                     ----------------   ----------------
                     Net cash provided by operating activities                            29,428,968         52,358,835
                                                                                     ----------------   ----------------

Cash flows from investing activities:
    Decrease in short-term investments                                                         -             13,760,000
    Aircraft lease and purchase deposits, net                                            (2,995,086)       (16,431,652)
    Decrease (increase) in restricted investments                                            931,800      (3,580,500)
    Capital expenditures                                                               (119,458,570)       (10,609,580)
                                                                                     ----------------   ----------------
                     Net cash used by investing activities                             (121,521,856)       (16,861,732)
                                                                                     ----------------   ----------------

Cash flows from financing activities:
    Net proceeds from issuance of common stock                                             1,915,538          1,010,364
    Proceeds from long-term borrowings                                                    72,000,000              -
    Principal payments on long-term borrow                                               (1,163,290)              -
    Principal payments on obligations under capital leases                                  (76,165)           (83,124)
                                                                                     ----------------   ----------------
                    Net cash provided by financing activities                             72,676,083            927,240
                                                                                     ----------------   ----------------

                    Net (decrease) increase in cash and cash equivalents                (19,416,805)         36,424,343

Cash and cash equivalents, beginning of period                                           109,251,426         67,850,933
                                                                                     ----------------   ----------------

Cash and cash equivalents, end of period                                               $  89,834,621       $104,275,276
                                                                                     ================   ================







FRONTIER AIRLINES, INC.
Notes to Financial Statements
December 31, 2001


(1)  Basis of Presentation

     The  accompanying unaudited financial statements have been prepared in
     accordance with generally accepted accounting principles for interim
     financial information and the instructions to Form 10-Q and Regulation
     S-X. Accordingly,  they do not include all of the information and
     footnotes required by generally accepted accounting principles for
     complete financial statements and should be read in conjunction  with the
     Company's Annual Report on Form 10-K for the year ended  March 31,  2001.
     In the opinion of management,  all adjustments (consisting  only of normal
     recurring  adjustments) considered necessary for a fair presentation have
     been included.  The results of operations for the nine months ended
     December 31, 2001 are not necessarily indicative of the results that will
     be realized for the full year.

(2)  Air Transportation Safety and Stabilization Act

     As a result of the  September  11,  2001  terrorist  attacks  on the United
     States,  on  September  22,  2001  President  Bush  signed into law the Air
     Transportation  Safety and System  Stabilization  Act (the "Act").  The Act
     includes for all U.S. airlines and air cargo carriers the following key
     provisions:  (i) $5 billion  in cash  compensation,  of which $4.5  billion
     is available to commercial passenger airlines and is allocated  based on
     the lesser of each  airline's  share of available seat miles during August
     2001 or the direct and incremental losses  (including  lost  revenues)
     incurred by the airline from September 11, 2001 through December 31,
     2001;  (ii) subject to certain conditions, the availability of up to $10
     billion in federal government guarantees of certain loans made to air
     carriers for which credit is not  reasonably  available as determined by a
     newly established  Air Transportation Stabilization Board;  (iii)  the
     authority of the Secretary of Transportation to reimburse air carriers
     (which  authority  expires  180 days  after the  enactment  of the Act) for
     increases in the cost of war risk insurance over the premium in effect
     for the period September 4, 2001 to September 10, 2001;  (iv) at the
     discretion of the Secretary of Transportation, a $100 million limit on
     the liability of any air carrier to third  parties with respect to acts of
     terrorism committed on or to such air carrier during the 180 day period
     following enactment of the Act;  and (v) the extension of the due date
     for the payment by air carriers of certain payroll and excise taxes until
     November 15, 2001 and January 15, 2002, respectively.

     The Company was entitled to receive up to approximately $20,200,000 from
     the $5 billion in authorized grants, of which $17,538,000 was received as
     of December 2001.  The Company recognized $3,766,000 and $12,568,000 of
     the grant during the three and nine months  ended  December  31,  2001,
     respectively,  which is included in nonoperating income and expense.  The
     remaining $4,970,000  represents amounts received in excess of estimated
     allowable direct and incremental losses incurred from September 11, 2001
     to December 31, 2001 and is included as a liability  on our balance sheet
     as of December  31,  2001.  As of December 31, 2001, the Company had
     deferred the payment of $8,819,000 of excise  taxes,  as permitted by the
     Act. These taxes were paid on January 15, 2002.

(3)  Long-Term Debt

     In May 2001,  the Company 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 has a term of
     120 months and is payable in equal monthly installments,  including
     interest payable in arrears.  The loans are secured by the aircraft.  As
     of December 31, 2001, the Company had borrowed $72,000,000 for the
     purchase of these three  aircraft.   Each loan provides for monthly
     principal and interest payments ranging from $205,579 to $218,109,  bears
     interest with rates ranging from 6.05% to 6.71%,  averaging 6.43% for the
     three aircraft loans, with maturities in May, August, and September 2011,
     at which time balloon payments totaling $10,200,000 are due with respect
     to each aircraft loan.

(4)  Subsequent Event

     As of February 14, 2002, we signed an amendment to two aircraft lease
     agreeements whereby these two aircraft will be returned to their lessor
     approximately 22 months sooner than their respective original lease
     termination dates.  We have paid the lessor approximately $3,700,000 and
     have committed to pay at the early return date as much as an additional
     $1,200,000 for the right to early return these two aircraft.  We expect
     to record in our fiscal fourth quarter ended March 31, 2002 an unusual
     charge against earnings of approximately $3,100,000 net of taxes to reflect
     this transaction.




Item  2:  Management's  Discussion  and  Analysis  of  Financial  Condition  and
Results of Operations

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 and its potential impact on our
liquidity;  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;
uncertainties regarding aviation fuel price; uncertainties regarding future
terrorist attacks on the United States or military actions that may be taken;
and uncertainties as to when and how fully consumer confidence in the airline
industry will be restored, if ever.  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.  See "Risk  Factors" in our Form 10-K
for the year ended March 31,  2001 as they may be modified by the disclosures
contained in this report.  Additional information regarding these and other
factors may be contained in our Form 10-K for the fiscal year ended March 31,
2001;  our Form 8-K filed May 7, 2001 and our Form 8-K filed Jan. 22,  2001,  as
amended by our Form 8-K/A filed July 11, 2001,  and our Form 10-Q for the
fiscal quarters ended June 30, 2001 and September 30, 2001.

Share,  per share and common stock information contained in this report has
been retroactively adjusted or "restated" to reflect a 50% common stock
dividend to shareholders of record on February 19, 2001, which we paid on
March 5, 2001.

General

       We are a scheduled airline based in Denver, Colorado.   We were
organized in February 1994 and we began flight operations in July 1994 with
two leased Boeing 737-200 aircraft.  We have since expanded our fleet to 26
leased aircraft and three purchased Airbus A319 aircraft,  comprised of seven
Boeing 737-200s, 17 Boeing 737-300s, and five Airbus A319s.  During the three
months ended March 31, 2002, we expect to add an additional leased Airbus A319
aircraft.  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,  assuming early lease returns of five of our
Boeing aircraft.  We advanced the return of one leased Boeing 737-300 aircraft
to its owner from April 2002 to September 2001.

       As of February 10, 2002, we operate routes linking our Denver hub to 25
cities in 19 states spanning the nation from coast to coast.  We added
Houston, Texas to our route system on May 16, 2001.  We commenced service
between Denver, and each of Reno/Lake  Tahoe, Nevada and Austin, Texas,  on
October 1, 2001.  Effective February 1, 2002, we began service between Denver
and New Orleans, Louisiana.  We intend to begin service between Denver and
Fort Lauderdale, Florida and Sacramento, California effective February 26,
2002.

       Effective July 9, 2001, we began a codeshare agreement with Great Lakes
Aviation, Ltd.  ("Great  Lakes") by which Great Lakes provides daily service to
seven regional markets from our Denver hub. The codeshare agreement initially
included Casper, Cody, Gillette, and Cheyenne, Wyoming;  Amarillo, Texas; Santa
Fe  New  Mexico;  and  Hayden, Colorado.   Effective  November 15,  2001,  we
expanded the codeshare agreement to include nine additional Great Lakes cities
including Laramie, Riverton, Rock Springs, and Worland, Wyoming;  Cortez and
Telluride, Colorado;  Scottsbluff, Nebraska; and Farmington, New Mexico and we
commenced a Great Lakes codeshare to Sheridan, Wyoming, on October 31, 2001.
Effective December 14, 2001, an additional 20 cities were added  including Page
and Phoenix, Arizona;  Alamosa and Pueblo, Colorado;  Dodge City, Garden City,
Hays, and Liberal, Kansas;  Dickinson and Williston, North Dakota; Alliance,
Chadron, Grand Island, Kearney, McCook, Norfolk, and North Platte,  Nebraska;
Pierre, South Dakota;  and Moab and Vernal, Utah.  Service between Denver and
Hayden, Colorado was deleted from the codeshare agreement effective December
13, 2001.

       In  September  2001,  we entered into a codeshare agreement with Mesa
Airlines, Inc. ("Mesa").  Under the terms of the agreement, we will market and
sell flights operated by Mesa as Frontier JetExpress.  We expect this
codeshare to begin February 17, 2002 with service between Denver and San Jose,
California,  and with supplemental flights to our current  service  between
Denver and Houston, Texas.  Effective  April 7, 2002,  the codeshare will be
expanded to include service to St. Louis,  Missouri., and Ontario, California.
This codeshare is expected to expand to include the operation by Mesa of at
least five 50-passenger Bombardier CRJ-200 regional jets,  providing service to
new destinations as well as additional frequencies to our current route
system.

       We currently use up to 11 gates at our hub,  Denver International
Airport ("DIA"),  where we operate approximately 132 daily system flight
departures and arrivals.  Prior to the September  11, 2001 terrorist attacks,
we operated  approximately 126 daily system flight departures and arrivals.
Following the terrorist attacks,  we reduced our service to approximately  103
daily system flight departures and arrivals.  On November 15, 2001, we added
an additional eight daily system flight departures and arrivals  to  our
schedule,  and we reinstated service to Ronald Reagan Washington National
Airport on December 12, 2001 with one daily round-trip.  As of March 5, 2002,
we expect to restore our service to our pre-September  11,  2001  levels.  We
intend to continue to monitor passenger demand and other competitive factors
and adjust the number of flights we operate accordingly.

       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 September 11 terrorist attacks, expansion of our
operations, and transition costs associated with our fleet replacement plan
during the nine months ended December 31, 2001, the slowing economy,  and hail
storms that damaged five of our aircraft earlier in the  year,  we do not
believe our results of operations for the nine months ended  December 31, 2001
are indicative of future operating  results or comparable to the nine months
ended December 31, 2000.

Critical Accounting Policies

       Because we accrue in advance for such events, our accounting policy for
maintenance expenses requires the use of estimates for the cost of future
major airframe maintenance checks, landing gear and engine overhauls.  These
estimates and accruals are based on timing and the scope of event and
prevailing market conditions,  all of which are subject to change,  and may
impact future operating results when the events actually take place.

Results of Operations

       We had net income of $15,927,000 or 54(cent)per diluted share for the nine
months ended  December 31, 2001 as compared to net income of $46,926,000  or
$1.61 per diluted share for the nine months ended December 31, 2000.  We had
net income of $909,000 or 3(cent)per diluted share for the three  months  ended
December 31, 2001 as compared to net income of $10,285,000 or 35(cent)per diluted
share for the three months ended December 31, 2000. On September 11, 2001,
the Federal Aviation  Administration  ("FAA")  temporarily suspended all
commercial airline flights as a result of the terrorist attacks on the United
States.  As a result of this suspension,  we cancelled 407 scheduled flights
until we resumed  operations on September 14,  2001.   After we resumed
operations,  we cancelled 303 additional scheduled flights through September
30, 2001 as a result of diminished consumer demand.  During the three months
ended December 31, 2001,  our daily  average aircraft block hour utilization
decreased to 7.8 from 9.2 during the prior comparable period ended December
31, 2000, as we reduced approximately 20.1% of departures originally scheduled
during that period.  Due to high fixed costs,  we continued to incur a
significant portion of our normal operating expenses during the period from
September 11, 2001 through December 31, 2001 and incurred operating  losses.
(For a  discussion  of steps we have taken to reduce our expenses as a result of
the September 11,  2001 terrorist attacks,   see "Liquidity and Capital
Resources" below.)

       As a result,  we recognized $12,568,000 of the federal grant we received
under the Act, which compensates for direct and incremental losses incurred by
air carriers from September  11, 2001 through the end of calendar year 2001.
During the three months ended  December 31, 2001,  we wrote down the carrying
value of spare parts that support the Boeing 737-200 aircraft by $1,512,000 as
a result of diminished demand for that aircraft type.  During the three months
ended  December 31, 2001, we recorded a credit to income tax expense totaling
$886,000 as a result of accruing income taxes during the year ended March 31,
2001, at a rate that was greater than the actual effective tax rate as
determined upon the filing of the income tax returns in December  2001.
Excluding the amount of the grant we recognized, the write down on aircraft
parts, and credits recorded to income tax expense, our net loss for the three
months ended December 31, 2001 would have been  $1,357,000  or 5(cent)per share and
net income for the nine months ended December 31, 2001 would have been
$7,701,000 or 26(cent)per diluted share.

       Prior to the terrorist attacks on September 11, 2001,  we were
experiencing the effects of a slowing economy, that had caused lower fares and
reduced business and leisure  travel.  During the nine months ended December
31, 2001,  we cancelled approximately 830 flights as a result of the September
11, 2001 terrorist attacks,  and weather conditions and weather related repairs
in the Denver area earlier in the year.

       During the nine months ended  December 31, 2001,  we took delivery of our
first five Airbus aircraft.  As this was a new aircraft type for us, we were
required by the FAA to demonstrate that our crews were proficient in flying
this type aircraft and that we were capable of properly maintaining the
aircraft and related maintenance records before we placed these aircraft in
scheduled passenger service.  This process took longer than we originally had
anticipated  and, as a result, we were required to cancel scheduled flights
that the first aircraft was scheduled to perform.  We believe that this delay
in receiving necessary FAA approvals,   adversely affected our passenger
revenues and our cost per ASM during the nine months ended December 31, 2001.

       Our cost per ASM for the nine months ended December 31, 2001 and 2000
was 9.58(cent)and 9.09(cent), respectively, an increase of .49(cent)or 5.4%. Cost per ASM
excluding fuel for the nine months ended December 31, 2001 and 2000 was 8.18(cent)
and 7.40(cent), respectively, an increase of .78(cent)or 10.5%.  Our cost per ASM for
the three months ended December 31, 2001 and 2000 was 9.49(cent)and 9.29(cent),
respectively, an increase of .20(cent)or 2.2%.  Cost per ASM excluding fuel for
the three months ended December 31, 2001 and 2000 was 8.32(cent)and 7.37(cent),
respectively, an increase of .95(cent)or 12.9%. Our cost per ASM increased during
the nine months ended December 31, 2001 principally because of an increase in
aircraft and traffic servicing expenses of .18(cent), and an increase in
maintenance expenses of .13(cent)per ASM. Our cost per ASM increased during the
three months ended December 31, 2001 over the prior comparable  period
principally  because of the decreased aircraft utilization and shorter stage
lengths during that period.  These expenses were impacted by the terrorist
attacks and the hail damage to five of our aircraft,  or approximately 20% of
our fleet,  during the nine months ended  December  31,  2001.  During the three
months ended December 31, 2001, we wrote down the carrying value of spare
parts that support the Boeing 737-200 aircraft by $1,512,000 as a result of
diminished demand for that aircraft type, resulting in an increase of .15(cent)per
ASM for the period.  We incurred short-term lease expenses for substitute
aircraft to minimize the number of flight cancellations while the hail damage
to our aircraft was being repaired, additional maintenance expenses for the
repair of the hail damage,  and interrupted trip expenses as a result of the
number of flight cancellations related to the aircraft out of service for
repair.  During April 2001, the Denver area also experienced  an  unusual
blizzard,  which caused flight cancellations as well as expenses associated
with deicing our aircraft.  We estimate that the total adverse impact on our
cost per ASM associated with these unusual weather conditions was .06(cent), or
approximately $1,893,000 for the nine months ended December 31, 2001.  During
the nine months ended December 31, 2001, we incurred approximately $3,940,000
in transition expenses associated with the induction of the Airbus  aircraft,
which had an adverse effect on our CASM of approximately .12(cent)per ASM.  These
include crew salaries;  travel, training and induction team expenses;  and
depreciation expense.  We also experienced an increase in promotion and sales
expenses to stimulate traffic in a weak economy of .05(cent)per ASM. An increase
in pilots' salaries effective in May 2001 also contributed to the increase in
cost per ASM during the nine months ended December 31, 2001.  Additionally,
due to the flight cancellations as a result of the September 11 terrorist
attacks and these weather conditions, our ASMs were less than we had planned,
which caused our fixed costs to be spread over fewer ASMs and,  we believe,
distorted our cost per ASM for the period.

       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 nine months ended
December 31, 2001 and 2000, our break-even load factors were 58.3% and 52.2%,
respectively,  compared to our achieved passenger load factors of 60.7% and
66.8%.  For the three months ended December 31, 2001 and 2000, our break-even
load factors were 53.7% and 54.3%, respectively, compared to our achieved
passenger load factors of 52.4% and 64%. Our break-even load factor increased
for the nine months ended December 31, 2001 from the prior comparable period
largely as a result of a decrease in our average fare to $133 during the nine
months ended  December 31, 2001 from $146 during the nine months ended December
31, 2000, compounded by an increase in our expense per ASM to 9.58(cent)for the
nine months ended December 31, 2001 from 9.09(cent)for the nine months ended
December 31, 2000.

       During the nine months ended  December 31, 2001, our average daily block
hour utilization decreased to 9.0 from 9.3 for the nine months ended December
31, 2000.  During the three months ended December 31, 2001 our average daily
block hour utilization decreased to 7.8 from 9.2 for the three months ended
December 31, 2000. The calculation of our block hour utilization includes all
aircraft  that  are on our operating certificate, which includes scheduled
aircraft as well as  aircraft  out of service for maintenance and operational
spare aircraft.  In September  2001, we grounded several aircraft as a result
of the September 11, 2001 terrorist attacks, resulting in reduced aircraft
utilization.

       The following table provides certain of our financial and operating
data for the three month and nine month periods ended December  31, 2001 and
2000.  The write-down of the carrying values of the Boeing 737-200 aircraft
parts totaling $1,512,000  has been excluded from the calculation of the
break-even load factor, expense per ASM and expense per ASM excluding fuel.

                     Selected Financial and Operating Data

                                             Three Months Ended December 31,      Nine Months Ended December 31,
                                                  2001             2000               2001              2000
                                           ------------------------------------ ------------------------------------
Selected Operating Data:
Passenger revenue (000s) (1)                     $    90,621     $    111,319      $    325,092      $    350,690
Revenue passengers carried (000s)                        623              750             2,271             2,289
Revenue passenger miles (RPMs) (000s) (2)            529,593          685,507         2,038,888         2,113,107
Available seat miles (ASMs) (000s) (3)             1,010,091        1,071,714         3,359,245         3,162,972
Passenger load factor (4)                              52.4%            64.0%             60.7%             66.8%
Break-even load factor (5)                             53.7%            54.3%             58.3%             52.2%
Block hours (6)                                       20,780           21,068            67,208            61,916
Departures                                             9,469            9,755            30,389            28,656
Average aircraft stage length                            808              839               837               843
Average passenger length of haul                         850              914               898               923
Average daily fleet block hour utilization (7)           7.8              9.2               9.0               9.3
Yield per RPM (cents) (8)                              17.11            16.24             15.94             16.60
Total yield per RPM (cents) (9)                        17.48            16.66             16.28             16.95
Yield per ASM (cents) (10)                              8.97            10.39              9.68             11.09
Total yield per ASM (cents) (11)                        9.16            10.66              9.88             11.32
Expense per ASM (cents)                                 9.34             9.29              9.54              9.09
Expense per ASM excluding fuel (cents)                  8.17             7.37              8.14              7.40
Average fare (12)                                 $      134       $      142        $      133        $      146
Average aircraft in fleet                               29.0             25.0              27.2              24.3
Aircraft in fleet at end of period                      29.0             25.0              29.0              25.0
Average age of aircraft at end of period                10.4             11.1              10.4              11.0
EBITDAR (000s) (13)                                   19,672           31,603            79,062           119,728
EBITDAR as a % of revenue                              21.3%            27.7%             23.8%             33.4%


(1)  "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.
(2)  "Revenue passenger miles," or RPMs, are determined by multiplying the
     number of fare-paying passengers carried by the distance flown.
(3)  "Available seat miles," or ASMs, are determined by multiplying the number
     of seats available for passengers by the number of miles flown.
(4)  "Passenger load factor" is determined by dividing revenue passenger miles
     by available seat miles.
(5)  "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
(6)  "Block hours" represent the time between aircraft gate departure and
     aircraft gate arrival.
(7)  "Average daily block hour utilization" represents the total block hours
     divided by the weighted average number of aircraft days in service.
(8)  "Yield per RPM" is determined by dividing passenger revenues by revenue
     passenger miles.
(9)  "Total Yield per RPM" is determined by dividing total revenues by
     revenue passenger miles.
(10) "Yield per ASM" is determined by dividing passenger revenues by
     revenue passenger miles.
(11) "Total Yield per ASM" is determined by dividing total 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 many airline industry analysts and we 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.


       The  following  table  provides  our  operating   revenues  and  expenses
expressed  as cents  per  total  ASMs  and as a  percentage  of total  operating
revenues,  as  rounded,  for the  three  month  and  nine  month  periods  ended
December 31, 2001 and 2000.

                                   Three Months Ended December 31,               Nine Months Ended December 31,
                               -----------------------------------------    -----------------------------------------
                                      2001                 2000                    2001                 2000
                               ---------- --------- ---------- ---------    ---------- --------- ---------- ---------
                                  Per        %         Per        %            Per        %         Per        %
                                 total       of       total       of          total       of       total       of
                                  ASM     Revenue      ASM     Revenue         ASM     Revenue      ASM     Revenue


Revenues:

    Passenger                     8.97       97.9%     10.39      97.5%        9.68       98.0%     11.09      97.9%

    Cargo                         0.13        1.4%      0.20       1.8%        0.14        1.4%      0.17       1.5%

    Other                         0.07        0.7%      0.07       0.7%        0.06        0.6%      0.06       0.6%
                               ---------- --------- ---------- ---------    ---------- --------- ---------- ---------

Total revenues                    9.16      100.0%     10.66     100.0%        9.88      100.0%     11.32     100.0%
                               ========== ========= ========== =========    ========== ========= ========== =========

Operating expenses:

    Flight operations             4.06       44.3%      4.48      42.0%        4.22       42.7%      4.18      36.9%
    Aircraft and traffic
servicing                         1.63       17.8%      1.43      13.4%        1.56       15.8%      1.38      12.2%

    Maintenance                   1.71       18.7%      1.49      13.9%        1.66       16.8%      1.53      13.5%

    Promotion and sales           1.24       13.5%      1.23      11.6%        1.35       13.7%      1.30      11.5%
    General and
administrative                    0.53        5.8%      0.54       5.0%        0.55        5.6%      0.58       5.1%
   Depreciation and
     amortization                 0.31        3.4%      0.13       1.2%        0.24        2.5%      0.12       1.0%
                               ---------- --------- ---------- ---------    ---------- --------- ---------- ---------

Total operating expenses          9.49      103.6%      9.29      87.2%        9.58       97.0%     9.09       80.3%
                               ========== ========= ========== =========    ========== ========= ========== =========


Total ASMs (000s)              1,010,091            1,071,714               3,359,245            3,162,972


Revenues

       Our revenues are highly sensitive to changes in fare levels.
Competitive 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 and the economy.  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.

       Effective  February 17, 2002,  the DOT will either be providing security
services through the newly established Transportation Security Agency or will
be assuming many of the contracts and overseeing those security vendors that
we and other carriers use to provide airport security services.  Additionally,
the DOT will reimburse us, as well as all other air carriers, for certain
security services provided by our own personnel.  In order to be able to
provide and fund these security services, the DOT has imposed a $2.50 security
service fee per passenger segment flown, not to exceed $5.00 for one-way
travel or $10.00 for a round trip, on tickets purchased on and after February
1, 2002.  We are unable to predict the effect  that these additional fees may
have on future fare or passenger traffic levels.

       Our average fare for the nine months ended December 31, 2001 and 2000
was $133 and $146, respectively, a decrease of 8.9%.  We believe that the
decrease in the average fare during the nine months ended December 31, 2001
from the prior comparable period was principally a result of the slowing
economy.  During the nine months ended December 31, 2000, we experienced an
increase in the number of passengers that a major competitor directed to us
because of delays and cancellations that airline experienced.  We estimate
that the additional passenger traffic received from that airline had the
effect of increasing our load factor and average fare for the nine months
ended December 31, 2000 by approximately  .7 load factor points and .2%,
respectively.

       Passenger Revenues.  Passenger revenues totaled $325,092,000 for the
nine months  ended  December  31, 2001  compared  to  $350,690,000 for the nine
months ended December 31, 2000, or a decrease of 7.3%, on increased capacity
of 196,273,000 ASMs or 6.2%.  Passenger revenues totaled $90,621,000 for the
three months ended  December 31, 2001 compared to $111,319,000 for the three
months ended December 31, 2000, or a decrease of 18.6%, on decreased capacity
of 61,623,000 ASMs or 5.7%.  The number of revenue passengers carried was
2,271,000 for the nine months ended December 31, 2001 compared to 2,289,000
for the nine months ended December  31, 2000 or a decrease of less than 1%.
The number of revenue passengers carried was 623,000 for the three  months
ended December 31, 2001 compared to 750,000 for the three months ended
December 31, 2000 or a decrease of 16.9%.  We had an average of 27.2 aircraft
in our fleet during the nine months ended December 31, 2001 compared to an
average of 24.3 aircraft during the nine months ended December 31, 2000, an
increase of 11.9%.  RPMs for the nine months ended December  31, 2001 were
2,038,888,000 compared to 2,113,107,000 for the nine months ended December 31,
2000, a decrease of 3.5%.  We believe that our cancelled flights due to the
terrorist attacks and weather had an adverse effect on our revenue during the
period.

       Cargo Revenues.  Cargo  revenues, consisting of revenues from freight
and mail service, totaled $4,807,000 and $5,375,000, a decrease of 10.6%, for
the nine months ended December 31, 2001 and 2000, respectively, representing
1.4% and 1.5%, respectively, of  total revenues.  Cargo revenues totaled
$1,269,000 and $2,102,000, a decrease of 39.6% for the three months ended
December 31, 2001 and 2000, representing 1.4% and 1.8%, respectively, of total
revenues.  We believe that our cargo revenues have been impacted by the
slowing economy as well as the flight cancellations as a  result of the
terrorist attacks, and the limitations placed on cargo service as a result of
that.  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.  Other revenues,  comprised principally of interline
handling fees, liquor sales and excess baggage fees, totaled $1,980,000 and
$2,039,000,  each .6% of total revenues for the nine months ended  December 31,
2001 and 2000, a decrease of 2.9%.

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 $321,896,000 and $287,475,000 for the nine months ended December 31, 2001
and 2000 and represented  97.0% and 80.3% of revenue, respectively.  Total
operating expenses for the three months ended December 31, 2001 and 2000 were
$95,849,000 and $99,550,000 and represented 103.6% and 87.2% of revenue,
respectively.  Operating  expenses  increased as a percentage of revenue during
the three and nine months ended  December 31, 2001 as a result of the 18.6% and
7.3% decrease in passenger revenues, respectively, associated with the slowing
economy and the September 11 terrorist attacks.  For a discussion of steps we
have  taken to reduce our expenses as a result of the  September 11,  2001
terrorist attacks, see " Liquidity and Capital Resources" below.

       Flight Operations.   Flight operations expenses of $141,696,000 and
$132,090,000 were 42.7% and 36.9% of total revenue for the nine months ended
December 31, 2001 and 2000, respectively.  Flight operations expenses  of
$41,000,000 and $48,003,000 were 44.3% and 42% of total revenue for the three
months ended December 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.  Included in flight
operations expenses during the three and nine months ended December 31, 2001
are approximately $264,000 and $2,007,000, respectively, for Airbus training
and related travel 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 expense of $46,955,000 for 51,954,000 gallons used and $53,278,000 for
49,595,000 gallons used resulted in an average fuel cost of 90.4(cent)and $1.07
per  gallon, for the nine months ended December 31, 2001 and 2000,
respectively.  Aircraft fuel expense represented 33.1% and 40.3% of total
flight operations expenses or 14.2% and 14.9% of total revenue for the nine
months ended December 31, 2001 and 2000, respectively.  Aircraft fuel expense
of $11,820,000 for 15,060,000 gallons used and $20,550,000 for 16,900,000
gallons used resulted in an average fuel expense of 78.5(cent)and $1.22 per gallon
for the three months ended  December 31, 2001 and 2000, respectively.  Aircraft
fuel costs represented 28.8% and 42.8% of total flight operations expenses for
the three months ended December 31, 2001 and 2000,  respectively,  or 12.8% and
18% of total revenue.  Fuel prices are subject to change weekly as we do not
purchase supplies in advance for inventory.  Fuel consumption for the nine
months ended December 31, 2001 and 2000 averaged 773 and 801 gallons per block
hour, respectively.  Fuel consumption for the three months ended December 30,
2001 and 2000 averaged 725 and 802 gallons per block hour, respectively.  Fuel
consumption decreased from the prior comparable periods because of a decrease
in our load  factors,  the more fuel-  efficient Airbus aircraft added to our
fleet,  and a newly developed fuel conservation  program  implemented in August
2001.  Fuel consumption decreased 9.6% during the three months ended December
31, 2001 from the prior comparable period also as a result of decreased use of
the Boeing 737-200 aircraft,  which have a higher fuel burn rate than the
Boeing 737-300 and Airbus A319  aircraft.   During the nine months ended
December 31, 2000, a major competitor directed passengers to us because of an
increase in the number of delays and cancellations that airline experienced.
Because of this we increased the speeds we flew our aircraft to mitigate
flight delays,  which increased our fuel burn rate.  We do not hedge our fuel
expense exposure.

       Aircraft  lease  expenses  totaled  $48,590,000  (14.6% of total revenue)
and  $45,472,000  (12.7% of total  revenue) for the nine months  ended  December
31, 2001 and 2000,  respectively,  an increase of 6.9%.  Aircraft lease expenses
totaled  $16,148,000  (17.4% of total revenue) and  $15,570,000  (13.6% of total
revenue) for the three months  ended  December 31, 2001 and 2000,  respectively,
an  increase  of  3.7%.  The  increase  is  largely  due to an  increase  in the
average  number of aircraft to 27.2 from 24.3, or 11.9%,  during the nine months
ended  December  31, 2001  compared to the same period in 2000.  During the nine
months ended  December 31, 2001, to minimize the number of flight  cancellations
while our  aircraft  were being  repaired  following  hail  damage,  we incurred
short-term  lease  expenses  of  $630,000  for  aircraft  to  partially  replace
capacity of the damaged  aircraft.  During the nine months  ended  December  31,
2001,  we also added our first  three  purchased  Airbus  aircraft to our fleet.
These aircraft do not have lease expenses associated with them.

        Aircraft insurance expenses totaled $2,453,000 (.7% of total revenue)
for the nine months ended December 31, 2001.  Aircraft insurance expenses for the
nine months ended December 31, 2000 were $2,448,000 (.7% of total revenue).
Aircraft insurance expenses were .12(cent)per RPM for each of the nine months
ended December 31, 2001 and 2000, respectively.  Aircraft insurance expenses
totaled $608,000 (.7% of total revenue) for the three months ended December
31, 2001.  Aircraft insurance expenses for the three months ended December 31,
2000 were $831,000 (.7% of total revenue).  Aircraft insurance expenses were
 .12(cent)per RPM for each of the three months ended December 31, 2001 and 2000.
Aircraft insurance expenses during the three and nine month periods ended
December 31, 2001 have not been fully impacted by the result of the terrorist
attacks on September 11, 2001.  Shortly after the attacks, we were required to
purchase two supplemental war risk insurance policies.  Only one of these
policies is eligible for reimbursement by the Federal government.  We expect
these expenses to significantly increase beginning in the fiscal year ending
March 31, 2003.  The Act allows the Secretary of Transportation to reimburse
airlines for a period of up to 180 days after enactment of the Act for the
incremental increases in war risk insurance premiums as a result of the
September 11, 2001 terrorist attacks.  While we are currently being partially
reimbursed for such increased premiums, reimbursement is scheduled to terminate
on March 20, 2002.  Upon the renewal of our hull and liability insurance policy
on June 7, 2002, we expect a significant increase in these premiums.

