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 June 30, 2002


[   ]    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 July 31, 2002 was 29,633,644.







                                                  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                                                                               5

Item 3:  Quantitative and Qualitative Disclosures About Market Risk                                         17




                                                 PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K                                                                   17







                                           PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
FRONTIER AIRLINES, INC.
Balance Sheets
(Unaudited)                                                                     June 30,      March 31,
                                                                                   2002          2002
                                                                             ----------------------------
Assets
Current assets:
    Cash and cash equivalents                                                $ 77,050,260    $87,555,189
    Short-term investments                                                      2,000,000      2,000,000
    Restricted investments                                                     16,171,000     11,574,000
    Receivables, net of allowance for doubtful accounts of $149,945
      and $155,000 at June 30, 2002 and March 31, 2002, respectively           29,783,810     35,391,857
    Maintenance deposits                                                       39,214,071     36,046,157
    Prepaid expenses and other assets                                          10,170,164     11,013,602
    Inventories                                                                 6,993,521      6,604,378
   Deferred tax assets                                                          1,768,664      1,788,078
    Deferred lease and other expenses                                             119,095         74,952
                                                                             ----------------------------
            Total current assets                                              183,270,585    192,048,213
Security, maintenance and other deposits                                       65,087,439     65,591,608
Property and equipment, net                                                   204,069,119    142,861,771
Deferred lease and other expenses                                                 863,071        523,134
Restricted investments                                                         13,511,826     12,660,210
                                                                             ----------------------------
                                                                            $ 466,802,040  $ 413,684,936
                                                                             ============================
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
    Accounts payable                                                        $  13,977,921    $20,152,888
    Air traffic liability                                                      69,011,089     64,123,083
    Other accrued expenses                                                     24,700,091     22,060,082
    Accrued maintenance expense                                                40,646,828     37,527,906
    Deferred stabilization act compensation                                       835,381      4,835,381
    Current portion of long-term debt                                           5,619,208      3,225,651
    Current portion of obligations under capital leases                           139,355        138,604
                                                                             ----------------------------
            Total current liabilities                                         154,929,873    152,063,595
Long-term debt                                                                112,854,181     66,832,018
Accrued maintenance expense                                                    17,485,022     15,796,330
Deferred tax liability                                                          9,546,248      6,716,815
Deferred rent                                                                   4,078,807      3,077,326
Obligations under capital leases, excluding current portion                        32,044         65,559
                                                                             ----------------------------
            Total liabilities                                                 298,926,175    244,551,643
                                                                             ----------------------------

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; 29,566,581 and 29,421,331 issued and outstanding
        outstanding at June 30, 2002 and March 31, 2002, respectively              29,567         29,422
    Additional paid-in capital                                                 86,838,929     85,867,486
    Unearned ESOP shares                                                       (1,413,114)    (2,119,670)
    Retained earnings                                                          82,420,483     85,356,055
                                                                             ----------------------------
            Total stockholders' equity                                        167,875,865    169,133,293
                                                                             ----------------------------
                                                                            $ 466,802,040  $ 413,684,936
                                                                             ============================






FRONTIER AIRLINES, INC.
Statements of Operations
(Unaudited)

                                                                               Three Months Ended June 30,
                                                                                  2002             2001
                                                                             ----------------------------
Revenues:
    Passenger                                                               $ 109,291,882     120,727,839
    Cargo                                                                       1,579,936       1,965,573
    Other                                                                         940,589         622,945
                                                                             ----------------------------
            Total revenues                                                    111,812,407     123,316,357
                                                                             ----------------------------

Operating expenses:
    Flight operations                                                          54,479,395      49,736,454
    Aircraft and traffic servicing                                             19,349,109      17,845,970
    Maintenance                                                                17,157,362      18,347,190
    Promotion and sales                                                        14,719,308      16,424,719
    General and administrative                                                  6,121,871       7,334,596
    Depreciation and amortization                                               3,798,412       2,321,868
                                                                             ----------------------------
            Total operating expenses                                          115,625,457     112,010,797
                                                                             ----------------------------
            Operating income (loss)                                            (3,813,050)     11,305,560
                                                                             ----------------------------

Nonoperating income (expense):
    Interest income                                                               706,962       1,530,758
    Interest expense                                                           (1,259,311)       (252,874)
    Other, net                                                                   (151,550)        (49,683)
                                                                             ----------------------------
            Total nonoperating income
(expense), net                                                                   (703,899)      1,228,201
                                                                             ----------------------------
Income (loss) before income tax expense                                        (4,516,949)     12,533,761
Income tax (benefit) expense                                                   (1,581,377)      4,794,164
                                                                             ----------------------------
Net income (loss)                                                            $ (2,935,572)    $ 7,739,597
                                                                             ============================
Earnings per share:
            Basic                                                                  ($0.10)          $0.27
                                                                             ============================
            Diluted                                                                ($0.10)          $0.26
                                                                             ============================
Weighted average shares of
  common stock outstanding
            Basic                                                               29,534,304     28,288,629
                                                                             ============================
            Diluted                                                             29,534,304     29,879,414
                                                                             ============================
FRONTIER AIRLINES, INC.
Statement of Cash Flows
(Unaudited)
                                                                               Three Months Ended June 30,
                                                                                   2002            2001
                                                                             ----------------------------
Cash flows from operating activities:
    Net income (loss)                                                        $ (2,935,572)    $ 7,739,597
    Adjustments to reconcile net income (loss) to net cash
        provided by operating activities:
            Employee stock ownership plan compensation expense                    706,556         554,062
            Depreciation and amortization                                       3,818,879       2,365,341
            Deferred tax expense (benefit)                                      2,848,847         (15,380)
            Changes in operating assets and liabilities:
                Restricted investments                                         (5,654,516)     (2,600,000)
                Receivables                                                     5,608,047      10,990,258
                Security, maintenance and other deposits                       (5,163,710)     (4,282,507)
                Prepaid expenses and other assets                                 438,891        (778,278)
                Inventories                                                      (389,143)     (1,029,116)
                Accounts payable                                               (6,174,967)     (4,204,317)
                Air traffic liability                                           4,888,006       6,077,072
                Other accrued expenses                                          2,640,009       1,995,247
                Stabilization Act compensation repayment                       (4,000,000)         -
                Income taxes payable                                                -             891,563
                Accrued maintenance expense                                     4,807,614       4,804,708
                Increase in deferred rent                                       1,001,481         618,151
                                                                             ----------------------------
                     Net cash provided by operating activites                   2,440,422      23,126,401
                                                                             ----------------------------
Cash flows from investing activities:
    Decrease (increase) in aircraft lease and purchase deposits, net            2,499,965      (4,109,607)
    Decrease in restricted investments                                            205,900         205,900
    Capital expenditures                                                      (65,005,760)    (52,896,402)
                                                                             ----------------------------
                     Net cash used by investing activities                    (62,299,895)    (56,800,109)
                                                                             ----------------------------
Cash flows from financing activities:
    Net proceeds from issuance of common stock                                    971,588         604,701
    Proceeds from long-term borrowings                                         49,200,000      24,000,000
    Principal payments on long-term
borrowings                                                                       (784,280)        (70,402)
    Principal payments on obligations under capital leases                        (32,764)        (29,968)
                                                                             ----------------------------
                    Net cash provided by financing activities                  49,354,544      24,504,331
                                                                             ----------------------------
                    Net decrease in cash and cash equivalents                 (10,504,929)     (9,169,377)
Cash and cash equivalents, beginning of period                                 87,555,189     109,251,426
                                                                              ---------------------------
Cash and cash equivalents, end of period                                     $ 77,050,260    $100,082,049
                                                                             ============================






FRONTIER AIRLINES, INC.
Notes to Financial Statements
June 30, 2002


(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, 2002. 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 three months ended June 30, 2002 are not  necessarily  indicative
     of the results that will be realized for the full year.

(2)      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 10 years and is payable in equal monthly  installments,  including  interest payable in arrears.  The loans
     are secured by the aircraft.  During the year ended March 31, 2002, 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 $207,579 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. As of June 30, 2002, the Company
     had $69,273,388 of debt outstanding secured by these three Airbus aircraft.

     In May 2002,  the Company  secured a loan for  $25,200,000  for the purchase of an Airbus  aircraft.  The loan
     has a term of 12 years and is payable in quarterly  installments,  including interest payable in arrears, with
     a floating  interest rate adjusted  quarterly  based on LIBOR plus a margin of 1.5%.  The total  interest rate
     for the first  quarter is 3.4375%.  The loan  amortizes  using an assumed  interest rate of 6% maturing in May
     2014,  at  which  time a  balloon  payment  of  $7,560,000  is due.  As of June  30,  2002,  the  Company  had
     $25,200,000 of debt outstanding secured by this aircraft.

     In June 2002, the Company  secured a $48,000,000  loan facility for the purchase of two Airbus  aircraft,  one
     of which was delivered in June 2002 and the other in July 2002,  with a maximum  borrowing of $24,000,000  per
     aircraft.  Each  aircraft  loan has a term of 12 years and is payable  in  quarterly  installments,  including
     interest  payable in arrears,  with a floating  interest rate adjusted  quarterly based on LIBOR plus a margin
     of 1.7%.  The total  interest  rate for the first  quarter  is  3.575%.  The loan  amortizes  using an assumed
     interest  rate of 3.55%  with  maturities  in June and July  2014,  at which time  balloon  payments  totaling
     $4,800,000  are due. As of June 30, 2002,  the Company had  $24,000,000  of debt  outstanding  secured by this
     aircraft.









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.  Unless the context  otherwise  requires,  references to "we", "us" or
"our" refer to Frontier  Airlines,  Inc. 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,  that 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 that we have  ordered;  issues  relating to our  transition to an Airbus
aircraft fleet;  uncertainties regarding aviation fuel prices;  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.


General

       We are a scheduled  passenger  airline based in Denver,  Colorado.  As of July 31, 2002,  we, in conjunction
with Frontier  JetExpress  operated by Mesa Air Group ("Mesa"),  operate routes linking our Denver hub to 33 cities
in 20 states  spanning  the nation from coast to coast.  We were  organized  in February  1994 and we began  flight
operations  in July 1994 with two leased Boeing  737-200  jets. We have since  expanded our fleet to 28 leased jets
and six purchased  Airbus  aircraft,  including seven Boeing  737-200s,  17 larger Boeing  737-300s,  and 10 Airbus
A319s.  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 second
quarter of calendar  year 2006.  During  fiscal  year 2002,  we advanced  the return of one leased  Boeing  737-300
aircraft to its owner from April 2002 to September  2001,  and two leased Boeing  737-200  aircraft from  September
and November  2004 to November  2002 and January 2003,  respectively.  We plan to accept  delivery of an additional
seven Airbus A319s during our fiscal year ending March 31, 2003.  Including the  anticipated  return of five Boeing
aircraft,  we plan to operate a fleet of three Boeing  737-200s,  16 Boeing  737-300s,  and 17 Airbus  A319s,  or a
total of 35 aircraft, by the end of our fiscal year ending March 31, 2003.

       We  currently  use up to 11  gates  at our hub,  Denver  International  Airport  ("DIA"),  where we  operate
approximately  158 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 31,  2002,  we have  expanded  our service to a level that was higher than our  pre-September  11, 2001
levels  through  additional  capacity  added after  September 11, 2001. We intend to continue to monitor  passenger
demand and other competitive  factors and adjust the number of flights we operate  accordingly.  During the quarter
ended June 30,  2002,  we added  service to  Indianapolis,  Indiana on May 23,  2002;  and Boise,  Idaho and Tampa,
Florida on June 24, 2002.

       In  September  2001,  we entered  into a  codeshare  agreement  with Mesa Air Group.  Under the terms of the
agreement,  we will  market  and sell  flights  operated  by Mesa as  Frontier  JetExpress.  This  codeshare  began
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  was expanded to
include service to St. Louis,  Missouri and Ontario,  California.  On May 1, 2002, Frontier JetExpress expanded its
services using five 50-passenger  Bombardier  CRJ-200 regional jets and began  supplemental  service between Denver
and San Diego,  California  and  Minneapolis,  Minnesota.  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.

       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 removed from the
codeshare agreement effective December 13, 2001.

       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
Stabilization  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  Stabilization  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.  During the fiscal year ended March 31, 2002,  we  recognized  $12,703,000  of the 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 had received a total of $17,538,000;  the remaining  $4,835,000  represents amounts received
in excess of estimated  allowable  direct and  incremental  losses incurred from September 11, 2001 to December 31,
2001.  During the  quarter  ended June 30,  2002,  we repaid  $4,000,000  of the excess  amounts  received  and the
remaining  $835,000 is included as a deferred  liability on our balance sheet  awaiting final audit of our Form 330
filing by the Federal government.


Results of Operations

       We had a net loss of  $2,936,000  or $.10 per share for the  quarter  ended June 30, 2002 as compared to net
income of $7,740,000  or $.26 per diluted share for the quarter ended June 30, 2001.  During the quarter ended June
30,  2002,  as compared  to the prior  comparable  period,  we  experienced  lower fares as a result of the slowing
economy.  Our average  fare was $108 for the quarter  ended June 30, 2002,  compared to $134 for the quarter  ended
June 30, 2001.  During the quarter ended June 30, 2001,  we were forced to cancel a  significant  number of flights
as a result of weather  conditions  in the Denver area.  We believe that this had an adverse  effect on our revenue
during that quarter.

       During the quarter  ended June 30, 2001, we took  delivery of our first two Airbus  aircraft.  As this was a
new aircraft type for us, we were required by the Federal Aviation  Administration  ("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.  Because of this delay in receiving  necessary FAA  approvals,  we believe
that our passenger revenues were adversely affected during the quarter ended June 30, 2001.

       Our cost per ASM for the  quarters  ended  June 30,  2002 and 2001 were  8.44(cent)and  9.75(cent),
respectively, a decrease of 1.31(cent)or 13.4%.  Cost per ASM excluding fuel for the quarters ended June 30, 2002
and 2001 were 7.17(cent) and 8.22(cent), respectively, a decrease of 1.05(cent)or 12.8%.  Our cost per ASM decreased
during the quarter ended June 30, 2002 as a result of a significantly  reduced level of Airbus transition expenses,
a decrease in the price of fuel,  a decrease  in the cost per block hour on our Boeing  fleet for  rotable  repairs
and engine  overhauls,  a decrease in our  distribution  expenses in relation to the  reduction in the average fare
and a reduction in travel agency commissions as a result of the elimination of travel agency commissions effective
June 1, 2002, the lack of a bonus accrual as a result of the net loss for the quarter,  and economies of scale
associated  with the 19.2% increase in ASMs over the prior  comparable  period.  These reductions were partially
offset by an increase of .12(cent) per ASM as a result of an increase in war risk  insurance  premiums  after the
events of September 11. Our cost per ASM during the quarter  ended June 30, 2001 was  impacted as a result of unusual
weather  conditions  including an unusual spring blizzard and a hail storm which caused damage to five of our aircraft,
or approximately  20% of our fleet,  during the quarter ended June 30, 2001. We incurred  short-term  lease expense
for  substitute  aircraft to minimize  the number of flight  cancellations  while our  aircraft  were  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.  We estimate that the total
adverse impact on our cost per ASM associated with these unusual weather conditions was .16(cent), or approximately
$1,800,000. Additionally,  due to the number of flight cancellations as a result of these  weather  conditions, we
had fewer ASMs 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 quarter.  During the quarter  ended June 30, 2001,  we incurred  approximately
$2,000,000 in transition  expenses  associated  with the induction of the Airbus  aircraft  which had an adverse
effect on our CASM of  approximately  .15(cent).  These include crew  salaries;  travel,  training and induction
team  expenses;  and depreciation  expense.  This compared to $865,000 in Airbus  transition  expenses during the
quarter ended June 30, 2002.

       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 quarter
ended June 30,  2002,  our  break-even  load factor was 65.4%  compared to our  achieved  passenger  load factor of
62.8%.  For the  quarter  ended June 30,  2001,  our  break-even  load factor was 60.6%  compared  to our  achieved
passenger load factor of 67.6%. Our break-even load factor  increased from the prior  comparable  period largely as
a result of a decrease  in our average  fare to $108  during the  quarter  ended June 30, 2002 from $134 during the
quarter  ended June 30, 2001,  offset by a decrease in our expense per ASM to 8.44(cent)for the quarter  ended June 30,
2002 from 9.75(cent)for the quarter ended June 30, 2001.

       Small  fluctuations  in our yield per  available  seat mile  ("RASM")  or expense  per  available  seat mile
("ASM") can  significantly  affect  operating  results  because we, like other  airlines,  have high fixed costs in
relation to  revenues.  Airline  operations  are highly  sensitive  to various  factors,  including  the actions of
competing airlines and general economic factors,  which can adversely affect our liquidity,  cash flows and results
of operations.

       As a result of the  expansion  of our  operations  during the quarter  ended June 30,  2002,  our results of
operations  are not  necessarily  indicative of future  operating  results or comparable to the prior quarter ended
June 30, 2001.







       The following  table provides  certain of our financial and operating data for the year ended March 31, 2002
and the quarters ended June 30, 2002 and 2001.

                                                               Year
                                                              Ended
                                                            March 31,         Quarters Ended June 30,
                                                               2002            2002             2001
                                                          ---------------  --------------  ---------------

             Passenger revenue (000s) (2)                    435,946          109,292         120,728
             Revenue passengers carried (000s)                 3,069              928             846
             Revenue passenger miles (RPMs) (000s) (3)     2,756,965          859,604         776,764
             Available seat miles (ASMs) (000s) (4)        4,592,298        1,369,399       1,148,546
             Passenger load factor (5)                         60.0%            62.8%           67.6%
             Break-even load factor (1) (6)                    57.6%            65.4%           60.6%
             Block hours (7)                                  92,418           27,680          22,660
             Departures                                       41,736           12,184          10,190
             Average seats per departure                         132              132             132
             Average stage length                                834              851             854
             Average length of haul                              898              926             918
             Average daily block hour utilization (8)            9.1              9.9             9.9
             Yield per RPM (cents) (9)                         15.78            12.71           15.54
             Total yield per RPM (cents) (10)                  16.14            13.01           15.88
             Yield per ASM (cents) (11)                         9.47             7.98           10.51
             Total yield per ASM (cents) (12)                   9.69             8.17           10.74
             Expense per ASM (cents)                            9.33             8.44            9.75
             Expense per ASM excluding fuel (cents)             8.00             7.17            8.22
             Passenger revenue per block hour            $     4,717       $    3,948      $    5,328
             Average fare (13)                           $       132       $      108      $      134
             Average aircraft in fleet                          27.8             30.6            25.2
             Aircraft in fleet at end of period                 30.0             33.0            27.0
             Average age of aircraft at end of period           10.6              9.6            10.8
             EBITDAR (000s) (14)                             100,403           16,763          29,896
             EBITDAR as a % of revenue                         22.6%            15.0%           24.2%

(1)  The write-down of the carrying values of the Boeing 737-200 aircraft parts totaling $1,512,000, the
     Stabilization Act compensation of $12,703,000, and the unusual charge for the early lease termination of
     $4,914,000, all of which occurred during the year ended March 31, 2002, have  been excluded from the
     calculation of the break-even load factor, expense per ASM and expense per ASM excluding fuel.
(2)  "Passenger revenue" includes revenues for non-revenue passengers, administrative fees, and revenue
     recognized for unused tickets that are greater than one year from issuance date.
(3)  "Revenue passenger miles," or RPMs, are determined by multiplying the number of fare-paying passengers
     carried by the distance flown.
(4)  "Available seat miles," or ASMs, are determined by multiplying the number of seats available for passengers
     by the number of miles flown.
(5)  "Passenger load factor" is determined by dividing revenue passenger miles by available seat miles.
(6)  "Break-even load factor" is the passenger load factor that will result in operating revenues being equal to
     operating expenses, assuming constant revenue per passenger mile and expenses.
(7)  "Block hours" represent the time between aircraft gate departure and aircraft gate arrival.
     (8)"Average daily block hour utilization" represents the total block hours divided by the number of aircraft
     days in service, divided by the weighted average of aircraft in our fleet during that period.  The number of
     aircraft includes all aircraft on our operating certificate, which includes scheduled aircraft, as well as
     aircraft out of service for maintenance and operation spare aircraft.
(9)  "Yield per RPM" is determined by dividing passenger revenues (excluding charter revenue) by revenue
     passenger miles.
(10) "Total yield per RPM" is determined by dividing total revenues by revenue passenger miles.
(11) "Yield per ASM" is determined by dividing passenger revenues (excluding charter revenue) by available seat
     miles.
(12) "Total yield per ASM" is determined by dividing passenger revenues by available seat miles.
(13) "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.
(14) "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.  Our calculation of EBITDAR may not be comparable to
     similarly titled measures reported by other companies.


       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 year ended March 31, 2002 and the quarters  ended
June 30, 2002 and 2001.

                                         Year Ended March 31,                    Quarters Ended June 30,
                                      --------------------------- -------------------------------------------------------
                                                 2002                        2002                       2001
                                      --------------------------- -------------------------------------------------------
                                            Per           %             Per            %           Per          %
                                           total          of           total          of          total        of
                                            ASM        Revenue          ASM         Revenue        ASM       Revenue
                                            ---        -------          ---         -------        ---       -------
Revenues:
    Passenger                              9.49         97.9%          7.98          97.7%        10.51        97.9%
    Cargo                                  0.14          1.5%          0.12           1.4%         0.17         1.6%
    Other                                  0.05          0.6%          0.07           0.8%         0.05         0.5%
                                      --------------------------- -------------------------------------------------------
Total revenues                             9.68        100.0%          8.17         100.0%        10.74       100.0%

Operating expenses:
    Flight operations                      4.16         42.9%          3.98          48.7%         4.33        40.3%
    Aircraft and traffic servicing         1.53         15.8%          1.41          17.3%         1.55        14.4%
    Maintenance                            1.53         15.8%          1.25          15.3%         1.60        14.9%
    Promotion and sales                    1.29         13.4%          1.07          13.2%         1.44        13.4%
    General and administrative             0.57          5.9%          0.45           5.5%         0.63         5.9%
    Depreciation and amortization          0.25          2.6%          0.28           3.4%         0.20         1.9%
                                      --------------------------- -------------------------------------------------------
Total operating expenses                   9.33         96.4%          8.44         103.4%         9.75        90.8%
                                      =========================== =======================================================
Total ASMs (000s)                     4,592,298                   1,369,399                   1,148,546


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 result in a decrease in passenger  demand in many markets.  We cannot predict  future fare levels,  which
depend to a  substantial  degree on actions of  competitors.  When sale prices or other price changes are initiated
by competitors in our markets,  we believe that we must, in most cases,  match those  competitive fares in order to
maintain our market share.  Passenger  revenues are seasonal in leisure  travel  markets  depending on the markets'
locations and when they are most frequently patronized.

       Our average fare for the quarters ended June 30, 2002 and 2001 was $108 and $134,  respectively,  a decrease
of 19.4%.  We believe that the  decrease in the average fare during the quarter  ended June 30, 2002 from the prior
comparable  period was a result of the slowing economy,  competitive  pricing on discount fares available inside 14
days of travel in our markets, and low introductory fares by new carriers serving the Denver market.

       Passenger  Revenues.  Passenger  revenues totaled  $109,292,000 for the quarter ended June 30, 2002 compared
to $120,728,000 for the quarter ended June 30, 2001, a decrease of 9.5%.  Passenger  revenue includes  revenues for
non-revenue  passengers,  administrative fees, and revenue recognized for tickets that are not used within one year
from their issue dates. We carried 928,000  revenue  passengers  during the quarter ended June 30, 2002 compared to
846,000 in the quarter  ended June 30, 2001,  an increase of 9.7%.  We had an average of 30.6 aircraft in our fleet
during the quarter ended June 30, 2002  compared to an average of 25.2  aircraft  during the quarter ended June 30,
2001,  an  increase  of  21.4%.  ASMs  increased  to  1,369,399,000  for the  quarter  ended  June  30,  2001  from
1,148,546,000  for the quarter  ended June 30,  2001,  an increase  of 19.2%.  RPMs for the quarter  ended June 30,
2002 were  859,604,000  compared to  776,764,000  for the quarter  ended June 30, 2001,  an increase of 10.7%.  Our
load factor  decreased  to 62.8% for the quarter  ended June 30, 2002 from 67.6% for the prior  comparable  period.
During the quarter ended June 30, 2001,  we had to cancel  numerous  flights as a result of the weather  conditions
the Denver area experienced.  We believe that this had an adverse effect on our revenue during that quarter.

       Cargo  revenues,  consisting of revenues from freight and mail service,  totaled  $1,580,000  and $1,966,000
for the  quarters  ended  June 30,  2002  and  2001,  representing  1.4%  and  1.6% of  total  operating  revenues,
respectively,  or a decrease of 19.6%.  This adjunct to the passenger  business is highly  competitive  and depends
heavily  on  aircraft  scheduling,   alternate  competitive  means  of  same  day  delivery  service  and  schedule
reliability.

       Other  revenues,  comprised  principally of interline  handling fees,  liquor sales and excess baggage fees,
totaled  $941,000 and $623,000 or .8% and .5% of total operating  revenues for the quarters ended June 30, 2002 and
2001,  respectively.  Other  revenue  increased  over the prior  comparable  period as a result of an  increase  in
interline  handling fees  primarily  due to the Mesa  codeshare  agreement  and an increase in ground  handling for
other airlines.

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  $115,625,000 and  $112,011,000 for the quarters ended June 30, 2002 and 2001 and represented  103.4%
and 90.8% of total  revenue,  respectively.  Operating  expenses  increased as a percentage  of revenue  during the
quarter  ended June 30, 2002 as a result of the 19.4%  decrease in the average  fare during the quarter  ended June
30, 2001 to the quarter ended June 30, 2002.

       Flight  Operations.  Flight  operations  expenses of  $54,479,000  and  $49,736,000  were 48.7% and 40.3% of
total revenue for the quarters  ended June 30, 2002 and 2001,  respectively.  Flight  operations  expenses  include
all expenses  related  directly to the operation of the aircraft  including  fuel,  lease and  insurance  expenses,
pilot and flight attendant compensation,  in-flight catering,  crew overnight expenses,  flight dispatch and flight
operations administrative expenses.

       Aircraft  fuel  expenses  are  comprised  of both the direct cost of fuel,  including  taxes and the cost of
delivering  fuel  into  the  aircraft.  Aircraft  fuel  costs  of  $17,396,000  for  20,858,000  gallons  used  and
$17,633,000 for 18,207,000 gallons used resulted in an average fuel cost of 83.4(cent)and 96.9(cent)per gallon and
represented  31.9% and 35.4% of total flight  operations  expenses  for the quarters  ended June 30, 2002 and 2001,
respectively.  The average fuel cost per gallon  decreased for the quarter ended June 30, 2002 from the  comparable
prior  period due to an overall  decrease in the market  price of fuel.  Fuel prices are subject to change  weekly,
as we do not  purchase  supplies  in  advance  for  inventory.  We do not hedge  our fuel  expense  exposure.  Fuel
consumption  for the  quarters  ended  June  30,  2002  and 2001  averaged  754 and 804  gallons  per  block  hour,
respectively.  Fuel  consumption  decreased  from the prior  comparable  period  because of a decrease  in our load
factors,  the  more  fuel-efficient  Airbus  aircraft  added  to our  fleet  and a  fuel  conservation  program  we
implemented in August 2001.
       .
       Aircraft  lease  expenses  totaled  $16,929,000  (14.6% of total  revenue) and  $16,318,000  (13.2% of total
revenue)  for the  quarters  ended June 30, 2002 and 2001,  respectively,  or an increase of 3.7%.  The increase is
largely  due to an  increase  in the  average  number of leased  aircraft  to 27.1 from 25.1,  an increase of 8.0%.
During the quarter  ended June 30, 2001,  to minimize the number of flight  cancellations  while our aircraft  were
being repaired,  we incurred  short-term lease expenses of $541,000 for aircraft to partially  replace our aircraft
damaged by hail.

         Aircraft  insurance  expenses  totaled  $2,618,000  (2.3% of total  revenue)  and  $859,000  (.7% of total
revenue) for the quarters ended June 30, 2002 and 2001, respectively. Aircraft insurance expenses were .30(cent)and
..11(cent)per RPM for the quarters ended June 30, 2002 and 2001, respectively. Aircraft insurance expenses increased
during the quarter  ended June 30, 2002 as a result of the  terrorist  attacks on September  11, 2001.  Immediately
following the events of September 11, our aviation war risk  underwriters  issued seven days notice of cancellation
to us. On September 24, 2001,  these  underwriters  reinstated  war risk passenger  liability  coverage but limited
third party  bodily  injury and property  damage to $50 million per  occurrence.  A special  surcharge of $1.25 per
passenger  carried  was  established  as the  premium  for this  coverage.  At the same time,  the FAA  provided us
supplemental  third  party war risk  coverage  from the $50  million  limit to $1.6  billion.  The premium for this
supplemental  coverage is $7.50 per flight  departure and is now set to expire on August 17, 2002,  unless  renewed
by  Congress.  While the  government  may  extend  the  deadline  for when it will stop  providing  excess war risk
coverage,  there are not  assurances  that any extension  will occur,  or if it does,  how long the extension  will
last.  We expect that if the  government  stops  providing  excess war risk coverage to the airline  industry,  the
premiums charged by aviation  insurers for this coverage will be substantially  higher than the premiums  currently
charged by the government.

       Pilot and flight attendant  salaries before payroll taxes and benefits totaled  $9,859,000 and $7,775,000 or
9.0% and 6.4% of  passenger  revenue for each of the  quarters  ended June 30, 2002 and 2001,  respectively,  or an
increase  of 26.8%.  Pilot and flight  attendant  compensation  increased  as a result of a 21.4%  increase  in the
average  number of aircraft in service,  an increase of 22.2% in block  hours,  a general  wage  increase in flight
attendant  salaries,  and  additional  crew  required to replace  those who were  attending  training on the Airbus
equipment.  We pay pilot and flight  attendant  salaries for training,  consisting of  approximately  six and three
weeks,  respectively,  prior to scheduled  increases in service,  which can cause the  compensation  expense during
such periods to appear high in relationship to the average number of aircraft in service.

       Aircraft and Traffic Servicing. Aircraft and traffic servicing  expenses were $19,349,000 and $17,846,000
(an  increase of 8.4%) for the  quarters  ended June 30, 2002 and 2001,  respectively,  and  represented  17.3% and
14.5% of total  revenue.  Aircraft  and  traffic  servicing  expenses  include  all  expenses  incurred at airports
including landing fees, facilities rental,  station labor, ground handling expenses,  and interrupted trip expenses
associated  with delayed or cancelled  flights.  Interrupted  trip  expenses are amounts paid to other  airlines to
protect  passengers as well as hotel, meal and other incidental  expenses.  Aircraft and traffic servicing expenses
will  increase  with the addition of new cities to our route  system.  During the quarter  ended June 30, 2002,  we
served 31 cities  compared  to 23 during the quarter  ended June 30,  2001,  or an  increase  of 34.8%.  During the
quarter  ended June 30,  2002,  our  departures  increased to 12,184 from  10,190,  or 19.6%.  Aircraft and traffic
servicing  expenses  were  $1,588 per  departure  for the  quarter  ended June 30,  2002 as  compared to $1,751 per
departure  for the quarter  ended June 30, 2001,  or a decrease of 9.3%.  Aircraft and traffic  servicing  expenses
during the quarter ended June 30, 2001 were adversely  impacted as a result of expenses  associated with deicing in
April 2001 as a result of an unusual spring  blizzard 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,  due to the number of flight  cancellations  as a result of these weather  conditions,  the number of
departures was 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 June 2001quarter.

       Effective  February  17, 2002,  the DOT began  providing  security  services  through the newly  established
Transportation  Security  Agency ("TSA") or assumed many of the contracts and oversight of 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.  In  anticipation  that these fees will not be  adequate to cover the costs of the TSA, a
security  infrastructure  fee has been assessed to all air carriers in an amount equal to the security fees paid by
each  carrier  during the  calendar  year ended  December  31,  2000.  These are  included in  expenses  during the
quarter ended June 30, 2002 and are payable monthly to the DOT.

       Maintenance.  Maintenance  expenses of  $17,157,000  and  $18,347,000  were 15.3% and 14.9% of total revenue
for the quarters ended June 30, 2002 and 2001,  respectively.  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  airframe,  engine,  landing gear and auxiliary power unit overhauls are accrued  monthly.  Maintenance
cost per block hour was $620 and $810 for the  quarters  ended June 30,  2002 and 2001,  respectively.  Maintenance
cost per block  hour  decreased  as a result of  decreases  on our  Boeing  fleet for  rotable  repairs  and engine
overhauls,  and the  additional  new  Airbus  aircraft  that are less  costly to  maintain  than our  older  Boeing
aircraft.  During the  quarter  ended June 30,  2001,  we had hail  damage to five of our  aircraft,  estimated  at
$560,000  ($25 per block  hour).  Additionally,  due to the number of flight  cancellations  as a result of adverse
spring weather conditions,  the number of block hours was less than we planned,  which caused our fixed costs to be
spread over fewer block hours and,  we believe,  distorted  our cost per block hour for the quarter  ended June 30,
2001.

     Promotion and Sales.  Promotion and sales expenses  totaled  $14,719,000  and  $16,425,000  and were 13.2% and
13.3% of total  revenue for the quarters  ended June 30, 2002 and 2001,  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 quarter ended June 30, 2002,  promotion and sales expenses per passenger decreased
to $15.86 from $19.41 for the quarter  ended June 30, 2001.  Promotion and sales  expenses per passenger  decreased
as a result of variable  expenses in relation to lower average  fares and partially as a result of our  elimination
of travel  agency  commissions  effective  on tickets  sold on or after June 1, 2002 and a decrease in  advertising
expenses.  During the quarter ended June 30, 2001,  we 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 quarters ended June 30, 2002 and
2001 totaled  $6,122,000  and  $7,335,000,  respectively,  and were 5.5% and 5.9% of total  revenue,  respectively.
During the quarter ended June 30, 2001, we accrued for employee  performance  bonuses totaling $1,065,000 or .9% of
total  revenue.  Bonuses are based on  profitability.  As a result of our pre-tax  loss for the quarter  ended June
30,  2002,  we did not accrue  bonuses.  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 also included in general and administrative  expenses.  We experienced  increases in our human resources,
training and information  technology  expenses as a result of an increase in employees from approximately  2,500 in
June 2001 to  approximately  2,960 in June 2002, an increase of 18.4%.  Because of the increase in  personnel,  our
health  insurance  benefit  expenses  increased  accordingly.  During the quarter  ended June 30, 2002,  we brought
revenue  accounting  in-house.  We previously  had outsourced  this  function.  We expect to realize a reduction in
expenses associated with revenue accounting.

       Depreciation  and  Amortization.  Depreciation and  amortization  expenses of $3,798,000 and $2,322,000,  an
increase of 63.4%,  were  approximately  3.4% and 1.9% of total  revenue for the  quarters  ended June 30, 2002 and
2001,  respectively.  These expenses include  depreciation of aircraft and aircraft  components,  office equipment,
ground  station  equipment,  other  fixed  assets.  Depreciation  expense  increased  over  the  prior  year due to
additional aircraft purchases.

       Nonoperating  Income  (Expense).  Net  nonoperating  expense totaled $704,000 for the quarter ended June 30,
2002  compared to net  nonoperating  income of  $1,228,000  for the quarter  ended June 30, 2001.  Interest  income
decreased to $707,000 from $1,531,000  during the quarter ended June 30, 2002 from the prior  comparable  period as
a result of a decrease in interest  rates and invested  cash  balances.  Interest  expense  increased to $1,259,000
for the quarter ended June 30, 2002 from  $253,000 as a result of interest  expense  associated  with the financing
of additional aircraft purchases since the prior comparable period.

       Income Tax Expense.  We accrued an income tax benefit of  $1,581,000  during the quarter ended June 30, 2002
at a 35% rate,  compared to an income tax expense  accrual of $4,794,000  for the quarter ended June 30, 2001, at a
39% rate.


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 11 Airbus aircraft  scheduled for
delivery by 2004. We have incurred  $121,200,000 in debt to finance six Airbus  aircraft we have purchased  through
June 30, 2002.  We seek to control our  operating  costs,  but our  airline,  like other  airlines,  has many fixed
costs.

       We had cash and cash  equivalents  and short-term  investments of  $79,050,000  and  $89,555,000 at June 30,
2002 and March 31, 2002,  respectively.  At June 30, 2002,  total current assets were  $183,271,000  as compared to
$154,930,000 of total current  liabilities,  resulting in working capital of $28,341,000.  At March 31, 2002, total
current assets were  $192,048,000 as compared to $152,064,000  of total current  liabilities,  resulting in working
capital of  $39,984,000.  The  decrease in our cash and working  capital from March 31, 2002 is largely a result of
cash used by  investing  activities,  principally  as a result of an increase  in  pre-delivery  payments  totaling
$10,893,000 for additional aircraft purchases.

       Cash  provided  by  operating  activities  for the  quarter  ended  June 30,  2002 was  $2,420,000.  This is
attributable  to an increase in deferred  tax  expense,  a decrease in  receivables,  and  increases in air traffic
liability,  other accrued expenses,  accrued  maintenance  expenses,  and deferred rent, offset by our net loss for
the period and increases in restricted  investments,  security,  maintenance and other  deposits,  and decreases in
accounts payable and deferred  Stabilization  Act compensation.  Included in cash provided by operating  activities
is a $4,000,000  repayment of the excess amounts received under the  Stabilization  Act. Cash provided by operating
activities  for the quarter ended June 30, 2001 was  $23,126,000.  This is  attributable  to our net income for the
period, decreases in trade receivables,  increases in air traffic liability,  other accrued expenses,  income taxes
payable,  and accrued maintenance expense,  offset by increases in restricted  investments,  security,  maintenance
and other deposits, prepaid expenses and inventories, and a decrease in accounts payable.

       Cash used by investing  activities for the quarter ended June 30, 2002 was  $62,300,000.  Net aircraft lease
and purchase  deposits  decreased by  $2,500,000  during this  quarter.  During the quarter ended June 30, 2002, we
took delivery of two purchased Airbus aircraft and applied their respective  pre-delivery  payments to the purchase
of those aircraft.  We also used $65,006,000 for the purchase of these  additional  Airbus aircraft and to purchase
rotable aircraft  components,  leasehold  improvements  other general equipment  purchases.  Cash used by investing
activities  for the quarter ended June 30, 2001 was  $56,800,000.  We used  $4,110,000 for  pre-delivery  payments,
net of amounts applied to the purchase of our first Airbus  aircraft,  for future  purchases of Airbus aircraft and
a cash  security  deposit  on the first  leased  Airbus  aircraft.  During the  quarter  ended  June 30,  2001,  we
converted two purchase  options into firmly ordered  Airbus A319  aircraft,  and advanced their delivery dates from
the third and fourth  calendar  quarters  of 2004 to May and June 2002 that  required  deposits of  $9,203,000.  We
also used  $52,896,000 for the purchase of these aircraft and to purchase  rotable  aircraft  components to support
the Airbus fleet,  as well as a spare engine for the Boeing fleet,  and other general  equipment  purchases  during
the quarter ended June 30, 2001.

       Cash provided by financing  activities  for the quarters  ended June 30, 2002 and 2001 was  $49,375,000  and
$24,504,000,  respectively.  During  the  quarters  ended  June 30,  2002 and 2001,  we  borrowed  $49,200,000  and
$24,000,000  to finance the purchase of Airbus  aircraft,  of which  $784,000  and $70,000  were repaid  during the
respective  quarters.  During the  quarters  ended June 30,  2002 and 2001,  we  received  $992,000  and  $605,000,
respectively, from the exercise of common stock options.

Contractual Obligations

       The following table summarizes our contractual obligations as of June 30, 2002:

                                        Less than          1-3            4-5           After
                                          1 year          years          years         5 years          Total
                                     -------------------------------------------------------------------------------
Long-term debt (1)                     $ 5,467,000    $ 12,226,000   $ 13,725,000   $ 87,055,000   $ 118,473,000
Capital lease obligations                  139,000          32,000                                       171,000
Operating leases (2) (4)                78,305,000     140,959,000    104,578,000    364,677,000     688,519,000
Unconditional purchase obligations (3) 161,400,000     181,000,000                                   342,400,000
                                     -------------------------------------------------------------------------------
Total contractual cash obligations    $245,311,000    $334,217,000   $118,303,000   $451,732,000  $1,149,563,000
                                     ===============================================================================

(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 10
     years and is payable in equal  monthly  installments,  including  interest,  payable in arrears.  The aircraft
     secures the loans.  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 March 31, 2002,  we
     had  $70,058,000  of debt  outstanding  for purchase of these three Airbus  aircraft.  Each loan  provides for
     monthly principal and interest  payments ranging from $207,579 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.

     In May 2002, we secured a loan for  $25,200,000  for the purchase of an Airbus  aircraft.  The loan has a term
     of 12 years and is payable in quarterly  installments,  including interest payable in arrears, with a floating
     interest  rate  adjusted  quarterly  based on LIBOR  plus a margin of 1.5%.  The total  interest  rate for the
     first quarter is 3.4375%.  The loan  amortizes  using an assumed  interest rate of 6% maturing in May 2014, at
     which  time a  balloon  payment  of  $7,560,000  is due.  As of June  30,  2002,  we had  $25,200,000  of debt
     outstanding secured by this aircraft.

     In June 2002, we secured a $48,000,000  loan  facility for the purchase of two Airbus  aircraft,  one of which
     was  delivered  in June  2002 and the  other  in July  2002,  with a  maximum  borrowing  of  $24,000,000  per
     aircraft.  Each  aircraft  loan has a term of 12 years and is payable  in  quarterly  installments,  including
     interest  payable in arrears,  with a floating  interest rate adjusted  quarterly based on LIBOR plus a margin
     of 1.7%.  The total  interest  rate for the first  quarter  is  3.575%.  The loan  amortizes  using an assumed
     interest  rate of 6% with  maturities  in June  and  July  2014,  at  which  time  balloon  payments  totaling
     $4,800,000  are due. As of June 30, 2002,  the Company had  $24,000,000  of debt  outstanding  secured by this
     aircraft.

(2)  As of June 30, 2002, we lease four Airbus 319 type aircraft and 24 Boeing 737 type  aircraft  under  operating
     leases with  expiration  dates  ranging from 2002 to 2014.  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 June 30, 2002,  we had made cash  security  deposits and had arranged for issuance of letters of
     credit totaling  $5,705,000 and $8,870,000,  respectively.  Accordingly,  our restricted cash balance includes
     $8,870,000 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 June 30, 2002, we had remaining unused  maintenance  deposits of $55,798,000  classified as an asset on our
     balance sheet.

     As a complement to our Airbus purchase  agreement,  in April and May 2000 we signed two agreements to lease 16
     new Airbus  aircraft for a term of 12 years.  Four of these  aircraft have been delivered to us as of June 30,
     2002.  As of June 30,  2002,  we have made cash  security  deposits on the  remaining 12 aircraft we agreed to
     lease and have made cash security  deposits and arranged for issuance of letters of credit  totaling  $400,000
     and $2,265,000, 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.

     Denver  International  Airport,  our primary hub for  operations,  is in the planning stages for a significant
     expansion of the concourse  where we currently have our aircraft  gates.  The expansion will add as many as 10
     gates for  full-size  commercial  jet  aircraft  and several  more gates for smaller  regional  jets.  We have
     voiced  preliminary  interest in entering into a long term lease  arrangement  with the airport  authority for
     the use of additional  aircraft gates in connection with our overall  expansion  plans. The amount we would be
     charged  under this lease will be  contingent  upon the ultimate  cost of the overall  project,  the amount of
     space to which we  commit,  the  financing  structure  and  interest  cost and the  final  method by which the
     airport  authority  allocates the  constructions  costs among the  airlines.  Currently,  construction  on the
     concourse  expansion is anticipated to start in the Spring of 2003 with completion  targeted for the Winter of
     2004.

(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 31 new Airbus  aircraft.  Included in the  purchase  commitment  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 17 of these  aircraft,  and have  options to
     purchase  up to an  additional  14  aircraft.  As of June 30,  2002,  we have taken  delivery  of six of these
     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 June 30,
     2002, we had made  pre-delivery  payments on future deliveries  totaling  $41,747,000 to secure these aircraft
     and option  aircraft.  We expect to be operating up to 37 purchased  and leased  Airbus  aircraft by the first
     quarter of calendar 2005.

     As of June 30, 2002, we have executed financing  commitments for five purchased Airbus A319 aircraft.  We have
     signed  a term  sheet  with a German  bank to  provide  debt  financing  for two of our  eight  A319  aircraft
     scheduled  for  delivery  from  Airbus in fiscal year 2003,  one of which was  delivered  and  financed in May
     2002.  The  terms  permit  us to borrow  up to  $51,100,000  over a period of 120  months at either a fixed or
     floating  interest rate with a $7,600,000  balloon  payment per aircraft due at maturity.  We have also signed
     a term sheet with a group of  European  banks for the debt  financing  of two of these A319  aircraft  (one of
     these  has been  delivered,  and  financing  completed  at June 30,  2002).  The  terms  permit  an  aggregate
     borrowing  of  $48,000,000  over a 10 year term of either fixed or floating  rates with a  $4,800,000  balloon
     payment per aircraft due at  maturity.  In addition,  we have signed a term sheet with a French bank group for
     the debt  financing of three of the fiscal year 2003 A319 aircraft  deliveries  with a borrowed  amount not to
     exceed  $72,000,000  over a period of 12  years.  The  interest  rate can be set by the  borrower  at either a
     fixed or floating rate with a $7,000,000  balloon payment due at maturity.  The eighth A319 aircraft  delivery
     scheduled for March 2003 currently has no committed long-term financing.

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 June 30,  2002,  we had  outstanding  letters  of credit,
bonds, and cash security deposits  totaling  $13,430,000,  $2,135,000,  and $6,756,000,  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 June 30, 2002, we have drawn  $13,430,000  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 the Airline 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 June 30, 2002,  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 July 26, 2002, the
coverage  would be increased to  $2,058,000  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 may from time to time 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 year ended March 31,  2002.  If we early
return  these  aircraft  from  service and are unable to 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 is entered  into. We have entered into an agreement
to early  return two  737-200  aircraft to the lessor,  for which we  recorded an unusual  charge of  approximately
$3,000,000, net of income taxes, against earnings in our year ended March 31, 2002.

       We are assessing  our liquidity  position in light of our aircraft  purchase  commitments  and other capital
needs, the economy,  our competition,  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.  In  that  regard,  we  filed  a shelf  registration  with  the  Securities  and  Exchange
Commission  in April  2002  that  would  allow us to sell  equity  or debt  securities  from time to time as market
conditions  permit. On June 28, 2002, we filed an application with the Air Transportation  Stabilization  Board for
a $70  million  line of  credit,  of which 85  percent  would be  secured  by a federal  government  guarantee.  If
approved,  we plan to obtain  this line of credit in order to enhance our  liquidity.  In  addition,  we may pursue
domestic or foreign bank  financing,  private debt financing or public debt  financing  such as enhanced  equipment
trust certificates or leveraged lease arrangements.


Critical Accounting Policies

       The preparation of financial  statements in conformity with accounting  principles generally accepted in the
United States of America  requires  management to make estimates and assumptions  that affect the reported  amounts
of assets and  liabilities  and  disclosure  of  contingent  assets and  liabilities  at the date of the  financial
statements  and the reported  amounts of revenues and expenses  during the reporting  period.  Actual results could
differ from those estimates.

       Critical  accounting  policies  are  defined  as those  that  are both  important  to the  portrayal  of our
financial  condition and results,  and require  management  to exercise  significant  judgments.  Our most critical
accounting  policies  are  described  briefly  below.  For  additional   information  about  these  and  our  other
significant accounting policies, see Note 1 of the Notes to the Financial Statements.

 Maintenance

       Routine maintenance and repairs are charged to operations as incurred.

       Under the terms of our aircraft lease agreements,  we are required to make monthly  maintenance  deposits to
the lessor and a liability  for accrued  maintenance  is  established  based on aircraft  usage.  The  deposits are
applied  against the cost of major  airframe  maintenance  checks,  landing  gear  overhaul  and engine  overhauls.
Deposit  balances  remaining  at  lease  termination  remain  with  the  lessor  and any  remaining  liability  for
maintenance  checks is reversed  against the deposit balance.  Additionally,  a provision is made for the estimated
costs of  scheduled  major  overhauls  required  to be  performed  on  leased  aircraft  and  components  under the
provisions of the aircraft lease  agreements if the required  monthly deposit amounts are not adequate to cover the
entire cost of the scheduled  maintenance.  We also accrues for major  airframe  maintenance  checks,  landing gear
overhauls and engine overhauls on our owned aircraft.  Accrued  maintenance  expense expected to be incurred beyond
one year is  classified  as  long-term.  The amounts  accrued for  maintenance  are based on  estimates of the time
required to complete the  procedures  and cost of parts used.  Additional  maintenance  accruals may be required if
these estimates prove to be inadequate.

Revenue Recognition

         Passenger,  cargo,  and other revenues are  recognized  when the  transportation  is provided or after the
tickets  expire,  one year after date of issuance,  and are net of excise  taxes,  passenger  facility  charges and
security  fees.  Revenues  that on tickets  that have been sold but not yet used been  deferred and included in the
accompanying balance sheet as air traffic liability.


Item 3:  Quantitative and Qualitative Disclosures About Market Risk

       The risk  inherent in our market risk  sensitive  position is the  potential  loss  arising  from an adverse
change in the price of fuel as described  below.  The sensitivity  analysis  presented does not consider either the
effect that such an adverse change may have on overall economic  activity or additional  action management may take
to mitigate our exposure to such a change.  Actual  results may differ from the amounts  disclosed.  At the present
time, we do not utilize fuel price hedging instruments to reduce our exposure to fluctuations in fuel prices.

       Our  earnings  are  affected  by changes in the price and  availability  of  aircraft  fuel.  Market risk is
estimated  as a  hypothetical  10 percent  increase in the average cost per gallon of fuel for the year ended March
31,  2002.  Based on fiscal year 2002 actual fuel  usage,  such an increase  would have  resulted in an increase to
aircraft fuel expense of  approximately  $6,482,000 in fiscal year 2002.  Comparatively,  based on projected fiscal
year 2003 fuel usage,  such an increase  would  result in an increase  to aircraft  fuel  expense of  approximately
$8,020,000  in fiscal year 2003.  The  increase in exposure to fuel price  fluctuations  in fiscal year 2003 is due
to the increase of our average  aircraft  fleet size during the year ended March 31, 2002,  projected  increases to
our fleet during the year ended March 31, 2003 and related gallons purchased.

       Our  average  cost per gallon of fuel for the period  ended June 30, 2002  decreased  13.9% from the average
cost for the quarter ended June 30, 2001.  See  "Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations - Operating Expenses."

       We will be susceptible to increased  interest expense  associated on A319 aircraft debt financings that have
floating  interest  rates and on expected  future  long-term  debt  obligations to fund the purchases of our Airbus
aircraft.


                                            PART II. OTHER INFORMATION

Item 6:        Exhibits and Reports on Form 8-K


(a)      Exhibits

         Exhibit
         Numbers

           10.68          Aircraft Lease Agreement  dated as of May 1, 2002 between AFS  Investments  XVILLC as
                          Lessor and Frontier Airlines, Inc. as Lessee. (1)

           10.69          Credit Agreement [Frontier/2002-A]  dated as of June 26, 2002 between Frontier Airlines,
                          Inc., Borrower,  and Landesbank  Schleswig-Holstein  Girozentrale,  as  Administrative
                          Agent on behalf of the  lenders.  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)

           10.70          Mortgage and Security  Agreement  [Frontier/2002-A]  dated as of June 26, 2002 between
                          Frontier  Airlines, Inc., Borrower, and Landesbank  Schleswig-Holstein  Girozentrale, as
                          Administrative Agent on behalf of the lenders. (1)

           10.71          Credit Agreement  [Frontier/2002-B]  dates as of July 16, 2002 between Frontier Airlines,
                          Inc., Borrower, and Erste Bank Der  Oesterreichschen  Sparkassen AG, as Administrative
                          Agent on behalf of the  lenders.  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)

           10.72          Mortgage and Security  Agreement  [Frontier/2002-B]  dated as of July 16, 2002 between
                          Frontier  Airlines, Inc.,  Borrower,  and Erste Bank Der  Oesterreichschen  Sparkassen AG,
                          as  Administrative Agent on behalf of the lenders. (1)

           10.73          Credit Agreement  {Frontier/HLB] dated as of May 23, 2002 between Frontier Airlines, Inc.,
                          Borrower,  and Hamburgische  Landesbank-Girozentrale,  as Administrative Agent on behalf of
                          the lenders. 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)

           10.74          Mortgage and Security Agreement  [Frontier/HLB]  dated as of May 23, 2002 between Frontier
                          Airlines,  Inc., Borrower, and Hamburgische Landsebank-Girozentrale, as Administrative Agent
                          on behalf of the lenders. (1)

           99.1           Certification of President and Chief Executive Officer, Jeffery S. Potter. (1)

           99.2           Certification of Chief Financial Officer, Paul H. Tate. (1)

           (1)            Filed herewith.

(b)      Reports on Form 8-K

              None.









                                                    SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


                                                     FRONTIER AIRLINES, INC.


Date:  August 5, 2002                                By: /s/ Paul H. Tate
                                                        -----------------------------------------------------------
                                                     Paul H. Tate, Vice President and
                                                     Chief Financial Officer

Date:  August 5, 2002                                By: /s/ Elissa A. Potucek
                                                        -----------------------------------------------------------
                                                     Elissa A. Potucek, Vice President, Controller,
                                                     Treasurer and Principal Accounting Officer

EX-10

                                                                    EXECUTION VERSION


         TO THE  EXTENT  THAT THIS  AIRCRAFT  LEASE  AGREEMENT  CONSTITUTES  CHATTEL  PAPER (AS  DEFINED IN THE
         UNIFORM  COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE  JURISDICTION),  NO SECURITY  INTEREST IN THIS
         AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH  TRANSFER OR POSSESSION OF ANY COUNTERPART  OTHER THAN
         THE ORIGINAL COUNTERPART,  WHICH SHALL BE IDENTIFIED AS THE COUNTERPART  DESIGNATED AS THE ORIGINAL ON
         THE SIGNATURE PAGE OF THIS AGREEMENT BY AFS INVESTMENTS XVI LLC



                                           AIRCRAFT LEASE AGREEMENT

                                            Dated as of May 1, 2002
                                                    between

                                            AFS INVESTMENTS XVI LLC
                                                   as Lessor

                                                      and

                                            FRONTIER AIRLINES, INC.
                                                   as Lessee

                                                 in respect of

                                           One Airbus A319 Aircraft

                                          as further identified herein
                                       ---------------------------------
                                       incorporating the provisions of a

                                            COMMON TERMS AGREEMENT
                                       ---------------------------------












                             AIRCRAFT LEASE AGREEMENT

THIS AIRCRAFT LEASE AGREEMENT is made as of May 1, 2002 and is

BETWEEN:

(1)      AFS Investments XVI LLC, a limited liability company formed under the laws of Delaware and an
         indirect wholly-owned subsidiary of General Electric Capital Corporation, a Delaware corporation
         ("GECC"), having its principal place of business at c/o GE Capital Aviation Services, Inc., 201 High
         Ridge Road, Stamford, Connecticut  06927 ("Lessor"); and

(2)      FRONTIER AIRLINES, INC., a corporation incorporated under the laws of Colorado with its principal
         place of business and chief executive office at Frontier Center One, 7001 Tower Road, Denver,
         Colorado 80249-7312 ("Lessee").

WHEREAS:

(A)      Lessee wishes to lease the Aircraft (as defined below) from Lessor, and Lessor wishes to lease the
         Aircraft to Lessee, on the terms and subject to the conditions provided herein;

(B)      GECC and Lessee have entered into the Common Terms Agreement (as defined below) in respect of
         aircraft that may be leased from time to time by Lessee or one of its Affiliates from Lessor or one
         of its Affiliates; and

(C)      Lessor and Lessee wish to incorporate by reference such Common Terms Agreement, as well as Schedules
         A and B attached hereto, into this Aircraft Lease Agreement for the Aircraft;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

1.       INTERPRETATION
1.1      Definitions:  In this Aircraft Lease Agreement, the following capitalized words and expressions have
         the respective meanings set forth below:

         Agreed Lessee Modifications means any modifications or changes to the GECC A319 Baseline
         Specification as requested by Lessee and agreed by Lessor for incorporation on the Aircraft prior to
         Delivery. Lessor agreement to such modifications shall not be unreasonably withheld. All requests
         for any Agreed Lessee Modification shall be made no later than ten (10) months prior to the Delivery
         of the Aircraft.


         Aircraft means the Airframe, Engines, Parts and Aircraft Documents and Records relating to the
         Aircraft described on Schedule A hereto.

         Airframe Maintenance Adjustment shall have the meaning as set forth in Schedule B, Part VI hereof.

         Airframe 4C Check means the 4C check including 5 year structural inspections all in accordance with
         Lessee's Maintenance Program which, at a minimum, shall comply with the Manufacturer's Maintenance
         Planning Document and Manufacturer's Maintenance Review Board Report.

         Airframe 8C Check means the 8C check including 10 year structural inspections all in accordance with
         Lessee's Maintenance Program which, at a minimum, shall comply with the Manufacturer's Maintenance
         Planning Document and Manufacturer's Maintenance Review Board Report.

         Airframe Structural Check means a heavy maintenance visit which shall include but not be limited to
         accomplishment of either or both of an Airframe 4C Check and an Airframe 8C Check.

         Airframe 4C Supplemental Rent  and Airframe 4C Supplemental Rent Rate shall have the respective
         meanings set forth in Clause (a) of Schedule B, Part V hereof.

         Airframe 8C Supplemental Rent  and Airframe 8C Supplemental Rent Rate shall have the respective
         meanings set forth in Clause (a) of Schedule B, Part V hereof.

         Alternate Scheduled Delivery Month means one Aircraft in each of April, 2002, November, 2002,
         December, 2002, June, 2003, May, 2003, September, 2003, April, 2004, and May 2004 as alternative
         delivery months to a Scheduled Delivery Month; subject, however to the continued availability of any
         Aircraft in any month other than an originally Scheduled Delivery Month.

         APU Supplemental Rent and APU Supplemental Rent Rate shall have the respective meanings set forth in
         Clause (d) of Schedule B, Part V hereof.

         Common Terms Agreement means the "Aircraft Lease Common Terms Agreement" dated as of April 20, 2000
         executed by GECC and Lessee (as in effect on the date hereof without, unless Lessor and Lessee
         otherwise expressly agree, giving any effect to any subsequent amendment, supplement, waiver or
         other modification thereto), and which forms part of this Aircraft Lease Agreement.

         Delivery Condition Requirements means the requirements specified in Part III of Schedule A.

         Delivery Location means Hamburg, Germany or such other location as Lessor and Lessee mutually agree.

         Deposit means all amounts payable pursuant to Section 3.1 hereof.

         Discount Rate means ten percent (10%).

         Engine LLP Supplemental Rent and Engine LLP Supplemental Rent Rate shall have the respective
         meanings set forth in Clause (b) of Schedule B, Part V hereof.

         Engine Refurbishment Maintenance Adjustment shall have the meaning as set forth in Schedule B, Part
         VI hereof.

         Engine Refurbishment Supplemental Rent and Engine Refurbishment Supplemental Rent Rate shall have
         the respective meanings set forth in Clause (c) of Schedule B, Part V hereof.

         Final Delivery Date means the date that is six (6) months after the last day of the Scheduled
         Delivery Month for the Aircraft.