       Pilot and flight attendant salaries before payroll taxes and benefits
totaled $23,693,000 and $16,126,000,  or 7.3% and 4.6% of passenger revenue,
for the nine months ended December 31, 2001 and 2000, respectively, an
increase of 46.9%.  Pilot and flight attendant salaries before  payroll taxes
and benefits totaled $7,512,000 and $5,804,000 or 8.3% and 5.2% of passenger
revenue for the three months ended December 31, 2001 and 2000, respectively,
an increase of 29.4%.  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. In May 2001,  we agreed to  reconsider  the current
rates of pay  under  our  collective  bargaining  agreement  with  our  pilots.
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 competitors.  We submitted a revised  pilot pay proposal
to the Frontier Airline Pilots Association  ("FAPA"), and its members accepted
this proposal and was made effective May 2001.  Pilot and  flight attendant
compensation also increased as a result of an 11.9% increase in the average
number of aircraft in service,  an increase of 8.6% in block hours,  a general
wage increase in flight attendant salaries,  and additional crews required to
replace those attending training on the Airbus equipment.  During the three
months ended December 31, 2001,  FAPA agreed to an 11% decrease in salaries for
all pilots in lieu of furloughs as a  result of the September  11,  2001
terrorist attacks.  The pilot salary levels were reinstated effective January
1, 2002.

       Aircraft and Traffic Servicing.   Aircraft and traffic servicing
expenses were $52,293,000 and $43,768,000 (an increase of 19.5%) for the nine
months ended December 31, 2001 and 2000, respectively, and represented 15.8%
and 12.2% of total revenue.  Aircraft and traffic servicing expenses were
$16,492,000 and $15,280,000 (an  increase of 7.9%) for the three months ended
December 31, 2001 and 2000, respectively, and represented 17.8% and 13.4% 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 reaccomodate passengers as well as hotel, meal and other
incidental expenses.  Aircraft and traffic servicing expenses increased with
the addition of new cities and departures to our route system.  During the
nine months ended  December 31, 2001, our departures increased to 30,389 from
28,656 for the nine months ended December  31,  2000, or 6.0%.  Aircraft and
traffic servicing expenses were $1,721 per departure for the nine months ended
December 31, 2001 as compared  to $1,527 per departure for the nine  months
ended December 31, 2000,  or an increase of $194 per departure.  During the
three months ended December 31, 2001,  our departures decreased to 9,469 from
9,755 or 2.9%.  Aircraft and traffic servicing expenses were $1,742  per
departure for the three months ended December 31, 2001 as compared to $1,566
per departure for the three months ended December 31, 2000, or an increase of
$176 per  departure.  Aircraft  and traffic  servicing  expenses increased as a
result of expenses associated with deicing in April 2001 as a result of an
unusual spring blizzard, a general wage rate increase,  and an increase in
interrupted trip expenses as a result of the number of flight cancellations
related to the aircraft out of service for repair of hail damage.
Additionally, our security expenses increased substantially during the three
months ended December 31, 2001,  or approximately 62% greater than those
incurred during the three months ended September 30, 2001, as a result of the
September 11, 2001 terrorist attacks.  Additionally, due to the number of
flight cancellations as a result of weather conditions,  as well as the
September 11 terrorist attacks,  the number of departures were less than we had
planned,  which caused our fixed costs to be spread over fewer departures and,
we believe, distorted our expenses per departure for the three and nine months
ended December 31, 2001.

       Effective February 17, 2002,  the DOT will either be providing security
services through the newly established Transportation Security Agency or will
be assuming many of the contracts and overseeing those security vendors that
we and other carriers use to provide airport security services.  Additionally,
the DOT will reimburse us, as well as all other air carriers, for certain
security services provided by our own personnel.  In order to be able to
provide and fund these security  services,  the DOT has imposed a $2.50 security
service fee per passenger segment flown, not to exceed $5.00 for one-way
travel or $10.00 for a round trip, on tickets purchased on and after February
1, 2002. As a result of these actions, we expect our expenses associated with
security services to be significantly reduced after February 17, 2002.  During
the three and nine months ended December 31,  2001, total security related
expenses approximated $1,221,000 and $2,537,000, respectively.

       Maintenance.  Maintenance expenses of $55,684,000 and $48,517,000 were
16.8% and 13.5% of total revenue for the nine months ended December 31, 2001
and  2000, respectively, an increase of 14.8%.  Maintenance expenses of
$17,320,000 and $15,927,000 were 18.7% and 13.9% of total revenue for the three
months ended December  31, 2001 and 2000, respectively, an increase of 8.7%.
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 is accrued monthly with variances from accruals recognized at the time
of the check.  Maintenance cost per block hour for the nine months ended
December 31, 2001 and 2000 were $829 and $784, respectively.  Maintenance cost
per block hour for the three months ended December 31, 2001 and 2000 were $833
and $756, respectively.  During the three months ended December 31, 2001,  we
wrote down the carrying value of spare parts that support the Boeing 737-200
aircraft by $1,512,000  as a result of diminished demand for that aircraft
type.  Excluding the effect of this adjustment, our maintenance cost per block
hour would have been $761 for the three months ended December 31, 2001.
Maintenance costs per block hour increased as a result of hail damage to five
of our aircraft during the nine months ended December 31, 2001, estimated at
$491,000 ($7 per block  hour), excluding in house labor, and a general wage
rate increase effective April 2001.  During the nine months ended December 31,
2001, we incurred approximately $881,000 for Airbus training or $13 per block
hour. The increase in our maintenance costs was offset by a heavy maintenance
check performed on the airframe of one of our leased aircraft during the three
months ended December 31, 2001, which will be reimbursed by the aircraft
owner, thereby reducing our labor costs by $543,000, or $26 per block hour for
the three months ended  December 31, 2001.  Also, during the three months ended
December 31, 2001, we decreased the number of our departures as a result of
decreased consumer demand for air travel and reduced the utilization of our
Boeing 737-200 aircraft, which are more costly to maintain.  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 transition.  Additionally, due to the flight cancellations as a
result of the September 11 terrorist attacks and these weather conditions, our
block hours were less than we had planned,  which caused our fixed costs to be
spread over fewer block hours and,  we believe,  distorted our cost per block
hour for the three months and nine months ended December 31, 2001.

       Promotion and Sales.  Promotion and sales expenses totaled $45,437,000
and $41,042,000  and were 13.7% and 11.5% of total revenue for the nine months
ended December 31, 2001 and 2000, respectively.  Promotion and sales expenses
totaled $12,526,000 and $13,221,000 and were 13.5% and 11.6% of total revenue
for the three  months ended December  31, 2001 and 2000, respectively.  These
include advertising expenses, telecommunications expenses, wages and benefits
for reservationists and reservations supervision as well as marketing
management and sales personnel, credit card fees, travel agency commissions
and computer reservations costs.  During the nine months ended December 31,
2001,  promotion and sales expenses per passenger increased to $20.01 compared
to $17.93 for the nine months ended  December 31,  2000.  Promotion and sales
expenses increased largely as a result of an increase in advertising expenses
to stimulate traffic  in a slowing economy.  Additionally, we have incurred
costs associated with the start-up and promotion of our frequent flyer program
as well as the redesign of our web site.

       General and  Administrative.  General and administrative expenses for
the nine months ended December 31, 2001 and 2000 totaled $18,599,000 and
$18,384,000 and were 5.6% and 5.1% of total revenue, respectively, an increase
of 1%.  General  and  administrative expenses for the three months ended
December 31, 2001 and 2000 totaled $5,390,000 and $5,738,000 and were 5.8% and
5.0% of total revenue, respectively,  a decrease of 6.1%.  During the nine months
ended December 31, 2001 and 2000, we accrued for employee performance bonuses
totaling $1,559,000 and  $5,615,000, respectively, which were .5% and 1.6% of
total revenue, a decrease of 72.2%.  As a result of the terrorist attacks of
September 11, 2001, w  temporarily suspended the bonus program from  September
11,  2001 through  December  31, 2001.  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 expenses including worker's compensation, and write-offs
associated with credit card and check fraud are als  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 2,300 in December 2000 to approximately 2,440 in
December 2001, an increase of  6.1%.  Also,  the cost of health  insurance
premiums increased to $2,571,000 during the nine months ended December 31,
2001 from $1,646,000 during the prior comparable period,  an increase of
56.2%.  Because of the increase in  personnel,  our health insurance benefits
expenses and accrued vacation expense increased accordingly.

       Depreciation and Amortization. Depreciation and amortization expenses
of $8,187,000 and $3,674,000 were 2.5% and 1.0% of total revenue, respectively,
for the nine months ended December 31, 2001 and 2000, an increase of 122.8%.
These  expenses  include  depreciation  of  aircraft and aircraft components,
office equipment, ground station equipment and other fixed assets.
Depreciation expense increased over the prior year as a result of depreciation
expense associated with our first three purchased  aircraft, an increase in our
spare parts inventory including spare engines and parts for the Airbus fleet,
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
$13,655,000  for the nine months ended  December 31, 2001 compared to $5,898,000
for the nine months ended December 31, 2000.  Interest income decreased to
$3,473,000 from $6,002,000 during the nine months ended December 31, 2001 from
the prior period due to a decrease in cash balances as a result of cash used
for pre-delivery payments for future purchases of aircraft, spare parts
inventories largely for the new Airbus fleet and a decrease in interest
rates.  Interest expense increased to $2,118,000 for the nine months ended
December 31, 2001 from $56,000 as a result of interest expense associated with
the financing of the first three purchased Airbus aircraft received in May,
August and September 2001.

       During the three and nine months ended December 31, 2001, we recognized
$3,766,000 and $12,568,000 of a federal grant as a result of the Act to offset
direct and incremental losses we experienced as a result  of the terrorist
attacks on September 11, 2001.  We received a total of $17,538,000 as of
December 31, 2001;  the remaining $4,970,000 represents amounts received in
excess of estimated allowable direct and incremental losses incurred from
September 11, 2001 to December 31, 2001 and is included as a deferred
liability on our balance sheet.

       Income Tax Expense.  We accrued income taxes of $7,712,000 and
$29,601,000 at 38.8% and 38.7% of income during the nine months ended
December 31, 2001 and 2000, respectively.  During the three and nine months
ended December 31, 2001,  we recorded a credit to income tax expense totaling
$886,000 and $1,327,000, respectively, and revised our effective tax rate from
38.25% to 38.8%.  During the year ended March 31, 2001,  we accrued income tax
expense at the rate of 38.7% which was greater than the actual effective tax
rate of 37.6% determined as a result of the completion and filing of the
income tax returns in December 2001.  During the nine months ended December
31, 2001,  we also recorded a $441,000 reduction to income tax expense as a
result of a review and revision of state tax apportionment factors used in
filing our amended state tax returns for 2000.

Liquidity and Capital Resources

       Our liquidity depends to a large extent on the number of passengers who
fly with us and the fares we charge.  Also, we depend on financing to acquire
many of our aircraft, including 12 aircraft scheduled for delivery by 2005. We
incurred $72,000,000 in debt during the nine months ended December 31, 2001 to
finance three Airbus aircraft.  We seek to control our operating costs, but our
airline, like other airlines, has many fixed costs.

       Our balance sheet reflected cash and cash equivalents and short-term
investments of $91,835,000 and $111,251,000 at December 31, 2001 and March 31,
2001, respectively.   At December  31,  2001, total current assets were
$176,585,000 as compared to $132,895,000 of total current liabilities,
resulting in working capital of $43,690,000.  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.  The decrease in our
cash and working capital from March 31, 2001 is largely a result of cash used
by investing activities, principally the purchase of our first three Airbus
aircraft and spare parts for the new Airbus fleet.

       Cash provided by operating activities for the nine months ended
December 31, 2001 was $29,429,000.  This is attributable to our net income for
the period, increase in depreciation expense, increase in deferred tax
expense, decreases in trade receivables and increases in other accrued
expenses, federal grant monies including those received in excess of our
direct and incremental expenses allowable under the Act, and accrued
maintenance expenses, offset by increases in restricted investments, security,
maintenance and other deposits, and decreases in accounts payable and air
traffic liability.  The increase in other accrued expenses was largely a
result of the deferral of payment permitted by the Act of excise taxes
totaling approximately $8,819,000 as of December 31,  2001.  These taxes were
paid in full on January 15, 2002.  Also, included in cash provided by
operations is $4,970,000 of amounts received in excess of allowable direct and
incremental losses reimbursable under the Act incurred from September 11, 2001
to December 31,  2001.  This amount also is included as a liability on our
balance sheet as of December 31, 2001.  Cash provided by operating activities
for the nine months ended December 31, 2000 was $52,359,000.   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 used by investing activities for the nine months ended December
31, 2001 was $121,522,000.  Net aircraft lease and purchase deposits increased
by  $2,995,000.  During the nine months ended December 31, 2001, we exercised
purchase options for three Airbus A319 aircraft, and advanced their delivery
dates from the third and fourth calendar quarters of 2004 to May and June
2002, which required deposits of $9,603,000.  We also used $119,459,000 for
the  purchase of our first three Airbus aircraft and to purchase rotable
aircraft components to support the Airbus fleet, as well as a spare engine for
the Boeing fleet, leasehold improvements for our new reservations center,
computer software for the new maintenance and accounting systems, and other
general equipment purchases.  Cash used by investing activities for the nine
months ended December 31, 2000 was $16,862,000.   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 nine months ended December 31, 2000, we made cash
security deposits and aircraft pre-delivery  payments totaling $16,432,000 and
an increase in restricted investments totaling $3,581,000 associated with two
leased Boeing 737-300 aircraft delivered during the nine months ended December
31, 2000, the 16 Airbus aircraft we have agreed to lease, and the 12 Airbus
aircraft we have agreed to purchase.  During the nine months ended December
31, 2000, we used $10,610,000 for capital expenditures for rotable aircraft
components, maintenance equipment and tools, aircraft leasehold costs and
improvements, computer equipment and software for enhancements to our internet
booking site, our reservations system and a replacement aircraft maintenance
tracking system.

       Cash  provided  by  financing   activities  for  the  nine  months  ended
December 31, 2001 and 2000 was $72,676,000 and $927,000, respectively. During
the nine months ended December 31, 2001, we borrowed $72,000,000 to finance
the purchase of our first three Airbus aircraft, of which $1,163,000 was
repaid during the nine months ended December 31, 2001.  During the nine months
ended December 31, 2001 and 2000, we received $1,916,000 and $1,010,000,
respectively, from the exercise of common stock options and warrants.

Contractual Obligations

       The following table summarizes our contractual obligations as of
December 31, 2001:

                                        Less than         1-3            4-5           After
                                          1 year         years          years         5 years          Total
                                     ------------------------------------------------------------------------------

Long-term debt (1)                  $   3,169,914  $   6,968,597  $   7,946,144  $   52,752,055 $    70,836,710
Capital lease obligations                 169,470         83,780                                        253,250
Operating leases (2)(4)                78,616,875    156,155,488    110,719,734     381,085,553     726,577,650
Unconditional purchase obligations(3) 125,200,000    222,100,000                                    347,300,000
                                     ------------------------------------------------------------------------------
Total contractual cash obligations  $ 207,156,259  $ 385,307,865  $ 118,665,878   $ 433,837,608 $ 1,144,967,610
                                     ==============================================================================


(1)  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 has a term of
     120 months and  is payable in equal monthly installments, including
     interest, payable in arrears. The loans are secured by the aircraft.
     The credit agreement contains certain events of default,  including events
     of default for failure to make payments when due or to comply with
     covenants in the agreement.  As of December 31, 2001,  we had borrowed
     $72,000,000 for purchase of these three Airbus aircraft.  Each loan
     provides for monthly principal and interest payments ranging from
     $205,579 to $218,109,  bears interest with rates ranging from 6.05% to
     6.71%, averaging 6.43% for the three aircraft loans, with maturities in
     May, August, and September 2011, at which time a balloon payment
     totaling $10,200,000 is due with respect each aircraft loan.

(2)  As of December 31, 2001,  we lease two Airbus 319 type aircraft and 24
     Boeing 737 type aircraft under operating leases with expiration dates
     ranging from 2002 to 2013.  Under these leases,  we are required to make
     cash security deposits or issue letters of credit representing
     approximately two months of lease payments per aircraft.  At December
     31, 2001, we had made cash security deposits and had arranged for
     issuance of letters of credit totaling $4,881,000 and $9,489,000,
     respectively.  Accordingly, our restricted cash balance includes
     $9,489,000 that collateralizes the outstanding letters of credit.
     Additionally, we make deposits to cover the cost of major scheduled
     maintenance overhauls of these aircraft.  These deposits are based on the
     number of flight hours flown and/or flight departures and are not
     included as an obligation in the above schedule.  At December 31, we had
     remaining unused maintenance deposits of $48,105,000.

     As a complement to our Airbus purchase agreement,  in April and May 2000
     we signed two agreements to lease 16 new Airbus aircraft, two of which
     had been delivered to us as of December  31, 2001 for a term of 12 years.
     As of December 31, 2001,  we had made cash security deposits on the
     remaining 14 aircraft we agreed to lease and had arranged for issuance of
     letters of credit totaling $400,000 and $2,676,700, respectively, to
     secure these leases.

     We also lease office and hangar space, spare engines and office equipment
     for our headquarters and airport facilities,  and certain other equipment
     with expiration dates ranging from 2002 to 2014.  In addition we also
     lease certain airport gate facilities on a month-to-month  basis.  Amounts
     for leases that are on a  month-to-month  basis are not included as an
     obligation in the above schedule.

     We expect, in the near future,  to embark on a  program to expand our
     gates, ticket counter and back office facilities at DIA. The actual cost
     of completing such a plan has yet to be determined.

(3)  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.  Included in the
     purchase commitment amount are amounts for spare aircraft components to
     support the aircraft.  We are not under any contractual obligations with
     respect to spare parts.  We have agreed to firm purchases of 15 of these
     aircraft,  and have options to purchase up to an additional 14 aircraft.
     During the nine months ended December 31, 2001,  we took delivery of the
     first three purchased aircraft.   Under the terms of the purchase
     agreement, we are required to make scheduled pre-delivery payments for
     these aircraft.  These payments are non-refundable  with certain
     exceptions.  As of December 31, 2001, we had made pre-delivery payments
     on future deliveries totaling $30,582,000  to secure these aircraft and
     option aircraft.  As of February 2002, it appears likely that delivery of
     the Airbus A318 aircraft, as powered with the Pratt and Whitney engines we
     have selected, will be delayed until as late as mid-2006.  We have agreed
     to purchase five of these aircraft and lease a sixth,  all of which were
     originally scheduled to be delivered to us between February 2003 and
     August 2004. Purchase amounts for the Airbus A318 aircraft are included
     in the purchase commitment amounts.  As of December 31, 2001, we have
     made pre-delivery payments for these aircraft totaling $4,099,000.  As of
     February 10, 2002 we have deferred scheduled pre-delivery payments
     totaling $2,066,000  as a result of the anticipated delay of these
     aircraft.  In view of the likely delay in delivery of these aircraft to
     us, we are currently evaluating the alternatives that may be available to
     us in order to maintain our planned capacity increases including the
     substitution of Airbus A319 aircraft for Airbus A318s and the possibility
     of selecting a different engine type for the Airbus A318.  We do not
     expect the delay in delivery of the Airbus A318 to have a material
     adverse effect on us. We expect to be operating up to 37 purchased and
     leased Airbus aircraft, by the first quarter of calendar 2005.

     As discussed  below,  we have secured a financing commitment for the first
     three purchased Airbus A319 aircraft.  To complete the purchase of the
     remaining aircraft we must secure additional 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, leveraged lease arrangements,
     government guaranteed financing, and a public debt or stock offering.
     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,
     particularly in view of the September 11 terrorist attacks, 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.

(4)  Included in this table are monthly rental payments for two 737-200
     aircraft with lease termination dates of September 2004 and November
     2004.  As of February 14, 2002,  we signed an amendment to these lease
     agreements whereby these two aircraft will be returned to their lessor
     approximately 22 months sooner than their respective original lease termination
     dates.  We have paid the lessor approximately $3,700,000 and have
     committed to pay at the early return date as much as an additional
     $1,200,000 for the right to early return these two aircraft.  We expect to
     record in our fourth quarter ended March 31, 2002 an unusual charge against
     earnings of approximately $3,100,000 net of taxes to reflect this transaction.





Commercial Commitments

       As we enter new markets,  increase the amount of space leased,  or add
leased  aircraft,  we are often  required to provide the lessor with a letter of
credit,  bond, or cash security  deposits.  These  generally  approximate  up to
three  months of rent and fees.  As of December  31,  2001,  we had  outstanding
letters of credit,  bonds,  and cash  security  deposits  totaling  $13,145,000,
$2,351,000,   and   $5,457,000,   respectively.   In   order   to   meet   these
requirements,  we have a credit agreement with a financial  institution,  for up
to  $1,500,000,  which expires  August 31, 2002,  and another  credit  agreement
with a  second  financial  institution  for  up to  $20,000,000,  which  expires
November  30,  2002.  These  credit lines can be used solely for the issuance of
standby  letters of credit.  Any amounts drawn under the credit  agreements  are
fully   collateralized  by  certificates  of  deposit,   which  are  carried  as
restricted  investments on our balance  sheet.  As of December 31, 2001, we have
drawn  $13,145,000  under these credit  agreements for standby letters of credit
that  collateralize  certain leases.  In the event that these credit  agreements
are not renewed  beyond their present  expiration  dates,  the  certificates  of
deposit  would be  redeemed  and paid to the  various  lessors as cash  security
deposits  in lieu of standby  letters of credit.  As a result  there would be no
impact on our  liquidity  if these  agreements  were not  renewed.  In the event
that the surety  companies  determined  that issuing  bonds on our behalf were a
risk  they  were no  longer  willing  to  underwrite,  we would be  required  to
collateralize  certain of these lease  obligations  with  either  cash  security
deposits or standby letters of credit, which would decrease our liquidity.

       We use Airlines  Reporting  Corporation  ("ARC") to provide reporting and
settlement  services  for travel  agency sales and other  related  transactions.
In order  to  maintain  the  minimum  bond (or  irrevocable  letter  of  credit)
coverage  of  $100,000,  ARC  requires  participating  carriers  to  meet,  on a
quarterly  basis,  certain  financial  tests  such as, but not  limited  to, net
profit margin  percentage,  working  capital ratio,  and percent of debt to debt
plus  equity.  As of  December  31,  2001,  we met  these  financial  tests  and
presently  are only  obligated  to provide  the  minimum  amount of  $100,000 in
coverage  to ARC.  If we  were to fail  the  minimum  testing  requirements,  we
would be  required to  increase  our  bonding  coverage to four times the weekly
agency net cash sales  (sales net of refunds and agency  commissions).  Based on
net  cash  sales  remitted  to us for the  week  ended  February  8,  2002,  the
coverage  would be increased to  $1,700,000  if we failed the tests.  If we were
unable  to  increase  the  bond  amount  as  a  result  of  our  then  financial
condition,  we  could  be  required  to issue a letter  of  credit,  that  would
restrict cash in an amount equal to the letter of credit.

       In attempting to maximize the efficiency of our fleet  replacement  plan,
we continue to endeavor to return  certain  leased B737 aircraft to their owners
on dates  before  the  currently  scheduled  lease  expiration  dates  for these
aircraft.  We  returned  one  Boeing  aircraft  during  the  nine  months  ended
December 31, 2001.  If we remove these  aircraft  from service and are unable to
negotiate  earlier  return dates with the  aircraft  owners,  or sublease  these
aircraft to third parties,  we may incur additional  expense,  or pay the lessor
all or a  portion  of the  remaining  lease  payments,  that  could  result in a
charge against earnings in the period in which the agreement was signed.  We have
entered into an agreement to early return two 737-200 aircraft to the lessor, for
which we expect to record an unusual change against earnings in our fiscal fourth
quarter ended March 31, 2002.  [see note (4) above]

       We expect to incur  significant  costs,  as well as realize  certain cost
savings,  in connection  with our transition from a Boeing to an Airbus aircraft
fleet.  Reference  is made to  Exhibit  99.1  filed with our report on Form 10-Q
for the quarter  ended  September  30, 2001 for a discussion  of these costs and
savings.

Air Transportation Safety and Stabilization Act

       As a result of the  September  11, 2001  terrorist  attacks on the United
States,  on September 22, 2001  President  Bush signed the Act into law. The Act
includes  for all  U.S.  airlines  and air  cargo  carriers  the  following  key
provisions:  (i) $5  billion  in cash  compensation,  of which  $4.5  billion is
available  to  commercial  passenger  airlines  and is  allocated  based  on the
lesser of each  airline's  share of available  seat miles during  August 2001 or
the direct and  incremental  losses  (including  lost revenues)  incurred by the
airline  from  September  11, 2001 through  December  31, 2001;  (ii) subject to
certain  conditions the availability of up to $10 billion in federal  government
guarantees  of  certain  loans  made to air  carriers  for  which  credit is not
reasonably  available as determined by a newly  established  Air  Transportation
Stabilization  Board;  (iii) the authority of the Secretary of Transportation to
reimburse  air carriers  (which  authority  expires 180 days after the enactment
of the Act) for  increases  in the cost of war risk  insurance  over the premium
in effect for the period  September 4, 2001 to September  10, 2001;  (iv) at the
discretion  of the  Secretary of  Transportation,  a $100  million  limit on the
liability  of any  air  carrier  to  third  parties  with  respect  to  acts  of
terrorism  committed  on or to such  air  carrier  during  the  180  day  period
following  enactment of the Act;  and (v) the  extension of the due date for the
payment by air carriers of certain  payroll and excise taxes until  November 15,
2001 and January 15, 2002, respectively.

       We were entitled to receive up to  approximately  $20,200,000 from the $5
billion in authorized  grants,  of which $17,538,000 was received as of December
2001. We recognized  $3,766,000  and  $12,568,000  of the grant during the three
and nine months  ended  December  31,  2001,  which is included in  nonoperating
income and expenses.  The remaining  $4,970,000  represents  amounts received in
excess of allowable  direct and  incremental  losses incurred from September 11,
2001 to December  31, 2001 and is included as a liability  on our balance  sheet
as of December  31, 2001.  As of December 31, 2001,  we had deferred the payment
of $8,819,000 in excise  taxes,  as permitted by the Act.  These taxes were paid
on January 15, 2002.

       We may apply under the Act for a  guaranteed  loan,  although we have not
determined  whether we will  apply or the  nature or amount of our  application.
A newly  created Air  Transportation  Stabilization  Board has the  authority to
set all terms and conditions,  including  determining the amounts and recipients
of the  loans.  The  federal  government  may  receive as  collateral  an equity
stake in the  airlines  receiving  federal  loan  guarantees.  If we apply for a
guaranteed  loan,  we may  also be  required  to  obtain  concessions  from  key
constituents,  including  aircraft lessors,  vendors and other creditors.  There
can be no assurance that an application by us would be successful;  however,  we
believe that our  inability to secure a guaranteed  loan under the  provision of
the Act would not have a material adverse effect on our business or operations.

Impact of the September 11, 2001  Terrorist  Attacks,  Our Response,  and Fourth
     Quarter Outlook

     Among the effects  experienced  by us from the September 11, 2001 terrorist
attacks  have  been  significant  flight  disruption  costs  caused by the FAA's
temporary  grounding  of  the  U.S.  airline  industry's  fleet,   significantly
increased  security,  insurance  and other costs,  significantly  higher  ticket
refunds and  significantly  reduced  load  factors.  These and other  associated
factors  affected our results of operations  and liquidity  during the last four
months of 2001.  Further terrorist  attacks using commercial  aircraft in flight
could result in another  grounding of our fleet,  and could result in additional
reductions  in load  factor and yields,  along with  increased  ticket  refunds,
security and other costs.  The worldwide  aviation  insurance  market may not be
able to sustain another  terrorist  attack on the same magnitude as the event of
September  11th  without  further  material  increases in premiums or cutback in
coverages.  In addition,  terrorist attacks not involving  commercial  aircraft,
or the general increase in hostilities  relating to reprisals  against terrorist
organizations  or otherwise,  could result in decreased  load factors and yields
for airlines, including us, and increased costs.

       Immediately  following  the  terrorist  attacks on September 11, 2001, we
took several  steps to reduce our  operating  expenses.  We reduced our capacity
by  approximately  20%. We also reduced our costs by offering  voluntary  leaves
of absences and early  retirements,  and by  furloughs,  totaling  approximately
405  employees;  by reducing  salaries  for company  officers by 20 to 40%,  and
reducing  the salaries of 650 other  employees  by three to 15%; by  eliminating
food service  provided on our flights;  and by  deferring  nonessential  capital
spending and  significantly  reducing all nonessential  operating  expenses.  We
also  have  experienced  lower  fuel  prices  since the end of  September  2001.
These  cost  savings  were  offset  by  increased   security  costs  and  higher
insurance  premiums.  We have not altered the Airbus  delivery  schedule and our
intent  is to  continue  with  the  fleet  transition  plan in  place  prior  to
September  11,  2001,  subject to the likely  delay in the  delivery of the A318
model aircraft discussed above.

       As of March 5, 2002,  we expect to restore  service to our  pre-September
11, 2001  levels.  As of February 10, 2002,  we had recalled  approximately  360
employees  as a result  of the  increases  in  capacity,  that  were  phased  in
beginning  November 15, 2001,  additional  personnel  requirements  for enhanced
security  measures,  and  maintenance  personnel  to provide  heavy  maintenance
checks on the  additional  aircraft  that will fly the  increased  schedule.  In
mid December  2001,  we restored  essentially  all of our pre September 11, 2001
food   service.   During  the  three   months  ended   December  31,  2001,   we
reinstated  salaries for all employees  except pilots,  director level employees
and  officers.  Pilots,  officers and director  level  employees'  salaries were
reinstated to their pre-September 11, 2001 levels effective January 1, 2002.

       After the events of September  11, 2001,  many  domestic  airlines  began
working  with the FAA to  increase  the  security of aircraft  flight  decks.  A
variety of security  enhancements were introduced,  ranging from Level 1 through
Level  4.  Level 4 has  the  most  comprehensive  enhancements.  We  also  began
exploring   additional   security   measures  and,  working  with  our  aircraft
manufacturers  and  the  FAA,  developed  enhanced  flight  deck  door  security
measures  that are  consistent  with  Level 2. All of our  Boeing  aircraft  are
currently  Level 2 compliant.  We expect our six Airbus aircraft will be Level 1
compliant by approximately  March 1, 2002, and,  pending FAA approvals,  will be
Level 4 compliant by  approximately  May 15, 2002.  The federal  government  has
established  a fund from which  participating  airlines are  reimbursed  to some
extent,   not  yet   determined,   for  the  additional   flight  deck  security
enhancements. We intend to participate in that reimbursement program.

       After  September 11, 2001, and with the subsequent  decline in the flying
public's  confidence in air travel safety and security,  we implemented  several
marketing  programs designed to assist in restoring  consumer  confidence in air
travel.   These  initiatives  have  helped  us  experience  a  slow  but  steady
increase in load  factors and booking  levels.  Some of these  initiatives  were
as follows:

o        Marketing programs that used direct mail, Internet fare sales, travel
         agent promotions and enhanced frequent flyer program benefits;
o        A community relations outreach program called Seats for Sharing that
         offered complimentary seats to eligible non-profit organizations,
         including schools and religious organizations;
o        Communication programs that included letters to various school
         administrators and employee-led visits to local schools, as well as
         increased unpaid media efforts designed to educate and inform the
         public on increased security;
o        An employee campaign that increased employee reduced rate "buddy"
         passes, designed to enable employees to encourage their friends and
         family members to fly again.