         Financing Documents means any documentation reflecting a mortgage or other debt financing for the
         Aircraft as the same may be restated, refinanced, replaced or refunded, from time to time as
         notified by Lessor to Lessee.

         Financing Parties means the holders of any indebtedness relating to the Aircraft.

         Financing Parties' Representative means any lender under the Financing Documents, if any, and its
         successors or assigns.

         Guarantor means any guarantor, if any, of the Lessee's obligations hereunder.

         Indemnitee means each of Lessor, Owner, GECC, Aviation Financial Services Inc., AFS Investments XVI
         Inc., GECAS, the Financing Parties' Representative and the Financing Parties, and their successors
         and assigns, and each of their shareholders, members, contractors, directors, officers,
         representatives, agents and employees.

         Landing Gear Supplemental Rent and Landing Gear Supplemental Rent Rate shall have the respective
         meanings set forth in Clause (e) of Schedule B, Part V hereof.

         Maintenance Adjustment means collectively the Airframe Maintenance Adjustment,  the Engine
         Refurbishment Maintenance Adjustment, the Engine LLP Maintenance Adjustment, the APU Maintenance
         Adjustment and the Landing Gear Maintenance Adjustment payable by Lessee pursuant to Section 5.4 of
         the Common Terms Agreement, Section 3 of this Agreement and Schedule B, Part VI of this Agreement.

         Manufacturer means the manufacturer of each of the Airframe or an Engine, as the case may be, as set
         forth on Schedule A hereto.

         Owner means Lessor or such other entity as notified by Lessor to Lessee in writing in accordance
         with the terms of the Lease, including Section 14 of the Common Terms Agreement.

         Redelivery Location means Denver, Colorado, or such other location on Lessee's route system within
         the Continental United States as Lessor shall advise Lessee in writing at least 30 days prior to the
         Expiry Date; provided that, if an Event of Default has occurred and is continuing, such notice may
         be delivered on the Expiry Date.

         Rent means all amounts payable pursuant to Section 3.2 hereof for the Aircraft.

         Rent Commencement Date means the date on which Lessor tenders the Aircraft for Delivery to Lessee in
         accordance with Clause 4.3(a) of the Common Terms Agreement.

         Scheduled Delivery Date means the date notified by Lessor to Lessee in accordance with Clause 4.1(a)
         of the Common Terms Agreement for the delivery of the Aircraft in the Scheduled Delivery Month.

         Scheduled Delivery Month means June, 2002.

         Scheduled Expiry Date means the date immediately preceding the date corresponding to the Delivery
         Date in the month that is the one hundred forty-fourth (144th) month after the Delivery Date for the
         Aircraft, which date shall be specifically set forth in the Lease Supplement for the Aircraft.

         State of Registry means United States.

         Supplemental Rent means, as applicable, all amounts payable under the Lease in respect of each of
         Airframe Supplemental Rent, Engine Supplemental Rent, APU Supplemental Rent and Landing Gear
         Supplemental Rent.

         Supplemental Rental Cap shall have the meaning set forth in Schedule B, Part V hereof.

         Tax Indemnitee means each of Owner, Lessor, Financing Parties' Representative, and each member of
         the consolidated group of which Lessor or Owner is a member for United States Federal Income Tax
         purposes, and their successors and assigns. For purposes of the foregoing sentence, where the Owner
         or Lessor is a pass-through entity for Federal income tax purposes, Tax Indemnitee shall include the
         consolidated group in which the taxable income or loss of the Owner or Lessor is reported for
         Federal income tax purposes.

1.2      Interpretation:  Unless otherwise defined herein, words and expressions defined in the Common Terms
         Agreement have the same respective meanings for the purposes of this Aircraft Lease Agreement.  The
         construction provisions of Section 1.2 of the Common Terms Agreement shall apply to this Aircraft
         Lease Agreement.

2.       LEASING
2.1      Agreement to Lease:  Subject to the terms and conditions of the Lease, Lessor will lease the
         Aircraft to Lessee and Lessee will take delivery of and lease the Aircraft from Lessor in accordance
         with the Lease for the duration of the Term for the Aircraft.

2.2      Term:  Subject to Sections 4.1 through 4.4 of the Common Terms Agreement, Delivery of the Aircraft
         will occur at the Delivery Location, whereupon Lessee shall accept the Aircraft hereunder by
         executing and delivering a Lease Supplement substantially in the form of Lease Supplement No. 1 as
         provided in Section 4.3 of the Common Terms Agreement.  The Term for the Aircraft will commence on
         the Delivery Date, which Delivery Date is scheduled to occur on the Scheduled Delivery Date, and
         will expire on the Scheduled Expiry Date unless terminated earlier in accordance with the provisions
         of the Lease.

3.       PAYMENTS
3.1      Deposit and Letter of Credit:  Lessee shall pay to Lessor the Deposit in cash or by Letter of Credit
         (to which Deposit Sections 5.12 and 5.13, as applicable, of the Common Terms Agreement shall apply)
         in the amount and at the times provided in Schedule B hereto.

3.2      Rent: Lessee shall pay Rent for the Aircraft to Lessor on each Rent Date during the Term in the
         amount determined in accordance with Schedule B hereto and as provided in Sections 5.2 and 5.3 of
         the Common Terms Agreement.  The first instalment of Rent shall be due and payable on the Rent
         Commencement Date for the Aircraft as defined herein. Provided no Event of Default has occurred and
         is continuing, (i) during the first five Rental Periods, Lessor shall grant Lessee a credit in an
         amount equal to the Initial Aircraft Rental Credit.  The Initial Aircraft Rental Credit shall be
         applied against the Rent for the Aircraft then due and payable for the applicable Rental Periods as
         set forth above following the Aircraft Delivery Date or in such other manner as Lessor and Lessee
         may agree.

3.3      Supplemental Rent and Maintenance Adjustment: Lessee shall pay (a) Supplemental Rent for the
         Aircraft to Lessor on each applicable date during the Term in accordance with Section 5.4 of the
         Common Terms Agreement and in the amounts provided in Schedule B hereto; and (b) the Maintenance
         Adjustments for the Aircraft to Lessor on the Return Occasion in the amounts provided in Schedule B
         hereto and as provided in Section 5.4 of the Common Terms Agreement. Lessor shall retain all
         Supplemental Rent and Maintenance Adjustments, subject to Section 3.4 below. Lessee's obligation to
         pay Supplemental Rent for the Aircraft shall be suspended when the Supplemental Rental Cap has been
         reached. The Supplemental Rental Cap for the Aircraft shall be maintained during the Term and
         increased from time to time by an amount equal to any Lessor Maintenance Contribution made by Lessor
         with respect to the Aircraft, whereupon Lessee shall recommence payment of  Supplemental Rent until
         the Supplemental Rental Cap for the Aircraft shall again have been reached.

3.4      Lessor's Maintenance Contribution: Lessor shall make Maintenance Contribution payments as and to the
         extent provided in Section 7.2 of the Common Terms Agreement.

3.5      Lessor's Bank Account:  For the purposes of Section 5.5 of the Common Terms Agreement, Lessor's bank
         account and wire transfer particulars, to which all payments to Lessor shall be made, are at the
         date hereof, Bankers Trust Company, ABA number 021 001 033 for the account of GE Capital Aviation
         Services, Inc., as Manager, Account No. 50 234 585, Ref. MSN 1759.

4.       CONDITION OF THE AIRCRAFT AT DELIVERY
4.1      On the Delivery Date, as a condition to Lessee's obligation to accept delivery thereof, the Aircraft
         shall be in the condition provided in Part III of Schedule A hereto.

5.       CONDITION OF THE AIRCRAFT AT REDELIVERY
5.1      On the Return Occasion for the Aircraft, Lessee shall redeliver the Aircraft to Lessor at the
         Redelivery Location and at such redelivery the Aircraft shall be in the condition provided in Part
         IV of Schedule A hereto and in the Common Terms Agreement, including Schedule 6 of the Common Terms
         Agreement.

6.       ADDRESSES FOR NOTICES
         The addresses and facsimile and telephone numbers of Lessor and Lessee are as follows:

         Lessor:           AFS Investments XVI LLC
                           c/o GE Capital Aviation Services, Inc.
                           201 High Ridge Road
                           Stamford, CT  06927

         Attention:        Contracts Leader
         Facsimile:        (203) 357-3201
         Telephone:        (203) 357-4482

         Lessee:           Frontier Airlines, Inc.
         Address: Frontier Center One
                           7001 Tower Road
                           Denver, Colorado 80249-7312

         Attention:        General Counsel
         Facsimile:        (720) 374-4375
         Telephone:        (720) 374-4512

7.       THE SCHEDULES AND COMMON TERMS AGREEMENT
         All the provisions of Schedule A, Schedule B and the Common Terms Agreement are incorporated by
         reference herein and are part of this Aircraft Lease Agreement as if they were set out in full
         herein.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BY ITS SIGNAUTE BELOW, THE LESSEE
         ACKNOWLEDGES AND AGREES THAT THE LEASE OF THE AIRCRAFT HEREUNDER IS ON AN "AS IS, WHERE IS"
         BASIS AND THAT THE DISCLAIMERS, EXCUPLATIONS AND LIMITATIONS OF LIABILITY, INDEMNITIES, THE
         CHOICE OF NEW YORK, AND THE WAIVER OF ANY RIGHT TO A TRIAL BY JURY PROVIDED FOR IN THE COMMON
         TERMS AGREEMENT ARE INCORPORATED HEREIN BY SUCH REFERNCE AND ARE PART OF THIS AGREEMENT AS IF
         THE SAME WERE SET OUT IN FULL HEREIN.

8.       RIGHTS AND REMEDIES. The exercise by Lessor of its rights and remedies pursuant to Section 13.2 of
         the Common Terms Agreement is subject to Part VII of Schedule B of the Lease.









9.       No amendment except in writing
         No provision of this Lease, including any provision of Schedule A, Schedule B or the Common Terms
         Agreement, may be amended, rescinded, changed, waived, discharged, terminated or otherwise modified
         in any way whatsoever, except by a writing signed by the party to be charged.  Lessor and Lessee
         acknowledge their agreement to the provisions of this Section 9 by their initials below:

         Lessor: ____________________       Lessee: ____________________






IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease Agreement, each by their duly
authorized representative(s), as of the date shown at the beginning of this Aircraft Lease Agreement.

LESSOR:                                     LESSEE:

AFS INVESTMENTS XVI LLC                     FRONTIER AIRLINES, INC.

By:      AFS INVESTMENTS XVI INC.
         its sole member


By:      __________________________         By:      __________________________

Name:    __________________________         Name:    __________________________

Title:   __________________________         Title:   __________________________













                                                  SCHEDULE A

                                    PART I-Airframe and engines description



AIRFRAME

         Manufacturer:              Airbus

         Model:                     A319-100

         Serial Number:             1759

         MTOW                       154,300 pounds

ENGINES (each of which has 750 or more rated takeoff horsepower or the equivalent of such horsepower)

         Engine Type:               CFM56-5B5/P

         Serial Nos:                To be advised at Delivery and included in the Lease Supplement.



The serial numbers stated under "Aircraft" and "Engines" above are those advised to Lessor by the
Manufacturer.  If the Manufacturer advises of any change to any serial number, the new number will be deemed
inserted under "Serial Number" under "Aircraft" and "Engines" above, as the case may be, above.








                                                  SCHEDULE A

                                          PART II-AIRCRAFT DOCUMENTS



MANUALS AVAILABLE (headlines)

1 - ENGINEERING DOCUMENTS

2 - MAINTENANCE & ASSOCIATED MANUALS

3 - MISCELLANEOUS PUBLICATIONS

4 - OPERATIONAL MANUALS AND DATA

5 - OVERHAUL DATA

6 - STRUCTURAL MANUALS



     MANUALS AVAILABLE (detailed)                  Abbr       Form     Type     Qty.    Delivery

1.   ENGINEERING DOCUMENTS

  Process and Material Specification              PMS        F      E        1       0***

     Standards Manual                                SM         F      E        1       -90

2.   MAINTENANCE & ASSOCIATED MANUALS

  APU Build-up Manual                             ABM        P2     E        2       -90

     Aircraft Maintenance Manual                     AMM        F      C        10      0 to +90

                                                                MF     C        1       0 to +90

     Aircraft Time Limits/Maintenance Checks         TLMC       P2     C        3       90

     Aircraft Schematics Manual                      ASM        F      C        10      0 to +90

                                                                MF     C        1       0 to +90

     Aircraft Wiring Manual                          AWM        F      C        5       0 to +90

                                                                MF     C     1          0 to +90

     Aircraft Wiring Lists                           AWL        F      C     5          0 to +90

                                                                MF     C     1          0 to +90

     Consumable Material List                        CML        P2     E     1          -90

     Duct Repair Manual                              DRM        P2     E     1          90***

     Fuel Pipe Repair Manual                         FPRM       P2     E     1          90***

     Illustrated Parts Catalog (Airframe)            IPC        F      C     10         0 to +90

                                                                MF     C     1          0 to +90

     Illustrated Parts Catalog (Power Plant)**PIPC   F          C      10    0 to +90

                                                                MF     C     1          0 to +90

     Illustrated Tools and Equipment Manual          TEM        P2     E     3          -180

     Maintenance Facility Planning                   MFP        P2     E     2          -360

     Maintenance Planning Document                   MPD        P2     P     1          -180

                                                                       E     3          -90

     Power Plant Build-up Manual**                   PBM        P2     C     2          -90

     Support Equipment Summary                       SES        P1     E     2          -180

     Tool and Equipment Drawings                     TED        AC     E        1       -180

     Tool and Equipment Index                        TEI        P2     E        2       360

     Tool and Equipment Bulletins                    TEB        P1     E        3       0

     Trouble Shooting Manual                         TSM        F      C        10      0 to +90

                                                                MF     C        1       0 to +90

3.   MISCELLANEOUS PUBLICATIONS

     Airplanes Characteristics for Airport Planning  AC         P2     E        2       -360***

     Aircraft Recovery Manual                        ARM        P2     E        2       0***

     Cargo Loading System Manual                     CLS        P2     E        2       -90

     Crash Crew Chart                                CCC        P1     E        5       -180

     List of Radioactive and Hazardous Elements      LRE        P2     E        1       90***

     List of Applicable Publications                 LAP        P1     C        1       -180

     Livestock Transportation Manual                 LTM        P2     E        1       90***

     Service Bulletin                                SB         P2     C        2       0

                                                                F      E        1       -90

     Technical Publications Combined Index           TPCI       D      E        1       -90

     Service Information Letters                     SIL        P1     E        1       0

     Transportability Manual                         TM         P1     E        1       -90***

     Vendor Information Manual                       VIM        D      E        1       360

     Vendor Information Manual GSE                   VIM/GSE    P2     E        2   360



The  quantities  listed  below are in addition to the set of one copy of each  operational  manual to be delivered
with the Aircraft (except PEP/PPM).



4.   OPERATIONAL MANUALS AND DATA

     Quick Reference Handbook                        QRH        P2     C        3       -90

     Flight Crew Operating Manual                    FCOM       P2     C        3       0

     Flight Manual                                   FM         P2     C        1       -90

                                                                       C        3       0

     Master Minimum Equipment List                   MMEL       P2     C        3       0

     Performance Engineering Program                 PEP        MT     C        1       -90

                                                                D      C        1       -90

     Performance Program Manual                      PPM        P2     C        3       90

     Weight and Balance Manual                       WBM        P2     C        3       0

5.   OVERHAUL DATA

    Component Documentation Status                  CDS        D            C    1     180***

     Component Evolution List                        CEL        P2           E    1     ***

     Cable Fabrication Manual                        CFM        P2           E    1     90***

     Component Maintenance Manual Airframe

     Manufacturer                                    CMMM       F            E    2     -180 to +180*



6.   STRUCTURAL MANUALS

    Nondestructive Testing Manual                 NTM        P2           E      2   -90***

     Structural Repair Manual                      SRM        F            E      2   -90***



**      Supplied by the Propulsion Systems manufacturer.

***      Optional.  Delivered as follow-on for CDS.



MANUAL FORMAT AND TYPE IDENTIFICATION


FORM              AC         APERTURE CARD.  Refers to 35mm film contained in punched aperture cards.

                  D          FLOPPY DISK 3"1/2

                  F          MICROFILM.  Refers to 16mm roll film on 3M type cartridges.

                  MF         MASTER FILM.  Refers to thick diazo film suitable for further reproduction.

                  MP         Refers to paper  printed one side,  unpunched  quality  shall be suitable for further
                             reproduction or microfilming.

                  MT         MAGNETIC TAPE

                  P1         PRINTED  ONE SIDE.  Refers to  manuals  in paper with print on one side of the sheets
                             only.

                  P2         PRINTED BOTH SIDES.  Refers to manuals with print on both sides of the sheets.


TYPE              C          CUSTOMIZED.  Refers to manuals which are customized.

                  E          ENVELOPE.  Refers to manuals which are not customized.

                  P          PRELIMINARY.  Refers to preliminary data or manuals which may consist of:



                  o   either one time issue not maintained by revision service, or

                  o   preliminary issues maintained by revision service until final manual or data delivery, or

                  o   supply of best  available  data under  final  format  with  progressive  completion  through
                                        revision service.

DELIVERY          Manual  delivery is expressed  either as the number of days prior to delivery of the Aircraft or
                  as nil (0),  which  designates  the date of  delivery  of the  Aircraft.  It is agreed  that the
                  number of days indicated will be rounded up to the next regular revision release date.






                                                  SCHEDULE A

                                   PART III-DELIVERY CONDITION REQUIREMENTS



Set forth below is a description of the condition in which the Aircraft must be in order for Lessee to be
obligated to accept the Aircraft under the Lease.  It is solely a description of such condition precedent and
shall not be construed as a representation, warranty or agreement of any kind whatsoever, express or implied,
by Lessor with respect to the Aircraft or its condition, all of which have been disclaimed by Lessor and
waived by Lessee as set forth in the Lease, including in the Common Terms Agreement.

Delivery Condition Requirements:

1.       The "Delivery Condition Requirements" for the Aircraft are as follows:

         On Delivery, the Aircraft shall

(i)      be new, ex factory and painted in Lessee's livery;

(ii)     have a valid Export Certificate of Airworthiness for the United States;

         (iii)    have an issued FAR 121 Compliance Statement from the Manufacturer;

         (iv)     on or prior to the Delivery Date, have had accomplished all outstanding mandatory service
                  bulletins, Airworthiness Directives and similar requirements applicable to the Aircraft
                  having a compliance date prior to the Delivery Date or within 180 days after the Delivery
                  Date and which are required by the State of Design, the FAA or the Manufacturer.

(v)               and otherwise be in the condition required for delivery pursuant to each of two Purchase
                  Agreements, dated July 16, 1996 and September 29, 1998, respectively, each between the
                  Manufacturer and GE Capital (each a "Purchase Agreement" and together, the "Purchase
                  Agreements") and the Airbus Aircraft Specification Number D.000.0200, Issue Number 4, dated
                  April 30, 1995, except as amended by change orders initiated by Lessor under the terms of
                  the Purchase Agreement, including as modified to include the additional GECC baseline SCNs
                  in accordance with the GECC A319 baseline specification Issue 1 (the "GECC A319 Baseline
                  Specification.")

2.       Modifications (a) The Agreed Lessee Modifications shall be accomplished pre-delivery at the sole
         cost and expense of Lessee. Lessor shall use reasonable efforts to accomplish all Agreed Lessee
         Modifications prior to Delivery.  Cost of all Agreed Lessee Modifications, including charges for any
         "out of sequence production", shall be invoiced to Lessee upon Lessor's receipt of invoice
         applicable to each individual Agreed Lessee Modification from the relevant third party vendor.  If
         Lessor notifies Lessee that any Agreed Lessee Modification cannot be accomplished prior to the
         Delivery Date, including without limitation any delays in accomplishing such Modifications caused by
         failure of Lessee to deliver any materials or parts to the Manufacturer by the required on-dock
         dates as advised by Manufacturer, such Agreed Lessee Modification shall be excluded from the
         Delivery Condition Requirements.

         (b)  Cost Adjustment.  Lessor and Lessee agree that if all fees, costs and expenses invoiced to
         Lessor directly attributable to the Agreed Lessee Modifications, including without limitation, the
         order, purchase, delivery and installation on the Aircraft of the galleys, seats, avionics, APU and
         wheels and brakes (collectively, the "BFE/SFE") selected by Lessee as part of the Agreed Lessee
         Modifications are less than such fees, costs and expenses invoiced to Lessor for the BFE/SFE
         selected by Lessor as part of the GECC A319 Baseline Specification, then upon the delivery of the
         Aircraft, Lessor shall pay to Lessee the difference between (i) the Lessee selected BFE/SFE ,
         pro-rata for such Aircraft leased by Lessee from Lessor, and (ii) the Lessor selected BFE/SFE for
         such Aircraft.  Lessee acknowledges that Lessor is subject to confidentiality agreements with its
         vendors relating the price of the above referenced BFE/SFE.  Lessor shall certify to Lessee the net
         difference between the costs of Lessee selected BFE/SFE if less than the Lessor selected BFE/SFE.

         (c )  Specification Credit.  Lessee has requested that the items listed below in this clause (c )
         (the "Listed Items") be removed from the GECC A319 Baseline Specification and not be included in the
         Aircraft.  Lessor shall, in its discretion, determine whether each Listed Item is, or is not,
         removed from the Aircraft.  In consideration thereof, Lessee hereby receives a credit for the
         Aircraft in the amount of One Hundred Twenty-five Thousand Dollars ($125,000) (the "Specification
         Credit") (i) first, against any amounts due and payable by Lessee to Lessor relating to the cost of
         any additions to the GECC A319 Baseline Specification selected by Lessee; (ii) second, to the extent
         any Specification Credit remains, against any amounts due and payable by Lessee to Lessor relating
         to the cost of any increase in BFE or SFE not already included in the GECC A319 Baseline
         Specification and (iii) third, to the extent any Specification Credit remains, against any amounts
         due and payable by Lessee to Lessor under this Agreement.  No Listed Items shall be included in the
         cost adjustments provided in clause 2 (b) above.








                                                     Listed Items:



Ozone Catalytic Converters                           (G8EO2J1011101S1H)



HF LRU                                               (G8E23J1113004S1H)



Third Radio Management Panel                         (G8E23J1310102S1H)



System Prov. For Audio Pax Entertainment Sys.        (G8E23J3670000G1H)



System Provisions for PES  Video                     (G8E23J3670000G1H,

                                                      G8E23J3610501S1H)



Lav. D Mod. for Stretcher Loading                    (G8E25J2070000G1H)



Prov. For Mech. Bulk Loading                         (G8E25J5231501S1H,

System in Fwd. And Aft Cargo Holds                    MCG8E25.52.003J1MO1)










                                                  SCHEDULE B
                                               COMMERCIAL TERMS

         Lessor and Lessee hereby agree that the definitions and other commercial and financial terms set
forth in this Schedule B shall apply to the leasing of the Aircraft under the Lease.

         In addition, Lessor and Lessee understand and agree that the commercial and financial information
contained in this Schedule B are considered by Lessor and Lessee as proprietary and confidential.  Lessor and
Lessee each hereby agree, and any of their assignees, upon becoming such shall agree that it will treat this
Schedule B as proprietary and confidential and will not, without the prior written consent of the other,
disclose or cause to be disclosed, the terms hereof or thereof to any Person, except to its agents,
representatives, advisors, employees, counsel, underwriters, auditors, investors, financing parties and head
lessors as necessary or appropriate for the leasing transaction which is the subject hereof, or except (a) as
may be required by applicable Law or pursuant to an order, or a valid and binding request, issued by any
court or other Government Entity having jurisdiction over Lessor, Lessee or the assignee of either of them,
as the case may be, or (b) as necessary to enable Lessor or its assignee to make transfers, assignments or
other dispositions to potential transferees, assignees or participants of its interest in and to the Lease.

         In connection with any such disclosure or any filing of the information contained herein or therein
pursuant to any such applicable Law, Lessor, Lessee or the assignee of either of them, as the case may be,
shall request and use its best reasonable efforts to obtain confidential treatment of this Schedule B and the
other party will cooperate in making and supporting any such request for confidential treatment.



PART I   PART I-CASUALTY OCCURRENCE DEFINITIONS

         Agreed Value means $33,500,000.

         Damage Notification Threshold means $500,000.

         Deductible Amount means $750,000; provided that the Deductible Amount shall not be higher than the
         lowest deductible carried on any hull insurance policy maintained in respect of any Airbus A319
         series 100 aircraft in Lessee's fleet which is leased, purchased, financed or refinanced after June
         8, 2000.

         Minimum Liability Coverage means $600,000,000.

PART II  DEPOSIT; LC AMOUNT; INTEREST RATE

         Deposit means, for the purposes of Section 3.1 of the Aircraft Lease Agreement, $411,800, one-half
         of which shall have been paid on or before the date hereof; and the balance of which shall be paid
         no later than 30 days prior to Delivery of the Aircraft; provided, however, that Lessee may elect to
         provide Lessor with a Letter of Credit in an amount, from a financial institution and otherwise in
         form and substance, reasonably acceptable to Lessor.  Lessee acknowledges and agrees that it is not
         located in the State of New York within the meaning of Section 7-101 1-c(b) of the New York General
         Obligations Law, and therefore the requirements of Section 7-101 of the New York General Obligations
         Law do not apply to the Deposit.

         Initial Aircraft Rental Credit means, an amount equal to $1,000,000.

         Interest Rate:  The Interest Rate shall be the "prime rate" as quoted in the Wall Street Journal
         from time to time during the applicable period plus one and one-half percent (1.5%) per annum, but
         not to exceed the maximum amount permitted by Law.

         LC Amount means, for the purposes of Section 3.1 of the Aircraft Lease Agreement, the amount of the
         Deposit secured by a Letter of Credit.

         Pre-Delivery Termination Value means $2,500,000.00.

         Quotation Date means the day two Business Days before the Scheduled Delivery Date.



PART III RENT

         Assumed Rent means (i) for the first twelve (12) Rental Periods $205,900; (ii) for Rental Periods 13
         through 24 $215,900; and (iii) for each Rental Period thereafter, $225,900.  The foregoing amounts
         are based upon the Manufacturer's Aircraft Price in June, 1999 and an eight year swap rate between
         6.05% and 6.83%.  The Assumed Rent shall be (A) increased by an amount equal to $3,230 per month if
         Lessee elects to pay the Deposit pursuant to a Letter of Credit and (B) increased by (i) $8,000 per
         month if Lessee elects, upon no less than 14 months prior written notice, to reschedule Delivery of
         the Aircraft to any Alternate Scheduled Delivery Month in lieu of the current Scheduled Delivery
         Month as herein defined or (ii) $16,000 per month if Lessee elects, upon no less than 14 months
         prior written notice, to reschedule Delivery of the Aircraft to a month which is not a Scheduled
         Delivery Month or an Alternate Scheduled Delivery Month.

         Rent. The Rent payable in respect of each Rental Period during the Term shall be payable in 144
         consecutive monthly installments, in advance on each Rent Date, with each such installment equal to
         an amount calculated as follows:



         Rent = (A x B + ([S-X] x [N x B])) where:

         A        is the Assumed Rent for the applicable Rental Period;

         X        means the assumed 8-year U.S. Dollar Swap rate expressed as a number determined as follows:
                  (i) ifs is less than or equal to 6.05%, then X is equal to 6.05%, (ii) ifs is greater than
                  6.05% and less than 6.83%, then X is equal to S, and (iii) ifs is equal to or greater than
                  6.83%, then X is equal to 6.83%;

         S        is (i) the actual 8 year Dollar swap rate ("Open" rate per Bloomberg screen "IRSB" )
                  expressed as a number and obtained by Lessor on the Quotation Date: or, if on the Quotation
                  Date the Bloomberg Screen "IRSB" is not available or does not display rates for the
                  required period, the 8-year Dollar swap rate quoted on the applicable Reuters page,
                  expressed as a number and obtained by Lessor on the Quotation Date; or (ii) the sum of(a)
                  the actual 8 year Dollar swap rate as set forth in (i) above fixed on a date, at Lessee's
                  option, which is earlier than title Quotation Date upon 30 days' prior written notice to
                  Lessor; and (b) 15 basis points for each year from the effective date of such notice (which
                  effective date shall be 30 days after the date of such notice) until the Scheduled Delivery
                  Date, pro rated for any partial year;

         N        is $12,900; and

         B        is 1 + (Gl - G2)/G2, rounded to the nearest five (5) places of decimals, where:

                  Gl       is the Manufacturer's Gross Invoice Price for the Aircraft on the basis of
                           delivery of the Aircraft on the Delivery Date; provided, however, that G1 shall
                           not be disclosed by Lessor to Lessee and

                  G2       is the Manufacturer's Gross Invoice Price for the Aircraft which would apply if
                           the Aircraft were delivered in June 1999; provided, however, that G2 shall not be
                           disclosed by Lessor to Lessee.

PART IV  [INTENTIONALLY OMITTED]

PART V   SUPPLEMENTAL RENT

         The Supplemental Rent payable will be determined with reference to the following:

         Airframe Supplemental Rent means all (i) Airframe 4C Supplemental Rent and (ii) Airframe 8C
         Supplemental Rent in each case payable by Lessee pursuant to Clause (a) below.

         Annual Supplemental Rent Adjustment means (3%.)

         APU Supplemental Rent means all Supplemental Rent payable by Lessee pursuant to Clause (d) below.

         Assumed Ratio Adjustment:  For the purposes of Section 5.4 of the Common Terms Agreement, Assumed
         Ratio means a 2.5 hour to one cycle ratio (2.5:1) and any adjustment pursuant to Clause 5.4 shall be
         based on the following table:




         Airbus A319 Aircraft -         0.5/1           1.0/1           1.5/1          2.0/1           2.5/1          3.0/1
         FH/CYC Ratio

         Airframe 4C                      $32             $32             $32            $32             $32            $32
         Supplemental Rent Rate

         Airframe 8C                      $12             $12             $12            $12             $12            $12
         Supplemental Rent Rate

         Engine Refurbishment            $128             $88             $73            $65             $62            $59
         Supplemental Rent Rate

         Engine LLP Supplemental         $115             $52.5           $35            $26             $21            $17.5
         Rent Rate

         APU Supplemental Rent            $39             $20             $13             $9              $7             $9
         Rate

         Landing Gear                     $39             $20             $13             $9              $7             $6
         Supplemental Rent Rate



         Assumed Utilization means an annual utilization of  3,500 hours per annum.

         Engine Supplemental Rent means all (i) Engine LLP Supplemental Rent payable by Lessee pursuant to
         Clause (b) below, and (ii) Engine Refurbishment Supplemental Rent payable by Lessee pursuant to
         Clause (c) below.

         Landing Gear Supplemental Rent means all Supplemental Rent payable by Lessee pursuant to Clause (e)
         below.

         Supplemental Rent equals each of the following amounts:

(a)      Airframe: in respect of each Airframe 4C Check, $32 ("Airframe 4C Supplemental Rent Rate") for each
         Flight Hour operated by the Aircraft during each calendar month during the Term ("Airframe
        4C Supplemental Rent") and Airframe 8C Check, $12 ("Airframe 8C Supplemental Rent Rate")
         for each Flight Hour operated by the Aircraft during each calendar month during the Term
         ("Airframe 8C Supplemental Rent");

(b)      Engine Life-Limited Parts: in respect of the life-limited Parts for each Engine installed on the
         Airframe, $21 ("Engine LLP Supplemental Rent Rate") for each Flight Hour operated by that
         Engine during each calendar month during the Term ("Engine LLP Supplemental Rent");

(c)      Engine Refurbishment: in respect of each Engine installed on the Airframe, $62 ("Engine
        Refurbishment Supplemental Rent Rate") for each Engine Flight Hour (or fraction thereof)
         operated by that Engine during each calendar month during the Term ("Engine Refurbishment
        Supplemental Rent");

(d)      APU: in respect of the APU Airframe, $7 ("APU Supplemental Rent Rate") for each Flight Hour
         operated by the APU during each calendar month during the Term ("APU Supplemental Rent"); and

(d)      Landing Gear: in respect of the Landing Gear, $7 ("Landing Gear Supplemental Rent Rate") for each
         Flight Hour operated by the Landing Gear during each calendar month during the Term
         ("Landing Gear Supplemental Rent").

Supplemental Rental Cap means an aggregate amount of all Supplemental Rent paid in respect of the
Aircraft during the Term in an amount equal to the sum of (i) $2,500,000 plus (ii) the amount of all
Maintenance Contributions made by Lessor in respect of the Aircraft.

PART VI  RETURN CONDITION DEFINITIONS; MAINTENANCE PAYMENTS AT REDELIVERY; AIRWORTHINESS DIRECTIVE SHARING
            PAYMENTS

         DEFINITIONS:

         Engine Cycles Restriction means 3,500 Engine Cycles.

         Engine Flight Hours Restriction means 4,000 Engine Flight Hours.

         Engine Refurbishment means all scheduled and unscheduled off-the-wing Engine maintenance and repair
         accomplished for each module in accordance with the performance restoration, minimum restoration or
         full overhaul sections of the Manufacturer's workscope planning guide and including performing the
         following for each of the modules, for each of the Engines:

                  Hot Section Module means the combustor, combustor casing, HPT nozzle, HPT rotor, LPT nozzle
                  (stage one).

                  Hot Section Module Refurbishment means, with respect to any Engine, the accomplishment of a
                  "Performance Level" refurbishment, per the CFMI Workscope Planning Guide, of the Hot Section
                  Module including the complete inspection and repair as necessary per the shop manual of the
                  combustor, combustor casing, high pressure turbine nozzle section, high pressure turbine
                  rotor, and low pressure turbine nozzle stage 1 in an engine repair/overhaul station,
                  including (without limitation) complete unstacking of the high pressure turbine; de-blading
                  of discs; visual inspections of all discs; verification that all snap diameters on discs are
                  within limits; inspection of all blades for tip condition, blade length and cracking.
                  Repair or replacement of all blades below minimum with new or refurbished blades; blade-up
                  of discs using new lock plates; assembly of rotors in the turbine; balance of all rotors;
                  installation of rotor in the Engine.

                  HPC Module means the high pressure compressor rotor and the high pressure compressor forward
                  and aft stator .

                  HPC Module Refurbishment means, with respect to any Engine, the accomplishment of a
                  "Performance Level" refurbishment, per the CFMI Workscope Planning Guide, of the HPC Module
                  including the completion of the following:  complete unstacking of the high pressure
                  compressor and complete shop manual inspection; of the forward and aft stator cases,
                  de-blading discs; visual inspections of all discs; verification that all snap diameters on
                  discs are within limits; inspection of all blades for proper chord dimensions, cracking; and
                  erosion on leading and trailing edges; repair or replacement of blades below minimum;
                  inspection and repair of stators as necessary; blade-up of discs using new lock plates;
                  assembly of rotor in the compressor; balance of all rotors; and installation of rotor in the
                  Engine..

                  Fan and Booster Module means the fan rotor and booster, the number 1 and 2 bearing support,
                  inlet gearbox and number 3 bearing assembly, and the fan frame assembly.

                  Fan and Booster Module Refurbishment means, with respect to any Engine, the accomplishment
                  of a "Minimum Level" refurbishment, per the CFMI Workscope Planning Guide, of the fan and
                  booster module including the completion of the following: removal from engine and shop
                  manual inspection of fan/booster assembly, removal and shop manual inspection of fan blades,
                  booster blades, and spacers.  The fan disk should be separated from the booster spool only
                  for cause. Visually inspect the exposed areas of the fan disk and booster spool. Recontour
                  fan blades, inspection of all blades for proper chord dimensions and cracking; repair or
                  replacement of blades below minimum; inspection and repair of stators as necessary; blade-up
                  of discs using new lock plates; assembly of rotors in the compressor; balance of all rotors;
                  installation of rotor in the Engine..

                  LPT Module means the low pressure turbine, LPT shaft, and LPT Frame.

                  LPT Module Refurbishment means, with respect to any Engine, the accomplishment of a "Minimum
                  Level" refurbishment, per the CFMI Workscope Planning Guide, of the LPT Module including the
                  complete visual inspection and repair as necessary of the low pressure turbine module of an
                  Engine in an engine repair/overhaul station, including (without limitation) complete
                  unstacking of the low pressure turbine; complete visual inspection; de-blading of discs ;
                  visual inspections of all discs; verification that all snap diameters on discs are within
                  limits; inspection of all blades for proper chord dimensions and cracking; repair or
                  replacement of all blades below minimum; inspection and repair of stators as necessary;
                  blade-up of discs using new lock plates; assembly of rotors in the turbine; balance of all
                  rotors; and installation of rotor in the Engine.

                  Accessory Drive Module means the Transfer Gearbox and Accessory Gearbox.

                  Accessory Drive Module Refurbishment means with respect to any engine the inspection and
                  repair per shop manual.

         Minimum APU Limit means 1,500 Flight Hours since the last gas path refurbishment.

         Minimum Component Calendar Life means 12 months.

         Minimum Component Cycles means 1,600 Cycles

         Minimum Component Flight Hours means 3,200 Flight Hours

         Minimum Engine Cycles means 3,500 Cycles.

         Minimum Engine Flight Hours means 4,000 Flight Hours.

         Minimum Landing Gear Calendar Time means 18 months

         Minimum Landing Gear Cycles means 3,500 Cycles.

         Minimum Landing Gear Flight Hours means 4,000 Flight Hours.

         Minimum Measurable Fuel Requirement means the amount of fuel as at Delivery.

         Redelivery "C" Check means the next sequential Block `C' check in accordance with the Lessee's
         Maintenance Program including those bridging tasks identified in the Manufacturer's Maintenance
         Planning Document, Appendix J, to bridge the Aircraft back to a block program and "Block `C'
         Structural Check" with at least 4,000 Flight Hours remaining to the next "C" or higher check.



         AD Sharing

         AD Threshold means $100,000.

         If any Airworthiness Directive is issued by the FAA for which terminating action is required to be
         performed by Lessee pursuant to Section 8.10(c)(ii) of the Common Terms Agreement and FAR Part 121
         and if the actual cost incurred by Lessee (as documented in the same manner and paid within the same
         time as required under Section 7.2 of the Common Terms Agreement for a Maintenance Contribution
         payment by Lessor) in performing or causing to be performed such Airworthiness Directive exceeds the
         AD Threshold, Lessor shall, following receipt of the invoice in such amount and provided no (i)
         Default relating to any payment under the Lease or (ii) any other Event of Default has occurred and
         is continuing, reimburse to Lessee an amount calculated in accordance with the following formula:



                  A-B* (C-D)/C where:

                  A = Total actual invoiced cost of such Airworthiness Directive.

                  B = AD Threshold.

                  C = 96 months.

                  D = Months remaining to the Scheduled Expiry Date.

MAINTENANCE ADJUSTMENTS:

Maintenance Adjustment:  In respect of each calendar month (or part thereof) during the Term, Lessee will pay
to Lessor at the end of the Term in accordance with Section 5.4 of the Common Terms Agreement and Section 3.3
of this Agreement the following Maintenance Adjustments:

(a)  Airframe Maintenance Adjustment:  in respect of the Airframe 4C Check and Airframe 8C Check, upon
     redelivery of the Aircraft to Lessor (but not after the occurrence of an Event of Loss with respect to
     the Aircraft), Lessee shall pay to Lessor for each Flight Hour since new or since the last Airframe
     Structural Check, as applicable, an amount equal to (i)(A) the number of Flight Hours on the Airframe
     since new or since the last Airframe Structural Check, as applicable, multiplied by (B) the Airframe 4C
     Supplemental Rent Rate less (C) the Remaining Airframe 4C Supplemental Rent and an amount equal to
     (ii)(A) the number of Flight Hours on the Airframe since new or since the last Airframe Structural
     Check, as applicable, multiplied by (B) the Airframe 8C Supplemental Rent Rate less (C) the Remaining
     Airframe 8C Supplemental Rent (collectively, the "Airframe Maintenance Adjustment").

(b)  Engine Refurbishment Maintenance Adjustment: in respect of each Engine, upon redelivery of the Aircraft
     to Lessor (but not after the occurrence of an Event of Loss with respect to the Aircraft or any Engine),
     for any life used since new or since the latest Engine Refurbishment of each defined module (as further
     described below, each a "Defined Module") in accordance with the applicable percentage, whichever is
     less, to the date of Redelivery, Lessee shall pay to Lessor an amount equal to (i) for each Engine
     Flight Hour (or fraction thereof) operated by that Engine in the aggregate during each calendar month
     during the Term since new or since the last Engine Refurbishment multiplied by (ii) the Engine
     Refurbishment Supplemental Rent Rate less (iii) Remaining Engine Refurbishment Supplemental Rent (the
     "Engine Refurbishment Maintenance Adjustment"). For purposes of this Clause, Defined Modules shall
     include each of the Combustion Chamber/ High Pressure Turbine (38% of the Engine Refurbishment
     Supplemental Rent Rate); High Pressure Compressor (33% of the Engine Refurbishment Supplemental Rent
     Rate); the Low Pressure Turbine (16% of the Engine Refurbishment Supplemental Rent Rate) and the Fan
     Booster (13% of Engine Refurbishment Supplemental Rent Rate).

provided, however, if any of the amounts described above is less than zero then the applicable Maintenance
Adjustment shall be equal to zero.

(c)  Engine Life Limited Parts:  with respect to Engine Life-Limited Parts ("Engine LLPs"), upon redelivery
     of the Aircraft to Lessor (but not after the occurrence of an Event of Loss with respect to the Aircraft
     or any Engine),  within any Engine, Lessee shall pay to Lessor an amount equal to (i) for each Engine
     Flight Hour (or fraction thereof) operated by that Engine in the aggregate during each calendar month
     during the Term since new or since the last Engine Refurbishment multiplied by (ii) the Engine LLP
     Supplemental Rent Rate less (iii) Remaining Engine LLP Supplemental Rent (the "Engine LLP Maintenance
     Adjustment").

(d)  APU: with respect to the APU, upon redelivery of the Aircraft to Lessor (but not after the occurrence of
     an Event of Loss with respect to the Aircraft), Lessee shall pay to Lessor an amount equal to (i) $7 per
     Flight Hour since new or HSI in accordance with the Manufacturer's recommendations less (ii) the
     Remaining APU Supplemental Rent (the "APU Maintenance Adjustment").

(e)  Landing Gear Adjustment: with respect to Landing Gear (per shipset), upon redelivery of the Aircraft to
     Lessor (but not after the occurrence of an Event of Loss with respect to the Aircraft), Lessee shall pay
     to Lessor an amount equal to (i) $7 per Flight Hour since new or since complete overhaul in accordance
     with the Manufacturer's recommendations, whichever is less, minus (ii)  the Remaining Landing Gear
     Supplemental Rent (the "Landing Gear Maintenance Adjustment")

For purposes of this section: "Remaining Airframe Supplemental Rent" means the amount equal to the aggregate
amount of Airframe 4C Supplemental Rent and the Airframe 8C Supplemental Rent paid under the Lease during the
Term minus the aggregate amount previously paid by Lessor under Section 7.2(a)(i) of the Common Terms
Agreement. "Remaining Engine LLP Supplemental Rent" means the amount equal to the aggregate amount of Engine
LLP Supplemental Rent paid under the Lease during the Term minus the aggregate amount previously paid by
Lessor under Section 7.2(a)(ii) of the Common Terms Agreement. "Remaining Engine Supplemental Rent" means the
amount equal to the aggregate amount of Engine Supplemental Rent paid under the Lease during the Term minus
the aggregate amount previously paid by Lessor under Section 7.2(a)(iii) of the Common Terms Agreement.
"Remaining APU Supplemental Rent" means the amount equal to the aggregate amount of APU Supplemental Rent paid
under the Lease during the Term minus the aggregate amount previously paid by Lessor under Section 7.2(a)(iv)
of the Common Terms Agreement. "Remaining Landing Gear Supplemental Rent" means the amount equal to the
aggregate amount of Landing Gear Supplemental Rent paid under the Lease during the Term minus the aggregate
amount previously paid by Lessor under Section 7.2(a)(v) of the Common Terms Agreement.












                                                  SCHEDULE B

   INTENTIONALLY DELETED FROM THE VERSION OF THIS DOCUMENT FILED WITH THE FAA AS CONTAINING CONFIDENTIAL AND
                                           PROPRIETARY INFORMATION.

EX-10

                                                                                               EXECUTION COPY





                                              CREDIT AGREEMENT
                                              [Frontier/2002-A]

                                                 Dated as of

                                                June 26, 2002


                                                    among



                                          FRONTIER AIRLINES, INC.,
                                                  Borrower,


                                         THE LENDERS LISTED HEREIN,


                                                     and


                                 LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE,
                              as Administrative Agent on behalf of the Lenders

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

                                   One (1) Airbus Model A319-111 Aircraft

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






                                            SkyBlue Capital LLC,
                                            Debt Placement Agent






                                                  TABLE OF CONTENTS
                                                                                                               Page

Section 1.        Certain Definitions and Interpretive Matters...................................................1
Section 2.        Loans; Borrower's Notice of Delivery Date; Closing Procedure; Alternative Structure............1
Section 3.        Fees...........................................................................................2
Section 4.        Conditions.....................................................................................3
Section 5.        Closing Procedure..............................................................................7
Section 6.        Extent of Interest of Lenders..................................................................7
Section 7.        Representations and Warranties.................................................................7
Section 8.        Indemnities...................................................................................12
Section 9.        Covenants of the Borrower.....................................................................19
Section 10.       The Notes.....................................................................................23
Section 11.       Events Of Default; Certain Rights of Administrative Agent.....................................28
Section 12.       Remedies......................................................................................30
Section 13.       Replacement Engines...........................................................................35
Section 14.       The Administrative Agent......................................................................36
Section 15.       Investment Of Funds...........................................................................39
Section 16.       Supplements and Amendments to the Mortgage and Other Operative Documents......................39
Section 17.       Notices.......................................................................................40
Section 18.       Governing Law; Consent to Jurisdiction; Waiver of Jury Trial..................................41
Section 19.       Costs and Expenses............................................................................42
Section 20.       Section 1110 Compliance.......................................................................42
Section 21.       Confidentiality...............................................................................42
Section 22.       Covenants of the Administrative Agent and the Lenders.........................................43
Section 23.       Leveraged Lease Financing.....................................................................43
Section 24.       Miscellaneous.................................................................................44
Section 25.       Terms of Fixed Rate Setting...................................................................46



Schedule I        Notice & Account Information
Schedule II       Participation in Original Amount
Exhibit A         Form of Borrowing Notice
Exhibit B         Form of Assignment Agreement
Exhibit C         Terms of Notional Swap Transaction






                                     CREDIT AGREEMENT [Frontier/2002-A]

         THIS CREDIT AGREEMENT [Frontier/2002-A] dated as of June 26, 2002 among (i) Frontier Airlines,
Inc., a Colorado corporation (the "Borrower"), (ii) the lenders that are party hereto identified under the
caption "Lenders" on the signature pages hereto or that, pursuant to Section 24(c) hereof, shall become a
"Lender" hereunder (individually, a "Lender" and, collectively, the "Lenders") and (iii) Landesbank
Schleswig-Holstein Girozentrale, a Landesbank organized under the laws of Germany, as Administrative Agent
on behalf of the Lenders (the "Administrative Agent").

                                            W I T N E S S E T H:

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

         WHEREAS, concurrently with the execution and delivery of this Agreement, the Borrower and the
Administrative Agent are entering into the Mortgage and Security Agreement [Frontier/2002-A] dated as of
the date hereof (the "Mortgage") pursuant to which the Borrower agrees, among other things, to issue one or
more Notes in respect of the Aircraft as evidence of the Borrower's indebtedness to the Lenders, which
Notes will be secured by the mortgage and security interest created by the Borrower in favor of the
Administrative Agent on behalf of the Lenders, and the Borrower shall execute and deliver a Mortgage
Supplement covering the Aircraft, supplementing the Mortgage.

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

Section 1.        Certain Definitions and Interpretive Matters.

         Except as otherwise defined in this Agreement, including its annexes, schedules and exhibits,
terms used herein in capitalized form shall have the meanings attributed thereto in the Mortgage.  The
rules of interpretation contained in Section 1.02 of the Mortgage shall be applicable to this Agreement.
Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to
such document as it may be modified, amended or supplemented from time to time in accordance with its terms
and the terms of each other agreement restricting the modification, amendment or supplement thereof.

Section 2.        Loans; Borrower's Notice of Delivery Date; Closing Procedure; Alternative Structure.

(a)      Loans.  Subject to the terms and conditions of this Agreement, each Lender agrees to make a
secured loan to the Borrower in respect of the Aircraft (herein called a "Loan") on a date to be designated
pursuant to Section 2 hereof, on or about June 26, 2002 but in no event later than December 31, 2002 (the
"Commitment Termination Date"), in the amount in Dollars set forth opposite such Lender's name in Schedule II
hereto (its "Commitment"), and to receive, as evidence of each such secured loan, Note(s) in an amount equal
to its Commitment.  The aggregate amount of the Commitments for the Aircraft shall equal the Original Amount
for the Aircraft. Each Loan shall bear interest and amortize in accordance with Section 2.02 of the Mortgage.
If any Lender shall default in its obligation to make the amount of its Commitment available pursuant to this
Section 2 in respect of the Aircraft, no other Lender shall have an obligation to make any portion of such
amount available or to increase the amount of its commitment for the Aircraft and the obligations of the
non-defaulting Lender shall remain subject to the terms and conditions set forth in this Agreement.

(b)      Notice of Delivery Dates.  The Borrower agrees to give the Lenders and the Administrative Agent
at least three (3) Business Days' prior written notice of the Delivery Date for the Aircraft, which Delivery
Date shall be a Business Day not later than the Commitment Termination Date by executing and delivering a
borrowing notice substantially in the form of Exhibit A hereto (the "Borrowing Notice"), which notice shall
also specify (if not previously selected as provided in paragraph (e) below) the Term Option elected and any
funding instructions.  The payment by each Lender of its Commitment in respect of the Aircraft in the manner
required by this Section 2 shall constitute a waiver of such notice.

(c)      Closing Procedure.  Subject to the terms and conditions of this Agreement, and simultaneous with
receipt by the Seller of the Original Amount for the Aircraft pursuant to this Section 2, the Borrower shall
authorize the delivery and filing for record at the FAA of the Mortgage and the Mortgage Supplement.  On the
Delivery Date specified in the Borrower's notice referred to in the first paragraph of this Section 2, subject
to the terms and conditions of this Agreement, each Lender agrees to pay, through the Administrative Agent, the
amount of its Commitment to the Seller by wire transferring such amounts to the Seller's account at Credit
Lyonnais, 1301 Avenue of the Americas, New York, NY 10019, ABA No. * Account # *, Attention:  Mustapha
Diop, Reference Frontier MSN 1761 or to such other account as the Borrower shall direct the Administrative
Agent (on behalf of the Lenders) in writing, upon closing.

(d)      Alternative Structure.  Notwithstanding anything to the contrary in this Agreement or any other
Operative Document, the Borrower, subject to the provisions of this Section 2(d) and Section 23 hereof, may
elect to finance the Aircraft on the basis of a U.S. leveraged lease financing, whereupon the Lenders'
Commitments shall be utilized for such purpose, and the Lenders' obligations to finance the Aircraft on a
mortgage basis, and the Borrower's obligations to use the Lenders' Commitments to finance the Aircraft on a
mortgage basis, shall be deemed discharged by such utilization.

(e)      Term Option.  The Borrower shall notify the Administrative Agent on or prior to the Delivery
Date of the Term Option for the Aircraft, which notice shall be irrevocable.

Section 3.        Fees.  (a)  The Borrower agrees to pay to the Administrative Agent (on behalf of the
Lenders), on or before the Delivery Date, an up-front fee of the percentage (the "Up-front Fee") of the
Original Amount of each Loan to be funded on the Delivery Date as separately agreed, to the account of the
Administrative Agent specified in Schedule I hereto (or such other account as the Administrative Agent may
direct in writing).

(b)      The Borrower agrees to pay to the Administrative Agent (on behalf of the Lenders), after the date
hereof, a commitment fee of *% (the "Commitment Fee") on the unutilized Commitments, to the account
of the Administrative Agent specified in Schedule I hereto (or such other account as the Administrative Agent
may direct in writing). The Commitment Fee shall accrue from and including September 26, 2002 to but excluding
the earlier of (x) the Delivery Date and (y) the Commitment Termination Date.  The Commitment Fee shall be
payable on the earlier dates contemplated by clauses (x) and (y) of the preceding sentence.  The Commitment
Fee shall be calculated on the basis of a year of 360 days and actual number of days elapsed.  Promptly
following receipt by the Administrative Agent of the Commitment Fee in respect of any period, the
Administrative Agent shall distribute the same to each Lender, pro rata based on such Lender's unutilized
Commitments.

Section 4.        Conditions.  (a)  Conditions Precedent to the Effectiveness of the Commitment.
It is agreed that the Commitment of the Lenders is subject to the satisfaction prior to or on the Delivery Date
of the following conditions precedent:

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

(A)      the Mortgage; and

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

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

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

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

(iii)    Each Lender and the Administrative Agent shall have received an opinion addressed to such Lender and
         the Administrative Agent from each of: (A) David Sislowski, Esq., General Counsel for the Borrower
         and (B) Curtis Mallet-Prevost, Colt & Mosle LLP, special counsel to the Borrower, each in form and
         substance reasonably satisfactory to the addressees thereof.

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

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

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

(iii)    On the Delivery Date, the Aircraft will have been duly certified by the FAA as to type and airworthiness,
         will have been insured by the Borrower in accordance with the terms of the Mortgage, will have suffered
         no Event of Loss (or event which, with the passage of time would constitute an Event of Loss) and will be
         in the condition and state of repair required under the terms of the Mortgage.

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

(A)      the Mortgage Supplement covering the Aircraft and dated the Delivery Date;  Schedule 1 to such Mortgage
                  Supplement shall be completed as provided in Section 2.02(c) of the Mortgage;

(B)      the Note(s) in an aggregate principal amount equal to the Original Amount reflecting the Term Option
                  selected by the Borrower;

(C)      the Consent and Agreement and the Engine Consent and Agreement, each of which shall be in form and
                  substance reasonably satisfactory to the Administrative Agent; and

(D)      the Warranty Bill of Sale and FAA Bill of Sale for the Aircraft.

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

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

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

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

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

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

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

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

(ix)     Each Lender and the Administrative Agent shall have received an opinion addressed to such Lender and
         the Administrative Agent from each of:  (A) David Sislowski, Esq., General Counsel for the Borrower
         and (B) Curtis Mallet-Prevost, Colt & Mosle LLP, special counsel to the Borrower, each in form and
         substance reasonably satisfactory to the addressees thereof.

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

(xi)     The Administrative Agent and each Lender shall have received an opinion addressed to the Administrative
         Agent and each Lender from in-house counsel to Seller, in respect of the Bills of Sale for the Aircraft
         delivered on the Delivery Date, in form and substance reasonably satisfactory to the addressees thereof.

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

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

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

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

(xvi)    The Administrative Agent shall have received the Up-front Fee pursuant to Section 3(a) and, if applicable,
         any Commitment Fee pursuant to Section 3(b) that is due and payable.

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

(xviii)  No material disruption shall have occurred in the London interbank market that may have an adverse
         effect upon the Lenders.

(xix)    Each other Lender shall have made available the amount of its Commitment for the Aircraft in accordance
         with Section 2(a) hereof.

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

Section 5.        Closing Procedure.  Following the Borrower's notice of the Delivery Date as provided
in Section 2 hereof, the parties will pre-position the executed Mortgage and Mortgage Supplement with FAA
counsel in Oklahoma City, Oklahoma, together with the FAA Bill of Sale for the Aircraft and the application
for registration of the Aircraft in the name of the Borrower.  On the Delivery Date and in sufficient time to
permit the closing to occur during business hours of the FAA in Oklahoma City, Oklahoma, each Lender will wire
transfer, through the Administrative Agent, its Commitment to the Seller.  On the Delivery Date, by conference
telephone call among the Seller, the Borrower, the Lenders (and/or their counsel acting on their behalf), the
Administrative Agent and FAA counsel, the Seller will authorize the filing of the FAA Bill of Sale for the
Aircraft and the Borrower will authorize the filing of the Mortgage and the Mortgage Supplement upon
receipt by the Seller of the Original Amount of the Loan for the Aircraft.  The irrevocable authorization
to FAA counsel to date the FAA Bill of Sale and the Mortgage Supplement and file the FAA Bill of Sale and
the Mortgage and Mortgage Supplement will occur prior to the transfer of the Original Amount of the Loan
for the Aircraft to the Seller, but the filing will not occur until the Seller's receipt of the purchase
price for the Aircraft.  The Note(s) will be delivered to the Lenders, as applicable, and legal opinions
will be delivered to all parties immediately following the filing of the FAA Bill of Sale and the Mortgage
and Mortgage Supplement at the FAA.

Section 6.        Extent of Interest of Lenders.  No Lender shall have any further interest in, or other
right with respect to, the mortgage and security interests created by the Mortgage when and if the Original Amount
of and interest on all Note(s) held by such Lender and all other sums payable to such Lender hereunder, under the
Mortgage and under such Note(s) shall have been paid in full.

Section 7.        Representations and Warranties.  (a)  Borrower's Representations and Warranties.
The Borrower represents and warrants that on the date hereof and on the Delivery Date:

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

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

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

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

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

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

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

(viii)   the statements of financial position of the Borrower as of March 31, 2002 and the date of the most
         recently concluded fiscal quarter of the Borrower for which a statement of financial position has been
         provided and the related statements of earnings and cash flow of the Borrower in all material respects
         for the year and fiscal quarter, respectively, then ended, copies of which have been furnished to the
         Lenders, fairly present the financial condition of the Borrower at such date and the results of operations
         and cash flow of the Borrower for the period ended on such dates, in accordance with generally
         accepted accounting principles consistently applied, and subject, in the case of the statements
         pertaining to the Borrower's most recently concluded fiscal quarter, to normal year-end
         adjustments, and since March 31, 2002, there has been no material and adverse change in the
         business or financial condition of the Borrower;

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

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

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

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

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

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

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

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

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

(xviii)  assuming the Lenders are acquiring their Notes in the ordinary course of their commercial banking business,
         none of the transactions contemplated by this Agreement will violate or result in a violation of the
         Securities Act of 1933, as amended, the securities Exchange Act of 1934, as amended, or any
         regulations issued pursuant thereto; and

(xix)    no United States Federal or state non-banking governmental approval of any kind is required of any Lender
         for its execution of or performance under this Agreement or any agreement contemplated hereby solely by
         reason of any fact or circumstance peculiar to: (a) the Borrower, (b) the nature of the Aircraft, or
         (c) the Borrower's proposed operation or use of the Aircraft.

(b)      Lenders' Representations and Warranties.  Each Lender severally represents and warrants to each of
the other Parties hereto, as of the date hereof and as of the Delivery Date that:

(i)      it is acquiring its Notes in the ordinary course of its commercial banking business and it has no present
         intention of distributing or reselling any interest to be acquired by it hereunder or under any of the
         other Operative Documents or any part thereof in violation of the Securities Act of 1933, as amended; and

(ii)     no part of the funds to be used by it to purchase or fund, as the case may be, its Notes or its interest
         under any of the Operative Documents constitutes plan assets of an employee benefit plan which is subject
         to ERISA and/or subject to Section 4975 of the United States Internal Revenue Code of 1986, as amended.
         As used in this Section 7(b)(ii), the term "plan assets" shall have the meaning assigned to such term
         under ERISA and the regulations promulgated thereunder.