       The impact of the  terrorist  attacks  of  September  11,  2001 and their
aftermath on us and the domestic  economy,  and the sufficiency of our financial
resources  to absorb that impact will depend on a number of factors,  including:
(i) the  magnitude and duration of the adverse  impact of the terrorist  attacks
on the economy in  general,  and the airline  industry in  particular;  (ii) our
ability to reduce our  operating  costs and  conserve our  financial  resources,
taking into account the increased  costs we will incur as a  consequence  of the
attacks,   (iii)  the  higher  costs   associated  with  new  airline   security
directives  and  any  other  increased  regulation  of air  carriers;  (iv)  the
significantly  higher costs of aircraft  insurance  coverage  for future  claims
caused  by  acts  of war,  terrorism,  sabotage,  hijacking  and  other  similar
perils,  and the extent to which such  insurance  will continue to be available;
(v) our ability to raise additional  financing;  (vi) the price and availability
of jet fuel, in light of current  industry  conditions;  (vii) the extent of the
benefits  received by us under the Act,  taking into account any  challenges  to
and  interpretations  or amendments of the Act or  regulations  issued  pursuant
thereto;  and (ix) the  timing and health of an  economic  recovery  or the lack
thereof.

       Our load factor for January  2002 was 51.9%  compared to 54.1% in January
2001.  As of February 10,  2002,  advance  booking  levels were down 4.0 and 3.7
points  in  February  and  April,  respectively,  and up 2.2  points  in  March,
compared to the same date and for the same  periods  last year.  Yields may also
decline  in our  fourth  fiscal  quarter  ending  March  31,  2002 and our first
fiscal  quarter of the fiscal  year  ending  March 31,  2003 if our  competitors
continue to discount their fares or we offer lower fares to boost traffic.

       At this point,  due principally to the lack of  predictability  of future
industry  traffic and yields,  we  continue to be unable to fully  estimate  the
impact on us of the  events of  September  11 and  their  consequences,  and the
sufficiency of our financial resources to absorb that impact.

       We are  assessing  our  liquidity  position  in  light  of  our  aircraft
purchase  commitments  and other  capital  needs,  the  economy,  the  events of
September  11, and other  uncertainties  surrounding  the airline  industry.  We
believe  it may be  appropriate  to  enhance  our  liquidity,  and are  actively
considering   several   financing   alternatives,   including   filing  a  shelf
registration  statement  that would allow us to sell  equity or debt  securities
from time to time as market  conditions  permit,  or a public offering of equity
or  debt  securities.  In addition, we may pursue domestic and foreign bank
financing such as enhanced equipment trust certificates, leveraged lease
arrangements or government guaranteed financing.  We have no agreements or
arrangements to offer such securities or which provide financing and we cannot
predict whether we will  undertake  any of  these alternatives or their timing.

New Accounting Pronouncements

       In June 2001, the Financial  Accounting  Standards  Board ("FASB") issued
Statement of Financial  Accounting  Standards No. 141,  "Business  Combinations"
which  requires  the use of the  purchase  method and  eliminates  the option of
using  the   pooling-of-interests   method  of   accounting   for  all  business
combinations.   The  provisions  in  this   statement   apply  to  all  business
combinations  initiated  after  June 30,  2001,  and all  business  combinations
accounted  for using the purchase  method for which the date of  acquisition  is
July 1, 2001, or later.

       In  June  2001,  the  FASB  issued  Statement  of  Financial   Accounting
Standards  No. 142,  "Goodwill  and Other  Intangible  Assets"  (SFAS 142) which
requires that all  intangible  assets  acquired,  other than those acquired in a
business  combination,  be  initially  recognized  and  measured  based  on  the
asset's  fair  value.  We are  required  to  adopt  the  provisions  of SFAS 142
effective  January  1,  2002.  Goodwill  and  certain  identifiable   intangible
assets will not be  amortized  under SFAS 142,  but instead will be reviewed for
impairment  at  least  annually  in  accordance  with  the  provisions  of  this
statement.  This  accounting  pronouncement  presently has no impact on us as we
do not have any intangible assets on our balance sheet.

       In  June  2001,  the  FASB  issued  Statement  of  Financial   Accounting
Standards  No. 143 (SFAS  143),  Accounting  for Asset  Retirement  Obligations,
which addresses  financial  accounting and reporting for obligations  associated
with the  retirement  of tangible  long-lived  assets and the  associated  asset
retirement  costs.  The standard  applies to legal  obligations  associated with
the  retirement  of  long-lived   assets  that  result  from  the   acquisition,
construction,  development  and/or  normal use of the asset.  SFAS 143  requires
that the fair  value  of a  liability  for an  asset  retirement  obligation  be
recognized  in the period in which it is  incurred if a  reasonable  estimate of
fair  value  can be  made.  The  fair  value  of the  liability  is added to the
carrying amount of the associated  asset and this additional  carrying amount is
depreciated  over the life of the asset.  The  liability  is accreted at the end
of each period  through  charges to  operating  expense.  If the  obligation  is
settled for other than the carrying  amount of the liability,  we will recognize
a gain or loss on  settlement.  We do not  expect the  impact of  adopting  SFAS
143 to be significant.

       In October  2001,  the FASB issued  Statement of Financial  Standards No.
144,  Accounting  for the  Impairment  or Disposal of Long-Lived  Assets,  which
addressed  financial  accounting and reporting for the impairment or disposal of
long-lived  assets.  While  Statement  No. 144  supersedes  Statement  No.  121,
Accounting  for the Impairment of Long-Lived  Assets and for  Long-Lived  Assets
to be  Disposed  of,  it  retains  many of the  fundamental  provisions  of that
Statement.  Statement  No. 144 also  supersedes  the  accounting  and  reporting
provisions    of   APB    Opinion   No.   30,    Reporting    the   Results   of
Operations-Reporting  the Effects of  Disposal  of A Segment of a Business,  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions,  for
the  disposal  of a  segment  of a  business.  We do not  expect  the  impact of
adopting SFAS No. 144 to be significant.


Item 3:  Quantitative and Qualitative Disclosures About Market Risk

       We are  exposed  to  market  risk  arising  from a change in the price of
fuel. The  sensitivity  analysis  presented does not consider  either the effect
that such a change may have on overall economic  activity or additional  actions
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  $7,062,000  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.

       Our average  cost per gallon of fuel for the nine months  ended  December
31,  2001  decreased  15.9%  from the  average  cost for the nine  months  ended
December  31,  2000.  See  "Management's  Discussion  and  Analysis of Financial
Condition and Results of Operations - Operating Expenses."




                           PART II. OTHER INFORMATION





Item 6:       Exhibits and Reports on Form 8-K

Exhibit
Numbers

(a)      Exhibits

              10.37(a) Amendment No. 2 dated as of February 14, 2002 between
                      Wells Fargo Bank Northwest, N.A. (formerly First Security
                      Bank National Association), as Lessor and Frontier Airlines,
                      Inc., as Lessee and Triton Aviation Finance to the Aircraft
                      Lease Agreement (MSN 23004)dated as of February 26, 1999.
                      Portions of this exhibit have been excluded from the
                      publicly available document and an application for
                      confidental treatment of the excluded material has been
                      requested. (1)

               10.38(a) Amendment No. 1 dated as of February 14, 2002 between
                       Wells Fargo Bank Northwest, N.A.(formerly First Security
                       Bank National Association), as Lessor and Frontier Airlines,
                       Inc. as Lessee and Triton Aviation Finance to the Aircraft
                       Lease Agreement (MSN 23007)dated as of February 26, 1999.
                       Portions of this exhibit have been excluded from the
                       publicly available document and an application for
                       confiental treatment of the excluded material has been
                       requested. (1)

              10.51(d) Amendment No. 4 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 application for an order
                      granting confidential treatment of the excluded material
                      has been requested. (1)

              10.62(a)Amendment No. 1 to the Codeshare Agreement dated as of
                      May 30, 2001 between Frontier Airlines, Inc., and Great
                      Lakes Aviation, Ltd.  Portions of this exhibit have been
                      excluded from the publicly available document and an
                      order granting confidential treatment of the excluded
                      material has been requested. (1)

              10.65(a)Amendment No. 1 to the Codeshare Agreement dated as of
                      September 4, 2001 between Mesa Airlines, Inc., 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 requested. (1)

              10.66   Employee Stock Ownership Plan of Frontier Airlines, Inc.
                      as amended and restated, effective January 1, 1997 and
                      executed February 5, 2002. (1)

              10.66(a)Amendment of the Employee Stock Ownership Plan of
                      Frontier Airlines, Inc. as amended and restated,
                      effective January 1, 1997 and executed February 5, 2002
                      for EGTRRA. (1)

   (1)   Filed herewith.


     (b) Reports on Form 8-K

              None.








                                   SIGNATURES

Pursuant to the requirements of the 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:  February 14, 2002                             By: /s/ Paul H. Tate
                                                     Paul H. Tate, Vice
                                                     President and
                                                     Chief Financial Officer

Date:  February 14, 2002                             By: /s/ Elissa A. Potucek
                                                     Elissa A. Potucek, Vice
                                                     President, Controller,
                                                     Treasurer and Principal
                                                     Accounting Officer

EX-10.66 MATERIAL CO

#789469 v1

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                         EMPLOYEE STOCK OWNERSHIP PLAN

                                       OF

                            FRONTIER AIRLINES, INC.



                amended and restated, effective January 1, 1997
                           executed February 5, 2002




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




#789469 v1
                              EMPLOYEE STOCK OWNERSHIP PLAN OF FRONTIER AIRLINES, INC.                           iv
                               TABLE OF CONTENTS
                                                                            Page



PREAMBLE            ..............................................................................................1

ARTICLE I           Definitions...................................................................................2
         1.1        "Affiliated Entity"...........................................................................2
         1.2        "Alternate Payee".............................................................................2
         1.3        "Annual Addition".............................................................................2
         1.4        "Break in Service"............................................................................3
         1.5        "Code"........................................................................................3
         1.6        "Committee"...................................................................................3
         1.7        "Company".....................................................................................3
         1.8        "Company Contributions".......................................................................3
         1.9        "Company ESOP Contributions"..................................................................3
         1.10       "Company Stock Bonus Contributions"...........................................................3
         1.11       "Compensation"................................................................................3
         1.12       "Covered Employee"............................................................................5
         1.13       "Determination Date"..........................................................................5
         1.14       "Determination Year"..........................................................................5
         1.15       "Disability"..................................................................................6
         1.16       "Domestic Relations Order"....................................................................6
         1.17       "Effective Date"..............................................................................6
         1.18       "Employee"....................................................................................6
         1.19       "ERISA".......................................................................................6
         1.20       "ESOP Suspense Account".......................................................................6
         1.21       "Exempt Loan".................................................................................6
         1.22       "Fiscal Year".................................................................................7
         1.23       "Five-Percent Owner"..........................................................................7
         1.24       "Highly Compensated Employee".................................................................7
         1.25       "Hour of Service".............................................................................7
         1.26       "Key Employee"................................................................................8
         1.27       "Leased Employee".............................................................................8
         1.28       "Limitation Year".............................................................................9
         1.29       "Look-Back Year"..............................................................................9
         1.30       "Non-Highly Compensated Employee".............................................................9
         1.31       "Non-Key Employee"............................................................................9
         1.32       "Normal Retirement Age".......................................................................9
         1.33       "Participant".................................................................................9
         1.34       "Plan Administrator"..........................................................................9
         1.35       "Plan Year"...................................................................................9
         1.36       "Qualified Domestic Relations Order ("QDRO")"................................................10
         1.37       "Required Beginning Date"....................................................................10
         1.38       "Spouse".....................................................................................10
         1.39       "Stock"......................................................................................10
         1.40       "Taxable Year"...............................................................................10
         1.41       "Top-Paid Group".............................................................................10
         1.42       "Valuation Date".............................................................................11
         1.43       "Year of Service"............................................................................11

ARTICLE II          Participation................................................................................12
         2.1        Participation................................................................................12
         2.2        Break in Covered Employee Status.............................................................12
         2.3        Enrollment-Procedure.........................................................................12
         2.4        Absences.....................................................................................12

ARTICLE III         Contributions................................................................................13
         3.1        Company Contributions........................................................................13
         3.2        Return of Contributions......................................................................13
         3.3        Limitation on Annual Additions...............................................................14
         3.4        Military Service.............................................................................16

ARTICLE IV          Interests in the Trust Fund..................................................................17
         4.1        Participants' Accounts.......................................................................17
         4.2        Valuation of Trust Fund......................................................................17
         4.3        Allocation of Increase or Decrease in Net Worth..............................................18
         4.4        Allocation of Company Contributions..........................................................18

ARTICLE V           Amount of Benefits...........................................................................20
         5.1        Vesting Schedule.............................................................................20
         5.2        Forfeitures..................................................................................20
         5.3        Restoration of Forfeitures...................................................................21
         5.4        Method of Forfeiture Restoration.............................................................21
         5.5        Allocation of Forfeitures....................................................................21
         5.6        Credits for Pre-Break Service................................................................22
         5.7        Transfers - Portability......................................................................22
         5.8        Reemployment - Separate Account..............................................................22

ARTICLE VI          Distribution of Benefits.....................................................................23
         6.1        Beneficiaries................................................................................23
         6.2        Consent......................................................................................23
         6.3        Distributable Amount.........................................................................24
         6.4        Manner of Distribution.......................................................................24
         6.5        Time of Distribution.........................................................................25
         6.6        Separate Accounting for Distributable Amounts................................................27

ARTICLE VII         Allocation of Responsibilities - Named Fiduciaries...........................................28
         7.1        No Joint Fiduciary Responsibilities..........................................................28
         7.2        The Company..................................................................................28
         7.3        The Trustee..................................................................................28
         7.4        Plan Administrator; Appeals Board............................................................28
         7.5        Plan Administrator to Construe Plan..........................................................29
         7.6        Organization of Appeals Board and Committee..................................................29
         7.7        Agent for Process............................................................................29
         7.8        Indemnification of Appeals Board and Committee Members.......................................29

ARTICLE VIII        Trust Agreement..............................................................................30
         8.1        Trust Agreement..............................................................................30
         8.2        Expenses of Trust............................................................................30

ARTICLE IX          Termination and Amendment....................................................................31
         9.1        Termination of Plan or Discontinuance of Contributions.......................................31
         9.2        Allocations upon Termination or Discontinuance of Company
         Contributions...........................................................................................31
         9.3        Procedure Upon Termination of Plan or Discontinuance of
         Contributions...........................................................................................31
         9.4        Amendment by Frontier........................................................................32
         9.5        Amendment to Vesting Schedule................................................................32

ARTICLE X           Special Provisions Regarding Company Stock...................................................33
         10.1       Time of Distribution.........................................................................33
         10.2       Put Option Requirements......................................................................33
         10.3       Diversification and Early Distribution.......................................................34
         10.4       Registration.................................................................................34
         10.5       Investment of Trust Fund.....................................................................34
         10.6       Dividends....................................................................................35
         10.7       Voting of Stock..............................................................................35
         10.8       Stock to Be Subject to Certain Conditions....................................................35
         10.9       Valuation of Stock...........................................................................36

ARTICLE XI          Company Stock Purchased With Exempt Loans....................................................37
         11.1       Prohibition Against Non-Exempt Loans.........................................................37
         11.2       Voting Rights................................................................................39
         11.3       Allocation to Accounts of Participants.......................................................39
         11.4       Non-Terminable Provisions....................................................................40

ARTICLE XII         Plan Adoption by Affiliated Entities.........................................................41
         12.1       Adoption of Plan.............................................................................41
         12.2       Agent of Affiliated Entity...................................................................41
         12.3       Disaffiliation and Withdrawal from Plan......................................................41
         12.4       Effect of Disaffiliation or Withdrawal.......................................................41
         12.5       Distribution Upon Disaffiliation or Withdrawal...............................................41

ARTICLE XIII        Top-Heavy Provisions.........................................................................43
         13.1       Application of Top-Heavy Provisions..........................................................43
         13.2       Determination of Top-Heavy Status............................................................43
         13.4       Special Minimum Contribution.................................................................44
         13.5       Change in Top-Heavy Status...................................................................44

ARTICLE XIV         Miscellaneous................................................................................45
         14.1       Right to Dismiss Employees - No Employment Contract..........................................45
         14.2       Claims Procedure.............................................................................45
         14.2       Claims Procedure.............................................................................46
         14.3       Source of Benefits...........................................................................47
         14.4       Exclusive Benefit of Employees...............................................................47
         14.5       Forms of Notices.............................................................................47
         14.6       Notice of Adoption of the Plan...............................................................47
         14.7       Plan Merger..................................................................................47
         14.8       Inalienability of Benefits - Domestic Relations Orders.......................................47
         14.9       Payments Due Minors or Incapacitated Individuals.............................................50
         14.10      Uniformity of Application....................................................................50
         14.11      Disposition of Unclaimed Payments............................................................51
         14.12      Pronouns:  Gender and Number.................................................................51
         14.13      Applicable Law...............................................................................51








#789469 v1
                              EMPLOYEE STOCK OWNERSHIP PLAN OF FRONTIER AIRLINES, INC.                           65
#789469 v1
                              EMPLOYEE STOCK OWNERSHIP PLAN OF FRONTIER AIRLINES, INC.
                         EMPLOYEE STOCK OWNERSHIP PLAN
                                       OF
                            FRONTIER AIRLINES, INC.


                                    PREAMBLE

         Frontier Airlines, Inc., a Colorado corporation ("Frontier" or the
"Company"), established an Employee Stock Ownership Plan (the "Plan")
effective April 1, 1994.  Frontier also established a trust (the "Trust") with
a trustee (the "Trustee") forming a part of the Plan to be effective at the
same time.  The Plan is hereby amended and restated as set forth below,
effective as of January 1, 1997 unless provided otherwise.  Any Participant
(as defined herein) who is credited with at least one Hour of Service (as
defined herein) after the effective date of this amendment and restatement
shall be subject to the provisions of this Plan as so amended and restated.
Any Participant in the Plan prior to the effective date of this amendment and
restatement who is not credited with an Hour of Service after the effective
date of this amendment and restatement shall continue to be governed by the
provisions of the Plan in effect prior to the effective date of this amendment
and restatement.

         The Plan and Trust are intended to comply with the provisions of the
Code (as defined herein) and ERISA (as defined herein), to qualify as both a
stock bonus plan under Code section 401(a) and an employee stock ownership
plan under Code section 4975(e)(7).


                        * * * * end of Preamble * * * *




#789469 v1
                              EMPLOYEE STOCK OWNERSHIP PLAN OF FRONTIER AIRLINES, INC.                            2
                                   ARTICLE I
                                  Definitions


         The  following  words and  phrases  shall  have the  meaning  set forth
below:

         1.1      "Affiliated Entity" means:

                  (a)......for all  Sections of the Plan except  those listed in
subsection (b),  any corporation or other entity, now or hereafter formed,  that
is or shall become  affiliated with the Company,  either directly or indirectly,
through  stock   ownership  or  control,   and  which  is  (i) included  in  the
controlled  group of  corporations  (within the meaning of Code  section 1563(a)
without regard to Code  section 1563(a)(4)  and Code  section 1563(e)(3)(C))  in
which the  Company  is also  included;  (ii) included  in the group of  entities
(whether or not  incorporated)  under common control (within the meaning of Code
section 414(c))  in which the  Company is also  included;  (iii) included  in an
affiliated  service group (within the meaning of Code  section 414(m))  in which
the  Company  is also  included;  or  (iv) required  to be  aggregated  with the
Company by Code section 414(o).

                  (b)......for purposes of determining  Annual  Additions  under
Section 1.3,  limiting  Annual  Additions to a  Participant's  account(s)  under
Section 3.3,  and construing the defined terms as they are used in  Sections 1.3
and 3.3 (such as "Compensation"  and "Employee"),  the term "Affiliated  Entity"
means any Affiliated Entity as determined in  subsections (a)(iii)  and (a)(iv),
and any entity that would be an Affiliated Entity under  subsections (a)(i)  and
(a)(ii)  if the  phrase  "more  than 50%" were  substituted  for the  phrase "at
least 80%" each place it occurs in Code section 1563(a)(1).

         1.2      "Alternate  Payee"  means  a  Participant's   Spouse,   former
spouse,  child,  or other  dependent  who is  recognized  by a QDRO as  having a
right to receive  all, or a portion  of, the  benefits  payable  under this Plan
with respect to such Participant.

         1.3      "Annual  Addition"  means the  allocations to a  Participant's
account(s) for any Limitation Year, as described in detail below.

                  (a)......Annual    Additions   shall   include:    (i) Company
Contributions  to this Plan and any other defined  contribution  plan maintained
by  the  Company  or  any  Affiliated  Entity;  (ii) Participant  before-tax  or
after-tax  contributions  to any other defined  contribution  plan maintained by
the  Company  or  any  Affiliated  Entity;   (iii) forfeitures  allocated  to  a
Participant's  account(s) in this Plan and any other defined  contribution  plan
maintained  by the  Company or any  Affiliated  Entity  (except as  provided  in
Paragraphs (b)(iii)  and (b)(vi) below);  (iv) all amounts paid or accrued after
December 31,  1985  in  Taxable  Years  ending  after  December 31,  1985,  to a
welfare  benefit  fund as defined in Code  section 419(e)  and  allocated to the
separate  account  (under  such  welfare  benefit  fund)  of a Key  Employee  to
provide  post-retirement  medical benefits;  and (v) contributions  allocated on
the  Participant's  behalf to any individual  medical account as defined in Code
section 415(l)(2).

                  (b)......Annual  Additions  shall  not  include:  (i) Rollover
contributions  made  pursuant  to  Code  section 402(c),  403(a)(4),  403(b)(8),
405(d)(3),  408(d)(3),  or 409(b)(3)(C),  to any other defined contribution plan
maintained  by the Company or an  Affiliated  Entity;  (ii) repayments  of loans
made to a  Participant  from a qualified  plan  maintained by the Company or any
Affiliated  Entity;  (iii) repayments  of forfeitures for rehired  Participants,
as  described  in  Code  sections 411(a)(7)(B)  and  411(a)(3)(D);   (iv) direct
transfer of employee  contributions  from one qualified plan to this Plan or any
other  qualified  defined  contribution  plan  maintained  by the Company or any
Affiliated Entity;  (v) deductible  employee contributions within the meaning of
Code   section 72(o)(5);   or   (vi) repayments   of   forfeitures   of  missing
individuals pursuant to Section 14.11.

         1.4      "Break in  Service"  means a Plan Year in which a  Participant
fails to receive  credit for more than 500 Hours of Service.  A five-year  Break
in  Service  means  five  consecutive  one-year  Breaks in  Service.  A leave of
absence in a non-paid  status  that is  approved in writing by the Company or an
Affiliated  Entity shall not  constitute a Break in Service for  eligibility  or
vesting  purposes.  A leave of absence in a non-paid  status that is approved in
writing  by  the  Company   shall  not   constitute   a  Break  in  Service  for
participation  purposes.  A Participant  shall be considered to have  terminated
employment  with the Company other than by reason of  retirement,  disability or
death,  upon any  separation  from  service  with  the  Company,  regardless  of
whether  the  Participant  receives a  severance  allowance  by way of salary or
benefit  continuation  for any period or in any other form;  provided,  however,
that no such  termination  of  employment  shall be deemed to have occurred as a
result of any of the following:

                  (a)......Separation  to enter  the  service  of an  Affiliated
Entity;

                  (b)......Leave of absence pursuant to Section 2.4;

                  (c)......Temporary  disability,  causing an absence,  followed
by  resumption  of active work within  180 days  following the first day of such
absence; or

                  (d)......Absence  from  employment  for  service  in the armed
forces  or  other  government  service  provided  that,  and  only so  long  as,
reemployment rights are protected by law.

         1.5      "Code"  means the Internal  Revenue  Code of 1986,  as amended
from time to time, and the  regulations  and rulings in effect  thereunder  from
time to time.

         1.6      "Committee" means the  administrative  committee  provided for
in Section 7.4, if one is appointed by the Company.

         1.7      "Company"   means   Frontier   Airlines,   Inc.,   a  Colorado
corporation,  any successor  thereto,  and any Affiliated Entity that adopts the
Plan pursuant to Article XII.

         1.8      "Company  Contributions"  means all  contributions to the Plan
made by the Company pursuant to Section 3.1 for the Plan Year.

         1.9      "Company ESOP  Contributions"  means all  contributions to the
Plan made by the  Company to pay  interest  and/or  principal  on an Exempt Loan
pursuant to subsection 3.1(a) and Article XI for the Plan Year.

         1.10     "Company  Stock Bonus  Contributions"  means all regular stock
bonus   contributions   to  the   Plan   made  by  the   Company   pursuant   to
subsection 3.1(a) for the Plan Year.

         1.11     "Compensation" means:

                  (a)......Code Section 415 Compensation.

                  .........(i)      Limitation   Years   Commencing   Prior   to
January 1,   1998.  For  purposes  of  determining   the  limitation  on  Annual
Additions under  section 3.3  and the minimum  contribution  under  section 13.4
when the Plan is top-heavy,  Compensation  shall mean those amounts  reported as
"wages,  tips,  other  compensation" on Form W-2 by the Company or an Affiliated
Entity.  For  purposes of  section 3.3,  Compensation  shall be measured  over a
Limitation  Year. For purposes of section 13.4,  Compensation  shall be measured
over  entire  Plan  Year.   Compensation  shall  include  amounts  paid  to  the
Employee but shall not include any  additional  amounts  accrued by the Employee
(except  for de minimis  amounts  earned  but not paid  because of the timing of
pay periods, as provided in the regulations under Code section 415).

                  .........(ii)     Limitation  Years  Commencing  on and  After
January 1,  1998 and Prior to January 1,  2001. For purposes of determining  the
limitation on Annual  Additions under  section 3.3 and the minimum  contribution
under 13.4  when the Plan is  top-heavy,  Compensation  shall mean those amounts
reported as "wages,  tips, other  compensation" on Form W-2 by the Company or an
Affiliated  Entity.  Compensation  shall include (A) any  elective  deferral (as
defined in Code  section 402(g)(3))  and (B) any  amount that is  contributed or
deferred  by the  Company  at the  election  of the  Employee  and  that  is not
includible  in the gross  income of the  Employee by reason of Code  section 125
or 457.  For  purposes of  section 3.3,  Compensation  shall be measured  over a
Limitation  Year. For purposes of section 13.4,  Compensation  shall be measured
over the entire  Plan  Year.  Compensation  shall  include  amounts  paid to the
Employee but shall not include any  additional  amounts  accrued by the Employee
(except  for de minimis  amounts  earned  but not paid  because of the timing of
pay periods, as provided in the regulations under Code section 415).

                  .........(iii)    Limitation  Years  Commencing  on and  After
January 1,   2001.  For  purposes  of  determining   the  limitation  on  Annual
Additions under  section 3.3  and the minimum  contribution  under  section 13.4
when the Plan is top-heavy,  Compensation  shall mean those amounts  reported as
"wages,  tips,  other  compensation" on Form W-2 by the Company or an Affiliated
Entity.  Compensation  shall include  (A) any  elective  deferral (as defined in
Code  section 402(g)(3)),  (B) any amount that is contributed or deferred by the
Company  at the  election  of the  Employee  and that is not  includible  in the
gross  income  of the  Employee  by  reason  of  Code  section 125  or  457  and
(C) Compensation  paid  or made  available  during  the  Limitation  Year  shall
include  elective  amounts  that are not  includible  in the gross income of the
Employee  by reason of Code  section 132(f)(4).  For  purposes  of  section 3.3,
Compensation  shall  be  measured  over  a  Limitation  Year.  For  purposes  of
section 13.4,  Compensation  shall  be  measured  over  the  entire  Plan  Year.
Compensation  shall  include  amounts paid to the Employee but shall not include
any additional  amounts  accrued by the Employee  (except for de minimis amounts
earned but not paid  because of the timing of pay  periods,  as  provided in the
regulations under Code section 415)

                  (b)......Code  Section  414(q)  Compensation.  For purposes of
identifying Highly Compensated  Employees and Key Employees under  sections 1.24
and 1.26,  Compensation  shall include the items described in subsection (a) and
shall  also  include  elective  contributions  that  are not  includable  in the
Employee's  income  pursuant  to  Code  sections 125,   402(e)(3),   402(h),  or
403(b).  For  purposes  of  identifying  Key  Employees,  Compensation  shall be
measured  over a Plan Year;  for  purposes  of  identifying  Highly  Compensated
Employees,   Compensation  shall  be  measured  over  a  Determination  Year  or
Look-Back  Year,  whichever is applicable.  Compensation  shall include  amounts
paid to the Employee,  but shall not include any additional  amounts  accrued by
the Employee  (except for de minimis  amounts earned but not paid because of the
timing of pay periods, as provided in the regulations under Code section 415).

                  (c)......Benefit  Compensation.  For  purposes of  determining
and allocating Company  Contributions under  subsection 3.1(a)  and Section 4.4,
Compensation   shall  mean  the  amounts   reported  as  "Wages,   tips,   other
compensation" on Form W-2 by the Company,  plus elective  contributions that are
not includable in the Employee's income pursuant to Code  sections 125,  401(k),
402(e)(3),  402(h),  403(b),  414(h)(2),  or  457(b)  and  amounts  that are not
includible   in  the   gross   income  of  the   Employee   by  reason  of  Code
section 132(f)(4),  but  excluding  bonuses,  expense  reimbursements  and other
expense  allowances,   per  diem  expense  payments,   fringe  benefits,  moving
expenses,  deferred  compensation,  the  value  of  any  free  or  reduced  rate
transportation,  and  welfare  benefits.  Compensation  shall be  measured  over
that  portion of a Plan Year after the Employee has  satisfied  the  eligibility
requirements of subsection 2.1(a) and while the Employee is a Covered Employee.

                  (d)......Limit  on   Compensation.   In   addition   to  other
applicable  limitations  set forth in the Plan,  and  notwithstanding  any other
provision  of the Plan to the  contrary,  for Plan Years  beginning  on or after
January 1,  1994, the annual  Compensation  for each employee taken into account
under the Plan  shall not exceed the OBRA '93  annual  compensation  limit.  The
OBRA  '93  annual   compensation   limit  is   $150,000,   as  adjusted  by  the
Commissioner  of the  Internal  Revenue  Service  for  increases  in the cost of
living   in   accordance   with   section 401(a)(17)(B)   of   the   Code.   The
cost-of-living  adjustment  in effect for a calendar year applies to any period,
not   exceeding   twelve   months,   over  which   Compensation   is  determined
(determination  period)  beginning in such  calendar  year.  If a  determination
period  consists of fewer than twelve months,  the OBRA '93 annual  compensation
limit will be  multiplied  by a fraction,  the  numerator of which is the number
of months in the determination period, and the denominator of which is twelve.

                  For Plan Years  beginning  on or after  January 1,  1994,  any
reference in this Plan to the limitation  under  section 401(a)(17)  of the Code
shall mean the OBRA '93 annual compensation limit set forth in this provision.

                  If Compensation  for any prior  determination  period is taken
into  account in  determining  an  employee's  benefits  accruing in the current
Plan Year, the  Compensation for that prior  determination  period is subject to
the OBRA '93 annual  compensation  limit in effect for that prior  determination
period.  For this  purpose,  for  determination  periods  beginning  before  the
first day of the first Plan Year  beginning  on or after  January 1,  1994,  the
OBRA '93 annual compensation limit is $150,000.

         1.12     "Covered  Employee"  means any Employee of the Company  except
for:

                  (a)......A leased  employee  including  but not  limited  to a
Leased Employee;

                  (b)......A  non-resident  alien  who  either  (i) receives  no
earned income  (within the meaning of Code  section 911(d)(2))  from the Company
or any  Affiliated  Entity  that  constitutes  income  from  sources  within the
United States (within the meaning of Code  section 861(a)(3))  or  (ii) receives
earned income from the Company or an Affiliated  Entity that constitutes  income
from  sources  within the United  States,  but such income is exempt from United
States income tax by an income tax treaty or convention; and

                  (c)......An Employee  included in a unit of Employees  covered
by a collective  bargaining  agreement that does not provide for such Employee's
participation  in the Plan,  provided that retirement  benefits were the subject
of good faith  bargaining  during the negotiation of such collective  bargaining
agreement.

                  (d)......A consultant  to the Company  (whether an Employee or
self-employed).

         1.13     "Determination  Date"  means,  with respect to each Plan Year,
the last day of the preceding  Plan Year;  provided  however,  that, in the case
of the first  Plan Year of the Plan,  the  Determination  Date shall be the last
day of such Plan Year.

         1.14     "Determination Year" means the Plan Year.

         1.15     "Disability"  means  a  physical  or  mental  condition  of an
Employee of the Company or an  Affiliated  Entity  that,  in the judgment of the
Plan  Administrator  based upon medical reports and other evidence  satisfactory
to  the  Plan   Administrator,   presumably   permanently   prevents   him  from
satisfactorily  performing  his usual  duties for the Company or the  Affiliated
Entity or the  duties of such  other  position  or job which the  Company or any
Affiliated  Entity  makes  available  to him  and for  which  such  Employee  is
qualified by reason of his training, education or experience.

         1.16     "Domestic  Relations  Order"  means  any  judgment,  decree or
order  (including  approval  of a  property  settlement  agreement)  issued by a
court  of  competent  jurisdiction  that  relates  to  the  provision  of  child
support,  alimony  payments,  or  marital  property  rights to a Spouse,  former
spouse,  child,  or other dependent of the Participant and is made pursuant to a
state domestic relations law (including a community property law).

         1.17     "Effective  Date"  means  the  effective  date of  this  Plan,
April 1, 1994.

         1.18     "Employee"

                  (i)......Plan  Years  Commencing  Prior  to  January 1,  2001.
"Employee"  means each  individual  who performs  services for the Company or an
Affiliated  Entity and whose wages are subject to  withholding by the Company or
an  Affiliated  Entity.  For the sole purpose of applying the  nondiscrimination
requirements   of  Code   section 414(n)(3),   Employee   shall  include  Leased
Employees;  however if Leased Employees  constitute twenty percent (20%) or less
of the Company's or Affiliated  Entity's  Non-Highly  Compensated  Employees and
if the leasing  organization  maintains a plan  described in  subsection 1.27(i)
below,  the term "Employee"  shall not included any Leased  Employees  described
in Section 1.27 below.

                  (ii).....Plan  Years   Commencing  on  and  After   January 1,
2001.  "Employee"  means any individual who provides  services to the Company or
an  Affiliated  Entity  as a common  law  employee  and  whose  remuneration  is
subject  to  the   withholding   of  federal   income  tax   pursuant   to  Code
section 3401.  Employee  shall  not  include  any  individual  (a) who  provides
services to the Company or an Affiliated  Entity under an  agreement,  contract,
or  any  other  arrangement  pursuant  to  which  the  individual  is  initially
classified as an independent  contractor or (b) whose  remuneration for services
has not been treated  initially as subject to the  withholding of federal income
tax  pursuant  to Code  section 3401  even  if the  individual  is  subsequently
reclassified  as a common law  employee as a result of a final decree of a court
of competent  jurisdiction  or the settlement of an  administrative  or judicial
proceeding.   For  the  sole   purpose   of   applying   the   nondiscrimination
requirements   of  Code   section 414(n)(3),   Employee   shall  include  Leased
Employees;  however if Leased Employees  constitute twenty percent (20%) or less
of the Company's or Affiliated  Entity's  Non-Highly  Compensated  Employees and
if the leasing  organization  maintains a plan  described in  subsection 1.27(i)
below, the term "Employee"  shall not include any Leased Employees  described in
Section 1.27 below.

         1.19     "ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended,  and the  regulations  and rulings in effect  thereunder  from
time to time.

         1.20     "ESOP  Suspense  Account" means that portion of the Trust Fund
containing Stock that secures the repayment of an Exempt Loan.

         1.21     "Exempt  Loan"  means a loan that  meets the  requirements  of
Treasury  Regulation  section 54.4975-7  and  Article XI,  and  that  is used to
purchase Stock.

         1.22     "Fiscal  Year" means the tax year of the Company  which is the
year beginning April 1 and ending March 31 of the following year.

         1.23     "Five-Percent Owner" means:

                  (a)......With respect to a  corporation,  any  individual  who
owns   (either   directly  or   indirectly   according  to  the  rules  of  Code
section 318)  more  than  5% of  the  value  of  the  outstanding  stock  of the
corporation  or stock  possessing  more  than 5% of the  total  combined  voting
power of all stock of the corporation.

                  (b)......With   respect  to  a   non-corporate   entity,   any
individual  who owns (either  directly or indirectly  according to rules similar
to those of Code  section 318)  more than 5% of the capital or profits  interest
in the entity.

An  individual  shall be a  Five-Percent  Owner  for a  particular  year if such
individual is a Five-Percent Owner at any time during such year.

         1.24     "Highly Compensated Employee" means any Employee who

                  (a)......during  the  Look-Back  Year  received   Compensation
from the Company and  Affiliated  Entities in excess of $80,000 (as  adjusted by
the Secretary of the Treasury) and was a member of the Top Paid Group; or

                  (b)......was a  Five-Percent  Owner during the Look-Back  Year
or the Determination Year.

         1.25     "Hour of Service" means:

                  (a)......Each hour for which an  Employee  is paid or entitled
to  payment by the  Company  or an  Affiliated  Entity  for the  performance  of
duties  for  the  Company  or  an  Affiliated   Entity  during  the   applicable
computation  period.  Hours of Service under this  subsection  shall be credited
to the  Employee for the  computation  period or periods in which the duties are
performed, regardless of when the Employee is paid for such duties.

                  (b)......Each hour for which an  Employee  is paid or entitled
to payment  by the  Company  or an  Affiliated  Entity on account of a period of
time  during  which  no  duties  are  performed  (irrespective  of  whether  the
employment  relationship  has  terminated)  due to vacation,  holiday,  illness,
incapacity  (including  Disability),  layoff,  jury duty, military duty or leave
of  absence.  Hours of Service  under this  subsection  shall be credited to the
Employee  for the  computation  period or  periods  in which the  period  during
which no duties are performed  occurs,  beginning with the first unit of time to
which the payment relates.  Notwithstanding the preceding sentence:

                  .........(i)      No more  than  501 Hours  of  Service  shall
be  credited  under  this  subsection  to an  Employee  on account of any single
continuous  period during which the Employee  performs no duties (whether or not
such period occurs in a single computation period);

                  .........(ii)     An hour for which an  Employee  is  directly
or  indirectly  paid,  or  entitled to  payment,  on account of a period  during
which no duties are  performed  shall not be  credited  to the  Employee if such
payment  is made or due  under  a plan  maintained  solely  for the  purpose  of
complying with applicable worker's compensation,  unemployment compensation,  or
disability insurance laws; and

                  .........(iii)    Hours  of  Service  shall  not  be  credited
for a payment  that  solely  reimburses  an Employee  for  medical or  medically
related  expenses  incurred by the Employee.  For purposes of this  subsection a
payment  shall be deemed to be made by or due from the Company or an  Affiliated
Entity  regardless  of whether  such  payment is made by or due from the Company
or Affiliated  Entity  directly,  or indirectly  through,  among others, a Trust
Fund,  or insurer,  to which the Company or  Affiliated  Entity  contributes  or
pays premiums and regardless of whether  contributions  made or due to the Trust
Fund,  insurer or other  entity are for the benefit of  particular  Employees or
are on behalf of a group of Employees in the aggregate.

                  (c)......Each  hour  for  which  back  pay,   irrespective  of
mitigation  of  damages,  is either  awarded  or agreed to by the  Company or an
Affiliated  Entity.  Hours of Service  under this  subsection  shall be credited
to the  Employee  for the  computation  period or  periods to which the award or
agreement  pertains  rather  than the  computation  period in which  the  award,
agreement  or payment is made.  The same Hours of Service  shall not be credited
both under this subsection and either subsection (a) or subsection (b).

                  (d)......In the  case  of each  Employee  who is  absent  from
work for any period by reason of the  pregnancy  of the  Employee,  by reason of
the birth of a child of the  Employee,  by reason  of the  placement  of a child
with  the  Employee  in  connection  with  the  adoption  of such  child by such
Employee,  by  reason  of  the  placement  of  a  child  with  the  Employee  in
connection  with the  Employee's  serving as a foster parent for such child,  or
for  purposes  of  caring  for such  child  for a period  beginning  immediately
following  such birth or  placement,  the Plan shall  treat as Hours of Service,
solely for  purposes  of  determining  whether a one-year  Break in Service  has
occurred  for  purposes of vesting and  participation  (but not for  purposes of
benefit   accrual),   the  following  hours:   (i) the  Hours  of  Service  that
otherwise  would  normally  have been  credited  to such  Employee  but for such
absence,  or  (ii) in  any case in which  the Plan is unable  to  determine  the
hours  described  in  paragraph (d)(i),  eight  Hours of Service per day of such
absence,  provided,  however, that the total number of hours treated as Hours of
Service  under  this  subsection  shall not exceed  501 Hours  of  Service.  The
hours  described  in this  subsection  shall be treated as Hours of Service only
in the year in which the  absence  from work  begins,  if an  Employee  would be
prevented  from  incurring  a  one-year  Break in  Service  in such year  solely
because  the period of absence  is  treated as Hours of Service as  provided  in
this  subsection,  or in any other case, in the immediately  following year. For
purposes  of  this  subsection,  the  term  "year"  means  the  period  used  in
computing a Break in  Service.  Notwithstanding  the  foregoing,  the  Committee
may determine  that no credit will be given pursuant to this  subsection  unless
the  Employee  furnishes  to  the  Committee  such  timely  information  as  the
Committee  may  reasonably  require to  establish  that the absence from work is
for  reasons  referred  to in the  first  sentence  of this  subsection  and the
number of days for which there was such an absence.

                  (e)......For purposes of  calculating  the Hours of Service to
be credited to periods  during  which no duties are  performed  and  determining
the  computation  periods to which hours shall be credited,  the rules set forth
in    subsections (b)    and   (c)   of   Department    of   Labor    Regulation
section 2530.200b-2   are  hereby  incorporated  by  reference  as  though  such
provisions were fully set forth at this point.

         1.26     "Key   Employee"   means  an  individual   described  in  Code
section 416(i) and the regulations promulgated thereunder.

         1.27     "Leased  Employee"  means an  individual  (other than a common
law  employee  of the  Company or an  Affiliated  Entity)  who,  pursuant  to an
agreement   between  the  Company  or  an   Affiliated   Entity  and  a  leasing
organization,  has performed  services for the Company or an  Affiliated  Entity
on a  substantially  full-time  basis for a period of at least one year, and the
services are  performed  under the primary  direction and control of the Company
or Affiliated  Entity.  However,  if the Internal Revenue Service has determined
in   a   ruling    issued    before    August 20,    1996   pursuant   to   Code
section 414(n)(2)(C)  that a  particular  relationship  did not involve a Leased
Employee  under  the  requirement  that  an  individual's  service  be of a type
historically  performed by common law  employees  in the  business  field of the
Company or an  Affiliated  Entity,  the  change in the law will not affect  that
prior   determination.   The  Company  or  an  Affiliated   Entity  shall  treat
contributions  or  benefits  provided  to the  Leased  Employee  by the  leasing
organization  as  contributions  or  benefits  provided  by  the  Company  or an
Affiliated  Entity to the extent  attributable to services the Leased  Employees
performed for the Company or Affiliated  Entity.  Notwithstanding  the preceding
provisions  of this  paragraph,  the Plan  shall  not treat an  individual  as a
Leased Employee if:

                  (i)......the Leased  Employee  is covered by a money  purchase
pension plan providing:

                           (1)      a nonintegrated  employer  contribution rate
                                    of at least 10% of  Compensation  (including
                                    amounts   that  are   excludable   from  the
                                    Leased  Employee's  gross  income under Code
                                    sections 125,    402(e)(3),    402(h),    or
                                    403(b), and

                           (2)      immediate participation, and

                           (3)      full and immediate vesting, and

                  (ii).....Leased  Employees do not constitute  more than twenty
percent  (20%) of the Company's or Affiliated  Entity's  Non-Highly  Compensated
Employees.

         1.28     "Limitation  Year"  means the Plan Year for  purposes  of Code
section 415.

         1.29     "Look-Back  Year" means the  12 months  immediately  preceding
the Determination Year.

         1.30     "Non-Highly  Compensated  Employee"  means an  Employee of the
Company or an  Affiliated  Entity who is neither a Highly  Compensated  Employee
nor a Family Member.

         1.31     "Non-Key  Employee"  means  any  Employee  who  is  not  a Key
Employee.

         1.32     "Normal Retirement Age" means age 60.

         1.33     "Participant"  means any  individual  with an account  balance
under  the  Plan  except   beneficiaries   and   Alternate   Payees.   The  term
"Participant"  shall also  include any Covered  Employee who has  satisfied  the
eligibility  requirements of  Section 2.1,  but who does not yet have an account
balance.

         1.34     "Plan  Administrator"  shall  mean  the  Company,  unless  the
Company  elects,  pursuant to  Section 7.4,  to appoint a separate  Committee to
act as plan  administrator,  in  which  case  the  Committee  shall  be the Plan
Administrator.

         1.35     "Plan  Year"  means the  12-month  period on which the records
of the Plan are  kept.  The  first  Plan  Year of the  Plan is the  period  from
April 1,  1994 through  March 31,  1995.  The second Plan Year of the Plan shall
be the short period from  April 1,  1995  through  December 31,  1995.  The Plan
Year of the Plan  thereafter  shall be the  calendar  year.  The short Plan Year
in 1995 shall be treated as a full Plan Year for all  purposes of the Plan,  but
for purposes of such  calculations  as the  Limitation  Year and for purposes of
computing any  restrictions  or  limitations  with respect to the Plan Year, all
such  restrictions  and limitations  shall be prorated to reflect the short Plan
Year.

         1.36     "Qualified   Domestic   Relations   Order  ("QDRO")"  means  a
Domestic  Relations  Order  that  creates  or  recognizes  the  existence  of an
Alternate  Payee's  right to, or  assigns  to an  Alternate  Payee the right to,
receive all or a portion of the benefits  payable with respect to a  Participant
under   the   Plan   and   with   respect   to   which   the   requirements   of
subsection 14.8(c) are met.

         1.37     "Required  Beginning  Date" means April 1 of the calendar year
following  the later of the calendar year in which the  Participant  attains age
70 1/2or the  calendar  year  in  which  the  Participant  terminates  employment;
provided  however,  that the Required  Beginning Date for a Participant who is a
Five-Percent  Owner is April 1 of the calendar year  following the calendar year
in which the Participant attains age 70 1/2.

         1.38     "Spouse"  means  the  individual  to  whom  a  Participant  is
lawfully  married  according  to  the  law  of the  state  of the  Participant's
domicile  on any  of  the  following  dates,  as  applicable:  the  date  of the
Participant's  death, the date any election is filed pursuant to Article VI,  or
the  date  the   Participant's   benefits   commence.   A  former  Spouse  of  a
Participant  shall have no interest  in this Plan,  except as provided in a QDRO
or in a  beneficiary  designation  form  executed by the  Participant  after the
Spouse had become a former Spouse.

         1.39     "Stock"  means  the  $.01 par  value  voting  common  stock of
Frontier,  which is an employer security described in Code  sections 409(l)  and
4975(e)(8)  that has a combination of voting power and dividend  rights equal to
or in excess of (a) that  class of  Frontier's  common stock having the greatest
voting power and (b) that  class of Frontier's  common stock having the greatest
dividend rights.

         1.40     "Taxable  Year"  means the  accounting  period of the  Company
for federal income tax purposes.

         1.41     "Top-Paid  Group"  means  the top 20% of  Employees  ranked on
the basis of  Compensation  received  during a  Determination  Year or Look-Back
Year.  For  purposes of  determining  the number of  Employees  in the  Top-Paid
Group, the following Employees may be excluded:

                  (a)......any  Employee  who has not  completed  six  months of
service before the end of the applicable year;

                  (b)......any   Employee   who   normally   works   less   than
17-1/2 hours per week, as defined in the regulations under Code section 414(q);

                  (c)......any   Employee   who   normally   works   less   than
six months  during the applicable year, as defined in the regulations under Code
section 414(q);

                  (d)......any Employee who has not attained  age 21  before the
end of the applicable year; and

                  (e)......any  Employee  who is a  non-resident  alien  and who
receives no earned income  (within the meaning of Code  section 911(d)(2))  from
the Company or any  Affiliated  Entity  that  constitutes  income  from  sources
within the United States (within the meaning of Code  section 861(a)(3))  during
the applicable year.

Notwithstanding  the foregoing,  Frontier may elect, on a consistent and uniform
basis,  to modify the  permissible  exclusions  set forth above by  substituting
any shorter  period of service or lower age.  Frontier  may elect to include all
Employees in determining the Top-Paid Group.

         1.42     "Valuation  Date"  means  the last day of each  Plan  Year and
any other  dates as  specified  in  Section 4.2  as of which  the  assets of the
Trust  Fund are  valued at fair  market  value and as of which the  increase  or
decrease  in  the  net  worth  of  the  Trust  Fund  is   allocated   among  the
Participants' accounts.

         1.43     "Year  of  Service"  means a  12-consecutive-month  period  as
described below.

                  (a)......For   purposes  of  vesting   under   Article V,   an
Employee  shall be  credited  with a Year of Service  on the day he is  credited
with  at  least   1,000 Hours  of  Service  during  a  Plan  Year.  For  rehired
Employees,  Years of  Service  shall be  calculated  according  to the  rules in
Section 5.6.  Service  prior to the Effective  Date shall be included.  Years of
Service  shall  accrue  while an Employee is on an approved  leave of absence as
provided in  Section 2.4;  however,  unless the  Employee  is absent  because of
military  service or jury duty,  the  Employee  shall not be credited  with more
than six months of service (or such longer  period of service as  satisfies  the
safe-harbor rule in the regulations  under Code  section 401(a)(4))  towards his
Years of Service  while he is absent,  unless  required  by  applicable  federal
law.  The short Plan Year from  April 1,  1995 through  December 31,  1995 shall
constitute  a Year of  Service,  but the  number  of Hours of  Service  required
during that Plan Year shall be prorated.

                  (b)......A  transfer  of  employment  from  one  participating
Affiliated  Entity to  another  shall not be an  interruption  of  services  for
purposes  of this  Plan.  Periods of  Service  with an entity  that is part of a
controlled  or  affiliated  group plan (within the meaning of Code  section 414)
of  which  the  Company  is a  member,  while  such  entity  is a part  of  such
controlled  or affiliated  group with the Company,  shall be treated as Years of
Service for all purposes of the Plan.


                        * * * * end of Article I * * * *



                                   ARTICLE II
                                 Participation


2.1      Participation.

         Each Covered  Employee  shall become a Participant  on the first day on
which the  Employee  first  performs  an Hour of Service  with the Company or an
Affiliated  Entity on initial  employment or latest  reemployment.  Any Employee
whose  employment  status is  changed so as to become a Covered  Employee  shall
become  a  Participant  as of the day of such  reclassification.  In any  event,
service  while in an ineligible  category  shall be credited for all purposes of
the Plan.

2.2      Break in Covered Employee Status.

         (a)      No  Termination  of  Employment.  A Covered  Employee  who has
satisfied  the  requirements  of  Section 2.1  and whose  employment  status has
changed  so as to be  eliminated  from the class of Covered  Employees  shall be
immediately  eliminated from  participation  in the Plan. A Covered Employee who
has satisfied the  requirements  of  Section 2.1  before ceasing to be a Covered
Employee,  who ceases to be a Covered  Employee without  terminating  employment
and who later becomes a Covered  Employee  again shall  immediately  be eligible
to  participate  in the Plan.  In either  event,  service while in an ineligible
category shall be credited for all purposes of the Plan.

         (b)      Termination  of  Employment.  In the  case of any  Participant
who  has  terminated   employment,   such  Participant   shall  be  eligible  to
participate  in  the  Plan  on  his  date  of  reemployment  if he is a  Covered
Employee.

2.3      Enrollment-Procedure.

         In order to  participate  in the Plan,  each  Covered  Employee who has
satisfied the  eligibility  requirements  of  Sections 2.1 or 2.2 shall fill out
and sign an enrollment form supplied by the Plan  Administrator  (and such other
forms as the Plan  Administrator  may  require)  and return such  form(s) to the
Plan  Administrator.  The form(s) shall include,  among other  information,  the
date of  birth of the  Covered  Employee,  and the  name,  address,  and date of
birth of each beneficiary of the Covered Employee.

2.4      Absences.

         A leave of  absence  in a non-paid  status  approved  in writing by the
Company  or  an  Affiliated   Entity  shall  not  constitute  a  termination  of
employment  for  eligibility  for  vesting  purposes.  A leave of  absence  in a
non-paid  status  approved  in writing by the  Company  shall not  constitute  a
termination of employment for participation purposes.


                       * * * * end of Article II * * * *



                                  ARTICLE III
                                 Contributions


3.1      Company Contributions.

         (a)      Company  Contributions.   For  each  Plan  Year,  the  Company
shall  contribute  to the Trust Fund such  amount of Company  Contributions,  if
any, as may be  authorized by the  Company's  Board of  Directors.  Such Company
Contributions  shall be either Company ESOP  Contributions  made to pay interest
and/or  principal  on an Exempt Loan  pursuant to  Article XI  or Company  Stock
Bonus  Contributions  made as regular  stock  bonus  contributions.  The Company
may elect to treat any  portion of  forfeitures  occurring  during the Plan Year
as  Company  Contributions,   pursuant  to  Section 5.5.  Company  Contributions
shall be allocated among eligible Participants in accordance with Section 4.4.

         (b)      Form of  Contributions.  Company  Contributions may be made in
cash or in Stock,  or partly in each, as  determined  by the Company's  Board of
Directors.

         (c)      Miscellaneous Contributions.

                  (i)......The  Company  may make  additional  contributions  to
the Plan to restore amounts  forfeited from the Company  Contributions  accounts
of certain  rehired  Participants,  pursuant  to  Section 5.4.  This  additional
contribution  shall be required only when the forfeitures  occurring  during the
Plan Year are  insufficient to restore such forfeited  amounts,  as described in
Section 5.5.   This  contribution   shall  be  allocated  to  the  Participant's
Company Contributions account.

                  (ii).....The  Company  may make  additional  contributions  to
the Plan to satisfy  the minimum  contribution  required  by  Section 13.4.  The
Company may elect to use any portion of  forfeitures  occurring  during the Plan
Year for this  purpose,  pursuant to  Section 5.5.  This  contribution  shall be
allocated to Company Contributions accounts.

                  (iii)....The  Company  may make  additional  contributions  to
the Plan to restore the forfeited  benefit of any missing  individual,  pursuant
to  Section 14.11.  This  additional  contribution  shall be required  only when
the  forfeitures  occurring  during  the Plan Year are  insufficient  to restore
such forfeited amounts, as described in Section 5.3.

         (d)      Contributions    Contingent    on    Deductibility.    Company
Contributions  for a Plan Year  (excluding  forfeitures)  shall not  exceed  the
amount  allowable as a deduction  for the Taxable Year ending with or within the
Plan Year  pursuant to Code  section 404.  Company  Contributions  shall be paid
to the  Trustee  no later  than  the due date  (including  any  extensions)  for
filing  the  Company's  federal  income  tax  return  for  such  year.   Company
Contributions  may be made  without  regard to current or  accumulated  earnings
and profits.

3.2      Return of Contributions.

         Upon request of the Company, the Trustee shall return:

         (a)      To  the  Company,   any  Company  Contribution  made  under  a
mistake  of fact.  The  amount  that  shall be  returned  shall not  exceed  the
excess of the amount  contributed  (reduced to reflect  any  decrease in the net
worth of the Trust Fund  attributable  thereto)  over the amount that would have
been contributed  without the mistake of fact.  Appropriate  reductions shall be
made  in  the   accounts   of   Participants   to  reflect  the  return  of  any
contributions  previously  credited to such accounts.  However,  no contribution
shall be  returned to the extent that such  reduction  would  reduce the account
of a  Participant  to an  amount  less than the  balance  that  would  have been
credited to his account had the  contribution  not been made.  Any  contribution
made under a mistake of fact  shall be  returned  within one year after the date
of payment.

         (b)      To  the  Company,   any  Company   Contribution  that  is  not
deductible  under  Code  section 404.  All  contributions  under  the  Plan  are
expressly   conditioned  upon  their   deductibility   for  federal  income  tax
purposes.  The amount that shall be  returned  shall be the excess of the amount
contributed  (reduced  to  reflect  any  decrease  in the net worth of the Trust
Fund  attributable  thereto) over the amount that would have been contributed if
there  had  not  been  a  mistake  in  determining  the  deduction.  Appropriate
reductions  shall be made in the accounts of  Participants to reflect the return
of  any  contributions  previously  credited  to  such  accounts.   However,  no
contribution  shall be returned to the extent that such  reduction  would reduce
the  account(s) of a  Participant  to an amount less than the balance that would
have been credited to his  account(s)  had the  contribution  not been made. Any
contribution  conditioned  on its  deductibility  shall be  returned  within one
year after it is disallowed as a deduction.

3.3      Limitation on Annual Additions.

         (a)      General  Limit.   The  Annual  Additions  to  a  Participant's
account(s) in this Plan and any other defined  contribution  plan  maintained by
the Company or an  Affiliated  Entity for any  Limitation  Year shall not exceed
in the  aggregate  the  lesser of  (i) 25% of such  Employee's  Compensation  or
(ii) the  applicable  Dollar  Limitation,  as  modified by  subsection (d).  For
purposes of this Section,  "Dollar  Limitation"  means  $30,000,  as adjusted by
the Secretary of the Treasury.

         (b)      ESOP  Adjustment to General  Limit.  In any Plan Year in which
an  Exempt  Loan is  outstanding  and in which  no more  than  one-third  of the
Company ESOP  Contribution  is allocated to Highly  Compensated  Employees,  the
term  "Annual  Additions"  shall not  include  the  following  amounts  that are
allocated to Participants'  Company Contributions  Accounts:  (i) forfeitures of
shares of Stock  that  were  acquired  with the  proceeds  of an Exempt  Loan as
described in Code  section 404(a)(9)(A),  or (ii) Company Contributions that are
deductible under Code section 404(a)(9)(B).

         (c)      Reduction  in  Annual   Additions.   If,  as  a  result  of  a
reasonable  error in estimating  Compensation,  or as a result of the allocation
of forfeitures,  or as a result of other facts and  circumstances as provided in
the   regulations   under  Code   section 415,   the  Annual   Additions   to  a
Participant's  account(s)  would, but for this subsection,  exceed the foregoing
limits,  the Annual  Additions  shall be reduced,  to the extent  necessary.  If
the  Participant  in  question  is a  Participant  both in this  Plan and in any
other defined  contribution  plan maintained by the Company,  the  Participant's
Company  Contributions  shall  first be reduced in such other plan and then,  to
the  extent  necessary,  shall  be  reduced  in this  Plan.  The  amount  of any
reduction  of Company  Contributions  shall be placed in a  suspense  account in
the  Trust  Fund and used to  reduce  Company  Contributions  to the  Plan.  The
following  rules shall apply to such suspense  account:  (i) no further  Company
Contributions  may be made if the allocation  thereof would be precluded by Code
section 415;  (ii) any  increase  or decrease in the net value of the Trust Fund
attributable  to the  suspense  account  shall not be  allocated to the suspense
account,  but  shall be  allocated  to the  remainder  of the  Trust  Fund;  and
(iii) all  amounts  held in the suspense  account  shall be allocated as of each
succeeding  allocation date on which  forfeitures  may be allocated  pursuant to
Section 5.5  (and may be allocated more frequently if the Plan  Administrator so
directs), until the suspense account is exhausted.

         (d)      Limits  for  Participation  in  Defined  Benefit  Plan.  If  a
Participant  participates  or  ever  participated  in  a  defined  benefit  plan
maintained   by  the  Company  or  an   Affiliated   Entity,   the  sum  of  the
Participant's  "defined  contribution  plan  fraction" and the "defined  benefit
plan  fraction,"  as defined  below,  shall not  exceed  1.0 for any  Limitation
Year. For purposes of this  subsection,  voluntary  contributions to a qualified
defined benefit plan are treated as a separate  defined  contribution  plan; all
defined  contribution  plans maintained by the Company or any Affiliated  Entity
are treated as one defined  contribution  plan;  and all defined  benefit  plans
currently  maintained  or  ever  maintained  by the  Company  or any  Affiliated
Entity are treated as one defined  benefit plan,  whether or not such plans have
been  terminated.  If the sum of the  Participant's  defined  contribution  plan
fraction and defined  benefit  plan  fraction  exceeds  1.0,  the  Participant's
benefit  under  first  the  defined  benefit  plan and  then  the  Participant's
account(s)  in this Plan shall be reduced,  pursuant to  subsection (b),  to the
extent necessary such that the sum of the fractions does not exceed 1.0.

                  (i)......Defined     contribution     plan     fraction.     A
Participant's  "defined  contribution  plan fraction" for any Limitation Year is
a fraction,  the  numerator  of which is the sum of the Annual  Additions to the
Participant's  account(s) for the Limitation  Year, and the denominator of which
is the sum of the lesser of the following  amounts  determined for such year and
for each prior Limitation Year:

                  .........(A)      125%  of the  Dollar  Limitation  in  effect
for such  Limitation  Year  (without  regard to the special  Dollar  Limitations
under Code section 415(c)(6)), or

                  .........(B)      35%  of  the  Employee's   Compensation  for
each Limitation Year.

If  the  Plan  is  "top-heavy,"  as  described  in  Article XIII,   the  special
adjustments  set forth in  Article XIII  may be required to compute this defined
contribution plan fraction.

                  (ii).....Defined   benefit  plan  fraction.   A  Participant's
"defined  benefit plan  fraction"  for any  Limitation  Year is a fraction,  the
numerator  of which is the sum of the  Participant's  projected  annual  benefit
(determined  as of the  last  day of the  Limitation  Year)  under  all  defined
benefit  plans  currently  maintained  or ever  maintained by the Company or any
Affiliated  Entity,  and the  denominator  of which is the lesser of 125% of the
Dollar  Limitation  for  such  Limitation  Year,  or 140%  of the  Participant's
highest three-year average Compensation.

                  (iii)....Top Heavy Adjustments.

                  .........(A)      In any  Limitation  Year that  contains  any
portion  of  a  Plan  Year  for  which  the  top-heavy  ratio,  as  computed  in
accordance  with  Section 13.2,  exceeds  60% but does not  exceed  90%,  either
(I) the  denominators  of the  defined  benefit  plan  fraction  and the defined
contribution   plan  fraction  shall  be  computed  using  100%  of  the  Dollar
Limitation  instead  of 125%,  or  (II) the  minimum  contribution  required  in
subsection 13.4(a)  shall be  increased  to  7-1/2%  of the  Non-Key  Employee's
Compensation.

                  .........(B)      In any  Limitation  Year that  contains  any
portion  of  a  Plan  Year  for  which  the  top-heavy  ratio,  as  computed  in
accordance  with  Section 13.2,  exceeds  90%, the  denominators  of the defined
benefit  plan  fraction  and the defined  contribution  plan  fraction  shall be
computed using 100% of the Dollar Limitation instead of 125%.

                  (iv).....Repeal  of  Combined  Plan  Limit.   For   Limitation
Years   commencing  on  and  after   December 31,   1999,   the   provisions  of
Section 3.3(d)  shall not apply.  The  provisions of Code  section 415  shall be
applied to this Plan and any other defined  contribution  plan of the Company or
an Affiliated  Entity in which a  Participant  participates  in such  Limitation
Years  without  regard to any  defined  benefit  plans in which the  Participant
accrues a benefit for such Limitation Year or for any prior Limitation Year.