Section 8.        Indemnities.  (a)  General Indemnity.  Subject to the next following paragraph but
without limiting any other rights that any Indemnitee may have under the other Operative Documents or applicable law,
the Borrower hereby agrees to indemnify each Indemnitee on an after-tax basis against, and agrees to protect, save
and keep harmless each of them from any and all Expenses imposed on, incurred by or asserted against any Indemnitee
arising out of or resulting from (i) the operation, possession, use, maintenance, overhaul, testing,
registration, reregistration, delivery, non-delivery, lease, nonuse, modification, alteration, or sale of
the Aircraft, the Airframe or any Engine, or any engine used in connection with the Airframe or any part of
any of the foregoing by the Borrower, any lessee or any other Person whatsoever, whether or not such
operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery,
non-delivery, lease, nonuse, modification, alteration, or sale is in compliance with the terms of the
Mortgage, including, without limitation, claims for death, personal injury or property damage or other loss
or harm to any person whatsoever and claims relating to any laws, rules or regulations pertaining to such
operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery,
non-delivery, lease, non-use, modification, alteration, sale or return including environmental control,
noise and pollution laws, rules or regulations; (ii) the manufacture, design, purchase, acceptance,
rejection, delivery, or condition of the Aircraft, the Airframe or any Engine, any engine used in
connection with the Airframe, or any part of any of the foregoing including, without limitation, latent and
other defects, whether or not discoverable, or trademark or copyright infringement; (iii) any breach of or
failure to perform or observe, or any other noncompliance with, any covenant or agreement to be performed,
or other obligation of the Borrower under any of the Operative Documents, or the falsity of any
representation or warranty of the Borrower in any of the Operative Documents; and (iv) any Event of Default
hereunder or the enforcement against the Borrower of any of the terms hereof (including, without
limitation, Section 12 hereof).

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

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

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

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

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

                  Amounts payable under this Section 8(a) shall be payable by the Borrower within thirty
days of demand therefor.

(b)      General Tax Indemnity.

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

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

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

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

                  If, as a result of an assignment under Section 24(c)(iii) below, a Person organized under
the laws of a jurisdiction outside of the United States becomes a Tax Indemnitee and payments to it to be
made under this Agreement are exempt from United States withholding tax, or are subject to such tax at a
reduced rate under an applicable tax treaty, then such assignee shall provide to the Borrower, promptly
following the date that it became a Tax Indemnitee and from time to time thereafter, so long as it is
lawfully able to do so in its reasonable judgment, a properly completed and executed Internal Revenue
Service Form W-8ECI or Form W-8BEN or Form W-9, or any successor form, and any other applicable form,
certificate document prescribed by the Internal Revenue Service certifying as to such assignee's
entitlement to such exemption or reduced rate with respect to all payments to be made to such assignee
under this Agreement and any new or other forms or certificates prescribed by the Internal Revenue Service
of the United States in the event that a lapse in time or change in circumstance renders a previous
certification obsolete or inaccurate in any material respect.  Unless the Borrower shall have received
forms or other documents reasonably satisfactory to it establishing that payments under this Agreement are
not subject to United States withholding tax, or are subject to such tax at a rate under an applicable tax
treaty, the Borrower shall, subject to its obligations under Section 8(a), withhold taxes from such
payments at the applicable statutory rate in the case of payments to or for any Tax Indemnitee, if it is
organized under the laws of a jurisdiction outside the United States.

                  Within 30 days after written request from the Borrower the relevant Tax Indemnitee, as
appropriate, shall, so long as no Default or Event of Default shall have occurred, execute and deliver to
the Borrower such certificates, forms or other documents which can be furnished consistent with the facts
and applicable law, and which are reasonably necessary for the Tax Indemnitee to obtain a refund of Taxes
indemnified by the Borrower under this Section (which shall be paid to the Borrower promptly upon receipt).

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

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

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

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

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

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

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

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

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

                                    In the event of a dispute between Borrower and any Tax Indemnitee
                  regarding the applicability of any of the exclusions described in Section 8(b)(i) or
                  Section 8(b)(ii) or the amount of any Indemnified Taxes, Borrower within 30 days of
                  demand therefor shall pay to such Tax Indemnitee any amount of Tax claimed to be owed
                  pursuant to Section 8(b)(i), as the case may be.  Any payment made by Borrower pursuant
                  to the immediately preceding sentence shall be refunded by the relevant Tax Indemnitee if
                  it subsequently is on a final and unconditional basis established that such amount was
                  not required to be paid under this Section 8(b)(i) or (b)(ii) hereof, as the case may be.

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

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

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

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

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

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

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

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

                                    Notwithstanding the foregoing provisions of this Section 8(b)(iii), no
                  Tax Indemnitee shall be obligated to contest a Claim to the United States Supreme Court.
                  In addition, notwithstanding the foregoing provisions of this Section 8(b), if at any
                  time such Tax Indemnitee waives its right of indemnification under this Section 8(b) in
                  respect of a Claim, or if, after having received payment of indemnification from Borrower
                  hereunder in respect of such Claim, such Tax Indemnitee tenders such payment to Borrower,
                  then Borrower shall not be entitled to contest, or to continue to contest, any such Claim.

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

(v)      Verification.  At the Borrower's written request, the computation of the amount of any indemnity payment
         owed by the Borrower or any amount owed by a Tax Indemnitee to the Borrower pursuant to this Section 8
         shall be verified and certified by an internationally recognized independent public accounting firm
         mutually selected by the Tax Indemnitee and the Borrower.  The costs of such verification
         (including the fee of such public accounting firm) shall be borne by the Borrower unless such
         verification shall result in an adjustment in the Borrower's favor of 5% or more of the net
         present value of the payment as computed by such Tax Indemnitee, in which case the costs shall be
         paid by such Tax Indemnitee.  Such determination shall be final and binding, absent manifest error
         on the part of the certified public accountants.  The Tax Indemnitees hereby agree to cooperate
         with the accountants in connection therewith, provided, however, notwithstanding anything that may
         be to the contrary in the Operative Documents, in no event shall the Borrower have the right to
         examine any information supplied to the verifying firm or the tax returns or books of the Tax
         Indemnitee in connection with the verifying procedures described herein or for any other reason.

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

Section 9.        Covenants of the Borrower.  (a)  Borrower Merger.  For so long as the Mortgage remains in force,
the Borrower shall not consolidate with or merge into or with any other Person, and not convey, transfer, lease or
otherwise dispose of all or substantially all of its property and other assets to, or acquire all or any substantial
part of the property or other assets or capital stock of (if such acquisition is analogous in either
purpose or effect to a consolidation or merger), any other Person, unless:

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

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

(iii)    Such Person shall have a credit rating (as determined by S&P or Moody's, as applicable) no worse than the
         Borrower's immediately prior to such transaction; and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(h)      Related Operative Documents.  The Borrower shall not amend any Related Operative Document without the
prior written consent of the Administrative Agent which consent shall not be unreasonably withheld.

Section 10.       The Notes.  (a)  Method of Payment.  Principal and interest and other amounts due hereunder
or under the Notes or in respect hereof or thereof shall be payable in Dollars in immediately available funds prior to
11:00 a.m., New York, New York time, on the due date thereof, to the Administrative Agent at the Payment Office and the
Administrative Agent shall, subject to the terms and conditions hereof and of the Mortgage, remit all such
amounts so received by it to each Lender at the account set forth in Schedule I hereto or to such other
account or accounts as such Lender may designate to the Administrative Agent in writing from time to time,
in immediately available funds for distribution to the Lenders, such payment to be made, in the case of any
such designated account in New York, New York, prior to 1:00 p.m., New York time, on the due date thereof.
In the event the Administrative Agent shall fail to make any such payment as provided in the immediately
foregoing sentence after its receipt of funds at the place and prior to the time specified above, the
Administrative Agent agrees to compensate the Lenders for loss of use of funds in a commercially reasonable
manner.  All such payments by the Borrower and the Administrative Agent shall be made free and clear of and
without reduction on account of all wire and other like charges.  Prior to the due presentment for
registration of transfer of any Note, the Borrower and the Administrative Agent may deem and treat the
Person in whose name any Note is registered on the Note Register as the absolute owner of such Note for the
purpose of receiving payment of all amounts payable with respect to such Note and for all other purposes
whether or not such Note shall be overdue, and neither the Borrower nor the Administrative Agent shall be
affected by any notice to the contrary.

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

(c)      Registration, Transfer and Exchange of Notes.  The Administrative Agent agrees with the Borrower that
the Administrative Agent shall keep a register (herein sometimes referred to as the "Note Register") in which provision
shall be made for the registration of Notes and the registration of transfers of Notes.  Prior to the due
presentment for registration of the transfer of any Note, the Borrower and the Administrative Agent shall
deem and treat the Person in whose name such Note is registered on the Note Register as the absolute owner
of such Note, and the Lender for the purpose of receiving payment of all amounts payable with respect to
such Note, and for all other purposes whether or not such Note is overdue, and neither the Borrower nor the
Administrative Agent shall be affected by notice to the contrary.  The Note Register shall be kept at the
office of the Administrative Agent or at the office of any successor Administrative Agent, and the
Administrative Agent is hereby appointed "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided.  Subject to Section 24(c) hereof, upon surrender for registration of
transfer of any Note at the Payment Office and upon delivery by the Administrative Agent to the Borrower of
such surrendered Note, the Borrower shall execute, and the Administrative Agent shall deliver, in the name
of the designated transferee or transferees, one or more new Notes of a like aggregate principal amount.
At the option of the Lender, its Notes may be exchanged for other Notes of any authorized denominations, of
a like aggregate principal amount, upon surrender of the Notes to be exchanged at the Payment Office.  Each
new Note issued upon transfer or exchange shall be in a principal amount of at least $5,000,000 (except as
may be necessary to evidence the entire outstanding principal amount of a Note) and dated the Delivery
Date.  Whenever any Notes are so surrendered for exchange, the Borrower shall execute and deliver the Notes
which the Lender making the exchange is entitled to receive.  All Notes issued upon any registration of
transfer or exchange of Notes shall be the valid obligations of the Borrower evidencing the same respective
obligations, and entitled to the same security and benefits under the Mortgage, as the Notes surrendered
upon such registration of transfer or exchange.  Every Note presented or surrendered for registration of
transfer or exchange, shall (if so required by the Administrative Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the Administrative Agent duly
executed by the Lender or its attorney duly authorized in writing, and the Administrative Agent may require
evidence satisfactory to it as to the compliance of any such transfer with the Securities Act and the
securities laws of any applicable state.  The Administrative Agent shall make a notation on each new Note
or Notes of the amount of all payments of principal previously made on the old Note or Notes with respect
to which such new Note is issued and the date to which interest accrued on such old Note or Notes has been
paid.  The Administrative Agent shall not be required to register the transfer of or exchange any
surrendered Notes as above provided during the five calendar day period preceding the due date of any
payment on such Notes.  The Administrative Agent shall give the Borrower and the Lenders notice of each
transfer of a Note under this Section 10(c).  Any such transferee of a Note, by its acceptance of a Note,
agrees to the provisions of the Operative Documents applicable to the Lenders, and shall be deemed to have
covenanted to the parties to the Operative Documents as to the matters covenanted by the original Lender
therein; provided that no transferee of a Note shall be entitled to receive any greater amount pursuant to
Section 10(h) of this Agreement than the transferor of such Note would have been entitled to receive had no
such transfer occurred.

(d)      Mutilated, Destroyed, Lost or Stolen Notes.  If any Note shall become mutilated, destroyed, lost or
stolen, the Borrower shall, upon the written request of the Lender, execute and deliver in replacement thereof,
a new Note in the same principal amount, dated the date of such Note and designated as issued under the Mortgage.
If the Note being replaced has become mutilated, such Note shall be surrendered to the Administrative Agent and
the original thereof shall be furnished to the Borrower by the Administrative Agent.  If the Note being
replaced has been destroyed, lost or stolen, the Lender shall furnish to the Borrower and the
Administrative Agent such security or indemnity as may be reasonably required by them to hold the Borrower
and the Administrative Agent harmless and evidence satisfactory to the Borrower and the Administrative
Agent of the destruction, loss or theft of such Note and of the ownership thereof; provided, however, that
if the Lender is an original party hereto or an Affiliate thereof or a bank or other financial institution
with a net worth (or capital and surplus, as the case may be) in excess of $500,000,000, the written notice
of such destruction, loss or theft and such ownership and the written undertaking of the Lender delivered
to the Borrower and the Administrative Agent to hold harmless the Borrower and the Administrative Agent in
respect of the execution and delivery of such new Note shall be sufficient evidence, security and indemnity.

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

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

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

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

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

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

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

(iv)     The amount of any prepayment may not be reborrowed.

(h)      Increased Costs.  (i)  The Borrower shall pay to the Administrative Agent for the account of each
Lender from time to time such amounts as such Lender may determine to be necessary to compensate such Lender for any
increase in actual costs that such Lender determines are attributable to its making, funding or maintaining its
Commitment or the Loans or any reduction in any amount receivable by such Lender hereunder in respect of
any of its Commitments or the Loans (such increases in costs and reductions in amounts receivable,
including amounts covered by clause (ii) below, being herein called "Additional Costs"), resulting from any
Regulatory Change that:

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

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

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

(ii)     Without limiting the effect of the foregoing provisions of this Section 10(h) (but without duplication),
         the Borrower shall pay to the Administrative Agent for account of any Lender from time to time on request
         such amount as the Lender may determine to be necessary to compensate such Lender (or, without duplication,
         the holding company of which such Lender is a subsidiary) for any increase in actual costs that it
         determines are attributable to the maintenance by such Lender (or any lending office or such
         holding company) of its Commitment or Loans hereunder, resulting from the implementation of any
         risk-based capital guideline, reserve requirement or other similar requirement hereafter issued by
         any Governmental Authority pursuant to any law or regulation or any interpretation, application,
         directive or request (whether or not having the force of law and whether or not failure to comply
         therewith would be unlawful so long as compliance therewith is standard banking practice in the
         relevant jurisdiction) (including, without limitation, implementing at the national level any
         Regulatory Change of the Basel Accord), the effect of which would be to reduce the return on
         investment of assets or equity in respect of its Commitments or Loans, including, without
         limitation, any such reduction attributable to any funding arrangements utilized in connection
         with the Loans; such compensation shall include, without limitation, an amount equal to any
         reduction of the rate of return on assets or equity of such Lender (or any lending office or such
         bank holding company) could have achieved but for such law, regulation, interpretation, directive
         or request.  For purposes of this Section 10(h)(ii), "Basel Accord" shall mean the proposals for
         risk-based capital framework described by the Basel Committee on Banking Regulations and
         Supervisory Practices in its paper entitled "International Convergence of Capital Measurement and
         Capital Standards" dated July, 1988, it being understood that, as at the date hereof, there has
         been no Regulatory Change of the Basel Accord (i.e., "Basel II" has not been adopted).

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

(iv)     If a Lender gives notice of a claim against the Borrower under this Section 10(h), the Borrower shall have
         the right (i) to require such Lender to sell its Notes to an institution designated by the Borrower in
         compliance with Section 24(c)(iii) of this Agreement for an amount equal to the outstanding principal amount
         thereof plus accrued interest thereon to the date of sale, together with the Break Amount and all
         other amounts owing thereto, if any, or (ii) to prepay the outstanding principal amount of Notes
         held by such Lender, together with accrued interest to the date of such prepayment and Break
         Amount, if any, and all other amounts owing thereto.

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

(vi)     Amounts payable by the Borrower under this Section 10(h) shall be payable by the Borrower within 30 days
         of demand therefor.

Section 11.       Events Of Default; Certain Rights of Administrative Agent.  (a)  Each of the following
events shall constitute an Event of Default (whether any such event shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

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

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

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

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

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

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

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

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

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

(x)      An "Event of Default" shall have occurred and be continuing under (as defined in) the Related Credit Agreement
         or a "Lease Event of Default" shall have occurred and be continuing under (and as defined in) any Lease
         Transaction; or

(xi)     (i)  The Borrower shall default in the payment when due of any principal of or interest on, or fail to make
         a scheduled rental payment on, any of its other indebtedness or any lease obligation; or (ii) any event
         specified in any note, agreement, indenture, lease or other document evidencing or relating to any
         indebtedness or any lease obligation shall occur, and, after giving effect to any applicable
         notice and/or grace periods, the effect of such default (in the case of clause (i)) or event (in
         the case of clause (ii)) is to cause, or to permit the holder or holders of such indebtedness or
         lease obligation (or a trustee or agent on behalf of such holder or holders) to cause, such
         indebtedness or lease obligation to become due or to be terminated, or to be prepaid in full
         (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity;
         provided that, (x) the outstanding amount of such indebtedness and (y) the capitalized amount of
          such lease obligation shall, singly or in the aggregate, be in excess of $10,000,000.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(ii)     Upon every such taking of possession, the Administrative Agent may, from time to time, at the expense of
         the Mortgage Estate, make all such expenditures for maintenance, insurance, repairs, replacements,
         alterations, additions and improvements to and of the Mortgage Estate, as it may deem proper.  In each such
         case, the Administrative Agent shall have the right to maintain, use, operate, store, lease,
         control or manage the Mortgage Estate and to carry on the business and to exercise all rights and
         powers of the Borrower relating to the Mortgage Estate, as the Administrative Agent shall deem
         best, including the right to enter into any and all such agreements with respect to the
         maintenance, insurance, use, operation, storage, leasing, control, management or disposition of
         the Mortgage Estate or any part thereof as the Administrative Agent may determine; and the
         Administrative Agent shall be entitled to collect and receive directly all tolls, rents, revenues,
         issues, income, products and profits of the Mortgage Estate and every part thereof.  Such tolls,
         rents, revenues, issues, income, products and profits shall be applied to pay the expenses of the
         use, operation, storage, leasing, control, management or disposition of the Mortgage Estate and of
         conducting the business thereof, and of all maintenance, repairs, replacements, alterations,
         additions and improvements, and to make all payments which the Administrative Agent may be
         required or may elect to make, if any, for taxes, assessments, insurance or other proper charges
         upon the Mortgage Estate or any part thereof (including the employment of engineers and
         accountants to examine, inspect and make reports upon the properties and books and records of the
         Borrower), and all other payments which the Administrative Agent may be required or authorized to
         make under any provision of the Mortgage, as well as just and reasonable compensation for the
         services of the Administrative Agent pursuant to this Section 12(c)(ii), and of all persons
         properly engaged and employed by the Administrative Agent.

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

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

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

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

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

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

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

                  fourth, so much of such payments or amounts remaining or shall be required to pay
         in full the amounts owing to the Related Lenders and the Related Administrative Agent under the Related
         Operative Documents in accordance with Section 12(g) of the Related Credit Agreement; and

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

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

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

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

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

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

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

(D)      that each of the conditions specified in Section 5.02 of the Mortgage with respect to such Replacement
                  Engine have been satisfied; and

(E)      that the Replacement Engine was first placed in service after October 22, 1994.

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

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

Section 14.       The Administrative Agent.  (a)  Appointment, Powers and Immunities.  Each Lender hereby appoints
and authorizes Landesbank Schleswig-Holstein Girozentrale ("LB Kiel") to act as its Administrative Agent hereunder
and under the other Operative Documents with such powers as are specifically delegated to the Administrative
Agent by the terms of this Agreement and of the other Operative Documents, together with such other powers
as are reasonably incidental thereto.  The Administrative Agent shall take all actions delegated to it
hereunder as an agent solely for the benefit of the Lenders.  The Administrative Agent (which term as used
in this sentence and in Section 14(c) and the first sentence of Section 14(f) hereof shall include
reference to its Affiliates and its own and their Affiliates' officers, directors, employees and agents, or
either of them):  (i) shall have no duties or responsibilities except those expressly set forth in this
Agreement and in the other Operative Documents, and shall not by reason of this Agreement or any other
Operative Document be a trustee for the Lenders; (ii) shall not be responsible to the Lenders for any
recitals, statements, representations or warranties contained in this Agreement or in any other Operative
Document, or in any certificate or other document referred to or provided for in, or received by any of
them under, this Agreement or any other Operative Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, any Note or any other Operative Document or
any other document referred to or provided for herein or therein or for any failure by the Borrower or any
other Person to perform any of its obligations hereunder or thereunder; (iii) shall not be required to
initiate or conduct any litigation or collection proceedings hereunder or under any other Operative
Document; (iv) shall not be responsible to the Lenders for any action taken or omitted to be taken by it
hereunder or under any other Operative Document or under any other document or instrument referred to or
provided for herein or therein or in connection herewith or therewith, except for its own gross negligence
or willful misconduct; and (v) may be removed from its role as Administrative Agent by the Lenders with or
without cause and upon notice by Lenders to the Borrower.  The Administrative Agent shall not assign its
interest to any replacement agent who is not a bank or financial institution with a net worth (or capital
and surplus, as the case may be) in excess of $500,000,000 without the Borrower's prior written consent,
such consent not to be unreasonably withheld.  The Administrative Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.

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

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

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

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

(f)      Resignation or Removal of the Administrative Agent.  Subject to the appointment and acceptance of a
successor Administrative Agent as provided below, and subject further to the penultimate sentence of this Section
14(f), the Administrative Agent may resign at any time by giving notice thereof to the Lenders and the Borrower,
and the Administrative Agent may be removed at any time with or without cause by the Majority Lenders.  Upon
any such resignation or removal, the Majority Lenders shall have the right to appoint a successor
Administrative Agent.  If no successor Administrative Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent's
giving of notice of resignation or the Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent.
Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent or shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder.  After any retiring Administrative
Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Section 14 shall
continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Administrative Agent.  The Administrative Agent shall not assign its interest to any
replacement agent who is not a bank or financial institution with a net worth (or capital and surplus, as
the case may be) in excess of $500,000,000 without the Borrower's prior written consent, such consent not
to be unreasonably withheld.

(g)      Consents under Operative Documents.  Except as otherwise provided in Section 16(a) hereof, the
Administrative Agent may, with the prior consent of the Majority Lenders (but not otherwise), consent to any
modification, supplement or waiver under any of the Operative Documents, provided that, without the prior consent
of each Lender, the Administrative Agent shall not (except as provided herein) release any collateral or otherwise
terminate any Lien under any Operative Document providing for collateral security, or agree to additional
obligations being secured by such collateral security (unless the Lien for such additional obligations
shall be junior to the Lien in favor of the other obligations secured by such Operative Document), except
that no such consent shall be required, and the Administrative Agent is hereby authorized, to release any
Lien covering property which is the subject of a disposition of property permitted hereunder or to which
the Lenders have consented.

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

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

Section 16.       Supplements and Amendments to the Mortgage and Other Operative Documents.  (a)
Instructions of Lenders; Limitations.  (i) At any time and from time to time, at the request of the Borrower
the Administrative Agent (but only on the written direction or consent of the Majority Lenders) shall execute a
supplement to the Mortgage for the purpose of adding provisions to, or changing or eliminating provisions of, the
Mortgage as specified in such request, provided, however, that, without the consent of each Lender, no such
amendment of or supplement to any such document, or waiver or modification of the terms of any thereof, shall
(i) modify any of the provisions of this Section 16(a) or the definitions of the terms, "Majority Lenders"
or "Operative Documents", contained herein or in any other Operative Document, (ii) increase the principal
amount of any Note or reduce the amount or extend the time of payment of any amount owing or payable under
any Note or (except as provided in this Agreement) increase or reduce the Break Amount or interest payable
on any Note (except that only the consent of the Lender holding any Note shall be required for any decrease
in any amounts of or the rate of Break Amount or interest payable on such Note or any extension for the
time of payment of any amount payable under such Note), (iii) reduce, modify or amend any indemnities in
favor of any Lender or in favor of or to be paid by the Borrower or alter the definition of "Indemnitee" to
exclude any Lender (except as consented to by each Person adversely affected thereby), or (iv) release the
Borrower from its obligations in respect of the payment of the principal and interest then outstanding (or
other amounts payable therewith) or change any of the circumstances under which Stipulated Insured Amount
(or other amounts payable therewith) are payable.  This Section 16(a) shall not apply to any mortgage or
mortgages supplemental hereto permitted by, and complying with the terms of, Section 13(b).
Notwithstanding the foregoing, without the consent of each Lender, no such supplement to the Mortgage, or
waiver or modification of the terms thereof or of any other agreement or document shall expressly permit
the creation of any Lien on the Mortgage Estate or any part thereof, except as therein expressly permitted,
or deprive any Lender of the benefit of the Lien of the Mortgage on the Mortgage Estate, except as provided
in Sections 13(a) and 13(b) hereof or in connection with the exercise of remedies under Section 12 hereof.
Except as provided in this Section 16(a), the Administrative Agent shall not amend, supplement or waive any
of the terms of the Mortgage or this Agreement.

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

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

Section 17.       Notices.  All notices, demands, instructions and other communications required or permitted to
be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or
certified mail, postage prepaid, or by facsimile, or by prepaid courier service, and shall be effective upon receipt.

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

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

Section 18.       Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  (a)  This Agreement shall in all
respects be governed by, and construed in accordance with, the law of the State of New York, including all matters of
construction, validity and performance.

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

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

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

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

Section 19.       Costs and Expenses.  The Borrower shall reimburse the Administrative Agent and the
Lenders for all reasonable out-of-pocket expenses incurred by it in connection with the negotiation and preparation
of this Agreement and the other Operative Documents (including the reasonable fees and expenses of its special counsel);
provided that, if a Delivery Date fails to occur due to the fault of the Administrative Agent or any Lender
(including the failure to obtain any necessary credit approval), the Administrative Agent will be
responsible for its own costs and expenses (including legal fees and expenses); which costs and expenses
shall be limited, in the case of the failure of the second Delivery Date to occur, to the costs and
expenses incurred solely in connection with such second Delivery Date.  The Borrower is also liable for all
of its own out-of-pocket expenses incurred in connection with the negotiation, preparation and the carrying
out of its obligations under this Agreement and the other Operative Documents (including the reasonable
fees and expenses of all of its special counsel).

Section 20.       Section 1110 Compliance.  Notwithstanding any provision herein or elsewhere contained to
the contrary, it is understood and agreed among the parties hereto that the transactions contemplated by this Credit
Agreement, and the other Operative Documents are expressly intended to be, shall be and should be construed so as to
be, entitled to the full benefits of 11 U.S.C. Section 1110, as amended from time to time, and any
successor provision thereto.

Section 21.       Confidentiality.  Except to the extent otherwise required by applicable law or, as required
to be filed publicly with the Securities and Exchange Commission, or unless the Borrower, the Lenders and the
Administrative Agent shall otherwise consent in writing, each party to this Agreement agrees to maintain the
confidentiality of this Agreement (and all drafts hereof and documents ancillary hereto) in its
communications with third parties other than any Indemnified Party and not to disclose, deliver or
otherwise make available to any third party (other than its directors, officers, employees, rating
agencies, accountants or counsel or to bank examiners or other regulatory personnel) the original or any
copy of all or any part of this Agreement (or any draft hereof and documents ancillary hereto) except to an
Indemnified Party.

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

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

Section 22.       Covenants of the Administrative Agent and the Lenders.  (a)  Quiet Enjoyment.
The Administrative Agent and each Lender each agrees that neither it nor any of its Affiliates, nor anyone acting on
behalf of any such Person will interfere in the Borrower's quiet enjoyment of the Aircraft so long as no Event of
Default shall have occurred and be continuing.

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

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

Section 23.       Leveraged Lease Financing.  Notwithstanding any provision herein or elsewhere in
the Operative Documents to the contrary notwithstanding, the Borrower may elect, prior to the borrowing for the
Aircraft contemplated by Section 2(a) hereof, to finance the Aircraft as a leveraged lease financing and the
Lenders agree to such utilization of their Commitments for such purpose, subject to the satisfaction of the following
terms and conditions:

(a)      the Borrower shall provide at least 30 days' advance notice of its intention to effect such a financing,
which notice shall identify the equity investor (the "Owner Participant") and owner trustee ("Lessor");

(b)      the identified Owner Participant shall have a tangible net worth of at least $50,000,000 (or have its
obligations guaranteed by a parent corporation with such a tangible net worth level), shall be an active participant
in the aircraft leveraged lease industry and the identity of which (as well as that of the Lessor) shall be
reasonably satisfactory to the Lenders;

(c)      documentation for such transaction shall be in form and substance satisfactory to the Lenders and shall:

(i)      contain terms and conditions concerning the Borrower and the Aircraft no less favorable to the Lenders than
         those binding on the Borrower contained in the Operative Documents; and

(ii)     contain debt/equity provisions as are consistent with market practice and reasonably satisfactory to the
         Lenders, but shall not, without the consent of the Lenders, contain any swap breakage cap or other limitation
         relating to any swap hedging transaction or the ability of the Lenders to recover any swap hedging
         transaction or the ability of the Lenders to recover any swap breakage losses ahead of recoveries
         by the Owner Participant of its investment;

(d)      the economic substance (e.g., loan amount, interest rate, payment periodicity, maturity date, amortization
profile and LIBOR) of the leveraged lease debt funded by the Lenders shall be the same as that evidenced by the Notes
under the Mortgage; provided that

(i)      the level of indebtedness may be reduced in part; and

(ii)     the amortization profile on the leveraged lease debt may be based on an optimized leveraged lease basis so
         long as (x) the final maturity is no later than 12 years following the Delivery Date, (y) the average life
         of such debt does not exceed 8 years (computed as of the Delivery Date) and (z) such amortization profile
         shall otherwise be mutually agreed by the Borrower and the Lenders on a good faith basis; and

(e)      the Borrower shall pay to the Lenders (i) the reasonable fees and expenses of their special counsel in
connection with the negotiation, drafting (by such special counsel of the related indenture), execution and
delivery of the documentation utilized to effect such leveraged lease and (ii) any reasonable out-of-pocket
(including travel) costs and expenses of the Administrative Agent as a single representative for all of the Lenders
incurred in connection with the leveraged lease.

Section 24.       Miscellaneous.  (a)  The representations, warranties, indemnities and agreements of the
Borrower, the Administrative Agent and the Lenders and each party's obligations under any and all thereof, shall
survive the expiration or other termination of this Agreement or any other Operative Document, except as expressly
provided herein or therein.

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

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

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

(iii)    Subject to the provisions of clause (iv) below, any Lender may assign its Notes, in whole or in part,
         as provided hereunder and in Section 10(c) hereof, to any Person (including an Affiliate, another lender
         or other third party) which assignment shall be effected pursuant to an agreement substantially in the
         form of Exhibit B hereto.  In addition, any Lender may, with the prior written consent of the Borrower,
         assign, in whole or in part, its Commitment in respect of the Aircraft to any other Person capable
         of meeting its funding obligation in respect of the assigned Commitment, which assignment shall be
         effected pursuant to an agreement substantially in the form of Exhibit B hereto, appropriately
         modified to relate to the assignment of a Commitment.  Effective upon the assignment of any
         Commitment in accordance with this Section 24(c), such Lender shall be relieved of its obligations
         in respect of such Commitment to the extent the assignee thereof shall have become obligated in
         respect thereof.

(iv)     Any assignment or transfer by such Lender hereunder shall be subject to the following conditions:

(A)      The transferring Lender shall have first obtained the prior written consent of the Borrower, which consent
                  shall not be unreasonably withheld (provided that no such consent shall be required if an Event of
                  Default has occurred and is continuing), unless the proposed transferee is a Permitted
                  Transferee in which case no such consent of the Borrower shall be required;

(B)      The transferring Lender shall send the Borrower a written notice of such proposed transfer, setting forth
                  the name and address of the proposed transferee, the amount of the transferring Lender's Notes
                  proposed to be transferred and the proposed date on which such transfer will occur.
                  Other than in respect of a transfer to a Permitted Transferee, Borrower will then have
                  three (3) Business Days to request such additional information as it may reasonably
                  require regarding such proposed transferee, or, if no such additional information is
                  requested and such proposed transfer satisfies the other requirements of this
                  Section 24(c), the Borrower shall be deemed to have consented to such proposed transfer.
                  In the event that the Borrower requests additional information, it shall have three (3)
                  Business Days from the time such additional information is provided to reject such
                  proposed transfer, failing which, subject to satisfaction of the other requirements of
                  this Section 24(c), the Borrower shall be deemed to have given its consent;

(C)      as a result of any assignment or transfer, there shall be no more than three (3) lenders in the aggregate;

(D)      no such assignment or transfer shall be in an amount less than $5,000,000;

(E)      so long as no Event of Default shall have occurred or be continuing, no assignment or transfer shall, at
                  the time of such assignment or transfer, increase the obligations (including, without limitation,
                  in respect of withholding taxes or increased costs) of the Borrower under this Agreement or
                  the Mortgage; and

(F)      except as otherwise set forth herein, no participant in any Loan assigned or transferred hereunder shall
                  have any rights directly against the Borrower.

                  In the event a Lender, in accordance with this Section 24(c), assigns its interest in any
Loan, together with its interest herein and in the other Operative Documents, in each case to the extent
relating to such Loan, then all references to "the Lender" hereunder shall mean and refer to such assignee
to the extent of such assignment, and any subsequent assignment by such assignee shall have a corresponding
effect.

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

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

(vi)     All costs and expenses in connection with any assignment or transfer permitted by this Section 24(c)
         (including any legal fees of counsel to the parties to the Operative Documents) shall be borne by
         the relevant transferring/assigning lender, except in the case of an assignment or transfer that
         is effected at the request of the Borrower or if an Event of Default shall have occurred and be
         continuing, in which case such costs and expenses (including reasonable legal fees) shall be borne
         by the Borrower.

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

Section 25.       Terms of Fixed Rate Setting.  (a)  The Lenders, at the Borrower's direction, shall
cause the Applicable Rate for the Loan to be a fixed rate effective for the period commencing on a date selected
by Borrower during the term of the Notes (the "Swap Effective Date") and ending on the final scheduled maturity
date of the Notes issued in respect of the Loan (the "Swap Period"); provided that if the proposed Swap Effective
Date is not an Interest Payment Date, the Borrower shall be liable for any LIBOR Break Amount.

(b)      If the Borrower desires the Applicable Rate to become a Fixed Rate, it shall give the Lenders at least
five Business Days' advance notice of such intention. By 9:30 a.m. (New York City time) on the date three Business
Days prior to the Swap Effective Date, each Lender shall quote to the Borrower the fixed rate of interest at which
such Lender would be willing to lend to the Borrower.  No later than two minutes after receipt of such
quotation, the Borrower shall inform each Lender whether it accepts or rejects such fixed rate quotation.
If such fixed rate quotation is accepted, such quoted fixed rate (the "Fixed Rate") shall be the Applicable
Rate hereunder. Each Lender agrees to provide its quotation of a Fixed Rate in accordance with market
practice based upon the Notional Swap Transaction and as though such Lender were the floating rate payor
thereunder.

(c)      In the event the Applicable Rate is the Fixed Rate, on the date of (i) any prepayment of the Notes
pursuant to the Mortgage or this Agreement (ii) any acceleration of the Notes pursuant to the Mortgage or this
Agreement, each Lender will provide a quotation of the Swap Break Amount, as it reasonably determines in good
faith in accordance with the definition thereof, representing the termination value of the Notional Swap
Transaction  by 12:00 noon New York City time on such date (the "Termination Date").

(d)      Each Lender agrees that, so long as no Special Default or Event of Default shall have occurred and be
continuing, it shall promptly pay to the Borrower at such account as the Borrower may specify any Swap Breakage
Gain in respect of the Notes, except that it may first deduct therefrom any amounts then due to it (or, if acting
as a swap agent, any Lender) under the Operative Documents and apply any amount so retained to the satisfaction
thereof.  At such time as there shall not be continuing any such Special Default or Event of Default, such
amount shall be paid to the Borrower.

(e)      Upon the request of the Borrower, each Lender shall provide to the Borrower a good faith estimate of the
Swap Breakage Loss or Swap Breakage Gain, as the case may be, related to the Notes, in connection with the
occurrence, or anticipated occurrence, of any event contemplated by the Operative Documents that might give rise
to an obligation to pay Swap Breakage Loss or Swap Breakage Gain.

(f)      Upon determination by a Lender of any Swap Breakage Loss or Swap Breakage Gain payable to or by it, as the
case may be, such Lender will provide to the Borrower a certificate, certifying such Swap Breakage Loss or Swap
Breakage Gain, which certified amount shall be conclusive absent manifest error.  Any Swap Breakage Loss or Swap
Breakage Gain payable pursuant to the terms of the Operative Documents shall be payable in Dollars.

(g)      Each Lender agrees to provide its quotation of Swap Break Amount based upon the Notional Swap Transaction
and as though such Lender were the floating rate payor thereunder.

(h)      References in this Section 25 to any Lender shall, to the extent appropriate, mean such Lender in its own
right or acting through a swap agent.

                                          [signature page follows]







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

                                                           FRONTIER AIRLINES, INC.,
                                                           Borrower


                                                           By:_______________________________
                                                                Name:
                                                                Title:

                                                           LANDESBANK SCHLESWIG-HOLSTEIN
                                                           GIROZENTRALE,
                                                           Administrative Agent


                                                           By:_______________________________
                                                                Name:
                                                                Title:


                                                           By:_______________________________
                                                                Name:
                                                                Title:

                                                           LENDERS:


                                                           LANDESBANK SCHLESWIG-HOLSTEIN
                                                           GIROZENTRALE


                                                           By:_______________________________
                                                                Name:
                                                                Title:


                                                           By:_______________________________
                                                                Name:
                                                                Title:

                                                           COMMERZBANK INTERNATIONAL
                                                           S.A., LUXEMBOURG


                                                           By:_______________________________
                                                                Name:
                                                                Title:


                                                           By:_______________________________
                                                                Name:
                                                                Title:






                                                                                [Credit Agreement [Frontier/2002-A]]
                                                      SCHEDULE I

                                             Notice & Account Information

Lenders

Notice to:

Landesbank Schleswig-Holstein Girozentrale
Martensdamm 6,
D-24103 Kiel
Germany
Attention: Transportation Finance

Telephone: (49 431) 900 2979
Telecopier: (49 431) 900-1542

Payment Instructions

Bank Name: JP Morgan Chase Bank, New York
Acct. No.: *
ABA No.: *
SWIFT No.: *
Reference: 201, Frontier A319 No. 1


Commerzbank International S.A., Luxembourg
11, rue Notre-Dame
L-2013 Luxembourg
Attention: Edgar Geister, Credit Department

Telephone:  (352) 477-911-268
Telecopier:  (352) 477-911-386

Payment Instructions


Bank Name: Commerzbank AG New York
SWIFT Code: *
Account Name: Commerzbank AG, Frankfurt
SWIFT Code: *
In favor of: Commerzbank International S.A.
SWIFT Code: *
Account No.: *
Reference: Frontier Airlines








                                                                                [Credit Agreement [Frontier/2002-A]]

                                                      SCHEDULE II

                                          Participation in Original Amount

                                  [All amounts are expressed in millions of U.S. Dollars]

                                     % of
  Lender                        Original Amount              Commitment 

Landesbank Schleswig-
Holstein Girozentrale                 *%                         $*

Commerzbank
International S.A.,
Luxembourg                            *%                         $*






                                                                                [Credit Agreement [Frontier/2002-A]]
                                                       EXHIBIT A


                                                FORM OF BORROWING NOTICE

                                                    [LETTERHEAD OF BORROWER]

                                                                  _____________________, 2002

Landesbank Schleswig-Holstein Girozentrale


Ladies and Gentlemen:

         We refer to the Credit Agreement [Frontier/2002-A], dated as of June 26, 2002 (the "Credit
Agreement", which term, if such agreement shall not have been executed and delivered by the parties thereto
prior to the date hereof, shall mean the most recently circulated draft thereof), among Frontier Airlines,
Inc., as borrower (the "Borrower"), the lenders that are party thereto identified under the caption
"Lenders" on the signature pages thereto or that, pursuant to Section 24(c) thereof, shall become a "Lender"
thereunder (individually, a "Lender" and, collectively, the "Lenders") and Landesbank Schleswig-Holstein
Girozentrale, as Administrative Agent on behalf of the Lenders.  Capitalized terms used but not defined in
this Borrowing Notice shall have the meaning given such terms (whether by reference to another document or
otherwise) in the Credit Agreement.

         In accordance with Section 2 of the Credit Agreement, Borrower hereby requests that a Loan be
advanced by the Lenders on __________________ (the "Closing Date").  The Borrower elects Option [A/B].  The
Borrower advises that the Loan will initially bear interest at a [floating rate/fixed rate].  The Lenders
are directed to pay $__________ of the proceeds of the Commitment by wire transfer to the following account:

                                               Credit Lyonnais
                                                New York, NY
                                                  ABA #: *
                                                Account #: *
                                         Attention: William McIlwain
                                        Reference: Frontier MSN 1761

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

                                                              Very truly yours,


                                                           FRONTIER AIRLINES, INC.

                                                           By:_______________________________
                                                                Name:
                                                                Title






                                                                                [Credit Agreement [Frontier/2002-A]]
                                                       EXHIBIT B

                                             FORM OF ASSIGNMENT AGREEMENT

         ASSIGNMENT AGREEMENT [Frontier/2002-A] dated as of __________ __, ____ between
________________________________ (the "Assignee") and _____________________________ (the "Assignor").

                                                  RECITALS

         WHEREAS, the Assignor is the holder of the Note No. ____ dated __________ __, ____ (the
"Assignor's Note") issued under the Credit Agreement [Frontier/2002-A] dated as of June 26, 2002 (the
"Credit Agreement"), between Frontier Airlines, Inc., as Borrower, the lenders that are party thereto
identified under the caption "Lenders" on the signature pages thereto or that, pursuant to Section 24(c)
thereof, shall become a "Lender" thereunder (individually, a "Lender" and, collectively, the "Lenders") and
Landesbank Schleswig-Holstein Girozentrale, as Administrative Agent;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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






                                                                                [Credit Agreement [Frontier/2002-A]]

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

                                                           [ASSIGNEE]


                                                           By:_______________________________
                                                           Name:
                                                           Title:


                                                           Address for Notices:

                                                           Wire Instructions:


                                                           [ASSIGNOR]


                                                           By:_______________________________
                                                           Name:
                                                           Title:

                                                           Address for Notices:

                                                           Wire Instructions:








                                                                                Exhibit A
                                                                                to Assignment Agreement

                                      Request for Note and Registration

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


To:      Landesbank Schleswig-Holstein Girozentrale,
         as Administrative Agent

Ladies and Gentlemen:

         We refer to the assignment by ____________________________ (the "Assignor"), of certain of its
rights and obligations with respect to Note No. ______ in the principal amount of $____________ (the
"Assignor's Note") to ___________________________ (the "Assignee"), pursuant to an Assignment Agreement
[Frontier/2002-A] dated as of _______ __, ____ between the Assignor and the Assignee. Capitalized terms not
otherwise defined herein shall have the meanings assigned thereto in such Assignment Agreement.  The
Assignor hereby delivers the Assignor's Note to Landesbank Schleswig-Holstein Girozentrale, in its capacity
as Administrative Agent.  The Assignor requests Borrower to issue to (i) the Assignee a new Note (the "New
Note") in the principal amount of $____________ and (ii) to the Assignor a new Note (the "Assignor's New
Note") in the principal amount of $______________, each, with a [Delivery Date] issue date.

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

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

                                                           Very truly yours,

                                                           [ASSIGNOR]

                                                           By:_______________________________
                                                           Name:
                                                           Title:

                                                           [ASSIGNEE]

                                                           By:_______________________________
                                                           Name
                                                           Title:

                                                           Address for Notices:

                                                           Wire Instructions
Accepted and Agreed

LANDESBANK SCHLESWIG-HOLSTEIN
GIROZENTRALE,
as Administrative Agent


By:______________________________
Name:
Title:





                                                                                [Credit Agreement [Frontier/2002-A]]
                                                       EXHIBIT C

                                     Terms of Notional Swap Transaction

          (capitalized terms used herein without definition shall have the meanings assigned thereto in the
                          Definitions (as defined in the definition of Swap Form))

                  Trade Date:                      __________ __, ____1

                  Effective Date:                  __________ __, ____2

                  Termination Date:                __________ __, 2___3, subject to
                                                   adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention.

                  Notional Amount:                 The Notional Amount in effect for a
                                                   Calculation Period shall be the
                                                   amount set forth in Schedule I
                                                   attached hereto opposite the
                                                   applicable date beginning such
                                                   Calculation Period; provided,
                                                   however, that such dates are subject
                                                   to adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention only with respect to
                                                   determining the Floating Payments.
                  Fixed Payments

                  Fixed Rate Payer                 Party B. [Lender]

                  Fixed Rate
                  Payment Dates:                   The __ of every _________,
                                                   __________, ____________ and
                                                   ________4, beginning __________ __,
                                                   ____5 and ending on the Termination
                                                   Date, payable in arrears, subject to
                                                   adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention.

                  Fixed Rate
                  Period End
                  Dates:                           The __ of every __________,
                                                   ___________, ___________ and
                                                   ________6, beginning __________ __,
                                                   ____7 and ending on the Termination
                                                   Date (no adjustment of Period End
                                                   Dates).

                  Fixed Rate:                      _____%.8

                  Fixed Rate
                  Day Count
                  Fraction:                        30/360.

                  Compounding:                     Inapplicable.

                  Floating Payments

                  Floating
                  Rate Payer:                      Party A. [Lender or Swap Agent]

                  Floating Rate
                  Payment Dates:                   The ___ of every __________,
                                                    _________, __________ and _________9,
                                                   beginning __________ __, ____10 and
                                                   ending on the Termination Date,
                                                   payable in arrears, subject to
                                                   adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention.

                  Floating Rate
                  Option:                          USD - LIBOR - BBA (except for first
                                                 Calculation Period).

                  Floating Rate for
                  first Calculation
                  Period:                          ___%11 (exclusive of Spread)

                  Spread:                          [1.65%][1.70%] - Option A/B

                  Designated                       [Except for first Calculation Period,
                  Maturity:                        three months for each Calculation
                                                   Period.]

                  Floating Rate                    Actual/360.
                  Day Count
                  Fraction:

                  Floating Rate                    Each Floating Rate Payment Date, exclusive
                  Reset Dates:                     of the last Floating Rate Payment Date.

                  Compounding:                     Inapplicable.

                  Business Day for                 London
                  Rate Setting:

                  Business Day for                 New York, Denver and London
                  Payments:






                                                                                [Credit Agreement [Frontier/2002-A]]

                                                 SCHEDULE I

                                                   TO THE

                                  CONFIRMATION OF THE RATE SWAP TRANSACTION

                                          DATED __________ __, ____


                     DATE12                                                NOTIONAL AMOUNT13

EX-10

                                                                                                 EXECUTION COPY











                                        MORTGAGE AND SECURITY AGREEMENT
                                               [Frontier/2002-A]

                                                  Dated as of

                                                 June 26, 2002

                                                    between

                                           FRONTIER AIRLINES, INC.,
                                                   Borrower

                                                      and

                                  LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE,
                               as Administrative Agent on behalf of the Lenders

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

                                    One (1) Airbus Model A319-111 Aircraft

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










                                               Table of Contents

                                                                                                           Page
                                                                                                           ----

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

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

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

Article II        THE NOTES.....................................................................................14

         Section 2.01          Form of Notes....................................................................14

         Section 2.02          Terms of Notes...................................................................18

         Section 2.03          Termination of Interest in Mortgage Estate.......................................19

Article III       REGISTRATION AND MAINTENANCE; OPERATION; POSSESSION AND LEASES; INSIGNIA......................19

         Section 3.01          Registration and Maintenance.....................................................19

         Section 3.02          Operation........................................................................19

         Section 3.03          Possession and Leases............................................................20

         Section 3.04          Insignia.........................................................................22

Article IV        REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS....................22

         Section 4.01          Replacement of Parts.............................................................22

         Section 4.02          Pooling of Parts; Temporary Replacement Parts....................................23

         Section 4.03          Alterations, Modifications and Additions.........................................23

         Section 4.04          Improvements Owned by Others.....................................................24

         Section 4.05          Substitution of Engines..........................................................24

Article V         LOSS, DESTRUCTION, REQUISITION, ETC...........................................................24

         Section 5.01          Event of Loss With Respect to the Aircraft.......................................24

         Section 5.02          Event of Loss With Respect to an Engine..........................................24

         Section 5.03          Application of Payments From Governmental Authorities for Requisition
                               of Title, Etc....................................................................25

         Section 5.04          Requisition for Use of the Aircraft by the United States Government
                               or the Government of Registry of the Aircraft....................................26

         Section 5.05          Application of Payments During Existence of Special Defaults or
                               Events of Default................................................................26

Article VI        INSURANCE.....................................................................................26

         Section 6.01          Bodily Injury Liability and Property Damage Liability Insurance..................26




         Section 6.02          Insurance Against Loss or Damage to the Aircraft.................................27

         Section 6.03          Reports, Etc. ...................................................................28

         Section 6.04          Self-Insurance...................................................................29

         Section 6.05          Additional Insurance by Borrower.................................................29

         Section 6.06          Indemnification by Government in Lieu of Insurance...............................29

         Section 6.07          Application of Payments During Existence of a Special Default or an
                               Event of Default.................................................................30

         Section 6.08          Terms of Insurance Policies......................................................30

Article VII       MISCELLANEOUS.................................................................................31

         Section 7.01          Termination of Mortgage..........................................................31

         Section 7.02          No Legal Title to Mortgage Estate in the Lenders.................................32

         Section 7.03          Sale of Aircraft by Administrative Agent is Binding..............................32

         Section 7.04          Mortgage for Benefit of Administrative Agent and Lenders.........................32

         Section 7.05          No Action Contrary to Borrower's Rights; Quiet Enjoyment.........................32

         Section 7.06          Notices..........................................................................32

         Section 7.07          Administrative Agent's Right to Perform for Borrower.............................33

         Section 7.08          Severability.....................................................................33

         Section 7.09          No Oral Modifications or Continuing Waivers......................................33

         Section 7.10          Successors and Assigns...........................................................33

         Section 7.11          Headings.........................................................................33

         Section 7.12          GOVERNING LAW; COUNTERPARTS......................................................33









EXHIBIT A           -  Form of Mortgage Supplement







                               MORTGAGE AND SECURITY AGREEMENT [Frontier/2002-A]

         MORTGAGE AND SECURITY AGREEMENT [Frontier/2002-A] , dated as of June 26, 2002, between FRONTIER
AIRLINES, INC., a Colorado corporation (the "Borrower"), and LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE, a
Landesbank organized under the laws of Germany, as Administrative Agent on behalf of the Lenders (together
with its successors hereunder in such capacity, the "Administrative Agent").

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

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

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

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

                                              GRANTING CLAUSE

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

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

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

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

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

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

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

         7.     all proceeds of any of the foregoing.

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

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

                                             HABENDUM CLAUSE

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

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

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

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

                                            Article I

                                     DEFINITIONS AND INTERPRETIVE MATTERS

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

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

         "Additional Insured(s)" means, collectively, the Administrative Agent and the Lenders.

        "Administrative Agent" means Landesbank Schleswig-Holstein Girozentrale, solely in its
   capacity as Administrative Agent on behalf of the Lenders, and any successor thereto in such capacity.

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

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

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

         "Applicable Margin" means, with respect to Option A, 1.65% per annum, or with respect
   to Option B, 1.70% per annum.

         "Applicable Rate" means, with respect to each Loan for any Interest Period, a rate per
   annum equal to (a) until clause (b) hereof shall be applicable, LIBOR for such Interest Period plus the
   Applicable Margin (calculated on the basis of a year of 360 days and actual number of days elapsed) and
   (b) from and after the date the Fixed Rate shall have become effective following its determination in
   accordance with Section 25(a) of the Credit Agreement, the Fixed Rate (calculated on the basis of a year
   of 360 days consisting of 12 30-day months).

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

         "Balloon Amount" means, with respect to Option A, $7,200,000, and with respect to Option
   B, $4,800,000.

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

         "Break Amount" means, as at any date of determination, the amount, if any, equal to
   the sum of LIBOR Break Amount and, during any Fixed Rate Period, Swap Breakage Loss.

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

         "Business Day" means any day other than a Saturday or Sunday or a day on which commercial
   banks are required or authorized to close in New York, New York, Frankfurt, Germany, and Denver, Colorado
   and, if such day relates to the advance of a Loan, the determination of any Interest Payment Date, any
   payment or prepayment of a Loan or setting of the Applicable Rate, or any notice in respect of any thereof,
   any day on which Dollar transactions are effected in the eurodollar markets in London, England.

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

         "Commitment" has the meaning specified in Section 2(a) of the Credit Agreement.

      "Consent and Agreement" means the Manufacturer Consent and Agreement [Frontier/2002-A] dated
   as of the Delivery Date of the Seller in respect of the Aircraft.

         "Credit Agreement" means that certain Credit Agreement [Frontier/2002-A], dated as of the
   date hereof, among the Borrower, the Lenders and the Administrative Agent, as such Credit Agreement may be
   amended or supplemented from time to time pursuant to the applicable provisions thereof.

         "Delivery Date" means the date of the initial Mortgage Supplement, which date shall be the
   date the Lenders advance the Loan to the Borrower.

         "Default" means any event which, with the giving of notice or the lapse of time or both if not
   timely cured or remedied, would become an Event of Default.

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

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

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

         "Engine Consent and Agreement" means the Engine Consent and Agreement [Frontier/2002-A] dated as of
   the Delivery Date of the Engine Manufacturer in respect of the Aircraft.

         "Engine Manufacturer" means CFM International, Inc.

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

         "Event of Default" has the meaning specified in Section 11(a) of the Credit Agreement.

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

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

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

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

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

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

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

         "Final Maturity Date" means the final Interest Payment Date.

        "Fixed Rate" means the Applicable Rate if the Applicable Rate is determined in accordance with
   clause (b) of the definition thereof.  The Fixed Rate shall be specified in a Mortgage Supplement.

         "Fixed Rate Period" means any period during which the Applicable Rate is determined by reference to
   the Fixed Rate.

         "Floating Rate Period" means the period during which the Applicable Rate is determined by reference
   to clause (a) of the definition thereof.

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

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

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

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

         "Indemnified Party," "Indemnitee," or "Indemnitees" means, collectively,
   the Administrative Agent, the Lenders and each of their respective successors, permitted assigns, directors,
   officers, and employees.

         "Interest Payment Date" means the first Quarterly Date following the Delivery Date and each of the
   thirty-nine (39) (if the Borrower has selected Option A) or forty-seven (47) (if the Borrower has selected
   Option B) Quarterly Dates thereafter; provided that, if (x) except during the Fixed Rate Period, any such
   date shall not be a Business Day, then the relevant Interest Payment Date shall be the next succeeding
   Business Day unless by virtue of such extension such date would fall in the next succeeding calendar month,
   in which case the relevant Interest Payment Date shall be the next preceding Business Day and (y) there shall
   be no such corresponding day in any such month, then the relevant Interest Payment Date shall be the last
   Business Day of such month.

         "Interest Period" means the period from and including the Delivery Date to, but excluding, the
   initial Interest Payment Date, and thereafter, each successive three-month period from and including an
   Interest Payment Date to, but excluding, the next succeeding Interest Payment Date.

         "Lease Transaction" means a leveraged leasing transaction involving the Related Aircraft as
   contemplated by Section 2(d) of the Related Credit Agreement.

         "Lenders" means the lenders that are party to the Credit Agreement identified under the caption
   "Lenders" on the signature pages thereto or that, pursuant to Section 24(c) thereof, shall become a "Lender"
   thereunder, together with their respective successors and permitted transferees and assigns.

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

         "LIBOR" means, in relation to the initial Interest Period, the Lenders' cost of funds for such
   Interest Period, and in relation to any subsequent Interest Period, the rate (rounded upwards to the nearest
   1/16 of 1%) for deposits in United States Dollars for that period quoted on Telerate page 3750 (British
   Bankers' Association Interest Settlement Rates) (or such other page as may replace such Page 3750 on such
   system) as being the rate at which deposits in United States Dollars are offered in the London Interbank
   Market for the same or substantially similar period at, or about, 11:00 a.m. (London time) on the second
   London Business Day before the first day of such Interest Period on which any amount is required to be funded
   for the purpose of this Agreement, or if, on such date, no rate is displayed, LIBOR shall mean the rate for
   deposits of an amount comparable to the Loan in United States Dollars for that period determined by the
   Administrative Agent to be the arithmetic mean of the rates offered by Citibank N.A., Barclays Bank PLC and
   Landesbank Schleswig-Holstein Girozentrale at 11:00 a.m. London time on the second London Business Day before
   the first day of the relevant period for that relevant period.

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

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

         "Loan" means the money borrowed on the Delivery Date by the Borrower from the Lenders.

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

         "Majority Lenders" means, as of any date of the determination thereof, Lenders holding at least 66?%
   of the aggregate outstanding principal amount of all Loans and Commitments on a combined basis and following
   the termination of the Commitments, Lenders holding at least 66?% of the aggregate outstanding principal
   amount of all Loans not yet reimbursed by the Borrower.

         "Manufacturer" means Airbus G.I.E., in its capacity as manufacturer of the Aircraft, and its
   successors and assigns.

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

        "Mortgage" and "this Mortgage" mean this Mortgage and Security Agreement [Frontier/2002-A],
   including any Mortgage Supplement and each other supplement from time to time entered into pursuant hereto.

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

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

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

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

        "Notional Swap Transaction" means a hypothetical interest rate exchange transaction, the economic
   terms of which are set forth on Exhibit C to the Loan Agreement, governed by the terms of the Swap Form.

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

         "Option A" means a Loan with a term of approximately ten years.

       "Option B" means a Loan with a term of approximately twelve years.

        "Original Amount" means, with respect to a Note, the stated original amount (that is, principal) of
   such Note, and, with respect to all the Notes, means the aggregate stated original amounts of such Notes,
   which shall, on the Delivery Date, equal the amount of the Loan.

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

         "Past Due Rate" means (i) during the Floating Rate Period, a per annum rate equal to the Applicable
   Rate plus 2.0% calculated on the basis of a year of 360 days and actual number of days elapsed and
   (ii) during the Fixed Rate Period, a per annum rate equal to 2.0% plus the higher of (x) the Applicable Rate
   and (y) LIBOR plus the Applicable Margin.

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

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

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

       "Permitted Transferee" means, with respect to any Lender, (i) an Affiliate of such Lender,
   (ii) another Lender or its Affiliate or, (iii) any other bank or financial institution.

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

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

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

         "Quarterly Date" means each September 15, December 15, March 15 and June 15.

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

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

         "Related Administrative Agent" means Erste Bank der oesterreichischen Sparkassen AG.

         "Related Credit Agreement" means that certain Credit Agreement [Frontier/2002-B], dated as of the
   date of execution and delivery thereof, among the Borrower, the Related Lenders and the Related
   Administrative Agent.

         "Related Lenders" means the lenders that are party to the Related Credit Agreement identified under
   the caption "Lenders" on the signature pages thereto or that, pursuant to Section 24(c) thereof, shall become
   a "Lender" thereunder, together with their respective successors and permitted transferees and assigns.

         "Related Operative Documents" means the "Operative Documents" as defined in the Related Credit
   Agreement.

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

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

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

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

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

         "Special Default" means a Default under any of Sections 11(a)(i), 11(a)(ii) or 11(a)(vii) of the
   Credit Agreement.

         "Stipulated Insured Amount" as of any date of determination means an amount equal to 110% of the
   aggregate principal amount then outstanding on the Notes.

         "Swap Break Amount" means, as of any date (the "Swap Termination Date") on which Break Amount may be
   payable under the Operative Documents and for any Lender (a negative number always being less than a positive
   number and a more negative number always being less than another negative number that is closer to zero) the
   amount such Lender (as floating rate payor) will require in accordance with market practice to have paid to
   it on such date (such amount to be expressed as a positive number), or the amount such Lender (as floating
   rate payor) is willing to pay in accordance with market practice on such date (such amount to be expressed as
   a negative number), in either case, to terminate the Notional Swap Transaction on such date with respect to,
   and to the extent of, the then outstanding principal amount of the Loan subject to prepayment or purchase.
   The term "Lender" as used in this definition means either a Lender in its own right or a Lender acting
   through a swap agent.

         "Swap Breakage Gain" means, as to any Lender, the absolute value of the Swap Break Amount for such
   Lender if the Swap Break Amount is a negative number.

         "Swap Breakage Loss" means, as to any Lender, the value of the Swap Break Amount for such Lender if
   the Swap Break Amount is a positive number.

         "Swap Form" means the standard form of Master Agreement published in 1992 (or any successor swap
   form) by, and incorporating by reference therein the definitions and provisions contained in the 1991 (or any
   successor definitions) ISDA Definitions of the International Swap Dealers Association, Inc. (the
   "Definitions").

         "Swap Transaction" means, for any Lender, the Swap Transaction of such Lender described in
   Section 25(a) of the Credit Agreement.

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

         "Term Option" means the option of the Borrower to select Option A or Option B.  The initial Mortgage
   Supplement shall designate whether the Borrower has selected Option A or Option B.

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

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

         "Warranty Bill of Sale" means a full warranty bill of sale in favor of the Borrower from Seller.

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

   Section 1.02     Certain Interpretive Matters.  For purposes of the Operative Documents and all such Notes
   and other documents, unless the context otherwise requires:  (a) unless otherwise specifically provided
   therein, any accounting term used in any Operative Document shall have the meaning customarily given such
   term in accordance with GAAP, and all financial computations thereunder shall be computed in accordance with
   GAAP consistently applied (that certain items or computations are explicitly modified by the phrase "in
   accordance  with GAAP" shall in no way be construed to limit the foregoing); (b) all other undefined
   capitalized terms contained in any of the Operative Documents shall, unless the context indicates otherwise,
   have the meanings provided for by the Uniform Commercial Code as in effect in the State of New York to the
   extent the same are used or defined therein; (c) references to any amount as on deposit or outstanding on any
   particular date means such amount at the close of business on such day; (d) the words "herein," "hereof" and
   "hereunder" and other words of similar import used in any Operative Document refer to such Operative Documents
   as a whole, including all annexes, exhibits and schedules, as the same may from time to time be amended,
   restated, amended and restated, supplemented or otherwise modified, and not to any particular section,
   subsection or clause contained in such Operative Document or any such annex, exhibit or schedule;
   (e) references to any Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to
   such Operative Document (or the Note or other document in which the reference is made), and references to any
   paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph,
   subsection, clause or other subdivision of such Section or definition; (f) the words "including," "includes"
   and "include" shall be deemed to be followed by the words "without limitation"; the word "or" is not
   exclusive; (g) references to any law or regulation refer to that law or regulation as amended from time to
   time and include any successor law or regulation; (h) references to any agreement refer to that agreement as
   from time to time amended or supplemented or as the terms of such agreement are waived or modified in
   accordance with its terms; (i) references to Persons include their respective successors and assigns (to the
   extent and only to the extent permitted by the Operative Document) or, in the case of Governmental
   Authorities, Persons succeeding to the relevant functions of such Persons; and all references to statutes and
   related regulations shall include any amendments of the same and any successor statutes and regulations;
   (j) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation
   of any provision hereof; and (k) wherever from the context it appears appropriate, each term stated in either
   the singular or plural shall include the singular and the plural, and pronouns stated in the masculine,
   feminine or neuter gender shall include the masculine, feminine and neuter genders.

                                                   Article II

                                                   THE NOTES

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



                                            FRONTIER AIRLINES, INC.

                                        PROMISSORY NOTE DUE [2012/2014]
                         ISSUED IN CONNECTION WITH ONE AIRBUS MODEL A319-111 AIRCRAFT
                         WITH MANUFACTURER'S SERIAL NUMBER ____ AND INITIALLY BEARING
   UNITED STATES FEDERAL AVIATION ADMINISTRATION REGISTRATION NUMBER _______ AND TWO CFM INTERNATIONAL MODEL
                                              CFM56-5B5/P ENGINES
                         BEARING MANUFACTURER'S SERIAL NUMBERS ________ AND _________

   New York, New York
   No. R-

   $                                                                                            [Delivery Date]

         Frontier Airlines, Inc. (the "Borrower") hereby promises to pay to _________________, or registered
   transferees, the principal sum of ___________________ Dollars, in [40/48] consecutive installments, equal to
   the amounts, and payable on the Interest Payment Dates, set forth in Annex A hereto, together with interest
   payable on each such Interest Payment Date on the unpaid principal amount hereof from the date hereof, or the
   immediately preceding Interest Payment Date, to (but excluding) such Interest Payment Date until such
   principal amount is paid in full.  If any sum payable under this Note falls due on a day which is not a
   Business Day, then such sum shall be payable on the next succeeding Business Day, unless such Business Day
   falls in the following month, in which case such sum shall be payable on the Business Day immediately prior
   thereto.  Interest on this Note shall be payable at the Applicable Rate (calculated on the basis of a 360-day
   year and the actual number of days elapsed (unless interest on this Note shall be calculated by reference to
   the Fixed Rate, in which case such interest shall be calculated on the basis of a year of 360 days consisting
   of 12 30-day months)).  In no contingency or event whatsoever shall the rate or amount of interest paid by
   Borrower under this Note exceed the maximum amount permissible under any law which a court of competent
   jurisdiction shall, in a final determination, deem applicable hereto.  In the event that a court determines
   that the Lender has received interest hereunder in excess of the maximum amount permitted by such law,
   (i) the Lender shall apply such excess to any unpaid principal owed by Borrower to the Lender or, if the
   amount of such excess exceeds the unpaid balance of such principal, the Lender shall promptly refund such
   excess interest to Borrower and (ii) the provisions hereof shall be deemed amended to provide for such
   permissible rate.  All sums paid, or agreed to be paid, by Borrower which are, or hereafter may be construed
   to be, compensation for the use, forbearance or detention of money shall, to the extent permitted by
   applicable law, be amortized, prorated, spread and allocated throughout the full term of all such
   indebtedness until the indebtedness is paid in full.  This Note shall bear interest at the applicable Past
   Due Rate on any principal hereof, and, to the extent permitted by applicable law, interest and other amounts
   due hereunder, not paid when due (whether at stated maturity, by acceleration or otherwise), for any period
   during which the same shall be overdue, payable on demand by the Lender given through the Administrative
   Agent.

         All payments of principal, Break Amount and Additional Costs, if any, and interest and all other
   amounts to be made to the Lender hereunder or under the Mortgage and Security Agreement [Frontier/2002-A]
   dated as of June 26, 2002 (as amended or supplemented from time to time, herein called the "Mortgage", the
   terms defined therein and not otherwise defined herein being used herein with the same meanings) between the
   Borrower and Landesbank Schleswig-Holstein Girozentrale, as Administrative Agent thereunder or under the
   other Operative Documents, shall be made in accordance with the terms of the Mortgage and the other Operative
   Documents.

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

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

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

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

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

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

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






                                                            [Mortgage and Security Agreement [Frontier/2002-A]]

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

                                                           FRONTIER AIRLINES, INC.


                                                           By:______________________________
                                                           Name:
                                                           Title:






                                                            [Mortgage and Security Agreement [Frontier/2002-A]]


                                                Annex A to Note

                                        SCHEDULE OF PRINCIPAL PAYMENTS

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

Section 2.02      Terms of Notes.  (a)  On the Delivery Date the Borrower shall issue Notes in respect of the
   Aircraft in an aggregate original principal amount of the Original Amount therefor to each Lender (or their
   respective nominees) in such amounts as shall be set forth in Schedule II to the Credit Agreement.

(b)      Each Note shall bear interest payable on each Interest Payment Date at the Applicable Rate on the
   unpaid principal amount thereof from the date thereof in the case of the first Interest Payment Date, or
   otherwise from the immediately preceding Interest Payment Date, to (but excluding) the following Interest
   Payment Date until such principal amount is paid in full.  Interest hereunder and under the Notes shall be
   calculated on the basis of a year of 360 days and actual number of days elapsed (unless interest on the Notes
   shall be calculated by reference to the Fixed Rate, in which case such interest shall be calculated on the
   basis of a year of 360 days consisting of 12 30-day months).  If any sum payable under the Notes or under
   this Mortgage falls due on a day which is not a Business Day, then such sum shall be payable on the next
   succeeding Business Day, unless such Business Day falls in the following month, in which case such sum shall
   be payable on the Business Day immediately prior thereto.

(c)      The principal of the Notes shall be due and payable in 40 consecutive installments (if the Borrower
   has selected Option A) or 48 consecutive installments (if the Borrower has selected Option B), in each case
   as set forth in Schedule 1 to the Mortgage Supplement, the first such installment to be due on the first
   Interest Payment Date.  Schedule 1 to the Mortgage Supplement shall be determined as follows:  the Original
   Amount shall be amortized on an annuity basis (using, as the discount rate, the lower of (x) the Applicable
   Rate for the initial Interest Period or (y) 6%) down to the applicable Balloon Amount, payable on the Final
   Maturity Date.  The Administrative Agent shall prepare Schedule 1 to the Mortgage Supplement and the
   amortization schedule for each Note based on the methodology described in the preceding sentence.

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

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

Section 2.03      Termination of Interest in Mortgage Estate.  No Lender shall, as such, have any further
   interest in, or other right with respect to, the Mortgage Estate relating to the Aircraft when and if the
   principal amount of and Break Amount and Additional Costs, if any, and interest on and other amounts due
   under all Notes held by such Lender and all other sums due to such Lender hereunder and under the other
   Operative Documents in respect of the Aircraft shall have been paid in full.

                                                  Article III

                   REGISTRATION AND MAINTENANCE; OPERATION; POSSESSION AND LEASES; INSIGNIA

Section 3.01      Registration and Maintenance.  The Borrower shall:  (1) (a) on the Delivery Date, cause the
   Aircraft to be duly registered in its name (if not so registered) and, at all times thereafter, to remain
   duly registered in the United States of America in its name under the Federal Aviation Act and (b) on the
   Delivery Date, cause this Mortgage to be duly recorded in the name of the Administrative Agent for the
   benefit of the Lenders and, at all times thereafter, so long as any Note shall be outstanding or any amount
   shall be owing to any Lender, cause this Mortgage to be so maintained of record as a first priority and
   perfected mortgage on the Aircraft; (2) maintain, service, repair, and overhaul (or cause to be maintained,
   serviced, repaired, and overhauled) the Aircraft (and any engine which is not an Engine but which is
   installed on the Aircraft) (a) so as to keep the Aircraft in as good condition as when delivered to the
   Borrower by the Manufacturer (ordinary wear and tear excepted) and so as to keep the Aircraft in good
   operating condition and in such condition as may be necessary to enable the airworthiness certification for
   the Aircraft to be maintained in good standing at all times under the Federal Aviation Act except when
   (i) the Aircraft is being serviced, repaired, maintained, overhauled, tested or modified as permitted or
   required by the terms of this Mortgage or (ii) all Airbus A319-100 aircraft of comparable vintage and/or
   configuration have been grounded by the FAA, and (b) in accordance with the Maintenance Program for the
   Aircraft and without in any way discriminating against the Aircraft, and (3) maintain or cause to be
   maintained in English all records, logs and other materials required to be maintained in respect of the
   Aircraft by the FAA.

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

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

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

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

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

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

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

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

   (g)      enter into a lease with (i) any U.S. Air Carrier approved in writing by the Administrative Agent at
   the direction of the Lenders, which approval (or direction) shall not be unreasonably withheld, and which is
   authorized by an applicable Governmental Authority to conduct commercial airline operations and to operate
   A319-111 aircraft, or (ii) any other Person approved in writing by the Administrative Agent at the direction
   of the Lenders.

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

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

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

Section 3.04      Insignia.  On or prior to the Delivery Date, or as soon thereafter as practicable (but in
   any event within 30 days thereafter), the Borrower agrees to affix and maintain (or cause to be affixed and
   maintained) in the cockpit of the Airframe and on each Engine a nameplate bearing the inscription:

                  Mortgaged To

                  Landesbank Schleswig-Holstein Girozentrale, as Administrative Agent

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

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

                                             Article IV

                  REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS

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

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

Section 4.03      Alterations, Modifications and Additions.  The Borrower will make (or cause to be made)
   such alterations, modifications and additions to the Airframes and Engines as may be required to meet the
   applicable standards of the FAA, subject to clauses (2)(a)(i) and (ii) of Section 3.01.  In addition, the
   Borrower may from time to time make such alterations and modifications in and additions to the Airframe or
   any Engine as the Borrower may deem desirable in the proper conduct of its business, including removal of
   Parts which the Borrower deems to be obsolete or no longer suitable or appropriate for use on the Airframe or
   such Engine; provided that no such alteration, modification, removal or addition impairs the condition or
   airworthiness of the Airframe or such Engine, or diminishes the value, utility and remaining useful life of
   the Airframe or such Engine below the value, utility or remaining useful life thereof immediately prior to
   such alteration, modification, removal or addition, assuming that the Airframe or such Engine is in the
   condition required hereunder.  All parts incorporated or installed in or attached or added to the Airframe or
   an Engine as the result of such alteration, modification or addition (except those parts described in
   Section 4.04 hereof which the Borrower has leased from others and Parts which may be removed by the Borrower
   pursuant to the next sentence) (the "Additional Part" or "Additional Parts") shall, without further act,
   become subject to the Lien of this Mortgage.  Notwithstanding the foregoing, the Borrower may remove any
   Additional Part, provided that such Additional Part (i) is in addition to, and not in replacement of or
   substitution for, any Part originally incorporated or installed in or attached to the Airframe or any Engine
   at the time of delivery thereof hereunder or any Part in replacement of or substitution for any such Part,
   (ii) is not required to be incorporated or installed in or attached or added to the Airframe or any Engine
   pursuant to the terms of Article III hereof or the first sentence of this Section 4.03, and (iii) can be
   removed from the Airframe or such Engine without impairing the airworthiness of the Airframe or such Engine
   or diminishing the value, utility and remaining useful life of the Airframe or such Engine which the Airframe
   or such Engine would have had at such time had such alteration, modification or addition not occurred.  Upon
   the removal thereof as provided above, such Additional Parts shall be deemed free of the Lien of this
   Mortgage.

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

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

                                               Article V

                                     LOSS, DESTRUCTION, REQUISITION, ETC.

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

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

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

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

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

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

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

                                                Article VI

                                                   INSURANCE

Section 6.01      Bodily Injury Liability and Property Damage Liability Insurance.

   (a)      Except as provided in paragraph (b) of this Section 6.01, and subject to the self insurance to the
   extent permitted by Section 6.04 and the provisions of Section 6.08, the Borrower will at all times carry and
   maintain or cause to be carried and maintained, on a non-discriminatory basis and with insurers of
   internationally recognized responsibility acceptable to the Administrative Agent (which acceptability not to
   be unreasonably withheld or delayed), airline liability insurance, including passenger legal liability,
   bodily injury liability, war risk and allied perils liability, property damage liability, and contractual
   liability (exclusive of manufacturer's product liability insurance) with respect to the Aircraft in an amount
   per occurrence not less than $600,000,000.  The Borrower shall maintain cargo liability insurance in an
   amount not less than the amount of cargo liability insurance maintained for other aircraft operated by the
   Borrower.

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

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

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

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

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

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

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

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

Section 6.04      Self-Insurance.  The Borrower may self-insure, by way of deductible, premium adjustment
   provisions in insurance policies, or otherwise, under a program applicable to all aircraft in the Borrower's
   fleet, the risks required to be insured against pursuant to Sections 6.01 and 6.02 but in no case shall the
   self-insurance with respect to the Aircraft exceed $750,000 per occurrence; provided that no deductible shall
   be applicable in the case of a total loss of the Airframe.  In the event the prevailing industry minimum
   deductible for aircraft similar to the Aircraft increases, the Borrower and Administrative Agent shall
   consult one another toward a mutually agreeable modified deductible, such modified deductible to be effective
   only upon the written consent of the Administrative Agent (on behalf of the Lenders).  Notwithstanding the
   foregoing, if the Borrower's consolidated shareholders' equity shall exceed $200,000,000, then the levels of
   self-insurance otherwise permitted by this Section 6.04 may be increased by $250,000 per occurrence.

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

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

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

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

                                               Article VII

                                                 MISCELLANEOUS

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

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

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

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

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

Section 7.05      No Action Contrary to Borrower's Rights; Quiet Enjoyment.  Notwithstanding any of the
   provisions of this Mortgage to the contrary, so long as no Event of Default shall have occurred and be
   continuing, each of the Administrative Agent and Lenders agrees that neither it nor any Person claiming by,
   through or under it, will take any action in violation of the Borrower's rights, including the right to quiet
   enjoyment, possession and use of the Aircraft in accordance with the terms of this Mortgage by Borrower.

Section 7.06      Notices.  Unless otherwise expressly specified or permitted by the terms hereof, all
   notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted
   by this Mortgage to be made, given, furnished or filed shall be in writing, mailed by certified mail, postage
   prepaid, or by confirmed telex, or by confirmed telecopy or electronic mail and (i) if to the Administrative
   Agent, addressed to it at its offices at Landesbank Schleswig-Holstein Girozentrale, Martensdamm 6, D-24103
   Kiel, Germany, Attention:  Transportation Finance, telephone: (49-431) 900-2979   telecopy: (49-431)
   900-1542, (ii) if to the Borrower, addressed to it at its office at Frontier Center One, 7001 Tower Road,
   Denver, CO 80249, Attention: Chief Financial Officer, telecopy: (720) 374-4375, or (iii) if to the Lenders,
   addressed to such party at such address as such party shall have furnished by notice to the Borrower and the
   Administrative Agent, or, until an address is so furnished, addressed to the address of such party (if any)
   set forth on Schedule I to the Credit Agreement.  Whenever any notice in writing is required to be given by
   the Borrower, the Administrative Agent or the Administrative Agent or the Lenders to any of the other of
   them, such notice shall be deemed given and such requirement satisfied when such notice is received, if such
   notice is received, if such notice is mailed by certified mail, postage prepaid, or is sent by confirmed
   telex, or by confirmed telecopy addressed as provided above.  Any party hereto may change the address to
   which notices to such party will be sent by giving notice of such change to the other parties to this
   Mortgage.

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

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

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

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

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

Section 7.12      GOVERNING LAW; COUNTERPARTS.  THIS MORTGAGE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
   CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
   VALIDITY AND PERFORMANCE.  This Mortgage may be executed by the parties hereto in separate counterparts, each
   of which when so executed and delivered shall be an original, but all such counterparts shall together
   constitute but one and the same instrument.

                                           [SIGNATURE PAGE FOLLOWS]






                                                            [Mortgage and Security Agreement [Frontier/2002-A]]


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

                                                           FRONTIER AIRLINES, INC.,
                                                           as Borrower


                                                           By: _____________________________
                                                           Name:
                                                           Title:
                                                           LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE,
                                                           as Administrative Agent


                                                           By: _____________________________
                                                           Name:
                                                           Title:



                                                           By: _____________________________
                                                           Name:
                                                           Title:






                                                            [Mortgage and Security Agreement [Frontier/2002-A]]
                                                  EXHIBIT A
                                                      to
                                                   Mortgage


                                              MORTGAGE SUPPLEMENT

         MORTGAGE SUPPLEMENT [Frontier/2002-A] No. _____ dated ___________, ____ (this "Mortgage Supplement")
   of Frontier Airlines, Inc. (herein called the "Borrower").

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

         WHEREAS, the Mortgage and Security Agreement [Frontier/2002-A] dated as of June 26, 2002 (the
   "Mortgage") between the Borrower and Landesbank Schleswig-Holstein Girozentrale, as Administrative Agent (the
   "Administrative Agent"), provides for the execution and delivery of a supplement thereto substantially in the
   form hereof which shall particularly describe the Aircraft (such term and other defined terms in the Mortgage
   being herein used with the same meanings) and any Replacement Engine included in the Mortgage Estate, and
   shall specifically mortgage the Aircraft or Replacement Engine, as the case may be, to the Administrative
   Agent.

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

         WHEREAS3, the Mortgage and Mortgage Supplement [Frontier/2002-A] dated _______________ have been
   duly recorded pursuant to Subtitle VII of Title 49 of the United States Code on __________, ____, as one
   document and have been assigned Conveyance No. _________;

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

                                                   AIRFRAME
                                      One airframe identified as follows:

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

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

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

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

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

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

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

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

         The principal of the Notes identified above shall be due and payable in [40/48] equal quarterly
   installments down to the Balloon Amount, as set forth on Schedule 1 hereto.  The Borrower has selected
   Option __ in respect of the Aircraft.

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

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






                                                            [Mortgage and Security Agreement [Frontier/2002-A]]


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

                                                           FRONTIER AIRLINES, INC.


                                                           By: _____________________________
                                                           Name:
                                                           Title:






                                                            [Mortgage and Security Agreement [Frontier/2002-A]]

                                                  SCHEDULE 1

                                        SCHEDULE OF PRINCIPAL PAYMENTS

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

                                   [OMITTED FROM COUNTERPART FILED WITH FAA
                                         FOR CONFIDENTIALITY PURPOSES]

EX-10

                                                                          EXECUTION COPY






                                    CREDIT AGREEMENT
                                   [Frontier/2002-B]

                                      Dated as of

                                     July 16, 2002


                                         among



                                FRONTIER AIRLINES, INC.,
                                       Borrower,


                               THE LENDERS LISTED HEREIN,


                                          and


                    ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG,
                    as Administrative Agent on behalf of the Lenders

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

                         One (1) Airbus Model A319-111 Aircraft

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






                                  SkyBlue Capital LLC,
                                  Debt Placement Agent






                                        TABLE OF CONTENTS
                                                                                                               Page

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

Section 2.        Loans; Borrower's Notice of Delivery Date; Closing Procedure;
                  Alternative Structure..........................................................................1

Section 3.        Fees...........................................................................................2

Section 4.        Conditions.....................................................................................3

Section 5.        Closing Procedure..............................................................................7

Section 6.        Extent of Interest of Lenders..................................................................7

Section 7.        Representations and Warranties.................................................................8

Section 8.        Indemnities...................................................................................12

Section 9.        Covenants of the Borrower.....................................................................19

Section 10.       The Notes.....................................................................................23

Section 11.       Events Of Default; Certain Rights of Administrative Agent.....................................28

Section 12.       Remedies......................................................................................31

Section 13.       Replacement Engines...........................................................................35

Section 14.       The Administrative Agent......................................................................36

Section 15.       Investment Of Funds...........................................................................39

Section 16.       Supplements and Amendments to the Mortgage and Other Operative
                  Documents.....................................................................................40

Section 17.       Notices.......................................................................................41

Section 18.       Governing Law; Consent to Jurisdiction; Waiver of Jury Trial..................................41

Section 19.       Costs and Expenses............................................................................42

Section 20.       Section 1110 Compliance.......................................................................42

Section 21.       Confidentiality...............................................................................42

Section 22.       Covenants of the Administrative Agent and the Lenders.........................................43

Section 23.       Leveraged Lease Financing.....................................................................43

Section 24.       Miscellaneous.................................................................................44

Section 25.       Terms of Fixed Rate Setting...................................................................46


Schedule I     -  Notice & Account Information

Schedule II    -  Participation in Original Amount

Exhibit A      -  Form of Borrowing Notice

Exhibit B      -  Form of Assignment Agreement

Exhibit C      -  Terms of Agreement Transaction







                                                                                [Credit Agreement [Frontier/2002-B]]
                         CREDIT AGREEMENT [Frontier/2002-B]

         THIS CREDIT AGREEMENT [Frontier/2002-B] dated as of July 16, 2002 among
(i) Frontier Airlines, Inc., a Colorado corporation (the "Borrower"), (ii) the lenders
that are party hereto identified under the caption "Lenders" on the signature pages
hereto or that, pursuant to Section 24(c) hereof, shall become a "Lender" hereunder
(individually, a "Lender" and, collectively, the "Lenders") and (iii) Erste Bank der
oesterreichischen Sparkassen AG, a bank organized under the laws of Austria, as
Administrative Agent on behalf of the Lenders (the "Administrative Agent").

                                  W I T N E S S E T H:

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

         WHEREAS, concurrently with the execution and delivery of this Agreement, the
Borrower and the Administrative Agent are entering into the Mortgage and Security
Agreement [Frontier/2002-B] dated as of the date hereof (the "Mortgage") pursuant to
which the Borrower agrees, among other things, to issue one or more Notes in respect
of the Aircraft as evidence of the Borrower's indebtedness to the Lenders, which Notes
will be secured by the mortgage and security interest created by the Borrower in favor
of the Administrative Agent on behalf of the Lenders, and the Borrower shall execute
and deliver a Mortgage Supplement covering the Aircraft, supplementing the Mortgage.

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

Section 1.        Certain Definitions and Interpretive Matters.

         Except as otherwise defined in this Agreement, including its annexes,
schedules and exhibits, terms used herein in capitalized form shall have the meanings
attributed thereto in the Mortgage.  The rules of interpretation contained in
Section 1.02 of the Mortgage shall be applicable to this Agreement.  Unless the context
otherwise requires, any reference herein to any of the Operative Documents refers to
such document as it may be modified, amended or supplemented from time to time in
accordance with its terms and the terms of each other agreement restricting the
modification, amendment or supplement thereof.

Section 2.        Loans; Borrower's Notice of Delivery Date; Closing Procedure; Alternative Structure.

(a)      Loans.  Subject to the terms and conditions of this Agreement, each Lender agrees to
make a secured loan to the Borrower in respect of the Aircraft (herein called a "Loan") on a
date to be designated pursuant to Section 2 hereof, on or about July 16, 2002 but in no event
later than December 31, 2002 (the "Commitment Termination Date"), in the amount in
Dollars set forth opposite such Lender's name in Schedule II hereto (its "Commitment"), and to
receive, as evidence of each such secured loan, Note(s) in an amount equal to its Commitment.  The
aggregate amount of the Commitments for the Aircraft shall equal the Original Amount for the Aircraft.
Each Loan shall bear interest and amortize in accordance with Section 2.02 of the Mortgage.  If any
Lender shall default in its obligation to make the amount of its Commitment available
pursuant to this Section 2 in respect of the Aircraft, no other Lender shall have an
obligation to make any portion of such amount available or to increase the amount of
its commitment for the Aircraft and the obligations of the non-defaulting Lender shall
remain subject to the terms and conditions set forth in this Agreement.

(b)      Notice of Delivery Dates.  The Borrower agrees to give the Lenders and the Administrative
Agent at least three (3) Business Days' prior written notice of the Delivery Date for the Aircraft,
which Delivery Date shall be a Business Day not later than the Commitment Termination Date by executing
and delivering a borrowing notice substantially in the form of Exhibit A hereto (the "Borrowing Notice"),
which notice shall also specify (if not previously selected as provided in paragraph (e) below) the Term
Option elected and any funding instructions.  The payment by each Lender of its Commitment in respect of
the Aircraft in the manner required by this Section 2 shall constitute a waiver of such notice.

(c)      Closing Procedure.  Subject to the terms and conditions of this Agreement, and simultaneous
with receipt by the Seller of the Original Amount for the Aircraft pursuant to this Section 2, the
Borrower shall authorize the delivery and filing for record at the FAA of the Mortgage and the Mortgage
Supplement.  On the Delivery Date specified in the Borrower's notice referred to in the first paragraph of
this Section 2, subject to the terms and conditions of this Agreement, each Lender agrees to pay, through
the Administrative Agent, the amount of its Commitment to the Seller by wire transferring such amounts to
the Seller's account at Credit Lyonnais, 1301 Avenue of the Americas, New York, NY 10019, ABA No. *
Account #  * , Attention:  Mustapha Diop, Reference Frontier MSN 1781 or to such other account as the
Borrower shall direct the Administrative Agent (on behalf of the Lenders) in writing, upon closing.

(d)      Alternative Structure.  Notwithstanding anything to the contrary in this Agreement or
any other Operative Document, the Borrower, subject to the provisions of this Section 2(d) and
Section 23 hereof, may elect to finance the Aircraft on the basis of a U.S. leveraged lease financing,
whereupon the Lenders' Commitments shall be utilized for such purpose, and the Lenders' obligations to
finance the Aircraft on a mortgage basis, and the Borrower's obligations to use the Lenders' Commitments
to finance the Aircraft on a mortgage basis, shall be deemed discharged by such utilization.

(e)      Term Option.  The Borrower shall notify the Administrative Agent on or prior to the Delivery
Date of the Term Option for the Aircraft, which notice shall be irrevocable.

(f)      Purpose.  The Borrower shall use the proceeds of the Loans to purchase the Aircraft from
the Seller; however, neither the Administrative Agent nor the Lenders shall have any responsibility in respect
of the use of the Loans by the Borrower.

Section 3.        Fees.  (a)  The Borrower agrees to pay to the Administrative Agent (on behalf of
the Lenders), on or before the Delivery Date, an up-front fee of the percentage (the "Up-front Fee")
of the Original Amount of each Loan to be funded on the Delivery Date as separately agreed, to the account of
the Administrative Agent specified in Schedule I hereto (or such other account as the Administrative Agent may
direct in writing).

(b)      The Borrower agrees to pay to the Administrative Agent (on behalf of the Lenders), after
the date hereof, a commitment fee of  * % (the "Commitment Fee") on the unutilized Commitments,
to the account of the Administrative Agent specified in Schedule I hereto (or such other account as the
Administrative Agent may direct in writing).  The Commitment Fee shall accrue from and including September
26, 2002 to but excluding the earlier of (x) the Delivery Date and (y) the Commitment Termination Date.
The Commitment Fee shall be payable on the earlier dates contemplated by clauses (x) and (y) of the
preceding sentence.  The Commitment Fee shall be calculated on the basis of a year of 360 days and actual
number of days elapsed.  Promptly following receipt by the Administrative Agent of the Commitment Fee in
respect of any period, the Administrative Agent shall distribute the same to each Lender, pro rata based on such
Lender's unutilized Commitments.

Section 4.        Conditions.  (a)  Conditions Precedent to the Effectiveness of the Commitment.
It is agreed that the Commitment of the Lenders is subject to the satisfaction prior to or on the
Delivery Date of the following conditions precedent:

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

(A)      the Mortgage; and

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

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

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

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

(iii)    Each Lender and the Administrative Agent shall have received an opinion addressed to such Lender and the
         Administrative Agent from each of: (A) David Sislowski, Esq., General Counsel
         for the Borrower and (B) Curtis Mallet-Prevost, Colt & Mosle LLP, special
         counsel to the Borrower, each in form and substance reasonably satisfactory to
         the addressees thereof.

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

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

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

(iii)    On the Delivery Date, the Aircraft will have been duly certified by the FAA as to type and
         airworthiness, will have been insured by the Borrower in accordance with the
         terms of the Mortgage, will have suffered no Event of Loss (or event which,
         with the passage of time would constitute an Event of Loss) and will be in the
         condition and state of repair required under the terms of the Mortgage.

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

(A)      the Mortgage Supplement covering the Aircraft and dated the Delivery Date;  Schedule 1 to such Mortgage
                  Supplement shall be completed as provided in Section 2.02(c) of the
                  Mortgage;

(B)      the Note(s) in an aggregate principal amount equal to the Original Amount reflecting the Term Option
                  selected by the Borrower;

(C)      the Consent and Agreement and the Engine Consent and Agreement, each of which shall be in form and
                  substance reasonably satisfactory to the Administrative Agent; and

(D)      the Warranty Bill of Sale and FAA Bill of Sale for the Aircraft.

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

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

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

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

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

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

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

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

(ix)     Each Lender and the Administrative Agent shall have received an opinion addressed to such Lender and the
         Administrative Agent from each of:  (A) David Sislowski, Esq., General Counsel
         for the Borrower and (B) Curtis Mallet-Prevost, Colt & Mosle LLP, special
         counsel to the Borrower, each in form and substance reasonably satisfactory to
         the addressees thereof.

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

(xi)     Each Lender and the Administrative Agent shall have received an opinion addressed to the Administrative
         Agent from in-house counsel to Seller, in respect of the Bills of Sale for the
         Aircraft delivered on the Delivery Date, in form and substance reasonably
         satisfactory to the addressees thereof.

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

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

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

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

(xvi)    The Administrative Agent shall have received the Up-front Fee pursuant to Section 3(a) and, if
         applicable, any Commitment Fee pursuant to Section 3(b) that is due and
         payable.

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

(xviii)  No material disruption shall have occurred in the London interbank market that may have an adverse
         effect upon the Lenders.

(xix)    Each other Lender shall have made available the amount of its Commitment for the Aircraft in accordance
         with Section 2(a) hereof.

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

Section 5.        Closing Procedure.  Following the Borrower's notice of the Delivery Date
as provided in Section 2 hereof, the parties will pre-position the executed Mortgage and Mortgage
Supplement with FAA counsel in Oklahoma City, Oklahoma, together with the FAA Bill of
Sale for the Aircraft and the application for registration of the Aircraft in the name
of the Borrower.  On the Delivery Date and in sufficient time to permit the closing to
occur during business hours of the FAA in Oklahoma City, Oklahoma, each Lender will
wire transfer, through the Administrative Agent, its Commitment to the Seller.  On the
Delivery Date, by conference telephone call among the Seller, the Borrower, the
Lenders (and/or their counsel acting on their behalf), the Administrative Agent and
FAA counsel, the Seller will authorize the filing of the FAA Bill of Sale for the
Aircraft and the Borrower will authorize the filing of the Mortgage and the Mortgage
Supplement upon receipt by the Seller of the Original Amount of the Loan for the
Aircraft.  The irrevocable authorization to FAA counsel to date the FAA Bill of Sale
and the Mortgage Supplement and file the FAA Bill of Sale and the Mortgage and
Mortgage Supplement will occur prior to the transfer of the Original Amount of the
Loan for the Aircraft to the Seller, but the filing will not occur until the Seller's
receipt of the purchase price for the Aircraft.  The Note(s) will be delivered to the
Lenders, as applicable, and legal opinions will be delivered to all parties
immediately following the filing of the FAA Bill of Sale and the Mortgage and Mortgage
Supplement at the FAA.

Section 6.        Extent of Interest of Lenders.  No Lender shall have any further interest
in, or other right with respect to, the mortgage and security interests created by the Mortgage when and
if the Original Amount of and interest on all Note(s) held by such Lender and all
other sums payable to such Lender hereunder, under the Mortgage and under such Note(s)
shall have been paid in full.

Section 7.        Representations and Warranties.  (a)  Borrower's Representations and Warranties.
The Borrower represents and warrants that on the date hereof and on the Delivery Date:

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

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

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

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

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

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

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

(viii)   the statements of financial position of the Borrower as of March 31, 2002 and the date of the most
         recently concluded fiscal quarter of the Borrower for which a statement of
         financial position has been provided and the related statements of earnings
         and cash flow of the Borrower in all material respects for the year and fiscal
         quarter, respectively, then ended, copies of which have been furnished to the
         Lenders, fairly present the financial condition of the Borrower at such date
         and the results of operations and cash flow of the Borrower for the period
         ended on such dates, in accordance with generally accepted accounting
         principles consistently applied, and subject, in the case of the statements
         pertaining to the Borrower's most recently concluded fiscal quarter, to normal
         year-end adjustments, and since March 31, 2002, there has been no material and
         adverse change in the business or financial condition of the Borrower;

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

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

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

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

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

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

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

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

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

(xviii)  assuming the Lenders are acquiring their Notes in the ordinary course of their commercial banking
         business, none of the transactions contemplated by this Agreement will violate
         or result in a violation of the Securities Act of 1933, as amended, the
         securities Exchange Act of 1934, as amended, or any regulations issued
         pursuant thereto; and

(xix)    no United States Federal or state non-banking governmental approval of any kind is required of any
         Lender for its execution of or performance under this Agreement or any
         agreement contemplated hereby solely by reason of any fact or circumstance
         peculiar to: (a) the Borrower, (b) the nature of the Aircraft, or (c) the
         Borrower's proposed operation or use of the Aircraft.

(b)      Lenders' Representations and Warranties.  Each Lender severally represents and warrants to each of the
other Parties hereto, as of the date hereof and as of the Delivery Date that:

(i)      it is acquiring its Notes in the ordinary course of its commercial banking business and it has no
         present intention of distributing or reselling any interest to be acquired by
         it hereunder or under any of the other Operative Documents or any part thereof
         in violation of the Securities Act of 1933, as amended; and

(ii)     no part of the funds to be used by it to purchase or fund, as the case may be, its Notes or its interest
         under any of the Operative Documents constitutes plan assets of an employee
         benefit plan which is subject to ERISA and/or subject to Section 4975 of the
         United States Internal Revenue Code of 1986, as amended.  As used in this
         Section 7(b)(ii), the term "plan assets" shall have the meaning assigned to
         such term under ERISA and the regulations promulgated thereunder.

Section 8.        Indemnities.  (a)  General Indemnity.  Subject to the next
following paragraph but without limiting any other rights that any Indemnitee may have under the
other Operative Documents or applicable law, the Borrower hereby agrees to indemnify each
Indemnitee on an after-tax basis against, and agrees to protect, save and keep harmless each of
them from any and all Expenses imposed on, incurred by or asserted against any
Indemnitee arising out of or resulting from (i) the operation, possession, use,
maintenance, overhaul, testing, registration, reregistration, delivery, non-delivery,
lease, nonuse, modification, alteration, or sale of the Aircraft, the Airframe or any
Engine, or any engine used in connection with the Airframe or any part of any of the
foregoing by the Borrower, any lessee or any other Person whatsoever, whether or not
such operation, possession, use, maintenance, overhaul, testing, registration,
reregistration, delivery, non-delivery, lease, nonuse, modification, alteration, or
sale is in compliance with the terms of the Mortgage, including, without limitation,
claims for death, personal injury or property damage or other loss or harm to any
person whatsoever and claims relating to any laws, rules or regulations pertaining to
such operation, possession, use, maintenance, overhaul, testing, registration,
reregistration, delivery, non-delivery, lease, non-use, modification, alteration, sale
or return including environmental control, noise and pollution laws, rules or
regulations; (ii) the manufacture, design, purchase, acceptance, rejection, delivery,
or condition of the Aircraft, the Airframe or any Engine, any engine used in
connection with the Airframe, or any part of any of the foregoing including, without
limitation, latent and other defects, whether or not discoverable, or trademark or
copyright infringement; (iii) any breach of or failure to perform or observe, or any
other noncompliance with, any covenant or agreement to be performed, or other
obligation of the Borrower under any of the Operative Documents, or the falsity of any
representation or warranty of the Borrower in any of the Operative Documents; and
(iv) any Event of Default hereunder or the enforcement against the Borrower of any of
the terms hereof (including, without limitation, Section 12 hereof).

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

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

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

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

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

                  Amounts payable under this Section 8(a) shall be payable by the
Borrower within thirty days of demand therefor.

(b)      General Tax Indemnity.

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

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

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

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

                  If, as a result of an assignment under Section 24(c)(iii) below, a
Person organized under the laws of a jurisdiction outside of the United States becomes
a Tax Indemnitee and payments to it to be made under this Agreement are exempt from
United States withholding tax, or are subject to such tax at a reduced rate under an
applicable tax treaty, then such assignee shall provide to the Borrower, promptly
following the date that it became a Tax Indemnitee and from time to time thereafter,
so long as it is lawfully able to do so in its reasonable judgment, a properly
completed and executed Internal Revenue Service Form W-8ECI or Form W-8BEN or
Form W-9, or any successor form, and any other applicable form, certificate document
prescribed by the Internal Revenue Service certifying as to such assignee's
entitlement to such exemption or reduced rate with respect to all payments to be made
to such assignee under this Agreement and any new or other forms or certificates
prescribed by the Internal Revenue Service of the United States in the event that a
lapse in time or change in circumstance renders a previous certification obsolete or
inaccurate in any material respect.  Unless the Borrower shall have received forms or
other documents reasonably satisfactory to it establishing that payments under this
Agreement are not subject to United States withholding tax, or are subject to such tax
at a rate under an applicable tax treaty, the Borrower shall, subject to its
obligations under Section 8(a), withhold taxes from such payments at the applicable
statutory rate in the case of payments to or for any Tax Indemnitee, if it is
organized under the laws of a jurisdiction outside the United States.

                  Within 30 days after written request from the Borrower the relevant
Tax Indemnitee, as appropriate, shall, so long as no Default or Event of Default shall
have occurred, execute and deliver to the Borrower such certificates, forms or other
documents which can be furnished consistent with the facts and applicable law, and
which are reasonably necessary for the Tax Indemnitee to obtain a refund of Taxes
indemnified by the Borrower under this Section (which shall be paid to the Borrower
promptly upon receipt).

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

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

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

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

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

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

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

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

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

                                    In the event of a dispute between Borrower and any
                  Tax Indemnitee regarding the applicability of any of the exclusions
                  described in Section 8(b)(i) or Section 8(b)(ii) or the amount of any
                  Indemnified Taxes, Borrower within 30 days of demand therefor shall
                  pay to such Tax Indemnitee any amount of Tax claimed to be owed
                  pursuant to Section 8(b)(i), as the case may be.  Any payment made by
                  Borrower pursuant to the immediately preceding sentence shall be
                  refunded by the relevant Tax Indemnitee if it subsequently is on a
                  final and unconditional basis established that such amount was not
                  required to be paid under this Section 8(b)(i) or (b)(ii) hereof, as
                  the case may be.

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

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

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

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

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

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

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

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

                                    Notwithstanding the foregoing provisions of this
                  Section 8(b)(iii), no Tax Indemnitee shall be obligated to contest a
                  Claim to the United States Supreme Court.  In addition,
                  notwithstanding the foregoing provisions of this Section 8(b), if at
                  any time such Tax Indemnitee waives its right of indemnification
                  under this Section 8(b) in respect of a Claim, or if, after having
                  received payment of indemnification from Borrower hereunder in
                  respect of such Claim, such Tax Indemnitee tenders such payment to
                  Borrower, then Borrower shall not be entitled to contest, or to
                  continue to contest, any such Claim.

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

(v)      Verification.  At the Borrower's written request, the computation of the amount of any
         indemnity payment owed by the Borrower or any amount owed by a Tax Indemnitee to the Borrower
         pursuant to this Section 8 shall be verified and certified by an
         internationally recognized independent public accounting firm mutually
         selected by the Tax Indemnitee and the Borrower.  The costs of such
         verification (including the fee of such public accounting firm) shall be borne
         by the Borrower unless such verification shall result in an adjustment in the
         Borrower's favor of 5% or more of the net present value of the payment as
         computed by such Tax Indemnitee, in which case the costs shall be paid by such
         Tax Indemnitee.  Such determination shall be final and binding, absent
         manifest error on the part of the certified public accountants.  The Tax
         Indemnitees hereby agree to cooperate with the accountants in connection
         therewith, provided, however, notwithstanding anything that may be to the
         contrary in the Operative Documents, in no event shall the Borrower have the
         right to examine any information supplied to the verifying firm or the tax
         returns or books of the Tax Indemnitee in connection with the verifying
         procedures described herein or for any other reason.

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

Section 9.        Covenants of the Borrower.  (a)  Borrower Merger.  For so long as
the Mortgage remains in force, the Borrower shall not consolidate with or merge into or with any other
Person, and not convey, transfer, lease or otherwise dispose of all or substantially all of
its property and other assets to, or acquire all or any substantial part of the
property or other assets or capital stock of (if such acquisition is analogous in
either purpose or effect to a consolidation or merger), any other Person, unless:

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

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

(iii)    Such Person shall have a credit rating (as determined by S&P or Moody's, as applicable) no
         worse than the Borrower's immediately prior to such transaction; and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(h)      Related Operative Documents.  The Borrower shall not amend any Related Operative Document
without the prior written consent of the Administrative Agent which consent shall not be
unreasonably withheld.

Section 10.       The Notes.  (a)  Method of Payment.  Principal and interest and other amounts due
hereunder or under the Notes or in respect hereof or thereof shall be payable in Dollars in
immediately available funds prior to 11:00 a.m., New York, New York time, on the due
date thereof, to the Administrative Agent at the Payment Office and the Administrative
Agent shall, subject to the terms and conditions hereof and of the Mortgage, remit all
such amounts so received by it to each Lender at the account set forth in Schedule I
hereto or to such other account or accounts as such Lender may designate to the
Administrative Agent in writing from time to time, in immediately available funds for
distribution to the Lenders, such payment to be made, in the case of any such
designated account in New York, New York, prior to 1:00 p.m., New York time, on the
due date thereof.  In the event the Administrative Agent shall fail to make any such
payment as provided in the immediately foregoing sentence after its receipt of funds
at the place and prior to the time specified above, the Administrative Agent agrees to
compensate the Lenders for loss of use of funds in a commercially reasonable manner.
All such payments by the Borrower and the Administrative Agent shall be made free and
clear of and without reduction on account of all wire and other like charges.  Prior
to the due presentment for registration of transfer of any Note, the Borrower and the
Administrative Agent may deem and treat the Person in whose name any Note is
registered on the Note Register as the absolute owner of such Note for the purpose of
receiving payment of all amounts payable with respect to such Note and for all other
purposes whether or not such Note shall be overdue, and neither the Borrower nor the
Administrative Agent shall be affected by any notice to the contrary.

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

(c)      Registration, Transfer and Exchange of Notes.  The Administrative Agent agrees with the
Borrower that the Administrative Agent shall keep a register (herein sometimes referred to as the
"Note Register") in which provision shall be made for the registration of Notes and the
registration of transfers of Notes.  Prior to the due presentment for registration of
the transfer of any Note, the Borrower and the Administrative Agent shall deem and
treat the Person in whose name such Note is registered on the Note Register as the
absolute owner of such Note, and the Lender for the purpose of receiving payment of
all amounts payable with respect to such Note, and for all other purposes whether or
not such Note is overdue, and neither the Borrower nor the Administrative Agent shall
be affected by notice to the contrary.  The Note Register shall be kept at the office
of the Administrative Agent or at the office of any successor Administrative Agent,
and the Administrative Agent is hereby appointed "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided.  Subject to Section 24(c)
hereof, upon surrender for registration of transfer of any Note at the Payment Office
and upon delivery by the Administrative Agent to the Borrower of such surrendered
Note, the Borrower shall execute, and the Administrative Agent shall deliver, in the
name of the designated transferee or transferees, one or more new Notes of a like
aggregate principal amount.  At the option of the Lender, its Notes may be exchanged
for other Notes of any authorized denominations, of a like aggregate principal amount,
upon surrender of the Notes to be exchanged at the Payment Office.  Each new Note
issued upon transfer or exchange shall be in a principal amount of at least $5,000,000
(except as may be necessary to evidence the entire outstanding principal amount of a
Note) and dated the Delivery Date.  Whenever any Notes are so surrendered for
exchange, the Borrower shall execute and deliver the Notes which the Lender making the
exchange is entitled to receive.  All Notes issued upon any registration of transfer
or exchange of Notes shall be the valid obligations of the Borrower evidencing the
same respective obligations, and entitled to the same security and benefits under the
Mortgage, as the Notes surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or exchange, shall
(if so required by the Administrative Agent) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Administrative Agent duly
executed by the Lender or its attorney duly authorized in writing, and the
Administrative Agent may require evidence satisfactory to it as to the compliance of
any such transfer with the Securities Act and the securities laws of any applicable
state.  The Administrative Agent shall make a notation on each new Note or Notes of
the amount of all payments of principal previously made on the old Note or Notes with
respect to which such new Note is issued and the date to which interest accrued on
such old Note or Notes has been paid.  The Administrative Agent shall not be required
to register the transfer of or exchange any surrendered Notes as above provided during
the five calendar day period preceding the due date of any payment on such Notes.  The
Administrative Agent shall give the Borrower and the Lenders notice of each transfer
of a Note under this Section 10(c).  Any such transferee of a Note, by its acceptance
of a Note, agrees to the provisions of the Operative Documents applicable to the
Lenders, and shall be deemed to have covenanted to the parties to the Operative
Documents as to the matters covenanted by the original Lender therein; provided that
no transferee of a Note shall be entitled to receive any greater amount pursuant to
Section 10(h) of this Agreement than the transferor of such Note would have been
entitled to receive had no such transfer occurred.

(d)      Mutilated, Destroyed, Lost or Stolen Notes.  If any Note shall become mutilated, destroyed,
lost or stolen, the Borrower shall, upon the written request of the Lender, execute and
deliver in replacement thereof, a new Note in the same principal amount, dated the
date of such Note and designated as issued under the Mortgage.  If the Note being
replaced has become mutilated, such Note shall be surrendered to the Administrative
Agent and the original thereof shall be furnished to the Borrower by the
Administrative Agent.  If the Note being replaced has been destroyed, lost or stolen,
the Lender shall furnish to the Borrower and the Administrative Agent such security or
indemnity as may be reasonably required by them to hold the Borrower and the
Administrative Agent harmless and evidence satisfactory to the Borrower and the
Administrative Agent of the destruction, loss or theft of such Note and of the
ownership thereof; provided, however, that if the Lender is an original party hereto
or an Affiliate thereof or a bank or other financial institution with a net worth (or
capital and surplus, as the case may be) in excess of $500,000,000, the written notice
of such destruction, loss or theft and such ownership and the written undertaking of
the Lender delivered to the Borrower and the Administrative Agent to hold harmless the
Borrower and the Administrative Agent in respect of the execution and delivery of such
new Note shall be sufficient evidence, security and indemnity.

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

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

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

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

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

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

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

(iv)     The amount of any prepayment may not be reborrowed.

(h)      Increased Costs.  (i)  The Borrower shall pay to the Administrative Agent for the account of
each Lender from time to time such amounts as such Lender may determine to be necessary to
compensate such Lender for any increase in actual costs that such Lender determines
are attributable to its making, funding or maintaining its Commitment or the Loans or
any reduction in any amount receivable by such Lender hereunder in respect of any of
its Commitments or the Loans (such increases in costs and reductions in amounts
receivable, including amounts covered by clause (ii) below, being herein called
"Additional Costs"), resulting from any Regulatory Change that:

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

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

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

(ii)     Without limiting the effect of the foregoing provisions of this Section 10(h) (but without
         duplication), the Borrower shall pay to the Administrative Agent for account of any Lender
         from time to time on request such amount as the Lender may determine to be
         necessary to compensate such Lender (or, without duplication, the holding
         company of which such Lender is a subsidiary) for any increase in actual costs
         that it determines are attributable to the maintenance by such Lender (or any
         lending office or such holding company) of its Commitment or Loans hereunder,
         resulting from the implementation of any risk-based capital guideline, reserve
         requirement or other similar requirement hereafter issued by any Governmental
         Authority pursuant to any law or regulation or any interpretation,
         application, directive or request (whether or not having the force of law and
         whether or not failure to comply therewith would be unlawful so long as
         compliance therewith is standard banking practice in the relevant
         jurisdiction) (including, without limitation, implementing at the national
         level any Regulatory Change of the Basel Accord), the effect of which would be
         to reduce the return on investment of assets or equity in respect of its
         Commitments or Loans, including, without limitation, any such reduction
         attributable to any funding arrangements utilized in connection with the
         Loans; such compensation shall include, without limitation, an amount equal to
         any reduction of the rate of return on assets or equity of such Lender (or any
         lending office or such bank holding company) could have achieved but for such
         law, regulation, interpretation, directive or request.  For purposes of this
         Section 10(h)(ii), "Basel Accord" shall mean the proposals for risk-based
         capital framework described by the Basel Committee on Banking Regulations and
         Supervisory Practices in its paper entitled "International Convergence of
         Capital Measurement and Capital Standards" dated July, 1988, it being
         understood that, as at the date hereof, there has been no Regulatory Change of
         the Basel Accord (i.e., "Basel II" has not been adopted).

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

(iv)     If a Lender gives notice of a claim against the Borrower under this Section 10(h),
         the Borrower shall have the right (i) to require such Lender to sell its Notes to an
         institution designated by the Borrower in compliance with Section 24(c)(iii) of this
         Agreement for an amount equal to the outstanding principal amount thereof plus
         accrued interest thereon to the date of sale, together with the Break Amount
         and all other amounts owing thereto, if any, or (ii) to prepay the outstanding
         principal amount of Notes held by such Lender, together with accrued interest
         to the date of such prepayment and Break Amount, if any, and all other amounts
         owing thereto.

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

(vi)     Amounts payable by the Borrower under this Section 10(h) shall be payable by the Borrower
         within 30 days of demand therefor.

Section 11.       Events Of Default; Certain Rights of Administrative Agent.  (a)  Each of the
following events shall constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

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

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

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

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

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

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

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

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

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

(x)      An "Event of Default" shall have occurred and be continuing under (as defined in) the
         Related Credit Agreement or a "Lease Event of Default" shall have occurred and be continuing
         under (and as defined in) any Lease Transaction; or

(xi)     (i)  The Borrower shall default in the payment when due of any principal of or interest on,
         or fail to make a scheduled rental payment on, any of its other indebtedness or any lease
         obligation; or (ii) any event specified in any note, agreement, indenture,
         lease or other document evidencing or relating to any indebtedness or any
         lease obligation shall occur, and, after giving effect to any applicable
         notice and/or grace periods, the effect of such default (in the case of
         clause (i)) or event (in the case of clause (ii)) is to cause, or to permit
         the holder or holders of such indebtedness or lease obligation (or a trustee
         or agent on behalf of such holder or holders) to cause, such indebtedness or
         lease obligation to become due or to be terminated, or to be prepaid in full
         (whether by redemption, purchase, offer to purchase or otherwise), prior to
         its stated maturity; provided that, (x) the outstanding amount of such
         indebtedness and (y) the capitalized amount of such lease obligation shall,
         singly or in the aggregate, be in excess of $10,000,000.

(b)      Certain Rights of Administrative Agent.  (i)  Subject to Section 14(h), in anticipation of
receipt from Borrower of payment of sums due and owing hereunder or under any Operative Document,
the Administrative Agent shall have the option, but shall not be obligated to, advance
to the Lenders on any Interest Payment Date, as provided in Section 10(a) hereof, an
amount equal to that required to be paid to the Lenders by the Borrower on such
Interest Payment Date.

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

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

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

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

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

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

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

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

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

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

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

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

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

(ii)     Upon every such taking of possession, the Administrative Agent may, from time to time,
         at the expense of the Mortgage Estate, make all such expenditures for maintenance, insurance,
         repairs, replacements, alterations, additions and improvements to and of the
         Mortgage Estate, as it may deem proper.  In each such case, the Administrative
         Agent shall have the right to maintain, use, operate, store, lease, control or
         manage the Mortgage Estate and to carry on the business and to exercise all
         rights and powers of the Borrower relating to the Mortgage Estate, as the
         Administrative Agent shall deem best, including the right to enter into any
         and all such agreements with respect to the maintenance, insurance, use,
         operation, storage, leasing, control, management or disposition of the
         Mortgage Estate or any part thereof as the Administrative Agent may determine;
         and the Administrative Agent shall be entitled to collect and receive directly
         all tolls, rents, revenues, issues, income, products and profits of the
         Mortgage Estate and every part thereof.  Such tolls, rents, revenues, issues,
         income, products and profits shall be applied to pay the expenses of the use,
         operation, storage, leasing, control, management or disposition of the
         Mortgage Estate and of conducting the business thereof, and of all
         maintenance, repairs, replacements, alterations, additions and improvements,
         and to make all payments which the Administrative Agent may be required or may
         elect to make, if any, for taxes, assessments, insurance or other proper
         charges upon the Mortgage Estate or any part thereof (including the employment
         of engineers and accountants to examine, inspect and make reports upon the
         properties and books and records of the Borrower), and all other payments
         which the Administrative Agent may be required or authorized to make under any
         provision of the Mortgage, as well as just and reasonable compensation for the
         services of the Administrative Agent pursuant to this Section 12(c)(ii), and
         of all persons properly engaged and employed by the Administrative Agent.

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

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

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

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

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

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

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

                  fourth, so much of such payments or amounts remaining or shall be
         required to pay in full the amounts owing to the Related Lenders and the
         Related Administrative Agent under the Related Operative Documents in
         accordance with Section 12(g) of the Related Credit Agreement; and

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

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

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

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

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

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

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

(D)      that each of the conditions specified in Section 5.02 of the Mortgage with respect to such Replacement
                  Engine have been satisfied; and

(E)      that the Replacement Engine was first placed in service after October 22, 1994.

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

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

Section 14.       The Administrative Agent.  (a)  Appointment, Powers and Immunities.  Each
Lender hereby appoints and authorizes Erste Bank der oesterreichischen Sparkassen AG ("Erste") to
act as its Administrative Agent hereunder and under the other Operative Documents with
such powers as are specifically delegated to the Administrative Agent by the terms of
this Agreement and of the other Operative Documents, together with such other powers
as are reasonably incidental thereto.  The Administrative Agent shall take all actions
delegated to it hereunder as an agent solely for the benefit of the Lenders.  The
Administrative Agent (which term as used in this sentence and in Section 14(c) and the
first sentence of Section 14(f) hereof shall include reference to its Affiliates and
its own and their Affiliates' officers, directors, employees and agents, or either of
them):  (i) shall have no duties or responsibilities except those expressly set forth
in this Agreement and in the other Operative Documents, and shall not by reason of
this Agreement or any other Operative Document be a trustee for the Lenders;
(ii) shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any other Operative
Document, or in any certificate or other document referred to or provided for in, or
received by any of them under, this Agreement or any other Operative Document, or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any Note or any other Operative Document or any other document referred to
or provided for herein or therein or for any failure by the Borrower or any other
Person to perform any of its obligations hereunder or thereunder; (iii) shall not be
required to initiate or conduct any litigation or collection proceedings hereunder or
under any other Operative Document; (iv) shall not be responsible to the Lenders for
any action taken or omitted to be taken by it hereunder or under any other Operative
Document or under any other document or instrument referred to or provided for herein
or therein or in connection herewith or therewith, except for its own gross negligence
or willful misconduct; and (v) may be removed from its role as Administrative Agent by
the Lenders with or without cause and upon notice by Lenders to the Borrower.  The
Administrative Agent shall not assign its interest to any replacement agent who is not
a bank or financial institution with a net worth (or capital and surplus, as the case
may be) in excess of $500,000,000 without the Borrower's prior written consent, such
consent not to be unreasonably withheld.  The Administrative Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence or misconduct of
any such agents or attorneys-in-fact selected by it in good faith.

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

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

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

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

(f)      Resignation or Removal of the Administrative Agent.  Subject to the appointment and
acceptance of a successor Administrative Agent as provided below, and subject further to the
penultimate sentence of this Section 14(f), the Administrative Agent may resign at any
time by giving notice thereof to the Lenders and the Borrower, and the Administrative
Agent may be removed at any time with or without cause by the Majority Lenders.  Upon
any such resignation or removal, the Majority Lenders shall have the right to appoint
a successor Administrative Agent.  If no successor Administrative Agent shall have
been so appointed by the Majority Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent's giving of notice of
resignation or the Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent.  Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative Agent or
shall thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder.  After any retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent, the
provisions of this Section 14 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as the
Administrative Agent.  The Administrative Agent shall not assign its interest to any
replacement agent who is not a bank or financial institution with a net worth (or
capital and surplus, as the case may be) in excess of $500,000,000 without the
Borrower's prior written consent, such consent not to be unreasonably withheld.

(g)      Consents under Operative Documents.  Except as otherwise provided in Section 16(a)
hereof, the Administrative Agent may, with the prior consent of the Majority Lenders (but not
otherwise), consent to any modification, supplement or waiver under any of the
Operative Documents, provided that, without the prior consent of each Lender, the
Administrative Agent shall not (except as provided herein) release any collateral or
otherwise terminate any Lien under any Operative Document providing for collateral
security, or agree to additional obligations being secured by such collateral security
(unless the Lien for such additional obligations shall be junior to the Lien in favor
of the other obligations secured by such Operative Document), except that no such
consent shall be required, and the Administrative Agent is hereby authorized, to
release any Lien covering property which is the subject of a disposition of property
permitted hereunder or to which the Lenders have consented.