3.4      Military Service.

         Notwithstanding   any   provision   of  this  plan  to  the   contrary,
contributions,  benefits,  and service credit with respect to qualified military
service  will  be  provided  in   accordance   with  Code   section 414(u)   for
individuals who initiate reemployment on and after December 12, 1994.


                       * * * * end of Article III * * * *



                                   ARTICLE IV
                          Interests in the Trust Fund


4.1      Participants' Accounts.

         The Plan  Administrator  shall establish and maintain separate accounts
in the name of each  Participant,  but the  maintenance  of such accounts  shall
not require any  segregation  of assets of the Trust  Fund.  Each  Participant's
share of the Company ESOP  Contributions  and Company Stock Bonus  Contributions
under  subsection 3.1(a)  as well as forfeitures,  together with any increase or
decrease  in the net  worth  of the  Trust  Fund  attributable  to such  Company
Contributions  and forfeitures,  shall be credited to his Company  Contributions
Accounts.  Shares of Stock  contributed  to or purchased by the Trust Fund shall
be allocated directly to the appropriate Participant accounts.

4.2      Valuation of Trust Fund.

         (a)      General.  The  Trustee  shall  value  the  assets of the Trust
Fund at  least  annually  as of the last  day of the  Plan  Year,  and as of any
other dates determined by the Plan  Administrator,  at their current fair market
value and  determine  the net worth of the Trust Fund.  The Trustee shall deduct
any expenses of the Trust Fund  occurring  since the  preceding  Valuation  Date
(if the  expenses are not paid by the  Company),  pursuant to  Section 8.2,  and
then  determine  the  increase  or  decrease  in the net worth of the Trust Fund
that has  occurred  since  the  preceding  Valuation  Date.  The  Trustee  shall
separately  determine the share of the increase or decrease  attributable to any
amount  separately  accounted  for under  subsections (c)  and (d). In addition,
the Plan  Administrator  may direct the Trustee to have a special  valuation  of
the  assets of the Trust  Fund when the Plan  Administrator  determines,  in its
sole  discretion,  that such  valuation is necessary  or  appropriate  or in the
event of unusual  market  fluctuations  of such assets.  Valuations  and special
valuations  shall not  include any Company  Contributions  for the current  Plan
Year, or any unallocated forfeitures.

         (b)      Appraisal  of Stock.  Stock that is not readily  tradeable  on
an established  securities  market shall be valued by an independent  appraiser,
pursuant  to  Section 10.9.   The  Plan   Administrator   may  order  a  special
valuation  of  Stock  as  of  the  end  of  any  calendar   month  if  the  Plan
Administrator  believes  that its fair market  value has  changed  substantially
since the most recent  Valuation  Date. Any decision made under this  subsection
in good faith shall be final and conclusive.

         (c)      Mandatory  Separate  Accounting.  The Trustee shall separately
account for amounts  subject to a Domestic  Relations  Order,  to provide a more
equitable  allocation  of any increase or decrease in the net worth of the Trust
Fund.

         (d)      Permissible  Separate  Accounting.  The Trustee may separately
account for the  following  amounts to provide a more  equitable  allocation  of
any increase or decrease in the net worth of the Trust Fund:

                  (i)......the   distributable   account   of   a   Participant,
pursuant to  Section 6.6,  including  any amount  distributable  to an Alternate
Payee or to a beneficiary of a deceased Participant; and

                  (ii).....Any  other  amounts  for  which  separate  accounting
will  provide a more  equitable  allocation  of the  increase or decrease in the
net worth of the Trust Fund.

4.3      Allocation of Increase or Decrease in Net Worth.

         (a)      Separate  Accounting.  As of each  Valuation  Date,  the  Plan
Administrator  shall  allocate  the increase or decrease in the net worth of the
Trust Fund that has  occurred  since the  preceding  Valuation  Date between the
non-separately  accounted  for  portion  of  the  Trust  Fund  and  the  amounts
separately accounted for that are identified in Section 4.2.

         (b)      Non-Stock  Amounts.  As  of  each  Valuation  Date,  the  Plan
Administrator  shall  allocate  the  increase  or decrease  attributable  to the
non-separately  accounted  for  portion of the Trust  Fund  among the  non-Stock
investments in the Company  Contributions  Accounts in the ratio that the dollar
value  of each  such  account  bore to the  aggregate  dollar  value of all such
accounts  on the  preceding  Valuation  Date after all  allocations  and credits
made as of such date had been completed.

         (c)      Stock.

                  (i)......Dividends in Stock.  As of each  Valuation  Date, the
Plan Administrator shall allocate among the Company  Contributions  Accounts any
dividends  on the  Stock  paid in the form of  Stock.  The  allocation  shall be
proportional  to the number of shares in such  accounts  on the record  date for
the payment of the dividend.

                  (ii).....ESOP   Suspense   Account.   Dividends   (other  than
dividends  in the form of Stock)  received  on Stock  held in the ESOP  Suspense
Account shall be used to make  payments on any  outstanding  Exempt  Loans.  The
shares  of  Stock  thereby   released  from  the  ESOP  Suspense  Account  under
Sections 11.1(f)  and 11.3 shall be allocated  among the  Participant's  Company
Contributions Accounts as specified in Section 4.4.

                  (iii)....Company  Contributions  Accounts.  If an Exempt  Loan
is  outstanding,  then  dividends  (other than  dividends  in the form of Stock)
received on Stock previously allocated to Company  Contributions  Accounts shall
be used to repay the Exempt  Loan(s).  The Stock thereby  released from the ESOP
Suspense  Account  under  Sections 11.1(f)  and 11.4  shall be  allocated  among
Company  Contributions  Accounts in  proportion to the number of shares of Stock
in each  such  account  on the date of the  dividend.  The  number  of shares of
Stock  thereby  allocated  shall have a fair market value of at least the amount
of the  dividend.  This  allocation  of Stock  released  from the ESOP  Suspense
Account shall take priority over the other  allocations  of such Stock  provided
for by the  Plan;  only the  shares of Stock  remaining  after  this  allocation
shall be allocated  pursuant to  Section 4.4.  If no Exempt Loan is outstanding,
then  dividends  (other than  dividends in the form of Stock)  received on Stock
previously  allocated to Company  Contributions  Accounts  shall be allocated on
the next  Valuation  Date to such  accounts,  in  proportion  to the  number  of
shares in such accounts on the date of the dividend.

         (d)      Other  Amounts.  After the allocation in  subsections (b)  and
(c) are completed,  the Trustee shall allocate any amounts separately  accounted
for  (including  the  increase  or  decrease  in the net worth of the Trust Fund
attributable  to such  amounts) to the  appropriate  account(s) if such separate
accounting is no longer necessary.

4.4      Allocation of Company Contributions.

         Allocations   under   this   Section 4.4   shall  be  made   after  the
allocations  under  Section 4.3.  If an Exempt Loan is outstanding,  the Company
ESOP  Contribution  shall  be used to repay  the  Exempt  Loan.  The  number  of
shares of Stock thereby  released  under  Sections 11.1(f)  and 11.4, as well as
any  forfeitures  occurring  during  the Plan Year that are not used to  restore
the  accounts  of  rehired  Participants  or  missing   individuals,   shall  be
allocated  as of  the  last  day  of  each  Plan  Year.  If no  Exempt  Loan  is
outstanding,  the Company ESOP  Contribution  and forfeitures  occurring  during
the Plan Year shall be  allocated  as of the last day of each Plan  Year.  These
amounts  shall  be  allocated  among  the  Company  Contributions   accounts  of
Participants  who were  employed  on the last day of the Plan  Year or who died,
retired or  terminated  employment  because of a  Disability  during  such Year.
For purposes of this  Section 4.4,  shares of Stock released from an encumbrance
pursuant to  subsection 11.1(f),  or the net proceeds resulting from the sale of
such Stock or the  receipt of  liquidating  distributions  with  respect to such
Stock shall be  allocated as a Company  Contribution  for the Plan Year to which
the payment of the amount under Article XI  relates.  Each Participant  eligible
to  share  in the  Company  Contribution  shall  receive  an  allocation  in the
proportion that each such  Participant's  Compensation  for such Plan Year bears
to the  aggregate  Compensation  of all such  Participants  with respect to such
Plan Year.


                       * * * * end of Article IV * * * *



                                   ARTICLE V
                               Amount of Benefits


5.1      Vesting Schedule.

         (a)      A  Participant  shall have a fully  vested and  nonforfeitable
interest  in all his  account(s)  upon  his  Normal  Retirement  Age if he is an
Employee  on such date,  his death  while an  Employee  or while on an  approved
leave of absence from the Company or an Affiliated  Entity,  or his  termination
of  employment   with  the  Company  or  an  Affiliated   Entity  because  of  a
Disability.  In all other  instances,  a Participant  shall become vested in his
Company Contributions account in accordance with the following schedule.

               Years of Service                      Vested Percentage

                      1                                     20
                      2                                     40
                      3                                     60
                      4                                     80
                  5 or more                                100


         Notwithstanding  the  foregoing,  all  Participants  who  shared in the
allocation of the Company  Contribution  for the Plan Year ended March 31,  1995
shall be 100% vested in such Company Contribution.

         (b)      Notwithstanding  the  foregoing,  in the event of the  merger,
consolidation  or liquidation of the Company,  or the  acquisition of its assets
or Stock  pursuant to a  non-taxable  reorganization,  if the Company is not the
surviving  entity as a result of any such  transaction,  all Participants in the
Plan shall,  upon the occurrence of any such event,  become 100% vested in their
Company Contribution account.

5.2      Forfeitures.

         (a)      Notwithstanding  the  vesting  rules  of  Section 5.1,  Annual
Additions  to a  Participant's  accounts and any increase or decrease in the net
worth of the Trust Fund  attributable  to such Annual  Additions  may be reduced
to satisfy the limits  described in  Section 3.3.  Any such  reduction  shall be
allocated as specified in Section 3.3.

         (b)      Notwithstanding  the vesting rules of  Section 5.1,  a missing
individual's  vested  accounts  may be  forfeited as of the last day of any Plan
Year, as provided in  Section 14.11.  Any such forfeiture  shall be allocated as
specified in Section 5.5.

         (c)      A   Participant's   non-vested   interest   in   his   Company
Contributions   account   shall  be  forfeited   as  soon  as   administratively
practicable after the first to occur of the following:

                  (i)......the  date  on  which  the   Participant   receives  a
distribution  of  his  entire  vested  interest  in  his  Company  Contributions
account; or

                  (ii).....the  date  on  which   the   Participant   terminates
employment,  if the Participant  terminates  employment with the Company and all
Affiliated  Entities while he is 0% vested (in such case the  Participant  shall
be deemed to have  received a  distribution  of his entire  vested  interest  in
such account on the day he terminated employment); or

                  (iii)....the  last  day  of  the  Plan   Year  in  which   the
Participant  incurs a five-year Break in Service.

5.3      Restoration of Forfeitures.

         The forfeiture of a missing  individual's  account(s),  as described in
Section 14.11,  shall be  restored  to such  individual  if he makes a claim for
such amount.  Forfeitures of a Participant's  non-vested interest in his Company
Contributions  account shall be restored  under the following  conditions if the
Participant is rehired.

         (a)      If a  Participant  is  rehired  before he  incurs a  five-year
Break in  Service,  and the  Participant  has  received  a  distribution  of his
entire  vested  interest in his Company  Contributions  account (with the result
that the Participant  forfeited his non-vested  interest in such account),  then
the  Participant  may  repay  to  the  Plan  the  entire  distribution,  without
interest,  within  five  years  of  his  date  of  reemployment.   The  required
repayment   shall   consist  of  the  number  of  shares  of  Stock   previously
distributed  to the  Participant,  together  with any cash  distributed;  if the
Participant  no  longer  owns the  Stock  that was  distributed  to him,  he may
contribute  cash equal to the current  fair market value of the number of shares
previously  distributed  and the Trustee shall use such cash to purchase  shares
of Stock.  If timely  repayment  is made,  the  exact  amount of the  forfeiture
shall be restored  to the  Participant's  account.  If timely  repayment  is not
made, no forfeiture shall be restored.

         (b)      If a  Participant  was 0%  vested  at the  time he  terminated
employment  with the Company and Affiliated  Entities,  and he is rehired before
he incurs a five-year  Break in  Service,  then the  Company  shall  restore the
exact amount forfeited from his Company Contributions account.

         (c)      If a  Participant  is  rehired  after he  incurs  a  five-year
Break in  Service,  then no  amount  forfeited  from his  Company  Contributions
account shall be restored to such account.

All the rights,  benefits,  and features  available to the Participant  when the
forfeiture occurred shall be available with respect to the restored forfeiture.

5.4      Method of Forfeiture Restoration.

         Forfeitures  that  are  restored   pursuant  to  Section 5.3  shall  be
accomplished  by an  allocation  of the  forfeitures  occurring  during the Plan
Year,  pursuant to Section 5.5,  or if such forfeitures are  insufficient,  by a
special Company Contribution, pursuant to subsection 3.1(c)(i).

5.5      Allocation of Forfeitures.

         As of the last day of each Plan Year, the  forfeitures  attributable to
Company  Contributions  that occurred  during the Fiscal Year shall be allocated
as  follows.  If more  than one  employer  has  adopted  this Plan  pursuant  to
Article XII,   forfeitures   arising   in   accounts   of   Employees   of  each
participating   employer   shall  be   aggregated   and  allocated  as  follows.
Forfeitures   shall  be  first  used  to   restore   forfeitures   pursuant   to
Section 5.4.  Any remaining  amount of forfeitures  shall be allocated as though
it were an additional Company Contribution to the Plan.

5.6      Credits for Pre-Break Service.

         (a)      Company Contributions Made After Reemployment.

                  (i)......A  Participant  who is vested in any  portion  of his
Company  Contributions  account,  who  incurs  a Break  in  Service,  and who is
thereafter  reemployed,  shall receive credit for vesting  purposes for Years of
Service  prior to his Break in Service upon  completing a Year of Service  after
such Break in Service.

                  (ii).....A  Participant  who is not  vested in any  portion of
his Company  Contributions  account,  who incurs a Break in Service,  and who is
thereafter  reemployed,  shall receive  credit for vesting  purposes for Periods
of  Service  prior to his Break in  Service  upon  completing  a Year of Service
after such Break in Service  provided the number of consecutive  one-year Breaks
in Service is less than the greater of (A) five or (B) the  aggregate  number of
Years of Service before such break.

         (b)      Company  Contributions  Made  Prior to  Termination.  Years of
Service after a Participant  has incurred a five-year  Break in Service shall be
disregarded  in determining  the vested  percentage in a  Participant's  Company
Contributions account at the time of the break.

5.7      Transfers - Portability.

         If  any  other  employer  adopts  this  or  a  similar  employee  stock
ownership  plan and enters into a  reciprocal  agreement  with the Company  that
provides  that  (a) the  transfer  of a  Participant  from such  employer to the
Company (or vice versa)  shall not be deemed a  termination  of  employment  for
purposes of the plans,  and  (b) service  with either or both employers shall be
credited  for  purposes  of  vesting  under  both  plans,  then the  transferred
Participant's  account shall be unaffected  by the transfer,  except,  if deemed
advisable by the Plan  Administrator,  it may be  transferred  to the trustee of
the other plan.

5.8      Reemployment - Separate Account.

         If  a  Participant  returns  to  employment  with  the  Company  or  an
Affiliated  Entity before  receiving  the entire  vested  portion of his Company
Contributions  account,  the vested portion that has not been distributed  shall
be held in a separate Company  Contributions  account for such Participant.  The
Participant  shall  be fully  vested  in such  account  and no  further  Company
Contributions  shall be allocated to that account.  In all other respects,  such
account  shall be  treated as a Company  Contributions  account.  A new  Company
Contributions  account shall be  established  to which all  appropriate  Company
Contributions  made  after the date of  reemployment  shall be  allocated.  If a
Participant   becomes  fully  vested  in  two  or  more  Company   Contributions
accounts, all such accounts shall be merged into one account.


                        * * * * end of Article V * * * *



                                   ARTICLE VI
                            Distribution of Benefits


6.1      Beneficiaries.

         (a)      General.  Each  Participant  (or, if the Participant has died,
his   beneficiary)   shall  file  with  the  Committee  a  designation   of  the
beneficiaries  and contingent  beneficiaries  to whom the  distributable  amount
(determined  in  section 6.3)  shall  be  paid  in the  event  of his  death.  A
beneficiary  designation  may be changed by the  Participant  or  beneficiary at
any time and  without  the  consent of any  previously  designated  beneficiary;
however,  if the  Participant  is married,  his Spouse shall be the  beneficiary
designated  to receive the benefits  payable  under this  Article VI  unless his
Spouse has  consented  to the  designation  of a  different  beneficiary.  To be
effective,  the  Spouse's  consent  must be in  writing,  witnessed  by a notary
public,  and filed with the  Committee.  Any such  election  shall be  effective
only as to the Spouse who signed the election.

         (b)      Divorce.  If a Participant  has  designated  his Spouse as his
beneficiary,  and the Participant  and this Spouse  subsequently  divorce,  then
the  beneficiary  designation  shall  be void and of no  effect  on the day such
divorce  is  final.   The  Participant  may  designate  a  former  Spouse  as  a
beneficiary  in a  beneficiary  designation  signed  after the divorce is final;
provided  however,  that if the Participant  remarries,  the new Spouse shall be
the  sole  designated   beneficiary  unless  the  new  Spouse  consents  to  the
designation of a new beneficiary.

         (c)      Default:  No  Effective   Beneficiary   Designation.   In  the
absence  of an  effective  beneficiary  designation  as to  any  portion  of the
distributable  amount of the  deceased  Participant's  account(s),  such  amount
shall be paid to the Participant's surviving Spouse; or if none, to his estate.

6.2      Consent.

         (a)      $5,000   or   Less.   If  a   Participant's   account(s)   are
immediately  distributable,   under  section 6.5,   and  if  the  nonforfeitable
portion of the  Participant's  account(s)  has an  aggregate  value of $5,000 or
less  (calculated in accordance with applicable  Treasury  regulations),  and if
distributions  pursuant to section 6.5 have not begun,  then the Committee shall
distribute  the  distributable   amount   (determined  in  section 6.3)  of  the
Participant's   account(s)   without  the   Participant's   consent.   Any  such
distribution  shall be in the form of a lump sum.  Any such  distribution  shall
be made to the Participant,  or, if deceased,  to his beneficiary  determined in
section 6.1.  Effective for Plan Years  beginning  before  August 6,  1997,  the
dollar figure in the first sentence shall be $3,500.

         (b)      More  Than  $5,000.   If  a   Participant's   account(s)   are
immediately  distributable under section 6.5, and if the nonforfeitable  portion
of a  Participant's  account(s)  has an  aggregate  value  greater  than  $5,000
(calculated in accordance with applicable  Treasury  regulations),  then, except
as  provided  in   subsection 6.5(c)   or  6.5(d),   any  distribution  of  such
account(s)  shall only be made with the  consent of the  Participant  or, if the
Participant is deceased,  the  beneficiary  determined  under section 6.1. To be
effective,   the  consent  to  the  form  of   distribution   and  the  time  of
distribution  must be in writing or in an  electronic  or  telephonic  form that
satisfies  the  requirements  of  Treas.  Reg.ss. 1.411(a)-11,   signed  by  the
Participant  (or  beneficiary),  and filed with the  Committee not more than 90,
and not less  than 30,  days  prior to the date the  distribution  is to  occur;
provided  however,  that the distribution  may be made, or commence,  fewer than
30 days  after the  consent is given if (i) the  Committee  clearly  informs the
Participant (or  beneficiary)  that the Participant (or beneficiary) has a right
to a period of at least  30 days to  consider  whether  to elect a  distribution
and  the  form  of  distribution  and  (ii) the   Participant  (or  beneficiary)
affirmatively   elects  a   distribution.   A  consent   once  given   shall  be
irrevocable  once  distribution  has begun.  Effective for Plan Years  beginning
before August 6, 1997, the dollar figure in the first sentence shall be $3,500.

         (c)      Transition  Rules.  This  subsection   provides   transitional
rules with regard to the cashout limits for  distributions  prior to October 17,
2000.  The  following  provisions  shall apply for  purposes of  sections 6.2(a)
and (b) and shall  supersede  the  provisions  of those  sections  to the extent
applicable.

                  (i)......If  payment  in the  form of a  qualified  joint  and
survivor  annuity is  required  with regard to a  Participant,  the rule in this
section is  substituted  for the rule  otherwise  applicable in  sections 6.2(a)
and (b). If the value of a  Participant's  vested account  balance  derived from
employer  and  employee  contributions  exceeds  (or at the  time  of any  prior
distribution  (A) in  Plan  Years  beginning  before  August 6,  1997,  exceeded
$3,500 or (B) in Plan Years beginning after August 5,  1997,  exceeded)  $5,000,
and the account  balance is immediately  distributable,  the Participant and the
Participant's  Spouse (or where either the  Participant  or the Spouse has died,
the survivor) must consent to any distribution of such account balance.

                  (ii).....If  payment  in the  form of a  qualified  joint  and
survivor  annuity is not  required  with respect to a  Participant,  the rule in
this   section  is   substituted   for  the  rules   otherwise   applicable   in
sections 6.2(a)  and  (b).  If  the  value  of a  Participant's  vested  account
balance derived from employer and employee contributions:

                           (A)      for Plan Years  beginning  before  August 6,
                  1997,  exceeds  $3,500 (or exceeded  $3,500 at the time of any
                  prior distribution);

                           (B)      for Plan  Years  beginning  after  August 5,
                  1997,  and for a  distribution  made prior to March 22,  1999,
                  exceeds  $5,000 (or  exceeded  $5,000 at the time of any prior
                  distribution), and

                           (C)      for Plan  Years  beginning  after  August 5,
                  1997 and for a  distribution  made after  March 21,  1999 that
                  either  exceeds  $5,000  or is a  remaining  payment  under  a
                  selected  optional  form of payment  that  exceeded  $5,000 at
                  the time the selected form of payment  began,  and the account
                  balance is immediately  distributable,  the  Participant  must
                  consent to any distribution of such account balance.

6.3      Distributable Amount.

         The  distributable  amount of a Participant's  account(s) is the vested
portion of his  account(s)  (as  determined  pursuant  to  Article V)  as of the
Valuation Date coincident  with or next preceding the date  distribution is made
to the Participant or  beneficiary,  reduced by any amount that is payable to an
Alternate  Payee  pursuant  to  Section 14.8.   Notwithstanding  the  foregoing,
distributions  in the form of Stock shall be valued at the fair market  value of
the  Stock on the date  that the  Trustee  directs  the  transfer  agent for the
Stock to  transfer  the  shares  of Stock  into the name of the  Participant  or
beneficiary.

6.4      Manner of Distribution.

         All  distributions  shall  be  made  in  shares  of  Stock,   provided,
however,  that the Plan  Administrator  may, in its sole  discretion,  cause the
Trustee  to  convert  a  fractional  share  to  cash  and  distribute  the  cash
attributable  thereto.  The  distributable  amount  shall  be paid in a lump sum
distribution (other than an annuity).

6.5      Time of Distribution.

         All  distributions  except immediate  cash-outs under Section 6.2 shall
be subject  to the  following  rules.  Immediate  cash-outs  shall be subject to
the direct transfer rules discussed in subsection (f).

         (a)      Earliest   Date   of    Distribution.    Unless   an   earlier
distribution is permitted by subsection (b) or required by  subsection (c),  the
earliest  date that a  Participant  may elect to  receive a  distribution  is as
follows.

                  (i)......Disability,   Retirement,   Death.   If  an  Employee
terminates   employment  with  the  Company  or  Affiliated  Entity  because  of
Disability,  death  or  after  attaining  Normal  Retirement  Age,  he  (or  his
beneficiary)  may elect to receive a distribution  as soon as practicable  after
the  allocations  are  completed  for the  Plan  Year in which  the  Participant
terminated employment.

                  (ii).....Termination   of   Employment.   If   a   Participant
terminates   employment   other  than  by  dying,   retiring,   or  incurring  a
Disability,  he may  elect to  receive  a  distribution  as soon as  practicable
after the  allocations  are completed for the Plan Year in which the Participant
terminated  employment.  In all  events,  a  Participant  may elect to receive a
distribution  at any  time  during  or after  the  sixth  plan  year  after  his
termination of  employment.  If  distribution  from the Trust Fund is to be made
after  the  Plan  Year  in  which  a  Participant  terminates  employment,  such
distribution  shall  include the full amount of the  Participant's  share of the
Company   Contributions  for  such  Plan  Year,  if  he  is  eligible  for  such
allocation under  Sections 3.1  and 4.4. If distribution  from the Trust Fund is
made  before  the   allocation   of  a   Participant's   share  of  the  Company
Contributions  for the Plan Year in which he terminates  employment and if he is
otherwise  eligible for such  allocation  under  Sections 3.1  and 4.4, then the
full amount of the  Participant's  share of the Company  Contributions  for such
Plan Year, if any, shall be distributed  to the  Participant,  if living and, if
not, to his  beneficiary,  in a lump sum not later than  60 days  after the date
on which such amount is allocated.

                  (iii)....During  Employment.  A  Participant  may not obtain a
distribution  while employed by the Company or an Affiliated  Entity,  except as
provided in subsection (c)  (relating to the required minimum  distribution at a
Participant's Required Beginning Date).
                  (iv).....Code      Section       409(o).       Notwithstanding
subsections (i),   (ii)  and  (iii),  a  Participant  may  elect  to  receive  a
distribution,  after  separating from service,  no later than the times required
by Code section 409(o).

         (b)      Alternate  Earliest  Date  of  Distribution.   Notwithstanding
Subsection (a),  unless a Participant  elects otherwise,  his distribution shall
commence no later than  60 days  after the close of the latest of:  (i) the Plan
Year in which the  Participant  attains  Normal  Retirement  Age;  (ii) the Plan
Year  in  which  occurs  the  tenth   anniversary  of  the  year  in  which  the
Participant  commenced  participation  in the Plan;  and (iii) the  Plan Year in
which the  Participant  terminates  employment  with the Company and  Affiliated
Entities.

         (c)      Latest Date of  Distribution.  Distribution  must be made in a
lump sum no later than the Required Beginning Date.

                  With  respect  to  distributions  under  the Plan in  calendar
years  beginning  and after  January 1,  2001,  the Plan will apply the  minimum
distribution  requirements of  section 401(a)(9) of the Internal Revenue Code in
accordance with the regulations  under  section 401(a)(9)  that were proposed in
January 2001,  notwithstanding  any provision of the Plan to the contrary.  This
paragraph  shall  continue  in effect  until the end of the last  calendar  year
beginning   with   the   effective   date  of  the   final   regulations   under
section 401(a)(9)  or such other date  specified  in guidance  published  by the
Internal Revenue Service.

         (d)      Distribution  Upon  Participant's  Death.  Distribution  shall
be  made  in a lump  sum  to the  Participant's  beneficiary  by the  end of the
calendar year in which falls the fifth anniversary of the Participant's death.

         (e)      Alternate  Payee.  The earliest  date that an Alternate  Payee
may receive a distribution shall be determined pursuant to Section 14.8.

         (f)      Direct Rollover Option.

                  (i)......A Participant,  an Alternate  Payee who is the spouse
or  former  spouse  of  a  Participant,  or a  surviving  spouse  of a  deceased
Participant  (collectively,  the  "distributee")  may direct the  Trustee to pay
all or any  portion of his  "eligible  rollover  distribution"  to an  "eligible
retirement  plan" in a "direct  rollover."  Within a  reasonable  period of time
before an eligible rollover  distribution,  the Plan Administrator  shall inform
the distributee of this direct  rollover  option,  the  appropriate  withholding
rules,  other rollover options,  the options regarding income taxation,  and any
other  information  required by Code  section 402(f).  If a distribution  is one
to  which  sections 401(a)(11)  and  417 of the  Internal  Revenue  Code  do not
apply,  such  distribution  may  commence  less than  30 days  after the  notice
required under  section 1.411(a)-11(c)  of the Income Tax  Regulations is given,
provided that (i) the Plan  Administrator  clearly informs the Participant  that
the  Participant  has a right to a period  of at least 30 days  after  receiving
the notice to consider  the  decision of whether or not to elect a  distribution
(and,  if  applicable,   a  particular   distribution   option),   and  (ii) the
Participant,  after receiving the notice,  affirmatively  elects a distribution.
For  purposes  of  the  foregoing  sentence,  a  distributee  is  treated  as  a
Participant.

                  (ii).....An   "eligible   rollover    distribution"   is   any
distribution  or in-service  withdrawal  other than  (i) distributions  required
under Code  section 401(a)(9),  (ii) distributions  of amounts that have already
been   subject   to   federal   income   tax   (such   as   defaulted    loans),
(iii) installment  payments in a series of substantially  equal payments made at
least  annually  and  (A) made  over a  specified  period of ten or more  years,
(B) made for the life or life  expectancy  of the  distributee,  or (C) made for
the  joint  life or  life  expectancy  of the  distributee  and  his  designated
beneficiary,  or (iv) any other actual or deemed  distribution  specified in the
regulations issued under Code section 402(c).

                  (iii)....For a  Participant  or an Alternate  Payee who is the
spouse  or  former  spouse  of a former or  current  Participant,  an  "eligible
retirement  plan" is an individual  retirement  account or annuity  described in
Code   section 408(a)   or  408(b),   an   annuity   plan   described   in  Code
section 403(a),  or the  qualified  trust of a  defined  contribution  plan that
accepts eligible  rollover  distributions.  For a surviving spouse of a deceased
Participant,  an "eligible retirement plan" is an individual  retirement account
or annuity.

                  (iv).....A "direct  rollover"  is a payment by the  Trustee to
the  eligible retirement plan specified by the distributee.

                  (v)......An   "Alternate   Payee"  is  a  former  or   current
Participant's   spouse,   former  spouse,  child,  or  other  dependent  who  is
recognized by a qualified  domestic  relations order (within the meaning of Code
section 414(p))  as  having  a right  to  receive  all,  or a  portion  of,  the
benefits  payable  under  this Plan with  respect to the  Participant  or former
Participant.

6.6      Separate Accounting for Distributable Amounts.

         When a  Participant's  account(s) have become  distributable,  in whole
or in part,  the  Plan  Administrator  may  direct  the  Trustee  to  separately
account for and separately invest the account(s),  or the distributable  portion
thereof.  All  distributions  shall be paid  solely from the  separate  account.
Amounts  thus  separately  accounted  for  shall not  share in the  increase  or
decrease in the net worth of the remainder of the Trust Fund.


                       * * * * end of Article VI * * * *



                                  ARTICLE VII
               Allocation of Responsibilities - Named Fiduciaries


7.1      No Joint Fiduciary Responsibilities.

         The  Company,  the  Trustee,  the Plan  Administrator  and the  Appeals
Board (as established  pursuant to Section 7.4)  shall be the named  fiduciaries
under  the Plan and Trust  Agreement  and  shall be the only  named  fiduciaries
thereunder.  The fiduciaries shall have only the  responsibilities  specifically
allocated  to them  herein  or in the  Trust  Agreement.  Such  allocations  are
intended to be  mutually  exclusive  and there shall be no sharing of  fiduciary
responsibilities.  Whenever  one  named  fiduciary  is  required  by the Plan or
Trust  Agreement to follow the  directions of another named  fiduciary,  the two
named   fiduciaries  shall  not  be  deemed  to  have  been  assigned  a  shared
responsibility,  but  the  responsibility  of the  named  fiduciary  giving  the
directions shall be deemed his sole  responsibility,  and the  responsibility of
the named fiduciary  receiving those  directions shall be to follow them insofar
as such instructions are on their face proper under applicable law.

7.2      The Company.

         The   Company   shall   be   responsible   for:    (a) making   Company
Contributions;  (b) certifying to the Trustee the names and specimen  signatures
of the members of the  Committee  appointed  to serve as the Plan  Administrator
pursuant to  Section 7.4,  if a Committee is appointed,  and the Appeals  Board,
acting from time to time;  (c) keeping  accurate  books and records with respect
to  its  Employees   and  the   appropriate   components   of  each   Employee's
Compensation and furnishing such data to the Plan  Administrator;  (d) selecting
agents  and   fiduciaries   to  operate  and  administer  the  Plan  and  Trust;
(e) appointing  an  investment  manager  if it  determines  that one  should  be
appointed;  and  (f) reviewing  periodically  the  performance  of such  agents,
managers, and fiduciaries.

7.3      The Trustee.

         The  Trustee  shall  be   responsible   for:   (a) in  the  absence  of
investment  direction from the Plan  Administrator,  the investment of the Trust
Fund to the extent and in the manner  provided in the Trust  Agreement;  (b) the
custody and  preservation of Trust assets  delivered to it; (c) the  purchase of
shares  of  Stock  in  accordance  with  the  written  directions  of  the  Plan
Administrator;  and (d) the  payment of such  amounts from the Trust Fund as the
Plan Administrator shall direct.

7.4      Plan Administrator; Appeals Board.

         The  Company  shall serve as the Plan  Administrator,  unless the Board
of  Directors  of the  Company  or the  Compensation  Committee  of the Board of
Directors  of the  Company  appoints a separate  Committee  to serve as the Plan
Administrator,  in which  case the  Committee  shall  have all of the duties and
obligations  established  by this Plan with  respect to the Plan  Administrator.
The Board of  Directors  of the  Company or the  Compensation  Committee  of the
Board of  Directors  of the  Company  shall  appoint a separate  Appeals  Board,
consisting  of  three  or  more  individuals  who  may  be,  but  need  not  be,
Participants,  officers,  directors,  or Employees  of the Company.  The members
of the Appeals Board (and the  Committee,  if one is created)  shall hold office
at  the   pleasure  of  the  Board  of   Directors   and  shall  serve   without
compensation.  The Plan  Administrator  shall  be the  "plan  administrator"  as
defined   in   section 3(16)(A)   of  ERISA.   It  shall  be   responsible   for
establishing  and  implementing a funding policy  consistent with the objectives
of the Plan and  with the  requirements  of  ERISA.  This  responsibility  shall
include  establishing  (and  revising as  necessary)  short-term  and  long-term
goals  and  requirements  pertaining  to the  financial  condition  of the Plan,
communicating  such goals and  requirements  to the persons  responsible for the
various   aspects  of  Plan   operations   and   monitoring   periodically   the
implementation  of such  goals and  requirements.  The  Appeals  Board  shall be
responsible  for  reviewing and deciding all claims  appeals in accordance  with
the  provisions  of  Section 14.2  and shall have full  discretion  and power to
determine all claims appeals.

7.5      Plan Administrator to Construe Plan.

         (a)      The Plan  Administrator  shall  administer  the Plan and shall
have all power and authority necessary for that purpose,  including,  but not by
way  of  limitation,  the  discretion  and  power  to  interpret  the  Plan,  to
determine  the  eligibility,  status,  and rights of all  individuals  under the
Plan,  and in  general  to decide  any  dispute  and all  questions  arising  in
connection  with the Plan.  The Plan  Administrator  shall  also be  responsible
for (a) directing  the Trustee  concerning the investment of assets in the Trust
Fund, other than Stock;  (b) directing  the Trustee with respect to the purchase
of Stock and with  respect to  entering  into  Exempt  Loans  under  Article XI;
(c) directing  the Trustee with respect to voting  shares of Stock to the extent
that  Participants  do not so direct such voting as provided for in the Plan and
the Trust  Agreement;  and  (d) valuing  the Stock in accordance with Article X.
The Plan  Administrator  shall direct the Trustee  concerning all  distributions
from the Trust Fund, in accordance  with the  provisions of the Plan,  and shall
have  such  other  powers  in the  administration  of the  Trust  Fund as may be
conferred  upon  it  by  the  Trust  Agreement.  The  Plan  Administrator  shall
maintain  all  Plan  records   except  records  of  the  Trust  Fund.  The  Plan
Administrator  may  appoint  agents to whom it may  delegate  such  powers as it
deems  appropriate,  except that any  dispute  shall be  determined  by the Plan
Administrator.

         (b)      The  Plan  Administrator  may  adjust  the  account(s)  of any
Participant,  delay  distributions  from the Plan,  and take  other  appropriate
actions in order to correct errors,  rectify  omissions,  and protect all assets
of the Plan from market  fluctuations  in such manner as the Plan  Administrator
believes   will   best   result   in   the   equitable   and   nondiscriminatory
administration of the Plan.

7.6      Organization of Appeals Board and Committee.

         The Appeals  Board and the  Committee  shall each elect a chairman  and
shall  adopt such rules as it deems  desirable  for the  conduct of its  affairs
and for the  administration  of the Plan.  The Appeals Board may appoint  agents
to whom it may  delegate  such powers as it deems  appropriate,  except that any
dispute  shall be determined  by the Appeals  Board.  The Appeals Board may make
its  determination  with or without  meetings,  and may authorize one or more of
its members or agents to sign  instructions,  notices and  determinations on its
behalf.  The action of a majority of the  Appeals  Board  shall  constitute  the
action of the Appeals Board.

7.7      Agent for Process.

         The Plan  Administrator  shall be agent of the Plan for  service of all
process.

7.8      Indemnification of Appeals Board and Committee Members.

         The Company  shall  indemnify  each  member of the  Appeals  Board (and
each  member  of  the   Committee,   if  one  is   appointed   to  act  as  Plan
Administrator)  and  Employees who perform  services for the Plan  Administrator
and the Appeals Board  against any and all claims,  loss,  damages,  expense and
liability  arising  from any action or failure to act,  except  when the same is
judicially  determined to be due to the gross  negligence or willful  misconduct
of such member or Employee.


                       * * * * end of Article VII * * * *



                                  ARTICLE VIII
                                Trust Agreement


8.1      Trust Agreement.

         The  Company  has  entered  into a Trust  Agreement  to provide for the
holding,  investment  and  administration  of the funds of the  Plan.  The Trust
Agreement  shall  be  part  of the  Plan,  and  the  rights  and  duties  of any
individual  under the Plan shall be subject to all terms and  provisions  of the
Trust Agreement.

8.2      Expenses of Trust.

         All  taxes  upon  or in  respect  of the  Trust  shall  be  paid by the
Trustee out of the Trust assets.  All reasonable  expenses of administering  the
Trust shall be paid by the  Trustee  out of the Trust  assets to the extent they
are not paid by the Company.  No fiduciary  shall receive any  compensation  for
services  rendered to the Plan if the fiduciary is being  compensated  on a full
time basis by the Company.


                      * * * * end of Article VIII * * * *




                                   ARTICLE IX
                           Termination and Amendment


9.1      Termination of Plan or Discontinuance of Contributions.

         Frontier   expects  to  continue   the  Plan   indefinitely,   but  the
continuance  of the Plan and the  payment of  contributions  are not  assumed as
contractual  obligations.   Frontier  may  terminate  the  Plan  or  discontinue
contributions  at any time.  Upon the  termination  (or partial  termination) of
the Plan or the complete  discontinuance of contributions,  the interests of all
affected   Participants   in  the  Trust  Fund  shall   become   fully   vested,
notwithstanding any other provision hereof.

9.2      Allocations upon Termination or Discontinuance of Company
Contributions.

         Upon the  termination  or partial  termination  of the Plan or upon the
complete   discontinuance  of  contributions,   the  Plan  Administrator   shall
promptly  notify  the  Trustee  of  such  termination  or  discontinuance.   The
Trustee shall then determine,  in the manner prescribed in Section 4.2,  the net
worth  of the  Trust  Fund  as of the  close  of the  last  business  day of the
calendar  month in which such notice was  received by the  Trustee.  The Trustee
shall  advise the Plan  Administrator  of any  increase  or decrease in such net
worth  that  has  occurred  since  the  preceding   Valuation   Date.  The  Plan
Administrator   shall   thereupon   allocate,   in  the  manner   described   in
Section 4.3,  among the remaining Plan  accounts,  any such increase or decrease
in the net worth of the Trust Fund.  Immediately  after the  allocation  of such
increase or decrease in net worth, the Plan  Administrator  shall allocate among
the remaining Plan accounts,  in the manner described in  Articles III,  IV, and
V, any  Company  Contributions  or  forfeitures  occurring  since the  preceding
Valuation Date.

9.3      Procedure Upon Termination of Plan or Discontinuance of Contributions.

         If the  Plan has  been  terminated  or  partially  terminated,  or if a
complete  discontinuance  of contributions to the Plan has occurred,  then after
the allocations  required under  Section 9.2  have been  completed,  the Trustee
shall distribute or transfer the account(s) of affected Employees as follows.

         (a)      If  the  affected  Employee's  account(s)  have  an  aggregate
value of $5,000 or less  (calculated  in  accordance  with  applicable  Treasury
regulations),  then the Trustee shall  distribute the  Employee's  account(s) to
the Employee in a lump sum (other than an annuity).

         (b)      If  the  affected  Employee's  account(s)  have  an  aggregate
value of more than $5,000  (calculated in accordance  with  applicable  Treasury
regulations),  and if the  Company or an  Affiliated  Entity  does not  maintain
another defined  contribution  plan (other than an employee stock ownership plan
within  the  meaning  of  Code  section 4975(e)(7)),   then  the  Trustee  shall
distribute the  Employee's  account(s) to the Employee in a lump sum (other than
an annuity).

         (c)      If  the  affected  Employee's  account(s)  have  an  aggregate
value of more than $5,000  (calculated in accordance  with  applicable  Treasury
regulations),  and if the  Company or an  Affiliated  Entity  maintains  another
defined  contribution  plan (other than an employee stock  ownership plan within
the meaning of Code  section 4975(e)(7)),  then the Trustee  shall  transfer the
Employee's  account(s)  to the other plan  unless the  Employee  consents  to an
immediate  distribution  of  such  account(s)  in a  lump  sum  (other  than  an
annuity).

         (d)      For Plan Years  beginning  before  August 6,  1997, the $5,000
figure in subsections (a), (b), and (c) shall be $3,500.

Subject to the  provisions  of  Article X,  any  distribution  or transfer  made
pursuant to this Section may be in cash,  in kind,  or partly in cash and partly
in kind.  After  all  such  distributions  or  transfers  have  been  made,  the
Trustee  shall  be  discharged   from  all  obligation   under  the  Trust;   no
Participant or beneficiary who has received any such  distribution,  or for whom
any such  transfer  has been made,  shall have any further  right or claim under
the Plan or Trust.

9.4      Amendment by Frontier.

         Frontier  may at any time  amend the Plan in any  respect,  subject  to
Section 9.5,  but no  amendment  shall be made  that  would  have the  effect of
vesting in the  Company any part of the Trust Fund or of  diverting  any part of
the  Trust  Fund  to  purposes   other  than  for  the   exclusive   benefit  of
Participants,  Alternate Payees, or their  beneficiaries,  and the rights of any
Participant,  Alternate  Payee,  or  beneficiary  with respect to  contributions
previously made shall not be adversely  affected by any amendment;  no amendment
shall reduce or restrict,  either  directly or indirectly,  the accrued  benefit
(within  the  meaning of Code  section 411(d)(6))  provided  to any  Participant
before the  amendment.  The Plan shall be amended by a writing  approved  by the
Company's  Board of Directors  and signed on behalf of the Company by an officer
of the Company  duly  authorized  by the Board of  Directors.  The Plan may also
be amended in writing by an officer of the Company to whom the  Company's  Board
of Directors  delegates  the  authority to amend the Plan.  Notwithstanding  the
foregoing,  if the  Company  is  subject  to  Section 16(b)  of  the  Securities
Exchange Act of 1934,  no amendment  may be made unless in  compliance  with the
Rules thereunder.

9.5      Amendment to Vesting Schedule.

         If the  vesting  schedule is amended,  each  Participant  with at least
three Years of Service may elect,  within the period  specified in the following
sentence  after  the  adoption  of the  amendment,  to have  his  nonforfeitable
percentage  computed  under  the Plan  without  regard  to such  amendment.  The
period  during which the election may be made shall  commence  with the date the
amendment is adopted and shall end on the latest of:

         (a)      60 days after the amendment is adopted;

         (b)      60 days after the amendment becomes effective; or

         (c)      60 days  after the  Participant  is issued  written  notice of
the amendment by the Company or the Plan Administrator.

Furthermore,  the amendment shall not decrease the  non-forfeitable  percentage,
measured as of the later of the date the amendment is adopted or  effective,  of
any Participant's accounts.


                       * * * * end of Article IX * * * *




                                   ARTICLE X
                   Special Provisions Regarding Company Stock


10.1     Time of Distribution.

         Notwithstanding  any other provision  under  Section 6.5 of the Plan, a
Participant  may elect to have the portion of his account  attributable to Stock
distributed  (i) not  later  than one year  after  the close of the Plan Year in
which such  Participant  separates  from service by reason of the  attainment of
Normal  Retirement Age under the Plan,  death, or Disability;  or (ii) not later
than one year  after the close of the fifth  Plan Year  following  the Plan Year
in which the Participant  separated from service,  if the Participant  separated
from  service  for any  reason  other  than those  enumerated  in  paragraph (i)
above,  and is not  reemployed  by the Company at the end of the fifth Plan Year
following  the Plan Year of such  separation  from service.  If the  Participant
separates   from   service  for  a  reason   other  than  those   described   in
paragraph (i)  above,  and is  employed by the Company as of the last day of the
fifth  Plan  Year  following  the Plan  Year of such  separation  from  service,
distribution  to the  Participant,  prior  to  any  subsequent  separation  from
service,  shall  be in  accordance  with  terms  of the  Plan  other  than  this
Section 10.1.  For  purposes of this  Section 10.1,  Stock shall not include any
Stock acquired with the proceeds of a loan  described in Code  section 404(a)(9)
until the close of the Plan Year in which such loan is repaid in full.

10.2     Put Option Requirements.

         (a)      Notwithstanding  any  other  provisions  of the  Plan,  in the
case  of a  distribution  of  Stock  when  it is  not  readily  tradeable  on an
established  securities  market,  the  Participant  receiving such  distribution
shall  have  the  right  to  exercise  a  put  option  that  complies  with  the
requirements  of Code  section 409(h).  Such put option  shall  provide  that if
the Participant  exercises the put option, the Company,  or the Plan if the Plan
so elects,  shall  repurchase all or any portion of the distributed  Stock.  The
put option may be exercised  during the  six-month  period  beginning on the day
after  the  Participant   receives  the  Stock.  If  the  Participant  does  not
exercise the option to sell such Stock, the option shall lapse temporarily.

         (b)      After the end of the Plan Year in which the  option  described
in  subsection  (a)  occurred,  and  following  the valuation of the Stock as of
such year end,  the Plan  Administrator  shall notify each  Participant  who was
eligible to, but did not,  exercise the option  described in  subsection (a)  of
the  updated  valuation  and the  opportunity  to once  again  exercise  the put
option  during  the  three-month  period  beginning  on the date the  notice  is
received.  If the  Participant  again fails to exercise  such  option,  it shall
lapse permanently.

         (c)      To exercise his put option,  the  Participant  must deliver to
the Company a written  notice of his election to sell such Stock,  together with
the  certificates  representing the shares to be sold duly endorsed for transfer
with applicable  transfer tax stamps attached thereto.  Upon such delivery,  the
Participant  shall have sold, and the Company shall have  purchased,  the number
of shares specified in such notice.

         (d)      The  purchase  price per share shall be the fair market  value
per share as of the  Valuation  Date under  Section 10.9  immediately  preceding
the date of sale.

         (e)      Stock  purchased  pursuant  to a put option  shall be paid for
as follows:

                  (i)......If  the  distribution  of  the  Stock  constituted  a
"Total  Distribution"  (as  defined in  paragraph (iii)),  payment for the Stock
shall be made in five  substantially  equal annual  payments.  The first payment
shall be made not later than 30 days  after the  Participant  exercises  the put
option.  The  remaining  payments  shall bear a reasonable  rate of interest and
shall be adequately secured.

                  (ii).....If the  distribution  of Stock does not  constitute a
Total  Distribution,  payment for the Stock shall be made in one cash payment no
later than 30 days after the Participant exercises the put option.

                  (iii)....A  "Total   Distribution"  is  a  distribution  to  a
Participant or his  beneficiary,  or a series of such  distributions  within one
taxable  year of the  recipient,  of the  Participant's  entire  balance in this
Plan.

         (f)      At the option of the Trustee,  pursuant to written  directions
from the Plan  Administrator,  the Plan may assume the rights and obligations of
the Company under the above  subsections  as to all or any part of the shares of
Stock tendered to the Company.

         (g)      If  the   Participant   has   contributed   the  Stock  to  an
individual  retirement  account or annuity  ("IRA"),  the IRA trustee shall have
the option to sell described in this Section 10.2.

10.3     Diversification and Early Distribution.

         Each  Participant  who has both attained  age 55 and completed at least
ten years of  participation  in the Plan (a "Qualified  Participant")  may elect
to receive a special,  early  distribution of Stock.  This special  election may
be made only  within  90 days  after the end of one of the first six Plan  Years
beginning  with the Plan Year the  Participant  became a Qualified  Participant.
After  the first  Plan Year the  Qualified  Participant  may elect to  receive a
distribution  of  up to  25%  of  those  shares  in  his  Company  Contributions
Account.  After the second through fifth Plan Years,  the Qualified  Participant
may elect to receive an  additional  number of shares,  provided  that the total
number  of shares  distributed  pursuant  to these  special  elections  does not
exceed  25% of the sum of the  number of shares in his  account  plus the number
of shares  previously  distributed.  After the sixth  Plan Year,  the  Qualified
Participant may elect to receive an additional  number of shares,  provided that
the total  number of shares  distributed  pursuant  to these  special  elections
does not  exceed  50% of the sum of the  number of such  shares  in his  account
plus the number of shares  previously  distributed.  The Stock received in these
distributions  is subject  to the put  options  described  in  Section 10.2.  No
distribution  may  be  made  under  this  section  without  the  consent  of the
Participant  and his Spouse  (if the  Participant  has a Spouse).  Distributions
pursuant to this section shall be made as soon as  practicable,  and in no event
later than 180 days after the close of the Plan Year.

10.4     Registration.

         Notwithstanding   any  other  provision   hereof,  no  Stock  shall  be
distributed to any person unless such  distribution is at that time  effectively
registered  or exempt from  registration  under the  Securities  Act of 1933, as
amended.  If the  distribution  of Stock to a Participant,  Alternate  Payee, or
beneficiary  is prohibited by the foregoing  limitation,  the Company shall take
such steps as are  necessary to permit the  distribution  of such  Participant's
interest in the Trust Fund.

10.5     Investment of Trust Fund.

         The Plan is designed to invest  primarily  in Stock.  Up to 100% of the
assets of the Trust may be  invested  in shares of Stock.  All cash  received by
the Trustee  shall,  at the written  direction  of the  Company,  be used to pay
interest  and  principal  on an  Exempt  Loan or to  purchase  Stock at the fair
market value of the Stock,  as  determined  under  Section 10.9.  At the written
direction of the Company,  the Trustee  shall  temporarily  invest Trust assets,
pending the  purchase  of Stock,  as  provided  in the Trust  Agreement.  In the
absence of written  direction  from the  Company,  the Trustee  may  temporarily
invest  Trust  assets,  pending  the  purchase  of Stock,  in savings  accounts,
certificates  of deposit and  high-grade  short-term  securities,  or such funds
may be held in cash or cash equivalents.

10.6     Dividends.

         The Company may from time to time  declare  and pay  dividends,  either
in cash or in  shares  of Stock,  with  respect  to shares of Stock in the Trust
Fund.   Dividends   paid  with  respect  to  Stock  shall  be  allocated   under
subsection 4.3(c).

10.7     Voting of Stock.

         (a)      If the  Stock is a  "registration-type  class of  securities,"
as  defined  in  Code  section 409(e),  each  Participant,  Alternate  Payee  or
beneficiary   shall  be  entitled  to  vote  the  shares  of  Stock,   including
fractional  shares,  allocated  to his  account and shall be entitled to receive
all proxy  materials and other  information  distributed to  shareholders in the
same manner as the other shareholders.

         (b)      If the Plan  owns any  Stock  that is not a  registration-type
class of  securities  (as  defined in Code  section 409(e)(4)),  a  Participant,
Alternate  Payee or  beneficiary  also shall be entitled to direct the  Trustee,
in  accordance  with the  provisions  of the Trust  Agreement,  to exercise  the
voting  rights  of that  Stock  in his  Company  Contributions  Account,  in the
following types of transactions  involving the Company:  merger,  consolidation,
recapitalization,    reclassification,   liquidation,   dissolution,   sale   of
substantially all assets of a trade or business,  or any similar  transaction as
may  be   prescribed   in  Treasury   Regulations.   While  an  Exempt  Loan  is
outstanding,  a  Participant,  Alternate  Payee,  or  beneficiary  shall also be
entitled to direct the  exercise of the voting  rights on any  shareholder  vote
of the  Stock  in his  Company  Contributions  Account  that  was  purchased  or
transferred  to the Plan in  connection  with the  Exempt  Loan.  In any case in
which the voting  rights  with  respect to Stock are not  required  to be passed
through to a Participant,  Alternate  Payee or  beneficiary  in accordance  with
the  foregoing,  such  Stock  shall  be  voted by the  Trustee  pursuant  to the
written  directions  of  the  Plan  Administrator,  as  provided  in  the  Trust
Agreement.

10.8     Stock to Be Subject to Certain Conditions.

         All shares of Stock  distributed to a Participant,  Alternate  Payee or
beneficiary  shall bear such  legends  and  statements  as the  Company may deem
advisable to assure  compliance  with  applicable  federal and state  securities
laws and regulations.  If the Company  requests,  a recipient of shares of Stock
shall,  prior to receipt of such  shares,  deliver to the Company  such  written
statements  as the  Company or its counsel  may  reasonably  require to indicate
that  (a) the  recipient  is  acquiring  such  shares for his own  account,  for
investment  and  not  with  the  view  to  disposing  of  such  shares,  (b) the
recipient of such shares  understands  that the shares have not been  registered
under the  Securities  Act of 1933 (the  "Act") and that  neither the shares nor
any interest  therein may be transferred,  sold,  assigned or conveyed except in
accordance  with  the  Act  and  applicable   state  securities  laws  and  must
therefore be held  indefinitely  unless they are  subsequently  registered under
the Act or an  exemption  from such  registration  is  available.  Such  written
statements may also require the recipient's  acknowledgment  that he understands
that if,  after  the  Stock has been held for a period of at least two years and
if the  provisions  of  Rule 144 of the General  Rules and  Regulations  adopted
under the Act are otherwise  available  (there being no  representations  by the
Company that the  provisions of Rule 144 will be  applicable),  then he may make
routine  sales of such  shares in limited  amounts,  in a specified  manner,  in
accordance  with other terms and  conditions  of Rule 144.  In the case of Stock
to which Rule 144 is not  applicable,  any sales by a recipient would have to be
made  in  compliance  with  Regulation  A  or  some  other  exception  from  the
registration requirements of the Act.

10.9     Valuation of Stock.

         With respect to all  activities  carried on by the Plan, all valuations
of  Stock,   while  the  Stock  is  not  readily  tradeable  on  an  established
securities   market,   shall  be  made  by  an  independent   appraiser  meeting
requirements  similar to those  contained  in  Treasury  Regulations  under Code
section 170(a)(1).  The fees of such  appraisers  shall  be paid by the  Company
or the Trust,  or may be shared by each, as determined by the Company;  all such
decisions  shall be made in compliance  with ERISA.  Shares of Stock held in the
Trust Fund which are not readily  tradeable on an established  securities market
shall  be  valued  annually  by the Plan  Administrator  (using  an  independent
appraiser),  for all purposes of the Plan,  at their fair market value as of the
last day of each Plan Year,  in  accordance  with the  applicable  provisions of
ERISA.   Shares  of  Stock  that  are  readily   tradeable  on  an   established
securities  market  shall be  valued as of the last day of each Plan Year and at
such other  dates as may be required  or  provided  by the Plan,  in  accordance
with  the  applicable  provisions  of  ERISA.  If  the  Stock  is  traded  on an
established  securities  market,  distributions  in the form of  Stock  shall be
valued at the fair  market  value of the Stock on the date the  Trustee  directs
the  transfer  agent for the Stock to  transfers  the  shares of Stock  into the
name of a  Participant  or a  Beneficiary.  In the  case of  purchases  of Stock
from "disqualified  persons" as defined in Code  section 4975(e)(2)),  the value
of the purchased Stock must be determined as of the date of the transaction.


                        * * * * end of Article X * * * *




                                   ARTICLE XI
                   Company Stock Purchased With Exempt Loans


11.1     Prohibition Against Non-Exempt Loans.

         In  general,  the term  "loan"  refers  to a loan made to the Plan by a
disqualified  person (as  defined in Code  section 4975(e)(2))  or a loan to the
Plan that is  guaranteed  by a  disqualified  person.  It includes a direct loan
of cash, a  purchase-money  transaction,  and an assumption of the obligation of
the Plan.  "Guarantee"  includes an  unsecured  guarantee  and the use of assets
of a  disqualified  person as  collateral  for a loan,  even  though  the use of
assets may not be a guarantee  under  applicable  state law. An  amendment  of a
loan in order to qualify as an Exempt Loan is not a  refinancing  of the loan or
the  making  of  another   loan.   Notwithstanding   anything  to  the  contrary
contained  in the Plan or  Trust  Agreement,  no loan  shall be made to the Plan
unless  such  loan  is an  Exempt  Loan  which  satisfies  all of the  following
requirements:

         (a)      Primary  Benefit  Requirement.  The loan must be primarily for
the benefit of the Plan Participants and their  beneficiaries.  In addition,  at
the time the loan is made,  the interest  rate for the loan and the price of the
Stock to be  acquired  with the  loan  proceeds  should  not be such  that  Plan
assets  might be drained  off and the terms of the loan,  whether or not between
independent  parties,  must be at least as favorable to the Plan as the terms of
a comparable loan resulting from arm's-length  negotiations  between independent
parties.

         (b)      Use of Loan  Proceeds.  The  proceeds of the loan must be used
within a  reasonable  time after  their  receipt by the Plan only for any or all
of the following purposes:

                  (i)......To acquire Stock.

                  (ii).....To repay such loan.

                  (iii)....To  repay  a  prior  Exempt  Loan.  A new  loan,  the
proceeds  of which  are so used,  must  satisfy  all of the  provisions  of this
subsection 11.1.   Except  as  provided  in  subsection 11.1(g)   below,  or  as
otherwise  required by  applicable  law, no Stock  acquired with the proceeds of
the loan  may be  subject  to a put,  call,  or other  option,  or  buy-sell  or
similar  arrangement  while held by and when distributed from the Plan,  whether
or not the Plan is  still an ESOP at such  time and  whether  any  Exempt  Loans
remain outstanding.

         (c)      Liability and  Collateral  of Plan for Loan.  The loan must be
without  recourse  against  the Plan and the only assets of the Plan that may be
given as  collateral  on the loan are assets  acquired  with the proceeds of the
loan and assets  that were used as  collateral  on a prior  Exempt  Loan  repaid
with the  proceeds  of the current  loan.  No person  entitled to payment  under
the loan shall have any right to assets of the Plan other than:

                  (i)......collateral given for the loan;

                  (ii).....Company  Contributions  (other than  contributions of
Stock) that are made under the Plan to meet its obligations under the loan;

                  (iii)....earnings  attributable  to  such  collateral  and the
investment of such contributions; and

                  (iv).....earnings  attributable  to all other  Stock  provided
the  required  allocation  of shares of Stock  released  from the ESOP  Suspense
Account is made pursuant to subsection 4.3(c).

The  payments  made by the Plan with  respect  to an Exempt  Loan  during a Plan
Year  must not  exceed  an  amount  equal to the sum of such  contributions  and
earnings  received  during or prior to the Plan Year less such payments in prior
years.  Such  contributions  and earnings  must be accounted  for  separately in
the books of account of the Plan until the loan is repaid.

         (d)      Default.  In the event of  default  upon an Exempt  Loan,  the
value of Plan assets  transferred  in  satisfaction  of the loan must not exceed
the amount of default.  If the lender is a  disqualified  person,  the loan must
provide for a transfer of Plan assets upon  default  only upon and to the extent
of the  failure of the Plan to meet the payment  schedule  of the loan.  For the
purposes  of this  subsection (d),  the  making of a  guarantee  does not make a
person a lender.

         (e)      Reasonable  Rate of  Interest.  The  interest  rate of  Exempt
Loan  must not be in excess  of a  reasonable  rate of  interest.  All  relevant
factors  will be  considered  in  determining  a  reasonable  rate of  interest,
including  the amount and duration of the loan,  the security and  guarantee (if
any) involved,  the credit  standing of the Plan and the guarantor (if any), and
the interest  rate  prevailing  for  comparable  loans.  When these  factors are
considered, a variable interest rate may be reasonable.

         (f)      Release From  Encumbrance.  Shares of Stock  purchased with an
Exempt Loan shall be allocated to a special ESOP  Suspense  Account and released
from the ESOP Suspense  Account (and the  encumbrance)  in accordance  with this
subsection (f).  Shares of Stock  released from the ESOP Suspense  Account shall
be allocated to the Participants'  Company  Contributions  Accounts. In general,
an Exempt  Loan  must  provide  for the  release  from  encumbrance  under  this
subsection  of Plan assets used as  collateral  for an Exempt  Loan.  The number
of  shares  of  Stock  released  each  Plan  Year  because  of  a  Company  ESOP
Contribution  shall  equal  the  number  of  encumbered  shares  of  Stock  held
immediately   before  release  for  the  current  Plan  Year   multiplied  by  a
fraction.  The  numerator  of  the  fraction  is the  amount  of  principal  and
interest paid for the year.  The  denominator  of the fraction is the sum of the
numerator  plus the  principal  and  interest  to be paid for all future  years.
The number of future years under the loan must be definitely  ascertainable  and
must be  determined  without  taking into  account any  possible  extensions  or
renewal  periods.  If the interest  rate under an Exempt Loan is  variable,  the
interest  to be paid in future  years  must be  computed  by using the  interest
rate  applicable  as of the end of the Plan Year.  If  collateral  includes more
than one class of  Stock,  the  number  of  shares of Stock of each  class to be
released for a Plan Year must be  determined  by applying  the same  fraction to
each  class.  Notwithstanding  the  foregoing,  a loan will not fail to  satisfy
this  subsection (f)  merely  because  the  number  of  shares  of  Stock  to be
released  from  encumbrance  is  determined  solely with  reference to principal
payments.  However,  if  release  is  determined  with  reference  to  principal
payments only, the following three additional rules apply:

                  (i)......the  loan  shall  provide  for  annual   payments  of
principal  and interest at a cumulative  rate that is not less rapid at any time
than level annual payments of such amounts for 10 years;

                  (ii).....the  interest  included in any payment  with  respect
to the  loan  shall  be  disregarded  only  to  the  extent  that  it  would  be
determined to be interest under standard loan amortization tables; and

                  (iii)....these  additional  rules  shall  not  apply  from the
time that,  because  of a renewal,  extension,  or  refinancing,  the sum of the
expired duration of the Exempt Loan, the renewal period,  the extension  period,
and the duration of a new loan exceeds 10 years.

         (g)      Put Option.  Stock  acquired by the Plan with the  proceeds of
the loan  shall be  subject to a put option  described  in  Section 10.2,  if it
meets the requirements  thereof,  or if it is subject to a "trading  limitation"
when  distributed.  For purposes of this subsection,  a trading  limitation on a
security  is a  restriction  under any  federal  or state  securities  law,  any
regulation  thereunder,  or an agreement,  not prohibited by this Article, which
would  make the  security  not as freely  tradeable  as one not  subject to such
restriction.  The  put  option  shall  be  exercisable  only  by a  Participant,
Alternate Payee or beneficiary,  by their donees,  or by a person  (including an
estate or its  distributee)  to whom the Stock  passes by reason of their death.
The put option shall permit a  Participant,  Alternate  Payee or  beneficiary to
put the stock to the  Company as  described  in  Section 10.2.  At the option of
the Trustee,  the Plan may assume the rights and  obligations  of the Company as
to all or any part of the  shares  tendered  to the  Company.  If it is known at
the time an Exempt  Loan is made that  federal or state law will be  violated by
the  Company's  honoring  such put option,  the put option must permit the Stock
to be put, in a manner  consistent  with such law, to a third  party  (e.g.,  an
affiliate  of the  Company  or a  shareholder  other  than  the  Plan)  that has
substantial  net  worth at the time the  loan is made  and  whose  net  worth is
reasonably expected to remain substantial.