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

(i)      Prorata Sharing.  Except to the extent otherwise provided herein (i) each payment or
prepayment of principal of the Loans shall be distributed by the Administrative Agent pro rata in
accordance with each Lender's share of the Loans and (ii) each payment of interest on
the Loans by the Borrower shall be distributed by the Administrative Agent pro rata in
accordance with the amounts of interest due and payable to the Lender.

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

Section 16.       Supplements and Amendments to the Mortgage and Other Operative Documents.
(a)  Instructions of Lenders; Limitations.  (i) At any time and from time to time, at the
request of the Borrower the Administrative Agent (but only on the written direction or consent
of the Majority Lenders) shall execute a supplement to the Mortgage for the purpose of adding
provisions to, or changing or eliminating provisions of, the Mortgage as specified in
such request, provided, however, that, without the consent of each Lender, no such
amendment of or supplement to any such document, or waiver or modification of the
terms of any thereof, shall (i) modify any of the provisions of this Section 16(a) or
the definitions of the terms, "Majority Lenders" or "Operative Documents", contained
herein or in any other Operative Document, (ii) increase the principal amount of any
Note or reduce the amount or extend the time of payment of any amount owing or payable
under any Note or (except as provided in this Agreement) increase or reduce the Break
Amount or interest payable on any Note (except that only the consent of the Lender
holding any Note shall be required for any decrease in any amounts of or the rate of
Break Amount or interest payable on such Note or any extension for the time of payment
of any amount payable under such Note), (iii) reduce, modify or amend any indemnities
in favor of any Lender or in favor of or to be paid by the Borrower or alter the
definition of "Indemnitee" to exclude any Lender (except as consented to by each
Person adversely affected thereby), or (iv) release the Borrower from its obligations
in respect of the payment of the principal and interest then outstanding (or other
amounts payable therewith) or change any of the circumstances under which Stipulated
Insured Amount (or other amounts payable therewith) are payable.  This Section 16(a)
shall not apply to any mortgage or mortgages supplemental hereto permitted by, and
complying with the terms of, Section 13(b).  Notwithstanding the foregoing, without
the consent of each Lender, no such supplement to the Mortgage, or waiver or
modification of the terms thereof or of any other agreement or document shall
expressly permit the creation of any Lien on the Mortgage Estate or any part thereof,
except as therein expressly permitted, or deprive any Lender of the benefit of the
Lien of the Mortgage on the Mortgage Estate, except as provided in Sections 13(a) and
13(b) hereof or in connection with the exercise of remedies under Section 12 hereof.
Except as provided in this Section 16(a), the Administrative Agent shall not amend,
supplement or waive any of the terms of the Mortgage or this Agreement.

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

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

Section 17.       Notices.  All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto shall be in writing and shall
be personally delivered or sent by registered or certified mail, postage prepaid, or by facsimile,
or by prepaid courier service, and shall be effective upon receipt.

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

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

Section 18.       Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  (a)  This
Agreement shall in all respects be governed by, and construed in accordance with, the law of the
State of New York, including all matters of construction, validity and performance.

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

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

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

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

Section 19.       Costs and Expenses.  The Borrower shall reimburse the Administrative
Agent and the Lenders for all reasonable out-of-pocket expenses incurred by it in connection
with the negotiation and preparation of this Agreement and the other Operative Documents
(including the reasonable fees and expenses of its special counsel); provided that, if
a Delivery Date fails to occur due to the fault of the Administrative Agent or any
Lender (including the failure to obtain any necessary credit approval), the
Administrative Agent will be responsible for its own costs and expenses (including
legal fees and expenses); which costs and expenses shall be limited, in the case of
the failure of the second Delivery Date to occur, to the costs and expenses incurred
solely in connection with such second Delivery Date.  The Borrower is also liable for
all of its own out-of-pocket expenses incurred in connection with the negotiation,
preparation and the carrying out of its obligations under this Agreement and the other
Operative Documents (including the reasonable fees and expenses of all of its special
counsel).

Section 20.       Section 1110 Compliance.  Notwithstanding any provision herein or elsewhere
contained to the contrary, it is understood and agreed among the parties hereto that the transactions
contemplated by this Credit Agreement, and the other Operative Documents are expressly
intended to be, shall be and should be construed so as to be, entitled to the full
benefits of 11 U.S.C. Section 1110, as amended from time to time, and any successor
provision thereto.

Section 21.       Confidentiality.  Except to the extent otherwise required by applicable
law or, as required to be filed publicly with the Securities and Exchange Commission, or unless
the Borrower, the Lenders and the Administrative Agent shall otherwise consent in writing, each
party to this Agreement agrees to maintain the confidentiality of this Agreement (and
all drafts hereof and documents ancillary hereto) in its communications with third
parties other than any Indemnified Party and not to disclose, deliver or otherwise
make available to any third party (other than its directors, officers, employees,
rating agencies, accountants or counsel or to bank examiners or other regulatory
personnel) the original or any copy of all or any part of this Agreement (or any draft
hereof and documents ancillary hereto) except to an Indemnified Party.

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

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

Section 22.       Covenants of the Administrative Agent and the Lenders.  (a)  Quiet Enjoyment.
The Administrative Agent and each Lender each agrees that neither it nor any of its
Affiliates, nor anyone acting on behalf of any such Person will interfere in the
Borrower's quiet enjoyment of the Aircraft so long as no Event of Default shall have
occurred and be continuing.

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

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

Section 23.       Leveraged Lease Financing.  Notwithstanding any provision herein or
elsewhere in the Operative Documents to the contrary notwithstanding, the Borrower may elect,
prior to the borrowing for the Aircraft contemplated by Section 2(a) hereof, to finance the
Aircraft as a leveraged lease financing and the Lenders agree to such utilization of
their Commitments for such purpose, subject to the satisfaction of the following terms
and conditions:

(a)      the Borrower shall provide at least 30 days' advance notice of its intention to effect such a
financing, which notice shall identify the equity investor (the "Owner Participant") and owner
trustee ("Lessor");

(b)      the identified Owner Participant shall have a tangible net worth of at least $50,000,000 (or
have its obligations guaranteed by a parent corporation with such a tangible net worth level),
shall be an active participant in the aircraft leveraged lease industry and the
identity of which (as well as that of the Lessor) shall be reasonably satisfactory to
the Lenders;

(c)      documentation for such transaction shall be in form and substance satisfactory to the Lenders
and shall:

(i)      contain terms and conditions concerning the Borrower and the Aircraft no less favorable to the
         Lenders than those binding on the Borrower contained in the Operative Documents; and

(ii)     contain debt/equity provisions as are consistent with market practice and reasonably satisfactory
         to the Lenders, but shall not, without the consent of the Lenders, contain any swap
         breakage cap or other limitation relating to any swap hedging transaction or
         the ability of the Lenders to recover any swap hedging transaction or the
         ability of the Lenders to recover any swap breakage losses ahead of recoveries
         by the Owner Participant of its investment;

(d)      the economic substance (e.g., loan amount, interest rate, payment periodicity, maturity date,
amortization profile and LIBOR) of the leveraged lease debt funded by the Lenders
shall be the same as that evidenced by the Notes under the Mortgage; provided that

(i)      the level of indebtedness may be reduced in part; and

(ii)     the amortization profile on the leveraged lease debt may be based on an optimized leveraged
         lease basis so long as (x) the final maturity is no later than 12 years following the
         Delivery Date, (y) the average life of such debt does not exceed 8 years
         (computed as of the Delivery Date) and (z) such amortization profile shall
         otherwise be mutually agreed by the Borrower and the Lenders on a good faith
         basis; and

(e)      the Borrower shall pay to the Lenders (i) the reasonable fees and expenses of their special
counsel in connection with the negotiation, drafting (by such special counsel of the related
indenture), execution and delivery of the documentation utilized to effect such
leveraged lease and (ii) any reasonable out-of-pocket (including travel) costs and
expenses of the Administrative Agent as a single representative for all of the Lenders
incurred in connection with the leveraged lease.

Section 24.       Miscellaneous.  (a)  The representations, warranties, indemnities and
agreements of the Borrower, the Administrative Agent and the Lenders and each party's obligations under
any and all thereof, shall survive the expiration or other termination of this
Agreement or any other Operative Document, except as expressly provided herein or
therein.

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

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

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

(iii)    Subject to the provisions of clause (iv) below, any Lender may assign its Notes, in whole or in
         part, as provided hereunder and in Section 10(c) hereof, to any Person (including an
         Affiliate, another lender or other third party) which assignment shall be
         effected pursuant to an agreement substantially in the form of Exhibit B
         hereto.  In addition, any Lender may, with the prior written consent of the
         Borrower, assign, in whole or in part, its Commitment in respect of the
         Aircraft to any other Person capable of meeting its funding obligation in
         respect of the assigned Commitment, which assignment shall be effected
         pursuant to an agreement substantially in the form of Exhibit B hereto,
         appropriately modified to relate to the assignment of a Commitment.  Effective
         upon the assignment of any Commitment in accordance with this Section 24(c),
         such Lender shall be relieved of its obligations in respect of such Commitment
         to the extent the assignee thereof shall have become obligated in respect
         thereof.

(iv)     Any assignment or transfer by such Lender hereunder shall be subject to the following conditions:

(A)      The transferring Lender shall have first obtained the prior written consent of the Borrower, which
                  consent shall not be unreasonably withheld (provided that no such
                  consent shall be required if an Event of Default has occurred and is
                  continuing), unless the proposed transferee is a Permitted Transferee
                  in which case no such consent of the Borrower shall be required;

(B)      The transferring Lender shall send the Borrower a written notice of such proposed transfer, setting
                  forth the name and address of the proposed transferee, the amount of
                  the transferring Lender's Notes proposed to be transferred and the
                  proposed date on which such transfer will occur.  Other than in
                  respect of a transfer to a Permitted Transferee, Borrower will then
                  have three (3) Business Days to request such additional information
                  as it may reasonably require regarding such proposed transferee, or,
                  if no such additional information is requested and such proposed
                  transfer satisfies the other requirements of this Section 24(c), the
                  Borrower shall be deemed to have consented to such proposed
                  transfer.  In the event that the Borrower requests additional
                  information, it shall have three (3) Business Days from the time such
                  additional information is provided to reject such proposed transfer,
                  failing which, subject to satisfaction of the other requirements of
                  this Section 24(c), the Borrower shall be deemed to have given its
                  consent;

(C)      as a result of any assignment or transfer, there shall be no more than three (3) lenders in the
                  aggregate;

(D)      no such assignment or transfer shall be in an amount less than $5,000,000;

(E)      so long as no Event of Default shall have occurred or be continuing, no assignment or transfer shall, at
                  the time of such assignment or transfer, increase the obligations
                  (including, without limitation, in respect of withholding taxes or
                  increased costs) of the Borrower under this Agreement or the
                  Mortgage; and

(F)      except as otherwise set forth herein, no participant in any Loan assigned or transferred hereunder
                  shall have any rights directly against the Borrower.

                  In the event a Lender, in accordance with this Section 24(c), assigns
its interest in any Loan, together with its interest herein and in the other Operative
Documents, in each case to the extent relating to such Loan, then all references to
"the Lender" hereunder shall mean and refer to such assignee to the extent of such
assignment, and any subsequent assignment by such assignee shall have a corresponding
effect.

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

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

(vi)     All costs and expenses in connection with any assignment or transfer permitted by this Section 24(c)
         (including any legal fees of counsel to the parties to the Operative
         Documents) shall be borne by the relevant transferring/assigning lender,
         except in the case of an assignment or transfer that is effected at the
         request of the Borrower or if an Event of Default shall have occurred and be
         continuing, in which case such costs and expenses (including reasonable legal
         fees) shall be borne by the Borrower.

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

Section 25.       Terms of Fixed Rate Setting.  (a)  The Lenders, at the Borrower's
direction, shall cause the Applicable Rate for the Loan to be a fixed rate effective for the period
commencing on a date selected by Borrower during the term of the Notes (the "Swap Effective Date")
and ending on the final scheduled maturity date of the Notes issued in respect of the
Loan (the "Swap Period"); provided that if the proposed Swap Effective Date is not an
Interest Payment Date, the Borrower shall be liable for any LIBOR Break Amount.

(b)      Subject always to Section 25(h) below, if the Borrower desires the Applicable Rate to
become a Fixed Rate, it shall give the Lenders at least five Business Days' advance notice of such
intention. By 9:30 a.m. (New York City time) on the date three Business Days prior to
the Swap Effective Date, each Lender shall quote to the Borrower the fixed rate of
interest at which such Lender would be willing to lend to the Borrower.  No later than
two minutes after receipt of such quotation, the Borrower shall inform each Lender
whether it accepts or rejects such fixed rate quotation.  If such fixed rate quotation
is accepted, such quoted fixed rate (the "Fixed Rate") shall be the Applicable Rate
hereunder. Each Lender agrees to provide its quotation of a Fixed Rate in accordance
with market practice based upon the Notional Swap Transaction and as though such
Lender were the floating rate payor thereunder.

(c)      In the event the Applicable Rate is the Fixed Rate, on the date of (i) any prepayment of the
Notes pursuant to the Mortgage or this Agreement (ii) any acceleration of the Notes pursuant
to the Mortgage or this Agreement, each Lender will provide a quotation of the Swap
Break Amount, as it reasonably determines in good faith in accordance with the
definition thereof, representing the termination value of the Notional Swap
Transaction  by 12:00 noon New York City time on such date (the "Termination Date").

(d)      Each Lender agrees that, so long as no Special Default or Event of Default shall have
occurred and be continuing, it shall promptly pay to the Borrower at such account as the
Borrower may specify any Swap Breakage Gain in respect of the Notes, except that it may first
deduct therefrom any amounts then due to it (or, if acting as a swap agent, any
Lender) under the Operative Documents and apply any amount so retained to the
satisfaction thereof.  At such time as there shall not be continuing any such Special
Default or Event of Default, such amount shall be paid to the Borrower.

(e)      Upon the request of the Borrower, each Lender shall provide to the Borrower a good faith
estimate of the Swap Breakage Loss or Swap Breakage Gain, as the case may be, related to the Notes, in
connection with the occurrence, or anticipated occurrence, of any event contemplated
by the Operative Documents that might give rise to an obligation to pay Swap Breakage
Loss or Swap Breakage Gain.

(f)      Upon determination by a Lender of any Swap Breakage Loss or Swap Breakage Gain payable to or
by it, as the case may be, such Lender will provide to the Borrower a certificate, certifying
such Swap Breakage Loss or Swap Breakage Gain, which certified amount shall be
conclusive absent manifest error.  Any Swap Breakage Loss or Swap Breakage Gain
payable pursuant to the terms of the Operative Documents shall be payable in Dollars.

(g)      Each Lender agrees to provide its quotation of Swap Break Amount based upon the Notional Swap
Transaction and as though such Lender were the floating rate payor thereunder.

(h)      The Lenders shall not be obligated to cause the Applicable Rate for the Loans to be a fixed
rate on any date when the proposed fixed rate for the Loans exceeds either (x) 6.7% per annum or
(y) a rate equal to 1.2% over the Indicative Fixed Rate; it being understood that if
the Borrower requests to have the Applicable Rate fixed but the Lenders are not
obligated under this subsection (h) to comply with the Borrower's request, the
Borrower's right to request to have the Applicable Rate fixed will remain in full force
and effect throughout the remaining term of the Loan.

(i)      References in this Section 25 to any Lender shall, to the extent appropriate, mean such
Lender in its own right or acting through a swap agent.

                                [signature page follows]






                                                                                [Credit Agreement [Frontier/2002-B]]

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

                                                           FRONTIER AIRLINES, INC.,
                                                           Borrower


                                                           By:________________________
                                                                Name:
                                                                Title:


                                                           ERSTE BANK DER
                                                           OESTERREICHISCHEN SPARKASSEN
                                                           AG,
                                                           Administrative Agent

                                                           By:________________________
                                                                Name:
                                                                Title:




                                                           By:
                                                                Name:
                                                                Title:

                                                           LENDERS:


                                                           ERSTE BANK DER
                                                           OESTERREICHISCHEN SPARKASSEN AG


                                                           By:________________________
                                                                Name:
                                                                Title:


                                                           By:
                                                                Name:
                                                                Title:


                                                           LANDESBANK HESSEN-THURINGEN
                                                           GIROZENTRALE


                                                           By:________________________
                                                                Name:
                                                                Title:


                                                           By:________________________
                                                                Name:
                                                                Title:






                                                                               [Credit Agreement [Frontier/2002-B]]
                                       Schedule I

                              Notice & Account Information

Lenders

Notice to:

Erste Bank der oesterreichischen Sparkassen AG
68 Cornhill
London EC3V 3QE
England
Attention:  Stewart Tanner

Telephone: +(44-207) 621-5013
Telecopier: +(44-207) 283-7142

Payment Instructions

Bank Name:  Bank of America NT & SA
SWIFT Code:  *
Account No.:  *
Account Name:  Erste Bank der oesterreichschen Sparkassen AG
SWIFT Code:  *
ABA No.:  *
Reference: Frontier Airlines 2002-B


Landesbank Hessen-Thuringen Girozentrale
Main Tower
Neue Mainzer Strasse 52-58
60311 Frankfurt am Main
Germany
Attention:  Mr. Axel Zipser, Corporate/Asset Finance

Telephone:  +(49-69) 9132-4437
Telecopier:  +(49-69) 9132-4392

Payment Instructions

Bank Name:  Citibank NA, New York
Account No.:  *
Account Name:  Landesbank Hessen-Thuringen
SWIFT Code:  *
Reference:  Frontier Airlines 2002-B



                                      Schedule II

                            Participation in Original Amount

                [All amounts are expressed in millions of U.S. Dollars]


                                     % of
  Lender                        Original Amount              Commitment 

Erste Bank der
oesterreichischen
Sparkassen AG                         *%                         $*

Landesbank Hessen-
Thuringen Girozentrale                *%                         $*                                                                               ommitmentr                      % of





                                                                                [Credit Agreement [Frontier/2002-B]]

                                       EXHIBIT A

                                form of borrowing notice

                                [LETTERHEAD OF BORROWER]


                                                                  ---------------------,
                                                                  2002

Erste Bank der oesterreichischen Sparkassen AG
68 Cornhill
London
EC3V 3QE
England

Landesbank Hessen-Thuringen Girozentrale
Main Tower
Neue Mainzer Strasse 52-58
60311 Frankfurt am Main
Germany

Ladies and Gentlemen:

         We refer to the Credit Agreement [Frontier/2002-B], dated as of July 16, 2002
(the "Credit Agreement", which term, if such agreement shall not have been executed
and delivered by the parties thereto prior to the date hereof, shall mean the most
recently circulated draft thereof), among Frontier Airlines, Inc., as borrower (the
"Borrower"), the lenders that are party thereto identified under the caption "Lenders"
on the signature pages thereto or that, pursuant to Section 24(c) thereof, shall
become a "Lender" thereunder (individually, a "Lender" and, collectively, the
"Lenders") and Erste Bank der oesterreichischen Sparkassen AG, as Administrative Agent
on behalf of the Lenders.  Capitalized terms used but not defined in this Borrowing
Notice shall have the meaning given such terms (whether by reference to another
document or otherwise) in the Credit Agreement.

         In accordance with Section 2 of the Credit Agreement, Borrower hereby requests
that a Loan be advanced by the Lenders on __________________ (the "Closing Date").
The Borrower elects Option [A/B].  The Borrower advises that the Loan will initially
bear interest at a [floating rate/fixed rate].  The Lenders are directed to pay
$__________ of the proceeds of the Commitment by wire transfer to the following
account:

                                    Credit Lyonnais
                                      New York, NY
                                        ABA #: *
                                      Account #: *
                              Attention: William McIlwain
                              Reference: Frontier MSN 1781

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

                                                              Very truly yours,


                                                           FRONTIER AIRLINES, INC.


                                                           By:________________________
                                                                Name:
                                                                Title






                                                                               [Credit Agreement [Frontier/2002-B]]

                                       EXHIBIT B

                              FORM OF ASSIGNMENT AGREEMENT

         ASSIGNMENT AGREEMENT [Frontier/2002-B] dated as of __________ __, ____ between
________________________________ (the "Assignee") and _____________________________
(the "Assignor").

                                        RECITALS

         WHEREAS, the Assignor is the holder of the Note No. ____ dated __________ __,
____ (the "Assignor's Note") issued under the Credit Agreement [Frontier/2002-B] dated
as of July 16, 2002 (the "Credit Agreement"), between Frontier Airlines, Inc., as
Borrower, the lenders that are party thereto identified under the caption "Lenders" on
the signature pages thereto or that, pursuant to Section 24(c) thereof, shall become a
"Lender" thereunder (individually, a "Lender" and, collectively, the "Lenders") and
Erste Bank der oesterreichischen Sparkassen AG, as Administrative Agent;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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






                                                                               [Credit Agreement [Frontier/2002-B]]
                                                       EXHIBIT B

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

                                                           [ASSIGNEE]

                                                           By:________________________
                                                           Name:
                                                           Title:

                                                           Address for Notices:

                                                           Wire Instructions:


                                                           [ASSIGNOR]

                                                           By:________________________
                                                           Name:
                                                           Title:

                                                           Address for Notices:

                                                           Wire Instructions:








                                                                               Exhibit A

                                                                 to Assignment Agreement

                           Request for Note and Registration

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


To:      Erste Bank der oesterreichischen Sparkassen AG,
         as Administrative Agent

Ladies and Gentlemen:

         We refer to the assignment by ____________________________ (the "Assignor"),
of certain of its rights and obligations with respect to Note No. ______ in the
principal amount of $____________ (the "Assignor's Note") to
___________________________ (the "Assignee"), pursuant to an Assignment Agreement
[Frontier/2002-B] dated as of _______ __, ____ between the Assignor and the Assignee.
Capitalized terms not otherwise defined herein shall have the meanings assigned
thereto in such Assignment Agreement.  The Assignor hereby delivers the Assignor's
Note to Erste Bank der oesterreichischen Sparkassen AG, in its capacity as
Administrative Agent.  The Assignor requests Borrower to issue to (i) the Assignee a
new Note (the "New Note") in the principal amount of $____________ and (ii) to the
Assignor a new Note (the "Assignor's New Note") in the principal amount of
$______________, each, with a [Delivery Date] issue date.

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

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

                                                           Very truly yours,

                                                           [ASSIGNOR]

                                                           By:________________________
                                                           Name:
                                                           Title:


                                                           [ASSIGNEE]

                                                           By:________________________
                                                           Name
                                                           Title:

                                                           Address for Notices:

                                                           Wire Instructions
Accepted and Agreed

ERSTE BANK DER
OESTERREICHISCHEN SPARKASSEN AG,
as Administrative Agent


By:_______________________
Name:
Title:





                                                                                [Credit Agreement [Frontier/2002-B]]
                                         EXHIBIT C

                           Terms of Notional Swap Transaction

            (capitalized terms used herein without definition shall have the meanings
    assigned thereto in the Definitions (as defined in the definition of Swap Form))

                  Trade Date:                      __________ __, ____1

                  Effective Date:                  __________ __, ____2

                  Termination Date:                __________ __, 2___3, subject to
                                                   adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention.

                  Notional Amount:                 The Notional Amount in effect for a
                                                   Calculation Period shall be the
                                                   amount set forth in Schedule I
                                                   attached hereto opposite the
                                                   applicable date beginning such
                                                   Calculation Period; provided,
                                                   however, that such dates are subject
                                                   to adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention only with respect to
                                                   determining the Floating Payments.
                  Fixed Payments

                  Fixed Rate Payer                 Party B. [Lender]

                  Fixed Rate
                  Payment Dates:                   The __ of every _________,
                                                   __________, ____________ and
                                                   ________4, beginning __________ __,
                                                   ____5 and ending on the Termination
                                                   Date, payable in arrears, subject to
                                                   adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention.

                  Fixed Rate
                  Period End
                  Dates:                           The __ of every __________,
                                                   ___________, ___________ and
                                                   ________6, beginning __________ __,
                                                   ____7 and ending on the Termination
                                                   Date (no adjustment of Period End
                                                   Dates).

                  Fixed Rate:                      _____%.8

                  Fixed Rate
                  Day Count
                  Fraction:                        30/360.

                  Compounding:                     Inapplicable.

                  Floating Payments

                  Floating
                  Rate Payer:                      Party A. [Lender or Swap Agent]

                  Floating Rate
                  Payment Dates:                   The ___ of every __________,
                                                    _________, __________ and _________9,
                                                   beginning __________ __, ____10 and
                                                   ending on the Termination Date,
                                                   payable in arrears, subject to
                                                   adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention.

                  Floating Rate
                  Option:                          USD - LIBOR - BBA (except for first
                                                 Calculation Period).

                  Floating Rate for
                  first Calculation
                  Period:                          ___%11 (exclusive of Spread)

                  Spread:                          [1.65%][1.70%] - Option A/B

                  Designated                       [Except for first Calculation Period,
                  Maturity:                        three months for each Calculation
                                                   Period.]

                  Floating Rate                    Actual/360.
                  Day Count
                  Fraction:

                  Floating Rate                    Each Floating Rate Payment Date, exclusive
                  Reset Dates:                     of the last Floating Rate Payment Date.

                  Compounding:                     Inapplicable.

                  Business Day for                 London
                  Rate Setting:

                  Business Day for                 New York, Denver and London
                  Payments:






                                                                               [Credit Agreement [Frontier/2002-B]]
                                                       EXHIBIT C




                                       SCHEDULE I

                                         TO THE

                       CONFIRMATION OF THE RATE SWAP TRANSACTION

                               DATED __________ __, ____


               DATE12                                NOTIONAL AMOUNT13

EX-10

                                                             EXECUTION COPY












                                          MORTGAGE AND SECURITY AGREEMENT
                                                 [Frontier/2002-B]

                                                    Dated as of

                                                   July 16, 2002

                                                      between

                                             FRONTIER AIRLINES, INC.,
                                                     Borrower

                                                        and

                                  ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG,
                                 as Administrative Agent on behalf of the Lenders

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

                                      One (1) Airbus Model A319-111 Aircraft

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






                                                 Table of Contents

                                                                                                               Page

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

         Section 1.01          Definitions.......................................................................3
         Section 1.02          Certain Interpretive Matters.....................................................13

Article II        THE NOTES.....................................................................................14

         Section 2.01          Form of Notes....................................................................14
         Section 2.02          Terms of Notes...................................................................18
         Section 2.03          Termination of Interest in Mortgage Estate.......................................19

Article III       REGISTRATION AND MAINTENANCE; OPERATION; POSSESSION AND LEASES; INSIGNIA......................19

         Section 3.01          Registration and Maintenance.....................................................19
         Section 3.02          Operation........................................................................19
         Section 3.03          Possession and Leases............................................................20
         Section 3.04          Insignia.........................................................................22

Article IV        REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS....................22

         Section 4.01          Replacement of Parts.............................................................22
         Section 4.02          Pooling of Parts; Temporary Replacement Parts....................................23
         Section 4.03          Alterations, Modifications and Additions.........................................23
         Section 4.04          Improvements Owned by Others.....................................................24
         Section 4.05          Substitution of Engines..........................................................24

Article V         LOSS, DESTRUCTION, REQUISITION, ETC...........................................................24

         Section 5.01          Event of Loss With Respect to the Aircraft.......................................24
         Section 5.02          Event of Loss With Respect to an Engine..........................................24
         Section 5.03          Application of Payments From Governmental Authorities for Requisition of
                               Title, Etc.......................................................................25
         Section 5.04          Requisition for Use of the Aircraft by the United States Government or
                               the Government of Registry of the Aircraft.......................................26
         Section 5.05          Application of Payments During Existence of Special Defaults or Events of
                               Default..........................................................................26

Article VI        INSURANCE.....................................................................................26

         Section 6.01          Bodily Injury Liability and Property Damage Liability Insurance..................26
         Section 6.02          Insurance Against Loss or Damage to the Aircraft.................................27
         Section 6.03          Reports, Etc. ...................................................................28
         Section 6.04          Self-Insurance...................................................................29
         Section 6.05          Additional Insurance by Borrower.................................................29
         Section 6.06          Indemnification by Government in Lieu of Insurance...............................29
         Section 6.07          Application of Payments During Existence of a Special Default or an Event
                               of Default.......................................................................30
         Section 6.08          Terms of Insurance Policies......................................................30

Article VII       MISCELLANEOUS.................................................................................31

         Section 7.01          Termination of Mortgage..........................................................31
         Section 7.02          No Legal Title to Mortgage Estate in the Lenders.................................32
         Section 7.03          Sale of Aircraft by Administrative Agent is Binding..............................32
         Section 7.04          Mortgage for Benefit of Administrative Agent and Lenders.........................32
         Section 7.05          No Action Contrary to Borrower's Rights; Quiet Enjoyment.........................32
         Section 7.06          Notices..........................................................................32
         Section 7.07          Administrative Agent's Right to Perform for Borrower.............................33
         Section 7.08          Severability.....................................................................33
         Section 7.09          No Oral Modifications or Continuing Waivers......................................33
         Section 7.10          Successors and Assigns...........................................................33
         Section 7.11          Headings.........................................................................33
         Section 7.12          GOVERNING LAW; COUNTERPARTS......................................................33









                                                                [Mortgage and Security Agreement [Frontier/2002-B]]

                                 MORTGAGE AND SECURITY AGREEMENT [Frontier/2002-B]

         MORTGAGE AND SECURITY AGREEMENT [Frontier/2002-B], dated as of July 16, 2002, between FRONTIER AIRLINES,
INC., a Colorado corporation (the "Borrower"), and ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG, a bank
organized under the laws of Austria, as Administrative Agent on behalf of the Lenders (together with its
successors hereunder in such capacity, the "Administrative Agent").

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

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

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

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

                                               -- GRANTING CLAUSE --

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

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

         2.       the FAA Bill of Sale and Warranty Bill of Sale issued by Seller to the Borrower in respect of
the Aircraft;

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

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

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

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

         7.       all proceeds of any of the foregoing.

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

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

                                                HABENDUM CLAUSE

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

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

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

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

                                              Article I

                                   DEFINITIONS AND INTERPRETIVE MATTERS

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

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

         "Additional Insured(s)" means, collectively, the Administrative Agent and the Lenders.

     "Administrative Agent" means Erste Bank der oesterreichischen Sparkassen AG, solely in its capacity as
Administrative Agent on behalf of the Lenders, and any successor thereto in such capacity.

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

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

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

         "Applicable Margin" means, with respect to Option A, 1.65% per annum, or with respect to Option B, 1.70%
per annum.

         "Applicable Rate" means, with respect to each Loan for any Interest Period, a rate per annum equal to
(a) until clause (b) hereof shall be applicable, LIBOR for such Interest Period plus the Applicable Margin
(calculated on the basis of a year of 360 days and actual number of days elapsed) and (b) from and after the date
the Fixed Rate shall have become effective following its determination in accordance with Section 25(a) of the
Credit Agreement, the Fixed Rate (calculated on the basis of a year of 360 days consisting of 12 30-day months).

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

         "Balloon Amount" means, with respect to Option A, $7,200,000, and with respect to Option B, $4,800,000.

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

        "Break Amount" means, as at any date of determination, the amount, if any, equal to the sum of LIBOR
Break Amount and, during any Fixed Rate Period, Swap Breakage Loss.

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

         "Business Day" means any day other than a Saturday or Sunday or a day on which commercial banks are
required or authorized to close in New York, New York, Frankfurt, Germany, and Denver, Colorado and, if such day
relates to the advance of a Loan, the determination of any Interest Payment Date, any payment or prepayment of a
Loan or setting of the Applicable Rate, or any notice in respect of any thereof, any day on which Dollar
transactions are effected in the eurodollar markets in London, England.

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

         "Commitment" has the meaning specified in Section 2(a) of the Credit Agreement.

         "Consent and Agreement" means the Manufacturer Consent and Agreement [Frontier/2002-B] dated as of the
Delivery Date of the Seller in respect of the Aircraft.

         "Credit Agreement" means that certain Credit Agreement [Frontier/2002-B], dated as of the date hereof,
 among the Borrower, the Lenders and the Administrative Agent, as such Credit Agreement may be amended or
supplemented from time to time pursuant to the applicable provisions thereof.

         "Delivery Date" means the date of the initial Mortgage Supplement, which date shall be the date the
Lenders advance the Loan to the Borrower.

         "Default" means any event which, with the giving of notice or the lapse of time or both if not timely
cured or remedied, would become an Event of Default.

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

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

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

         "Engine Consent and Agreement" means the Engine Consent and Agreement [Frontier/2002-B] dated as of the
 Delivery Date of the Engine Manufacturer in respect of the Aircraft.

         "Engine Manufacturer" means CFM International, Inc.

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

         "Event of Default" has the meaning specified in Section 11(a) of the Credit Agreement.

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

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

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

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

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

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

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

         "Final Maturity Date" means the final Interest Payment Date.

        "Fixed Rate" means the Applicable Rate if the Applicable Rate is determined in accordance with
 clause (b) of the definition thereof.  The Fixed Rate shall be specified in a Mortgage Supplement.

         "Fixed Rate Period" means any period during which the Applicable Rate is determined by reference to the
Fixed Rate.

         "Floating Rate Period" means the period during which the Applicable Rate is determined by reference to
clause (a) of the definition thereof.

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

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

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

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

         "Indemnified Party," "Indemnitee," or "Indemnitees" means, collectively, the Administrative Agent, the
 Lenders and each of their respective successors, permitted assigns, directors, officers, and employees.

         "Indicative Fixed Rate" means an indicative fixed rate for the Loans notified by the Administrative
Agent to the Borrower on the Delivery Date obtained by the Administrative Agent from Merrill Lynch or another
counterparty reasonably acceptable to the Borrower.

         "Interest Payment Date" means the first Quarterly Date following the Delivery Date and each of the
 thirty-nine (39) (if the Borrower has selected Option A) or forty-seven (47) (if the Borrower has selected
Option B) Quarterly Dates thereafter; provided that, if (x) except during the Fixed Rate Period, any such date
shall not be a Business Day, then the relevant Interest Payment Date shall be the next succeeding Business Day
unless by virtue of such extension such date would fall in the next succeeding calendar month, in which case the
relevant Interest Payment Date shall be the next preceding Business Day and (y) there shall be no such
corresponding day in any such month, then the relevant Interest Payment Date shall be the last Business Day of
such month.

         "Interest Period" means the period from and including the Delivery Date to, but excluding, the initial
Interest Payment Date, and thereafter, each successive three-month period from and including an Interest Payment
Date to, but excluding, the next succeeding Interest Payment Date.

         "Lease Transaction" means a leveraged leasing transaction involving the Related Aircraft as contemplated
by Section 2(d) of the Related Credit Agreement.

         "Lenders" means the lenders that are party to the Credit Agreement identified under the caption
"Lenders" on the signature pages thereto or that, pursuant to Section 24(c) thereof, shall become a "Lender"
thereunder, together with their respective successors and permitted transferees and assigns.

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

         "LIBOR" means, in relation to the initial Interest Period, the Lenders' cost of funds for such Interest
Period, and in relation to any subsequent Interest Period, the rate (rounded upwards to the nearest 1/16 of 1%)
for deposits in United States Dollars for that period quoted on Telerate page 3750 (British Bankers' Association
Interest Settlement Rates) (or such other page as may replace such Page 3750 on such system) as being the rate at
which deposits in United States Dollars are offered in the London Interbank Market for the same or substantially
similar period at, or about, 11:00 a.m. (London time) on the second London Business Day before the first day of
such Interest Period on which any amount is required to be funded for the purpose of this Agreement, or if, on
such date, no rate is displayed, LIBOR shall mean the rate for deposits of an amount comparable to the Loan in
United States Dollars for that period determined by the Administrative Agent to be the arithmetic mean of the
rates offered by Citibank N.A., Barclays Bank PLC and Erste Bank der oesterreichischen Sparkassen AG at 11:00
a.m. London time on the second London Business Day before the first day of the relevant period for that relevant
period.

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

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

         "Loan" means the money borrowed on the Delivery Date by the Borrower from the Lenders.

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

         "Majority Lenders" means, as of any date of the determination thereof, Lenders holding at least 66?% of
the aggregate outstanding principal amount of all Loans and Commitments on a combined basis and following the
termination of the Commitments, Lenders holding at least 66?% of the aggregate outstanding principal amount of
all Loans not yet reimbursed by the Borrower.

         "Manufacturer" means Airbus G.I.E., in its capacity as manufacturer of the Aircraft, and its successors
 and assigns.

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

         "Mortgage" and "this Mortgage" mean this Mortgage and Security Agreement [Frontier/2002-B], including
  any Mortgage Supplement and each other supplement from time to time entered into pursuant hereto.

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

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

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

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

         "Notional Swap Transaction" means a hypothetical interest rate exchange transaction, the economic terms
of which are set forth on Exhibit C to the Loan Agreement, governed by the terms of the Swap Form.

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

         "Option A" means a Loan with a term of approximately ten years.

         "Option B" means a Loan with a term of approximately twelve years.

         "Original Amount" means, with respect to a Note, the stated original amount (that is, principal) of such
 Note, and, with respect to all the Notes, means the aggregate stated original amounts of such Notes, which shall,
on the Delivery Date, equal the amount of the Loan.

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

         "Past Due Rate" means (i) during the Floating Rate Period, a per annum rate equal to the Applicable Rate
plus 2.0% calculated on the basis of a year of 360 days and actual number of days elapsed and (ii) during the
Fixed Rate Period, a per annum rate equal to 2.0% plus the higher of (x) the Applicable Rate and (y) LIBOR plus
the Applicable Margin.

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

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

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

         "Permitted Transferee" means, with respect to any Lender, (i) an Affiliate of such Lender, (ii) another
Lender or its Affiliate or, (iii) any other bank or financial institution.

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

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

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

         "Quarterly Date" means each [September 15, December 15, March 15 and June 15].

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

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

         "Related Administrative Agent" means Landesbank Schleswig-Holstein Girozentrale.

         "Related Credit Agreement" means that certain Credit Agreement [Frontier/2002-A], dated as of the date
of execution and delivery thereof, among the Borrower, the Related Lenders and the Related Administrative Agent.

         "Related Lenders" means the lenders that are party to the Related Credit Agreement identified under the
caption "Lenders" on the signature pages thereto or that, pursuant to Section 24(c) thereof, shall become a
"Lender" thereunder, together with their respective successors and permitted transferees and assigns.

         "Related Operative Documents" means the "Operative Documents" as defined in the Related Credit Agreement.

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

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

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

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

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

         "Special Default" means a Default under any of Sections 11(a)(i), 11(a)(ii) or 11(a)(vii) of the Credit
Agreement.

         "Stipulated Insured Amount" as of any date of determination means an amount equal to 110% of the
aggregate principal amount then outstanding on the Notes.

         "Swap Break Amount" means, as of any date (the "Swap Termination Date") on which Break Amount may be
payable under the Operative Documents and for any Lender (a negative number always being less than a positive
number and a more negative number always being less than another negative number that is closer to zero) the
amount such Lender (as floating rate payor) will require in accordance with market practice to have paid to it on
such date (such amount to be expressed as a positive number), or the amount such Lender (as floating rate payor)
is willing to pay in accordance with market practice on such date (such amount to be expressed as a negative
number), in either case, to terminate the Notional Swap Transaction on such date with respect to, and to the
extent of, the then outstanding principal amount of the Loan subject to prepayment or purchase. The term "Lender"
as used in this definition means either a Lender in its own right or a Lender acting through a swap agent.

         "Swap Breakage Gain" means, as to any Lender, the absolute value of the Swap Break Amount for such
Lender if the Swap Break Amount is a negative number.

         "Swap Breakage Loss" means, as to any Lender, the value of the Swap Break Amount for such Lender if the
Swap Break Amount is a positive number.

         "Swap Form" means the standard form of Master Agreement published in 1992 (or any successor swap form)
by, and incorporating by reference therein the definitions and provisions contained in the 1991 (or any successor
definitions) ISDA Definitions of the International Swap Dealers Association, Inc. (the "Definitions").

         "Swap Transaction" means, for any Lender, the Swap Transaction of such Lender described in Section 25(a)
of the Credit Agreement.

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

         "Term Option" means the option of the Borrower to select Option A or Option B.  The initial Mortgage
Supplement shall designate whether the Borrower has selected Option A or Option B.

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

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

        "Warranty Bill of Sale" means a full warranty bill of sale in favor of the Borrower from Seller.

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

Section 1.02      Certain Interpretive Matters.  For purposes of the Operative Documents and all such Notes and
other documents, unless the context otherwise requires:  (a) unless otherwise specifically provided therein, any
accounting term used in any Operative Document shall have the meaning customarily given such term in accordance
with GAAP, and all financial computations thereunder shall be computed in accordance with GAAP consistently
applied (that certain items or computations are explicitly modified by the phrase "in accordance with GAAP" shall
in no way be construed to limit the foregoing); (b) all other undefined capitalized terms contained in any of the
Operative Documents shall, unless the context indicates otherwise, have the meanings provided for by the Uniform
Commercial Code as in effect in the State of New York to the extent the same are used or defined therein;
(c) references to any amount as on deposit or outstanding on any particular date means such amount at the close of
business on such day; (d) the words "herein," "hereof" and "hereunder" and other words of similar import used in
any Operative Document refer to such Operative Documents as a whole, including all annexes, exhibits and
schedules, as the same may from time to time be amended, restated, amended and restated, supplemented or
otherwise modified, and not to any particular section, subsection or clause contained in such Operative Document
or any such annex, exhibit or schedule; (e) references to any Section, Schedule or Exhibit are references to
Sections, Schedules and Exhibits in or to such Operative Document (or the Note or other document in which the
reference is made), and references to any paragraph, subsection, clause or other subdivision within any Section
or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition;
(f) the words "including," "includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; (g) references to any law or regulation refer to that law or
regulation as amended from time to time and include any successor law or regulation; (h) references to any
agreement refer to that agreement as from time to time amended or supplemented or as the terms of such agreement
are waived or modified in accordance with its terms; (i) references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the Operative Document) or, in the case
of Governmental Authorities, Persons succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of the same and any successor statutes and
regulations; (j) headings are for purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof; and (k) wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, feminine and neuter genders.

                                                 Article II

                                                  THE NOTES

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


FRONTIER AIRLINES, INC.

                                          PROMISSORY NOTE DUE [2012/2014]
                           ISSUED IN CONNECTION WITH ONE AIRBUS MODEL A319-111 AIRCRAFT
                           WITH MANUFACTURER'S SERIAL NUMBER 1781 AND INITIALLY BEARING
     UNITED STATES FEDERAL AVIATION ADMINISTRATION REGISTRATION NUMBER N910FR AND TWO CFM INTERNATIONAL MODEL
                                                CFM56-5B5/P ENGINES
                              BEARING MANUFACTURER'S SERIAL NUMBERS 575446 AND 575447

New York, New York
No. R-

$                                                                                                  [Delivery Date]

         Frontier Airlines, Inc. (the "Borrower") hereby promises to pay to _________________ ("Lender"), or
registered transferees, the principal sum of ___________________ Dollars, in [40/48] consecutive installments,
equal to the amounts, and payable on the Interest Payment Dates, set forth in Annex A hereto, together with
interest payable on each such Interest Payment Date on the unpaid principal amount hereof from the date hereof,
or the immediately preceding Interest Payment Date, to (but excluding) such Interest Payment Date until such
principal amount is paid in full.  If any sum payable under this Note falls due on a day which is not a Business
Day, then such sum shall be payable on the next succeeding Business Day, unless such Business Day falls in the
following month, in which case such sum shall be payable on the Business Day immediately prior thereto.  Interest
on this Note shall be payable at the Applicable Rate (calculated on the basis of a 360-day year and the actual
number of days elapsed (unless interest on this Note shall be calculated by reference to the Fixed Rate, in which
case such interest shall be calculated on the basis of a year of 360 days consisting of 12 30-day months)).  In
no contingency or event whatsoever shall the rate or amount of interest paid by Borrower under this Note exceed
the maximum amount permissible under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto.  In the event that a court determines that the Lender has received
interest hereunder in excess of the maximum amount permitted by such law, (i) the Lender shall apply such excess
to any unpaid principal owed by Borrower to the Lender or, if the amount of such excess exceeds the unpaid
balance of such principal, the Lender shall promptly refund such excess interest to Borrower and (ii) the
provisions hereof shall be deemed amended to provide for such permissible rate.  All sums paid, or agreed to be
paid, by Borrower which are, or hereafter may be construed to be, compensation for the use, forbearance or
detention of money shall, to the extent permitted by applicable law, be amortized, prorated, spread and allocated
throughout the full term of all such indebtedness until the indebtedness is paid in full.  This Note shall bear
interest at the applicable Past Due Rate on any principal hereof, and, to the extent permitted by applicable law,
interest and other amounts due hereunder, not paid when due (whether at stated maturity, by acceleration or
otherwise), for any period during which the same shall be overdue, payable on demand by the Lender given through
the Administrative Agent.
         All payments of principal, Break Amount and Additional Costs, if any, and interest and all other amounts
to be made to the Lender hereunder or under the Mortgage and Security Agreement [Frontier/2002-B] dated as of
July 16, 2002 (as amended or supplemented from time to time, herein called the "Mortgage", the terms defined
therein and not otherwise defined herein being used herein with the same meanings) between the Borrower and Erste
Bank der oesterreichischen Sparkassen AG, as Administrative Agent thereunder or under the other Operative
Documents, shall be made in accordance with the terms of the Mortgage and the other Operative Documents.

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

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

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

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

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

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

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






                                                                [Mortgage and Security Agreement [Frontier/2002-B]]


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

                                                           FRONTIER AIRLINES, INC.


                                                           By: __________________________________
                                                           Name:
                                                           Title:






                                                                [Mortgage and Security Agreement [Frontier/2002-B]]


Annex A to Note

                                          SCHEDULE OF PRINCIPAL PAYMENTS

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

Section 2.02      Terms of Notes.  (a)  On the Delivery Date the Borrower shall issue Notes in respect of the
Aircraft in an aggregate original principal amount of the Original Amount therefor to each Lender (or their
respective nominees) in such amounts as shall be set forth in Schedule II to the Credit Agreement.

(b)      Each Note shall bear interest payable on each Interest Payment Date at the Applicable Rate on the unpaid
principal amount thereof from the date thereof in the case of the first Interest Payment Date, or otherwise from
the immediately preceding Interest Payment Date, to (but excluding) the following Interest Payment Date until
such principal amount is paid in full.  Interest hereunder and under the Notes shall be calculated on the basis
of a year of 360 days and actual number of days elapsed (unless interest on the Notes shall be calculated by
reference to the Fixed Rate, in which case such interest shall be calculated on the basis of a year of 360 days
consisting of 12 30-day months).  If any sum payable under the Notes or under this Mortgage falls due on a day
which is not a Business Day, then such sum shall be payable on the next succeeding Business Day, unless such
Business Day falls in the following month, in which case such sum shall be payable on the Business Day
immediately prior thereto.

(c)      The principal of the Notes shall be due and payable in 40 consecutive installments (if the Borrower has
selected Option A) or 48 consecutive installments (if the Borrower has selected Option B), in each case as set
forth in Schedule 1 to the Mortgage Supplement, the first such installment to be due on the first Interest
Payment Date.  Schedule 1 to the Mortgage Supplement shall be determined as follows:  the Original Amount shall
be amortized on an annuity basis (using, as the discount rate, the lower of (x) the Applicable Rate for the
initial Interest Period or (y) 6%) down to the applicable Balloon Amount, payable on the Final Maturity Date.
The Administrative Agent shall prepare Schedule 1 to the Mortgage Supplement and the amortization schedule for
each Note based on the methodology described in the preceding sentence.

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

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

Section 2.03      Termination of Interest in Mortgage Estate.  No Lender shall, as such, have any further
interest in, or other right with respect to, the Mortgage Estate relating to the Aircraft when and if the
principal amount of and Break Amount and Additional Costs, if any, and interest on and other amounts due under
all Notes held by such Lender and all other sums due to such Lender hereunder and under the other Operative
Documents in respect of the Aircraft shall have been paid in full.

                                                    Article III

                     REGISTRATION AND MAINTENANCE; OPERATION; POSSESSION AND LEASES; INSIGNIA

Section 3.01      Registration and Maintenance.  The Borrower shall:  (1) (a) on the Delivery Date, cause the
Aircraft to be duly registered in its name (if not so registered) and, at all times thereafter, to remain duly
registered in the United States of America in its name under the Federal Aviation Act and (b) on the Delivery
Date, cause this Mortgage to be duly recorded in the name of the Administrative Agent for the benefit of the
Lenders and, at all times thereafter, so long as any Note shall be outstanding or any amount shall be owing to
any Lender, cause this Mortgage to be so maintained of record as a first priority and perfected mortgage on the
Aircraft; (2) maintain, service, repair, and overhaul (or cause to be maintained, serviced, repaired, and
overhauled) the Aircraft (and any engine which is not an Engine but which is installed on the Aircraft) (a) so as
to keep the Aircraft in as good condition as when delivered to the Borrower by the Manufacturer (ordinary wear
and tear excepted) and so as to keep the Aircraft in good operating condition and in such condition as may be
necessary to enable the airworthiness certification for the Aircraft to be maintained in good standing at all
times under the Federal Aviation Act except when (i) the Aircraft is being serviced, repaired, maintained,
overhauled, tested or modified as permitted or required by the terms of this Mortgage or (ii) all Airbus A319-100
aircraft of comparable vintage and/or configuration have been grounded by the FAA, and (b) in accordance with the
Maintenance Program for the Aircraft and without in any way discriminating against the Aircraft, and (3) maintain
or cause to be maintained in English all records, logs and other materials required to be maintained in respect
of the Aircraft by the FAA.

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

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

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

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

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

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

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

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

(g)      enter into a lease with (i) any U.S. Air Carrier approved in writing by the Administrative Agent at the
direction of the Lenders, which approval (or direction) shall not be unreasonably withheld, and which is
authorized by an applicable Governmental Authority to conduct commercial airline operations and to operate
A319-111 aircraft, or (ii) any other Person approved in writing by the Administrative Agent at the direction of
the Lenders.

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

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

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

Section 3.04      Insignia.  On or prior to the Delivery Date, or as soon thereafter as practicable (but in any
event within 30 days thereafter), the Borrower agrees to affix and maintain (or cause to be affixed and
maintained) in the cockpit of the Airframe and on each Engine a nameplate bearing the inscription:

                  Mortgaged To

                  Erste Bank der oesterreichischen Sparkassen AG, as Administrative Agent

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

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

                                                 Article IV

                    REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS

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

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

Section 4.03      Alterations, Modifications and Additions.  The Borrower will make (or cause to be made) such
alterations, modifications and additions to the Airframes and Engines as may be required to meet the applicable
standards of the FAA, subject to clauses (2)(a)(i) and (ii) of Section 3.01.  In addition, the Borrower may from
time to time make such alterations and modifications in and additions to the Airframe or any Engine as the
Borrower may deem desirable in the proper conduct of its business, including removal of Parts which the Borrower
deems to be obsolete or no longer suitable or appropriate for use on the Airframe or such Engine; provided that
no such alteration, modification, removal or addition impairs the condition or airworthiness of the Airframe or
such Engine, or diminishes the value, utility and remaining useful life of the Airframe or such Engine below the
value, utility or remaining useful life thereof immediately prior to such alteration, modification, removal or
addition, assuming that the Airframe or such Engine is in the condition required hereunder.  All parts
incorporated or installed in or attached or added to the Airframe or an Engine as the result of such alteration,
modification or addition (except those parts described in Section 4.04 hereof which the Borrower has leased from
others and Parts which may be removed by the Borrower pursuant to the next sentence) (the "Additional Part" or
"Additional Parts") shall, without further act, become subject to the Lien of this Mortgage.  Notwithstanding the
foregoing, the Borrower may remove any Additional Part, provided that such Additional Part (i) is in addition to,
and not in replacement of or substitution for, any Part originally incorporated or installed in or attached to
the Airframe or any Engine at the time of delivery thereof hereunder or any Part in replacement of or
substitution for any such Part, (ii) is not required to be incorporated or installed in or attached or added to
the Airframe or any Engine pursuant to the terms of Article III hereof or the first sentence of this
Section 4.03, and (iii) can be removed from the Airframe or such Engine without impairing the airworthiness of the
Airframe or such Engine or diminishing the value, utility and remaining useful life of the Airframe or such
Engine which the Airframe or such Engine would have had at such time had such alteration, modification or
addition not occurred.  Upon the removal thereof as provided above, such Additional Parts shall be deemed free of
the Lien of this Mortgage.

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

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

                                                Article V

                                       LOSS, DESTRUCTION, REQUISITION, ETC.

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

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

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

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

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

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

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

                                                 Article VI

                                                 INSURANCE

Section 6.01      Bodily Injury Liability and Property Damage Liability Insurance.

(a)      Except as provided in paragraph (b) of this Section 6.01, and subject to the self insurance to the
extent permitted by Section 6.04 and the provisions of Section 6.08, the Borrower will at all times carry and
maintain or cause to be carried and maintained, on a non-discriminatory basis and with insurers of
internationally recognized responsibility acceptable to the Administrative Agent (which acceptability not to be
unreasonably withheld or delayed), airline liability insurance, including passenger legal liability, bodily
injury liability, war risk and allied perils liability, property damage liability, and contractual liability
(exclusive of manufacturer's product liability insurance) with respect to the Aircraft in an amount per
occurrence not less than $600,000,000.  The Borrower shall maintain cargo liability insurance in an amount not
less than the amount of cargo liability insurance maintained for other aircraft operated by the Borrower.

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

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

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

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

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

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

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

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

Section 6.04      Self-Insurance.  The Borrower may self-insure, by way of deductible, premium adjustment
provisions in insurance policies, or otherwise, under a program applicable to all aircraft in the Borrower's
fleet, the risks required to be insured against pursuant to Sections 6.01 and 6.02 but in no case shall the
self-insurance with respect to the Aircraft exceed $750,000 per occurrence; provided that no deductible shall be
applicable in the case of a total loss of the Airframe.  In the event the prevailing industry minimum deductible
for aircraft similar to the Aircraft increases, the Borrower and Administrative Agent shall consult one another
toward a mutually agreeable modified deductible, such modified deductible to be effective only upon the written
consent of the Administrative Agent (on behalf of the Lenders).  Notwithstanding the foregoing, if the Borrower's
consolidated shareholders' equity shall exceed $200,000,000, then the levels of self-insurance otherwise
permitted by this Section 6.04 may be increased by $250,000 per occurrence.

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

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

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

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

                                                    Article VII

                                                   MISCELLANEOUS

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

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

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

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

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

Section 7.05      No Action Contrary to Borrower's Rights; Quiet Enjoyment.  Notwithstanding any of the
provisions of this Mortgage to the contrary, so long as no Event of Default shall have occurred and be
continuing, each of the Administrative Agent and Lenders agrees that neither it nor any Person claiming by,
through or under it, will take any action in violation of the Borrower's rights, including the right to quiet
enjoyment, possession and use of the Aircraft in accordance with the terms of this Mortgage by Borrower.

Section 7.06      Notices.  Unless otherwise expressly specified or permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this
Mortgage to be made, given, furnished or filed shall be in writing, mailed by certified mail, postage prepaid, or
by confirmed telex, or by confirmed telecopy or electronic mail and (i) if to the Administrative Agent, addressed
to it at its offices at Erste Bank der oesterreichischen Sparkassen AG, 68 Cornhill, London, EC3V 3QE, England,
Attention:  Stewart Tanner, telephone: (44-207) 621-5013   telecopy: (44-207) 283-7142, (ii) if to the Borrower,
addressed to it at its office at Frontier Center One, 7001 Tower Road, Denver, CO 80249, Attention: Chief
Financial Officer, telecopy: (720) 374-4375, or (iii) if to the Lenders, addressed to such party at such address
as such party shall have furnished by notice to the Borrower and the Administrative Agent, or, until an address
is so furnished, addressed to the address of such party (if any) set forth on Schedule I to the Credit
Agreement.  Whenever any notice in writing is required to be given by the Borrower, the Administrative Agent or
the Administrative Agent or the Lenders to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, if such notice is received, if such notice is mailed by
certified mail, postage prepaid, or is sent by confirmed telex, or by confirmed telecopy addressed as provided
above.  Any party hereto may change the address to which notices to such party will be sent by giving notice of
such change to the other parties to this Mortgage.

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

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

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

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

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

Section 7.12      GOVERNING LAW; COUNTERPARTS.  THIS MORTGAGE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE.  This Mortgage may be executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall together constitute but one and the
same instrument.

                                             [SIGNATURE PAGE FOLLOWS]






                                                                [Mortgage and Security Agreement [Frontier/2002-B]]

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

                                                           FRONTIER AIRLINES, INC.,
                                                           as Borrower

                                                           By: __________________________________
                                                           Name:
                                                           Title:

                                                           ERSTE BANK DER OESTERREICHISCHEN SPARKASSEN AG,
                                                           as Administrative Agent


                                                           By: __________________________________
                                                           Name:
                                                           Title:



                                                           By: __________________________________
                                                           Name:
                                                           Title:






                                                                [Mortgage and Security Agreement [Frontier/2002-B]]

                                                EXHIBIT A
                                                        to
                                                     Mortgage


                                                MORTGAGE SUPPLEMENT

         MORTGAGE SUPPLEMENT [Frontier/2002-B] No. _____ dated ___________, ____ (this "Mortgage Supplement") of
Frontier Airlines, Inc. (herein called the "Borrower").

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

         WHEREAS, the Mortgage and Security Agreement [Frontier/2002-B] dated as of July 16, 2002 (the
"Mortgage") between the Borrower and Erste Bank der oesterreichischen Sparkassen AG, as Administrative Agent (the
"Administrative Agent"), provides for the execution and delivery of a supplement thereto substantially in the form
hereof which shall particularly describe the Aircraft (such term and other defined terms in the Mortgage being
herein used with the same meanings) and any Replacement Engine included in the Mortgage Estate, and shall
specifically mortgage the Aircraft or Replacement Engine, as the case may be, to the Administrative Agent.

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

         WHEREAS3, the Mortgage and Mortgage Supplement [Frontier/2002-B] dated _______________ have been duly
recorded pursuant to Subtitle VII of Title 49 of the United States Code on __________, ____, as one document and
have been assigned Conveyance No. _________;

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

                                                     AIRFRAME
                                        One airframe identified as follows:

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

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

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

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

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

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

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

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

         The principal of the Notes identified above shall be due and payable in [40/48] equal quarterly
installments down to the Balloon Amount, as set forth on Schedule 1 hereto.  The Borrower has selected Option _
in respect of the Aircraft.

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

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






                                                                [Mortgage and Security Agreement [Frontier/2002-A]]

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

                                                           FRONTIER AIRLINES, INC.