11.2     Voting Rights.

         Stock  acquired  with the  proceeds of an Exempt Loan that is allocated
to Participants' Company  Contributions  Accounts shall be subject to the voting
rights  described  in  Section 10.7.  Stock  acquired  with the  proceeds  of an
Exempt Loan that has been  allocated to the ESOP  Suspense  Account,  or for any
other reason has not been  allocated to  Participants'  accounts  shall be voted
by  the  Trustee  in  accordance   with  the  written   direction  of  the  Plan
Administrator.

11.3     Allocation to Accounts of Participants.

         (a)      Except as provided in this Section 11.3,  amounts  contributed
to  the  Plan  shall  be  allocated  as  provided  under  Treasury   Regulations
sections 1.401-1(b)(ii)  and  (iii),  and Stock  acquired  by the Plan  shall be
accounted      for     as     provided      under      Treasury      Regulations
section 1.402(a)-1(b)(2)(ii).

         (b)      As of the end of each Plan Year,  the Plan shall  consistently
allocate  to  the  Participants'   accounts   nonmonetary   units   representing
Participants' interests in assets withdrawn from the ESOP Suspense Account.

         (c)      Income with  respect to Stock  acquired  with the  proceeds of
an Exempt  Loan shall be  allocated  as income of the Plan  except to the extent
that the Plan  provides for the use of cash  dividends  paid on Stock to pay the
principal or interest on Exempt  Loans.  The use of such  dividends  (as well as
cash  dividends  paid on Stock not acquired with the proceeds of an Exempt Loan)
is hereby specifically  permitted,  regardless of whether the dividends are paid
on Stock previously allocated to Participants'  Company  Contributions  Accounts
pursuant to  subsection (b).  This allocation  shall satisfy the requirements of
subsection 4.3(c).

         (d)      If  a  portion  of  a  Participant's   Company   Contributions
account is  forfeited,  Stock  allocated  under  subsection (b)  above  shall be
forfeited  only  after  other  assets.  If  interests  in more than one class of
Stock have been allocated to the Participant's  Company  Contributions  account,
the  Participant  must be treated as forfeiting the same proportion of each such
class.

11.4     Non-Terminable Provisions.

         Stock  acquired  with  proceeds of an Exempt Loan shall  continue to be
subject to the  provisions  of this  Article,  even after all Exempt  Loans have
been  paid  in  full  and  even  if the  Plan  ceases  to be an  Employee  Stock
Ownership Plan.


                       * * * * end of Article XI * * * *




                                  ARTICLE XII
                      Plan Adoption by Affiliated Entities


12.1     Adoption of Plan.

         Frontier may permit any Affiliated Entity to adopt the Plan and Trust
for its Employees.  Thereafter, such Affiliated Entity shall deliver to the
Trustee a certified copy of the resolutions or other documents evidencing its
adoption of the Plan and Trust, but such Affiliated Entity shall not be
required to execute a copy of the Trust Agreement.

12.2     Agent of Affiliated Entity.

         By becoming a party to the Plan, each Affiliated Entity appoints
Frontier as its agent with authority to act for the Affiliated Entity in all
transactions in which Frontier believes such agency will facilitate the
administration of the Plan.  Frontier shall have the sole authority to amend
and terminate the Plan.

12.3     Disaffiliation and Withdrawal from Plan.

         (a)      Disaffiliation.  Any  Affiliated  Entity  that has adopted the
Plan and  thereafter  ceases for any  reason to be an  Affiliated  Entity  shall
forthwith cease to be a party to the Plan.

         (b)      Withdrawal.   Any   Affiliated   Entity  may,  by  appropriate
action and written  notice thereof to Frontier,  provide for the  discontinuance
of its  participation  in the Plan.  Such  withdrawal from the Plan shall not be
effective until the end of the Plan Year.

12.4     Effect of Disaffiliation or Withdrawal.

         If at the time of disaffiliation or withdrawal,  the  disaffiliating or
withdrawing  entity,  by appropriate  action,  adopts a substantially  identical
plan that provides for direct  transfers  from this Plan,  then, as to employees
of such entity, no plan termination  shall have occurred;  the new plan shall be
deemed a  continuation  of this  Plan  for such  employees.  In such  case,  the
Trustee  shall  transfer  to the  trustee of the new plan all of the assets held
for the benefit of employees of the  disaffiliating or withdrawing  entity,  and
no forfeitures or  acceleration  of vesting shall occur solely by reason of such
action.  Such  payment  shall  operate as a complete  discharge  of the Trustee,
and of all organizations  except the  disaffiliating  or withdrawing  entity, of
all  obligations  under  this  Plan  to  employees  of  the   disaffiliating  or
withdrawing  entity and to their  beneficiaries.  A new plan shall not be deemed
substantially  identical  to this Plan if it provides  slower  vesting than this
Plan.  Nothing in this  Section  shall  authorize  the  divesting  of any vested
portion of a Participant's account(s).

12.5     Distribution Upon Disaffiliation or Withdrawal.

         (a)      Disaffiliation.  If an entity  disaffiliates  from the Company
and the provisions of  Section 12.4  are not followed,  then the following rules
apply to the account(s) of employees of the disaffiliating entity.

                  (i)......If the  disaffiliating  entity  maintains  a  defined
contribution  plan  (other  than an  employee  stock  ownership  plan within the
meaning of Code  section 4975(e)(7)),  then,  if the other plan will accept such
a transfer,  the Trustee shall transfer the  employee's  account(s) to the other
plan unless the  employee  consents to an immediate  distribution  in a lump sum
(other than an annuity) of the vested  portion of his  account(s);  if the other
plan will not accept such a transfer,  the account(s)  shall remain in this Plan
until the employee elects to receive a distribution pursuant to Article VI.

                  (ii).....If the  disaffiliating  entity  does not  maintain  a
defined  contribution  plan (other than an employee stock  ownership plan within
the meaning of Code  section 4975(e)(7)),  then the Trustee shall distribute the
vested  portion  of the  employee's  account(s)  to the  employee  in a lump sum
(other than an  annuity),  upon the  consent of the  employee.  If the  employee
does not consent to an immediate  distribution,  then  distribution  may only be
made according to Article VI.

         (b)      Withdrawal.  If an Affiliated  Entity  withdraws from the Plan
and the provisions of  Section 12.4  are not followed,  then the following rules
apply to the account(s) of Employees of the withdrawing entity.

                  (i)......If  the  withdrawing   entity   maintains  a  defined
contribution  plan that accepts  transfers from this Plan, then the Employee may
transfer  his  account(s)  from  this  Plan  to such  plan.  No  forfeitures  or
acceleration of vesting shall occur solely by reason of such transfer.

                  (ii).....If  the  withdrawing   entity  does  not  maintain  a
defined  contribution  plan that  accepts  transfers  from this  Plan,  then the
Employee's account(s) shall remain in this Plan.

         (c)      Distributions.  Any  distribution  or transfer  made  pursuant
to  this  Section  shall  be  in  shares  of  Stock,  provided,   however,  that
fractional  shares of Stock may be  converted  to and paid in cash.  After  such
distribution  or transfer has been made, no Participant  or beneficiary  who has
received  any such  distribution,  or for whom any such  transfer has been made,
shall have any further right or claim under the Plan or Trust.


                       * * * * end of Article XII * * * *




                                  ARTICLE XIII
                              Top-Heavy Provisions


13.1     Application of Top-Heavy Provisions.

         The provisions of this Article shall be applicable only if the Plan
becomes "top-heavy" as defined below for any Plan Year.  If the Plan becomes
"top-heavy" as of the Determination Date for a Plan Year, the provisions of
this Article shall apply to the Plan effective as of the first day of such
Plan Year and shall continue to apply to the Plan (whether or not the Plan
ceases to be "top-heavy") until the Plan is terminated or otherwise amended.

13.2     Determination of Top-Heavy Status.

         The Plan  shall be  considered  "top-heavy"  for a Plan  Year if, as of
the  Determination  Date  for that  Plan  Year,  the  aggregate  of the  account
balances (as calculated  according to the  regulations  under Code  section 416)
of Key  Employees  under  this Plan  (and  under all  other  plans  required  or
permitted to be  aggregated  with this Plan) exceeds 60% of the aggregate of the
account  balances  (as  calculated  according  to  the  regulations  under  Code
section 416)  in this Plan (and under all other plans  required or  permitted to
be  aggregated  with  this  Plan)  of  all  current  Employees  and  all  former
Employees  who  terminated  employment  within  five years of the  Determination
Date.  This ratio shall be referred to as the  "top-heavy  ratio".  For purposes
of determining the account balance of any Participant,  distributions  made with
respect  to  such   individual   within  a  five-year   period   ending  on  the
Determination  Date shall be  included.  This shall also apply to  distributions
under a terminated  plan that,  if it had not been  terminated,  would have been
required to be  included  in an  aggregation  group.  The account  balances of a
Participant  who had once  been a Key  Employee,  but who is not a Key  Employee
during  the Plan Year,  shall not be taken into  account.  The  following  plans
must be  aggregated  with  this Plan for the  top-heavy  test:  (a) a  qualified
plan  maintained by the Company or an Affiliated  Entity in which a Key Employee
participated  during this Plan Year or during the  previous  four Plan Years and
(b) any other qualified plan  maintained by the Company or an Affiliated  Entity
that  enables  this  Plan or any  plan  described  in  clause (a)  to  meet  the
requirements  of Code  sections 401(a)  and  410.  The  following  plans  may be
aggregated   with  this  Plan  for  the  top-heavy   test:  any  qualified  plan
maintained by the Company or an  Affiliated  Entity that,  in  combination  with
the Plan or any plan  required  to be  aggregated  with this  Plan when  testing
this  Plan  for   top-heaviness,   would  satisfy  the   requirements   of  Code
sections 401(a)  and 410. If one or more of the plans  required or  permitted to
be  aggregated  with  this  Plan is a  defined  benefit  plan,  a  Participant's
"account  balance"  shall  equal  the  present  value  of his  accrued  benefit,
including  any  distributions  within five years of the  Determination  Date. If
the  aggregation  group  includes more than one defined  benefit plan,  the same
actuarial  assumptions  shall be used with respect to each such defined  benefit
plan.  The foregoing  top-heavy  ratio shall be computed in accordance  with the
provisions of Code  section 416(g),  together with the  regulations  and rulings
thereunder.

13.3     Special  VestingP. .1 provides for faster  vesting,  the amount credited
to the  Participant's  Company  Contributions  account  shall vest in accordance
with the following schedule during any top-heavy Plan Year:

                             Years of Service                  Vested Percentage

                                    1                                  20
                                    2                                  40
                                    3                                  60
                                    4                                  80
                                5 or more                             100

13.4     Special Minimum Contribution.

         (a)      Amount   of   Minimum   Contribution.    Notwithstanding   the
provisions  of  Section 3.1  and  Article IV  to the  contrary,  and  subject to
subsection (b),  in every top-heavy Plan Year, a minimum  allocation is required
for each Non-Key  Employee who both  (i) performed  one or more Hours of Service
during the Plan Year as a Covered  Employee  after  satisfying  any  eligibility
requirement  of  Section 2.1,  and  (ii) was  an Employee on the last day of the
Plan Year.  This  minimum  allocation  is required  regardless  of whether  such
Non-Key  Employee  received  credit  for 1,000 or more  Hours of Service or made
any  required  contributions  to the  Plan  for  such  Plan  Year.  The  minimum
allocation shall be a percentage of such Non-Key  Employee's  Compensation.  The
percentage  shall  be the  lesser  of 3% or the  largest  percentage  of any Key
Employee's  Compensation.  For all Key and Non-Key  Employees,  this  percentage
takes  into  account  all  Company  Contributions  and  forfeitures,  except for
amounts  used to restore  the  accounts  of a rehired  or  missing  Participant,
allocated  for the Plan Year.  If this minimum  allocation  is not satisfied for
any Non-Key  Employee,  the  Company  shall  contribute  the  additional  amount
needed  to  satisfy  this  requirement  to  such  Non-Key   Employee's   Company
Contributions account.

         (b)      Coordination  With 401(k)  Plan.  The Company  also  maintains
the Frontier  Airlines,  Inc.  Retirement  Savings Plan, a defined  contribution
profit  sharing plan with a cash or deferred  arrangement  (the "401(k)  Plan").
A  Participant  who  participates  in both this Plan and the  401(k)  Plan shall
receive the top heavy minimum contribution in this Plan.

13.5     Change in Top-Heavy Status.

         If the  Plan  ceases  to be a  "top-heavy"  plan  as  defined  in  this
Article XIII,  and if any change in the benefit  structure,  vesting schedule or
other  component of a  Participant's  accrued benefit shall occur as a result of
such  change  in  top-heavy  status,  the  nonforfeitable   percentage  of  each
Participant's  benefit  attributable  to  Company  Contributions  shall  not  be
decreased as a result of such  change.  In addition,  each  Participant  with at
least three Years of Service  with the  Company and  Affiliated  Entities on the
date of such change,  may elect to have his nonforfeitable  percentage  computed
under the Plan  without  regard to such  change in  status.  The  period  during
which the  election  may be made shall  commence  on the date the Plan ceases to
be a top-heavy plan and shall end on the later of  (a) 60 days  after the change
in status occurs,  (b) 60 days after the change in status becomes effective,  or
(c) 60 days  after the  Participant  is issued  written  notice of the change by
the Company or the Plan Administrator.


                      * * * * end of Article XIII * * * *




                                  ARTICLE XIV
                                 Miscellaneous


14.1     Right to Dismiss Employees - No Employment Contract.

         The Company and  Affiliated  Entities may terminate  the  employment of
any  Employee  as  freely  and with the same  effect as if this Plan were not in
existence.  Participation  in this Plan by an Employee  shall not  constitute an
express or implied  contract of employment  between the Company or an Affiliated
Entity and the Employee.

This section 14.2 shall apply to claims filed prior to January 1, 2002:

14.2     Claims Procedure.

         (a)      All claims shall be filed in writing by the  Participant,  his
beneficiary,  or the authorized  representative  of the claimant,  by completing
the procedures that the Plan  Administrator  requires.  The procedures  shall be
reasonable  and may  include  the  completion  of forms  and the  submission  of
documents and additional  information.  For purposes of this Section,  a request
for an in-service withdrawal shall be considered a claim.

         (b)      The Plan  Administrator  shall review all  materials and shall
decide  whether to  approve or deny the claim.  If a claim is denied in whole or
in part,  written notice of denial shall be furnished by the Plan  Administrator
to the  claimant  within  90 days  after  the  receipt  of the claim by the Plan
Administrator,  unless  special  circumstances  require an extension of time for
processing  the claim,  in which event  notification  of the extension  shall be
provided  to the  claimant  and the  extension  shall not  exceed  90 days.  The
written  notice shall set forth the specific  reasons for such denial,  specific
reference  to  pertinent  Plan  provisions,  a  description  of  any  additional
material or  information  necessary for the claimant to perfect his claim and an
explanation of why such material or  information is necessary,  all written in a
manner  calculated to be  understood  by the claimant.  The notice shall include
appropriate  information  as to the steps to be taken if the claimant  wishes to
submit his denied  claim for  review.  The  claimant  may  request a review upon
written application,  may review pertinent  documents,  and may submit issues or
comments in writing.  The claimant must request a review  within the  reasonable
period of time  prescribed by the Plan  Administrator.  In no event shall such a
period  of time be less  than  60 days.  The  Appeals  Board  shall  decide  all
reviews  of denied  claims.  A  decision  on  review  shall be  rendered  within
60 days of the receipt of request for review by the  Appeals  Board.  If special
circumstances  require a further  extension of time for  processing,  a decision
shall be  rendered  not  later  than  120 days  following  the  Appeals  Board's
receipt of the request for review.  If such an  extension  of time for review is
required,  written  notice of the  extension  shall be furnished to the claimant
prior to the  commencement  of the extension.  The Appeals  Board's  decision on
review shall be furnished to the  claimant.  Such  decision  shall be in writing
and  shall  include  specific  reasons  for the  decision,  written  in a manner
calculated to be understood by the claimant,  as well as specific  references to
the pertinent Plan provisions on which the decision is based.

         (c)      The Plan  Administrator,  when initially  deciding claims, and
the Appeals  Board,  when deciding  appeals of denied  claims,  shall have total
discretionary  authority to  determine  eligibility,  status,  and the rights of
all individuals under the Plan and to construe any and all terms of the Plan.

This section 14.2 shall apply to claims filed on and after January 1, 2002:

14.2     Claims Procedure.

         (a)      Filing a Claim.  All  claims  shall be filed in writing by the
Participant,   his  beneficiary,   or  the  authorized   representative  of  the
claimant,  by  completing  the  procedures  that  the  Committee  requires.  The
procedures  shall be reasonable  and may include the completion of forms and the
submission  of  documents  and  additional  information.  All claims  under this
Plan shall be filed in writing with the Committee  according to the  Committee's
procedures  no later than one year after the  occurrence of the event that gives
rise to the claim.  If the claim is not filed  within the time  described in the
preceding sentence, the claim shall be barred.

         (b)      Review of Initial Claim.

                  (i)......Initial  Period  for Review of Claim.  The  Committee
shall  review  all  materials  and shall  decide  whether to approve or deny the
claim.  If a claim is  denied  in whole or in part,  written  notice  of  denial
shall be furnished by the  Committee  to the claimant  within a reasonable  time
after  the  claim is filed  but not  later  than  90 days  after  the  Committee
receives the claim.  The notice shall set forth the specific  reason(s)  for the
denial,  reference  to the  specific  plan  provisions  on which  the  denial is
based,  a description of any  additional  material or information  necessary for
the  claimant to perfect his claim and an  explanation  of why such  material or
information  is necessary,  and a description  of the Plan's review  procedures,
including the  applicable  time limits and a statement of the  claimant's  right
to bring a civil  action  under ERISA  section 502(a)  following a denial of the
appeal.

                  (ii).....Extension.   If   the   Committee   determines   that
special  circumstances  require an extension of time for  processing  the claim,
it shall  give  written  notice  to the  claimant  and the  extension  shall not
exceed  90 days.  The notice shall be given before the  expiration of the 90 day
period  described  in  section 14.2(b)(i)  above and shall  indicate the special
circumstances  requiring  the  extension  and the  date by which  the  Committee
expects to render its decision.

         (c)      Appeal of Denial of Initial  Claim.  The  claimant may request
a review upon  written  application,  may review  pertinent  documents,  and may
submit  issues or  comments  in  writing.  The  claimant  must  request a review
within the reasonable  period of time  prescribed by the Committee.  In no event
shall such a period of time be less than 60 days.  The  Committee  shall forward
all appeals,  including all material  submitted by the claimant,  to the Appeals
Board.

         (d)      Review of Appeal.

                  (i)......Initial  Period  for Review of  Appeal.  The  Appeals
Board shall  conduct all reviews of denied  claims and shall render its decision
within a  reasonable  time,  but not less than  60 days  of the  receipt  of the
appeal by the  Committee,  which shall  forward the appeal to the Appeals  Board
promptly.  The claimant shall be notified of the Appeals  Board's  decision in a
notice,  which shall set forth the specific reason(s) for the denial,  reference
to the specific plan  provisions on which the denial is based,  a statement that
the  claimant  is  entitled  to  receive,  upon  request  and  free  of  charge,
reasonable  access  to  and  copies  of  all  documents,   records,   and  other
information   relevant  to  the  claimant's   claim,  and  a  statement  of  the
claimant's  right to bring a civil action under ERISA  section 502(a)  following
a denial of the appeal.

                  (ii).....Extension.  If  the  Appeals  Board  determines  that
special  circumstances  require an extension of time for  reviewing  the appeal,
it shall  give  written  notice  to the  claimant  and the  extension  shall not
exceed 60 days.  The notice shall be given before the  expiration  of the 60 day
period  described  in section  14.2(d)(i)  above and shall  indicate the special
circumstances  requiring  the  extension and the date by which the Appeals Board
expects to render its decision.

         (e)      Form  of  Notice  to  Claimant.  The  notice  to the  claimant
shall be given in  writing  or  electronically  and shall be written in a manner
calculated   be   understood   by  the   claimant.   If  the   notice  is  given
electronically,  it shall comply with the  requirements  of  Department of Labor
Regulation section 2520.104b-1(c)(1)(i), (iii), and (iv).

         (f)      Discretionary  Authority of Committee and Appeals  Board.  The
Committee  and the Appeals  Board  shall have full  discretionary  authority  to
determine  eligibility,  status,  and the  rights of all  individuals  under the
Plan,  to construe  any and all terms of the Plan,  and to find and construe all
facts.

14.3     Source of Benefits.

         All  benefits  payable  under the Plan  shall be paid  solely  from the
Trust Fund,  and the Company and  Affiliated  Entities  assume no  liability  or
responsibility therefor.

14.4     Exclusive Benefit of Employees.

         It is the  intention  of the Company  that no part of the Trust,  other
than as provided in  Sections 3.2,  8.2, and 14.8 hereof and  Section 4.2 of the
Trust  Agreement,  ever to be used for or diverted  to  purposes  other than for
the   exclusive   benefit  of   Participants,   Alternate   Payees,   and  their
beneficiaries,  and that this Plan shall be  construed  to follow the spirit and
intent of the Code and ERISA.

14.5     Forms of Notices.

         Wherever  provision  is made in the Plan for the filing of any  notice,
election,  or  designation  by  a  Participant,   Spouse,  Alternate  Payee,  or
beneficiary,  the action of such individual  shall be evidenced by the execution
of such form as the Plan Administrator may prescribe for the purpose.

14.6     Notice of Adoption of the Plan.

         The Company  shall  provide  each of its  Employees  with notice of the
adoption of this Plan,  notice of any  amendments to the Plan, and notice of the
salient  provisions  of the Plan  prior to the end of the  first  Plan  Year.  A
complete  copy of the  Plan  shall  also be made  available  for  inspection  by
Employees or any other individual with an account balance under the Plan.

14.7     Plan Merger.

         If  this  Plan  is  merged  or  consolidated  with,  or its  assets  or
liabilities   are   transferred   to,  any  other  qualified  plan  of  deferred
compensation,   each  Participant   shall  be  entitled  to  receive  a  benefit
immediately  after the merger,  consolidation,  or transfer  that is equal to or
greater  than the  benefit he would have been  entitled  to receive  immediately
before  the  merger,  consolidation,  or  transfer  if this  Plan had then  been
terminated.

14.8     Inalienability of Benefits - Domestic Relations Orders.

         (a)      No   Assignment   of   Benefits.   Except   as   provided   in
subsections (b)  and (g) below,  no Participant  or  beneficiary  shall have any
right to assign,  alienate,  transfer,  hypothecate,  encumber or anticipate his
interest in any  benefits  under this Plan,  nor shall such  benefits be subject
to any legal  process to levy upon or attach  the same for  payment of any claim
against any such Participant or beneficiary.

         (b)      Exception:   QDROs.   Subsection (a)   shall   apply   to  the
creation,  assignment,  or  recognition  of a right to any benefit  payable with
respect to a  Participant  pursuant to a Domestic  Relations  Order  unless such
Domestic  Relations  Order is a QDRO in which case the Plan  shall make  payment
of benefits in accordance with the applicable requirements of any such QDRO.

         (c)      Requirements  for QDROs.  In order to be a QDRO,  the Domestic
Relations  Order:  (i) must  clearly specify the name and the last known mailing
address of the  Participant;  (ii) must  specify the name and mailing address of
each  Alternate  Payee  covered  by the  order;  (iii) must  specify  either the
amount or  percentage  of the  Participant's  benefits to be paid by the Plan to
each such Alternate  Payee,  or the manner in which such amount or percentage is
to be  determined;  (iv) must  specify the number of payments or period to which
such order  applies;  (v) must  specify  each plan to which such order  applies;
(vi) may  not require  the Plan to provide  any type or form of benefit,  or any
option,  not otherwise  provided  under the Plan,  subject to the  provisions of
Paragraphs (f)(ii)  and  (f)(iii);  (vii) may not  require  the Plan to  provide
increased  benefits  (determined  on the basis of actuarial  value);  (viii) may
not  require the payment of  benefits  to an  Alternate  Payee if such  benefits
have  already  been  designated  to be paid to  another  Alternate  Payee  under
another order previously determined to be a QDRO.

         (d)      Payments Prior to  Participant's  Separation From Service.  In
the case of any  payment  before an  Employee  has  separated  from  service,  a
Domestic   Relations  Order  shall  not  be  treated  as  failing  to  meet  the
requirements of  Subsection (c)  solely because such order requires that payment
of  benefits  be made to an  Alternate  Payee  (i) on or after the date on which
the  Employee  attains (or would have  attained)  his earliest  retirement  age,
(ii) as if the  Employee  had  retired  on the date on which such  payment is to
begin  under such order (but  taking into  account  only the account  balance on
such date),  and (iii) in any form in which such  benefits may be paid under the
Plan to the  Employee.  The  earliest  retirement  age is the earlier of (i) the
date on which the  Employee  is entitled to a  distribution  under the Plan,  or
(ii) the  later  of  (A) the  date  the  Employee  attains  age 50,  or  (B) the
earliest date on which the Employee  could begin  receiving  benefits  under the
Plan if the Employee  separated from service.  For purposes of this  Subsection,
the  account  balance as of the date  specified  in the QDRO shall be the vested
portion of the Employee's account(s) on such date.

         (e)      Procedures.

                  (i)......General.   The  Plan  Administrator  shall  establish
reasonable  procedures to determine the qualified  status of Domestic  Relations
Orders and to administer  distributions  under QDRO's.  Such procedures shall be
in writing and shall  permit an Alternate  Payee to  designate a  representative
to receive copies of notices.

                  (ii).....Notice  to  Participant  and  Prospective   Alternate
Payee(s);  Review.  When the Plan  Administrator  receives a Domestic  Relations
Order,  it shall promptly  notify the  Participant  and each Alternate  Payee of
such  receipt  and  provide  them  with  copies  of the  Plan's  procedures  for
determining  the  qualified  status of the  order.  Within a  reasonable  period
after  receipt of a  Domestic  Relations  Order,  the Plan  Administrator  shall
determine  whether  such  order is a QDRO and notify  the  Participant  and each
Alternate Payee of such determination.

                  (iii)....Separate  Accounting.  During  any  period  in  which
the issue of whether a Domestic  Relations  Order is a QDRO is being  determined
(by  the  Plan  Administrator,   by  a  court  of  competent  jurisdiction,   or
otherwise),  the Plan  Administrator  shall  separately  account for the amounts
payable  to the  Alternate  Payee if the order is  determined  to be a QDRO.  If
the  order  (or  modification  thereof)  is  determined  to  be  a  QDRO  within
18 months  after the date the first  payment  would have been  required  by such
order, the Plan  Administrator  shall pay the amounts  separately  accounted for
(plus any interest  thereon) to the  individual(s)  entitled  thereto.  However,
if the Plan  Administrator  determines  that the order is not a QDRO,  or if the
issue  as to  whether  such  order  is a  QDRO  has  not  been  resolved  within
18 months  after the date the first  payment  would have been  required  by such
order, then the Plan Administrator  shall pay the amounts  separately  accounted
for  (plus any  interest  thereon)  to the  individual(s)  who  would  have been
entitled  to such  amounts if there had been no order.  Any  determination  that
an order is a QDRO that is made  after the close of the  18-month  period  shall
be applied  prospectively  only.  If the Plan's  fiduciaries  act in  accordance
with  fiduciary  provisions of ERISA in treating a Domestic  Relations  Order as
being  (or not  being)  a QDRO or in  taking  action  in  accordance  with  this
Subsection,  then the Plan's  obligation to the  Participant  and each Alternate
Payee  shall be  discharged  to the extent of any payment  made  pursuant to the
acts of such fiduciaries.

                  (iv).....Participant    Distributions.    Upon   receiving   a
Domestic  Relations  Order  (either in draft form or entered by a court) or upon
receiving  information that causes the Plan  Administrator to reasonably believe
that a  Domestic  Relations  Order  will be  submitted,  the Plan  Administrator
shall place a hold on the affected  Participant's  accounts  that  prohibits the
Participant  from  receiving a  distribution  upon  termination  of  employment.
However,  the  Participant  may  receive  a  distribution  upon  termination  of
employment  if all  prospective  Alternate  Payees  consent  in  writing  to the
distribution or if the court that is hearing the domestic  relations  proceeding
approves  the  distribution.  If the Plan  Administrator  places the hold on the
account   as  a  result  of   receiving   information   that   causes  the  Plan
Administrator  to believe that a Domestic  Relations Order will be submitted and
if the Plan  Administrator  does not receive a Domestic  Relations Order (either
in  draft  form  or  entered  by  a  court)  within   180 days  after  the  Plan
Administrator  placed the hold on the Participant's  accounts,  the hold will be
removed from the Participant's  accounts.  If the Plan Administrator  places the
hold  on  the  Participant's  accounts  as a  result  of  receiving  a  Domestic
Relations  Order  (either in draft  form or entered by a court),  the hold shall
remain  on the  Participant's  accounts  until  the  first to  occur of  (A) the
120th day  after the date the Plan  Administrator  responds to the parties  with
its  comments  on the  Domestic  Relations  Order,  or  (B) the  date  the  Plan
Administrator  determines  that the  Domestic  Relations  Order  is a  Qualified
Domestic  Relations  Order and the  Participant's  accounts are divided  between
the  Participant  and the Alternate  Payee in the records of the Plan.  However,
if  the  Participant's   accounts  are  affected  by  the  separate   accounting
requirement  of  subsection 14.8(e)(iii)  above,  the hold shall continue to the
extent  necessary  for the Plan and the Plan  Administrator  to comply  with the
separate accounting requirement.  Nothing in this  subsection 14.8(e)(iv)  shall
prevent the Participant  from exercising  investment  control over the assets in
his accounts during the pendency of a hold on the accounts.

         (f)      The  Alternate  Payee shall have the  following  rights  under
the Plan:

                  (i)......The Alternate  Payee may designate  beneficiaries  in
the same manner as a Participant,  pursuant to  Section 6.1.  However,  any such
beneficiary  designation  shall be  effective  without the consent of the spouse
of  the   Alternate   Payee.   In  the  absence  of  an  effective   beneficiary
designation,  the  distributable  amount  of the  Alternate  Payee's  account(s)
shall be paid to his  surviving  spouse;  or if none,  in  equal  shares  to his
surviving  children and issue of deceased  children by right of  representation;
or if  none,  in equal  shares  to each  surviving  parent;  or if none,  to his
estate.

                  (ii).....Notwithstanding   any   other   provisions   of  this
Section 14.8,  an alternate  payee shall  receive a  distribution  of his or her
Plan  assets  as  soon  as  administratively  practicable  after  any  necessary
valuation  of his or her  account  balance  and  after  the  Plan  Administrator
determines that the domestic  relations order is a qualified  domestic relations
order.  An  alternate  payee may only  receive a  distribution  in the form of a
lump sum of his or her entire interest in the Plan.

                  (iii)....Distribution  to an  Alternate  Payee  shall begin on
or before the  Participant's  Required  Beginning  Date. An Alternate  Payee may
only receive a distribution in the form of a lump sum (other than an annuity).

                  (iv).....Upon the death of an Alternate  Payee,  the Alternate
Payee's  entire  interest in the Plan shall be  distributed in a lump sum by the
end of the calendar  year  containing  the fifth  anniversary  of the  Alternate
Payee's death.

                  (v)......The Alternate  Payee (or his  beneficiary)  may bring
claims  against  the  Plan in the  same  manner  as a  Participant  pursuant  to
Section 14.2.

         (g)      Certain  Judgments and  Settlements.  This  subsection 14.8(g)
shall  apply  to  judgments,   orders,   and  decrees  issued,   and  settlement
agreements entered into, on or after August 5,  1997.  Subsection (a)  shall not
apply to any  offset  of the  Participant'  s  account  balance(s)  in an amount
equal to an amount  that the  Participant  is ordered or  required to pay to the
Plan if:

                  (i)......the order or requirement to pay arises

                  .........(1)      under a judgment  of  conviction  of a crime
involving the Plan, or

                  .........(2)      under  a   civil   judgment,   including   a
consent  decree,  entered by a court in an action  brought in connection  with a
violation   (or  an  alleged   violation)   of  the   fiduciary   responsibility
requirements of Title I of ERISA, or

                  .........(3)      pursuant to a settlement  agreement  between
the Secretary of Labor and the  Participant  in connection  with a violation (or
an alleged  violation) of the fiduciary  responsibility  requirements of Title I
of ERISA, and

                  (ii).....the   judgment,    order,   decree,   or   settlement
agreement  expressly  provides  for the  offset  of all or a part of the  amount
ordered or required to be paid to the Plan  against  the  Participant's  account
balance(s) under the Plan.

14.9     Payments Due Minors or Incapacitated Individuals.

         If any individual  entitled to a payment under the Plan is a minor,  or
if the Plan  Administrator  determines that any such individual is incapacitated
by reason of physical or mental disability,  whether or not legally  adjudicated
as such,  the Plan  Administrator  shall  have the power to cause  the  payments
becoming due to such  individual  to be made to his personal  representative  or
to another for his benefit,  without  responsibility  of the Plan  Administrator
or the  Trustee  to see to the  application  of  such  payments.  Payments  made
pursuant  to such  power  shall  operate as a  complete  discharge  of the Trust
Fund, the Trustee and the Plan Administrator.

14.10    Uniformity of Application.

         The provisions of this Plan shall be applied in a uniform and
non-discriminatory manner in accordance with rules adopted by the Plan
Administrator which rules shall be systematically followed and consistently
applied so that all individuals similarly situated shall be treated alike.

14.11    Disposition of Unclaimed Payments.

         Each  Participant,  Alternate  Payee,  or  beneficiary  with an account
balance  in this Plan must  file with the Plan  Administrator  from time to time
in  writing  his  address,   the  address  of  each  of  his  beneficiaries  (if
applicable),  and each  change  of  address.  Any  communication,  statement  or
notice  addressed to such  individual  at his last  address  filed with the Plan
Administrator  (or if no address is filed  with the Plan  Administrator  then at
his last  address  as shown on the  Company's  records)  will be binding on such
individual  for all  purposes of the Plan.  Neither the Plan  Administrator  nor
the Trustee  shall be  required to search for or locate any missing  individual.
If the Plan  Administrator  notifies  an  individual  that he is  entitled  to a
distribution  and also notifies him of the  provisions of this Section,  and the
individual  fails to  claim  his  benefits  under  the Plan or make his  address
known  to  the  Plan   Administrator   within  five  calendar  years  after  the
notification,   the  benefits  under  the  Plan  of  such  individual  shall  be
forfeited  as of the end of the  Plan  Year  coincident  with or  following  the
five-year  waiting period.  Any amount forfeited  pursuant to this Section shall
be allocated  pursuant to  Section 5.5.  If the  individual  should later make a
claim for his forfeited benefit,  the Company shall make a special  contribution
to the Plan equal to the  forfeiture,  and such amount shall be  distributed  to
the individual.

14.12    Pronouns:  Gender and Number.

         Unless  the  context  clearly  indicates  otherwise,  words  in  either
gender  shall  include  the other  gender and the  singular  shall  include  the
plural and vice versa.

14.13    Applicable Law.

         This Plan shall be construed  and  regulated by ERISA,  the Code,  and,
to the extent applicable, the laws of the State of Colorado.


                                                 FRONTIER
                                                 AIRLINES, INC.



DATE:  __________________, 2002          By:____________________________________

EX-10. 37(A) MATERIA

COUNTERPART  NO. ___ OF 4 SERIALLY  NUMBERED,  MANUALLY  EXECUTED  COUNTERPARTS.
TO THE EXTENT THAT THIS  DOCUMENT  CONSTITUTES  CHATTEL  PAPER UNDER THE UNIFORM
COMMERCIAL CODE IN EFFECT IN ANY APPLICABLE  JURISDICTION,  NO SECURITY INTEREST
IN THIS  DOCUMENT  MAY BE CREATED  THROUGH THE TRANSFER  AND  POSSESSION  OF ANY
COUNTERPART OTHER THAN COUNTERPART NO. 1.


                  AMENDMENT NO. 2 TO AIRCRAFT LEASE AGREEMENT
                          (BOEING 737-200A MSN 23004)


                  THIS AMENDMENT  NO. 2 TO AIRCRAFT LEASE AGREEMENT (this
Amendment) is dated as of February 14, 2002, and made by and between WELLS
FARGO BANK NORTHWEST, N.A. (formerly First Security Bank, National
Association), not in its individual capacity but solely as owner trustee, as
lessor (Lessor) and FRONTIER AIRLINES, INC., as lessee (Lessee), and,
solely with respect to Section 5 below, TRITON AVIATION FINANCE (Triton).
Capitalized terms not defined herein are used as defined in the Lease (as
defined below).

                                    RECITALS

A.       Pursuant to that certain Aircraft Lease Agreement dated as of
February 26, 1999, as supplemented by Lease Supplement No. 1, dated November
19, 1999 and amended by Amendment No. 1 to Aircraft Lease Agreement dated as
of August 22, 2000 (the Lease), Lessor leased to Lessee one Boeing Model
737-200A aircraft bearing manufacturer's serial number 23004 (as more
particularly described in the Lease, the Aircraft);  and

B.       Lessee and Lessor have agreed to shorten the Term of the Lease and to
amend certain provisions relating to the return of the Aircraft at the end of
the Term, subject to the terms and conditions contained herein;

                  NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessee and Lessor agree as follows:

1.       Expiration Date.  The definition of Expiration Date in Exhibit A to
the Lease is hereby deleted in its entirety and replaced with the following:

                  Expiration Date. shall mean January 31, 2003.

2.       Engine Return Condition.    Exhibit C to the Lease is hereby amended
as follows:

(a)      Paragraph C(6) is amended by deleting everything after the word
              manual in the last sentence thereof.

(b)      Paragraph D(2) is deleted in its entirety and replaced with the
              following:

(2)      The Engines shall be returned with either (i) no fewer than 3,000
                       cycles remaining per Engine, or (ii) no fewer
                       than 9,000 cycles remaining for both Engines
                       in the aggregate.

         (c)  Except as specifically amended by this Section 2,
Exhibit C remains in full force and effect and has not otherwise been
amended or modified.

3.       Engine Maintenance and Overhaul.  In the event that an Engine
Overhaul is required in order to cause an Engine to comply with the terms of
the Lease, including, without limitation, the applicable requirements of the
FAA, Lessee will make a good faith effort to minimize the cost of any work for
which Lessee is entitled to reimbursement from the reserve account established
for such Engine pursuant to Section 4(b) of the Lease.  Lessee will consult
with Lessor regarding the scope of such work, and, unless Lessor and Lessee
agree in writing that additional work should be performed, will perform or
cause to be performed only such work as is required, in Lessee's reasonable
judgment, in order to cause such Engine to comply with the terms of the Lease
for the remainder of the Term.  Without limiting the foregoing, if an Engine
Overhaul would be required in order to meet any of the requirements set forth
in Exhibit C to the Lease upon the Return Occasion, then, notwithstanding any
other provision of the Lease to the contrary, Lessee will be entitled to
perform such Engine Overhaul, and will be entitled to reimbursement for the
actual out-of-pocket costs incurred by it, to the same extent as during the
Term; provided that,  Lessee and Lessor will consult and agree as to the
necessity and/or scope of any such Engine Overhaul.

4.       Lump Sum Payment.  In consideration of the foregoing, Lessee agrees
to pay to Lessor (a) on the date hereof, an amount equal to $*, and (b) upon
the Return Occasion, provided that no Casualty Occurrence has occurred, an
amount equal to $*;  provided further that, notwithstanding Section 4(b) of
the Lease, Lessee will be entitled to a credit against the amount payable
pursuant to this clause (b) in an amount equal to * of the amount remaining in
the reserve accounts for each of the Engines on the Return Occasion (after
taking into account any claims pending on such date  and claims, if any, to be
submitted after such date, as agreed by Lessee and Lessor in accordance with
Paragraph 3 above).

5.        Representation and Warranty.  Triton hereby represents and warrants
to Lessee that the execution, delivery and performance of this Amendment by
Lessor does not conflict with, or result in any breach of, or constitute a
default (or event which with the giving of notice, or lapse of time, or both,
would become a default) under any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which Lessor or Triton or any of affiliate of Triton is a
party.

6.        Effectiveness of  Lease.  Except as specifically amended by this
Amendment, the Lease remains in full force and effect and has not been amended
or modified.

7.       Counterparts.  This Amendment may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and
the same instrument.

8.       Governing Law.  This Amendment shall in all respects be governed by,
and construed in accordance with, the laws of the State of California.

9.       Expenses.  Each party shall pay its own costs and expenses in
connection with the preparation, execution and delivery of this Amendment.


              [the remainder of this page is intentionally blank]




                  IN WITNESS WHEREOF,  Lessor, Lessee and Triton have caused
this Amendment to be duly executed as of the date and year first above written.

                                         WELLS FARGO BANK
                                         NORTHWEST,
                                         Not in its individual capacity
                                         but solely as Owner Trustee



                                     By: _______________________________
                                          Name:
                                          Title:
                                          TRITON AVIATION FINANCE



                                     By:________________________________
                                        Name:
                                        Title:
                                        FRONTIER AIRLINES, INC.
                                        Lessee



                                      By:_______________________________
                                         Name:
                                         Title:
                                         Acknowledged:
                                         TRITON AVIATION SERVICES LIMITED
                                         Servicer


                                     By: __________________________________
                                         Name:
                                         Title:

EX-10.38(A) MATERIAL

COUNTERPART  NO. ___ OF 4 SERIALLY  NUMBERED,  MANUALLY  EXECUTED  COUNTERPARTS.  TO THE EXTENT THAT THIS  DOCUMENT
CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE IN EFFECT IN ANY APPLICABLE  JURISDICTION,  NO SECURITY
INTEREST IN THIS  DOCUMENT  MAY BE CREATED  THROUGH THE  TRANSFER  AND  POSSESSION  OF ANY  COUNTERPART  OTHER THAN
COUNTERPART NO. 1.


                                    AMENDMENT NO. 1 TO AIRCRAFT LEASE AGREEMENT
                                            (BOEING 737-200A MSN 23007)


                  THIS AMENDMENT  NO. 1 TO AIRCRAFT LEASE AGREEMENT (this "Amendment") is dated as of February
___, 2002, and made by and between WELLS FARGO BANK NORTHWEST, N.A. (formerly First Security Bank, National
Association), not in its individual capacity but solely as owner trustee, as lessor ("Lessor") and FRONTIER
AIRLINES, INC., as lessee ("Lessee"), and, solely with respect to Section 5 below, TRITON AVIATION FINANCE
("Triton").  Capitalized terms not defined herein are used as defined in the Lease (as defined below).

                                                     RECITALS

A.       Pursuant to that certain Aircraft Lease Agreement dated as of February 26, 1999, as supplemented by
Lease Supplement No. 1, dated September 22, 1999 (the "Lease"), Lessor leased to Lessee one Boeing Model 737-200A
aircraft bearing manufacturer's serial number 23007 (as more particularly described in the Lease, the
"Aircraft");  and

B.       Lessee and Lessor have agreed to shorten the Term of the Lease and to amend certain provisions relating
to the return of the Aircraft at the end of the Term, subject to the terms and conditions contained herein;

                  NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration,
Lessee and Lessor agree as follows:

1.       Expiration Date.  The definition of "Expiration Date" in Exhibit A to the Lease is hereby deleted in its
entirety and replaced with the following:

                  Expiration Date. shall mean November 30, 2002.

2.       Engine Return Condition.    Exhibit C to the Lease is hereby amended as follows:

(a)      Paragraph C(6) is amended by deleting everything after the word "manual" in the last sentence thereof.

(b)      Paragraph D(2) is deleted in its entirety and replaced with the following:

(2)      The Engines shall be returned with either (i) no fewer than 3,000 cycles remaining per Engine, or (ii)
                       no fewer than 9,000 cycles remaining for both Engines in the aggregate.

         (c)  Except as specifically amended by this Section 2, Exhibit C remains in full force and
effect and has not otherwise been amended or modified.

3.       Engine Maintenance and Overhaul.  In the event that an Engine Overhaul is required in order to cause an
Engine to comply with the terms of the Lease, including, without limitation, the applicable requirements of the
FAA, Lessee will make a good faith effort to minimize the cost of any work for which Lessee is entitled to
reimbursement from the reserve account established for such Engine pursuant to Section 4(b) of the Lease.  Lessee
will consult with Lessor regarding the scope of such work, and, unless Lessor and Lessee agree in writing that
additional work should be performed, will perform or cause to be performed only such work as is required, in
Lessee's reasonable judgment, in order to cause such Engine to comply with the terms of the Lease for the
remainder of the Term.  Without limiting the foregoing, if an Engine Overhaul would be required in order to meet
any of the requirements set forth in Exhibit C to the Lease upon the Return Occasion, then, notwithstanding any
other provision of the Lease to the contrary, Lessee will be entitled to perform such Engine Overhaul, and will
be entitled to reimbursement for the actual out-of-pocket costs incurred by it, to the same extent as during the
Term; provided that,  Lessee and Lessor will consult and agree as to the necessity and/or scope of any such
Engine Overhaul.

4.       Lump Sum Payment.  In consideration of the foregoing, Lessee agrees to pay to Lessor (a) on the date
hereof, an amount equal to $*, and (b) upon the Return Occasion, provided that no Casualty Occurrence has
occurred, an amount equal to $*;  provided further that, notwithstanding Section 4(b) of the Lease, Lessee will
be entitled to a credit against the amount payable pursuant to this clause (b) in an amount equal to * of the
amount remaining in the reserve accounts for each of the Engines on the Return Occasion (after taking into
account any claims pending on such date  and claims, if any, to be submitted after such date, as agreed by Lessee
and Lessor in accordance with Paragraph 3 above).

5.        Representation and Warranty.  Triton hereby represents and warrants to Lessee that the execution,
delivery and performance of this Amendment by Lessor does not conflict with, or result in any breach of, or
constitute a default (or event which with the giving of notice, or lapse of time, or both, would become a
default) under any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which Lessor or Triton or any affiliate of Triton is a party.

6.        Effectiveness of  Lease.  Except as specifically amended by this Amendment, the Lease remains in full
force and effect and has not been amended or modified.

7.       Counterparts.  This Amendment may be executed by the parties in separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts shall together constitute but one
and the same instrument.

8.       Governing Law.  This Amendment shall in all respects be governed by, and construed in accordance with,
the laws of the State of California.

9.       Expenses.  Each party shall pay its own costs and expenses in connection with the preparation, execution
and delivery of this Amendment.


                                [the remainder of this page is intentionally blank]







                  IN WITNESS WHEREOF,  Lessor, Lessee and Triton have caused this Amendment to be duly executed
as of the date and year first above written.


                                                              WELLS FARGO BANK
                                                               NORTHWEST, NA,
                                                               Not in its individual capacity but solely
                                                               as Owner Trustee



                                                              By:    _______________________________
                                                              Name:
                                                              Title:
                                                              TRITON AVIATION FINANCE



                                                              By:  ________________________________
                                                              Name:
                                                              Title:
                                                              FRONTIER AIRLINES, INC.
                                                                       Lessee

                                                              By:    _______________________________
                                                              Name:
                                                              Title:
                                                              Acknowledged:
                                                              TRITON AVIATION SERVICES LIMITED
                                                              Servicer



                                                              By:  _________________________________
                                                              Name:
                                                              Title:

EX-10.51(D) MATERIAL

                                Amendment No. 4

                      To the A318/A319 Purchase Agreement
                           Dated as of March 10, 2000

                                    between

                                 AVSA, S.A.R.L.

                                      and

                            FRONTIER AIRLINES, INC.




This Amendment No. 4  (hereinafter  referred to as the  "Amendment")  is entered
into  as  of  November  30,  2001,   between   AVSA,   S.A.R.L.,   a  societe  a
responsabilite  limitee organized and existing under the laws of the Republic of
France,   having  its  registered  office  located  at  2,  Rond-Point   Maurice
Bellonte,  31700 Blagnac, France (hereinafter referred to as the "Seller"),  and
Frontier  Airlines,  Inc., a corporation  organized and existing  under the laws
of the  State of  Colorado,  United  States of  America,  having  its  principal
corporate   offices  located  at  7001  Tower  Road,   Denver,   CO  80249,  USA
(hereinafter referred to as the "Buyer").

                                   WITNESSETH

WHEREAS,   the  Buyer  and  the  Seller  entered  into  an  A318/A319   Purchase
Agreement,  dated as of March 10,  2000,  relating to the sale by the Seller and
the  purchase by the Buyer of certain  Airbus  Industrie  A318-100  and A319-100
model aircraft (the "Aircraft")  which,  together with all Exhibits,  Appendixes
and Letter  Agreements  attached thereto and as amended by Amendment No. 1 dated
as of July  17,  2000,  Amendment  No.  2  dated  as of  November  6,  2000  and
Amendment  No.  3  dated  as  of  June  18,  2001,  is  hereinafter  called  the
"Agreement".


WHEREAS, the Buyer wishes to exercise one option,


NOW, THEREFORE, IT IS AGREED AS FOLLOWS



1.       DEFINITIONS

         Capitalized  terms used herein and not  otherwise  defined  herein will
         have  the  meanings  assigned  to  them  in the  Agreement.  The  terms
         "herein",  "hereof" and  "hereunder"  and words of similar import refer
         to this Amendment.

2.       CLAUSE 9:  DELIVERY SHEDULE

2.1      The Buyer hereby  exercises  its option under  Paragraph  1.1 of Letter
         Agreement  No.2 to the  Agreement to firmly order A319 Option  Aircraft
         No.  1  (the  "Firmly   Ordered  Option   Aircraft").   Therefore,   in
         accordance  with  Paragraph  2.1  of  Letter  Agreement  No.  2 to  the
         Agreement,  the Seller  offers the Buyer a  delivery  position  for one
         A319 Additional Option Aircraft in the 3rd Quarter of year 2005.

2.2      As a  consequence  of Paragraph  2.1 above,  the delivery  schedule set
         forth  in  Clause  9.1.1  of  the  Agreement  is  hereby  canceled  and
         replaced by the following quoted provisions:

         QUOTE

    Firm Aircraft A/C ID        Aircraft Type                        Delivery
    No.

        *





    Option          A/C ID        Aircraft Type                       Delivery
    Aircraft No.

         *







         UNQUOTE


3.       PREDELIVERY PAYMENTS

         The  schedule  of  Predelivery  Payments  for the  Aircraft  is  hereby
         amended  to reflect  the  changes  detailed  above in  Paragraph  2. On
         signature  of this  Amendment,  the  Buyer  will  make all  Predelivery
         Payments then due to the Seller.


4.       CLAUSE 5.3:  DEPOSIT

         On signature of this  Amendment,  the Buyer will pay the Seller the sum
         of US$* , which  represents  the  nonrefundable  deposit  (the  "Option
         fee") for the A319  Additional  Option  Aircraft.  The  Option Fee paid
         will  be  credited  without  interest  against  the  first  Predelivery
         Payment for such A319 Additional Option Aircraft.

5.       EFFECT OF THE AMENDMENT

         The Agreement  will be deemed  amended to the extent  herein  provided,
         and,  except as  specifically  amended  hereby,  will  continue in full
         force  and  effect  in  accordance  with  its  original   terms.   This
         Amendment  supersedes  any  previous  understandings,  commitments,  or
         representations  whatsoever,  whether  oral or written,  related to the
         subject matter of this Amendment.

         Both parties  agree that this  Amendment  will  constitute an integral,
         nonseverable  part of the Agreement and be governed by its  provisions,
         except  that  if  the  Agreement  and  this   Amendment  have  specific
         provisions that are  inconsistent,  the specific  provisions  contained
         in this Amendment will govern.



6.       CONFIDENTIALITY

         This Amendment is subject to the  confidentiality  provisions set forth
         in Clause 22.5 of the Agreement.


         IN WITNESS  WHEREOF,  the parties  hereto have caused this Amendment to
         be  executed  by their  respective  officers  or  agents  on the  dates
         written below.




                                                          AVSA, S.A.R.L.


                                                          By:_________________

                                                          Its:_________________

                                                          Date: November 30, 2001





                                                          FRONTIER AIRLINES, INC.


                                                          By:__________________

                                                          Its:__________________

                                                          Date: November 30, 2001

EX-10.62 (A) MATERIA

                                                          CODESHARE AGREEMENT

         This Amendment No. 1 (the "Amendment") is made and entered into as of February 8, 2002 (the "Effective Date"),
by and between Frontier Airlines, Inc. ("Frontier"), a corporation organized under the laws of Colorado, and Great
Lakes Aviation Ltd. ("Great Lakes"), a corporation organized under the laws of Iowa.

RECITALS:

A.       Frontier and Great Lakes have entered into a Codeshare Agreement, dated as of May 3, 2001
                  (the "Codeshare Agreement").  All capitalized terms used in this Amendment, but
                  not defined herein, shall have the meaning given to such terms in the Codeshare Agreement.

B.       Frontier has also entered into a codeshare agreement with Mesa Airlines, Inc.


NOW, THEREFORE, in consideration of the recitals and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Great Lakes and Frontier agree to amend the Codeshare Agreement as
follows:


1.       Add the following new Section 2(4):  In consideration for the reservation services, CRS fees, credit
                  card charge commissions, and certain ticketing services provided by Frontier under the
                  Codeshare Agreement, Great Lakes agrees to pay to Frontier a * per passenger fee for
                  passengers flying solely on connecting routes that involve flight segments operated by both
                  Mesa and Great Lakes under the F9 code; i.e., connecting routes that do not involve any
                  Frontier-operated segments.

2.       This Amendment shall be in full force and effect during the entire term of the Codeshare Agreement.

                                                              GREAT LAKES AVIATION, LTD.


                                                              By: ______________________________
                                                              Name: ____________________________
                                                              Title: _____________________________

                                                              FRONTIER AIRLINES, INC.


                                                              By: ______________________________
                                                              Name: ____________________________
                                                              Title: _____________________________

EX-10.65 (A) MATERI

                                           AMENDMENT NO. 1 TO
                                                CODESHARE AGREEMENT

         This Amendment No. 1 (the Amendment) is made and entered into as of February 12, 2002
(the Effective Date), by and between Frontier Airlines, Inc. (Frontier), a corporation organized
under the laws of Colorado, and Mesa Airlines, Inc. (Mesa), a corporation organized under the laws
of Nevada.

RECITALS:

A.       Mesa and Frontier have entered into a Codeshare Agreement, dated as of September 4, 2001
                  (the Codeshare Agreement).  All capitalized terms used in this Amendment, but not
                  defined herein, shall have the meaning given to such terms in the Codeshare Agreement.

B.       Frontier has also entered into a codeshare agreement with Great Lakes Airlines.



NOW, THEREFORE, in consideration of the recitals and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Mesa and Frontier agree to amend the Codeshare Agreement as
follows:



1.       Add the following new Section 6.8.1:   In consideration for the reservation services, CRS fees,
                  credit card charge commissions, and certain ticketing services provided by Frontier under the
                  Codeshare Agreement, Mesa agrees to pay to Frontier a * per passenger fee for passengers flying
                  solely on connecting routes that involve flight segments operated by both Mesa and Great Lakes
                  under the F9 code; i.e., connecting routes that do not involve any Frontier-operated segments.
                  This fee shall not be in addition to the fee set forth in Section 6.8 of the Codeshare
                  Agreement.

2.       This Amendment shall be in full force and effect during the entire term of the Codeshare Agreement.

                                                              MESA AIRLINES, INC.


                                                              By: ______________________________
                                                              Name: ____________________________
                                                              Title: _____________________________

                                                              FRONTIER AIRLINES, INC.


                                                              By: ______________________________
                                                              Name: ____________________________
                                                              Title: _____________________________

EX-10.66 (A) MATERIA

       EMPLOYEE STOCK OWNERSHIP PLAN OF FRONTIER AIRLINES, INC. EGTRRA AMENDMENT                        1
                                                      AMENDMENT OF THE
                                              EMPLOYEE STOCK OWNERSHIP PLAN OF
                                                  FRONTIER AIRLINES, INC.
                                                         FOR EGTRRA

                                                          PREAMBLE

         1.       Adoption and effective date of amendment.  This  amendment of the Employee  Stock  Ownership Plan
of Frontier  Airlines,  Inc. (the "Plan") is adopted to reflect  certain  provisions of the Economic Growth and Tax
Relief  Reconciliation  Act of 2001  ("EGTRRA")  This  amendment  is  intended  as good faith  compliance  with the
requirements  of EGTRRA and is to be construed in accordance  with EGTRRA and guidance  issued  thereunder.  Except
as otherwise  provided,  this  amendment  shall be  effective as of the first day of the first plan year  beginning
after December 31, 2001.

         2.       Supersession  of  inconsistent  provisions.  This amendment shall supersede the provisions of the
plan to the extent those provisions are inconsistent with the provisions of this amendment.


                                                     AMENDMENT

         SECTION 1.  LIMITATIONS ON CONTRIBUTIONS

         1.       Effective  date.   This  section  shall  be  effective  for  limitation   years  beginning  after
December 31, 2001.

         2.       Maximum  annual  addition.  Except to the extent  permitted  under section 414(v) of the Code, if
applicable,  the annual  addition that may be  contributed or allocated to a  participant's  account under the plan
for any limitation year shall not exceed the lesser of:

         (a)      $ 40,000, as adjusted for increases in the cost-of-living under section 415(d) of the Code, or

         (b)      100 percent of the participant's  compensation,  within the meaning of  section 415(c) (3) of the
Code, for the limitation year.

         The  compensation  limit referred to in (b) shall not apply to any contribution for medical benefits after
separation  from  service  (within  the  meaning of  section 401(h)  or  section 419A(f) (2)  of the Code) which is
otherwise treated as an annual addition.


         SECTION 2.  INCREASE IN COMPENSATION LIMIT

         The annual  compensation of each  participant  taken into account in determining  allocations for any plan
year beginning after December 31,  2001, shall not exceed $ 200,000,  as adjusted for  cost-of-living  increases in
accordance with  section 401(a) (17) (B)  of the Code. Annual  compensation means compensation during the plan year
or such other  consecutive  12-month  period over which  compensation is otherwise  determined  under the plan (the
determination   period).  The  cost-of-living   adjustment  in  effect  for  a  calendar  year  applies  to  annual
compensation for the determination period that begins with or within such calendar year.

         SECTION 3.  MODIFICATION OF TOP-HEAVY RULES

         1.       Effective  date.  This  section  shall apply for  purposes of  determining  whether the plan is a
top-heavy plan under  section 416(g) of the Code for plan years beginning after December 31,  2001, and whether the
plan  satisfies  the minimum  benefits  requirements  of  section 416(c)  of the Code for such years.  This section
amends Article XIII of the plan.

         2.       Determination of top-heavy status.

         2.1      Key  employee.  Key  employee  means any  employee or former  employee  (including  any  deceased
employee)  who at any time  during  the plan  year that  includes  the  determination  date was an  officer  of the
employer having annual compensation  greater than $ 130,000 (as adjusted under  section 416(i) (1)  of the Code for
plan years beginning  after  December 31,  2002), a 5-percent  owner of the employer,  or a 1- percent owner of the
employer  having  annual  compensation  of more  than $  150,000.  For  this  purpose,  annual  compensation  means
compensation  within the meaning of  section 415(c) (3)  of the Code.  The  determination  of who is a key employee
will be made in accordance with  section 416(i) (1)  of the Code and the applicable  regulations and other guidance
of general applicability issued thereunder.

         2.2      Determination  of present  values and  amounts.  This  section 2.2  shall  apply for  purposes of
determining  the present  values of accrued  benefits  and the amounts of account  balances of  employees as of the
determination date.

         2.2.1    Distributions  during  year  ending on the  determination  date.  The  present  values of accrued
benefits  and the amounts of account  balances of an employee as of the  determination  date shall be  increased by
the  distributions  made with respect to the employee  under the plan and any plan  aggregated  with the plan under
section 416(g) (2)  of the Code during the 1-year period ending on the determination  date. The preceding  sentence
shall also apply to  distributions  under a  terminated  plan which,  had it not been  terminated,  would have been
aggregated  with the plan under  section 416(g) (2) (A) (i)  of the Code. In the case of a distribution  made for a
reason other than  separation from service,  death, or disability,  this provision shall be applied by substituting
"5-year period" for "1-year period."

         2.2.2    Employees not  performing  services  during year ending on the  determination  date.  The accrued
benefits and accounts of any  individual who has not performed  services for the employer  during the 1-year period
ending on the determination date shall not be taken into account.

         3.       Minimum benefits.

         3.1      Matching  contributions.  Employer  matching  contributions  shall  be  taken  into  account  for
purposes of satisfying the minimum contribution  requirements of  section 416(c) (2)  of the Code and the plan. The
preceding  sentence  shall apply with  respect to matching  contributions  under the plan or, if the plan  provides
that the  minimum  contribution  requirement  shall be met in another  plan,  such other  plan.  Employer  matching
contributions  that are used to  satisfy  the  minimum  contribution  requirements  shall be  treated  as  matching
contributions for purposes of the actual  contribution  percentage test and other requirements of section 401(m) of
the Code.

         3.2      Contributions  under other plans.  The  Employer  also  maintains  the  Frontier  Airlines,  Inc.
Retirement  Savings  Plan, a defined  contribution  profit  sharing plan with a cash or deferred  arrangement  (the
"401(k)  Plan").  A Participant  who  participates  both in this plan and the 401(k) Plan shall receive the minimum
contribution in this plan.
         SECTION 4.  DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS

         1.       Effective date.  This section shall apply to distributions made after December 31, 2001.

         2.       Modification  of  definition of eligible  retirement  plan.  For purposes of the direct  rollover
provisions  in  section 6.5(f)  of the plan,  an  eligible  retirement  plan shall  also mean an  annuity  contract
described in section 403(b)  of the Code and an eligible plan under  section 457(b) of the Code which is maintained
by a  state,  political  subdivision  of a  state,  or any  agency  or  instrumentality  of a  state  or  political
subdivision  of a state and which agrees to  separately  account for amounts  transferred  into such plan from this
plan. The  definition of eligible  retirement  plan shall also apply in the case of a  distribution  to a surviving
spouse,  or to a spouse or former spouse who is the alternate payee under a qualified  domestic  relation order, as
defined in section 414(p) of the Code.

         3.       Modification   of   definition   of   eligible   rollover   distribution   to  exclude   hardship
distributions.  For purposes of the direct rollover  provisions in  section 6.5(f)  of the plan, any amount that is
distributed on account of hardship  shall not be an eligible  rollover  distribution  and the  distributee  may not
elect to have any portion of such a distribution paid directly to an eligible retirement plan.

         4.       Modification  of definition  of eligible  rollover  distribution  to include  after-tax  employee
contributions.  For  purposes of the direct  rollover  provisions  in  section 6.5(f)  of the plan,  a portion of a
distribution  shall not fail to be an  eligible  rollover  distribution  merely  because  the  portion  consists of
after-tax  employee  contributions  which  are not  includible  in  gross  income.  However,  such  portion  may be
transferred only to an individual  retirement  account or annuity  described in  section 408(a) or (b) of the Code,
or to a qualified  defined  contribution  plan  described  in  section 401(a)  or 403(a) of the Code that agrees to
separately  account  for  amounts  so  transferred,  including  separately  accounting  for  the  portion  of  such
distribution which is includible in gross income and the portion of such distribution which is not so includible.


                                                     FRONTIER AIRLINES, INC.



Date:______________________, 2001           By:_________________________________