                                                           By: __________________________________
                                                           Name:
                                                           Title:






                                                                [Mortgage and Security Agreement [Frontier/2002-A]]

                                                    SCHEDULE 1

                                          SCHEDULE OF PRINCIPAL PAYMENTS

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

                                     [OMITTED FROM COUNTERPART FILED WITH FAA
                                           FOR CONFIDENTIALITY PURPOSES]

EX-10

                                                                EXECUTION COPY




                                    CREDIT AGREEMENT
                                     [Frontier/HLB]


                                      Dated as of

                                      May 23, 2002


                                         AMONG



                                FRONTIER AIRLINES, INC.,
                                       Borrower,


                               THE LENDERS LISTED HEREIN,


                                          and


                        HAMBURGISCHE LANDESBANK -GIROZENTRALE-,
                    as Administrative Agent on behalf of the Lenders






                                                 TABLE OF CONTENTS
                                                                                                               Page


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

Section 2.        Loans; Borrower's Notice of Delivery Dates; Closing Procedure;
                  Alternative Structure..........................................................................2

Section 3.        Fees...........................................................................................3

Section 4.        Conditions.....................................................................................3

Section 5.        Closing Procedure..............................................................................7

Section 6.        Extent of Interest of Lenders..................................................................8

Section 7.        Representations and Warranties.................................................................8

Section 8.        Indemnities...................................................................................12

Section 9.        Covenants of the Borrower.....................................................................19

Section 10.       The Notes.....................................................................................23

Section 11.       Events Of Default; Certain Rights of Administrative Agent.....................................28

Section 12.       Remedies......................................................................................31

Section 13.       Replacement Engines...........................................................................35

Section 14.       The Administrative Agent......................................................................37

Section 15.       Investment Of Funds...........................................................................39

Section 16.       Supplements and Amendments to the Mortgage and Other Operative
                  Documents.....................................................................................40

Section 17.       Notices.......................................................................................41

Section 18.       Governing Law; Consent to Jurisdiction; Waiver of Jury Trial..................................41

Section 19.       Costs and Expenses............................................................................42

Section 20.       Section 1110 Compliance.......................................................................42

Section 21.       Confidentiality...............................................................................43

Section 22.       Covenants of the Administrative Agent and the Lenders.........................................43

Section 23.       Leveraged Lease Financing.....................................................................44

Section 24.       Miscellaneous.................................................................................45

Section 25.       Terms of FIXED RATE SETTING...................................................................47

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





                                                                [Credit Agreement [Frontier/HLB]]



 CREDIT AGREEMENT [Frontier/HLB]

         THIS CREDIT AGREEMENT [Frontier/HLB] dated as of May 23, 2002 among
(i) Frontier Airlines, Inc., a Colorado corporation (the "Borrower"), (ii) the lenders
that are party hereto identified under the caption "Lenders" on the signature pages
hereto or that, pursuant to Section 24(c) hereof, shall become a "Lender" hereunder
(individually, a "Lender" and, collectively, the "Lenders") and (iii) Hamburgische
Landesbank -Girozentrale-, a Landesbank organized under the laws of Germany, as
Administrative Agent on behalf of the Lenders (the "Administrative Agent").

                                  W I T N E S S E T H:

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

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

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

Section 1.        Certain Definitions and Interpretive Matters.

         Except as otherwise defined in this Agreement, including its annexes,
schedules and exhibits, terms used herein in capitalized form shall have the meanings
attributed thereto in the Mortgage.  The rules of interpretation contained in Section
1.02 of the Mortgage shall be applicable to this Agreement.  In addition the following
terms shall have the following meanings:

         "Aircraft 1743" means, collectively, the Airbus A319-111 airframe bearing
manufacturer's serial number 1743, together with two (2) CFM International Model CFM
56-5B5/P Engines bearing manufacturer's serial numbers 575406 and 575407.

         "Aircraft TBD" means, collectively, the Airbus A319-111 airframe scheduled to
be delivered to the Borrower under its Purchase Agreement in December 2002, together
with two (2) CFM International Model CFM 56-5B5/P Engines initially installed thereon,
in each case bearing the manufacturer's serial numbers set forth in the Mortgage
Supplement with respect thereto.

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

Section 2.        Loans; Borrower's Notice of Delivery Dates; Closing Procedure; Alternative Structure.

(a)      Loans.  Subject to the terms and conditions of this Agreement, each Lender
agrees to make a secured loan to the Borrower in respect of each Aircraft (herein called,
for such Aircraft, a "Loan") on a date to be designated pursuant to Section 2 hereof, on
or about (x) in the case of Aircraft 1743, May 23, 2002 but in no event later than June 30,
2002 (the "Initial Commitment Termination Date") and (y) in the case of Aircraft TBD, in
December, 2002, but in no event later than January 31, 2003 (the "Second Commitment
Termination Date"), in the amount in Dollars for each Aircraft and Leverage Option set
forth opposite such Lender's name in Schedule II hereto (its "Commitment" for such
Aircraft), and to receive, as evidence of each such secured loan, Note(s) of the
applicable Series in an amount equal to its Commitment for such Aircraft; provided
that the aggregate amount of Loans for all Aircraft to be made by each Lender shall
not exceed the amount in Dollars set forth opposite such Lender's name in Schedule II
hereto as its Maximum Commitment (its "Maximum Commitment").  The aggregate amount of
the Commitments for each Aircraft shall equal the Original Amount for such Aircraft.
Each Loan shall bear interest and amortize in accordance with Section 2.02 of the
Mortgage.

(b)      Notice of Delivery Dates.  The Borrower agrees to give the Lenders and
the Administrative Agent at least three (3) Business Days' prior written notice of the
Delivery Date for each Aircraft, which Delivery Date shall be a Business Day not later
than (i) in the case of Aircraft 1743, the Initial Commitment Termination Date and (ii)
in the case of Aircraft TBD, the Second Commitment Termination Date, by executing and
delivering a borrowing notice substantially in the form of Exhibit A hereto (the "Borrowing
Notice"), which notice shall also specify (if not previously selected as provided in
paragraph (e) below) the Leverage Option elected and any funding instructions.  The
payment by each Lender of its Commitment in respect of any Aircraft in the manner
required by this Section 2 shall constitute a waiver of such notice.

(c)      Closing Procedure.  Subject to the terms and conditions of this Agreement,
and simultaneous with receipt by the Seller of the Original Amount for any Aircraft pursuant
to this Section 2, the Borrower shall authorize the delivery and filing for record at the
FAA of the Mortgage and/or the Mortgage Supplement for such Aircraft.  On the Delivery Date
for each Aircraft specified in the Borrower's notice referred to in the first paragraph of
this Section 2, subject to the terms and conditions of this Agreement, each Lender agrees
to pay the amount of its Commitment for such Aircraft to the Seller by wire
transferring such amounts to the Seller's account at Credit Lyonnais, 1301 Avenue of
the Americas, New York, NY 10019, ABA No. * Account # *, Attention  William McIlwain,
Reference Frontier MSN 1743 or TBD, as the case may be, or to such other account as
the Borrower shall direct the Administrative Agent (on behalf of the Lenders) in
writing, upon closing.

(d)      Alternative Structure.  Notwithstanding anything to the contrary in this
Agreement or any other Operative Document, the Borrower, subject to the provisions of this
Section 2(d) and Section 23 hereof, may elect to finance Aircraft 1743 and/or Aircraft TBD
on the basis of a U.S. leveraged lease financing, whereupon the Lenders' Commitments shall
be utilized for such purpose, and the Lenders' obligations to finance the applicable
aircraft on a mortgage basis, and the Borrower's obligations to use the Lenders'
Commitments to finance the applicable aircraft on a mortgage basis, shall be deemed
discharged by such utilization.

(e)      Leverage Option.  The Borrower may notify the Administrative Agent at any
time after the date hereof of the Leverage Option for any Aircraft, which notice shall be
irrevocable.

Section 3.        Fees.

(a)      The Borrower agrees to pay to the Administrative Agent (on behalf of the Lenders),
on or before each Delivery Date, an up-front fee of the percentage (the "Up-front Fee")
of the Original Amount of each Loan to be funded on such Delivery Date as separately agreed,
to the account of the Administrative Agent specified in Schedule I hereto (or such other
account as the Administrative Agent may direct in writing).

(b)      The Borrower agrees to pay to the Administrative Agent (on behalf of the Lenders),
after the date hereof, a commitment fee of *% (the "Commitment Fee") on the unutilized
Commitments (for which purpose the figures for Option B shall govern unless the Borrower,
pursuant to Section 2(e) hereof, has notified the Administrative Agent that it has elected
Option A with respect to any Aircraft, in which case the Commitments for such Aircraft
shall be determined in accordance with Option A effective from the date of receipt by
the Administrative Agent of notice of such election), to the account of the
Administrative Agent specified in Schedule I hereto (or such other account as the
Administrative Agent may direct in writing).  The Commitment Fee shall accrue from and
including April 30, 2002 to but excluding the earlier of (x) the Delivery Date for the
last Aircraft financed hereunder and (y) the Second Commitment Termination Date.  The
Commitment Fee shall be payable on August 23, 2002, November 23, 2002 and on the
earlier dates contemplated by clauses (x) and (y) of the preceding sentence.  The
Commitment Fee shall be calculated on the basis of a year of 360 days and actual
number of days elapsed.  Promptly following receipt by the Administration Agent of the
Commitment Fee in respect of any period, the Administrative Agent shall distribute the
same to each Lender, pro rata based on such Lender's unutilized Commitments.

Section 4.        Conditions.

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

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

(A)      the Mortgage; and

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

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

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

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

(iii)    Each Lender and the Administrative Agent shall have received an opinion addressed to
         such Lender and the Administrative Agent from each of: (A) David Sislowski, Esq.,
         General Counsel for the Borrower and (B) Curtis Mallet-Prevost, Colt & Mosle LLP,
         special counsel to the Borrower, each in form and substance reasonably satisfactory
         to the addressees thereof.

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

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

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

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

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

(A)      the Mortgage Supplement covering such Aircraft and dated such Delivery Date;
                  Schedule I to such Mortgage Supplement shall be completed as provided in
                  Section 2.02(c) of the Mortgage;

(B)      the Note(s) of the Series for such Aircraft in an aggregate principal amount equal
                  to the Original Amount reflecting the Leverage Option selected by the
                  Borrower;

(C)      the Consent and Agreement and the Engine Consent and Agreement, in each case,  in
                  respect of such Aircraft, each of which shall be in form and substance
                  reasonably satisfactory to the Administrative Agent; and

(D)      the Warranty Bill of Sale and FAA Bill of Sale for such Aircraft.

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

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

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

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

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

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

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

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

(ix)     Each Lender and the Administrative Agent shall have received an opinion addressed
         to such Lender and the Administrative Agent from each of:  (A) David Sislowski,
         Esq., General Counsel for the Borrower and (B) Curtis Mallet-Prevost, Colt & Mosle
         LLP, special counsel to the Borrower, each in form and substance reasonably
         satisfactory to the addressees thereof.

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

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

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

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

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

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

(xvi)    The Administrative Agent shall have received the Up-front Fee pursuant to Section
         3(a) and, if applicable, any Commitment Fee pursuant to Section 3(b) that is due
         and payable.

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

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

Section 5.        Closing Procedure.

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

Section 6.        Extent of Interest of Lenders.

         No Lender shall have any further interest in, or other right with respect to,
the mortgage and security interests created by the Mortgage when and if the Original
Amount of and interest on all Note(s) held by such Lender and all other sums payable
to such Lender hereunder, under the Mortgage and under such Note(s) shall have been
paid in full.

Section 7.        Representations and Warranties.

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

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

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

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

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

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

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

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

(viii)   the statements of financial position of the Borrower as of December 31, 2001 and
         the date of the most recently concluded fiscal quarter of the Borrower for which
         a statement of financial position has been provided and the related statements of
         earnings and cash flow of the Borrower in all material respects for the year and
         fiscal quarter, respectively, then ended, copies of which have been furnished to
         the Lenders, fairly present the financial condition of the Borrower at such date
         and the results of operations and cash flow of the Borrower for the period
         ended on such dates, in accordance with generally accepted accounting
         principles consistently applied, and subject, in the case of the statements
         pertaining to the Borrower's most recently concluded fiscal quarter, to normal
         year-end adjustments, and since December 31, 2001, there has been no material
         and adverse change in the business or financial condition of the Borrower;

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

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

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

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

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

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

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

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

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

(b)      Representations and Warranties of Administrative Agent and Lenders.

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

(i)      it is acquiring its Notes in the ordinary course of its commercial banking
         business and it has no present intention of distributing or reselling any interest
         to be acquired by it hereunder or under any of the other Operative Documents or
         any part thereof in violation of the Securities Act of 1933, as amended; and

(ii)     no part of the funds to be used by it to purchase or fund, as the case may be,
         its Notes or its interest under any of the Operative Documents constitutes plan
         assets of an employee benefit plan which is subject to the United States Employee
         Retirement Income Security Act of 1974, as amended ("ERISA") and/or subject
         to Section 4975 of the United States Internal Revenue Code of 1986, as amended.
         As used in this Section 7(b)(ii), the term "plan assets" shall have the meaning
         assigned to such term under ERISA and the regulations promulgated thereunder.

Section 8.        Indemnities.

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

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

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

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

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

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

                  Amounts payable under this Section 8(a) shall be payable by the
Borrower within thirty days of demand therefor.

(b)      General Tax Indemnity.

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

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

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

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

                  If, as a result of an assignment under Section 24(c)(iii) below, a
Person organized under the laws of a jurisdiction outside of the United States becomes
a Tax Indemnitee and payments to it to be made under this Agreement are exempt from
United States withholding tax, or are subject to such tax at a reduced rate under an
applicable tax treaty, then such assignee shall provide to the Borrower, promptly
following the date that it became a Tax Indemnitee and from time to time thereafter,
so long as it is lawfully able to do so in its reasonable judgment, a properly
completed and executed Internal Revenue Service Form W-8ECI or Form W-8BEN or Form
W-9, or any successor form, and any other applicable form, certificate document
prescribed by the Internal Revenue Service certifying as to such assignee's
entitlement to such exemption or reduced rate with respect to all payments to be made
to such assignee under this Agreement and any new or other forms or certificates
prescribed by the Internal Revenue Service of the United States in the event that a
lapse in time or change in circumstance renders a previous certification obsolete or
inaccurate in any material respect.  Unless the Borrower shall have received forms or
other documents reasonably satisfactory to it establishing that payments under this
Agreement are not subject to United States withholding tax, or are subject to such tax
at a rate under an applicable tax treaty, the Borrower shall, subject to its
obligations under Section 8(a), withhold taxes from such payments at the applicable
statutory rate in the case of payments to or for any Tax Indemnitee, if it is
organized under the laws of a jurisdiction outside the United States.

                  Within 30 days after written request from the Borrower the relevant
Tax Indemnitee, as appropriate, shall, so long as no Default or Event of Default shall
have occurred, execute and deliver to the Borrower such certificates, forms or other
documents which can be furnished consistent with the facts and applicable law, and
which are reasonably necessary for the Tax Indemnitee to obtain a refund of Taxes
indemnified by the Borrower under this Section (which shall be paid to the Borrower
promptly upon receipt).

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

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

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

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

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

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

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

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

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

                                    In the event of a dispute between Borrower and any
                  Tax Indemnitee regarding the applicability of any of the exclusions
                  described in Section 8(b)(i) or Section 8(b)(ii) or the amount of any
                  Indemnified Taxes, Borrower within 30 days of demand therefor shall
                  pay to such Tax Indemnitee any amount of Tax claimed to be owed
                  pursuant to Section 8(b)(i), as the case may be.  Any payment made by
                  Borrower pursuant to the immediately preceding sentence shall be
                  refunded by the relevant Tax Indemnitee if it subsequently is on a
                  final and unconditional basis established that such amount was not
                  required to be paid under this Section 8(b)(i) or (b)(ii) hereof, as
                  the case may be.

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

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

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

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

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

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

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

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

                                    Notwithstanding the foregoing provisions of this
                  Section 8(b)(iii), no Tax Indemnitee shall be obligated to contest a
                  Claim to the United States Supreme Court.  In addition,
                  notwithstanding the foregoing provisions of this Section 8(b), if at
                  any time such Tax Indemnitee waives its right of indemnification
                  under this Section 8(b) in respect of a Claim, or if, after having
                  received payment of indemnification from Borrower hereunder in
                  respect of such Claim, such Tax Indemnitee tenders such payment to
                  Borrower, then Borrower shall not be entitled to contest, or to
                  continue to contest, any such Claim.

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

(v)      Verification.  At the Borrower's written request, the computation of the
         amount of any indemnity payment owed by the Borrower or any amount owed by a Tax
         Indemnitee to the Borrower pursuant to this Section 8 shall be verified and
         certified by an internationally recognized independent public accounting firm
         mutually selected by the Tax Indemnitee and the Borrower.  The costs of such
         verification (including the fee of such public accounting firm) shall be borne
         by the Borrower unless such verification shall result in an adjustment in the
         Borrower's favor of 5% or more of the net present value of the payment as
         computed by such Tax Indemnitee, in which case the costs shall be paid by such
         Tax Indemnitee.  Such determination shall be final and binding, absent
         manifest error on the part of the certified public accountants.  The Tax
         Indemnitees hereby agree to cooperate with the accountants in connection
         therewith, provided, however, notwithstanding anything that may be to the
         contrary in the Operative Documents, in no event shall the Borrower have the
         right to examine any information supplied to the verifying firm or the tax
         returns or books of the Tax Indemnitee in connection with the verifying
         procedures described herein or for any other reason.

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

Section 9.        Covenants of the Borrower.

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

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

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

(iii)    Such Person shall have a credit rating (as determined by S&P or Moody's, as
         applicable) no worse than the Borrower's immediately prior to such transaction;
         and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Section 10.       The Notes.

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

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

(c)      Registration, Transfer and Exchange of Notes.  The Administrative Agent agrees
with the Borrower that the Administrative Agent shall keep a register (herein sometimes
referred to as the "Note Register") in which provision shall be made for the
registration of Notes of each Series and the registration of transfers of Notes of such
Series.  Prior to the due presentment for registration of the transfer of any Note, the
Borrower and the Administrative Agent shall deem and treat the person in whose name such
Note is registered on the Note Register as the absolute owner of such Note, and the Lender
for the purpose of receiving payment of all amounts payable with respect to such Note, and
for all other purposes whether or not such Note is overdue, and neither the Borrower
nor the Administrative Agent shall be affected by notice to the contrary.  The Note
Register shall be kept at the office of the Administrative Agent or at the office of
any successor Administrative Agent, and the Administrative Agent is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers of Notes as herein
provided.  Subject to Section 24(c) hereof, upon surrender for registration of
transfer of any Note of any Series at the Payment Office and upon delivery by the
Administrative Agent to the Borrower of such surrendered Note, the Borrower shall
execute, and the Administrative Agent shall deliver, in the name of the designated
transferee or transferees, one or more new Notes of a like aggregate principal amount
and Series.  At the option of the Lender, its Notes of any Series may be exchanged for
other Notes of such Series of any authorized denominations, of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at the Payment Office.
Each new Note issued upon transfer or exchange shall be in a principal amount of at
least $5,000,000 (except as may be necessary to evidence the entire outstanding
principal amount of a Note) and dated the Delivery Date of the Aircraft of the related
Series.  Whenever any Notes are so surrendered for exchange, the Borrower shall
execute and deliver the Notes which the Lender making the exchange is entitled to
receive.  All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Borrower evidencing the same respective
obligations, and entitled to the same security and benefits under the Mortgage, as the
Notes surrendered upon such registration of transfer or exchange.  Every Note
presented or surrendered for registration of transfer or exchange, shall (if so
required by the Administrative Agent) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Administrative Agent duly executed
by the Lender or its attorney duly authorized in writing, and the Administrative Agent
may require evidence satisfactory to it as to the compliance of any such transfer with
the Securities Act and the securities laws of any applicable state.  The
Administrative Agent shall make a notation on each new Note or Notes of the amount of
all payments of principal previously made on the old Note or Notes with respect to
which such new Note is issued and the date to which interest accrued on such old Note
or Notes has been paid.  The Administrative Agent shall not be required to register
the transfer of or exchange any surrendered Notes as above provided during the five
calendar day period preceding the due date of any payment on such Notes.  The
Administrative Agent shall give the Borrower and the Lenders notice of each transfer
of a Note under this Section 10(c).  Any such transferee of a Note, by its acceptance
of a Note, agrees to the provisions of the Operative Documents applicable to the
Lenders, and shall be deemed to have covenanted to the parties to the Operative
Documents as to the matters covenanted by the original Lender therein; provided that
no transferee of a Note shall be entitled to receive any greater amount pursuant to
Section 10(h) of this Agreement than the transferor of such Note would have been
entitled to receive had no such transfer occurred.

(d)      Mutilated, Destroyed, Lost or Stolen Notes.  If any Note shall become mutilated,
destroyed, lost or stolen, the Borrower shall, upon the written request of the Lender,
execute and deliver in replacement thereof, a new Note of a like Series, in the same
principal amount, dated the date of such Note and designated as issued under the Mortgage.
If the Note being replaced has become mutilated, such Note shall be surrendered to the
Administrative Agent and the original thereof shall be furnished to the Borrower by
the Administrative Agent.  If the Note being replaced has been destroyed, lost or
stolen, the Lender shall furnish to the Borrower and the Administrative Agent such
security or indemnity as may be reasonably required by them to hold the Borrower and
the Administrative Agent harmless and evidence satisfactory to the Borrower and the
Administrative Agent of the destruction, loss or theft of such Note and of the
ownership thereof; provided, however, that if the Lender is an original party hereto
or an Affiliate thereof or a bank or other financial institution with a net worth (or
capital and surplus, as the case may be) in excess of $500,000,000, the written notice
of such destruction, loss or theft and such ownership and the written undertaking of
the Lender delivered to the Borrower and the Administrative Agent to hold harmless the
Borrower and the Administrative Agent in respect of the execution and delivery of such
new Note shall be sufficient evidence, security and indemnity.

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

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

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

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

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

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

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

(h)      Increased Costs.  (i)  (i) The Borrower shall pay to the Administrative Agent for
         the account of each Lender from time to time such amounts as such Lender may determine
         to be necessary to compensate such Lender for any increase in actual costs that such
         Lender determines are attributable to its making, funding or maintaining its
         Commitment or the Loans or any reduction in any amount receivable by such
         Lender hereunder in respect of any of its Commitments or the Loans (such
         increases in costs and reductions in amounts receivable, including amounts
         covered by clause (ii) below, being herein called "Additional Costs"),
         resulting from any Regulatory Change that:

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

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

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

(ii)     Without limiting the effect of the foregoing provisions of this Section 10(h)
         (but without duplication), the Borrower shall pay to the Administrative Agent for
         account of any Lender from time to time on request such amount as the Lender may
         determine to be necessary to compensate such Lender (or, without duplication, the
         holding company of which such Lender is a subsidiary) for any increase in actual
         costs that it determines are attributable to the maintenance by such Lender (or any
         lending office or such holding company) of its Commitment or Loans hereunder,
         resulting from the implementation of any risk-based capital guideline, reserve
         requirement or other similar requirement hereafter issued by any Governmental
         Authority pursuant to any law or regulation or any interpretation, directive
         or request (whether or not having the force of law and whether or not failure
         to comply therewith would be unlawful so long as compliance therewith is
         standard banking practice in the relevant jurisdiction) (including, without
         limitation, implementing at the national level any Regulatory Change of the
         Basel Accord), the effect of which would be to reduce the return on investment
         of assets or equity in respect of its Commitments or Loans, including, without
         limitation, any such reduction attributable to any funding arrangements
         utilized in connection with the Loans; such compensation shall include,
         without limitation, an amount equal to any reduction of the rate of return on
         assets or equity of such Lender (or any lending office or such bank holding
         company) could have achieved but for such law, regulation, interpretation,
         directive or request.  For purposes of this Section 10(h)(ii), "Basel Accord"
         shall mean the proposals for risk-based capital framework described by the
         Basel Committee on Banking Regulations and Supervisory Practices in its paper
         entitled "International Convergence of Capital Measurement and Capital
         Standards" dated July, 1988, it being understood that, as at the date hereof,
         there has been no Regulatory Change of the Basel Accord (i.e., "Basel II" has
         not been adopted).

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

(iv)     If a Lender gives notice of a claim against the Borrower under this Section 10(h),
         the Borrower shall have the right (i) to require such Lender to sell its Notes to
         an institution designated by the Borrower in compliance with Section 24(c)(iii)
         of this Agreement for an amount equal to the outstanding principal amount thereof
         plus accrued interest thereon to the date of sale, together with the Break Amount
         and all other amounts owing thereto, if any, or (ii) to prepay the outstanding
         principal amount of Notes held by such Lender, together with accrued interest
         to the date of such prepayment and Break Amount, if any, and all other amounts
         owing thereto.

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

(vi)     Amounts payable by the Borrower under this Section 10(h) shall be payable by the
         Borrower within 30 days of demand therefor.

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

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

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

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

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

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

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

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

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

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

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

(x)      A "Lease Event of Default" shall have occurred and be continuing under (and as defined
         in) any Related Transactions; or

(xi)     (i) The Borrower shall default in the payment when due of any principal of or
         interest on, or fail to make a scheduled rental payment on, any of its other
         indebtedness or any lease obligation; or (ii) any event specified in any note,
         agreement, indenture, lease or other document evidencing or relating to any
         indebtedness or any lease obligation shall occur, and, after giving effect to any
         applicable notice and/or grace periods, the effect of such default (in the case of
         clause (i)) or event (in the case of clause (ii)) is to cause, or to permit the
         holder or holders of such indebtedness or lease obligation (or a trustee or
         agent on behalf of such holder or holders) to cause, such indebtedness or
         lease obligation to become due or to be terminated, or to be prepaid in full
         (whether by redemption, purchase, offer to purchase or otherwise), prior to
         its stated maturity; provided that, (x) the outstanding amount of such
         indebtedness and (y) the capitalized amount of such lease obligation shall,
         singly or in the aggregate, be in excess of $10,000,000.

(b)      Certain Rights of Administrative Agent.

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

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

Section 12.       Remedies.

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

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

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

(iv)     If the principal of the Notes shall have become due and payable pursuant to this
         Section 12(a), there shall also become due and payable, to the fullest extent permitted
         by law, to the Lenders upon demand, without presentment, protest or notice, all of
         which are hereby waived, the Break Amount and Additional Costs (if any) therefor.

(v)      The Lenders shall be entitled, at any sale pursuant to this Section 12, to credit
         against any purchase price bid at such sale by the Lenders all or any part of the
         unpaid obligations owing to the Lenders and secured by the Lien of the Mortgage.
         The Administrative Agent and the Lenders shall, upon any such purchase, acquire
         good title to the property so purchased, to the extent permitted by applicable
         law, free of all rights of redemption.

(vi)     The Administrative Agent agrees to give to the Borrower at least ten days' prior
         written revocable notice of any foreclosure of the Lien of the Mortgage, or of any
         other action to cause the Borrower to lose its title in an Aircraft (which period
         of notice the parties hereto confirm is commercially reasonable).

(b)      Repossession and Sale.  At any time during the continuation of an Event of Default,
the Administrative Agent in addition to any rights it might otherwise have at law, may do either
or both of the following:

(i)      Upon the written demand of the Administrative Agent, and at the Borrower's expense,
         cause the Borrower to return promptly, and the Borrower shall return promptly, all
         or any part of any Aircraft as the Administrative Agent may so demand, to the
         Administrative Agent at a major airport on the Borrower's route system in one of
         the forty eight (48) contiguous states of the United States of America chosen by
         the Administrative Agent in the manner and condition required by Section 3.01 of
         the Mortgage, or, alternatively, the Administrative Agent at its option, may,
         to the extent permitted by law, peaceably enter upon the premises where all or
         any part of an Aircraft is located and take immediate possession of and remove
         the same by summary proceedings or otherwise (and, at the Administrative
         Agent's option store the same at the Borrower's premises until disposal
         thereof by the Administrative Agent), all without liability accruing to the
         Administrative Agent for or by reason of such entry or taking of possession or
         removal so long as the Administrative Agent has acted in accordance with the
         provisions of the Mortgage; provided that during any period an Aircraft is
         activated under CRAF in accordance with the provisions of Section 3.03 of the
         Mortgage and in the possession of the government of the United States of
         America or an instrumentality or agency thereof, the Administrative Agent
         shall not, on account of any Event of Default, be entitled to do any of the
         following in such manner as to limit the Borrower's control under the Mortgage
         of the associated Airframe or any Engines installed thereon, unless at least
         sixty (60) days' (or such lesser period as may then be applicable under the
         Military Airlift Command program of the government of the United States of
         America) prior written notice of default hereunder shall have been given by
         the Administrative Agent by registered or certified mail to the Borrower with
         a copy addressed to the Contracting Office Representative for the Military
         Airlift Command of the United States Air Force under the contract with the
         Borrower relating to such Aircraft; or

(ii)     with or without taking possession thereof, sell all or any part of any Aircraft at
         public or private sale, as the Administrative Agent may determine, or otherwise
         dispose of, hold, use, operate or lease to others, as the Administrative Agent,
         in its sole discretion, may determine, all free and clear of any rights of the
         Borrower, except as hereinafter set forth in this Section 12.

                  In addition, the Borrower shall be liable, except as otherwise
provided above and without duplication of amounts payable hereunder, for any and all
reasonable and actual legal fees and other costs and expenses incurred by the
Administrative Agent and the Lenders in connection with the enforcement of any of
their respective rights and remedies hereunder.

                  At any sale of an Aircraft or any part thereof pursuant to this
Section 12, the Administrative Agent on the Lenders' behalf, may bid for and purchase
such property.  The Administrative Agent on the Lenders' behalf, agrees to give the
Borrower at least ten days' written notice of the date fixed for any public sale of
any Airframe or any Engine or of the date on or after which will occur the execution
of any contract providing for any private sale (together with details thereof).
Except as otherwise expressly provided above, no remedy referred to in this Section 12
is intended to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to the Administrative Agent at law or
in equity; and the exercise or beginning of exercise by the Administrative Agent of
any one (1) or  more of such remedies shall not preclude the simultaneous or later
exercise by the Administrative Agent of any or all of such other remedies.  No express
or implied waiver by the Administrative Agent of any Event of Default shall in any way
be, or be construed to be, a waiver of any future or subsequent Event of Default.

(c)      Taking of Aircraft.  (i) If an Event of Default shall have occurred and be
         continuing, at the request of the Administrative Agent, the Borrower shall promptly
         execute and deliver to the Administrative Agent such instruments of title and other
         documents as the Administrative Agent may deem necessary or advisable to
         enable the Administrative Agent or an agent or representative designated by
         the Administrative Agent, at such time or times and place or places as the
         Administrative Agent may specify, to obtain possession of all or any part of
         the Mortgage Estate to which the Administrative Agent shall at the time be
         entitled hereunder.  If the Borrower shall for any reason fail to execute and
         deliver such instruments and documents after such request by the
         Administrative Agent, the Administrative Agent may (A) obtain a judgment
         conferring on the Administrative Agent the right to immediate possession and
         requiring the Borrower to execute and deliver such instruments and documents
         to (or as delivered by) the Administrative Agent, to the entry of which
         judgment the Borrower hereby specifically consents, and (B) pursue all or part
         of the Mortgage Estate wherever such Mortgage Estate may be found and may
         peaceably enter any of the premises of the Borrower wherever it may be or be
         supposed to be and search for and take possession of and remove the same.  All
         expenses of obtaining such judgment or of pursuing, searching for and taking
         such property shall, until paid, be secured by the Lien of the Mortgage.

(ii)     Upon every such taking of possession, the Administrative Agent may, from time to
         time, at the expense of the Mortgage Estate, make all such expenditures for
         maintenance, insurance, repairs, replacements, alterations, additions and
         improvements to and of the Mortgage Estate, as it may deem proper.  In each such
         case, the Administrative Agent shall have the right to maintain, use, operate,
         store, lease, control or manage the Mortgage Estate and to carry on the business
         and to exercise all rights and powers of the Borrower relating to the Mortgage Estate,
         as the Administrative Agent shall deem best, including the right to enter into any
         and all such agreements with respect to the maintenance, insurance, use,
         operation, storage, leasing, control, management or disposition of the
         Mortgage Estate or any part thereof as the Administrative Agent may determine;
         and the Administrative Agent shall be entitled to collect and receive directly
         all tolls, rents, revenues, issues, income, products and profits of the
         Mortgage Estate and every part thereof.  Such tolls, rents, revenues, issues,
         income, products and profits shall be applied to pay the expenses of the use,
         operation, storage, leasing, control, management or disposition of the
         Mortgage Estate and of conducting the business thereof, and of all
         maintenance, repairs, replacements, alterations, additions and improvements,
         and to make all payments which the Administrative Agent may be required or may
         elect to make, if any, for taxes, assessments, insurance or other proper
         charges upon the Mortgage Estate or any part thereof (including the employment
         of engineers and accountants to examine, inspect and make reports upon the
         properties and books and records of the Borrower), and all other payments
         which the Administrative Agent may be required or authorized to make under any
         provision of the Mortgage, as well as just and reasonable compensation for the
         services of the Administrative Agent pursuant to this Section 9.03(b), and of
         all persons properly engaged and employed by the Administrative Agent.

(d)      Discontinuance of Proceedings.  In case the Administrative Agent (on its
own behalf, or on behalf of the Lenders) shall have instituted any proceeding to enforce
any right, power or remedy under the Mortgage by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Administrative Agent, then and in every such case, the
Administrative Agent and the Borrower shall, subject to any determination in such proceedings,
be restored to their former positions and rights hereunder with respect to the Mortgage Estate,
and all rights, remedies and powers of the Administrative Agent shall continue as if no
such proceedings had been instituted.

(e)      Waiver of Past Dekfaults.  The Administrative Agent, upon written instructions
from the Majority Lenders, shall waive any past Default or Event of Default hereunder and its
consequences and upon any such waiver such Default or Event of Default shall cease to exist
and any Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Agreement, but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon.

(f)      Remedies Cumulative.  Each and every right, power and remedy given to the
Administrative Agent or the Lenders specifically or otherwise herein shall be cumulative and
shall be in addition to every other right, power and remedy herein specifically given or now
or hereafter existing at law, in equity or by statute, and each and every right, power and
remedy whether specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Administrative
Agent or the Lenders and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the same time
or thereafter any other right, power or remedy.  No delay or omission by the
Administrative Agent or the Lenders in the exercise of any right, remedy or power or
in the pursuit of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Borrower or to be an
acquiescence therein.

(g)      Payment After Event of Default, etc.  All payments received and amounts held
or realized by the Administrative Agent after an Event of Default shall have occurred and
so long as such Event of Default shall be continuing, and after the Notes shall have been
accelerated pursuant to Section 12(a) hereof or after the Lenders or the Administrative
Agent shall foreclose or enforce the Mortgage or after the Notes shall have become due and
payable as provided in Section 12(a)(ii) or (iii), as well as all payments or amounts
then held by the Administrative Agent as part of the Mortgage Estate, shall be
promptly distributed by the Administrative Agent in the following order of priority:

                  first, so much of such payments or amounts as shall be required to
         reimburse the Administrative Agent for any tax, expense, charge or other loss
         (including, without limitation, all amounts to be expended at the expense of,
         or charged upon the tolls, rents, revenues, issues, income, products and
         profits of, the property included in the Mortgage Estate pursuant to
         Section 12(c)(ii)) incurred by the Administrative Agent (to the extent not
         previously reimbursed) (including, without limitation, the expenses of any
         sale, taking or other proceeding, reasonable attorneys' fees and expenses,
         court costs, and any other expenditures incurred or expenditures or advances
         made by the Administrative Agent, in the protection, exercise or enforcement
         of any right, power or remedy or any damages sustained by the Administrative
         Agent, liquidated or otherwise, upon such Event of Default) shall be applied
         by the Administrative Agent in reimbursement of such expenses;

                  second, so much of such payments or amounts remaining as shall be
          required to pay in full to the Lenders all amounts payable thereto pursuant to
         any other Operative Document and secured hereunder (other than amounts payable
         pursuant to clause "third" of this Section 12(g)) to the Lenders and remaining
         unpaid, including Break Amount and Additional Costs, shall be distributed to
         such Persons, and if the aggregate amount remaining shall be insufficient to
         pay all such amounts in full, it shall be distributed ratably, without
         priority of such person over any other;

                  third, so much of such payments or amounts remaining as shall be
         required to pay in full the aggregate unpaid principal amount of and all
         accrued but unpaid interest to the date of distribution on, the Notes shall be
         distributed to the Lenders, and if the aggregate amount remaining shall be
         insufficient to pay all such amounts in full, it shall be distributed ratably,
         without priority of any such person over any other, in the proportion that the
         principal amount of and all accrued but unpaid interest to the date of
         distribution on, each Note bears to the aggregate principal amount of and all
         accrued but unpaid interest to the date of distribution on all Notes; and

                  fourth, the balance, if any, of such payments or amount remaining
         thereafter shall be distributed to the Borrower or as a court of competent
         jurisdiction shall direct.

Section 13.       Replacement Engines.

(a)      Replacement Engines.  At any time and from time to time, any Engine which
has been (or is to be treated as if the same had been) subject to an Event of Loss and may
be replaced under Section 5.02 of the Mortgage by a Replacement Engine shall be replaced
in accordance with the provisions of this Section 13(a) and the Borrower shall, from time
to time, direct the Administrative Agent to execute and deliver to or as directed in writing
by an appropriate instrument releasing such Engine from the Lien of the Mortgage, the
Administrative Agent on behalf of the Lenders shall execute and deliver such
instrument as aforesaid, but only upon receipt by or deposit with the Administrative
Agent of the following:

(i)      A written request from the Borrower, requesting such release and specifically
         describing the Engine(s) so to be released.

(ii)     A certificate signed by a duly authorized officer of the Borrower stating the
         following with respect to the replacement of any Engine:

(A)      the fair market value of the Replacement Engine as of the date of such certificate
                  (which value shall not be less than the then fair market value of the
                  Engine requested to be released, assuming such Engine was in the condition
                  and repair required to be maintained (but without regard to hours and
                  cycles until overhaul));

(B)      the fair market value of the Engine to be released (immediately prior to the date
                  such Engine suffered an Event of Loss);

(C)      that the release of the Engine so to be released will not impair the security of
                  the Mortgage or be in contravention of any of the provisions of the
                  Mortgage;

(D)      that each of the conditions specified in Section 5.02 of the Mortgage with respect
                  to such Replacement Engine have been satisfied; and

(E)      that the Replacement Engine was first placed in service after October 22, 1994.

(b)      Mortgage Supplements for Replacements.  In the event of a Replacement Engine
being substituted as contemplated by Section 5.02 of the Mortgage, the Borrower and the
Administrative Agent agree for the benefit of the Lenders, subject to fulfillment of the
conditions precedent and compliance by the Borrower with its obligations set forth in
Section 5.02 of the Mortgage and the requirements of Section 13(a) with respect to such
Replacement Engine, to execute and deliver a Mortgage Supplement with respect thereto
as contemplated by Section 5.02 of the Mortgage, and, provided no Default or Event of
Default in each case under Section 11 hereof shall have occurred and be continuing, to
execute and deliver to the Borrower an appropriate instrument releasing the Engine
being replaced from the Lien of the Mortgage (which may be the Mortgage Supplement
that adds the Replacement Engine to the Mortgage).

(c)      Effect of Replacement.  In the event of the substitution of a Replacement
Engine pursuant to Section 5.02 of the Mortgage and Section 13(a) hereof, all provisions
of this Agreement and the Mortgage relating to an Engine or Engines being replaced shall
be applicable to such Replacement Engine or Engines with the same force and effect as if
such Replacement Engine or Engines were the same engine or engines as the Engine or Engines
being replaced but for the Event of Loss with respect to an Engine or Engines being
replaced.

Section 14.       The Administrative Agent.

(a)      Appointment, Powers and Immunities.  Each Lender hereby appoints and authorizes
Hamburgische Landesbank-Girozentrale- ("HLB") to act as its Administrative Agent
hereunder and under the other Operative Documents with such powers as are specifically
delegated to the Administrative Agent by the terms of this Agreement and of the other
Operative Documents, together with such other powers as are reasonably incidental thereto.
The Administrative Agent shall take all actions delegated to it hereunder as an agent
solely for the benefit of the Lenders.  The Administrative Agent (which term as used
in this sentence and in Section 14(c) and the first sentence of Section 14(f) hereof
shall include reference to its Affiliates and its own and their Affiliates' officers,
directors, employees and agents, or either of them):  (i) shall have no duties or
responsibilities except those expressly set forth in this Agreement and in the other
Operative Documents, and shall not by reason of this Agreement or any other Operative
Document be a trustee for the Lenders; (ii) shall not be responsible to the Lenders
for any recitals, statements, representations or warranties contained in this
Agreement or in any other Operative Document, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement or
any other Operative Document, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, any Note or any other Operative
Document or any other document referred to or provided for herein or therein or for
any failure by the Borrower or any other Person to perform any of its obligations
hereunder or thereunder; (iii) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other Operative Document;
(iv) shall not be responsible to the Lenders for any action taken or omitted to be
taken by it hereunder or under any other Operative Document or under any other
document or instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct; and
(v) may be removed from its role as Administrative Agent by the Lenders with or
without cause and upon notice by Lenders to the Borrower.  The Administrative Agent
shall not assign its interest to any replacement agent who is not a bank or financial
institution with a net worth (or capital and surplus, as the case may be) in excess of
$500,000,000 without the Borrower's prior written consent, such consent not to be
unreasonably withheld.  The Administrative Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it in good faith.

(b)      Reliance by the Administrative Agent.  The Administrative Agent shall be entitled
to rely upon any certification, notice or other communication (including, without limitation,
any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Administrative Agent.  As to any matters not expressly
provided for herein or in any other Operative Document, the Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, hereunder or
thereunder in accordance with instructions given by each Lender as is required in such
circumstance, and such instructions of such Lender and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders.

(c)      Defaults.  The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default (other than the non-payment of principal of or interest
on Notes) unless the Administrative Agent have received notice from the Lenders or the Borrower
specifying such Default and stating that such notice is a "Notice of Default".  In the event
that the Administrative Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give prompt notice thereof to the Lenders (and shall give
the Lenders prompt notice of each such non-payment).  The Administrative Agent shall
(subject to Section 16(a) hereof) take such action with respect to such Default as
shall be directed by the Majority Lenders, provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative Agent may
(but shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default as it shall deem advisable in the best interest of the
Lenders except to the extent that this Agreement expressly requires that such action
be taken, or not be taken, only with the consent or upon the authorization of the
Majority Lenders.

(d)      Rights as Administrative Agent.  HLB (and any successor acting as Administrative
Agent) and its affiliates may (without having to account therefor to the Lenders) accept
deposits from, lend money to, make investments in and generally engage in any kind of loan,
trust or other business with the Borrower (and any of its subsidiaries or Affiliates)
as if it were not acting as the Administrative Agent, and HLB and its affiliates may
accept fees and other consideration from the Borrower for services in connection with
this Agreement or otherwise without having to account for the same to the Lenders.

(e)      Failure to Act.  Except for action expressly required of the Administrative Agent
hereunder and under the other Operative Documents, the Administrative Agent shall in all
cases be fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive indemnification against any and all liability and expense that may be incurred
by it by reason of taking or continuing to take any such action.

(f)      Resignation or Removal of the Administrative Agent.  Subject to the appointment
and acceptance of a successor Administrative Agent as provided below, and subject further
to the penultimate sentence of this Section 14(f), the Administrative Agent may resign at
any time by giving notice thereof to the Lenders and the Borrower, and the Administrative
Agent may be removed at any time with or without cause by the Majority Lenders.  Upon
any such resignation or removal, the Majority Lenders shall have the right to appoint
a successor Administrative Agent.  If no successor Administrative Agent shall have
been so appointed by the Majority Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent's giving of notice of
resignation or the Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent.  Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative Agent or
shall thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder.  After any retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent, the
provisions of this Section 14 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as the
Administrative Agent.  The Administrative Agent shall not assign its interest to any
replacement agent who is not a bank or financial institution with a net worth (or
capital and surplus, as the case may be) in excess of $500,000,000 without the
Borrower's prior written consent, such consent not to be unreasonably withheld.

(g)      Consents under Operative Documents.  Except as otherwise provided in Section 16(a)
hereof, the Administrative Agent may, with the prior consent of the Majority Lenders (but
not otherwise), consent to any modification, supplement or waiver under any of the
Operative Documents, provided that, without the prior consent of each Lender, the
Administrative Agent shall not (except as provided herein) release any collateral or
otherwise terminate any Lien under any Operative Document providing for collateral
security, or agree to additional obligations being secured by such collateral security
(unless the Lien for such additional obligations shall be junior to the Lien in favor
of the other obligations secured by such Operative Document), except that no such
consent shall be required, and the Administrative Agent is hereby authorized, to
release any Lien covering property which is the subject of a disposition of property
permitted hereunder or to which the Lenders have consented.

(h)      Non-Receipt of Funds by the Administrative Agent.  Unless the Administrative Agent
shall have been notified by the Lenders or the Borrower (the "Payor") prior to the date on
which the Payor is to make payment to the Administrative Agent of (in the case of the
Lenders) the proceeds of a Loan to be made by it hereunder or (in the case of the Borrower)
a payment to the Administrative Agent for account of one or more of the Lenders
hereunder (such payment being herein called the "Required Payment"), which notice
shall be effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but shall
not be required to), make the amount thereof available to the intended recipient(s) on
such date and, if the Payor has not in fact made the Required Payment to the
Administrative Agent, the recipient(s) of such payment shall, on demand, repay to the
Administrative Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so made
available by the Administrative Agent until the date the Administrative Agent recovers
such amount at a rate per annum equal to the Federal Funds Rate for such day and, if
such recipient(s) shall fail promptly to make such payment, the Administrative Agent
shall be entitled to recover such amount, from the Payor, together with interest as
aforesaid.

Section 15.       Investment Of Funds.  Any moneys held by the Administrative Agent as security
hereunder for Borrower's obligations shall, until paid to Borrower or otherwise applied in
accordance with the terms of the Operative Documents, be invested by the
Administrative Agent as Borrower may from time-to-time direct in writing (or orally
and confirmed in writing), but subject to availability at the Administrative Agent's
discretion (it being understood that absent such a direction, there shall be no
obligation to invest such moneys) in (a) obligations of, or guaranteed by, the United
States Government or agencies thereof, (b) open market commercial paper of any
corporation incorporated under the laws of the United States of America or any State
thereof rated at least "P-2" or its equivalent by Moody's or at least "A-2" or its
equivalent by S&P, (c) certificates of deposit issued by commercial banks organized
under the laws of the United States or of any political subdivision thereof having a
combined capital and surplus in excess of $750,000,000 which banks or their holding
companies have a rating of A or its equivalent by Moody's or S&P; provided, however,
that the aggregate amount at any one time so invested in certificates of deposit
issued by any one bank shall not exceed five percent (5%) of such bank's capital and
surplus, (d) Dollar denominated offshore certificates of deposit issued by, or
offshore time deposits with, any commercial bank described in (c) or any subsidiary
thereof, and (e) repurchase agreements with any financial institution having combined
capital and surplus of at least $750,000,000 with any of the obligations described in
clauses (a) through (d) as collateral, none of which investments (but exclusive of any
underlying investment that may be subject to a repo) shall have a term to maturity in
excess of 30 days.  There shall be promptly remitted to Borrower or its order (but no
more frequently than monthly) any gain (including interest received) realized as a
result of any such investment (net or any, fees, commissions and other expenses, if
any, incurred in connection with such investment) unless a Special Default or an Event
of Default shall have occurred and be continuing.  The Borrower shall be responsible
for any net loss realized as a result of any such investment and shall reimburse the
Administrative Agent on demand.

Section 16.       Supplements and Amendments to the Mortgage and Other Operative Documents

(a)      Instructions of Lenders; Limitations.  (i) At any time and from time to time, at the
request of the Borrower the Administrative Agent (but only on the written direction or
consent of the Majority Lenders) shall execute a supplement to the Mortgage for the purpose
of adding provisions to, or changing or eliminating provisions of, the Mortgage as specified
in such request, provided, however, that, without the consent of each Lender, no such
amendment of or supplement to any such document, or waiver or modification of the
terms of any thereof, shall (i) modify any of the provisions of this Section 16(a) or
the definitions of the terms, "Majority Lenders" or "Operative Documents", contained
herein or in any other Operative Document, (ii) increase the principal amount of any
Note or reduce the amount or extend the time of payment of any amount owing or payable
under any Note or (except as provided in this Agreement) increase or reduce the Break
Amount or interest payable on any Note (except that only the consent of the Lender
holding any Note shall be required for any decrease in any amounts of or the rate of
Break Amount or interest payable on such Note or any extension for the time of payment
of any amount payable under such Note), (iii) reduce, modify or amend any indemnities
in favor of any Lender or in favor of or to be paid by the Borrower or alter the
definition of "Indemnitee" to exclude any Lender (except as consented to by each
Person adversely affected thereby), or (iv) release the Borrower from its obligations
in respect of the payment of the principal and interest then outstanding (or other
amounts payable therewith) or change any of the circumstances under which Stipulated
Insured Amount (or other amounts payable therewith) are payable.  This Section 16(a)
shall not apply to any mortgage or mortgages supplemental hereto permitted by, and
complying with the terms of, Section 13(b).  Notwithstanding the foregoing, without
the consent of each Lender, no such supplement to the Mortgage, or waiver or
modification of the terms thereof or of any other agreement or document shall
expressly permit the creation of any Lien on the Mortgage Estate or any part thereof,
except as therein expressly permitted, or deprive any Lender of the benefit of the
Lien of the Mortgage on the Mortgage Estate, except as provided in Sections 13(a) and
13(b) hereof or in connection with the exercise of remedies under Section 12 hereof.
Except as provided in this Section 16(a), the Administrative Agent shall not amend,
supplement or waive any of the terms of the Mortgage or this Agreement.

(b)      Administrative Agent Protected.  If, in the opinion of the institution acting as
the Administrative Agent hereunder any document required to be executed pursuant to the
terms of Section 16(a) affects any right, duty, immunity or indemnity with respect to it
under the Mortgage, the Administrative Agent may in its discretion decline to execute such
document.

(c)      Documents Mailed to the Lenders.  Promptly after the execution by the Administrative
Agent and the Lenders of any document entered into pursuant to Section 16(a), the Administrative
Agent shall mail, by certified mail, postage prepaid, a conformed copy thereof to each
Lender at its address shown on the Note Register, but the failure of the Borrower or
the Administrative Agent, to mail such conformed copies shall not impair or affect the
validity of such document.

Section 17.       Notices.

         All notices, demands, instructions and other communications required or
permitted to be given to or made upon any party hereto shall be in writing and shall
be personally delivered or sent by registered or certified mail, postage prepaid, or
by facsimile, or by prepaid courier service, and shall be effective upon receipt.

         Unless otherwise specified in a notice sent or delivered in accordance with
the foregoing provisions of this Section 17, notices, demands, instructions and other
communications in writing shall be given to or made upon the respective parties hereto
at their respective addresses (or to their respective telex address or facsimile
numbers) as follows:  (a) if to the Borrower or the Administrative Agent, to the
respective addresses set forth in Section 7.06 of the Mortgage, (b) if to the Lenders,
to the respective addresses set forth on Schedule I hereto, or (c) if to any
subsequent lender, addressed to such lender its address set forth in the Note Register
maintained pursuant hereto.

         Notwithstanding anything to the contrary contained herein or in any of the
Operative Documents, and for the avoidance of doubt, any notice required to be given
by the Lenders hereunder or under any of the Operative Documents may also be given by
the Administrative Agent on the Lenders' behalf.  The Administrative Agent agrees to
give any notice so received to the Lenders.

Section 18.       Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.

(a)      This Agreement shall in all respects be governed by, and construed in accordance with,
the law of the State of New York, including all matters of construction, validity and performance.

(b)      Each party hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York
sitting in New York County and of the United States District Court of the Southern District
of New York, and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such Federal
court.  Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.  Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or proceeding
relating to this Agreement against another party or its properties in the courts of
any jurisdiction.

(c)      Each party hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to this Agreement
in any court referred to in paragraph (b) of this Section.  Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)      Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 17.  Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any other manner permitted by law.

(e)      EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 19.       Costs and Expenses.  The Borrower shall reimburse the Administrative
Agent for all reasonable out-of-pocket expenses incurred by it in connection with the
negotiation and preparation of this Agreement and the other Operative Documents (including
the reasonable fees and expenses of its special counsel); provided that, if a Delivery
Date fails to occur due to the fault of the Administrative Agent or any Lender
(including the failure to obtain any necessary credit approval), the Administrative
Agent will be responsible for its own costs and expenses (including legal fees and
expenses); which costs and expenses shall be limited, in the case of the failure of
the second Delivery Date to occur, to the costs and expenses incurred solely in
connection with such second Delivery Date.  The Borrower is also liable for all of its
own out-of-pocket expenses incurred in connection with the negotiation, preparation
and the carrying out of its obligations under this Agreement and the other Operative
Documents (including the reasonable fees and expenses of all of its special counsel).

Section 20.       Section 1110 Compliance.

         Notwithstanding any provision herein or elsewhere contained to the contrary,
it is understood and agreed among the parties hereto that the transactions
contemplated by this Credit Agreement, and the other Operative Documents are expressly
intended to be, shall be and should be construed so as to be, entitled to the full
benefits of 11 U.S.C. Section 1110, as amended from time to time, and any successor
provision thereto.

Section 21.       Confidentiality.

         Except to the extent otherwise required by applicable law or, as required to
be filed publicly with the Securities and Exchange Commission, or unless the Borrower,
the Lenders and the Administrative Agent shall otherwise consent in writing, each
party to this Agreement agrees to maintain the confidentiality of this Agreement (and
all drafts hereof and documents ancillary hereto) in its communications with third
parties other than any Indemnified Party and not to disclose, deliver or otherwise
make available to any third party (other than its directors, officers, employees,
rating agencies, accountants or counsel or to bank examiners or other regulatory
personnel) the original or any copy of all or any part of this Agreement (or any draft
hereof and documents ancillary hereto) except to an Indemnified Party.

         None of the Borrower, the Administrative Agent, or any of their respective
Affiliates shall issue any news release or make any public announcement pertaining to
the transactions contemplated by this Agreement and the Operative Documents without
the prior written consent of the other (which consent shall not be unreasonably
withheld) unless such news release or public announcement is required by applicable
law, in which case the parties shall consult with each other prior to the issuance of
such news release or public announcement.

         Notwithstanding anything herein, there is no restriction (either express or
implied) on any disclosure or dissemination of the tax structure or tax aspects of the
transaction contemplated by the Operative Documents.  Furthermore, each party hereto
acknowledges that it has no proprietary rights to any tax matters or tax idea
contemplated by the Operative Documents or to any element of the transaction structure
contemplated by the Operative Documents.

Section 22.       Covenants of the Administrative Agent and the Lenders.

(a)      Quiet Enjoyment.  The Administrative Agent and each Lender each agrees that neither
it nor any of its Affiliates, nor anyone acting on behalf of any such Person will interfere
in the Borrower's quiet enjoyment of the Aircraft so long as no Event of Default shall have
occurred and be continuing.

(b)      Lender Liens.  The Administrative Agent and each Lender hereby severally covenants
and agrees with each of the other parties hereto that so long as (i) it remains the
Administrative Agent or a Lender, as the case may be, and (ii) the Lien of the Mortgage on
any Aircraft has not been released in accordance with the terms of the Operative Documents,
it will (X) take such action as may be necessary to discharge any Lender Liens, if any, on
any Aircraft attributable to it or any of its Affiliates and (Y) indemnify and hold
harmless the other parties hereto from and against any loss, cost or expense which may
be suffered or incurred by any such Person as a result of its failure to discharge and
satisfy any such Lender Lien.

(c)      Transfer Restrictions.  Each Lender covenants that (notwithstanding anything
herein or in any other Operative Document to the contrary) it will not transfer its Notes
or any interest under any of the Operative Documents unless the transferee makes the
representation and warranty contained in Section 7(b).

Section 23.       Leveraged Lease Financing.  Notwithstanding any provision herein or
elsewhere in the Operative Documents to the contrary notwithstanding, the Borrower may elect,
prior to the borrowing for either Aircraft contemplated by Section 2(a) hereof, to finance
Aircraft 1743 and/or Aircraft TBD as a leveraged lease financing and the Lenders agree to
such utilization of their Commitments for such purpose, subject to the satisfaction of the
following terms and conditions:

(a)      the Borrower shall provide at least 30 days' advance notice of its intention to effect
such a financing, which notice shall identify the equity investor (the "Owner Participant")
and owner trustee ("Lessor");

(b)      the identified Owner Participant shall have a tangible net worth of at least
$50,000,000 (or have its obligations guaranteed by a parent corporation with such a tangible
net worth level), shall be an active participant in the aircraft leveraged lease industry
and the identity of which (as well as that of the Lessor) shall be reasonably satisfactory
to the Lenders;

(c)      documentation for such transaction shall be in form and substance satisfactory to
         the Lenders and shall:

(i)      contain terms and conditions concerning the Borrower and the Aircraft no less
         favorable to the Lenders than those binding on the Borrower contained in the
         Operative Documents (provided that the lease in any such leveraged lease transaction
         need not cross default to (i) the Mortgage or (ii) if both Aircraft shall be financed
         by leveraged leases, to the lease for the other Aircraft unless the Owner
         Participant for both Aircraft are the same and the Owner Participant has,
         after reasonable efforts undertaken by the Borrower to achieve such result,
         agreed to the same); and

(ii)     contain debt/equity provisions as are consistent with market practice and reasonably
         satisfactory to the Lenders, but shall not, without the consent of the Lenders,
         contain any swap breakage cap or other limitation relating to any swap hedging
         transaction or the ability of the Lenders to recover any swap hedging transaction
         or the ability of the Lenders to recover any swap breakage losses ahead of recoveries
         by the Owner Participant of its investment;

(d)      the economic substance (e.g., loan amount, interest rate, payment periodicity,
maturity date, amortization profile and LIBOR) of the leveraged lease debt funded by the
Lenders shall be the same as that evidenced by the Notes under the Mortgage; provided that


(i)      the level of indebtedness may be reduced in part; and

(ii)     the amortization profile on the leveraged lease debt may be based on an optimized
         leveraged lease basis so long as (x) the final maturity is no later than 12 years
         following the Delivery Date of such Aircraft, (y) the average life of such debt
         does not exceed 8 years (computed as of such Delivery Date) and (z) such amortization
         profile shall otherwise be mutually agreed by the Borrower and the Lenders on
         a good faith basis; and

(e)      the Borrower shall pay to the Lenders (i) the reasonable fees and expenses of their
special counsel in connection with the negotiation, drafting (by such special counsel of
the related indenture), execution and delivery of the documentation utilized to effect
such leveraged lease and (ii) any reasonable out-of-pocket (including travel) costs and
expenses of the Administrative Agent as a single representative for all of the Lenders
incurred in connection with the leveraged lease.

Section 24.       Miscellaneous.

(a)      The representations, warranties, indemnities and agreements of the Borrower, the
Administrative Agent and the Lenders and each party's obligations under any and all thereof,
shall survive the expiration or other termination of this Agreement or any other Operative
Document, except as expressly provided herein or therein.

(b)      This Agreement may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.  Neither this Agreement nor any
of the terms hereof may be terminated, amended, supplemented, waived or modified, except by
an instrument in writing signed by the party or parties thereto.

(c)      (i) This Agreement shall be binding upon and shall inure to the benefit of, and
         shall be enforceable by, the parties hereto and their respective successors
         and permitted assigns.

(ii)     The Borrower may not assign any of its rights or obligations under this Agreement
         or the other Operative Documents except to the extent expressly provided thereby.

(iii)    Subject to the provisions of clause (iv) below, any Lender may assign its Notes,
         in whole or in part, as provided hereunder and in Section 10(c) hereof, to any
         Person (including an Affiliate, another lender or other third party) which
         assignment shall be effected pursuant to an agreement substantially in the form
         of Exhibit B hereto.  In addition, any Lender may, with the prior written consent
         of the Borrower, assign, in whole or in part, its Commitment in respect of any
         Aircraft to any other Person capable of meeting its funding obligation in
         respect of the assigned Commitment, which assignment shall be effected
         pursuant to an agreement substantially in the form of Exhibit B hereto,
         appropriately modified to relate to the assignment of a Commitment.  Effective
         upon the assignment of any Commitment in accordance with this Section 24(c),
         such Lender shall be relieved of its obligations in respect of such Commitment
         to the extent the assignee thereof shall have become obligated in respect
         thereof.

(iv)     Any assignment or transfer by such Lender hereunder shall be subject to the following
         conditions:

(A)      The transferring Lender shall have first obtained the prior written consent of the
                  Borrower, which consent shall not be unreasonably withheld (provided that
                  no such consent shall be required if an Event of Default has occurred and
                  is continuing);

(B)      The transferring Lender shall send the Borrower a written notice of such proposed
                  transfer, setting forth the name and address of the proposed transferee,
                  the amount of the transferring Lender's Notes proposed to be transferred
                  and the proposed date on which such transfer will occur.  the Borrower
                  will then have three (3) Business Days to request such additional
                  information as it may reasonably require regarding such proposed
                  transferee, or , if no such additional information is requested and
                  such proposed transfer satisfies the other requirements of this
                  Section 24(c), the Borrower shall be deemed to have consented to such
                  proposed transfer.  In the event that the Borrower requests
                  additional information, it shall have three (3) Business Days from
                  the time such additional information is provided to reject such
                  proposed transfer, failing which, subject to satisfaction of the
                  other requirements of this Section 24(c), the Borrower shall be
                  deemed to have given its consent;

(C)      as a result of any assignment or transfer, there shall be no more than five (5)
                  lenders in the aggregate;

(D)      no such assignment or transfer shall be in an amount less than $5,000,000;

(E)      so long as no Event of Default shall have occurred or be continuing, no assignment
                  or transfer shall, at the time of such assignment or transfer, increase
                  the obligations (including, without limitation, in respect of withholding
                  taxes or increased costs) of the Borrower under this Agreement or the
                  Mortgage; and

(F)      except as otherwise set forth herein, no participant in any Loan assigned or
                  transferred hereunder shall have any rights directly against the Borrower.

                  In the event a Lender, in accordance with this Section 24(c), assigns
its interest in any Loan, together with its interest herein and in  the other
Operative Documents, in each case to the extent relating to such Loan, then all
references to "the Lender" hereunder shall mean and refer to such assignee to the
extent of such assignment, and any subsequent assignment by such assignee shall have a
corresponding effect.

                  Subject always to the foregoing, this Agreement inures to the benefit
of, and is binding upon, the successors and assigns of the parties hereto.

(v)      Notwithstanding the foregoing, the Administrative Agent may not assign or transfer
         its rights or obligations hereunder or under the other Operative Documents without
         the prior written consent of the Lenders, such consent not to be unreasonably
         withheld.

(vi)     All costs and expenses in connection with any assignment or transfer permitted by
         this Section 24(c) (including any legal fees of counsel to the parties to the
         Operative Documents) shall be borne by the relevant transferring/assigning lender,
         except in the case of an assignment or transfer that is effected at the
         request of the Borrower or if an Event of Default shall have occurred and be
         continuing, in which case such costs and expenses (including reasonable legal
         fees) shall be borne by the Borrower.

(d)      No Lender shall have any obligation or duty to the Borrower, or to other Persons
with respect to the transactions contemplated hereby except those obligations or duties of
such Lender expressly set forth in this Agreement and the other Operative Documents, and
no Lender shall be liable for performance by any other party hereto of such other party's
obligations or duties hereunder.  Without limitation of the generality of the
foregoing, under no circumstances whatsoever shall any Lender be liable to the
Borrower for any action or inaction on the part of the Administrative Agent in
connection with the transactions contemplated herein, whether or not such action or
inaction is caused by willful misconduct or gross negligence of the Administrative
Agent.

Section 25.       Terms of Fixed Rate Setting.

(a)      The Lenders, at the Borrower's direction, shall cause the Applicable Rate for
each Loan to be a fixed rate effective for the period commencing on a date selected by
Borrower during the term of the Notes (the "Swap Effective Date") and ending on the final
scheduled maturity date of the Notes issued in respect of such Loan (the "Swap Period").

(b)      If the Borrower desires to elect a Fixed Rate, it shall give the Lenders at least
five Business Days' advance notice of such intention. By 9:30 a.m. (New York City time) on
the date three Business Days prior to the Swap Effective Date, if the Borrower desires the
Applicable Rate to become a Fixed Rate, each Lender shall quote to the Borrower the fixed
rate of interest at which such Lender would be willing to lend to the Borrower.  No later
than two minutes after receipt of such quotation, the Borrower shall inform each Lender
whether it accepts or rejects such fixed rate quotation.  If such fixed rate quotation
is accepted, such quoted fixed rate (the "Fixed Rate") shall be the Applicable Rate
hereunder. Each Lender agrees to provide its quotation of a Fixed Rate in accordance
with market practice based upon the Notional Swap Transaction and as though such
Lender were the floating rate payor thereunder.

(c)      In the event the Applicable Rate is the Fixed Rate, on the date of (i) any
prepayment of the Notes pursuant to the Mortgage or (ii) any acceleration of the Notes
pursuant to the Mortgage, each Lender will provide a quotation, as it reasonably determines
in good faith in accordance with market practice, representing the termination value of
the Notional Swap Transaction  by 12:00 noon New York City time on such date (the
"Termination Date").

(d)      Each Lender agrees that, so long as no Special Default or Event of Default shall
have occurred and be continuing, it shall, promptly pay to the Borrower at such account as
the Borrower may specify any Swap Breakage Gain in respect of the Notes, except that it
may first deduct therefrom any amounts then due to it (or, if acting as a swap agent, any
Lender) under the Operative Documents and apply any amount so retained to the
satisfaction thereof.  At such time as there shall not be continuing any such Special
Default or Event of Default, such amount shall be paid to the Borrower.

(e)      Upon the request of the Borrower, each Lender shall provide to the Borrower a
good faith estimate of the Swap Breakage Loss or Swap Breakage Gain, as the case may be,
related to the Notes, in connection with the occurrence, or anticipated occurrence, of any
event contemplated by the Operative Documents that might give rise to an obligation to pay
Swap Breakage Loss or Swap Breakage Gain.

(f)      Upon determination by a Lender of any Swap Breakage Loss or Swap Breakage Gain
payable to or by it, as the case may be, such Lender will provide to the Borrower a
certificate, certifying such Swap Breakage Loss or Swap Breakage Gain, which certified
amount shall be conclusive absent manifest error.  Any Swap Breakage Loss or Swap Breakage
Gain payable pursuant to the terms of the Operative Documents shall be payable in Dollars.

(g)      Each Lender agrees to provide its quotation of Swap Break Costs based upon the
Notional Swap Transaction and as though such Lender were the floating rate payor thereunder.

(h)      References in this Section 25 to any Lender shall, to the extent appropriate, mean
such Lender in its own right or acting through a swap agent.

                                [signature page follows]





         IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be
duly executed by their respective officers thereunto duly authorized as of the day and
year first above written.

                                                           FRONTIER AIRLINES, INC.,
                                                           Borrower


                                                           By:____________________________
                                                           Its:___________________________

                                                           HAMBURGISCHE LANDESBANK
                                                           -GIROZENTRALE-,
                                                           Administrative Agent


                                                           By:____________________________
                                                           Its:___________________________



                                                           By:____________________________
                                                           Its:___________________________



                                                           LENDERS:

                                                           HAMBURGISCHE LANDESBANK
                                                           -GIROZENTRALE-


                                                           By:____________________________
                                                           Its:___________________________



                                                           By:____________________________
                                                           Its:___________________________






                                                                [Credit Agreement [Frontier/HLB]]

Schedule I

                              Notice & Account Information

Lenders

Notice to:

Hamburgische Landesbank -Girozentrale-
Gerhart-Hauptmann-Platz 50
D-20095 Hamburg
Germany
Attention: Dept. Airlines/Stephan Faehrmann

Telephone:  +49-40-3333-2601
Telecopier:  +49-40-3333-3098 (this relates to Lender and Administrative Agent)

Payment Instructions

Bank Name: JPMorgan Chase
Acct. No.: *
Acct. Name: Hamburgische Landesbank Girozentrale
ABA No.: *
SWIFT No.: *
Reference: Frontier Airlines/687 723

Borrower:

Frontier Airlines, Inc.
Frontier Center One
7001 Tower Road
Denver, CO  80249
Attention:  Chief Financial Officer

Telephone:  (720) 374-4510
Telecopier:  (720) 374-4375






                                                                [Credit Agreement [Frontier/HLB]]

                                          Schedule II

                            Participation in Original Amount


                [All amounts are expressed in millions of U.S. Dollars]






                          % of         Commitment for each           Maximum
  Lender      Original Amount       Aircraft                 Commitment
                                               1743              TBD

Hamburgische                                         Option A
Landesbank
 -Girozentrale-             *                    *                *                      *

Hamburgische                                         Option B
Landesbank
 -Girozentrale-             *                    *                *                      *







                                                                [Credit Agreement [Frontier/HLB]]
                                          EXHIBIT A

                                Form of borrowing notice

                                [LETTERHEAD OF BORROWER]


                                                          ----------------------, 200_

HAMBURGISCHE LANDESBANK -GIROZENTRALE-



Ladies and Gentlemen:

         We refer to the Credit Agreement [Frontier/HLB], dated as of May 23, 2002 (the
"Credit Agreement", which term, if such agreement shall not have been executed and
delivered by the parties thereto prior to the date hereof, shall mean the most
recently circulated draft thereof), among Frontier Airlines, Inc., as borrower (the
"Borrower"), the lenders that are party thereto identified under the caption "Lenders"
on the signature pages thereto or that, pursuant to Section 24(c) thereof, shall
become a "Lender" thereunder (individually, a "Lender" and, collectively, the
"Lenders") and Hamburgische Landesbank -Girozentrale-, as Administrative Agent on
behalf of the Lenders.  Capitalized terms used but not defined in this Borrowing
Notice shall have the meaning given such terms (whether by reference to another
document or otherwise) in the Credit Agreement.

         In accordance with Section 2 of the Credit Agreement, Borrower hereby requests
that a Loan be advanced by the Lenders on __________________ (the "Closing Date").
The Borrower elects Option [A/B].  The Lenders are directed to pay $__________ of the
proceeds of the Commitment by wire transfer to the following account:

                                    [Credit Lyonnais
                                      New York, NY
                                        ABA #: *
                                      Account #: *
                              Attention: William McIlwain
                             Reference: Frontier MSN _____]

         Borrower agrees that it shall not postpone the Closing Date except as
expressly agreed between the parties in writing.  In the event of a postponement of
the Closing Date or other reduction or modification or termination of the related
Loan, Borrower shall compensate Lenders upon written request by Lenders for all
losses, damages, liabilities and reasonable expenses (including any losses and
expenses incurred on account of funds borrowed, contracted for or utilized for
purposes relating to the Loan or in connection with the re-employment or reinvestment
of such funds or an interruption of the use of such funds and including interest or
other such costs on funds borrowed until such funds are returned to their funding
source) that Lenders sustain as a result of (a) the failure of Borrower to borrow any
part of the Commitment of the Lenders, (b) the repayment or voluntary prepayment of
any portion of the Loan, (c) the failure of Borrower to prepay the Loan on a
prepayment date, (d) the repayment or prepayment of any portion of the Loan as a
result of the exercise by the Administrative Agent or any Lender of its remedies
following the occurrence of an Event of Default, or (e) the repayment or prepayment of
any portion of the Loan.  Compensation to the Lenders under this Borrowing Notice
shall include interest at the Applicable Rate on each Lender's Commitment from the
Closing Date and any Break Amounts and Additional Costs or and other amounts (other
than interest) payable by each Lender to providers of funds obtained by each Lender in
order to make its Commitment, and costs incurred by each Lender in redeploying funds
that were to be used by it to make its Commitment.

                                                              Very truly yours,

                                                           FRONTIER AIRLINES, INC.


                                                           By:____________________________
                                                           Name:
                                                           Title






                                                                [Credit Agreement [Frontier/HLB]]


                                          EXHIBIT B

                              FORM OF ASSIGNMENT AGREEMENT

         ASSIGNMENT AGREEMENT [Frontier/HLB] dated as of __________ __, ____ between
________________________________ (the "Assignee") and _____________________________
(the "Assignor").

                                          RECITALS

         WHEREAS, the Assignor is the holder of the Note No. ____ dated __________ __,
____ (the "Assignor's Note") issued under the Credit Agreement [Frontier/HLB], dated
as of May 23, 2002 (the "Credit Agreement") between Frontier Airlines, Inc., as
Borrower, the lenders that are party thereto identified under the caption "Lenders" on
the signature pages thereto or that, pursuant to Section 24(c) thereof, shall become a
"Lender" thereunder (individually, a "Lender" and, collectively, the "Lenders") and
Hamburgische Landesbank -Girozentrale-, as Administrative Agent;

         WHEREAS, the Assignor proposes to assign to the Assignee $____________ of the
$_____________ Assignor's Note and a pro rata portion of all of the rights and
obligations of the Assignor under the Credit Agreement and the other Operative
Documents (as defined below) in respect thereof, on the terms and subject to the
conditions set forth herein, and the Assignee proposes to accept the assignment of
such rights and obligations from the Assignor on such terms and subject to such
conditions;

         NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:

         Section 1.  Definitions.  Unless otherwise defined herein, terms defined in
the Credit Agreement are used herein as therein defined.

         Section 2.  Assignment.  On __________ __, ____ (the "Effective Date"), and on
the terms and subject to the conditions set forth herein, the Assignor will sell,
assign and transfer to the Assignee, without recourse to or representation, express or
implied, by the Assignor (except as expressly set forth in Section 5 hereof), a
$___________ portion of the Assignor's Note and a pro rata portion of the rights and
obligations of the Assignor under the Credit Agreement and the other Operative
Documents in respect thereof (but not with respect to any indemnity or other claim,
interest thereon at the Past Due Rate and Break Amounts, if any, accrued and unpaid as
of the Effective Date or thereafter payable to the Assignor in respect of the period
prior to the Effective Date), and the Assignee shall accept such assignment from the
Assignor and assume all of the obligations of the Assignor accruing from and after the
Effective Date under the Credit Agreement and the other Operative Documents relating
to the Assignor's Note on such terms and subject to such conditions.  Upon the
satisfaction of the conditions set forth in Section 4 hereof, (A) the Assignee shall,
on the Effective Date, succeed to the rights and be obligated to perform the
obligations of a Lender under the Credit Agreement and the other Operative Documents,
and (B) the Assignor shall be released from its obligations under the Credit Agreement
and the other Operative Documents accrued from and after the Effective Date, in each
case to the extent such obligations have been assumed by the Assignee.

         Section 3.  Payments.  As consideration for the sale, assignment and transfer
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor, on the
Effective Date, in lawful currency of the United States and in immediately available
funds, to the account specified below its signature on the signature pages hereof, an
amount equal to $_______________.

         Section 4.  Conditions.  This Assignment Agreement shall be effective upon the
due execution and delivery of this Assignment Agreement by the Assignor and the
Assignee and the effectiveness of the assignment contemplated by Section 2 hereof is
subject to (a) the receipt by the Assignor of the payment provided for in Section 3
hereof [and the receipt by the Assignee of an up-front fee in the amount of $_______]
and (b) the delivery to the Administrative Agent of the Assignor's Note, duly endorsed
for [partial] transfer to the Assignee, together with a request in the form attached
hereto as Exhibit A that a new Note be issued to the Assignee and Assignor.

         Section 5.  Representations and Warranties of the Assignor.  The Assignor
represents and warrants as follows:  (a) the Assignor has full power and authority,
and has taken all action necessary to execute and deliver this Assignment Agreement
and any other documents required or permitted to be executed or delivered by it in
connection with this Assignment Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Assignment Agreement, and no
governmental authorizations or other authorizations are required in connection
therewith, (b) the Assignor's interest in the Assignor's Note is free and clear of any
and all Liens created by or through the Assignor, (c) this Assignment Agreement
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with its terms, and (d) the Assignor has received
no written notice of any Default having occurred and continuing on the date of
execution hereof.

         Section 6.  Representations and Warranties of the Assignee.  The Assignee
hereby represents and warrants to the Assignor that (a) the Assignee has full power
and authority, and has taken all action necessary to execute and deliver this
Assignment Agreement and any and all other documents required or permitted to be
executed or delivered by it in connection with this Assignment Agreement and to
fulfill its obligations under, and to consummate the transactions contemplated by,
this Assignment Agreement, and no governmental authorizations or other authorizations
are required in connection therewith, (b) this Assignment Agreement constitutes the
legal, valid and binding obligation of the Assignee, enforceable against the Assignee
in accordance with its terms, and (c) the Assignee has fully reviewed the terms of the
Operative Documents and has independently and without reliance upon the Assignor and
based on such information as the Assignee has deemed appropriate, made its own credit
analysis and decision to enter into this Assignment Agreement.

         Section 7.  Further Assurances.  The Assignor and the Assignee hereby agree to
execute and deliver such other instruments, and take such other action, as either
party may reasonably request in connection with the transactions contemplated by this
Assignment Agreement.

         Section 8.  Governing Law.  This Assignment Agreement shall be governed by,
and construed in accordance with, the law of the State of New York.

         Section 9.  Notices.  All communications between the parties or notices in
 connection herewith shall be in writing, hand-delivered or sent by ordinary mail,
telex or facsimile transmitter, addressed as set forth on the signature pages hereof.
All such communications and notices shall be effective upon receipt.

         Section 10. Binding Effect.  This Assignment Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and
assigns.

         Section 11. Interpretation.  The headings of the various sections hereof are
for convenience of reference only and shall not affect the meaning or construction of
any provision hereof.

         Section 12. Integration of Terms.  This Assignment Agreement contains the
entire agreement between the parties relating to the subject matter hereof and
supersedes all oral statements and other writings with respect to the subject matter
hereof.

         Section 13. Counterparts.  This Assignment Agreement may be executed in one
or more counterparts, each of which shall be an original but all of which, taken
together, shall constitute one and the same instrument.





         IN WITNESS WHEREOF, the parties have caused this Assignment Agreement to be
executed and delivered by their duly authorized officers as of the date first above
written.

                                                           [ASSIGNEE]


                                                           By:____________________________
                                                                Name:
                                                                Title:
                                                           Address for Notices:


                                                           Wire Instructions:
                                                           [ASSIGNOR]


                                                           By:____________________________
                                                                Name:
                                                                Title:

                                                           Address for Notices:

                                                           Wire Instructions:






                                                                [Credit Agreement [Frontier/HLB]]






                                                                Exhibit A
                                                                to Assignment Agreement

                           Request for Note and Registration

                                                                  --------- --, ----


To:      Hamburgische Landesbank -Girozentrale-,
         as Administrative Agent

Ladies and Gentlemen:

         We refer to the assignment by ____________________________ (the "Assignor"),
of certain of its rights and obligations with respect to Note No. ______ (Series __)
in the principal amount of $____________ (the "Assignor's Note") to
___________________________ (the "Assignee"), pursuant to an Assignment Agreement
[Frontier/HLB] dated as of _______ __, ____ between the Assignor and the Assignee.
Capitalized terms not otherwise defined herein shall have the meanings assigned
thereto in such Assignment Agreement.  The Assignor hereby delivers the Assignor's
Note to Hamburgische Landesbank -Girozentrale-, in its capacity as Administrative
Agent.  The Assignor requests Borrower to issue to (i) the Assignee a new Note (the
"New Note") in the principal amount of $____________ and (ii) to the Assignor a new
Note (the "Assignor's New Note") in the principal amount of $______________, each,
with a [Delivery Date] issue date.

         The Administrative Agent is hereby instructed to pay all interest on the
portion of the Assignor's Note being assigned hereunder accrued through the date
hereof directly to Assignor on the Interest Payment Date such interest is payable and
paid.

         The Assignor requests the Administrative Agent to deliver the New Note to the
Assignee at its address set forth below and to deliver the Assignor's New Note to the
undersigned.

                                                           Very truly yours,

                                                           [ASSIGNOR]


                                                           By:____________________________
                                                                Name:
                                                                Title:




                                                           [ASSIGNEE]


                                                           By:____________________________
                                                                Name
                                                                Title:




                                                           Address for Notices:
                                                           Wire Instructions
Accepted and Agreed

HAMBURGISCHE LANDESBANK
- -GIROZENTRALE-,
as Administrative Agent


By:________________________________
     Title:







                                       Exhibit C

                               Terms of Notional Swap Transaction

         (capitalized terms used herein without definition shall have the meanings
    assigned thereto in the Definitions (as defined in the definition of Swap Form))

                  Trade Date:                      __________ __, ____1

                  Effective Date:                  __________ __, ____2

                  Termination  Date:               __________ __, 2___3, subject to
                                                   adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention.

                  Notional Amount:                 The Notional Amount in effect for a
                                                   Calculation Period shall be the
                                                   amount set forth in Schedule I
                                                   attached hereto opposite the
                                                   applicable date beginning such
                                                   Calculation Period; provided,
                                                   however, that such dates are subject
                                                   to adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention only with respect to
                                                   determining the Floating Payments.
                  Fixed Payments

                  Fixed Rate
                  Payer:                           Party B. [Lender]

                  Fixed Rate
                  Payment Dates:                   The __ of every _________,
                                                   __________, ____________ and
                                                   ________4, beginning __________ __,
                                                   ____5 and ending on the Termination
                                                   Date, payable in arrears, subject to
                                                   adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention.
                  Fixed Rate
                  Period End
                  Dates:                           The __ of every __________,
                                                   ___________, ___________ and
                                                   ________6, beginning __________ __,
                                                   ____7 and ending on the Termination
                                                   Date (no adjustment of Period End
                                                   Dates).
                  Fixed Rate:                      _____%.8

                  Fixed Rate
                  Day Count
                  Fraction:                        30/360.

                  Compounding:                     Inapplicable.

                  Floating Payments

                  Floating
                  Rate Payer:                       Party A. [Lender or Swap Agent]

                  Floating Rate
                  Payment Dates:                   The ___ of every __________,
                                                   _________, __________ and _________9,
                                                   beginning __________ __, ____10 and
                                                   ending on the Termination Date,
                                                   payable in arrears, subject to
                                                   adjustment in accordance with the
                                                   Modified Following Business Day
                                                   Convention.

                  Floating Rate
                  Option                           USD - LIBOR - BBA (except for first
                                                   Calculation Period)

                  Floating Rate                    ___%11 (exclusive of Spread)
                  for first
                  Calculation
                  Period:

                  Spread:                          [1.50%][1.60%] - Option A/B

                  Designated                       [Except for first Calculation Period,
                  Maturity:                        three months for each Calculation
                                                   Period.]

                  Floating Rate                    Actual/360.
                  Day Count
                  Fraction:

                  Floating Rate                    Each Floating Rate Payment Date, exclusive
                  Reset Dates:                     of the last Floating Rate Payment Date.

                  Compounding:                     Inapplicable.

                  Business Day for                 London
                  Rate Setting:

                  Business Day for                 New York, Denver and London
                  Payments:







                                       SCHEDULE I


                                         TO THE


                       CONFIRMATION OF THE RATE SWAP TRANSACTION




                               DATED __________ __, ____






  DATE12                                                       NOTIONAL AMOUNT13

EX-10

                                                                                            EXECUTION COPY











                                     MORTGAGE AND SECURITY AGREEMENT
                                              [Frontier/HLB]

                                               Dated as of

                                               May 23, 2002

                                                 BETWEEN

                                         FRONTIER AIRLINES, INC.,

                                                 Borrower

                                                   AND

                                 HAMBURGISCHE LANDESBANK -GIROZENTRALE-,
                             as Administrative Agent on behalf of the Lenders

                                     -------------------------------

                                  Two (2) Airbus Model A319-111 Aircraft






                                             Table of Contents

                                                                                                               Page
Article I         DEFINITIONS AND INTERPRETIVE MATTERS...........................................................3

         Section 1.01          Definitions.......................................................................3

         Section 1.02          Certain Interpretive Matters.....................................................13

Article II        THE NOTES.....................................................................................15

         Section 2.01          Form of Notes....................................................................15

         Section 2.02          Terms of Notes...................................................................20

         Section 2.03          Termination of Interest in Mortgage Estate.......................................20

Article III       REGISTRATION AND MAINTENANCE; OPERATION; POSSESSION AND LEASES; INSIGNIA......................21

         Section 3.01          Registration and Maintenance.....................................................21

         Section 3.02          Operation........................................................................21

         Section 3.03          Possession and Leases............................................................21

         Section 3.04          Insignia.........................................................................24

Article IV        REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS....................24

         Section 4.01          Replacement of Parts.............................................................24

         Section 4.02          Pooling of Parts; Temporary Replacement Parts....................................24

         Section 4.03          Alterations, Modifications and Additions.........................................25

         Section 4.04          Improvements Owned by Others.....................................................25

         Section 4.05          Substitution of Engines..........................................................25

Article V         LOSS, DESTRUCTION, REQUISITION, ETC...........................................................26

         Section 5.01          Event of Loss With Respect to the Aircraft.......................................26

         Section 5.02          Event of Loss With Respect to an Engine..........................................26

         Section 5.03          Application of Payments From Governmental Authorities for Requisition of
                               Title, Etc.......................................................................27

         Section 5.04          Requisition for Use of the Aircraft by the United States Government or
                               the Government of Registry of the Aircraft.......................................27

         Section 5.05          Application of Payments During Existence of Special Defaults or Events of
                               Default..........................................................................28

Article VI        INSURANCE.....................................................................................28

         Section 6.01          Bodily Injury Liability and Property Damage Liability Insurance..................28

         Section 6.02          Insurance Against Loss or Damage to the Aircraft.................................29

         Section 6.03          Reports, Etc.....................................................................30

         Section 6.04          Self-Insurance...................................................................31

         Section 6.05          Additional Insurance by Borrower.................................................31

         Section 6.06          Indemnification by Government in Lieu of Insurance...............................31

         Section 6.07          Application of Payments During Existence of a Special Default or an Event
                               of Default.......................................................................31

         Section 6.08          Terms of Insurance Policies......................................................32

Article VII       MISCELLANEOUS.................................................................................33

         Section 7.01          Termination of Mortgage..........................................................33

         Section 7.02          No Legal Title to Mortgage Estate in the Lenders.................................33

         Section 7.03          Sale of Aircraft by Administrative Agent is Binding..............................34

         Section 7.04          Mortgage for Benefit of Administrative Agent and Lenders.........................34

         Section 7.05          No Action Contrary to Borrower's Rights; Quiet Enjoyment.........................34

         Section 7.06          Notices..........................................................................34

         Section 7.07          Administrative Agent's Right to Perform for Borrower.............................35

         Section 7.08          Severability.....................................................................35

         Section 7.09          No Oral Modifications or Continuing Waivers......................................35

         Section 7.10          Successors and Assigns...........................................................35

         Section 7.11          Headings.........................................................................35

         Section 7.12          GOVERNING LAW; Counterparts......................................................35







                                  MORTGAGE AND SECURITY AGREEMENT [Frontier/HLB]

         MORTGAGE AND SECURITY AGREEMENT [Frontier/HLB], dated as of May 23, 2002, between FRONTIER
AIRLINES, INC., a Colorado corporation (the "Borrower"), and HAMBURGISCHE LANDESBANK -GIROZENTRALE-, a
Landesbank organized under the laws of Germany, as Administrative Agent on behalf of the Lenders
(together with its successors hereunder in such capacity, the "Administrative Agent").

         WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or
referred to in Article I hereof;

         WHEREAS, the Borrower desires by this Mortgage, among other things (i) to provide for the
issuance by the Borrower to each Lender of Notes evidencing participation by each Lender in each Loan as
provided in the Credit Agreement, and (ii) to provide for the assignment, mortgage and pledge by the
Borrower to the Administrative Agent, as the Mortgage Estate hereunder, the Borrower's right, title and
interest in and to each Aircraft and the payments and other amounts received in respect thereof in
accordance with the terms hereof, as security for, among other things, the Borrower's obligations to the
Lenders, and for the benefit and security of the Lenders;

         WHEREAS, all things have been done to make the Notes, when executed by the Borrower and issued
and delivered hereunder, the valid obligations of the Borrower; and

         WHEREAS, all things necessary to make this Mortgage the valid, binding and legal obligation of
the Borrower, for the uses and purposes herein set forth and in accordance with its terms, have been
done and performed and have happened;

                                           GRANTING CLAUSE

         NOW, THEREFORE, THIS MORTGAGE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt
payment of the principal of and Break Amount (if any) and interest on, and all other amounts due under
and with respect to, all Notes from time to time outstanding hereunder and the performance and
observance by the Borrower of all the agreements, covenants and provisions for the benefit of the
Lenders herein and in the Credit Agreement and the Notes contained, and the prompt payment of any and
all amounts from time to time owing hereunder and under the Credit Agreement and the other Operative
Documents by the Borrower to the Lenders, and for the uses and purposes and subject to the terms and
provisions hereof, and in consideration of the premises and of the covenants herein contained, and of
the acceptance of the Notes by the Lenders, and of the sum of $1 paid to the Borrower at or before the
delivery hereof, the receipt whereof is hereby acknowledged, the Borrower has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell,
assign, transfer, convey, mortgage, pledge and confirm, unto the Administrative Agent and its successors
and assigns, for the security and benefit of the Lenders, as aforesaid, a security interest in and
mortgage lien upon, all right, title and interest of the Borrower in, to and under the following
described property, rights and privileges (which collectively, including all property hereafter
specifically subjected to the Lien of this Mortgage by a Mortgage Supplement or any other mortgage
supplemental hereto, shall constitute the "Mortgage Estate"), to wit:

         1.       each Aircraft (including the Airframe and the associated Engines) as more particularly
described in the relevant Mortgage Supplement and all replacements thereof and substitutions therefor to
which the Borrower shall from time to time acquire title as provided herein or any such replacements or
substitutions therefor, as provided in this Mortgage, and all records, logs and other documents at any
time maintained with respect to the foregoing property;

         2.       the FAA Bill of Sale and Warranty Bill of Sale issued by AVSA, S.A.R.L. to the
Borrower in respect of each Aircraft;

         3.       Clause 12 (Warranties and Service Life Policy) and Clause 13 (Patent Indemnity) of the
Purchase Agreement insofar as they relate to the Aircraft or any element thereof, the warranties and
indemnities, including all limitations thereto, provided in Section 2 of Exhibit B in the Engine
Agreement and all claims arising under such provisions in respect of the Engines and the Bills of Sale
(reserving to the Borrower, however, all of the Borrower's other rights and interest in and to the
Purchase Agreement and the Engine Agreement) together with all rights, powers, privileges, options and
other benefits of the Borrower in respect of such provisions (subject to such reservation) with respect
to the Airframes or the Engines, including, without limitation, the right to make all waivers and
agreements, to give and receive all notices and other instruments or communications, and to take such
action upon the occurrence of a default in respect of such provisions, including the commencement,
conduct and consummation of legal, administrative or other proceedings, as shall be permitted thereby or
by law, and to do any and all other things which the Borrower is or may be entitled to do in respect of
such provisions (subject to such reservation), subject, with respect to the Purchase Agreement, to the
terms and conditions of the Consent and Agreement and, with respect to the Engine Agreement, the Engine
Consent and Agreement;

         4.       all payments or proceeds payable to the Borrower with respect to each Aircraft or any
part thereof as the result of the sale, lease or other disposition thereof, and all estate, right, title
and interest of every nature whatsoever of the Borrower in and to the same and every part thereof;

         5.       all insurance and requisition proceeds and all other payments of any kind with respect
to the Aircraft, including but not limited to the insurance required hereunder but excluding any credits
provided to the Borrower by any manufacturer, seller or supplier of the Aircraft or any Engine or Part;

         6.       all monies and securities deposited or required to be deposited with the
Administrative Agent or the Lenders pursuant to any term of this Mortgage or required to be held by the
Administrative Agent in the name of the Lenders hereunder; and

         7.       all proceeds of any of the foregoing.

Any and all properties referred to in this Granting Clause which are hereafter acquired by the Borrower,
shall, without further conveyance, assignment or act by the Borrower or the Administrative Agent or the
Lenders thereby become and be subject to the security interest hereby granted as fully and completely as
though specifically described herein.

         Notwithstanding any of the foregoing provisions of this Granting Clause, but subject to the
express provisions of the other articles of this Mortgage, so long as no Event of Default shall have
occurred and be continuing, the Borrower shall have the right, to the exclusion of the Administrative
Agent and any others claiming by, through or under the Administrative Agent, (i) to quiet enjoyment of
each Aircraft, Airframe and Engine, and to possess, use, retain and control each Aircraft, Airframe and
Engine and all revenues, income and profits derived therefrom and (ii) with respect to the Assigned
Warranties, to exercise in the Borrower's name all rights and powers under the Assigned Warranties and
to retain any recovery or benefit resulting from the enforcement of any warranty or indemnity or other
obligation under the Assigned Warranties.

                                           HABENDUM CLAUSE 

         TO HAVE AND TO HOLD all and singular the aforesaid property unto the Administrative Agent, its
successors and assigns, in trust for the benefit and security of the Lenders, and for the uses and
purposes and subject to the terms and provisions set forth in this Mortgage.

         The Borrower does hereby constitute the Administrative Agent the true and lawful attorney of
the Borrower (which appointment is coupled with an interest), irrevocably, with full power (in the name
of the Borrower or otherwise) to ask, require, demand, receive, compound and give acquittance for any
and all monies and claims for monies (in each case including insurance and requisition proceeds) due and
to become due under or arising out of the Operative Documents and all other property which now or
hereafter constitutes part of the Mortgage Estate, to endorse any checks or other instruments or orders
in connection therewith and to file any claims or to take any action or to institute any proceedings
which the Administrative Agent may deem to be necessary or advisable in the premises; provided that the
Administrative Agent agrees not to exercise such power of attorney unless an Event of Default shall be
continuing.

         The Borrower does hereby warrant and represent that (except as permitted herein) it has not
assigned or pledged any of its right, title, and interest hereby assigned to anyone other than the
Administrative Agent.

         IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows:

                                             Article I.

                                   DEFINITIONS AND INTERPRETIVE MATTERS

Section 1.01      Definitions.  For all purposes of this Mortgage the following terms shall have the following
meanings (such definitions to be equally applicable to both the singular and plural forms of the terms
defined).  Any agreement referred to below shall mean such agreement as amended, supplemented and
modified from time to time in accordance with the applicable provisions thereof and of the other
Operative Documents.  Unless otherwise specified, Section and Article references are to Sections and
Articles of this Mortgage:

         "Additional Costs" is defined in Section 10(h) of the Credit Agreement.

         "Additional Insured(s)" means, collectively, the Administrative Agent and the Lenders.

         "Administrative Agent" means Hamburgische Landesbank -Girozentrale-, solely in its capacity as
Administrative Agent on behalf of the Lenders, and any successor thereto in such capacity.

          "Affiliate" means, with respect to any Person, any other Person which directly or indirectly
controls, is controlled by, or under common control with, such Person.  The term "control" means the
possession, directly or indirectly of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

         "Aircraft" means each Airframe together with the two (2) Engines referenced in the Mortgage
Supplement relating to such Airframe, whether or not such Engines are installed on such Airframe or any
other airframe, and, where the context permits, all logs, manuals and data and inspection, modification
and overhaul records required to be maintained with respect to the foregoing property.

         "Airframe" means:  (i) each Airbus A319-111 aircraft (excluding Engines or engines from
time-to-time installed thereon) specified by United States Registration Number and Manufacturer's Serial
Number in the related Mortgage Supplement; and (ii) any and all related Parts.

         "Applicable Margin" means, with respect to Option A,  *% per annum, or with respect to Option
B,  *% per annum.

         "Applicable Rate" means, with respect to each Loan for any Interest Period, a rate per annum
equal to (a) until clause (b) hereof shall be applicable, LIBOR for such Interest Period plus the
Applicable Margin (calculated on the basis of a year of 360 days and actual number of days elapsed) and
(b) from and after the date the Fixed Rate shall have become effective following its determination in
accordance with Section 25(a) of the Credit Agreement, the Fixed Rate (calculated on the basis of a year
of 360 days consisting of 12 30-day months).

         "Assigned Warranties" means all right, title and interest of the Borrower in, to and under the
warranties covered in clause 3 of the Granting Clause.

         "Balloon Amount" means, with respect to each Loan,  *% of the Original Amount of such Loan.

         "Bankruptcy Code" means the provisions of title 11 of the United States Code, 11 U.S.C.ss.ss. 101
et seq.

         "Break Amount" means, as at any date of determination, the amount, if any, equal to the sum of
LIBOR Break Amount and, during any Fixed Rate Period, Swap Breakage Loss.

         "Bills of Sale" means, for any Aircraft, collectively, an FAA Bill of Sale and a Warranty Bill
of Sale relating to such Aircraft in favor of Borrower.

         "Business Day" means any day other than a Saturday or Sunday or a day on which commercial banks
are required or authorized to close in New York, New York, Frankfurt, Germany, and Denver, Colorado and,
if such day relates to the advance of a Loan, the determination of any Interest Payment Date, any
payment or prepayment of a Loan or setting of the Applicable Rate, or any notice in respect of any
thereof, any day on which Dollar transactions are effected in the eurodollar markets in London, England.

         "Civil Reserve Air Fleet Program" or "CRAF" means the Civil Reserve Air Fleet Program
administered by the United States Government or any substantially similar program.

         "Commitment" in respect of any Aircraft has the meaning specified in Section 2(a) of the Credit
Agreement.

         "Consent and Agreement" means, for any Aircraft, the Manufacturer Consent and Agreement
[Frontier/HLB], dated as of the Delivery Date for such Aircraft, of AVSA in respect of such Aircraft.

         "Credit Agreement" means that certain Credit Agreement [Frontier/HLB], dated as of the date
hereof, among the Borrower, the Lenders and the Administrative Agent, as such Credit Agreement may be
amended or supplemented from time to time pursuant to the applicable provisions thereof.

         "Delivery Date" means, for each Aircraft, the date of the initial Mortgage Supplement for such
Aircraft, which date shall be the date the Lenders deliver the Loan in respect of such Aircraft to the
Borrower.

         "Default" means any event which, with the giving of notice or the lapse of time or both if not
timely cured or remedied, would become an Event of Default.

         "Dollars", "Dollar" and "$" means the lawful currency of the United States of America.

      "Engine" means, for or in respect of any Airframe, (i) each of the two (2) CFM International,
Inc. Model CFM56-5B5/P engines listed by Manufacturer's Serial Numbers in the initial Mortgage
Supplement for such Airframe, whether or not from time to time installed on such Airframe or any other
airframe; (ii) any Replacement Engine which may from time to time be substituted for any such Engine
pursuant to the terms hereof; and (iii) in each case, any and all related Parts.  The term "Engines"
means, for or in respect of any Airframe, as of any date of determination, both Engines relating to such
Airframe then subject to the lien hereof.  Except as otherwise set forth herein, at such time as a
Replacement Engine shall be substituted for an Engine pursuant to the terms hereof, such replaced Engine
shall cease to be an Engine hereunder.

         "Engine Agreement" means General Terms Agreement No. 6-13616 dated as of June 30, 2000 between
CFM International, Inc. and Societe Nationale D'Etude et de construction de Moteurs iAviation and the
Borrower.

         "Engine Consent and Agreement" means, for any Aircraft, the Engine Consent and Agreement
[Frontier/HLB] dated as of the Delivery Date of such Aircraft of the Engine Manufacturer in respect of
such Aircraft.

         "Engine Manufacturer" means CFM International, Inc.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

         "Event of Default" has the meaning specified in Section 11(a) of the Credit Agreement.

         "Event of Loss" with respect to any Aircraft, Airframe or Engine means any of the following
events with respect to such property:  (i) the loss of such property, or of the use thereof, due to the
destruction of or damage to such property which renders repair uneconomical or which renders such
property permanently unfit for normal use by the Borrower for any reason whatsoever; (ii) any damage to
such property which results in the receipt of insurance proceeds with respect to such property on the
basis of an actual, constructive or compromised total loss; (iii) theft, hijacking or disappearance of
such property for a period in excess of 90 days (or, if earlier, the date on which the Borrower has
confirmed to the Administrative Agent in writing that it cannot recover such property); (iv) the
confiscation, condemnation, or seizure of, or requisition of (x) title to, or use of, such property by
any governmental or purported governmental authority (other than a requisition of use by the government
of the United States of America or any agency or instrumentality thereof which bears the full faith and
credit of the government of the United States of America) or (y) use by any other government or
governmental authority for a period in excess of 60 consecutive days; (v) as a result of any law, rule,
regulation, order or other action by the FAA or other similar governmental body of the government of
registry of such Aircraft having jurisdiction, use of such type of property in the normal course of the
business of air transportation shall have been prohibited for a period of six consecutive months, unless
the Borrower, prior to the expiration of such six-month period, shall have undertaken and shall be
diligently carrying forward all steps which are necessary and desirable to permit the normal use of such
property by the Borrower, but in any event if such use shall have been prohibited for a period of
12 months; and (vi) any event treated as an Event of Loss pursuant to Section 3.03(d) hereof.

         An Event of Loss with respect to an Aircraft shall be deemed to have occurred if an Event of
Loss occurs with respect to the related Airframe.

         "Expense" or "Expenses" means any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, out of pocket costs, expenses and disbursements (including reasonable legal fees
and expenses) of whatever kind and nature but excluding internal costs and expenses such as salaries,
any amounts that would be included in Break Amount, and overhead of whatsoever kind and nature.

         "FAA Bill of Sale" means, for each Aircraft, a bill of sale on AC Form 8050-2 or such other
form as may be approved by the FAA in favor of the Borrower from Seller in respect of such Aircraft.

         "Federal Aviation Act" means subtitle VII of Title 49 of the United States Code, or any
successor provision.

         "Federal Aviation Administration" and "FAA" mean the United States Federal Aviation
Administration and any successor agency or agencies thereto.

         "FedWire" means the funds transfer system used to transfer reserve balances for immediately
available credit among the member banks of the United States Federal Reserve System.

         "Final Maturity Date" means with respect to each Loan, the Interest Payment Date falling on or
closest to the twelve year anniversary date of the Delivery Date of the applicable Aircraft.

         "Fixed Rate" means the Applicable Rate if the Applicable Rate is determined in accordance with
clause (b) of the definition thereof. The Fixed Rate shall be specified in an Indenture Supplement.

         "Fixed Rate Period" means any period during which the Applicable Rate is determined by
reference to the Fixed Rate.

         "Floating Rate Period" means the period during which the Applicable Rate is determined by
reference to clause (a) of the definition thereof.

         "GAAP" means generally accepted accounting principles, consistently applied.

         "Governmental Authority" means any nation or government, any state, county, city, town,
district, board, bureau, office, commission, any other municipality or other political subdivision
thereof (including any educational facility, utility or other Person operated thereby), and any court,
agency, department, authority or other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

         "Inchoate Liens" mean inchoate Liens of the type described in Section 9(d)(ii) of the Credit
Agreement for taxes not yet due and Section 9(d)(iii) of the Credit Agreement (other than, in the case
of said clause (iii), contested Liens).

         "Indemnified Amounts" means, with respect to any Person, any and all claims, losses,
liabilities, obligations, damages, penalties, actions, judgments, suits, proceedings in contract or tort
including such Person's strict liability in tort, and related costs and expenses of any nature
whatsoever (including reasonable attorneys' fees and disbursements and other costs of investigation or
defense, including those incurred upon any appeal).

         "Indemnified Party," "Indemnitee," or "Indemnitees" means, collectively, the Administrative
 Agent, the Lenders and each of their respective successors, permitted assigns, directors, officers, and
employees.

         "Interest Payment Date" means, with respect to each Loan, the three month anniversary date of
the Delivery Date of the applicable Aircraft and thereafter on the corresponding date of each succeeding
third month; provided that, if (x) except during the Fixed Rate Period, any such date shall not be a
Business Day, then the relevant Interest Payment Date shall be the next succeeding Business Day unless
by virtue of such extension such date would fall in the next succeeding calendar month, in which case
the relevant Interest Payment Date shall be the next preceding Business Day and (y) there shall be no
such corresponding day in any such month, then the relevant Interest Payment Date shall be the last
Business Day of such month.

         "Interest Period" means, in respect of any Loan, each three month period from and including the
Delivery Date or any Interest Payment Date to, but excluding, the next subsequent Interest Payment Date.

         "Lenders" means the lenders that are party to the Credit Agreement identified under the caption
"Lenders" on the signature pages thereto or that, pursuant to Section 24(c) thereof, shall become a
"Lender" thereunder, together with their respective successors and permitted transferees and assigns.

         "Lender Lien" means any Lien on any part of the Mortgage Estate arising as a result of or in
connection with (a) claims against or affecting the Administrative Agent or the Lenders and that are not
related to the transactions contemplated by the Operative Documents, (b) any act or omission of any such
party (including, in the case of the Administrative Agent, such Person in its individual capacity or in
its capacity as agent) that is not related to the transactions contemplated by the Operative Documents,
or (c) Taxes (including claims therefor) or other losses, costs or expenses imposed on any such party
(including, in the case of the Administrative Agent, such Person in its individual capacity or in its
capacity as agent) for which Borrower is not obligated to indemnify pursuant to the Credit Agreement or
any other Operative Document.

         "Leverage Option" means the option of the Company to select, for either Aircraft, Option A or
Option B.  The initial Mortgage Supplement for each Aircraft shall designate whether the Borrower has
selected Option A or Option B with respect to such Aircraft.

         "LIBOR" means, in relation to any Interest Period, the rate (rounded upwards to the nearest
1/16 of 1%) for deposits in United States Dollars for that period quoted on Telerate page 3750 (British
Bankers' Association Interest Settlement Rates) (or such other page as may replace such Page 3750 on
such system) as being the rate at which deposits in United States Dollars are offered in the London
Interbank Market for the same or substantially similar period at, or about, 11:00 a.m. (London time) on
the second London Business Day before the first day of such Interest Period on which any amount is
required to be funded for the purpose of this Agreement, or if, on such date, no rate is displayed,
LIBOR shall mean the rate for deposits of an amount comparable to the Loan in United States Dollars for
that period determined by the Administrative Agent to be the arithmetic mean of the rates offered by
Citibank N.A., Barclays Bank plc and Hamburgische Landesbank -Girozentrale- at 11:00 a.m. London time on
the second London Business Day before the first day of the relevant period for that relevant period.

         "LIBOR Break Amount" means the amount or amounts, if any, required to compensate each Lender
for any losses, costs or expenses (excluding loss of profit) which it may incur as the result of the
prepayment (including a prepayment following acceleration) (or the failure to make any such prepayment
on the date irrevocably scheduled therefor) of any Note (or interest thereon) held by it on a date other
than the immediately succeeding Interest Payment Date or in an amount different than the amount to be
paid on such date pursuant to the terms of the Operative Documents, including, without limitation,
losses, costs or expenses incurred in connection with unwinding or liquidating any deposits or funding
or financing arrangement with its funding sources, as determined by such Lender absent manifest error.
Without limiting the effect of the preceding sentence, such compensation shall include an amount equal
to the excess, if any, of (i) the amount of interest which otherwise would have accrued on the principal
amount of such Lender so prepaid from the date of prepayment to the immediately succeeding Interest
Payment Date (the "Break Period") over (ii) the amount of interest component of the amount such Lender
would have obtained from leading banks in the London interbank market for Dollar deposits of leading
banks in an amount comparable to such principal amount and with a maturity comparable to the Break
Period (as determined by such Lender absent manifest error).

         "Lien" means any mortgage, pledge, lien, claim, encumbrance, lease, security interest or other
lien of any kind on property.

         "Loan" in respect of each Aircraft means the money borrowed on the Delivery Date for such
Aircraft by the Borrower from the Lenders.

         "Maintenance Program" means the maintenance program for the Aircraft of the Borrower which is
approved by the government of registry of the Aircraft.

         "Majority Lenders" means, as of any date of the determination thereof, Lenders holding at least
66?% of the aggregate outstanding principal amount of all Loans and Commitments on a combined basis and
following the termination of the Commitments, Lenders holding at least 66?% of the aggregate outstanding
principal amount of all Loans not yet reimbursed by the Borrower.

         "Manufacturer" means Airbus G.I.E., in its capacity as manufacturer of the Aircraft, and its
successors and assigns.

         "Moody's" means Moody's Investors Service.

         "Mortgage" and "this Mortgage" mean this Mortgage and Security Agreement [Frontier/HLB],
including any Mortgage Supplement and each other supplement from time to time entered into pursuant
hereto.

         "Mortgage Estate" means the "Mortgage Estate" as defined in the Granting Clause hereof.

         "Mortgage Supplement" means a supplement to this Mortgage substantially in the form of
Exhibit A, which shall particularly describe each Airframe and associated Engines, or any Replacement
Engine, included in the property of the Borrower covered by this Mortgage, or any other supplement
hereto.

         "Notes" or "Promissory Notes" means the promissory notes issued pursuant to Section 2.02(a) and
any such notes issued in exchange or replacement therefore pursuant to Section 10 of the Credit
Agreement.

         "Note Register" has the meaning specified in Section 10(c) of the Credit Agreement.

         "Notional Swap Transaction" means a hypothetical interest rate exchange transaction, the
economic terms of which are set forth on Exhibit C to the Loan Agreement, governed by the terms of the
Swap Form.

         "Operative Documents" means the Credit Agreement, the Mortgage, any Mortgage Supplement, the
Notes, each Consent and Agreement and each Engine Consent and Agreement, and any amendments, of
supplements of any of the foregoing.

         "Option A" means, for either Aircraft, a Loan in respect of such Aircraft in the aggregate
principal amount of $*.

         "Option B" means, for either Aircraft, a Loan in respect of such Aircraft in the aggregate
principal amount of $*.

         "Original Amount" means, with respect to a Note, the stated original amount (that is,
principal) of such Note, and, with respect to all the Notes of any Series, means the aggregate stated
original amounts of such Notes, which shall, on the Delivery Date for the Aircraft of the related
Series, equal the amount of the Loan for such Aircraft.  The aggregate Original Amount for each Series
of Notes shall be (i) if Option A is selected by the Borrower, $*  and (ii) if Option B is selected by
the Borrower, $* with respect to each Aircraft.

         "Parts" means all appliances, parts, instruments, appurtenances, accessories, furnishings and
other equipment of whatever nature (other than complete Engines or engines), which are from time to time
incorporated or installed in or attached to an Airframe or any Engine and all such items which are
subsequently removed therefrom so long as the Lien of this Mortgage shall cover the same pursuant to the
terms hereof; provided, however, that improvements described in Section 4.04 hereof shall not fall
within the definition of Parts.

         "Past Due Rate" means (i) during the Floating Rate Period, a per annum rate equal to the
Applicable Rate plus *% calculated on the basis of a year of 360 days and actual number of days elapsed
and (ii) during the Fixed Rate Period, a per annum rate equal to 2.0% plus the higher of (x) the
Applicable Rate and (y) LIBOR plus the Applicable Margin.

         "Payment Office" means the bank and account number of the Administrative Agent referred to in
Schedule I to the Credit Agreement.

         "Permitted Investments" means those investments described in Section 15 of the Credit Agreement.

         "Permitted Lien" means any Lien permitted under Section 9(d) of the Credit Agreement.

         "Person" means any individual, corporation, limited liability company, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.

         "Plan" means an "employee benefit plan" (as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended) or any "plan" (as such term is defined in
Section 4975(e)(1) of the Code) which has been established or maintained or contributed to by the
Borrower or an Affiliate that, together with the Borrower, is treated as a single employer under
Section 414(b), (c) or (m) of the Code.

         "Purchase Agreement" means the Airbus A318/A319 Purchase Agreement dated as of March 10, 2000
between AVSA, S.A.R.L. and Borrower, relating to the purchase by the Borrower of the Aircraft, as
originally executed or as modified, amended or supplemented in accordance with the terms thereof, but
only insofar as the foregoing relates to the Aircraft.

         "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System (or
any successor), as the same may be modified and supplemented and in effect from time to time.

         "Regulatory Change" means any change after the date hereof in any Federal, state or foreign law
or regulation (including Regulation D of the Federal Reserve Board) or the adoption or making after such
date of any interpretation, directive or request under any Federal, state or foreign law or regulation
(whether or not having the force of law) by any Governmental Authority charged with the interpretation
or administration thereof that, in each case, is applicable to the Lenders.

         "Related Transaction" means a leveraged leasing transaction involving Aircraft 1243 or Aircraft
TBD as contemplated by Section 2(d) of the Credit Agreement.

         "Replacement Engine" means any engine substituted for an Engine pursuant to Section 13(a) of
the Credit Agreement.

         "Reserve Requirement" means, for any Lender with respect to any Note, the average maximum rate
at which reserves (including, without limitation, any marginal, supplemental or emergency reserves) are
required to be maintained by such Lender in respect of such Note under Regulation D by member banks of
the Federal Reserve System in New York City with deposits exceeding one billion Dollars against
"Eurocurrency liabilities" (as such term is used in Regulation D or as otherwise applicable under other
requirements applicable to such Lender).  Without limiting the effect of the foregoing, the Reserve
Requirement includes any other reserves required to be maintained by such member banks or the Lenders by
reason of any Regulatory Change with respect to any category of extensions of credit or other assets
that includes the Notes.

         "S&P" means Standard & Poors Ratings Service .

         "Securities Act" means the Securities Act of 1933, as amended.

         "Seller" means AVSA, S.A.R.L., a wholly-owned subsidiary of the Manufacturer.

         "Series" has the meaning specified in Section 2.02(a) hereof.  A Note of a particular Series
shall be designated as such by reference to the manufacturer's serial number of the Aircraft in respect
of which such Note was issued.

         "Special Default" means a Default under any of Sections 11(a)(i), 11(a)(ii) or 11(a)(vii) of
the Credit Agreement.

         "Stipulated Insured Amount" for any Aircraft as of any date of determination means an amount
equal to 110% of the aggregate principal amount then outstanding on the Notes of the Series issued in
respect of such Aircraft.

         "Swap Break Amount" means, as of any date (the "Swap Termination Date") on which Break Amount
may be payable under the Operative Documents and for any Lender (a negative number always being lesser
than a positive number and a more negative number always being less than another negative number that is
closer to zero) the amount such Lender (as floating rate payor) will require in accordance with market
practice to have paid to it on such date (such amount to be expressed as a positive number), or the
amount such Lender (as floating rate payor) is willing to pay in accordance with market practice on such
date (such amount to be expressed as a negative number), in either case, to terminate the Notional Swap
Transaction on such date with respect to, and to the extent of, the then outstanding principal amount of
the Loan subject to prepayment or purchase. The term "Lender" as used in this definition means either a
Lender in its own right or a Lender acting through a swap agent.

         "Swap Breakage Gain" means, as to any Lender, the absolute value of the Swap Break Amount for
such Lender if the Swap Break Amount is a negative number.

         "Swap Breakage Loss" means, as to any Lender, the value of the Swap Break Amount for such
Lender if the Swap Break Amount is a positive number.

          "Swap Form" means the standard form of Master Agreement published in 1992 (or any successor
swap form) by, and incorporating by reference therein the definitions and provisions contained in the
1991 (or any successor definitions) ISDA Definitions of the International Swap Dealers Association, Inc.
(the "Definitions").

         "Swap Transaction" means, for any Lender, the Swap Transaction of such Lender described in
Section 25(a) of the Credit Agreement.

         "Tax" or "Taxes" means any and all fees (including, without limitation, license, documentation
and registration fees), taxes (including, without limitation, income, gross receipts, sales, rental,
use, turnover, value added, property (tangible and intangible), excise and stamp taxes), licenses,
levies, imposts, duties, recording charges or fees, charges, assessments, or withholdings of any nature
whatsoever, together with any assessments, penalties, fines, additions to tax and interest thereon.

         "U.S. Air Carrier" means any United States air carrier as to which there is in force a
certificate issued pursuant to Section 41102(a) of the Federal Aviation Act, and which is a citizen of
the United States (as defined in 49 U.S.C.ss. 40102(a)(15)) holding an air carrier operating certificate
issued by the Secretary of Transportation pursuant to chapter 447 of title 49 (or the equivalent
authority issued by the Civil Aeronautics Board under the predecessor regulatory laws, rules and
regulations) for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo or
which may operate as an air carrier by certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.

         "War Risk Insurance" has the meaning assigned to such term in Section 6.02 hereof.

         "Warranty Bill of Sale" means, for any Aircraft, a full warranty bill of sale in favor of the
Borrower from AVSA, S.A.R.L. in respect of such Aircraft.

         "Wet Lease" means any arrangement whereby the Borrower agrees to furnish an Airframe and
associated Engines or engines installed thereon to a third party pursuant to which such Airframe and
Engines or engines (i) are operated by pilots who are regular employees of the Borrower, and (ii) such
property is maintained by the Borrower.

Section 1.02      Certain Interpretive Matters.  For purposes of the Operative Documents and all such Notes and
other documents, unless the context otherwise requires:  (a) unless otherwise specifically provided
therein, any accounting term used in any Operative Document shall have the meaning customarily given
such term in accordance with GAAP, and all financial computations thereunder shall be computed in
accordance with GAAP consistently applied (that certain items or computations are explicitly modified by
the phrase "in accordance  with GAAP" shall in no way be construed to limit the foregoing); (b) all
other undefined capitalized terms contained in any of the Operative Documents shall, unless the context
indicates otherwise, have the meanings provided for by the Uniform Commercial Code as in effect in the
State of New York to the extent the same are used or defined therein; (c) references to any amount as on
deposit or outstanding on any particular date means such amount at the close of business on such day;
(d) the words "herein," "hereof" and "hereunder" and other words of similar import used in any Operative
Document refer to such Operative Documents as a whole, including all annexes, exhibits and schedules, as
the same may from time to time be amended, restated, amended and restated, supplemented or otherwise
modified, and not to any particular section, subsection or clause contained in such Operative Document
or any such annex, exhibit or schedule; (e) references to any Section, Schedule or Exhibit are
references to Sections, Schedules and Exhibits in or to such Operative Document (or the Note or other
document in which the reference is made), and references to any paragraph, subsection, clause or other
subdivision within any Section or definition refer to such paragraph, subsection, clause or other
subdivision of such Section or definition; (f) the words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation"; the word "or" is not exclusive; (g) references
to any law or regulation refer to that law or regulation as amended from time to time and include any
successor law or regulation; (h) references to any agreement refer to that agreement as from time to
time amended or supplemented or as the terms of such agreement are waived or modified in accordance with
its terms; (i) references to Persons include their respective successors and assigns (to the extent and
only to the extent permitted by the Operative Document) or, in the case of Governmental Authorities,
Persons succeeding to the relevant functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes and regulations;
(j) headings are for purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof; and (k) wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter
genders.




                                          Article II


                                          THE NOTES

Section 2.01.     Form of Notes.  The Notes shall each be substantially in the form set forth below, as follows:


                                         FRONTIER AIRLINES, INC.

                                         PROMISSORY NOTE DUE 2014
                       ISSUED IN CONNECTION WITH ONE AIRBUS MODEL A319-111 AIRCRAFT
                       WITH MANUFACTURER'S SERIAL NUMBER ____ AND INITIALLY BEARING
   UNITED STATES FEDERAL AVIATION ADMINISTRATION REGISTRATION NUMBER _______ AND TWO CFM INTERNATIONAL
                                        MODEL CFM56-5B5/P ENGINES
                       BEARING MANUFACTURER'S SERIAL NUMBERS ________ AND _________

New York, New York
No. R-
Series:  ______

$                                                                                                  [Delivery Date]

         Frontier Airlines, Inc. (the "Borrower") hereby promises to pay to __________________, or
registered transferees, the principal sum of ___________________ Dollars, in 48 consecutive
installments, equal to the amounts, and payable on the Interest Payment Dates, set forth in Annex A
hereto, together with interest payable on each such Interest Payment Date on the unpaid principal amount
hereof from the date hereof, or the immediately preceding Interest Payment Date, to (but excluding) such
Interest Payment Date until such principal amount is paid in full.  If any sum payable under this Note
falls due on a day which is not a Business Day, then such sum shall be payable on the next succeeding
Business Day, unless such Business Day falls in the following month, in which case such sum shall be
payable on the Business Day immediately prior thereto.  Interest on this Note shall be payable at the
Applicable Rate (calculated on the basis of a 360-day year and the actual number of days elapsed (unless
interest on this Note shall be calculated by reference to the Fixed Rate, in which case such interest
shall be calculated on the basis of a year of 360 day consisting of 12 30-day months)).  In no
contingency or event whatsoever shall the rate or amount of interest paid by Borrower under this Note
exceed the maximum amount permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto.  In the event that a court determines that the Lender has
received interest hereunder in excess of the maximum amount permitted by such law, (i) the Lender shall
apply such excess to any unpaid principal owed by Borrower to the Lender or, if the amount of such
excess exceeds the unpaid balance of such principal, the Lender shall promptly refund such excess
interest to Borrower and (ii) the provisions hereof shall be deemed amended to provide for such
permissible rate.  All sums paid, or agreed to be paid, by Borrower which are, or hereafter may be
construed to be, compensation for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, spread and allocated throughout the full term of
all such indebtedness until the indebtedness is paid in full.  This Note shall bear interest at the
applicable Past Due Rate on any principal hereof, and, to the extent permitted by applicable law,
interest and other amounts due hereunder, not paid when due (whether at stated maturity, by acceleration
or otherwise), for any period during which the same shall be overdue, payable on demand by the Lender
given through the Administrative Agent.

         All payments of principal, Break Amount and Additional Costs, if any, and interest and all
other amounts to be made to the Lender hereunder or under the Mortgage and Security Agreement
[Frontier/HLB] dated as of May 23, 2002 (as amended or supplemented from time to time, herein called the
"Mortgage", the terms defined therein and not otherwise defined herein being used herein with the same
meanings) between the Borrower and Hamburgische Landesbank -Girozentrale-, as Administrative Agent
thereunder or under the other Operative Documents, shall be made in accordance with the terms of the
Mortgage and the other Operative Documents.

         Principal and interest and all other amounts due hereunder shall be payable in Dollars in
immediately available funds prior to 11:00 a.m., New York, New York time, on the due date thereof, to
the Administrative Agent at the Payment Office and the Administrative Agent shall, subject to the terms
and conditions of the Mortgage, remit all such amounts so received by it to the Lender hereof in
accordance with the terms of the Mortgage at the account set forth in Schedule I to the Credit
Agreement, or to such account or accounts at such financial institution or institutions as the Lender
may designate to the Administrative Agent in writing from time to time, in immediately available funds,
such payment to be made, in the case of any such designated account in New York, New York, prior to
1:00 p.m., New York time, on the due date thereof.  In the event the Administrative Agent shall fail to
make any such payment as provided in the immediately foregoing sentence after its receipt of funds at
the place and prior to the time specified above, the Administrative Agent agrees to compensate the
Lender for loss of use of funds in a commercially reasonable manner.  All such payments by the Borrower
and the Administrative Agent shall be made free and clear of and without reduction for or on account of
all wire or other like charges.

         The Lender, by its acceptance of this Note, agrees that, except as otherwise expressly provided
in the Mortgage, each payment received by it in respect hereof shall be applied, first, to the payment
of any amount (other than the principal of or interest on this Note) due in respect of this Note,
second, to the payment of interest hereon (as well as any interest on overdue principal and, to the
extent permitted by law, interest and other amounts payable hereunder) due and payable hereunder, third,
to the payment of the principal of this Note then due and fourth, the balance, if any, remaining
 thereafter, to the payment of the principal of this Note remaining unpaid, in the manner set forth in
the last sentence of Section 10(b) of the Credit Agreement.

         This Note is one of the Notes referred to in the Mortgage which have been or are to be issued
by the Borrower pursuant to the terms of the Mortgage.  The Mortgage Estate is held by the
Administrative Agent as security for the benefit of the Lenders, in part, for the Notes.  Reference is
hereby made to the Mortgage and the Credit Agreement referred to therein for a statement of the rights
and obligations of the Lender, and the nature and extent of the security for this Note, and the nature
and extent of the security for the other Notes, as well as for a statement of the terms and conditions
of the trusts created by the Mortgage, to all of which terms and conditions in the Mortgage and such
Credit Agreement the Lender agrees by its acceptance of this Note.

         There shall be maintained a Note Register for the purpose of registering transfers and
exchanges of Notes at the office of the Administrative Agent or at the office of any successor
administrative agent in the manner provided in Section 10(c) of the Credit Agreement.  As provided in
the Credit Agreement and subject to certain limitations set forth therein, this Note or any interest
herein may, subject to the next following paragraph, be assigned or transferred, and the Notes are
exchangeable for a like aggregate original principal amount of Notes of a like Series of any authorized
denomination, as requested by the Lender surrendering the same.

         Prior to the due presentment for registration of transfer of this Note, the Borrower and the
Administrative Agent shall deem and treat the person in whose name this Note is registered on the Note
Register as the absolute owner of this Note and the Lender for the purpose of receiving payment of all
amounts payable with respect to this Note and for all other purposes whether or not this Note is
overdue, and neither the Borrower nor the Administrative Agent shall be affected by notice to the
contrary.

         This Note is subject to prepayment as permitted by Sections 10(f) and 10(g) of the Credit
Agreement and to acceleration by the Administrative Agent as provided in Section 12(a) of the Credit
Agreement, and the Lender, by its acceptance of this Note, agrees to be bound by said provisions.

         This Note shall be governed by and construed in accordance with the law of the State of New
York.





         IN WITNESS WHEREOF, the Borrower has caused this Note to be executed in its corporate name by
its officer thereunto duly authorized, as of the date hereof.

                                                           FRONTIER AIRLINES, INC.


                                                           By:____________________________
                                                           Its:___________________________





                                             Annex A to Note


                                      SCHEDULE OF PRINCIPAL PAYMENTS

Interest Payment Date
(falling on or closest to)               Principal Amount to be paid1





Section 2.02      Terms of Notes.  (a)  (a) On the Delivery Date of each Aircraft the Borrower shall issue Notes
in respect of such Aircraft (the Notes issued in respect of each Aircraft shall be referred to as a
"Series") in an aggregate original principal amount of the Original Amount therefor to each Lender (or
their respective nominees) in such amounts as shall be set forth in Schedule II to the Credit Agreement
for such Aircraft (based on the selected Leverage Option).

(b)      Each Note shall bear interest payable on each Interest Payment Date at the Applicable Rate on the unpaid
principal amount thereof from the date thereof in the case of the first Interest Payment Date, or
otherwise from the immediately preceding Interest Payment Date, to (but excluding) the following
Interest Payment Date until such principal amount is paid in full.  Interest hereunder and under the
Notes shall be calculated on the basis of a year of 360 days and actual number of days elapsed (unless
interest on the Notes shall be calculated by reference to the Fixed Rate, in which case such interest
shall be calculated on the basis of a year of 360 days consisting of 12 30-day months).  If any sum
payable under the Notes or under this Mortgage falls due on a day which is not a Business Day, then such
sum shall be payable on the next succeeding Business Day, unless such Business Day falls in the
following month, in which case such sum shall be payable on the Business Day immediately prior thereto.

(c)      The principal of the Notes of each Series shall be due and payable in 48 consecutive installments as set
forth in Schedule 1 to the Mortgage Supplement for such Series, the first such installment to be due on
the first Interest Payment Date following the date of issuance of such Series of Notes.  Schedule I to
the Mortgage Supplement for each Series shall be determined as follows:  the Original Amount for such
Series shall be amortized on an annuity basis (using, as the discount rate, *%) down to the applicable
Balloon Amount, payable on the Final Maturity Date for such Notes.  The Administrative Agent shall
prepare Schedule I to the applicable Mortgage Supplement and the amortization schedule for each Note
based on the methodology described in the preceding sentence.

(d)      Each Note shall bear interest at the Past Due Rate on any principal thereof and, to the extent permitted
by applicable law, interest and other amounts due thereunder and hereunder, not paid when due (whether
at stated maturity, by acceleration or otherwise), for any period during which the same shall be
overdue, payable on demand by the Lenders given through the Administrative Agent.  Any such late payment
shall bear interest at the Past Due Rate.

(e)      The Notes shall be executed on behalf of the Borrower by one of its authorized officers.  Notes bearing
the signatures of individuals who were at any time the proper officers of the Borrower shall bind the
Borrower, notwithstanding that such individuals or any of them have ceased to hold such offices prior to
the delivery of such Notes or did not hold such offices at the respective dates of such Notes.  No Notes
shall be issued hereunder except those provided for in Section 2.02(a) and any Notes issued in exchange
or replacement therefor pursuant to the terms of this Mortgage.  Each Note of any Series issued under
this Section 2.02 shall be dated the Delivery Date of the related Aircraft.

Section 2.03      Termination of Interest in Mortgage Estate.  No Lender shall, as such, have any further
interest in, or other right with respect to, the Mortgage Estate relating to any Aircraft when and if
the principal amount of and Break Amount and Additional Costs, if any, and interest on and other amounts
due under all Notes held by such Lender and all other sums due to such Lender hereunder and under the
other Operative Documents in respect of such Aircraft shall have been paid in full.

                                           Article III


             REGISTRATION AND MAINTENANCE; OPERATION; POSSESSION AND LEASES; INSIGNIA

Section 3.01      Registration and Maintenance.  The Borrower shall:  (1) (a) on the Delivery Date for each
Aircraft, cause such Aircraft to be duly registered in its name (if not so registered) and, at all times
thereafter, to remain duly registered in the United States of America in its name under the Federal
Aviation Act and (b) on the Delivery Date for each Aircraft, cause this Mortgage to be duly recorded in
the name of the Administrative Agent for the benefit of the Lenders and, at all times thereafter, so
long as any Note shall be outstanding or any amount shall be owing to any Lender, cause this Mortgage to
be so maintained of record as a first priority and perfected mortgage on the Aircraft; (2) maintain,
service, repair, and overhaul (or cause to be maintained, serviced, repaired, and overhauled) each
Aircraft (and any engine which is not an Engine but which is installed on an Aircraft) (a) so as to keep
such Aircraft in as good condition as when delivered to the Borrower by the Manufacturer (ordinary wear
and tear excepted) and so as to keep such Aircraft in good operating condition and in such condition as
may be necessary to enable the airworthiness certification for such Aircraft to be maintained in good
standing at all times under the Federal Aviation Act except when (i) such Aircraft is being serviced,
repaired, maintained, overhauled, tested or modified as permitted or required by the terms of this
Mortgage or (ii) all Airbus A319-100 aircraft of comparable vintage and/or configuration have been
grounded by the FAA, and (b) in accordance with the Maintenance Program for such Aircraft and without in
any way discriminating against such Aircraft, and (3) maintain or cause to be maintained in English all
records, logs and other materials required to be maintained in respect of the Aircraft by the FAA.

Section 3.02      Operation.  The Borrower will not maintain, use, service, repair, overhaul or operate the
Aircraft in violation of any law, rule, regulation, treaty, or order of any government or governmental
authority (domestic or foreign) having jurisdiction, or in violation of any airworthiness certificate,
license or registration relating to the Aircraft issued by any such authority except the Borrower may
contest in good faith the validity or application of any such law, rule, regulation, treaty, order,
certificate, license or registration, so long as there is no material risk of the sale, forfeiture or
loss of any Aircraft, any Airframe or any Engine, or the Administrative Agent's interest therein.  The
Borrower will not operate or fly any Aircraft in or to any war zone or any area of threatened or
recognized hostility or in any area excluded from coverage by any insurance required to be maintained by
the terms of Article VI (or any indemnity issued in lieu thereof); provided, however, that the failure
of the Borrower to comply with the provisions of this sentence shall not give rise to an Event of
Default hereunder where such failure is an extraordinary occurrence attributable to a hijacking, medical
emergency, equipment malfunction, weather condition, navigational error or similar event.

Section 3.03      Possession and Leases.  The Borrower will not, without the prior written consent of the
Administrative Agent at the direction of the Lenders, which consent (and direction) will not be
unreasonably withheld or delayed, lease or otherwise in any manner deliver, transfer or relinquish
possession of any Airframe or any Engine or install or permit any Engine to be installed on any airframe
other than an Airframe; provided that so long as no Event of Default shall have occurred and be
continuing at the time of such delivery, transfer or relinquishment of possession or installation and
the Borrower shall continue to comply with the provisions of Section 3.01 and Article VI, the Borrower
may, without the prior written consent of the Administrative Agent:

(a)      subject any Engine to normal pooling or similar arrangements customary in the airline industry and
entered into by the Borrower in the ordinary course of its business with a U.S. Air Carrier or any other
air carrier approved in writing by the Administrative Agent at the direction of the Lenders (which
approval will not be unreasonably withheld or delayed); provided that (i) no such agreement or
arrangement contemplates or requires the transfer of title to any Engine and (ii) if the Borrower's
title to any Engine shall be divested under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss with respect to such Engine and the Borrower shall comply with
Section 5.02 hereof in respect thereof;

(b)      deliver possession of any Airframe or any Engine to the Manufacturer or the Engine Manufacturer, or to
any Person for testing, service, repair, maintenance or overhaul work on any Airframe or any Engine or
for alterations or modifications in or additions to the Airframe(s) or Engine(s);

(c)      install an Engine on an airframe owned by the Borrower, leased to the Borrower, or owned or purchased by
the Borrower subject to a conditional sale or other security agreement, provided that (a) such airframe
is free and clear of all Liens, except (i) in the case of airframes leased to the Borrower or owned or
purchased by the Borrower subject to a conditional sale or other security agreement, the rights of the
parties to the lease or conditional sale agreement or other security agreement covering such airframe,
or their assignee, (ii) Permitted Liens, and (iii) the rights of other air carriers under normal
interchange agreements which are customary in the airline industry and do not contemplate, permit or
require the transfer of title to the airframe or engines installed thereon, and (b) any such lease,
conditional sale or other security agreement provides that such Engine shall not become subject to the
lien of such lease, conditional sale or other security agreement, notwithstanding the installation
thereof on such airframe, and the inclusion in such agreement of a provision similar to the last
paragraph of this Section 3.03 shall satisfy such requirement;

(d)      install an Engine on an airframe owned by the Borrower, leased to the Borrower or purchased by the
Borrower subject to a conditional sale or other security agreement under circumstances where
paragraph 3.03(c) above is inapplicable, provided that such installation shall be deemed an Event of Loss
with respect to such Engine and the Borrower shall comply with Section 5.02 hereof in respect thereof,
the Administrative Agent not intending hereby to waive any right or interest it may have to or in such
Engine under applicable law until compliance by the Borrower with such Section 5.02;

(e)      transfer possession of any Airframe or any Engine to the United States of America or any instrumentality
or agency thereof pursuant to CRAF so long as the Borrower shall promptly notify the Administrative
Agent upon transferring possession of such Airframe or any Engine to the United States of America or any
agency or instrumentality thereof pursuant to such program and provide the Administrative Agent with the
name and address of the Contracting Office Representative for the Military Aircraft Command of the
United States Air Force to whom notice must be given in the event the Administrative Agent desires to
give notice as provided in Section 12 of the Credit Agreement;

(f)      transfer possession of any Airframe or any Engine to the United States of America or any instrumentality
or agency thereof which bears the full faith and credit of the United States of America; and

(g)      enter into a lease with (i) any U.S. Air Carrier approved in writing by the Administrative Agent at the
direction of the Lenders, which approval (or direction) shall not be unreasonably withheld, and which is
authorized by an applicable Governmental Authority to conduct commercial airline operations and to
operate A319-111 aircraft, or (ii) any other Person approved in writing by the Administrative Agent at
the direction of the Lenders.

         The rights of any transferee who receives possession by reason of a transfer permitted by this
Section 3.03 (other than the transfer of an Engine deemed an Event of Loss) shall be subject and
subordinate to (and, in the case of any lease, shall be expressly subject and subordinate to) all the
terms of this Mortgage; provided that in the case of the use of an Aircraft in CRAF the subject and
subordinate requirements herein shall be subject to the notice specified in Section 12 of the Credit
Agreement and other requirements of the CRAF program.  In the case of any lease, the Borrower shall
remain primarily liable hereunder for the performance of all of the terms of this Mortgage, and the
terms of any such lease shall not permit any lessee to take any action not permitted to be taken by the
Borrower hereunder with respect to the Aircraft and may permit the Borrower to cure any default by the
lessee and to terminate the lease upon such default.

         Any Wet Lease or similar arrangement under which the Borrower maintains operational control of
an Aircraft shall not constitute a delivery, transfer or relinquishment of possession for purposes of
this Section 3.03 so long as such Wet Lease shall be for a term (including any renewals) not in excess
of three months and is wet leased to a U.S. Air Carrier.

         The Administrative Agent agrees, for the benefit of the Borrower, and for the benefit of any
mortgagee or any other Lender of a security interest in any engine owned by the Borrower, any lessor of
any engine leased to the Borrower and any conditional vendor of any engine purchased by the Borrower
subject to a conditional sale agreement or any other security agreement, that no interest shall be
created hereunder in any engine so owned, leased or purchased and that neither the Administrative Agent
nor its successors or assigns will acquire or claim, as against the Borrower or any such mortgagee,
lessor or conditional vendor or any other Lender of a security interest or interest in such engine as
the result of such engine being installed on an Airframe; provided, however, that such agreement of the
Administrative Agent shall not be for the benefit of any lessor or secured party of any airframe leased
to the Borrower or purchased by the Borrower subject to a conditional sale or other security agreement
or for the benefit of any mortgagee of or any other Lender of a security interest in an airframe owned
by the Borrower, unless such lessor, conditional vendor, other secured party or mortgagee has agreed
(which agreement may be contained in such lease, conditional sale or other security agreement or
mortgage and may consist of a paragraph similar to this paragraph) that neither it nor its successors or
assigns will acquire, as against the Administrative Agent, any right, title or interest in an Engine as
a result of such Engine being installed on such airframe.

Section 3.04      Insignia.  On or prior to the Delivery Date, or as soon thereafter as practicable, the Borrower
agrees to affix and maintain (or cause to be affixed and maintained) in the cockpit of each Airframe and
on each Engine a nameplate bearing the inscription:

                  Mortgaged To

                  Hamburgische Landesbank -Girozentrale-, as Administrative Agent

(such nameplate to be replaced, if necessary, with a nameplate reflecting the name of any successor to
the Administrative Agent as permitted under the Operative Documents).

         Nothing herein contained shall prohibit the Borrower from placing its customary colors and
insignia on each Airframe or any Engine or from otherwise operating the Aircraft in its livery.

                                          Article IV

           REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS

Section 4.01      Replacement of Parts.  The Borrower will promptly replace or cause to be replaced all Parts
which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever, except as otherwise
provided in Section 4.03.  All replacement parts (other than replacement parts temporarily installed as
provided in Section 4.02) shall be free and clear of all Liens (except Permitted Liens), and shall be in
as good an operating condition, and shall have a value and utility substantially equal to, the Parts
replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the
terms hereof.  All Parts at any time removed from any Airframe or any Engine shall remain subject to the
Lien of this Mortgage, no matter where located, until such time as such Parts shall be replaced by parts
which meet the requirements for replacement parts specified above.  Upon any replacement part becoming
incorporated or installed in or attached to any Airframe or any Engine, without further act (subject
only to Permitted Liens and any arrangement permitted by Section 4.02 hereof), (i) such replacement part
shall become subject to the Lien of this Mortgage and be deemed a Part for all purposes hereof to the
same extent as the Parts originally incorporated or installed in or attached to such Airframe or such
Engine and (ii) the replaced Part shall no longer be deemed a Part hereunder.

Section 4.02      Pooling of Parts; Temporary Replacement Parts.  Any Part removed from any Airframe or any
Engine as provided in Section 4.01 hereof may be subjected by the Borrower to a pooling arrangement of
the type which is permitted for Engines by Section 3.03(a) hereof; provided that the part replacing such
removed Part shall be incorporated or installed in or attached to such Airframe or Engine in accordance
with Section 4.01 as promptly as practicable after the removal of such removed Part.  In addition, the
Borrower may use temporary parts or pooled parts on an Aircraft as temporary replacements for Parts,
provided that the Borrower as promptly thereafter as practicable, either (1) causes such pooled or
temporary replacement part to become subject to the Lien of this Mortgage free and clear of all Liens
other than Permitted Liens or (2) replaces such replacement part with a further replacement part owned
by the Borrower which meets the requirements of Section 4.01 and which shall become subject to the Lien
of this Mortgage, free and clear of all Liens other than Permitted Liens.

Section 4.03      Alterations, Modifications and Additions.  The Borrower will make (or cause to be made) such
 alterations, modifications and additions to the Airframes and Engines as may be required to meet the
applicable standards of the FAA, subject to clauses (2)(a)(i) and (ii) of Section 3.01.  In addition,
the Borrower may from time to time make such alterations and modifications in and additions to any
Airframe or any Engine as the Borrower may deem desirable in the proper conduct of its business,
including removal of Parts which the Borrower deems to be obsolete or no longer suitable or appropriate
for use on such Airframe or such Engine; provided that no such alteration, modification, removal or
addition impairs the condition or airworthiness of such Airframe or such Engine, or diminishes the
value, utility and remaining useful life of such Airframe or such Engine below the value, utility or
remaining useful life thereof immediately prior to such alteration, modification, removal or addition,
assuming that such Airframe or such Engine is in the condition required hereunder.  All parts
incorporated or installed in or attached or added to an Airframe or an Engine as the result of such
alteration, modification or addition (except those parts described in Section 4.04 hereof which the
Borrower has leased from others and Parts which may be removed by the Borrower pursuant to the next
sentence) (the "Additional Part" or "Additional Parts") shall, without further act, become subject to
the Lien of this Mortgage.  Notwithstanding the foregoing, the Borrower may remove any Additional Part,
provided that such Additional Part (i) is in addition to, and not in replacement of or substitution for,
any Part originally incorporated or installed in or attached to any Airframe or any Engine at the time
of delivery thereof hereunder or any Part in replacement of or substitution for any such Part, (ii) is
not required to be incorporated or installed in or attached or added to any Airframe or any Engine
pursuant to the terms of Article III hereof or the first sentence of this Section 4.03, and (iii) can be
removed from such Airframe or such Engine without impairing the airworthiness of such Airframe or such
Engine or diminishing the value, utility and remaining useful life of such Airframe or such Engine which
such Airframe or such Engine would have had at such time had such alteration, modification or addition
not occurred.  Upon the removal thereof as provided above, such Additional Parts shall be deemed free of
the Lien of this Mortgage.

Section 4.04      Improvements Owned by Others.  Notwithstanding any other provision of this Mortgage, the
Borrower may install or permit to be installed in an Aircraft audio-visual, entertainment, telephonic or
other passenger convenience equipment owned by third parties (or owned jointly by the Borrower and
others) and leased or otherwise furnished to the Borrower in the ordinary course of business, provided
that such equipment meets all requirements for removal of Additional Parts as specified in Section 4.03,
and the Lien of this Mortgage shall not attach thereto and the rights of the owners therein shall not
constitute a default under the Operative Documents.

Section 4.05      Substitution of Engines.  So long as no Default or Event of Default shall have occurred and be
continuing, Borrower shall have the right at its option at any time on at least five Business Days'
prior written notice, to terminate the Lien of this Mortgage with respect to any Engine.  In such event,
and at the time of such termination, the Borrower shall replace such Engine hereunder by complying with
the terms of Section 5.02 hereof to the same extent as if an Event of Loss had occurred with respect to
such Engine (other than the time periods allowed for such replacement), and the Administrative Agent (at
the direction of the Lenders) shall release the replaced Engine from the Lien of this Mortgage as
provided in Section 5.02.

                                               Article V 

                            LOSS, DESTRUCTION, REQUISITION, ETC.

Section 5.01      Event of Loss With Respect to the Aircraft.  Upon the occurrence of an Event of Loss with
respect to an Airframe or an Airframe and the Engines and/or engines then installed thereon, the
Borrower shall forthwith give the Administrative Agent and the Lenders written notice of such Event of
Loss but in any event within five days of such occurrence.  On the earlier of (x) the 90th day following
the occurrence of such Event of Loss or (y) the fifth Business Day following the receipt of the
insurance proceeds in respect of such Event of Loss, the Borrower shall pay or cause to be paid to the
Administrative Agent an amount equal to the aggregate amount of the payment or payments of principal,
Break Amount (if any), Additional Costs, interest and other amounts then due on or in respect of the
Notes of the Series issued with respect to such Airframe and all other amounts due under the Operative
Documents.

Section 5.02      Event of Loss With Respect to an Engine.  Upon the occurrence of an Event of Loss with respect
to an Engine under circumstances in which there has not occurred an Event of Loss with respect to an
Airframe, the Borrower shall forthwith give the Administrative Agent and the Lenders written notice
thereof (but in any event within ten days of such occurrence) and shall, within 60 days after the
occurrence of such Event of Loss (or, in the case of an Event of Loss described in clause (vi) of the
definition thereof, within 90 days after the Chief Financial Officer, Treasurer, any Vice President or
other officer of the Borrower elected by the Borrower's Board of Directors has received actual knowledge
of such Event of Loss), as replacement for the Engine with respect to which such Event of Loss occurred,
subject to the Lien of this Mortgage another CFM International, Inc. Model CFM56-5B5/P engine (or an
engine of the same manufacturer of an equivalent or an improved model and suitable for installation and
use on the Airframes and compatible with the other Engines mortgaged hereunder) free and clear of all
Liens (other than Inchoate Liens) and having a value and utility at least equal to, and being in as good
an operating condition, as the Engine subject to such Event of Loss, assuming such Engine was maintained
in accordance with the provisions of this Mortgage.  Prior to or at the time of any such conveyance, the
Borrower will (i) cause a Mortgage Supplement with respect to such Replacement Engine to be duly
executed and filed for recording pursuant to the Federal Aviation Act, (ii) furnish the Administrative
Agent with an opinion of the Borrower's counsel to the effect that such Replacement Engine is owned by
Borrower free and clear of all Liens (other than Inchoate Liens), and that upon execution and filing of
the Mortgage Supplement or other required document the Replacement Engine will be subject to the Lien of
the Mortgage on a first priority and perfected basis; provided that, in the case of any such Lien which
ranks on par with or ahead in priority to the Lien of the Mortgage, the Borrower may satisfy the
foregoing requirement if the Borrower shall have provided a bond or other security in respect of such
Lien in an amount and under terms reasonably satisfactory to the Administrative Agent at the direction
of the Lenders, (iii) furnish a certificate signed by a duly authorized officer of the Borrower stating
with respect to any Replacement Engine:  (1) a description of the Engine suffering the Event of Loss,
which shall be identified by manufacturer's serial number; (2) a description of the Replacement Engine
(including the manufacturer's name and serial number); (3) that on the date of the Mortgage Supplement
relating to the Replacement Engine the Borrower will be the owner of such Replacement Engine free and
clear of all Liens except Permitted Liens, that such Replacement Engine will be on such date in good
working order (subject to maintenance permitted or required by this Mortgage) and condition and that
such Replacement Engine is of the same or an improved model of the Engine; and (4) that each of the
conditions specified in this Section 5.02 with respect to such Replacement Engine has been satisfied and
(iv) furnish the Administrative Agent with such evidence of compliance with the insurance provisions of
Article VI hereof with respect to such Replacement Engine as the Administrative Agent may reasonably
request.  Upon compliance by the Borrower with all of the terms of this Section 5.02 and Section 13(a)
of the Credit Agreement such Engine shall thereupon cease to be an Engine secured hereunder.  For all
purposes hereof, each such Replacement Engine shall, after such conveyance, be deemed an "Engine"
hereunder.

Section 5.03      Application of Payments From Governmental Authorities for Requisition of Title, Etc.  Any
payments (other than insurance proceeds the application of which is provided for in Article VI) received
at any time by the Borrower or the Administrative Agent from any governmental authority or other Person
with respect to an Event of Loss (other than a requisition for use by the government of the United
States of America not constituting an Event of Loss) will be applied as follows:

                  1.       If payments are received with respect to an Airframe (or an Airframe or any
Engines or engines then installed thereon), after reimbursement of the Administrative Agent and the
Lenders for reasonable costs and expenses, so much of such payments remaining as shall not exceed the
amounts required to be paid by the Borrower pursuant to Section 5.01 shall be paid to the Administrative
Agent and applied in reduction of the Borrower's obligation to pay such other amounts, if not already
paid by the Borrower, or, if already paid by the Borrower, shall be applied to reimburse the Borrower
for its payment of such amounts, and following the foregoing application, the balance, if any, of such
payments shall be paid to the Borrower; and

                  2.       If such payments are received with respect to an Engine under circumstances
contemplated by Section 5.02 hereof, so much of such payments remaining after reimbursement of the
Administrative Agent and the Lenders for reasonable costs and expenses shall be paid over to, or
retained by, the Borrower, provided that the Borrower shall have fully performed, or will perform, the
terms of Section 5.02 with respect to the Event of Loss for which such payments are made.

Section 5.04      Requisition for Use of the Aircraft by the United States Government or the Government of
Registry of the Aircraft.  In the event of the requisition for use of an Airframe or the Engines or
engines installed on such Airframe by the government of the United States of America or any other
government of registry of an Aircraft or any instrumentality or agency of any thereof or a CRAF
activation, in either case not constituting an Event of Loss, the Borrower shall promptly notify the
Administrative Agent of such requisition or activation, and all of the Borrower's obligations under this
Mortgage with respect to such Aircraft shall continue to the same extent as if such requisition or
activation had not occurred.  All payments received by the Administrative Agent or the Borrower from
such government for the use of such Airframe and Engines or engines shall be paid over to, or retained
by, the Borrower.

Section 5.05      Application of Payments During Existence of Special Defaults or Events of Default.  Any amount
referred to in this Article V which is payable to or retainable by the Borrower shall not be paid to or
retained by the Borrower if at the time of such payment or retention a Special Default or an Event of
Default shall have occurred and be continuing, but shall be held by or paid over to the Administrative
Agent as security for the obligations of the Borrower under this Mortgage and, if the Administrative
Agent declares this Mortgage to be in default pursuant to Section 12 of the Credit Agreement, applied
against the Borrower's obligations hereunder as and when due.  At such time as there shall not be
continuing any such Special Default or Event of Default, such amount shall be paid to the Borrower to
the extent not previously applied in accordance with the preceding sentence.

                                            Article VI


                                    INSURANCE

Section 6.01      Bodily Injury Liability and Property Damage Liability Insurance.

(a)      Except as provided in paragraph (b) of this Section 6.01, and subject to the self insurance to the
extent permitted by Section 6.04 and the provisions of Section 6.08, the Borrower will at all times
carry and maintain or cause to be carried and maintained, on a non-discriminatory basis and with
insurers of internationally recognized responsibility acceptable to the Administrative Agent (which
acceptability not to be unreasonably withheld or delayed), airline liability insurance, including
passenger legal liability, bodily injury liability, war risk and allied perils liability, property
damage liability, and contractual liability (exclusive of manufacturer's product liability insurance)
with respect to each Aircraft in an amount per occurrence not less than $*.  The Borrower shall maintain
cargo liability insurance in an amount not less than the amount of cargo liability insurance maintained
for other aircraft operated by the Borrower.

(b)      During any period that an Aircraft is on the ground and not in operation, the Borrower may carry or
cause to be carried, in lieu of the insurance required by paragraph (a) above, and subject to the
self-insurance to the extent permitted by Section 6.04, insurance otherwise conforming to the provisions
of said paragraph (a) except that (i) the amounts of coverage shall not be required to exceed the
amounts of bodily injury liability and property damage liability insurance from time to time applicable
to aircraft owned or leased by major U.S. carriers of the same or similar type as such Aircraft which
are on the ground and not in operation and (ii) the scope of the risks covered and the type of insurance
shall be consistent with industry practice and the same as from time to time shall be applicable to
aircraft owned or leased by major U.S. carriers of the same or similar type which are on the ground and
not in operation and will be consistent with industry practice.

Section 6.02      Insurance Against Loss or Damage to the Aircraft.

(a)      Except as provided in paragraph (b) of this Section 6.02 and the provisions of Section 6.08, and subject
to the provisions of Section 6.04 permitting self-insurance, the Borrower shall at all times carry and
maintain or cause to be carried and maintained, on a non-discriminatory basis, in effect with insurers
of internationally recognized responsibility acceptable to the Administrative Agent (which acceptability
not to be unreasonably withheld or delayed) (i) "all risk" aircraft hull insurance covering each
Aircraft (with flight, taxiing and ingestion coverages), (ii) fire, transit and extended coverage of
Engines and Parts while removed from an Aircraft (providing insurance for replacement value), and
(iii) war risk and allied perils insurance, including governmental confiscation and expropriation (other
than by the government of registry of an Aircraft) and hijacking insurance (collectively, "War Risk
Insurance"); provided that, in the case of War Risk Insurance, such insurance shall only be required to
be maintained (x) with respect to the buy-backs covering strikes, sabotage, confiscation and hijacking
contained in London Form LSW 555B and (y) with respect to terms and provisions of War Risk Insurance in
addition to those covered by the preceding clause (x), (A) if and to the extent the same is maintained
by the Borrower with respect to other aircraft owned or operated by the Borrower on the same routes or
(B) if an Aircraft is operated in a war zone (unless the Borrower obtains indemnification in lieu
thereof pursuant to Section 6.06 hereof) or (C) if and to the extent the same is industry standard for
major U.S. carriers operating similarly-sized aircraft on similar routes; provided, further, that the
foregoing insurance shall at all times while an Aircraft is subject to this Mortgage be for an amount
(taking into account self-insurance to the extent permitted by Section 6.04) not less than the
Stipulated Insured Amount.  In the case of a loss with respect to an engine (other than an Engine)
installed on an Airframe, the Administrative Agent shall hold any payment received by it of any hull
insurance proceeds in respect of such loss for account of the Borrower or any other third party to the
extent the Borrower or such third party is entitled to receive such proceeds.

         Except during a period when a Special Default or an Event of Default has occurred and is
continuing (in which case all losses will be adjusted by the loss payee), all losses will be adjusted
with the insurers by the Borrower (giving due regard to the interest of the Administrative Agent).  It
is agreed that all insurance payments received under insurance policies required to be maintained by the
Borrower pursuant to this Section 6.02 as the result of the occurrence of an Event of Loss will be
applied as follows:

                  1.       if such payments are received with respect to an Airframe (or such Airframe
and the Engines and/or engines installed thereon), payments as shall not exceed the amounts due pursuant
to Section 10(f)(ii) of the Credit Agreement shall be applied, after reimbursement of the Administrative
Agent for reasonable costs and expenses, in reduction of the Borrower's obligation to pay such amounts,
if not already paid by the Borrower, or, if already paid by the Borrower, shall be applied to reimburse
the Borrower for its payment of such amounts and the balance, if any, of such payments remaining
thereafter will be paid over to, or retained by, the Borrower; and

                  2.       if such payments are received with respect to an Engine under the
circumstances contemplated by Section 5.02 hereof, such payments shall be paid over to, or retained by,
the Borrower, provided that the Borrower shall have fully performed or, concurrently therewith, will
fully perform the terms of Section 5.02 with respect to the Event of Loss for which such payments are
made.

         The insurance payments for any property damage loss to any Airframe or any Engine not
constituting an Event of Loss with respect thereto or with respect to an Event of Loss of an Engine
shall be paid as follows:  all payments in respect of losses less than or equal to $* shall be paid to
the Borrower, and all payments with respect to losses greater than $* shall be paid to the
Administrative Agent, to be held as collateral security for the Borrower's obligations hereunder, and
applied to reimburse the Borrower for accomplishing repairs and/or replacements as required, or to pay
suppliers directly for such repairs and/or replacements as directed by the Borrower.  In the case of any
payment to the Administrative Agent (other than in respect of an Event of Loss of an Aircraft), the
Administrative Agent shall, upon receipt of evidence reasonably satisfactory to it that the damage
giving rise to such payment shall have been repaired or that such payment shall then be required to pay
for repairs then being made or the replacement of the Engine suffering the Event of Loss, pay the amount
of such payment, and any interest or income earned thereon, to the Borrower or its order.

(b)      During any period that an Aircraft is on the ground and not in operation, the Borrower may carry or
cause to be carried, in lieu of the insurance required by paragraph (a) above, and subject to the
self-insurance to the extent permitted by Section 6.04, insurance otherwise conforming with the
provisions of said paragraph (a), except that the scope of the risks and the type of insurance shall be
the same as from time to time applicable to aircraft owned or leased and operated by major U.S. carriers
of the same or similar type similarly on the ground and not in operation, provided that, subject to the
self-insurance to the extent permitted by Section 6.04, the Borrower shall maintain insurance against
risk of loss or damage to such Aircraft in an amount at least equal to the Stipulated Insured Amount
during such period that such Aircraft is on the ground and not in operation.

Section 6.03      Reports, Etc.  The Borrower will furnish, or cause to be furnished, to the Administrative Agent
on or before each Delivery Date and annually on or before the renewal dates of the Borrower's relevant
insurance policies, a report, signed by a recognized independent firm of insurance brokers, which
brokers may be regularly retained by the Borrower (the "Insurance Brokers"), describing in reasonable
detail the hull and liability insurance then carried and maintained with respect to each Aircraft and
stating the opinion of such firm that, to the best of its knowledge, such insurance complies with the
terms of Article VI.  Such information shall remain confidential as provided in Section 21 of the Credit
Agreement.  The Borrower will cause the Insurance Brokers to agree to advise the Administrative Agent in
writing (a) of any default in the payment of premium and of any other act or omission on the part of the
Borrower of which it has actual knowledge and which will invalidate or render unenforceable, in whole or
in part, any insurance as required by the terms hereof, (b) at least thirty (30) days (seven (7) days in
the case of War Risk Insurance) prior to the cancellation (but not scheduled expiration) or material
adverse change of any insurance maintained pursuant to this Article VI, provided that, in respect of the
War Risk Insurance, if the notice period specified above is not obtainable, the Insurance Brokers shall
provide for as long a period of prior notice as shall then be obtainable and (c) if any of the insurance
required by this Article VI are not renewed on the same terms (save as to premium and period of cover
and as the Administrative Agent might otherwise have notified to the Insurance Brokers to be acceptable
to the Administrative Agent) seven (7) days prior to expiry thereof.  In the event that the Borrower
shall fail to maintain or cause to be maintained insurance as herein provided, the Administrative Agent
may, at its sole option, provide such insurance and, in such event, the Borrower shall, upon demand,
reimburse the Administrative Agent for the cost thereof.

Section 6.04      Self-Insurance.  The Borrower may self-insure, by way of deductible, premium adjustment
provisions in insurance policies, or otherwise, under a program applicable to all aircraft in the
Borrower's fleet, the risks required to be insured against pursuant to Sections 6.01 and 6.02 but in no
case shall the self-insurance with respect to an Aircraft exceed $* per occurrence; provided that no
deductible shall be applicable in the case of a total loss of an Airframe.  In the event the prevailing
industry minimum deductible for aircraft similar to the Aircraft increases, the Borrower and
Administrative Agent shall consult one another toward a mutually agreeable modified deductible, such
modified deductible to be effective only upon the written consent of the Administrative Agent (on behalf
of the Lenders).  Notwithstanding the foregoing, if the Borrower's consolidated shareholders' equity
shall exceed $*, then the levels of self-insurance otherwise permitted by this Section 6.04 may be
increased by $* per Aircraft per occurrence.

Section 6.05      Additional Insurance by Borrower.  The Borrower may carry for its own account at its sole cost
and expense insurance with respect to its interest in the Aircraft, provided that such insurance does
not prevent the Borrower from carrying the insurance required or permitted by this Article VI or
adversely affect such insurance provided hereunder or the cost thereof.

Section 6.06      Indemnification by Government in Lieu of Insurance.  Notwithstanding any provisions of this
Article VI requiring insurance, the Administrative Agent on behalf of the Lenders agrees to accept, in
lieu of insurance against any risk with respect to the Aircraft, indemnification from, or insurance
provided by, the government of the United States of America or any agency or instrumentality thereof the
obligations of which are supported by the full faith and credit of the government of the United States
of America, against such risk in an amount which, when added to the amount of insurance against such
risk maintained by the Borrower shall be at least equal to the amount of insurance against such risk
otherwise required by this Article VI (taking into account self insurance permitted by Section 6.04).
The Borrower shall furnish, in advance of attachment of such indemnity or insurance, if practical to do
so, a certificate of a responsible financial or legal officer of the Borrower confirming in reasonable
detail the amount and scope of such indemnification or insurance and that such indemnification or
insurance complies with the preceding sentence.

Section 6.07      Application of Payments During Existence of a Special Default or an Event of Default.  Any
amount referred to in this Article VI which is payable to or retainable by or to be held for the benefit
of the Borrower shall not be paid to or retained by or held for the benefit of the Borrower if at the
time of such payment or retention a Special Default or an Event of Default shall have occurred and be
continuing, but shall be held by or paid over to the Administrative Agent, as security for the
obligations of the Borrower under this Mortgage and, if the Administrative Agent or any Lender, as
applicable, shall have declared this Mortgage or the Credit Agreement to be in default, applied against
the Borrower's obligations hereunder as and when due.  At such time as there shall not be continuing any
such Special Default or Event of Default, such amount shall be paid to the Borrower to the extent not
previously applied in accordance with the preceding sentence.

Section 6.08      Terms of Insurance Policies.  Any policies carried in accordance with Sections 6.01 and 6.02
covering the Aircraft, and any policies taken out in substitution or replacement for any such policies,
as applicable, (1) shall name the Additional Insureds as additional insureds, as their interests may
appear, (2) shall name the Administrative Agent (on behalf of the Lenders) as sole loss payee to the
extent provided in clause (12) below, (3) may provide for self-insurance to the extent permitted in
Section 6.04, (4) shall provide that if the insurers cancel such insurance for any reason whatsoever, or
if any material change is made in the insurance which adversely affects the interest of any Additional
Insured, such cancellation or change shall not be effective as to the Additional Insureds for thirty
(30) days after receipt by (but, in the case of War Risk Insurance, seven (7) days after sending to) the
Additional Insureds of written notice by such insurers of such cancellation or change, provided,
however, that if, in respect of the War Risk Insurance, any notice period specified above is not
obtainable, such policies shall provide for as long a period of prior notice as shall then be
obtainable, (5) shall provide that in respect of the Additional Insureds' respective interests in such
policies the insurance shall not be invalidated by any action or inaction of the Borrower and shall
insure the respective interests of the Additional Insureds regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by the Borrower, (6) shall be primary
without any right of contribution from any other insurance which is carried by any Additional Insured,
(7) shall expressly provide that all of the provisions thereof, except the limits of liability, shall
operate in the same manner as if a separate policy covered each insured,  (8) shall waive any right of
subrogation of the insurers or any right of the insurers to set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of any Additional Insured but
only to the extent of the indemnities provided under the Credit Agreement, (9) shall provide that losses
(other than for total loss of an Aircraft) shall be adjusted with the Borrower (or, if an Event of
Default shall have occurred which is continuing, with the Administrative Agent), (10) shall provide that
the Additional Insureds are not liable for any insurance premiums, (11) shall be effective with respect
to both domestic and international operations, (12) shall provide that (i) except as specified in
clause (iii) of this sub-section, in the event of a loss involving payments in excess of $*, all payments
in respect of such loss up to the amount of Stipulated Insured Amount (whether such payment is made to
the Borrower or any third party) shall be paid to the Administrative Agent on behalf of the Lenders, it
being understood and agreed that in the case of any payment to the Administrative Agent otherwise than
in respect of an Event of Loss of an Aircraft, the Administrative Agent shall, upon receipt of evidence
reasonably satisfactory to it that the damage giving rise to such payment shall have been repaired or
that such payment shall then be required to pay for repairs then being made or the replacement of the
Engine suffering the Event of Loss, pay the amount of such payment, and any interest or income earned
thereon, to the Borrower or its order, (ii) except as specified in clause (iii) of this sub-section, all
proceeds of $* or less (regardless of the total amount of proceeds resulting from such loss) and any
payments of any loss in excess of Stipulated Insured Amount for an Aircraft shall be paid to the
Borrower or its order and (iii) notwithstanding anything to the contrary contained in the preceding
clauses (i) and (ii), if a Special Default or an Event of Default shall have occurred and be continuing
and the insurers have been notified thereof by the Administrative Agent, all payments of loss shall be
paid to the Administrative Agent, (13) if war risk coverage is maintained, shall contain a 50/50 clause
as per AVS 103, and (14) if the policy (or policies) contains (or contain) an electronic date
recognition exclusion such as AVN 2000, to include AVN 2001 and AVN 2002 or such other writebacks for
hull and liability coverage as are customary for commercial airlines in the United States.

                                           Article VII

                                   MISCELLANEOUS

Section 7.01      Termination of Mortgage.  (a) (a)  Upon (or at any time after) payment in full of the principal
of and interest on and Break Amount, if any, and Additional Costs and all other amounts due under, or
otherwise due to the Lenders hereunder and under the other Operative Documents and provided that there
shall then be no other amounts due to the Lenders and the Administrative Agent hereunder or under the
Credit Agreement or the other Operative Documents or otherwise secured hereby, the Administrative Agent
shall execute and deliver to or as directed in writing by the Borrower an appropriate instrument
releasing the Aircraft from the Lien of this Mortgage, and the Administrative Agent shall execute and
deliver such instrument as aforesaid and, at the Borrower's expense, will execute and deliver such other
instruments or documents as may be reasonably requested by the Borrower to give effect to such release;
provided, however, that this Mortgage and the trusts created hereby shall earlier terminate and this
Mortgage shall be of no further force or effect and the rights of the Lenders and the Administrative
Agent shall terminate (and the Administrative Agent, at the Lenders' direction, shall release, by an
appropriate instrument, the Mortgage Estate and the Aircraft from the Lien of this Mortgage) upon any
sale or other final disposition by the Administrative Agent, at the Lenders' direction, of all property
part of the Mortgage Estate and the final distribution by the Administrative Agent of all monies or
other property or proceeds constituting part of the Mortgage Estate in accordance with the terms
hereof.  Except as aforesaid otherwise provided, this Mortgage and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.

(b)      In addition, upon (or at any time after) payment in full of the principal of and interest on and Break
Amount and Additional Cost, if any, and all other amounts due under, or otherwise due to the Lenders
hereunder and under the other Operative Documents with respect to any Aircraft and provided that no
Default shall be continuing and there shall then be no other amounts due to the Lenders and the
Administrative Agent hereunder or under the Loan Agreement or the other Operative Documents or otherwise
secured hereby in respect of such Series of Notes with respect to any Aircraft, the Administrative
Agent, at the Lenders' direction, shall execute and deliver to or as directed in writing by the Borrower
an appropriate instrument releasing such Aircraft relating to such Series from the Lien of this
Mortgage, and the Administrative Agent, at the Lenders' direction, shall execute and deliver such
instrument as aforesaid and, at the Borrower's expense, will execute and deliver such other instruments
or documents as may be reasonably requested by the Borrower to give effect to such release.

Section 7.02      No Legal Title to Mortgage Estate in the Lenders.  The Lenders shall not have legal title to
any part of the Mortgage Estate.  No transfer, by operation of law or otherwise, of any Note or other
right, title and interest of the Lenders in and to the Mortgage Estate or hereunder shall operate to
terminate this Mortgage or entitle the Lenders or any successor or transferee of the Lenders to an
accounting or to the transfer to it of legal title to any part of the Mortgage Estate.

Section 7.03      Sale of Aircraft by Administrative Agent is Binding.  Any sale or other conveyance of any
Aircraft by the Administrative Agent, at the Lenders' direction, made pursuant to the terms of this
Mortgage shall bind the Lenders and shall be effective to transfer or convey all right, title and
interest of the Administrative Agent, the Borrower and the Lenders in and to such Aircraft.  No
purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency
or regularity of such sale or conveyance or as to the application of any sale or other proceeds with
respect thereto by the Administrative Agent.

Section 7.04      Mortgage for Benefit of Administrative Agent and Lenders.  Nothing in this Mortgage, whether
express or implied, shall be construed to give to any person other than the Borrower, the Administrative
Agent and the Lenders any legal or equitable right, remedy or claim under or in respect of this Mortgage.

Section 7.05      No Action Contrary to Borrower's Rights; Quiet Enjoyment.  Notwithstanding any of the
provisions of this Mortgage to the contrary, so long as no Event of Default shall have occurred and be
continuing, each of the Administrative Agent and Lenders agrees that neither it nor any Person claiming
by, through or under it, will not take any action in violation of the Borrower's rights, including the
right to quiet enjoyment, possession and use of the Aircraft in accordance with the terms of this
Mortgage by Borrower.

Section 7.06      Notices.  Unless otherwise expressly specified or permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by
this Mortgage to be made, given, furnished or filed shall be in writing, mailed by certified mail,
postage prepaid, or by confirmed telex, or by confirmed telecopy or electronic mail and (i) if to the
Administrative Agent, addressed to it at its office at Hamburgische Landesbank -Girozentrale-,
Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, Attention: Dept. Airlines/Stephan Faehrmann,
telephone: +49-40-3333-2601, telecopier: +49-40-3333-3098, (ii) if to the Borrower, addressed to it at
its office at Frontier Center One, 7001 Tower Road, Denver, CO 80249, Attention: Chief Financial
Officer, telecopy: (720) 374-4375, or (iii) if to the Lenders, addressed to such party at such address
as such party shall have furnished by notice to the Borrower and the Administrative Agent, or, until an
address is so furnished, addressed to the address of such party (if any) set forth on Schedule I to the
Credit Agreement.  Whenever any notice in writing is required to be given by the Borrower, the
Administrative Agent or the Administrative Agent or the Lenders to any of the other of them, such notice
shall be deemed given and such requirement satisfied when such notice is received, if such notice is
received, if such notice is mailed by certified mail, postage prepaid, or is sent by confirmed telex, or
by confirmed telecopy addressed as provided above.  Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other parties to this Mortgage.

Section 7.07      Administrative Agent's Right to Perform for Borrower.  If the Borrower fails to make any
payment or to perform or comply with any of its agreements contained herein, then (but in each case,
other than in the case of failure to maintain insurance as required hereunder, no earlier than five
Business Days after notice to Borrower as to the occurrence of such failure, whether or not it shall yet
constitute an Event of Default hereunder) the Administrative Agent may itself make such payment or
perform or comply with such agreement but shall not be obligated hereunder to do so, and the amount of
such payment and the amount of the reasonable expenses of the Administrative Agent incurred in
connection with such payment or the performance of or compliance with such agreement, as the case may
be, together with interest thereon at the Past Due Rate, shall be payable by Borrower upon demand.

Section 7.08      Severability.  Any provision of this Mortgage which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

Section 7.09      No Oral Modifications or Continuing Waivers.  No terms or provisions of this Mortgage or the
Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing
signed by the party or other Person against whom enforcement of the change, waiver, discharge or
termination is sought and any other party or other Person whose consent is required pursuant to this
Mortgage; and any waiver of the terms hereof or of any Note shall be effective only in the specific
instance and for the specific purpose given.

Section 7.10      Successors and Assigns.  All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the successors and assigns of each, all as
herein provided.  Any request, notice, direction, consent, waiver or other instrument or action by the
Lenders shall bind the successors and assigns of the Lenders.

Section 7.11      Headings.  The headings of the various Articles and Sections herein and in the table of
contents hereto are for the convenience of reference only and shall not define or limit any of the terms
or provisions hereof.

Section 7.12      GOVERNING LAW; Counterparts.  THIS MORTGAGE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE.  This Mortgage may be executed by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

                                             [SIGNATURE PAGE FOLLOWS]






         IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed by their
respective officers thereunto duly authorized, as of the day and year first above written, and
acknowledge that this Mortgage has been made and delivered in the City of New York, and this Mortgage
having become effective only upon such execution and delivery.

                                                           FRONTIER AIRLINES, INC.,
                                                           as Borrower


                                                           By:____________________________
                                                           Name:__________________________
                                                           Title:_________________________


                                                           HAMBURGISCHE LANDESBANK -GIROZENTRALE-,
                                                           as Administrative Agent


                                                           By:____________________________
                                                           Name:__________________________
                                                           Title:_________________________



                                                           By:____________________________
                                                           Name:__________________________
                                                           Title:_________________________






                                                                   [Mortgage and Security Agreement [Frontier/HLB]

                                                 EXHIBIT A
                                                    to
                                                 Mortgage


                                           MORTGAGE SUPPLEMENT

         MORTGAGE SUPPLEMENT [Frontier/HLB] No. _____ dated ___________, ____ (this "Mortgage
 Supplement") of Frontier Airlines, Inc. (herein called the "Borrower").

                                           W I T N E S S E T H:

         WHEREAS, the Mortgage and Security Agreement [Frontier/HLB] dated as of May 23, 2002 (the
"Mortgage") between the Borrower and Hamburgische Landesbank -Girozentrale-, as Administrative Agent (the
"Administrative Agent"), provides for the execution and delivery of a supplement thereto substantially
in the form hereof which shall particularly describe the Aircraft (such term and other defined terms in
the Mortgage being herein used with the same meanings) and any Replacement Engine included in the
Mortgage Estate, and shall specifically mortgage such Aircraft or Replacement Engine, as the case may
be, to the Administrative Agent.

         WHEREAS2, the Mortgage relates to the Airframe and Engines described below and a counterpart of
the Mortgage is attached hereto and made a part hereof and this Mortgage Supplement, together with such
counterpart of the Mortgage, is being filed for recordation on the date hereof with the Federal Aviation
Administration as one document.

         WHEREAS3, the Mortgage and Mortgage Supplement [Frontier/HLB] dated _______________ have been
duly recorded pursuant to Subtitle VII of Title 49 of the United States Code on __________, ____, as one
document and have been assigned Conveyance No. _________;

         NOW, THEREFORE, this Mortgage Supplement witnesseth, that, to secure the prompt payment of the
principal of and Break Amount (if any) and interest on, and all other amounts due with respect to, all
Notes from time to time outstanding under the Mortgage and the performance and observance by the
Borrower of all the agreements, covenants and provisions for the benefit of the Lenders in the Mortgage
and in the Credit Agreement and the Notes contained, and the prompt payment of any and all amounts from
time to time owing under the Mortgage or the Credit Agreement or the other Operative Documents by the
Borrower to the Lenders, and for the uses and purposes and subject to the terms and provisions of the
Mortgage, and in consideration of the premises and of the covenants contained in the Mortgage, and of
the acceptance of the Notes by the Lenders, and of the sum of $1 paid to the Borrower at or before the
delivery hereof, the receipt whereof is hereby acknowledged, the Borrower has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell,
assign, transfer, convey, mortgage, pledge and confirm, unto the Administrative Agent and its successors
and assigns, for the security and benefit of the Lenders, in the trust created by the Mortgage, a
security interest in and mortgage lien upon, all right, title and interest of the Borrower in, to and
under the following described property:

                                                 AIRFRAME
                                   One airframe identified as follows:

                                                             FAA                       Manufacturer's
    Manufacturer                 Model               Registration Number               Serial Number
    ------------                 -----               -------------------               -------------
Airbus G.I.E.                   A319-111

together with all Parts, appliances, equipment, instruments and accessories (including, without
limitation, radio and radar) from time to time thereto belonging, owned by the Borrower and installed in
or appurtenant to said aircraft.

                                             AIRCRAFT ENGINES
                                Two (2) aircraft engines, each such engine
                               having 750 or more rated takeoff horsepower
                            or the equivalent thereof, identified as follows:

                                                                                     Manufacturer's
Manufacturer                                        Model                             Serial Number
- ------------                                        -----                             -------------
CFM International, Inc.                          CFM56-5B5/P

together with all Parts, equipment and accessories thereto belonging, by whomsoever manufactured, owned
by the Borrower and installed in or appurtenant to said aircraft engines.

         Together with all substitutions, replacements and renewals of the property above described, and
all property owned by the Borrower which shall hereafter become physically attached to or incorporated
in the property above described, whether the same are now owned by the Borrower or shall hereafter be
acquired by it.

         TO HAVE AND TO HOLD all and singular the aforesaid property unto the Administrative Agent, its
successors and assigns, for the benefit and security of the Lenders for the uses and purposes and
subject to the terms and provisions set forth in the Mortgage.

         AND, FURTHER, the Borrower hereby acknowledges that the Airframe and/or Engines referred to in
this Mortgage Supplement have been delivered to the Borrower and are included in the property of the
Borrower and are subject to the Lien of the Mortgage.

         The principal of the Notes of the Series issued in respect of the Aircraft identified above
shall be due and payable in 48 equal quarterly installments down to the Balloon Amount, as set forth on
Schedule 1 hereto.  The Borrower has selected Option __ in respect of such Aircraft.

         This Mortgage Supplement shall be construed as supplemental to the Mortgage and shall form a
part thereof, and the Mortgage is hereby incorporated by reference herein and is hereby ratified,
approved and confirmed.

         This Mortgage Supplement is being delivered in the State of New York.





         IN WITNESS WHEREOF, the Borrower has caused this Mortgage Supplement to be duly executed by one
of its officers thereunto authorized, this ____ day of ________, ____.

                                                           FRONTIER AIRLINES, INC.


                                                           By:____________________________
                                                           Name:__________________________
                                                           Title:_________________________






                                                                   [Mortgage and Security Agreement [Frontier/HLB]]


                                                SCHEDULE 1

                                      SCHEDULE OF PRINCIPAL PAYMENTS

Interest Payment Date                                                      Principal Amount to
(falling on or closest to)                                                       be Paid
- --------------------------                                                       -------

                                 [OMITTED FROM COUNTERPART FILED WITH FAA
                                      FOR CONFIDENTIALITY PURPOSES]

EX-99

                                                                                           Exhibit 99.1

                                             CERTIFICATION PURSUANT TO
                                              18 U.S.C. SECTION 1350,
                                              AS ADOPTED PURSUANT TO
                                   SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection  with the Quarterly  Report of Frontier  Airlines,  Inc. (the  "Company") on Form 10-Q for the period
ending June 30, 2002 as filed with the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I.
Jeffery S. Potter,  President and Chief Executive  Officer of the Company,  certify,  pursuant to 18 U.S.C.ss.1350,
as adopted pursuant toss.906 of the Sarbanes-Oxley Act of 2002, that:

(1)      The Report fully complies with the requirements of section 12(a) or 15(d) of the Securities Exchange Act
of 1934; and

(2)      The information contained in the Report fairly presents, in all material respects, the financial
condition and result of operations of the Company.


/s/ Jeffery S. Potter

EX-99

                                                                                           Exhibit 99.2

                                             CERTIFICATION PURSUANT TO
                                              18 U.S.C. SECTION 1350,
                                              AS ADOPTED PURSUANT TO
                                   SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection  with the Quarterly  Report of Frontier  Airlines,  Inc. (the  "Company") on Form 10-Q for the period
ending June 30, 2002 as filed with the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I.
Paul H. Tate, Chief Financial  Officer of the Company,  certify,  pursuant to 18 U.S.C.ss.1350, as adopted pursuant
to ss.906 of the Sarbanes-Oxley Act of 2002, that:

(1)      The Report fully complies with the requirements of section 12(a) or 15(d) of the Securities Exchange Act
of 1934; and

(2)      The information contained in the Report fairly presents, in all material respects, the financial
condition and result of operations of the Company.


/s/ Paul H. Tate